NONPROLIFERATION 

AND DISARMAMENT 

FUND

State Should Better 

Assure the Effective 

Use of Program 

Authorities

Report to the Ranking Member, 

Committee on Foreign Relations, U.S. 

Senate

November 2012

GAO-13-83

United States Government Accountability Office

GAO
 United States Government Accountability Office 

Highlights of GAO-13-83, a report to the 

Ranking Member, Committee on Foreign 

Relations, U.S. Senate 

November 2012 

NONPROLIFERATION AND DISARMAMENT 

FUND 

State Should Better Assure the Effective Use of 

Program Authorities 

Why GAO Did This Study 

The proliferation of weapons of mass 

destruction and advanced conventional 

weapons poses significant threats to 

U.S. and international security. State’s 

NDF began operating in 1994 to help 

combat such threats by funding a 

variety of nonproliferation and 

disarmament projects. NDF’s legal 

authorities provide it significant 

flexibility to perform its work and it has 

initiated high-profile projects in 

locations that are significant to U.S. 

interests. Nonetheless, questions have 

been raised about how NDF has used 

its authorities, including its authority to 

carry over balances into future fiscal 

years, and the extent to which NDF is 

effectively implementing its activities. 

This report examines (1) State’s use of 

NDF authorities in developing and 

implementing NDF projects and (2) the 

extent to which State has conducted a 

program evaluation of NDF and used 

this information to improve program 

performance. To conduct this review, 

GAO analyzed NDF program and 

project data and documentation, 

analyzed a sample of NDF project 

close-out documents, and interviewed 

NDF and other U.S. officials. 

What GAO Recommends 

GAO recommends that State (1) 

develop a methodology for determining 

the amount of carryover reserves 

needed to meet program requirements, 

(2) develop guidance for determining 

when inactive NDF projects should be 

closed out, (3) conduct periodic 

program evaluations of NDF, and (4) 

establish requirements for the types of 

information to be included in project 

close-out reports. State agreed with 

the recommendations. 

What GAO Found 

The Department of State’s (State) Nonproliferation and Disarmament Fund 

(NDF) has several key authorities that provide it significant operational flexibility; 

however, it has not determined its needed carryover balances and it has taken 

years to close out many of its projects in the absence of guidance for closing 

them. Annual appropriations bills have consistently provided NDF with three key 

authorities that it has used to carry out its activities. First, NDF has the authority 

to undertake projects notwithstanding any other provision of law. NDF has used 

this authority to fund projects in countries, such as North Korea, where U.S. 

assistance is prohibited by U.S. sanctions and other legal restrictions. Second, 

NDF has the authority to undertake projects globally. NDF has used this 

authority to fund projects in numerous regions around the world, in contrast with 

other U.S. nonproliferation programs, which have historically focused on 

countries in the former Soviet Union. Third, NDF’s appropriations do not expire 

within a particular time period, enabling NDF to carry over balances from year to 

year not designated for specific projects. However, NDF has not determined 

appropriate levels for these balances, which increased significantly in the past 

few years. Additionally, NDF has sometimes taken many years to close projects, 

including those where work was never started or was suspended, and has not 

established criteria to determine when inactive projects should be closed and 

unexpended resources made available for other projects. As a result, NDF funds 

may be tied up for years in inactive projects, precluding the funds’ use for other 

projects. 

State has never conducted a program evaluation of NDF. In February 2012, 

State developed a policy requiring bureaus to evaluate programs, projects, and 

activities, and outlined the requirements for these evaluations. As part of this 

policy, State required bureaus to submit an evaluation plan for fiscal years 2012 

through 2014 that identified the programs and projects they plan to evaluate. 

However, the Bureau of International Security and Nonproliferation (ISN), which 

oversees NDF, did not include NDF in its fiscal years 2012 through 2014 

evaluation plan. State currently lacks information that could be used to conduct a 

program evaluation and to improve NDF’s management of the program. Project 

close-out reports are critical to the process of closing out a project and identifying 

lessons learned, but NDF project close-out reports do not contain information 

that could enable NDF to better manage its program. For example, not all closeout reports address the results of the project. NDF uses e-mails and face-to-face 

meetings to communicate lessons learned without documenting them. 

Established standards suggest that these should be transferred to a database of 

lessons learned for use in future projects and activities, an action State officials 

said they are considering taking. NDF has also produced a project management 

guide to encourage project managers to use standard procedures and write 

close-out reports, but does not require the use of this guide. In addition, the guide 

does not detail a format for project managers to use in preparing their close-out 

reports or list the information that project managers must address. NDF officials 

said they plan to develop standard operating procedures to address these 

View GAO-13-83. For more information, issues, but had not done so as of November 2012. 

contact Thomas Melito at (202) 512-9601 or 

melitot@gao.gov. 
Page i GAO-13-83 State NDF Program

Letter 1 

Background 3

NDF’s Authorities Provide It Significant Operational Flexibility, but 

under Its No-Year Budget Authority, NDF Has Not Determined 

Needed Carryover Balances 10

State Has Not Conducted a Program Evaluation of NDF and Lacks 

Information for Conducting an Evaluation to Inform NDF’s 

Program Management 22

Conclusion 29

Recommendations for Executive Action 30

Agency Comments and Our Evaluation 31

Appendix I Scope and Methodology 32

Appendix II Comments from the Department of State 36

Appendix III GAO Contact and Staff Acknowledgments 39

Table

Table 1: Authorized NDF Activities under the FREEDOM 

Support Act 4

Figures

Figure 1: NDF-Funded Dismantling of a Scud Missile in Ukraine 5

Figure 2: NDF Project Review and Approval Process 6

Figure 3: Congressionally-Notified NDF Projects, Fiscal Years 2007 

through 2012 8

Figure 4: NDF Funding by Project Category, Fiscal Years 2007 

through 2012 9

Figure 5: Locations of NDF Projects both Before and After Fiscal 

Year 2007 15

Figure 6: Overview of NDF Funding Categories and Accumulation 

of Carryover Balances 17

Figure 7: NDF Funds Available for Notification, Fiscal Years 1994 

through 2013 18

Contents 
Page ii GAO-13-83 State NDF Program

Abbreviations

CTR Cooperative Threat Reduction Program

DOD Department of Defense

DOE Department of Energy

FAR Federal Acquisition Regulation

FIMS Financial and Information Management System

FSU former Soviet Union

GTR Global Threat Reduction Program

ISN Bureau of International Security and Nonproliferation

NDF Nonproliferation and Disarmament Fund

OMB Office of Management and Budget

State Department of State

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Page 1 GAO-13-83 State NDF Program

United States Government Accountability Office 

Washington, DC 20548

November 30, 2012

The Honorable Richard G. Lugar

Ranking Member

Committee on Foreign Relations

United States Senate

Dear Senator Lugar:

The proliferation of weapons of mass destruction and their delivery 

systems, as well as the spread of advanced conventional weapons, 

poses significant threats to U.S. and international security. Congress 

created the Nonproliferation and Disarmament Fund (NDF) in 1992 to 

support U.S. government efforts to combat such threats.1

 

1

While the legislation creating NDF was passed in 1992, NDF did not become operational 

and begin funding projects until 1994. 

Since then, the 

Department of State (State), which manages the program, has used NDF 

to fund a variety of nonproliferation and disarmament projects. These 

projects have included the shutdown of chemical weapons facilities, the 

transfer of highly enriched uranium to secure locations, the construction 

of border security facilities, and the destruction of stockpiles of ballistic 

missiles. NDF has funded projects in a range of countries around the 

globe and has also supported work by international organizations, such 

as the International Atomic Energy Agency. Congress has provided NDF 

with various legal authorities to increase its ability to carry out 

nonproliferation and disarmament projects, as opportunities arise. State 

officials have noted that these authorities provide NDF a level of flexibility 

in carrying out its mission that is uncommon among U.S. government 

programs. According to State, NDF has made it possible for the U.S. 

government to respond rapidly to unanticipated or unusually difficult, highpriority nonproliferation and disarmament opportunities. While NDF has 

taken on high-profile projects in locations significant to U.S. interests, 

such as North Korea and Libya, questions have been raised about how 

NDF has used its legal authorities, including its authority to carry over 

funds into future fiscal years, and the extent to which it is effectively 

implementing its activities.

 
 

Page 2 GAO-13-83 State NDF Program

This report examines (1) State’s use of NDF authorities in developing and 

implementing NDF projects and (2) the extent to which State has 

conducted a program evaluation of NDF and used this information to 

improve program performance. To address these objectives, we analyzed 

NDF data on program appropriations, commitments, obligations, and 

carryover balances for fiscal years 1994 through 2012. We also analyzed 

NDF project data on funding amounts, locations, objectives, and time 

frames for fiscal years 1994 through 2012. We assessed both the program 

and project data and found them sufficiently reliable for our purposes. 

Additionally, we reviewed NDF project documentation, such as project 

proposal summaries, approval memos, and congressional notifications to 

obtain additional information on NDF projects. To identify NDF’s key legal 

authorities, we reviewed relevant laws and regulations. To assess the 

extent to which State has evaluated NDF, we met with State officials from 

the Bureaus of Budget and Planning and International Security and 

Nonproliferation (ISN), and reviewed project close-out documentation for a 

judgmental sample of 23 project close-out reports—14 of which we 

selected, and 9 of which State selected. In selecting our sample, we 

considered only projects that NDF had closed out since the beginning of 

fiscal year 2007. Our selection criteria included project cost, location, and 

type. State selected its projects using similar criteria; however, State did 

not limit itself to projects that were closed out. For example, State selected 

some projects for which work was completed, but the project was not yet 

officially closed out. For all 23 project close-out reports, we assessed the 

types of information contained in these reports, and the degree to which 

they could be used to provide needed information for evaluations and 

improve NDF’s management of the program. In reviewing the 

documentation for the projects State selected, we determined that the 

inclusion of these projects in our analysis did not alter our overall findings 

and thus did not compromise the independence of our work. We also met 

with State officials in the NDF program office and officials from the 

Departments of Defense (DOD) and Energy (DOE) who were responsible 

for proposing or implementing NDF projects. Additionally, we met with 

officials from the Office of Management and Budget (OMB) to better 

understand NDF’s budget planning process. Additional details about our 

scope and methodology can be found in appendix I.

We conducted this performance audit from March 2012 through 

November 2012 in accordance with generally accepted government 

auditing standards. These 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 
 

Page 3 GAO-13-83 State NDF Program

believe that the evidence obtained provides a reasonable basis for our

findings and conclusions based on our audit objectives.

Congress authorized the President to establish NDF in 1992 under 

section 504 of the FREEDOM Support Act.2 The legislation authorized the 

President to use NDF to promote a variety of bilateral and multilateral 

nonproliferation and disarmament activities. In 1994, the President 

delegated authority for the program to the Secretary of State, who 

subsequently delegated authority for the program to the Under Secretary 

of State for Arms Control and International Security.3

Congress funds NDF annually through the Nonproliferation, Antiterrorism, Demining, and Related Programs appropriations account, 

within the Foreign Operations, Export Financing, and Related Programs 

Appropriations Acts. NDF received $10 million in initial funding for fiscal 

year 1994. Since fiscal year 1994, NDF has received $597 million in total 

appropriations. From fiscal years 2007 through 2012, NDF appropriations 

ranged from a high of $118 million in fiscal year 2009 to a low of $30 

million in fiscal year 2012.

The NDF office, 

within ISN, is responsible for day-to-day management of the program. 

The NDF Director leads the office, which has a staff of 16 people, 

including both State officials and contract employees.

4 According to State, NDF is unusual among 

U.S. foreign assistance programs in that it does not request funding for 

specific activities as part of its annual Congressional Budget Justification.

The NDF Director stated that this helps ensure that NDF has the flexibility 

to respond to nonproliferation and disarmament opportunities as they 

arise, rather than tying NDF funds to particular projects or locations in 

advance.

 

2

Pub. L. No. 102-511, § 504.

3

At the time, the Secretary of State delegated the authority to the Under Secretary of State 

for International Security Affairs, but this position was subsequently renamed the Under 

Secretary of State for Arms Control and International Security. 

4

The fiscal year 2009 amount included $41 million in the original appropriation for the 

fiscal year and an additional $77 million provided in a supplemental appropriation. 

Background
 

Page 4 GAO-13-83 State NDF Program

The FREEDOM Support Act provided NDF with a broad mission to fund 

bilateral and multilateral nonproliferation and disarmament activities and 

annual appropriations bills have consistently granted NDF other key 

authorities. NDF has used its authorities under the FREEDOM Support Act 

to fund a diverse set of projects. Table 1 outlines NDF activities authorized 

by the FREEDOM Support Act and provides examples of the types of 

activities NDF has funded. State officials and NDF program documents 

have characterized NDF’s mission as focused on funding unanticipated or 

unusually difficult projects of high priority to the U.S. government.

Table 1: Authorized NDF Activities under the FREEDOM Support Act

Activities authorized by the FREEDOM Support Act Example of each activity type

1 Support the dismantlement and destruction of nuclear, 

biological, and chemical weapons; their delivery systems; and 

conventional weapons

Identified and eliminated conventional weapons, such as 

man-portable air defense systems and certain rocketpropelled grenades, in Libya after the fall of the Ghadafi 

regime.

2 Support bilateral and multilateral efforts to halt the proliferation 

of nuclear, biological, and chemical weapons; their delivery 

systems; related technologies; and other weapons 

Negotiated and executed the removal of highly enriched 

uranium from Serbia’s closed Vinca Institute to a secure 

facility in Russia where it was converted into standard 

nuclear fuel.

3 Establish programs for safeguarding against the proliferation 

of nuclear, biological, chemical, and other weapons 

Funded the purchase of radiation detection equipment and 

training for 10 countries to assist them in locating, securing, 

and disposing of high-risk radioactive materials.

4 Establish programs for preventing diversion of weaponsrelated scientific and technical expertise to terrorist groups or 

to third countries

Established and equipped a biosecurity and biosafety 

training center in Jordan to train scientists from the Middle 

East and Central Asia on how to safely and securely handle 

dangerous pathogens to prevent their proliferation.

5 Establish science and technology centers for the purpose of 

engaging weapons scientists and engineers (in particular 

those who were previously involved in the design and 

production of nuclear, biological, and chemical weapons) in 

productive, nonmilitary undertakings

Funded the Iraqi International Center for Science and 

Industry to support the civilian employment of Iraqi scientists, 

engineers, and other technicians formerly working in Iraq’s 

weapons of mass destruction programs. 

6 Establish programs for facilitating the conversion of military 

technologies and capabilities and defense industries into 

civilian activities

Removed and destroyed biological and chemical production 

capabilities at a facility in Russia and reconfigured the facility 

to support non-weapons, civilian-use production. 

Source: FREEDOM Support Act and GAO analysis of NDF project documentation.

Figure 1 illustrates the dismantling of a Scud missile as part of an NDFfunded project in Ukraine.5

 

5

The Scud is a short-range, liquid-fueled missile first built by the Soviet Union. 

NDF Authorities
 

Page 5 GAO-13-83 State NDF Program

Figure 1: NDF-Funded Dismantling of a Scud Missile in Ukraine
 

Page 6 GAO-13-83 State NDF Program

In addition to the authorities granted to NDF in the FREEDOM Support 

Act, annual appropriations bills have also consistently provided NDF with 

three key authorities that are designed to increase NDF’s flexibility in 

carrying out nonproliferation and disarmament activities around the globe, 

as opportunities arise. These include the authority to (1) undertake

projects notwithstanding other provisions of law (notwithstanding 

authority); (2) implement projects anywhere in the world or through 

international organizations when it is in the national security interest of the 

United States to do so, notwithstanding provisions of the FREEDOM 

Support Act that limited certain NDF activities to the independent states of 

the former Soviet Union (FSU) (geographic authority); and (3) use funding 

without restriction to fiscal year (no-year budget authority).

State uses a multistep process to review NDF project proposals and 

determine which projects to fund, as shown in figure 2.

Figure 2: NDF Project Review and Approval Process

NDF Project Review and 

Approval Process
 

Page 7 GAO-13-83 State NDF Program

According to NDF officials, NDF does not typically develop its own project 

proposals. Rather, other agencies, such as DOD and DOE, and other 

State offices, such as the Office of Export Control Cooperation, submit 

project proposals. NDF’s Review Panel, which is chaired by the Assistant 

Secretary of State from ISN, reviews these proposals. Two ISN Deputy 

Assistant Secretaries of State and the Assistant Secretaries of State from 

the Bureau of Political-Military Affairs and the Bureau of Arms Control, 

Verification, and Compliance serve as the other voting members on the 

panel. Officials from other U.S. agencies, including DOD, DOE, OMB, the 

Department of Commerce, and the Department of Homeland Security, as 

well as representatives from the National Security Council and U.S. 

intelligence community, also attend panel meetings. After reviewing the 

project proposals, the voting members of the NDF Review Panel make 

recommendations to State’s Under Secretary for Arms Control and 

International Security to approve, deny, or defer projects. In the Review 

Panel meetings, members can also propose modifications, such as 

increasing or decreasing the amount of funding for a project. The Under 

Secretary has the final authority to approve a project. NDF officials stated 

that in certain cases—for example, if a project is particularly urgent—the 

NDF Review Panel may not formally meet to review a proposal before it is 

submitted to the Under Secretary.6 In those cases, NDF instead may 

discuss the proposal with other Review Panel agencies in a different 

venue, such as at a National Security Council meeting.7

After the Under Secretary approves a project, but before work begins, 

State provides a 15-day advance notification to Congress to inform it of 

State’s intent to begin work on the project.8

 

6

According to State officials, even if the Review Panel does not meet, its voting members 

still provide their formal recommendations to the Under Secretary. 

As part of the notification, 

NDF informs Congress of its intent to obligate a specified amount of funds 

on the project. NDF then considers these funds designated for that 

project and not available for use on other projects, unless a subsequent 

notification is made.

7

The National Security Council is the President’s principal forum for considering national 

security and foreign policy matters with his senior national security advisors and cabinet 

officials.

8

Congress, through a provision in annual appropriations acts for Foreign Operations, 

requires such notification for projects not previously justified to Congressional 

Appropriations Committees. For example, Pub. L. No. 112-74, 125 Stat. 1201 and Pub. L. 

No. 107-115, 115 Stat. 2142.
 

Page 8 GAO-13-83 State NDF Program

From fiscal years 1994 through 2012, NDF notified Congress of its intent 

to initiate work on 179 projects. NDF subsequently cancelled 19 of these 

projects after their notification and put an additional project on hold 

because of congressional concerns. As of the end of fiscal year 2012, 

NDF had 33 active projects. NDF also reported that, as of the end of 

fiscal year 2012, it had an additional 42 projects for which work was 

completed or cancelled, and the financial review of the projects was 

finished. In accordance with NDF close-out procedures, NDF is in the 

process of seeking approval from the Under Secretary for Arms Control 

and International Security before officially closing them. 

Since the beginning of fiscal year 2007, NDF has notified Congress of its 

intent to initiate work on a total of 24 projects, with a high of 15 in fiscal 

year 2010 and a low of zero in fiscal year 2011. Figure 3 shows the 

number of congressionally-notified projects from fiscal years 2007 

through 2012.

Figure 3: Congressionally-Notified NDF Projects, Fiscal Years 2007 through 2012

Note: NDF did not initiate work on one of the projects notified in fiscal year 2010 because of 

congressional concerns. 

NDF funding amounts for projects vary significantly. NDF has notified 

Congress of its intent to spend as much as $50 million to as little as 

$179,000 on individual projects initiated since the beginning of fiscal year 

NDF Projects
 

Page 9 GAO-13-83 State NDF Program

2007. The lengths of projects also vary. For example, since the beginning 

of fiscal year 2007, NDF has closed out projects that were completed in 

as little as a few months to more than 9 years. In addition, some projects 

are follow-up projects that build on projects initiated in earlier fiscal years. 

For example, beginning in fiscal year 1998, NDF has undertaken five 

separate projects—the most recent of which was initiated in fiscal year 

2010—to assist the government of Kazakhstan in shutting down a nuclear 

reactor in Aktau.

NDF divides its projects into four categories: (1) destruction and 

conversion, (2) safeguards and verification, (3) enforcement and 

interdiction, and (4) education and training. Since the beginning of fiscal 

year 2007, State has committed the most resources to projects in the 

destruction/conversion category. In fiscal years 2007 through 2012, 39 

percent of NDF funding for new projects went to projects in this category. 

Figure 4 shows a breakdown of funding for NDF among the four project 

categories, as well as administrative expenses, for fiscal years 2007 

through 2012.

Figure 4: NDF Funding by Project Category, Fiscal Years 2007 through 2012

Note: NDF did not fund any projects in the education/training category in fiscal years 2007 through 

2012. 
 

Page 10 GAO-13-83 State NDF Program

NDF has several key authorities that provide it significant operational 

flexibility; however, it has not determined its needed carryover balances 

and it has taken years to close out many of its projects in the absence of 

guidance for closing them. Annual appropriations bills have consistently 

provided NDF with three key authorities that it has used to carry out its 

activities. First, NDF has used its notwithstanding authority to fund 

projects in countries where other U.S. programs are barred from 

operating by U.S. sanctions or other legal restrictions.9 Second, NDF has 

used its geographic authority to fund projects in a range of countries 

around the globe.

10 Third, NDF has used its no-year budget authority to 

carry over balances not designated for specific projects from one year to 

the next.11 However, NDF has not determined appropriate levels for these 

balances, which have increased significantly in the past several years.

Additionally, NDF has taken many years to close some projects where 

work was never started, or was suspended, and has not established 

guidance for determining when inactive projects should be closed out and 

unexpended no-year funds made available for other projects.

Annual appropriations acts have consistently granted NDF 

notwithstanding authority, which allows NDF to undertake projects 

“notwithstanding any other provision of law.” As a result, NDF has the 

ability to fund projects in countries where other U.S. programs are 

generally barred from operating by U.S. legal restrictions. For example, 

when North Korea agreed to the disablement of its Yongbyon nuclear 

reactor in 2007 after progress in diplomatic talks, NDF was able to fund 

the project because of its notwithstanding authority, while other U.S. 

agencies, such as DOD and DOE, could not because various U.S. legal 

restrictions limited the assistance they could provide the country. 

 

9

Notwithstanding authority allows NDF to expend funds, “notwithstanding any other 

provision of law.” This authority allows NDF to fund projects when other forms of U.S. 

assistance may be prohibited by U.S. sanctions or other legal restrictions. 

10The geographic authority granted to NDF in annual appropriations measures provides it 

the ability to fund projects anywhere in the world, when it is deemed to be in the national 

security interest of the United States to do so, notwithstanding provisions of the 

FREEDOM Support Act that limit certain NDF activities to the independent states of the 

FSU. 

11Funds appropriated with no-year budget authority remain available for obligation for an 

indefinite period of time. A no-year appropriation is usually identified by language 

indicating that the appropriation is “to remain available until expended.” 

NDF’s Authorities 

Provide It Significant 

Operational 

Flexibility, but under 

Its No-Year Budget 

Authority, NDF Has 

Not Determined 

Needed Carryover 

Balances

NDF Used Its 

Notwithstanding Authority 

to Implement Several 

Projects Where Laws and 

Regulations Otherwise 

Restricted U.S. Assistance
 

Page 11 GAO-13-83 State NDF Program

According to State officials, NDF’s broad notwithstanding authority is 

uncommon among U.S. government programs. For example, the 2010 

National Defense Authorization Act provided DOD’s Cooperative Threat 

Reduction (CTR) program notwithstanding authority for the first time in 

the program’s history and granted only limited use of the authority.

12

When seeking to use its notwithstanding authority, NDF requests 

approval from the Under Secretary for Arms Control and International 

Security. According to the NDF Director, when NDF was established, 

State decided that NDF’s notwithstanding authority should, as a matter of 

policy, be approved at the Under Secretary level, rather than at a lower 

level.

DOD 

cannot use its notwithstanding authority for more than 10 percent of 

CTR’s appropriation for a given fiscal year and must meet other 

requirements before exercising the authority, such as obtaining 

concurrence from the Secretaries of State and Energy. 

13

Since the beginning of fiscal year 2007, NDF has requested and received 

approval from the Under Secretary to use its notwithstanding authority for 

11 of the 24 projects it initiated. In four cases, NDF identified specific laws 

or regulations it needed to overcome using its notwithstanding authority.

In another case, which involved funding for a multinational exercise, NDF 

stated that it might need to use its notwithstanding authority depending on 

the countries participating in the exercise. In three additional cases, NDF 

stated that it had not identified specific legal restrictions that would 

necessitate using the authority, but made a general request to the Under 

State officials said that NDF typically informs Congress of its 

intent to use the authority as part of the 15-day congressional notification 

process. Although U.S. law does not require that State inform Congress 

of NDF’s use of its notwithstanding authority, the conference report 

accompanying the fiscal year 2012 Consolidated Appropriations Act 

directed the Secretary of State to notify the Committees on Appropriations 

in writing, within 5 days of exercising NDF’s notwithstanding authority. 

The conference report also directed that the notification include a 

justification for the use of the authority.

 

12Pub. L. No. 111-84, §1305. CTR, which is implemented by DOD’s Defense Threat 

Reduction Agency, is designed to assist countries in securing and eliminating their 

weapons of mass destruction and preventing their proliferation.

13State noted that legally, notwithstanding authority applies to NDF funds by the terms of 

the legislation and does not require a formal determination to rely upon this authority.
 

Page 12 GAO-13-83 State NDF Program

Secretary for approval given the sensitive nature of the projects. In the 

final three cases, NDF requested the use of its notwithstanding authority 

for classified projects whose details cannot be publicly reported.

In those cases where NDF requested the use of its notwithstanding 

authority to overcome specific laws or regulations, it identified several 

different legal restrictions it needed to overcome. For example:

• NDF requested the use of its notwithstanding authority to initiate work 

on a project in Libya in fiscal year 2012. Among other things, the 

authority was required to overcome restrictions on U.S. security 

assistance to countries that engage in a consistent pattern of gross 

violations of human rights.14

• In the case of two projects at the Yongbyon site in North Korea, NDF 

requested the use of its notwithstanding authority to, among other 

things, overcome “Glenn Amendment” restrictions within the Arms 

Export Control Act. The Glenn Amendment triggers U.S. sanctions if 

the President determines that a nonnuclear country (as defined by the 

Nuclear Nonproliferation Treaty) has detonated a nuclear explosive 

device.15

• NDF also requested the use of its notwithstanding authority to 

overcome a restriction that the Foreign Assistance Act would have 

imposed on a project in Iraq. The Act restricts U.S. assistance to 

countries that have severed diplomatic relations with the United 

States and which have not entered into a new bilateral assistance 

agreement once diplomatic relations have resumed.

16

In addition to using its notwithstanding authority to bypass restrictions on 

U.S. assistance to particular countries, NDF has in some cases also used 

its notwithstanding authority to overcome laws and regulations pertaining 

to contracting and acquisitions. For example, NDF used its 

notwithstanding authority on some contracts to overcome Federal 

At the time of 

the project, there were concerns regarding the status of the United 

States’ bilateral agreement with Iraq.

 

1422 U.S.C. 2304.

1522 U.S.C. 2799aa-1.

1622 U.S.C. 2370(t).
 

Page 13 GAO-13-83 State NDF Program

Acquisition Regulation (FAR) competition requirements, according to a 

2004 State Inspector General report.17

In addition to competition requirements, some NDF officials stated that 

NDF may use its notwithstanding authority to bypass other types of 

acquisition requirements, such as “Buy America” provisions. For example, 

one NDF official stated that to expedite work on NDF’s project at the 

Yongbyon reactor in North Korea, NDF purchased some of the equipment 

used from China.

Additionally, a 2009 National 

Academies of Science report examining options for strengthening and 

expanding DOD’s CTR program noted that, because of its 

notwithstanding authority, NDF is not subject to contracting requirements, 

including the FAR, which CTR must follow. The report noted that this 

ability may allow NDF to undertake certain projects more quickly and at

less expense than CTR. However, according to State officials, NDF has 

not typically used the program’s notwithstanding authority to bypass 

federal contracting laws and regulations. State officials said that, while 

NDF has almost always relied on sole-source bids, rather than a 

competitive bidding process, it primarily selected contractors to implement 

projects using existing flexibilities in the law and regulations available to 

all agencies. For example, State officials stated that NDF has relied on 

provisions in the FAR that permit sole-source contracts in situations 

where there is an urgent and compelling need.

Since 1994, annual appropriations acts have provided NDF with broad 

geographic authority to fund projects worldwide as nonproliferation and 

disarmament opportunities arise. NDF’s geographic authority allows it to

fund projects outside the states of the FSU if the Under Secretary for 

Arms Control and International Security makes a determination that it is in 

the national security interest of the United States to do so. NDF’s 

authority to fund projects globally since the program’s start in 1994 is in 

contrast to the authorities of some other U.S. nonproliferation programs. 

For example, DOD’s CTR program was not authorized to fund any 

projects outside the FSU until the passage of the Fiscal Year 2004 

Defense Authorization Bill and continued to face various restrictions on 

conducting work outside the FSU until 2007. In addition, as we reported in 

 

17The United States Department of State and the Broadcasting Board of Governors Office 

of the Inspector General, Report of Inspection: Bureau of Nonproliferation, ISP-I-05-50 

(Washington, D.C.: Dec. 2004).

NDF’s Geographic 

Authority Has Allowed It 

to Fund Projects around 

the World
 

Page 14 GAO-13-83 State NDF Program

December 2011, many of DOE’s Defense Nuclear Nonproliferation 

programs, which originated in the early 1990s following the dissolution of 

the Soviet Union, have focused primarily on improving nuclear security in 

Russia.18

Since 1994, NDF has used its geographic authority to fund projects in 

Central and South America, North and Sub-Saharan Africa, Eastern and 

Western Europe, the Balkans, the Middle East, and Asia. As shown in 

figure 5, NDF has funded projects in several different countries since the 

beginning of fiscal year 2007, including Afghanistan, Egypt, Kazakhstan, 

North Korea, and Ukraine, among others. It has also funded a limited 

number of projects in the United States, including the construction of 

training facilities at DOE’s Hazardous Materials Management and 

Emergency Response site in Washington State for the purpose of training 

foreign nationals.

The NDF Director stated that, while NDF has been used to 

supplement projects in the FSU or to fill emergency gaps, its primary 

emphasis has always been on other parts of the world.

 

18GAO, Nuclear Nonproliferation: Action Needed to Address NNSA’s Program 

Management and Coordination Challenges, GAO-12-71 (Washington, D.C: Dec. 14, 

2011). 
 

Page 15 GAO-13-83 State NDF Program

Figure 5: Locations of NDF Projects both Before and After Fiscal Year 2007

Note: Some projects were not associated with a specific location and are not shown on the map. In 

addition, the locations of some projects are classified and not shown. Finally, in some cases, NDF did 

not actually undertake work in a country, but instead provided the country funding to participate in an 

activity, such as a multilateral exercise, in a different location. 
 

Page 16 GAO-13-83 State NDF Program

Over the life of the program, Congress has consistently granted NDF noyear budget authority in annual appropriations bills. This authority makes 

NDF appropriations available for obligation until expended, rather than 

requiring them to be obligated within a particular time period, such as a 

fiscal year. This authority has allowed NDF to carry over balances across 

multiple fiscal years that it has not designated for specific projects. NDF 

considers money to be designated for a specific project and no longer 

available for use on other projects at the point when it notifies Congress 

of its intent to fund the project, unless NDF renotifies the funds for the 

purpose of another project.19

 

19For the purposes of this report, we use the term “notified” to indicate funds that have 

been designated for specific projects. While NDF considers notified funds to be internally 

committed to a project, notified funds may not necessarily have been obligated for that 

project through an act creating a legal liability of the U.S. government for payments for 

goods or services. 

NDF’s carryover balances have increased 

over time and are at historically high levels. Figure 6 provides an 

overview of NDF’s various categories of funding and how NDF 

accumulates carryover balances. In addition, NDF’s no-year budget 

authority allows it to close projects and apply the unexpended funds to 

future projects; however, NDF has sometimes delayed in closing out 

some projects for many years, including projects where no work ever 

occurred or was suspended. Until projects are closed, any unexpended 

project funds are not reported as part of NDF’s carryover balances. As a 

result, NDF’s carryover balance is likely understated.

Under Its No-Year Budget 

Authority, NDF’s Carryover 

Balances Have Reached 

Historically High Levels 

and Are Likely 

Understated Because of 

Delays in Closing Projects
 

Page 17 GAO-13-83 State NDF Program

Figure 6: Overview of NDF Funding Categories and Accumulation of Carryover Balances

NDF’s carryover balances have grown significantly in the past few years 

to historically high levels. NDF’s carryover balance peaked at the end of 

fiscal year 2009 at $122 million in unnotified funds, which were carried 

over into fiscal year 2010 as shown in figure 7. Unnotified funds include 

funds never designated for a project, as well as any unobligated and 

unexpended project funds that once again become available as unnotified 

Carryover Balances Have 

Increased over Time to 

Historically High Levels, but 

NDF Has Not Formally 

Determined Needed Reserve 

Amounts
 

Page 18 GAO-13-83 State NDF Program

funds when a project is closed. Before the end of fiscal year 2009, NDF’s 

balance carried over into the next fiscal year had been $10 million or 

higher three times since the program began in fiscal year 1994 and had 

never been higher than $22 million. NDF’s carryover balance was $86 

million at the end of fiscal year 2012.

Figure 7: NDF Funds Available for Notification, Fiscal Years 1994 through 2013

Note: NDF funds available for notification are those that have not been designated for a particular 

project. New budget authority represents the NDF appropriation amount for the fiscal year plus or 

minus any appropriations adjustments, such as supplemental appropriations. 

a

The new budget authority amount for fiscal year 2013 reflects NDF’s budget request of $30 million as 

NDF has not received its fiscal year 2013 appropriation. 

NDF has not established a formal means of determining the amount of 

money it needs to carry over from year to year to respond to 
 

Page 19 GAO-13-83 State NDF Program

unanticipated nonproliferation and disarmament opportunities.20

In the past several years, increases in NDF’s annual appropriations from 

levels in earlier fiscal years, as well as the initiation of work on a smaller 

number of projects, have contributed to NDF’s increased carryover 

balances. As shown in figure 7 above, NDF’s appropriation was never 

more than $30 million before fiscal year 2005 and was only higher than 

$20 million in one fiscal year. However, from fiscal years 2005 through 

2012, NDF’s appropriation has been $30 million or more every year.

According to the Assistant Secretary of State for International Security 

and Nonproliferation, State management is aware of the growth in NDF’s 

carryover balances and is committed to spending them down as 

opportunities consistent with the mission of NDF arise. 

21

 

20According to NDF officials, the office seeks to keep about $30 million in unnotified 

balances to use as a reserve in the event that unanticipated nonproliferation or 

disarmament opportunities arise. NDF officials noted that this amount was an increase 

from earlier years of the program, when NDF sought to keep approximately $10 million in 

reserve. However, the officials noted that this amount is not a formally established target 

and that the office did not use any particular process to develop it. 

NDF’s appropriation reached a high of $118 million in fiscal year 2009, 

which included $77 million in a supplemental appropriation. NDF also 

initiated a limited number of projects in the past 2 years. For example, it 

initiated only one new project in fiscal year 2012 and no projects in fiscal 

year 2011. In total, NDF notified Congress of 24 projects from fiscal years 

2007 through 2012, compared with 63 projects from fiscal years 2001 

through 2006. In part, NDF officials stated that the decline in the number 

of projects initiated was caused by the creation of other U.S. government 

programs that are now able to fund various activities from their own 

budgets that might have previously required NDF funding. For example, 

NDF officials noted that NDF previously funded certain types of export 

control assistance activities that State’s Export Control and Related 

Border Security Assistance program is now able to fund and implement. 

However, NDF officials noted that while NDF has initiated a smaller 

number of projects in fiscal years 2007 through 2012, many of the 

projects it has initiated have involved significantly larger amounts of 

notified funds than in fiscal years 2001 through 2006. For example, NDF 

had only one project with over $10 million in notified funds in fiscal years 

2001 through 2006, while it had 11 projects with over $10 million in 

notified funds in fiscal years 2007 through 2012.

21NDF’s budget request for fiscal year 2013 was $30 million.
 

Page 20 GAO-13-83 State NDF Program

Other U.S. government programs also receive no-year money and have 

the ability to carry over balances from year to year. We have previously 

reported on efforts by some of these programs to determine appropriate 

carryover balance amounts. For example, in contrast with NDF, DOE’s 

National Nuclear Security Administration has established thresholds for 

the carryover balances of its Defense Nuclear Nonproliferation 

programs.22 These threshold amounts are based upon specified 

percentages of the total funds available to each of the Defense Nuclear 

Nonproliferation programs in a given fiscal year. As we reported in 

December 2011, if programs’ carryover balances exceed these

thresholds, they will trigger additional scrutiny by the National Nuclear 

Security Administration as to whether the carryover balances are 

appropriate to meet program requirements.23

NDF also maintains a significant amount of funds that it notified to 

Congress in the past for projects, but has not yet obligated. Of the 32 

active NDF projects initiated in fiscal year 2010 or earlier, 25 percent of 

the total notified funds have not yet been obligated. This represents more 

than $66 million in notified but unobligated funds. As some NDF projects 

take many years to complete, NDF does not necessarily obligate all funds 

early in their implementation. However, of the 32 active NDF projects 

initiated in fiscal year 2010 or earlier, we identified 5 projects for which 

less than 25 percent of the notified funds had been obligated.

Because NDF’s funding is no-year money, NDF can close projects for 

which it has never started work, or has suspended work, and apply the 

unexpended funds to future projects. However, NDF has not established 

guidance for determining when it should close out inactive projects. As a 

result, NDF funds may be tied up for years in projects where no work is 

occurring, precluding the funds’ use for other projects. For example, NDF 

maintains over $24 million in unobligated funds from a $25 million project 

in North Korea that it notified to Congress in fiscal year 2008. NDF has 

not obligated any of the funds for this project since North Korea expelled 

International Atomic Energy Agency inspectors and U.S. monitors from 

 

22The National Nuclear Security Administration implements more than 20 nonproliferation 

programs worldwide that work to secure nuclear warheads; protect, consolidate, and 

dispose of weapon-useable nuclear materials; and transition weapons of mass destruction 

expertise and infrastructure in partner countries to peaceful purposes, among other things.

23GAO-12-71. 

NDF Has Taken Years to Close 

Some Projects, Delaying 

Unexpended Funds’ 

Availability for New Projects
 

Page 21 GAO-13-83 State NDF Program

the country in April 2009 and work on the project was abruptly halted. 

Additionally, NDF has not yet obligated any of the $750,000 notified in 

fiscal year 2005 for a project to support Proliferation Security Initiative 

interdiction activities. According to NDF officials, no funds have been 

obligated to date because they have not identified any Proliferation 

Security Initiative activities that warranted the use of the funds.

NDF has not developed guidance that establishes time frames for closing 

cancelled or completed projects to ensure that they are closed out in a 

timely manner. NDF data show that in the past, NDF has taken years to 

cancel and close some projects where little or no work ended up 

occurring. Of the 61 projects NDF has closed out since the beginning of 

fiscal year 2007, 16 were cancelled projects for which less than 20 

percent of the notified funds were ever obligated and expended.

24

In addition to cancelled projects, NDF has taken years to close some 

completed projects. For example, of the 61 projects NDF has closed out 

since the beginning of fiscal year 2007, we identified 13 that NDF closed 

out more than 10 years after work on the project was completed and an 

additional 18 that NDF closed out more than 5 years after work on the 

project was completed. These 31 projects had over $3.5 million in notified 

but unexpended funds. The unexpended funds for these cancelled and 

completed projects were eventually made available for use on future 

projects. However, it can take years from the time projects are cancelled 

or completed to the time they are closed out, which can result in an 

understatement of the amount of money NDF has available.

For six 

of these cancelled projects, NDF took more than 10 years to close them 

out from the date they were initially notified to Congress, and for an 

additional 3 projects NDF took more than 5 years to close them out from 

the date they were notified to Congress. In total, these 9 projects had 

over $8.3 million in notified funds that were never expended.

NDF officials noted that prior to 2005, NDF took years to close completed 

and cancelled projects because it lacked the needed staff. However, NDF 

officials stated that since then, the office has hired additional staff and 

developed procedures to help ensure that projects are closed out more 

quickly. Additionally, NDF officials noted that the office has eliminated its 

backlog of projects needing to be closed. However, NDF still has 42 

 

24For all but three of these projects, NDF expended none of the notified funds. 
 

Page 22 GAO-13-83 State NDF Program

projects for which it has completed all financial close-out activities, but is 

in the process of seeking approval from the Under Secretary for Arms 

Control and International Security before closing them and returning the 

unexpended funds to the NDF account.

25 These 42 projects have a total 

of over $19 million in unexpended funds that will be added to NDF’s 

unnotified balances, once they are closed.

State has not conducted a program evaluation of NDF and lacks 

information that would be useful in doing so. A program evaluation is a 

systematic study to assess how well a program is working and that can 

identify lessons learned for future projects. State has developed a new 

policy requiring bureaus to evaluate programs, projects, and activities. To 

comply with this policy, State issued guidance requiring bureaus to submit 

an evaluation plan for fiscal years 2012 through 2014, identifying the 

programs and projects they plan to evaluate. However, ISN, which 

oversees NDF, did not include NDF in its fiscal years 2012 through 2014 

evaluation plan. Moreover, State currently lacks information, such as the 

results of some projects and lessons learned, that could be used to 

conduct a program evaluation of NDF and that would help inform the 

management of the program.

Since NDF became operational in 1994, State has not conducted a 

program evaluation of NDF, according to ISN and NDF officials.26

 

25NDF informs the Under Secretary by memorandum of the completion or proposed 

cancellation of a project. The Under Secretary then approves the closure of the project 

and the return to the NDF account of any unexpended funds that were notified for the 

project. 

Although NDF reported to Congress in its fiscal year 2013 budget 

submission that all of its projects are evaluated in-house, these 

documents are project close-out monitoring reports and not evaluations. 

As State and other organizations have noted, monitoring and evaluations 

are conceptually and operationally different. GAO defines evaluation as 

individual, systematic studies that are conducted periodically or on an asrequired basis to assess how well a program is working, while project 

26While State has never conducted a program evaluation of NDF, NDF has contracted for 

two evaluations of NDF’s financial management system. The first was completed in May 

2009. The second is planned for completion in December 2012.

State Has Not 

Conducted a Program 

Evaluation of NDF 

and Lacks 

Information for 

Conducting an 

Evaluation to Inform 

NDF’s Program 

Management

State Has Not Conducted 

an NDF Program 

Evaluation
 

Page 23 GAO-13-83 State NDF Program

close-out reports consist of formal documentation that indicates 

completion of the project or phase of the project.27

ISN and NDF officials explained that NDF and its projects have never 

been subject to a program evaluation because of the unique nature of 

each project. For example, according to NDF officials, to get one country 

to agree to dismantle its Scud missiles, NDF agreed to pay for that 

country’s armed forces to use a labor-intensive method to dismantle the 

missiles. However, NDF officials also noted that there are common 

features to many projects that can serve as the basis for lessons learned. 

Our analysis of NDF’s project database shows that since NDF’s first 

project in 1994, NDF has implemented a number of similar projects that 

could have been evaluated to determine the lessons learned for use in 

present and future projects. For example, NDF has implemented 11 

destruction and conversion projects involving missiles and rockets, 5 of 

which involved the destruction of Scud missiles. The first of these missile 

destruction and conversion projects took place in 1994 and the latest 

began in 2010. In addition, as noted earlier in this report, NDF has 

implemented at least five projects involving the shutdown of a nuclear 

reactor in Kazakhstan. 

The Government Performance and Results Modernization Act of 201028

strengthened the mandate to evaluate programs, requiring agencies to 

include a discussion of evaluations in their strategic plans and 

performance reports. In part to comply with the requirements of this Act, 

State established a policy in February 2012 to evaluate programs and 

projects. In addition, as we reported in May 2012, according to officials 

from State’s Bureau of International Narcotics and Law Enforcement, the 

policy was established to comply with a June 2009 directive from the 

Secretary of State for systematic evaluation and to promote a culture 

change among program offices.29

 

27For additional information about designing and conducting evaluations, see GAO: 

Designing Evaluations: 2012 Revision, 

According to State officials, the 

February 2012 policy superseded an evaluation policy dating from 

September 2010 that did not fully comply with a recommendation later 

GAO-12-208G (Washington, D.C: Jan. 2012). 

28Pub. L. No. 111-352.

29See GAO, Foreign Police Assistance: Defined Roles and Improved Information Sharing 

Could Enhance Interagency Collaboration, GAO-12-534 (Washington, D.C.: May 9, 2012).

State Has Developed a 

New Evaluation Policy 

Along with Tools to 

Facilitate Evaluations and 

Lessons Learned
 

Page 24 GAO-13-83 State NDF Program

detailed in State’s December 2010 Quadrennial Diplomacy and 

Development Review that State adopt an evaluation framework 

consistent with that of the U.S. Agency for International Development.30

State’s 2012 evaluation policy outlines requirements and provides a 

framework and justification for evaluations of all State programs, including 

both diplomatic and development programs, projects, and activities. For 

example, the policy notes that a robust, coordinated, and targeted 

evaluation policy is essential to State’s ability to measure and monitor 

program performance, document program impact, and identify best 

practices and lessons learned. It also states that such a policy can help 

assess return on investment and provide input for policy, planning, and 

budget decisions.31

State’s evaluation policy assigns a key role to the bureaus and requires 

them to evaluate two to four programs, projects, or activities over a 24-

month period starting in fiscal year 2012 and all large programs, projects, 

and activities at least once in their lifetime or every 5 years, whichever is 

less.32

• requires the bureaus to appoint a coordinator to ensure that the 

bureaus meet the new policy’s requirements;

It also

• requires bureaus to develop and submit a bureau evaluation plan as 

an annex to their multiyear strategic plans, but gives bureaus flexibility 

in determining the specific programs to evaluate, as well as the timing 

and manner of evaluations they will perform; and

 

30Department of State, Leading Through Civilian Power: The First Quadrennial Diplomacy 

and Development Review (Washington, D.C.: 2010). The 2010 Quadrennial Diplomacy 

and Development Review was intended as a sweeping review of State’s and the U.S. 

Agency for International Development’s core missions. While DOD has conducted such 

periodic reviews, this review was the first of its kind undertaken by State.

31The terminology that is used to define the types of program evaluations that can be 

conducted differs among agencies. For example, State’s policy refers to “performance,” 

“impact,” “summative/ex-post,” and “global/regional” evaluations, while GAO-12-208G 

refers to “process,” “outcome,” and “net impact” evaluations.

32State’s policy defines a “large” program, project, or activity in two ways: one whose 

dollar value equals or exceeds the median program, project, or activity size in that bureau, 

or one for which the number of full-time staff exceeds the median number of staff 

associated with similar individual programs, projects, and activities in that bureau.
 

Page 25 GAO-13-83 State NDF Program

• notes that bureaus should integrate evaluation findings into decision 

making about strategies, program priorities, and project design, as 

well as into the planning and budget formulation process.

State’s evaluation policy also draws a clear distinction between 

monitoring and evaluation. State defines monitoring as a continual 

process designed to assess the progress of a program, project, or 

activity. By comparison, evaluations go beyond monitoring to identify the 

underlying factors and forces that affect the implementation process, as 

well as the efficiency, sustainability, and effectiveness of the intervention 

and its outcomes. As our previous work, State, and other organizations 

have noted, evaluations also require a measure of independence. 

According to State, this can be promoted in several ways, including 

entrusting the evaluation to an outside research and evaluation 

organization or fostering a professional culture that emphasizes the need 

for rigorous and independent evaluations.

To complement the new evaluation policy and provide further direction, 

State issued new guidance in March 2012 that describes several types of 

evaluations that bureaus can conduct and outlines data collection 

methods. The March 2012 guidance also defines the information that 

must be included in each bureau evaluation plan. For example, bureaus 

must include in the first plan a list of evaluations to be initiated or 

completed between fiscal years 2012 and 2014. Bureaus are expected to 

update these plans annually, according to State officials.

In addition to the guidance, State has developed or is in the process of 

developing other resources and tools to complement and support the new 

evaluation policy. These include an internal website containing resources 

to assist bureaus with their evaluation responsibilities and the 

establishment of a community of practice where officials can share their 

expertise and discuss evaluation issues.33

 

33State has also taken other steps, such as holding an evaluation conference. According 

to State officials, the agency is also working to establish two weeklong courses on 

evaluations that will be open to all State officials.
 

Page 26 GAO-13-83 State NDF Program

ISN submitted its first bureau evaluation plan in April 2012, but the plan 

did not include any NDF projects. According to ISN officials, the bureau 

had a short amount of time in which to submit its bureau evaluation plan 

and for that reason the plan focused on programs that already had 

projects scheduled for evaluation. After the State evaluation guidance 

was finalized in late March 2012, the bureaus only had 1 month to submit 

their bureau evaluation plans for fiscal years 2012 through 2014, 

according to ISN officials. In canvassing ISN’s five program offices, ISN 

determined that some offices were already planning evaluations for 

certain projects within their programs, according to ISN officials and 

documents. For example, according to the ISN bureau evaluation plan, 

State’s Global Threat Reduction (GTR) Program plans to contract for four 

evaluations during the fiscal years 2012 through 2015 period.34 GTR has 

in the past contracted for evaluations of its projects in Iraq, Ukraine, and 

Russia.

State currently lacks information that would be useful in conducting a 

program evaluation of NDF and in improving the management of its 

program. NDF uses project close-out reports to document its final 

monitoring of a project.35

 

34GTR focuses on front-line states like Iraq, Pakistan, and Yemen. It is intended to reduce 

the threat posed by terrorists or countries of concern seeking to acquire weapons of mass 

destruction. State’s GTR program is distinct from DOE’s Global Threat Reduction 

Initiative, which is implemented by the National Nuclear Security Administration. Other 

program evaluations that ISN has included in its bureau evaluation plan include certain 

projects managed by the Preventing Nuclear Smuggling Program and the Global Initiative 

to Combat Nuclear Terrorism. The Preventing Nuclear Smuggling Program assists 

vulnerable countries in strengthening their capacity to prevent, detect, and respond to 

nuclear and radioactive smuggling incidents. The Global Initiative to Combat Nuclear 

Terrorism is a voluntary group of 85 countries that have committed to strengthening their 

capacity to prevent, detect, and respond to nuclear terrorism. Funding for this initiative 

supports workshops and training activities focusing primarily on nuclear forensics and 

detection.

State’s March 2012 evaluation guidance notes 

the importance of preparing good monitoring reports since these both 

complement evaluations and can provide valuable information for use in 

preparing evaluations. They can also be a key source of information that 

can be used to improve the management of a program, such as the 

35NDF officials have described the project close-out reports as evaluations. However, 

based on various criteria described in appendix I, we determined that the reports better fit 

the standard of a project monitoring report. See appendix I for a fuller explanation of our 

determination. 

ISN Did Not Include NDF 

in Its Fiscal Years 2012 

through 2014 Bureau 

Evaluation Plan

State Currently Lacks 

Information Useful in 

Conducting an NDF 

Program Evaluation and 

Managing NDF’s Program
 

Page 27 GAO-13-83 State NDF Program

results of a project and lessons learned. However, NDF’s project closeout reports did not document information that could be useful to NDF and 

the NDF Review Panel. The reports also varied in content and format.

Project management standards note the importance of documenting 

results in project close-out documents, but not all of the project close-out 

reports that we examined discussed the results of the project.36 Of the 23 

project close-out reports that we examined, 2 did not address project 

results at all. In addition, for the other 21, we found some instances where 

the discussions of results were fairly minimal and other instances where 

the reports did not state whether all intended outcomes or goals had been 

achieved. According to the Project Management Body of Knowledge 

Guide, a recognized standard for project managers, project close-out 

documents or reports should include formal documentation that indicates 

completion of a project, including results.37

Project management standards note the importance of documenting 

project results and entering this information into a database of lessons 

learned. However, 13 of the 23 project close-out reports that we 

examined did not discuss lessons learned. Moreover, NDF officials stated 

that they did not have a database of lessons learned. To document and 

share lessons learned, NDF officials said that they primarily used informal 

mechanisms such as e-mails or face-to-face meetings. The Project 

Management Body of Knowledge Guide notes the importance of 

documenting lessons learned and entering this information into a lessonslearned database for use in future projects. Some agencies that 

implement projects or with an interest in communicating lessons learned 

have formal databases that they use to enter lessons learned and 

communicate this information to project implementers. For example, the 

U.S. Agency for International Development and the U.S. Army Center for 

Moreover, according to NDF 

officials, NDF and the NDF Review Panel consider potential results in 

determining whether to fund future projects.

 

36To conduct our analysis, we reviewed each project close-out report to determine the 

presence of a list of key terms developed based on our analysis of project management 

standards and NDF’s 1994 project suitability guidelines, as well as interviews with NDF 

officials. Appendix I contains a fuller discussion of the methodology we used to produce 

our analysis of NDF project close-out reports. 

37Project Management Institute, A Guide to the Project Management Body of Knowledge, 

Fourth Edition (2008). 

Project Close-Out Reports 

Omitted Project Results, 

Lessons Learned, and Other 

Information
 

Page 28 GAO-13-83 State NDF Program

Lessons Learned have both established lessons-learned databases.38

In addition, the close-out reports often did not address other criteria that 

the NDF Review Panel considers in assessing future projects for NDF 

funding. For example, 11 of the 23 project close-out reports that we 

examined did not discuss cost, and 17 of the 23 did not discuss the 

timeliness of the project. In one instance, the final cost of the project was 

approximately 66 percent under the amount notified to Congress, but the 

close-out report did not provide a reason why this had occurred. Of the 23 

reports we examined, 19 did not discuss the appropriateness of using 

NDF funding for the project and none discussed the project’s return on 

investment.

State Bureau of Budgeting and Planning officials told us that as part of its 

effort to implement the new evaluation policy, State is considering the 

establishment of a lessons-learned database that could include 

information from NDF.

39

Although the 14 project close-out reports written by NDF officials were 

more similar in content and format, the other 9 differed considerably. For 

example, 10 of the 14 reports written by NDF officials had a section 

labeled “summary” or “overview” and 11 of the 14 were in the form of a 

memorandum. The reports written by contractors and others varied 

considerably. One consisted of a two-page letter from the project 

implementer that stated that the report funded by the project had been 

completed, but little else. Another consisted of a PowerPoint presentation 

written by a foreign government that did not provide many details about 

the implementation of the project. NDF officials stated that requiring the 

According to the guidelines promulgated by State when 

NDF was established in 1994, NDF criteria used to assess a project’s 

suitability for NDF funding include the cost and the appropriateness of 

using NDF as a source of funding. In addition, according to NDF officials, 

the NDF Review Panel also considers the project’s return on investment 

and timeliness as part of its criteria. Moreover, according to NDF officials, 

the NDF Review Panel has sometimes modified its initial assessment of a 

project’s cost based on past experience.

 

38The U.S. Agency for International Development implements and manages U.S. foreign 

assistance programs. The U.S. Army’s Center for Lessons Learned collects and analyzes 

data from current and historical sources and produces and disseminates lessons learned 

for commanders and staff. 

39Return on investment is a measure of the benefits gained by implementing a project. 

Project Close-Out Reports Also 

Varied in Content and Format
 

Page 29 GAO-13-83 State NDF Program

use of a standard format in project close-out reports might not always be 

appropriate or useful given the wide variety of projects that NDF funds 

and undertakes. However, it may be difficult to obtain information useful 

to future evaluations from reports that vary so significantly in content and 

format.

Recognizing the need for NDF project managers to prepare a close-out 

report to ensure that information is consistently documented, in 

December 2010, NDF established the expectation that NDF project 

managers produce a project close-out report. NDF also produced a 

project management guide designed to encourage project managers to 

standardize their procedures. The NDF project management guide, which 

according to NDF officials is based on the Project Management Body of 

Knowledge Guide, among other things lists the preparation of a project 

close-out report as one of the steps for closing out a project.40 However, 

NDF officials stated in July 2012 that while project managers are 

expected to write project close-out reports, they are not required to do so.

In addition, NDF officials stated that NDF encourages but does not 

require the use of the project management guide and the guide does not 

detail the information that project managers need to include in their 

reports or specify the report format. Partly in response to our work, NDF 

officials stated that they plan to develop standard operating procedures to 

address the issues we identified in the project close-out reports, which will 

also include a requirement for project managers to identify lessons 

learned. However, as of November 2012, they had not made any 

changes to their procedures.

Over its lifetime, NDF has responded to pressing nonproliferation and 

disarmament needs, helping to address significant threats to international 

security. To support NDF in accomplishing its mission, U.S. law has 

provided NDF with an unusual degree of flexibility in how it manages its 

resources and conducts its work. While the critical nature of NDF’s 

mission provides a strong rationale for such flexibility, it also increases 

the need for State to effectively manage its program resources to ensure 

that NDF is achieving its intended results. However, State has not taken 

 

40While NDF’s project management guide is based on the Project Management Body of 

Knowledge Guide, according to NDF officials, State as a whole has not adopted the use of 

this guide and the guide is not used as a reference in any of State’s project management 

courses. 

Conclusion
 

Page 30 GAO-13-83 State NDF Program

the necessary steps to do so. For example, unlike some programs, NDF 

lacks a formal process for determining how much carryover balance it 

needs to maintain in reserve to meet unanticipated program 

requirements. Without such a process, NDF cannot know to what extent 

its carryover balances, which have increased in the past few years to 

historically high levels, may be exceeding its unanticipated funding needs. 

In addition, NDF has taken years to close some projects, delaying the 

availability of unexpended funds for other projects and likely understating 

NDF’s carryover balances. A methodical process for determining NDF’s 

needed carryover balances and for closing projects could help ensure 

that NDF’s budget requests accurately reflect program needs. 

Additionally, NDF lacks a process to identify and incorporate lessons 

learned into future projects. State has never performed a program 

evaluation of NDF in its 18-year history to determine lessons learned for 

better designing projects that contribute to U.S. nonproliferation goals. 

State has implemented a new evaluation policy that could encourage the 

bureaus to more rigorously rationalize and prioritize their resources over 

time and identify and incorporate lessons learned. Nonetheless, State is 

not including NDF among the programs to be evaluated during fiscal 

years 2012 through 2014. Finally, NDF’s project close-out reports could 

provide useful information to inform future program evaluations’ 

identification of lessons learned that could be systematically incorporated 

into future projects.

To more effectively manage NDF’s resources, increase program 

accountability, and ensure that NDF has the information necessary to 

improve program performance, we recommend that the Secretary of 

State take the following four actions:

• direct NDF to develop a methodology for determining the amount of 

reserves that it should carry over annually to meet program 

requirements to address unanticipated nonproliferation and 

disarmament opportunities;

• direct NDF to develop guidance for determining when inactive NDF 

projects should be closed and the remaining, unexpended funds 

made available for use on other projects;

• direct ISN and NDF to periodically and systematically conduct and 

document program evaluations of NDF;

Recommendations for 

Executive Action
 

Page 31 GAO-13-83 State NDF Program

• direct NDF to revise its project management guide to establish 

requirements for project managers’ close-out reports to include 

information useful for improving the management of NDF projects.

We provided a draft of our report to DOD, DOE, OMB, and State for their 

review and comment. DOD and OMB did not provide comments. State 

provided written comments, which we have reprinted in appendix II. State 

concurred with all four of our recommendations and identified several 

actions it intends to take in response to the recommendations. For 

example, State said that it will direct NDF to develop a methodology that 

the NDF Review Panel can then use to make an annual recommendation 

on the appropriate level of carryover balances for the next fiscal year to 

the Under Secretary for Arms Control and International Security. State 

also said that NDF has begun implementing the recommendation to 

revise its project management guidance to establish requirements for 

close-out reports, by creating a standard operating procedure for these 

reports. State and DOE provided technical comments, which we 

incorporated in the report, as appropriate. 

We are sending copies of this report to interested congressional 

committees, the secretaries and agency heads of the departments 

addressed in this report, and other interested parties. In addition, the 

report is available at no charge on the GAO website at 

http://www.gao.gov. 

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

me at (202) 512-9601 or melitot@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.

Sincerely yours,

Thomas Melito

Director

International Affairs and Trade

Agency Comments 

and Our Evaluation
Appendix I: Scope and Methodology

Page 32 GAO-13-83 State NDF Program

This report examines (1) the Department of State’s (State) use of 

Nonproliferation and Disarmament Fund (NDF) authorities in developing 

and implementing NDF projects and (2) the extent to which State has 

conducted a program evaluation of NDF and used this information to 

improve program performance.

To assess how State has used NDF’s authorities in developing and 

implementing NDF projects, we obtained program-wide and project-level 

data from NDF’s Financial and Information Management System (FIMS) 

for fiscal years 1994 through 2012. To assess the reliability of data in 

FIMS, we reviewed NDF documentation on the system, reviewed 

previous audits that assessed the reliability of FIMS data, compared FIMS 

data to data from other sources to confirm FIMS data’s accuracy, and 

interviewed cognizant State officials. To gain additional information on the 

reliability of data in FIMS, we met with a private contractor conducting a 

review for NDF under the supervision of the State’s Office of the Inspector 

General. The scope of the contractor’s work included a review of the 

reliability of FIMS data. On the basis of the information we obtained, we 

determined that the FIMS data were sufficiently reliable for our purposes. 

We analyzed NDF program-wide data to determine program 

appropriations, commitments, obligations, and carryover balances for 

fiscal years 1994 through 2012. We analyzed NDF project data to 

determine project funding amounts, locations, objectives, and time frames 

for fiscal years 1994 and 2012. Additionally, we reviewed NDF project 

documentation including project proposals, approval memos, and 

congressional notifications, for all NDF projects initiated since the 

beginning of fiscal year 2007 to assess the types of projects NDF has 

funded and how it used its authorities in developing and implementing 

these projects. To gain additional information on NDF projects, we also 

reviewed State press releases, speeches by State officials, and fact 

sheets describing NDF activities. To identify NDF’s key legal authorities, 

we reviewed relevant laws and regulations, including the FREEDOM 

Support Act and NDF appropriations legislation for fiscal years 1994 

through 2012. Additionally, we examined congressional committee and 

conference reports from 1999 through 2012 to identify relevant 

congressional guidance regarding NDF. We also reviewed key NDF 

documents discussing the program’s authorities, including the 1994 

memorandum pursuant to the FREEDOM Support Act establishing the 

program and the accompanying NDF Guidelines. To gather additional 

information on NDF’s authorities and how it develops and implements 

projects, we conducted a series of interviews with NDF officials and also 

met with officials from other agencies that proposed or implemented NDF 

projects, including the Departments of Defense and Energy. We also 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 33 GAO-13-83 State NDF Program

interviewed officials from the Office of Management and Budget to gain 

additional information on NDF’s budget planning process. Finally, we 

reviewed previous GAO reports, as well as reports by the State Inspector 

General, the Congressional Research Service, and the National 

Academies of Science, to identify relevant findings regarding NDF and 

related U.S. nonproliferation and disarmament programs.

To assess the extent to which State has evaluated NDF and used this 

information to improve program performance, we interviewed State 

officials with the Bureaus of International Security and Nonproliferation 

(ISN) and Budgeting and Planning. We also obtained copies of State’s 

February 2012 evaluation policy and March 2012 evaluation guidance, as 

well as a copy of ISN’s April 2012 bureau evaluation plan. NDF officials 

described their project close-out reports as evaluations, but based on our 

discussion with State ISN and Budgeting and Planning officials, our 

review of GAO reports discussing evaluations, and State’s February 2012 

evaluation policy, we determined that NDF’s project close-out reports fit 

more closely the standard of a monitoring report. GAO defines 

evaluations as individual, systematic studies that are conducted 

periodically or on an as-required basis to assess how well a program is 

working. State’s evaluation policy notes that in addition to assessing the 

progress of a program, project, or activity, evaluations go beyond 

monitoring to identify the underlying factors and forces that affect the 

implementation process, as well as the efficiency, sustainability, and 

effectiveness of the program or project and its outcomes. As such, State’s 

policy draws a clear distinction between evaluation and monitoring. As 

previous GAO reports, State, and other organizations have noted, 

evaluations require a measure of independence, which can be promoted 

in several ways, including entrusting the evaluation to an outside research 

and evaluation organization or fostering a professional culture that 

emphasizes the need for rigorous and independent evaluations. By 

comparison, State defines monitoring as a continual process designed to 

assess the progress of a program, project, or activity. The Project 

Management Body of Knowledge Guide1

 

1

The Project Management Body of Knowledge Guide is a product of the Project 

Management Institute and is a recognized standard for the project management 

profession. 

notes that project close-out 

documentation consists of formal documentation indicating the 

completion of a project or phase of a project. For all these reasons, on the 

basis of our analysis of NDF’s project close-out reports, we made the 
Appendix I: Scope and Methodology

Page 34 GAO-13-83 State NDF Program

determination that NDF’s project close-out reports better fit the standard 

of a monitoring report than an evaluation. While project close-out reports 

serve a different purpose from evaluations, based on our review of the 

Project Management Body of Knowledge Guide and NDF’s Project 

Management Guide, we determined that we could assess the project 

close-out reports to determine their usefulness in enabling NDF to 

improve its management of the program. For this purpose, we obtained a 

judgmental sample of 23 project close-out reports—14 of which we 

selected and 9 of which State selected. In selecting our sample, we chose 

only to consider projects that NDF had closed out since the beginning of 

fiscal year 2007—of which there were 61—in order to ensure that all 

close-out documentation was completed for the projects. Our selection 

criteria for our sample included project cost, location, and type. For 

example, we selected a variety of projects from all four categories of 

projects that NDF funds—destruction and conversion, safeguards and 

verification, enforcement and interdiction, and education and training.

State selected its projects using similar criteria; however, State did not 

limit itself to projects that were closed out. In some cases, State selected 

projects where work was completed, but the project was not yet officially 

closed out. In reviewing the documentation for the projects State 

selected, we determined that these projects were broadly similar to the 

ones that we selected and the inclusion of these projects in our analysis 

did not alter our overall findings or compromise the independence of our 

work. To conduct our analysis of the close-out reports, we developed a 

list of key terms, such as “results,” “completion,” and “lessons learned.” 

Our inclusion of these terms was based on our analysis of project 

management standards, which note the importance of the project closeout process in the project management cycle and the importance of 

obtaining information about the results of the project and lessons learned.

We also included other terms such as “cost,” “timeliness,” “on time,” 

“return on investment,” and “appropriateness of using NDF funding.” We 

included these terms because NDF officials told us that NDF and the NDF 

Review Panel include these criteria in determining a project’s suitability 

for NDF funding. Because NDF does not have any requirement to use a 

standard terminology in its reports, we used a dictionary to obtain other 

synonyms of these terms as well. We examined each of the project closeout reports to determine the presence of these key terms. We also 

examined each of the project close-out reports to determine the author, 

content, and format. We did this on the basis of discussions with NDF 

officials, who told us that they had established an expectation that NDF 

project managers complete a project close-out report and had developed 

a project manager’s guide that contained a checklist. While NDF does not 

have a requirement for project reports to be written in a standard format, 
Appendix I: Scope and Methodology

Page 35 GAO-13-83 State NDF Program

we determined that the close-out reports that we had examined varied 

widely in their content and format and concluded that such variety could 

make it more difficult for evaluators to extract key information from these 

reports. After completing our initial review, the lead analyst submitted the 

results of his work and the methodology used to two additional levels of 

review. These reviewers were asked to validate the methodology and 

results. The sample of 23 project close-out reports cannot be generalized 

to the entire population of NDF project reports for the period in our review. 

We also reviewed NDF’s Project Management Guide to determine the 

extent to which NDF has established specific requirements or guidance 

regarding how project close-out reporting should be conducted. To obtain 

the list of 11 similar missile destruction and conversion related projects, 

we conducted a word search of NDF’s projects using the key terms 

“missiles” and “rockets.” 

We conducted this performance audit from March 2012 through 

November 2012 in accordance with generally accepted government 

auditing standards. These 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.
Appendix II: Comments from the Department 

of State

Page 36 GAO-13-83 State NDF Program

Appendix II: Comments from the Department 

of State
Appendix II: Comments from the Department 

of State

Page 37 GAO-13-83 State NDF Program
Appendix II: Comments from the Department 

of State

Page 38 GAO-13-83 State NDF Program
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 39 GAO-13-83 State NDF Program

Thomas Melito, (202) 512-9601 or melitot@gao.gov

In addition to the contact named above, the following staff made key 

contributions to this report: Jeff Phillips, Assistant Director; Lynn Cothern; 

Martin De Alteriis; Mark Dowling; José M. Peña, III; and Ryan Vaughan.

Etana Finkler and Jeremy Sebest provided graphics support and Debbie 

Chung provided editorial assistance. Julie Hirshen and Julia Jebo Grant 

also provided additional technical assistance.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(320899)
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