United States General Accounting Office

GAO Report to Congressional Requesters

June 1995 WEAPONS OF MASS

DESTRUCTION

Reducing the Threat

From the Former

Soviet Union: An

Update

GAO/NSIAD-95-165

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-260438 

June 9, 1995

The Honorable Floyd Spence

Chairman

The Honorable Ronald Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

The Honorable John Kasich

Chairman

Committee on the Budget

House of Representatives

As you know, Congress has had an ongoing interest in the effectiveness of

U.S. efforts to reduce the threat posed by weapons of mass destruction in

the former Soviet Union (FSU). In response to your requests, we have

assessed the Cooperative Threat Reduction (CTR) program’s

• planning and funding status and

• recent progress in addressing CTR objectives in the FSU, that is, the safe and

secure elimination of nuclear, chemical, and other weapons of mass

destruction (including missiles and other strategic delivery vehicles);

improving controls over nuclear weapons and materials; and promoting

demilitarization projects.

This letter summarizes our findings, which are described in greater detail

in appendixes I through IV.

Background In 1991, Congress authorized the Department of Defense (DOD) to establish

a CTR program to help FSU states (1) destroy weapons of mass destruction,

(2) store and transport those weapons in connection with their

destruction, and (3) reduce the risk of proliferation. Subsequently,

Congress directed DOD to address these three objectives on a priority

basis, added new objectives (e.g., promoting FSU defense conversion), and

approved use of up to $1.25 billion in fiscal years 1992 through 1995

toward achieving CTR objectives. DOD plans to request a total of

$735 million for fiscal years 1996 and 1997.

To accomplish its CTR objectives, DOD has launched projects under 38

implementing agreements with Russia, Ukraine, Belarus, and Kazakhstan.

Page 1 GAO/NSIAD-95-165 CTR: An Update
B-260438 

Of its 1992-97 CTR funds, DOD plans to use about half to help dismantle and

destroy strategic nuclear delivery vehicles and chemical weapons, roughly

one quarter to improve FSU controls over nuclear weapons and materials,

and almost one-fifth to help demilitarization of FSU defense activities. DOD

provides goods and services, rather than direct cash payments. DOD must

notify Congress of its intention to obligate funds for specific CTR projects

15 days before actually obligating the funds.

We have issued a series of reports concerning the CTR program over the

past 3 years. Most recently, in October 1994, we reported that although the

program had initiated numerous projects to address a wide array of

threats, DOD had not estimated total requirements for achieving program

objectives and that the prognosis for achieving the program’s objectives

varied widely.1

 We also reported that DOD had yet to begin auditing FSU use

of CTR aid. We recommended that the Secretary of Defense institute a

long-term planning process to help DOD allocate CTR funds among

competing demands and to guide preparation of annual budgets. Congress

subsequently required DOD to estimate total U.S. expenditures required to

achieve CTR objectives, prepare a multiyear CTR program plan, and report

on how it will determine that CTR aid is being used for intended purposes.

Results in Brief In some areas, the CTR program has made progress over the past year and

its long-term prognosis for achieving its objectives may be promising. The

program has played an important role in facilitating Ukraine’s weapons

dismantlement efforts and the executive branch believes that the promise

of CTR aid has been a significant factor in the political decisions of the

recipient states to begin dismantling weapons of mass destruction.

Nevertheless, the overall specific material impact of CTR assistance

provided to date has been limited and the program must overcome

numerous challenges and problems to realize its long-term objectives.2

DOD has made progress over the past year in planning the CTR program and

in obligating and expending funds for CTR projects. DOD has developed its

first comprehensive multiyear plan for the CTR program. After a slow start

in preceding years, DOD has more than doubled program obligations and

tripled program expenditures over the past 11 months. The value of CTR

work actually performed exceeds reported expenditure levels and

1

Weapons of Mass Destruction: Reducing the Threat From the Former Soviet Union

(GAO/NSIAD-95-7), Oct. 6, 1994.

2

In this report, we use the term specific material impact to mean the actual use of this assistance to

address CTR objectives.

Page 2 GAO/NSIAD-95-165 CTR: An Update
B-260438 

program managers are adjusting their reporting system to more accurately

reflect the value of work performed. Also, DOD has recently made some

initial progress in conducting audits and examinations in FSU states

receiving CTR funds.

The specific material impact of actual CTR assistance provided to date has

been limited—in part because (1) several key projects, such as a fissile

material storage facility, are still in their early stages and cannot be

expected to have a significant material impact for several years and

(2) deliveries of some CTR aid did not begin until relatively recently. Some

CTR projects appear to have already had a specific material impact. For

example, CTR aid has facilitated the return of hundreds of nuclear

warheads from Ukraine to Russia.

The program’s long-term prospects may be more promising, but problems

and challenges remain. For example, CTR aid should allow Ukraine to meet

its Strategic Arms Reduction Treaty (START) obligations. On the other hand,

difficulties in working with the Russians in resolving key issues have

slowed progress on several projects that could have major long-term

significance. For example, the United States and Russia have yet to agree

on the applicability of a technology to be used in a chemical weapons

destruction facility and may not do so until midway through fiscal year

1996. This uncertainty raises questions as to the program’s need for the

$104 million it is requesting in fiscal year 1996, in part, to begin designing

and constructing the facility. If the United States and Russia agree on the

applicability of a technology by March 1996, as scheduled, it appears that

the program may be unable to obligate about $34 million in funds in fiscal

year 1996. Moreover, even if the facility were to be completed on schedule,

uncertainties concerning resources, schedules, and costs would

compromise Russia’s ability to destroy its chemical weapons stockpile in

compliance with the Chemical Weapon Convention’s timetables if the

Convention enters into force in 1996 (see app. II).

Matters for

Congressional

Consideration

Congress may wish to consider reducing the CTR program’s fiscal year 1996

request for $104 million for support to Russian chemical weapons

destruction efforts by about $34 million because of uncertainties regarding

the expenditure. In addition, Congress may wish to consider withholding

approval to obligate any remaining funds designated for the design or

construction of elements of a chemical weapons destruction facility until

the United States and Russia have agreed on the results of the joint

evaluation study concerning applicability of a destruction technology.

Page 3 GAO/NSIAD-95-165 CTR: An Update
B-260438 

Agency Comments

and Our Evaluation

DOD and the Department of State, in objecting to our finding that the

material impact to date of CTR projects had been limited, stated that we

had overlooked the CTR program’s political impact and leverage in

ensuring that FSU states undertake weapons elimination programs and in

obtaining Ukrainian, Belarussian, and Kazakhstani agreement to become

non-nuclear weapons states. We do not dispute this political dimension to

the CTR program, but we believe that DOD and State’s comments stem from

a misunderstanding of the purpose of our report. As requested, our report,

the latest in a series of our assessments of the CTR program, focuses on the

material impact of CTR projects over the past year in addressing the threats

posed by FSU weapons of mass destruction and on the prospects for such

effects in the future.

DOD further commented that we had underestimated the role of the

material assistance provided to date and provided several examples in

support of this comment. We have added some of these examples to our

report. However, DOD also cited benefits of deliveries of support

equipment to Ukraine and armored protective blankets to Russia. Our

draft specifically cited the impact of CTR deliveries to Ukraine and Russian

use of armored blankets in withdrawing warheads from Ukraine. DOD

further stated that Russia is “today” using U.S.-supplied guillotine shears to

cut up bombers. These shears have not yet been used and are not

expected to be used until July 1995.

DOD stated that numerous tangible reductions in the threat to the United

States have been achieved “through a combination of leverage provided by

the CTR program and direct material assistance.” However, the examples

that DOD provides do not distinguish between reductions that may be

attributed to political impacts since the Soviet Union’s collapse in

December 1991 and those that have resulted from the delivery of CTR aid.

For example, DOD states that missiles containing 2,825 warheads have been

deactivated since the Soviet collapse but does not indicate how many of

these were deactivated through the direct use of CTR

assistance—assistance which only began arriving in mid-1993. Similarly,

DOD states that approximately 630 strategic launchers and bombers have

been eliminated since the Soviet collapse. However, Russia had eliminated

more than 400 of these by July 1994 before receiving CTR delivery vehicle

elimination aid.

DOD’s comments imply that every missile and every warhead deactivated in

the former Soviet Union since December 1991 can be attributed to the CTR

program. DOD does not provide a clear accounting as to how and to what

Page 4 GAO/NSIAD-95-165 CTR: An Update
B-260438 

extent CTR hardware has been used by the FSU states to eliminate a specific

number of systems. While such an accounting may not be the only

standard that should be used to assess the CTR program, it should at least

be one of the key criteria employed in reviewing the program’s progress.

Although we have asked it to provide support for the material impact of

CTR aid in dismantling specific numbers of systems, DOD has not done so.

DOD officials recently informed us that it may be impossible to determine

this impact in terms of specific numbers of systems.

DOD and the Department of State objected to our matters for congressional

consideration. Both agencies asserted that we were incorrect in stating

that the United States and Russia had not yet agreed upon a technology for

destroying chemical weapons. However, as DOD indicates in its comments,

Russia has selected a technology that the United States would not have

recommended—an unproven technology that the United States is now

attempting to validate.

DOD, the Department of State, and the Department of Energy also provided

technical clarifications, which we have incorporated in our report. The

comments of DOD, State, and Energy are presented in their entirety in

appendixes VII, VIII, and IX, along with our evaluations of them.

Scope and

Methodology

To assess the CTR program’s planning and recent progress, we reviewed

documents and met with officials from DOD, the Department of Energy,

and the Department of State, as well as with officials from the Arms

Control and Disarmament Agency, Defense Enterprise Fund, the Russian

government and industry, Ukrainian government and industry, and a

variety of U.S. contractors involved in the CTR program. We also visited

selected CTR projects in Russia and Ukraine and discussed program

implementation with assistance recipients and U.S. officials on site. To

determine the funding status of the program, we obtained specific data on

funding obligations, disbursements and work performed from the Defense

Nuclear Agency that implements the CTR program. We conducted our

review between January and June 1995 in accordance with generally

accepted government auditing standards.

Page 5 GAO/NSIAD-95-165 CTR: An Update
B-260438 

We are planning to send copies of this report to other appropriate

congressional committees; the Secretaries of Defense, Energy, and State;

the Director of the Arms Control and Disarmament Agency; and other

interested parties. Copies will also be made available to others upon

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

questions concerning this report. Major contributors to this report are

listed in appendix X.

Joseph E. Kelley

Director-in-Charge

International Affairs Issues

Page 6 GAO/NSIAD-95-165 CTR: An Update
Page 7 GAO/NSIAD-95-165 CTR: An Update
Contents

Letter 1

Appendix I 

Improvements in

Planning and Funding

10

Appendix II 

Destruction and

Dismantlement

Projects

12

Appendix III 

Control Over Nuclear

Weapons and

Materials

20

Appendix IV 

Demilitarization

27

Appendix V 

Funding for the CTR

Program (Fiscal Years

1992-95)

34

Appendix VI 

Work Performed on

Selected CTR Projects

(Fiscal Years 1992-95)

36

Page 8 GAO/NSIAD-95-165 CTR: An Update
Contents

Appendix VII 

Comments From the

Department of

Defense

37

Appendix VIII 

Comments From the

Department of State

61

Appendix IX 

Comments From the

Department of Energy

74

Appendix X 

Major Contributors to

This Report

78

Abbreviations

CTR Cooperative Threat Reduction

DOD Department of Defense

FSU former Soviet Union

GAN Gosatomnadzor

IAEA International Atomic Energy Agency

ICBM Inter Continental Ballistic Missile

MINATOM Russian Ministry of Atomic Energy

START Strategic Arms Reduction Treaty

Page 9 GAO/NSIAD-95-165 CTR: An Update
Appendix I 

Improvements in Planning and Funding

The Department of Defense (DOD) has made progress in Cooperative

Threat Reduction (CTR) program planning, and in obligating and disbursing

CTR funds since our last review of the program. It has recently made

progress in auditing and examining the aid that it has provided to the

former Soviet Union (FSU).

A new program office, established in May 1994 under the Under Secretary

of Defense for Acquisition and Technology to oversee program

implementation, drafted the CTR program’s first multiyear plan in response

to a congressional directive. The plan (which is classified) is to be

reviewed and revised annually and is to be used to guide the program

through its termination in 2001.1

The CTR program has more than doubled the level of obligated

funds—increasing from the June 1994 level of $223 million cited in our last

report to almost $599 million as of May 8, 1995 (see app. V). The CTR office

predicts that DOD will obligate over $800 million by the end of fiscal year

1995.

The CTR program has also made progress in disbursing funds since our last

report. Disbursements have more than tripled from the June 1994 level of

$49.5 million to almost $177 million as of May 8, 1995. The largest

disbursements were made for strategic offensive arms elimination projects

in Russia and Ukraine, the International Science and Technology Center in

Moscow, Russian rail car security enhancements, and the design of a

Russian fissile material storage facility.

However, we have found that these disbursement figures significantly

understate the value of CTR work actually performed to date. We asked

DOD’s CTR program managers to contact contractors for 18 projects

(representing 85 percent of the program’s then-current budget) and

determine the cost of work actually performed but not yet recorded by

DOD as of March 1, 1995. We found that the value of the actual work

performed on these 18 was $205.7 million—almost double the value of the

disbursements reported for them as of March 1, 1995 (see app. VI). The

difference reflects the substantial period of time separating the

performance of the work and DOD’s payment for the work. The CTR

program is now developing a data collection system that will include

monthly reporting requirements for this kind of data.

1

We are currently reviewing the plan for the Committee on the Budget, House of Representatives.

Page 10 GAO/NSIAD-95-165 CTR: An Update
Appendix I 

Improvements in Planning and Funding

DOD has made arrangements with the Departments of State, Energy, and

Commerce to streamline the program by transferring nine projects,

beginning in fiscal year 1996. The Department of State will assume

responsibility for the International Science and Technology Center and,

with the Department of Commerce, for projects aimed at improving export

controls in four FSU states. Projects aimed at improving nuclear materials

controls and accountancy in three FSU states will be transferred to the

Department of Energy.2

DOD has recently made some initial progress in conducting audits and

examinations of CTR aid to ensure that the aid is being used for the

purposes intended. While CTR agreements with the FSU states provide the

United States with the right to conduct such audits and examinations,

Russia and, later, Ukraine raised concerns regarding implementing

procedures that required some months to resolve. On May 19, 1995, DOD

completed an audit and examination of rail car conversion kits in Russia.3

DOD has also scheduled a June 1995 audit in Ukraine and has notified

Kazakhstan of plans for a July 1995 audit. In January 1995, DOD completed

an audit and examination of a continuous communications satellite link in

Belarus.

On May 31, 1995, DOD provided Congress with its long-overdue legislatively

mandated report on U.S. efforts to ensure that CTR aid can be accounted

for and is being used for intended purposes. We will provide Congress

with our assessment of the DOD report, as required by law.4

2

In our report entitled Former Soviet Union: U.S. Bilateral Program Lacks Effective Coordination

(GAO/NSIAD-95-10, Feb. 7, 1995), we reported that the executive branch has had difficulty in

coordinating all of its FSU assistance programs. We are currently evaluating several recent executive

branch actions to improve such coordination. According to the Department of State, an interagency

working group will coordinate former CTR projects. The Departments of State and Energy have

prepared multiyear plans concerning CTR projects being transferred to them.

3

DOD also conducted a financial audit of the International Science and Technology Center in Moscow

in March 1995.

4

Section 1203 of the National Defense Authorization Act for fiscal year 1995 required DOD to provide

the report to Congress by January 5, 1995, and calls for our assessment of the DOD report.

Page 11 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

To date, the material impact of aid actually delivered by the CTR program’s

destruction and dismantlement projects has generally been limited,

although the program has succeeded in facilitating the deactivation of

strategic systems in Ukraine. While Ukrainian dismantlement progress

appears to be dependent on CTR aid, Russia had moved ahead of its

Strategic Arms Reduction Treaty I (START)1

 schedule before it received

substantial CTR aid. CTR aid has not yet resulted in the destruction of any

Russian chemical weapons and efforts to help plan eventual Russian

chemical weapons destruction have been hampered by numerous delays.

Executive branch agencies credit the CTR program with having had a very

significant impact on the political decisions of FSU states to begin

eliminating thousands of strategic nuclear delivery vehicles and chemical

weapons. They state that the CTR program’s impact is therefore greater

than suggested by focusing on the actual material impact of CTR aid

delivered to date.

The long-term prospects of the CTR program’s destruction and

dismantlement projects may be brighter than their limited material impact

to date might indicate. CTR aid to Russian efforts to eliminate missile fuel

could speed the pace of Russian dismantlement efforts. A small

U.S.-funded chemical destruction facility may help spur the Russian

program, although even this facility will not be nearly sufficient to ensure

Russian compliance with the Chemical Weapons Convention.

Strategic Offensive Arms

Elimination

The CTR program’s efforts to destroy and dismantle strategic offensive

arms are focused on nuclear delivery systems, such as missiles, missile

silos, ballistic missile submarines, and heavy bombers. Russia has

informed the United States that it does not need U.S. aid in dismantling the

nuclear warheads removed from these systems.2

 We reported last year that

the impact of CTR strategic offensive arms elimination assistance was

likely to vary from one FSU republic to another.

1

START I limits the FSU to 1,600 delivery vehicles (i.e. bombers, submarine missile launchers, and

missile silos) and 6,000 warheads no later than the year 2001. The, as yet, unratified START II treaty

further lowers these limits and bans multiple re-entry vehicle intercontinental ballistic missiles. The

United States and Russia are to meet START II limits by 2003, unless the United States helps finance

Russia’s dismantlement efforts. If so, Russia would met START II limits by the end of 2000.

2

According to DOD, France is providing Russia with machine tools to help dismantle warheads. French

dismantlement tool aid is valued at $5 million.

Page 12 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

Russia The material impact to date of strategic delivery vehicle elimination aid

actually delivered to Russia appears to have been limited. DOD, in

commenting on a draft of this report, stated that the CTR program has had

important political and material impacts in advancing Russia’s

dismantlement effort—noting, for example, that the CTR program had

contributed to the elimination of approximately 630 strategic launchers

and bombers since the Soviet Union’s 1991 collapse. However, in and of

itself, the material impact of the CTR strategic delivery vehicle elimination

aid provided to date is less than DOD’s comment would suggest, since

Russia had eliminated over 400 of these 630 launchers prior to initial

deliveries of this aid.3

Although Russia had succeeded in eliminating sufficient launchers to meet

its START I delivery vehicle limit by April 1995,4

 Russian officials told us

that their resources are strained by delivery vehicle dismantlement efforts

and that they lack adequate amounts of advanced technology for some

dismantlement procedures. Russia must transport and destroy thousands

of metric tons of liquid rocket propellant and, for the first time, dispose of

large quantities of solid rocket fuel. Russian officials emphasized that

Russia would need the assistance even without implementation of 

START II. They told us that rocket fuel transportation and disposition were

the most crucial bottlenecks in their meeting treaty obligations and that

such difficulties had forced them to suspend dismantlement of liquid

fueled SS-18 missiles in Kazakhstan for 3 months. The CTR program is

providing equipment to safely transport and temporarily store liquid

rocket fuel from dismantled missiles. DOD has also awarded a contract to

dispose of the liquid fuel5

 (which has been delayed by a bid protest).

Russian officials told us that more CTR assistance will be needed to

dismantle solid rocket motors and dispose of the fuel.

While Russia has already met its START I delivery vehicle limit, it has not

yet met its START I warhead limit and its START II limits. According to DOD,

CTR assistance will help Russia meet its START I and II obligations by 2001, 

2 years ahead of schedule. DOD has agreed to provide Russia with

$150 million for delivery vehicle dismantlement, including $20 million for

3

Our prior CTR work reveals that, according to Russian officials, Russia eliminated over 400 launchers

by July 1994. CTR dismantlement assistance deliveries to Russia did not begin until September 1994.

Moreover, not all delivered CTR assistance has yet been put into operation. For example, U.S.-supplied

guillotine shears have not yet cut up any Russian bombers, although Russia has used lighter U.S.

equipment to strip such aircraft.

4

We reported in October 1994 that Russia had the means to eliminate its delivery vehicles in

compliance with START I obligations.

5

Russia rejected the U.S. incineration method for disposing of such fuel.

Page 13 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

solid rocket motor and fuel disposition. As of May 8, 1995, CTR program

officials had obligated $112 million and disbursed almost $20 million for

dismantlement projects in Russia. As of March 1995, the value of work

performed totaled $56 million. About 40 percent of the CTR-provided

equipment has been delivered.

The CTR budget estimate includes $95 million over the next 2 years to

further accelerate Russian dismantlement efforts and encourage Russian

ratification of the START II agreement. DOD is also considering providing

about $145 million in dismantlement assistance. Of the proposed

$145 million, roughly half would be used to help dispose of solid rocket

motors and fuel. The remaining assistance would be used to dispose of

liquid fuel and support destruction of delivery vehicles and launchers.

Ukraine Ukraine lacks Russia’s resources and capabilities to dismantle its 

176 delivery vehicles and silos. The CTR program has obligated $90 million

for strategic nuclear arms dismantlement in Ukraine. As of March 1995,

the value of work performed exceeded $52 million. The CTR budget

estimate submission calls for an additional $30 million over the next 

2 fiscal years to further assist Ukraine with its dismantlement efforts.

As we reported last year, Ukraine lacks the necessary capabilities and

infrastructure to dismantle delivery systems, especially silos, in

accordance with START I. During our visit to Ukraine, Ukrainian political

and military officials stressed the importance of continued CTR

dismantlement assistance, citing that without it, Ukraine could not

continue its dismantlement efforts.

CTR aid is intended to help eliminate SS-19 and SS-246 missiles and silos

and dispose of liquid rocket propellant. Initial CTR assistance

deliveries—mobile cranes, all-terrain vehicles, fuel, tires, and

batteries—appear to have facilitated the removal of warheads from

missiles and the return of warheads to Russia. As of January 1995, 40 SS-19

missiles had been removed from their silos and all 46 SS-24 missiles had

their warheads removed. According to Ukraine, as of April 1995,

40 percent of its nuclear warheads—about 700—had been returned to

Russia. Per agreement, all nuclear weapons are to be removed from

Ukraine by mid-1996.

6

It is uncertain what Ukraine plans to do with the SS-24 missiles once the launchers have been

eliminated. Under START, it is not required to eliminate these missiles.

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Appendix II 

Destruction and Dismantlement Projects

The CTR program will use over $30 million to design, construct, and equip

an SS-19 missile neutralization facility at which liquid fuel will be removed

from the missiles as they are dismantled. Ukraine has no such facility. An

integrating contractor7

 will oversee the neutralization facility and train the

Ukrainians in its operation.

Dismantlement efforts could also be affected by the need to house

demobilized Strategic Rocket Forces officers. Ukrainian law dictates that

demobilized officers must be provided housing. Ukrainian officials told us

that they cannot afford to construct the total amount needed and that

future dismantlement progress could be slowed without prospects for

adequate officer housing. The CTR program plans to provide about 

428 housing units through defense conversion projects.

Kazakhstan CTR officials have authorized $70 million in assistance to Kazakhstan and

plan to spend another $20 million over the next 2 fiscal years. As of May 8,

1995, less than $50,000 in dismantlement assistance had been provided to

Kazakhstan because—according to DOD—CTR efforts to help Kazakhstan

eliminate over 100 SS-18 missile silos had been delayed for several months

due to Russian security concerns. These concerns have since been

resolved, according to DOD.

CTR assistance will fund an integrating contractor to help eliminate the

silos after Russia removes the missiles.8

 The silo work is not expected to

begin until later this year when DOD hires an integrating contractor.9

 Until

then, the actual cost of the project is unknown.

Belarus In Belarus, CTR program officials plan to provide $11 million in aid to help

remove SS-25 missiles, related structures, and, possibly, residual liquid

fuel. No CTR dismantlement aid has been provided to date. CTR aid will help

Belarus meet its START I obligation to eliminate the missile launch pads.

Russia is removing the SS-25 missiles from Belarus and has already

withdrawn more than 45 of them.

7

An integrating contractor manages all phases of a particular project and interfaces with other

contractors performing specific tasks.

8

As of April 1995, the Russians had removed all warheads from Kazakhstan.

9

In the interim, DOD has hired two contractors to help Kazakhstan salvage metal and equipment from

the silos.

Page 15 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

Chemical Weapons

Destruction

The CTR program’s progress in addressing Russian chemical weapons

destruction has been frustrating, and its outlook, though improving,

remains unclear. Russian delays hampered several significant CTR efforts

in the past year. Although the program may increase CTR chemical

weapons aid almost ten-fold, many issues need to be resolved before

future CTR funds can be used—including the prospects for using an

unproven Russian technology. Despite several recent promising

developments, it seems unlikely that Russia will be able to destroy its total

chemical weapons stockpile in accordance with time frames stated in the

Chemical Weapons Convention.

CTR assistance is directed at developing technology and procedures to

destroy Russian nerve agents, which constitute about 80 percent of the

declared Russian stockpile of 40,000 metric tons, at five of seven chemical

weapons sites. The United States, in prior years, committed to provide

$55 million in CTR funds to (1) prepare a comprehensive implementation

plan for destroying chemical weapons; (2) establish a centrally located

analytical chemical weapons destruction laboratory; and (3) conduct a

joint evaluation of a Russian chemical weapons destruction technology,

for determining what additional U.S. assistance could be provided in the

design and development of a chemical weapons destruction facility. As of

May 1995, the CTR program has obligated $22.2 million of the $55 million

available for chemical weapons destruction efforts and disbursed about

$7.3 million. The value of work performed totaled about $7.7 million.

However, delays have plagued efforts to spend the current $55 million. For

example, the overall completion date for the program’s major U.S.

contract, worth almost $8 million, likely will slip 1 year, from

mid-December 1995 to the end of 1996. Current project delays occurred

for several reasons, including (1) disagreements between the United States

and Russia over the priority of destroying air-delivered versus

artillery-delivered chemical munitions; (2) differences over the type of

chemical weapons destruction technology to be used, whether a proven

U.S.-favored direct incineration process, or a Russian-favored two-step

neutralization process; and (3) Russian delays in providing information

and access to chemical weapons storage sites. Also, Russian indecision for

over a year on selecting the central analytical destruction laboratory’s

location delayed use of $30 million committed for that purpose.

The CTR program envisions dramatic increases from the $55 million level of

assistance. The DOD budget estimate submission for fiscal years 1996-97

includes $234 million for the next 2 fiscal years to help in design and

Page 16 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

construction of a chemical weapons destruction facility that would be

capable of destroying about 500 metric tons per year of the roughly 

5,600 metric tons of chemical weapons agent located at this facility.10 It

also notes that constructing a chemical weapons destruction facility would

cost more than $500 million and require multi-year funding through 2001.

However, even dramatic increases will address only a portion of Russian

chemical weapon destruction costs. Russian estimates indicate that

destroying Russia’s total chemical weapons stockpile might cost

$5 billion-$10 billion. Some Russians estimate that Russia will need

between 35-50 percent of the estimated cost of total chemical weapons

destruction in donor assistance.11 DOD intends for the U.S. funding to

address less than 10 percent of Russian funding requirements and to act as

a catalyst for broader financial support to achieve full chemical weapons

destruction goals. Although the chemical weapons destruction facility is

intended to eliminate a “significant portion” of the threat, according to the

DOD budget estimate submission, the site where it will be built contains

only 14 percent of the Russian chemical weapons stockpile. Facilities at all

seven sites are anticipated.

Uncertainties of cost and schedule associated with Russia’s unproved

technology could be severe. The United States experienced years of delays

and unanticipated cost increases during the design and construction of a

U.S. chemical weapons destruction facility using a proven technology.12

In addition, many issues need to be resolved before large-scale funding

can be undertaken. Requirements for fiscal year 1996 funding appear to be

contingent on completion of several tasks—most importantly, the joint

evaluation of chemical weapons destruction technology. The final report

on the joint evaluation’s results is to contain specific proposals on the

applicability of the two-step process for designing a chemical weapons

destruction facility. DOD’s budget estimate submission for fiscal years 1996

and 1997 assumes that the results of the joint evaluation will be favorable

and completed on schedule by March 1996. Development of an

10An additional $10 million for the chemical weapons destruction facility for fiscal year 1995 actually

will be reprogrammed for other uses, according to a DOD official.

11Germany has provided assistance of about $6.5 million through fiscal year 1994 and expects to

approve an additional $4.5 million for fiscal year 1995 during May, according to a German official.

12We reported in December 1994 that the U.S. chemical weapons stockpile program had been delayed

by design, equipment, and construction problems at the new disposal facility at Johnston Atoll. As a

result of these and other factors, the estimated cost of the stockpile disposal program increased and

the Army’s destruction schedule slipped. Chemical Weapons Disposal: Plans for Nonstockpile

Chemical Warfare Material Can Be Improved (GAO/NSIAD-95-55, Dec. 20, 1994).

Page 17 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

implementation plan and conceptual designs for a pilot demonstration

facility is to accord with the results of the joint evaluation. Further delays

during fiscal year 1995 and early into 1996 could reduce the need and

impact the justification for the budget requests.

To date, the chemical weapons destruction program remains uncertain

about specific requirements for fiscal year 1996 funding and how much of

the funding the program will be able to obligate during the fiscal year. A

DOD official said, as of mid-May, that he realistically could expect to

obligate between $50 million-$70 million of the fiscal year 1996 request of

$104 million. In addition, the chemical weapons destruction program in

mid-May had identified about $34.3 million of the fiscal year 1996 budget

request for technology development requirements, including additional

Russian equipment testing to be determined. In commenting on a draft of

this report, DOD said that it had scheduled $34.3 million to be obligated in

late 1996 as the first installment for the integrating contractor that would

provide U.S. assistance for the design and construction of the Russian

chemical weapons destruction facility. However, DOD has mistaken the

$34.3 million, which it associated at the time of our review with undefined

additional technology development activities with a nearly identical

amount that recently revised funding breakouts allocated to the

integrating contractor. DOD reduced an amount for the integrating

contractor from $35.7 million to $34.3 million. DOD provided insufficient

documentation to justify changes in these funding amounts. Given the lack

of clarity associated with the purpose for the $34.3 million and history of

delays in this program, it appears uncertain that DOD needs or could

realistically expect to obligate this amount of funding in fiscal year 1996.

Uncertainty still exists about Russia’s specific commitments to destroy its

chemical weapons under its international obligations. In the past, Russia

made no specific commitments to the United States to carry out the

conditions of a bilateral chemical weapons destruction agreement and the

Chemical Weapons Convention. DOD told Russian representatives in May

that an implementing agreement would need to link U.S. assistance to

specific Russian actions that address U.S. concerns.

Because of these uncertainties—and without significant additional

financial assistance—Russia appears unable to destroy its stockpile in

compliance with the Chemical Weapons Convention’s time frames, if the

Convention enters into force in or about 1996 as estimated. The

Convention requires that all stocks of chemical weapons be destroyed in

10 years, with an extension of 5 years, if needed. Although estimates for

Page 18 GAO/NSIAD-95-165 CTR: An Update
Appendix II 

Destruction and Dismantlement Projects

meeting the Convention’s time frames depend on several variables and

events that have not yet occurred—such as the entry into force of the

Convention and Russian ratification of it, successful completion of the

chemical weapons destruction technology joint evaluation, and design and

construction of chemical weapons destruction facilities—it is doubtful

that all seven chemical weapons destruction site facilities could be

completed to meet the time frames.

However, several key events in March 1995 could provide new impetus to

chemical weapons destruction projects. These include Russia’s

(1) finalizing and approving a work plan for 1995, which set tasks and

milestones for the year; (2) identifying locations for the chemical weapons

destruction facility and the central analytical laboratory; (3) issuing a

presidential decree on chemical weapons disarmament, which established

a legal framework for chemical weapons destruction and stated that a plan

for speeding up Russia’s preparation for destroying chemical weapons be

completed by May 1995; and (4) establishing a separate line item of about

$21 million for chemical weapons destruction in the Russian federal

budget.

Page 19 GAO/NSIAD-95-165 CTR: An Update
Appendix III 

Control Over Nuclear Weapons and

Materials

CTR projects for providing Russia with the means to safely store

components from dismantled nuclear weapons have been delayed for

several months, although they now appear to be moving forward again.

However, long-standing Russian plans to acquire two storage facilities and

100,000 storage containers exceed the scope of these projects. While CTR

projects have had little direct impact in improving material protection,

control and accounting over weapons-useable civilian material at FSU

nuclear facilities, the prognosis for doing so is improving as a result of

recent agreements with Russia to upgrade controls at some facilities.

However, several issues need to be resolved before a long-range plan now

being developed by the United States to improve controls at 80 to 100 such

facilities can be implemented successfully.

Fissile Material Storage Russian officials have stated that Russia lacks suitable storage for

components from thousands of nuclear weapons and have asserted that

the process of dismantling these weapons could be slowed by this storage

shortfall.1

 They plan to build two storage facilities—each capable of

holding 50,000 containers2

 and each built in two, 25,000-container phases.

Russian officials maintain that acquiring storage space and containers are

their highest CTR priorities.3

The United States has agreed to provide Russia’s Ministry of Atomic

Energy with $15 million in design assistance and $75 million in equipment,

training, and services to help build and outfit one of the facilities, at

Mayak. The Army Corps of Engineers has performed design-related work

valued at $13.8 million to help Russia with numerous studies, analyses,

and plans.4 DOD has obligated $27.4 million in equipment funds and

performed equipment-related work valued at $4.7 million.

The CTR program has included another $6 million in design funds and

$75 million in construction funds for the Mayak facility in its 1996-97

1

In the past U.S. agencies have been unable to confirm a storage shortfall. Some have noted that

Ministry of Defense storage space for intact weapons could be used. The Ministry of Atomic Energy

has argued against doing so.

2

Estimates that 2 to 5 containers could be needed to hold components from a single warhead indicate

that one 50,000 container facility could hold materials from 10,000 to 25,000 weapons. Russia may

dismantle as many as 24,000 weapons.

3

The Russians have stated that the facility will be transparent to the United States. Facility

transparency is part of an overall U.S. effort to prevent a resumption of the U.S.-Soviet nuclear arms

competition.

4

The Department of Energy contributed $1 million of its own funds to the design effort.

Page 20 GAO/NSIAD-95-165 CTR: An Update
Appendix III 

Control Over Nuclear Weapons and

Materials

budget estimate submission. If approved, these funds would raise total CTR

funds for the Mayak facility to $171 million.

During the past year the storage facility project was delayed by several

months, due to difficulties with the Russians. In September 1994, after

learning that the Russians had unilaterally made a major change in the

facility’s design—eliminating the relevance of roughly 30 percent of the

U.S. design effort—the United States froze deliveries of construction

equipment until Russia addressed U.S. questions about the new change.

Deliveries were also held up by Russia’s initial reluctance to allow the

United States to perform a radiation survey of the Mayak site.5

 In

March 1995, DOD, satisfied with the progress of the design6

 and having

convinced Russia to schedule the survey, authorized the shipment of the

construction equipment. Russia has begun preparing the site for

construction, which is scheduled to begin in June.

The CTR program has cited the storage facility project as evidence that the

risk of proliferation has been reduced. Although the project is now moving

forward again, the facility’s first 25,000 container phase will not be ready

until December 1998—assuming no further difficulties. Moreover, before

the United States can support construction at the Mayak site the United

States and Russia must first amend existing agreements or conclude new

ones to allow for additional design and construction funds and work out

arrangements for the use of a U.S.-hired integrating contractor. DOD

officials informed us that they are developing a detailed plan for using

construction funds and that the project could probably absorb the

$23 million requested for facility construction in fiscal year 1996—if

agreements or amendments can be completed and an integrating

contractor is hired by the end of 1995. Russia must also provide

(1) detailed construction schedules and (2) more detailed design

information to allow the United States to define equipment, training, and

services requirements and obligate another $47.6 million of the $75 million

in CTR equipment funds.

The total cost of the Mayak facility will likely exceed the $171 million

allocated by the CTR program. The latest Russian study reviewed by the

Army Corps of Engineers estimates that the entire Mayak facility will cost

about $677 million to build and equip—a substantial increase over past

5

The Mayak site is located at the scene of a 1957 nuclear accident that contaminated much of the area.

6

Russia plans to have completed 35 percent of the design by October 1995.

Page 21 GAO/NSIAD-95-165 CTR: An Update
Appendix III 

Control Over Nuclear Weapons and

Materials

estimates.7 In the past, Russian officials have suggested that the two

countries divide the costs evenly, which could result in a U.S. share of

about $338 million for the Mayak facility—if the current Russian estimate

is accurate.

CTR efforts to provide containers for the facility have also been

delayed—although in this case the delays are due to U.S. technical

difficulties and coordination problems. Russia plans to equip both storage

facilities with a total of 100,000 containers. The United States plans to

develop and deliver as many containers as possible within a $50 million

budget.8

 Originally this amount was estimated to be about 33,000

containers. The United States has not agreed to provide additional

containers.

The project had planned to produce and deliver the first 10,000 containers

to Russia by December 1995, beginning with monthly shipments of 1,000 in

March 1995. However, one container failed during tests in

December 1994—necessitating design changes. An independent analysis

cited technical and managerial deficiencies.

Although project participants appear to have taken corrective action, the

container project will warrant close attention through its completion, due

to its complexity, cost, and high Russian interest level. Although the

redesigned prototype has been successfully tested, manufactured units

will require more testing and CTR officials will not decide before July 1995

whether to begin full-scale production. As a result, fewer

containers—possibly 26,000 to 28,000—will be provided later than had

been planned. The United States anticipates producing 850 a month by the

end of this year. The Russians have been pressing for delivery and

expressed great unhappiness with the delay when we met with them in

Moscow.

7

The November 1993 estimate of $315 million cited in our last report placed the cost of building and

equipping the facility’s first phase at $300 million. The current Russian estimate includes $454 million

to build and equip the facility’s first phase—an increase of more than 50 percent. According to DOD,

the current Russian estimate is within the range of the Army Corps of Engineers’ most recent

estimates.

8

DOD has obligated $45 million and disbursed $10 million as of May 8, 1995. As of March 1, the value of

work performed was estimated at $14.2 million.

Page 22 GAO/NSIAD-95-165 CTR: An Update
Appendix III 

Control Over Nuclear Weapons and

Materials

Material Protection,

Control, and Accounting

To date, the CTR program has had little direct impact in protecting,

controlling, and accounting for civilian nuclear material that presents a

high proliferation risk.9

 The program’s prospects are improving as a result

of recent agreements with the Russians to upgrade nuclear material

controls at civilian facilities using direct-use material (highly enriched

uranium and plutonium). The United States is also developing a long-range

plan to help upgrade controls at 80 to 100 civilian, naval nuclear, and

nuclear weapons-related facilities handling direct-use material by 2002.

However, several issues need to be addressed for the U.S. program to

succeed.

The FSU possesses hundreds of tons of direct-use nuclear material located

at 80 to 100 civilian, naval nuclear, and nuclear weapons-related facilities,

mostly in Russia. Much of this material is considered to be highly

attractive for theft. Current nuclear controls in use at FSU nuclear facilities

make it difficult to deter or detect such theft. The facilities rely on manual,

paper-based tracking systems that cannot quickly locate and assess

material losses. In addition these facilities lack modern physical protection

systems, such as monitors, that can detect unauthorized attempts to

remove nuclear material from a facility.

The CTR program provides assistance to Russia, Ukraine, and Kazakhstan

for upgrading civilian nuclear material controls at selected model facilities

and developing regulations, enforcement procedures and national material

tracking systems. Through the program, the United States has provided

technical working group meetings, site surveys, physical protection

equipment, computers, and training in support of CTR projects. To date,

none of the projects have been completed. DOD has obligated $36.8 million

of $62.5 million budgeted, and the value of work is $2.7 million.10 DOD is

currently defining work valued at $28 million for future obligations.

So far, CTR efforts have had little direct impact in improving control over

direct-use material at civilian facilities. This is due mainly to delays in

negotiating agreements with the FSU states; Russian Ministry of Atomic

Energy (MINATOM) restricting work to low-proliferation risk materials in

9

Although it was not a CTR project, DOD used some CTR funds to finance their portion of Project

Sapphire. In 1994, Project Sapphire transferred from Kazakhstan to the United States 600 kilograms of

highly enriched uranium that presented a proliferation risk. According to a DOD official, CTR funds

used for Project Sapphire were in addition to the $5 million available for obligation for material

protection control and accounting assistance to Kazakhstan.

10In Russia, DOD has obligated $20.3 million of $45 million budgeted, and the total value of work

performed is $1.2 million. In Ukraine, DOD has obligated $11.5 million of a planned $12.5 million,

although the total value of work performed is less than $660,000. In Kazakhstan, DOD has obligated

$4.9 million of a planned $5 million program, and the total value of work performed is $850,000.

Page 23 GAO/NSIAD-95-165 CTR: An Update
Appendix III 

Control Over Nuclear Weapons and

Materials

Russia; and the preliminary nature of the work at other FSU facilities where

direct-use material is present. Problems in procuring equipment have also

caused some delays. CTR work on developing a national regulatory system

in Russia has been hampered by MINATOM’s resistance to expanding the

role of GAN, Russia’s nuclear regulatory agency, and GAN’s lack of statutory

authority for oversight and enforcement.

The prospects for accelerating obligations in Russia may be improving.

Recently, Russia and the United States agreed to add five high-priority

sites handling large amounts of direct-use material to the program. The

Department of Energy also signed a letter of intent with GAN to cooperate

in implementing a national material control and accounting system. The

Department of Energy is preparing a long-range plan to enhance nuclear

material protection control and accounting at the 80 to 100 facilities

handling direct-use material by the year 2002. Responsibility for funding

and supporting CTR nuclear material protection control and accounting

efforts will be transferred from DOD to the Energy Department in fiscal

year 1996. The Energy Department plan would include Energy’s lab-to-lab

program, initiated by Energy in 1994, which works directly with personnel

at Russian civilian and nuclear-weapon related nuclear facilities to

improve nuclear material control, accounting, and physical protection. The

plan’s estimated cost is about $0.5 billion.

Several issues would need to be addressed for such a program to succeed.

• Currently, there is no agreement with the Russians for work at most of the

80 to 100 facilities. In the past, MINATOM has taken a go-slow approach and

only recently opened up direct-use facilities to the CTR program. However,

the Energy Department has had some early success in upgrading controls

at a direct-use facility under its lab-to-lab program. In addition, the U.S.

and Russian Steering Groups for Energy’s lab-to-lab program have agreed

to develop a unified plan for cooperation with the principal MINATOM

nuclear weapons-related facilities, and Energy is negotiating agreements

for work at many of the other 80 to 100 facilities.11

• The Department of Energy has not yet determined the appropriate number

of personnel and amount of resources needed to manage the planned

expansion of the program. In fiscal year 1995, Energy manages a lab-to-lab

budget of $15 million. Starting in fiscal year 1996, Energy will be

responsible for implementing the proposed long-range plan, which calls

for a budget increase in material protection control and accounting

11In addition, the Russian government issued a decree in January that commits it to improving material

protection control and accounting at Russian nuclear facilities.

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Appendix III 

Control Over Nuclear Weapons and

Materials

assistance to about $70 million per year. This budget level will continue

until fiscal year 1999.

• The United States has yet to determine the degree of oversight needed to

ensure program success. The Russians have already told Energy officials

that the United States may not be allowed direct access to a small number

of highly sensitive facilities. It is unclear to what extent currently

negotiated audit and examination provisions under CTR will apply to the

new projects in the proposed long-range plan. According to a State

Department official, given the extremely important priority of preventing

diversion of nuclear material, the executive branch has agreed in principle

on the need for flexibility in pursuing adequate arrangements for ensuring

that U.S. assistance is used as intended. The official also noted that most

of the equipment provided is highly specialized, permanently installed, and

not easily used for other purposes.

Even with a successful Energy-led program, the United States would not

be able to control the extent to which Russian facilities meet international

standards. According to a U.S. national laboratory official, Russia will be

provided with all the elements to develop a nuclear material control

system that is consistent with international standards, but responsibility

for meeting the standards rests with the Russians. As a nuclear weapons

state under the Nuclear Nonproliferation Treaty, Russia is under no treaty

obligation to meet international safeguard standards.12 In contrast, as

non-nuclear weapons states under the treaty, Ukraine and Kazakhstan are

required to meet IAEA safeguard standards.

Weapons Security Two CTR projects to enhance nuclear weapons security—armored

protective blankets and kits to upgrade railcars—are being completed. The

United States and Russia are exploring new areas of cooperation on

weapons security.

The CTR program provided 4,000 armored blankets to Russia between July

1992 and June 1993. In October 1994 the program completed shipping 

115 kits to upgrade rail cars for transporting warheads. Russian officials

told us in March 1995 that most of the kits were being installed and that

the process had been delayed by a Russian funding shortfall that had been

recently remedied.

12Russia has entered a voluntary agreement with the International Atomic Energy Agency (IAEA) to

meet international safeguards requirements at some of its civilian nuclear power facilities and research

reactors. Russia also is a signatory to the Convention on the Physical Protection of Nuclear Materials,

and as such is obligated to meet defined standards of physical protection for nuclear material. Ukraine

is also a signatory to the Convention.

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Appendix III 

Control Over Nuclear Weapons and

Materials

Russian officials told us that Russia has used blankets to protect 600

strategic warheads being withdrawn from Ukraine. DOD, in commenting on

a draft of this report, informed us that the blankets and rail cars have been

used to move warheads within Russia and to Russia from Ukraine and

Kazakhstan. DOD also noted that CTR assistance had helped secure and

transport strategic warheads that had been deployed in Russia.13

We reported last year that—despite the rail car kits and the blankets—the

FSU rail transportation system would still not be safe by Western

standards. Russian officials told us that they were concerned about threats

posed by criminals and poor rail conditions. U.S. and Russian officials are

now exploring additional weapons security measures, including new types

of rail cars and supercontainers for warheads in transit. The two countries

are also considering computerized accounting systems for warheads and

personnel security measures. While DOD has recently agreed to provide

$20 million in such aid, its budget estimate includes far more for weapons

security—a total of about $120 million in fiscal year 1995-97 funds for such

purposes, including $42.5 million in fiscal year 1996 alone.

13DOD noted that there are over 1,000 such warheads. DOD officials do not know how many of these

1,000 have been transported with CTR aid.

Page 26 GAO/NSIAD-95-165 CTR: An Update
Appendix IV 

Demilitarization

The International Science and Technology Center in Moscow appears to

have had a good first year in addressing its nonproliferation objectives,

although it does not preclude the possibility that scientists receiving

Center funds may also work on Russian institutes’ weapons activity with

non-Center funds.1

 Most of DOD’s defense conversion projects are not

converting active production lines but are instead using previously

dormant facilities that once produced items related to weapons of mass

destruction.

International Science and

Technology Center

During its first year, the International Science and Technology Center in

Moscow appears to have made a good beginning in achieving its

nonproliferation objectives by supporting work on peaceful projects for

scientists engaged in weapons of mass destruction and missile delivery

system activities. However, although CTR program materials have often

described the recipients of Center funds as “former” weapons scientists,

we found that scientists receiving Center funds may also continue to be

employed by institutes engaged in weapons work. According to the State

Department, the Center’s objective is to intentionally fund weapons

scientists in the FSU and redirect their efforts to peaceful activities. The

Center prohibits use of its funds for weapons work.

With the collapse of the Soviet Union, the United States became

concerned that FSU experts in weapons of mass destruction and related

technologies might flee to other countries of proliferation concern to

employ their specialized knowledge and maintain their livelihoods.

According to State Department officials, many such experts are not being

paid on a regular basis by their institutes. Continued economic

deterioration could exacerbate this problem, particularly in light of

decreased demand for this expertise and the inability of the governments

to pay these experts on a regular basis. Estimates of the numbers of

experts who potentially might engage in proliferation activities range from

10 thousand to several 10s of thousands of individuals. Center officials

estimate that there are 3,000 core weapons of mass destruction and missile

delivery system experts.

As a result, the United States, European Community, Japan, and Russia

agreed to establish the Moscow Center to provide peaceful opportunities

1

DOD categorizes U.S. support for the Center as CTR demilitarization activity, prompting our decision

to discuss the Center here. The Department of State, which currently manages the Center project for

DOD and which will assume complete responsibility for U.S. support for the Center in fiscal year 1996,

commented on a draft of this report that it has always considered the Center to be a non-proliferation

effort, not a demilitarization project.

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Appendix IV 

Demilitarization

to weapons scientists and engineers, particularly to experts on weapons of

mass destruction and delivery vehicles. The Center selects projects from

those submitted on a competitive basis, using a detailed review process.

Center projects are carried out at various facilities and institutes

throughout the FSU. To limit the potential diversion of funds, scientists and

experts are paid directly on a quarterly basis rather than through their

institutes and direct procurements of necessary equipment are made for

the projects. An overhead payment up to 10 percent is made to the

scientists’ institutes upon successful completion of the project.

The United States has committed $46 million to the Center in Moscow.2

 As

of May 8, 1995, DOD had obligated $22.8 million and disbursed $20.9 million

to the Center. The Center, which has been in operation for about 1 year,

has disbursed $2.8 million for salaries and related project costs. Its

Governing Board has approved 130 projects—valued at $60 million—of

nearly 400 proposals received.3

 Grants include approximately $25 million

in U.S. funds and involve 8,200 scientists and engineers, including,

according to Center officials, at least 1,000 core weapons of mass

destruction scientists.

Recipients of seven Center grants at three different institutes told us that

they had been involved in nuclear weapons development or nerve agent

research—suggesting that they are among the Center’s target group. They

noted that the grants were important in redirecting their research and

helping them survive the current economic conditions. State Department

officials indicate that the target population appears to be staying in Russia,

although the Center’s role in encouraging them to do so is difficult to

assess.

We found that Center-supported scientists are not necessarily employed

full time on Center projects and that they may spend part of their

non-Center funded time working on Russian weapons of mass destruction.

They may remain employed by FSU laboratories and work less than

100 percent of their time on Center projects—some as little as 10 percent.

This situation raises the prospect that the scientists could spend the

remainder of their time on their institutes’ work on weapons of mass

destruction.

2

This amount includes $5 million for projects in Belarus and $6 million for projects in Kazakhstan.

3

DOD conducted a full financial audit of the Center in March 1995 and concluded that the Center’s

financial statement fairly presented its financial position as of December 31, 1994.

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Appendix IV 

Demilitarization

According to the State Department, Center and U.S. officials track the time

the scientists spend on Center projects only and are not in a position to

monitor their non-Center activities. Nevertheless, Center officials told us

that they doubt that most scientists are actually working on other than

Center projects. Center and State officials told us that the scientists

maintain their connection to the institutes to retain important social

benefits that the Center does not provide. U.S. officials stated that the

Center is intended to help prevent proliferation and encourage commercial

efforts, rather than to preclude scientists from working on Russian

weapons of mass destruction, and that the Center prohibits the use of its

funds for weapons-related work.

We also learned that the United States and the Center are taking some

steps to guard against the risk that scientists participating in Center

projects could create dual-use items—civilian goods with weapons

applications—with Center funds. U.S. officials explained that the United

States policy is not to fund a project if it advances the state of Russian

weapons technology, but could consider doing so if it utilizes existing

weapons technologies for civilian applications and would provide

meaningful employment for the target group of scientists. For example,

the United States is supporting, through the Center, development of a

commercial streak camera. Streak camera technology can be relevant to

nuclear testing, and the final product could be subject to export licensing

if produced for export, depending on its technical capabilities. The Center

project was reviewed for dual-use potential during a detailed U.S. review

process for all Center proposals based on scientific merit and U.S. policy.

The State Department will assume responsibility for U.S. support for the

Center in fiscal year 1996 and has prepared a multiyear plan to 2003. It

estimates the project level will reach 225 projects, employing an estimated

12,000 individuals. State plans to budget approximately $90 million over

the next 7 years for Center activities, $18 million annually through 1998

with a gradual decline to almost zero in fiscal year 2003. From the year

2003, State Department projects that nearly all funds will come from other

U.S. agencies and non-governmental sources such as commercial

partnerships. State officials hope to increase promotion of commercial

partnerships where limited activities have occurred.

State officials could not provide detailed analysis to support these

planning figures, which, they stated, were largely developed by DOD

through fiscal year 1998. However, they informed us that they have

initiated a process for reviewing and revising these figures. They added

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Appendix IV 

Demilitarization

that the funding levels were based on first-year spending rates, an

unexpectedly large number of proposals, hopes of achieving a more

targeted outreach to scientists, and overall political considerations.

Project monitoring is already an area of concern for Center officials, who

said that, because of the limited number of staff, they can monitor projects

only intermittently, instead of quarterly as desired. Additionally, State

Department officials explained that project monitoring is a tool in

reviewing dual-use concerns and that the United States has proposed that

the Center hire six to eight new project staff to help free senior staff for

monitoring activities.

Defense Conversion According to DOD officials, U.S. defense conversion aid is not intended to

be sufficient to convert the FSU’s defense industry. The program is

planning to promote defense conversion by providing leverage to U.S.

investment in the FSU. Although DOD claims their conversion efforts reduce

the threat of weapons of mass destruction, we found that most of these

efforts are converting dormant facilities that once produced items related

to weapons of mass destruction. In commenting on a draft of this report,

DOD informed us that most of its efforts are aimed at converting

production capability because it considers much of Russia’s weapons

production capability to be inactive. DOD stated that converting inactive

capability will alleviate pressure on Russia to rearm or sell high-tech

weapons abroad and also aid the Russian economy. We also found that,

initially, DOD efforts did not give priority to privatization of defense

enterprises, and some of these companies remain state owned .

The task of converting the FSU’s defense industry to peaceful enterprises is

enormous. One DOD official says that Russian officials claim that defense

conversion will cost $150 billion and take 12 to 15 years. About 1,800

Russian defense plants are already undergoing conversion.

The DOD defense conversion efforts primarily consist of industrial

partnerships between U.S. enterprises and FSU weapons producers and in

many cases these partnerships are creating private spin-off enterprises.

Most of these efforts have been initiated in the past year and are in the

early stages of development. Until now, DOD has managed nearly all of the

defense conversion projects, but after fiscal year 1995 all new projects are

to be managed by the Defense Enterprise Fund—a DOD-funded non-profit

venture capital fund.

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Demilitarization

DOD has $152.7 million available for obligation for defense conversion from

fiscal year 1994 and 1995 funding. Currently, it plans to allocate an

additional $70 million in fiscal year 1996-97 funds to the Fund. Up to

$60 million of the $152.7 million is being obligated to convert former

defense facilities to housing construction to help support the

demobilization of Strategic Rocket Force officers. DOD is using the

remaining $92.7 million primarily for industrial partnerships that will

create joint ventures. The Fund will receive $27.7 million of this

$92.7 million.

As of May 8, the CTR program had obligated $97.6 million for defense

conversion and the Fund.4

 As of March, according to DOD, the value of

defense conversion work performed was about $24.7 million, and as of

May defense conversion projects had created 93 jobs for Americans and

1,475 jobs for FSU defense employees. DOD estimates expect U.S.

companies to have exported more than $27 million, and projected sales of

the 15 joint ventures are expected to exceed $53 million this fiscal year.

DOD-Managed Projects DOD justifies the program by claiming that defense conversion efforts

reduce the threat of weapons of mass destruction at their origin by

converting enterprises to civilian sector endeavors. According to a DOD

official, DOD focused on initiating projects at FSU firms and facilities that

once produced weapons of mass destruction, but there is only one facility

where an active production line is being converted to civilian use. The

Defense Nuclear Agency initiated the defense conversion program by

matching U.S. businesses with DOD-selected FSU defense enterprises. We

also found that defense conversion took priority over privatization as

criteria for selection. Although encouraging privatization is a U.S. policy,

Defense Nuclear Agency officials said that it was not an initial concern of

CTR defense conversion.5 According to DOD officials, implementing

agreements with the FSU republics do not make privatization a requirement

for defense conversion projects, but DOD officials are working with the FSU

governments to privatize CTR projects.

DOD-managed projects are at varying stages of implementation.

• In Russia, one project links GosNIIAS—a state-owned aviation enterprise

on Russia’s list of firms not to be privatized—to a U.S. firm with which it

4

As of May 30, 1995, the CTR program had obligated nearly $118 million for defense conversion and the

Defense Enterprise Fund.

5

In Belarus, privatization is not permitted.

Page 31 GAO/NSIAD-95-165 CTR: An Update
Appendix IV 

Demilitarization

had previously been involved. DOD is providing $4.1 million to the U.S. firm,

which has subcontracted $938,000 to GosNIIAS to begin to develop an air

traffic control system in the Russian Far East. Unlike another Russian

project we reviewed, the GosNIIAS project is not a joint venture and

profits made could go back to GosNIIAS.

• In Ukraine, a U.S. commercial partner has teamed up with a Ukrainian

enterprise, Hartron, which formerly made ballistic missile guidance

systems for the SS-18 and SS-19. These firms will work together to develop

nuclear power plant instrumentation and control systems, which are

designed to improve nuclear safety. The United States provided a

$5 million grant to the U.S. firm, which has contributed $14 million for this

joint venture. As of July 1994, Hartron has about 10,000 employees and has

several other on-going conversion efforts, including a Chinese-Ukrainian

venture assembling televisions, an association with a U.S. computer firm

to produce components, and a planned project linking banks with satellite

communications.

• In Kazakhstan, a U.S. firm has teamed up with KazInformtelecom to build

a national and international telecommunications system, which is

projected to be operational in 11 cities in 12 months. The U.S. government

is providing $5 million of the $16.1 million for this partnership.

KazInformtelecom is a new company that was established in 1994. It is the

executive contractor to convert part of the Saryshaghan testing site to

civilian use. Saryshaghan tested surface to air and anti-ballistic missiles.

• Defense conversion funds are also being used to help provide housing to

further Inter Continental Ballistic Missile (ICBM) demobilization. According

to DOD, the shortage of housing is one of the most serious obstacles to

eliminating strategic nuclear missile arsenals and closing missile bases. In

Belarus, Russia, and Ukraine, provisions for housing are a statutory

prerequisite for officer demobilization. In Ukraine, DOD plans to provide

assistance that will result in 428 housing units at a cost of $30 million. The

Ukraine housing requirement for demobilization is 6,000 units. In Russia,

the DOD-funded housing project is expected to provide 500 units of the

potentially 30,000 housing units needed at a cost of up to $20 million. In

Belarus DOD plans to provide up to 207 of the 802 housing units needed at a

cost of $10 million. All but one of these projects are aimed at creating new

housing industries and infrastructure that can be used to create additional

housing. As a result, housing project start-up costs appear high.

Page 32 GAO/NSIAD-95-165 CTR: An Update
Appendix IV 

Demilitarization

Defense Enterprise

Fund-Managed Projects

New defense conversion projects are being developed by the Defense

Enterprise Fund, a venture capital fund capitalized by DOD to finance joint

ventures and promote FSU defense conversion. According to one Fund

official, the Fund will take more risk than the average venture capital firms

to fill a perceived void and will require that its projects are privatized. The

Fund has recently begun operating. Its Board of Directors first met in

September 1994. DOD has obligated $27.7 million available to the Fund. To

date, the Fund has provided one $1.8 million loan. The Board has approved

several other projects whose final terms and conditions are being

negotiated.

DOD has proposed that about $118 million be provided to the Defense

Enterprise Fund from fiscal years 1994 through 1997. In fiscal year 1995,

$20 million was rescinded from the $40 million budget. DOD officials

believe that the proposed funding is the minimum necessary to capitalize

the Defense Enterprise Fund so it will have enough money to sustain itself

after funding is completed. These officials believe that if funding is cut

again the Fund will not have an opportunity to become self-sustaining and

will just be an expensive mechanism to support joint defense conversion

business initiatives. DOD justifies this funding based on other venture

capital fund experiences and computer modeling of the $118 million,

which shows the fund can be self-sustaining in certain scenarios.

According to DOD officials, DOD took a conservative approach and modeled

scenarios that predicted between 30 percent and 70 percent of the projects

will default. These high default rates were based on pessimistic forecasts

by other fund managers who predict problems trying to convert former

Soviet weapons of mass destruction industries. Using the higher default

rates, the Fund would have great difficulty sustaining itself. DOD has

requested the Defense Enterprise Fund provide its own analysis based on

DOD’s funding profile.

Page 33 GAO/NSIAD-95-165 CTR: An Update
Appendix V 

Funding for the CTR Program (Fiscal Years

1992-95)

Dollars in millions

Projects

Notifications to

Congress Obligations Disbursements

Destruction and dismantlement

Chemical weapons

destruction/lab—Russia

$55.000 $22.182 $7.336

Communications link

Belarus 2.300 .974 .457

Kazakhstan 2.300 .614 .134

Ukraine 2.400 .650 .131

Environmental

restoration-Project Peace

25.000 14.772 1.831

Nuclear infrastructure elimination

Belarus 5.000 .000 .000

Kazakhstan 17.000 .000 .000

Ukraine 10.000 .000 .000

Strategic offensive arms elimination

Belarus 6.000 .000 .000

Kazakhstan 70.000 .324 .049

Russia 150.000 112.083 19.639

Ukraine 205.000 89.536 19.279

Subtotal 550.000 241.135 48.856

Chain of custody/nonproliferation

Armored blankets—Russia 5.000 3.244 2.905

Emergency response

Belarus 5.000 4.288 3.604

Kazakhstan 5.000 2.045 .302

Russia 15.000 12.857 11.182

Ukraine 5.000 2.002 .179

Export controls

Belarus 16.260 3.073 1.237

Kazakhstan 2.260 1.117 .137

Russia 2.260 .044 .011

Ukraine 7.260 3.337 .254

Fissile material

containers—Russia

50.000 44.944 10.086

Material control and accountability

Kazakhstan 5.000 4.923 .364

Russia 45.000 20.333 .568

Ukraine 12.500 11.504 .129

(continued)

Page 34 GAO/NSIAD-95-165 CTR: An Update
Appendix V 

Funding for the CTR Program (Fiscal Years

1992-95)

Dollars in millions

Projects

Notifications to

Congress Obligations Disbursements

Nuclear reactor

safety—Ukraine

11.000 11.000 .046

Rail car security

upgrades—Russia

21.500 21.500 17.649

Storage facility design 15.000 15.000 12.866

Storage facility equipment 75.000 27.356 2.511

Weapons security—Russia 20.000 .000 .000

Subtotal 318.040 188.567 64.030

Demilitarization

Defense conversion/Industrial Partnerships

Belarus 20.000 19.607 8.098

Kazakhstan 15.000 14.860 .105

Russia 40.000 17.218 3.681

Ukraine 50.000 38.286 4.280

Defense Enterprise Fund 27.670 7.670 7.670

Research and

development

foundation—Russia

10.000 .000 .000

Science and technology center

Belarus 5.000 .000 .000

Kazakhstan 6.000 .000 .000

Russia 35.000 22.853 20.889

Ukraine 15.000 .414 .307

Subtotal 223.670 120.908 45.030

Other authorized programs/program support

Arctic nuclear

waste—Russia

30.000 19.520 5.270

Military-to-military contacts

Belarus 7.524 .301 .098

Kazakhstan .900 .074 .014

Russia 11.548 7.761 3.844

Ukraine 5.900 .869 .321

Other assessment costs 24.400 19.720 9.221

Subtotal 80.272 48.245 18.768

Total $1,171.982 $598.855 $176.684

Note: These figures were current as of May 8, 1995.

Page 35 GAO/NSIAD-95-165 CTR: An Update
Appendix VI 

Work Performed on Selected CTR Projects

(Fiscal Years 1992-95)

Dollars in millions

Projects

Value of work

performed Disbursements

Destruction and dismantlement

Chemical weapons destruction/lab—Russia $7.649 $5.120

Environmental restoration-Project

Peace—Belarus

4.958 .802

Strategic offensive arms elimination

Russia 55.925 28.186

Ukraine 52.530 8.753

Kazakhstan .045 .045

Chain of custody

Emergency response—Belarus 4.125 3.340

Fissile material containers—Russia 14.254 6.501

Material control and accountability

Kazakhstan .850 .016

Russia 1.189 .368

Ukraine .660 .117

Storage facility design—Russia 13.764 12.441

Storage facility equipment—Russia 4.744 .345

Demilitarization

Defense conversion-industrial partnership

Belarus 7.785 6.844

Kazakhstan .113 .099

Russia 3.059 2.524

Ukraine 6.043 1.966

Defense Enterprise Fund 7.670 7.670

Science and technology center—Russia 20.313 20.313

Total $205.676 $105.450

Note: These figures were current as of March 1, 1995.

Page 36 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 37 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Page 38 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Now on pp. 2 and 4.

See pp. 2 and 4.

See pp. 4-5.

See pp. 14-15.

See comment 1.

Page 39 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See p. 4.

See comment 1.

See comment 2.

See comment 3.

See pp. 4 and 12-15.

Page 40 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See pp. 4 and 12-15.

See comment 4.

See pp. 4-5.

Page 41 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See pp. 2-5.

See p. 3.

See comment 5.

Page 42 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Now on p. 3.

See comment 6.

See comment 7.

See comment 8.

Now on p. 3.

Page 43 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Now on p. 3.

See comment 9.

See comment 10.

Now on p. 10.

Page 44 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See p. 11.

See comment 5.

Page 45 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See pp. 10-11.

Now on p. 11.

See p. 11.

Now on p. 12 .

See p. 12.

See comment 11.

Page 46 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See pp. 12-15.

See comment 1.

See comment 2.

See comment 12.

Page 47 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of Defense

See comment 13.

Now on p. 15.

See p. 15.

See comment 14.

Now on p. 16.

See p. 16.

Page 48 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of Defense

See comment 15.

See comment 16.

Now on p. 18.

See comment 10.

Now on p. 20.

See pp. 20 and 23-25.

Page 49 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Now on p. 22.

See p. 22.

Now on p. 23.

See comment 17.

Page 50 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See comment 18.

See comment 19.

See comment 20.

Now on p. 27.

See comment 21.

Page 51 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of Defense

See comment 22.

Now on pp. 27-30.

Page 52 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See p. 27.

See comment 23.

See p. 27.

See p. 28.

Page 53 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

See comment 24.

See p. 27.

See comment 25.

See p. 28.

Now on p. 28.

See p. 28.

Now on p. 35.

See comment 26.

Now on p. 35.

See p. 35.

Page 54 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

Page 55 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

The following are GAO’s comments on DOD’s letter dated June 2, 1995.

GAO Comments 1. The draft report states that without CTR assistance Ukraine could not

dismantle its nuclear weapons.

2. DOD’s statements that CTR-provided equipment is being used to cut up

heavy bombers and nuclear submarines are inaccurate. While some

CTR-provided equipment is in use at Engels Air Base, the guillotine shears

have not been used to cut up any aircraft to date. In addition, while heavy

equipment being provided through the CTR program to cut up nuclear

submarines is not yet operational, some CTR-supplied equipment is being

used to cut launcher tubes out of submarines.

3. We question DOD’s emphasis on the tangible impact of the program with

regard to dismantlement efforts. In various documents, DOD officials

attribute the deactivation of thousands of nuclear warheads and the

dismantlement of hundreds of strategic launchers to CTR assistance. When

asked to document their claims, DOD officials could not provide the data

needed to substantiate the direct impact of CTR dismantlement assistance.

4. According to a DOD official, the phrase “these warheads” refers to the

class of warheads rather than to a specific number of warheads moved.

5. As of May 18, 1995, the date of the draft report, our information on CTR

audits and examinations was accurate. We have modified the report to

reflect the most recent developments.

6. We have added language to clarify our meaning. The United States and

Russia have not agreed on the applicability of the Russian destruction

technology for a chemical weapons destruction facility because the

necessary data will not be available until the ongoing joint evaluation is

concluded. Unlike the U.S.-preferred incineration process, the Russian

technology has no record of performance outside the laboratory, and the

Russians have not provided sufficient data to allay U.S. concerns about the

technology’s technical and cost uncertainties. Without the joint evaluation

results, a U.S. commitment to support an uncertain technology would be

premature.

7. It is precisely because of the difficult history of chemical weapons

destruction in the United States with what is now a proven technology,

that we questioned the basis for DOD’s assumption that the Russian

Page 56 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

technology inevitably will be “validated” to be feasible and affordable for

use in a large-scale facility.

8. While the chemical weapons destruction project management may have

been persistent in its efforts to overcome U.S. and Russian differences, we

also must note that in many significant differences—such as selection of a

chemical weapons destruction technology and selection of the type of

chemical weapons (artillery- or air-delivered munitions) to be destroyed

first, among others—the Russian position has prevailed. We believe that

this reinforces DOD’s point on the difficulties the chemical weapons

destruction project faces.

9. We believe that it is necessary to link obligation rates to the final

reporting data for the critical joint evaluation study because the nature

and scope of future U.S. support for several efforts—the preliminary

implementation plan, the pilot demonstration system, and the Russian

chemical weapons destruction facility—are related directly to the results

of the testing.

10. In response to our questions, DOD provided us with several revised

“preliminary” funding breakouts and schedules, just prior to, during, and

after the time it received our draft report for comment. In the latter

revisions, the $34.3 million for additional technology development

activities to be determined—that we recommended be reduced—had

changed to show about $23 million for testing specific types of equipment,

and the remainder of the $34.3 million was reallocated to other parts of the

project.

11. Our understanding of such timelines was illustrated in our

October 1994 CTR report. (See page 1, footnote 1 of this report.) We stated

that the “. . . program was initially slowed by the time needed to complete

agreements between the United States and former Soviet republics, fully

develop projects, and comply with legislated requirements . . . .”

12. In our October 1994 CTR report, we also stated that the Russians do not

want U.S. assistance in dismantling their nuclear warheads. At that time,

DOD had no comment on our assessment.

13. Our draft report described how the CTR program is providing assistance

to help the Russians safely store components from dismantled nuclear

weapons and stated that the U.S. and Russia are discussing the provision

of supercontainers.

Page 57 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of Defense

14. As of May 18, 1995, the date of our draft report, the information on

dismantlement efforts in Kazakhstan was accurate. We have modified the

report to more accurately reflect the current status of these efforts.

15. The “Statement of Work for a Comprehensive Plan to Support the

Russian Chemical Weapons Destruction Program,” dated January 1994,

stated that a U.S. contractor would prepare a comprehensive plan to

“include all the key milestones for the destruction of the entire Russian

CW [chemical weapons] stockpile and the estimated associated costs.”

The preliminary implementation plan for the first site only is a significant

decrease in scope.

16. DOD is incorrect in stating that the draft report was “out-of-date.” We

noted in the draft report that the Russians—after a year-long delay—had

selected the site for the Central Analytical Laboratory in March 1995 and

we characterized this event as one of several recent positive

developments.

17. The draft report clearly distinguishes between nuclear material

protection, control, and accounting, and nuclear weapons security. Our

finding that the CTR program has made little progress in protecting nuclear

material that presents a proliferation risk refers to nuclear material

protection, control, and accounting projects not only at specific facilities,

but also to the establishment of national material control and accounting

systems in Russia. We also disagree with DOD’s comments that we

narrowly focused on one aspect of the program. Our assessment in this

area relates to all known sites where nuclear material directly usable in

nuclear weapons is located.

18. While we agree with DOD that Project Sapphire was a critical step in

protecting nuclear material that presented a proliferation risk, Project

Sapphire was not a CTR project. Project Sapphire was funded by State, DOD,

and Energy. We have added a footnote that explains that some CTR funds

were used to pay for DOD’s portion of Project Sapphire and that DOD’s

portion of Project Sapphire was not funded out of the material protection,

control, and accounting program for Kazahkstan. In addition, we believe

that Project Sapphire represents a unique response to a specific

proliferation threat and does not represent an ongoing strategy of the CTR

program to improve nuclear material protection, control, and accounting

in the FSU. We note that the administration is currently developing a

strategy to improve material protection, control, and accounting systems

at all known facilities using direct use material in the former Soviet Union.

Page 58 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

19. Although some progress has been made in other CTR projects that are

involved in improving protection of nuclear material, the projects involve

either (1) facilities using nuclear material that presents a low proliferation

risk (such as low enriched uranium and irradiated plutonium) or

(2) projects in their initial stages involving facilities using material

presenting a high proliferation risk (such as highly enriched uranium and

unirradiated plutonium). We have made changes to the draft that more

accurately show that the CTR program has made little direct impact in

protecting nuclear material that presents a high proliferation risk.

20. DOD’s comment on progress made with Russia under the

laboratory-to-laboratory program overstates the impact of fiscal year 1995

CTR funds on the program. The Department of Energy’s lab-to-lab program

has successfully completed a project to upgrade physical protection of

approximately 100 kilograms of highly enriched uranium at the Kurchatov

Institute in Moscow. However, the project was completed in

February 1995 using Energy’s funds. Fiscal year 1995 CTR funds for

Energy’s lab-to-lab program were not transferred to Energy until April 20,

1995.

21. We have revised the text of the report to acknowledge that most

defense conversion projects are focused on converting inactive defense

factories that still have production capability. We also acknowledge in the

report that DOD believes converting excess production capability will

alleviate pressure on Moscow to rearm or sell high-tech weapons abroad

and will also aid the Russian economy.

22. Although DOD has accelerated the start-up of 15 projects in a little more

than a year, we believe that it is too early to judge the success of these

projects. One of the projects that DOD gives high marks to in its comments

was considered by officials responsible for managing the program as

stalled from its inception. After receipt of our draft report, DOD officials

informed us of progress on this project.

23. The report already notes the primary purpose of the program is to

prevent proliferation.

24. This concept is not disputed anywhere in the report.

25. DOD’s assertion that it generally describes the recipients of Center

grants as “former Soviet” weapons scientists is incorrect. DOD often—in

testimony, budget submissions, and briefing documents—used the

Page 59 GAO/NSIAD-95-165 CTR: An Update
Appendix VII 

Comments From the Department of Defense

terminology, “former” weapons scientists or scientists “formerly” involved

in a weapons program. The Assistant Secretary of Defense, while testifying

before the House Appropriations Committee, Subcommittee on Defense,

on March 9, 1994, described the recipients as “former weapons scientists,”

and the 1996 Budget Submission describes the recipients as “scientists and

engineers formerly involved with weapons of mass destruction.”

26. The $27.67 million totals the amount notified to Congress for all the

republics.

Page 60 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

See comment 1.

Page 61 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

Now on pp. 2-5.

Page 62 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

Now on p. 3.

Now on p. 4.

See p. 4.

See comment 2.

See comment 3.

Page 63 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

Now on pp. 10-11.

See pp. 10-11.

Page 64 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

See comment 4.

Now on p. 12.

See comment 5.

Now on p. 15.

See p. 15.

Now on p. 15.

See p. 15.

See comment 6.

Page 65 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

Now on p. 24.

See p. 24.

Now on pp. 27-30.

Page 66 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

Now on p. 27.

See p. 27.

Now on p. 27.

See comment 7.

Page 67 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

Now on p. 27.

See p. 27.

Now on pp. 27-28.

See p. 27.

See p. 28.

See p. 28.

Page 68 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

See p. 27.

See comment 8.

Now on pp. 28-29.

See comment 9.

Now on p. 29.

See comment 10.

Page 69 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

Now on pp. 29-30.

See pp. 29-30.

Now on pp. 28-29.

See pp. 28-29.

Page 70 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

Now on p. 30.

See comment 11.

Now on pp. 30-31.

See coment 12.

Page 71 GAO/NSIAD-95-165 CTR: An Update
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Comments From the Department of State

The following are GAO’s comments on the Department of State’s letter

dated June 1, 1995.

GAO Comments 1. Classified enclosure concerning chemical weapons destruction issues

has been detached from the letter.

2. We have added language to clarify our meaning. The United States and

Russia have not agreed on the applicability of the Russian destruction

technology for a chemical weapons destruction facility because the

necessary data will not be available until the ongoing joint evaluation is

concluded. Unlike the U.S. preferred incineration process, the Russian

technology has no record of performance outside the laboratory, and the

Russians have not provided sufficient data to allay U.S. concerns about the

technology’s technical and cost uncertainties. Without the joint evaluation

results, a U.S. commitment to support an uncertain technology would be

premature.

3. State Department officials notified us that their written comments on

our draft report contained some out-of-date and incorrect information

concerning the Chemical Weapons Destruction project. As a result, State

officials stated in our exit meeting that State deferred to DOD concerning

program-specific comments. Consequently, we responded only to DOD’s

comments on program details.

4. Our information on CTR audits and examinations was accurate as of

May 18, 1995, the date of the draft report. We have modified the report to

reflect the recent progress in conducting such examinations.

5. Russia was dismantling its nuclear warheads and launchers before any

CTR dismantlement assistance arrived in September 1994. While Russia

appears to maintain a robust dismantlement rate, we could not determine

to what extent CTR assistance would accelerate the Russian dismantlement

rate.

6. While we do not take issue with State’s assertions about the political

impact of offering Belarus CTR assistance, the United States and Belarus

have yet to sign an implementing agreement detailing the requirements for

CTR dismantlement assistance.

7. DOD has often—in testimony, budget submissions, and briefing

documents—used the terminology, “former” weapons scientists or

Page 72 GAO/NSIAD-95-165 CTR: An Update
Appendix VIII 

Comments From the Department of State

scientists “formerly” involved in a weapons program. The Assistant

Secretary of Defense, while testifying before the House Appropriations

Committee, Subcommittee on Defense on March 9, 1994, described the

recipients as “former weapons scientists,” and the 1996 Budget Submission

described the recipients as “scientist and engineers formerly involved with

weapons of mass destruction.” The report notes that there is no

connection between Center-funded projects and weapons projects beyond

the fact that the same scientists could be working on both projects.

8. We cannot comment on the impact of anecdotal evidence.

9. We did not perform a statistical analysis of all Center projects. Rather,

based on the review of approximately 10 percent of the existing projects,

we point out that scientists working on Center projects could also be

working on current weapons programs. U.S. and Center officials, as well

as recipients, confirmed that no restrictions exist to prohibit this from

occurring. The text was changed to reflect the receipt of social benefits as

a reason for part-time employment at the institutes.

10. The example cited in the report does not display a basic

misunderstanding on our part. The report uses streak cameras as an

example of an item, funded by the Center, that is dual-use in nature. Streak

cameras are relevant in nuclear testing, the project was subject to the

dual-use review by the U.S. officials, and the final product could be subject

to export licensing.

11. We have revised the text of the report to acknowledge that most

defense conversion projects are focused on converting inactive defense

factories that still have production capability. Our report now points out

that DOD believes converting production capability will aid the Russian

economy and alleviate pressure on Moscow to rearm or sell high-tech

weapons abroad. Neither DOD or the Department of State have provided

any information showing how the industrial partnership program would

largely eliminate the capability to produce weapons of mass destruction.

12. This paragraph focuses on overall defense conversion and not just

weapons of mass destruction. Although the DOD defense conversion

program emphasizes converting weapons of mass destruction facilities,

not all conversion projects are converting these types of facilities. In one

case, a firm in Ukraine was formerly producing engines and parts for naval

vessels.

Page 73 GAO/NSIAD-95-165 CTR: An Update
Appendix IX 

Comments From the Department of Energy

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Now on p. 23.

Now on p. 23.

Now on p. 24.

Now on p. 24.

Now on p. 24.

Now on p. 24.

Page 74 GAO/NSIAD-95-165 CTR: An Update
Appendix IX 

Comments From the Department of Energy

Now on p. 24.

See comment 2.

Now on pp. 24-25.

Now on p. 24.

Now on p. 25.

Now on p. 25.

Page 75 GAO/NSIAD-95-165 CTR: An Update
Appendix IX 

Comments From the Department of Energy

See comment 3.

Page 76 GAO/NSIAD-95-165 CTR: An Update
Appendix IX 

Comments From the Department of Energy

The following are our comments on the Department of Energy’s letter

dated May 26, 1995 and memorandum dated May 17, 1995.

GAO Comments 1. We have changed the report to reflect wording changes suggested by the

Department of Energy.

2. The statement that currently there is no agreement with the Russians for

work at the 80 to 100 facilities is accurate. However, we have made

changes to the report to reflect the agreement in principle reached by the

U.S. and Russian lab-to-lab steering groups for work at MINATOM nuclear

weapons related facilities and Energy’s current efforts to negotiate

agreements for work at many of the other 80 to 100 facilities.

3. Energy’s assertion is incorrect. However, to more accurately reflect

Russia’s international obligations, we have added a footnote that Russia

has entered into a voluntary arrangement to meet international safeguards

at some of its civilian nuclear power facilities and research reactors.

However, this falls short of having to meet international standards for all

of its nuclear facilities as in the case of Ukraine and Kazakhstan. We also

added that Russia is a party to the Convention on the Physical Protection

of Nuclear Materials that obligates it to meet defined standards of physical

protection of nuclear materials.

Page 77 GAO/NSIAD-95-165 CTR: An Update
Appendix X 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

F. James Shafer

Pierre R. Toureille

Blake L. Ainsworth

Charles T. Bolton

Muriel J. Forster

Jo Ann T. Geoghan

Julie M. Hirshen

Beth A. Hoffman Leon

Jeffrey D. Phillips

Raymond A. Plunkett

Resources

Community and

Economic

Development

Division, Washington,

D.C.

Mary Alice A. Hayward

European Office Patrick A. Dickriede

(711118) Page 78 GAO/NSIAD-95-165 CTR: An Update
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