Volume 3, Issue 3 September 1999

National Security Report

Background and Perspective on Important National Security and Defense Policy Issues,

Written and Produced by

From the Chairman...

Chairman, House Armed Services Committee

Preventing Nuclear

Espionage:

Reforming DOE is the

Next Step

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Earlier this year,the bipartisan

“Cox committee”

released its detailed

report on the national security implications of U.S.

technology transfers to the People’s Republic of China

(PRC).

The Cox committee’s conclusions

served as a wake-up call for all who believed that America’s most sensitive

nuclear secrets were adequately protected. In fact, as the members of the

Cox committee unanimously concluded,

lax security at our nation’s nuclear laboratories facilitated the PRC’s theft of classified information on, “every currently deployed thermonuclear warhead in the U.S.

ballistic missile arsenal.” Indeed, the Cox

report acknowledges that the PRC’s espionage has targeted U.S. nuclear secrets

for 20 years, and concludes that such espionage penetration, “almost certainly

continues to the present.”

The Cox report is also critical of recent

security lapses. For instance, although

Administration officials were aware of security problems at DOE nuclear labs in

1995, the June 1999 report of President

Clinton’s own Foreign Intelligence Advisory Board (PFIAB) noted that DOE’s

compliance with Administration directives

to address security problems was,

“grudging and belated.” Secretary of EnThe Department of Energy (DOE) is responsible for the development

and maintenance of the

U.S. nuclear arsenal. Much

of this important work occurs at the Lawrence

Livermore, Los Alamos,

and Sandia nuclear laboratories in California and

New Mexico and involves

the most sensitive American nuclear secrets. For

many years, the adequacy

of security measures at

these facilities has been

subject to criticism, and in 1994, background checks on foreign visitors to the

Los Alamos and Sandia weapons laboratories were suspended. At the same

time that the number of foreign visitors

from sensitive countries increased from

500 to more than 1,600 between 1988 and

the mid-1990s, DOE’s counterintelligence

budget was declining. A series of reports by the General Accounting Office

documented serious security risks inherent in DOE’s foreign visitors program.

Starting in 1995, DOE intelligence officials became aware of evidence suggesting that China had obtained U.S. nuclear

secrets from the Los Alamos laboratory.

In 1996, the Deputy Secretary of Energy

recommended improvements to enhance

security, but they were not implemented

until 1998 when the Administration acknowledged the magnitude of the problem and initiated actions to address it.

In response to allegations of lax security at the nation’s nuclear weapons laboratories, on March 18, 1999, the President

directed his Foreign Intelligence Advisory Board (PFIAB), headed by former

Senator Warren Rudman, to undertake an

inquiry on the security situation at DOE’s

weapons laboratories. In June 1999, the

PFIAB issued its report to the President

and the Congress.

The PFIAB report was highly critical

of the Department of Energy’s failure to

adequately protect the nation’s nuclear

secrets. In an unusually blunt report,

“Science at its Best, Security at its

Worst,” the President’s advisors concluded that DOE was, “saturated with

cynicism, an arrogant disregard for authority, and a staggering pattern of denial.” They found that, “DOE and the

weapons laboratories have a deeply

rooted culture of low regard for and, at

times, hostility to security issues.” The

PFIAB maintained that these problems

have endured for 20 years – virtually

See Also:

Defense

Quotables

 Vol. 1, Issue 2

“The Department

of Energy: Time

for Reform”

Background

Brief

Background

Brief

Los Alamos National

Laboratory

Los Alamos National

Laboratory

Reforming the Department of Energy:

Safeguarding America’s Nuclear Secrets
2 National Security Report

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since the creation of DOE – and concluded that, “the Department of Energy

is incapable of reforming itself – bureaucratically or culturally....”

DOE’s nuclear security problems had

also been highlighted earlier in 1999 by

the bipartisan House Select Committee

on U.S. National Security and Military/

Commercial Concerns with the People’s

Republic of China (the so-called “Cox

committee”), headed by Representatives

Chris Cox (R-CA) and Norm Dicks (DWA). The Cox committee unanimously

concluded in its unclassified report that

China, “has stolen design information

on the United States’ most advanced

thermonuclear weapons.” China’s theft

of classified secrets includes information

on, “every currently deployed thermonuclear warhead in the U.S. ballistic missile arsenal.” The stolen information also

includes, “classified design information

for an enhanced radiation weapon (commonly known as the ‘neutron bomb’),

which neither the United States, nor any

other nation, has yet deployed.”

While the theft of such secrets began

in the 1970s, the committee noted that,

“significant secrets are known to have

been stolen as recently as the mid-1990s”

and that, “such thefts almost certainly

continue to the present.” Furthermore,

according to press reports, secret U.S.

nuclear weapons computer codes – more

valuable in some respects than nuclear

weapons design information – have also

been compromised.

In response to the Cox committee’s

recommendation that the Administration

conduct a comprehensive damage assessment of the strategic implications of

the loss of these secrets, George Tenet,

Director of Central Intelligence, established an independent panel to review

the damage to U.S. national security resulting from Chinese nuclear espionage.

The CIA report, which was independently reviewed by an outside panel

headed by retired four-star Admiral

David Jeremiah, concluded that China’s

successful nuclear espionage, “probably accelerated its program to develop

future nuclear weapons” by allowing

Chinese scientists, “to focus successfully down critical paths and avoid less

promising approaches to nuclear weapons designs.” In addition, the CIA report noted that China has also obtained

from the United States, “at least basic design information on several modern U.S.

nuclear reentry vehicles, including the Trident II” sea-launched ballistic missile.

The Administration has acknowledged

that it was slow to react to DOE’s serious

security problems. It was not until February 1998 that President Clinton issued

a directive to tighten security and undertake counterintelligence measures at the

labs. Nevertheless, on May 30, 1999,

Secretary of Energy Bill Richardson

stated on Meet the Press that security

reforms were not instituted until Fall 1998.

In March 1999, the President’s National

Security Advisor Samuel Berger acknowledged, “There’s no question that [China

has] benefited from this” transfer of

nuclear weapons information. In May

1999, Secretary Richardson conceded,

“There have been damaging security

leaks. The Chinese have obtained damaging information... during past administrations and the current administration.”

The PFIAB report praised Secretary

Richardson’s recent efforts to improve

security at the nation’s weapons labs and

DOE has indeed begun to take some corrective actions. A DOE employee at Los

Alamos laboratory suspected of passing

nuclear weapons information to China in

the late 1980s, and the subject of an FBI

investigation since late 1997, was fired

in March 1999. Secretary Richardson

called the employee’s transfer of classified information to an unclassified computer system, “a serious security breach

that is unconscionable.” Secretary

Richardson also asked Dr. John McTague,

former Vice President of Technical Affairs

at Ford Motor Company, to review DOE’s
National Security Report 3

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Secretary of Energy

Deputy Secretary of Energy

Policy & Staff

Support

Administrator

(Undersecretary)

Security

Counterlntelligence

Deputy Administrator

for Defense Programs

Deputy Administrator

for Defense Nuclear

Nonproliferation

Deputy Administrator

for Naval Reactors

National Security

Laboratories

Nuclear Weapons

Production Facilities

Staff Support

Personnel, General Counsel,

Legislative Affairs,

Public Affairs

DOE Nuclear Weapons Programs Management and Oversight

As Reorganized by the FY2000 Defense Authorization Act

Provided by the House Armed Services Committee

Office of

Intelligence

Policy

Formulation

Program Execution and Implementation

Office of

CounterIntelligence

National Nuclear Security Administration

foreign visitors program at the labs to

assess, “the balance between national

security and science.” Earlier this year,

Secretary Richardson ordered a two-week

suspension of classified computer activity at DOE’s weapons labs in order to

assess and improve the security of the

computer networks. Employee polygraphs were also ordered. However, despite some of these initial steps, it seems

clear that they will not be sufficient to

address many of the underlying causes

of DOE’s security problems.

According to the Cox report, “...the

new counterintelligence program at the

Department of Energy will not be even

minimally effective until the year 2000.”

Although Secretary Richardson proclaimed that, “our nation’s nuclear secrets are today safe and secure,” PFIAB

Chairman Rudman testified that the Secretary, “overstated the case.” Further,

the PFIAB notes that, “the core of the

Department’s bureaucracy is quite capable of undoing Secretary Richardson’s

reforms, and may well be inclined to do so

if given the chance.” More fundamental

and permanent changes are needed.

The PFIAB finally concluded that, “organizational disarray, managerial neglect,

and a culture of arrogance – both at DOE

headquarters and the labs themselves –

conspired to create an espionage scandal waiting to happen.... Reorganization

is clearly warranted to resolve the many

specific problems with security and counterintelligence in the weapons laboratories, but also to address the lack of accountability throughout the entire Department.” Indeed, on NBC’s Meet the

Press on June 20, 1999, Senator Rudman

referred to a complex wiring chart depicting the structure of DOE’s nuclear programs management (see chart on page

2), “the organization [of DOE] is dysfunctional... I refer to [this chart] as the wiring diagram of Frankenstein’s brain.” On

June 29, 1999, Rudman further explained

to the House Committee on Science that

his “Frankenstein’s brain” description

was particularly appropriate, “because

only a mad man could put together that

kind of a chart.” The need for organizational reform of DOE is unquestioned.

Congress Responds

The PFIAB’s conclusions and the inability of DOE to institute and sustain

needed reforms are consistent with the

findings of many other studies that, over

the years, have highlighted DOE’s organizational and bureaucratic problems.

The most recent of these studies include,

“The Organization and Management of

the Nuclear Weapons Program” by the

Institute for Defense Analyses in 1997,

and the 1999 report of the Commission

on Maintaining U.S. Nuclear Weapons

Expertise chaired by retired Navy Admiral Henry G. Chiles. Both reports were

critical of confused lines of authority and

a lack of mission focus within the

Department’s weapons activities.

The failure to correct chronic security

and counterintelligence problems led the

PFIAB to conclude that the Department,

“is a dysfunctional bureaucracy that has

proven incapable of reforming itself” and

to recommend the creation of a new

agency — either independent or semiautonomous — within the Department

to manage nuclear weapons activities.

Recognizing security and wider organizational problems, the House Armed

Services Committee earlier this year included a provision in the House-passed

defense authorization bill (H.R. 1401) to

clarify lines of authority and responsibility within DOE’s Office of Defense Programs. However, continuing revelations

of espionage and the June 1999 PFIAB

report made evident the need for more

fundamental reform.

The PFIAB recommended creation of

a new semi-autonomous agency within

DOE to oversee all nuclear weapons and

nonproliferation-related matters, streamline the management structure for these activities, and mandate that the director of

the new agency be appointed by the President subject to the Senate’s approval.

Consistent with the PFIAB’s recommendations, on August 4, 1999, conferees on S. 1059, the FY 2000 defense authorization bill, agreed to the creation of

a new semi-autonomous agency, the National Nuclear Security Administration

(NNSA), within DOE with responsibility

for nuclear weapons research and production (see chart on page 3 and table

on page 4). The head of the semi-autonomous agency works directly for and

reports directly to the Secretary of Energy — again, as recommended by the

PFIAB. The Secretary of Energy will retain all policy making authority for the

Department, while the NNSA Administrator (who will also be an

Undersecretary) will be charged with executing the nuclear weapons program.

The nuclear weapons laboratories and

production facilities will report directly

to the Administrator, providing unambiguous lines of authority and respon-
4 National Security Report

The National Security Report is archived on the House Armed Services Committee website at: http://www.house.gov/hasc/. Additional background

information may be obtained from the committee staff (x54151).

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1) creates a semi-autonomous agency within DOE,

the National Nuclear Security Administration (NNSA);

2) focuses within the NNSA the responsibility to

assure the safety, reliability, and effectiveness of U.

S. nuclear weapons and the promotion of

nonproliferation of weapons of mass destruction;

3) establishes an Administrator for the NNSA (also

an Undersecretary), and grants the Administrator

responsibility for programs and activities of the

NNSA;

4) provides that the NNSA Administrator works

directly for, and is subject to the authority, direction,

and control of the Secretary of Energy;

5) establishes dramatically clearer lines of authority

and responsibility with respect to DOE national

security programs not only by insisting that the NNSA

Administrator work directly for the Secretary of Energy,

but also by specifically requiring the directors of

the nuclear weapons laboratories to report directly

to the NNSA Administrator through the NNSA

Deputy Administrator for Defense Programs;

6) establishes DOE offices of intelligence and

counterintelligence necessary to implement policies

to safeguard U.S. nuclear weapons secrets;

7) requires continued full compliance by the NNSA

with all environmental, safety, and health laws,

regulations and requirements;

8) requires improved budgeting and contracting

practices for the NNSA; and

9) provides the NNSA Administrator with authorities

necessary to better shape his work force to attract

and retain high quality technical personnel.

Reforming the

Department of

Energy

sibility — and with it, substantially improved accountability. Intelligence and counterintelligence policy will be established by

the Secretary, while intelligence and counterintelligence offices

within the NNSA will be responsible for executing those policies.

These reforms will help ensure that DOE develops a clearer

mission focus on nuclear weapons research and production

and nonproliferation matters and that previously confused lines

of authority and responsibility are simplified and streamlined.

Such reform will establish conditions to help change the bureaucratic culture that permeates the Department of Energy

and the national security laboratories identified by the PFIAB.

Without such change, longstanding management, security, and

counterintelligence problems are unlikely to be solved. As the

PFIAB report concluded, the culture of the entrenched DOE

bureaucracy will continue to work against significant reform.

As additional details about the damaging consequences of

DOE’s security shortfalls continue to be revealed, it is clear

that the time for reorganization and reform is now. Working

with the Administration, Congress will play an active role in

ensuring that U.S. nuclear secrets are protected.

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ergy Bill Richardson conceded the point when he stated that

DOE, “could have been dramatically more energetic and conscious of the security problem.”

In the context of recent events and revelations, it is difficult

to argue that the Cox committee’s conclusions reflect a “worstcase scenario.” In fact, what is particularly troubling to me is

not just what we know about Chinese espionage at our nuclear

weapons labs, but what we don’t know. It is not unreasonable

to conclude, given the scope and magnitude of past and

present PRC espionage efforts, that the Cox committee’s findings may represent only the tip of the iceberg.

Unfortunately, DOE has proven itself institutionally unable to properly protect the nation’s sensitive nuclear secrets. In this regard, the PFIAB report concluded that DOE

is, “incapable of reforming itself.” The Department’s organization, and culture is not well suited to protecting the

nation’s nuclear secrets. Accordingly, the conference report on S. 1059, the FY 2000 National Defense Authorization Act, contains significant common sense organizational

reforms to ensure that similar security breaches are not

repeated in the future. These actions are an overdue step

toward more effective safeguarding of America’s vital

nuclear secrets and deserve the support of the Congress

and the President.

The Conference Report to S. 1059 — The Fiscal Year

2000 National Defense Authorization Act — provides

significant Department of Energy reforms. The

legislation:

From the Chairman...