Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists in Russia and Other Countries Needs to Be Reassessed
Published: 2007-12-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To address concerns about unemployed or underemployed Soviet-era weapons scientists in Russia and other countries, the Department of Energy (DOE) established the Initiatives for Proliferation Prevention (IPP) program in 1994 to engage former Soviet weapons scientists in nonmilitary work in the short term and create private sector jobs for these scientists in the long term. GAO assessed (1) DOE's reported accomplishments for the IPP program, (2) DOE's exit strategy for the program, and (3) the extent to which the program has experienced annual carryovers of unspent funds and the reasons for any such carryovers. To address these issues, GAO analyzed DOE policies, plans, and budgets and interviewed key program officials and representatives from 22 Russian and Ukrainian institutes.
section_title: What GAO Found
paragraphs: DOE has overstated accomplishments for the 2 critical measures it uses to assess the IPP program's progress and performance--the number of scientists receiving DOE support and the number of long-term, private sector jobs created. First, although DOE claims to have engaged over 16,770 scientists in Russia and other countries, this total includes both scientists with and without weapons-related experience. GAO's analysis of 97 IPP projects involving about 6,450 scientists showed that more than half did not claim to possess any weapons-related experience. Furthermore, officials from 10 Russian and Ukrainian institutes told GAO that the IPP program helps them attract, recruit, and retain younger scientists who might otherwise emigrate to the United States or other western countries and contributes to the continued operation of their facilities. This is contrary to the original intent of the program, which was to reduce the proliferation risk posed by Soviet-era weapons scientists. Second, although DOE asserts that the IPP program helped create 2,790 long-term, private sector jobs for former weapons scientists, the credibility of this number is uncertain because DOE relies on "good-faith" reporting from U.S. industry partners and foreign institutes on the number of jobs created and does not independently verify the number of jobs reported to have been created. DOE has not developed an exit strategy for the IPP program, even though officials from the Russian government, Russian and Ukrainian institutes, and U.S. companies raised questions about the continuing need for the program. Importantly, a senior Russian Atomic Energy Agency official told GAO that the IPP program is no longer relevant because Russia's economy is strong and its scientists no longer pose a proliferation risk. DOE has not developed criteria to determine when scientists, institutes, or countries should "graduate" from the program. In contrast, the Department of State (State), which supports a similar program to assist Soviet-era weapons scientists, has assessed participating institutes and developed a strategy to graduate certain institutes from its program. Instead of finding ways to phase out the IPP program, DOE has recently expanded the program to include new countries and areas. Specifically, in 2004, DOE began providing assistance to scientists in Iraq and Libya. In addition, the IPP program is working with DOE's Office of Nuclear Energy to develop projects that support the Global Nuclear Energy Partnership--a DOE-led international effort to expand the use of civilian nuclear power. In every fiscal year since 1998, DOE carried over unspent funds in excess of the amount that the Congress provided for the program. For example, as of September 2007, DOE carried over about $30 million in unspent funds--$2 million more than the $28 million that the Congress had appropriated for the IPP program in fiscal year 2007. Two main factors have contributed to this recurring problem--lengthy review and approval processes for paying former Soviet weapons scientists and delays in implementing some IPP projects.

section_title: Letter
paragraphs: During the decades before its dissolution, the Soviet Union produced a  cadre of scientists and engineers whose knowledge and expertise would  be invaluable to countries or terrorist groups trying to develop weapons of  mass destruction (WMD). After the Soviet Union’s collapse in 1991, many  of these scientists suffered significant cuts in pay or lost their government- supported work. The United States and other countries were concerned  that these scientists would sell their expertise to terrorists or countries of  concern, such as Iran, Iraq, and North Korea. To address this potential  proliferation concern, the Department of Energy (DOE) established the  Initiatives for Proliferation Prevention (IPP) program in 1994. The  objectives of the IPP program, which is implemented by the National  Nuclear Security Administration (NNSA), are to (1) in the short term,  engage weapons scientists and scientific research and development  institutes located in Russia and other countries of the former Soviet Union  in nonmilitary work by supplementing their existing salaries and (2) in the  long term, create sustainable, private sector jobs for former weapons  scientists. As of April 2007, DOE reported it had supplemented the salaries  of over 16,770 scientists, engineers, and technicians and created 2,790  long-term, private sector jobs in Russia and other countries of the former  Soviet Union.
Through October 1, 2007, there were 929 draft, active, inactive, and  completed IPP projects involving personnel at about 200 nuclear,  chemical, and biological institutes in Russia and other countries. Many IPP  projects involve more than one institute, and sometimes a single project  will involve institutes in more than one country. Over 80 percent of the  projects are focused on institutes in Russia, and the majority of these  projects involve scientists and institutes specializing in nuclear weapons- related work. Other countries that currently participate or have  participated in the IPP program include Armenia, Belarus, Georgia,  Kazakhstan, Ukraine, and Uzbekistan.
For each IPP project, DOE requires that at least 65 percent of the project’s  funding go to Russia and other countries as payments to individuals  actually working on the project or to the participating institutes in  payment for project-related supplies, equipment, and overhead. Because  the IPP program is not administered through a government-to-government  agreement, as are many other U.S. nonproliferation programs, DOE  distributes funding for IPP projects through three tax-exempt entities to  avoid paying foreign taxes: the International Science and Technology  Center (ISTC) in Russia, the Science and Technology Center in Ukraine  (STCU), and the U.S. Civilian Research and Development Foundation  (CRDF). These organizations transfer IPP funds directly to the personal  bank accounts of IPP project participants in Russia and other countries.  To receive payment for work on IPP projects, project participants must  submit paperwork to these organizations indicating, among other things,  whether they possess WMD experience.
Project proposals under the IPP program are prepared and submitted to  DOE by officials from the participating national laboratories, although a  project may also result from the initiative of a foreign institute or U.S.  company. Each participating DOE national laboratory provides technical  and financial oversight over a set of projects. Partnerships are formed by  the national laboratories between U.S. companies—known as industry  partners—and institutes in Russia and other countries. Industry partners  are engaged in projects through Cooperative Research and Development  Agreements with the participating DOE national laboratories, which  require cost-sharing to develop technologies for commercial application.  An Inter-Laboratory Board (ILAB) serves as the primary coordinating body  for the national laboratories involved in the IPP program. The ILAB  coordinates, reviews, and facilitates the activities of the participating  national laboratories and makes recommendations to DOE on how to  implement the program. Ultimate decision-making authority lies with the  DOE headquarters IPP program office.
To improve the potential of IPP projects to create sustainable jobs in  Russia and other countries, DOE requires that a U.S. industry partner be  identified before it approves and funds a project. A consortium of U.S.  industry partners—the United States Industry Coalition (USIC)—was  established in 1994. To participate in the IPP program, a company must  become a member of USIC and pay dues based on its size. USIC reviews  IPP project proposals for commercial potential and requires that all  project proposals have the basic outline of a business plan for  commercializing the technology involved. In addition, USIC annually  surveys its member companies to determine the commercial results of IPP  projects, such as the number of long-term, private sector jobs created.  DOE uses the results of USIC’s surveys to report to the Congress on the  number of jobs the IPP program created.
DOE’s IPP program is one of several nonproliferation programs focused  on reducing the potential proliferation risks posed by scientists from  Russia and other countries. Other such programs include the Science  Centers program funded by the U.S. government—under the auspices of  the Department of State (State)—and other nations; CRDF; and a variety  of initiatives primarily focused on biological institutes and implemented by  the Departments of Agriculture, Defense, Health and Human Services, and  State. In addition, from 1998 through 2006, DOE administered the Nuclear  Cities Initiative, whose goal was to create sustainable jobs for weapons  scientists in Russia’s closed nuclear cities and to help Russia accelerate  the downsizing of its nuclear weapons complex. The government-to- government agreement between the United States and Russia governing  this program expired and was not renewed, and, as a result, the program  was terminated in September 2006.
In 1999, we reviewed the IPP program and made several recommendations  to improve its management, including recommending that DOE (1) obtain  more accurate data on the background and number of scientists  participating in the program, (2) maximize the amount of funds going to  former Soviet Union weapons institutes, and (3) eliminate projects that do  not have commercial potential. The Congress, among other things,  subsequently prohibited DOE from using IPP program funding, available  after fiscal year 1999, to supplement the income of scientists and engineers  who (1) are currently engaged in activities directly related to the design,  development, production, or testing of chemical or biological WMD or a  missile system to deliver such weapons or (2) were not formerly engaged  in activities directly related to the design, development, production, or  testing of WMD or a missile delivery system for such weapons. The  Congress also prohibited DOE from funding any institute or scientist  determined by the Secretary of Energy to have made a scientific or  business contact about WMD with a representative of a “country of  proliferation concern.”
In this context, you asked us to review the IPP program. As agreed with  your office, we assessed (1) DOE’s reported accomplishments for the IPP  program, (2) DOE’s exit strategy for the IPP program, and (3) the extent to  which the IPP program has experienced annual carryover balances of  unspent funds and the reasons for such carryover.
To address these objectives, we examined 207 of the 929 IPP projects. We  selected this judgmental sample of draft, active, inactive, and completed  projects on the basis of a variety of factors, such as geographic  distribution, representation of all participating national laboratories, and  project costs. Of the 207 projects in our sample, we received or were able  to reconstruct information on payments to project participants for 97  projects. We interviewed key officials and analyzed documentation, such  as program guidance, project proposals, and financial information, from  DOE and its contractors at the Argonne, Brookhaven, Idaho, Lawrence  Berkeley, Lawrence Livermore, Los Alamos, Oak Ridge, National  Renewable Energy, Pacific Northwest, Sandia, and Savannah River  National Laboratories; the Kansas City Plant; and Defense and State. We  interviewed officials from 15 Russian and 7 Ukrainian institutes that  participate in the IPP program. We also spoke with officials from the  Federal Agency for Atomic Energy of the Russian Federation, which  oversees institutes involved in Russia’s nuclear weapons program.  Furthermore, we interviewed officials from 14 U.S. companies that  participate in the IPP program to better understand their perspective on  the program’s benefits and its implementation. In addition, we analyzed  cost and budgetary information from DOE, DOE’s national laboratories,  CRDF, ISTC, and STCU. We interviewed knowledgeable officials on the  reliability of these data, including issues such as data entry, access, quality  control procedures, and the accuracy and completeness of the data. We  determined that these data were sufficiently reliable for the purposes of  this review. Appendix I provides more details on our scope and  methodology, and appendix II provides more detailed information on the  institutes that we visited in Russia and Ukraine. We conducted our review  from October 2006 through December 2007 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: Historically, IPP projects were placed in one of three categories—Thrust 1,  Thrust 2, and Thrust 3. DOE now only supports Thrust 2 projects.  Specifically:    Thrust 1 projects were geared toward technology identification and  verification and focused on “laboratory-to-laboratory” collaboration, or  direct contact between DOE’s national laboratories and weapons institutes  and scientists in the former Soviet Union. These projects had no industry  partner and, according to DOE, were entered into to quickly engage  former Soviet weapons scientists and their institutes. DOE funded 447  Thrust 1 projects, 378 of which were completed. DOE no longer supports  Thrust 1 projects.
Thrust 2 projects involve a U.S. industry partner that agrees to share in the  costs of the project with DOE to further develop potential technologies.  The U.S. industry partner is expected to match the funds DOE provides,  either by providing in-kind support, such as employee time and equipment,  or by providing cash. Through October 2007, there were 479 IPP projects  in the Thrust 2 category.
Thrust 3 projects, with the exception of 1 project, did not receive any  financial support from DOE and were intended to be self-sustaining  business ventures. DOE no longer supports Thrust 3 projects. There were  only three Thrust 3 projects and the last project was completed in 2001.
All proposed IPP projects are reviewed by DOE’s national laboratories; the  IPP program office; and other agencies, including Defense and State,  before they are approved for funding. Initially, a national laboratory  proposes a project for consideration. As the national laboratory prepares  the proposal, the laboratory project manager, generally referred to as the  “principal investigator,” is responsible for including, among other things, a  list of intended participants and for designating the WMD experience for  each participant. The proposed participants are assigned to one of the  following three categories:    Category I—direct experience in WMD research, development, design,  production, or testing;   Category II—indirect WMD experience in the underlying technologies of  potential use in WMD; or   Category III—no WMD-relevant experience.
If the IPP project is approved, DOE transfers funding to the project  participants using payment mechanisms at CRDF, ISTC, or STCU. To be  paid by any of these entities, the project participants must self-declare  whether they possess weapons experience and indicate a more specific  category of WMD expertise, such as basic knowledge of nuclear weapons  design, construction, and characteristics. The weapons category  classifications these scientists declare are certified first by the foreign  institute’s director and then by the foreign government ministry overseeing  the institute. See appendix III for a more detailed list of the WMD  categories used by DOE, CRDF, ISTC, and STCU.
After the project passes an initial review within the proposing national  laboratory, it is further analyzed by the ILAB and its technical committees,  which then forward the project proposal to DOE headquarters for review.  DOE, in turn, consults with State and other U.S. government agencies on  policy, nonproliferation, and coordination considerations. The IPP  program office at DOE headquarters is ultimately responsible for making  final decisions, including funding, on all projects.
section_title: DOE Has Overstated the Progress Made on Key Performance Measures, Raising Doubts about the IPP Program’s Nonproliferation Benefits
paragraphs: DOE has not accurately portrayed the IPP program’s progress, according  to our analysis of two key measures used to assess the program’s  performance—the number of WMD scientists receiving DOE support and  the number of long-term, private sector jobs created. Many of the  scientists in Russia and other countries that DOE has paid through its IPP  program did not claim to have WMD experience. Furthermore, DOE’s  process for substantiating the weapons backgrounds of IPP project  participants has several weaknesses, including limited information about  the backgrounds of scientists proposed for an IPP project. In addition,  DOE has overstated the rate at which weapons scientists have been  employed in long-term, private sector jobs because it does not  independently verify the data it receives on the number of jobs created,  relies on estimates of job creation, and includes in its count a large  number of part-time jobs that were created. Finally, DOE has not revised  the IPP program’s performance metrics, which are currently based on a  1991 assessment of the threat posed by former Soviet weapons scientists.
subsections: section_title: DOE Has Supplemented the Salaries of Many Scientists in Russia and Other Countries Who Did Not Claim Direct Experience with WMD
paragraphs: A major goal of the IPP program is to engage former Soviet weapons  scientists, engineers, and technicians, and DOE claims to have  supplemented the incomes of over 16,770 of these individuals since the  program’s inception. However, this number is misleading because DOE  officials told us that this figure includes both personnel with WMD  experience and those without any WMD experience. We reviewed the  payment records of 97 IPP projects, for which information was available  and complete, and found that 54 percent, or 3,472, of the 6,453 participants  in these projects did not claim to possess any WMD experience in the  declarations they made concerning their backgrounds. Moreover, project  participants who did not claim any WMD experience received 40 percent,  or approximately $10.1 million, of the $25.1 million paid to personnel on  these projects. For example, in 1 project to develop a high-power  accelerator that was funded for $1 million, 88 percent, or 66, of the   75 participants who have received payments did not claim any previous  weapons-related experience.
On a project-by-project basis, we also found that DOE is not complying  with a requirement of its own guidance for the IPP program—that is, each  IPP project must have a minimum of 60 percent of the project’s  participants possessing WMD-relevant experience prior to 1991 (i.e.,  Soviet-era WMD experience). According to our analysis of the payment  records of 97 projects for which information was available and complete,  we found that 60 percent, or 58, of the 97 projects did not meet this  requirement. A factor contributing to this outcome may be a poor  understanding of the IPP program guidance among the ILAB  representatives of the 12 national laboratories participating in the  program. During our interviews with national laboratory officials, we  heard a range of opinions on the appropriate minimum percentage of  WMD scientists on individual IPP projects. For example, ILAB  representatives from 5 national laboratories indicated that they strive for a  minimum of 50 percent of WMD scientists on each IPP project; the ILAB  representative from the Pacific Northwest National Laboratory indicated a  goal of 55 percent. The ILAB representative from the National Renewable  Energy Laboratory indicated that he was not aware of any DOE policy  establishing a minimum percentage of participants with WMD  backgrounds on an IPP project.
Finally, many IPP project participants that DOE supports are too young to  have supported the Soviet Union’s WMD programs. Officials at 10 of the   22 Russian and Ukrainian institutes we interviewed said that IPP program  funds have allowed their institutes to recruit, hire, and retain younger  scientists. We found that 15 percent, or 972, of the 6,453 participants in the  payment records of the 97 projects we reviewed were born in 1970 or later  and, therefore, were unlikely to have contributed to Soviet-era WMD  efforts. This group of younger participants received approximately   14 percent, or about $3.6 million, of $25.1 million paid to project  participants in the 97 projects we reviewed.
While DOE guidance for the IPP program does not specifically prohibit  participation of younger scientists in IPP projects, DOE has not clearly  stated the proliferation risk posed by younger scientists and the extent to  which they should be a focus of the IPP program. The absence of a clear  policy on this matter has contributed to confusion and lack of consensus  among national laboratory officials involved in the program about the  extent to which younger scientists, rather than older, more experienced  WMD experts, should be involved in IPP projects. For example, the ILAB  representative at the Argonne National Laboratory told us that it would be  appropriate to question the participation of personnel born in the   mid-1960s or later since they most likely lacked weapons-related  experience. A representative at the Los Alamos National Laboratory who  has been involved with the IPP program for over a decade said that the  program should engage “second-generation” scientists born in 1980 or  later because doing so can help create opportunities for “third- and fourth- generation” scientists at facilities in Russia and other countries in the  future. Senior officials at the Lawrence Livermore National Laboratory  told us that scientists in Russia and other countries, regardless of their age  or actual experience in weapons-related programs, should be included in  IPP projects because weapons expertise can be passed from one  generation to the next.
section_title: DOE Lacks Necessary Information and a Rigorous, Formalized Review Process to Assess the WMD Credentials of IPP Project Participants
paragraphs: In 1999, we recommended that, to the extent possible, DOE should obtain  more accurate data on the number and background of scientists  participating in IPP program projects. DOE told us that it has made  improvements in this area, including development of a classification  system for WMD experts, hiring a full-time employee responsible for  reviewing the WMD experience and backgrounds of IPP project  participants, and conducting annual project reviews. DOE relies heavily on  the statements of WMD experience that IPP project participants declare  when they submit paperwork to receive payment for work on IPP projects.  However, we found that DOE lacks an adequate and well-documented  process for evaluating, verifying, and monitoring the number and WMD  experience level of individuals participating in IPP projects.
According to DOE officials, all IPP projects are scrutinized carefully and  subjected to at least 8, and in some cases 10, stages of review to assess  and validate the WMD experience of the project participants.  Responsibility for verifying the WMD experience and backgrounds of IPP  project participants rests not only with DOE, but with the national  laboratories, other federal agencies, and the entities responsible for  transmitting funding to the scientists in Russia and other countries (CRDF,  ISTC, or STCU). However, the ultimate responsibility for this assessment  rests with DOE’s IPP program office. Table 1 provides an overview of the  different stages involved in DOE’s assessment of IPP project participants’  WMD backgrounds.
In reviewing project documentation and in our discussions with officials  responsible for conducting these reviews, we found limitations throughout  this multistage assessment process. Specifically:    DOE has limited information to verify the WMD experience of personnel  proposed for IPP projects because government officials in Russia and  other countries are reluctant to provide information about their countries’  scientists. For example, ISTC officials told us that the Russian government  refuses to provide résumés for scientists involved in projects funded by  the Science Centers program, including IPP projects that use the ISTC  payment process; while CRDF officials indicated that both the Russian and  Ukrainian governments have shown increasing resistance to the policy  requiring the scientists to declare their WMD-related experience. Three  national laboratory officials stated that it is illegal under Russian law to  ask project participants about their backgrounds, and that instead they  make judgments regarding the WMD experience of the project participants  on the basis of their personal knowledge and anecdotal information.
Some IPP project proposals may advance from the national laboratories  for consideration by DOE with insufficient vetting or understanding of all  personnel who are to be engaged on the project. Contrary to the process  DOE laid out for the review of the WMD scientists’ backgrounds, senior  representatives at five national laboratories told us that they and their  project managers do not have sufficient time or the means to verify the  credentials of the proposed project participants. Furthermore, they believe  that DOE is primarily responsible for substantiating the weapons  experience of the individuals who are to be engaged in the projects.
DOE does not have a well-documented process for verifying the WMD  experience of IPP project participants, and, as a result, it is unclear  whether DOE has a reliable sense of the proliferation risk these  individuals pose. DOE’s review of the WMD credentials of proposed  project participants relies heavily on the determinations of the IPP  program office. We examined the proposal review files that the program  maintains, and we were unable to find adequate documentation to  substantiate the depth or effectiveness of the program office’s review of  the WMD experience of proposed IPP project participants. DOE officials  noted that they do not usually check the weapons backgrounds of every  individual listed in an IPP project proposal, but only the key project  scientists and a few of the personnel working with them. Specifically, in  none of the IPP project files that we reviewed did we find formal, written  documentation analyzing and substantiating the WMD backgrounds and  proliferation risks of the personnel to be engaged in those IPP projects.  Each of these files did, however, contain a comprehensive formal  assessment by DOE’s Office of International Regimes and Agreements  analyzing export control issues and compliance with U.S. nonproliferation  laws.
Officials at the three organizations DOE uses to make tax-free payments  for IPP projects—CRDF, ISTC, and STCU—also downplayed their  organizations’ ability to validate the backgrounds of the scientists  participating in IPP projects. CRDF officials stated that their organization  has not independently validated any of the weapons backgrounds of the  participating scientists, and they do not consider that a responsibility  under CRDF’s contract with DOE. Similarly, ISTC officials told us that  their organization cannot verify the backgrounds of scientists in projects  funded by the Science Centers program, including IPP projects that use  the ISTC payment process, and instead relies on the foreign institute’s  certification of the project participants. Finally, STCU relies on the  validation provided by the foreign institute’s director, and verifies this  information in annual project reviews during which a sample of project  participants are interviewed to confirm their WMD experience.
Because it can be a matter of months or longer between development of  an IPP project proposal and project implementation, the list of personnel  who are actually paid on a project can differ substantially from the  proposed list of scientists. For several IPP projects we reviewed, we did  not find documentation in DOE’s project files indicating that the  department was notified of the change of staff or had assessed the WMD  backgrounds of the new project participants. For example, 1 IPP project— to discover new bioactive compounds in Russia and explore their  commercial application—originally proposed 27 personnel and was  funded at $1 million. However, 152 personnel were eventually paid under  this project, and we did not find an updated list of the project personnel or  any indication of a subsequent review of the additional personnel by DOE  in the IPP project files. In another project to develop straw-fired boilers in  Ukraine funded at $936,100, DOE reviewed the backgrounds of 18  personnel who were part of the project proposal. However, CRDF  payment records indicated that 24 personnel were subsequently paid on  the project, only 5 of whom were listed in the original proposal DOE had  reviewed and approved. As a result, it is unclear whether DOE conducts  sufficient oversight on changes in the number or composition of the  workforce involved in IPP projects. For its part, CRDF informed us that  when an institute requests a change in project staff and that change is  approved by the participating national laboratory, CRDF does not report  these changes to DOE, but relies on the national laboratory to notify  relevant DOE officials.
The limited information DOE obtains about IPP project participants and  the weaknesses in DOE’s review of the backgrounds of these individuals  leave the IPP program vulnerable to potential misallocation of funds. In  our review, we found several examples that call into question DOE’s  ability to adequately evaluate IPP project participants’ backgrounds before  the projects are approved and funded. For example:    A National Renewable Energy Laboratory official told us he was confident  that a Russian institute involved in a $250,000 IPP project he oversaw to  monitor microorganisms under environmental stress was supporting  Soviet-era biological weapons scientists. However, during our visit to the  institute in July 2007, the Russian project leader told us that neither he nor  his institute was ever involved in biological weapons research. As a result  of this meeting, DOE canceled this project on July 31, 2007. DOE’s  cancellation letter stated that the information provided during our visit led  to this action. It further stated, “it is well documented in statute and in the   General Program Guidance that our projects must engage  Russians, and others, with relevant weapons of mass destruction or  strategic delivery means backgrounds. Violation of this requirement is an  extremely serious matter.”
In November 2006, DOE canceled a project in Ukraine intended to develop  a new type of fuel combustion system, 18 months after approving the  project and after spending about $76,000. DOE canceled this project when  it discovered an inadequate number of personnel with WMD backgrounds  involved in the project and after a Defense Contract Audit Agency (DCAA)  audit revealed other irregularities, including a conflict of interest between  the primary Ukrainian institute and the U.S. partner company. During the  interagency review of the project proposal, State officials questioned the  primary Ukrainian institute’s involvement in WMD. However, in our review  of DOE’s project files, we did not find evidence that these concerns  triggered a more-intensive evaluation of this institute by DOE prior to the  project’s approval.
A 2005 DCAA audit found that 90 percent of the participants on an IPP  project administered by the Pacific Northwest National Laboratory lacked  WMD experience. This project, which was designed to develop improved  biological contamination detectors, was funded at $492,739. Officials at the  national laboratory insisted that DCAA “was just plain wrong.” DOE and  national laboratory officials asserted that the project participants were  under instruction not to discuss their weapons involvement and, on the  basis of their personal knowledge of the Russian project leader and the  institute, they believed the project participants constituted a proliferation  risk. However, according to the payment records we reviewed, the Russian  project leader and other scientists involved in the project were not  prevented from declaring their WMD backgrounds to CRDF. Such  conflicting accounts, the absence of clear information, and the judgments  made by IPP program officials in assessing the proliferation risks posed by  IPP project participants underscore the difficulties the program faces and  the possibility that the program is funding personnel who do not constitute  a proliferation risk.
section_title: DOE Has Overstated the Number of Former Weapons Scientists Reemployed in Long-term, Private Sector Jobs
paragraphs: Although a senior DOE official described commercialization as the  “flagship” of the IPP program, we found that the program’s  commercialization achievements have been overstated and are misleading,  further eroding the perceived nonproliferation benefits of the program. In  the most recent annual report for the IPP program available at the time of  our review, DOE indicated that 50 projects had evolved to support 32  commercially successful activities. DOE reported that these   32 commercial successes had helped create or support 2,790 new private  sector jobs for former weapon scientists in Russia and other countries. In  reviewing these projects, we identified several factors that raise concerns  over the validity of the IPP program’s reported commercial success and  the numbers of scientists employed in private sector jobs. For example:    The annual survey instrument that USIC distributes to collect information  on job creation and other commercial successes of IPP projects relies on  “good-faith” responses from U.S. industry partners and foreign institutes,  which are not audited by DOE or USIC. In 9 of the 32 cases, we found that  DOE based its job creation claims on estimates or other assumptions. For  example, an official from a large U.S. company told us that the number of  jobs it reported to have helped create was his own rough estimate. He told  us he derived the job total by estimating the amount of money that the  company was spending at Russian and Ukrainian institutes and dividing  that total by the average salary for Russian engineers in the company’s  Moscow office.
We could not substantiate many of the jobs reported to have been created  in our interviews with the U.S. companies and officials at the Russian and  Ukrainian institutes where these commercial activities were reportedly  developed, due to conflicting information and accounts. For example,  officials from 1 U.S. company we interviewed claimed that 250 jobs at   2 institutes in Russia had been created, on the basis of 2 separate IPP  projects. However, during our visit to the Scientific Research Institute of  Measuring Systems to discuss one of these projects, we were told that the  project is still under way, manufacturing of the product has not started,  and none of the scientists have been reemployed in commercial  production of the technology. Similarly, during our site visit, officials at  the Institute of Nuclear Research of the Russian Academy of Sciences  could not confirm the creation of 350 jobs they had reported as a result of  several IPP projects relating to the production of radioisotopes. They  indicated that no more than 160 personnel were employed at their institute  in commercial activities stemming from those IPP projects, that most of  these jobs were only part time, and that they could not account for jobs  that may have been created at other institutes previously involved in the  projects. “A product, process, or service is generating revenue from sales or other economic value  added in the  or the U.S., based on an IPP project (either completed  or ongoing); and/or there is a private contractual relationship between the U.S. industry  partner and the  institute covering research and development work to  be done by the institute for the U.S. industry partner growing out of an IPP project.”
The lack of consensus among DOE and national laboratory officials  involved in the IPP program on a common commercialization definition  has created confusion and disagreement on which IPP projects should be  considered commercially successful. For example, DOE counted as a  commercial success one IPP project administered by the Pacific  Northwest National Laboratory to facilitate biodegradation of oil spills.  However, the national laboratory officials responsible for this project  disagreed with DOE’s characterization, in part because the project has not  generated any commercial revenues.
Furthermore, DOE’s broad-based definition of commercialization has  allowed it to overstate its commercialization accomplishments to include  part-time jobs created from and revenues derived from grants or contract  research. Specifically:    DOE counts part-time private sector jobs created, even if the scientists  employed in these part-time jobs also continue to work at the former  Soviet weapons institute. DOE policy does not require scientists  employed in a private sector activity resulting from an IPP project to sever  their relationship with their institute. In fact, in our review of the 2,790  jobs created, we found that 898, or nearly one third, of these jobs were  part-time jobs, meaning that the scientists in some cases may still be  affiliated with the institutes and involved in weapons-applicable research.
The sources of revenue for some commercially successful IPP projects  also call into question the long-term sustainability of some of the jobs  created. DOE reported that $22.1 million in total revenue was generated by  the foreign institutes or their spin-off companies as a result of commercial  activities stemming from IPP projects. Of this total, approximately   $4.5 million, or 20 percent, consisted of grants (including grants from the  Russian government); contract research; and other sources of income that  appear to be of limited duration, that are not based on commercial sales,  and that may not offer a sustainable long-term source of revenue. For  example, DOE reported that 510 jobs were created at the Kurchatov  Institute and other Russian institutes as the result of an IPP project to  develop thorium-based fuels for use in nuclear reactors. However, we  found that over 400 of those jobs were supported by a separate DOE  contract to evaluate the use of thorium fuels for plutonium disposition.  The Russian project participants told us that over 500 workers were  supported while receiving funding from the 2 DOE sources, but the project  is now completed, it has not been commercialized, and there are no more  than 12 personnel currently involved in efforts related to the project.
section_title: DOE Has Not Revised the IPP Program’s Performance Metrics to Reflect Updated Threat Information
paragraphs: The IPP program’s long-term performance targets do not accurately reflect  the size and nature of the threat the program is intended to address  because DOE is basing the program’s performance measures on outdated  information. DOE has established 2 long-term performance targets for the  IPP program—to engage 17,000 weapons scientists annually by 2015 in  either IPP grants or in private sector jobs resulting from IPP projects, and  to create private sector jobs for 11,000 weapons scientists by 2019.  However, DOE bases these targets on a 16-year-old, 1991 National  Academy of Sciences (NAS) assessment that had estimated approximately  60,000 at-risk WMD experts in Russia and other countries in the former  Soviet Union. DOE derived 17,000 scientists as its share of the total target  population by subtracting from the NAS estimate the number of WMD  scientists engaged by other U.S. government and international WMD  scientist assistance programs (such as State’s Science Centers program)  and making assumptions about attrition rates in the former Soviet WMD  workforce.
DOE officials acknowledged that the 1991 NAS study does not provide an  accurate assessment of the current threat posed by WMD scientists in  Russia and other countries. A 2005 DOE-commissioned study by the RAND  Corporation estimated that the population of unemployed or  underemployed weapons scientists in Russia and other former Soviet  states had decreased significantly. The RAND study provided rough  revised estimates of the number of WMD scientists in the former Soviet  Union, and DOE acknowledged in 2006 that the target population of WMD  experts in the former Soviet Union had dropped from the 1991 NAS  estimate of 60,000 to approximately 35,000 individuals. However, DOE has  not formally updated its performance metrics for the IPP program and, in  its fiscal year 2008 budget justification, continued to base its long-term  program targets on the 1991 NAS estimate.
Moreover, DOE’s current metrics for the IPP program are not complete or  meaningful indicators of the proliferation risk posed by weapons scientists  in Russia and other countries and, therefore, do not provide sufficient  information to the Congress on the program’s progress in reducing the  threat posed by former Soviet WMD scientists. The total number of  scientists supported by IPP grants or employed in private sector jobs  conveys a level of program accomplishment, but these figures are broad  measures that do not describe progress in redirecting WMD expertise  within specific countries or at institutes of highest proliferation concern.  DOE has recognized this weakness in the IPP program metrics and  recently initiated the program’s first systematic analysis to understand the  scope of the proliferation risk at individual institutes in the former Soviet  Union. DOE believes that setting priorities for providing support to foreign  institutes is necessary because (1) the economies in Russia and the other  countries of the former Soviet Union have improved since the program’s  inception, (2) former “at-risk” institutes are now solvent, and (3) the threat  of mass migration of former Soviet weapons scientists has subsided.  However, DOE believes that a concern remains over the “targeted  recruitment” of scientists and former WMD personnel. DOE officials  briefed us on their efforts in September 2007, but told us that the analysis  is still under way, and that it would not be completed until 2008. As a  result, we were unable to evaluate the results of DOE’s assessment.
section_title: DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead Has Expanded Efforts to Iraq and Libya and Is Using the Program to Support the Department’s Global Nuclear Energy Partnership
paragraphs: Russian government officials, representatives of Russian and Ukrainian  institutes, and individuals at U.S. companies raised questions about the  continuing need for the IPP program, particularly in Russia, whose  economy has improved in recent years. However, DOE has yet to develop  criteria for phasing-out the IPP program in Russia and other countries of  the former Soviet Union. Meanwhile, DOE is departing from the program’s  traditional focus on Russia and other former Soviet states to engage  scientists in new countries, such as Iraq and Libya, and to fund projects  that support a DOE-led initiative on nuclear energy, called the Global  Nuclear Energy Partnership (GNEP).
subsections: section_title: Russian Government Officials, Russian and Ukrainian Scientists, and U.S. Industry Representatives Questioned the Continuing Need for the IPP Program
paragraphs: Officials from the Russian government, representatives of Russian and  Ukrainian institutes, and individuals at U.S. companies who have been  long-time program participants raised questions about the continuing need  for the IPP program, given economic improvements in Russia and other  countries of the former Soviet Union. Specifically:    A senior Russian Atomic Energy Agency official told us in July 2007 that  the IPP program is no longer relevant because Russia’s economy is strong  and its scientists no longer pose a proliferation risk. Additionally, in  September 2006, the Deputy Head of the Russian Atomic Energy Agency  stated that Russia is no longer in need of U.S. assistance, and that it is  easier and more convenient for Russia to pay for its own domestic nuclear  security projects.
Officials from 10 of the 22 Russian and Ukrainian institutes we interviewed  told us that they do not see themselves or scientists at their institutes as a  proliferation risk. Russian and Ukrainian officials at 14 of the 22 institutes  we visited told us that salaries are regularly being paid, funding from the  government and other sources has increased, and there is little danger of  scientists migrating to countries of concern. However, many of these  officials said that they are concerned about scientists emigrating to the  United States and Western Europe, and that IPP program funds help them  to retain key personnel. Furthermore, many of these officials noted that  the program was particularly helpful during the difficult financial period in  the late 1990s.
Representatives of 5 of the 14 U.S. companies we interviewed told us that,  due to Russia’s increased economic prosperity, the IPP program is no  longer relevant as a nonproliferation program in that country. Some of  these company officials believe that the program should be reassessed to  determine if it is still needed.
In economic terms, Russia has advanced significantly since the IPP  program was created in 1994. Some of the measures of Russia’s economic  strength include the following:    massive gold and currency reserves, including more than $113 billion in a    a dramatic decrease in the amount of foreign debt—from about 96 percent  of Russia’s gross domestic product in 1999 to about 5 percent in April  2007; and rapid growth in gross domestic product—averaging about 6 percent per  year from 1998 to 2006.
In addition, the president of Russia recently pledged to invest substantial  government resources in key industry sectors, including nuclear energy,  nanotechnology, and aerospace technologies and aircraft production.  Many of the Russian institutes involved in the IPP program could benefit  substantially under these planned economic development initiatives,  undercutting the need for future IPP program support. In fact, officials at  many of the Russian institutes with whom we spoke told us that they hope  to receive increased government funding from these new presidential  initiatives.
In another sign of economic improvement, many of the institutes we  visited in Russia and Ukraine appeared to be in better physical condition  and more financially stable, especially when compared with their  condition during our previous review of the IPP program. In particular, at  one institute in Russia—where during our 1998 visit we observed a  deteriorated infrastructure and facilities—we toured a newly refurbished  building that featured state-of-the-art equipment. Russian officials told us  that the overall financial condition of the institute has improved markedly  because of increased funding from the government as well as funds from  DOE. In addition, one institute we visited in Ukraine had recently  undergone a $500,000 renovation, complete with a marble foyer and a  collection of fine art. Furthermore, we found that many institutes we  visited have been able to develop commercial relationships with Russian,  U.S., and other international companies on their own—outside of the IPP  framework—leading to increased revenues and commercial opportunities.  For example, officials at one Russian institute met with us immediately  following their successful negotiation of a new contract for research and  development activities with a large international energy company.  However, DOE officials noted that the economic recovery throughout  Russia has been uneven, and that DOE believes there are many facilities  that remain vulnerable. Even so, DOE officials told us that their intent is to  reorient the IPP program from assistance to cooperation, especially in  Russia, given the recent improvements in that country’s economy.
section_title: DOE Has Not Developed Criteria to Determine When Individuals or Institutes Should No Longer Receive IPP Funding
paragraphs: DOE has not developed an exit strategy for the IPP program, and it is  unclear when the department expects that the program will have  completed its mission. DOE officials told us in September 2007 that they  do not believe that the program needs to develop an exit strategy at this  time. However, DOE officials acknowledged that the IPP program’s long- term goal of finding employment for 17,000 WMD scientists in Russia and  other countries does not represent an exit strategy.
DOE has not developed criteria to determine when scientists, institutes, or  countries should be “graduated” from the IPP program, and DOE officials  believe that there is a continued need to engage Russian scientists. In  contrast, State has already assessed participating institutes and developed  a strategy—using a range of factors, such as the institute’s ability to pay  salaries regularly and to attract funding from other sources—to graduate  certain institutes from its Science Centers program. State and DOE  officials told us that the Science Centers and IPP programs are  complementary and well-coordinated. However, we found that the  programs appear to have different approaches regarding continued U.S.  government support at certain institutes. Specifically, DOE is currently  supporting 35 IPP projects at 17 Russian and Ukrainian institutes that  State considers to already be graduated from its Science Centers program  and, therefore, no longer in need of U.S. assistance. For example,  according to State documents, beginning in fiscal year 2003, State  considered the Kurchatov Institute to be graduated from its Science  Centers program and, according to the Deputy Executive Director of ISTC,  the institute is financially well-off and no longer needs U.S. assistance.  However, we found that since fiscal year 2003, DOE has funded 6 new IPP  projects at the Kurchatov Institute and a related spin-off company. DOE  officials acknowledged that coordination between State and DOE’s  scientist assistance programs could be improved.
Part of State’s exit strategy involves enhancing commercial opportunities  at some institutes through the Commercialization Support Program. This  program, which began in October 2005, is administered by ISTC with  funding from the United States, through State’s Science Centers program.  State aims to facilitate and strengthen long-term commercial self- sustainability efforts at institutes in Russia and other countries by  providing training and equipment to help them bring commercially viable  technologies to market through the Commercialization Support Program.  According to ISTC officials, 17 commercialization initiatives at institutes in  Russia have been supported through the program, 2 of which were  completed as of July 2007. DOE, State, and ISTC officials told us the IPP  program and the Commercialization Support Program have a similar goal  of finding commercial opportunities for weapons scientists in Russia and  other countries of the former Soviet Union. According to ISTC officials, a  key difference in the programs is that the Commercialization Support  Program can support infrastructure upgrades at foreign institutes, but,  unlike the IPP program, it is not used to support research and  development activities. DOE and State officials insisted that the programs  are complementary, but acknowledged that they need to be better  coordinated.
section_title: DOE Expanded IPP Efforts to Iraq and Libya and Is Working with Its Global Nuclear Energy Partnership to Maintain the IPP Program’s Relevance
paragraphs: DOE recently expanded its scientist assistance efforts on two fronts: DOE  began providing assistance to scientists in Iraq and Libya, and the IPP  program is working with DOE’s Office of Nuclear Energy to develop IPP  projects that support GNEP—a DOE-led international effort to expand the  use of civilian nuclear power. These new directions represent a significant  departure from the IPP program’s traditional focus on the former Soviet  Union. According to a senior DOE official, the expansion of the program’s  scope was undertaken as a way to maintain its relevance as a  nonproliferation program.
DOE has expanded the IPP program’s efforts into these new areas without  a clear mandate from the Congress and has suspended parts of its IPP  program guidance for implementing projects in these new areas.  Specifically:    Although DOE briefed the Congress on its plans, DOE officials told us that  they began efforts in Iraq and Libya without explicit congressional  authorization to expand the program outside of the former Soviet Union.  In contrast, other U.S. nonproliferation programs, such as Defense’s  Cooperative Threat Reduction program, sought and received explicit  congressional authorization before expanding their activities to countries  outside of the former Soviet Union. DOE officials told us they plan to ask  the Congress to include such language in future legislation.
In Libya, DOE is deviating from IPP program guidance and its standard  practice of limiting the amount of IPP program funds spent at DOE’s  national laboratories for project oversight to not more than 35 percent of  total expenditures.
Regarding efforts to support GNEP, DOE has suspended part of the IPP  program’s guidance that requires a U.S. industry partner’s participation,  which is intended to ensure IPP projects’ commercial potential.
subsections: section_title: Iraq
paragraphs: Since 2004, DOE has been working to identify, contact, and find  employment for Iraqi scientists in peaceful joint research and development  projects. DOE’s efforts were undertaken at the request of State, which has  overall responsibility for coordinating nonproliferation activities and  scientist assistance efforts in Iraq. DOE and State coordinate their  activities through regular meetings and correspondence, participation in  weekly teleconferences, interagency proposal review meetings, and  coordination on strategic planning and upcoming events. Through May  2007, DOE had spent about $2.7 million to support its activities in Iraq.  DOE has approved 29 projects, the majority of which are administered by  Sandia National Laboratories. These include projects on radon exposure,  radionuclides in the Baghdad watershed, and the development of salt  tolerant wheat strains. However, owing to the uncertain security situation  in Iraq, DOE and national laboratory officials told us that these are short- term projects. Sandia National Laboratory officials acknowledged that  most of the projects DOE is funding in Iraq have no commercialization  potential.
section_title: Libya
paragraphs: Similarly, DOE expanded its efforts to Libya at the request of State. DOE  spent about $934,000 through May 2007 to support 5 projects in Libya,  including projects involving water purification and desalination. However,  DOE is deviating from its IPP program guidance and standard practices by  placing no restrictions on the amount of IPP program funds that can be  spent at DOE national laboratories for oversight of these projects. DOE  limits spending at the national laboratories for IPP projects in all other  countries to comply with section 3136(a)(1) of the National Defense  Authorization Act for Fiscal Year 2000, which states the following: “Not  more than 35 percent of funds available in any fiscal year after fiscal year  1999 for the IPP program may be obligated or expended by the DOE  national laboratories to carry out or provide oversight of any activities  under that program.” DOE officials acknowledged that more than 35  percent of IPP program funds for projects in Libya have been and will  continue to be spent at the national laboratories. We found that through  May 2007, DOE spent about $910,000 (97 percent) at the national  laboratories, while spending about $24,000 (3 percent) in Libya. In a  written response to us on September 7, 2007, DOE noted that the IPP  program “will continue to operate in Libya on this basis [i.e., spending  more than 35 percent of funds at the DOE national laboratories], while  working with our legislative office to eliminate any perceived ambiguities  .” DOE informed us on October 24, 2007, that these efforts are  currently under way.
DOE officials estimate that about 200 scientists in Libya have WMD  knowledge and pose a proliferation risk. However, in contrast with its  activities in Russia and other countries, DOE’s focus in Libya is not on  engaging individual weapons scientists, but rather on converting former  WMD manufacturing facilities, because, according to DOE, the Libyan  government has made clear that it will continue to pay the salaries of its  former WMD scientists and engineers. In collaboration with State, DOE is  working to help scientists at Tajura, formerly the home of Libya’s nuclear  research center, set up and transition to research in seawater desalination  and analytical water chemistry. DOE and State coordinate on strategic  planning for and implementation of scientist engagement efforts in Libya.  According to State, coordination mechanisms include regular e-mail  correspondences, weekly interagency and laboratory teleconferences, and  quarterly meetings. DOE officials told us they plan to complete their  efforts in Libya by 2009.
section_title: Global Nuclear Energy Partnership
paragraphs: In fiscal year 2007, DOE also expanded the efforts of the IPP program to  provide support for GNEP—a DOE-led international effort to expand the  use of civilian nuclear power. In October 2006, a senior DOE official told  us that the department planned to use IPP projects to support GNEP as a  way to maintain the program’s relevance as a nonproliferation program.  On December 13, 2006, the IPP program office brought together national  laboratory experts to propose new IPP projects that could support GNEP.  Currently, six active or approved IPP projects are intended to support  GNEP. According to IPP program officials, DOE’s Office of Nuclear  Energy and Office of Science will be providing some funding to three of  these projects. According to DOE officials, because these funds will come  from other DOE offices and programs, they would not be subject to  congressionally mandated limitations on the percentage of IPP program  funds that can be spent at DOE national laboratories. As a result, DOE  officials told us they plan to use funding provided by the Office of Nuclear  Energy and the Office of Science to increase the amount spent at DOE  national laboratories for technical review and oversight of GNEP-related  IPP projects.
DOE has suspended some key IPP program guidelines, such as the  requirement for a U.S. industry partner, for IPP projects intended to  support GNEP. DOE officials told us that most GNEP-related IPP projects  do not have immediate commercial potential, but could attract industry in  the future. Furthermore, they said that GNEP-related IPP projects are  essentially collaborative research and development efforts between  Russian institutes and DOE national laboratories. DOE has yet to develop  separate written guidance for GNEP-related IPP projects, but told us it is  planning to do so. As a result, national laboratory officials we interviewed  told us that implementing procedures for GNEP-related IPP projects has  been piecemeal and informal, which has created some confusion about  how these projects will be managed and funded.
section_title: Multiple DOE and Contractor Reviews and Delays in Project Implementation Contribute to the IPP Program’s Large Balances of Unspent Program Funds
paragraphs: In every fiscal year since 1998, DOE has carried over unspent funds in  excess of the amount that the Congress provided for the IPP program,  primarily because of DOE and its contractors’ lengthy and multilayered  review and approval processes for paying former Soviet weapons  scientists for IPP-related work and long delays in implementing some IPP  projects. DOE and national laboratory officials told us they are attempting  to improve financial oversight over the IPP program, in part, to address  concerns about unspent program funds. To that end, DOE is developing a  new program management system, which it expects to fully implement in  2008—14 years after the start of the program.
subsections: section_title: DOE Has Carried Over Unspent Funds Greater Than the Amount the Congress Has Allocated to the IPP Program Each Fiscal Year since 1998
paragraphs: Since fiscal year 1994, DOE has spent about $309 million to implement the  IPP program, but has annually carried over large balances of unspent  program funds. DOE officials have recognized that unspent funds are a  persistent and continuing problem with the IPP program. Specifically, in  every fiscal year after 1998, DOE has carried over unspent funds in excess  of the amount that the Congress provided for the program the following  year. For example, as of September 2007, DOE had carried over about   $30 million in unspent funds—$2 million more than the $28 million that the  Congress had appropriated for the IPP program in fiscal year 2007. In fact,  as figure 1 shows, for 3 fiscal years—2003 through 2005—the amount of  unspent funds was more than double the amount that the Congress  appropriated for the program in those fiscal years, although the total  amount of unspent funds has been declining since its peak in 2003.
section_title: The IPP Program’s Persistent Annual Unspent Balances Have Resulted Primarily from Multiple Layers of Review and Delays in Project Implementation
paragraphs: Two main factors have contributed to DOE’s large and persistent  carryover of unspent funds: the lengthy and multilayered review and  approval processes DOE uses to pay IPP project participants for their  work, and long delays in implementing some IPP projects. DOE identified  three distinct payment processes that it uses to transfer funds to individual  scientists’ bank accounts in Russia and other countries—ISTC/STCU,  CRDF subcontract, and CRDF master contract. These three processes  involve up to seven internal DOE offices and external organizations that  play a variety of roles, including reviewing project deliverables, approving  funds, and processing invoices. DOE officials told us that these processes  were originally introduced to ensure the program’s fiscal integrity, but  they agreed that it was time to streamline these procedures.
Regarding the first payment process, as figure 2 illustrates, before payment  reaches project participants’ bank accounts, it passes from DOE  headquarters (which includes the IPP program office and NNSA’s Budget  Office), through DOE’s Energy Finance and Accounting Service Center,  which records the obligation of funds. DOE then transfers funding to the  Oak Ridge Financial Service Center, which pays the invoice by transferring  funds to ISTC or STCU. The funds arrive at ISTC or STCU, which  disburses them in quarterly payments to IPP project participants, upon  receipt of project invoices, quarterly technical reports, and documentation  from the participating former Soviet Union institutes that deliverables  were sent to the national laboratories. However, DOE and national  laboratory officials told us that this payment process has limitations.  Specifically, these officials told us that if there is a problem with a  deliverable, it is usually too late for DOE or the participating national  laboratory to request that ISTC or STCU stop the payment to the project  participants for the current quarter.
The other two processes that DOE uses to make payments to IPP project  participants involve CRDF. In most cases, DOE administers the CRDF  payment process through a subcontract with the participating national  laboratory. In some rare cases, DOE contracts directly with foreign  institutes through a CRDF “master contract.” For projects that use CRDF  to process payments, the entire amount of project funding is first  transferred to the participating national laboratory, where it is placed in  two separate accounts. The first account consists of no more than 30  percent of project funding for oversight costs incurred by the national  laboratory. The second account has all funding for the foreign project  participants, which is at least 70 percent of project funding.
As figure 3 illustrates, before IPP project participants receive payment  from CRDF, invoices and approvals of deliverables from the national  laboratories, as well as CRDF forms, are sent to DOE headquarters for  approval. DOE headquarters reviews the invoices against the contract and,  if the amounts match, approves them and sends documentation to the  DOE Procurement Office. DOE headquarters also notifies the participating  national laboratory of its approval, and the laboratory sends the funds  listed on the invoices to DOE’s Energy Finance and Accounting Service  Center. The DOE Procurement Office approves payment on project  invoices and notifies CRDF and DOE’s Energy Finance and Accounting  Service Center that payments should be made. Funds are then transferred  from the Energy Finance and Accounting Service Center to the Oak Ridge  Financial Service Center and then to CRDF. Once CRDF has received the  funds and the necessary approvals from DOE, it makes payments to the  project participants’ bank accounts.
DOE officials acknowledged the enormity of the problem that the lag time  between the allocation of funds, placement of contracts, and payment for  deliverables creates for the IPP program and told us they are taking steps  to streamline their payment processes. In addition, Russian and Ukrainian  scientists at 9 of the 22 institutes we interviewed told us that they  experienced delays in payments ranging from 3 months to 1 year. Among  the 207 projects we reviewed, we found several examples of payment  delays. For example:  In one project on the development and testing of a device to detect hidden  explosives, the Lawrence Livermore National Laboratory official who  heads the project told us that the U.S. industry partner had to pay Russian  scientists’ salaries until IPP funding could be released. Lawrence  Livermore officials involved in this project noted that delays in payments  to project participants slowed the project’s completion.
Officials at another Russian institute told us about two projects that  experienced payment delays. On the project to develop nuclear material  container security devices, they had shipped a deliverable to Sandia  National Laboratories in October 2006, but it took more than 4 months for  them to receive payment. On the project to produce a new computer  modeling code for use in Russian nuclear reactor simulators, Russian  institute officials told us payments were delayed 3 to 4 months. Officials  said that when they asked Brookhaven National Laboratory officials about  the delay, they were told it was due to DOE’s complex payment processing  systems.
Delays in implementing some IPP projects also contribute to DOE’s large  and persistent carryover of unspent funds. According to officials from U.S.  industry partners, national laboratories, and Russian and Ukrainian  institutes, some IPP projects experience long implementation delays. As a  result, project funds often remain as unspent balances until problems can  be resolved. For example, the ILAB representative from the Argonne  National Laboratory told us that, in his experience, IPP projects do not  finish on schedule about 60 percent of the time owing to a variety of  problems. These problems include implementation issues due to  administrative problems, the withdrawal or bankruptcy of the U.S.  industry partner, and turnover in key project participants. In our review of  207 IPP projects, we found several examples of projects that had  experienced implementation delays. For example:    One project to produce a low-cost artificial leg for use in developing  countries had $245,000 in unspent funds as of April 2007—19 percent of  the $1.3 million DOE allocated for the project. Because a testing device  needed for the project was not properly labeled when it was sent from the  United States, the Russian Customs Service rejected the device. Sandia  National Laboratory officials told us that this rejection had delayed project  implementation for nearly 1 year.
About 3 years into a project to create banks of chemical compounds  linked with computer databases for industrial use, the project’s U.S.  industry partner was bought out by a larger company. The amount  allocated for the project was nearly $1.4 million. The larger company lost  interest in the project, and, according to the DOE project manager, the  project sat idle for 3 or 4 years while DOE tried to get the company to take  action. Ultimately, the project was finished 8 years after it began.
Officials at one Russian institute we visited told us another IPP project to  improve a material to help neutralize radioactive waste had experienced  delays when the original U.S. industry partner went bankrupt, causing the  project to be temporarily suspended. According to these officials, it took   2 years to find a new U.S. industry partner.
Brookhaven National Laboratory officials described a delay of more than   6 months on a $740,000 project intended to develop new pattern  recognition software. According to Brookhaven officials, these delays  were caused by significant personnel turnover at the participating Russian  institute, mostly through the loss of key personnel who found better,  higher paying jobs outside of the institute.
section_title: DOE Is Implementing a New IPP Program Management System, in Part, to Address Problems with Large Balances of Unspent Funds
paragraphs: DOE is implementing a new system designed to better manage IPP  projects’ contracts and finances. DOE officials told us that this action was  undertaken in response to a recommendation we made in 2005 to improve  the management and internal controls at NNSA. Specifically, we  recommended in our August 2005 report, among other things, that NNSA’s  program managers maintain quick access to key contract records, such as  deliverables and invoices that relate to management controls, regardless of  whether the records are located at a national laboratory or headquarters.  Following our 2005 report, in 2006, DOE initiated an extensive review of  IPP financial and procurement procedures at participating national  laboratories. DOE and national laboratory officials told us that  representatives from the IPP program office visited all of the participating  national laboratories, except for the Kansas City Plant, and worked with  each laboratory’s financial department to find ways to reduce unspent  funds. DOE officials told us that, as a result, they were able to redirect  about $15 million in unspent program funds for immediate use on existing  IPP projects.
In addition, DOE officials said that they have imposed new management  controls to address project delays and reduce balances of unspent funds.  These controls include implementing a management reengineering plan  and enforcing control mechanisms, called “sunset” provisions, which  require national laboratory officials to justify continuing any IPP project  that experiences an implementation delay of 6 to 8 months. DOE has also  begun to implement its new Expertise Accountability Tool (EXACT), a  project and information management system that it launched in October  2006. DOE expects to fully implement the EXACT system in 2008—  14 years after the start of the IPP program. According to DOE officials,  EXACT will allow instant sharing of IPP project data between DOE and  the participating national laboratories. DOE officials believe that the  EXACT system will allow the IPP program office to better monitor and  oversee the progress of IPP projects at the national laboratories, including  reviews of IPP project participants’ WMD backgrounds and tracking  unspent funds at the national laboratories.
section_title: Conclusions
paragraphs: In our view, the purpose and need for the IPP program must be  reassessed. We believe that DOE has failed to clearly articulate the current  threat posed by WMD scientists in Russia and other countries and has not  adjusted the IPP program to account for the changed economic landscape  in the region and improved conditions at many of the institutes involved in  the program. Instead, DOE has continued to emphasize a broad strategy of  engagement with foreign scientists and institutes, much as it did more than  a decade ago, and it has not developed comprehensive plans for focusing  on the most at-risk individuals and institutes or for developing an end- game for the program. We believe that DOE’s inability to establish a clear  exit strategy for the IPP program has contributed to a perception among  foreign recipients that the program is essentially open-ended, represents  an indefinite commitment of U.S. support, and serves as a useful  marketing tool to attract and retain young scientists who might otherwise  emigrate to the United States or other western countries.
We believe that it is time for DOE to reassess the program to explain to the  Congress how the program should continue to operate in the future or to  discuss whether the program should continue to operate at all. Without a  reassessment of the program’s objectives, metrics, priorities, and exit  strategy, the Congress cannot adequately determine at what level and for  how long the program should continue to be supported. We believe that  such a reassessment presents DOE with an opportunity to refocus the  program on the most critical remaining tasks, with an eye toward reducing  the program’s scope, budget, and number of participating organizations.
Beyond reassessing the continuing need for the IPP program, a number of  management problems are negatively affecting the program. Specifically:    The fact that DOE has paid many scientists who claimed no WMD  expertise is particularly troubling and, in our view, undermines the IPP  program’s credibility as a nonproliferation program. The lack of  documentation of DOE’s review of IPP project participants also raises  concerns.
DOE does not have reliable data on the commercialization results of IPP  projects or a clear definition of what constitutes a commercially  successful IPP project, preventing it from providing the Congress with a  more accurate assessment of the program’s results and purported benefits.
Regarding its efforts to expand the IPP program, DOE’s projects in Iraq  and Libya represent a significant departure from the program’s original  focus on the countries of the former Soviet Union. While there may be  sound national security reasons for expanding efforts to these countries,  we are concerned that, unlike other federal agencies, DOE did not receive  explicit authorization from the Congress before expanding its program  outside of the former Soviet Union. Furthermore, in its efforts in Libya,  DOE is not adhering to its own guidance restricting the percentage of IPP  program funds that can be spent at DOE’s national laboratories on  oversight activities.
The lack of clear, written guidance for IPP projects intended to support  GNEP has led to confusion among national laboratory officials who  implement the IPP program.
Regarding the financial state of the IPP program, DOE’s long-standing  problem with large balances of unspent program funds raises serious  concerns about DOE’s ability to spend program resources in a timely  manner and about the method DOE uses to develop requests for future  budgets. Reform of the complex payment system used by the IPP program  to pay foreign scientists could help address some of these concerns.
Because Russian scientists and institutes benefit from the IPP program, it  seems appropriate that DOE should seek to take advantage of Russia’s  improved economic condition to ensure a greater commitment to jointly  held nonproliferation objectives.
The absence of a joint plan between DOE’s IPP program and ISTC’s  Commercialization Support Program, which is funded by State, raises  questions about the lack of coordination between these two U.S.  government programs that share similar goals of finding peaceful  commercial opportunities for foreign WMD scientists.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Energy, working with the  Administrator of the National Nuclear Security Administration, reassess  the IPP program to justify to the Congress the continued need for the  program. Such a reassessment should, at a minimum, include a thorough  analysis of the proliferation risk posed by weapons scientists in Russia and  other countries; a well-defined strategy to more effectively target the  scientists and institutes of highest proliferation concern; more accurate  reporting of program accomplishments; and a clear exit strategy for the  IPP program, including specific criteria to determine when specific  countries, institutes, and individuals are ready to graduate from  participation in the IPP program. This reassessment should be done in  concert with, and include input from, other federal agencies, such as State;  the U.S. intelligence community; officials in host governments where IPP  projects are being implemented; the U.S. business community; and  independent U.S. nongovernmental organizations.
If DOE determines that the program is still needed, despite the increased  economic prosperity in Russia and in light of the general trend toward  cost-sharing in U.S. nonproliferation programs in that country, we  recommend that the Secretary of Energy, working with the Administrator  of the National Nuclear Security Administration, seek a commitment for  cost-sharing from the Russian government for future IPP projects at  Russian institutes.
To address a number of management issues that need to be resolved so  that the IPP program operates more effectively, we recommend that the  Secretary of Energy, working with the Administrator of the National  Nuclear Security Administration, immediately take the following eight  actions:    establish a more rigorous, objective, and well-documented process for  verifying the WMD backgrounds and experiences of participating foreign  scientists;   develop more reliable data on the commercialization results of IPP  projects, such as the number of jobs created;    amend IPP program guidance to include a clear definition of what  constitutes a commercially successful IPP project;   seek explicit congressional authorization to expand IPP efforts outside of  the former Soviet Union; for IPP efforts in Libya, ensure compliance with the statutory restriction  on the percentage of IPP program funds spent on oversight activities at the  DOE national laboratories to no more than 35 percent;   develop clear and specific guidance for IPP projects that are intended to    streamline the process through which foreign scientists receive IPP funds  by eliminating unnecessary layers of review; and   seek to reduce the large balances of unspent funds associated with the IPP  program and adjust future budget requests accordingly.
Finally, we recommend that the Secretaries of Energy and State, working  with the Administrator of the National Nuclear Security Administration,  develop a joint plan to better coordinate the efforts of DOE’s IPP program  and ISTC’s Commercialization Support Program, which is funded by State.
section_title: Agency Comments and Our Evaluation
paragraphs: DOE and State provided written comments on a draft of this report, which  are presented in appendixes V and VI, respectively. DOE agreed with 8 of  our 11 recommendations to improve the overall management and  oversight of the IPP program, including augmenting the department’s  process for reviewing the WMD backgrounds of IPP project participants  and developing more reliable data on the commercialization results of IPP  projects. DOE disagreed with 2 of our recommendations and neither  agreed nor disagreed with 1 recommendation. In addition, State concurred  with our recommendation to improve coordination between DOE’s IPP  program and ISTC’s Commercialization Support Program, which is funded  by State. DOE and State also provided technical comments, which we  incorporated in this report as appropriate.
In its comments on our draft report, DOE raised concerns about our  characterization of the IPP program’s accomplishments, requirements, and  goals. DOE stated that we did not acknowledge actions the department  was undertaking during the course of our review and asserted that our  report does not provide a balanced critique of the IPP program because  we relied on an analysis of a judgmental sample of IPP projects to support  our findings. DOE also disagreed with our general conclusion and  recommendation that the IPP program needs to be reassessed. In addition,  DOE did not concur with our recommendation that the department ensure  compliance with the statutory restriction on the percentage of IPP  program funds spent on oversight activities at the DOE national  laboratories to no more than 35 percent. DOE neither agreed nor  disagreed with our recommendation that the department seek a  commitment for cost-sharing from the Russian government for future IPP  projects at Russian institutes.
DOE is incorrect in its assertions that we failed to acknowledge actions it  was undertaking during the course of our review, and that our report does  not provide a balanced critique of the IPP program. Our report  acknowledges actions DOE is taking to improve program management,  such as the development of a new program and financial management  system. Our review identified numerous problems and raised concerns  about the IPP program’s scope, implementation, and performance that we  believe should be addressed by DOE as part of a reassessment of the IPP  program. However, DOE disagreed with our recommendation that the IPP  program needs to undergo such a reassessment and noted in its comments  that the department believes it has already conducted such an assessment  of the program. We were aware that such broad internal reviews took  place in 2004 and 2006, but these assessments were conducted not of the  IPP program exclusively, but rather of all DOE efforts to assist weapons  scientists, including a complementary DOE program to assist workers in  Russia’s nuclear cities that has since been canceled. As a result, we believe  these assessments are outdated because the IPP program operates under a  significantly different set of circumstances today than when DOE  conducted its previous internal assessments.
Finally, DOE disagreed with our recommendation that the department  ensure compliance with the statutory restriction on the percentage of IPP  program funds spent on oversight activities at the DOE national  laboratories to no more than 35 percent. We believe DOE has  misconstrued our recommendation concerning its funding of projects in  Libya. We did not recommend, nor did we mean to imply, that DOE should  allocate 65 percent of total project funds to Libya for projects in that  country. Instead, our recommendation urges the department to ensure that  it complies with existing statutory restrictions on the percentage of IPP  funds that can be spent on oversight activities by DOE national  laboratories. Specifically, as DOE notes, section 3136 of the National  Defense Authorization Act for Fiscal Year 2000 provides that not more  than 35 percent of funds available in any fiscal year for the IPP program  may be spent by DOE national laboratories to provide oversight of  program activities. DOE’s IPP guidance and its standard practice have  been to implement this provision of law on a project-by-project basis, so  that no more than 35 percent of the funds for each project are spent by  national laboratories. However, with respect to projects in Libya, DOE is  deviating from its IPP guidance by placing no restrictions on the amount  of IPP program funds that can be spent at DOE national laboratories for  oversight of projects in Libya. We found that 97 percent of funds DOE  spent on projects in Libya through May 2007 were spent at DOE’s national  laboratories for project management and oversight. (See app. V for DOE’s  comments and our responses.)
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to interested  congressional committees; the Secretaries of Energy and State; the  Administrator, National Nuclear Security Administration; and the Director,  Office of Management and Budget. We will also make copies available to  others upon request. In addition, this report will be made available at no  charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Major contributors to this report are included in appendix  VII.
section_title: Appendix I: Scope and Methodology
paragraphs: To review the Initiatives for Proliferation Prevention (IPP) program, we  interviewed key officials and analyzed documentation, such as program  guidance, project proposals, and financial information from the  Departments of Energy (DOE), Defense, and State (State). We also  interviewed representatives from each of the 12 national laboratories—the  Argonne, Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore,  Los Alamos, National Renewable Energy, Oak Ridge, Pacific Northwest,  Sandia, and Savannah River National Laboratories and the Kansas City  Plant—that participate in the IPP program. Our interviews focused on  general program plans, strategies, and policies as well as issues associated  with specific IPP projects. We also interviewed and reviewed  documentation provided by the U.S. Civilian Research and Development  Foundation (CRDF) in Arlington, Virginia; the International Science and  Technology Center (ISTC) in Moscow, Russia; and the Science and  Technology Center in Ukraine (STCU) in Kyiv, Ukraine. We analyzed cost  and budgetary information from DOE, DOE’s national laboratories, CRDF,  ISTC, and STCU. Furthermore, we interviewed knowledgeable officials on  the reliability of these data, including issues such as data entry, access,  quality control procedures, and the accuracy and completeness of the  data. We determined that these data were sufficiently reliable for the  purposes of this review.
We visited Russia and Ukraine to discuss the implementation of the IPP  program with officials and personnel involved in IPP projects. While in  Russia and Ukraine, we interviewed officials from 15 Russian and 7  Ukrainian institutes that participate in the IPP program. We met with  officials from the Federal Agency for Atomic Energy of the Russian  Federation, which oversees institutes involved in Russia’s nuclear  weapons program. We also spoke with officials from the U.S. embassies in  Moscow and Kyiv.
Furthermore, we interviewed officials from 14 U.S. companies that  participate in the IPP program to better understand their perspectives on  the program’s goals, benefits, and challenges, and the results of specific  projects for which they have served as industry partners. We interviewed  the principal staff of the U.S. Industry Coalition, which represents  companies that participate in the IPP program. We also met with 5  nongovernmental experts who have followed developments in the IPP and  related nonproliferation programs to get their views on the program.
To assess the reported accomplishments of the IPP program, we  judgmentally selected for in-depth review 207 IPP projects, including draft,  active, inactive, and completed projects, in the Thrust 1, Thrust 2, and  Thrust 3 categories. These 207 projects represented over 22 percent of the  929 total IPP projects through September 2007. Of the projects that we  reviewed, 180 were with Russia, 21 were with Ukraine, 3 were with  Kazakhstan, and 3 were with Armenia. Because these projects were a  judgmental sample, the findings associated with them cannot be applied  generally to the IPP program as a whole.
We used the IPP information system to identify and select IPP projects.  This database, also referred to by DOE as the “Lotus Notes” system, was  developed and maintained by the Los Alamos National Laboratory and is  considered the program’s project proposal management system. The  system contains data on all IPP projects, from draft proposals to  completed projects, and includes such information as the project  description, statement of work, information on participating scientists in  the former Soviet Union and the U.S. industry partner, and financial  expenditures. DOE notified us that it was developing a new IPP project  management database, known as the Expertise Accountability Tool  (EXACT), and that some IPP project information contained in Lotus  Notes—especially pertaining to project expenditures and the number of  scientists supported—might not be current, accurate, or complete.  However, DOE officials told us that the EXACT system was not available  during our project selection phase, and that it would not contain  information on completed IPP projects. As a result, we used the Lotus  Notes database to make our project selection.
We selected projects on the basis of a number of criteria, such as project  status, project funding, the type of institute involved in the project,  geographic distribution, national laboratory representation, and the  claimed commercial success of the project. We also received and used  recommendations from DOE on criteria to consider in selecting projects  for review.
The status and dollar size of IPP projects were significant considerations  in our project selection. For example, we focused primarily on active  projects—that is, Thrust 2 projects that were approved, funded, or under  way—regardless of their dollar value. We also considered draft and  inactive Thrust 2 projects where proposed funding was over $800,000, as  well as completed Thrust 1 and Thrust 2 projects that spent over $250,000.  We also selected projects for review across a variety of institutes in the  former Soviet Union, including facilities with backgrounds in nuclear,  chemical, biological, and missile research and development.
The foreign countries and institutes where we planned to conduct  fieldwork also played a significant role in our project selection. Time and  cost constraints, as well as Russian government restrictions on access to  some facilities, limited the number and types of sites we were able to visit.  We concentrated on projects at institutes in Russia and Ukraine because  over 90 percent of all IPP projects are in these two countries. We focused  on IPP projects at institutes in the Russian cities of Moscow, Nizhny  Novgorod, and Sarov because these cities ranked high in our analysis of  several variables, including the total number of IPP projects, the number  of projects supporting commercial activities, and the total amount of  funding proposed in IPP projects in those locations. We also focused on  projects in the Ukrainian cities of Kyiv, because over 54 percent of IPP  projects in Ukraine are there, and Kharkiv, because of its relative  proximity to Kyiv and the number of projects there. We selected institutes  in the Russian and Ukrainian cities for site visits on the basis of several  criteria, including the total number of projects, the number of active  projects, the type of institute, and the number of projects commercialized  at each location.
We also selected projects administered by each of the national  laboratories and the Kansas City Plant that participate in the program as  well as projects managed by DOE headquarters. The selected projects  included 18 projects at Argonne, 22 at Brookhaven, 8 at Idaho, 18 at  Lawrence Berkeley, 33 at Lawrence Livermore, 14 at Los Alamos, 11 at  National Renewable Energy, 12 at Oak Ridge, 41 at Pacific Northwest, 15  at Sandia, and 2 at Savannah River; 9 projects at the Kansas City Plant; as  well as 4 projects managed by DOE headquarters.
The commercial success of an IPP project also played an important role in  its selection. For example, we selected for review all 50 projects that DOE  indicated as having led to commercially successful ventures identified in  its Fiscal Year 2005 IPP Program Annual Report. We were able to review  48 of the 50 commercially successful projects with the sponsoring national  laboratory, Russian or Ukrainian institute, or industry partner or some  combination of these three entities. We also reviewed 11 IPP projects that  had been identified as commercially successful in prior year annual  reports, but that were not addressed in the fiscal year 2005 report.
To assess the nonproliferation impact of the IPP program, we requested  and evaluated available information on the personnel at institutes in the  countries of the former Soviet Union participating in the projects we  selected for review. To determine the percentage of personnel without  weapons of mass destruction (WMD) experience, we added the total  number of project personnel who did not claim prior WMD experience— based on the WMD experience codes the project personnel self-declared  to one of the three IPP payment systems—and divided this figure against  the total number of project participants. We followed a similar process to  calculate the percentage of older personnel versus younger personnel. We  classified workers born in 1970 or later as younger workers because they  were unlikely to have contributed to Soviet-era WMD programs. We also  calculated the total amount of funds paid to these four different categories  of participants—those claiming WMD experience, those who did not, older  workers, and younger participants. In some cases, birth dates were not  available for some participants in the documentation we received; in those  instances, those individuals and the payments made to them were tracked  in separate categories.
We collected this information by providing officials at each of the 12  participating national laboratories with a template, requesting that the  laboratory project leader provide information on the personnel involved in  each project in our sample, including each participant’s full name, institute  affiliation, date of birth, WMD experience, and amount paid under the  project. In instances where we did not receive complete information from  the laboratories, we used payment records and other information on IPP  project participants maintained by the three payment mechanisms— CRDF, ISTC, and STCU—to complete data missing from the templates, or  to reconstruct payment records for the project participants in cases where  the national laboratory did not provide any information on the project  participants. Because of potential data reliability concerns raised by CRDF  on older IPP projects for which it processed payments, we consulted with  CRDF representatives and received recommendations on specific projects  that we should exclude from our analysis.
Among the 207 IPP projects we reviewed, no payments had yet been made  on 42 projects and 14 projects were inactive. Of the remaining 151 IPP  projects in our sample, we determined that 54 projects were too old for  evaluation, because DOE did not collect rosters of individual project  participants before 2000, or that sufficient and reliable information on the  project participants was not readily available. Thus, our review of the  backgrounds of the participants was conducted on 97 of the 207 projects  in our sample.
To assess the commercial results of IPP projects, we reviewed 48 of the   50 projects that contributed to the commercial successes presented in  DOE’s fiscal year 2005 annual report for the IPP program, which was the  most recent report available at the time of our review. DOE provided us  with the list of IPP projects associated with those commercial successes,  and we reviewed and evaluated the raw data collected by the U.S. Industry  Coalition for each of those projects in its 2005 commercial success survey,  which DOE used as the basis for the commercial successes cited in its  fiscal year 2005 IPP annual report. In addition, for the 48 commercially  successful projects we reviewed, we interviewed representatives from the  sponsoring national laboratory, Russian or Ukrainian institute, or industry  partner or some combination of these three entities to understand the  commercial activities and other details associated with these projects.  Specifically, we (1) met or conducted telephone interviews with   12 companies involved in the commercially successful projects,   (2) interviewed representatives at the national laboratories for 46 of the   50 projects reported to be commercially successful, and (3) visited 6 of the  institutes in Russia and Ukraine where IPP projects were reported to have  been commercialized.
To assess the IPP program’s future, we interviewed DOE and national  laboratory officials. We also assessed State’s planned exit strategy for its  Science Centers program. We discussed State’s strategy with DOE, State,  and ISTC officials. Regarding the IPP program’s expansion, we met with  officials and reviewed documentation from DOE, State, and the Lawrence  Livermore, National Renewable Energy, and Sandia National Laboratories  concerning the engagement of former weapons scientists in Iraq and  Libya. Regarding the program’s support to the Global Nuclear Energy  Partnership, we reviewed documents and interviewed officials from the  IPP program office, DOE national laboratories, and DOE’s Office of  Nuclear Energy.
To assess the extent to which the IPP program has had annual carryover  balances of unspent funds and the reasons for such carryover, we  obtained financial data from DOE’s IPP program office, DOE’s National  Nuclear Security Administration’s (NNSA) budget and finance office, and  the national laboratories participating in the program. We discussed and  reviewed these data with budget and program analysts at the IPP program  office and NNSA’s budget and finance office. In addition, we interviewed  knowledgeable officials on the reliability of these data, including issues  such as data entry, access, quality control procedures, and the accuracy  and completeness of the data. We determined that these data were  sufficiently reliable for the purposes of this review.
We conducted our review from October 2006 through December 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Additional Information on the Russian and Ukrainian Institutes That We Included in Our Fieldwork
paragraphs: During our review of the DOE’s IPP program, we interviewed officials  from 15 institutes in Russia and 7 in Ukraine in July 2007.
subsections: section_title: Russian Institutes
paragraphs: In July 2007, we met with Russian scientists and officials from institutes in  Moscow, Nizhny Novgorod, Pushchino, and Troitsk, Russia, to discuss  draft, active, inactive, and completed IPP projects.
subsections: section_title: Center for Ecological Research and BioResources Development
paragraphs: The Center for Ecological Research and BioResources Development was  established in 2000 through a $1.5 million grant from the IPP program. It  focuses on the discovery of novel bioactive compounds, biodiversity  collection and identification, and environmental bioremediation. The  center comprises 9 research institutes and is connected with 30  laboratories, with about 300 scientists. The center’s role is to coordinate  the activities of the member institutes, organize workshops and visits,  consult on the administration of IPP projects, provide report editing and  translation, perform financial reporting and examinations, and export  biomaterials to the United States and elsewhere. The center has shipped  over 50,000 biological samples. We discussed 5 IPP projects, including   2 completed, 2 active, and 1 draft project. When we discussed IPP projects  with the center, representatives from 2 partner institutes—the Institute of  Biochemistry and Physiology of Microorganisms and the Scientific Center  for Applied Microbiology and Biotechnology—were also present.
section_title: Gamaleya Scientific Research Institute of Epidemiology and Microbiology
paragraphs: The Gamaleya Scientific Research Institute of Epidemiology and  Microbiology was founded in 1891 for research into infectious diseases in  humans and manufactures more than 40 different pharmaceutical  products, including a tuberculosis vaccine. Gamaleya officials told us that  the institute employs 800 staff, including 120 scientists and 680 technicians  and administrative personnel. We visited the institute during our first audit  of the IPP program in 1999. We spoke with Gamaleya officials about   3 completed IPP projects. The institute is involved in marketing a  veterinary drug and is just starting to market an antiparasite drug for  honeybees. The third project is expected to produce a marketable product  in 2 to 3 years.
section_title: Institute for Nuclear Research of the Russian Academy of Sciences
paragraphs: The Institute for Nuclear Research of the Russian Academy of Sciences,  with branches in Moscow and Troitsk, was founded in 1970 to further  development of fundamental research activities in the field of atomic,  elementary particle, and cosmic ray physics and neutrino astrophysics.
The institute, with a staff of about 1,300 specialists, was formed from   3 nuclear laboratories of the P.N. Lebedev Institute of Physics of the  former Soviet Union’s National Academy of Sciences. About 600 people  work in the Troitsk branch of the institute. We spoke with institute  officials at this branch about 5 IPP projects—4 completed and 1 active.  During the first audit of DOE IPP programs, in 1999, we visited the  Moscow branch of this institute.
section_title: Institute of Applied Physics of the Russian Academy of Sciences
paragraphs: The Institute of Applied Physics of the Russian Academy of Sciences in  Nizhny Novgorod became an independent research facility in 1977. During  this time, its primary focus was working with transmitting and detecting  waves through different matters; in practical terms, this included work for  the Soviet military on radar tracking of missiles and supporting Russian  missile defense, materials science applications in radioelectronic  equipment, and submarine detection using radar. Institute officials told us  that since the beginning of the 1990s, the institute has reduced its staff  from about 2,000 employees, to roughly 1,100. However, it has retained a  large number of top-level researchers despite the fact that defense orders  plummeted to zero. Officials told us that the institute was in good shape  today, has adapted to the changing environment, and has created several  successful spin-off companies. We discussed 4 IPP projects with institute  officials—1 completed, 1 active, and 2 draft.
section_title: Institute of Biochemistry and Physiology of Microorganisms
paragraphs: The Institute of Biochemistry and Physiology of Microorganisms is 1 of   4 research institutes that make up the Center for Ecological Research and  BioResources Development. This institute is not a weapons institute and  never had a role in the Soviet biological weapons program. However,  institute officials noted that some scientists at the institute had come from  other institutes that were involved in biological warfare research. The  institute is home to the “All Russia Biological Culture Collection.” We  discussed 3 IPP projects—1 completed, 1 active, and 1 draft—with  officials from the institute. These were 3 of the 4 IPP projects we  discussed at the Center for Ecological Research and BioResources  Development.
section_title: Institute of General Physics of the Russian Academy of Sciences
paragraphs: The Institute of General Physics of the Russian Academy of Sciences was  founded in 1983 by Nobel Prize winner Academician A.M. Prokhorov, who  headed it until 1998 and now serves as the institute’s honorary director.  The institute began as Division “A” of the Lebedev Physical Institute. It  currently consists of 13 research departments and 5 research centers: (1)  natural sciences, (2) laser materials and technologies, (3) wave research,  (4) fiber optics, and (5) physical instrumentation. The institute has a staff  of 1,264, including 600 researchers. Its principal research areas encompass  quantum electronics and optics, solid state physics, micro- and  nanoelectronics, integral and fiber optics, plasma physics and  photoelectronics, radio physics and acoustics, laser medicine, and  ecology. We discussed 6 IPP projects with institute officials—4 completed  and 2 active.
section_title: Krasnaya Zvezda (Red Star)
paragraphs: Krasnaya Zvezda was established in 1972 to combine other organizations  that employed designers, developers, and manufacturers of space-based  nuclear power systems. Krasnaya Zvezda officials told us that they  continue to do some defense-related work. However, the institute now  mostly focuses on the civilian sector and work on civilian nuclear energy  projects, including radioactive waste management at civilian nuclear  power plants. The financial situation has been relatively steady over the  past years and officials anticipate that with the reorganization of the  Federal Agency for Atomic Energy of the Russian Federation, Krasnaya  Zvezda will be involved in many future civilian nuclear energy contracts.  Krasnaya Zvezda maintains a close relationship with the Kurchatov  Institute. We discussed 5 IPP projects—  3 completed and 2 draft—with Krasnaya Zvezda officials.
section_title: Kurchatov Institute
paragraphs: The Kurchatov Institute is one of Russia’s leading nuclear research  institutes. Through the mid-1950s, defense activities represented more  than 80 percent of the institute’s budget. By 1965, the defense portion had  been reduced to about 50 percent, and, although Kurchatov has scientists  who were involved with nuclear weapons programs in the past, today  there are virtually no defense-related contracts. The institute conducts  research on controlled thermonuclear fusion, plasma physics, solid state  physics, and superconductivity. It designs nuclear reactors for the Russian  Navy, the Russian icebreaker fleet, and space applications. Nuclear  experts from the Kurchatov Institute have helped set up and operate  Soviet-exported research reactors, including one at Libya’s Tajura nuclear  research center. In addition, the Kurchatov Institute is the subcontractor  for DOE’s Material Protection, Control, and Accounting program with the  Russian Navy and icebreaker fleet. We discussed 10 IPP projects with  Kurchatov officials—7 completed and 3 active. In 1999, we visited the  Kurchatov Institute during our first audit of DOE’s IPP program.
section_title: Moscow State University
paragraphs: One of the oldest Russian institutions of higher education, Moscow State  University was established in 1755. According to DOE and national  laboratory officials, Moscow State University departments of physics,  chemistry, and biology were involved in research related to WMD.  Specifically, according to DOE, when the Soviet Ministry of Defense  needed certain expertise or research done, it called upon individuals at  academic institutions, such as Moscow State University. We discussed 1  project DOE subsequently canceled and 1 draft IPP project with Moscow  State University officials.
section_title: Radiophysical Research Institute
paragraphs: The Radiophysical Research Institute of the Ministry of Education and  Science was founded in 1956 in Nizhny Novgorod. Since then outreach  efforts have been directed toward (1) supporting research in the fields of  natural sciences and astronomy and (2) expanding interest in research  work in such areas as astronomy, solar physics, the relationship between  the Sun and the Earth, and the associated geophysics. We spoke with an  official from the Radiophysical Research Institute, who was present during  our interview with officials from the Scientific Research Institute of  Measuring Systems. We discussed 1 project that ended in 2002 with this  official.
section_title: Scientific Research Institute of Measuring Systems
paragraphs: The Scientific Research Institute of Measuring Systems in Nizhny  Novgorod, Russia, was established in 1966 to develop and produce  electronics to support industry enterprises, including nuclear power plants  as well as nuclear research and developments. Today, the institute  researches, designs, and manufactures computer and semiconductor  equipment, mostly for use in the Russian energy industry. The institute  also develops and manufactures software and control systems for gas  lines, and thermal and nuclear power stations. We discussed 3 IPP projects  with officials—1 active and 2 completed projects.
section_title: Afrikantov Experimental Machine Building Design Bureau
paragraphs: The State Unitary Enterprise I.I. Afrikantov Experimental Machine  Building Design Bureau was founded in 1947 as a component of the Gorky  Machine Building Plant Design Bureau to create equipment for nuclear  industry. Later, as the mission expanded to the creation of various nuclear  reactors, the design bureau was separated from the Gorky Machine  Building Plant. Currently, the Afrikantov Experimental Machine Building  Design Bureau employs about 3,400 staff and is one of the lead design  organizations in the industry, supporting a large scientific and production  center for nuclear power engineering. Since the 1960s, the institute has  been the chief designer of ship-based reactor plants and fast neutron  reactors. One of the institute’s significant achievements is the creation of  innovative integral reactors with natural and forced coolant circulation.  The institute actively participates in the creation of nuclear power  installations abroad and has scientific and technical cooperative  arrangements with the International Atomic Energy Agency, and national  laboratories and companies in China, France, India, Japan, South Korea,  and the United States. We discussed 2 draft IPP projects with officials  from the institute.
section_title: Soliton-NTT Research Center
paragraphs: Soliton is a private company that was spun off from the Kurchatov  Institute in the early 1990s. Soliton was formed by scientists from the  Kurchatov Institute to convert defense technologies to civil purposes and  to commercialize these technologies. Before working for Soliton, many  Soliton employees were involved in weapons-related activities at the  Kurchatov Institute, and most still retain some ties to Kurchatov. Soliton  has official permission to use scientists from other institutes as part of the  effort to commercialize former weapons laboratories. Soliton was  organized so that small-scale nonweapons projects could be undertaken  using the talents of several weapons scientists from a variety of institutes.  We discussed 6 IPP projects with Soliton officials—5 completed and 1  active.
section_title: Russian Federal Nuclear Center—All-Russian Scientific Research Institute of Experimental Physics
paragraphs: In 1946, the Soviet government established the All-Russian Scientific  Research Institute of Experimental Physics in Sarov, where the first Soviet  nuclear bomb was designed and assembled. In Soviet times, the institute’s  mission included the design of nuclear warheads and the development of  experimental and prototype warheads. Today, the safety and reliability of  the Russian nuclear stockpile are the institute’s primary missions.  According to information provided by the institute, since 1990, it has  increasingly developed international collaboration in unclassified science  and technology areas. The institute employs about 24,000 people,  approximately half of whom are scientists or engineers, and is the largest  research institution in Russia that successfully handles defense, science,  and national economic problems. Under the current nuclear testing  moratorium, nuclear weapons research and development activities are  concentrated at computational and theoretical, design, and test divisions  of the institute. During our earlier audit of DOE’s IPP program, we  interviewed officials from this institute in 1998. We discussed 10 IPP  projects—5 active and 5 completed—with institute officials.
section_title: Zelinsky Institute of Organic Chemistry
paragraphs: The Zelinsky Institute of Organic Chemistry of the Russian Academy of  Sciences, founded in 1934, is one of the world’s largest scientific centers in  the fields of organic chemistry, organic catalysis, and chemistry of  biologically active compounds. It employs about 600 people, although it  had over 1,300 at its peak in the 1980s. In addition, about 150 students are  engaged in graduate studies at the institute. Officials told us that until the  early 1990s, the institute was involved in some defense-related activities,  but it has not been involved in any WMD-related work since the early  1990s. The institute mostly worked on research related to high explosives  and solid rocket fuel (not chemical weapons). We discussed 3 IPP  projects—2 completed and 1 canceled—with institute officials.
section_title: Ukrainian Institutes
paragraphs: While in Ukraine, we met with representatives from 7 institutes based in  Dnipropetrovsk, Kharkiv, and Kyiv and discussed 18 IPP projects with  scientists and institute officials.
subsections: section_title: E.O. Paton Electric Welding Institute
paragraphs: The E.O. Paton Electric Welding Institute was founded in 1934, and has  become one of the largest research institutes in the world, with about  8,000 employees (3,000 at the headquarters in Kyiv). The institute is a  multidisciplinary scientific and technical complex involved in fundamental  and applied research in the field of welding and related technologies;  development of technologies, materials, equipment, and control systems;  rational welded structures and parts; and methods and means for  diagnostics and nondestructive testing. The institute undertakes research  in all phases of electric welding and certain specialized related processes,  such as brazing, explosive forming, electrometallurgy, and friction  welding. The institute’s work covers welding of virtually all metals and  alloys as well as ceramics in thicknesses varying from submicron to tens  of centimeters. The institute also develops welding equipment,  manufactures pilot plants, and develops welding consumables. We  discussed 7 IPP projects—4 completed and 3 active—with E.O. Paton  officials and Pratt and Whitney Kyiv employees at 3 Paton facilities in  Kyiv.
section_title: International Center for Electron Beam Technology
paragraphs: The International Center for Electron Beam Technology is a spin-off  institute from the E.O. Paton Welding Institute and is located nearby in  Kyiv. The center derives more than half of its funding from IPP funds and  was created in the early 1990s by Paton employees specifically to take on  projects with international organizations. According to institute officials,  they do not receive any funding for their activities from the Ukrainian  government. However, they also told us that financially, their situation is  much better than 14 years ago, but that all of their research equipment is  out of date. All of the IPP funds are used to pay scientists’ salaries, and  they do not have other funds for new equipment. We discussed 2 IPP  projects—1 completed and 1 active—during the interview.
section_title: Institute for Metal Physics
paragraphs: The Institute for Metal Physics is part of the Ukrainian Academy of  Sciences and employs about 600 staff—about half researchers and half  support staff. The number of staff is down from a peak of 1,600 in Soviet  times but has been stable for the past 5 to 6 years, according to institute  officials. These officials told us that during the Soviet era, about 80 percent  of the institute’s work was related to missile delivery systems. The  institute became completely divorced from weapons work in the mid  1980s. Today, virtually all work is commercial. During our visit, we  discussed 1 active IPP project.
section_title: International Institute of Cell Biology
paragraphs: The International Institute of Cell Biology is a nonprofit entity founded in  1992 by the Ukrainian Academy of Sciences. The International Institute of  Cell Biology employs about 150 people, about one third of whom have  doctorates. It is closely affiliated with the Institute of Cell Biology and  Genetic Engineering, founded in 1988, and the Institute of Microbiology  and Virology founded in 1928. The Institute of Cell Biology and Genetic  Engineering is one of the key laboratories involved with plant genetic  engineering in the former Soviet Union and offers substantial expertise in  tissue culture initiation, preservation and maintenance, and gene transfer  and expression. The Institute of Microbiology and Virology, with about 300  scientists, hosts the second largest collection of microorganisms in the  countries of the former Soviet Union. The official we interviewed told us  that the Institute of Microbiology and Virology was involved in defense  efforts involving biological agents during Soviet times. Researchers from  both of these institutes were involved in the International Institute of Cell  Biology’s work with the IPP program. The deputy director told us that  there has been a significant brain drain over the years. Over the last 15  years, 50 scientists left the institute and went to western-oriented  countries, such as Germany and Australia. We discussed 1 completed IPP  project. However, the deputy director told us that he is planning to apply  for 2 more projects in the future.
section_title: Intertek, Ltd.
paragraphs: Registered as a private company in 2000, Intertek, Ltd., was founded by a  man who was a professor of Aircraft Engines and Technology at the  National Aerospace University in Kharkiv until 2004. We discussed an IPP  project, at the draft stage, with Intertek’s director and a representative  from a partner institute, the State Design Office Yuzhnoye. The director  told us that Intertek currently employs about 15 people and would expand  to 40 if the IPP project starts up. Most of the staff would be drawn from  the National Aerospace University in Kharkiv.
section_title: Kharkov Institute of Physics and Technology
paragraphs: Kharkov Institute of Physics and Technology, one of the oldest and largest  centers for physical science in Ukraine, was created in 1928 to research  nuclear and solid-state physics. The institute, located in Kharkiv, Ukraine,  currently has 2,500 employees, down from about 6,500 employees before  1991. Many young specialists left during the difficult financial period of the  late 1990s for Brazil, Canada, France, Germany, Israel, the Netherlands,  Sweden, the United Kingdom, and the United States. Institute officials are  not aware of any specialists who have either left Ukraine for a country of  concern or provided any information to such a country. Since 2004, the  institute has been under the Ukrainian Academy of Sciences and is  Ukraine’s lead organization on scientific programs for nuclear and  radiation technologies. The institute’s economic condition has  significantly improved over the past 10 years. It is receiving more direct  funding from the Ukrainian federal budget and also receives grants from  U.S. and European programs. Assistance partners include STCU and IPP.  IPP funding makes up no more than 2 percent of the total budget. We  discussed 6 IPP projects—1 draft, 2 active, and 3 completed—with  institute officials.
section_title: State Design Office Yuzhnoye
paragraphs: The State Design Office Yuzhnoye in Dnipropetrovsk was founded in 1954  for researching and engineering space and rocket technology. The institute  has designed and manufactured many varieties of ballistic missile  complexes, and designed and launched 70 types of spacecraft. Once  Ukraine gained its independence in 1991, Yuzhnoye, the sole Soviet missile  design facility located outside of the Russian Federation, discontinued its  work on ballistic missiles. However, since 1994, Yuzhnoye personnel,  under a contract with the Russian Strategic Rocket Forces, have continued  to provide a wide range of services aimed at extending the service life of  those missile complexes still in use. In addition, the institute has  diversified its production to include agricultural machinery, such as  combines; a line of food processing accessories; and trolleys. We met with  an official from Yuzhnoye during our interview with Intertek, Ltd., and  discussed 1 draft IPP project on which the 2 institutes are collaborating.
section_title: Appendix III: Classification Systems Used to Assess IPP Project Participants’ Knowledge of Weapons of Mass Destruction
paragraphs: This appendix provides information on the classification systems DOE and  the three entities that make IPP project payments to recipients in Russia  and other countries use to classify the WMD expertise of the personnel  participating in an IPP project.
DOE, for example, classifies personnel into one of three categories:  1.  Direct experience in WMD design, production, or testing.  2.  Experience in research and development of WMD underlying  technology.  3.  No WMD-relevant experience.
DOE also requires that a preponderance of staff working on its projects  have had WMD-relevant experience before 1991 (i.e., fall in categories 1 or  2 above). According to DOE, “the meaning of ‘preponderance’ is taken to  be 60 percent, as a bare minimum. Two thirds would be better, and  anything above that better still.”
There is no consistent approach to categorizing the proposed project  personnel by the national laboratories in the lists they submit in the  proposal to DOE for review. In some cases, the proposed personnel are  categorized using the DOE classifications. But in other cases, the  individuals in the project proposal are classified using weapons  experience codes of the intended payment mechanism. Some IPP project  proposals classify personnel using both the DOE categories and the  payment system codes.
Each of the three payment entities have similar but slightly different lists  of weapons experience codes that personnel on an IPP project use to  designate their relevant WMD background. See table 2 for the weapons  codes used by CRDF, ISTC, and STCU, by general type of weapons  expertise.
section_title: Appendix IV: IPP Projects DOE Reported to Be Commercially Successful
paragraphs: Table 3 provides information on the 50 IPP projects DOE indicated as  contributing to commercial successes in its Fiscal Year 2005 IPP  Program Annual Report.
section_title: Appendix V: Comments from the Department of Energy
paragraphs: The following are GAO’s comments on the Department of Energy’s letter  dated November 21, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  We are aware that DOE conducted internal assessments in 2004 and  2006 of its overall efforts to engage WMD scientists in the former  Soviet Union and other countries. However, these assessments did not  evaluate the IPP program exclusively and were conducted at a time  when the IPP program was complemented by and coordinated with a  similar DOE program focused on downsizing facilities and creating  new jobs for personnel in Russia’s nuclear cities. This complementary  program—the Nuclear Cities Initiative—has since been canceled. As a  result, the IPP program operates under a significantly different set of  circumstances today than when DOE conducted its previous internal  assessments. Moreover, we note that some recommendations and  action items from DOE’s previous internal assessments, such as the  development of an exit strategy, have not been implemented. Finally,  during our review and as discussed in this report, we found numerous  shortcomings and problems with the IPP program. We made a number  of recommendations for improving the program, many of which DOE  agreed with, including issues that should be addressed in the context  of a program reassessment, such as the need to develop a program exit  strategy. For these reasons, we are recommending that DOE undertake  a fundamental reassessment of the IPP program, in concert with other  agencies, to determine the continuing value of and need for the  program.  2.  DOE has incorrectly characterized how we collected information and  conducted our analysis of the participants on IPP projects. Contrary to  DOE’s assertion, we did not base our analysis of this issue on  responses to questions we posed directly to officials at Russian and  Ukrainian institutes. We used data and statements provided directly by  DOE program officials to determine the total number of former Soviet  weapons scientists, engineers, and technicians the program has  engaged since its inception. Regarding the level and number of WMD  experts involved in individual IPP projects, as explained in the scope  and methodology section of our draft report, we used a number of  methods for assessing these totals, including analyzing data provided  by project managers at the national laboratories; reviewing payment  records provided by CRDF, ISTC, and STCU; and assessing the  reliability of data we received.  3.  DOE has incorrectly asserted that we implied that DOE and State did  not concur on the project in question, and that DOE ignored State’s  concerns regarding the primary Ukrainian institute’s involvement in  WMD. We used this case as an example of how DOE’s limited ability to  assess the proposed participants on an IPP project can lead to  misallocation of funding. In our view, a more thorough evaluation of  the entities involved in the project by DOE during its proposal review  might have uncovered the conflict-of-interest issues between the  primary Ukrainian institute and the industry partner discovered by the  Defense Contract Audit Agency after the project was under way and  funds had been spent.  4.  Our finding was based on an in-depth review of the personnel involved  in 97 IPP projects, representing over 6,450 individuals, or over 38  percent of the total personnel DOE has reported to have engaged  through the IPP program. We have no way of assessing the accuracy,  reliability, or validity of DOE’s assertion that a majority of IPP project  participants have WMD experience. However, we are skeptical that the  department was able to conduct a thorough analysis of all IPP project  payment records during the time it took to review and comment on our  draft report.  5.  During our visit to the Russian institute in question, institute officials  told us that they were not the source for the reported job creation  figure and could not substantiate the total number of jobs created as a  result of the IPP projects we asked about. For this reason, we declined  the institute official’s offer to obtain further documentation regarding  the number of jobs created at other institutes involved in these  projects. Although DOE claims to have received additional information  from this institute to corroborate the number of jobs reported to have  been created, DOE did not provide this information to us. As a result,  we cannot determine the reliability or accuracy of DOE’s claim that the  number of jobs it had reported as created is correct.  6.  We have accurately described what we observed during our visit to the  Ukrainian institute in question. Based on our observations, this  institute clearly was not in dire financial straits or in poor physical  condition like some of the institutes in the former Soviet Union we  have visited in the past. The donation of funding to improve the  physical condition of the institute has no material bearing on the facts  that we presented in our draft report.  7.  DOE has mischaracterized our findings and our process for evaluating  the continued need for the program. As we pointed out in our draft  report, officials at 10 of the 22 Russian and Ukrainian institutes we  visited stated that they did not believe they or the other scientists at  their institutes posed a proliferation risk, while officials at 14 of the 22  institutes also attested to the financial stability of their facilities.  Moreover, a senior Russian Atomic Energy Agency official told us, in  the presence of IPP program officials, in July 2007 that the program is  no longer relevant. DOE asserted that we did not include  endorsements of the program in our draft report. However, we do state  that many officials at the Russian and Ukrainian institutes we visited  noted that the program was especially helpful during the period of  financial distress in the late 1990s.  8.  DOE misstates the number of institutes that we included in our  fieldwork in Russia and Ukraine. The correct number is 22. Regarding  DOE’s comment, our draft report clearly stated that DOE policy does  not require IPP project participants reemployed in peaceful activities  to cut ties to their home institute. However, more than one institute we  visited stated that they are still involved in some weapons-related  work, and many institutes remain involved in research and technology  development that could be applied to WMD or delivery systems for  WMD. We do not believe it is possible for DOE to verify the full extent  and intended purpose of all activities at the institutes where the IPP  program is engaged. Moreover, we believe that DOE misrepresents the  IPP program’s accomplishments by counting individuals who have  been reemployed in private sector jobs but also are employed by their  institutes and, therefore, may still be involved in weapons-related  activities. In our view, the reemployment of former weapons scientists  into new long-term, private sector jobs—one of the primary metrics  DOE uses to measure progress of the IPP program—implies that these  individuals have terminated their previous employment at the  institutes and are dedicated solely to peaceful commercial activities  outside of their institutes.  9.  While there is no IPP program requirement to exclude former weapons  scientists employed on a part-time basis from the total number of jobs  created as a result of IPP projects, DOE’s reported job creation total  fails to delineate between part-time and full-time jobs. By not more  clearly distinguishing the number of jobs created in each category, this  metric is misleading and also misrepresents the program’s  accomplishments regarding the employment of weapons scientists in  commercial activities. However, we have added information to our  report that states that there is no IPP program requirement to exclude  former weapons scientists employed on a part-time basis from the  total number of jobs created as a result of IPP projects.  10. Our draft report stated that the IPP program does not prohibit  participation of younger scientists in IPP projects. In our view,  however, DOE has a mistaken and naïve impression of how institutes  in the former Soviet Union view the benefits of allowing younger  scientists to participate in the IPP program. DOE believes that  participation of some younger generation scientists on IPP projects  must be permitted to successfully implement projects. This practice  has the unintended consequence of allowing former Soviet Union  institutes to use the IPP program as a long-term recruitment tool for  younger scientists and, thereby, may perpetuate the proliferation risk  posed by scientists at these institutes. As we stated in our draft report,  officials at 10 of the 22 institutes we visited in Russia and Ukraine said  that the IPP program has allowed their institutes to recruit, hire, and  retain younger scientists. In our view, this is contrary to the original  intent of the program, which was to reduce the proliferation risk posed  by Soviet-era weapons scientists. That is why, among other reasons,  we are recommending that DOE conduct a reassessment of the IPP  program that includes a thorough analysis of the proliferation risk  posed by weapons scientists in Russia and other countries, a well- defined strategy to more effectively target the scientists and institutes  of highest proliferation concern, more accurate reporting of program  accomplishments, and a clear exit strategy for the program.  11. DOE incorrectly characterized our description of its program  management system. Specifically, we stated in the draft report “DOE  and national laboratory officials told us they are attempting to improve  financial oversight over the IPP program, in part, to address concerns  about unspent program funds. To that end, DOE is developing a new  program management system, which it expects to fully implement in  2008—14 years after the start of the program.” Throughout our review,  numerous DOE and national laboratory officials expressed concern  about the existing systems that DOE used to manage IPP projects. Our  description of DOE’s planned implementation of its new program  management system is accurate.  12. DOE officials concurred with our recommendation of reducing large  balances of unspent funds and adjusting future budget requests  accordingly. The data we present are based on DOE’s own financial  reporting and accurately reflect the state of the program’s uncosted  balances (unspent funds) over the last 10 years. We noted in our draft  report that the program’s uncosted balances are declining, but, as DOE  officials acknowledge, uncosted balances remain a serious problem for  the IPP program.  13. We are pleased that DOE concurs with our recommendation to  improve coordination between the department’s IPP program and  ISTC’s Commercialization Support Program, which is funded by State.  In its comments, State also concurred with this recommendation.  14. We believe DOE has misconstrued our recommendation concerning its  funding of projects in Libya. We did not recommend, nor did we mean  to imply, that DOE should allocate 65 percent of project funds to Libya  for projects in that country. Instead, our recommendation urges the  department to ensure that it complies with existing statutory  restrictions on the percentage of IPP funds that can be spent on  oversight activities by DOE national laboratories. Specifically, as DOE  notes, section 3136 of the National Defense Authorization Act for  Fiscal Year 2000 provides that not more than 35 percent of funds  available in any fiscal year for the IPP program may be spent by DOE  national laboratories to provide oversight of program activities. As our  report indicates, DOE’s IPP guidance and its standard practice have  been to implement this provision of law on a project-by-project basis,  so that no more than 35 percent of the funds for each project are spent  by national laboratories. Our point in our report and in our  recommendation is that, with respect to projects in Libya, DOE has not  followed its IPP guidance restricting national laboratory expenditures.  Instead, we found that 97 percent of funds DOE spent on projects in  Libya through May 2007 were spent at DOE’s national laboratories for  project management and oversight. In this regard, we note that DOE  concurred with our recommendation that the department seek explicit  congressional authorization to expand IPP efforts outside of the  former Soviet Union. In seeking such authorization, DOE may wish to  clarify the nature of other restrictions on the program, such as those  set forth in section 3136 of the National Defense Authorization Act for  Fiscal Year 2000.  15. DOE has mistakenly asserted that our selection of projects for review  served as the sole basis for our conclusions and recommendations. As  we explained in the draft report’s scope and methodology section, the  selection and evaluation of a sample of IPP projects was one of several  analytical tools we employed during our review. We not only  conducted an in-depth assessment of over 200 IPP projects, but also  met multiple times with DOE officials; analyzed program plans,  policies, and procedures; interviewed representatives at each of the 12  national laboratories involved in the program; interviewed staff of the  U.S. Industry Coalition and 14 U.S. industry partner companies with  long-standing participation in the program; and had discussions with  numerous recipients of IPP program assistance at 22 institutes in  Russia and Ukraine. We also met several times with State officials who  are responsible for funding a similar program; interviewed and  assessed information provided by officials at CRDF, ISTC, and STCU;  and met with nongovernmental experts familiar with the program. As  further noted in our draft report, to develop our judgmental sample of  207 projects we used project selection criteria supplied by DOE and  considered a variety of factors—such as project status, project  funding, type and location of institutes where projects have been  implemented, and a project’s commercial success—to ensure we  addressed a broad cross-section of IPP projects. This comprehensive  approach, consistent with generally accepted government auditing  standards, served as the foundation for our assessment which was fair,  balanced, and objective. Our extensive review identified legitimate  questions concerning the IPP program’s scope, implementation, and  performance that we believe should be addressed during the course of  the fundamental reassessment of the program recommended in our  draft report.
section_title: Appendix VI: Comments from the Department of State
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Glen Levis (Assistant Director),   R. Stockton Butler, David Fox, Preston Heard, and William Hoehn made  key contributions to this report. Other technical assistance was provided  by David Maurer; Carol Herrnstadt Shulman; Jay Smale, Jr.; and Paul  Thompson.
section_title: Related GAO Products
paragraphs: Nuclear Nonproliferation: Better Management Controls Needed for Some  DOE Projects in Russia and Other Countries. GAO-05-828. Washington,  D.C.: August 29, 2005.
Weapons of Mass Destruction: Nonproliferation Programs Need Better  Integration. GAO-05-157. Washington, D.C.: January 28, 2005.
Nuclear Nonproliferation: DOE’s Effort to Close Russia’s Plutonium  Production Reactors Faces Challenges, and Final Shutdown Is  Uncertain. GAO-04-662. Washington, D.C.: June 4, 2004.
Nuclear Nonproliferation: DOE’s Efforts to Secure Nuclear Material and  Employ Weapons Scientists in Russia. GAO-01-726T. Washington, D.C.:  May 15, 2001.
Weapons of Mass Destruction: State Department Oversight of Science  Centers Program. GAO-01-582. Washington, D.C.: May 10, 2001.
Nuclear Nonproliferation: DOE’s Efforts to Assist Weapons Scientists in  Russia’s Nuclear Cities Face Challenges. GAO-01-429. Washington, D.C.:  May 3, 2001.
Biological Weapons: Effort to Reduce Former Soviet Threat Offers  Benefits, Poses New Risks. GAO/NSIAD-00-138. Washington, D.C.:   April 28, 2000.
Nuclear Nonproliferation: Concerns with DOE’s Efforts to Reduce the  Risks Posed by Russia’s Unemployed Weapons Scientists.   GAO/RCED-99-54. Washington, D.C.: February 19, 1999.