Nuclear Nonproliferation: Better Management Controls Needed for Some DOE Projects in Russia and Other Countries
Published: 2005-08-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The National Defense Authorization Act for FY 2004 mandated that we assess the management of threat reduction and nonproliferation programs that the Departments of Defense and Energy each administer. The objective of this report is to assess how the Department of Energy's National Nuclear Security Administration (NNSA) implements management controls, which we define here to be the processes ensuring that work done under a contract meets contract specifications and that payments go to contractors as intended.
section_title: What GAO Found
paragraphs: Two NNSA offices, the Office of Nuclear Risk Reduction (designated by NNSA as NA-23) and International Material Protection and Cooperation (NA- 25), documented management controls for almost all of their contracts that we reviewed, but the third office, the Office of Nonproliferation and International Security (NA-24), did not document controls for most of their contracts because they could not provide the required documentation. More specifically, for eight of the nine NA-23 and NA-25 contracts we reviewed, the NA-23 headquarters staff and the laboratory staff that manage the contracts for NA-25 provided to us complete records of deliverables and invoices, as well as evidence that technical officials reviewed and approved the deliverables and contract officers reviewed and approved the invoices. (For the ninth contract, NA-25 provided us with incomplete documentation of its controls.) In addition, NA-23 and NA-25 each apply procedural guidance that assists managers in maintaining these controls. However, according to an NNSA official, none of the three offices currently perform periodic reviews to ensure their existing management controls remain appropriate. In contrast, we were unable to determine if NA-24 implements management controls because, for seven of the nine contracts we reviewed, the documentation it provided to us was in most cases either incomplete or it provided no clear audit trail that we could follow. (Documentation was complete for the eighth and ninth contracts.) The types of documents that were missing varied across and within some contracts. In addition, NA-24 does not provide its contract managers with procedural guidance on how to maintain its management controls, nor does it perform a periodic review of its controls to ensure the controls are effective and appropriate.

section_title: Letter
paragraphs: In March 2000, the National Nuclear Security Administration (NNSA)  assumed responsibility for carrying out the Department of Energy’s (DOE)  national security and nuclear nonproliferation responsibilities. These  nuclear nonproliferation projects, most of which have been undertaken in  Russia but also reside in many other foreign countries, involve DOE’s  national laboratories, U.S. contractors, and Russian scientists and  contractors and entail activities such as upgrading the security of nuclear  weapons sites and “blending-down” weapons-grade highly enriched  uranium so it can be used in nuclear power plants to generate electricity.  From fiscal year 2001 through fiscal year 2004, DOE obligated $1.7 billion  on these projects, which are comprised of multiple contracts for  construction work or the provision of services.
Three offices within NNSA administer most of the nonproliferation  projects: The Office of Nuclear Risk Reduction (designated by NNSA as NA-23)  seeks to reduce the risk of accidents at foreign nuclear facilities by,  among other things, strengthening foreign governments’ abilities to  respond to nuclear emergencies.  For example, two current projects aim  to enable two Russian cities, Seversk and Zheleznogorsk, to replace  nuclear power reactors that produce weapons-grade material that the  cities currently use for heat and electricity production with fossil-fuel  electricity plants. NA-23 staff provide the day-to-day management of the  contracts for these projects.
The Office of Nonproliferation and International Security (NA-24),  counters proliferation and strengthens the nonproliferation regime by  promoting transparency and verification in the dismantlement of  weapons of mass destruction (WMD), denying acquisition of WMD by  terrorists and illicit trade in nuclear technology, and encouraging  international partners to strengthen their export controls and redirect  the work of former nuclear scientists, technicians, and engineers toward  projects with commercial potential, such as the development of titanium  alloys for medical applications. DOE’s national laboratories provide  most of the day-to-day technical management of the contracts for these  projects.
The Office of International Material Protection and Cooperation (NA-25)  administers projects designed to, among other things, improve the  security of weapons-usable nuclear and radiological material and  enhance detection infrastructure at sites that currently store these  materials. The national laboratories provide most of the day-to-day  management of the contracts that carry out these projects.
The three NNSA offices use essentially the same process to ensure  contractors’ work and payments made to them meet the specifications of  the contract. After contractors or scientists complete a task, they send a  deliverable (a technical report or other documentation of the work  performed) and an invoice to the appropriate national laboratory or NNSA  office for technical review and approval. If the technical reviewer approves  the deliverable, he or she documents approval and forwards the  documentation of the approval, along with the invoice, to the contract  officer at the national laboratory or NNSA office. If the contract officer  approves the invoice, in most cases, the national laboratory then makes  payment to the contractors or scientists. In other cases, the deliverable  and invoice then proceed to the relevant NNSA office for further review,  and either the office or another organization makes the final payment to the  contractors or scientists.
A key way for federal program managers to ensure accountability within  such contracting processes, as well as to improve outcomes and minimize  problems in their programs, is to implement appropriate management  (internal) controls. As described in two GAO documents, Standards for  Internal Controls in the Federal Government and Internal Control  Management and Evaluation Tool, management controls can address  many activities in a program or organization. Therefore, it is important that  a program’s management controls relate directly to its processes and  activities. Thus, in the context of NNSA’s nuclear nonproliferation projects,  appropriate management controls mean that the three offices do the  following with each component contract:  maintain complete records of deliverables and technical officials’  review and approval of them;  maintain complete records of invoices and contract officers’ review and   maintain documentation of the above records for ready access by  agency program managers, either at a national laboratory or  headquarters, to facilitate active monitoring of the contract;   use formal, procedural guidance that specifies processes for  maintaining management controls; and  periodically review management control processes and documentation  to ensure they remain appropriate and effective.
The National Defense Authorization Act for Fiscal Year 2004 mandated  that we assess the management controls used to carry out nonproliferation  and threat reduction projects administered by DOE and the Department of  Defense (DOD) and the effect of these controls on the execution of the  projects. In response, we have issued two reports to date. The first report  assessed how DOD and NNSA use their own strategies to guide their  respective threat reduction and nonproliferation projects and how well the  agencies have coordinated their strategies. The second report examined  DOD’s management controls for its Cooperative Threat Reduction  program. This report, which completes our response to the mandate,  assesses NNSA’s implementation of management controls for its nuclear  nonproliferation projects.
To perform this assessment, we obtained from the three relevant NNSA  offices a list of contracts for nuclear nonproliferation projects that were  active between June 2001 and June 2004. From this list, we then identified  contracts whose value exceeded $1 million. Going down this list, we  selected a nonprobability sample of the largest 18 dollar-value contracts:  two from NA-23, nine from NA-24, and seven from NA-25. This mix  reflected the proportion of contracts among the three offices that were  active from June 2001 through June 2004 and included at least one contract  from each of the national laboratories cited on the original list of  nonproliferation contracts that we received from NNSA—Brookhaven in  New York, Los Alamos and Sandia in New Mexico, Lawrence Berkeley and  Lawrence Livermore in California, Oak Ridge and the Y-12 National  Security Complex in Tennessee, Pacific Northwest in Washington, and the  Idaho National Laboratory. In addition, we obtained documents on the  three offices and the 18 contracts and interviewed officials from each of the  offices and national laboratories. A more detailed description of our  methodology is included at the end of this letter.
We conducted our work from May 2004 to July 2005 in accordance with  generally accepted government auditing standards.
subsections: section_title: Management Controls Are in Place for Two of the Three NNSA Offices Administering Contracts for Nuclear Nonproliferation Projects
paragraphs: Two NNSA offices, NA-23 and NA-25, documented management controls  for almost all of their contracts that we reviewed; but the third office, NA- 24, could not provide us with the complete records necessary to document  these controls. Similarly, NA-23 and NA-25 provide their technical  reviewers and contract managers with procedural guidance that assists in  maintaining these controls, while NA-24 did not provide this type of  guidance. In addition, NA-23 and NA-25 maintain the key contract  documents at headquarters and the national laboratories, respectively, in  such a way that the records are quickly accessible for active monitoring by  contract and program managers, as evidenced by their ability to provide us  with key contract records.
subsections: section_title: NA-23 and NA-25 Documented Management Controls for the Contracts We Reviewed
paragraphs: Two NNSA offices, NA-23 and NA-25, documented management controls  for most of their contracts that we reviewed. As shown in table 1, for eight  of the nine contracts we reviewed from these two offices, NA-23 staff and  national laboratory officials who manage NA-25’s contracts provided us  with complete records of deliverables and invoices as well as evidence that  technical reviewers and contract officers reviewed and approved  deliverables and invoices, respectively. (For the ninth contract, which  involved comprehensive physical protection upgrades to a strategic rocket  forces site in Russia, Oak Ridge National Laboratory did not provide  complete documentation of approvals for deliverables.) For example, the  two contracts we reviewed from NA-23—which are designed to construct  or refurbish fossil-fuel plants for the Russian cities of Zheleznogorsk and  Seversk so that each city can shut down its plutonium-producing nuclear  reactor that it currently uses to generate heat and electricity—involve  multiple contractors in the United States and Russia. Despite being by far  the largest contracts by dollar value in our sample ($390 million for Seversk  and $570 million for Zheleznogorsk—the next largest contract was valued  at $29 million), NA-23 headquarters provided us with, among other things,  complete documentation of all invoices; photographs of the deliverables  (i.e., construction work) completed to date; and evidence of the reviews  and approvals of the invoices and payments to the foreign contractors and  subcontractors. NA-23 also provided us with detailed breakdowns of work  (called Work Breakdown Structures), work authorizations, and cost  evaluations for each project. The documentation NA-23 provided us was  among the most complete and organized of all the contracts we reviewed.  An NA-23 official told us that this office makes efforts to specify in acute  detail the work to be done and the costs for that work because this enables  the office to effectively monitor and maintain a degree of control over the  work of foreign contractors and subcontractors.
NA-25 officials also provided us with complete documentation of  management controls for the contracts they manage. As shown in table 1,  for six of the seven contracts we reviewed, the national laboratories that  manage these contracts provided complete records of deliverables and  invoices as well as evidence that technical reviewers at the national  laboratories and/or contract officers at the national laboratories and/or  NA-25 reviewed and approved the deliverables and invoices, respectively.  (The seventh contract is the Oak Ridge contract, mentioned above.) For  example, for the two contracts we reviewed that Brookhaven National  Laboratory manages for NA-25, each invoice on the contracts received at  least one approval from technical reviewers at the laboratory, and each  financial transaction received two approvals from contract managers. In  another contract involving the purchase of nuclear detection devices for  deployment in Russia, the national laboratory managing the contract—  Pacific Northwest—provided us with purchase orders for the contract as  well as a receipt of delivery so that we could verify that the goods  purchased had reached their destination prior to final delivery in Russia.
Both NA-23 and NA-25 maintain copies of key records, such as deliverables  and invoices within quick access to program and contract managers, as  evidenced by the ability of each office to provide these records to us. NA-23  maintains these records at headquarters, while NA-25 maintains the  records at the national laboratories that provide the day-to-day  management over the contracts. However, it is important to note that the  laboratories should be able to provide NNSA managers with complete and  quick access to contract records, as the national laboratories are  contractors to DOE, and it is NNSA that is ultimately responsible for  monitoring the nonproliferation projects.
NA-23 and NA-25 each apply formal, procedural guidance that assists  technical reviewers and contract managers in maintaining management  controls. For example, because the contracts involve capital procurement  or acquisitions exceeding $5 million, NA-23 must apply the rules and  procedures specified in DOE Order 413.3, Project Management for the  Acquisition of Capital Assets.  NA-23’s contract managers receive program  guidance through work authorizations signed by an authorized official at  NNSA headquarters and guidance on the payment process via DOE’s  Contract Specialist Guide 42.8, which specifies procedures for review and  approval of vouchers and invoices so that contract managers will handle  them in a timely and efficient manner. According to NA-23 officials, Federal  Acquisition Regulations also stipulate many of the specific steps that NA- 23 must undertake in the planning, implementation, and review of the  contracts that make up the Seversk and Zheleznogorsk projects. NA-25  developed its own procedural guidance, known as the Project Management  Document, for technical reviewers and contract officials. This guide  provides instructions on, among other things, project planning, funds  management, reporting of a project’s ongoing progress and costs, contract  management, and procedures for putting important contract data into NA- 25’s Program Management Information System.
Finally, according to NNSA’s Director of Policy and Internal Controls  Management and an NNSA official in charge of acquisitions in the Office of  Defense Nuclear Nonproliferation, neither NA-23 nor NA-25 perform  periodic reviews of their management control processes, although NNSA’s  Office of Engineering and Project Support, at the outset of NA-23’s projects,  did perform a general review of NA-23’s management controls. GAO’s  management control guidelines state that agencies should monitor and  regularly evaluate their control activities to ensure that they are still  appropriate and working as intended.
section_title: NA-24 Provided Insufficient Documentation on Management Controls
paragraphs: NA-24 could not provide evidence of the records necessary to document its  management controls. Despite our numerous inquiries from January 2005  to June 2005 and discussions with agency officials—including one with  NNSA’s Principal Assistant Deputy Administrator—the documentation we  received on seven of the nine contracts we examined from this office was  either incomplete or did not provide a clear audit trail that we could follow.  (For the two other contracts, one managed by Brookhaven National  Laboratory and one managed by Los Alamos National Laboratory,  laboratory officials provided complete documentation of management  controls.) For example, for one contract managed by the Idaho National  Laboratory involving the discovery of bioactive compounds in Russia that  may be used in watershed protection or carbon sequestration:   Ten of the 35 invoices did not include a document showing that NA-24  had authorized payment to the Russian contractors.
Fourteen invoices on this contract did not include evidence that Idaho  National Laboratory’s technical reviewer for the contract approved the  deliverable on which the invoice was based.
For another contract managed through NA-24 headquarters, Foundation  for Russian American Economic Cooperation (FRAEC), NA-24 provided us  with documentation, but we were able to determine very little about the  contract on the basis of this documentation because of the following  reasons:  there appeared to be no explanation of the linkages between the work  products outlined in the contract, the deliverables, and the invoices, and  we received fewer than half of the invoices for the contract and fewer  than one-fifth of the deliverables for the contract.
Senior officials with NA-24 told us that it doesn’t need to keep copies of key  contract documents because the documents are maintained at the national  laboratories managing the contracts and accessible to NA-24. However, the  fact NA-24 was unable to obtain complete sets of records on seven of the  nine contracts we reviewed suggests otherwise. In addition, NA-24 did not  provide us with formal, written guidance that provides managers with the  procedures on how to process and maintain key contract records, and the  office appears to rely on each national laboratory to provide its own  procedural guidelines.
Finally, NA-24, like NA-23 and NA-25, does not perform periodic reviews of  its management control processes. GAO’s management control guidelines  state that agencies should monitor and regularly evaluate their control  activities to ensure that they are still appropriate and working as intended.
section_title: Conclusions
paragraphs: On the basis of our review of the contracts, it appears that, if an NNSA  program office provides its managers with procedural guidance on how to  maintain management controls, the office does a better job at  implementing and documenting these management controls. In our view,  procedural guidance enables program and contract managers to implement  and document management controls in a systematic way, as evidenced by  the fact that NA-23 and NA-25 each use procedural guidance and were able  to document their controls.
In addition, maintaining managers’ quick and complete access to key  contract records—regardless of whether the records are located at the  national laboratory or NNSA headquarters—appears to coincide with  maintaining and documenting management controls. Officials at NA-24 told  us that they have access to all contract records through the laboratories  that manage their contracts, yet the office was unable to provide us with  these records.
Finally, as required by GAO standards for management controls, periodic  reviews of management controls would help the NNSA offices that we  reviewed determine whether they are adhering to their management  controls and whether these controls are relevant and effective. For  example, if NA-24 had performed a review of its management control  procedures, it might have discovered that it did not have on hand complete  sets of invoices and approvals of deliverables for each of the office’s  nonproliferation contracts.
section_title: Recommendations
paragraphs: To ensure that each NNSA office that we reviewed maintains complete  documentation of its management controls, we recommend that the  Secretary of Energy, working with the Administrator of the National  Nuclear Security Administration, require NNSA to take the following three  actions:  each NNSA office use formal, procedural guidance that clearly states   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; and  NNSA perform periodic reviews of its management control processes to  be certain that each program office’s management controls can be  documented and remain appropriate and effective.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Department of Energy’s National Nuclear Security  Administration (NNSA) with a draft of this report for its review and  comment. NNSA’s written comments are presented as appendix III. In its  written comments, NNSA notes that it will undertake a series of actions in  response to our recommendations, but also states that our report creates  an incorrect perception that the Defense Nuclear Nonproliferation  Program, particularly NA-24, is lacking in the application of management  controls.
In their comments to our draft report, NNSA’s major points are as follow: 1. We reviewed only contracts from a portion of NA-24, Global Initiatives  for Proliferation Prevention (GIPP), and we did not receive complete  documentation from NA-24 because we did not speak to the  procurement officer for the GIPP program; 2. NA-24 has implemented “very stringent” management controls; 3. We mischaracterize the management controls on two contracts—one  managed by the Idaho National Laboratory (INL) and the other  managed by NA-24 headquarters staff; 4. For an NA-25 contract managed by Oak Ridge National Laboratory, we  received incomplete documentation because of an initial  misunderstanding by the laboratory rather than a control problem  within NA-25, and that managers at Oak Ridge sent us the missing  documents on August 16, 2005. 5. NA-25 does conduct external program management reviews of its  management controls through a Technical Survey Team (TST).
First, regarding the scope of our review, at the outset of our work, we  asked NA-24 for a list of all its contracts in Russia and other countries that  were active from the beginning of June 2001 through the end of June 2004,  then took a nonprobability sample of those contracts. We did not  intentionally focus solely on NA-24’s GIPP program. Regardless, as we state  in the report, results from nonprobability samples cannot be used to make  inferences about a population, and our statements about NA-24 relate to its  ability to document the management controls for the contracts we  examined. Regarding NNSA’s comment that we did not meet with the GIPP  procurement officer, it is unclear to us why NNSA is making this point. For  most of the contracts we reviewed, NA-24 provided us with documents  directly. After providing NA-24 with a fact sheet stating that we received  incomplete documentation for seven of the nine the contracts we reviewed,  we met with NA-24’s Assistant Deputy Administrator on June 27, 2005, who  provided us with additional documentation that she characterized as  “complete”. After a thorough review, we found much of this additional  documentation to be incomplete, indecipherable, and often duplicative of  the information we had already been given earlier in our review. On August  17, 2005, after submitting our draft report to NNSA for comment, we met  again with the Assistant Deputy Administrator as well as the Associate  Assistant Deputy Administrator, the Principal Assistant Deputy  Administrator for Defense Nuclear Nonproliferation, and the GIPP  procurement officer. At this meeting, the procurement officer provided us  with no new documentation, and the NA-24 officials again asserted that the  documents they provided us in June were “complete”. Furthermore, during  the meeting, while discussing some of the documents that we found to be  missing, we asked the officials to produce a few of these documents at  random from the materials they gave us in June. In most cases, they were  unable to do so.  In fact, in the case of one missing document, an NA-24  official stated that it “had to be somewhere in there” (included in the  materials submitted in June), but it was not.
Second, we disagree with NA-24’s contention that it has implemented “very  stringent” management controls. Although NNSA cites a number of actions  that NA-24 has taken to strengthen its controls, the fact remains that NA-24  did not provide us with sufficient documentation for seven of the nine  contracts we reviewed despite numerous requests from us to do so. For  example, on one contract managed by the Y-12 National Security Complex,  rather than providing a “real-time” technical reviewer’s approval for each  deliverable, NA-24 provided us with a single email from the technical  reviewer, dated June 24, 2005, that purported to cover two years’ worth of  missing approvals. This post-hoc approval does not represent a satisfactory  management control. Based on what NA-24 provided us, we believe that the  office’s controls for some contracts we reviewed are weak. In our view, NA- 24 needs to implement actions that address and strengthen the specific  management controls we identify in the report, and we are encouraged that  NNSA has agreed to implement our recommendations.
Third, for the INL-managed contract, NNSA asserts that it provided us in  June with the documentation we sought. However, the documents were  indecipherable to us because most were unlabeled, presented in no  particular chronological order, and rely on emails in which neither the  sender’s nor recipients’ positions were identified. For the headquarters- managed contract, NNSA contends that, at our meeting on August 17, 2005,  it explained how the process of deliverables and invoices for this contract  (providing assistance to the Foundation for Russian American Economic  Cooperation) differs from the processes of other contracts we examined.  Although this may be the case, the documents that NA-24 provided did not  clearly explain or illustrate those processes. More importantly, the  documents that NA-24 provided comprised fewer than one-half of the  deliverables and one-fifth of the invoices that we identified in June as  missing.
Fourth, although we have fewer concerns about NA-25’s management  controls, in the case of one of the contracts managed by Oak Ridge  National Laboratory, managers provided acceptable documentation of  technical reviewers’ approvals on only three of six deliverables. Although  we agree with NNSA that officials at the laboratory did not initially provide  us with complete documentation of technical approvals, as we state in the  report, NNSA is ultimately responsible for the controls on its contracts,  even if the contracts are managed day-to-day by someone else. In addition,  the documentation that officials at the laboratory sent us on August 16,  2005, did not provide all the information that was missing. Rather, they  provided documentation of one additional technical review and  resubmitted materials that we had already informed Oak Ridge managers  did not represent acceptable documentation. As a result, we stand by our  recommendation that NNSA perform periodic reviews of management  controls for each of the three offices we examined.
Fifth, regarding NNSA’s statement that TST performs external reviews of  NA-25’s management controls, it is important to note that the TST is a panel  of experts established by DOE to determine if DOE-installed security  systems at Russian nuclear sites meet departmental guidelines for  effectively reducing the risk of nuclear theft. Moreover, we spoke to NNSA’s  Director of Policy and Internal Controls Management on August 26, 2005,  and he agreed that, while the TST provides useful project oversight, it does  not provide the kind of comprehensive review of program management  controls examined in our review. More importantly, during the course of  our work, NA-25 did not provide evidence of any reviews of their  management controls.
Finally, we believe it is important to note that management controls were  most evident on NA-24 and NA-25 contracts managed by national  laboratories from which we were able to obtain all the necessary  documentation directly, without any NNSA headquarters involvement. This  was especially noteworthy in the case of NA-24 because both of this office’s  contracts that we determined demonstrated effective management controls  were managed by a national laboratory – Brookhaven or Los Alamos – and  in both cases we obtained all the necessary documents directly from the  laboratory managers.
section_title: Scope and Methodology
paragraphs: To assess the effectiveness of the NNSA’s management controls of its  nonproliferation projects, we identified the three offices within NNSA that  currently oversee and manage the nonproliferation projects that fell within  the scope of our work: (1) the Office of Nuclear Risk Reduction  (designated by NNSA as NA-23), (2) the Office of Nonproliferation and  International Security (NA-24), and (3) the Office of International Material  Protection and Cooperation (NA-25). To identify what constitutes  management controls, we consulted two GAO documents: Standards for  Internal Controls in the Federal Government and Internal Control  Management and Evaluation Tool. Using these documents, we focused on  the management controls associated with NNSA’s nonproliferation  contracts. More specifically, we examined the supervisory actions designed  to ensure that the work performed under the contract (known as  “deliverables”) meet the contract’s specifications and that payments for  that work receive required approvals and reach the intended recipients. To  do this, we sought from NNSA the following documents for each of the  contracts we reviewed:  contract deliverables (or summary of the deliverable – as practicable);  technical approval from an NNSA or national laboratory official for each   invoices for all deliverables;  documentation of an independent payment authorization and review for  each deliverable, which should include at least one signature from a  national laboratory financial office official supervising the contract  and/or one official at NNSA headquarters;  approval letter from NNSA or the national laboratory authorizing the  final payment of the contractors for a deliverable (as applicable);  a guide to the process each national laboratory uses to approve a  deliverable and authorize payment.
To select a nonprobability sample of contracts, we obtained, from the three  offices in NNSA, a list of all their nonproliferation contracts in Russia and  other countries that were active from the beginning of June 2001 through  the end of June 2004. We identified contracts whose value exceeded $1  million and arranged them in descending dollar value. We chose the 15  contracts with the largest dollar value, subject to the constraints that (1) no  more than two contracts come from NA-23, 7 contracts from NA-24, and six  contracts from NA-25 and (2) a single national laboratory manages no more  than three contracts in our sample. We chose these constraints so that (1)  the mix of contracts among the three offices in our sample roughly  reflected the mix of contracts among the three offices in our original list  and (2) the sample would reflect a diversity of laboratories. Finally, we  included one contract from each of the three remaining laboratories that  were not yet included in our sample, bringing our final list to 18 contracts.
To ensure that NNSA’s lists of its nuclear nonproliferation contracts were  sufficiently reliable for our purposes, we obtained responses to a series of  questions covering issues such as data entry, data access, quality-control  procedures, and the accuracy and completeness of the data for the eight  databases from which these data were drawn. Follow-up questions were  added, whenever necessary. Based on our review of this work, we found  these data to be sufficiently reliable for the purpose of using these lists to  select a nonprobability sample of 18 contracts for review.
In addition to contract documents, we also interviewed NNSA officials in  Washington, D.C., and Germantown, Maryland. To gather information  about the contracts we selected for review, we traveled to Brookhaven  National Laboratory in New York and Los Alamos and Sandia National  Laboratories in New Mexico to meet with laboratory officials and program,  project, procurement, and contract managers to explain our review; to  learn about NNSA programs and projects, as well as procedures for  implementing management controls; and to determine the kinds of project  documents we would need. To gather information and documents on the  remaining contracts, on the basis of what we learned during these trips, we  sent detailed written communications and conducted teleconferences,  numerous and frequent in some cases, with the requisite staff in  headquarters and at other national laboratories. Specifically, we contacted  staff at the Lawrence Berkeley and Lawrence Livermore National  Laboratories in California, the Oak Ridge National Laboratory and the Y-12  National Security Complex in Tennessee, the Pacific Northwest National  Laboratory in Washington, and the Idaho National Laboratory. We focused  on identifying the controls implemented to ensure that former Soviet Union  partners meet contract terms before the invoices for the deliverables are  paid.
After we gathered and evaluated all the available documentation from  NNSA headquarters and the various national laboratories for each contract,  we assessed the contracts on the basis of the completeness of their  documentation and overall evidence of the implementation of management  controls. We placed each contract in one of three categories: (1) contracts  for which all or almost all of the necessary documentation was provided—  especially the major contract documents (statement of work and task  orders), deliverables, and technical and independent contractual/financial  approvals of each deliverable—providing clear evidence of the systematic  implementation of management controls throughout the life-cycle of the  contract; (2) contracts for which most of the documents were provided,  suggesting that systematic implementation of management controls may be  occurring but not clearly indicating as much; and (3) contracts for which  there were significant gaps in necessary documentation, providing no basis  to conclude that systematic management controls are implemented.
We conducted our review between May 2004 and July 2005 in accordance  with generally accepted government auditing standards.
We are sending copies of this report to interested congressional  committees and the Secretary of Energy. We will also make copies available  to others upon request. In addition, the report will be available on the GAO  Web site at http://www.gao.gov.
If you have any questions regarding this report, please contact Mr. Aloise at  (202) 512-3841 or aloisee@gao.gov. Contact points for our Office of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO contacts and staff acknowledgements are listed in  appendix IV.
section_title: NNSA Contracts
paragraphs: The following table lists all NNSA contracts that we reviewed.
Luch - Task Order 1 – Blend-down HEU to LEU PBZ-C2 Comprehensive Physical Protection Upgrades to Russian Navy Site CBC-B2 Comprehensive Physical Protection Upgrades to Russian Navy Site COMP2BR-Comprehensive Physical Protection System Upgrades Aquila – Purchase of Equipment to enhance the monitoring of nuclear  materials FRAEC –Technical and administrative assistance in planning, establishing,  and operating the international development centers.
Pipe Coating Facility (#63544) – Establish a production facility within the city  of Snezhinsk for the production of insulated pipes.
T2-0192-RU – Development of a 3-D neutronics optimization algorithm for  application to cancer treatment facilities.
Nuclear Non-Proliferation Center –The Analytical Center for Nuclear Non- Proliferation will carry out research on several projects, including a Quarterly  Information Bulletin and Internet Analysis and creation of an Internet page.
T2-0186-RU – Development of a Tank Retrieval and Closure Demonstration  Center in the Mining and Chemical Combine (MCC) to help in retrieval and  processing of radioactive wastes generated during production of plutonium for  nuclear weapons.
T2-0194-RU – The use of new technologies to process important Ti alloys for  medical applications and aerospace industries.
T2-0204-UA – Welding and Reactive Diffusion Joining (RDJ) repair technologies  for use in aircraft and land-based turbine engines.
SAIC/P.O. # 14436 – Nuclear material detectors for border guards T2-0244-RU – Development of an explosives detection system.
T2-2002-RU – Discovery of bioactive compounds from selected environments in Russia for products such as watershed protection and carbon sequestration.
section_title: Documentation of Management Controls – GAO Assessment by Contract
paragraphs: Luch Task Order 1 – Blend-down  HEU to LEU PBZ C2 – Security Upgrades to  Russian Navy Site CBC B2 – Security Upgrades to  Russian Navy Site TVZ01– Minatom Guard Railcar  Procurement COMP2BR – Comprehensive  Physical Protection Systems  Upgrades Aquila – Enhanced nuclear materials  monitoring systems FRAEC – Technical and  administrative assistance in planning,  establishing, and operating  international development centers.
section_title: Comments from the Department of Energy
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition, Nancy Crothers, Greg Marchand, Judy Pagano, Daren Sweeney,  and Kevin Tarmann made significant contributions to this report.