Export Controls: More Thorough Analysis Needed to Justify Changes in High Performance Computer Controls
Published: 2002-08-02T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: For national security and foreign policy reasons, U.S. export control policy seeks to balance economic interests in promoting high technology exports with national security interests to maintain a military advantage in high performance computers over potential adversaries. In January 2002, the President announced that the control threshold--above which computers exported to countries such as China, India, and Russia--would increase from 85,000 millions of theoretical operations per second (MTOPS) to 190,000 MTOPS. The report justifying the changes in control thresholds for high performance computers focused on the availability of such computers. However, the justification did not fully address the requirements of the National Defense Authorization Act of 1998. The December 2001 report did not address several key issues related to the decision to raise the threshold: (1) the unrestricted export of computers with performance capabilities between the old and new thresholds will allow countries of concern to obtain computers that they have had difficulty constructing on their own, (2) the United States is unable to monitor the end-uses of many of the computers it exports, and (3) the report does not acknowledge the multilateral process used to make prior changes in high performance computer thresholds.

section_title: Letter
paragraphs: The United States controls the export of high performance computers for  national security and foreign policy reasons. U.S. export control policy  seeks to balance U.S. economic interests in promoting high technology  exports with national security interests in maintaining a military advantage  over potential adversaries. High performance computers have both civilian  and military applications, operate at or above a defined performance  threshold (measured in millions of theoretical operations per second  ), and require an export license to particular destinations such as  China, India, and Russia. The President has periodically changed, on the  basis of technological advances, the threshold above which licenses are  required.
In January 2002, the President announced that the control threshold above  which computers exported to countries such as China, India, and Russia  would increase from 85,000 MTOPS to 190,000 MTOPS. When the President  changes the threshold, the National Defense Authorization Act of 1998  requires that the President provide a justification to Congress. The  justification should, at a minimum, address the extent to which computers   capable of performance between the established and newly proposed level  of performance are available from other countries, address all their  potential military uses, and assess the impact of such uses on U.S. national  security interests. A related law also requires that we assess the executive  branch’s proposed changes. The justification for the President’s January  2002 change to the control threshold for high performance computers was  presented in a December 28, 2001, report to Congress. Thus, we (1)  assessed the President’s justification for the decision as presented in the  December 2001 report and (2) identified other issues relevant to the  decision to change the control threshold.
To address these issues, we reviewed the statutory requirements for the  justification, the documentation used by executive branch officials to  support the conclusions presented in the report, and export control  regulations pertaining to high performance computers. In addition, we  obtained information from the 10 manufacturers listed in the President’s  report on the availability of high performance computers having the  specifications described in the report. The information obtained from the  manufacturers was supplemented with additional information obtained  from a leading information technology industry market research  organization. We also interviewed officials from the Departments of  Commerce, Defense, and State who were responsible for producing the  President’s report.
subsections: section_title: Background
paragraphs: The United States controls high performance computers and related  components (for example, microprocessors) through the Export  Administration Act of 1979 and the implementing Export Administration  Regulations. The act authorizes Commerce to require firms to obtain  licenses for the export of sensitive items that may be a national security or  foreign policy concern. The Departments of Defense, Energy, and State  assist Commerce, which administers the act, by reviewing export  applications and supporting Commerce in its reviews of export control  policy.
Since 1993, the President has revised U.S. export control levels for high  performance computers seven times, including the revisions announced in  January 2002. These revisions have resulted in a nearly thousandfold  increase in the export control threshold over the 8-year period; most of  these changes have occurred over the last 2 years (see fig. 1). The latest  effort to revise the threshold was initiated in response to a letter from the  Computer Coalition for Responsible Exports.
Beginning in 1996, the executive branch organized countries into four  computer “tiers,” with each tier above tier 1 representing a successively  higher level of concern related to U.S. national security interests. Current  U.S. export control policy places no license requirements on tier-1 or tier-2  countries, primarily those in Western Europe, Japan, Asia, Africa, Latin  America, and Central and Eastern Europe.  Exports of computers above a  specific performance level to tier-3 countries such as China, India, Israel,  Pakistan, and Russia require a license. Exports of high performance  computers to tier-4 countries such as Iran, Iraq, and North Korea are  essentially prohibited.
To help inform congressional decision makers about changes in U.S. export  controls on computers, the National Defense Authorization Act of 1998  requires that the President report to Congress the justification for changing  the control threshold for exports of high performance computers to certain  sensitive countries. The report must, at a minimum, (1) address the extent  to which high performance computers with capabilities between the  established level and the newly proposed level of performance are  available from foreign countries, (2) address all potential uses of military  significance to which high performance computers between the  established level and the newly proposed level could be applied, and (3)  assess the impact of such uses on U.S. national security interests.
In addition, section 1402 of the National Defense Authorization Act of 2000  requires the President to annually assess the cumulative impact of licensed  transfers of military-sensitive technologies to countries and entities of  concern and possible countermeasures that may be necessary to overcome  the use of such technologies. Section 1406 requires the President, in  consultation with the Secretaries of Defense and Energy, to conduct a  comprehensive review of the national security implications of exporting  high performance computers to China with annual updates through 2004.  In January 2000, the President delegated the responsibility for producing  these reports to the Secretaries of Defense and Energy.
As required by law, we reviewed prior justifications for changing the export  control thresholds on high performance computers. We found that the  changes were not adequately justified. For example, previous reports failed  to address all uses of military significance to which high performance  computers could be applied at the new thresholds, or the impact of such  uses on national security, as required by law. In response to these  deficiencies, we recommended that the Secretary of Defense report on the national security threat and proliferation impact of U.S. exports of high  performance computers to countries of concern.
section_title: Report Does Not Adequately Justify Changes in Control Threshold
paragraphs: The Department of Commerce stated that the December 2001 decision to  raise the control threshold for high performance computer exports was  based on thorough analysis. However, we found the justification did not  adequately meet the three criteria required by law. First, the report stated  that computers based on Intel Corporation’s Itanium processor and capable  of performing at the 190,000 MTOPS level would be widely available in  early 2002. This assertion was not based on any formal analyses and has  proven to be inaccurate. Second, the report provided little analysis of all  the potential military uses of these computers. Third, the report did not  assess the impact of the uses of these computers on U.S. national security.  Although the report asserts that high performance computers would be of  limited value to countries of concern not having the demonstrated  knowledge and experience in using these computers, the report did not  discuss the national security implications of exporting computers to  countries of concern, such as China and Russia, that have a demonstrated  ability to use them. Further, several laws and a Defense Department  directive have mandated other studies that could be used to better  understand the national security implications of the export of high  performance computers and other technologies; however, the Department  of Defense has not completed such studies.
subsections: section_title: 190,000 MTOPS Computers Are Not Widely Available
paragraphs: The December 2001 report inadequately addressed the first criterion of the  National Defense Authorization Act of 1998 in its discussion of the extent  to which high performance computers with capabilities between the  established level and proposed level of performance are available from  other countries. The executive branch’s report stated that the decision to  raise the licensing threshold level to 190,000 MTOPS was based on the wide  availability by early 2002 of new computer servers containing 32 Intel Corporation Itanium processors. Such servers approach a composite  theoretical performance of 190,000 MTOPS. Contrary to assertions made in  the report, however, Itanium-based computers with performance  capabilities in the 190,000 MTOPS range are not widely available. We found  that the report’s finding of availability was not based on an independent  analysis but rather on information provided by industry. According to  Defense officials responsible for producing the report, industry  representatives told them that (1) the market would be flooded with 32- way, Itanium-based servers in early 2002, (2) the People’s Republic of China  is the long-term market of importance, and (3) U.S. industry is concerned  that, if the threshold is not raised, foreign competitors will capture the  market.
Although not required by law, Commerce could have independently verified  industry’s assertions as to the availability of the servers by conducting  foreign availability assessments. Foreign availability assessments identify  foreign sources of items subject to U.S. national security export controls,  such as high performance computers, and are the principal mechanism  recognized in the U.S. Export Administration Regulations for determining  the availability of controlled items. These assessments determine whether  items of comparable quality are available in quantities from non-U.S.  sources that would render U.S. export controls on the items ineffective.  Commerce officials stated that no foreign availability study was conducted  because industry had made its case informally. Instead of conducting a  study to establish that these servers would be widely available by early  2002, Commerce stated that it conducted interagency meetings and  discussions with industry as well as an analysis of the worldwide  availability of high performance computers. Commerce stated that it also  reviewed the Internet sites of the computer manufacturers mentioned in  the report. In commenting on a draft of our report, the Department of  Commerce asserted that it completed a market analysis of the worldwide  availability of high performance microprocessors and computer clustering  capabilities, and held discussions with other executive branch agencies  and foreign governments. However, the President’s report did not cite or  include this market analysis nor did the department provide additional  information to document this completed analysis in response to our  request.
We reviewed the documentation that Commerce obtained from the Internet  and other sources and found little additional evidence about the availability  of 32-way, Itanium-based servers beyond the information contained in the  Computer Coalition for Responsible Exports’ August 2001 letter requesting  a change in the export control threshold. The information provided did not  indicate that the 10 companies listed in the President’s report planned to  introduce 32-way servers or that the servers would be widely available in  early 2002. We also contacted the companies listed in the report and found  that, as of May 2002, only one of the companies—Unisys Corporation—was  producing a 32-way, Itanium-based server (see table 1).
Information obtained from the companies listed in the President’s report  contradicts the assertion that 32-way, Itanium-based servers will be widely  available in early 2002. Representatives we interviewed stated that their  companies would not introduce these servers in 2002 or had no plans to  manufacture these servers due to the lack of software and a market for  such powerful servers. An official from a leading information technology  market research firm stated that Itanium-based technology is far too new to  allow a reasonable determination of its impact on the server market.  Furthermore, according to the research firm’s information, no 32-way,  Itanium-based servers were shipped in the first quarter of 2002.
Finally, the report noted that a significant market exists for high-end  servers of up to 32 processors. However, Commerce data indicate that the  market for computers with performance capabilities in the 190,000 MTOPS  range in countries of concern is small and that the loss of sales in these  countries should not materially affect U.S. manufacturers. In 2001,  Commerce received 16 export license applications for computers with  performance capabilities at or above 85,000 MTOPS; all but one was  approved. Six of the approved applications were for sales to China.  Moreover, Japan—the other leading exporter of high performance  computers—did not sell any of these systems to China, Russia, or India in  2001, according to the Department of Defense.
section_title: Report Did Not Assess All Potential Uses of Military Significance
paragraphs: As in previous reports used to justify changes in the control threshold, the  December 2001 report did not meet the second criterion of the National  Defense Authorization Act of 1998: to address all potential uses of military  significance to which computers with performance capabilities between  the old control threshold and the new threshold could be applied. The  report stated that the U.S. government uses computers in virtually all  military and national security applications, including the design,  development, and production of weapon systems, military operations,  cryptoanalysis, and nuclear weapons design and simulation. Defense  officials to whom we spoke stated that Defense does not maintain an  inventory of all U.S. national security-related computer applications, that  the value of such a list is questionable, and that it may be impossible to  construct such a list. The President’s report provides little information  about which military applications can be run on computers with  capabilities between the old and new threshold. The report pointed out that  the majority of U.S. military and national security applications are run on  computers below 190,000 MTOPS. Using information provided by Defense,  we found that computers operating at or below 190,000 MTOPS meet  98 percent of Defense’s military computational requirements. Defense  officials responsible for preparing the report said that the level of control  selected—190,000 MTOPS—was driven by the market and what the  administration believes it can control, not by the military and national  security applications that could be run on high performance computers.
section_title: Assessment of Impact on National Security Not Conducted
paragraphs: The President’s report did not discuss the impact on U.S. national security  of countries such as Russia and China obtaining high performance  computing power up to the new control threshold, as required by law. Such  a national security assessment has been a long-term, executive branch  requirement. For example, section 1402 of the National Defense  Authorization Act of 2000 requires the President to annually assess the  cumulative impact of licensed transfers of military-sensitive technology to  countries and entities of concern and to identify possible countermeasures  that may be necessary to overcome the use of such technologies. In  addition, section 1406 of the act requires assessments of the national  security implications of exporting high performance computers to China  with annual updates through 2004. In addition, a 1985 Department of  Defense directive requires annual assessments of the total effects of  technology transfers. We found that Defense had not completed the  studies required by the law or its directive. Moreover, Defense has not yet  implemented our prior recommendation to report on the national security  threat and proliferation impact of U.S. exports of high performance  computers to countries of concern. Although the Departments of Defense  and Commerce stated that they are already engaged in reviews of similar  issues, the agencies could not furnish plans or other documentation on  how they are implementing our recommendation.
Instead of addressing the national security implications associated with the  export of high performance computers, the President’s report simply stated  that high performance computers would be of little or no value to countries  of concern not having the requisite knowledge and experience in using  these computers to advance their military capabilities. However, the report  did not discuss the usefulness of these computers to countries such as  China and Russia that have demonstrated the ability to use high  performance computers. The report’s assertion that countries of concern  will not benefit from the acquisition of high performance computers also  contradicts statements made in other reports published by the executive  branch and statements made by Defense officials responsible for producing  the President’s report, as indicated in the following examples.
Reports published in 2000 that were used to justify previous increases in  the export control threshold for high performance computers stated  that Russia and China have the expertise necessary to use these  computers for national security applications such as the construction of  submarines, advanced aircraft, composite materials, or a variety of  other devices.
A 2001 report by the Department of Energy’s National Nuclear Security  Administration concluded that the availability of overall computing  power to a nuclear weapons design program is critical. Acquisition of  computers with higher performance levels allows a nuclear weapons  program to conduct studies faster and enables studies that cannot be  conducted on systems of lower performance, thus shortening the time  for design and development to full-scale testing. The report further  concludes that computers with an effective performance of  10,000 MTOPS or greater would be of significant use to China’s  designers in examining likely gaps in their nuclear weapons programs.
A 2001 executive branch assessment concluded that the increased use  of high performance computers in the weapons of mass destruction  programs of countries of concern could severely complicate U.S. efforts to monitor and assess such programs. The use of these computers can  reduce and even eliminate many traditional observable weapons  production activities such as large manufacturing operations and live  weapons tests.
According to the Defense officials responsible for preparing the December  2001 report, the level of computing power used to solve a particular  problem is based on the level of computing power available. If more  powerful computers are available, they are used. The greater the power of  the available computer, the faster the problem can be solved. Consequently,  the computers exported under the new threshold will allow countries of  concern to solve more quickly more complex problems in weapons  systems design.
section_title: Other Key Issues Relevant to the Decision to Raise Control Thresholds Not Addressed in the Report
paragraphs: Although not required by law, the President’s December 2001 report did not  address several key issues related to the decision to raise the threshold.  These issues include the ability of countries of concern to construct high  performance computers on their own, U.S. government difficulties in  monitoring the end-use of computers exported to countries of concern, the  use of MTOPS as a measure of individual computer performance, and the  impact of establishing a new licensing threshold outside the Wassenaar  Arrangement process.
The report did not acknowledge the difficulty that some countries of  concern have encountered in clustering smaller machines together to  achieve greater computing power. However, as we have reported before, it  may be more difficult to operate custom-built clustered systems than to  build them, according to experts. For example, without vendor-supplied  software to automate key functions on a clustered system, everything must  be done manually, making computing labor intensive and less reliable than  if it were performed on a vendor-manufactured system. With the higher thresholds, countries of concern will not have to rely on more inefficient  clustered systems to obtain greater computing capabilities.
The report did not address the difficulty that the U.S. government has  had in effectively monitoring the high performance computers that are  exported to countries of concern. Monitoring exported equipment for  proper use is a key element of the U.S. export licensing process.  Approved export licenses for high performance computers typically  stipulate conditions, such as where the computer must be located and  how it should be used. The conditions are designed to deter the end user  from using the computer inappropriately or from transferring the  computer to another location. Monitoring of these conditions is to be  accomplished through required end-use checks conducted by U.S.  government personnel. In our prior report, we found that U.S.  government personnel in China tasked with this job have been unable to  conduct many checks. In testimony before the U.S.-China Security  Review Commission on January 17, 2002, Commerce’s Assistant  Secretary for Export Enforcement stated that the Chinese government  dictates the schedule for conducting end-use checks. As a result, more  than 700 outstanding checks remain to be completed, according to  Commerce.
The inadequacies of the President’s report are compounded by the  continued use of MTOPS to determine the performance capabilities of  computers. Although industry and government no longer consider  MTOPS a valid measure of computer performance, the executive branch  continues to use it. In our 2000 report on high performance computers,  we recommended that executive branch agencies comprehensively  assess ways to address the shortcomings of computer export controls, including the development of new performance measures. The  President’s December 2001 report stated that the executive branch is  conducting a comprehensive review of export controls on computer  hardware. According to the report, this interagency review will, among  other things, attempt to identify a controllable class of high-end  computer systems of greater military sensitivity and alternative metrics  for controlling such systems. However, Defense officials stated that the  study has no deadline and no formal terms of reference.
The report did not acknowledge the multilateral process established  under the Wassenaar Arrangement—a forum of 33 countries established  in 1996 to reach multilateral agreements on which dual-use goods merit  special scrutiny and reporting. Changes to control thresholds on dual- use goods are coordinated through the Wassenaar Arrangement. The  arrangement uses a consensus-based approach to establish control  thresholds on these goods. The United States unilaterally raised the  MTOPS licensing threshold to 190,000 without first obtaining the  consensus of other Wassenaar Arrangement members. Due to actions  taken by the United States, the U.S. licensing threshold is now 190,000 MTOPS, while the control thresholds of other Wassenaar  member states remain at 28,000. Consequently, U.S. exporters have a  competitive advantage over their international competitors because U.S.  exporters are not required to obtain an export license for a wider range  of computers. According to State Department officials, the unilateral  U.S. action may complicate future efforts to reach consensus in the  Wassenaar forum on other important export control issues.
section_title: Conclusions
paragraphs: The report justifying the decision to decontrol high performance  computers was not based on a thorough analysis and did not fully address  the requirements of the National Defense Authorization Act of 1998. Since  the report’s conclusions are based on inaccurate information provided by  the computer industry and an inadequate assessment of national security  issues, the decision to raise the export control threshold is analytically  weak and appears to be premature, given market conditions. By providing  greater access to more powerful computers through the removal of any  export-licensing requirement, the United States could allow countries of  concern to pursue computer applications having military uses with a  greater degree of rigor and reliability. A more thorough analysis of the  foreign availability and the national security impact of transferring  technology to countries of concern would have provided a better analytical  basis for making changes in the control threshold. Given the level of high  performance computing power that the United States approves for export,  such studies of the cumulative effect of computer and related technology  exports will be increasingly important in determining the impact of such  exports on U.S. national security and in making future decisions about  adjusting export control thresholds.
section_title: Matter for Congressional Consideration
paragraphs: In our draft report, we recommended that the Departments of Commerce,  Defense, and State comply with existing statutes and complete a thorough  assessment of the foreign availability, military significance, and the  national security impact of changes to high performance computer  controls. Prior GAO reports have made similar recommendations. Since the  departments have not responded to our earlier recommendations on this  issue or clearly indicated whether they agreed with the recommendations  made in our draft report, we have included a Matter for Congressional  Consideration.
To help ensure that a thorough assessment of these issues is completed,  Congress may wish to consider requiring that the executive branch fully  comply with the provisions of the National Defense Authorization Acts of  1998 and 2000 before the executive branch alters or eliminates the export  control thresholds for high performance computers.
section_title: Agency Comments and Our Evaluation
paragraphs: We received written comments on a draft of this report from the  Departments of Commerce, Defense, and State, which are reprinted in  appendixes I, II, and III. The Commerce Department disagreed with our  findings and conclusions and said that the executive branch conducted a  thorough review of U.S. export controls on high performance computers  prior to the President’s January 2002 decision to raise the licensing  thresholds. Commerce stated that this review included significant input  from all relevant agencies, consultations with other Wassenaar  Arrangement partners, as well as an analysis of the worldwide availability  of high performance computers and computer clustering. Commerce also  said the United States continues to seek a means to control computers of  the greatest strategic importance. The Department of Defense said it is  conducting a study of computer export controls consistent with our  recommendations and the requirements of law. The Department of State  said it agreed that several shortcomings exist in the executive branch’s  justification to raise the licensing thresholds for high performance  computers. While agreeing that there were some gaps in the study, State  said it did not believe that these shortcomings invalidated a key finding that  high performance computers can no longer be controlled effectively, due to  advances in clustering computers together to achieve higher capabilities.
We have added information to the report to more fully describe the  information that Commerce gathered from industry. However, we disagree  that the administration conducted a thorough review of U.S. export  controls prior to the President’s January 2002 decision to raise the licensing  thresholds. As noted in our report, the President’s justification focused on  only one of three elements required by law—the availability of high  performance computers. Additionally, the availability assessment was not  adequate since only 1 of 10 companies capable of producing high  performance computers planned to market such computers in 2002. As  noted in Commerce Department data, the current market for computers at  the 190,000 MTOOPS level is relatively small and is not developing as  quickly as anticipated. Accordingly, the disparity between market  conditions and industry’s assertions about the widespread availability of  such computers should have prompted Commerce to conduct an  independent foreign availability assessment as allowed by the Export  Administration Regulations. However, Commerce did not conduct this  important analysis because senior Commerce officials informed GAO that  the department did not have the resources to complete such assessments.
The President’s report did not fully address the two remaining elements  required by law—identifying all potential uses of military significance and  the national security implications of high performance computer exports.  As noted in our report, Defense Department information shows that  computers operating at or below 190,000 MTOPS meet 98 percent of  Defense’s military computational requirements. Therefore, the President’s  justification to raise the MTOPS licensing threshold should have included  an assessment of the effects on national security.
The State Department’s comments clearly articulated the executive  branch’s position on high performance computers—“high performance  computers can no longer be controlled effectively” because high  performance computing capacity is widely available. While our report  found State’s assertion on availability is not supported by current market  conditions, State’s comments demonstrate that preceived market  conditions and related trends in computer clustering served as the primary  basis for the decision to raise the control threshold for high performance  computers. Regarding State’s comments on computer clustering, we note  that State’s position contrasts with an October 2001 Department of Defense  analysis that concluded that a clustered system does not provide  comparable capabilities as a stand-alone high performance computer. The  State and Commerce Departments cited no analysis as to how these  powerful computers could enhance the military capabilities of countries of  concern or affect U.S. national security interests. These important analyses  are required by law but not addressed in the President’s report.
section_title: Scope and Methodology
paragraphs: To assess the President’s justifications for raising the export control  threshold from 85,000 MTOPS to 190,000 MTOPS, we reviewed the  statutory requirements related to the President’s justification and the  regulations that pertain to the export of high performance computers.  Further, we reviewed documentation used as the basis for the report’s  assertions. The documentation included the letter and associated  attachments addressed to Commerce from the Computer Coalition for  Responsible Exports that prompted the change in the threshold. We also  examined information available on the Internet about the computer server  products offered by the 10 manufacturers mentioned in the President’s  report and contacted the manufacturers to obtain additional information.  The information obtained from the manufacturers was supplemented with  information obtained from a leading information technology industry  research organization, including reports pertaining to the availability of  Intel Itanium-based servers. Finally, we interviewed Commerce, Defense,  and State officials responsible for producing the report. The National  Security Council, which plays a key role in coordinating the interagency  process for changing export controls on high performance computers,  declined to discuss the President’s report with us.
We performed our work from February 2002 through July 2002 in  accordance with generally accepted government auditing standards.
We are sending this report to interested congressional committees and the  Secretaries of Commerce, Defense, and State. We will also make copies  available to other interested parties on request. In addition, the report will  be available at no charge on the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-8979 if you or your staff have any questions  concerning this report. Another GAO contact and staff acknowledgments  are listed in appendix IV.
section_title: Comments from the Department of Commerce
paragraphs: The following are GAO’s comments on the Department of Commerce’s  letter dated July 16, 2002.
subsections: section_title: GAO Comments
paragraphs: 1. We disagree that the Commerce Department conducted a thorough  review of U.S. export controls prior to the President’s January 2002  decision to raise the licensing thresholds. As noted in our report, the  President’s justification focused on only one of three elements required  by law—the availability of high performance computers. The  justification did not adequately identify uses of military significance or  the national security impact of changing the thresholds. 2. We agree that this raises a legal issue, which we mentioned in our  testimony on high performance computers on March 15, 2001. Once a  new measure is decided upon, the executive branch could work with  Congress to allow use of other measures. Section 221 of H.R. 2581,  would repeal the National Defense Authorization Act provisions  dealing with export controls on high performance computers. These  controls are expressed in MTOPS. 3. We agree that countries of concern can cluster or link together lower  performance computers to achieve higher computing capabilities.  However, clustering still comes at a cost in terms of speed and  difficulties in operating the clustered systems. Raising the control  threshold to 190,000 MTOPS effectively eliminates these costs and  allows countries of concern to easily purchase high performance  computers. 4. Defense Department officials stated that high performance computers  performing at or below 190,000 MTOPS meet 98 percent of the  Department of Defense’s computational requirements. Therefore, it is  difficult to understand Commerce’s assertion that the United States  continues to seek a means to control computers of the greatest  strategic importance. 5. This comment acknowledges that Commerce used market conditions  as the sole criterion for changing the control thresholds for high  performance computers. The act also requires an assessment of how  these powerful computers could enhance the military capabilities of  countries of concern or affect U.S. national security interests. These  topics were not addressed in the President’s report. 6. We disagree. The practical effect of raising the U.S. license exception  level to 190,000 MTOPS is to raise the control threshold to this level  since computers below this level (190,000 MTOPS) do not require an  export license. Further, according to Commerce officials, not all  Wassenaar members have license exception provisions in their  regulations. Consequently, a disparity exists between U.S. licensing  requirements and the control thresholds used by other Wassenaar  member countries, as we noted in our report. Finally, according to State  Department officials and official documents we reviewed, other  Wassenaar members complained that the United States unilaterally  increased its export control threshold by raising the licensing  exception level to 190,000 MTOPS. 7. Commerce and Defense officials responsible for preparing the  President’s December 2001 report confirmed that the effort to formally  change the licensing threshold and prepare the justification was  prompted by the letter from industry. 8. Commerce data indicate that there are more than 700 outstanding post- shipment verifications that have not been conducted in China. 9. When implemented, the Department of Commerce’s effort to “red flag”  persons for which it has not been able to conduct prelicense checks or  post-shipment verifications may prove to be a useful first step in  improving its ability to counter problems associated with conducting  checks and verifications.
section_title: Comments from the Department of Defense
section_title: Comments from the Department of State
paragraphs: The following are GAO’s comments on the letter from the Department of  State dated July 19, 2002.
subsections: section_title: GAO Comments
paragraphs: 1. We are encouraged that executive branch agencies continue to explore  alternatives to the current MTOPS metric. We believe the results of this  analysis should be shared with Congress. 2. We agree that some countries subject to the existing controls may be  among the most adept at developing clustering software and  technology. However, this point was not included in the President’s  report. The report simply stated that the impact of clustering will be  assessed in the course of the executive branch’s review of computer  export controls. 3. While computer clustering complicates efforts to maintain effective  export controls, this point was not used as the basis for raising the  export control thresholds for high performance computers. Also, the  executive branch continues to debate the extent that clustering has  rendered the current export control system ineffective. An October  2001 Defense study found that clustered systems do not match the  overall performance capabilities of the stand-alone systems supplied by  U.S. vendors. This study concluded that foreign country’s use of  clustered systems should not be used as a justification for decontrolling  all classes of high performance computers.
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the individual named above, David M. Bruno, Claude T.  Adrien, and Lynn Cothern made key contributions to this report.
section_title: GAO’s Mission
paragraphs: The General Accounting Office, the investigative arm of Congress, exists to  support Congress in meeting its constitutional responsibilities and to help improve  the performance and accountability of the federal government for the American  people. GAO examines the use of public funds; evaluates federal programs and  policies; and provides analyses, recommendations, and other assistance to help  Congress make informed oversight, policy, and funding decisions. GAO’s  commitment to good government is reflected in its core values of accountability,  integrity, and reliability.
section_title: Obtaining Copies of GAO Reports and Testimony
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Each day, GAO issues a list of newly released reports, testimony, and  correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site  daily. The list contains links to the full-text document files. To have GAO e-mail this  list to you every afternoon, go to www.gao.gov and select “Subscribe to daily E-mail alert for newly released products” under the GAO Reports heading.
subsections: section_title: Order by Mail or Phone
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
section_title: Public Affairs