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. 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. 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. 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.