Congress authorized the President to establish NDF in 1992 under section 504 of the FREEDOM Support Act. The legislation authorized the President to use NDF to promote a variety of bilateral and multilateral nonproliferation and disarmament activities. In 1994, the President delegated authority for the program to the Secretary of State, who subsequently delegated authority for the program to the Under Secretary of State for Arms Control and International Security. The NDF office, within ISN, is responsible for day-to-day management of the program. The NDF Director leads the office, which has a staff of 16 people, including both State officials and contract employees. Congress funds NDF annually through the Nonproliferation, Anti- terrorism, Demining, and Related Programs appropriations account, within the Foreign Operations, Export Financing, and Related Programs Appropriations Acts. NDF received $10 million in initial funding for fiscal year 1994. Since fiscal year 1994, NDF has received $597 million in total appropriations. From fiscal years 2007 through 2012, NDF appropriations ranged from a high of $118 million in fiscal year 2009 to a low of $30 million in fiscal year 2012. According to State, NDF is unusual among U.S. foreign assistance programs in that it does not request funding for specific activities as part of its annual Congressional Budget Justification. The NDF Director stated that this helps ensure that NDF has the flexibility to respond to nonproliferation and disarmament opportunities as they arise, rather than tying NDF funds to particular projects or locations in advance. The FREEDOM Support Act provided NDF with a broad mission to fund bilateral and multilateral nonproliferation and disarmament activities and annual appropriations bills have consistently granted NDF other key authorities. NDF has used its authorities under the FREEDOM Support Act to fund a diverse set of projects. Table 1 outlines NDF activities authorized by the FREEDOM Support Act and provides examples of the types of activities NDF has funded. State officials and NDF program documents have characterized NDF’s mission as focused on funding unanticipated or unusually difficult projects of high priority to the U.S. government. Figure 1 illustrates the dismantling of a Scud missile as part of an NDF- funded project in Ukraine. In addition to the authorities granted to NDF in the FREEDOM Support Act, annual appropriations bills have also consistently provided NDF with three key authorities that are designed to increase NDF’s flexibility in carrying out nonproliferation and disarmament activities around the globe, as opportunities arise. These include the authority to (1) undertake projects notwithstanding other provisions of law (notwithstanding authority); (2) implement projects anywhere in the world or through international organizations when it is in the national security interest of the United States to do so, notwithstanding provisions of the FREEDOM Support Act that limited certain NDF activities to the independent states of the former Soviet Union (FSU) (geographic authority); and (3) use funding without restriction to fiscal year (no-year budget authority). State uses a multistep process to review NDF project proposals and determine which projects to fund, as shown in figure 2. According to NDF officials, NDF does not typically develop its own project proposals. Rather, other agencies, such as DOD and DOE, and other State offices, such as the Office of Export Control Cooperation, submit project proposals. NDF’s Review Panel, which is chaired by the Assistant Secretary of State from ISN, reviews these proposals. Two ISN Deputy Assistant Secretaries of State and the Assistant Secretaries of State from the Bureau of Political-Military Affairs and the Bureau of Arms Control, Verification, and Compliance serve as the other voting members on the panel. Officials from other U.S. agencies, including DOD, DOE, OMB, the Department of Commerce, and the Department of Homeland Security, as well as representatives from the National Security Council and U.S. intelligence community, also attend panel meetings. After reviewing the project proposals, the voting members of the NDF Review Panel make recommendations to State’s Under Secretary for Arms Control and International Security to approve, deny, or defer projects. In the Review Panel meetings, members can also propose modifications, such as increasing or decreasing the amount of funding for a project. The Under Secretary has the final authority to approve a project. NDF officials stated that in certain cases—for example, if a project is particularly urgent—the NDF Review Panel may not formally meet to review a proposal before it is submitted to the Under Secretary. In those cases, NDF instead may discuss the proposal with other Review Panel agencies in a different venue, such as at a National Security Council meeting. After the Under Secretary approves a project, but before work begins, State provides a 15-day advance notification to Congress to inform it of State’s intent to begin work on the project. As part of the notification, NDF informs Congress of its intent to obligate a specified amount of funds on the project. NDF then considers these funds designated for that project and not available for use on other projects, unless a subsequent notification is made. From fiscal years 1994 through 2012, NDF notified Congress of its intent to initiate work on 179 projects. NDF subsequently cancelled 19 of these projects after their notification and put an additional project on hold because of congressional concerns. As of the end of fiscal year 2012, NDF had 33 active projects. NDF also reported that, as of the end of fiscal year 2012, it had an additional 42 projects for which work was completed or cancelled, and the financial review of the projects was finished. In accordance with NDF close-out procedures, NDF is in the process of seeking approval from the Under Secretary for Arms Control and International Security before officially closing them. Since the beginning of fiscal year 2007, NDF has notified Congress of its intent to initiate work on a total of 24 projects, with a high of 15 in fiscal year 2010 and a low of zero in fiscal year 2011. Figure 3 shows the number of congressionally-notified projects from fiscal years 2007 through 2012. NDF funding amounts for projects vary significantly. NDF has notified Congress of its intent to spend as much as $50 million to as little as $179,000 on individual projects initiated since the beginning of fiscal year 2007. The lengths of projects also vary. For example, since the beginning of fiscal year 2007, NDF has closed out projects that were completed in as little as a few months to more than 9 years. In addition, some projects are follow-up projects that build on projects initiated in earlier fiscal years. For example, beginning in fiscal year 1998, NDF has undertaken five separate projects—the most recent of which was initiated in fiscal year 2010—to assist the government of Kazakhstan in shutting down a nuclear reactor in Aktau. NDF divides its projects into four categories: (1) destruction and conversion, (2) safeguards and verification, (3) enforcement and interdiction, and (4) education and training. Since the beginning of fiscal year 2007, State has committed the most resources to projects in the destruction/conversion category. In fiscal years 2007 through 2012, 39 percent of NDF funding for new projects went to projects in this category. Figure 4 shows a breakdown of funding for NDF among the four project categories, as well as administrative expenses, for fiscal years 2007 through 2012. NDF has several key authorities that provide it significant operational flexibility; however, it has not determined its needed carryover balances and it has taken years to close out many of its projects in the absence of guidance for closing them. Annual appropriations bills have consistently provided NDF with three key authorities that it has used to carry out its activities. First, NDF has used its notwithstanding authority to fund projects in countries where other U.S. programs are barred from operating by U.S. sanctions or other legal restrictions. Second, NDF has used its geographic authority to fund projects in a range of countries around the globe. Third, NDF has used its no-year budget authority to carry over balances not designated for specific projects from one year to the next. However, NDF has not determined appropriate levels for these balances, which have increased significantly in the past several years. Additionally, NDF has taken many years to close some projects where work was never started, or was suspended, and has not established guidance for determining when inactive projects should be closed out and unexpended no-year funds made available for other projects. Annual appropriations acts have consistently granted NDF notwithstanding authority, which allows NDF to undertake projects “notwithstanding any other provision of law.” As a result, NDF has the ability to fund projects in countries where other U.S. programs are generally barred from operating by U.S. legal restrictions. For example, when North Korea agreed to the disablement of its Yongbyon nuclear reactor in 2007 after progress in diplomatic talks, NDF was able to fund the project because of its notwithstanding authority, while other U.S. agencies, such as DOD and DOE, could not because various U.S. legal restrictions limited the assistance they could provide the country. According to State officials, NDF’s broad notwithstanding authority is uncommon among U.S. government programs. For example, the 2010 National Defense Authorization Act provided DOD’s Cooperative Threat Reduction (CTR) program notwithstanding authority for the first time in the program’s history and granted only limited use of the authority.cannot use its notwithstanding authority for more than 10 percent of CTR’s appropriation for a given fiscal year and must meet other requirements before exercising the authority, such as obtaining concurrence from the Secretaries of State and Energy.