Weapons of Mass Destruction: DOD Reporting on Cooperative Threat Reduction Assistance Has Improved

Published by the Government Accountability Office on 1997-02-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Committees

February 1997
                  WEAPONS OF MASS
                  DOD Reporting on
                  Cooperative Threat
                  Reduction Assistance
                  Has Improved

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      National Security and
      International Affairs Division


      February 27, 1997

      The Honorable Strom Thurmond
      The Honorable Carl Levin
      Ranking Minority Member
      Committee on Armed Services
      United States Senate

      The Honorable Floyd Spence
      The Honorable Ronald Dellums
      Ranking Minority Member
      Committee on National Security
      House of Representatives

      Section 1206 of the National Defense Authorization Act for Fiscal Year
      1996 requires the Department of Defense (DOD) to report annually on
      Cooperative Threat Reduction (CTR) assistance provided to the newly
      independent states (NIS).1 According to the legislation, DOD’s report is to
      include (1) a list of CTR assistance that has been provided, (2) a description
      of the current location and condition of the material and equipment
      provided, (3) a determination of whether the assistance has been used for
      the purposes intended, and (4) a description of CTR audit and examination
      activities to be carried out during the next fiscal year. DOD submitted its
      annual report for the year 1995 on December 31, 1996—nearly a year after
      its due date.2

      The legislation also requires that we provide Congress an assessment of
      DOD’s report within 30 days of the date that DOD issues its report.
      Accordingly, we reviewed DOD’s report to determine whether it
      (1) contained current and complete data on CTR assistance deliveries,
      including their location and condition; (2) presented the best available
      sources of information to show what assistance was accounted for and
      how it was used; (3) provided an overall determination of assistance use;
      and (4) listed planned audit and examination activities for the coming

      The NIS states of Belarus, Kazakstan, Russia, and Ukraine inherited the former Soviet Union’s
      weapons of mass destruction.
       The legislation specifies that DOD report on CTR assistance deliveries no later than January 31 of
      each year until the program ends.

      Page 1                                            GAO/NSIAD-97-84 Weapons of Mass Destruction

                       year. We also followed DOD’s implementation of the recommendation we
                       had previously made for DOD to improve its annual reports.3

                       In 1991, Congress authorized DOD to provide assistance to NIS. As of
Background             February 1997, the CTR program has obligated over $1 billion to help the
                       states of Belarus, Kazakstan, Russia, and Ukraine (1) destroy their
                       weapons of mass destruction, (2) safely store and transport the weapons
                       in connection with their destruction, and (3) reduce the risk of weapons
                       proliferation. CTR assistance deliveries include materials, equipment, and
                       training. Specifically, the types of equipment being provided vary widely
                       and include railcar conversion kits, computers, various cutting tools used
                       for the destruction of nuclear delivery vehicles, fissile material containers,
                       cranes, and manuals. DOD officials plan to discuss CTR assistance deliveries
                       made during 1996 in their forthcoming annual report.4

                       In May 1995, DOD issued its first annual report on CTR assistance.5 In our
                       assessment of that report, we identified several DOD deficiencies in
                       meeting the legislative requirements, and we recommended several
                       corrective actions to DOD.6 Specifically, we recommended that DOD reports
                       (1) contain current and complete data on CTR deliveries, (2) integrate
                       available sources of information on CTR assistance to show how it is used,
                       (3) link such information to the determination that assistance is being
                       used for the purposes intended, and (4) detail planned audit and
                       examination activities for the coming year.

                       DOD’s recent report is an improvement over its May 1995 report and
Results in Brief       provides an overview of how DOD accounted for CTR-provided assistance
                       through December 1995. Unlike its predecessor, this report

                   •   contains comprehensive listings of equipment deliveries, including the
                       location, dollar value, and delivery dates of the items provided, and
                       comments on the condition of the assistance;

                        Weapons of Mass Destruction: DOD Reporting on Cooperative Threat Reduction Assistance Can Be
                       Improved (GAO/NSIAD-95-191, Sept. 29, 1995).
                        As required by the legislation, DOD was to have submitted its next report accounting for CTR
                       assistance by January 31, 1997. DOD officials hope to issue this report in March.
                        Although DOD’s first report on accounting for CTR assistance was dated January 5, 1995, it was not
                       issued until May 1995.
                        Weapons of Mass Destruction (GAO/NSIAD-95-191, Sept. 29, 1995).

                       Page 2                                           GAO/NSIAD-97-84 Weapons of Mass Destruction

                        •   integrates a variety of information sources in accounting for CTR
                        •   makes a determination on whether the assistance has been appropriately
                            used; and
                        •   lists future audit and examination activities.

                            Compared with the information in DOD’s May 1995 report, the
CTR Assistance              December 1996 DOD report includes more current and comprehensive data
Deliveries                  on CTR equipment deliveries. As of December 1995, DOD had delivered over
                            $165 million worth of CTR equipment to the recipient countries. Program
                            officials stated that due to improvements in their computer database, they
                            can more readily track assistance deliveries. As required, the report also
                            contains information on the serviceability— that is, the condition—of the
                            CTR-provided assistance. In those instances where equipment was
                            inoperable or not being used, the report indicated what measures were
                            being undertaken to correct the problems.

                            DOD  has improved its means of collecting and reporting information on
Sources of                  CTR-provided  assistance. DOD tracks CTR assistance through several means,
Information                 including the use of audit and examination teams, observations by
                            contractor logistics support teams and project managers, information
                            collected from other government agencies, and intelligence sources.

Audit and Examination       By the end of 1995, audit and examination teams had conducted 12 audits
Teams                       and examinations among the four recipient countries. The teams audited a
                            variety of CTR-provided assistance, including rail car conversion kits,
                            strategic nuclear arms elimination equipment, and environmental
                            restoration equipment. With one exception, the audit teams found that the
                            recipients were using the equipment for the purposes intended. Personnel
                            from DOD’s On-Site Inspection Agency, who lead the audit and examination
                            teams,7 have developed flexible procedures for conducting the audits.
                            Also, the Defense Special Weapons Agency has appointed a liaison to
                            coordinate all audit and examination activities. The audit and examination
                            teams provide briefings to the CTR program office on audit results and
                            issue written reports summarizing the audits to the Deputy Assistant
                            Secretary of Defense for Threat Reduction Policy.

                             DOD technical and policy experts may also serve on audit and examination teams.

                            Page 3                                         GAO/NSIAD-97-84 Weapons of Mass Destruction

Logistics Support Teams   DOD also collected information on how assistance is being used through
and Project Managers      contractor logistics support teams observations. These contractor
                          personnel witness the transfer of CTR-provided equipment to the recipient
                          countries, conduct inventories of the equipment, and provide technical
                          assistance for installation and training to facilitate the proper use of the
                          equipment. For example, during 1995, logistics support teams observed 9
                          CTR projects in 21 locations throughout Russia. In Ukraine, teams observed
                          equipment provided for seven CTR projects at four different locations.

                          In addition, CTR project managers often travel to the recipient countries to
                          monitor the status of their projects and observe how CTR assistance is
                          being used. For example, in 1995, project managers and contract officials
                          visited 10 sites across the 4 recipient countries to review defense
                          conversion projects and 3 sites for housing projects in Belarus and

Information Obtained      In late 1995, DOD transferred management and oversight responsibilities
From Other Government     for the CTR effort involving the International Science and Technology
Agencies                  Center8 to the Department of State and the nuclear material protection,
                          control, and accountability (MPC&A) projects to the Department of Energy.
                          Nonetheless, DOD obtained information on how the use of this CTR
                          assistance was monitored from the Departments of State and Energy and
                          included it in its report. Moreover, the Defense Contract Audit Agency
                          (DCAA)9 audited projects at the 2 Russian institutions—Arzamas-16 and
                          Chelyabinsk-70—that were managing most Science and Technology
                          Center projects and reviewed 10 additional projects through its annual
                          financial audit.

                          DOD’s report also states that the Energy Department is developing internal
                          procedures for conducting audits of MPC&A projects. Because the
                          Department of Energy has not yet implemented these procedures, the
                          report cites the results of “preliminary measures,” which indicate that
                          MPC&A assistance provided to the four recipient countries is being used for
                          the purposes intended.

                           In 1992, the United States, European Community, Japan, and Russia, established the International
                          Science and Technology Center to provide peaceful employment opportunities to weapons scientists
                          and engineers, especially those experts involved with producing weapons of mass destruction.
                           U.S. officials stated that the State Department used DCAA because DOD funded the U.S. contribution
                          to the Center through fiscal year 1995. Through a reimbursable arrangement, State has continued to
                          request that DCAA perform audits.

                          Page 4                                          GAO/NSIAD-97-84 Weapons of Mass Destruction

Intelligence Sources   In developing its report, DOD indicated that it also used intelligence
                       sources to help it account for CTR-provided assistance. According to these
                       sources, CTR assistance was not diverted during 1995. However, because
                       the detailed information is classified, we cannot discuss it in this report.

                       DOD acknowledges in the report that it did not have sufficient resources to
Determination of       routinely examine all of the assistance provided since the CTR program
Assistance Use         began deliveries in 1993. Instead, DOD stated that it based its determination
                       on a random sampling from a variety of sources, across the spectrum of
                       CTR projects. Through December 1995, DOD had provided assistance in
                       support of 27 CTR projects. The report cites information on 88 percent of
                       these projects to support its determination that assistance provided under
                       the CTR program had been properly accounted for and was being used for
                       the purposes intended.

                       DOD officials believe that the working relationships they have developed
                       with recipient countries’ officials reinforce their assessment that CTR
                       assistance is being used for the purposes intended. Even if significant
                       diversions of CTR assistance were to occur, DOD is reasonably confident
                       that such diversions would be readily detected, given its sources of

                       As required by the legislation, DOD’s report lists 16 planned audit and
Future Audit and       examination activities for 1996. Although not required, DOD also lists its
Examination            17 planned activities for 1997. These lists provide a breakdown of how
Activities             many audits and examinations DOD will conduct per month for the entire
                       year. Our work shows that during 1996, DOD completed all of its planned
                       audits and examinations.

                       DOD reports that its efforts to account for CTR assistance have increased in
                       intensity since December 1995. For example, DOD conducted more audits
                       and examinations in 1996 than during 1995. According to DOD officials, as
                       more CTR equipment is delivered, they intend to increase the use of input
                       from technical teams, project managers, and intelligence sources to
                       determine how CTR assistance is being used in the recipient countries.

                       Page 5                               GAO/NSIAD-97-84 Weapons of Mass Destruction

                  DOD   concurred with a draft of this report.
Agency Comments
                  To accomplish our review objectives, we reviewed DOD’s December 1996
Scope and         report accounting for CTR-provided assistance, DOD’s audit and
Methodology       examination reports, and other DOD documents to determine whether DOD
                  had met the legislative requirements and implemented our previous
                  recommendation. We also reviewed DCAA audit reports and the 1995
                  International Science and Technology Center’s annual report. We met with
                  officials from the Office of the Secretary of Defense, the Defense Special
                  Weapons Agency, the On-Site Inspection Agency, and the State
                  Department. In addition, we reviewed DOD’s classified annex to its report.
                  Due to the limited time allowed for us to assess DOD’s report, we could not
                  travel to the CTR recipient countries of Belarus, Kazakstan, Russia, and
                  Ukraine and meet with recipient countries’ officials to corroborate
                  information contained in DOD’s report.

                  We conducted our review during January 1997 in accordance with
                  generally accepted government auditing standards.

                  We plan to send copies of this report to the Secretary of Defense and other
                  interested congressional committees. We will also make copies available
                  to others upon request.

                  Please contact me on (202) 512-4128 if you or your staff have any
                  questions concerning this report. The major contributors were
                  F. James Shafer, Beth Hoffman León, and Jo Ann Geoghan.

                  Harold J. Johnson
                  Associate Director, International Relations
                    and Trade Issues

(711237)          Page 6                                GAO/NSIAD-97-84 Weapons of Mass Destruction
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