oversight

Weapons of Mass Destruction: Effort to Reduce Russian Arsenals May Cost More, Achieve Less Than Planned

Published by the Government Accountability Office on 1999-04-13.

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

                  United States General Accounting Office

GAO               Report to the Chairman and Ranking
                  Minority Member, Committee on Armed
                  Services, House of Representatives


April 1999
                  WEAPONS OF MASS
                  DESTRUCTION

                  Effort to Reduce
                  Russian Arsenals May
                  Cost More, Achieve
                  Less Than Planned




GAO/NSIAD-99-76
      United States
GAO   General Accounting Office
      Washington, D.C. 20548                                                                                    Leter




      National Security and
      International Affairs Division

      B-282010                                                                                        Letter

      April 13, 1999

      The Honorable Floyd Spence
      Chairman
      The Honorable Ike Skelton
      Ranking Minority Member
      Committee on Armed Services
      House of Representatives

      Since the early 1990s, the Department of Defense (DOD) has supported
      Russia’s design and construction of two facilities intended to promote U.S.
      national security by helping to reduce Russian arsenals of nuclear and
      chemical weapons. The first, a storage facility now under construction at
      Russia’s Mayak nuclear complex, is intended to facilitate Russia’s
      elimination of nuclear weapons by providing safe and secure storage for
      nuclear materials (such as plutonium) removed from such weapons. The
      second, a pilot chemical weapons destruction facility to be built near
      Russia’s Shchuch’ye chemical weapons storage depot, is intended to
      destroy that depot’s nerve agent weapons, accelerate destruction of such
      weapons at other depots by providing a proven destruction technology, and
      help Russia comply with the Chemical Weapons Convention.1 DOD has
      supported these facilities through its Cooperative Threat Reduction (CTR)
      program.2

      Your committee has expressed concerns about the cost of the Mayak and
      Shchuch’ye facilities, the likelihood that they will become operational on
      schedule, and the extent to which the United States is likely to realize its
      national security objectives for them. Accordingly, our specific objectives
      in response to your request were to assess




      1The Chemical Weapons Convention prohibits the development, production, acquisition, stockpiling,
      retention, transfer, and use of chemical weapons. The Convention, which entered into force on
      April 29, 1997, requires signatory states to destroy any stocks that they may have of such weapons over
      a 10-year period and provides for the possible granting of a 5-year extension.

      2
        The CTR program was initiated in 1991 to help former Soviet states reduce risks posed by weapons of
      mass destruction. The Congress has provided DOD with more than $2.7 billion through fiscal year 1999
      for the CTR program. For more information regarding this program, see our reports entitled Weapons
      of Mass Destruction: Status of the Cooperative Threat Reduction Program (GAO/NSIAD-96-222, Sept.
      27, 1996), Weapons of Mass Destruction: Reducing the Threat From the Former Soviet Union—An
      Update (GAO/NSIAD-95-165, June 9, 1995), and Weapons of Mass Destruction: Reducing the Threat
      From the Former Soviet Union (GAO/NSIAD-95-7, Oct. 6, 1994).




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                   • whether the Mayak project will be completed on schedule and within
                     past DOD estimates of its total cost to the United States,
                   • whether the United States has made progress in ensuring that the
                     completed Mayak facility would achieve U.S. national security
                     objectives by safely and securely storing retired materials taken only
                     from dismantled nuclear weapons,
                   • whether the Shchuch’ye project will be completed on schedule and the
                     status of DOD efforts to estimate its total cost to the United States, and
                   • whether the completed Shchuch’ye facility will achieve U.S. national
                     security objectives by helping Russia destroy the Shchuch’ye depot’s
                     stocks and accelerate elimination of all Russian chemical weapons
                     under the Chemical Weapons Convention.



Results in Brief   Russian funding shortfalls have substantially increased the Mayak facility’s
                   estimated cost to the United States while underscoring the need for
                   substantial additional assistance if the Shchuch’ye project’s broader
                   objectives are to be attained. Russian reluctance to share critical
                   information with the United States may limit Mayak’s national security
                   benefits and has contributed to delays in the Shchuch’ye project.

                   Russia’s failure to fund its share of the costs of the Mayak facility has
                   already increased estimated U.S. costs for Mayak from $275 million to
                   $413 million, deferred construction of one of the facility’s two planned
                   storage buildings, and delayed the facility’s initial availability by about
                   3 years. U.S. costs for Mayak could ultimately increase to almost
                   $1.3 billion if DOD eventually opts to build the facility’s originally planned
                   second building and help Russia prepare, package, and transport plutonium
                   for storage at Mayak.

                   Notwithstanding its growing investment in the Mayak project, the United
                   States continues to lack clear assurance that Russia will actually use the
                   Mayak facility in a manner that will ensure the achievement of all U.S.
                   national security objectives for the project. U.S. and Russian negotiators
                   have drafted—but have not yet concluded—an agreement that could assure
                   DOD that weapons-grade plutonium at Mayak is securely stored and would
                   not be used for weapons in the future. However, Russian negotiators have
                   not agreed to U.S. proposals aimed at confirming that Mayak’s plutonium
                   would originate solely from dismantled weapons and that Mayak would
                   thus support Russia’s dismantlement of nuclear weapons.




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             The Shchuch’ye project has fallen about 18 months behind schedule since
             October 1997 and now is not scheduled to begin operating until 2006.
             Several factors, including Russia’s failure to promptly provide needed
             information about the chemical weapons to be destroyed, have slowed
             both completion of the facility’s conceptual design and DOD’s efforts to
             refine its $750 million estimate of the pilot facility’s cost to the United
             States. The project also fell behind schedule because DOD increased the
             time allotted for constructing, testing, and starting up the pilot facility, due
             in part to funding limits.

             The United States lacks assurance that the Shchuch’ye project will achieve
             its broader national security objectives of accelerating the destruction of
             such weapons at other depots and helping Russia comply with the
             Chemical Weapons Convention. As designed, the U.S.-funded pilot facility
             would destroy most of the depot’s 5,600 metric tons of chemical weapons—
             although not until well past Russia’s Chemical Weapons Convention
             deadline for destroying its entire chemical weapons stockpile—and
             provide Russia with a proven technology for use at its four other nerve
             agent depots. However, Russia’s economic difficulties strongly suggest that
             it would be unwilling or unable to invest the billions of dollars needed to
             construct and operate destruction facilities at the four depots that store the
             rest of its 32,000 metric ton nerve agent stockpile. As a result, DOD is
             counting on large-scale assistance from other nations to fund the additional
             facilities needed to help Russia fully comply with the Chemical Weapons
             Convention and so realize the Shchuch’ye project’s broader objectives.

             This report suggests that if the Congress wishes to have greater assurance
             that the Shchuch’ye project will achieve its stated broad national security
             objectives, it may wish to require DOD to identify specific funding sources
             for the construction of the four additional chemical weapons destruction
             facilities or provide further justification for continuing the project.



Background   The Mayak facility is intended to promote U.S. national security interests
             by allowing Russia to safely and securely retire nuclear materials removed
             from dismantled nuclear weapons. The Soviet Union, which had about
             30,000 nuclear weapons at the time of its collapse, may have produced as
             much as 200 metric tons of plutonium and 1,200 metric tons of highly
             enriched uranium—sufficient for producing over 70,000 nuclear weapons.
             Following the 1991 Soviet collapse, Russian officials indicated that a
             shortage of secure storage space for nuclear material might impede their
             ability to retire and eliminate nuclear warheads.



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Although U.S. agencies were unable to confirm the existence of such a
shortage, DOD agreed in 1992 to provide $15 million to help Russia design a
facility to hold nuclear materials from dismantled weapons. In 1993, DOD
agreed to provide another $75 million to help build such a facility at Mayak.
DOD informed congressional committees in 1996 that it would cap its
growing investment in Mayak at half of the facility’s cost. Based on
then-current DOD cost estimates, such a cap would have limited total U.S.
expenses for Mayak at about $275 million. As of February 1999, DOD had
obligated about $165 million for Mayak and expended about $83 million.

Mayak’s two planned storage buildings were designed to accommodate a
total of 50,000 containers3 filled with as much as 66 metric tons of
plutonium and 536 metric tons of highly enriched uranium.4 By mid-1998,
the first of these storage buildings and several support buildings had been
partially constructed. Initial operations were to start in 1999.

DOD has also been supporting design and construction of the Shchuch’ye
pilot chemical weapons destruction facility to promote U.S. national
security by (1) destroying all nerve agent-filled munitions at a Russian
chemical weapons storage depot, (2) accelerating Russia’s chemical
weapons destruction efforts by providing a proven nerve agent destruction
technology and a facility design that could be adapted for use at other
storage sites, and (3) helping Russia meet its Chemical Weapons
Convention deadlines. By ratifying the Chemical Weapons Convention in
1997, Russia agreed to destroy its chemical weapons by 2007, with a
possible extension to 2012. However, it does not have an operational
capability to destroy large quantities of chemical weapons5 and its seven
declared chemical weapons storage depots contain 40,000 metric tons of
chemical weapons agent—the world’s largest chemical weapons stockpile.
Over 80 percent of this stockpile consists of the lethal nerve agents sarin,
soman, and VX. According to executive branch officials, the destruction of
Russia’s chemical weapons stockpile, especially its nerve agents, would



3
  In addition to the cost of the Mayak facility, DOD also has spent $63 million to produce about 32,700
nuclear material containers for Russian use at a facility such as the one being built at Mayak.

4These   amounts are sufficient to build more than 29,000 nuclear weapons.

5
  The United States ratified the Chemical Weapons Convention on April 25, 1997, and is obligated to
destroy its 31,500-ton stockpile by 2007. The Congress had already directed the U.S. Army to destroy
this stockpile. According to the Army, 13 percent of the stockpile had been destroyed by mid-January
1999. It plans to complete the destruction of the entire U.S. stockpile by 2004.




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                             significantly reduce the chemical weapons threat faced by the United
                             States.

                             In 1994, DOD began taking initial steps toward providing Russia the
                             capability of destroying chemical weapons at the Shchuch’ye depot, which
                             stores about 2 million artillery projectiles and rocket and missile warheads
                             filled with nerve agents. The project would result in a pilot facility capable
                             of destroying 500 metric tons of nerve agents annually. Russia could
                             expand the pilot facility into a full-scale facility capable of destroying
                             1,200 metric tons annually. DOD plans to fund the entire cost of the pilot
                             destruction facility. As of the end of 1998, DOD had obligated about
                             $95 million for the project and expended about $56 million.



Mayak Will Cost DOD          Because of Russian funding shortfalls, DOD now plans to bear about 90
                             percent of the cost of constructing a truncated version of the Mayak facility
More and Be Available        that will be available almost 3 years later than previously scheduled. DOD
Later Than Planned           estimates that the smaller facility will cost the United States about
                             50 percent more than the amount that DOD had previously planned to
                             contribute toward the full-sized facility. U.S. costs could increase to as
                             much as $1.3 billion if DOD opts to expand Mayak to its originally-planned
                             size and to help Russia load Mayak with plutonium.


Russian Funding Shortfalls   DOD’s 1996 assumption that Russia would pay for half of Mayak’s costs has
Lead to Higher U.S. Costs,   not been born out by subsequent events. According to a DOD estimate,
                             through 1999 Russia had programmed about $45 million for Mayak—less
Smaller Facility, Delayed
                             than 14 percent of all U.S.-Russian Mayak funding. In April 1998, Russian
Opening                      officials informed DOD that Russia would be unable to contribute
                             significant funds for Mayak in the future and asked DOD to fund Mayak’s
                             completion.

                             After concluding that it could not allocate the funds needed to complete the
                             entire facility by 1999 as planned, DOD chose to extend the time allotted
                             for constructing Mayak’s first storage building and to defer the second
                             storage building. DOD estimated that the smaller facility could be
                             completed by mid-2002 at a cost of $413 million—$138 million more than
                             DOD’s 1996 cap of $275 million for the full-sized facility. DOD’s new
                             estimate included $20 million to cover the cost of extending the project and
                             $36 million for new infrastructure items needed to operate Mayak. The




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                        truncated, 25,000-container facility would be able to hold 50 metric tons of
                        plutonium and 200 metric tons of highly enriched uranium.6 In January
                        1999, Russia agreed that DOD would contribute no more than $413 million
                        for a 25,000-container facility.7

                        However, DOD officials continue to budget and plan for the possibility that
                        DOD will opt in 2000 to proceed with the deferred second storage building,
                        which could be completed by mid-2006 and designed to hold an additional
                        100 metric tons of plutonium. DOD officials told us that Russia would need
                        the second building if it chooses to retire more plutonium as a result of the
                        elimination of nuclear weapons. DOD estimates that the second building
                        would cost the United States another $230 million—raising total U.S.
                        Mayak design and construction costs to about $642 million.


DOD May Help Russia     DOD may also provide another $650 million to help Russia prepare,
Prepare Plutonium for   package, and transport plutonium for storage at Mayak. In April 1998,
                        Russian officials informed DOD that Russia lacked the resources to fully
Storage at Mayak
                        utilize its capabilities for preparing and packaging materials for storage at
                        Mayak and that this lack of resources could constrict Russian nuclear
                        weapons dismantlement. According to DOD officials, DOD subsequently
                        proposed that it would help Russia prepare, package, and transport
                        plutonium for storage at the facility. DOD officials informed us that such
                        aid would be contingent on Russia’s willingness to provide the United
                        States with access to the facilities that would prepare and package the
                        plutonium.

                        The CTR program office estimates that helping Russia prepare, package,
                        and transport 50 metric tons of plutonium for storage at Mayak’s first
                        building by 2006 could cost DOD about $223 million. The cost of such an

                        6Unlike highly enriched uranium, plutonium produces heat and can change in ways that could raise
                        safety concerns if stored at too high a temperature for too long. While Mayak’s first building was
                        designed to safely hold no more than 33 metric tons of plutonium, the initial results of a
                        DOD-sponsored study indicate that it could safely hold the 50 metric tons of plutonium that Russia now
                        plans to retire at Mayak. Containers holding 50 metric tons of plutonium would fill about half of the
                        building’s storage capacity. The remaining half could be used to store up to 200 metric tons of highly
                        enriched uranium. Whether Russia will store any highly enriched uranium at Mayak is unclear, given
                        that it has agreed to sell 500 metric tons of uranium from dismantled weapons to the United States after
                        converting the uranium into low-enriched fuel for power reactors.

                        7
                          The Congress has barred the obligation or expenditure of any fiscal year 1998 funds for Mayak until
                        15 days after DOD notifies the Congress that DOD and Russia have entered into an agreement that
                        specifies the total cost to the United States for the facility, as well as an agreement that incorporates the
                        principle of transparency with respect to the use of the facility (P.L. 105-85, sec. 1407).




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                                             effort would increase sharply if DOD were also to help Russia fill Mayak’s
                                             second building—if constructed—with another 100 metric tons of
                                             plutonium. The CTR program office estimates that preparing, packaging,
                                             and transporting a total of 150 metric tons of plutonium for storage at a
                                             two-building Mayak facility by 2010 would cost DOD roughly $650 million.
                                             Such an effort, coupled with the cost of designing and constructing both
                                             buildings, could raise total U.S. Mayak costs to almost $1.3 billion, as
                                             shown in table 1.



Table 1: Mayak Facility’s Capacity, Schedule, and Cost Estimates

                                  Mayak facility, as planned in       Mayak facility, as currently       Mayak facility, if expanded to
                                  1996                                planned                            originally-planned size
Capacity                          Two buildings holding a total of    One building holding a total of    Two buildings holding a total of
                                  50,000 containers                   25,000 containers                  50,000 containers
Estimated start of operations     1999                                2002                               2002 (first building)
                                                                                                         2006 (second building)
Estimated U.S. cost of design and $275 million                        $413 million                       $642 million
construction
Estimated U.S. cost of loading    $0                                  $223 million                       $650 million
facility with plutonium                                               (50 metric tons)                   (150 metric tons)
(preparation, packaging, and
transportation)
Total estimated U.S. cost of      $275 million                        $636 million                       $1.29 billion
facility design, construction,
and loading
                                             Note: Shaded areas represent potential future costs.
                                             Source: GAO analysis of DOD information.




Russian Officials Press for                  Russian officials continue to seek additional U.S. support for various
Additional U.S. Support                      Mayak-related facilities. In 1998, DOD refused to pay about $76 million for
                                             items—including a garage, a car wash, a bus station, and an overly large
                                             heating plant—that it considered non-essential. In November 1998,
                                             Russian officials argued that Russia could not afford to pay for several such
                                             items that they stated would be needed to ensure Mayak’s certification for
                                             operation by Russian authorities. DOD officials, while rejecting almost all
                                             of the items, agreed to pay for a fire station and to consider heating plant
                                             options because they considered these items to be integral to Mayak’s safe




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                             operation. Russia’s continued economic difficulties suggest that it will
                             continue to press DOD for additional support for such items in the future.8



Full Achievement of          The United States cannot ensure it will achieve the full range of its Mayak
                             national security objectives unless and until Russia agrees to measures
U.S. National Security       needed to confirm that the completed facility contains only materials from
Objectives at Mayak          dismantled nuclear weapons. DOD appears to have made greater progress
                             toward being able to confirm that weapons-grade materials at Mayak are
Hinges on Russian            not available for reuse in weapons and are being stored securely and safely.
Decisions

Ongoing Negotiations         In a January 1996 joint statement with the U.S. Secretary of Defense, the
Continue Efforts to Define   Russian Minister for Atomic Energy stated that the Mayak facility would
                             have “joint accountability and transparency measures” that would permit
U.S. Access
                             the United States to confirm Mayak’s use. However, in September 1996, we
                             reported that the United States and Russia had not made any progress in
                             finalizing transparency arrangements for Mayak, which was then scheduled
                             for completion less than 3 years later.9 We noted that without a detailed
                             transparency arrangement the United States would be unable to ensure
                             that Russia was using Mayak to store materials from dismantled weapons
                             and that those materials were not being reused for weapons. We therefore
                             suggested that the Congress consider linking DOD’s ability to obligate
                             funds for constructing Mayak to the completion of a transparency
                             agreement.

                             The Congress subsequently barred DOD from obligating fiscal year 1998
                             funds for Mayak until 15 days after DOD had notified the Congress that
                             DOD and Russia had entered into an agreement incorporating the principle
                             of transparency with respect to the facility’s use. 10 In October 1997, the
                             United States and Russia began negotiating an agreement to define the


                             8
                              Russia’s economic situation raises concerns about its ability to pay the cost of operating Mayak once
                             the facility is completed. Russian officials have stated that Mayak could cost as much as $80 million a
                             year to operate. Although DOD officials have not estimated Mayak’s life-cycle costs, a U.S. contractor
                             estimate suggests that the facility could cost Russia about $12 million to $13 million a year for
                             operations and maintenance.

                             9Seeour report entitled Weapons of Mass Destruction: Status of the Cooperative Threat Reduction
                             Program

                             10
                                  This restriction is found in P.L. 105-85, sec. 1407.




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                            transparency measures that the United States would be allowed to employ
                            at Mayak. By February 1999, the negotiators had partially drafted a
                            possible agreement. DOD officials that we spoke with could not predict
                            when the agreement would be completed.


Weapons Origin of Mayak’s   DOD is attempting to secure sufficient access to the plutonium entering
Future Contents in Doubt    Mayak to be confident that it was removed from dismantled nuclear
                            weapons. Knowing that the plutonium originated from nuclear weapons
                            would provide evidence that Russia is dismantling such weapons.

                            U.S. officials have defined several criteria for assessing whether plutonium
                            originated from a nuclear weapon. DOD officials informed us that Russian
                            negotiators have offered to allow U.S. measurements relevant to one of
                            these criteria to be made as plutonium enters Mayak for storage and to
                            supplement these measurements with written pledges that the stored
                            material originated from weapons. U.S. officials told us that Russian
                            negotiators have agreed to measurements that would provide confidence
                            that Mayak’s plutonium is weapons grade.

                            However, according to U.S. officials, Russian negotiators have not agreed
                            to allow U.S. measurements regarding the shape of the alleged plutonium
                            components and other U.S. criteria. Russian officials have stated that all
                            plutonium components will be reshaped before they are shipped to Mayak
                            for U.S. measurement.11 Such reshaping would reduce DOD’s ability to
                            confirm that the weapons-grade plutonium entering Mayak had been
                            removed from weapons and that Mayak is directly supporting Russia’s
                            elimination of nuclear weapons. Russian negotiators rebuffed a U.S.
                            request to allow measurements of Mayak-bound plutonium at the reshaping
                            facility prior to its reshaping because of (1) the lack of any U.S.-funded
                            activities at the reshaping facility and (2) Russian sensitivities concerning
                            the information that the United States would obtain. DOD officials
                            informed us that they intend to make the taking of weapons-origin
                            measurements a condition of any CTR aid to Russia’s preparation,
                            packaging, and transportation of plutonium for storage at Mayak.



                            11
                              According to DOD officials, Russian negotiators stated that the reshaping was intended to deny
                            International Atomic Energy Agency inspectors access to sensitive information. The Agency’s
                            membership includes more than 100 nations that do not have nuclear weapons. See our report entitled
                            Nuclear Nonproliferation and Safety: Challenges Facing the International Atomic Energy Agency
                            (GAO/NSIAD/RCED-93-284, Sept. 22, 1993).




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Draft Access Agreement   DOD is also seeking to increase its confidence that nuclear materials stored
Provides Pledge That     at Mayak would not be used to produce new Russian nuclear weapons and
                         would be stored securely.12 The draft agreement contains provisions
Materials Will Not Be
                         addressing both of these objectives, although questions remain concerning
Removed and Allows DOD   Russia’s plans for providing physical security for the facility.
Monitoring
                         The draft agreement includes a Russian pledge not to remove any material
                         from Mayak—other than for emergency purposes13—without first
                         negotiating sufficient provisions to assure the United States that the
                         materials would not be reused for weapons. To bolster U.S. confidence
                         that these materials would be securely stored, the draft agreement would
                         provide the United States with considerable access at Mayak. U.S.
                         monitors would be allowed to inspect Mayak six times a year and utilize
                         data generated by Mayak’s material control and accounting system. U.S.
                         monitors would be allowed to spend at least 5 days to conduct the initial
                         inspection. During each inspection, they would be allowed to download
                         recorded data from sensors used by the Russians to identify, scan, and
                         track each container as it passes through Mayak’s unloading and incoming
                         control rooms. Annually, U.S. monitors would be able to select randomly
                         up to 120 storage shafts and verify the identifying tags on the containers in
                         those shafts against Mayak’s records.14 U.S. monitors would have the right
                         to scan one container from each of the selected shafts to determine its
                         contents. Russia also would be required to inventory a random number of
                         containers twice a year with U.S. participation.

                         Details regarding Mayak’s physical security measures remain unclear,
                         however. DOD officials informed us that Russia has been reluctant to
                         provide information about Russia’s plans to provide physical security for
                         the facility. The lack of such information could impair DOD’s ability to
                         assess Russian requests for safety-related equipment.

                         DOD has addressed Mayak’s safety by reviewing its design. DOD officials
                         reviewed Russian design documents in October 1996 and identified several


                         12
                            In November 1998, Russian officials informed us that they had secured temporary storage space for
                         materials from nuclear weapons that would be sufficient until Mayak begins operating in 2002. They
                         stated that the temporary storage space is unsuited for long-term storage, in part because it depends
                         heavily on guards for security.

                         13The   draft agreement specifies the United States would have to be notified of any such removal.

                         14
                           One hundred twenty shafts a year would constitute about 4 percent of Mayak’s shafts and could
                         contain almost 2 metric tons of plutonium.




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                               safety concerns. A 1997 U.S. follow-up review concluded that the Russians
                               had incorporated some changes in their design and had provided sufficient
                               additional data to resolve remaining issues. DOD officials informed us that
                               they are continuing to monitor the design of key safety-related
                               components.



Shchuch’ye Project             The Shchuch’ye project has fallen behind schedule since October 1997,
                               delaying the preparation of a more accurate cost estimate and the pilot
Has Fallen Behind              facility’s planned start-up date. The project has fallen behind schedule
Schedule                       largely due to delays in completing the facility’s conceptual design and U.S.
                               funding constraints.


Development of the             In October 1997, U.S. and Russian officials agreed to a joint schedule for
Facility’s Conceptual Design   the Shchuch’ye project. This new schedule estimated that the facility’s
                               conceptual design15 would be completed by April 1998. DOD officials have
and Cost Estimate Is Behind
                               recently verified that it was not completed until February 1999. DOD
Schedule                       officials attributed this 10-month delay to three factors.

                               The conceptual design fell behind schedule partly because Russia did not
                               promptly provide detailed specifications for the types of chemical weapons
                               stored at the Shchuch’ye depot to U.S. engineers, despite repeated U.S.
                               requests. Without these specifications, U.S. engineers could not verify that
                               the facility’s weapons-handling equipment would safely extract nerve
                               agents from these weapons. According to a DOD official, by the end of
                               January 1999, Russia had provided enough information about the weapons
                               stored at the Shchuch’ye depot to allow completion of the conceptual
                               design. However, the delay led DOD to defer fabrication of test
                               weapons-handling equipment from January 1999 to July 1999. According to
                               a DOD official, this delay could impact the overall project schedule.

                               The conceptual design also fell behind schedule partly because of delays in
                               verifying the safety and effectiveness of Russia’s chemical agent
                               destruction process for Russian VX nerve agent.16 The process employs a
                               chemical compound to neutralize the nerve agents extracted from the


                               15In U.S. engineering practice, a project’s conceptual or preliminary design is complete when 35 percent
                               of its total design is complete.

                               16
                                    This process had already been demonstrated to be effective destroying other Russian nerve agents.




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chemical weapons and then transforms the neutralized agents into a solid
waste product, which will be stored in bunkers next to the facility. During
testing, U.S. engineers discovered that the waste product’s flash point17
was about 20 degrees Fahrenheit below the threshold that U.S. fire code
standards would classify as “explosive.”18 In response to U.S. concerns,
Russian engineers modified the chemical compound used to neutralize the
nerve agents to produce a waste product with a flash point that was
acceptable, according to a DOD official.19 However, several additional
months were needed before U.S. and Russian engineers were able to
produce acceptable test quantities of the modified chemical compound.20

In addition, the facility’s conceptual design fell behind schedule partly
because Russian officials did not obtain needed investment and site
permits until June 1998—1 year behind schedule. Russian officials were
reluctant to complete more than 10 percent of the Shchuch’ye facility’s
design without these permits, which are roughly equivalent to a U.S.
environmental impact assessment. According to DOD officials, the
October 1997 schedule underestimated the length of time the Russian
Ministry of Defense would need to obtain the permits under new laws and
regulations that strengthened the role of regional commissions.

Due to the delay in completing the conceptual design, DOD officials have
deferred the completion of a more reliable estimate of the pilot facility’s
cost from April 1998. Their preliminary estimate of the pilot facility’s cost
is about $750 million. DOD officials expect that the final cost estimate for
the pilot facility will be about the same or lower than the preliminary
estimate. DOD intends to fund the entire cost of the Shchuch’ye pilot
facility with CTR funds, including its start up and demonstration with
various agents and munitions. In accordance with our 1996
recommendation, the Secretary of Defense has stated that DOD will not
obligate funds for the Shchuch’ye pilot facility’s construction until DOD has


17
  A volatile combustible substance’s flash point is the lowest temperature at which vapors above it will
ignite when exposed to flame.
18
 DOD officials acknowledged that the waste product’s low flash point should have been identified
during DOD’s 1996 review of the Russian process.

19Under   U.S. fire code standards, the modified waste product would be classified as flammable.

20
  A DOD official informed us that the project might encounter additional delays in verifying the Russian
process. For example, Russian scientists were not able to start joint toxicology testing and waste
evaluation in early February 1999 as planned. The resultant delay of this activity until early summer
1999 could impact the overall project schedule, according to this DOD official.




Page 12                                           GAO/NSIAD-99-76 Weapons of Mass Destruction
                              B-282010




                              developed a sound cost estimate based on a completed conceptual
                              design.21


Pilot Facility Construction   The October 1997 joint schedule would have also accelerated the
and Start of Operations       Shchuch’ye pilot facility’s construction and start of operations by about
                              2 years over prior U.S. schedules. Under this schedule, the pilot facility
Delayed by 18 Months
                              would have started operating in December 2004. According to DOD
                              officials, Russian officials sought to accelerate the schedule because they
                              had publicly committed to begin destroying chemical weapons earlier than
                              the prior schedule would have allowed. According to DOD officials and
                              documents, DOD officials were concerned about the new schedule’s
                              practicality as they signed it, and they told Russian officials that its
                              implementation would be subject to confirmation of U.S. funding and other
                              factors.

                              In June 1998, DOD officials abandoned the October 1997 schedule and
                              adopted a new schedule that shifted the start of the pilot facility’s
                              operations to June 2006, a delay of 18 months. They did so because the
                              completion of the facility’s conceptual design had been delayed, annual
                              CTR funds would not be sufficient to support the accelerated construction
                              schedule,22 and DOD’s experience with U.S. chemical weapons destruction
                              facilities demonstrated that more time would be required to test and start
                              up the pilot facility.


Pilot Facility Construction   DOD’s plans to fund the entire cost of building the Shchuch’ye pilot facility
Schedule Depends on           hinge on Russia’s ability to prepare the facility’s site for construction and
                              operations. U.S. officials have conditioned U.S. assistance for the pilot
Russian Funding
                              facility’s construction on Russia’s completion of several social and
                              industrial infrastructure projects, such as gas and water lines, storm
                              sewers, housing, and a rail line from the storage depot to the destruction
                              facility. These projects are estimated to cost almost $240 million. Russia
                              must complete initial social and industrial infrastructure projects by late
                              August 1999 before DOD officials will authorize the U.S. contractor to


                              21Seeour report entitled Weapons of Mass Destruction: Status of the Cooperative Threat Reduction
                              Program.

                              22
                               The funding shortage worsened when CTR officials cut about $85 million from the Shchuch’ye project
                              budget in fiscal years 2000 and 2001 to provide additional funding for the Mayak project. This funding
                              was restored in fiscal years 2002 to 2004.




                              Page 13                                          GAO/NSIAD-99-76 Weapons of Mass Destruction
                               B-282010




                               mobilize for construction in September 1999. Russia was scheduled to
                               start construction of the initial infrastructure projects in May 1998 but has
                               delayed doing so until June 1999—leaving only 3 months for their
                               completion. Russia will have to complete additional social and industrial
                               projects for U.S. assistance to continue.



Shchuch’ye Project             The Shchuch’ye project cannot achieve its broader national security
                               objectives unless Russia receives a large infusion of additional funding.
May Not Fully Achieve          Destroying Russia’s large chemical weapons stockpile, particularly its
All U.S. Objectives            nerve agents, has been a long-standing U.S. goal. The Shchuch’ye project
                               was intended to serve this goal by (1) destroying all nerve agent-filled
                               munitions at one Russian chemical weapons storage depot, (2) accelerating
                               Russia’s chemical weapons destruction efforts by providing a proven nerve
                               agent destruction technology and a facility design that could be adapted for
                               use at four other nerve agent-filled weapons storage sites, and (3) helping
                               Russia meet its Chemical Weapons Convention deadlines. Although the
                               U.S.-funded pilot facility would largely achieve the first objective, Russia’s
                               faltering economy and limited international assistance raise serious doubts
                               about the sources of funding for constructing the four additional facilities
                               needed to fully achieve the second and third objectives.


Pilot Facility Would Destroy   As designed, the Shchuch’ye pilot facility would destroy 95 percent of the
Most Weapons at                nerve agents stored at the nearby depot. The depot stores about 2 million
                               weapons, mostly artillery rounds and rocket warheads, filled with about
Shchuch’ye Depot
                               5,600 metric tons of chemical agents (about 14 percent of Russia’s total
                               declared chemical weapons stockpile)—primarily nerve agents.23 The
                               pilot facility will not be able to destroy 5 percent of the nerve agents, which
                               are contained in large-diameter rocket and missile warheads that will not
                               fit on its processing lines.




                               23
                                The Shchuch’ye facility would not destroy a small amount of phosgene-filled projectiles stored at the
                               Shchuch’ye depot. Phosgene is a widely used commercial chemical (carbonyl chloride) and the
                               weapons themselves present a minimal threat, according to DOD officials.




                               Page 14                                          GAO/NSIAD-99-76 Weapons of Mass Destruction
                             B-282010




Extending Shchuch’ye         Although the Shchuch’ye project would provide a proven design for a
Technology to Other Depots   chemical weapons destruction facility that Russia could use at four other
                             nerve agent storage depots, DOD and State Department officials informed
Could Cost Russia Billions
                             us that Russia’s dire economic outlook could hinder its ability to provide
of Dollars                   the billions of dollars needed to erect four additional destruction facilities.
                             DOD officials told us that Russia could adopt the Shchuch’ye design for use
                             at (1) the Kizner depot—which stores artillery projectiles and rocket
                             warheads similar to those at Shchuch’ye—and (2) three depots that store
                             air-deliverable nerve agent weapons, if the weapons-handling equipment
                             were redesigned. However, Russia could require over $3 billion to
                             construct these four additional facilities and provide needed
                             infrastructure—as well as additional billions of dollars for their operations.

                             According to DOD officials and documents, Russia is directing its limited
                             funds toward the design and construction of two facilities to eliminate bulk
                             blister agents, rather than nerve agents. Executive branch officials are
                             counting on substantial assistance from other nations to fund the
                             construction of the four additional facilities needed to destroy Russia’s
                             entire nerve agent stockpile. However, according to DOD and State
                             Department officials, foreign assistance for Russia’s chemical weapons
                             destruction efforts is largely limited to U.S. support for the Shchuch’ye
                             project, although Germany has provided some aid to help Russia eliminate
                             blister agents. DOD officials expressed hope that the U.S. investment in
                             building the Shchuch’ye pilot facility will encourage other nations to help
                             Russia eliminate its chemical weapons.24


Russia Is Unlikely to Meet   The Shchuch’ye pilot facility’s limited capacity and delayed start of
Its Chemical Weapons         operations will prevent Russia from destroying the Shchuch’ye depot’s
                             nerve agent stocks before Russia’s Chemical Weapons Convention deadline
Convention Targets
                             of 2007. The U.S.-funded pilot facility is scheduled to begin destroying
                             nerve agents by 2006 at a rate of about 500 metric tons annually. At this
                             rate, it would finish destroying the small- and medium-diameter weapons
                             that contain 95 percent of the depot’s 5,600 metric tons of agent in 2017—
                             10 years after the expiration of Russia’s Convention deadline and 5 years



                             24
                               According to DOD, foreign international assistance for Russia's chemical weapons destruction
                             program currently totals about $18 million. Germany is providing about $9.6 million to help eliminate
                             bulk blister agents; Italy has pledged $8 million for a facility at Kizner; and two other countries are
                             funding public health studies. Other interested countries are waiting for Russia to demonstrate its
                             commitment to the program before pledging assistance, according to DOD.




                             Page 15                                           GAO/NSIAD-99-76 Weapons of Mass Destruction
              B-282010




              after the expiration of an extension to that deadline. By completing the
              full-scale facility with a capacity of 1,200 metric tons annually, Russia could
              destroy the Shchuch’ye depot’s entire nerve agent stockpile by its extended
              Convention deadline. However, to do so, Russia would have to provide
              about $250 million to expand the facility—roughly the same amount that it
              failed to provide for the Mayak project. DOD officials informed us that
              DOD has no plans to help construct the full-scale facility.

              Although Russia’s 1995 chemical weapons elimination plan called for the
              completion of five nerve agent facilities by 2001, even the most advanced of
              these projects—the Shchuch’ye pilot facility—will not become operational
              until 2006. The Shchuch’ye depot’s stocks constitute only about 17 percent
              of its nerve agent stockpile. Given Shchuch’ye’s role as a pilot facility for
              the Russian nerve agent destruction program, Russia is unlikely to destroy
              the nerve agents stored at the four other depots in time to meet even its
              extended Convention deadline.25

              According to a State Department official and a nongovernmental
              organization, ongoing efforts to eliminate Russian chemical weapons—
              however prolonged—are important to ensuring the continued viability of
              the Convention itself and securing a broader range of security benefits
              flowing from the Convention. The State Department official said that
              Russia’s ability to meet its Chemical Weapons Convention time frame is
              less important than its willingness to persevere in its efforts to eventually
              eliminate its entire chemical weapons stockpile.



Conclusions   The recent history of the Mayak and Shchuch’ye projects indicates that U.S.
              efforts to reduce the threat of Russian nuclear and chemical weapons will
              cost more than previously estimated and take longer than previously
              scheduled. Unless Russia and other foreign nations take certain steps,
              these facilities will not provide the United States with all the national
              security benefits that it sought. Russia’s funding shortfalls and reluctance
              to provide DOD with crucial information have hampered DOD’s efforts and
              limited prospects for achieving all of these projects’ intended benefits
              within expected time frames.


              25
                Russian defense officials, speaking before the collapse of the Russian economy in mid-1998, stated
              that Russia was unlikely to meet its Chemical Weapons Convention targets. According to DOD officials,
              Russian officials have expressed interest in obtaining assistance in improving security at Russia’s seven
              chemical weapons storage sites as the weapons there await destruction. Russia has yet to define the
              specific physical security improvements needed at each of its storage sites.




              Page 16                                           GAO/NSIAD-99-76 Weapons of Mass Destruction
                B-282010




                The extent and nature of the partially built Mayak facility’s costs and
                benefits to the United States remain unsettled. Russia’s funding shortfalls
                will substantially increase U.S. costs beyond the $165 million that DOD has
                obligated to date and the $275 million cap that DOD set in 1996. Although
                current plans call for no more than $413 million in U.S. funding for Mayak,
                the United States could ultimately spend up to $1.3 billion to design and
                build an enlarged facility and load it with 150 metric tons of plutonium.
                Mayak’s national security benefits would be constrained by a continued
                Russian refusal to allow U.S. confirmation that the materials at Mayak were
                removed from weapons. However, Mayak could still provide the United
                States with some assurance that at least 50 metric tons of weapons-grade
                plutonium—enough to provide Russia with more than 6,200 nuclear
                weapons—were being securely stored and were not available for use in
                weapons. If expanded to its originally-planned size, Mayak could allow
                DOD to monitor Russia’s storage of roughly 75 percent of all the plutonium
                estimated to have been produced by the Soviet Union—an amount
                sufficient for more than 18,000 nuclear weapons.

                The Shchuch’ye project’s outlook is more problematic. If constructed, the
                pilot facility would slowly eliminate about 17 percent of Russia’s nerve
                agents over the next 2 decades. Given that DOD already has obligated
                about $95 million for the Shchuch’ye project, achieving this limited benefit
                would cost the United States an additional $655 million—assuming Russia
                can fund needed infrastructure projects that may cost almost $240 million.
                Nonetheless, the $750 million investment by the United States would not be
                sufficient to ensure the realization of the project’s broader objectives—
                accelerating Russia’s destruction of its entire 32,000 metric ton nerve agent
                stockpile and its fulfillment of its Chemical Weapons Convention deadlines.
                Although the Shchuch’ye project could provide a proven technology for
                these facilities, Russia’s ongoing economic difficulties—as illustrated by
                Mayak’s funding shortfalls—strongly suggest that it would be unwilling or
                unable to invest the billions of dollars needed to construct the additional
                facilities it will need. As a result, DOD is counting on substantial assistance
                from other nations to fund the construction of these additional facilities
                and ensure that the Shchuch’ye project realizes its broader objectives.



Matter for      Since substantial international assistance is essential for achieving the
                Shchuch’ye project’s broader objectives, the Congress may wish to direct
Congressional   the Secretary of Defense to report to it regarding the specific sources of
Consideration   funding for the four additional facilities needed to eliminate Russia’s nerve
                agent stockpile. If the Secretary of Defense cannot identify these likely



                Page 17                               GAO/NSIAD-99-76 Weapons of Mass Destruction
                      B-282010




                      sources with specificity, the Congress may wish to consider seeking further
                      justification for the project from the Department of Defense.



Agency Comments and   Although DOD and the Department of State generally concurred with the
                      factual information presented in this report, both agencies took exception
Our Evaluation        to our suggested matter for congressional consideration. DOD also
                      disagreed with some aspects of our analysis, particularly those concerning
                      the projects’ ability to realize their national security objectives.

                      DOD objected to statements in our report that it stated suggest that the
                      United States would not realize its national security goals at Mayak or
                      Shchuch’ye. DOD stressed that these projects would achieve their most
                      pressing national security goals. For example, DOD stated that Mayak
                      would achieve its major security objective of safely and securely storing
                      fissile material that could otherwise be used to assemble nuclear weapons.
                      It also stated that ensuring that such materials were derived from
                      dismantled nuclear weapons was not Mayak’s primary or sole security
                      objective. Similarly, DOD expressed confidence that Shchuch’ye would
                      destroy a substantial and threatening portion of the Russian chemical
                      weapons stockpile and validate technology needed to facilitate destruction
                      of similar agents elsewhere. DOD recommended that we alter the initial
                      paragraph of our conclusion to better reflect its perspectives.

                      We did not intend to suggest that the United States is unlikely to achieve
                      any of its national security goals at Mayak and Shchuch’ye. Instead, as
                      stated in our report, we concluded that the United States cannot ensure it
                      will achieve the full range of its national security objectives for Mayak
                      unless and until Russia agrees to allow the United States to undertake
                      measures needed to confirm that Mayak contains only materials from
                      nuclear weapons. Our report also concluded that, although the Shchuch’ye
                      facility could eliminate the bulk of the Shchuch’ye depot’s chemical
                      weapon stocks, the project is very unlikely to achieve its broader
                      objectives unless Russia receives a large infusion of additional funding.

                      These objectives have long been key elements of the rationale for
                      supporting the Mayak and Shchuch’ye projects. For example, Mayak’s
                      primary function as a repository of materials derived from Russian nuclear
                      weapons elimination has been reflected since 1992 in the titles of
                      U.S.-Russian agreements governing U.S. aid for Mayak. In congressional
                      testimony in March 1996, DOD officials reaffirmed Mayak’s intended role in
                      removing potential bottlenecks in Russia’s elimination of nuclear weapons.



                      Page 18                             GAO/NSIAD-99-76 Weapons of Mass Destruction
B-282010




In 1997, the executive branch made weapons-origin transparency one of
three key U.S. transparency negotiation objectives. While a U.S. failure to
achieve such transparency would not degrade Mayak’s usefulness for
storing materials that could be used for weapons, it would eliminate
Mayak’s role in providing assurance that CTR aid is facilitating the
dismantlement of Russian nuclear weapons—and would therefore signal a
diminution of Mayak’s intended national security benefits.

Similarly, the executive branch’s rationale for constructing the pilot
Shchuch’ye destruction facility has long included the goal of
“jump-starting” Russian chemical weapons elimination. Without the
realization of this goal, the $750 million Shchuch’ye project would result
only in the gradual elimination of about 17 percent of Russia’s nerve agents
and the validation of its technology. It would not help eliminate the
remaining 83 percent of Russia’s nerve agents, including the air-deliverable
nerve agents that the United States originally placed a higher priority on
destroying than the munitions at Shchuch’ye.

DOD acknowledged that Russia needs a large-scale infusion of funds from
other nations to fully implement its Chemical Weapons Convention
obligations. However, DOD stated that the report we suggest it provide to
Congress concerning such funding would penalize the project for its
current problems and could ultimately hurt efforts to obtain foreign funds.
It stated that tying the Secretary of Defense’s ability to obligate funds to
such a report would be ill-advised. DOD also suggested that Russia’s plans
to enlarge the pilot facility could allow it to eliminate Shchuch’ye’s stocks
within its Chemical Weapons Convention deadline—if the deadline is
extended by 5 years—and that Russia’s economy could recover sufficiently
to allow Russia to fund its chemical weapons elimination efforts. The
Department of State stated that the report that we had suggested would
needlessly slow the project without adding significantly to available
information.

We disagree with these critiques. According to DOD, it plans no further
fundling of chemical weapons distruction facilities beyond the pilot plant at
Schehuch’ye. Thus our suggestion is motivated not by the pilot project’s
current problems but by the fact that its benefits will be limited to a
relatively modest reduction of Russian nerve agent stocks unless foreign
governments begin committing funds on a scale that they have yet to do.
While a Russian economic recovery could allow Russia to expand the pilot
facility and build new facilities, Russia’s current and projected economic
condition suggests that such speculation is not a sound basis for near-term



Page 19                              GAO/NSIAD-99-76 Weapons of Mass Destruction
              B-282010




              U.S. decision-making. Because prospects for achieving Shchuch’ye’s
              broader objective of “jump-starting” Russia’s destruction of its entire
              stockpile appears to rest on the possibility of support from countries other
              than the United States or Russia, we believe that the Congress may wish to
              weigh the likelihood of such support in considering this costly project. The
              presentation of current and complete executive branch information
              concerning this topic could therefore assist the Congress in this decision.

              We have modified the wording of the matter for congressional
              consideration to clarify our intent.

              DOD’s and State’s comments are reprinted in appendixes I and II. The
              agencies also provided technical suggestions that were incorporated where
              appropriate.



Scope and     Our Mayak and Shchuch’ye assessments are case studies utilizing extant
              data and information. To assess the status and projected cost of the Mayak
Methodology   facility, we interviewed officials of DOD’s Threat Reduction Policy Office,
              the Defense Threat Reduction Agency’s Cooperative Threat Reduction
              Office, the Army Corps of Engineers, the Bechtel Corporation, and the Los
              Alamos National Laboratory. We reviewed and analyzed current and past
              status and conference reports, design documents, safety and thermal
              analyses, and cost estimates concerning Mayak. We also interviewed
              officials from Russia’s Ministry of Atomic Energy and monitored a 2-day
              senior level conference near Washington, D.C., on Mayak’s prospects that
              was jointly sponsored by the Defense Threat Reduction Agency and the
              Russian Ministry of Atomic Energy. The conference included presentations
              by Russia’s VNPIET design bureau and South Urals Construction Company.

              To assess the efforts being made to ensure that Mayak will store materials
              from dismantled nuclear weapons safely and securely, we interviewed DOD
              and other U.S. officials concerning the ongoing transparency negotiations.
              We also reviewed the currently agreed-upon language in the draft
              agreement.

              To assess the Shchuch’ye project’s current status, prospects for
              completion, and potential cost to the United States, we interviewed
              officials of DOD’s Threat Reduction Policy Office, the Defense Threat
              Reduction Agency’s Cooperative Threat Reduction Office, and the Army
              Corps of Engineers. We reviewed and analyzed current and past status and




              Page 20                             GAO/NSIAD-99-76 Weapons of Mass Destruction
conference reports, design documents, and other analyses concerning the
project.

To assess the Shchuch’ye facility’s potential impact on Russia’s prospects
for meeting its international chemical weapons commitments, we reviewed
the provisions of the Chemical Weapons Convention and identified the
specific milestones applicable to Russia, and reviewed CTR program
documents to determine the facility’s planned date of initial operations and
its capacity. We also met with DOD and State officials regarding other
nations’ assistance to Russia’s chemical weapons elimination effort.

We conducted our review from October 1998 through March 1999 in
accordance with generally accepted government auditing standards.


As agreed, we plan no further distribution of this report until
14 days from the date of the report, unless you publicly announce its
contents earlier. At that time, we will send copies of this report to other
congressional committees; the Honorable William Cohen, Secretary of
Defense; the Honorable Madeleine Albright, Secretary of State; and the
Honorable Jacob Lew, Director, Office of Management and Budget. Copies
will also be available to others upon request.

This report was prepared under the direction of Harold J. Johnson,
Associate Director, International Relations and Trade Issues. If you or your
staff have any questions concerning this report, he can be reached at
(202) 512-4128. Major contributors to this report were Boris Kachura,
Pierre Toureille, and Michael Rohrback.




Henry L. Hinton, Jr.
Assistant Comptroller General
National Security and International Affairs




Page 21                             GAO/NSIAD-99-76 Weapons of Mass Destruction
Page 22   GAO/NSIAD-99-76 Weapons of Mass Destruction
Appendix I

Comments From the Department of Defense                             AppenIx
                                                                          di




See p. 18




See p. 18




             Page 23      GAO/NSIAD-99-76 Weapons of Mass Destruction
            Appendix I
            Comments From the Department of Defense




See p. 19




See p. 19




See p. 3




            Page 24                                   GAO/NSIAD-99-76 Weapons of Mass Destruction
            Appendix I
            Comments From the Department of Defense




See p. 19




            Page 25                                   GAO/NSIAD-99-76 Weapons of Mass Destruction
            Appendix I
            Comments From the Department of Defense




See p. 3




See p. 16




See p. 8




            Page 26                                   GAO/NSIAD-99-76 Weapons of Mass Destruction
Appendix II

Comments From the Department of State                                AppeInx
                                                                           Idi




See p. 19




See comment 1.




                 Page 27   GAO/NSIAD-99-76 Weapons of Mass Destruction
                   Appendix II
                   Comments From the Department of State




                   The following are GAO’s comments on the Department of State’s letter
                   dated March 16, 1999.



Comment            1. We have not reprinted the Department of State’s technical comments.
                   We have incorporated these comments as appropriate.




(711384)   Letrt   Page 28                                 GAO/NSIAD-99-76 Weapons of Mass Destruction
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