Nuclear Nonproliferation:

IAEA Has Made Progress in Implementing Critical Programs but Continues to Face Challenges

GAO-13-139: Published: May 16, 2013. Publicly Released: Jun 17, 2013.

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What GAO Found

The International Atomic Energy Agency (IAEA) has taken several steps to strengthen its safeguards program since GAO's 2005 report, including increasing the number of countries that are subject to a broader range of safeguards measures, upgrading its analytical laboratories, and producing its first long-term strategic plan. However, the agency faces two critical challenges in further improving the effectiveness and efficiency of the safeguards program. First, several countries have raised concerns about IAEA's plans to expand implementation of what it calls the "state-level concept" to all countries with safeguards agreements by 2014. The state-level concept is an approach in which the agency considers a broad range of information about a country's nuclear capabilities and tailors its safeguards activities in each country accordingly. IAEA officials told GAO that broader implementation of this approach would allow the agency to better allocate resources by reducing safeguards activities where there is no indication of undeclared nuclear activities and to focus its efforts on any issues of safeguards concern. However, IAEA has not clearly defined and communicated how it will implement the state-level concept. As a result, several countries are concerned that the state-level concept may be applied in a subjective, potentially discriminatory manner or that it could allow IAEA to be too intrusive into their civilian nuclear operations. Second, the agency has not quantified the resources it may need to fully implement the state-level concept-- making it difficult to determine its long-term costs and benefits.

IAEA has continued to support countries' efforts to improve the security of their nuclear material and facilities, but three key issues limit the agency's ability to ensure that its nuclear security resources are used efficiently and effectively. First, IAEA's nuclear security program relies heavily on extra-budgetary contributions from donor countries, which makes it difficult to plan and implement projects, in part because these funds vary from year to year. Second, IAEA has not conducted a needs-based assessment of the resources required beyond its 2-year budget cycle, which also hinders its ability to ensure that resources are directed to the greatest security needs. Third, the extent to which IAEA is meeting its nuclear security goals is unclear because IAEA does not systematically report on the results of measures used to assess the performance of the agency's nuclear security program.

IAEA is making progress in establishing an international nuclear fuel bank by 2014 that is intended to provide eligible countries with a guaranteed supply of low enriched uranium (LEU) for civilian nuclear power programs in the event of a supply disruption. IAEA's fuel bank is not intended to provide a routine supply of LEU. However, several experts and foreign officials told GAO that the fuel bank's value is uncertain, causing some foreign officials to call it "a solution looking for a problem." For example, the fuel bank may never be used, in part because there are already several stable suppliers on the international nuclear fuel market. In addition, IAEA does not have a plan in place for the long-term operation and funding of the bank, although agency officials told GAO they intend to complete such a plan in 2013. Furthermore, the IAEA bank is one of several guaranteed, multilateral fuel supply options--including banks established by the United States and Russia--for countries seeking an assured supply of nuclear fuel.

Why GAO Did This Study

IAEA plays a crucial role in supporting U.S. nuclear nonproliferation goals through its safeguards and nuclear security programs. The Department of State (State) coordinates the United States' financial and policy relationship with IAEA. IAEA's safeguards program is designed to detect and deter the diversion of nuclear material for nonpeaceful purposes, while the agency's nuclear security program assists countries in improving the physical protection of their nuclear material and facilities. IAEA plans to create an international fuel bank to guarantee the supply of fuel for civilian nuclear power programs. GAO was asked to examine (1) any challenges that IAEA faces in carrying out its safeguards program, (2) any limitations regarding the nuclear security program, and (3) the status of IAEA's planned nuclear fuel bank. GAO reviewed relevant documents and interviewed officials from IAEA and U.S. federal agencies, 15 nuclear nonproliferation experts, and representatives from 16 countries.

What GAO Recommends

GAO recommends, among other things, that State work with IAEA to (1) clearly define and communicate how IAEA will implement the statelevel concept, (2) evaluate the nuclear security program's long-term resource needs, and (3) prepare a plan for the long-term operation and funding of IAEA's fuel bank. State agreed with several of the recommendations and disagreed with two, including the one on the nuclear security program’s longterm resource needs. GAO continues to believe that implementing all of these recommendations would enhance the efficiency and effectiveness of IAEA’s programs.

For more information, contact David C. Trimble at (202) 512-3841 or trimbled@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In August 2016, the Department of State stated that the United States had assisted IAEA in reminding member states that many of the concepts behind the state-level concept (SLC) were rooted in requirements for comprehensive safeguards agreements required by the Treaty on the Non-Proliferation of Weapons. In addition, State said, IAEA held a series of technical meetings with member states that resulted in the states' support for IAEA's plans for implementing the SLC. IAEA also issued a second report on the SLC that clearly defined and communicated the concept and development of safeguards implementation at the state level. In late 2014, the IAEA Board of Governors and IAEA General Conference took note of this report and the IAEA Director General's assurances on SLC implementation.

    Recommendation: To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to clearly define and communicate how the agency will implement the state-level concept in an objective, nondiscriminatory manner that does not exceed IAEA's authority to collect information about countries' nuclear activities.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: In August 2016, the Department of State stated that it had revisited the results of a comprehensive review of U.S. support for IAEA safeguards, following the IAEA Board of Governors' policy-level discussions of the state-level concept (SLC) in 2013-15. In this review, which included assessments of IAEA's overall safeguards resources needs (financial human, and technical), State identified areas where U.S. support for IAEA was needed for further development and implementation of the SLC.

    Recommendation: To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to conduct an assessment of the human capital, technological, and other resources the agency may need to broaden implementation of the state-level concept--and the associated long-term benefits and costs.

    Agency Affected: Department of State

  3. Status: Closed - Not Implemented

    Comments: In August 2016, the Department of State stated that fully evaluating the IAEA Division of Nuclear Security's (DNS) long-term resource needs is difficult, as the nature and scope of its assistance programs are driven by member state requests, which vary yearly. In addition, State said, the unpredictable nature of member states' extra-budgetary contributions-which comprise the majority of DNS' current budget-makes developing long-term plans difficult, especially in relation to personnel. Furthermore, State noted that many member states, including the United States, are resource-constrained; as such, IAEA must balance the demand and need for programs within a finite budget and a limited willingness by member states to increase that budget.

    Recommendation: To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to evaluate the nuclear security program's long-term resource needs and assess whether the agency's heavy reliance on extra-budgetary contributions is sufficient to plan and meet those needs.

    Agency Affected: Department of State

  4. Status: Open

    Comments: In August 2016, the Department of State stated that as a general matter, the United States strongly supports results-based management of programs. As such, State noted that the United States would welcome IAEA's efforts to report on the performance of its nuclear security program's impact and effectiveness, using specific, measureable, achievable, relevant, and time-bound metrics. GAO followed-up with State in January 2017 to further clarify actions, if any, State is taking to improve IAEA's reporting of the nuclear security program's impact and effectiveness.

    Recommendation: To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to systematically report on the results of the agency's performance measures for the nuclear security program to allow member countries and the international community at large to gauge the extent to which the agency is achieving its goals or the nuclear security program's impact and effectiveness.

    Agency Affected: Department of State

  5. Status: Open

    Comments: In August 2016, the Department of State stated that the IAEA Board of Governors' decision to approve the nuclear fuel bank required that care shall be taken to avoid disrupting the price of uranium on the international market. State also indicated that when the Director General reports to the Board -- expected to occur in late 2016 or early 2017 -- on IAEA's plans to purchase low-enriched uranium (LEU), State will be in a better position to assess whether this requirement has been met. State also noted that the Director General's report will be publicly available in its final form. GAO followed-up with State in January 2017 for more information on the implementation status of this recommendation.

    Recommendation: To ensure that IAEA's nuclear fuel bank is implemented in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to prepare a publicly available assessment of the potential impact of IAEA's nuclear fuel bank on the international nuclear fuel market.

    Agency Affected: Department of State

  6. Status: Open

    Comments: In August 2016, the Department of State noted that the IAEA Board of Governors' decision to approve the nuclear fuel bank required that IAEA (1) develop a detailed financial and administrative plan for the fuel bank's ongoing operation to ensure its effective management and sustainability, (2) report the plan to the Board, and (3) keep the Board informed of progress in its implementation. State added that the Director General has been reporting IAEA's progress in establishing the fuel bank and will soon be presenting an overall financial plan. In addition, State said that IAEA believes it has sufficient funding to cover the ongoing maintenance and operation of the fuel bank for up to 20 years. State added that, as a member of IAEA's Board, the United States will continue to be in a position to require that IAEA's plans for the fuel bank include strategies to help set priorities and allocate resources for its viability, and to evaluate these plans. GAO followed-up with State in January 2017 to get further information on actions taken to incorporate priorities and resource allocations into IAEA's long-term operations and funding plan for the fuel bank.

    Recommendation: To ensure that IAEA's nuclear fuel bank is implemented in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to ensure that the agency's plan for the long-term operation and funding of the nuclear fuel bank includes strategies to help set priorities and allocate resources for the viability of the fuel bank that include, for example, information on the levels and sources of funding needed for the ongoing maintenance and operation of the fuel bank.

    Agency Affected: Department of State

  7. Status: Closed - Implemented

    Comments: In response to our recommendation, NNSA prepared a draft report that analyzes and assesses the need for the U.S. nuclear fuel bank as well as the potential demand for nuclear fuel banks and the potential for redundancy among the banks. This report also analyzes, among other things, the net demand for low-enriched uranium, the reliability of the supply chain, and the market impacts of the fuel banks.

    Recommendation: To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of National Nuclear Security Administration (NNSA) should review and assess the need for the U.S. nuclear fuel bank, based on the United States' financial support of IAEA's fuel bank and the potential for duplication of efforts, and report on the results of this assessment.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  8. Status: Closed - Implemented

    Comments: In response to our recommendation, NNSA prepared a draft report that analyzes and assesses the need for the U.S. nuclear fuel bank as well as the potential demand for nuclear fuel banks and the potential for redundancy among the banks. This report also analyzes, among other things, the net demand for low-enriched uranium, the reliability of the supply chain, and the market impacts of the fuel banks.

    Recommendation: To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of NNSA should report key information on the U.S. nuclear fuel bank's operations, such as its use to date, estimated demand, potential impact on the international nuclear fuel market, or any controls to mitigate the potential market impact.

    Agency Affected: Department of Energy: National Nuclear Security Administration

  9. Status: Open

    Comments: GAO received information from NNSA in September 2016 on the status of the recommendation, which may require clarification from the State Department. GAO will continue follow-up on this recommendation during fiscal year 2017.

    Recommendation: To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of NNSA should review and report on the financial status of the U.S. nuclear fuel bank, including its costs to date and any ongoing costs related to the bank, in NNSA's annual budget justification reports or other publicly available documents.

    Agency Affected: Department of Energy: National Nuclear Security Administration

 

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