Export Controls:

Information on the Decision to Revise High Performance Computer Controls

NSIAD-98-196: Published: Sep 16, 1998. Publicly Released: Sep 16, 1998.

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Pursuant to a legislative requirement and a congressional request, GAO reviewed concerns that U.S. national security interests may have been compromised by sales of unlicensed high performance computers (HPC) to China and Russia, focusing on: (1) the basis for the executive branch's revision of HPC export controls; (2) changes in licensing activities and the implementation of certain U.S. licensing and export enforcement requirements since the revision; and (3) the current foreign availability of HPCs, particularly for certain countries of national security concern.

GAO noted that: (1) a Stanford University study on foreign availability of HPCs was a key element in the decision to revise HPC export controls; (2) however, GAO's analysis of the study showed that it had 2 significant limitations; (3) first, the study lacked empirical evidence or analysis to support its conclusion that HPCs were uncontrollable based on worldwide availability and insufficient resources to control them; (4) second, the study did not assess the capabilities of countries of concern to use HPCs for military and other national security applications; (5) the study's principal author said that U.S. government data were insufficient to make such an assessment, and the study recommended that better data be gathered so that such an analysis could be done in the future; (6) the executive branch did not undertake a threat analysis of providing HPCs to countries of concern, but raised the computing power thresholds for HPC export controls and established a four-tier control structure; (7) the 1996 revision to HPC export controls had three key consequences; (8) the number of computer export licenses issued declined from 395 in fiscal year 1995 to 42 in 1997; (9) U.S. HPC exporters were charged with responsibilities previously conducted by the government, including screening and reporting on the end use and end user of HPCs; (10) the regulation required HPC manufacturers to keep records of the end users of all their HPC exports over 2,000 million theoretical operations per second (MTOPS); (11) to date, information on these exports reported to the government has been incomplete; (12) responsibility for postshipment verification (PSV) checks remained with the government; (13) however, because of how PSVs for computers are implemented, their value is reduced because they verify the physical location of a HPC, but not how it is used; (14) subsidiaries of U.S. computer manufacturers dominate the overseas HPC market, and they must comply with U.S. controls; (15) three Japanese companies are global competitors of U.S. manufacturers, two of which told GAO that they had no sales to tier 3 countries such as Russia and China; (16) Japan, Germany and the United Kingdom each have export controls on HPCs similar to those of the United States, according to foreign government officials; (17) Russia, China, and India have developed HPCs, but the capabilities of their computers are believed to be limited; and (18) thus, GAO's analysis suggests that HPCs over 2,000 MTOPS are not readily available to tier 3 countries from foreign sources without restrictions.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To complement the studies undertaken by the Departments of Defense and Energy for the House Committee on National Security, the Secretary of Defense should assess and report on the national security threat and proliferation impact of U.S. exports of HPCs to countries of national security and proliferation concern. This assessment, at a minimum, should address: (1) how and at what performance levels countries of concern use HPCs for military modernization and proliferation activities; (2) the threat of such uses to U.S. national security interests; and (3) the extent to which such HPCs are controllable.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD stated that the action was not necessary because it "considered" national security before the regulatory changes were made. DOD provided no evidence that the specific elements in the recommendation have ever been addressed.

    Recommendation: The Secretary of Commerce, with the support of the Secretaries of Defense, Energy, and State, and the Director of the U.S. Arms Control and Disarmament Agency, should jointly evaluate and report on options to safeguard U.S. national security interests regarding HPCs. Such options should include, but not be limited to: (1) requiring government review and control of the export of computers at their highest scalable MTOPS performance levels and (2) requiring that HPCs destined for tier 3 countries be physically modified to prevent upgrades beyond the allowed levels.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: The Commerce and Defense Departments have studied a limited number of options to replace the current export control measure of computer performance but did not examine the options suggested in the recommendation or other potential options suggested in subsequent GAO reports. The agencies plan no further action on this issue.

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