Nuclear Nonproliferation:

DOE Needs Better Controls to Identify Contractors Having Foreign Interests

RCED-91-83: Published: Mar 25, 1991. Publicly Released: Apr 25, 1991.

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Pursuant to a congressional request, GAO reviewed whether the Department of Energy (DOE) and three of its weapons laboratories complied with DOE regulations and procedures designed to protect the United States against uncontrolled transfers of nuclear weapons-related technology or material to entities that are foreign owned, controlled, or influenced (FOCI) U.S. companies performing classified work for DOE.

GAO found that: (1) DOE and its government-owned, contractor-operated weapons laboratories did not fully comply with DOE regulations and procedures aimed at determining contractors' vulnerability to foreign interests and preventing associated risks; (2) DOE did not follow FOCI procedures for 98 percent of the classified contracts it awarded from October 1987 through March 1990 that were subject to such procedures; (3) none of the eight DOE field operations offices completely complied with FOCI procedures when awarding management and operating contracts; (4) DOE regulations for determining whether contractors were subject to FOCI were inadequate; (5) the regulations required DOE contracting officers to make national security determinations, even though DOE safeguards and security officials were more qualified to make such determinations; (6) numerous DOE FOCI requirements were burdensome, and some were inconsistent with Department of Defense (DOD) regulations for determining whether DOD contractors were subject to FOCI, causing confusion among contractors working on both DOE and DOD classified contracts; (7) DOE internal control weaknesses caused numerous problems in safeguarding classified information; and (8) all three DOE weapons laboratories lacked adequate data systems to accurately identify all classified contracts.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: OSS submitted the proposed changes to the DOE Acquisition Regulation on September 16, 1991, to the DOE Office of Procurement, Office of Policy, PR-121, which, when approved, will transfer FOCI determination responsibility from the contracting officers to OSS personnel. In the interim, DOE issued an acquisition letter, dated March 4, 1992, that officially transfers responsibility.

    Recommendation: To increase the effectiveness of regulations for preventing foreign access to classified information and lessen the burdensome nature of FOCI reviews, the Secretary of Energy should revise DOE acquisition regulations to transfer FOCI determination responsibility from contracting officers to Office of Safeguards and Security (OSS) personnel.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE is revising its acquisition regulations to reduce the need for a separate FOCI determination before each contract award. In the interim, DOE issued an acquisition letter, dated March 4, 1992, providing for this requirement.

    Recommendation: To increase the effectiveness of regulations for preventing foreign access to classified information and lessen the burdensome nature of FOCI reviews, the Secretary of Energy should revise DOE acquisition regulations to require a FOCI determination only before awarding a classified contract to an uncleared company.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE is revising its acquisition regulations to require FOCI information updated as directed by OSS or at least every 5 years. In the interim, DOE issued an acquisition letter, dated March 4, 1992, providing for this requirement.

    Recommendation: To increase the effectiveness of regulations for preventing foreign access to classified information and lessen the burdensome nature of FOCI reviews, the Secretary of Energy should revise DOE acquisition regulations to require all cleared contractors working with classified matter to update their FOCI information as directed by OSS or at least every 5 years.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: DOE has thoroughly explored the feasibility of entering into an interagency agreement with DOD that would result in DOD acceptance of DOE's FOCI determinations. Although, according to DOE officials, significant differences exist between the two programs, DOE and DOD have reached a reciprocity agreement to use each others' FOCI determinations involving national security information in the "Work for Others Program."

    Recommendation: To provide more consistency in FOCI regulations governmentwide, the Secretary of Energy should explore the feasibility of entering into an interagency agreement with DOD that would result in DOE acceptance of DOD FOCI determinations.

    Agency Affected: Department of Energy

  5. Status: Closed - Implemented

    Comments: On November 30, 1992, all relevant DOE assistant secretaries and office directors were directed by the Office of Security Affairs to ensure that all contractors under their cognizance begin to maintain reliable tracking systems that identify all classified contracts.

    Recommendation: To strengthen DOE FOCI internal controls, the Secretary of Energy should require management and operating contractors to maintain reliable computer-based systems that identify all classified contracts.

    Agency Affected: Department of Energy

  6. Status: Closed - Implemented

    Comments: On September 30, 1992, written guidelines and procedures for handling OSS FOCI reviews were approved and implemented by the Office of Security Affairs.

    Recommendation: To provide more consistency in FOCI regulations governmentwide and strengthen DOE FOCI internal controls, the Secretary of Energy should develop written guidelines for OSS reviews of FOCI questionnaires.

    Agency Affected: Department of Energy

  7. Status: Closed - Implemented

    Comments: DOE took alternative action on the recommendation on contracts with individual consultants by deciding to adjudicate FOCI issues during its personnel security clearance process. The recommendation to identify all affiliated parent companies has been implemented. However, the recommendation to include a penalty notice as part of the questionnaire will not be implemented because of language contained in the Federal Acquisition Reform Act of 1996, which relaxes the certification process.

    Recommendation: To strengthen DOE FOCI internal controls, the Secretary of Energy should revise the current FOCI questionnaire to include: (1) additional questions applicable to contracts with individual consultants; (2) a penalty notice on false, misleading, or incomplete statements; and (3) a requirement to identify all affiliated parent companies.

    Agency Affected: Department of Energy

 

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