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Report to the Chairman, Committee on Homeland Security, House of 
Representatives:

United States Government Accountability Office:

GAO:

December 2007:

Nuclear Nonproliferation:

DOE's Program to Assist Weapons Scientists in Russia and Other 
Countries Needs to Be Reassessed:

GAO-08-189: 

GAO Highlights:

Highlights of GAO-08-189, a report to the Chairman, Committee on 
Homeland Security, House of Representatives. 

Why GAO Did This Study:

To address concerns about unemployed or underemployed Soviet-era 
weapons scientists in Russia and other countries, the Department of 
Energy (DOE) established the Initiatives for Proliferation Prevention 
(IPP) program in 1994 to engage former Soviet weapons scientists in 
nonmilitary work in the short term and create private sector jobs for 
these scientists in the long term. GAO assessed (1) DOE’s reported 
accomplishments for the IPP program, (2) DOE’s exit strategy for the 
program, and (3) the extent to which the program has experienced annual 
carryovers of unspent funds and the reasons for any such carryovers. To 
address these issues, GAO analyzed DOE policies, plans, and budgets and 
interviewed key program officials and representatives from 22 Russian 
and Ukrainian institutes. 

What GAO Found:

DOE has overstated accomplishments for the 2 critical measures it uses 
to assess the IPP program’s progress and performance—the number of 
scientists receiving DOE support and the number of long-term, private 
sector jobs created. First, although DOE claims to have engaged over 
16,770 scientists in Russia and other countries, this total includes 
both scientists with and without weapons-related experience. GAO’s 
analysis of 97 IPP projects involving about 6,450 scientists showed 
that more than half did not claim to possess any weapons-related 
experience. Furthermore, officials from 10 Russian and Ukrainian 
institutes told GAO that the IPP program helps them attract, recruit, 
and retain younger scientists who might otherwise emigrate to the 
United States or other western countries and contributes to the 
continued operation of their facilities. This is contrary to the 
original intent of the program, which was to reduce the proliferation 
risk posed by Soviet-era weapons scientists. Second, although DOE 
asserts that the IPP program helped create 2,790 long-term, private 
sector jobs for former weapons scientists, the credibility of this 
number is uncertain because DOE relies on “good-faith” reporting from 
U.S. industry partners and foreign institutes on the number of jobs 
created and does not independently verify the number of jobs reported 
to have been created.

DOE has not developed an exit strategy for the IPP program, even though 
officials from the Russian government, Russian and Ukrainian 
institutes, and U.S. companies raised questions about the continuing 
need for the program. Importantly, a senior Russian Atomic Energy 
Agency official told GAO that the IPP program is no longer relevant 
because Russia’s economy is strong and its scientists no longer pose a 
proliferation risk. DOE has not developed criteria to determine when 
scientists, institutes, or countries should “graduate” from the 
program. In contrast, the Department of State (State), which supports a 
similar program to assist Soviet-era weapons scientists, has assessed 
participating institutes and developed a strategy to graduate certain 
institutes from its program. Instead of finding ways to phase out the 
IPP program, DOE has recently expanded the program to include new 
countries and areas. Specifically, in 2004, DOE began providing 
assistance to scientists in Iraq and Libya. In addition, the IPP 
program is working with DOE’s Office of Nuclear Energy to develop 
projects that support the Global Nuclear Energy Partnership—a DOE-led 
international effort to expand the use of civilian nuclear power.

In every fiscal year since 1998, DOE carried over unspent funds in 
excess of the amount that the Congress provided for the program. For 
example, as of September 2007, DOE carried over about $30 million in 
unspent funds—$2 million more than the $28 million that the Congress 
had appropriated for the IPP program in fiscal year 2007. Two main 
factors have contributed to this recurring problem—lengthy review and 
approval processes for paying former Soviet weapons scientists and 
delays in implementing some IPP projects.

What GAO Recommends: 

GAO recommends, among other things, that DOE assess the continuing need 
for the IPP program with input from other federal agencies, including 
State and the intelligence community. DOE and State generally agreed 
with GAO’s recommendations, although DOE disagreed with the need to 
reassess the IPP program. However, the nature, scope, and volume of 
problems GAO identified during the course of its review necessitates 
such a reassessment to ensure that limited IPP program funds are 
directed to the scientists and institutes of highest proliferation 
risk. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-189]. For more information, contact Gene 
Aloise at (202) 512-3841 or aloisee@gao.gov.

[End of section] 

Contents:

Letter:

Results in Brief:

Background:

DOE Has Overstated the Progress Made on Key Performance Measures, 
Raising Doubts about the IPP Program's Nonproliferation Benefits:

DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead 
Has Expanded Efforts to Iraq and Libya and Is Using the Program to 
Support the Department's Global Nuclear Energy Partnership:

Multiple DOE and Contractor Reviews and Delays in Project 
Implementation Contribute to the IPP Program's Large Balances of 
Unspent Program Funds:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Additional Information on the Russian and Ukrainian 
Institutes That We Included in Our Fieldwork:

Appendix III: Classification Systems Used to Assess IPP Project 
Participants' Knowledge of Weapons of Mass Destruction:

Appendix IV: IPP Projects DOE Reported to Be Commercially Successful:

Appendix V: Comments from the Department of Energy:

Appendix VI: Comments from the Department of State:

Appendix VII: GAO Contact and Staff Acknowledgments:

Related GAO Products:

Tables:

Table 1: Multistage Process for Assessing IPP Project Participants' WMD 
Backgrounds:

Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes:

Table 3: DOE Projects Listed as Contributing to Commercial Successes in 
DOE's Fiscal Year 2005 IPP Program Annual Report:

Figures:

Figure 1: Appropriations and Unspent Balances for the IPP Program from 
Fiscal Years 1998 through 2008:

Figure 2: ISTC/STCU Payment Process:

Figure 3: CRDF Payment Process:

Abbreviations:

CRDF: U.S. Civilian Research and Development Foundation: 

DCAA: Defense Contract Audit Agency: 

DOE: Department of Energy: 

EXACT: Expertise Accountability Tool: 

GNEP: Global Nuclear Energy Partnership: 

ILAB: Inter-Laboratory Board: 

IPP: Initiatives for Proliferation Prevention: 

ISTC: International Science and Technology Center: 

NAS: National Academy of Sciences: 

NNSA: National Nuclear Security Administration: 

STCU: Science and Technology Center in Ukraine: 

USIC: United States Industry Coalition: 

WMD: weapons of mass destruction: 

[End of section] 

United States Government Accountability Office: Washington, DC 20548:

December 12, 2007:

The Honorable Bennie G. Thompson: 
Chairman: 
Committee on Homeland Security: 
House of Representatives:

Dear Mr. Chairman:

During the decades before its dissolution, the Soviet Union produced a 
cadre of scientists and engineers whose knowledge and expertise would 
be invaluable to countries or terrorist groups trying to develop 
weapons of mass destruction (WMD). After the Soviet Union's collapse in 
1991, many of these scientists suffered significant cuts in pay or lost 
their government-supported work. The United States and other countries 
were concerned that these scientists would sell their expertise to 
terrorists or countries of concern, such as Iran, Iraq, and North 
Korea. To address this potential proliferation concern, the Department 
of Energy (DOE) established the Initiatives for Proliferation 
Prevention (IPP) program in 1994.[Footnote 1] The objectives of the IPP 
program, which is implemented by the National Nuclear Security 
Administration (NNSA),[Footnote 2] are to (1) in the short term, engage 
weapons scientists and scientific research and development institutes 
located in Russia and other countries of the former Soviet Union in 
nonmilitary work by supplementing their existing salaries and (2) in 
the long term, create sustainable, private sector jobs for former 
weapons scientists. As of April 2007, DOE reported it had supplemented 
the salaries of over 16,770 scientists, engineers, and technicians and 
created 2,790 long-term, private sector jobs in Russia and other 
countries of the former Soviet Union.

Through October 1, 2007, there were 929 draft, active, inactive, and 
completed IPP projects involving personnel at about 200 nuclear, 
chemical, and biological institutes in Russia and other countries. Many 
IPP projects involve more than one institute, and sometimes a single 
project will involve institutes in more than one country. Over 80 
percent of the projects are focused on institutes in Russia, and the 
majority of these projects involve scientists and institutes 
specializing in nuclear weapons-related work. Other countries that 
currently participate or have participated in the IPP program include 
Armenia, Belarus, Georgia, Kazakhstan, Ukraine, and Uzbekistan.

For each IPP project, DOE requires that at least 65 percent of the 
project's funding go to Russia and other countries as payments to 
individuals actually working on the project or to the participating 
institutes in payment for project-related supplies, equipment, and 
overhead. Because the IPP program is not administered through a 
government-to-government agreement, as are many other U.S. 
nonproliferation programs, DOE distributes funding for IPP projects 
through three tax-exempt entities to avoid paying foreign taxes: the 
International Science and Technology Center (ISTC) in Russia, the 
Science and Technology Center in Ukraine (STCU), and the U.S. Civilian 
Research and Development Foundation (CRDF). These organizations 
transfer IPP funds directly to the personal bank accounts of IPP 
project participants in Russia and other countries. To receive payment 
for work on IPP projects, project participants must submit paperwork to 
these organizations indicating, among other things, whether they 
possess WMD experience.

Project proposals under the IPP program are prepared and submitted to 
DOE by officials from the participating national laboratories,[Footnote 
3] although a project may also result from the initiative of a foreign 
institute or U.S. company. Each participating DOE national laboratory 
provides technical and financial oversight over a set of projects. 
Partnerships are formed by the national laboratories between U.S. 
companies--known as industry partners--and institutes in Russia and 
other countries. Industry partners are engaged in projects through 
Cooperative Research and Development Agreements with the participating 
DOE national laboratories, which require cost-sharing to develop 
technologies for commercial application. An Inter-Laboratory Board 
(ILAB) serves as the primary coordinating body for the national 
laboratories involved in the IPP program. The ILAB coordinates, 
reviews, and facilitates the activities of the participating national 
laboratories and makes recommendations to DOE on how to implement the 
program. Ultimate decision-making authority lies with the DOE 
headquarters IPP program office.

To improve the potential of IPP projects to create sustainable jobs in 
Russia and other countries, DOE requires that a U.S. industry partner 
be identified before it approves and funds a project. A consortium of 
U.S. industry partners--the United States Industry Coalition (USIC)-- 
was established in 1994. To participate in the IPP program, a company 
must become a member of USIC and pay dues based on its size. USIC 
reviews IPP project proposals for commercial potential and requires 
that all project proposals have the basic outline of a business plan 
for commercializing the technology involved. In addition, USIC annually 
surveys its member companies to determine the commercial results of IPP 
projects, such as the number of long-term, private sector jobs created. 
DOE uses the results of USIC's surveys to report to the Congress on the 
number of jobs the IPP program created.

DOE's IPP program is one of several nonproliferation programs focused 
on reducing the potential proliferation risks posed by scientists from 
Russia and other countries. Other such programs include the Science 
Centers program funded by the U.S. government--under the auspices of 
the Department of State (State)--and other nations;[Footnote 4] CRDF; 
and a variety of initiatives primarily focused on biological institutes 
and implemented by the Departments of Agriculture, Defense, Health and 
Human Services, and State. In addition, from 1998 through 2006, DOE 
administered the Nuclear Cities Initiative, whose goal was to create 
sustainable jobs for weapons scientists in Russia's closed nuclear 
cities and to help Russia accelerate the downsizing of its nuclear 
weapons complex.[Footnote 5] The government-to-government agreement 
between the United States and Russia governing this program expired and 
was not renewed, and, as a result, the program was terminated in 
September 2006.

In 1999, we reviewed the IPP program and made several recommendations 
to improve its management, including recommending that DOE (1) obtain 
more accurate data on the background and number of scientists 
participating in the program, (2) maximize the amount of funds going to 
former Soviet Union weapons institutes, and (3) eliminate projects that 
do not have commercial potential.[Footnote 6] The Congress, among other 
things, subsequently prohibited DOE from using IPP program funding, 
available after fiscal year 1999, to supplement the income of 
scientists and engineers who (1) are currently engaged in activities 
directly related to the design, development, production, or testing of 
chemical or biological WMD or a missile system to deliver such weapons 
or (2) were not formerly engaged in activities directly related to the 
design, development, production, or testing of WMD or a missile 
delivery system for such weapons.[Footnote 7] The Congress also 
prohibited DOE from funding any institute or scientist determined by 
the Secretary of Energy to have made a scientific or business contact 
about WMD with a representative of a "country of proliferation 
concern."[Footnote 8]

In this context, you asked us to review the IPP program. As agreed with 
your office, we assessed (1) DOE's reported accomplishments for the IPP 
program, (2) DOE's exit strategy for the IPP program, and (3) the 
extent to which the IPP program has experienced annual carryover 
balances of unspent funds and the reasons for such carryover.

To address these objectives, we examined 207 of the 929 IPP projects. 
We selected this judgmental sample of draft, active, inactive, and 
completed projects on the basis of a variety of factors, such as 
geographic distribution, representation of all participating national 
laboratories, and project costs. Of the 207 projects in our sample, we 
received or were able to reconstruct information on payments to project 
participants for 97 projects. We interviewed key officials and analyzed 
documentation, such as program guidance, project proposals, and 
financial information, from DOE and its contractors at the Argonne, 
Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, Los Alamos, 
Oak Ridge, National Renewable Energy, Pacific Northwest, Sandia, and 
Savannah River National Laboratories; the Kansas City Plant; and 
Defense and State. We interviewed officials from 15 Russian and 7 
Ukrainian institutes that participate in the IPP program. We also spoke 
with officials from the Federal Agency for Atomic Energy of the Russian 
Federation, which oversees institutes involved in Russia's nuclear 
weapons program. Furthermore, we interviewed officials from 14 U.S. 
companies that participate in the IPP program to better understand 
their perspective on the program's benefits and its implementation. In 
addition, we analyzed cost and budgetary information from DOE, DOE's 
national laboratories, CRDF, ISTC, and STCU. We interviewed 
knowledgeable officials on the reliability of these data, including 
issues such as data entry, access, quality control procedures, and the 
accuracy and completeness of the data. We determined that these data 
were sufficiently reliable for the purposes of this review. Appendix I 
provides more details on our scope and methodology, and appendix II 
provides more detailed information on the institutes that we visited in 
Russia and Ukraine. We conducted our review from October 2006 through 
December 2007 in accordance with generally accepted government auditing 
standards.

Results in Brief:

DOE has overstated accomplishments for the 2 critical measures it uses 
to assess the IPP program's progress and performance--the number of WMD 
scientists receiving DOE support and the number of long-term, private 
sector jobs created. First, according to our analysis of 97 IPP 
projects involving about 6,450 scientists for whom we had complete 
payment information, more than half of the scientists paid by the 
program never claimed to have WMD experience. Furthermore, instead of 
supporting Soviet-era WMD scientists as a way of minimizing 
proliferation risks, officials at 10 nuclear and biological institutes 
in Russia and Ukraine told us that IPP program funds help them attract, 
recruit, and retain younger scientists and contribute to the continued 
operation of their facilities. This is contrary to the original intent 
of the program, which was to reduce the proliferation risk posed by 
Soviet-era weapons scientists. For example, about 972 of the scientists 
paid for work on these 97 projects were born in 1970 or later, making 
them too young to have contributed to Soviet-era WMD efforts. Second, 
although DOE asserts that through April 2007, the IPP program had 
helped create 2,790 long-term, private sector jobs in Russia and other 
countries, we were unable to substantiate the existence of many of 
these jobs in our review of 48 of the 50 projects DOE considers to be 
commercial successes. For example, DOE reported that 350 jobs were 
created at one Russian institute, but officials from that institute 
told us that only 160 people had actually been employed, that most were 
on a part-time basis, and that they could not account for jobs that may 
have been created at other institutes previously involved in the 
projects. The validity of the number of jobs reported to have been 
created by the IPP program is in doubt because DOE relies on "good- 
faith" reporting from U.S. industry partners and institutes in Russia 
and other countries and does not independently verify employment data 
it receives. Finally, the metrics DOE uses to set IPP program goals and 
measure progress are outdated. DOE officials admitted that the IPP 
program targets--based on a 1991 assessment of the former Soviet WMD 
scientist population--are not sufficient to judge the IPP program's 
progress in reducing proliferation risks. However, DOE has not updated 
its metrics on the basis of more recent estimates of the WMD scientist 
population, and it has not set priorities for the program on the basis 
of a comprehensive country-by-country and institute-by-institute 
evaluation of proliferation risks. Due to the serious nature of these 
findings, we are recommending that DOE perform a comprehensive 
reassessment of the IPP program to help the Congress determine whether 
to continue to fund the program. We believe this reassessment should 
include, at a minimum, a thorough analysis of the proliferation risk 
posed by weapons scientists in Russia and other countries, a well- 
defined prioritization strategy to more effectively target the 
scientists and institutes of highest proliferation concern, and more 
accurate reporting of program accomplishments.

DOE has not developed an exit strategy for the IPP program in Russia 
and other countries, although officials from the Russian government, 
Russian and Ukrainian institutes, and U.S. companies raised questions 
about the continuing need for the IPP program, given economic 
improvements in Russia and other countries where DOE provides 
assistance. Importantly, a senior Russian Atomic Energy Agency official 
told us that the IPP program is no longer relevant because Russia's 
economy is strong and its scientists no longer pose a proliferation 
risk. However, DOE has not developed criteria to determine when 
scientists, institutes, or countries should "graduate" from the IPP 
program. In contrast, State, which supports a similar program to assist 
weapons scientists in Russia and other countries, has assessed 
participating institutes and developed a strategy--using a range of 
factors, such as an institute's ability to pay salaries regularly and 
to attract funding from other sources--to graduate certain institutes 
from its program. Even so, we found that DOE is currently supporting 35 
IPP projects at 17 Russian and Ukrainian institutes that State 
considers to already have graduated from its program and, therefore, no 
longer require U.S. assistance. Instead of finding ways to phase out 
the IPP program in the countries of the former Soviet Union, DOE has 
recently expanded the program to include new countries and areas as a 
way to maintain its relevance as a nonproliferation program. 
Specifically, DOE recently began providing assistance to scientists in 
Iraq and Libya. In addition, the IPP program is working with DOE's 
Office of Nuclear Energy to develop projects that support the Global 
Nuclear Energy Partnership--a DOE-led international effort to expand 
the use of civilian nuclear power. DOE has expanded the IPP program's 
efforts into these new areas without a clear mandate from the Congress 
and has suspended parts of its IPP program guidance for implementing 
projects in these new areas. For example, in its efforts in Libya, DOE 
is deviating from IPP program guidance and its standard practice of 
limiting the amount of IPP program funds spent at the national 
laboratories for project oversight to not exceed 35 percent of the 
total expenditures. We found that 97 percent of funds DOE spent on 
projects in Libya through May 2007 were spent at DOE's national 
laboratories for project management and oversight activities. We are 
recommending, among other things, that DOE (1) develop a clear exit 
strategy for the IPP program, including detailed criteria to determine 
when specific countries, institutes, and individuals are ready to 
graduate from participation in the IPP program, and (2) seek explicit 
congressional authorization to expand IPP efforts outside of the former 
Soviet Union.

Regarding its management of IPP program funding, DOE has carried over 
unspent funds in excess of the amount that the Congress provided for 
the IPP program in every fiscal year since 1998. For example, as of 
September 2007, DOE had carried over about $30 million in unspent 
funds--$2 million more than the $28 million that the Congress had 
appropriated for the IPP program in fiscal year 2007. Two main factors 
have contributed to this recurring problem: (1) lengthy and 
multilayered review and approval processes by DOE and its contractors 
for paying former Soviet weapons scientists for IPP-related work and 
(2) long delays in implementing some IPP projects. Regarding the first 
factor, payments to supplement the salaries of scientists in Russia and 
other countries are often delayed because they are reviewed by multiple 
offices within DOE; participating national laboratories; and the 
organizations, such as ISTC, that DOE uses to make tax-free payments to 
project participants' bank accounts. DOE officials acknowledged that 
the lag time between the allocation of funds, placement of contracts, 
and payment for deliverables is a problem for the IPP program. Russian 
and Ukrainian scientists we interviewed told us that they regularly 
experienced delays of 3 months to 1 year in receiving payments for 
completed work on IPP projects. In addition, some IPP projects we 
reviewed experienced long delays in implementation because of, among 
other things, administrative problems and turnover in key project 
participants. For example, in 2006, the Russian Customs Service 
rejected a testing device needed for one IPP project after it was 
improperly labeled when it was shipped from the United States to the 
participating Russian institute. As a result, DOE was unable to spend 
about $245,000 intended for this project for more than 1 year until the 
issue was resolved. DOE and national laboratory officials told us they 
are attempting to improve financial oversight over the IPP program, in 
part, to address concerns about unspent program funds. To that end, DOE 
is developing a program management system, which it expects to fully 
implement in 2008--14 years after the start of the program. We are 
recommending that DOE seek to reduce the large balances of unspent IPP 
program funds and streamline the process through which foreign 
scientists receive IPP funds by eliminating unnecessary layers of 
review.

We provided a draft of this report to DOE and State for comment. DOE 
agreed with 8 of our 11 recommendations to improve the overall 
management and oversight of the IPP program, noting that a number of 
changes were already under way. However, DOE disagreed with 2 
recommendations and neither agreed nor disagreed with 1 recommendation. 
Specifically, DOE disagreed that it needs to reassess the IPP program, 
expressing the view that a reassessment has already taken place that 
justified the program's continued need. We are aware that DOE conducted 
internal assessments in 2004 and 2006 of its overall efforts to engage 
WMD scientists in the former Soviet Union and other countries. However, 
these assessments did not evaluate the IPP program exclusively and were 
conducted at a time when the IPP program was complemented by and 
coordinated with a similar DOE program focused on downsizing facilities 
and creating new jobs for personnel in Russia's nuclear cities. This 
complementary program--the Nuclear Cities Initiative--has since been 
canceled. As a result, we believe these assessments are outdated 
because the IPP program operates under a significantly different set of 
circumstances today than when DOE conducted its previous internal 
assessments. Moreover, we believe that the nature, scope, and volume of 
problems we identified during the course of our review necessitates a 
reassessment of the IPP program to ensure that limited program funds 
are directed to the scientists and institutes of highest proliferation 
risk. DOE also disagreed with the need to ensure compliance with the 
statutory restriction on the percentage of IPP program funds spent on 
oversight activities at the DOE national laboratories to no more than 
35 percent. However, we note in our report that DOE is deviating from 
its IPP program guidance and standard practices by placing no 
restrictions on the amount of IPP program funds that can be spent at 
DOE national laboratories for oversight of projects in Libya. In 
addition, State concurred with the 1 recommendation directed to both 
DOE and State. DOE and State also provided technical comments, which we 
incorporated in this report as appropriate.

Background:

Historically, IPP projects were placed in one of three categories-- 
Thrust 1, Thrust 2, and Thrust 3. DOE now only supports Thrust 2 
projects. Specifically:

* Thrust 1 projects were geared toward technology identification and 
verification and focused on "laboratory-to-laboratory" collaboration, 
or direct contact between DOE's national laboratories and weapons 
institutes and scientists in the former Soviet Union. These projects 
had no industry partner and, according to DOE, were entered into to 
quickly engage former Soviet weapons scientists and their institutes. 
DOE funded 447 Thrust 1 projects, 378 of which were completed. DOE no 
longer supports Thrust 1 projects.

* Thrust 2 projects involve a U.S. industry partner that agrees to 
share in the costs of the project with DOE to further develop potential 
technologies. The U.S. industry partner is expected to match the funds 
DOE provides, either by providing in-kind support, such as employee 
time and equipment, or by providing cash. Through October 2007, there 
were 479 IPP projects in the Thrust 2 category.

* Thrust 3 projects, with the exception of 1 project, did not receive 
any financial support from DOE and were intended to be self-sustaining 
business ventures. DOE no longer supports Thrust 3 projects. There were 
only three Thrust 3 projects and the last project was completed in 2001.

All proposed IPP projects are reviewed by DOE's national laboratories; 
the IPP program office; and other agencies, including Defense and 
State, before they are approved for funding. Initially, a national 
laboratory proposes a project for consideration. As the national 
laboratory prepares the proposal, the laboratory project manager, 
generally referred to as the "principal investigator," is responsible 
for including, among other things, a list of intended participants and 
for designating the WMD experience for each participant. The proposed 
participants are assigned to one of the following three categories:

* Category I--direct experience in WMD research, development, design, 
production, or testing;

* Category II--indirect WMD experience in the underlying technologies 
of potential use in WMD; or:

* Category III--no WMD-relevant experience.

If the IPP project is approved, DOE transfers funding to the project 
participants using payment mechanisms at CRDF, ISTC, or STCU. To be 
paid by any of these entities, the project participants must self- 
declare whether they possess weapons experience and indicate a more 
specific category of WMD expertise, such as basic knowledge of nuclear 
weapons design, construction, and characteristics. The weapons category 
classifications these scientists declare are certified first by the 
foreign institute's director and then by the foreign government 
ministry overseeing the institute. See appendix III for a more detailed 
list of the WMD categories used by DOE, CRDF, ISTC, and STCU.

After the project passes an initial review within the proposing 
national laboratory, it is further analyzed by the ILAB and its 
technical committees, which then forward the project proposal to DOE 
headquarters for review. DOE, in turn, consults with State and other 
U.S. government agencies on policy, nonproliferation, and coordination 
considerations. The IPP program office at DOE headquarters is 
ultimately responsible for making final decisions, including funding, 
on all projects.

DOE Has Overstated the Progress Made on Key Performance Measures, 
Raising Doubts about the IPP Program's Nonproliferation Benefits:

DOE has not accurately portrayed the IPP program's progress, according 
to our analysis of two key measures used to assess the program's 
performance--the number of WMD scientists receiving DOE support and the 
number of long-term, private sector jobs created. Many of the 
scientists in Russia and other countries that DOE has paid through its 
IPP program did not claim to have WMD experience. Furthermore, DOE's 
process for substantiating the weapons backgrounds of IPP project 
participants has several weaknesses, including limited information 
about the backgrounds of scientists proposed for an IPP project. In 
addition, DOE has overstated the rate at which weapons scientists have 
been employed in long-term, private sector jobs because it does not 
independently verify the data it receives on the number of jobs 
created, relies on estimates of job creation, and includes in its count 
a large number of part-time jobs that were created. Finally, DOE has 
not revised the IPP program's performance metrics, which are currently 
based on a 1991 assessment of the threat posed by former Soviet weapons 
scientists.

DOE Has Supplemented the Salaries of Many Scientists in Russia and 
Other Countries Who Did Not Claim Direct Experience with WMD:

A major goal of the IPP program is to engage former Soviet weapons 
scientists, engineers, and technicians, and DOE claims to have 
supplemented the incomes of over 16,770 of these individuals since the 
program's inception. However, this number is misleading because DOE 
officials told us that this figure includes both personnel with WMD 
experience and those without any WMD experience. We reviewed the 
payment records of 97 IPP projects, for which information was available 
and complete, and found that 54 percent, or 3,472, of the 6,453 
participants in these projects did not claim to possess any WMD 
experience in the declarations they made concerning their backgrounds. 
Moreover, project participants who did not claim any WMD experience 
received 40 percent, or approximately $10.1 million, of the $25.1 
million paid to personnel on these projects. For example, in 1 project 
to develop a high-power accelerator that was funded for $1 million, 88 
percent, or 66, of the 75 participants who have received payments did 
not claim any previous weapons-related experience.

On a project-by-project basis, we also found that DOE is not complying 
with a requirement of its own guidance for the IPP program--that is, 
each IPP project must have a minimum of 60 percent of the project's 
participants possessing WMD-relevant experience prior to 1991 (i.e., 
Soviet-era WMD experience). According to our analysis of the payment 
records of 97 projects for which information was available and 
complete, we found that 60 percent, or 58, of the 97 projects did not 
meet this requirement. A factor contributing to this outcome may be a 
poor understanding of the IPP program guidance among the ILAB 
representatives of the 12 national laboratories participating in the 
program. During our interviews with national laboratory officials, we 
heard a range of opinions on the appropriate minimum percentage of WMD 
scientists on individual IPP projects. For example, ILAB 
representatives from 5 national laboratories indicated that they strive 
for a minimum of 50 percent of WMD scientists on each IPP project; the 
ILAB representative from the Pacific Northwest National Laboratory 
indicated a goal of 55 percent. The ILAB representative from the 
National Renewable Energy Laboratory indicated that he was not aware of 
any DOE policy establishing a minimum percentage of participants with 
WMD backgrounds on an IPP project.

Finally, many IPP project participants that DOE supports are too young 
to have supported the Soviet Union's WMD programs. Officials at 10 of 
the 22 Russian and Ukrainian institutes we interviewed said that IPP 
program funds have allowed their institutes to recruit, hire, and 
retain younger scientists. We found that 15 percent, or 972, of the 
6,453 participants in the payment records of the 97 projects we 
reviewed were born in 1970 or later and, therefore, were unlikely to 
have contributed to Soviet-era WMD efforts. This group of younger 
participants received approximately 14 percent, or about $3.6 million, 
of $25.1 million paid to project participants in the 97 projects we 
reviewed.

While DOE guidance for the IPP program does not specifically prohibit 
participation of younger scientists in IPP projects, DOE has not 
clearly stated the proliferation risk posed by younger scientists and 
the extent to which they should be a focus of the IPP program. The 
absence of a clear policy on this matter has contributed to confusion 
and lack of consensus among national laboratory officials involved in 
the program about the extent to which younger scientists, rather than 
older, more experienced WMD experts, should be involved in IPP 
projects. For example, the ILAB representative at the Argonne National 
Laboratory told us that it would be appropriate to question the 
participation of personnel born in the mid-1960s or later since they 
most likely lacked weapons-related experience. A representative at the 
Los Alamos National Laboratory who has been involved with the IPP 
program for over a decade said that the program should engage "second- 
generation" scientists born in 1980 or later because doing so can help 
create opportunities for "third-and fourth-generation" scientists at 
facilities in Russia and other countries in the future. Senior 
officials at the Lawrence Livermore National Laboratory told us that 
scientists in Russia and other countries, regardless of their age or 
actual experience in weapons-related programs, should be included in 
IPP projects because weapons expertise can be passed from one 
generation to the next.

DOE Lacks Necessary Information and a Rigorous, Formalized Review 
Process to Assess the WMD Credentials of IPP Project Participants:

In 1999, we recommended that, to the extent possible, DOE should obtain 
more accurate data on the number and background of scientists 
participating in IPP program projects. DOE told us that it has made 
improvements in this area, including development of a classification 
system for WMD experts, hiring a full-time employee responsible for 
reviewing the WMD experience and backgrounds of IPP project 
participants, and conducting annual project reviews. DOE relies heavily 
on the statements of WMD experience that IPP project participants 
declare when they submit paperwork to receive payment for work on IPP 
projects. However, we found that DOE lacks an adequate and well- 
documented process for evaluating, verifying, and monitoring the number 
and WMD experience level of individuals participating in IPP projects.

According to DOE officials, all IPP projects are scrutinized carefully 
and subjected to at least 8, and in some cases 10, stages of review to 
assess and validate the WMD experience of the project participants. 
Responsibility for verifying the WMD experience and backgrounds of IPP 
project participants rests not only with DOE, but with the national 
laboratories, other federal agencies, and the entities responsible for 
transmitting funding to the scientists in Russia and other countries 
(CRDF, ISTC, or STCU). However, the ultimate responsibility for this 
assessment rests with DOE's IPP program office. Table 1 provides an 
overview of the different stages involved in DOE's assessment of IPP 
project participants' WMD backgrounds.

Table 1: Multistage Process for Assessing IPP Project Participants' WMD 
Backgrounds:

Stage number: 1; 
Review: Assessment by the national laboratory principal investigator.

Stage number: 2; 
Review: Assessment by ILAB representatives and ILAB technical 
committees.

Stage number: 3; 
Review: Review by ILAB Chairperson.

Stage number: 4; 
Review: Preliminary DOE review.

Stage number: 5; 
Review: U.S. interagency review.

Stage number: 6; 
Review: Approval and certification by DOE.

Stage number: 7; 
Review: Validation by project funding mechanism (CRDF, ISTC, or STCU).

Stage number: 8; 
Review: Secondary review by DOE following project approval but prior to 
project implementation.

Stage number: 9; 
Review: End-of-year review by DOE prior to release of 2[nd] - or 3rd-
year funding (for multiyear projects only).

Stage number: 10; 
Review: Audits of selected projects by the Defense Contract Audit 
Agency.

Source: GAO analysis of DOE data.

[End of table] 

In reviewing project documentation and in our discussions with 
officials responsible for conducting these reviews, we found 
limitations throughout this multistage assessment process. Specifically:

* DOE has limited information to verify the WMD experience of personnel 
proposed for IPP projects because government officials in Russia and 
other countries are reluctant to provide information about their 
countries' scientists. For example, ISTC officials told us that the 
Russian government refuses to provide résumés for scientists involved 
in projects funded by the Science Centers program, including IPP 
projects that use the ISTC payment process; while CRDF officials 
indicated that both the Russian and Ukrainian governments have shown 
increasing resistance to the policy requiring the scientists to declare 
their WMD-related experience. Three national laboratory officials 
stated that it is illegal under Russian law to ask project participants 
about their backgrounds, and that instead they make judgments regarding 
the WMD experience of the project participants on the basis of their 
personal knowledge and anecdotal information.

* Some IPP project proposals may advance from the national laboratories 
for consideration by DOE with insufficient vetting or understanding of 
all personnel who are to be engaged on the project. Contrary to the 
process DOE laid out for the review of the WMD scientists' backgrounds, 
senior representatives at five national laboratories told us that they 
and their project managers do not have sufficient time or the means to 
verify the credentials of the proposed project participants. 
Furthermore, they believe that DOE is primarily responsible for 
substantiating the weapons experience of the individuals who are to be 
engaged in the projects.

* DOE does not have a well-documented process for verifying the WMD 
experience of IPP project participants, and, as a result, it is unclear 
whether DOE has a reliable sense of the proliferation risk these 
individuals pose. DOE's review of the WMD credentials of proposed 
project participants relies heavily on the determinations of the IPP 
program office. We examined the proposal review files that the program 
maintains, and we were unable to find adequate documentation to 
substantiate the depth or effectiveness of the program office's review 
of the WMD experience of proposed IPP project participants. DOE 
officials noted that they do not usually check the weapons backgrounds 
of every individual listed in an IPP project proposal, but only the key 
project scientists and a few of the personnel working with them. 
Specifically, in none of the IPP project files that we reviewed did we 
find formal, written documentation analyzing and substantiating the WMD 
backgrounds and proliferation risks of the personnel to be engaged in 
those IPP projects. Each of these files did, however, contain a 
comprehensive formal assessment by DOE's Office of International 
Regimes and Agreements analyzing export control issues and compliance 
with U.S. nonproliferation laws.

* Officials at the three organizations DOE uses to make tax-free 
payments for IPP projects--CRDF, ISTC, and STCU--also downplayed their 
organizations' ability to validate the backgrounds of the scientists 
participating in IPP projects. CRDF officials stated that their 
organization has not independently validated any of the weapons 
backgrounds of the participating scientists, and they do not consider 
that a responsibility under CRDF's contract with DOE. Similarly, ISTC 
officials told us that their organization cannot verify the backgrounds 
of scientists in projects funded by the Science Centers program, 
including IPP projects that use the ISTC payment process, and instead 
relies on the foreign institute's certification of the project 
participants. Finally, STCU relies on the validation provided by the 
foreign institute's director, and verifies this information in annual 
project reviews during which a sample of project participants are 
interviewed to confirm their WMD experience.

* Because it can be a matter of months or longer between development of 
an IPP project proposal and project implementation, the list of 
personnel who are actually paid on a project can differ substantially 
from the proposed list of scientists. For several IPP projects we 
reviewed, we did not find documentation in DOE's project files 
indicating that the department was notified of the change of staff or 
had assessed the WMD backgrounds of the new project participants. For 
example, 1 IPP project--to discover new bioactive compounds in Russia 
and explore their commercial application--originally proposed 27 
personnel and was funded at $1 million. However, 152 personnel were 
eventually paid under this project, and we did not find an updated list 
of the project personnel or any indication of a subsequent review of 
the additional personnel by DOE in the IPP project files. In another 
project to develop straw-fired boilers in Ukraine funded at $936,100, 
DOE reviewed the backgrounds of 18 personnel who were part of the 
project proposal. However, CRDF payment records indicated that 24 
personnel were subsequently paid on the project, only 5 of whom were 
listed in the original proposal DOE had reviewed and approved. As a 
result, it is unclear whether DOE conducts sufficient oversight on 
changes in the number or composition of the workforce involved in IPP 
projects. For its part, CRDF informed us that when an institute 
requests a change in project staff and that change is approved by the 
participating national laboratory, CRDF does not report these changes 
to DOE, but relies on the national laboratory to notify relevant DOE 
officials.

The limited information DOE obtains about IPP project participants and 
the weaknesses in DOE's review of the backgrounds of these individuals 
leave the IPP program vulnerable to potential misallocation of funds. 
In our review, we found several examples that call into question DOE's 
ability to adequately evaluate IPP project participants' backgrounds 
before the projects are approved and funded. For example:

* A National Renewable Energy Laboratory official told us he was 
confident that a Russian institute involved in a $250,000 IPP project 
he oversaw to monitor microorganisms under environmental stress was 
supporting Soviet-era biological weapons scientists. However, during 
our visit to the institute in July 2007, the Russian project leader 
told us that neither he nor his institute was ever involved in 
biological weapons research. As a result of this meeting, DOE canceled 
this project on July 31, 2007. DOE's cancellation letter stated that 
the information provided during our visit led to this action. It 
further stated, "it is well documented in statute and in the [IPP 
program's] General Program Guidance that our projects must engage 
Russians, and others, with relevant weapons of mass destruction or 
strategic delivery means backgrounds. Violation of this requirement is 
an extremely serious matter."

* In November 2006, DOE canceled a project in Ukraine intended to 
develop a new type of fuel combustion system, 18 months after approving 
the project and after spending about $76,000. DOE canceled this project 
when it discovered an inadequate number of personnel with WMD 
backgrounds involved in the project and after a Defense Contract Audit 
Agency (DCAA) audit revealed other irregularities, including a conflict 
of interest between the primary Ukrainian institute and the U.S. 
partner company. During the interagency review of the project proposal, 
State officials questioned the primary Ukrainian institute's 
involvement in WMD. However, in our review of DOE's project files, we 
did not find evidence that these concerns triggered a more-intensive 
evaluation of this institute by DOE prior to the project's approval.

* A 2005 DCAA audit found that 90 percent of the participants on an IPP 
project administered by the Pacific Northwest National Laboratory 
lacked WMD experience. This project, which was designed to develop 
improved biological contamination detectors, was funded at $492,739. 
Officials at the national laboratory insisted that DCAA "was just plain 
wrong." DOE and national laboratory officials asserted that the project 
participants were under instruction not to discuss their weapons 
involvement and, on the basis of their personal knowledge of the 
Russian project leader and the institute, they believed the project 
participants constituted a proliferation risk. However, according to 
the payment records we reviewed, the Russian project leader and other 
scientists involved in the project were not prevented from declaring 
their WMD backgrounds to CRDF. Such conflicting accounts, the absence 
of clear information, and the judgments made by IPP program officials 
in assessing the proliferation risks posed by IPP project participants 
underscore the difficulties the program faces and the possibility that 
the program is funding personnel who do not constitute a proliferation 
risk.

DOE Has Overstated the Number of Former Weapons Scientists Reemployed 
in Long-term, Private Sector Jobs:

Although a senior DOE official described commercialization as the 
"flagship" of the IPP program, we found that the program's 
commercialization achievements have been overstated and are misleading, 
further eroding the perceived nonproliferation benefits of the program. 
In the most recent annual report for the IPP program available at the 
time of our review,[Footnote 9] DOE indicated that 50 projects had 
evolved to support 32 commercially successful activities.[Footnote 10] 
DOE reported that these 32 commercial successes had helped create or 
support 2,790 new private sector jobs for former weapon scientists in 
Russia and other countries.[Footnote 11] In reviewing these projects, 
we identified several factors that raise concerns over the validity of 
the IPP program's reported commercial success and the numbers of 
scientists employed in private sector jobs. For example:

* The annual survey instrument that USIC distributes to collect 
information on job creation and other commercial successes of IPP 
projects relies on "good-faith" responses from U.S. industry partners 
and foreign institutes, which are not audited by DOE or USIC. In 9 of 
the 32 cases, we found that DOE based its job creation claims on 
estimates or other assumptions. For example, an official from a large 
U.S. company told us that the number of jobs it reported to have helped 
create was his own rough estimate. He told us he derived the job total 
by estimating the amount of money that the company was spending at 
Russian and Ukrainian institutes and dividing that total by the average 
salary for Russian engineers in the company's Moscow office.

* We could not substantiate many of the jobs reported to have been 
created in our interviews with the U.S. companies and officials at the 
Russian and Ukrainian institutes where these commercial activities were 
reportedly developed, due to conflicting information and accounts. For 
example, officials from 1 U.S. company we interviewed claimed that 250 
jobs at 2 institutes in Russia had been created, on the basis of 2 
separate IPP projects. However, during our visit to the Scientific 
Research Institute of Measuring Systems to discuss one of these 
projects, we were told that the project is still under way, 
manufacturing of the product has not started, and none of the 
scientists have been reemployed in commercial production of the 
technology. Similarly, during our site visit, officials at the 
Institute of Nuclear Research of the Russian Academy of Sciences could 
not confirm the creation of 350 jobs they had reported as a result of 
several IPP projects relating to the production of radioisotopes. They 
indicated that no more than 160 personnel were employed at their 
institute in commercial activities stemming from those IPP projects, 
that most of these jobs were only part time, and that they could not 
account for jobs that may have been created at other institutes 
previously involved in the projects.

Moreover, we found differing views among DOE and national laboratory 
officials on what constitutes a commercially successful IPP project. 
For example, an Oak Ridge National Laboratory official told us an IPP 
project could be considered a commercial success if the project 
participants become employed full time in a private business and are no 
longer employed by the WMD institute. A National Renewable Energy 
Laboratory official defined commercially successful IPP projects as 
those that lead to new products or new production capabilities in the 
former Soviet Union with significant sales in the marketplace. DOE 
guidance for the IPP program does not provide a standard definition or 
criteria to determine whether an IPP project should be judged 
commercially successful. However, in response to our request, DOE 
offered the following definition of a commercially successful IPP 
project:

"A product, process, or service is generating revenue from sales or 
other economic value added in the [former Soviet Union] or the U.S., 
based on an IPP project (either completed or ongoing); and/or there is 
a private contractual relationship between the U.S. industry partner 
and the [former Soviet Union] institute covering research and 
development work to be done by the institute for the U.S. industry 
partner growing out of an IPP project."

The lack of consensus among DOE and national laboratory officials 
involved in the IPP program on a common commercialization definition 
has created confusion and disagreement on which IPP projects should be 
considered commercially successful. For example, DOE counted as a 
commercial success one IPP project administered by the Pacific 
Northwest National Laboratory to facilitate biodegradation of oil 
spills. However, the national laboratory officials responsible for this 
project disagreed with DOE's characterization, in part because the 
project has not generated any commercial revenues.

Furthermore, DOE's broad-based definition of commercialization has 
allowed it to overstate its commercialization accomplishments to 
include part-time jobs created from and revenues derived from grants or 
contract research. Specifically:

* DOE counts part-time private sector jobs created, even if the 
scientists employed in these part-time jobs also continue to work at 
the former Soviet weapons institute.[Footnote 12] DOE policy does not 
require scientists employed in a private sector activity resulting from 
an IPP project to sever their relationship with their institute. In 
fact, in our review of the 2,790 jobs created, we found that 898, or 
nearly one third, of these jobs were part-time jobs, meaning that the 
scientists in some cases may still be affiliated with the institutes 
and involved in weapons-applicable research.

* The sources of revenue for some commercially successful IPP projects 
also call into question the long-term sustainability of some of the 
jobs created. DOE reported that $22.1 million in total revenue was 
generated by the foreign institutes or their spin-off companies as a 
result of commercial activities stemming from IPP projects. Of this 
total, approximately $4.5 million, or 20 percent, consisted of grants 
(including grants from the Russian government); contract research; and 
other sources of income that appear to be of limited duration, that are 
not based on commercial sales, and that may not offer a sustainable 
long-term source of revenue. For example, DOE reported that 510 jobs 
were created at the Kurchatov Institute and other Russian institutes as 
the result of an IPP project to develop thorium-based fuels for use in 
nuclear reactors.[Footnote 13] However, we found that over 400 of those 
jobs were supported by a separate DOE contract to evaluate the use of 
thorium fuels for plutonium disposition. The Russian project 
participants told us that over 500 workers were supported while 
receiving funding from the 2 DOE sources, but the project is now 
completed, it has not been commercialized, and there are no more than 
12 personnel currently involved in efforts related to the project.

DOE Has Not Revised the IPP Program's Performance Metrics to Reflect 
Updated Threat Information:

The IPP program's long-term performance targets do not accurately 
reflect the size and nature of the threat the program is intended to 
address because DOE is basing the program's performance measures on 
outdated information. DOE has established 2 long-term performance 
targets for the IPP program--to engage 17,000 weapons scientists 
annually by 2015 in either IPP grants or in private sector jobs 
resulting from IPP projects, and to create private sector jobs for 
11,000 weapons scientists by 2019. However, DOE bases these targets on 
a 16-year-old, 1991 National Academy of Sciences (NAS) assessment that 
had estimated approximately 60,000 at-risk WMD experts in Russia and 
other countries in the former Soviet Union. DOE derived 17,000 
scientists as its share of the total target population by subtracting 
from the NAS estimate the number of WMD scientists engaged by other 
U.S. government and international WMD scientist assistance programs 
(such as State's Science Centers program) and making assumptions about 
attrition rates in the former Soviet WMD workforce.

DOE officials acknowledged that the 1991 NAS study does not provide an 
accurate assessment of the current threat posed by WMD scientists in 
Russia and other countries. A 2005 DOE-commissioned study by the RAND 
Corporation estimated that the population of unemployed or 
underemployed weapons scientists in Russia and other former Soviet 
states had decreased significantly. The RAND study provided rough 
revised estimates of the number of WMD scientists in the former Soviet 
Union, and DOE acknowledged in 2006 that the target population of WMD 
experts in the former Soviet Union had dropped from the 1991 NAS 
estimate of 60,000 to approximately 35,000 individuals. However, DOE 
has not formally updated its performance metrics for the IPP program 
and, in its fiscal year 2008 budget justification, continued to base 
its long-term program targets on the 1991 NAS estimate.

Moreover, DOE's current metrics for the IPP program are not complete or 
meaningful indicators of the proliferation risk posed by weapons 
scientists in Russia and other countries and, therefore, do not provide 
sufficient information to the Congress on the program's progress in 
reducing the threat posed by former Soviet WMD scientists. The total 
number of scientists supported by IPP grants or employed in private 
sector jobs conveys a level of program accomplishment, but these 
figures are broad measures that do not describe progress in redirecting 
WMD expertise within specific countries or at institutes of highest 
proliferation concern. DOE has recognized this weakness in the IPP 
program metrics and recently initiated the program's first systematic 
analysis to understand the scope of the proliferation risk at 
individual institutes in the former Soviet Union. DOE believes that 
setting priorities for providing support to foreign institutes is 
necessary because (1) the economies in Russia and the other countries 
of the former Soviet Union have improved since the program's inception, 
(2) former "at-risk" institutes are now solvent, and (3) the threat of 
mass migration of former Soviet weapons scientists has subsided. 
However, DOE believes that a concern remains over the "targeted 
recruitment" of scientists and former WMD personnel. DOE officials 
briefed us on their efforts in September 2007, but told us that the 
analysis is still under way, and that it would not be completed until 
2008. As a result, we were unable to evaluate the results of DOE's 
assessment.

DOE Has Not Developed an Exit Strategy for the IPP Program, but Instead 
Has Expanded Efforts to Iraq and Libya and Is Using the Program to 
Support the Department's Global Nuclear Energy Partnership:

Russian government officials, representatives of Russian and Ukrainian 
institutes, and individuals at U.S. companies raised questions about 
the continuing need for the IPP program, particularly in Russia, whose 
economy has improved in recent years. However, DOE has yet to develop 
criteria for phasing-out the IPP program in Russia and other countries 
of the former Soviet Union. Meanwhile, DOE is departing from the 
program's traditional focus on Russia and other former Soviet states to 
engage scientists in new countries, such as Iraq and Libya, and to fund 
projects that support a DOE-led initiative on nuclear energy, called 
the Global Nuclear Energy Partnership (GNEP).

Russian Government Officials, Russian and Ukrainian Scientists, and 
U.S. Industry Representatives Questioned the Continuing Need for the 
IPP Program:

Officials from the Russian government, representatives of Russian and 
Ukrainian institutes, and individuals at U.S. companies who have been 
long-time program participants raised questions about the continuing 
need for the IPP program, given economic improvements in Russia and 
other countries of the former Soviet Union. Specifically:

* A senior Russian Atomic Energy Agency official told us in July 2007 
that the IPP program is no longer relevant because Russia's economy is 
strong and its scientists no longer pose a proliferation risk. 
Additionally, in September 2006, the Deputy Head of the Russian Atomic 
Energy Agency stated that Russia is no longer in need of U.S. 
assistance, and that it is easier and more convenient for Russia to pay 
for its own domestic nuclear security projects.

* Officials from 10 of the 22 Russian and Ukrainian institutes we 
interviewed told us that they do not see themselves or scientists at 
their institutes as a proliferation risk. Russian and Ukrainian 
officials at 14 of the 22 institutes we visited told us that salaries 
are regularly being paid, funding from the government and other sources 
has increased, and there is little danger of scientists migrating to 
countries of concern. However, many of these officials said that they 
are concerned about scientists emigrating to the United States and 
Western Europe, and that IPP program funds help them to retain key 
personnel. Furthermore, many of these officials noted that the program 
was particularly helpful during the difficult financial period in the 
late 1990s.

* Representatives of 5 of the 14 U.S. companies we interviewed told us 
that, due to Russia's increased economic prosperity, the IPP program is 
no longer relevant as a nonproliferation program in that country. Some 
of these company officials believe that the program should be 
reassessed to determine if it is still needed.

In economic terms, Russia has advanced significantly since the IPP 
program was created in 1994. Some of the measures of Russia's economic 
strength include the following:

* massive gold and currency reserves, including more than $113 billion 
in a stabilization fund;[Footnote 14]

* a dramatic decrease in the amount of foreign debt--from about 96 
percent of Russia's gross domestic product in 1999 to about 5 percent 
in April 2007; and:

* rapid growth in gross domestic product--averaging about 6 percent per 
year from 1998 to 2006.

In addition, the president of Russia recently pledged to invest 
substantial government resources in key industry sectors, including 
nuclear energy, nanotechnology, and aerospace technologies and aircraft 
production. Many of the Russian institutes involved in the IPP program 
could benefit substantially under these planned economic development 
initiatives, undercutting the need for future IPP program support. In 
fact, officials at many of the Russian institutes with whom we spoke 
told us that they hope to receive increased government funding from 
these new presidential initiatives.

In another sign of economic improvement, many of the institutes we 
visited in Russia and Ukraine appeared to be in better physical 
condition and more financially stable, especially when compared with 
their condition during our previous review of the IPP program. In 
particular, at one institute in Russia--where during our 1998 visit we 
observed a deteriorated infrastructure and facilities--we toured a 
newly refurbished building that featured state-of-the-art equipment. 
Russian officials told us that the overall financial condition of the 
institute has improved markedly because of increased funding from the 
government as well as funds from DOE. In addition, one institute we 
visited in Ukraine had recently undergone a $500,000 renovation, 
complete with a marble foyer and a collection of fine art. Furthermore, 
we found that many institutes we visited have been able to develop 
commercial relationships with Russian, U.S., and other international 
companies on their own--outside of the IPP framework--leading to 
increased revenues and commercial opportunities. For example, officials 
at one Russian institute met with us immediately following their 
successful negotiation of a new contract for research and development 
activities with a large international energy company. However, DOE 
officials noted that the economic recovery throughout Russia has been 
uneven, and that DOE believes there are many facilities that remain 
vulnerable. Even so, DOE officials told us that their intent is to 
reorient the IPP program from assistance to cooperation, especially in 
Russia, given the recent improvements in that country's economy.

DOE Has Not Developed Criteria to Determine When Individuals or 
Institutes Should No Longer Receive IPP Funding:

DOE has not developed an exit strategy for the IPP program, and it is 
unclear when the department expects that the program will have 
completed its mission. DOE officials told us in September 2007 that 
they do not believe that the program needs to develop an exit strategy 
at this time. However, DOE officials acknowledged that the IPP 
program's long-term goal of finding employment for 17,000 WMD 
scientists in Russia and other countries does not represent an exit 
strategy.

DOE has not developed criteria to determine when scientists, 
institutes, or countries should be "graduated" from the IPP program, 
and DOE officials believe that there is a continued need to engage 
Russian scientists. In contrast, State has already assessed 
participating institutes and developed a strategy--using a range of 
factors, such as the institute's ability to pay salaries regularly and 
to attract funding from other sources--to graduate certain institutes 
from its Science Centers program. State and DOE officials told us that 
the Science Centers and IPP programs are complementary and well- 
coordinated. However, we found that the programs appear to have 
different approaches regarding continued U.S. government support at 
certain institutes. Specifically, DOE is currently supporting 35 IPP 
projects at 17 Russian and Ukrainian institutes that State considers to 
already be graduated from its Science Centers program and, therefore, 
no longer in need of U.S. assistance. For example, according to State 
documents, beginning in fiscal year 2003, State considered the 
Kurchatov Institute to be graduated from its Science Centers program 
and, according to the Deputy Executive Director of ISTC, the institute 
is financially well-off and no longer needs U.S. assistance. However, 
we found that since fiscal year 2003, DOE has funded 6 new IPP projects 
at the Kurchatov Institute and a related spin-off company. DOE 
officials acknowledged that coordination between State and DOE's 
scientist assistance programs could be improved.

Part of State's exit strategy involves enhancing commercial 
opportunities at some institutes through the Commercialization Support 
Program. This program, which began in October 2005, is administered by 
ISTC with funding from the United States, through State's Science 
Centers program. State aims to facilitate and strengthen long-term 
commercial self-sustainability efforts at institutes in Russia and 
other countries by providing training and equipment to help them bring 
commercially viable technologies to market through the 
Commercialization Support Program. According to ISTC officials, 17 
commercialization initiatives at institutes in Russia have been 
supported through the program, 2 of which were completed as of July 
2007. DOE, State, and ISTC officials told us the IPP program and the 
Commercialization Support Program have a similar goal of finding 
commercial opportunities for weapons scientists in Russia and other 
countries of the former Soviet Union. According to ISTC officials, a 
key difference in the programs is that the Commercialization Support 
Program can support infrastructure upgrades at foreign institutes, but, 
unlike the IPP program, it is not used to support research and 
development activities. DOE and State officials insisted that the 
programs are complementary, but acknowledged that they need to be 
better coordinated.

DOE Expanded IPP Efforts to Iraq and Libya and Is Working with Its 
Global Nuclear Energy Partnership to Maintain the IPP Program's 
Relevance:

DOE recently expanded its scientist assistance efforts on two fronts: 
DOE began providing assistance to scientists in Iraq and Libya, and the 
IPP program is working with DOE's Office of Nuclear Energy to develop 
IPP projects that support GNEP--a DOE-led international effort to 
expand the use of civilian nuclear power. These new directions 
represent a significant departure from the IPP program's traditional 
focus on the former Soviet Union. According to a senior DOE official, 
the expansion of the program's scope was undertaken as a way to 
maintain its relevance as a nonproliferation program.

DOE has expanded the IPP program's efforts into these new areas without 
a clear mandate from the Congress and has suspended parts of its IPP 
program guidance for implementing projects in these new areas. 
Specifically:

* Although DOE briefed the Congress on its plans, DOE officials told us 
that they began efforts in Iraq and Libya without explicit 
congressional authorization to expand the program outside of the former 
Soviet Union. In contrast, other U.S. nonproliferation programs, such 
as Defense's Cooperative Threat Reduction program, sought and received 
explicit congressional authorization before expanding their activities 
to countries outside of the former Soviet Union. DOE officials told us 
they plan to ask the Congress to include such language in future 
legislation.

* In Libya, DOE is deviating from IPP program guidance and its standard 
practice of limiting the amount of IPP program funds spent at DOE's 
national laboratories for project oversight to not more than 35 percent 
of total expenditures.

* Regarding efforts to support GNEP, DOE has suspended part of the IPP 
program's guidance that requires a U.S. industry partner's 
participation, which is intended to ensure IPP projects' commercial 
potential.

Iraq:

Since 2004, DOE has been working to identify, contact, and find 
employment for Iraqi scientists in peaceful joint research and 
development projects. DOE's efforts were undertaken at the request of 
State, which has overall responsibility for coordinating 
nonproliferation activities and scientist assistance efforts in Iraq. 
DOE and State coordinate their activities through regular meetings and 
correspondence, participation in weekly teleconferences, interagency 
proposal review meetings, and coordination on strategic planning and 
upcoming events. Through May 2007, DOE had spent about $2.7 million to 
support its activities in Iraq. DOE has approved 29 projects, the 
majority of which are administered by Sandia National Laboratories. 
These include projects on radon exposure, radionuclides in the Baghdad 
watershed, and the development of salt tolerant wheat strains. However, 
owing to the uncertain security situation in Iraq, DOE and national 
laboratory officials told us that these are short-term projects. Sandia 
National Laboratory officials acknowledged that most of the projects 
DOE is funding in Iraq have no commercialization potential.

Libya:

Similarly, DOE expanded its efforts to Libya at the request of 
State.[Footnote 15] DOE spent about $934,000 through May 2007 to 
support 5 projects in Libya, including projects involving water 
purification and desalination. However, DOE is deviating from its IPP 
program guidance and standard practices by placing no restrictions on 
the amount of IPP program funds that can be spent at DOE national 
laboratories for oversight of these projects. DOE limits spending at 
the national laboratories for IPP projects in all other countries to 
comply with section 3136(a)(1) of the National Defense Authorization 
Act for Fiscal Year 2000, which states the following: "Not more than 35 
percent of funds available in any fiscal year after fiscal year 1999 
for the IPP program may be obligated or expended by the DOE national 
laboratories to carry out or provide oversight of any activities under 
that program." DOE officials acknowledged that more than 35 percent of 
IPP program funds for projects in Libya have been and will continue to 
be spent at the national laboratories. We found that through May 2007, 
DOE spent about $910,000 (97 percent) at the national laboratories, 
while spending about $24,000 (3 percent) in Libya. In a written 
response to us on September 7, 2007, DOE noted that the IPP program 
"will continue to operate in Libya on this basis [i.e., spending more 
than 35 percent of funds at the DOE national laboratories], while 
working with our legislative office to eliminate any perceived 
ambiguities [in the law]." DOE informed us on October 24, 2007, that 
these efforts are currently under way.

DOE officials estimate that about 200 scientists in Libya have WMD 
knowledge and pose a proliferation risk. However, in contrast with its 
activities in Russia and other countries, DOE's focus in Libya is not 
on engaging individual weapons scientists, but rather on converting 
former WMD manufacturing facilities, because, according to DOE, the 
Libyan government has made clear that it will continue to pay the 
salaries of its former WMD scientists and engineers. In collaboration 
with State, DOE is working to help scientists at Tajura, formerly the 
home of Libya's nuclear research center, set up and transition to 
research in seawater desalination and analytical water chemistry. DOE 
and State coordinate on strategic planning for and implementation of 
scientist engagement efforts in Libya. According to State, coordination 
mechanisms include regular e-mail correspondences, weekly interagency 
and laboratory teleconferences, and quarterly meetings. DOE officials 
told us they plan to complete their efforts in Libya by 2009.

Global Nuclear Energy Partnership:

In fiscal year 2007, DOE also expanded the efforts of the IPP program 
to provide support for GNEP--a DOE-led international effort to expand 
the use of civilian nuclear power.[Footnote 16] In October 2006, a 
senior DOE official told us that the department planned to use IPP 
projects to support GNEP as a way to maintain the program's relevance 
as a nonproliferation program. On December 13, 2006, the IPP program 
office brought together national laboratory experts to propose new IPP 
projects that could support GNEP. Currently, six active or approved IPP 
projects are intended to support GNEP. According to IPP program 
officials, DOE's Office of Nuclear Energy and Office of Science will be 
providing some funding to three of these projects.[Footnote 17] 
According to DOE officials, because these funds will come from other 
DOE offices and programs, they would not be subject to congressionally 
mandated limitations on the percentage of IPP program funds that can be 
spent at DOE national laboratories. As a result, DOE officials told us 
they plan to use funding provided by the Office of Nuclear Energy and 
the Office of Science to increase the amount spent at DOE national 
laboratories for technical review and oversight of GNEP-related IPP 
projects.

DOE has suspended some key IPP program guidelines, such as the 
requirement for a U.S. industry partner, for IPP projects intended to 
support GNEP. DOE officials told us that most GNEP-related IPP projects 
do not have immediate commercial potential, but could attract industry 
in the future. Furthermore, they said that GNEP-related IPP projects 
are essentially collaborative research and development efforts between 
Russian institutes and DOE national laboratories. DOE has yet to 
develop separate written guidance for GNEP-related IPP projects, but 
told us it is planning to do so. As a result, national laboratory 
officials we interviewed told us that implementing procedures for GNEP- 
related IPP projects has been piecemeal and informal, which has created 
some confusion about how these projects will be managed and funded.

Multiple DOE and Contractor Reviews and Delays in Project 
Implementation Contribute to the IPP Program's Large Balances of 
Unspent Program Funds:

In every fiscal year since 1998, DOE has carried over unspent funds in 
excess of the amount that the Congress provided for the IPP program, 
primarily because of DOE and its contractors' lengthy and multilayered 
review and approval processes for paying former Soviet weapons 
scientists for IPP-related work and long delays in implementing some 
IPP projects. DOE and national laboratory officials told us they are 
attempting to improve financial oversight over the IPP program, in 
part, to address concerns about unspent program funds. To that end, DOE 
is developing a new program management system, which it expects to 
fully implement in 2008--14 years after the start of the program.

DOE Has Carried Over Unspent Funds Greater Than the Amount the Congress 
Has Allocated to the IPP Program Each Fiscal Year since 1998:

Since fiscal year 1994, DOE has spent about $309 million to implement 
the IPP program, but has annually carried over large balances of 
unspent program funds. DOE officials have recognized that unspent funds 
are a persistent and continuing problem with the IPP program. 
Specifically, in every fiscal year after 1998, DOE has carried over 
unspent funds in excess of the amount that the Congress provided for 
the program the following year. For example, as of September 2007, DOE 
had carried over about $30 million in unspent funds--$2 million more 
than the $28 million that the Congress had appropriated for the IPP 
program in fiscal year 2007. In fact, as figure 1 shows, for 3 fiscal 
years--2003 through 2005--the amount of unspent funds was more than 
double the amount that the Congress appropriated for the program in 
those fiscal years, although the total amount of unspent funds has been 
declining since its peak in 2003.

Figure 1: Appropriations and Unspent Balances for the IPP Program from 
Fiscal Years 1998 through 2008:

[See PDF for image] 

This figure is a combination line and vertical bar graph depicting 
appropriations and unspent balances for the IPP Program from fiscal 
years 1998 through 2008. The vertical axis of the graph represents 
dollars in millions from 0 to 70. The horizontal axis of the graph 
represents fiscal years 1998 to 2008[A]. The line in the graph depicts 
unspent at start of the fiscal year, while the vertical bars depict 
either appropriated balances or estimated appropriations. The following 
values are approximated from the graph (dollars in millions): 

Fiscal year: 1998; 
Unspent at start of fiscal year: $30; 
Appropriated: $30. 

Fiscal year: 1999; 
Unspent at start of fiscal year: $36; 
Appropriated: $22. 

Fiscal year: 2000; 
Unspent at start of fiscal year: $35; 
Appropriated: $20. 

Fiscal year: 2001; 
Unspent at start of fiscal year: $40; 
Appropriated: $24. 

Fiscal year: 2002; 
Unspent at start of fiscal year: $48; 
Appropriated: $35. 

Fiscal year: 2003; 
Unspent at start of fiscal year: $65; 
Appropriated: $20. 

Fiscal year: 2004; 
Unspent at start of fiscal year: $60; 
Appropriated: $22. 

Fiscal year: 2005; 
Unspent at start of fiscal year: $53; 
Appropriated: $22. 

Fiscal year: 2006; 
Unspent at start of fiscal year: $48; 
Appropriated: $24. 

Fiscal year: 2007; 
Unspent at start of fiscal year: $33; 
Appropriated: $28. 

Fiscal year: 2008; 
Unspent at start of fiscal year: $30; 
Estimated appropriation: $16. 

Source: GAO analysis of DOE data. 

[A] As of November 30, 2007, DOE is operating under a continuing 
resolution. As a result, we used projected IPP program budget data, 
which DOE officials provided to us in May 2007, to estimate the fiscal 
year 2008 appropriation for the IPP program shown in this figure.

[End of figure]

The IPP Program's Persistent Annual Unspent Balances Have Resulted 
Primarily from Multiple Layers of Review and Delays in Project 
Implementation:

Two main factors have contributed to DOE's large and persistent 
carryover of unspent funds: the lengthy and multilayered review and 
approval processes DOE uses to pay IPP project participants for their 
work, and long delays in implementing some IPP projects. DOE identified 
three distinct payment processes that it uses to transfer funds to 
individual scientists' bank accounts in Russia and other countries-- 
ISTC/STCU, CRDF subcontract, and CRDF master contract. These three 
processes involve up to seven internal DOE offices and external 
organizations that play a variety of roles, including reviewing project 
deliverables, approving funds, and processing invoices. DOE officials 
told us that these processes were originally introduced to ensure the 
program's fiscal integrity, but they agreed that it was time to 
streamline these procedures.

Regarding the first payment process, as figure 2 illustrates, before 
payment reaches project participants' bank accounts, it passes from DOE 
headquarters (which includes the IPP program office and NNSA's Budget 
Office), through DOE's Energy Finance and Accounting Service Center, 
which records the obligation of funds. DOE then transfers funding to 
the Oak Ridge Financial Service Center, which pays the invoice by 
transferring funds to ISTC or STCU. The funds arrive at ISTC or STCU, 
which disburses them in quarterly payments to IPP project participants, 
upon receipt of project invoices, quarterly technical reports, and 
documentation from the participating former Soviet Union institutes 
that deliverables were sent to the national laboratories. However, DOE 
and national laboratory officials told us that this payment process has 
limitations. Specifically, these officials told us that if there is a 
problem with a deliverable, it is usually too late for DOE or the 
participating national laboratory to request that ISTC or STCU stop the 
payment to the project participants for the current quarter.

Figure 2: ISTC/STCU Payment Process:

[See PDF for image] 

This figure is a flowchart of the STC/STCU Payment Process. The 
following data is depicted: 

Payments: 
DOE Headquarters: 
Payment: Less than or equal to 30 percent of total, paid to DOE 
national laboratories. 
Payment: Former Soviet Union project funds, greater than or equal to 70 
percent of total, paid to: 
* DOE Energy Finance and Accounting Service Center; 
* DOE Oak Ridge Financial Service Center; 
* ISTC/STCU, Quarterly payments to scientists; 
* Foreign project participants. 

Product or deliverable: 
Foreign project participants sends product or deliverable to DOE 
national laboratories. 

Quarterly technical reports, report of payment, and/or invoices: 
Foreign project participants send quarterly technical report and 
invoices to ISTC/STCU; 
ISTC/STCU send report of payment to DOE Headquarters; 
ISTC/STCU forwards the quarterly technical report to DOE national 
laboratories.

Source: GAO analysis of DOE data. 

[End of figure]

The other two processes that DOE uses to make payments to IPP project 
participants involve CRDF. In most cases, DOE administers the CRDF 
payment process through a subcontract with the participating national 
laboratory. In some rare cases, DOE contracts directly with foreign 
institutes through a CRDF "master contract."[Footnote 18] For projects 
that use CRDF to process payments, the entire amount of project funding 
is first transferred to the participating national laboratory, where it 
is placed in two separate accounts. The first account consists of no 
more than 30 percent of project funding for oversight costs incurred by 
the national laboratory. The second account has all funding for the 
foreign project participants, which is at least 70 percent of project 
funding.

As figure 3 illustrates, before IPP project participants receive 
payment from CRDF, invoices and approvals of deliverables from the 
national laboratories, as well as CRDF forms, are sent to DOE 
headquarters for approval. DOE headquarters reviews the invoices 
against the contract and, if the amounts match, approves them and sends 
documentation to the DOE Procurement Office. DOE headquarters also 
notifies the participating national laboratory of its approval, and the 
laboratory sends the funds listed on the invoices to DOE's Energy 
Finance and Accounting Service Center. The DOE Procurement Office 
approves payment on project invoices and notifies CRDF and DOE's Energy 
Finance and Accounting Service Center that payments should be made. 
Funds are then transferred from the Energy Finance and Accounting 
Service Center to the Oak Ridge Financial Service Center and then to 
CRDF. Once CRDF has received the funds and the necessary approvals from 
DOE, it makes payments to the project participants' bank accounts.

Figure 3: CRDF Payment Process:

[See PDF for image] 

This figure is a flowchart of the CRDF Payment Process. The following 
data is depicted: 

Payments: 
DOE Headquarters: U.S. and former Soviet Union project funds (100 
percent of total), paid to DOE national laboratories (less than 30 
percent of funds used for U.S. expenses); 
DOE national laboratories: Funds sent from account greater than 70 
percent of project funds to DOE Energy Finance and Accounting Service 
Center; 
DOE Energy Finance and Accounting Service Center: sends funds to DOE 
Oak Ridge Financial Service Center; 
DOE Oak Ridge Financial Service Center: send funds to CRDF; 
CRDF: sends funds to Foreign project participants. 

Approval letter, invoices, and CRDF forms: 
DOE Headquarters: sent to DOE Procurement Office; 
DOE Procurement Office: sent to DOE Energy Finance and Accounting 
Service Center and CRDF; 
DOE national laboratories: sent to DOE Headquarters. 

Invoice for deliverable and CRDF forms: 
Foreign project participants: sent to DOE national laboratories. 

Product or deliverable: 
Foreign project participants: sent to DOE national laboratories. 

Source: GAO analysis of DOE data. 

[End of figure]

DOE officials acknowledged the enormity of the problem that the lag 
time between the allocation of funds, placement of contracts, and 
payment for deliverables creates for the IPP program and told us they 
are taking steps to streamline their payment processes. In addition, 
Russian and Ukrainian scientists at 9 of the 22 institutes we 
interviewed told us that they experienced delays in payments ranging 
from 3 months to 1 year. Among the 207 projects we reviewed, we found 
several examples of payment delays. For example:

* In one project on the development and testing of a device to detect 
hidden explosives, the Lawrence Livermore National Laboratory official 
who heads the project told us that the U.S. industry partner had to pay 
Russian scientists' salaries until IPP funding could be released. 
Lawrence Livermore officials involved in this project noted that delays 
in payments to project participants slowed the project's completion.

* Officials at another Russian institute told us about two projects 
that experienced payment delays. On the project to develop nuclear 
material container security devices, they had shipped a deliverable to 
Sandia National Laboratories in October 2006, but it took more than 4 
months for them to receive payment. On the project to produce a new 
computer modeling code for use in Russian nuclear reactor simulators, 
Russian institute officials told us payments were delayed 3 to 4 
months. Officials said that when they asked Brookhaven National 
Laboratory officials about the delay, they were told it was due to 
DOE's complex payment processing systems.

Delays in implementing some IPP projects also contribute to DOE's large 
and persistent carryover of unspent funds. According to officials from 
U.S. industry partners, national laboratories, and Russian and 
Ukrainian institutes, some IPP projects experience long implementation 
delays. As a result, project funds often remain as unspent balances 
until problems can be resolved. For example, the ILAB representative 
from the Argonne National Laboratory told us that, in his experience, 
IPP projects do not finish on schedule about 60 percent of the time 
owing to a variety of problems. These problems include implementation 
issues due to administrative problems, the withdrawal or bankruptcy of 
the U.S. industry partner, and turnover in key project participants. In 
our review of 207 IPP projects, we found several examples of projects 
that had experienced implementation delays. For example:

* One project to produce a low-cost artificial leg for use in 
developing countries had $245,000 in unspent funds as of April 2007--19 
percent of the $1.3 million DOE allocated for the project. Because a 
testing device needed for the project was not properly labeled when it 
was sent from the United States, the Russian Customs Service rejected 
the device. Sandia National Laboratory officials told us that this 
rejection had delayed project implementation for nearly 1 year.

* About 3 years into a project to create banks of chemical compounds 
linked with computer databases for industrial use, the project's U.S. 
industry partner was bought out by a larger company. The amount 
allocated for the project was nearly $1.4 million. The larger company 
lost interest in the project, and, according to the DOE project 
manager, the project sat idle for 3 or 4 years while DOE tried to get 
the company to take action. Ultimately, the project was finished 8 
years after it began.

* Officials at one Russian institute we visited told us another IPP 
project to improve a material to help neutralize radioactive waste had 
experienced delays when the original U.S. industry partner went 
bankrupt, causing the project to be temporarily suspended. According to 
these officials, it took 2 years to find a new U.S. industry partner.

* Brookhaven National Laboratory officials described a delay of more 
than 6 months on a $740,000 project intended to develop new pattern 
recognition software. According to Brookhaven officials, these delays 
were caused by significant personnel turnover at the participating 
Russian institute, mostly through the loss of key personnel who found 
better, higher paying jobs outside of the institute.

DOE Is Implementing a New IPP Program Management System, in Part, to 
Address Problems with Large Balances of Unspent Funds:

DOE is implementing a new system designed to better manage IPP 
projects' contracts and finances. DOE officials told us that this 
action was undertaken in response to a recommendation we made in 2005 
to improve the management and internal controls at NNSA. Specifically, 
we recommended in our August 2005 report, among other things, that 
NNSA's program managers maintain quick access to key contract records, 
such as deliverables and invoices that relate to management controls, 
regardless of whether the records are located at a national laboratory 
or headquarters.[Footnote 19] Following our 2005 report, in 2006, DOE 
initiated an extensive review of IPP financial and procurement 
procedures at participating national laboratories. DOE and national 
laboratory officials told us that representatives from the IPP program 
office visited all of the participating national laboratories, except 
for the Kansas City Plant, and worked with each laboratory's financial 
department to find ways to reduce unspent funds.[Footnote 20] DOE 
officials told us that, as a result, they were able to redirect about 
$15 million in unspent program funds for immediate use on existing IPP 
projects.

In addition, DOE officials said that they have imposed new management 
controls to address project delays and reduce balances of unspent 
funds. These controls include implementing a management reengineering 
plan and enforcing control mechanisms, called "sunset" provisions, 
which require national laboratory officials to justify continuing any 
IPP project that experiences an implementation delay of 6 to 8 months. 
DOE has also begun to implement its new Expertise Accountability Tool 
(EXACT), a project and information management system that it launched 
in October 2006. DOE expects to fully implement the EXACT system in 
2008--14 years after the start of the IPP program. According to DOE 
officials, EXACT will allow instant sharing of IPP project data between 
DOE and the participating national laboratories. DOE officials believe 
that the EXACT system will allow the IPP program office to better 
monitor and oversee the progress of IPP projects at the national 
laboratories, including reviews of IPP project participants' WMD 
backgrounds and tracking unspent funds at the national laboratories.

Conclusions:

In our view, the purpose and need for the IPP program must be 
reassessed. We believe that DOE has failed to clearly articulate the 
current threat posed by WMD scientists in Russia and other countries 
and has not adjusted the IPP program to account for the changed 
economic landscape in the region and improved conditions at many of the 
institutes involved in the program. Instead, DOE has continued to 
emphasize a broad strategy of engagement with foreign scientists and 
institutes, much as it did more than a decade ago, and it has not 
developed comprehensive plans for focusing on the most at-risk 
individuals and institutes or for developing an end-game for the 
program. We believe that DOE's inability to establish a clear exit 
strategy for the IPP program has contributed to a perception among 
foreign recipients that the program is essentially open-ended, 
represents an indefinite commitment of U.S. support, and serves as a 
useful marketing tool to attract and retain young scientists who might 
otherwise emigrate to the United States or other western countries.

We believe that it is time for DOE to reassess the program to explain 
to the Congress how the program should continue to operate in the 
future or to discuss whether the program should continue to operate at 
all. Without a reassessment of the program's objectives, metrics, 
priorities, and exit strategy, the Congress cannot adequately determine 
at what level and for how long the program should continue to be 
supported. We believe that such a reassessment presents DOE with an 
opportunity to refocus the program on the most critical remaining 
tasks, with an eye toward reducing the program's scope, budget, and 
number of participating organizations.

Beyond reassessing the continuing need for the IPP program, a number of 
management problems are negatively affecting the program. Specifically:

* The fact that DOE has paid many scientists who claimed no WMD 
expertise is particularly troubling and, in our view, undermines the 
IPP program's credibility as a nonproliferation program. The lack of 
documentation of DOE's review of IPP project participants also raises 
concerns.

* DOE does not have reliable data on the commercialization results of 
IPP projects or a clear definition of what constitutes a commercially 
successful IPP project, preventing it from providing the Congress with 
a more accurate assessment of the program's results and purported 
benefits.

* Regarding its efforts to expand the IPP program, DOE's projects in 
Iraq and Libya represent a significant departure from the program's 
original focus on the countries of the former Soviet Union. While there 
may be sound national security reasons for expanding efforts to these 
countries, we are concerned that, unlike other federal agencies, DOE 
did not receive explicit authorization from the Congress before 
expanding its program outside of the former Soviet Union. Furthermore, 
in its efforts in Libya, DOE is not adhering to its own guidance 
restricting the percentage of IPP program funds that can be spent at 
DOE's national laboratories on oversight activities.

* The lack of clear, written guidance for IPP projects intended to 
support GNEP has led to confusion among national laboratory officials 
who implement the IPP program.

* Regarding the financial state of the IPP program, DOE's long-standing 
problem with large balances of unspent program funds raises serious 
concerns about DOE's ability to spend program resources in a timely 
manner and about the method DOE uses to develop requests for future 
budgets. Reform of the complex payment system used by the IPP program 
to pay foreign scientists could help address some of these concerns.

* Because Russian scientists and institutes benefit from the IPP 
program, it seems appropriate that DOE should seek to take advantage of 
Russia's improved economic condition to ensure a greater commitment to 
jointly held nonproliferation objectives.

* The absence of a joint plan between DOE's IPP program and ISTC's 
Commercialization Support Program, which is funded by State, raises 
questions about the lack of coordination between these two U.S. 
government programs that share similar goals of finding peaceful 
commercial opportunities for foreign WMD scientists.

Recommendations for Executive Action:

We recommend that the Secretary of Energy, working with the 
Administrator of the National Nuclear Security Administration, reassess 
the IPP program to justify to the Congress the continued need for the 
program. Such a reassessment should, at a minimum, include a thorough 
analysis of the proliferation risk posed by weapons scientists in 
Russia and other countries; a well-defined strategy to more effectively 
target the scientists and institutes of highest proliferation concern; 
more accurate reporting of program accomplishments; and a clear exit 
strategy for the IPP program, including specific criteria to determine 
when specific countries, institutes, and individuals are ready to 
graduate from participation in the IPP program. This reassessment 
should be done in concert with, and include input from, other federal 
agencies, such as State; the U.S. intelligence community; officials in 
host governments where IPP projects are being implemented; the U.S. 
business community; and independent U.S. nongovernmental organizations.

If DOE determines that the program is still needed, despite the 
increased economic prosperity in Russia and in light of the general 
trend toward cost-sharing in U.S. nonproliferation programs in that 
country, we recommend that the Secretary of Energy, working with the 
Administrator of the National Nuclear Security Administration, seek a 
commitment for cost-sharing from the Russian government for future IPP 
projects at Russian institutes.

To address a number of management issues that need to be resolved so 
that the IPP program operates more effectively, we recommend that the 
Secretary of Energy, working with the Administrator of the National 
Nuclear Security Administration, immediately take the following eight 
actions:

* establish a more rigorous, objective, and well-documented process for 
verifying the WMD backgrounds and experiences of participating foreign 
scientists;

* develop more reliable data on the commercialization results of IPP 
projects, such as the number of jobs created;

* amend IPP program guidance to include a clear definition of what 
constitutes a commercially successful IPP project;

* seek explicit congressional authorization to expand IPP efforts 
outside of the former Soviet Union;

* for IPP efforts in Libya, ensure compliance with the statutory 
restriction on the percentage of IPP program funds spent on oversight 
activities at the DOE national laboratories to no more than 35 percent;

* develop clear and specific guidance for IPP projects that are 
intended to support GNEP;

* streamline the process through which foreign scientists receive IPP 
funds by eliminating unnecessary layers of review; and:

* seek to reduce the large balances of unspent funds associated with 
the IPP program and adjust future budget requests accordingly.

Finally, we recommend that the Secretaries of Energy and State, working 
with the Administrator of the National Nuclear Security Administration, 
develop a joint plan to better coordinate the efforts of DOE's IPP 
program and ISTC's Commercialization Support Program, which is funded 
by State.

Agency Comments and Our Evaluation:

DOE and State provided written comments on a draft of this report, 
which are presented in appendixes V and VI, respectively. DOE agreed 
with 8 of our 11 recommendations to improve the overall management and 
oversight of the IPP program, including augmenting the department's 
process for reviewing the WMD backgrounds of IPP project participants 
and developing more reliable data on the commercialization results of 
IPP projects. DOE disagreed with 2 of our recommendations and neither 
agreed nor disagreed with 1 recommendation. In addition, State 
concurred with our recommendation to improve coordination between DOE's 
IPP program and ISTC's Commercialization Support Program, which is 
funded by State. DOE and State also provided technical comments, which 
we incorporated in this report as appropriate.

In its comments on our draft report, DOE raised concerns about our 
characterization of the IPP program's accomplishments, requirements, 
and goals. DOE stated that we did not acknowledge actions the 
department was undertaking during the course of our review and asserted 
that our report does not provide a balanced critique of the IPP program 
because we relied on an analysis of a judgmental sample of IPP projects 
to support our findings. DOE also disagreed with our general conclusion 
and recommendation that the IPP program needs to be reassessed. In 
addition, DOE did not concur with our recommendation that the 
department ensure compliance with the statutory restriction on the 
percentage of IPP program funds spent on oversight activities at the 
DOE national laboratories to no more than 35 percent. DOE neither 
agreed nor disagreed with our recommendation that the department seek a 
commitment for cost-sharing from the Russian government for future IPP 
projects at Russian institutes.

DOE is incorrect in its assertions that we failed to acknowledge 
actions it was undertaking during the course of our review, and that 
our report does not provide a balanced critique of the IPP program. Our 
report acknowledges actions DOE is taking to improve program 
management, such as the development of a new program and financial 
management system. Our review identified numerous problems and raised 
concerns about the IPP program's scope, implementation, and performance 
that we believe should be addressed by DOE as part of a reassessment of 
the IPP program. However, DOE disagreed with our recommendation that 
the IPP program needs to undergo such a reassessment and noted in its 
comments that the department believes it has already conducted such an 
assessment of the program. We were aware that such broad internal 
reviews took place in 2004 and 2006, but these assessments were 
conducted not of the IPP program exclusively, but rather of all DOE 
efforts to assist weapons scientists, including a complementary DOE 
program to assist workers in Russia's nuclear cities that has since 
been canceled. As a result, we believe these assessments are outdated 
because the IPP program operates under a significantly different set of 
circumstances today than when DOE conducted its previous internal 
assessments.

Finally, DOE disagreed with our recommendation that the department 
ensure compliance with the statutory restriction on the percentage of 
IPP program funds spent on oversight activities at the DOE national 
laboratories to no more than 35 percent. We believe DOE has 
misconstrued our recommendation concerning its funding of projects in 
Libya. We did not recommend, nor did we mean to imply, that DOE should 
allocate 65 percent of total project funds to Libya for projects in 
that country. Instead, our recommendation urges the department to 
ensure that it complies with existing statutory restrictions on the 
percentage of IPP funds that can be spent on oversight activities by 
DOE national laboratories. Specifically, as DOE notes, section 3136 of 
the National Defense Authorization Act for Fiscal Year 2000 provides 
that not more than 35 percent of funds available in any fiscal year for 
the IPP program may be spent by DOE national laboratories to provide 
oversight of program activities. DOE's IPP guidance and its standard 
practice have been to implement this provision of law on a project-by- 
project basis, so that no more than 35 percent of the funds for each 
project are spent by national laboratories. However, with respect to 
projects in Libya, DOE is deviating from its IPP guidance by placing no 
restrictions on the amount of IPP program funds that can be spent at 
DOE national laboratories for oversight of projects in Libya. We found 
that 97 percent of funds DOE spent on projects in Libya through May 
2007 were spent at DOE's national laboratories for project management 
and oversight. (See app. V for DOE's comments and our responses.)

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to interested congressional committees; the Secretaries of Energy and 
State; the Administrator, National Nuclear Security Administration; and 
the Director, Office of Management and Budget. We will also make copies 
available to others upon request. In addition, this report will be made 
available at no charge on the GAO Web site at [hyperlink 
http://www.gao.gov].

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Major contributors to this report are 
included in appendix VII.

Sincerely yours, 

Signed by: 

Gene Aloise: 
Director, Natural Resources and Environment: 

[End of section]

Appendix I: Scope and Methodology:

To review the Initiatives for Proliferation Prevention (IPP) program, 
we interviewed key officials and analyzed documentation, such as 
program guidance, project proposals, and financial information from the 
Departments of Energy (DOE), Defense, and State (State). We also 
interviewed representatives from each of the 12 national laboratories-
-the Argonne, Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, 
Los Alamos, National Renewable Energy, Oak Ridge, Pacific Northwest, 
Sandia, and Savannah River National Laboratories and the Kansas City 
Plant--that participate in the IPP program. Our interviews focused on 
general program plans, strategies, and policies as well as issues 
associated with specific IPP projects. We also interviewed and reviewed 
documentation provided by the U.S. Civilian Research and Development 
Foundation (CRDF) in Arlington, Virginia; the International Science and 
Technology Center (ISTC) in Moscow, Russia; and the Science and 
Technology Center in Ukraine (STCU) in Kyiv, Ukraine. We analyzed cost 
and budgetary information from DOE, DOE's national laboratories, CRDF, 
ISTC, and STCU. Furthermore, we interviewed knowledgeable officials on 
the reliability of these data, including issues such as data entry, 
access, quality control procedures, and the accuracy and completeness 
of the data. We determined that these data were sufficiently reliable 
for the purposes of this review.

We visited Russia and Ukraine to discuss the implementation of the IPP 
program with officials and personnel involved in IPP projects. While in 
Russia and Ukraine, we interviewed officials from 15 Russian and 7 
Ukrainian institutes that participate in the IPP program. We met with 
officials from the Federal Agency for Atomic Energy of the Russian 
Federation, which oversees institutes involved in Russia's nuclear 
weapons program. We also spoke with officials from the U.S. embassies 
in Moscow and Kyiv.

Furthermore, we interviewed officials from 14 U.S. companies that 
participate in the IPP program to better understand their perspectives 
on the program's goals, benefits, and challenges, and the results of 
specific projects for which they have served as industry partners. We 
interviewed the principal staff of the U.S. Industry Coalition, which 
represents companies that participate in the IPP program. We also met 
with 5 nongovernmental experts who have followed developments in the 
IPP and related nonproliferation programs to get their views on the 
program.

To assess the reported accomplishments of the IPP program, we 
judgmentally selected for in-depth review 207 IPP projects, including 
draft, active, inactive, and completed projects, in the Thrust 1, 
Thrust 2, and Thrust 3 categories. These 207 projects represented over 
22 percent of the 929 total IPP projects through September 2007. Of the 
projects that we reviewed, 180 were with Russia, 21 were with Ukraine, 
3 were with Kazakhstan, and 3 were with Armenia.[Footnote 21] Because 
these projects were a judgmental sample, the findings associated with 
them cannot be applied generally to the IPP program as a whole.

We used the IPP information system to identify and select IPP projects. 
This database, also referred to by DOE as the "Lotus Notes" system, was 
developed and maintained by the Los Alamos National Laboratory and is 
considered the program's project proposal management system. The system 
contains data on all IPP projects, from draft proposals to completed 
projects, and includes such information as the project description, 
statement of work, information on participating scientists in the 
former Soviet Union and the U.S. industry partner, and financial 
expenditures. DOE notified us that it was developing a new IPP project 
management database, known as the Expertise Accountability Tool 
(EXACT), and that some IPP project information contained in Lotus 
Notes--especially pertaining to project expenditures and the number of 
scientists supported--might not be current, accurate, or complete. 
However, DOE officials told us that the EXACT system was not available 
during our project selection phase, and that it would not contain 
information on completed IPP projects. As a result, we used the Lotus 
Notes database to make our project selection.

We selected projects on the basis of a number of criteria, such as 
project status, project funding, the type of institute involved in the 
project, geographic distribution, national laboratory representation, 
and the claimed commercial success of the project. We also received and 
used recommendations from DOE on criteria to consider in selecting 
projects for review.

The status and dollar size of IPP projects were significant 
considerations in our project selection. For example, we focused 
primarily on active projects--that is, Thrust 2 projects that were 
approved, funded, or under way--regardless of their dollar value. We 
also considered draft and inactive Thrust 2 projects where proposed 
funding was over $800,000, as well as completed Thrust 1 and Thrust 2 
projects that spent over $250,000. We also selected projects for review 
across a variety of institutes in the former Soviet Union, including 
facilities with backgrounds in nuclear, chemical, biological, and 
missile research and development.

The foreign countries and institutes where we planned to conduct 
fieldwork also played a significant role in our project selection. Time 
and cost constraints, as well as Russian government restrictions on 
access to some facilities, limited the number and types of sites we 
were able to visit. We concentrated on projects at institutes in Russia 
and Ukraine because over 90 percent of all IPP projects are in these 
two countries. We focused on IPP projects at institutes in the Russian 
cities of Moscow, Nizhny Novgorod, and Sarov because these cities 
ranked high in our analysis of several variables, including the total 
number of IPP projects, the number of projects supporting commercial 
activities, and the total amount of funding proposed in IPP projects in 
those locations.[Footnote 22] We also focused on projects in the 
Ukrainian cities of Kyiv, because over 54 percent of IPP projects in 
Ukraine are there, and Kharkiv, because of its relative proximity to 
Kyiv and the number of projects there. We selected institutes in the 
Russian and Ukrainian cities for site visits on the basis of several 
criteria, including the total number of projects, the number of active 
projects, the type of institute, and the number of projects 
commercialized at each location.

We also selected projects administered by each of the national 
laboratories and the Kansas City Plant that participate in the program 
as well as projects managed by DOE headquarters. The selected projects 
included 18 projects at Argonne, 22 at Brookhaven, 8 at Idaho, 18 at 
Lawrence Berkeley, 33 at Lawrence Livermore, 14 at Los Alamos, 11 at 
National Renewable Energy, 12 at Oak Ridge, 41 at Pacific Northwest, 15 
at Sandia, and 2 at Savannah River; 9 projects at the Kansas City 
Plant; as well as 4 projects managed by DOE headquarters.

The commercial success of an IPP project also played an important role 
in its selection. For example, we selected for review all 50 projects 
that DOE indicated as having led to commercially successful ventures 
identified in its Fiscal Year 2005 IPP Program Annual Report. We were 
able to review 48 of the 50 commercially successful projects with the 
sponsoring national laboratory, Russian or Ukrainian institute, or 
industry partner or some combination of these three entities. We also 
reviewed 11 IPP projects that had been identified as commercially 
successful in prior year annual reports, but that were not addressed in 
the fiscal year 2005 report.

To assess the nonproliferation impact of the IPP program, we requested 
and evaluated available information on the personnel at institutes in 
the countries of the former Soviet Union participating in the projects 
we selected for review. To determine the percentage of personnel 
without weapons of mass destruction (WMD) experience, we added the 
total number of project personnel who did not claim prior WMD 
experience--based on the WMD experience codes the project personnel 
self-declared to one of the three IPP payment systems--and divided this 
figure against the total number of project participants. We followed a 
similar process to calculate the percentage of older personnel versus 
younger personnel. We classified workers born in 1970 or later as 
younger workers because they were unlikely to have contributed to 
Soviet-era WMD programs. We also calculated the total amount of funds 
paid to these four different categories of participants--those claiming 
WMD experience, those who did not, older workers, and younger 
participants. In some cases, birth dates were not available for some 
participants in the documentation we received; in those instances, 
those individuals and the payments made to them were tracked in 
separate categories.

We collected this information by providing officials at each of the 12 
participating national laboratories with a template, requesting that 
the laboratory project leader provide information on the personnel 
involved in each project in our sample, including each participant's 
full name, institute affiliation, date of birth, WMD experience, and 
amount paid under the project. In instances where we did not receive 
complete information from the laboratories, we used payment records and 
other information on IPP project participants maintained by the three 
payment mechanisms--CRDF, ISTC, and STCU--to complete data missing from 
the templates, or to reconstruct payment records for the project 
participants in cases where the national laboratory did not provide any 
information on the project participants. Because of potential data 
reliability concerns raised by CRDF on older IPP projects for which it 
processed payments, we consulted with CRDF representatives and received 
recommendations on specific projects that we should exclude from our 
analysis.

Among the 207 IPP projects we reviewed, no payments had yet been made 
on 42 projects and 14 projects were inactive. Of the remaining 151 IPP 
projects in our sample, we determined that 54 projects were too old for 
evaluation, because DOE did not collect rosters of individual project 
participants before 2000, or that sufficient and reliable information 
on the project participants was not readily available. Thus, our review 
of the backgrounds of the participants was conducted on 97 of the 207 
projects in our sample.

To assess the commercial results of IPP projects, we reviewed 48 of the 
50 projects that contributed to the commercial successes presented in 
DOE's fiscal year 2005 annual report for the IPP program, which was the 
most recent report available at the time of our review. DOE provided us 
with the list of IPP projects associated with those commercial 
successes, and we reviewed and evaluated the raw data collected by the 
U.S. Industry Coalition for each of those projects in its 2005 
commercial success survey, which DOE used as the basis for the 
commercial successes cited in its fiscal year 2005 IPP annual report. 
In addition, for the 48 commercially successful projects we reviewed, 
we interviewed representatives from the sponsoring national laboratory, 
Russian or Ukrainian institute, or industry partner or some combination 
of these three entities to understand the commercial activities and 
other details associated with these projects. Specifically, we (1) met 
or conducted telephone interviews with 12 companies involved in the 
commercially successful projects, (2) interviewed representatives at 
the national laboratories for 46 of the 50 projects reported to be 
commercially successful, and (3) visited 6 of the institutes in Russia 
and Ukraine where IPP projects were reported to have been 
commercialized.

To assess the IPP program's future, we interviewed DOE and national 
laboratory officials. We also assessed State's planned exit strategy 
for its Science Centers program. We discussed State's strategy with 
DOE, State, and ISTC officials. Regarding the IPP program's expansion, 
we met with officials and reviewed documentation from DOE, State, and 
the Lawrence Livermore, National Renewable Energy, and Sandia National 
Laboratories concerning the engagement of former weapons scientists in 
Iraq and Libya. Regarding the program's support to the Global Nuclear 
Energy Partnership, we reviewed documents and interviewed officials 
from the IPP program office, DOE national laboratories, and DOE's 
Office of Nuclear Energy.

To assess the extent to which the IPP program has had annual carryover 
balances of unspent funds and the reasons for such carryover, we 
obtained financial data from DOE's IPP program office, DOE's National 
Nuclear Security Administration's (NNSA) budget and finance office, and 
the national laboratories participating in the program. We discussed 
and reviewed these data with budget and program analysts at the IPP 
program office and NNSA's budget and finance office. In addition, we 
interviewed knowledgeable officials on the reliability of these data, 
including issues such as data entry, access, quality control 
procedures, and the accuracy and completeness of the data. We 
determined that these data were sufficiently reliable for the purposes 
of this review.

We conducted our review from October 2006 through December 2007 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Additional Information on the Russian and Ukrainian 
Institutes That We Included in Our Fieldwork:

During our review of the DOE's IPP program, we interviewed officials 
from 15 institutes in Russia and 7 in Ukraine in July 2007.

Russian Institutes:

In July 2007, we met with Russian scientists and officials from 
institutes in Moscow, Nizhny Novgorod, Pushchino, and Troitsk, Russia, 
to discuss draft, active, inactive, and completed IPP projects.

Center for Ecological Research and BioResources Development:

The Center for Ecological Research and BioResources Development was 
established in 2000 through a $1.5 million grant from the IPP program. 
It focuses on the discovery of novel bioactive compounds, biodiversity 
collection and identification, and environmental bioremediation. The 
center comprises 9 research institutes and is connected with 30 
laboratories, with about 300 scientists. The center's role is to 
coordinate the activities of the member institutes, organize workshops 
and visits, consult on the administration of IPP projects, provide 
report editing and translation, perform financial reporting and 
examinations, and export biomaterials to the United States and 
elsewhere. The center has shipped over 50,000 biological samples. We 
discussed 5 IPP projects, including 2 completed, 2 active, and 1 draft 
project. When we discussed IPP projects with the center, 
representatives from 2 partner institutes--the Institute of 
Biochemistry and Physiology of Microorganisms and the Scientific Center 
for Applied Microbiology and Biotechnology--were also present.

Gamaleya Scientific Research Institute of Epidemiology and Microbiology:

The Gamaleya Scientific Research Institute of Epidemiology and 
Microbiology was founded in 1891 for research into infectious diseases 
in humans and manufactures more than 40 different pharmaceutical 
products, including a tuberculosis vaccine. Gamaleya officials told us 
that the institute employs 800 staff, including 120 scientists and 680 
technicians and administrative personnel. We visited the institute 
during our first audit of the IPP program in 1999. We spoke with 
Gamaleya officials about 3 completed IPP projects. The institute is 
involved in marketing a veterinary drug and is just starting to market 
an antiparasite drug for honeybees. The third project is expected to 
produce a marketable product in 2 to 3 years.

Institute for Nuclear Research of the Russian Academy of Sciences:

The Institute for Nuclear Research of the Russian Academy of Sciences, 
with branches in Moscow and Troitsk, was founded in 1970 to further 
development of fundamental research activities in the field of atomic, 
elementary particle, and cosmic ray physics and neutrino astrophysics. 
The institute, with a staff of about 1,300 specialists, was formed from 
3 nuclear laboratories of the P.N. Lebedev Institute of Physics of the 
former Soviet Union's National Academy of Sciences. About 600 people 
work in the Troitsk branch of the institute. We spoke with institute 
officials at this branch about 5 IPP projects--4 completed and 1 
active. During the first audit of DOE IPP programs, in 1999, we visited 
the Moscow branch of this institute.

Institute of Applied Physics of the Russian Academy of Sciences:

The Institute of Applied Physics of the Russian Academy of Sciences in 
Nizhny Novgorod became an independent research facility in 1977. During 
this time, its primary focus was working with transmitting and 
detecting waves through different matters; in practical terms, this 
included work for the Soviet military on radar tracking of missiles and 
supporting Russian missile defense, materials science applications in 
radioelectronic equipment, and submarine detection using radar. 
Institute officials told us that since the beginning of the 1990s, the 
institute has reduced its staff from about 2,000 employees, to roughly 
1,100. However, it has retained a large number of top-level researchers 
despite the fact that defense orders plummeted to zero. Officials told 
us that the institute was in good shape today, has adapted to the 
changing environment, and has created several successful spin-off 
companies. We discussed 4 IPP projects with institute officials--1 
completed, 1 active, and 2 draft.

Institute of Biochemistry and Physiology of Microorganisms:

The Institute of Biochemistry and Physiology of Microorganisms is 1 of 
4 research institutes that make up the Center for Ecological Research 
and BioResources Development. This institute is not a weapons institute 
and never had a role in the Soviet biological weapons program. However, 
institute officials noted that some scientists at the institute had 
come from other institutes that were involved in biological warfare 
research. The institute is home to the "All Russia Biological Culture 
Collection." We discussed 3 IPP projects--1 completed, 1 active, and 1 
draft--with officials from the institute. These were 3 of the 4 IPP 
projects we discussed at the Center for Ecological Research and 
BioResources Development.

Institute of General Physics of the Russian Academy of Sciences:

The Institute of General Physics of the Russian Academy of Sciences was 
founded in 1983 by Nobel Prize winner Academician A.M. Prokhorov, who 
headed it until 1998 and now serves as the institute's honorary 
director. The institute began as Division "A" of the Lebedev Physical 
Institute. It currently consists of 13 research departments and 5 
research centers: (1) natural sciences, (2) laser materials and 
technologies, (3) wave research, (4) fiber optics, and (5) physical 
instrumentation. The institute has a staff of 1,264, including 600 
researchers. Its principal research areas encompass quantum electronics 
and optics, solid state physics, micro-and nanoelectronics, integral 
and fiber optics, plasma physics and photoelectronics, radio physics 
and acoustics, laser medicine, and ecology. We discussed 6 IPP projects 
with institute officials--4 completed and 2 active.

Krasnaya Zvezda (Red Star):

Krasnaya Zvezda was established in 1972 to combine other organizations 
that employed designers, developers, and manufacturers of space-based 
nuclear power systems. Krasnaya Zvezda officials told us that they 
continue to do some defense-related work. However, the institute now 
mostly focuses on the civilian sector and work on civilian nuclear 
energy projects, including radioactive waste management at civilian 
nuclear power plants. The financial situation has been relatively 
steady over the past years and officials anticipate that with the 
reorganization of the Federal Agency for Atomic Energy of the Russian 
Federation, Krasnaya Zvezda will be involved in many future civilian 
nuclear energy contracts. Krasnaya Zvezda maintains a close 
relationship with the Kurchatov Institute. We discussed 5 IPP projects-
-3 completed and 2 draft--with Krasnaya Zvezda officials.

Kurchatov Institute:

The Kurchatov Institute is one of Russia's leading nuclear research 
institutes. Through the mid-1950s, defense activities represented more 
than 80 percent of the institute's budget. By 1965, the defense portion 
had been reduced to about 50 percent, and, although Kurchatov has 
scientists who were involved with nuclear weapons programs in the past, 
today there are virtually no defense-related contracts. The institute 
conducts research on controlled thermonuclear fusion, plasma physics, 
solid state physics, and superconductivity. It designs nuclear reactors 
for the Russian Navy, the Russian icebreaker fleet, and space 
applications. Nuclear experts from the Kurchatov Institute have helped 
set up and operate Soviet-exported research reactors, including one at 
Libya's Tajura nuclear research center. In addition, the Kurchatov 
Institute is the subcontractor for DOE's Material Protection, Control, 
and Accounting program with the Russian Navy and icebreaker fleet. We 
discussed 10 IPP projects with Kurchatov officials--7 completed and 3 
active. In 1999, we visited the Kurchatov Institute during our first 
audit of DOE's IPP program.

Moscow State University:

One of the oldest Russian institutions of higher education, Moscow 
State University was established in 1755. According to DOE and national 
laboratory officials, Moscow State University departments of physics, 
chemistry, and biology were involved in research related to WMD. 
Specifically, according to DOE, when the Soviet Ministry of Defense 
needed certain expertise or research done, it called upon individuals 
at academic institutions, such as Moscow State University. We discussed 
1 project DOE subsequently canceled and 1 draft IPP project with Moscow 
State University officials.

Radiophysical Research Institute:

The Radiophysical Research Institute of the Ministry of Education and 
Science was founded in 1956 in Nizhny Novgorod. Since then outreach 
efforts have been directed toward (1) supporting research in the fields 
of natural sciences and astronomy and (2) expanding interest in 
research work in such areas as astronomy, solar physics, the 
relationship between the Sun and the Earth, and the associated 
geophysics. We spoke with an official from the Radiophysical Research 
Institute, who was present during our interview with officials from the 
Scientific Research Institute of Measuring Systems. We discussed 1 
project that ended in 2002 with this official.

Scientific Research Institute of Measuring Systems:

The Scientific Research Institute of Measuring Systems in Nizhny 
Novgorod, Russia, was established in 1966 to develop and produce 
electronics to support industry enterprises, including nuclear power 
plants as well as nuclear research and developments. Today, the 
institute researches, designs, and manufactures computer and 
semiconductor equipment, mostly for use in the Russian energy industry. 
The institute also develops and manufactures software and control 
systems for gas lines, and thermal and nuclear power stations. We 
discussed 3 IPP projects with officials--1 active and 2 completed 
projects.

Afrikantov Experimental Machine Building Design Bureau:

The State Unitary Enterprise I.I. Afrikantov Experimental Machine 
Building Design Bureau was founded in 1947 as a component of the Gorky 
Machine Building Plant Design Bureau to create equipment for nuclear 
industry. Later, as the mission expanded to the creation of various 
nuclear reactors, the design bureau was separated from the Gorky 
Machine Building Plant. Currently, the Afrikantov Experimental Machine 
Building Design Bureau employs about 3,400 staff and is one of the lead 
design organizations in the industry, supporting a large scientific and 
production center for nuclear power engineering. Since the 1960s, the 
institute has been the chief designer of ship-based reactor plants and 
fast neutron reactors. One of the institute's significant achievements 
is the creation of innovative integral reactors with natural and forced 
coolant circulation. The institute actively participates in the 
creation of nuclear power installations abroad and has scientific and 
technical cooperative arrangements with the International Atomic Energy 
Agency, and national laboratories and companies in China, France, 
India, Japan, South Korea, and the United States. We discussed 2 draft 
IPP projects with officials from the institute.

Soliton-NTT Research Center:

Soliton is a private company that was spun off from the Kurchatov 
Institute in the early 1990s. Soliton was formed by scientists from the 
Kurchatov Institute to convert defense technologies to civil purposes 
and to commercialize these technologies. Before working for Soliton, 
many Soliton employees were involved in weapons-related activities at 
the Kurchatov Institute, and most still retain some ties to Kurchatov. 
Soliton has official permission to use scientists from other institutes 
as part of the effort to commercialize former weapons laboratories. 
Soliton was organized so that small-scale nonweapons projects could be 
undertaken using the talents of several weapons scientists from a 
variety of institutes. We discussed 6 IPP projects with Soliton 
officials--5 completed and 1 active.

Russian Federal Nuclear Center--All-Russian Scientific Research 
Institute of Experimental Physics:

In 1946, the Soviet government established the All-Russian Scientific 
Research Institute of Experimental Physics in Sarov, where the first 
Soviet nuclear bomb was designed and assembled. In Soviet times, the 
institute's mission included the design of nuclear warheads and the 
development of experimental and prototype warheads. Today, the safety 
and reliability of the Russian nuclear stockpile are the institute's 
primary missions. According to information provided by the institute, 
since 1990, it has increasingly developed international collaboration 
in unclassified science and technology areas. The institute employs 
about 24,000 people, approximately half of whom are scientists or 
engineers, and is the largest research institution in Russia that 
successfully handles defense, science, and national economic problems. 
Under the current nuclear testing moratorium, nuclear weapons research 
and development activities are concentrated at computational and 
theoretical, design, and test divisions of the institute. During our 
earlier audit of DOE's IPP program, we interviewed officials from this 
institute in 1998. We discussed 10 IPP projects--5 active and 5 
completed--with institute officials.

Zelinsky Institute of Organic Chemistry:

The Zelinsky Institute of Organic Chemistry of the Russian Academy of 
Sciences, founded in 1934, is one of the world's largest scientific 
centers in the fields of organic chemistry, organic catalysis, and 
chemistry of biologically active compounds. It employs about 600 
people, although it had over 1,300 at its peak in the 1980s. In 
addition, about 150 students are engaged in graduate studies at the 
institute. Officials told us that until the early 1990s, the institute 
was involved in some defense-related activities, but it has not been 
involved in any WMD-related work since the early 1990s. The institute 
mostly worked on research related to high explosives and solid rocket 
fuel (not chemical weapons). We discussed 3 IPP projects--2 completed 
and 1 canceled--with institute officials.

Ukrainian Institutes:

While in Ukraine, we met with representatives from 7 institutes based 
in Dnipropetrovsk, Kharkiv, and Kyiv and discussed 18 IPP projects with 
scientists and institute officials.

E.O. Paton Electric Welding Institute:

The E.O. Paton Electric Welding Institute was founded in 1934, and has 
become one of the largest research institutes in the world, with about 
8,000 employees (3,000 at the headquarters in Kyiv). The institute is a 
multidisciplinary scientific and technical complex involved in 
fundamental and applied research in the field of welding and related 
technologies; development of technologies, materials, equipment, and 
control systems; rational welded structures and parts; and methods and 
means for diagnostics and nondestructive testing. The institute 
undertakes research in all phases of electric welding and certain 
specialized related processes, such as brazing, explosive forming, 
electrometallurgy, and friction welding. The institute's work covers 
welding of virtually all metals and alloys as well as ceramics in 
thicknesses varying from submicron to tens of centimeters. The 
institute also develops welding equipment, manufactures pilot plants, 
and develops welding consumables. We discussed 7 IPP projects--4 
completed and 3 active--with E.O. Paton officials and Pratt and Whitney 
Kyiv employees at 3 Paton facilities in Kyiv.

International Center for Electron Beam Technology:

The International Center for Electron Beam Technology is a spin-off 
institute from the E.O. Paton Welding Institute and is located nearby 
in Kyiv. The center derives more than half of its funding from IPP 
funds and was created in the early 1990s by Paton employees 
specifically to take on projects with international organizations. 
According to institute officials, they do not receive any funding for 
their activities from the Ukrainian government. However, they also told 
us that financially, their situation is much better than 14 years ago, 
but that all of their research equipment is out of date. All of the IPP 
funds are used to pay scientists' salaries, and they do not have other 
funds for new equipment. We discussed 2 IPP projects--1 completed and 1 
active--during the interview.

Institute for Metal Physics:

The Institute for Metal Physics is part of the Ukrainian Academy of 
Sciences and employs about 600 staff--about half researchers and half 
support staff. The number of staff is down from a peak of 1,600 in 
Soviet times but has been stable for the past 5 to 6 years, according 
to institute officials. These officials told us that during the Soviet 
era, about 80 percent of the institute's work was related to missile 
delivery systems. The institute became completely divorced from weapons 
work in the mid 1980s. Today, virtually all work is commercial. During 
our visit, we discussed 1 active IPP project.

International Institute of Cell Biology:

The International Institute of Cell Biology is a nonprofit entity 
founded in 1992 by the Ukrainian Academy of Sciences. The International 
Institute of Cell Biology employs about 150 people, about one third of 
whom have doctorates. It is closely affiliated with the Institute of 
Cell Biology and Genetic Engineering, founded in 1988, and the 
Institute of Microbiology and Virology founded in 1928. The Institute 
of Cell Biology and Genetic Engineering is one of the key laboratories 
involved with plant genetic engineering in the former Soviet Union and 
offers substantial expertise in tissue culture initiation, preservation 
and maintenance, and gene transfer and expression. The Institute of 
Microbiology and Virology, with about 300 scientists, hosts the second 
largest collection of microorganisms in the countries of the former 
Soviet Union. The official we interviewed told us that the Institute of 
Microbiology and Virology was involved in defense efforts involving 
biological agents during Soviet times. Researchers from both of these 
institutes were involved in the International Institute of Cell 
Biology's work with the IPP program. The deputy director told us that 
there has been a significant brain drain over the years. Over the last 
15 years, 50 scientists left the institute and went to western-oriented 
countries, such as Germany and Australia. We discussed 1 completed IPP 
project. However, the deputy director told us that he is planning to 
apply for 2 more projects in the future.

Intertek, Ltd.

Registered as a private company in 2000, Intertek, Ltd., was founded by 
a man who was a professor of Aircraft Engines and Technology at the 
National Aerospace University in Kharkiv until 2004. We discussed an 
IPP project, at the draft stage, with Intertek's director and a 
representative from a partner institute, the State Design Office 
Yuzhnoye. The director told us that Intertek currently employs about 15 
people and would expand to 40 if the IPP project starts up. Most of the 
staff would be drawn from the National Aerospace University in Kharkiv.

Kharkov Institute of Physics and Technology:

Kharkov Institute of Physics and Technology, one of the oldest and 
largest centers for physical science in Ukraine, was created in 1928 to 
research nuclear and solid-state physics. The institute, located in 
Kharkiv, Ukraine, currently has 2,500 employees, down from about 6,500 
employees before 1991. Many young specialists left during the difficult 
financial period of the late 1990s for Brazil, Canada, France, Germany, 
Israel, the Netherlands, Sweden, the United Kingdom, and the United 
States. Institute officials are not aware of any specialists who have 
either left Ukraine for a country of concern or provided any 
information to such a country. Since 2004, the institute has been under 
the Ukrainian Academy of Sciences and is Ukraine's lead organization on 
scientific programs for nuclear and radiation technologies. The 
institute's economic condition has significantly improved over the past 
10 years. It is receiving more direct funding from the Ukrainian 
federal budget and also receives grants from U.S. and European 
programs. Assistance partners include STCU and IPP. IPP funding makes 
up no more than 2 percent of the total budget. We discussed 6 IPP 
projects--1 draft, 2 active, and 3 completed--with institute officials.

State Design Office Yuzhnoye:

The State Design Office Yuzhnoye in Dnipropetrovsk was founded in 1954 
for researching and engineering space and rocket technology. The 
institute has designed and manufactured many varieties of ballistic 
missile complexes, and designed and launched 70 types of spacecraft. 
Once Ukraine gained its independence in 1991, Yuzhnoye, the sole Soviet 
missile design facility located outside of the Russian Federation, 
discontinued its work on ballistic missiles. However, since 1994, 
Yuzhnoye personnel, under a contract with the Russian Strategic Rocket 
Forces, have continued to provide a wide range of services aimed at 
extending the service life of those missile complexes still in use. In 
addition, the institute has diversified its production to include 
agricultural machinery, such as combines; a line of food processing 
accessories; and trolleys. We met with an official from Yuzhnoye during 
our interview with Intertek, Ltd., and discussed 1 draft IPP project on 
which the 2 institutes are collaborating.

[End of section]

Appendix III: Classification Systems Used to Assess IPP Project 
Participants' Knowledge of Weapons of Mass Destruction:

This appendix provides information on the classification systems DOE 
and the three entities that make IPP project payments to recipients in 
Russia and other countries use to classify the WMD expertise of the 
personnel participating in an IPP project.

DOE, for example, classifies personnel into one of three categories:

1. Direct experience in WMD design, production, or testing.

2. Experience in research and development of WMD underlying technology.

3. No WMD-relevant experience.

DOE also requires that a preponderance of staff working on its projects 
have had WMD-relevant experience before 1991 (i.e., fall in categories 
1 or 2 above). According to DOE, "the meaning of 'preponderance' is 
taken to be 60 percent, as a bare minimum. Two thirds would be better, 
and anything above that better still."

There is no consistent approach to categorizing the proposed project 
personnel by the national laboratories in the lists they submit in the 
proposal to DOE for review. In some cases, the proposed personnel are 
categorized using the DOE classifications. But in other cases, the 
individuals in the project proposal are classified using weapons 
experience codes of the intended payment mechanism. Some IPP project 
proposals classify personnel using both the DOE categories and the 
payment system codes.

Each of the three payment entities have similar but slightly different 
lists of weapons experience codes that personnel on an IPP project use 
to designate their relevant WMD background. See table 2 for the weapons 
codes used by CRDF, ISTC, and STCU, by general type of weapons 
expertise.

Table 2: CRDF, ISTC, and STCU Weapons Expertise Classification Codes:

General weapons expertise category: Biological; 
CRDF weapons expertise codes: 
C1: Design and performance of missile warheads and rockets for delivery 
of biological weapons; 
C2: Biopolymer production related to biological warhead capabilities; 
C3: Dissemination of biological weapon agents; 
C4: Basic knowledge of biological weapons design and their effect on 
the human system; 
ISTC weapons expertise codes: 
3.1: Design and performance of missile warheads and rockets for 
delivery of biological weapons; 
3.2: Biopolymer production related to biological warhead capabilities; 
3.3: Dissemination of biological weapon agents; 
3.4: Basic knowledge of biological weapons design and their effect on 
the human system; 
STCU weapons expertise codes: 
1.3: Mass destruction weapon— bacteriological. 

General weapons expertise category: Chemical; 
CRDF weapons expertise codes: 
B1: Design and performance of missile warheads and rockets for delivery 
of chemical weapons; 
B2: Materials, facilities, and performance processes needed for the 
production of chemical weapon agents and their key precursors; 
B3: Dissemination of chemical weapon agents; 
B4: Basic knowledge of chemical weapons design and their effect on the 
human system; 
ISTC weapons expertise codes: 
2.1: Design and performance of missile warheads and rockets for 
delivery of chemical weapons; 
2.2: Materials, facilities, and performance processes needed for the 
production of chemical weapon agents and their key precursors; 
2.3: Dissemination of chemical weapon agents; 
2.4: Basic knowledge of chemical weapons design and their effect on the 
human system; 
STCU weapons expertise codes: 
1.2: Mass destruction weapon—chemical. 

General weapons expertise category: Missile/Anti-Ballistic Missile 
Systems; 
CRDF weapons expertise codes: 
A1: Design, construction, and performance of air, space, surface, and 
underwater-launched missiles. Materials and technologies for these 
missiles. Production of engines, fuels, composites, integrated 
elements, radioelectronic equipment, and different testing devices for 
missiles; 
A2: Techniques for guidance and control of missiles from launching to 
impact. Includes optical guidance, television guidance, wire guidance, 
present and terminal guidance, internal guidance, command guidance, and 
homing guidance; 
A3: Missile handling and launching, including transportation, storage, 
and preparation for launching; air, space, surface, and underwater 
launching and support equipment and technologies; checkout equipment 
and procedures; guided missile ranges; 
A4: Techniques and systems for tracking missiles as defensive measures. 
Can be from surface installations or air and space-borne platforms; 
ISTC weapons expertise codes: 
1.1: Design, construction, and performance of air, space, surface, and 
underwater-launched missiles. Materials and technologies for these 
missiles. Production of engines, fuels, composites, integrated 
elements, radioelectronic equipment, and different testing devices for 
missiles; 
1.2: Techniques for guidance and control of missiles from launching to 
impact. Includes optical guidance, television guidance, wire guidance, 
present and terminal guidance, internal guidance, command guidance, and 
homing guidance; 
1.3: Missile handling and launching, including transportation, storage, 
and preparation for launching; air, space, surface, and underwater 
launching and support equipment and technologies; checkout equipment 
and procedures; guided missile ranges; 
1.4: Techniques and systems for tracking missiles as defensive 
measures. Can be from surface installations or air and space-borne 
platforms; 
STCU weapons expertise codes: 
2.1: Delivery systems—missile technologies; 
2.2: Delivery systems—guiding systems; 
2.3: Delivery systems—others; 
3.1: Anti-Ballistic Missile systems—recognition systems; 
3.2: Anti-Ballistic Missile systems—guiding systems; 
3.3: Anti-Ballistic Missile systems—others. 

General weapons expertise category: Nuclear; 
CRDF weapons expertise codes: 
D1: Basic knowledge of nuclear weapons design, construction, 
characteristics, and the effect on the human system; 
D2: Design, construction, and performance of missile warheads for 
delivery of nuclear weapons; 
D3: Design, construction, and performance of the equipment and 
components of Uranium and Plutonium separation; 
D4: Design, construction, and performance of the equipment connected 
with heavy water production; 
D5: Design, construction, and performance of the equipment for 
development of detonators; 
D6: Design, construction, and performance of explosive substances and 
related equipment; 
D7: Design, construction, and performance of the equipment and 
components for nuclear testing; 
D8: Design, construction, performance, and operation of production-type 
nuclear reactors for fissile and tritium-content materials production 
(breeding); 
D9: Design, construction, and performance of nuclear reactors and units 
for submarine and for military space programs; 
ISTC weapons expertise codes: 
4.1: Basic knowledge of nuclear weapons design, construction, 
characteristics, and the effect on the human system; 
4.2: Design, construction, and performance of missile warheads for 
delivery of nuclear weapons; 
4.3: Design, construction, and performance of the equipment and 
components for Uranium and Plutonium separation; 
4.4: Design, construction, and performance of the equipment connected 
with heavy water production; 
4.5: Design, construction, and performance for development of 
detonators; 
4.6: Design, construction, and performance of explosive substances and 
related equipment; 
4.7: Design, construction, and performance of the equipment and 
components for nuclear testing; 
4.8: Design, construction, performance, and operation of production-
type nuclear reactors for fissile and tritium-content materials 
production (breeding); 
4.9: Design, construction, and performance of nuclear reactors and 
units for submarine and for military space programs; 
STCU weapons expertise codes: 
1.1: Mass destruction weapon—nuclear. 

General weapons expertise category: Other; 
CRDF weapons expertise codes: 
E1: Design, construction, and performance of powerful laser facilities 
for military applications; 
E2: Design, construction, and performance of accelerator facilities for 
military applications in space programs; 
E3: Other; 
ISTC weapons expertise codes: 
5.1: Design, construction, and performance of powerful laser facilities 
for military applications; 
5.2: Design, construction, and performance of accelerator facilities 
for military applications in space programs; 
STCU weapons expertise codes: 
1.4: Mass destruction weapon—others; 
4: Other weapons. 

General weapons expertise category: No Weapons Experience;
CRDF weapons expertise codes: No code for personnel not claiming 
weapons experience; 
ISTC weapons expertise codes: No code for personnel not claiming 
weapons experience; 
STCU weapons expertise codes: 
0: Non-former weapon scientist. 

Sources: CRDF, ISTC, and STCU. 

[End of table] 

[End of section] 

Appendix IV: IPP Projects DOE Reported to Be Commercially Successful: 

Table 3 provides information on the 50 IPP projects DOE indicated as 
contributing to commercial successes in its Fiscal Year 2005 IPP 
Program Annual Report. 

Table 3: DOE Projects Listed as Contributing to Commercial Successes in 
DOE's Fiscal Year 2005 IPP Program Annual Report: 

Project title: Nanophase Powders; 
Project number(s): LANL-T2-0148-RU; LANL-T2-0190-RU; 
U.S. companies: Argonide Corporation; 
Lead DOE national laboratory: Los Alamos; 
Lead foreign institute(s): Institute of Petroleum Chemistry and 
Institute of Strength Physics and Materials Science, Russia. 

Project title: Ceramic Nanofibers; 
Project number(s): NREL-T2-0200-RU; NREL-T2-0200a-RU; 
U.S. companies: Argonide Corporation; 
Lead DOE national laboratory: National Renewable Energy; 
Lead foreign institute(s): Institute of Strength Physics and Materials 
Science, and State Research Center of Virology and Biotechnology, 
Russia. 

Project title: Positron Emission Tomography; 
Project number(s): LANL-T2-0164-RU; LANL-T2-0193-RU; LANL-T3-0400-RU; 
U.S. companies: Technology Commercialization International; 
Lead DOE national laboratory: Los Alamos; 
Lead foreign institute(s): Institute of Nuclear Research, Russia. 

Project title: Positron Emission Tomography; 
Project number(s): BNL-T2-0306-RU; 
U.S. companies: Technology Commercialization International; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Institute of Nuclear Research, Russia. 

Project title: Molybdenum-99 from Solution Reactor; 
Project number(s): ANL-T2-0210A-RU; 
U.S. companies: Technology Commercialization International; 
Lead DOE national laboratory: Argonne; 
Lead foreign institute(s): Kurchatov Institute of Atomic Energy, 
Russia. 

Project title: Ferrolectric Phase Shifters for Cellular and Personal 
Communications Systems Phased Array Antenna; 
Project number(s): NREL-T2-0191-RU; NREL-T2-0208-RU; 
U.S. companies: Paratek Microwave; 
Lead DOE national laboratory: National Renewable Energy; 
Lead foreign institute(s): St. Petersburg Electrotechnical University, 
Russia. 

Project title: Soil and Water Remediation at Contaminated Sites Using 
Humosorb; 
Project number(s): ORS-T2-0078-RU; 
U.S. companies: Stable Earth Technology, Electro-Physical and Acoustic 
Technologies, Ltd.; 
Lead DOE national laboratory: Oak Ridge; 
Lead foreign institute(s): Electro-Physical and Acoustic Technologies, 
Ltd., Russia. 

Project title: Land Mine Detectors; 
Project number(s): SNL-T2-0194-RU; 
U.S. companies: Stolar Research Corporation; 
Lead DOE national laboratory: Sandia; 
Lead foreign institute(s): Spektr-Konversia, Russia. 

Project title: Radar Mapping of Geologic Structures from Drills; 
Project number(s): KCP-T2-0225-RU; 
U.S. companies: Stolar Research Corporation; 
Lead DOE national laboratory: Kansas City Plant; 
Lead foreign institute(s): Measuring Systems Research Institute, 
Russia. 

Project title: Electron Beam Welding; 
Project number(s): LBNL-T1-0017-RU; LBNL-T2-0110-RU; LBNL-T2-0110A-RU; 
U.S. companies: Phygen Corporation; 
Lead DOE national laboratory: Lawrence Berkeley; 
Lead foreign institute(s): All-Russian Scientific Research Institute of 
Inorganic Materials--Siberia Branch, Institute of High Current 
Electronics, and Tomsk State University of Control Systems and 
Radioelectronics, Russia. 

Project title: Thorium Power Cycle; 
Project number(s): BNL-T2-0074-RU; BNL-T2-0074a-RU; BNL-T2-0074b-RU; 
U.S. companies: Thorium Power Company; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Kurchatov Institute of Atomic Energy and 
Electrostal, Russia. 

Project title: Software Developer Training; 
Project number(s): LLNL-T2-0236-RU; DOEH-T2-0003-RU; 
U.S. companies: No Partner; 
Lead DOE national laboratory: Lawrence Livermore and DOE Headquarters; 
Lead foreign institute(s): Kurchatov Institute of Atomic Energy, 
Russia. 

Project title: Copper-Beryllium Alloy; 
Project number(s): LANL-T2-0195-KZ; 
U.S. companies: RWE Nukem, Inc. and Brush-Wellman; 
Lead DOE national laboratory: Los Alamos; 
Lead foreign institute(s): Ulba Metallurgical Plant, Kazakhstan. 

Project title: Uranium Dioxide Powder; 
Project number(s): BNL-T2-0308-KZ; 
U.S. companies: RWE Nukem, Inc. and Global Nuclear Fuels; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Ulba Metallurgical Plant, Kazakhstan. 

Project title: Needleless Injectors; 
Project number(s): KCP-T2-0221-RU; 
U.S. companies: Felton International, Inc.; 
Lead DOE national laboratory: Kansas City Plant; 
Lead foreign institute(s): Chemical Automatics Design Bureau, Russia. 

Project title: Turbine Airfoil Repair; 
Project number(s): ORS-T2-0204-UA; 
U.S. companies: Pratt and Whitney/United Technologies Corporation; 
Lead DOE national laboratory: Oak Ridge; 
Lead foreign institute(s): Paton Electric Welding Institute, Ukraine. 

Project title: Unique Russian Crusher Design for Metal Recycling; 
Project number(s): ORS-T2-0107-RU; ORS-T2-0180-RU; 
U.S. companies: Rustec, Inc.; 
Lead DOE national laboratory: Oak Ridge; 
Lead foreign institute(s): Association of Centers for Engineering and 
Automation, Russia. 

Project title: Stable Isotopes Carbon-13 and Oxygen-18 for Medical 
Applications; 
Project number(s): LLNL-T2-0234-RU; 
U.S. companies: Spectra Gases; 
Lead DOE national laboratory: Lawrence Livermore; 
Lead foreign institute(s): Kurchatov Institute of Atomic Energy, 
Moscow, Russia. 

Project title: Electrochemical Process for Removal of Heavy Metals from 
Wastewater; 
Project number(s): BNL-T2-0307-RU; 
U.S. companies: Fenix Technology International; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Ural Process Engineering, Ltd., and the All- 
Russian Scientific Research Institute of Technical Physics, Russia. 

Project title: Linear Ion Source; 
Project number(s): BNL-T1-0012-RU; BNL-T1-0012a-RU; 
U.S. companies: No Partner; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Institute of Electrophysics, Russia. 

Project title: Step-by-Step Deformation of Metal Alloys; 
Project number(s): SNL-T1-0084-RU; 
U.S. companies: No Partner; 
Lead DOE national laboratory: Sandia; 
Lead foreign institute(s): Chelyabinsk State University of Technology, 
Russia. 

Project title: Crop Protection Products; 
Project number(s): PNNL-T2-0194-UA; PNNL-T2-0195-RU; 
U.S. companies: Dupont; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): Ukraine Institute of Organic Chemistry, 
Ukraine, and Experimental Plant for the Design and Manufacturing of 
Scientific Equipment, Russia. 

Project title: Crop Protection Products; 
Project number(s): LBNL-T2-0193-RU; 
U.S. companies: Dupont; 
Lead DOE national laboratory: Lawrence Berkeley; 
Lead foreign institute(s): State Research Center of Virology and 
Biotechnology, Russia. 

Project title: Explosives Detection and Other Proton Beam Based 
Applications; 
Project number(s): BNL-T2-0320-RU; 
U.S. companies: Brookhaven Technology Group; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): Budker Institute of Nuclear Problems, 
Russia. 

Project title: Biodegradation of Oil Spills; 
Project number(s): PNNL-T2-0202-RU; 
U.S. companies: Dye Seed Ranch; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): JSC BioKhimMash, Russia. 

Project title: Recombinant Luciferase for Photometric Detectors; 
Project number(s): PNNL-T2-0217-RU; 
U.S. companies: New Horizons Diagnostics; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): Gamaleya Institute of Epidemiology and 
Microbiology, and Moscow State University, Russia. 

Project title: Biosensors for Detection of Neurotoxins; 
Project number(s): PNNL-T2-0203-RU; 
U.S. companies: New Horizons Diagnostics; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): State Research Institute of Organic 
Chemistry and Technology, and Moscow State University, Russia. 

Project title: Laser Diode Spectroscopy; 
Project number(s): BNL-T2-0318-RU; 
U.S. companies: Canberra Aquila; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): General Physics Institute, Russia. 

Project title: Comprehensive Asset Tracking; 
Project number(s): BNL-T2-0131-RU; BNL-T2-0131a-RU; BNL-T2-0131b-RU; 
BNL-T2-0314-RU; 
U.S. companies: Canberra Aquila; 
Lead DOE national laboratory: Brookhaven; 
Lead foreign institute(s): General Physics Institute, Russia. 

Project title: Chemical Kinetics Software for Reactor and Process 
Design; 
Project number(s): PNNL-T2-0246-RU; 
U.S. companies: Freescale Semiconductor, Inc.; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): Kintech Kinetic Technologies, Russia[A]. 

Project title: Proprietary Information; 
Project number(s): One project; 
U.S. companies: Not Disclosed; 
Lead DOE national laboratory: Pacific Northwest; 
Lead foreign institute(s): Not Disclosed. 

Project title: Proprietary Information; 
Project number(s): Three projects; 
U.S. companies: Not Disclosed; 
Lead DOE national laboratory: Lawrence Livermore and Pacific Northwest; 
Lead foreign institute(s): Not Disclosed. 

Source: GAO analysis of DOE and U.S. Industry Coalition data. 

[A] Kintech Kinetic Technologies is a spin-off company of the Kurchatov 
Institute of Atomic Energy. 

[End of table] 

[End of section] 

Appendix V: Comments from the Department of Energy: 

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

Department of Energy: 
National Nuclear Security Administration: 
Washington, DC 20585: 

November 21, 2007: 

Mr. Gene Aloise: 
Director: 
Natural Resources and Environment: 
U.S. Government Accountability Office: 
Washington, D.C. 20548: 

Dear Mr. Aloise: 

The National Nuclear Security Administration (NNSA) appreciates the 
opportunity to review the Government Accountability Office's (GAO) 
draft report, GAO-08-189, "Nuclear Nonproliferation: DOE's Program to 
Assist Weapons Scientists in Russia and Other Countries Needs to Be 
Reassessed." We understand that GAO conducted this audit at the request 
of the House's Committee on Homeland Security to determine generally 
the accomplishments for the audited program. 

The NNSA disagrees with the general conclusion as stated by GAO that 
leads to a program reassessment and justification of the program. We 
agree with the perceived intent of GAO that it is always important to 
review the goals of a program to ensure relevance. In that regard, NNSA 
does agree with GAO and wants to make a special note that the Global 
Initiatives for Proliferation Prevention (GIPP) program went through a 
complete justification assessment at the request of the Administrator. 
The Administrator has determined that the program is justified and 
continues to support the program to Congress as evidenced in the annual 
budget planning and programming cycle. In that regard we consider that 
we have answered GAO's basic recommendation to reassess and justify the 
program. With regard to the other recommendations to: [See comment 1] 

* Establish a more rigorous, objective, and well-documented process for 
verifying the WMD backgrounds and experiences of participating foreign 
scientists. 

We agree that the review process needs better documentation. We will, 
however, continue to include the informed judgments of our Laboratory 
experts, particularly those who have, or had in the past, direct access 
to foreign institutes and personnel. 

* Develop more reliable data on the commercialization results of IPP 
projects, such as the number of jobs created. 

We agree with the benefit of improved data collection. As we explained 
to the auditors, the metric that was used is a metric that was 
developed for a since terminated program. We will establish and 
implement a more relevant metric. 

*Amend IPP program guidance to include a clear definition of what 
constitutes a commercially successful IPP project. 

We will include the definition in our guidance in the future. 

* Seek explicit congressional authorization to expand IPP efforts 
outside the former Soviet Union. 

We are already in the process of seeking congressional authorization to 
expand our efforts outside the Former Soviet Union. (Note: This could 
also be considered a validation of the program justification). 

* For IPP efforts in Libya, ensure compliance with the statutory 
restriction on the percentage of IPP program funds spent on oversight 
activities at the DOE national laboratories to no more than 35%. 

NNSA does not concur with this recommendation. The reasons for our 
disagreement were explained previously to GAO management. 

* Develop clear and specific guidance for IPP projects that are 
intended to support GNEP. 

NNSA agrees that it is prudent to have clear guidance when the results 
of one program support the goals of another. Since GNEP is an evolving 
initiative, it is premature for us to develop IPP project guidance. 
However, once the GNEP initiative is mature enough, NNSA will consider 
any appropriate actions that may support the GNEP initiative. 

* Streamline the process through which foreign scientists receive IPP 
funds by eliminating unnecessary layers of review. 

NNSA will certainly streamline appropriately the overall process for 
funding foreign scientists. 

* Seek to reduce large balances of unspent funds associated with the 
IPP program and adjust future budget requests accordingly 

We have reduced our uncosted balances over the past two years, with 
ambitious targets for the future. The Department takes this problem 
seriously, as evidenced by the commitment to streamlining the GIPP 
payment process and establishing a more detailed financial and program 
tracking database. 

NNSA also has general comments because we do not believe that the body 
of this report substantiates the critical claims and observations. For 
example: 

* The GAO questions the level and number of WMD experts engaged on GIPP 
projects. GAO bases its analysis on responses to questions posed to 
officials at Russian and Ukrainian institutes. National Laboratory 
experts explained to GAO teams that U.S. agencies place limited weight 
on WMD information obtained from direct questioning of institute 
personnel. In fact, DOE, the State Department and the Defense Contract 
Audit Agency (DCAA), which GIPP brought on board in 2003 to audit 
projects in Russia and the FSU, agreed in 2006 that WMD-related 
questions are counter-productive in the course of a financial audit. 
[See comment 2] 

* The GAO implies that DOE ignored State Department concerns about the 
lack of WMD expertise at a primary institute in Ukraine. As noted in 
the project documentation, the WMD scientist teams were drawn from 
other institutes involved in the project and not from the primary 
institute. We regret that GAO's draft report implies that State did not 
concur in this project, which was never the case. [See comment 3] 

* The GAO states that only a minority of former Soviet project 
participants have WMD experience, based on review of a select number of 
project payment records. Financial information on all projects,obtained 
from GIPP's payment agents, indicates that a majority of project 
participants have WMD experience and have received the majority of 
grant payments. [See comment 4] 

* The GAO describes a Russian institute that cited figures for jobs 
generated by a GIPP project that were much lower than GIPP numbers. Two 
DOE representatives present at the meeting observed GAO decline an 
offer by the institute to obtain further documentation, including jobs 
at partner institutions involved in the project. DOE has since 
confirmed the original GIPP numbers. [See comment 5] 

* An anecdote about a lavish refurbishment of a Ukrainian institute – 
intended to demonstrate that GIPP is funding solvent institutes – omits 
that the funding was donated by a former institute scientist who became 
successful in the West. This information was conveyed to the GAO while 
the audit was taking place. We therefore find it unsettling that GAO 
uses this example to comment on the economic circumstances at the 
institute in question, or with respect to former Soviet institutes in 
general. [See comment 6] 

* The GAO indicates that Russian and Ukrainian institute personnel 
state that GIPP is no longer needed. The GAO posed the question as 
whether institutes would prefer a scientist cooperation program that 
did not have a nonproliferation objective or the need to include WMD 
scientists. When asked this way, some institute personnel naturally 
stated a preference for the less restrictive alternative. However, 
other personnel also endorsed GIPP as a nonproliferation program. We 
regret that this and other endorsements of GIPP as a nonproliferation 
program were excluded from the draft report, and we believe that the 
report's objectivity suffers as a result. [See comment 7] 

The Department is also concerned with the GAO's inaccurate portrayal of 
GIPP requirements. For example: 

* The GAO notes that GIPP grant recipients have not cut ties with their 
home institutes. This is not a program requirement, and in fact the 
overwhelming majority of the former Soviet institutes in which GIPP is 
active are no longer connected with weapons work. Of the 27 institutes 
GAO visited in Russia and Ukraine, only one remains involved with 
weapons work. [See comment 8] 

* The GAO criticizes the program statistics that account for part-time 
employment of former Soviet scientists. There is no program requirement 
to discount part-time employment. Whether employment is full or part 
time, the critical matter is whether the former WMD scientist is 
employed and tied to a civilian activity. [See comment 9] 

* The GAO raises concerns that GIPP projects involve Russian and 
Ukrainian project participants too young to have had prior WMD 
expertise. There is no program restriction on engagement of younger 
scientists. They are sometimes needed to achieve a project's scientific 
and commercial objectives and to therefore attract the former WMD 
scientists. [See comment 10] 

With respect to strategic planning and management, we acknowledge the 
need to give greater consideration to developing an "exit strategy" in 
Russia and improving outdated metrics. However, in other areas, a 
fuller accounting would have provided a better basis and a more 
complete picture for reaching conclusions with respect to GIPP. For 
example: 

* The GAO notes in its draft report that "DOE is developing a program 
management system, which it expects to fully implement in 2008 – 14 
years after the start of the program." In fact, despite GAO's 
implication that there is no IPP management system, a system has been 
in place for well over a decade. GAO analysts were briefed on these 
systems in detail, and in fact used the existing system extensively 
throughout this audit, as well as previous audits. [See comment 11] 

* The GAO is critical of the program's fiscal management, noting 
historically high uncosted balances. It is important to note, however, 
that, notwithstanding multi-year projects and contract obligations that 
on average result in higher uncosted balances, GIPP uncosted balances 
have been reduced by over 50% in the past two fiscal years and continue 
to trend downward. [See comment 12] 

* The GAO recommends that State and DOE better coordinate the 
implementation of their commercialization initiatives and respective 
exit strategies. The two Departments have briefed each other, commented 
on, influenced, and drawn from each others' reprioritization and 
drawdown efforts. Consistent with GAO's recommendation, the Department 
plans to raise with State colleagues the possibility of a "joint plan" 
for commercialization. [See comment 13] 

Concerning engagement with non-FSU partners, the GAO recommends that 
DOE allocate 65% of project funds to Libya for projects in that 
country. As the Department has noted, the FY2000 National Defense 
Authorization Act, which places a 35% limit on expenses for DOE 
national laboratories, applies to the program as a whole, not to 
specific projects or countries. The 35% limit was enacted to ensure 
that a maximum of funds would reach former Soviet scientists in need of 
salary support. Such a requirement does not pertain to Libya, given 
that Libya funds its own scientists involved in cooperative projects. 
The wisdom of funneling 65% of program funds to Libya is also open to 
question. Congress has been briefed on the program's increasingly 
global mission, including activity in Iraq and Libya. [See comment 14] 

NNSA believes that the draft report contains useful recommendations and 
points out the fact that our own actions were underway during the 
course of the audit and were not acknowledged in the report. In 
addition, while the GAO notes that because the projects it reviewed 
"were a judgmental sample" and therefore "the findings associated with 
them cannot be applied generally to the IPP program as a whole," we 
regret that this standard does not appear to have been consistently 
adhered to, leading to an imbalanced critique of the program. 
Nevertheless, this report can be useful if it helps to spur the 
implementation of constructive program changes. [See comment 15] 

Should you have any questions about this response, please contact 
Richard Speidel, Director, Policy and Internal Controls Management. 

Sincerely, 

Signed by: 

Michael C. Kane: 
Associate Administrator for Management and Administration: 

cc: Will Toby, Deputy Administrator for Defense Nuclear 
Nonproliferation: 
David Boyd, Senior Procurement Executive: 
Karen Boardman, Director, Service Center: 

The following are GAO's comments on the Department of Energy's letter 
dated November 21, 2007. 

GAO Comments: 

1. We are aware that DOE conducted internal assessments in 2004 and 
2006 of its overall efforts to engage WMD scientists in the former 
Soviet Union and other countries. However, these assessments did not 
evaluate the IPP program exclusively and were conducted at a time when 
the IPP program was complemented by and coordinated with a similar DOE 
program focused on downsizing facilities and creating new jobs for 
personnel in Russia's nuclear cities. This complementary program--the 
Nuclear Cities Initiative--has since been canceled. As a result, the 
IPP program operates under a significantly different set of 
circumstances today than when DOE conducted its previous internal 
assessments. Moreover, we note that some recommendations and action 
items from DOE's previous internal assessments, such as the development 
of an exit strategy, have not been implemented. Finally, during our 
review and as discussed in this report, we found numerous shortcomings 
and problems with the IPP program. We made a number of recommendations 
for improving the program, many of which DOE agreed with, including 
issues that should be addressed in the context of a program 
reassessment, such as the need to develop a program exit strategy. For 
these reasons, we are recommending that DOE undertake a fundamental 
reassessment of the IPP program, in concert with other agencies, to 
determine the continuing value of and need for the program. 

2. DOE has incorrectly characterized how we collected information and 
conducted our analysis of the participants on IPP projects. Contrary to 
DOE's assertion, we did not base our analysis of this issue on 
responses to questions we posed directly to officials at Russian and 
Ukrainian institutes. We used data and statements provided directly by 
DOE program officials to determine the total number of former Soviet 
weapons scientists, engineers, and technicians the program has engaged 
since its inception. Regarding the level and number of WMD experts 
involved in individual IPP projects, as explained in the scope and 
methodology section of our draft report, we used a number of methods 
for assessing these totals, including analyzing data provided by 
project managers at the national laboratories; reviewing payment 
records provided by CRDF, ISTC, and STCU; and assessing the reliability 
of data we received. 

3. DOE has incorrectly asserted that we implied that DOE and State did 
not concur on the project in question, and that DOE ignored State's 
concerns regarding the primary Ukrainian institute's involvement in 
WMD. We used this case as an example of how DOE's limited ability to 
assess the proposed participants on an IPP project can lead to 
misallocation of funding. In our view, a more thorough evaluation of 
the entities involved in the project by DOE during its proposal review 
might have uncovered the conflict-of-interest issues between the 
primary Ukrainian institute and the industry partner discovered by the 
Defense Contract Audit Agency after the project was under way and funds 
had been spent. 

4. Our finding was based on an in-depth review of the personnel 
involved in 97 IPP projects, representing over 6,450 individuals, or 
over 38 percent of the total personnel DOE has reported to have engaged 
through the IPP program. We have no way of assessing the accuracy, 
reliability, or validity of DOE's assertion that a majority of IPP 
project participants have WMD experience. However, we are skeptical 
that the department was able to conduct a thorough analysis of all IPP 
project payment records during the time it took to review and comment 
on our draft report. 

5. During our visit to the Russian institute in question, institute 
officials told us that they were not the source for the reported job 
creation figure and could not substantiate the total number of jobs 
created as a result of the IPP projects we asked about. For this 
reason, we declined the institute official's offer to obtain further 
documentation regarding the number of jobs created at other institutes 
involved in these projects. Although DOE claims to have received 
additional information from this institute to corroborate the number of 
jobs reported to have been created, DOE did not provide this 
information to us. As a result, we cannot determine the reliability or 
accuracy of DOE's claim that the number of jobs it had reported as 
created is correct. 

6. We have accurately described what we observed during our visit to 
the Ukrainian institute in question. Based on our observations, this 
institute clearly was not in dire financial straits or in poor physical 
condition like some of the institutes in the former Soviet Union we 
have visited in the past. The donation of funding to improve the 
physical condition of the institute has no material bearing on the 
facts that we presented in our draft report. 

7. DOE has mischaracterized our findings and our process for evaluating 
the continued need for the program. As we pointed out in our draft 
report, officials at 10 of the 22 Russian and Ukrainian institutes we 
visited stated that they did not believe they or the other scientists 
at their institutes posed a proliferation risk, while officials at 14 
of the 22 institutes also attested to the financial stability of their 
facilities. Moreover, a senior Russian Atomic Energy Agency official 
told us, in the presence of IPP program officials, in July 2007 that 
the program is no longer relevant. DOE asserted that we did not include 
endorsements of the program in our draft report. However, we do state 
that many officials at the Russian and Ukrainian institutes we visited 
noted that the program was especially helpful during the period of 
financial distress in the late 1990s. 

8. DOE misstates the number of institutes that we included in our 
fieldwork in Russia and Ukraine. The correct number is 22. Regarding 
DOE's comment, our draft report clearly stated that DOE policy does not 
require IPP project participants reemployed in peaceful activities to 
cut ties to their home institute. However, more than one institute we 
visited stated that they are still involved in some weapons-related 
work, and many institutes remain involved in research and technology 
development that could be applied to WMD or delivery systems for WMD. 
We do not believe it is possible for DOE to verify the full extent and 
intended purpose of all activities at the institutes where the IPP 
program is engaged. Moreover, we believe that DOE misrepresents the IPP 
program's accomplishments by counting individuals who have been 
reemployed in private sector jobs but also are employed by their 
institutes and, therefore, may still be involved in weapons-related 
activities. In our view, the reemployment of former weapons scientists 
into new long-term, private sector jobs--one of the primary metrics DOE 
uses to measure progress of the IPP program--implies that these 
individuals have terminated their previous employment at the institutes 
and are dedicated solely to peaceful commercial activities outside of 
their institutes. 

9. While there is no IPP program requirement to exclude former weapons 
scientists employed on a part-time basis from the total number of jobs 
created as a result of IPP projects, DOE's reported job creation total 
fails to delineate between part-time and full-time jobs. By not more 
clearly distinguishing the number of jobs created in each category, 
this metric is misleading and also misrepresents the program's 
accomplishments regarding the employment of weapons scientists in 
commercial activities. However, we have added information to our report 
that states that there is no IPP program requirement to exclude former 
weapons scientists employed on a part-time basis from the total number 
of jobs created as a result of IPP projects. 

10. Our draft report stated that the IPP program does not prohibit 
participation of younger scientists in IPP projects. In our view, 
however, DOE has a mistaken and naïve impression of how institutes in 
the former Soviet Union view the benefits of allowing younger 
scientists to participate in the IPP program. DOE believes that 
participation of some younger generation scientists on IPP projects 
must be permitted to successfully implement projects. This practice has 
the unintended consequence of allowing former Soviet Union institutes 
to use the IPP program as a long-term recruitment tool for younger 
scientists and, thereby, may perpetuate the proliferation risk posed by 
scientists at these institutes. As we stated in our draft report, 
officials at 10 of the 22 institutes we visited in Russia and Ukraine 
said that the IPP program has allowed their institutes to recruit, 
hire, and retain younger scientists. In our view, this is contrary to 
the original intent of the program, which was to reduce the 
proliferation risk posed by Soviet-era weapons scientists. That is why, 
among other reasons, we are recommending that DOE conduct a 
reassessment of the IPP program that includes a thorough analysis of 
the proliferation risk posed by weapons scientists in Russia and other 
countries, a well-defined strategy to more effectively target the 
scientists and institutes of highest proliferation concern, more 
accurate reporting of program accomplishments, and a clear exit 
strategy for the program. 

11. DOE incorrectly characterized our description of its program 
management system. Specifically, we stated in the draft report "DOE and 
national laboratory officials told us they are attempting to improve 
financial oversight over the IPP program, in part, to address concerns 
about unspent program funds. To that end, DOE is developing a new 
program management system, which it expects to fully implement in 2008-
-14 years after the start of the program." Throughout our review, 
numerous DOE and national laboratory officials expressed concern about 
the existing systems that DOE used to manage IPP projects. Our 
description of DOE's planned implementation of its new program 
management system is accurate. 

12. DOE officials concurred with our recommendation of reducing large 
balances of unspent funds and adjusting future budget requests 
accordingly. The data we present are based on DOE's own financial 
reporting and accurately reflect the state of the program's uncosted 
balances (unspent funds) over the last 10 years. We noted in our draft 
report that the program's uncosted balances are declining, but, as DOE 
officials acknowledge, uncosted balances remain a serious problem for 
the IPP program. 

13. We are pleased that DOE concurs with our recommendation to improve 
coordination between the department's IPP program and ISTC's 
Commercialization Support Program, which is funded by State. In its 
comments, State also concurred with this recommendation. 

14. We believe DOE has misconstrued our recommendation concerning its 
funding of projects in Libya. We did not recommend, nor did we mean to 
imply, that DOE should allocate 65 percent of project funds to Libya 
for projects in that country. Instead, our recommendation urges the 
department to ensure that it complies with existing statutory 
restrictions on the percentage of IPP funds that can be spent on 
oversight activities by DOE national laboratories. Specifically, as DOE 
notes, section 3136 of the National Defense Authorization Act for 
Fiscal Year 2000 provides that not more than 35 percent of funds 
available in any fiscal year for the IPP program may be spent by DOE 
national laboratories to provide oversight of program activities. As 
our report indicates, DOE's IPP guidance and its standard practice have 
been to implement this provision of law on a project-by-project basis, 
so that no more than 35 percent of the funds for each project are spent 
by national laboratories. Our point in our report and in our 
recommendation is that, with respect to projects in Libya, DOE has not 
followed its IPP guidance restricting national laboratory expenditures. 
Instead, we found that 97 percent of funds DOE spent on projects in 
Libya through May 2007 were spent at DOE's national laboratories for 
project management and oversight. In this regard, we note that DOE 
concurred with our recommendation that the department seek explicit 
congressional authorization to expand IPP efforts outside of the former 
Soviet Union. In seeking such authorization, DOE may wish to clarify 
the nature of other restrictions on the program, such as those set 
forth in section 3136 of the National Defense Authorization Act for 
Fiscal Year 2000. 

15. DOE has mistakenly asserted that our selection of projects for 
review served as the sole basis for our conclusions and 
recommendations. As we explained in the draft report's scope and 
methodology section, the selection and evaluation of a sample of IPP 
projects was one of several analytical tools we employed during our 
review. We not only conducted an in-depth assessment of over 200 IPP 
projects, but also met multiple times with DOE officials; analyzed 
program plans, policies, and procedures; interviewed representatives at 
each of the 12 national laboratories involved in the program; 
interviewed staff of the U.S. Industry Coalition and 14 U.S. industry 
partner companies with long-standing participation in the program; and 
had discussions with numerous recipients of IPP program assistance at 
22 institutes in Russia and Ukraine. We also met several times with 
State officials who are responsible for funding a similar program; 
interviewed and assessed information provided by officials at CRDF, 
ISTC, and STCU; and met with nongovernmental experts familiar with the 
program. As further noted in our draft report, to develop our 
judgmental sample of 207 projects we used project selection criteria 
supplied by DOE and considered a variety of factors--such as project 
status, project funding, type and location of institutes where projects 
have been implemented, and a project's commercial success--to ensure we 
addressed a broad cross-section of IPP projects. This comprehensive 
approach, consistent with generally accepted government auditing 
standards, served as the foundation for our assessment which was fair, 
balanced, and objective. Our extensive review identified legitimate 
questions concerning the IPP program's scope, implementation, and 
performance that we believe should be addressed during the course of 
the fundamental reassessment of the program recommended in our draft 
report. 

[End of section] 

Appendix VI: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary for Resource Management and Chief Financial 
Officer: 
Washington, D.C. 20520: 

November 19, 2007: 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548-0001: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report,
"Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists 
in Russia and Other Countries Needs to Be Reassessed," GAO Job Code 
360770. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact 
Linda Bernstein, Science Centers Program Coordinator, Bureau of 
International Security and Nonproliferation, at (202) 736-7976. 

Sincerely, 

Signed by: 

Bradford R. Higgins: 

cc: GAO — Glen Levis: 
ISN — Andrew Semmel: 
State/OIG — Mark Duda: 

Department of State Comment on GAO Draft Report: 

Nuclear Nonproliferation: DOE's Program to Assist Weapons Scientists in 
Russia and Other Countries Needs to Be Reassessed (GAO-08-189, Job Code 
360770): 

Thank you for allowing the Department of State the opportunity to 
provide comments on the recommendation in the draft report Nuclear 
Nonproliferation: DOE's Program to Assist Weapons Scientists in Russia 
and Other Countries Needs to Be Reassessed. 

Regarding the recommendation (page 44) to work with the Administrator 
of the National Nuclear Security Administration, and the Secretary of 
Energy, to develop a joint plan to better coordinate the efforts of 
DOE's IPP Program and the ISTC's Commercialization Support Program: 

The Department of State and the Department of Energy concur with the 
recommendation to more closely coordinate these program elements and 
will consult with DOE on implementing this recommendation. 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gene Aloise, (202) 512-3841 or aloisee@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Glen Levis (Assistant 
Director), R. Stockton Butler, David Fox, Preston Heard, and William 
Hoehn made key contributions to this report. Other technical assistance 
was provided by David Maurer; Carol Herrnstadt Shulman; Jay Smale, Jr.; 
and Paul Thompson. 

[End of section] 

Related GAO Products: 

Nuclear Nonproliferation: Better Management Controls Needed for Some 
DOE Projects in Russia and Other Countries. GAO-05-828. Washington, 
D.C.: August 29, 2005. 

Weapons of Mass Destruction: Nonproliferation Programs Need Better 
Integration. GAO-05-157. Washington, D.C.: January 28, 2005. 

Nuclear Nonproliferation: DOE's Effort to Close Russia's Plutonium 
Production Reactors Faces Challenges, and Final Shutdown Is Uncertain. 
GAO-04-662. Washington, D.C.: June 4, 2004. 

Nuclear Nonproliferation: DOE's Efforts to Secure Nuclear Material and 
Employ Weapons Scientists in Russia. GAO-01-726T. Washington, D.C.: May 
15, 2001. 

Weapons of Mass Destruction: State Department Oversight of Science 
Centers Program. GAO-01-582. Washington, D.C.: May 10, 2001. 

Nuclear Nonproliferation: DOE's Efforts to Assist Weapons Scientists in 
Russia's Nuclear Cities Face Challenges. GAO-01-429. Washington, D.C.: 
May 3, 2001. 

Biological Weapons: Effort to Reduce Former Soviet Threat Offers 
Benefits, Poses New Risks. GAO/NSIAD-00-138. Washington, D.C.: April 
28, 2000. 

Nuclear Nonproliferation: Concerns with DOE's Efforts to Reduce the 
Risks Posed by Russia's Unemployed Weapons Scientists. GAO/RCED-99-54. 
Washington, D.C.: February 19, 1999. 

[End of section] 

Footnotes: 

[1] The IPP program was originally called the Industrial Partnering 
Program and was established under Pub. L. No. 103-87 § 575, 107 Stat. 
972-773 (1993). In 1996, DOE changed the program's name to reflect a 
greater focus on and commitment to nonproliferation issues. In 2002, 
the IPP program and another similar DOE nonproliferation program, the 
Nuclear Cities Initiative, were placed under a common management 
organization within DOE and designated the Russian Transition 
Initiatives. In 2006, the Russian Transition Initiatives was renamed 
the Global Initiatives for Proliferation Prevention and adopted the 
mission of addressing the proliferation of WMD expertise globally. 
Since the program's inception, North Korea has successfully tested a 
nuclear weapon, and there are concerns that Iran has made progress in 
developing its own nuclear weapons program. 

[2] NNSA is a separately organized agency within DOE that was created 
by the National Defense Authorization Act for Fiscal Year 2000, Pub. L. 
No. 106-65, 113 Stat. 953 (1999), with responsibility for the nation's 
nuclear weapons, nonproliferation, and naval reactors programs. 

[3] DOE manages the largest laboratory system of its kind in the world. 
Originally created to design and build atomic weapons, DOE's 22 
laboratories have expanded their missions to conduct research in many 
disciplines--from high-energy physics to advanced computing. The 12 
national laboratories that participate in the IPP program are the 
Argonne, Brookhaven, Idaho, Lawrence Berkeley, Lawrence Livermore, Los 
Alamos, Oak Ridge, National Renewable Energy, Pacific Northwest, 
Sandia, and Savannah River National Laboratories and the Kansas City 
Plant. 

[4] The Science Centers, consisting of ISTC and STCU, are 
intergovernmental bodies with over 12 contributing member states. The 
centers were established to provide peaceful research opportunities to 
weapons scientists of the former Soviet Union. For additional 
information, see GAO, Weapons of Mass Destruction: State Department 
Oversight of Science Centers Program, GAO-01-582 (Washington, D.C.: May 
10, 2001). 

[5] Ten closed nuclear cities formed the core of the former Soviet 
Union's nuclear weapons complex. Many of the cities are located in 
geographically remote locations and were so secret that they did not 
appear on any publicly-available maps until 1992. For additional 
information, see GAO, Nuclear Nonproliferation: DOE's Efforts to Assist 
Scientists in Russia's Nuclear Cities Face Challenges, GAO-01-429 
(Washington, D.C.: May 3, 2001). 

[6] See GAO, Nuclear Nonproliferation: Concerns with DOE's Efforts to 
Reduce the Risks Posed by Russia's Unemployed Weapons Scientists, GAO/ 
RCED-99-54 (Washington, D.C.: Feb. 19, 1999). As a result of our 1999 
review, DOE modified the IPP program by implementing requirements to 
(1) better categorize the weapons backgrounds of scientists 
participating in IPP projects; (2) review projects for potential dual- 
use technology; (3) limit funding for DOE national laboratories to no 
more than 35 percent for each IPP project; (4) eliminate basic research 
projects; (5) establish direct, tax-free payments to participating 
former Soviet scientists; and (6) institute audits conducted by the 
Defense Contract Audit Agency as a way of verifying proper transfer of 
IPP program funds and equipment. 

[7] Pub. L. No. 106-65 § 3136(a)(2). 

[8] Pub. L. No. 106-65 § 3136(a)(3). As defined by the section, a 
"country of proliferation concern" means any country designated as such 
by the Director of Central Intelligence for purposes of the IPP 
program. 

[9] On September 5, 2007, DOE provided us with preliminary data that 
will be published in its fiscal year 2006 IPP program annual report. 
This report has not yet been issued. As a result, for purposes of this 
report, we used the most up-to-date published information available 
during our review, which was DOE's Fiscal Year 2005 IPP Program Annual 
Report. 

[10] In some cases, more than one IPP project was connected to a 
commercial success. See appendix IV for a complete list of the IPP 
projects reported by DOE as being commercially successful. 

[11] We found that DOE made a mathematical error in totaling the number 
of new jobs created and in migrating data from the USIC survey to the 
Fiscal Year 2005 IPP Program Annual Report. As a result, the actual 
total of new jobs that DOE should have reported is 2,780. 

[12] According to DOE, there is no IPP program requirement to exclude 
former weapons scientists employed on a part-time basis from the total 
number of jobs created as a result of IPP projects. 

[13] Thorium is a naturally occurring radioactive metal, and it is 
considered an alternative nuclear fuel to uranium. 

[14] Russia's Stabilization Fund was established by resolution of the 
Government of Russia on January 1, 2004, to serve as an important tool 
for absorbing excessive liquidity; reducing inflationary pressure; and 
insulating the economy of Russia from volatility of raw material export 
earnings, which was among the reasons of the Russian financial crisis 
in 1998. 

[15] Launched in March 2004, State's Libya Scientist Engagement Program 
aims to reduce the risk of WMD expertise proliferation and, 
simultaneously, demonstrate Libya's return to the international 
community by supporting the transition of former Libyan weapons 
scientists to civilian careers that will enhance Libya's economic 
development. 

[16] GNEP, which is managed by DOE's Office of Nuclear Energy, is part 
of the department's Advanced Energy Initiative and seeks to develop 
worldwide consensus on enabling expanded use of nuclear energy to meet 
growing electricity demand. GNEP would achieve its goal by having 
nations with secure, advanced nuclear capabilities provide fuel 
services--fresh fuel and recovery of used (spent) fuel--to other 
nations that agree to employ nuclear energy for power generation 
purposes only. 

[17] Specifically, the Office of Nuclear Energy plans to provide 
$600,000 to two projects ($300,000 per project) dealing with spent fuel 
disposition, and the Office of Science plans to provide funds of an 
amount yet to be determined for one project dealing with the 
environmental consequences of spent fuel storage. 

[18] According to DOE officials, CRDF "master contracts" between DOE 
and foreign institutes were only used for 12 projects and are being 
phased out. The process is very similar to the CRDF subcontract process 
shown in figure 3. 

[19] GAO, Nuclear Nonproliferation: Better Management Controls Needed 
for Some DOE Projects in Russia and Other Countries, GAO-05-828 
(Washington, D.C.: Aug. 29, 2005). 

[20] According to DOE officials, the Kansas City Plant was not visited 
because it did not have any issues with unspent funds. 

[21] Some projects involved multiple collaborating institutes and, in 
some cases, involved institutes in more than one country. We 
categorized projects by country according to the host country where the 
lead institute was located. 

[22] Because Sarov is a closed Russian nuclear city to which DOE 
officials told us we were not likely to be granted access by the 
Russian government, relevant IPP project managers traveled from Sarov 
to meet with us in Nizhny Novgorod. 

[End of section] 

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