Chemical Weapons:

Organization for the Prohibition of Chemical Weapons Needs Comprehensive Plan to Correct Budgeting Weaknesses

GAO-03-5: Published: Oct 24, 2002. Publicly Released: Oct 24, 2002.

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The Organization for the Prohibition of Chemical Weapons is responsible for implementing the Chemical Weapons Convention, which bans the use of chemical weapons and requires their elimination. The United States and other member states have raised concerns that a number of management weaknesses may prevent the organization from fulfilling its mandate. As requested, GAO assessed the accuracy of the organization's budget and the impact of budget shortfalls on program activities. GAO also reviewed efforts to improve the organization's budget planning.

Since its establishment in 1997, the ability of the Organization for the Prohibition of Chemical Weapons (OPCW) to carry out key inspection functions has been hindered by inaccurate budget projections and, more recently, budget deficits. The organization has consistently overestimated its income and underestimated its expenses. Its budgets have recorded as income nearly $1 million in unpaid assessments owed by 30 member states. The budgets have also overestimated reimbursement payments for inspections conducted in member states with chemical weapons-related facilities. As of June, 2002, these states owed the organization more than $2 million. Furthermore, the budgets for 2000 through 2002 underestimated personnel expenses. The organization's inaccurate income and spending estimates contributed to a $2.8 million deficit in 2000 and a potential deficit of $5.2 million in 2002. Weak budgeting practices and budget deficits have affected the organization's ability to perform inspection activities as mandated by the Chemical Weapons Convention. The organization had to reduce the number of inspections it conducted in 2001 and plans to reduce the number it conducts in 2002. Although the organization and the State Department have taken some steps to address the budget problems, the organization has not developed a comprehensive plan to overcome its inherent weaknesses. Unless the organization improves its planning, budget shortfalls will continue to affect its ability to conduct inspections.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GAO's October 2002 report recommended that the Secretary of State work with representatives of other member states and the Director-General of the OPCW to develop a comprehensive plan to improve the organization's budgetary practices. In commenting on GAO's report, the State Department stated that the OPCW had taken several actions to address this recommendation, including developing better estimates of expenditures, income, and cash flow. The State Department also indicated that it intended to work with the OPCW's Director-General and other member states during 2003, to ensure that a comprehensive response to the organization's financial difficulties was put into place. In a separate December 2002 letter to GAO, the new Director-General of the OPCW stated that the organization was taking several measures to improve its budgeting practices. During a subsequent GAO visit to the OPCW in September 2003 on a related engagement, GAO observed that the organization had implemented a series of actions to improve its budgetary practices as GAO recommended in its 2002 report. Specifically, the OPCW has (1) improved the efficiency of its inspection activities by reducing the size of inspection teams where appropriate, thus lowering daily allowance and travel costs; and (2) revised inspector contracts to reduce staff costs and allow for greater flexibility in assigning inspection teams. In addition, OPCW member states approved a more than six-percent increase in the organization's budget for 2004, to ensure that the OPCW had sufficient funding to accomplish its various missions. According to the Director-General, use of a new results-based budgeting process will increase the effectiveness of the OPCW, enhance the transparency of the budgeting process, and improve budget controls and accountability.

    Recommendation: To improve the current budget problems of the Organization for the Prohibition of Chemical Weapons, the Secretary of State should work with the representatives of other member states and the new Director-General to develop a comprehensive plan to improve the organization's budgetary practices. The plan should outline specific strategies to (1) improve the projection and collection of income, (2) accurately project expenses, and (3) strengthen the role of the Office of Internal Oversight in helping the organization improve its budgeting process. Such a plan would be consistent with the budget recommendations of the Secretariat's oversight bodies.

    Agency Affected: Department of State

  2. Status: Closed - Not Implemented

    Comments: The State Department believes that existing Congressional reporting to Congress meets the intent of this recommendation.

    Recommendation: To ensure that Congress is informed about the status of efforts to improve the OPCW's budgeting practices, the Secretary of State should annually report to Congress on the extent to which the OPCW is correcting its budgeting weaknesses and implementing the recommendations made by the organization's oversight bodies.

    Agency Affected: Department of State


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