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Highlights

In 1993, the United States agreed to buy 500 metric tons of highly enriched uranium from Russia. This uranium was extracted from dismantled nuclear weapons over a 20-year period. USEC, Incorporated, (the company that acts as an executive agent for the United States) paid Russia about $1.6 billion for more than 3,000 metric tons of low enriched uranium blended from highly enriched uranium. Five of these deliveries to USEC have been delayed because, among other reasons, Russia was dissatisfied with the revenue it ws getting from the sales. By the end of 1999, USEC had received about 19 metric tons less than the agreement called for at that point in the contract. The U.S. government and USEC expect that the shortfall will be made up in the next few years. In addition to the uranium obtained from dismantled nuclear weapons, Russia is also proposing that the United States buy newly produced uranium processed in its commercial facilities. GAO recommends that this arrangement be assessed to determine its impact on the nuclear fuel industry and national security.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Assistant to the President for National Security Affairs The Assistant to the President for National Security Affairs should direct the chair of the Enrichment Oversight Committee to study and report to Congress on the benefits and the national security implications to the United States, in addition to the impact on the domestic nuclear fuel industry, of importing newly produced low enriched uranium (LEU) from Russia as is being proposed in USEC's current negotiations with Techsnabexport on the price of the enrichment services component of LEU to be delivered to the United States through 2013.
Closed - Implemented
In June 2002, the United States government approved a new contract between USEC and Tenex for the import of LEU derived from Russian nuclear weapons. However, the U.S. refused to approve USEC's plan to import newly produced LEU. According to the Senior Advisor to the Undersecretary of State for Arms Control and International Security, the U.S. government did not approve USEC's plan because it believed, largely as a result of GAO's work on the subject, that USEC as a private company should not abuse its position as executive agent for an important U.S. nonproliferation program to make additional commercial arrangements not available to the rest of the U.S. nuclear fuel industry.
Office of the Assistant to the President for National Security Affairs The Assistant to the President for National Security Affairs should direct the chair of the Enrichment Oversight Committee to prepare and transmit to Congress a contingency plan that would detail the circumstances under which a replacement for USEC would be needed, the criteria for choosing the entity or entities (including U.S. government agencies) that would serve as the replacement, and the specific procedures to be followed in the event that USEC withdraws or is replaced as executive agent for the highly enriched uranium agreement.
Closed - Not Implemented
In June 2002, the Department of Energy and USEC, Inc. signed a memorandum of agreement that retained USEC as the sole executive agent for the HEU agreement. Although the memorandum of agreement reserved the U.S. government's right to remove USEC as executive agent or to appoint additional agents, the specific circumstances under which the government would exercise those rights were not laid out, nor were the procedures to be followed in the event that USEC withdraws or was replaced specified.

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