Cooperative Threat Reduction: DOD Has Adequate Oversight of
Assistance, but Procedural Limitations Remain (19-JUN-01,
GAO-01-694).
Since 1992, the Congress has authorized the Department of Defense
(DOD) to provide more than $3 billion for the Cooperative Threat
Reduction (CTR) program to help Russia, Belarus, Ukraine,
Kazakhstan, Uzbekistan, Moldova, and Georgia secure and eliminate
weapons of mass destruction. Congress was concerned about proper
oversight of equipment and services provided under the program
and required DOD to report annually on whether the assistance
provided was being used as intended. This report reviews (1)
whether DOD's oversight procedures produce the necessary
information to determine if the threat reduction assistance,
including equipment provided and services furnished, is being
used as intended and (2) whether improvements can be made in the
way DOD carries out its oversight responsibilities. GAO found
that DOD has procedures in place that provide reasonable
assurance that most of the assistance provided--at least 95
percent--is being used as intended and is adequately accounted
for, given negotiated access limitations. Because of access
restrictions imposed by the Russian government, a limited amount
of equipment--less than five percent of the total value of
assistance provided--is in locations where access by U.S.
personnel is not permitted. GAO's evaluation indicated that DOD
can enhance the quality of its program oversight function by
better targeting and expanding the scope of its formal audit and
examination procedure.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-694
ACCNO: A01200
TITLE: Cooperative Threat Reduction: DOD Has Adequate Oversight
of Assistance, but Procedural Limitations Remain
DATE: 06/19/2001
SUBJECT: Nuclear proliferation
Nuclear weapons
Program evaluation
Arms control agreements
Foreign aid programs
Foreign governments
International cooperation
DOD Cooperative Threat Reduction Program
Russia
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GAO-01-694
Report to Congressional Committees
United States General Accounting Office
GAO
June 2001 COOPERATIVE THREAT REDUCTION
DOD Has Adequate Oversight of Assistance, but Procedural Limitations Remain
GAO- 01- 694
Page 1 GAO- 01- 694 Cooperative Threat Reduction
June 19, 2001 The Honorable Carl Levin Chairman The Honorable John Warner
Ranking Minority Member Committee on Armed Services United States Senate
The Honorable Bob Stump Chairman The Honorable Ike Skelton Ranking Minority
Member Committee on Armed Services House of Representatives
Since 1992, the Congress has authorized the Department of Defense (DOD) to
provide more than $3 billion for the Cooperative Threat Reduction (CTR)
program to help Russia, Belarus, Ukraine, Kazakhstan, Uzbekistan, Moldova,
and Georgia secure and eliminate weapons of mass destruction. The Congress
was concerned about proper oversight of equipment and services provided
under the program and required DOD to report annually on whether the
assistance provided was being used as intended. 1 Initially, the program
primarily provided equipment, such as cranes and railcars, to the recipient
countries, but it has since evolved to a program that provides mostly
contracted services, such as the design and construction of a fissile
material storage facility.
Section 1311 of the Floyd D. Spence National Defense Authorization Act for
Fiscal Year 2001 (P. L. 106- 398) requires that we report on DOD?s oversight
of the CTR program. Accordingly, we assessed (1) whether the Department?s
oversight procedures produce the necessary information to determine if the
threat reduction assistance, including equipment provided and services
furnished, is being used as intended and (2) whether improvements can be
made in the way the Department carries out its oversight responsibilities.
Also, section 1206 of the National Defense
1 The provisions of section 1206 of the National Defense Authorization Act
for Fiscal Year 1996, which required DOD to provide an annual report to the
Congress accounting for CTR assistance, were replaced by section 1308 of the
Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001.
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 694 Cooperative Threat Reduction
Authorization Act for Fiscal Year 1996 required that we provide assessments
of DOD?s annual reports accounting for the assistance provided under the CTR
program. 2 Our assessment of DOD?s 1999 report that was submitted to the
Congress in January 2001 is in appendix I. 3
DOD has procedures in place that provide reasonable assurance that most of
the assistance provided- at least 95 percent- is being used as intended and
is adequately accounted for, given negotiated access limitations. The three
primary procedures for determining if equipment and services provided under
the CTR program are being used as intended are as follows: (1) ongoing day-
to- day program management activities, (2) periodic audit and examination
team visits, and (3) routine analysis of intelligence information.
Notwithstanding these procedures, our analysis indicated that because of
access restrictions imposed by the Russian government, a limited amount of
equipment- less than 5 percent of the total value of assistance provided- is
in locations where access by U. S. personnel is not permitted. The United
States, for example, is not provided access to the Russian sites where the
equipment associated with the storage and transportation of nuclear warheads
is located. Because the recipient governments require DOD to give 30- days
notice and receive preapproval for almost all visits to sites, and the
Department is sometimes denied access to sites where CTR assistance is
located, the Department has reasonable but not absolute assurance that most
assistance is used as intended or that it is used only for the purposes
intended.
Our evaluation indicated that DOD can enhance the quality of its program
oversight function by better targeting and expanding the scope of its formal
audit and examination procedure. As currently conducted, audit and
examination site visits provide minimal information to DOD in addition to
that already provided through the other two procedures. We found that during
the audit and examination visits, DOD personnel essentially conducted an
inventory of equipment, frequently duplicating equipment verification
already performed by program management visits.
2 Previous GAO reports include Weapons of Mass Destruction: DOD Reporting on
Cooperative Threat Reduction Assistance Can Be Improved (NSIAD- 95- 191,
Sept. 29, 1995); Weapons of Mass Destruction: DOD Reporting on Cooperative
Threat Reduction Assistance Has Improved (NSIAD- 97- 84, Feb. 27, 1997);
Cooperative Threat Reduction: Review of DOD?s June 1997 Report on Assistance
Provided (NSIAD- 97- 218, Sept. 5, 1997); and Cooperative Threat Reduction:
DOD?s 1997- 98 Reports on Accounting for Assistance Were Late and Incomplete
(GAO/ NSIAD- 00- 40, Mar. 15, 2000).
3 See section 1206 of P. L. 104- 106 and section 1308 of P. L. 106- 398.
Results in Brief
Page 3 GAO- 01- 694 Cooperative Threat Reduction
Audit and examination visits do not assess the efficiency or effectiveness
of the projects receiving U. S. assistance. Although this approach may have
been adequate during the early phase of the program when assistance
consisted primarily of equipment, the program now provides primarily
contracted services that can be overseen through the program management
function supplemented by intelligence information. Nonetheless, audit and
examination visits are provided for under bilateral agreements with
recipient governments and offer an opportunity to more routinely assess
project efficiency and effectiveness. Thus, targeting such visits to
assistance not fully covered by program management and enlarging their scope
to include evaluations of project efficiency and effectiveness would enhance
the DOD?s overall program oversight.
Accordingly, we recommend that the Secretary of Defense better target audit
and examination visits to avoid unnecessary duplication of coverage, but
expand the scope of such visits to include assessments of projects on the
basis of well- defined criteria.
Since 1992, DOD has obligated more than $2.5 billion of the over $3 billion
the Congress has appropriated to help CTR recipient countries destroy
weapons of mass destruction, transport and store weapons to be destroyed,
and prevent weapons proliferation. Early in the program, CTR assistance was
largely provided to recipient countries in the form of equipment, such as
cranes, trucks, and cutting tools. As the program matured, most of the
assistance provided was in the form of services, such as the dismantlement
of Russian nuclear submarines that are contracted for or provided by the CTR
program to recipient countries. Additionally, other costs have been
associated with the program, such as travel expenses, the defense and
military contacts program, 4 and contractor support. Figure 1 shows the
level and types of assistance provided from fiscal years 1992 through 2000.
4 The defense and military contacts program consists of training exercises,
conferences, and other activities. Background
Page 4 GAO- 01- 694 Cooperative Threat Reduction
Figure 1: Cumulative CTR Obligations, Fiscal Years 1992- 2000
Source: Defense Threat Reduction Agency.
In 1992, DOD began providing equipment to recipient countries for use in
destroying weapons of mass destruction and improving the infrastructure
needed to destroy these weapons. By the mid- 1990s, DOD began to hire U. S.
companies to coordinate and integrate the destruction of the recipient
countries? weapons of mass destruction because these countries claimed they
could no longer afford to complete the work and were falling behind
schedule. When work is undertaken at sensitive facilities where access is
limited or denied, DOD often contracts directly with recipient country
contractors.
Page 5 GAO- 01- 694 Cooperative Threat Reduction
DOD uses the following three basic procedures to provide oversight and
maintain accountability for CTR assistance: (1) audit and examination team
visits, (2) routine program management, and (3) intelligence analysis. At
the start of the CTR program, bilateral agreements were signed with
recipient countries that established the United States? right to determine
if assistance is being used for its intended purposes. To implement its
rights under these agreements, DOD initially developed what it calls ?audit
and examination? procedures to account for CTR- provided equipment. Under
these procedures, a DOD team documents equipment condition and use by
visiting sites to inspect the equipment and reviewing documents to determine
its use, a process of essentially taking an inventory of equipment provided
under the program. CTR assistance provided in the form of service contracts
is generally overseen and accounted for under the program management
function. Program management entails the continual involvement of DOD
officials throughout the life of the project to ensure proper use of all
services and training before payment, in accordance with Federal Acquisition
Regulations. All contracts for services with recipient countries are awarded
on a firm- fixed- price basis; that is, contract milestones must be met and
work accepted by a U. S. government representative before payment is
authorized. The Defense Contract Audit Agency reviews all contract costs and
conducts audits of U. S. contractors involved with the CTR program. To
compliment its audit and examination and program management oversight, DOD
also uses information provided by the intelligence community to account for
CTR assistance.
Initially, much of the CTR assistance provided consisted of equipment,
whereas now the vast majority of assistance is provided in the form of
contracted services. As illustrated in figure 2, in 1994, 45 percent of CTR
assistance provided was equipment compared with less than 1 percent in 2000.
Page 6 GAO- 01- 694 Cooperative Threat Reduction
Figure 2: Percentage of CTR Obligations Provided as Equipment and All Other
Assistance, Fiscal Years 1992- 2000
Source: Defense Threat Reduction Agency.
DOD has procedures in place to obtain the information necessary to provide
reasonable, but not absolute, assurance that most CTR assistance is used for
the purpose intended. Through program management, audit and examination
procedures, and intelligence analysis, our analysis indicated that DOD can
reasonably account for at least 95 percent of the total program dollars
provided to recipient countries. Using these methods, DOD obtains a variety
of information, including documentary, visual, testimonial, and photographic
evidence, that it then uses to compile its annual accounting report to the
Congress. The 5 percent or less of the total value of assistance provided
for which DOD cannot give reasonable assurance that it is being used for the
purposes intended generally consists of equipment located at sites where
DOD?s access is restricted or denied. DOD Has Procedures
To Provi de Reasonable Assurance of Accountability for CTR Assistance
Page 7 GAO- 01- 694 Cooperative Threat Reduction
(See app. I for information on DOD?s 1999 report accounting for CTR
assistance.)
Through program management, audits and examinations, and intelligence
analysis, DOD can account for most of the total program dollars provided to
recipient countries. As illustrated in figure 1, approximately $2. 2 billion
of the $2.5 billion of CTR assistance obligated has been in the form of
services and other activities, with the remaining $340 million of assistance
provided in the form of equipment. Our review shows that DOD maintains
effective accountability for services, other activities, and some equipment
through its program management and intelligence analysis. However, the
inability to view all equipment, particularly at those sites where Russia
does not allow U. S. personnel access, precludes DOD from determining that
all equipment is being used for the intended purpose. Our analysis showed
that a limited amount of equipment- less than 5 percent of the total value
of CTR assistance provided- is in locations where U. S. personnel have no
access rights or do not visit. Although DOD has used these procedures to
account for CTR assistance since the program began, we found that, in the
past, DOD officials did not routinely document the results of their program
management visits. DOD has strengthened its procedures for documenting
information collected through its program management efforts, which is
extremely important now that the vast majority of new CTR assistance is in
the form of services, whose accountability primarily relies on program
management.
DOD partially accounts for CTR assistance through program management, which
provides oversight of the majority of CTR assistance. In managing their
projects, CTR program officials make frequent visits to recipient countries.
Through these site visits, they observe the use of CTR- provided equipment,
monitor contract performance and schedule, and inspect and accept the work
performed, in addition to discussing technical and programmatic issues with
recipient country officials. DOD has recently developed a reporting system
to capture these activities more systematically. Since implementing the
system at the start of fiscal year 2001, 70 program management visits were
conducted through the end of February 2001; 69 of these visits have been
documented. Thirteen visits included inspecting and accepting the work
performed, and 30 visits included the inspection of CTR- provided equipment
and materials, among other activities performed. Procedures Used to
Account for CTR Assistance
Program Management
Page 8 GAO- 01- 694 Cooperative Threat Reduction
Additionally, program managers obtain information from the U. S. contractors
that manage some of the projects and maintain CTR- provided equipment.
Project managers obtain the status of projects from contractors responsible
for managing entire projects. For example, the U. S. contractor for the
construction of the Security Assessment Training Center at Sergiev Posad,
Russia, maintains U. S. nationals on site to directly oversee ongoing work.
Contractor personnel provide weekly status reports and meet frequently with
CTR project officials. When we visited Sergiev Posad in January 2001, we
observed the interaction between contractor personnel and program officials
regarding the construction of a small arms training facility and the testing
of various security systems. For example, figure 3 shows several types of
vehicle security gates provided through CTR assistance. These gates are
tested by U. S. and Russian personnel at the facility to determine which
equipment best meets requirements for upgrading security at Russian nuclear
storage facilities.
Figure 3: Security Assessment and Training Center in Sergiev Posad, Russia
Note: This photograph contains three vehicle gates, part of one is to the
immediate right, the second one is the two large structures to the left and
right, and the third has a bar gate that is in the open position on the
right. These vehicle gates are not just barriers; they also have sensor
components.
Source: GAO.
Page 9 GAO- 01- 694 Cooperative Threat Reduction
DOD also has one U. S. contractor providing logistics and maintenance
support for all CTR- provided equipment. This contractor has recently
developed the Electronic Information Delivery System that tracks equipment
location, value, and maintenance. The system also monitors the number of
contractor visits scheduled, completed, and denied to the sites where
equipment is located. The database is available to program officials through
the Internet. Program officials can obtain reliable information from their
various contractors on how CTR assistance is used.
DOD personnel conduct audit and examination visits on the basis of formal
agreements and procedures with recipient countries. Audit and examination
teams essentially take an inventory of CTR- provided equipment to verify
location and use for the annual accounting report; however, the teams do not
assess the projects? efficiency or effectiveness. For calendar year 2000,
DOD scheduled 23 audits and examinations, of which 14 were conducted. The
remaining nine were either cancelled or postponed, primarily due to
difficulties with the Russians concerning the agreement governing audit and
examination procedures. However, CTR program officials stated that they had
full confidence that the equipment meant to be inventoried by the audit and
examination teams was being used as intended as the result of their program
management procedures.
The selection of which projects, sites, and equipment will undergo an audit
and examination is judgmental and is based on the risk of equipment loss,
misuse, or diversion; the estimated dollar value of the equipment; the date
of the last audit and examination of that project; and the site?s
accessibility. DOD officials, however, could not always specify the
rationale used in scheduling audits and examinations.
Audit and examination team leaders determine the specific sites to be
visited and equipment to be inventoried on the basis of program manager and
contractor input; however, the decision is subject to director approval.
Audit and examination teams, through visual inspection and record reviews,
annually inventory a selection of CTR- furnished equipment to ensure its
proper location and use. The information obtained through audits and
examinations varies from project to project, depending upon the implementing
agreements with recipient countries. For example, we observed DOD officials
conduct two audits and examinations in Russia. One consisted of visiting a
site where CTR- provided equipment was located, meeting with the officials
who used the equipment, conducting a complete inventory of high- value
equipment, and reviewing training documents. Figure 4 shows the Reutov
Business Development Center, where we observed an audit and examination team
examine about Audits and Examinations
Page 10 GAO- 01- 694 Cooperative Threat Reduction
$270,000 worth of CTR- provided office equipment. The other audit and
examination compared detailed photographs, taken by recipient country
officials, of CTR- provided equipment with inventory lists provided by DOD
and the recipient country. Although the DOD officials who conducted these
audit and examination visits verified that equipment provided through the
CTR program was in place, the officials did not assess whether the projects
examined were conducted in an efficient manner, or whether they were
effectively meeting the objectives of the CTR program, because such
assessments were not part of the scope of work of the audit and examination
teams.
Figure 4: Reutov Business Development Center, Russia
Note: This is a photograph of the Reutov Business Development Center, where
we observed an audit and examination team inventory about $270,000 worth of
CTR- provided office equipment.
Source: GAO
The Weapons Intelligence, Nonproliferation, and Arms Control Center provides
intelligence analysis to the CTR program. The center?s staff analyzes
information obtained from across the intelligence community regarding CTR-
provided assistance. Its assessments supporting CTR accountability are
included in a classified annex to DOD?s annual accounting report. The
center?s assistance also includes briefings to Intelligence Analysis
Page 11 GAO- 01- 694 Cooperative Threat Reduction
program and project managers when needed, assessments of ways in which
potential CTR projects could enhance recipient countries? military forces,
studies of current events and trends, and information helpful in negotiating
and implementing projects.
DOD?s inability to gain access to all sites in some recipient countries
where CTR- provided equipment is located has been an issue since the CTR
program began in 1992. The U. S. government has been concerned about its
ability to examine the use of the equipment, while recipient countries have
had security concerns regarding U. S. access to sensitive facilities. In an
effort to balance these concerns, bilateral agreements were signed to
provide the United States with the general right to audit CTR assistance,
but separate agreements were also required specifying the procedures by
which the United States can audit individual projects. For example, all
audit and examination team visits require a 30- day notice of the audit
before arrival of the team and are limited to no more than three visits per
calendar year, per project. Due to the extreme sensitivity of nuclear weapon
storage sites, Russia did not agree to provide U. S. personnel with access
to those sites. Thus, a separate agreement was negotiated to provide
photographic audits rather than on- site visits to account for the use of
CTR- provided assistance. This agreement stipulates that recipient country
officials, after meeting with the audit and examination team, use CTR-
provided cameras and film to photograph equipment at sites where U. S.
officials are denied access. The team provides the country officials with
specific guidance on how to photograph the equipment as well as a unique
identifier that must be included in all photographs. Recipient country
officials then provide the photographs to the awaiting audit and examination
team for review. The team compares the CTR- provided equipment in the
photographs with inventory lists maintained by DOD and the recipient
country.
Although the level of access varies among CTR projects, nearly all CTR
program- related visits must be preapproved by recipient countries. Certain
types of documents, such as visas, are required of all visitors. We have
grouped the level of access to sites where $340 million worth CTR equipment
has been provided into the following three categories: (1) those sites where
no access is provided to U. S. personnel, although audits and examinations
are performed through alternative methods; (2) those sites where audits and
examinations are not performed due to the absence of administrative
arrangements but where program managers have access to the project sites
(restricted access); and (3) those sites where access has not been denied to
either audit and examination teams or project DOD Does Not Have Full
Access to All Sites Where Equipment Is Located
Page 12 GAO- 01- 694 Cooperative Threat Reduction
managers (unrestricted access). 5 Figure 5 shows the value of CTR equipment
by recipient country and level of access.
Figure 5: Value of CTR Equipment Impacted by Recipient Country and Level of
Access
Note: Georgia also received about $700,000 worth of CTR equipment that falls
within the category of unrestricted access. Russia received $3.1 million of
equipment for a program that has been completed and is no longer subject to
program management or audits and examinations. Moldova and Uzbekistan have
not received any equipment.
Source: GAO analysis on the basis of Defense Threat Reduction Agency data.
5 Information is current through April 30, 2001.
Page 13 GAO- 01- 694 Cooperative Threat Reduction
United States officials are not provided access to the Russian sites where
the equipment associated with the storage and transportation of nuclear
warheads is located. In some cases, equipment such as the U. S.- provided
railcars used to transport warheads is delivered to alternate locations for
review by U. S. government officials. In other cases, such as for the
equipment at warhead storage sites, U. S. government officials are provided
with time- stamped photographs of the equipment to account for its use. For
example, figure 6 is a photograph of a supercontainer that was used to
transport nuclear weapons. The photograph was taken during the January 2001
audit and examination of equipment at Russian nuclear weapons storage sites.
DOD accepted the photograph as proof that the equipment was located at a
nuclear weapons storage site where U. S. personnel were denied access.
Figure 6: Example of a Photograph Russia Provided to an Audit and
Examination Team in January 2001
Note: This is a photograph of a supercontainer that was used for
transporting nuclear weapons, with the DOD identifier taped on the side.
Source: Department of Defense.
Audit and examination teams have restricted access to sites containing
equipment designed to help the Russians eliminate their strategic nuclear
Page 14 GAO- 01- 694 Cooperative Threat Reduction
delivery systems- that is, heavy bombers, intercontinental ballistic
missiles, and submarine launched ballistic missiles- and the safe storage of
fissile materials. Although program managers usually have access to those
sites where such equipment is located, the Russian government has denied
access to CTR audit and examination teams since 1999, even though DOD
considers this a violation of Russia?s obligations under the bilateral
agreements. DOD officials said that they are working with the Russian
government, primarily the Ministry of Atomic Energy, to negotiate a mutually
acceptable arrangement to promote the continuation of audits and
examinations.
The final category covers CTR equipment provided to recipient countries
where access has not been routinely denied to audit and examination teams
and project managers. This equipment ranges from that used to destroy
chemical weapons in Russia to that used to eliminate strategic nuclear
delivery vehicles in Ukraine and Kazakhstan. However, recipient countries
must preapprove virtually all visits to sites where CTR assistance is
located, and, occasionally, project managers and audit and examination teams
are denied access to CTR- provided equipment. For example, during a
September 2000 audit and examination of export control equipment in
Kazakhstan, team members were denied access to two buildings for security
concern reasons. Furthermore, some contractor personnel have been denied
access to recipient country facilities that are normally open to U. S.
personnel. From May 2000 through April 2001, the CTR logistics support
contractor scheduled 361 site visits to repair and maintain CTR- provided
equipment, but in 9 cases, the requests were denied. All nine denials were
at sites in Russia involving the elimination of strategic offensive arms.
DOD could improve the quality of its program oversight function by better
targeting and expanding the scope of its audit and examination procedure.
Audits and examinations have become less useful in accounting for CTR
assistance because they frequently duplicate what program managers do on a
routine basis, and, as currently conducted, the reviews simply consist of
taking equipment inventories. As the CTR program has changed from providing
equipment to providing contracted services, audits and examinations have not
evolved to include assessments of the effectiveness or efficiency of the
services provided.
Many audits and examinations conducted in 2000 appear to provide little
value in accounting for CTR assistance beyond the information already
provided through program management and intelligence analysis. Of the DOD
Can Improve Its
Audit and Examination Procedure to Better Oversee CTR Assistance
Page 15 GAO- 01- 694 Cooperative Threat Reduction
13 audits and examinations scheduled for Russia in calendar year 2000, 7 did
not take place. However, CTR officials we interviewed stated that it did not
matter that these audit and examinations were not conducted because the
officials could account for their projects without the information supplied
by audits and examinations. The officials said they had sufficient data
available from program management and intelligence analysis to provide
reasonable assurance on the use of equipment. Figure 7 is a photograph used
to inventory CTR- provided equipment at a Russian nuclear weapons storage
site. DOD accepted this photograph as proof that U. S.- provided equipment
was located at the site where U. S. personnel were denied access.
Figure 7: CTR- Provided Russian Firetruck and Minitractor
Note: This is a photograph of U. S.- provided equipment located at a site
where DOD personnel have no access.
Source: Department of Defense.
Our analysis indicated that audit and examination visits often duplicated
equipment verification already performed and documented through program
management. For example, in October 2000, a project manager visited a
strategic nuclear arms elimination site in Ukraine and documented his
observation of CTR- provided equipment, including 16 of
Page 16 GAO- 01- 694 Cooperative Threat Reduction
33 dump trucks. Later, in December, an audit and examination team visited
the same site and inventoried the same equipment, but this time observed 17
of 33 trucks. During both visits, the remaining trucks were accounted for
through a review of records.
Although DOD officials acknowledged that audits and examinations, as
currently conducted, provide little additional value, they believe that
these procedures should continue to be used to account for CTR assistance.
The officials commented that the United States should maintain its right to
audit and examine CTR- provided assistance as stated in the bilateral
agreements with the recipient countries but added that the scope of audits
and examinations could be expanded to encompass more than simply taking an
inventory of equipment. The results of a recent DOD Inspector General audit
of CTR assistance support the concept of broader reviews. 6 For example, the
report raised no issues regarding the accountability of assistance but did
raise concerns regarding the efficiency of some CTR projects. Specifically,
DOD officials questioned how recipient countries would use funds generated
by salvageable materials from the elimination of weapons of mass
destruction. Furthermore, with the help of the Defense Systems Management
College, DOD officials are reviewing CTR program management processes to see
if they can be strengthened.
DOD has procedures in place that provide reasonable assurance that most
assistance is used for its intended purpose; however, DOD?s inability to
gain access to some sites preclude it from collecting sufficient evidence to
ensure that all CTR- provided assistance is used only for the purposes
intended. DOD has developed and begun implementing new procedures for
documenting the methods it uses to collect data regarding CTR assistance.
Specifically, information obtained from the recently developed reporting
system to capture program manager trip activities and the Electronic
Information Delivery System for tracking CTR- provided equipment could
improve the quality of future accounting reports. Given the program?s
transition from providing equipment to providing services, most of the
audits and examinations conducted in 2000 appear to lack value beyond that
provided by program management and intelligence analysis.
6 Office of the Inspector General Department of Defense Audit Report,
Cooperative Threat Reduction Program, Report No. D- 2001- 074, March 9,
2001. Conclusions
Page 17 GAO- 01- 694 Cooperative Threat Reduction
By restructuring and better targeting audits and examinations, DOD would
have a more valuable tool to oversee and account for CTR assistance. This
may mean doing fewer audits and examinations, but expanding the scope of
such audits and examinations to include assessments of projects?
effectiveness and efficiency, including the delivery of services. Currently,
there are no well- defined criteria for targeting audits and examinations.
To improve DOD?s accounting of CTR- provided assistance, we recommend that
the Secretary of Defense strengthen audit and examination procedures by
developing criteria to target audits and examinations at the most
vulnerable CTR projects, such as those least accounted for through other
means; and
expanding the scope of audits and examinations from simply taking an
inventory of equipment provided under the program to assessing the
effectiveness and efficiency of CTR assistance, including contracted
services.
DOD?s Defense Threat Reduction Agency commented on a draft of this report
and agreed with our findings and our recommendation to enhance the quality
of its oversight of the Cooperative Threat Reduction Program. In discussing
how it plans to implement our recommendation, DOD said it has developed a
methodology to better target audits and examinations at the most vulnerable
CTR projects, such as those least accounted for through other means. The
methodology includes calculating a weighted risk factor for each CTR project
based on 10 criteria. (See appendix II for more details.) By applying these
criteria to each project, program officials can better target which audits
and examinations to conduct. In addition, DOD officials plan to expand the
scope of audits and examinations to periodically assess the effectiveness
and efficiency of CTR assistance, including contracted services. DOD did not
specify, however, how and when such measures would be incorporated into its
CTR audit and examination process.
On the basis of the legislative mandate, our objectives were to assess (1)
whether DOD?s oversight procedures produce the necessary information to
determine if the threat reduction assistance, including equipment provided
and services furnished, is being used as intended and (2) whether
improvements can be made in the way DOD carries out its oversight
responsibilities. Recommendation for
Executive Action Agency Comments
Scope and Methodology
Page 18 GAO- 01- 694 Cooperative Threat Reduction
To accomplish our objectives, we examined DOD?s scope, procedures, and
mechanisms for collecting and analyzing data used to account for the use of
CTR assistance; determined what data DOD uses to report on whether CTR
assistance is being used for the purpose intended; and reviewed how much of
the equipment and services DOD actually accounts for. Specifically, we
interviewed Defense Threat Reduction Agency officials, CTR policy officials,
and CTR contractors responsible for DOD?s CTR accounting reports. We
interviewed four of the six primary program managers and several project
managers, particularly those who had audit and examination visits for their
programs cancelled. We interviewed five of the eight audit and examination
team leaders. We also met with officials from the Weapons Intelligence,
Nonproliferation, and Arms Control Center to obtain information on certain
CTR projects and on how the intelligence community supports CTR program
accounting efforts.
We reviewed program management trip reports, weekly reports, quarterly
program reviews, and other program documents. We were given a demonstration
and were provided documentation of the newly developed Electronic
Information Delivery System, which is a contractor- based logistics and
maintenance support database. We also spoke with U. S. contractors working
in Russia. We accompanied a Defense Threat Reduction Agency audit and
examination team on two audits and examinations in Russia from January 19,
2001, to February 1, 2001. Additionally, we reviewed all audit and
examination trip reports for 1999 and 2000. We met with and obtained
documentation from officials in the DOD Inspector General?s Office who had
recently examined several CTR projects.
We also reviewed DOD?s annual accounting report for 1999 to determine
whether the Department had met the legislative requirements of section 1206
of the National Defense Authorization Act for Fiscal Year 1996. See appendix
I for our analysis.
We performed our work from October 2000 through May 2001 in accordance with
generally accepted government auditing standards.
We are providing copies of this report to other interested congressional
committees and the Secretary of Defense. We will make copies available to
others upon request.
Please contact me at (202) 512- 4128 if you or your staff have any questions
concerning this report. Key contributors to this assignment were F. James
Page 19 GAO- 01- 694 Cooperative Threat Reduction
Shafer, Hynek Kalkus, Beth Hoffman Le�n, Martin DeAlteriis, and Lynn
Cothern.
Harold J. Johnson Director, International Affairs and Trade
Appendix I: Review of the Department of Defense?s 1999 Report Accounting for
CTR Assistance
Page 20 GAO- 01- 694 Cooperative Threat Reduction
As required by section 1206 of Public Law 104- 106, we reviewed the
Department of Defense?s (DOD) 1999 accounting report to determine if it (1)
contained current and complete data on the Cooperative Threat Reduction
(CTR) assistance provided (both equipment and services), (2) described how
CTR- provided assistance was accounted for and used, (3) provided a
description of how DOD plans to account for the assistance during the
following year, and (4) listed specific information on Russia?s arsenal of
tactical nuclear warheads. 1
On the basis of our review, DOD?s 1999 accounting report covered the
legislatively mandated information, yet it did not always convey the
information completely and consistently. Specifically:
DOD?s 1999 accounting report contained current and complete data on a little
over two- thirds of all CTR assistance provided to the recipient countries
through September 1999. According to DOD officials, the monies not accounted
for in the report were spent on equipment purchased in country; equipment
purchased in the United States but not yet shipped; and ?other? CTR program
costs, such as travel, shipment of equipment, military- to- military
contacts, and Defense Threat Reduction Agency contractors. The report lists
equipment totaling $314 million, services totaling $1.1 billion, and
miscellaneous items totaling almost $16 million, for a combined total of
nearly $1.5 billion worth of assistance. By the end of fiscal year 1999,
however, the CTR program had provided over $2.1 billion of assistance to the
recipient countries. The report lists some of the equipment that was
purchased in recipient CTR countries, but it does not distinguish between
that equipment and equipment shipped from the United States. According to
CTR officials, the draft 2000 accounting report will provide more
information about equipment purchased in recipient countries for that year.
The 1999 report also included a listing of about $27 million in CTR
equipment that DOD provided to recipient states during a 3month period in
1997 that the 1998 accounting report excluded.
1 Previous GAO reports include Weapons of Mass Destruction: DOD Reporting on
Cooperative Threat Reduction Assistance Can Be Improved (NSIAD- 95- 191,
Sept. 29, 1995); Weapons of Mass Destruction: DOD Reporting on Cooperative
Threat Reduction Assistance Has Improved (NSIAD- 97- 84, Feb. 27, 1997);
Cooperative Threat Reduction: Review of DOD?s June 1997 Report on Assistance
Provided (NSIAD- 97- 218, Sept. 5, 1997); and Cooperative Threat Reduction:
DOD?s 1997- 98 Reports on Accounting for Assistance Were Late and Incomplete
(GAO/ NSIAD- 00- 40, Mar. 15, 2000). Appendix I: Review of the Department of
Defense?s 1999 Report Accounting for CTR Assistance
Appendix I: Review of the Department of Defense?s 1999 Report Accounting for
CTR Assistance
Page 21 GAO- 01- 694 Cooperative Threat Reduction
In its 1999 accounting report, DOD described how CTR- provided assistance
was accounted for and used. Specifically, DOD explained the methods it used
to account for CTR- provided equipment- audits and examinations, program
management trips, and intelligence obtained through national technical
means. The 1999 accounting report listed where the equipment was located at
the time of the report and described the value of contractor services
provided for each project. Although the report usually provided summary
assessments of whether the equipment at the various projects was being used
for its intended purposes, it did not detail the services provided and often
did not specifically assess whether such services were satisfactory. DOD
officials acknowledged that this was the situation but explained that they
judged the amount of information on contractor services to be sufficient.
Unlike the 1998 report, the 1999 accounting report summarized how the
Departments of State and Energy account for their CTR- funded projects and
referred the reader to reports submitted by these departments that detail
how the assistance was accounted for. 2
The 1999 accounting report provided a description of how DOD plans to
account for the assistance in fiscal year 2000. 3 Although DOD had planned
to conduct 23 audits and examinations during the fiscal year, it only
conducted 14. The remaining nine were either cancelled or postponed due to
difficulties with the Russians concerning the agreement governing audit and
examination procedures.
DOD?s 1999 accounting report did not list specific information on Russia?s
arsenal of tactical nuclear warheads as required by section 1312 of the
National Defense Authorization Act for Fiscal Year 2000. However, DOD
provided this information in a separate report sent to the Congress on
January 9, 2001.
DOD?s 1999 report accounting for CTR assistance, like its five predecessors,
was submitted late to the Congress. The report was due on January 31, 2000,
but was not issued to the Congress until January 17,
2 Future CTR accounting reports to the Congress will only provide accounting
assurances for those projects DOD supports through the International Science
and Technology Center. As CTR funds are no longer provided to the Department
of Energy?s Material Control Accounting and Physical Protection Program,
Energy will directly report its accounting efforts to the Congress.
3 See section 1206 of P. L. 104- 106.
Appendix I: Review of the Department of Defense?s 1999 Report Accounting for
CTR Assistance
Page 22 GAO- 01- 694 Cooperative Threat Reduction
2001- a delay of almost 12 months. DOD officials attributed the delay to a
prolonged internal review process and to the fact that CTR policy officials
revised the draft report, late in the review process, to incorporate the
recommendations contained in our March 2000 report. The Department?s delay
prevented the Congress from knowing the status of CTR- provided assistance
while members were considering CTR program funding levels for fiscal year
2001.
Appendix II: Comments From the Department of Defense
Page 23 GAO- 01- 694 Cooperative Threat Reduction
Appendix II: Comments From the Department of Defense
Appendix II: Comments From the Department of Defense
Page 24 GAO- 01- 694 Cooperative Threat Reduction
Appendix II: Comments From the Department of Defense
Page 25 GAO- 01- 694 Cooperative Threat Reduction
Appendix II: Comments From the Department of Defense
Page 26 GAO- 01- 694 Cooperative Threat Reduction
Appendix II: Comments From the Department of Defense
Page 27 GAO- 01- 694 Cooperative Threat Reduction
Appendix II: Comments From the Department of Defense
Page 28 GAO- 01- 694 Cooperative Threat Reduction (320007)
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