Weapons of Mass Destruction: State Department Oversight of Science Centers Program (10-MAY-01, GAO-01-582)
Since 1994, the United States has appropriated $227 million to
support two multilateral science centers in Russia and Ukraine
that pay scientists of the former Soviet Union who once developed
nuclear, chemical, and biological weapons and missile systems to
conduct peaceful research. By employing scientists through the
science centers, the United States seeks to reduce proliferation
risks associated with underemployed, highly trained scientists
who could be tempted to sell their expertise to terrorist groups
of countries of concern. This report examines the (1) selection
procedures the State Department uses to fund projects that meet
program objectives, and (2) monitoring procedures the State
Department uses to verify that scientists are working on the
peaceful research they are paid to produce. However, the
Department does not have complete information on the total number
and locations of Senior scientists and has not been granted
access to Senior scientist at critical research institutes under
the Russian Ministry of Defense. GAO found that the State
Department has designed an interagency review process to select
and fund research proposals submitted by weapons scientists to
the science centers in Russia and Ukraine. The overall goal is to
select projects that reduce proliferation risks to the United
States and employ as many senior scientists as possible. GAO
found that the science centers were following their monitoring
processes and taking actions to address audit deficiencies.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-582
ACCNO: A00979
TITLE: Weapons of Mass Destruction: State Department Oversight
of Science Centers Program
DATE: 05/10/2001
SUBJECT: Weapons research and development
Foreign governments
Nuclear proliferation
International cooperation
Arms control agreements
Russia Ukraine
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GAO-01-582
GAO
May 2001
Report to the Chairman and to the Ranking Member, Subcommittee on Foreign
Operations, Committee on Appropriations, U. S. Senate
WEAPONS OF MASS DESTRUCTION
State Department Oversight of Science Centers Program
GAO- 01- 582
Page 1 GAO- 01- 582 Weapons of Mass Destruction
May 10, 2001 The Honorable Mitch McConnell Chairman The Honorable Patrick J.
Leahy Ranking Member Subcommittee on Foreign Operations Committee on
Appropriations United States Senate
Since 1994, the United States has appropriated $227 million to support two
multilateral science centers in Russia and Ukraine that pay scientists of
the former Soviet Union who once developed nuclear, chemical, and biological
weapons and missile systems to conduct peaceful research. By employing
scientists through the science centers, the United States seeks to reduce
proliferation risks associated with underemployed, highly trained scientists
who could be tempted to sell their expertise to terrorist groups or
countries of concern such as Iran, Iraq, or North Korea. Accordingly, the
program has employed thousands of weapons scientists in a variety of
research areas, including projects aimed at developing new anticancer drugs,
improving nuclear safety, and enhancing environmental cleanup techniques.
The State Department plays an active role in selecting the research projects
for funding that meet program objectives and assuring adequate program
oversight.
The Senate report accompanying the Senate Foreign Operations, Export
Financing, and Related Programs appropriation bill for fiscal year 2001
directed GAO to examine the State Department?s oversight of the science
center program. Accordingly, we reviewed (1) the selection procedures State
uses to fund projects that meet program objectives and (2) the monitoring
procedures State uses to verify that scientists are working on the peaceful
research they are paid to produce.
To address these issues, we examined State Department records and spoke with
officials of State?s Bureau of Nonproliferation responsible for overseeing
U. S. involvement in this program. We also spoke with officials from other
agencies that participate in selecting projects to fund. We visited the
International Science and Technology Center in Russia and the Science and
Technology Center in Ukraine to interview officials and review their files
to determine how the centers were implementing the program. In addition, we
visited nine research institutes located in Russia and Ukraine that are
participating in the program and interviewed
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 582 Weapons of Mass Destruction
scientists involved in 35 projects that had received $7.4 million from the
United States. Our analysis focused on State Department- funded projects and
not the program in its entirety.
The State Department has designed an interagency review process to select
and fund research proposals submitted by weapons scientists to the science
centers in Russia and Ukraine. The review process is intended to screen out
proposals that may directly or indirectly support weapons development,
evaluate the proposals? scientific merit, and target proposals employing
predominantly senior weapons scientists (those of greatest proliferation
concern). The overall goal of this process is to select projects that reduce
proliferation risks to the United States and employ as many senior
scientists as possible. However, the Department does not have complete
information on the total number and location of senior scientists and has
not been granted access to senior scientists at critical biological research
institutes under the Russian Ministry of Defense. During 2000, about 6,500
of an estimated 30,000 to 75,000 senior weapons scientists in the former
Soviet Union worked on U. S.- funded projects.
The State Department does not directly monitor the activities or results of
the work of scientists participating in U. S.- funded science center
projects. Instead, the Department relies on the mostly Russian and Ukrainian
specialists at the science centers, overseen by managers from the United
States, the European Union, Japan, and Canada, to conduct routine monitoring
of the senior scientists? progress and the Department of Defense to conduct
financial and technical audits. Based on our in- country review of 35
research projects at nine institutes in Russia and Ukraine, we found that
the science centers were following their monitoring processes and taking
actions to address audit deficiencies. While the monitoring process helps
the State Department oversee the activities of the senior scientists working
on U. S.- funded projects, the terms of the project agreements do not allow
auditors to track what the scientists are doing while they are not working
on the projects. This is particularly relevant since, for example, in 2000,
75 percent of the senior scientists worked 4 ½ months or less on U. S.-
funded projects. Some senior scientists worked as little as a few days on U.
S.- funded projects over the course of the entire year. Consequently, the
Department knows little about the scientists? activities outside the
program. Results in Brief
Page 3 GAO- 01- 582 Weapons of Mass Destruction
During the Cold War, the Soviet Union established several hundred research
institutes that were dedicated to the research, development, and production
of weapons of mass destruction. Although precise figures are not available,
science center officials estimate that at the time of the Soviet Union?s
collapse, from 30,000 to 75,000 highly trained senior weapons scientists
worked at these institutes. These figures do not include the thousands of
less experienced junior scientists and technicians who also worked in these
institutes. After the collapse of the Soviet Union in 1991, many of these
scientists suffered significant cuts in pay and lost their government-
supported work. By early 1992, the United States and other countries were
concerned that senior weapons scientists struggling to support their
families could be tempted to sell their expertise to terrorists or countries
of concern such as Iraq, Iran, and North Korea.
To address this threat, the United States, the European Union, Japan, and
Russia signed an agreement in 1992 establishing the International Science
and Technology Center in Moscow. A year later, the United States, Sweden,
Canada, and Ukraine signed an agreement establishing the Science and
Technology Center in Ukraine, located in the city of Kiev. 1 The science
centers in Russia and Ukraine began funding research projects in 1994 and
1995, respectively. In addition, the science centers have recently begun
supporting the weapons scientists? long- term transition to peaceful
research by helping them identify and develop the commercial potential of
their research, providing some business training, and helping fund patent
applications.
While the science centers operate independently of each other, they are very
similar in structure and procedures (see fig. 1). Each science center has a
governing board that meets two or three times a year to make administrative
decisions, which includes formally approving project funding. Each science
center also has an executive director and secretariat that carries out these
decisions by conducting the center?s day- to- day operations and
administering the funded projects. The science centers? senior management
consists mostly of representatives from the United States and the other
funding parties (the European Union, Japan, and Canada). However, almost all
of the secretariat?s staff who are responsible
1 After Sweden?s accession to the European Union, the European Union became
a member of the science center in Ukraine in 1998. Background
Page 4 GAO- 01- 582 Weapons of Mass Destruction
for project implementation and oversight are Russian and Ukrainian nationals
hired by the funding parties and the host government of Russia or Ukraine.
Figure 1: Science Centers? Structure
Note: During 2000, Armenia held a rotating seat on the Russian Center?s
Governing Board as a representative of itself and four other recipient
countries - Belarus, Georgia, Kazakhstan, and the Kyrgyz Republic.
Source: GAO analysis of International Science and Technology Center in
Russia and Science and Technology Center in Ukraine documents.
As of December 31, 2001, the United States had funded 590 projects conducted
at 431 research institutes, mostly within Russia and Ukraine, but also in
Armenia, Georgia, Kazakhstan, Uzbekistan, and the Kyrgyz Republic. The
projects range in length from 6 months to more than 3 years and involve
basic and applied research in such areas as developing anticancer drugs,
devising techniques to enhance environmental cleanup, and ensuring nuclear
reactor safety. The projects employ teams of senior weapons scientists,
junior scientists, and technicians according to the
Research Institutes
Provide facilities for research
Science Center Secretariat
Administers Projects
Governing Board
Approves projects for funding
International Science and Technology Center in Russia
Governing Board Members
United States European Union
Japan Russia Armenia
Science and Technology Center in Ukraine
Governing Board Members
United States European Union Canada Ukraine
Russia Armenia
Belarus Georgia Kazakhstan Kyrgyz Republic
Ukraine Georgia Uzbekistan
Projects conducted in: Scientists
Provide science centers with technical and financial reports
Projects conducted in:
Manages project funds to purchase equipment, pay scientists? grants and
institute overhead
Conducts oversight of ongoing projects
Compensated for overhead costs Makes administrative decisions
Conduct research
Page 5 GAO- 01- 582 Weapons of Mass Destruction
detailed workplans included in the project agreements. They receive cash
payments for their work that are sent directly from the science centers to
their personal bank accounts. According to science center officials, the
average daily grant payment for senior weapons scientists is $20-$ 22 per
day, tax free, compared to an average daily wage for all workers of about $4
in Russia or about $2 in Ukraine.
While most of a project?s funds are spent for the scientists? and
technicians? salaries, the United States also pays for other costs
associated with the project, as specified in the project agreement. These
costs usually include the purchasing of computer equipment and some
laboratory equipment, such as chemicals and glassware. In addition, the
United States pays for senior scientists? travel to international
conferences so that they can present their work and meet with their western
counterparts. Also, the institutes receive payment for overhead costs, such
as electricity and heat (not to exceed 10 percent of the project?s total
cost).
As table 1 shows, the United States has provided more funds for projects at
both centers than any other source. 2 Since 1994, $227 million has been
appropriated specifically for the science center program, of which $133.9
million had been used to fund approved projects as of March 31, 2001. 3 In
addition, U. S. agencies such as the Departments of Defense, Agriculture,
Energy, and Health and Human Services have used $25.4 million in funds from
other appropriations to support projects through the science center program.
4 Finally, private sector firms from the United States, the European Union,
Japan, and Canada have funded projects of commercial interest to them that
they helped develop with senior weapons scientists.
2 The funding parties also cover the operating expenses of the science
centers. For 2001, total operating expenses at both centers are expected to
amount to about $6. 3 million. The United States pays about one- third of
these costs at the center in Russia and about threequarters of these costs
at the center in Ukraine.
3 U. S. funds for the science centers were appropriated to the Department of
Defense for fiscal year 1994- 95 and to the Department of State since fiscal
year 1996. 4 We did not review the selection and oversight process for
projects supported by these funds.
Page 6 GAO- 01- 582 Weapons of Mass Destruction
Table 1: Funding for Projects at the Science Centers, by Source, 1994
Through March 2001
(Dollars in millions)
Source Center in Russia Center in Ukraine Total
United States, science center appropriation $104.9 $29.0 $133.9 United
States - other appropriations 21.7 3. 7 25.4 European Union 98.3 6. 3 104.6
Japan 36.4 0. 7 37.1 Canada 0.0 1. 9 1.9 Private sector 5.7 3. 6 9.3 Other
countries 16.2 0. 1 16.3
Total $283.2 $45.3 $328.5
Note: Other countries include Norway, Republic of Korea, and Switzerland.
Sources: International Science and Technology Center in Russia and Science
and Technology Center in Ukraine.
As figures 2 and 3 show, the United States has provided about 45 percent of
the funding for projects at the science center in Russia and about 72
percent of the funding for projects at the science center in Ukraine since
1994.
Page 7 GAO- 01- 582 Weapons of Mass Destruction
Figure 2: Funding for Projects Through the Science Center in Russia, by
Donor, 1994 - 2000
Source: International Science and Technology Center, Russia.
45% 35%
13% 5%
United States European Union Japan Other
2% Private sector A
Page 8 GAO- 01- 582 Weapons of Mass Destruction
Figure 3: Funding for Projects Through the Science Center in Ukraine, by
Donor, 1995- 2000
Source: Science and Technology Center in Ukraine.
In addition to the science center program, the Department of Energy (DOE)
funds research by weapons scientists through two similar programs. As of
December 2000, DOE had obligated about $110 million for the Initiatives for
Proliferation Prevention program and about $16 million for the Nuclear
Cities Initiative. Like the science centers program, Initiatives for
Proliferation Prevention pays scientists directly for peaceful research in
several countries of the former Soviet Union, particularly nuclear weapons
scientists. However, the program is also designed to commercialize
technologies that utilize the scientists? expertise. 5 The objectives of the
Nuclear Cities Initiative are to create nonmilitary job opportunities for
weapons scientists in Russia?s closed nuclear cities and to help Russia
accelerate the downsizing of its nuclear weapons complex. 6
5 See Nuclear Nonproliferation: Concerns with DOE?s Efforts to Reduce the
Risks Posed by Russia?s Unemployed Weapons Scientists (RCED- 99- 54, Feb.
19, 1999). 6 See Nuclear Nonproliferation: DOE?s Efforts to Assist Weapons
Scientists in Russia?s Nuclear Cities Face Challenges (GAO- 01- 429, May 3,
2001).
72% 8%
14% 4%
United States European Union Canada
2% Japan and Other Private Sector
Page 9 GAO- 01- 582 Weapons of Mass Destruction
Unlike the science center program, the Nuclear Cities Initiative does not
pay scientists directly.
One mechanism the State Department uses to meet the program?s
nonproliferation objectives is its leading role in selecting which projects
will receive funding. The project selection process begins after the science
centers send the proposals they receive from scientists to the State
Department for review. An interagency process involving the Departments of
State, Defense, and Energy reviews about 1,000 project proposals during the
course of a year for scientific merit and potential policy and proliferation
concerns. The State Department?s selection is limited to those projects
approved by the national government where the scientists work and, in some
instances, the State Department has not been granted access to scientists at
critical biological research institutes. Since 1994, the State Department
has selected for funding 590 projects that employed about 9,700 senior
scientists. However, the State Department does not know how much of the
total population of senior scientists it has reached because estimates of
the total number of scientists vary widely.
The State Department?s selection process begins when scientists submit
project proposals through their research institutes to their government for
approval and certification of the senior weapons scientists? expertise. The
State Department selects from those project proposals that have been
approved by the national government where the scientists work. 7 Although
State Department and science center officials stated that most project
proposals were approved by the national governments, not all research
institutes in the former Soviet Union have had scientists put forth a
project proposal to one of the science centers. For example, four biological
weapons institutes under the Russian Ministry of Defense have not submitted
project proposals to the science center in Russia. This effectively denies
the State Department access to the senior scientists at these institutes, an
issue of potential concern, since Russia?s intentions regarding its
inherited biological weapons capability remain unclear. 8
7 The agreements establishing the science centers require host government
concurrence of project proposals. 8 See Biological Weapons: Effort to Reduce
Former Soviet Threat Offers Benefits, Poses New Risks (NSIAD- 00- 138, Apr.
28, 2000). State Department
Leads Project Selection Process
Project Review and Approval Process
Page 10 GAO- 01- 582 Weapons of Mass Destruction
Project proposals approved by their government are then sent to one of the
science center secretariats to be forwarded to the United States for review.
9 The other funding parties also receive project proposals from the science
centers and conduct their own, independent selection process. 10 After
project proposals arrive from the science centers, the State Department
distributes them to the various participants in the interagency review
process, including the Departments of Defense and Energy, and U. S.
scientists from private companies and universities. As shown in figure 4,
projects undergo a variety of reviews to ensure that the State Department
funds projects that meet nonproliferation objectives and program intent.
9 Before a project proposal arrives at the State Department, it must also be
certified by the science center that it contains a workplan and other
required information. 10 The United States is the only funding party at both
centers that reviews every proposal.
Page 11 GAO- 01- 582 Weapons of Mass Destruction
Figure 4: Project Selection Process
Source: GAO analysis of information from State Department.
The State Department chairs an interagency group, including the Departments
of Defense and Energy, that conducts a policy review of all project
proposals. According to State Department officials, this interagency policy
review group assesses whether the proposed project contains elements that
contradict U. S. policy, such as work being conducted with institutes in
Belarus (where there are human rights concerns) or with institutes that are
working with Iranian scientists in areas of proliferation concern. The
policy group also coordinates the project proposals with other U. S.
government programs that may involve the same institute or scientists. This
process relies on the reviewers? knowledge and experience with specific
institutes and scientists and their expertise on policy issues. According to
State Department officials, weapons scientists submit few proposals that are
contrary to U. S. policy.
State Department officials and science advisers from the U. S. national
laboratories and other scientists also review the proposals for scientific
merit to ensure that projects employ mostly senior scientists carrying out
meaningful work. The science advisers forward proposals to two or three
Policy Review
Science Review
Policy Review (Departments of State, Defense, and Energy)
Science Review (U. S. national laboratories and other scientists)
Proliferation Review (Departments of State, Defense, and Energy)
Final Selection (Departments of State, Defense, and Energy)
Do not fund projects contrary to U. S. policy, such as proposals from
institutes that do work with countries of concern
Fund projects with scientific merit where senior weapons scientists comprise
at least half of the project team
Ensure projects do not support offensive weapons research
Within available resources, finance as many scientists and institutes as
possible, especially those that pose the greatest proliferation concern
Reviews Desired outcomes
Page 12 GAO- 01- 582 Weapons of Mass Destruction
other U. S. scientists who specialize in the proposed area of work to obtain
their views on the scientific implications of the work, including what they
know about the scientists who submitted the proposal. Based on this review
and their own experience, the advisers develop a consensus opinion on the
merits of the proposed work and whether the United States should fund it.
The interagency group recommends rejecting projects where less than half of
the scientists are former senior weapons scientists. 11 According to State
Department officials, the Department focuses its funding efforts on projects
where the majority of participants are senior scientists whose expertise
represents a more significant proliferation threat than junior scientists or
technicians. However, the State Department cannot independently verify the
weapons experience of the senior scientists it has employed. The State
Department relies on the scientists? national governments to certify that
the senior weapons scientists listed as participants in a project proposal
actually have sufficient expertise to pose a proliferation risk.
According to State Department officials, the group also considers the
commercialization potential of the proposals as part of the review process.
According to State Department and science center officials, although
commercialization is not a primary goal, their ability to promote the
sustainability of the program through the commercial application of
scientific research is limited by the inherent challenges of finding
commercial applications for any scientific research. In addition, the
political and economic situation in Russia, Ukraine, and the other countries
participating in the science centers remains very uncertain and thus deters
foreign investors.
Every project proposal is also reviewed for potential proliferation
concerns. The State Department chairs an interagency group, including
representatives from the Departments of Defense and Energy and other
national security agencies, that examines each proposal to ensure that the
projects the United States funds have only peaceful applications. For
example, according to State Department officials, a proposal to develop a
rocket that could launch several satellites at once was rejected on the
grounds that this same technology could also be used to launch multiple
warheads. Careful examination of the proposed work is particularly critical
in the biological area, where the division between offensive and
11 The United States co- funds projects with other donors where less than
half of the participants are senior weapons scientists. Proliferation Review
Page 13 GAO- 01- 582 Weapons of Mass Destruction
defensive research is often difficult to determine. The proliferation review
group also weighs the risks that financing certain projects could help
sustain a weapons institute infrastructure in the former Soviet Union by
keeping institutes in operation that might have curtailed their research
functions for lack of funds.
After proposals are reviewed for potential policy, science, and
proliferation concerns, officials from the Departments of State, Defense,
and Energy meet to develop the official U. S. position on which project
proposals to fund. During final project selection, the interagency group
considers the information and recommendations developed during the other
reviews, supplemented by past experience with institutes and scientists, to
reach consensus on each project. The group also weighs other considerations.
For example, State Department and science center staff said that they try to
provide funds for projects at as many institutes as possible. A project with
relatively weak scientific merit might receive funding if it is at an
institute of high interest to the United States due to proliferation
concerns. When the group reaches consensus on which projects to fund, it
passes these instructions on to the U. S. representatives on the centers?
governing boards. Representatives from the funding parties on each board
then jointly decide which projects will receive funding.
The next step is for a member of the science center?s staff to work with the
project team to fine- tune the official project agreement. The staff member
and the project team will revise the project?s workplan and make any
modifications required by the funding party. For example, in some cases the
State Department has required project teams to add a U. S.- based
collaborator, agree to additional oversight, or change the project?s budget
to allow scientists to travel to the West more frequently during the course
of the project. The funding parties are not bound to make any payments
related to a project until the final project agreement has their approval
and has been signed by the science center?s executive director. Once the
project agreement has been signed, the project can begin.
According to State Department officials, they cannot fund all of the project
proposals that meet the State Department?s selection criteria due to funding
constraints. For example, in preparation for the March 2001 meeting of the
governing board for the center in Russia, the Department reviewed 148
proposals and found that 92 met U. S. funding criteria. However, the State
Department only funded the 31 proposals with the highest number of senior
scientists, greatest scientific merit, and/ or the involvement of institutes
of particular proliferation concern. Final Selection
Funding Levels and Scientists Employed
Page 14 GAO- 01- 582 Weapons of Mass Destruction
From 1994 through the end of 2000, the United States had funded 590 projects
that employed about 9,700 senior scientists. Figure 5 shows the number of
senior scientists who worked on one or more U. S.- funded projects during
the course of each year. These figures increased steadily from 1994 through
1999 and decreased slightly during 2000. 12 About 6,500 senior scientists
worked on U. S.- funded projects during 2000. Since 1994, more than half of
the total number of people employed by U. S.- funded projects have been
senior scientists.
Figure 5: Number of Senior Scientists on State Department- funded Projects
Note: Figure includes projects fully or partially funded by the State
Department. Source: Science centers in Russia and Ukraine.
Although the State Department knows how many scientists it has employed
through the projects it has funded, it does not know what
12 This figure shows the number of senior scientists employed with funds
specifically appropriated for the science center program. It does not
include scientists funded by other donors? support. Since many scientists
work on projects that last more than one year, the number of scientists
employed during each year cannot be added together.
114 6,544 6,824
5,187 3,705 1,792 333
0 1,000
2,000 3,000
4,000 5,000
6,000 7,000
8,000 1994 1995 1996 1997 1998 1999 2000
Number of senior scientists
Page 15 GAO- 01- 582 Weapons of Mass Destruction
portion of the target population of senior weapons scientists it has
reached. The estimated number of senior weapons scientists in the Soviet
Union at the time of its collapse varies from 30,000 to 75,000 scientists.
During the past decade, an unknown number of senior weapons scientists left
their research institutes to pursue other forms of employment, retired, or
died. At some of the research institutes we visited, the institute directors
told us that about half of their staff left within 2 years of the collapse,
although they stated most who left were junior scientists, technicians, and
support staff. Given these uncertainties, the State Department can only
estimate how much of the total population of senior scientists it has
reached. For example, the 9,700 senior scientists employed by U. S.- funded
projects to date could represent anywhere from 12 percent to 32 percent of
the target population. According to the science centers, funding from all
sources, including the United States, has employed about 21,000 senior
scientists to date.
The State Department does not directly monitor the activities or results of
the work of scientists who are participating in U. S.- funded research
projects. Instead, the Department relies on the mostly Russian and Ukrainian
technical specialists and accountants at the science centers, overseen by
managers from the United States, the European Union, Japan, and Canada, to
monitor scientists? progress in completing their research. The State
Department also uses Department of Defense and outside auditors to conduct
reviews of a sample of U. S.- funded projects. For the 35 projects we
reviewed at nine institutes in Russia and Ukraine, the science centers were
following their monitoring procedure. However, several factors limit the
ability of the State Department to monitor the activities of scientists
working on U. S.- funded projects.
The State Department first relies on the mostly Russian and Ukrainian staff
at the science centers to ensure that scientists are working on the research
they are paid to produce. The science center staff do not observe the
scientists on a day- to- day basis but rather (1) conduct on- site technical
and financial monitoring at least once during each project, (2) review
financial and technical reports submitted by the scientists, and (3) have
frequent contacts with project scientists and receive input from U. S. and
other western scientists who collaborate on the projects. For the 35
projects we reviewed, the science centers were following this monitoring
procedure. State Department
Relies on Science Center Staff and Outside Auditors to Monitor the
Activities of Project Scientists
Science Center Staff Conduct Routine Monitoring of Projects
Page 16 GAO- 01- 582 Weapons of Mass Destruction
Under the terms of the science center project agreements, science center
staff have access to the locations where the research is conducted and to
the personnel, equipment, and documentation associated with the projects. At
least once during the course of a project, science center technical
specialists and accountants spend a day at the institute to confirm that the
research is progressing according to the project agreement by, among other
things,
conducting confidential interviews with individual scientists to discuss
their involvement in the project;
verifying that the amount of time scientists claim on their timesheets
matches the financial reports submitted to the science centers; and
discussing and observing project accomplishments such as results of
experiments, prototypes of new technology, and computer simulations and
databases.
For the 35 projects we examined in detail, we found that the science center
staff had generally followed their on- site monitoring procedures. The
science centers had reports in their project files that documented the on-
site monitoring. In addition, scientists we met with at the institutes
described the on- site monitoring, including the questions asked during the
confidential interviews. At one institute in Ukraine, we observed the
science center staff conducting confidential interviews as part of on- site
monitoring.
The project agreements require the research institutes to submit quarterly
financial reports and quarterly, annual, and final technical reports to the
science centers. Only after performing routine checks of the financial
reports do the science centers deposit the payments into the scientists?
individual bank accounts. The science centers also examine the technical
reports to ensure that the project is achieving the technical results
specified in the project agreement and determine whether the project is on
schedule. For the 35 projects we selected, we verified that the science
centers had received and analyzed the financial and technical reports
required under the project agreements. In addition, scientists we spoke with
at the research institutes also confirmed that they prepare and submit the
reports according to the terms of the project agreements.
In addition to the monitoring procedures provided under the project
agreements, the science center staff have informal contact with scientists
on the project team about once a week, which allows them to check on the
status of projects on an ongoing basis. These frequent contacts occur when
scientists purchase equipment through the science centers, make
Page 17 GAO- 01- 582 Weapons of Mass Destruction
travel arrangements to participate in international conferences, or come to
the science centers to use computers or submit reports in person. Each U.
S.- funded project also has a U. S. or western collaborator, either a
government agency or private company, that works with the scientists on the
research. For example, collaborators attend international conferences with
the scientists, visit the institutes to observe the project results, host
visits by scientists to the United States, and sometimes conduct part of the
research. The science centers seek feedback on the projects? technical
progress from the collaborators, who often have a high degree of expertise
in the project area. When possible, the science centers also participate in
meetings between the scientists and collaborators. Scientists at the
research institutes we visited confirmed that they have frequent contact
with the science center staff and collaborators.
The State Department annually selects a number of U. S.- funded projects to
be audited by the Defense Contract Audit Agency of the Department of
Defense. During 1999 and 2000, the agency conducted 84 audits on behalf of
the State Department. The auditors review financial reports submitted to the
science centers and visit the institutes to interview selected scientists,
examine timesheet completion procedures and individual scientists?
timesheets, and check the inventory of equipment purchased under the
project. Based on these procedures, they determine, among other things,
whether the scientists? time records are reliable and maintained according
to the terms of the project agreement and whether the weapons scientists
working on the project are the same as those identified in the workplan.
Technical auditors from U. S. industry or other government agencies
accompanied the Defense Contract Audit Agency on 44 of the 84 audits
conducted in 1999 and 2000. The technical auditors provided the scientific
expertise necessary to evaluate the scientists? technical performance and
determine whether the amount of time the scientists claim they were working
was commensurate with their technical performance, as documented in their
scientific logbooks and research results. Because the technical auditors
have the expertise to evaluate projects? technical progress, the State
Department wants technical auditors to accompany the Defense Contract Audit
Agency on all future audits of science center projects.
The science centers also undergo an annual external audit of their financial
statements and project monitoring procedures. These external audits,
conducted by international accounting firms hired by the science centers,
include visits to research institutes to evaluate the science centers?
monitoring procedures and make recommendations regarding the State
Department Uses
External Audits to Provide an Additional Level of Oversight
Page 18 GAO- 01- 582 Weapons of Mass Destruction
ability of the science centers to monitor the amount of time that scientists
spend on the science center projects.
According to State Department and science center officials, the science
centers take action to address deficiencies uncovered through monitoring.
Science center officials stated that the problems they have uncovered
through monitoring have been generally minor, for example, errors in
conforming to science centers? accounting requirements. At the science
center in Ukraine, officials stated that the most serious violation they had
uncovered was a scientist who was charging time to a project while he was in
the hospital. They calculated how much he had been overpaid, and he paid the
money back.
External audits have found deficiencies in the timekeeping practices for a
number of projects. For example, one audit found that some scientists had
claimed more than the maximum amount of time they are allowed per year (220
days) and recommended additional procedures to prevent such occurrences in
the future. The Defense Contract Audit Agency initially found some
scientists were charging the science centers the amount of time that had
been budgeted in the project workplan rather than the actual amount of time
they had worked. Usually, the scientists told the auditors that they had
worked more than amount of time they had claimed on their timesheets. For
many projects, the technical auditors confirmed that the scientists were
probably underreporting their time spent on the projects. However, the
technical auditors for two projects at an institute in Russia found that
some scientists could not provide sufficient evidence that they had worked
on the projects for the time they had charged. The State Department
temporarily ceased funding additional projects at this institute until the
problem was resolved. Overall, according to the Defense Contract Audit
Agency, the science centers have implemented procedures to reinforce correct
timekeeping practices among project scientists, and the problems have
lessened.
The scope of State Department?s monitoring of scientists is limited to the
implementation of science center projects. Under the terms of the project
agreements, the science centers and external auditors only monitor
scientists while they are working on science center projects; they cannot
track what the scientists are doing while they are not working on the
projects or after the projects end. Furthermore, the project agreements do
not prohibit the scientists from continuing to work on research for their
institutes including, in Russia, research related to nuclear weapons.
Although scientists may volunteer information about their other research
Science Centers Address
Deficiencies Uncovered Through Monitoring
Monitoring Has Limitations
Page 19 GAO- 01- 582 Weapons of Mass Destruction
activities, the State Department has no formal way to monitor what other
research these scientists are performing or for whom they are performing it.
This limitation is particularly relevant for scientists who work only
parttime on science center projects. As shown in figure 6, during 2000 very
few senior scientists worked full- time (defined by both science centers as
220 working days per calendar year). Seventy- five percent worked 4 ½
months (100 days) or less on a science center project during 2000, and some
worked just a few days during the year.
Figure 6: Number of Days Senior Scientists Worked on U. S.- funded Projects,
Calendar Year 2000
Source: Science centers in Russia and Ukraine.
In addition, the project agreements only provide the science centers and
external auditors access to institutes? records related to projects funded
by the science centers. The lack of access to records related to what the
scientists are doing while they are not working on science center projects
limits the ability of the science centers and external auditors to
independently confirm the information that the scientists do provide about
their activities. For example, monitoring cannot confirm whether
3,156 207 447 961 1 ,773
0 500
1,000 1,500
2,000 2,500
3,000 3,500
Number of senior scientists
1 to 50 51 to 100 101 to 150 151 to 200 200 or more Workdays
Page 20 GAO- 01- 582 Weapons of Mass Destruction
scientists are receiving pay from other sources for the time they claim they
are working on science center projects.
Finally, the project agreements require that auditors and science center
staff provide the institutes with 20 to 35 days advance notice before making
visits to conduct on- site monitoring. According to State Department and
Defense Contract Audit Agency officials, the advance notice limits the
element of surprise and gives project scientists the opportunity to cover up
deficiencies in their adherence to the project agreements.
In written comments provided on a draft of this report, the Department of
State concurred with the report?s major findings. However, the Department
provided additional information to clarify specific sections of the draft
report. Specifically, the Department agreed with our finding that it relied
on Russian and Ukrainian specialists to monitor the science center projects.
However, the Department stated that it is confident that the specialists?
monitoring efforts comply with western standards and that the majority of
these individuals are former Soviet weapons scientists who are now committed
to the mission and nonproliferation objectives of the science centers. The
Department also agreed with our finding that there are no reliable estimates
on the total population of senior weapons scientists. However, the
Department stated that anecdotal evidence suggests that the United States
and other funding parties have engaged about half of the population of
senior weapons scientists. Finally, the Department stated that while it
would be impractical for the United States to keep track of the activities
of the weapons scientists when they are not working for the science centers,
the Department cited examples of how it maintains contact with current and
past participants to varying degrees. The Department?s comments are
presented in appendix I.
To review the State Department?s project selection process, we met with
officials from the Departments of State and Defense and the Department of
Energy?s national laboratories who participate in the process. We also
attended one meeting of the science advisers. We discussed the program?s
scope and limitations with officials from the Departments of State and
Defense and the U. S. national laboratories, as well as with U. S.
representatives on the governing boards of both science centers. We also
discussed these issues with the senior management at both centers. In
addition, we reviewed the science centers? agreements, statutes, and annual
reports. The statistical data were compiled from reports obtained from the
Chief Financial Officers at both centers. Agency Comments
Scope and Methodology
Page 21 GAO- 01- 582 Weapons of Mass Destruction
To examine the monitoring procedures used to check whether scientists are
working on the peaceful research they are paid to produce, we first met with
State Department officials to discuss what monitoring procedures were in
place. We then examined each component of the monitoring process in detail,
as follows:
We met with auditors from the Defense Contract Audit Agency and science
advisers from the national laboratories to learn how they conduct their
monitoring activities. We then reviewed the Defense Contract Audit Agency?s
reports on its audits of U. S.- funded science center projects conducted
during 1999 and 2000.
We reviewed the reports prepared by the external auditors for both science
centers and met with representatives from the firm that conducted the most
recent audit of the center in Russia.
We visited the science centers in Russia and Ukraine and met with
officials at all levels of these organizations including the Executive
Directors, Deputy Executive Directors, Chief Financial Officers, technical
specialists, and members of the financial staff to discuss how they conduct
technical and financial monitoring of projects. We compared these
discussions with the centers? written guidance. We also reviewed in detail
the project documentation, including financial, technical, and monitoring
reports, for 35 projects that had received U. S. funds.
To verify that the monitoring process detailed in science center documents
was actually taking place, we visited the following nine institutes in
Russia and Ukraine where the 35 projects had recently been completed or were
currently underway:
Paton Electric Welding Institute, Kiev, Ukraine (nuclear, chemical, and
missile)
Institute of Semiconductor Physics, Kiev, Ukraine (nuclear and missile)
Frantsevich Institute for Problems of Materials Science, Kiev, Ukraine
(nuclear and missile)
Moscow Engineering Physics Institute, Moscow, Russia (nuclear)
All- Russia Research Institute of Automatics, Moscow, Russia (nuclear)
State Scientific Research Institute of Organic Chemistry and Technology,
Moscow, Russia (chemical)
State Scientific Institute of Immunological Engineering, Lyubuchany,
Russia (biological)
State Research Center for Applied Microbiology, Obolensk, Russia(
biological)
Central Aerohydrodynamic Institute, Zhukovsky, Russia (aeronautics/
missile)
Page 22 GAO- 01- 582 Weapons of Mass Destruction
In selecting the 35 projects, we chose institutes that collectively did work
in the four areas of proliferation concern. During our visits, we met with
the institutes? directors and members of each project team. In many cases,
we also toured the facilities where they conducted their work. Although we
only selected projects to review that had received U. S. funds, in some
cases other donors had also provided financial support.
We performed our work from December 2000 through April 2001 in accordance
with generally accepted government auditing standards.
We are sending copies of this report to interested congressional committees
and the Honorable Colin Powell, Secretary of State. Copies will also be made
available to others upon request.
If you or your staff have any questions about this report, please contact me
on (202) 512- 4128. Another GAO contact and staff acknowledgments are listed
in appendix II.
Joseph A. Christoff, Director International Affairs and Trade
Appendix I: Comments From the Department of State
Page 23 GAO- 01- 582 Weapons of Mass Destruction
Appendix I: Comments From the Department of State
Appendix I: Comments From the Department of State
Page 24 GAO- 01- 582 Weapons of Mass Destruction
Appendix I: Comments From the Department of State
Page 25 GAO- 01- 582 Weapons of Mass Destruction
Appendix I: Comments From the Department of State
Page 26 GAO- 01- 582 Weapons of Mass Destruction
Appendix I: Comments From the Department of State
Page 27 GAO- 01- 582 Weapons of Mass Destruction
Appendix I: Comments From the Department of State
Page 28 GAO- 01- 582 Weapons of Mass Destruction
Appendix II: GAO Contact and Staff Acknowledgments
Page 29 GAO- 01- 582 Weapons of Mass Destruction
Diana Glod, (202) 512- 8945 In addition to the person named above, Joe Cook,
Dave Maurer, and Valérie Nowak made key contributions to this report.
Appendix II: GAO Contact and Staff
Acknowledgments GAO Contact Acknowledgments
(320010)
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