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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Foreign Relations, U.S. 
Senate: 

November 2012: 

Nonproliferation And Disarmament Fund: 

State Should Better Assure the Effective Use of Program Authorities: 

GAO-13-83: 

GAO Highlights: 

Highlights of GAO-13-83, a report to the Ranking Member, Committee on 
Foreign Relations, U.S. Senate. 

Why GAO Did This Study: 

The proliferation of weapons of mass destruction and advanced 
conventional weapons poses significant threats to U.S. and 
international security. State’s NDF began operating in 1994 to help 
combat such threats by funding a variety of nonproliferation and 
disarmament projects. NDF’s legal authorities provide it significant 
flexibility to perform its work and it has initiated high-profile 
projects in locations that are significant to U.S. interests. 
Nonetheless, questions have been raised about how NDF has used its 
authorities, including its authority to carry over balances into 
future fiscal years, and the extent to which NDF is effectively 
implementing its activities. This report examines (1) State’s use of 
NDF authorities in developing and implementing NDF projects and (2) 
the extent to which State has conducted a program evaluation of NDF 
and used this information to improve program performance. To conduct 
this review, GAO analyzed NDF program and project data and 
documentation, analyzed a sample of NDF project close-out documents, 
and interviewed NDF and other U.S. officials. 

What GAO Found: 

The Department of State’s (State) Nonproliferation and Disarmament 
Fund (NDF) has several key authorities that provide it significant 
operational flexibility; however, it has not determined its needed 
carryover balances and it has taken years to close out many of its 
projects in the absence of guidance for closing them. Annual 
appropriations bills have consistently provided NDF with three key 
authorities that it has used to carry out its activities. First, NDF 
has the authority to undertake projects notwithstanding any other 
provision of law. NDF has used this authority to fund projects in 
countries, such as North Korea, where U.S. assistance is prohibited by 
U.S. sanctions and other legal restrictions. Second, NDF has the 
authority to undertake projects globally. NDF has used this authority 
to fund projects in numerous regions around the world, in contrast 
with other U.S. nonproliferation programs, which have historically 
focused on countries in the former Soviet Union. Third, NDF’s 
appropriations do not expire within a particular time period, enabling 
NDF to carry over balances from year to year not designated for 
specific projects. However, NDF has not determined appropriate levels 
for these balances, which increased significantly in the past few 
years. Additionally, NDF has sometimes taken many years to close 
projects, including those where work was never started or was 
suspended, and has not established criteria to determine when inactive 
projects should be closed and unexpended resources made available for 
other projects. As a result, NDF funds may be tied up for years in 
inactive projects, precluding the funds’ use for other projects. 

State has never conducted a program evaluation of NDF. In February 
2012, State developed a policy requiring bureaus to evaluate programs, 
projects, and activities, and outlined the requirements for these 
evaluations. As part of this policy, State required bureaus to submit 
an evaluation plan for fiscal years 2012 through 2014 that identified 
the programs and projects they plan to evaluate. However, the Bureau 
of International Security and Nonproliferation (ISN), which oversees 
NDF, did not include NDF in its fiscal years 2012 through 2014 
evaluation plan. State currently lacks information that could be used 
to conduct a program evaluation and to improve NDF’s management of the 
program. Project close-out reports are critical to the process of 
closing out a project and identifying lessons learned, but NDF project 
close-out reports do not contain information that could enable NDF to 
better manage its program. For example, not all close-out reports 
address the results of the project. NDF uses e-mails and face-to-face 
meetings to communicate lessons learned without documenting them. 
Established standards suggest that these should be transferred to a 
database of lessons learned for use in future projects and activities, 
an action State officials said they are considering taking. NDF has 
also produced a project management guide to encourage project managers 
to use standard procedures and write close-out reports, but does not 
require the use of this guide. In addition, the guide does not detail 
a format for project managers to use in preparing their close-out 
reports or list the information that project managers must address. 
NDF officials said they plan to develop standard operating procedures 
to address these issues, but had not done so as of November 2012. 

What GAO Recommends: 

GAO recommends that State (1) develop a methodology for determining 
the amount of carryover reserves needed to meet program requirements, 
(2) develop guidance for determining when inactive NDF projects should 
be closed out, (3) conduct periodic program evaluations of NDF, and 
(4) establish requirements for the types of information to be included 
in project close-out reports. State agreed with the recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-13-83]. For more 
information, contact Thomas Melito at (202) 512-9601 or 
melitot@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

NDF's Authorities Provide It Significant Operational Flexibility, but 
under Its No-Year Budget Authority, NDF Has Not Determined Needed 
Carryover Balances: 

State Has Not Conducted a Program Evaluation of NDF and Lacks 
Information for Conducting an Evaluation to Inform NDF's Program 
Management: 

Conclusion: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of State: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Authorized NDF Activities under the FREEDOM Support Act: 

Figures: 

Figure 1: NDF-Funded Dismantling of a Scud Missile in Ukraine: 

Figure 2: NDF Project Review and Approval Process: 

Figure 3: Congressionally-Notified NDF Projects, Fiscal Years 2007 
through 2012: 

Figure 4: NDF Funding by Project Category, Fiscal Years 2007 through 
2012: 

Figure 5: Locations of NDF Projects both Before and After Fiscal Year 
2007: 

Figure 6: Overview of NDF Funding Categories and Accumulation of 
Carryover Balances: 

Figure 7: NDF Funds Available for Notification, Fiscal Years 1994 
through 2013: 

Abbreviations: 

CTR: Cooperative Threat Reduction Program: 

DOD: Department of Defense: 

DOE: Department of Energy: 

FAR: Federal Acquisition Regulation: 

FIMS: Financial and Information Management System: 

FSU: former Soviet Union: 

GTR: Global Threat Reduction Program: 

ISN: Bureau of International Security and Nonproliferation: 

NDF: Nonproliferation and Disarmament Fund: 

OMB: Office of Management and Budget: 

State: Department of State: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

November 30, 2012: 

The Honorable Richard G. Lugar:
Ranking Member:
Committee on Foreign Relations:
United States Senate: 

Dear Senator Lugar: 

The proliferation of weapons of mass destruction and their delivery 
systems, as well as the spread of advanced conventional weapons, poses 
significant threats to U.S. and international security. Congress 
created the Nonproliferation and Disarmament Fund (NDF) in 1992 to 
support U.S. government efforts to combat such threats.[Footnote 1] 
Since then, the Department of State (State), which manages the 
program, has used NDF to fund a variety of nonproliferation and 
disarmament projects. These projects have included the shutdown of 
chemical weapons facilities, the transfer of highly enriched uranium 
to secure locations, the construction of border security facilities, 
and the destruction of stockpiles of ballistic missiles. NDF has 
funded projects in a range of countries around the globe and has also 
supported work by international organizations, such as the 
International Atomic Energy Agency. Congress has provided NDF with 
various legal authorities to increase its ability to carry out 
nonproliferation and disarmament projects, as opportunities arise. 
State officials have noted that these authorities provide NDF a level 
of flexibility in carrying out its mission that is uncommon among U.S. 
government programs. According to State, NDF has made it possible for 
the U.S. government to respond rapidly to unanticipated or unusually 
difficult, high-priority nonproliferation and disarmament 
opportunities. While NDF has taken on high-profile projects in 
locations significant to U.S. interests, such as North Korea and 
Libya, questions have been raised about how NDF has used its legal 
authorities, including its authority to carry over funds into future 
fiscal years, and the extent to which it is effectively implementing 
its activities. 

This report examines (1) State's use of NDF authorities in developing 
and implementing NDF projects and (2) the extent to which State has 
conducted a program evaluation of NDF and used this information to 
improve program performance. To address these objectives, we analyzed 
NDF data on program appropriations, commitments, obligations, and 
carryover balances for fiscal years 1994 through 2012. We also 
analyzed NDF project data on funding amounts, locations, objectives, 
and time frames for fiscal years 1994 through 2012. We assessed both 
the program and project data and found them sufficiently reliable for 
our purposes. Additionally, we reviewed NDF project documentation, 
such as project proposal summaries, approval memos, and congressional 
notifications to obtain additional information on NDF projects. To 
identify NDF's key legal authorities, we reviewed relevant laws and 
regulations. To assess the extent to which State has evaluated NDF, we 
met with State officials from the Bureaus of Budget and Planning and 
International Security and Nonproliferation (ISN), and reviewed 
project close-out documentation for a judgmental sample of 23 project 
close-out reports--14 of which we selected, and 9 of which State 
selected. In selecting our sample, we considered only projects that 
NDF had closed out since the beginning of fiscal year 2007. Our 
selection criteria included project cost, location, and type. State 
selected its projects using similar criteria; however, State did not 
limit itself to projects that were closed out. For example, State 
selected some projects for which work was completed, but the project 
was not yet officially closed out. For all 23 project close-out 
reports, we assessed the types of information contained in these 
reports, and the degree to which they could be used to provide needed 
information for evaluations and improve NDF's management of the 
program. In reviewing the documentation for the projects State 
selected, we determined that the inclusion of these projects in our 
analysis did not alter our overall findings and thus did not 
compromise the independence of our work. We also met with State 
officials in the NDF program office and officials from the Departments 
of Defense (DOD) and Energy (DOE) who were responsible for proposing 
or implementing NDF projects. Additionally, we met with officials from 
the Office of Management and Budget (OMB) to better understand NDF's 
budget planning process. Additional details about our scope and 
methodology can be found in appendix I. 

We conducted this performance audit from March 2012 through November 
2012 in accordance with generally accepted government auditing 
standards. These standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

Congress authorized the President to establish NDF in 1992 under 
section 504 of the FREEDOM Support Act.[Footnote 2] The legislation 
authorized the President to use NDF to promote a variety of bilateral 
and multilateral nonproliferation and disarmament activities. In 1994, 
the President delegated authority for the program to the Secretary of 
State, who subsequently delegated authority for the program to the 
Under Secretary of State for Arms Control and International Security. 
[Footnote 3] The NDF office, within ISN, is responsible for day-to-day 
management of the program. The NDF Director leads the office, which 
has a staff of 16 people, including both State officials and contract 
employees. 

Congress funds NDF annually through the Nonproliferation, Anti-
terrorism, Demining, and Related Programs appropriations account, 
within the Foreign Operations, Export Financing, and Related Programs 
Appropriations Acts. NDF received $10 million in initial funding for 
fiscal year 1994. Since fiscal year 1994, NDF has received $597 
million in total appropriations. From fiscal years 2007 through 2012, 
NDF appropriations ranged from a high of $118 million in fiscal year 
2009 to a low of $30 million in fiscal year 2012.[Footnote 4] 
According to State, NDF is unusual among U.S. foreign assistance 
programs in that it does not request funding for specific activities 
as part of its annual Congressional Budget Justification. The NDF 
Director stated that this helps ensure that NDF has the flexibility to 
respond to nonproliferation and disarmament opportunities as they 
arise, rather than tying NDF funds to particular projects or locations 
in advance. 

NDF Authorities: 

The FREEDOM Support Act provided NDF with a broad mission to fund 
bilateral and multilateral nonproliferation and disarmament activities 
and annual appropriations bills have consistently granted NDF other 
key authorities. NDF has used its authorities under the FREEDOM 
Support Act to fund a diverse set of projects. Table 1 outlines NDF 
activities authorized by the FREEDOM Support Act and provides examples 
of the types of activities NDF has funded. State officials and NDF 
program documents have characterized NDF's mission as focused on 
funding unanticipated or unusually difficult projects of high priority 
to the U.S. government. 

Table 1: Authorized NDF Activities under the FREEDOM Support Act: 

Activities authorized by the FREEDOM Support Act: 
1. Support the dismantlement and destruction of nuclear, biological, 
and chemical weapons; their delivery systems; and conventional weapons; 
Example of each activity type: Identified and eliminated conventional 
weapons, such as man-portable air defense systems and certain rocket-
propelled grenades, in Libya after the fall of the Ghadafi regime. 

Activities authorized by the FREEDOM Support Act: 
2. Support bilateral and multilateral efforts to halt the 
proliferation of nuclear, biological, and chemical weapons; 
their delivery systems; related technologies; and other weapons; 
Example of each activity type: Negotiated and executed the removal of 
highly enriched uranium from Serbia's closed Vinca Institute to a 
secure facility in Russia where it was converted into standard nuclear 
fuel. 

Activities authorized by the FREEDOM Support Act: 
3. Establish programs for safeguarding against the proliferation of 
nuclear, biological, chemical, and other weapons; 
Example of each activity type: Funded the purchase of radiation 
detection equipment and training for 10 countries to assist them in 
locating, securing, and disposing of high-risk radioactive materials. 

Activities authorized by the FREEDOM Support Act: 
4. Establish programs for preventing diversion of weapons-related 
scientific and technical expertise to terrorist groups or to third 
countries; 
Example of each activity type: Established and equipped a biosecurity 
and biosafety training center in Jordan to train scientists from the 
Middle East and Central Asia on how to safely and securely handle 
dangerous pathogens to prevent their proliferation. 

Activities authorized by the FREEDOM Support Act: 
5. Establish science and technology centers for the purpose of 
engaging weapons scientists and engineers (in particular those who 
were previously involved in the design and production of nuclear, 
biological, and chemical weapons) in productive, nonmilitary 
undertakings; 
Example of each activity type: Funded the Iraqi International Center 
for Science and Industry to support the civilian employment of Iraqi 
scientists, engineers, and other technicians formerly working in 
Iraq's weapons of mass destruction programs. 

Activities authorized by the FREEDOM Support Act: 
6. Establish programs for facilitating the conversion of military 
technologies and capabilities and defense industries into civilian 
activities; 
Example of each activity type: Removed and destroyed biological and 
chemical production capabilities at a facility in Russia and 
reconfigured the facility to support non-weapons, civilian-use 
production. 

Source: FREEDOM Support Act and GAO analysis of NDF project 
documentation. 

[End of table] 

Figure 1 illustrates the dismantling of a Scud missile as part of an 
NDF-funded project in Ukraine.[Footnote 5] 

Figure 1: NDF-Funded Dismantling of a Scud Missile in Ukraine: 

[Refer to PDF for image: 3 photographs] 

Source:State Department. 

[End of figure] 

In addition to the authorities granted to NDF in the FREEDOM Support 
Act, annual appropriations bills have also consistently provided NDF 
with three key authorities that are designed to increase NDF's 
flexibility in carrying out nonproliferation and disarmament 
activities around the globe, as opportunities arise. These include the 
authority to (1) undertake projects notwithstanding other provisions 
of law (notwithstanding authority); (2) implement projects anywhere in 
the world or through international organizations when it is in the 
national security interest of the United States to do so, 
notwithstanding provisions of the FREEDOM Support Act that limited 
certain NDF activities to the independent states of the former Soviet 
Union (FSU) (geographic authority); and (3) use funding without 
restriction to fiscal year (no-year budget authority). 

NDF Project Review and Approval Process: 

State uses a multistep process to review NDF project proposals and 
determine which projects to fund, as shown in figure 2. 

Figure 2: NDF Project Review and Approval Process: 

[Refer to PDF for image: process illustration] 

State: 
Other State offices and bureaus submit proposals. 

Other U.S. agencies: 
Other U.S. agencies such as DOD and DOE submit proposals. 

Project proposals submitted to NDF: 

* NDF Review Panel evaluates proposals (Review Panel includes voting
members from State as well as nonvoting members from other U.S. 
agencies); 

* NDF Review Panel voting members make recommendations to Under 
Secretary for Arms Control and International Security; 

* Under Secretary approves, denies, or defers projects; 

* Approved projects "notified to Congress" (15-day notification 
period); 

Project implementation begins. 

Source: GAO analysis of NDF data. 

[End of figure] 

According to NDF officials, NDF does not typically develop its own 
project proposals. Rather, other agencies, such as DOD and DOE, and 
other State offices, such as the Office of Export Control Cooperation, 
submit project proposals. NDF's Review Panel, which is chaired by the 
Assistant Secretary of State from ISN, reviews these proposals. Two 
ISN Deputy Assistant Secretaries of State and the Assistant 
Secretaries of State from the Bureau of Political-Military Affairs and 
the Bureau of Arms Control, Verification, and Compliance serve as the 
other voting members on the panel. Officials from other U.S. agencies, 
including DOD, DOE, OMB, the Department of Commerce, and the 
Department of Homeland Security, as well as representatives from the 
National Security Council and U.S. intelligence community, also attend 
panel meetings. After reviewing the project proposals, the voting 
members of the NDF Review Panel make recommendations to State's Under 
Secretary for Arms Control and International Security to approve, 
deny, or defer projects. In the Review Panel meetings, members can 
also propose modifications, such as increasing or decreasing the 
amount of funding for a project. The Under Secretary has the final 
authority to approve a project. NDF officials stated that in certain 
cases--for example, if a project is particularly urgent--the NDF 
Review Panel may not formally meet to review a proposal before it is 
submitted to the Under Secretary.[Footnote 6] In those cases, NDF 
instead may discuss the proposal with other Review Panel agencies in a 
different venue, such as at a National Security Council meeting. 
[Footnote 7] 

After the Under Secretary approves a project, but before work begins, 
State provides a 15-day advance notification to Congress to inform it 
of State's intent to begin work on the project.[Footnote 8] As part of 
the notification, NDF informs Congress of its intent to obligate a 
specified amount of funds on the project. NDF then considers these 
funds designated for that project and not available for use on other 
projects, unless a subsequent notification is made. 

NDF Projects: 

From fiscal years 1994 through 2012, NDF notified Congress of its 
intent to initiate work on 179 projects. NDF subsequently canceled 19 
of these projects after their notification and put an additional 
project on hold because of congressional concerns. As of the end of 
fiscal year 2012, NDF had 33 active projects. NDF also reported that, 
as of the end of fiscal year 2012, it had an additional 42 projects 
for which work was completed or canceled, and the financial review of 
the projects was finished. In accordance with NDF close-out 
procedures, NDF is in the process of seeking approval from the Under 
Secretary for Arms Control and International Security before 
officially closing them. 

Since the beginning of fiscal year 2007, NDF has notified Congress of 
its intent to initiate work on a total of 24 projects, with a high of 
15 in fiscal year 2010 and a low of zero in fiscal year 2011. Figure 3 
shows the number of congressionally-notified projects from fiscal 
years 2007 through 2012. 

Figure 3: Congressionally-Notified NDF Projects, Fiscal Years 2007 
through 2012: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2007; 
Number of notified projects: 5. 

Fiscal year: 2008; 
Number of notified projects: 1. 

Fiscal year: 2009; 
Number of notified projects: 2. 

Fiscal year: 2010; 
Number of notified projects: 15. 

Fiscal year: 2011; 
Number of notified projects: 0. 

Fiscal year: 2012; 
Number of notified projects: 1. 

Source: GAO analysis of NDF data. 

Note: NDF did not initiate work on one of the projects notified in 
fiscal year 2010 because of congressional concerns. 

[End of figure] 

NDF funding amounts for projects vary significantly. NDF has notified 
Congress of its intent to spend as much as $50 million to as little as 
$179,000 on individual projects initiated since the beginning of 
fiscal year 2007. The lengths of projects also vary. For example, 
since the beginning of fiscal year 2007, NDF has closed out projects 
that were completed in as little as a few months to more than 9 years. 
In addition, some projects are follow-up projects that build on 
projects initiated in earlier fiscal years. For example, beginning in 
fiscal year 1998, NDF has undertaken five separate projects--the most 
recent of which was initiated in fiscal year 2010--to assist the 
government of Kazakhstan in shutting down a nuclear reactor in Aktau. 

NDF divides its projects into four categories: (1) destruction and 
conversion, (2) safeguards and verification, (3) enforcement and 
interdiction, and (4) education and training. Since the beginning of 
fiscal year 2007, State has committed the most resources to projects 
in the destruction/conversion category. In fiscal years 2007 through 
2012, 39 percent of NDF funding for new projects went to projects in 
this category. Figure 4 shows a breakdown of funding for NDF among the 
four project categories, as well as administrative expenses, for 
fiscal years 2007 through 2012. 

Figure 4: NDF Funding by Project Category, Fiscal Years 2007 through 
2012: 

[Refer to PDF for image: pie-chart] 

Destruction/conversion: 39%; 
Safeguards/verification: 30%; 
Enforcement/interdiction: 28%; 
Administration: 3%. 

Source: GAO analysis of NDF data. 

Note: NDF did not fund any projects in the education/training category 
in fiscal years 2007 through 2012. 

[End of figure] 

NDF's Authorities Provide It Significant Operational Flexibility, but 
under Its No-Year Budget Authority, NDF Has Not Determined Needed 
Carryover Balances: 

NDF has several key authorities that provide it significant 
operational flexibility; however, it has not determined its needed 
carryover balances and it has taken years to close out many of its 
projects in the absence of guidance for closing them. Annual 
appropriations bills have consistently provided NDF with three key 
authorities that it has used to carry out its activities. First, NDF 
has used its notwithstanding authority to fund projects in countries 
where other U.S. programs are barred from operating by U.S. sanctions 
or other legal restrictions.[Footnote 9] Second, NDF has used its 
geographic authority to fund projects in a range of countries around 
the globe.[Footnote 10] Third, NDF has used its no-year budget 
authority to carry over balances not designated for specific projects 
from one year to the next.[Footnote 11] However, NDF has not 
determined appropriate levels for these balances, which have increased 
significantly in the past several years. Additionally, NDF has taken 
many years to close some projects where work was never started, or was 
suspended, and has not established guidance for determining when 
inactive projects should be closed out and unexpended no-year funds 
made available for other projects. 

NDF Used Its Notwithstanding Authority to Implement Several Projects 
Where Laws and Regulations Otherwise Restricted U.S. Assistance: 

Annual appropriations acts have consistently granted NDF 
notwithstanding authority, which allows NDF to undertake projects 
"notwithstanding any other provision of law." As a result, NDF has the 
ability to fund projects in countries where other U.S. programs are 
generally barred from operating by U.S. legal restrictions. For 
example, when North Korea agreed to the disablement of its Yongbyon 
nuclear reactor in 2007 after progress in diplomatic talks, NDF was 
able to fund the project because of its notwithstanding authority, 
while other U.S. agencies, such as DOD and DOE, could not because 
various U.S. legal restrictions limited the assistance they could 
provide the country. According to State officials, NDF's broad 
notwithstanding authority is uncommon among U.S. government programs. 
For example, the 2010 National Defense Authorization Act provided 
DOD's Cooperative Threat Reduction (CTR) program notwithstanding 
authority for the first time in the program's history and granted only 
limited use of the authority.[Footnote 12] DOD cannot use its 
notwithstanding authority for more than 10 percent of CTR's 
appropriation for a given fiscal year and must meet other requirements 
before exercising the authority, such as obtaining concurrence from 
the Secretaries of State and Energy. 

When seeking to use its notwithstanding authority, NDF requests 
approval from the Under Secretary for Arms Control and International 
Security. According to the NDF Director, when NDF was established, 
State decided that NDF's notwithstanding authority should, as a matter 
of policy, be approved at the Under Secretary level, rather than at a 
lower level.[Footnote 13] State officials said that NDF typically 
informs Congress of its intent to use the authority as part of the 15-
day congressional notification process. Although U.S. law does not 
require that State inform Congress of NDF's use of its notwithstanding 
authority, the conference report accompanying the fiscal year 2012 
Consolidated Appropriations Act directed the Secretary of State to 
notify the Committees on Appropriations in writing, within 5 days of 
exercising NDF's notwithstanding authority. The conference report also 
directed that the notification include a justification for the use of 
the authority. 

Since the beginning of fiscal year 2007, NDF has requested and 
received approval from the Under Secretary to use its notwithstanding 
authority for 11 of the 24 projects it initiated. In four cases, NDF 
identified specific laws or regulations it needed to overcome using 
its notwithstanding authority. In another case, which involved funding 
for a multinational exercise, NDF stated that it might need to use its 
notwithstanding authority depending on the countries participating in 
the exercise. In three additional cases, NDF stated that it had not 
identified specific legal restrictions that would necessitate using 
the authority, but made a general request to the Under Secretary for 
approval given the sensitive nature of the projects. In the final 
three cases, NDF requested the use of its notwithstanding authority 
for classified projects whose details cannot be publicly reported. 

In those cases where NDF requested the use of its notwithstanding 
authority to overcome specific laws or regulations, it identified 
several different legal restrictions it needed to overcome. For 
example: 

* NDF requested the use of its notwithstanding authority to initiate 
work on a project in Libya in fiscal year 2012. Among other things, 
the authority was required to overcome restrictions on U.S. security 
assistance to countries that engage in a consistent pattern of gross 
violations of human rights.[Footnote 14] 

* In the case of two projects at the Yongbyon site in North Korea, NDF 
requested the use of its notwithstanding authority to, among other 
things, overcome "Glenn Amendment" restrictions within the Arms Export 
Control Act. The Glenn Amendment triggers U.S. sanctions if the 
President determines that a nonnuclear country (as defined by the 
Nuclear Nonproliferation Treaty) has detonated a nuclear explosive 
device.[Footnote 15] 

* NDF also requested the use of its notwithstanding authority to 
overcome a restriction that the Foreign Assistance Act would have 
imposed on a project in Iraq. The Act restricts U.S. assistance to 
countries that have severed diplomatic relations with the United 
States and which have not entered into a new bilateral assistance 
agreement once diplomatic relations have resumed.[Footnote 16] At the 
time of the project, there were concerns regarding the status of the 
United States' bilateral agreement with Iraq. 

In addition to using its notwithstanding authority to bypass 
restrictions on U.S. assistance to particular countries, NDF has in 
some cases also used its notwithstanding authority to overcome laws 
and regulations pertaining to contracting and acquisitions. For 
example, NDF used its notwithstanding authority on some contracts to 
overcome Federal Acquisition Regulation (FAR) competition 
requirements, according to a 2004 State Inspector General report. 
[Footnote 17] Additionally, a 2009 National Academies of Science 
report examining options for strengthening and expanding DOD's CTR 
program noted that, because of its notwithstanding authority, NDF is 
not subject to contracting requirements, including the FAR, which CTR 
must follow. The report noted that this ability may allow NDF to 
undertake certain projects more quickly and at less expense than CTR. 
However, according to State officials, NDF has not typically used the 
program's notwithstanding authority to bypass federal contracting laws 
and regulations. State officials said that, while NDF has almost 
always relied on sole-source bids, rather than a competitive bidding 
process, it primarily selected contractors to implement projects using 
existing flexibilities in the law and regulations available to all 
agencies. For example, State officials stated that NDF has relied on 
provisions in the FAR that permit sole-source contracts in situations 
where there is an urgent and compelling need. 

In addition to competition requirements, some NDF officials stated 
that NDF may use its notwithstanding authority to bypass other types 
of acquisition requirements, such as "Buy America" provisions. For 
example, one NDF official stated that to expedite work on NDF's 
project at the Yongbyon reactor in North Korea, NDF purchased some of 
the equipment used from China. 

NDF's Geographic Authority Has Allowed It to Fund Projects around the 
World: 

Since 1994, annual appropriations acts have provided NDF with broad 
geographic authority to fund projects worldwide as nonproliferation 
and disarmament opportunities arise. NDF's geographic authority allows 
it to fund projects outside the states of the FSU if the Under 
Secretary for Arms Control and International Security makes a 
determination that it is in the national security interest of the 
United States to do so. NDF's authority to fund projects globally 
since the program's start in 1994 is in contrast to the authorities of 
some other U.S. nonproliferation programs. For example, DOD's CTR 
program was not authorized to fund any projects outside the FSU until 
the passage of the Fiscal Year 2004 Defense Authorization Bill and 
continued to face various restrictions on conducting work outside the 
FSU until 2007. In addition, as we reported in December 2011, many of 
DOE's Defense Nuclear Nonproliferation programs, which originated in 
the early 1990s following the dissolution of the Soviet Union, have 
focused primarily on improving nuclear security in Russia.[Footnote 
18] The NDF Director stated that, while NDF has been used to 
supplement projects in the FSU or to fill emergency gaps, its primary 
emphasis has always been on other parts of the world. 

Since 1994, NDF has used its geographic authority to fund projects in 
Central and South America, North and Sub-Saharan Africa, Eastern and 
Western Europe, the Balkans, the Middle East, and Asia. As shown in 
figure 5, NDF has funded projects in several different countries since 
the beginning of fiscal year 2007, including Afghanistan, Egypt, 
Kazakhstan, North Korea, and Ukraine, among others. It has also funded 
a limited number of projects in the United States, including the 
construction of training facilities at DOE's Hazardous Materials 
Management and Emergency Response site in Washington State for the 
purpose of training foreign nationals. 

Figure 5: Locations of NDF Projects both Before and After Fiscal Year 
2007: 

[Refer to PDF for image: illustrated world map] 

Locations with projects initiated before fiscal year 2007 (39 
locations): 
Albania; 
Argentina; 
Armenia; 
Azerbaijan; 
Belarus; 
Bosnia and Herzegovina; 
Brazil; 
Bulgaria; 
Cambodia; 
China; 
Costa Rica; 
Cyprus; 
Czech Republic; 
Ecuador; 
Estonia; 
Georgia; 
Hungary; 
Indonesia; 
Jamaica; 
Kenya; 
Kyrgyzstan; 
Latvia; 
Lithuania; 
Malta; 
Moldova;        
Panama; 
Philippines; 
Russia; 
Singapore; 
Slovakia; 
Slovenia; 
South Africa; 
South Korea; 
Tajikistan; 
Thailand; 
Turkey; 
Turkmenistan; 
United Arab Emirates; 
Uzbekistan. 

Locations with projects initiated since the beginning of fiscal year 
2007 (3 locations): 
Afghanistan; 
Crozet Islands; 
North Korea. 

Locations with projects initiated both before and after the beginning 
of fiscal year 2007 (9 locations): 
Egypt;  
Iraq; 
Jordan; 
Kazakhstan; 
Libya; 
Poland; 
Romania; 
Ukraine; 
Washington state. 

Sources: GAO analysis of NDF data; Map Resources (map). 

Note: Some projects were not associated with a specific location and 
are not shown on the map. In addition, the locations of some projects 
are classified and not shown. Finally, in some cases, NDF did not 
actually undertake work in a country, but instead provided the country 
funding to participate in an activity, such as a multilateral 
exercise, in a different location. 

[End of figure] 

Under Its No-Year Budget Authority, NDF's Carryover Balances Have 
Reached Historically High Levels and Are Likely Understated Because of 
Delays in Closing Projects: 

Over the life of the program, Congress has consistently granted NDF no-
year budget authority in annual appropriations bills. This authority 
makes NDF appropriations available for obligation until expended, 
rather than requiring them to be obligated within a particular time 
period, such as a fiscal year. This authority has allowed NDF to carry 
over balances across multiple fiscal years that it has not designated 
for specific projects. NDF considers money to be designated for a 
specific project and no longer available for use on other projects at 
the point when it notifies Congress of its intent to fund the project, 
unless NDF renotifies the funds for the purpose of another 
project.[Footnote 19] NDF's carryover balances have increased over 
time and are at historically high levels. Figure 6 provides an 
overview of NDF's various categories of funding and how NDF 
accumulates carryover balances. In addition, NDF's no-year budget 
authority allows it to close projects and apply the unexpended funds 
to future projects; however, NDF has sometimes delayed in closing out 
some projects for many years, including projects where no work ever 
occurred or was suspended. Until projects are closed, any unexpended 
project funds are not reported as part of NDF's carryover balances. As 
a result, NDF's carryover balance is likely understated. 

Figure 6: Overview of NDF Funding Categories and Accumulation of 
Carryover Balances: 

[Refer to PDF for image: illustration] 

1) New budget authority for the fiscal year; 
plus: 
Carryover balance from the previous fiscal year: 

2) Total available funds for the fiscal year: 

3) Notified funds: 

4) Unnotified funds 

5) Obligated funds: 

6) Unobligated funds: 

7) Expended funds; 

8) Unexpended funds; 

9) Project close-out: 

10) Carryover balance for the next fiscal year. 

1 & 2: Congress provides NDF new budget authority in annual 
appropriations. This money, plus NDF's carryover balances from the 
previous fiscal year, equals NDF's total available funding for the 
fiscal year. 

3 & 4: Once a project proposal is approved, NDF notifies Congress of 
its intent to use a specified amount of funds to implement the 
project. These "notified" funds are then designated for the project 
and are not available for use on other projects. NDF funds not 
designated for a particular project remain unnotified. 

5 & 6: Notified project funds are obligated as NDF enters into 
definite commitments for the payment of goods and services ordered or 
received. The portion of NDF's notified funds not yet obligated remain 
unobligated. 

7 & 8: As NDF makes payments on obligations, funds are expended. 
Obligated funds not yet paid out remain unexpended. 

9 & 10: At the end of the fiscal year unnotified funds are carried 
over to the next fiscal year. Additionally, when projects are closed, 
any unobligated funds, or unexpended obligations become available for 
notification once again and become part of the NDF carryover balance. 

Source: GAO analysis of NDF data. 

[End of figure] 

Carryover Balances Have Increased over Time to Historically High 
Levels, but NDF Has Not Formally Determined Needed Reserve Amounts: 

NDF's carryover balances have grown significantly in the past few 
years to historically high levels. NDF's carryover balance peaked at 
the end of fiscal year 2009 at $122 million in unnotified funds, which 
were carried over into fiscal year 2010 as shown in figure 7. 
Unnotified funds include funds never designated for a project, as well 
as any unobligated and unexpended project funds that once again become 
available as unnotified funds when a project is closed. Before the end 
of fiscal year 2009, NDF's balance carried over into the next fiscal 
year had been $10 million or higher three times since the program 
began in fiscal year 1994 and had never been higher than $22 million. 
NDF's carryover balance was $86 million at the end of fiscal year 2012. 

Figure 7: NDF Funds Available for Notification, Fiscal Years 1994 
through 2013: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 1994; 
New budget authority: $10.0 million; 
End of year carryover balance: $0; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 1995; 
New budget authority: $10.0 million; 
End of year carryover balance: $1.256 million; 
Amount returned to NDF from closed projects: $1.0 million. 

Fiscal year: 1996; 
New budget authority: $20.0 million; 
End of year carryover balance: $4.729 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 1997; 
New budget authority: $15.0 million; 
End of year carryover balance: $11.975 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 1998; 
New budget authority: $15.0 million; 
End of year carryover balance: $3.028 million; 
Amount returned to NDF from closed projects: $2.342 million. 

Fiscal year: 1999; 
New budget authority: $14.99 million; 
End of year carryover balance: $5.833 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2000; 
New budget authority: $15.0 million; 
End of year carryover balance: $7.493 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2001; 
New budget authority: $14.967 million; 
End of year carryover balance: $10.067 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2002; 
New budget authority: $14.0 million; 
End of year carryover balance: $9.759 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2003; 
New budget authority: $14.902 million; 
End of year carryover balance: $3.962 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2004; 
New budget authority: $29.823 million; 
End of year carryover balance: $9.414 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2005; 
New budget authority: $39.244 million; 
End of year carryover balance: $2.891 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2006; 
New budget authority: $37.125 million; 
End of year carryover balance: $21.906 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2007; 
New budget authority: $37.0 million; 
End of year carryover balance: $8.117 million; 
Amount returned to NDF from closed projects: $9.27 million. 

Fiscal year: 2008; 
New budget authority: $33.724 million; 
End of year carryover balance: $1.558 million; 
Amount returned to NDF from closed projects: $1 million. 

Fiscal year: 2009; 
New budget authority: $118.0 million; 
End of year carryover balance: $8.598 million 
Amount returned to NDF from closed projects: $27.41 million. 

Fiscal year: 2010; 
New budget authority: $75.0 million; 
End of year carryover balance: $121.958 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2011; 
New budget authority: $53.263 million; 
End of year carryover balance: $32.833 million; 
Amount returned to NDF from closed projects: $0. 

Fiscal year: 2012; 
New budget authority: $30.0 million; 
End of year carryover balance: $86.096 million; 
Amount returned to NDF from closed projects: $4.3 million. 

Fiscal year: 2013[A]; 
New budget authority: $30.0 million; 
End of year carryover balance: $86.096 million; 
Amount returned to NDF from closed projects: $0. 

Source: GAO analysis of NDF data. 

Note: NDF funds available for notification are those that have not 
been designated for a particular project. New budget authority 
represents the NDF appropriation amount for the fiscal year plus or 
minus any appropriations adjustments, such as supplemental 
appropriations. 

[A] The new budget authority amount for fiscal year 2013 reflects 
NDF's budget request of $30 million as NDF has not received its fiscal 
year 2013 appropriation. 

[End of figure] 

NDF has not established a formal means of determining the amount of 
money it needs to carry over from year to year to respond to 
unanticipated nonproliferation and disarmament opportunities.[Footnote 
20] According to the Assistant Secretary of State for International 
Security and Nonproliferation, State management is aware of the growth 
in NDF's carryover balances and is committed to spending them down as 
opportunities consistent with the mission of NDF arise. 

In the past several years, increases in NDF's annual appropriations 
from levels in earlier fiscal years, as well as the initiation of work 
on a smaller number of projects, have contributed to NDF's increased 
carryover balances. As shown in figure 7 above, NDF's appropriation 
was never more than $30 million before fiscal year 2005 and was only 
higher than $20 million in one fiscal year. However, from fiscal years 
2005 through 2012, NDF's appropriation has been $30 million or more 
every year.[Footnote 21] NDF's appropriation reached a high of $118 
million in fiscal year 2009, which included $77 million in a 
supplemental appropriation. NDF also initiated a limited number of 
projects in the past 2 years. For example, it initiated only one new 
project in fiscal year 2012 and no projects in fiscal year 2011. In 
total, NDF notified Congress of 24 projects from fiscal years 2007 
through 2012, compared with 63 projects from fiscal years 2001 through 
2006. In part, NDF officials stated that the decline in the number of 
projects initiated was caused by the creation of other U.S. government 
programs that are now able to fund various activities from their own 
budgets that might have previously required NDF funding. For example, 
NDF officials noted that NDF previously funded certain types of export 
control assistance activities that State's Export Control and Related 
Border Security Assistance program is now able to fund and implement. 
However, NDF officials noted that while NDF has initiated a smaller 
number of projects in fiscal years 2007 through 2012, many of the 
projects it has initiated have involved significantly larger amounts 
of notified funds than in fiscal years 2001 through 2006. For example, 
NDF had only one project with over $10 million in notified funds in 
fiscal years 2001 through 2006, while it had 11 projects with over $10 
million in notified funds in fiscal years 2007 through 2012. 

Other U.S. government programs also receive no-year money and have the 
ability to carry over balances from year to year. We have previously 
reported on efforts by some of these programs to determine appropriate 
carryover balance amounts. For example, in contrast with NDF, DOE's 
National Nuclear Security Administration has established thresholds 
for the carryover balances of its Defense Nuclear Nonproliferation 
programs.[Footnote 22] These threshold amounts are based upon 
specified percentages of the total funds available to each of the 
Defense Nuclear Nonproliferation programs in a given fiscal year. As 
we reported in December 2011, if programs' carryover balances exceed 
these thresholds, they will trigger additional scrutiny by the 
National Nuclear Security Administration as to whether the carryover 
balances are appropriate to meet program requirements.[Footnote 23] 

NDF Has Taken Years to Close Some Projects, Delaying Unexpended Funds' 
Availability for New Projects: 

NDF also maintains a significant amount of funds that it notified to 
Congress in the past for projects, but has not yet obligated. Of the 
32 active NDF projects initiated in fiscal year 2010 or earlier, 25 
percent of the total notified funds have not yet been obligated. This 
represents more than $66 million in notified but unobligated funds. As 
some NDF projects take many years to complete, NDF does not 
necessarily obligate all funds early in their implementation. However, 
of the 32 active NDF projects initiated in fiscal year 2010 or 
earlier, we identified 5 projects for which less than 25 percent of 
the notified funds had been obligated. 

Because NDF's funding is no-year money, NDF can close projects for 
which it has never started work, or has suspended work, and apply the 
unexpended funds to future projects. However, NDF has not established 
guidance for determining when it should close out inactive projects. 
As a result, NDF funds may be tied up for years in projects where no 
work is occurring, precluding the funds' use for other projects. For 
example, NDF maintains over $24 million in unobligated funds from a 
$25 million project in North Korea that it notified to Congress in 
fiscal year 2008. NDF has not obligated any of the funds for this 
project since North Korea expelled International Atomic Energy Agency 
inspectors and U.S. monitors from the country in April 2009 and work 
on the project was abruptly halted. Additionally, NDF has not yet 
obligated any of the $750,000 notified in fiscal year 2005 for a 
project to support Proliferation Security Initiative interdiction 
activities. According to NDF officials, no funds have been obligated 
to date because they have not identified any Proliferation Security 
Initiative activities that warranted the use of the funds. 

NDF has not developed guidance that establishes time frames for 
closing canceled or completed projects to ensure that they are closed 
out in a timely manner. NDF data show that in the past, NDF has taken 
years to cancel and close some projects where little or no work ended 
up occurring. Of the 61 projects NDF has closed out since the 
beginning of fiscal year 2007, 16 were canceled projects for which 
less than 20 percent of the notified funds were ever obligated and 
expended.[Footnote 24] For six of these canceled projects, NDF took 
more than 10 years to close them out from the date they were initially 
notified to Congress, and for an additional 3 projects NDF took more 
than 5 years to close them out from the date they were notified to 
Congress. In total, these 9 projects had over $8.3 million in notified 
funds that were never expended. 

In addition to canceled projects, NDF has taken years to close some 
completed projects. For example, of the 61 projects NDF has closed out 
since the beginning of fiscal year 2007, we identified 13 that NDF 
closed out more than 10 years after work on the project was completed 
and an additional 18 that NDF closed out more than 5 years after work 
on the project was completed. These 31 projects had over $3.5 million 
in notified but unexpended funds. The unexpended funds for these 
canceled and completed projects were eventually made available for use 
on future projects. However, it can take years from the time projects 
are canceled or completed to the time they are closed out, which can 
result in an understatement of the amount of money NDF has available. 

NDF officials noted that prior to 2005, NDF took years to close 
completed and canceled projects because it lacked the needed staff. 
However, NDF officials stated that since then, the office has hired 
additional staff and developed procedures to help ensure that projects 
are closed out more quickly. Additionally, NDF officials noted that 
the office has eliminated its backlog of projects needing to be 
closed. However, NDF still has 42 projects for which it has completed 
all financial close-out activities, but is in the process of seeking 
approval from the Under Secretary for Arms Control and International 
Security before closing them and returning the unexpended funds to the 
NDF account.[Footnote 25] These 42 projects have a total of over $19 
million in unexpended funds that will be added to NDF's unnotified 
balances, once they are closed. 

State Has Not Conducted a Program Evaluation of NDF and Lacks 
Information for Conducting an Evaluation to Inform NDF's Program 
Management: 

State has not conducted a program evaluation of NDF and lacks 
information that would be useful in doing so. A program evaluation is 
a systematic study to assess how well a program is working and that 
can identify lessons learned for future projects. State has developed 
a new policy requiring bureaus to evaluate programs, projects, and 
activities. To comply with this policy, State issued guidance 
requiring bureaus to submit an evaluation plan for fiscal years 2012 
through 2014, identifying the programs and projects they plan to 
evaluate. However, ISN, which oversees NDF, did not include NDF in its 
fiscal years 2012 through 2014 evaluation plan. Moreover, State 
currently lacks information, such as the results of some projects and 
lessons learned, that could be used to conduct a program evaluation of 
NDF and that would help inform the management of the program. 

State Has Not Conducted an NDF Program Evaluation: 

Since NDF became operational in 1994, State has not conducted a 
program evaluation of NDF, according to ISN and NDF officials. 
[Footnote 26] Although NDF reported to Congress in its fiscal year 
2013 budget submission that all of its projects are evaluated in-
house, these documents are project close-out monitoring reports and 
not evaluations. As State and other organizations have noted, 
monitoring and evaluations are conceptually and operationally 
different. GAO defines evaluation as individual, systematic studies 
that are conducted periodically or on an as-required basis to assess 
how well a program is working, while project close-out reports consist 
of formal documentation that indicates completion of the project or 
phase of the project.[Footnote 27] 

ISN and NDF officials explained that NDF and its projects have never 
been subject to a program evaluation because of the unique nature of 
each project. For example, according to NDF officials, to get one 
country to agree to dismantle its Scud missiles, NDF agreed to pay for 
that country's armed forces to use a labor-intensive method to 
dismantle the missiles. However, NDF officials also noted that there 
are common features to many projects that can serve as the basis for 
lessons learned. Our analysis of NDF's project database shows that 
since NDF's first project in 1994, NDF has implemented a number of 
similar projects that could have been evaluated to determine the 
lessons learned for use in present and future projects. For example, 
NDF has implemented 11 destruction and conversion projects involving 
missiles and rockets, 5 of which involved the destruction of Scud 
missiles. The first of these missile destruction and conversion 
projects took place in 1994 and the latest began in 2010. In addition, 
as noted earlier in this report, NDF has implemented at least five 
projects involving the shutdown of a nuclear reactor in Kazakhstan. 

State Has Developed a New Evaluation Policy Along with Tools to 
Facilitate Evaluations and Lessons Learned: 

The Government Performance and Results Modernization Act of 
2010[Footnote 28] strengthened the mandate to evaluate programs, 
requiring agencies to include a discussion of evaluations in their 
strategic plans and performance reports. In part to comply with the 
requirements of this Act, State established a policy in February 2012 
to evaluate programs and projects. In addition, as we reported in May 
2012, according to officials from State's Bureau of International 
Narcotics and Law Enforcement, the policy was established to comply 
with a June 2009 directive from the Secretary of State for systematic 
evaluation and to promote a culture change among program 
offices.[Footnote 29] According to State officials, the February 2012 
policy superseded an evaluation policy dating from September 2010 that 
did not fully comply with a recommendation later detailed in State's 
December 2010 Quadrennial Diplomacy and Development Review that State 
adopt an evaluation framework consistent with that of the U.S. Agency 
for International Development.[Footnote 30] 

State's 2012 evaluation policy outlines requirements and provides a 
framework and justification for evaluations of all State programs, 
including both diplomatic and development programs, projects, and 
activities. For example, the policy notes that a robust, coordinated, 
and targeted evaluation policy is essential to State's ability to 
measure and monitor program performance, document program impact, and 
identify best practices and lessons learned. It also states that such 
a policy can help assess return on investment and provide input for 
policy, planning, and budget decisions.[Footnote 31] 

State's evaluation policy assigns a key role to the bureaus and 
requires them to evaluate two to four programs, projects, or 
activities over a 24-month period starting in fiscal year 2012 and all 
large programs, projects, and activities at least once in their 
lifetime or every 5 years, whichever is less.[Footnote 32] It also: 

* requires the bureaus to appoint a coordinator to ensure that the 
bureaus meet the new policy's requirements; 

* requires bureaus to develop and submit a bureau evaluation plan as 
an annex to their multiyear strategic plans, but gives bureaus 
flexibility in determining the specific programs to evaluate, as well 
as the timing and manner of evaluations they will perform; and: 

* notes that bureaus should integrate evaluation findings into 
decision making about strategies, program priorities, and project 
design, as well as into the planning and budget formulation process. 

State's evaluation policy also draws a clear distinction between 
monitoring and evaluation. State defines monitoring as a continual 
process designed to assess the progress of a program, project, or 
activity. By comparison, evaluations go beyond monitoring to identify 
the underlying factors and forces that affect the implementation 
process, as well as the efficiency, sustainability, and effectiveness 
of the intervention and its outcomes. As our previous work, State, and 
other organizations have noted, evaluations also require a measure of 
independence. According to State, this can be promoted in several 
ways, including entrusting the evaluation to an outside research and 
evaluation organization or fostering a professional culture that 
emphasizes the need for rigorous and independent evaluations. 

To complement the new evaluation policy and provide further direction, 
State issued new guidance in March 2012 that describes several types 
of evaluations that bureaus can conduct and outlines data collection 
methods. The March 2012 guidance also defines the information that 
must be included in each bureau evaluation plan. For example, bureaus 
must include in the first plan a list of evaluations to be initiated 
or completed between fiscal years 2012 and 2014. Bureaus are expected 
to update these plans annually, according to State officials. 

In addition to the guidance, State has developed or is in the process 
of developing other resources and tools to complement and support the 
new evaluation policy. These include an internal website containing 
resources to assist bureaus with their evaluation responsibilities and 
the establishment of a community of practice where officials can share 
their expertise and discuss evaluation issues.[Footnote 33] 

ISN Did Not Include NDF in Its Fiscal Years 2012 through 2014 Bureau 
Evaluation Plan: 

ISN submitted its first bureau evaluation plan in April 2012, but the 
plan did not include any NDF projects. According to ISN officials, the 
bureau had a short amount of time in which to submit its bureau 
evaluation plan and for that reason the plan focused on programs that 
already had projects scheduled for evaluation. After the State 
evaluation guidance was finalized in late March 2012, the bureaus only 
had 1 month to submit their bureau evaluation plans for fiscal years 
2012 through 2014, according to ISN officials. In canvassing ISN's 
five program offices, ISN determined that some offices were already 
planning evaluations for certain projects within their programs, 
according to ISN officials and documents. For example, according to 
the ISN bureau evaluation plan, State's Global Threat Reduction (GTR) 
Program plans to contract for four evaluations during the fiscal years 
2012 through 2015 period.[Footnote 34] GTR has in the past contracted 
for evaluations of its projects in Iraq, Ukraine, and Russia. 

State Currently Lacks Information Useful in Conducting an NDF Program 
Evaluation and Managing NDF's Program: 

State currently lacks information that would be useful in conducting a 
program evaluation of NDF and in improving the management of its 
program. NDF uses project close-out reports to document its final 
monitoring of a project.[Footnote 35] State's March 2012 evaluation 
guidance notes the importance of preparing good monitoring reports 
since these both complement evaluations and can provide valuable 
information for use in preparing evaluations. They can also be a key 
source of information that can be used to improve the management of a 
program, such as the results of a project and lessons learned. 
However, NDF's project close-out reports did not document information 
that could be useful to NDF and the NDF Review Panel. The reports also 
varied in content and format. 

Project Close-Out Reports Omitted Project Results, Lessons Learned, 
and Other Information: 

Project management standards note the importance of documenting 
results in project close-out documents, but not all of the project 
close-out reports that we examined discussed the results of the 
project.[Footnote 36] Of the 23 project close-out reports that we 
examined, 2 did not address project results at all. In addition, for 
the other 21, we found some instances where the discussions of results 
were fairly minimal and other instances where the reports did not 
state whether all intended outcomes or goals had been achieved. 
According to the Project Management Body of Knowledge Guide, a 
recognized standard for project managers, project close-out documents 
or reports should include formal documentation that indicates 
completion of a project, including results.[Footnote 37] Moreover, 
according to NDF officials, NDF and the NDF Review Panel consider 
potential results in determining whether to fund future projects. 

Project management standards note the importance of documenting 
project results and entering this information into a database of 
lessons learned. However, 13 of the 23 project close-out reports that 
we examined did not discuss lessons learned. Moreover, NDF officials 
stated that they did not have a database of lessons learned. To 
document and share lessons learned, NDF officials said that they 
primarily used informal mechanisms such as e-mails or face-to-face 
meetings. The Project Management Body of Knowledge Guide notes the 
importance of documenting lessons learned and entering this 
information into a lessons-learned database for use in future 
projects. Some agencies that implement projects or with an interest in 
communicating lessons learned have formal databases that they use to 
enter lessons learned and communicate this information to project 
implementers. For example, the U.S. Agency for International 
Development and the U.S. Army Center for Lessons Learned have both 
established lessons-learned databases.[Footnote 38] State Bureau of 
Budgeting and Planning officials told us that as part of its effort to 
implement the new evaluation policy, State is considering the 
establishment of a lessons-learned database that could include 
information from NDF. 

In addition, the close-out reports often did not address other 
criteria that the NDF Review Panel considers in assessing future 
projects for NDF funding. For example, 11 of the 23 project close-out 
reports that we examined did not discuss cost, and 17 of the 23 did 
not discuss the timeliness of the project. In one instance, the final 
cost of the project was approximately 66 percent under the amount 
notified to Congress, but the close-out report did not provide a 
reason why this had occurred. Of the 23 reports we examined, 19 did 
not discuss the appropriateness of using NDF funding for the project 
and none discussed the project's return on investment.[Footnote 39] 
According to the guidelines promulgated by State when NDF was 
established in 1994, NDF criteria used to assess a project's 
suitability for NDF funding include the cost and the appropriateness 
of using NDF as a source of funding. In addition, according to NDF 
officials, the NDF Review Panel also considers the project's return on 
investment and timeliness as part of its criteria. Moreover, according 
to NDF officials, the NDF Review Panel has sometimes modified its 
initial assessment of a project's cost based on past experience. 

Project Close-Out Reports Also Varied in Content and Format: 

Although the 14 project close-out reports written by NDF officials 
were more similar in content and format, the other 9 differed 
considerably. For example, 10 of the 14 reports written by NDF 
officials had a section labeled "summary" or "overview" and 11 of the 
14 were in the form of a memorandum. The reports written by 
contractors and others varied considerably. One consisted of a two-
page letter from the project implementer that stated that the report 
funded by the project had been completed, but little else. Another 
consisted of a PowerPoint presentation written by a foreign government 
that did not provide many details about the implementation of the 
project. NDF officials stated that requiring the use of a standard 
format in project close-out reports might not always be appropriate or 
useful given the wide variety of projects that NDF funds and 
undertakes. However, it may be difficult to obtain information useful 
to future evaluations from reports that vary so significantly in 
content and format. 

Recognizing the need for NDF project managers to prepare a close-out 
report to ensure that information is consistently documented, in 
December 2010, NDF established the expectation that NDF project 
managers produce a project close-out report. NDF also produced a 
project management guide designed to encourage project managers to 
standardize their procedures. The NDF project management guide, which 
according to NDF officials is based on the Project Management Body of 
Knowledge Guide, among other things lists the preparation of a project 
close-out report as one of the steps for closing out a 
project.[Footnote 40] However, NDF officials stated in July 2012 that 
while project managers are expected to write project close-out 
reports, they are not required to do so. In addition, NDF officials 
stated that NDF encourages but does not require the use of the project 
management guide and the guide does not detail the information that 
project managers need to include in their reports or specify the 
report format. Partly in response to our work, NDF officials stated 
that they plan to develop standard operating procedures to address the 
issues we identified in the project close-out reports, which will also 
include a requirement for project managers to identify lessons 
learned. However, as of November 2012, they had not made any changes 
to their procedures. 

Conclusion: 

Over its lifetime, NDF has responded to pressing nonproliferation and 
disarmament needs, helping to address significant threats to 
international security. To support NDF in accomplishing its mission, 
U.S. law has provided NDF with an unusual degree of flexibility in how 
it manages its resources and conducts its work. While the critical 
nature of NDF's mission provides a strong rationale for such 
flexibility, it also increases the need for State to effectively 
manage its program resources to ensure that NDF is achieving its 
intended results. However, State has not taken the necessary steps to 
do so. For example, unlike some programs, NDF lacks a formal process 
for determining how much carryover balance it needs to maintain in 
reserve to meet unanticipated program requirements. Without such a 
process, NDF cannot know to what extent its carryover balances, which 
have increased in the past few years to historically high levels, may 
be exceeding its unanticipated funding needs. In addition, NDF has 
taken years to close some projects, delaying the availability of 
unexpended funds for other projects and likely understating NDF's 
carryover balances. A methodical process for determining NDF's needed 
carryover balances and for closing projects could help ensure that 
NDF's budget requests accurately reflect program needs. Additionally, 
NDF lacks a process to identify and incorporate lessons learned into 
future projects. State has never performed a program evaluation of NDF 
in its 18-year history to determine lessons learned for better 
designing projects that contribute to U.S. nonproliferation goals. 
State has implemented a new evaluation policy that could encourage the 
bureaus to more rigorously rationalize and prioritize their resources 
over time and identify and incorporate lessons learned. Nonetheless, 
State is not including NDF among the programs to be evaluated during 
fiscal years 2012 through 2014. Finally, NDF's project close-out 
reports could provide useful information to inform future program 
evaluations' identification of lessons learned that could be 
systematically incorporated into future projects. 

Recommendations for Executive Action: 

To more effectively manage NDF's resources, increase program 
accountability, and ensure that NDF has the information necessary to 
improve program performance, we recommend that the Secretary of State 
take the following four actions: 

* direct NDF to develop a methodology for determining the amount of 
reserves that it should carry over annually to meet program 
requirements to address unanticipated nonproliferation and disarmament 
opportunities; 

* direct NDF to develop guidance for determining when inactive NDF 
projects should be closed and the remaining, unexpended funds made 
available for use on other projects; 

* direct ISN and NDF to periodically and systematically conduct and 
document program evaluations of NDF; 

* direct NDF to revise its project management guide to establish 
requirements for project managers' close-out reports to include 
information useful for improving the management of NDF projects. 

Agency Comments and Our Evaluation: 

We provided a draft of our report to DOD, DOE, OMB, and State for 
their review and comment. DOD and OMB did not provide comments. State 
provided written comments, which we have reprinted in appendix II. 
State concurred with all four of our recommendations and identified 
several actions it intends to take in response to the recommendations. 
For example, State said that it will direct NDF to develop a 
methodology that the NDF Review Panel can then use to make an annual 
recommendation on the appropriate level of carryover balances for the 
next fiscal year to the Under Secretary for Arms Control and 
International Security. State also said that NDF has begun 
implementing the recommendation to revise its project management 
guidance to establish requirements for close-out reports, by creating 
a standard operating procedure for these reports. State and DOE 
provided technical comments, which we incorporated in the report, as 
appropriate. 

We are sending copies of this report to interested congressional 
committees, the secretaries and agency heads of the departments 
addressed in this report, and other interested parties. In addition, 
the report is available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-9601 or melitot@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix III. 

Sincerely yours, 

Signed by: 

Thomas Melito: 
Director: 
International Affairs and Trade: 

[End of section] 

Appendix I: Scope and Methodology: 

This report examines (1) the Department of State's (State) use of 
Nonproliferation and Disarmament Fund (NDF) authorities in developing 
and implementing NDF projects and (2) the extent to which State has 
conducted a program evaluation of NDF and used this information to 
improve program performance. 

To assess how State has used NDF's authorities in developing and 
implementing NDF projects, we obtained program-wide and project-level 
data from NDF's Financial and Information Management System (FIMS) for 
fiscal years 1994 through 2012. To assess the reliability of data in 
FIMS, we reviewed NDF documentation on the system, reviewed previous 
audits that assessed the reliability of FIMS data, compared FIMS data 
to data from other sources to confirm FIMS data's accuracy, and 
interviewed cognizant State officials. To gain additional information 
on the reliability of data in FIMS, we met with a private contractor 
conducting a review for NDF under the supervision of the State's 
Office of the Inspector General. The scope of the contractor's work 
included a review of the reliability of FIMS data. On the basis of the 
information we obtained, we determined that the FIMS data were 
sufficiently reliable for our purposes. We analyzed NDF program-wide 
data to determine program appropriations, commitments, obligations, 
and carryover balances for fiscal years 1994 through 2012. We analyzed 
NDF project data to determine project funding amounts, locations, 
objectives, and time frames for fiscal years 1994 and 2012. 
Additionally, we reviewed NDF project documentation including project 
proposals, approval memos, and congressional notifications, for all 
NDF projects initiated since the beginning of fiscal year 2007 to 
assess the types of projects NDF has funded and how it used its 
authorities in developing and implementing these projects. To gain 
additional information on NDF projects, we also reviewed State press 
releases, speeches by State officials, and fact sheets describing NDF 
activities. To identify NDF's key legal authorities, we reviewed 
relevant laws and regulations, including the FREEDOM Support Act and 
NDF appropriations legislation for fiscal years 1994 through 2012. 
Additionally, we examined congressional committee and conference 
reports from 1999 through 2012 to identify relevant congressional 
guidance regarding NDF. We also reviewed key NDF documents discussing 
the program's authorities, including the 1994 memorandum pursuant to 
the FREEDOM Support Act establishing the program and the accompanying 
NDF Guidelines. To gather additional information on NDF's authorities 
and how it develops and implements projects, we conducted a series of 
interviews with NDF officials and also met with officials from other 
agencies that proposed or implemented NDF projects, including the 
Departments of Defense and Energy. We also interviewed officials from 
the Office of Management and Budget to gain additional information on 
NDF's budget planning process. Finally, we reviewed previous GAO 
reports, as well as reports by the State Inspector General, the 
Congressional Research Service, and the National Academies of Science, 
to identify relevant findings regarding NDF and related U.S. 
nonproliferation and disarmament programs. 

To assess the extent to which State has evaluated NDF and used this 
information to improve program performance, we interviewed State 
officials with the Bureaus of International Security and 
Nonproliferation (ISN) and Budgeting and Planning. We also obtained 
copies of State's February 2012 evaluation policy and March 2012 
evaluation guidance, as well as a copy of ISN's April 2012 bureau 
evaluation plan. NDF officials described their project close-out 
reports as evaluations, but based on our discussion with State ISN and 
Budgeting and Planning officials, our review of GAO reports discussing 
evaluations, and State's February 2012 evaluation policy, we 
determined that NDF's project close-out reports fit more closely the 
standard of a monitoring report. GAO defines evaluations as 
individual, systematic studies that are conducted periodically or on 
an as-required basis to assess how well a program is working. State's 
evaluation policy notes that in addition to assessing the progress of 
a program, project, or activity, evaluations go beyond monitoring to 
identify the underlying factors and forces that affect the 
implementation process, as well as the efficiency, sustainability, and 
effectiveness of the program or project and its outcomes. As such, 
State's policy draws a clear distinction between evaluation and 
monitoring. As previous GAO reports, State, and other organizations 
have noted, evaluations require a measure of independence, which can 
be promoted in several ways, including entrusting the evaluation to an 
outside research and evaluation organization or fostering a 
professional culture that emphasizes the need for rigorous and 
independent evaluations. By comparison, State defines monitoring as a 
continual process designed to assess the progress of a program, 
project, or activity. The Project Management Body of Knowledge Guide 
[Footnote 41] notes that project close-out documentation consists of 
formal documentation indicating the completion of a project or phase 
of a project. For all these reasons, on the basis of our analysis of 
NDF's project close-out reports, we made the determination that NDF's 
project close-out reports better fit the standard of a monitoring 
report than an evaluation. While project close-out reports serve a 
different purpose from evaluations, based on our review of the Project 
Management Body of Knowledge Guide and NDF's Project Management Guide, 
we determined that we could assess the project close-out reports to 
determine their usefulness in enabling NDF to improve its management 
of the program. For this purpose, we obtained a judgmental sample of 
23 project close-out reports--14 of which we selected and 9 of which 
State selected. In selecting our sample, we chose only to consider 
projects that NDF had closed out since the beginning of fiscal year 
2007--of which there were 61--in order to ensure that all close-out 
documentation was completed for the projects. Our selection criteria 
for our sample included project cost, location, and type. For example, 
we selected a variety of projects from all four categories of projects 
that NDF funds--destruction and conversion, safeguards and 
verification, enforcement and interdiction, and education and 
training. State selected its projects using similar criteria; however, 
State did not limit itself to projects that were closed out. In some 
cases, State selected projects where work was completed, but the 
project was not yet officially closed out. In reviewing the 
documentation for the projects State selected, we determined that 
these projects were broadly similar to the ones that we selected and 
the inclusion of these projects in our analysis did not alter our 
overall findings or compromise the independence of our work. To 
conduct our analysis of the close-out reports, we developed a list of 
key terms, such as "results," "completion," and "lessons learned." Our 
inclusion of these terms was based on our analysis of project 
management standards, which note the importance of the project close-
out process in the project management cycle and the importance of 
obtaining information about the results of the project and lessons 
learned. We also included other terms such as "cost," "timeliness," 
"on time," "return on investment," and "appropriateness of using NDF 
funding." We included these terms because NDF officials told us that 
NDF and the NDF Review Panel include these criteria in determining a 
project's suitability for NDF funding. Because NDF does not have any 
requirement to use a standard terminology in its reports, we used a 
dictionary to obtain other synonyms of these terms as well. We 
examined each of the project close-out reports to determine the 
presence of these key terms. We also examined each of the project 
close-out reports to determine the author, content, and format. We did 
this on the basis of discussions with NDF officials, who told us that 
they had established an expectation that NDF project managers complete 
a project close-out report and had developed a project manager's guide 
that contained a checklist. While NDF does not have a requirement for 
project reports to be written in a standard format, we determined that 
the close-out reports that we had examined varied widely in their 
content and format and concluded that such variety could make it more 
difficult for evaluators to extract key information from these 
reports. After completing our initial review, the lead analyst 
submitted the results of his work and the methodology used to two 
additional levels of review. These reviewers were asked to validate 
the methodology and results. The sample of 23 project close-out 
reports cannot be generalized to the entire population of NDF project 
reports for the period in our review. We also reviewed NDF's Project 
Management Guide to determine the extent to which NDF has established 
specific requirements or guidance regarding how project close-out 
reporting should be conducted. To obtain the list of 11 similar 
missile destruction and conversion related projects, we conducted a 
word search of NDF's projects using the key terms "missiles" and 
"rockets." 

We conducted this performance audit from March 2012 through November 
2012 in accordance with generally accepted government auditing 
standards. These standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of State: 

United States Department of State: 
Comptroller: 
1969 Dyess Avenue: 
Charleston, SC 29405: 

November 19, 2012: 

Dr. Loren Yager: 
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Dr. Yager: 

We appreciate the opportunity to review your draft report, 
"Nonproliferation And Disarmament Fund: State Should Better Assure the 
Effective Use of Program Authorities," GAO Job Code 320899. 

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

If you have any questions concerning this response, please contact 
Paul Van Son, Senior Advisor, Bureau of International Security and 
Nonproliferation at (202) 647-3409. 

Sincerely, 

Signed by: 

James L. Millette: 

cc: 
GAO — Thomas Melito: 
ISN — Thomas Countryman: 
State/OIG — Evelyn Klemstine: 

Department of State Comments on GAO Draft Report: 

Nonproliferation And Disarmament Fund: State Should Better Assure the 
Effective Use of Program Authorities (GAO-13-83, GAO Code 320899): 

Thank you for the opportunity to comment on your draft report entitled 
Nonproliferation And Disarmament Fund: State Should Better Assure the 
Effective Use of Program Authorities. The Department of State welcomes 
this report. Since its inception, the Nonproliferation and Disarmament 
Fund's (NDF's) broad authorities have enabled the U.S. Government 
(USG) to respond swiftly and effectively to fast-breaking, 
unanticipated or unusually difficult opportunities to combat 
proliferation and disarm both conventional and weapons of mass 
destruction inventories worldwide. 

The report documents NDF's overall effectiveness and the wide variety 
of projects it has successfully undertaken in its history as an 
emergency contingency fund. The majority of these projects have been 
undertaken in close cooperation with other USG agencies or 
international organizations. They have often been urgent and high 
priority in strategically-sensitive and politically-challenging 
locations. 

The report makes four recommendations. State concurs with each of them. 

First, GAO recommends that NDF be directed to develop a methodology to 
determine the amount of reserves it should carry over annually to 
address unanticipated nonproliferation and disarmament activities. 
State agrees, and will direct the NDF to develop a methodology that 
the NDF Review Panel can then use to make an annual recommendation on 
the appropriate level of carry over balances for the next fiscal year 
to the Under Secretary for Arms Control and International Security. 
The methodology may not necessarily be based solely on a percentage of 
the total funds available in a given fiscal year or other "bright-
line" rule; it may need to consider a number of factors, including the 
likelihood of various nonproliferation and disarmament contingencies 
presenting themselves over the near-term. 

Second, GAO recommends that NDF develop guidance for determining when 
active projects should be closed and remaining, unexpended funds be 
made available for other uses. State agrees; NDF will establish a 
policy that includes a timeline to closeout NDF projects and promptly 
return any remaining funds to the NDF account. The reasons for not 
meeting a timeline will be documented for the NDF Review Panel. 

Third, GAO recommends that the International Security and
Nonproliferation Bureau (ISN) periodically conduct and document 
systematic evaluations of NDF. State agrees, and ISN will begin 
consultations next year with relevant bureaus to prepare for NDF's 
inclusion in future evaluations. As the GAO noted, State's evaluation 
policy was promulgated in February 2012 and NDF did contract for two 
Office of Inspector General audits of its financial management system 
in 2009 and 2012. 

Fourth, GAO recommends that NDF revise its project manager's guidance 
to establish requirements for close-out reports, including useful 
information to make future improvements. State agrees, and the NDF has 
already begun implementing this recommendation by creating a standard 
operating procedure for project closeout reports. Going forward, these 
reports will document lessons learned and other data that may be 
helpful to NDF Review Panels in assessing future project proposals for 
NDF funding. The NDF intends over time and where software costs permit 
to link the requirement for these reports and their content into the 
project manager's portion of the NDF Financial Information Management 
System. 

Again, State thanks the GAO for this constructive audit. Please be 
assured that the Department takes the GAO's findings very seriously 
and will implement the above recommendations to better prepare the NDF 
to operate even more effectively in the future. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Thomas Melito, (202) 512-9601 or melitot@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, the following staff made key 
contributions to this report: Jeff Phillips, Assistant Director; Lynn 
Cothern; Martin De Alteriis; Mark Dowling; José M. Peña, III; and Ryan 
Vaughan. Etana Finkler and Jeremy Sebest provided graphics support and 
Debbie Chung provided editorial assistance. Julie Hirshen and Julia 
Jebo Grant also provided additional technical assistance. 

[End of section] 

Footnotes: 

[1] While the legislation creating NDF was passed in 1992, NDF did not 
become operational and begin funding projects until 1994. 

[2] Pub. L. No. 102-511, § 504. 

[3] At the time, the Secretary of State delegated the authority to the 
Under Secretary of State for International Security Affairs, but this 
position was subsequently renamed the Under Secretary of State for 
Arms Control and International Security. 

[4] The fiscal year 2009 amount included $41 million in the original 
appropriation for the fiscal year and an additional $77 million 
provided in a supplemental appropriation. 

[5] The Scud is a short-range, liquid-fueled missile first built by 
the Soviet Union. 

[6] According to State officials, even if the Review Panel does not 
meet, its voting members still provide their formal recommendations to 
the Under Secretary. 

[7] The National Security Council is the President's principal forum 
for considering national security and foreign policy matters with his 
senior national security advisors and cabinet officials. 

[8] Congress, through a provision in annual appropriations acts for 
Foreign Operations, requires such notification for projects not 
previously justified to Congressional Appropriations Committees. For 
example, Pub. L. No. 112-74, 125 Stat. 1201 and Pub. L. No. 107-115, 
115 Stat. 2142. 

[9] Notwithstanding authority allows NDF to expend funds, 
"notwithstanding any other provision of law." This authority allows 
NDF to fund projects when other forms of U.S. assistance may be 
prohibited by U.S. sanctions or other legal restrictions. 

[10] The geographic authority granted to NDF in annual appropriations 
measures provides it the ability to fund projects anywhere in the 
world, when it is deemed to be in the national security interest of 
the United States to do so, notwithstanding provisions of the FREEDOM 
Support Act that limit certain NDF activities to the independent 
states of the FSU. 

[11] Funds appropriated with no-year budget authority remain available 
for obligation for an indefinite period of time. A no-year 
appropriation is usually identified by language indicating that the 
appropriation is "to remain available until expended." 

[12] Pub. L. No. 111-84, §1305. CTR, which is implemented by DOD's 
Defense Threat Reduction Agency, is designed to assist countries in 
securing and eliminating their weapons of mass destruction and 
preventing their proliferation. 

[13] State noted that legally, notwithstanding authority applies to 
NDF funds by the terms of the legislation and does not require a 
formal determination to rely upon this authority. 

[14] 22 U.S.C. 2304. 

[15] 22 U.S.C. 2799aa-1. 

[16] 22 U.S.C. 2370(t). 

[17] The United States Department of State and the Broadcasting Board 
of Governors Office of the Inspector General, Report of Inspection: 
Bureau of Nonproliferation, ISP-I-05-50 (Washington, D.C.: Dec. 2004). 

[18] GAO, Nuclear Nonproliferation: Action Needed to Address NNSA's 
Program Management and Coordination Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-12-71] (Washington, D.C: Dec. 14, 
2011). 

[19] For the purposes of this report, we use the term "notified" to 
indicate funds that have been designated for specific projects. While 
NDF considers notified funds to be internally committed to a project, 
notified funds may not necessarily have been obligated for that 
project through an act creating a legal liability of the U.S. 
government for payments for goods or services. 

[20] According to NDF officials, the office seeks to keep about $30 
million in unnotified balances to use as a reserve in the event that 
unanticipated nonproliferation or disarmament opportunities arise. NDF 
officials noted that this amount was an increase from earlier years of 
the program, when NDF sought to keep approximately $10 million in 
reserve. However, the officials noted that this amount is not a 
formally established target and that the office did not use any 
particular process to develop it. 

[21] NDF's budget request for fiscal year 2013 was $30 million. 

[22] The National Nuclear Security Administration implements more than 
20 nonproliferation programs worldwide that work to secure nuclear 
warheads; protect, consolidate, and dispose of weapon-usable nuclear 
materials; and transition weapons of mass destruction expertise and 
infrastructure in partner countries to peaceful purposes, among other 
things. 

[23] [hyperlink, http://www.gao.gov/products/GAO-12-71]. 

[24] For all but three of these projects, NDF expended none of the 
notified funds. 

[25] NDF informs the Under Secretary by memorandum of the completion 
or proposed cancellation of a project. The Under Secretary then 
approves the closure of the project and the return to the NDF account 
of any unexpended funds that were notified for the project. 

[26] While State has never conducted a program evaluation of NDF, NDF 
has contracted for two evaluations of NDF's financial management 
system. The first was completed in May 2009. The second is planned for 
completion in December 2012. 

[27] For additional information about designing and conducting 
evaluations, see GAO: Designing Evaluations: 2012 Revision, 
[hyperlink, http://www.gao.gov/products/GAO-12-208G] (Washington, D.C: 
Jan. 2012). 

[28] Pub. L. No. 111-352. 

[29] See GAO, Foreign Police Assistance: Defined Roles and Improved 
Information Sharing Could Enhance Interagency Collaboration, 
[hyperlink, http://www.gao.gov/products/GAO-12-534] (Washington, D.C.: 
May 9, 2012). 

[30] Department of State, Leading Through Civilian Power: The First 
Quadrennial Diplomacy and Development Review (Washington, D.C.: 2010). 
The 2010 Quadrennial Diplomacy and Development Review was intended as 
a sweeping review of State's and the U.S. Agency for International 
Development's core missions. While DOD has conducted such periodic 
reviews, this review was the first of its kind undertaken by State. 

[31] The terminology that is used to define the types of program 
evaluations that can be conducted differs among agencies. For example, 
State's policy refers to "performance," "impact," "summative/ex-post," 
and "global/regional" evaluations, while [hyperlink, 
http://www.gao.gov/products/GAO-12-208G] refers to "process," 
"outcome," and "net impact" evaluations. 

[32] State's policy defines a "large" program, project, or activity in 
two ways: one whose dollar value equals or exceeds the median program, 
project, or activity size in that bureau, or one for which the number 
of full-time staff exceeds the median number of staff associated with 
similar individual programs, projects, and activities in that bureau. 

[33] State has also taken other steps, such as holding an evaluation 
conference. According to State officials, the agency is also working 
to establish two week-long courses on evaluations that will be open to 
all State officials. 

[34] GTR focuses on front-line states like Iraq, Pakistan, and Yemen. 
It is intended to reduce the threat posed by terrorists or countries 
of concern seeking to acquire weapons of mass destruction. State's GTR 
program is distinct from DOE's Global Threat Reduction Initiative, 
which is implemented by the National Nuclear Security Administration. 
Other program evaluations that ISN has included in its bureau 
evaluation plan include certain projects managed by the Preventing 
Nuclear Smuggling Program and the Global Initiative to Combat Nuclear 
Terrorism. The Preventing Nuclear Smuggling Program assists vulnerable 
countries in strengthening their capacity to prevent, detect, and 
respond to nuclear and radioactive smuggling incidents. The Global 
Initiative to Combat Nuclear Terrorism is a voluntary group of 85 
countries that have committed to strengthening their capacity to 
prevent, detect, and respond to nuclear terrorism. Funding for this 
initiative supports workshops and training activities focusing 
primarily on nuclear forensics and detection. 

[35] NDF officials have described the project close-out reports as 
evaluations. However, based on various criteria described in appendix 
I, we determined that the reports better fit the standard of a project 
monitoring report. See appendix I for a fuller explanation of our 
determination. 

[36] To conduct our analysis, we reviewed each project close-out 
report to determine the presence of a list of key terms developed 
based on our analysis of project management standards and NDF's 1994 
project suitability guidelines, as well as interviews with NDF 
officials. Appendix I contains a fuller discussion of the methodology 
we used to produce our analysis of NDF project close-out reports. 

[37] Project Management Institute, A Guide to the Project Management 
Body of Knowledge, Fourth Edition (2008). 

[38] The U.S. Agency for International Development implements and 
manages U.S. foreign assistance programs. The U.S. Army's Center for 
Lessons Learned collects and analyzes data from current and historical 
sources and produces and disseminates lessons learned for commanders 
and staff. 

[39] Return on investment is a measure of the benefits gained by 
implementing a project. 

[40] While NDF's project management guide is based on the Project 
Management Body of Knowledge Guide, according to NDF officials, State 
as a whole has not adopted the use of this guide and the guide is not 
used as a reference in any of State's project management courses. 

[41] The Project Management Body of Knowledge Guide is a product of 
the Project Management Institute and is a recognized standard for the 
project management profession. 

[End of section] 

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