Nuclear Nonproliferation: IAEA Has Made Progress in Implementing Critical Programs but Continues to Face Challenges
Highlights
What GAO Found
The International Atomic Energy Agency (IAEA) has taken several steps to strengthen its safeguards program since GAO's 2005 report, including increasing the number of countries that are subject to a broader range of safeguards measures, upgrading its analytical laboratories, and producing its first long-term strategic plan. However, the agency faces two critical challenges in further improving the effectiveness and efficiency of the safeguards program. First, several countries have raised concerns about IAEA's plans to expand implementation of what it calls the "state-level concept" to all countries with safeguards agreements by 2014. The state-level concept is an approach in which the agency considers a broad range of information about a country's nuclear capabilities and tailors its safeguards activities in each country accordingly. IAEA officials told GAO that broader implementation of this approach would allow the agency to better allocate resources by reducing safeguards activities where there is no indication of undeclared nuclear activities and to focus its efforts on any issues of safeguards concern. However, IAEA has not clearly defined and communicated how it will implement the state-level concept. As a result, several countries are concerned that the state-level concept may be applied in a subjective, potentially discriminatory manner or that it could allow IAEA to be too intrusive into their civilian nuclear operations. Second, the agency has not quantified the resources it may need to fully implement the state-level concept-- making it difficult to determine its long-term costs and benefits.
IAEA has continued to support countries' efforts to improve the security of their nuclear material and facilities, but three key issues limit the agency's ability to ensure that its nuclear security resources are used efficiently and effectively. First, IAEA's nuclear security program relies heavily on extra-budgetary contributions from donor countries, which makes it difficult to plan and implement projects, in part because these funds vary from year to year. Second, IAEA has not conducted a needs-based assessment of the resources required beyond its 2-year budget cycle, which also hinders its ability to ensure that resources are directed to the greatest security needs. Third, the extent to which IAEA is meeting its nuclear security goals is unclear because IAEA does not systematically report on the results of measures used to assess the performance of the agency's nuclear security program.
IAEA is making progress in establishing an international nuclear fuel bank by 2014 that is intended to provide eligible countries with a guaranteed supply of low enriched uranium (LEU) for civilian nuclear power programs in the event of a supply disruption. IAEA's fuel bank is not intended to provide a routine supply of LEU. However, several experts and foreign officials told GAO that the fuel bank's value is uncertain, causing some foreign officials to call it "a solution looking for a problem." For example, the fuel bank may never be used, in part because there are already several stable suppliers on the international nuclear fuel market. In addition, IAEA does not have a plan in place for the long-term operation and funding of the bank, although agency officials told GAO they intend to complete such a plan in 2013. Furthermore, the IAEA bank is one of several guaranteed, multilateral fuel supply options--including banks established by the United States and Russia--for countries seeking an assured supply of nuclear fuel.
Why GAO Did This Study
IAEA plays a crucial role in supporting U.S. nuclear nonproliferation goals through its safeguards and nuclear security programs. The Department of State (State) coordinates the United States' financial and policy relationship with IAEA. IAEA's safeguards program is designed to detect and deter the diversion of nuclear material for nonpeaceful purposes, while the agency's nuclear security program assists countries in improving the physical protection of their nuclear material and facilities. IAEA plans to create an international fuel bank to guarantee the supply of fuel for civilian nuclear power programs. GAO was asked to examine (1) any challenges that IAEA faces in carrying out its safeguards program, (2) any limitations regarding the nuclear security program, and (3) the status of IAEA's planned nuclear fuel bank. GAO reviewed relevant documents and interviewed officials from IAEA and U.S. federal agencies, 15 nuclear nonproliferation experts, and representatives from 16 countries.
Recommendations
GAO recommends, among other things, that State work with IAEA to (1) clearly define and communicate how IAEA will implement the statelevel concept, (2) evaluate the nuclear security program's long-term resource needs, and (3) prepare a plan for the long-term operation and funding of IAEA's fuel bank. State agreed with several of the recommendations and disagreed with two, including the one on the nuclear security programs longterm resource needs. GAO continues to believe that implementing all of these recommendations would enhance the efficiency and effectiveness of IAEAs programs.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
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| Department of State | To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to clearly define and communicate how the agency will implement the state-level concept in an objective, nondiscriminatory manner that does not exceed IAEA's authority to collect information about countries' nuclear activities. |
In August 2016, Department of State officials reported that the United States had assisted IAEA in reminding member states that many of the concepts behind the state-level concept (SLC) were rooted in requirements for comprehensive safeguards agreements required by the Treaty on the Non-Proliferation of Weapons. In addition, State said, IAEA held a series of technical meetings with member states that resulted in the states' support for IAEA's plans for implementing the SLC. IAEA also issued a second report on the SLC that clearly defined and communicated the concept and development of safeguards implementation at the state level. In September 2014, the IAEA Board of Governors and IAEA General Conference took note of this report and the IAEA Director General's assurances on SLC implementation.
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| Department of State | To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to conduct an assessment of the human capital, technological, and other resources the agency may need to broaden implementation of the state-level concept--and the associated long-term benefits and costs. |
In August 2016, Department of State officials reported that State had revisited the results of a comprehensive review of U.S. support for IAEA safeguards, following the IAEA Board of Governors' policy-level discussions of the state-level concept (SLC) in 2013-15. In this review, which included assessments of IAEA's overall safeguards resources needs (financial human, and technical), State identified areas where U.S. support for IAEA was needed for further development and implementation of the SLC.
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| Department of State | To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to evaluate the nuclear security program's long-term resource needs and assess whether the agency's heavy reliance on extra-budgetary contributions is sufficient to plan and meet those needs. |
In August 2016, Department of State officials reported that fully evaluating the IAEA Division of Nuclear Security's (DNS) long-term resource needs is difficult, as the nature and scope of its assistance programs are driven by member state requests, which vary yearly. In addition, State officials said, the unpredictable nature of member states' extra-budgetary contributions-which comprise the majority of DNS' current budget-makes developing long-term plans difficult, especially in relation to personnel. Furthermore, State officials noted that many member states, including the United States, are resource-constrained; as such, IAEA must balance the demand and need for programs within a finite budget and a limited willingness by member states to increase that budget.
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| Department of State | To ensure that safeguards and nuclear security resources are allocated and spent in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to systematically report on the results of the agency's performance measures for the nuclear security program to allow member countries and the international community at large to gauge the extent to which the agency is achieving its goals or the nuclear security program's impact and effectiveness. |
Department of State officials told us that State has pursued the development of IAEA performance measures to gauge the impact and effectiveness of the agency's nuclear security program. Specifically, State officials noted that the United States welcomes IAEA's efforts to report on the performance of its nuclear security program's impact and effectiveness by using specific, measureable, achievable, relevant, and time-bound metrics. To that end, State officials reported that the United States continually works with IAEA's Division of Nuclear Security to monitor the nuclear security program to ensure its effectiveness and efficiency, and receives a detailed update on its performance every December, especially for activities using U.S. funding. Furthermore, State officials told us a U.S.-funded expert was sent to IAEA in 2016 with a mandate to work, in part, on these issues. While State officials reported that IAEA does not currently have specific performance measures for nuclear security activities, IAEA does regularly report its activities. For example, IAEA annually produces a Nuclear Security Report that is presented to the international agency's General Conference and Board of Governors. State officials also told us that since our report, State has encouraged IAEA to (1) add more meaningful performance measures to IAEA's biennial "Programme and Budget" documents, (2) develop clearly-defined tasks and outputs in its Nuclear Security Plan, and (3) report on the agency's achievements in its annual Nuclear Security Report. In particular, State officials reported that the current version of the Nuclear Security Plan for 2018-2021 includes planned outputs for tasks and projects, which establish what IAEA intends to accomplish over the next 4 years.
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| Department of State | To ensure that IAEA's nuclear fuel bank is implemented in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to prepare a publicly available assessment of the potential impact of IAEA's nuclear fuel bank on the international nuclear fuel market. |
In March 2017, Department of State officials reported that the IAEA Board of Governors' decision to approve the nuclear fuel bank required that "care shall be taken to avoid disrupting the price of uranium on the international market." State officials also indicated that IAEA's Director General would be reporting to the Board in 2017 on IAEA's plans to purchase low enriched uranium (LEU). At that time, State officials anticipated that the Director General's report would be publicly available in its final form. In addition, State officials reported that to obtain a full understanding of LEU market factors before preparing the report, IAEA held a workshop in Vienna, Austria, in October 2016 on LEU acquisition for the bank, in which Department of Energy officials and several U.S. companies participated. Furthermore, in August 2017, State Department officials reported that in response to our recommendation, the United States, through IAEA's Board of Governors and other member countries, has encouraged IAEA to ensure that the LEU bank does not disrupt the international nuclear fuel market. According to State officials, to enable IAEA to obtain a full understanding of LEU market factors, IAEA (1) contracted a company to provide independent expert advice with regard to the LEU acquisition process, (2) supplemented such advice with two consultants on nuclear fuel, (3) contracted a company to provide advice on LEU transport and assistance with handover arrangements between transporters, and (4) held a workshop where member states could present additional factors they thought warranted consideration. According to State officials, IAEA intended to integrate all these elements into a procurement plan to ensure that the mandate to not disrupt the nuclear fuel market was met. State officials reported, the documents explaining the procurement process were subsequently designated sensitive, as IAEA determined that protecting information on procurement and pricing would help the agency limit the LEU bank's effect on the nuclear fuel market. As such, most member states that attended the workshop supported IAEA in its decision not to make the assessment publicly available, according to State officials.
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| Department of State | To ensure that IAEA's nuclear fuel bank is implemented in the most effective and efficient manner, the Secretary of State should work with IAEA and its member countries through the agency's Board of Governors to ensure that the agency's plan for the long-term operation and funding of the nuclear fuel bank includes strategies to help set priorities and allocate resources for the viability of the fuel bank that include, for example, information on the levels and sources of funding needed for the ongoing maintenance and operation of the fuel bank. |
In August 2016, Department of State officials reported that the IAEA Board of Governors' decision to approve the nuclear fuel bank required that IAEA (1) develop a detailed financial and administrative plan for the fuel bank's ongoing operation to ensure its effective management and sustainability, (2) report the plan to the Board, and (3) keep the Board informed of progress in its implementation. State officials also told us at that time that the Director General had been reporting IAEA's progress in establishing the fuel bank and would soon be presenting an overall financial plan. As a member of IAEA's Board, State officials added that the United States would continue to be in a position to require that IAEA's plans for the fuel bank include strategies to help set priorities and allocate resources for its viability, and to evaluate these plans. In August 2017, State officials reported that IAEA had provided to member states a "project and financial plan" in May 2017 that included costs for the fuel bank--including its management, contracting, regulatory compliance, LEU acquisition and storage, and overall operation--for the next 20 years. According to State officials, the plan also demonstrates that current funding will be sufficient to cover the total estimated costs of all aspects of the LEU fuel bank for 20 years, with more than 11 percent of the funding (not including interest) expected to remain at that point.
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| National Nuclear Security Administration | To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of National Nuclear Security Administration (NNSA) should review and assess the need for the U.S. nuclear fuel bank, based on the United States' financial support of IAEA's fuel bank and the potential for duplication of efforts, and report on the results of this assessment. |
In response to our recommendation, NNSA prepared a draft report that analyzes and assesses the need for the U.S. nuclear fuel bank as well as the potential demand for nuclear fuel banks and the potential for redundancy among the banks. This report also analyzes, among other things, the net demand for low-enriched uranium, the reliability of the supply chain, and the market impacts of the fuel banks.
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| National Nuclear Security Administration | To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of NNSA should report key information on the U.S. nuclear fuel bank's operations, such as its use to date, estimated demand, potential impact on the international nuclear fuel market, or any controls to mitigate the potential market impact. |
In response to our recommendation, NNSA prepared a draft report that analyzes and assesses the need for the U.S. nuclear fuel bank as well as the potential demand for nuclear fuel banks and the potential for redundancy among the banks. This report also analyzes, among other things, the net demand for low-enriched uranium, the reliability of the supply chain, and the market impacts of the fuel banks.
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| National Nuclear Security Administration | To ensure the most effective, efficient, and transparent use of U.S. government resources, the Administrator of NNSA should review and report on the financial status of the U.S. nuclear fuel bank, including its costs to date and any ongoing costs related to the bank, in NNSA's annual budget justification reports or other publicly available documents. |
In March 2014, NNSA prepared a report in response to our recommendation that addressed the issues GAO raised. According to the report, the initial inventory of the American Assured Fuel Supply--i.e., the U.S. fuel bank--was obtained by downblending highly enriched uranium (HEU) deemed to be surplus for national defense needs. The report also stated that a contractor would provide the management of the fuel bank on an ongoing basis, and that the contractor has accepted the use of the fuel bank inventory as full compensation for administering the fuel bank's operations. Furthermore, according to the report, there is currently no monetary cost to NNSA for the services performed by the contractor managing the fuel bank, as the agency had arranged to compensate the contractor responsible for downblending the material through what NNSA described as a barter arrangement. As a result, NNSA's budget justification does not include specific information about the costs of the fuel bank but does note that NNSA's Material Management and Minimization program is responsible for oversight of the fuel bank's contract management.
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