This is the accessible text file for GAO report number GAO-07-133R
entitled 'Combating Nuclear Smuggling: DHS's Cost-Benefit Analysis to
Support the Purchase of New Radiation Detection Portal Monitors Was Not
Based on Available Performance Data and Did Not Fully Evaluate All the
Monitors' Costs and Benefits' which was released on October 17, 2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
United States Government Accountability Office: Washington, DC 20548:
October 17, 2006:
The Honorable Thad Cochran:
Chairman:
The Honorable Robert C. Byrd:
Ranking Minority Member:
Committee on Appropriations:
United States Senate:
The Honorable Jerry Lewis:
Chairman:
The Honorable David R. Obey:
Ranking Minority Member:
Committee on Appropriations:
House of Representatives:
Subject: Combating Nuclear Smuggling: DHS's Cost-Benefit Analysis to
Support the Purchase of New Radiation Detection Portal Monitors Was Not
Based on Available Performance Data and Did Not Fully Evaluate All the
Monitors' Costs and Benefits:
Since the attacks of September 11, 2001, combating terrorism has been
one of the nation's highest priorities. As part of that effort,
preventing nuclear and radioactive material from being smuggled into
the United States--perhaps to be used by terrorists in a nuclear weapon
or in a radiological dispersal device (a "dirty bomb")--has become a
key national security objective. The Department of Homeland Security
(DHS) is responsible for providing radiation detection capabilities at
U.S. ports-of-entry.[Footnote 1] Until April 2005, U.S. Customs and
Border Protection (CBP) under DHS managed this program. However, on
April 15, 2005, the president directed the establishment, within DHS,
of the Domestic Nuclear Detection Office (DNDO), whose duties include
acquiring and supporting the deployment of radiation detection
equipment.[Footnote 2] CBP continues its traditional screening function
at ports-of-entry to interdict dangerous nuclear and radiological
materials through the use of radiation detection equipment, including
portal monitors. The Pacific Northwest National Laboratory (PNNL), one
of the Department of Energy's (DOE) national laboratories, manages the
deployment of radiation portal monitors for DHS[Footnote 3].
Current portal monitors, which cost about $55,000 per monitor, detect
the presence of radiation, but cannot distinguish between harmless
radiological materials, such as naturally occurring radiological
material in some ceramic tile, and dangerous nuclear materials, such as
highly enriched uranium (HEU). CBP officers also use radioactive
isotope identification devices (RIIDs), which are handheld devices
designed to identity different types of radioactive material, such as
radioactive material used in medicine or industry, a naturally
occurring source of radiation, or weapons-grade material. These devices
have limitations in their ability to detect and identify nuclear
material. DHS would like to improve the capabilities of its radiation
detection equipment in order to better distinguish between different
types of nuclear and radiological materials. As a result, DHS sponsored
research, development, and testing activities in 2005 that were
designed to produce portal monitors that, in addition to detecting,
would also identify the type of nuclear or radiological material.
Portal monitors with this new identification technology currently cost
about $377,000 or more per monitor. In these same tests, DHS also
tested the performance of currently deployed portal monitors.
In July 2006, DHS announced that it had awarded contracts to three
vendors to further develop and purchase $1.2 billion worth of new
portal monitors over 5 years. DHS plans to deploy these monitors at
U.S. ports of entry. For fiscal year 2007, DNDO plans to acquire the
first installment of 104 new portal monitors that use new
identification technology at a cost of $80.2 million. Congress,
however, has curtailed DNDO's ability to do so by restricting the
availability of funding for full scale procurement of new radiation
detection portal monitors until DHS certifies that a significant
increase in operational effectiveness will be achieved.[Footnote 4]
In a March 2006 report, to ensure that DHS's substantial investment in
radiation detection technology yields the greatest possible level of
detection capability at the lowest possible cost, we recommended that
once the costs and capabilities of these new portal monitors were well
understood, and before any of the new equipment was purchased, the
Secretary of DHS work with the Director of DNDO to analyze the benefits
and costs of deploying new portal monitors.[Footnote 5] Further, we
recommended that this analysis focus on determining whether any
additional detection capability provided by the new portal monitors
were worth the additional costs.
In response to our recommendation, in May 2006, DNDO issued a cost-
benefit analysis for the acquisition and deployment of new portal
monitors.[Footnote 6] In this document, DNDO stated that the purpose of
its analysis was to help provide a "robust" defense against nuclear
smuggling, to limit the negative impacts to legitimate trade and travel
between nations, and to provide a sound financial investment for the
United States government. In this context, by agreement with your
staff, we reviewed DNDO's cost-benefit analysis to determine the extent
to which it provides a sound analytical basis for acquiring and
deploying new portal monitors. We briefed your staff on the results of
our evaluation on August 21, 2006, and this report presents the details
of that briefing. The briefing focused mainly on the use of performance
and cost data for current and newer portal monitors (see Enclosure 1).
To conduct our review of DNDO's cost-benefit analysis we analyzed
documentation supporting the costs used for both currently deployed and
new equipment. As provided by federal regulations, DHS developed what
is called an Independent Government Cost Estimate.[Footnote 7] We
obtained and evaluated this estimate to determine its reasonableness.
We also reviewed test reports for new portal monitors and currently
deployed monitors produced by National Institutes of Standards and
Technology (NIST) and PNNL to assess the validity of performance
assumptions DNDO used in its analysis. In addition, we had discussions
with officials from DNDO, CBP, NIST, and several of DOE's national
laboratories, including Oak Ridge, Sandia, Brookhaven, and PNNL, as
well as representatives of the trucking and shipping industries. We
conducted our review from May 2006 to September 2006 in accordance with
generally accepted government auditing standards.
Summary:
DNDO's cost-benefit analysis does not provide a sound analytical basis
for DNDO's decision to purchase and deploy new portal monitor
technology. DNDO did not use the results of its own performance tests
in its cost-benefit analysis and instead relied on assumptions of the
new technology's anticipated performance level. Performance tests also
showed that the ability of new radiation detection portal monitors to
correctly identify masked HEU (placed next to or within another,
usually more benign, radiological substance) was even more
limited.[Footnote 8] According to the cost-benefit analysis and
radiation detection experts to whom we spoke, masked HEU is a
significant concern because it is difficult to detect. DNDO also
focused the analysis exclusively on identifying HEU and did not
consider in the analysis how well (either as a goal or in testing) new
portal monitor technology can correctly detect or identify other
dangerous radiological or nuclear materials. Furthermore, the analysis
did not include the results from side-by-side tests that DNDO conducted
of the advanced portal monitors and current portal monitors.
The cost-benefit analysis for acquiring and deploying portal monitors
is also incomplete because it does not include all of the major costs
and benefits required by DHS guidelines. In particular, DNDO did not
assess the likelihood that radiation detection equipment would either
misidentify or fail to detect nuclear or radiological material. Rather,
it focused its analysis on reducing the time necessary to screen
traffic at border check points and reduce the impact of any delays on
commerce. DNDO also used questionable assumptions about the procurement
costs of portal monitor technology. DNDO assumed a purchase price for
current portal monitor technology that is more than twice what CBP
typically pays.
We provided DHS with a draft of this report for its review and comment.
Its written comments are presented in Enclosure 2. The Department
neither agreed nor disagreed with our recommendation, but continues to
stand behind the basic conclusions of its cost-benefit analysis that
new radiation detection portal monitors are a sound investment for the
U.S. Government. We continue to believe, however, that significant
weaknesses in DNDO's cost-benefit analysis precludes it from providing
a reliable basis for making major procurement decisions, such as
whether to invest heavily in deploying a new portal monitor technology.
Background:
DHS's program to deploy radiation detection equipment at U.S. ports-of-
entry has two goals.[Footnote 9] The first is to use this equipment to
screen all cargo, vehicles, and individuals coming into the United
States. Each day, DHS processes about 64,000 containers arriving in the
United States via ships, trucks, and rail cars; 365,000 vehicles; and
more than 1.1 million people. The United States has over 380 border
sites at which DHS plans to deploy radiation detection equipment. The
second goal of the program is to screen all of this traffic without
delaying its movement into the nation. To illustrate the difficulty of
achieving this second goal, CBP's port director at the San Ysidro,
California, land border crossing estimated that, prior to initiating
radiation detection screening, the volume of traffic through the port-
of-entry was so great that, at times, the wait to enter the United
States from Mexico was about 2.5 hours. He noted that had radiation
detection screening added a mere 20 seconds to the wait of each
vehicle, the wait during those peak times could have increased to about
3.5 or 4 hours--an unacceptable outcome in his view. DHS's current
plans call for completing deployments of radiation portal monitors at
U.S. ports-of-entry by September 2009.
To screen commerce for radiation, CBP uses several types of detection
equipment and a system of standard operating procedures. Current
radiation detection equipment includes radiation portal monitors, which
can detect gamma radiation (emitted by radiological materials that can
be used in a dirty bomb as well as naturally occurring radiological
material in some ceramic tile) and neutron radiation (emitted by only a
limited number of materials, such as plutonium--a material that can be
used to make a nuclear weapon).
Generally, CBP's standard procedures direct vehicles, containers, and
people coming into the country to pass through portal monitors to
screen for the presence of radiation. This "primary inspection" serves
to alert CBP officers that a radioactive threat might be present.
Because current portal monitors using detection technology--known as
"plastic scintillators" (PVT)--detect the presence of radiation but
cannot distinguish between harmless and dangerous nuclear or
radiological materials, "secondary inspections" are required. To
confirm and identify the presence of radiation, this secondary
inspection includes CBP officers using RIIDs to determine whether the
radiation being emitted is from a harmless source, such as kitty
litter, or a dangerous source, such as weapons-grade nuclear material.
Typically, completing a secondary inspection takes about 15 minutes.
DHS would like to improve the capabilities of its radiation detection
equipment in order to distinguish among different types of nuclear and
radiological materials and, in so doing, reduce the number of secondary
inspections on non-threatening nuclear and radiological
material.[Footnote 10]
DNDO Relied on the Potential Performance of New Portal Monitors Rather
Than Its Own Test Results of Current Equipment Performance in Its Cost-
Benefit Analysis:
DHS is developing new portal monitors, known as "advanced spectroscopic
portal monitors" (ASP) that, in addition to detecting nuclear or
radiological material, can also identify the type of material. In 2005,
DNDO conducted side-by-side testing at the Nevada Test Site
(NTS)[Footnote 11] on 10 ASP systems and 3 PVT systems developed by
private sector companies, including the PVT systems currently deployed.
DHS requested that NIST provide assistance by conducting an independent
analysis of data acquired during the last phase of developmental
testing of ASPs to help DHS determine the performance of ASP portal
monitors being proposed by private sector companies. NIST compared the
10 ASP systems, and in June 2006 submitted a report to DHS on the
results of that testing.[Footnote 12]
Performance tests of ASPs showed that they did not meet DNDO's main
performance assumption in the cost-benefit analysis of correctly
identifying HEU 95 percent of the time it passes through portal
monitors. The 95 percent performance assumption included ASPs' ability
to both detect bare, or unmasked, HEU in a container and HEU masked in
a container with a more benign radiological material.[Footnote 13]
Based on NIST's assessment of the performance data, the ASP prototypes
(manufactured by the three companies that won DNDO's recent ASP
procurement contract) tested at NTS identified bare HEU only 70 to 88
percent of time. Performance tests also showed that ASPs' ability to
identify masked HEU fell far short of meeting the 95 percent level of
performance assumed in the cost-benefit analysis. According to DNDO's
cost-benefit analysis, identifying masked HEU is the most difficult
case to address. DOE officials told us that benign radiological
materials could be used to hide the presence of HEU. NIST reported that
the best ASP prototype DNDO tested last year in Nevada that won a
procurement contract was able to correctly identify masked HEU and
depleted uranium (DU) only 53 percent of the time. Similarly, the ASP
prototypes submitted by the other two companies that won DNDO's ASP
procurement were able to identify masked HEU and DU only 45 percent and
17 percent of the time.
Despite these results, DNDO did not use the information from these
tests in its cost-benefit analysis. Instead, DNDO officials told us
that since new portal monitors cannot meet the 95 percent level of
performance, they relied on the assumption that they will reach that
level of performance sometime in the future. DNDO officials asserted
that the current performance levels of the ASPs will improve, but they
provided no additional information as to how the 95 percent performance
goal will be achieved or an estimate of when the technology will attain
this level.
Moreover, DNDO's cost-benefit analysis only considered the benefits of
ASPs' ability to detect and identify HEU and did not consider ASPs
ability to detect and identify other nuclear and radiological
materials. The ability of an ASP to identify specific nuclear or
radiological materials depends on whether the ASP contains software
that is specific to those materials. In our view, a complete cost-
benefit analysis would include an assessment of ASPs' ability to detect
and identify a variety of nuclear and radiological material, not just
HEU. By excluding radiological and nuclear materials other than HEU,
DNDO's analysis did not consider the number of secondary inspections
that would be related to these materials and hence it likely
underestimated the costs of ASP use. Further, DNDO told us the
assumptions for the ability of ASP systems to detect and identify HEU
95 percent came from the ASP performance specifications. However, we
examined the performance specifications and found no specific
requirement for detecting or identifying HEU with a 95 percent
probability.[Footnote 14] While there is a requirement in the
performance specification for the identification for HEU and other
special nuclear material, we found no associated probability of success
in performing this function.
DNDO's cost-benefit analysis also may not accurately reflect the
capabilities of PVTs to detect nuclear or radiological material. DNDO
officials acknowledged that DNDO tested the performance of PVTs along
with the ASPs in 2005, but did not use the results of these tests in
its cost-benefit analysis. Instead, in a June 2006 written response to
our questions, DNDO told us it based its analysis on the performance of
PVT monitors that PNNL tested during 2004 in New York. However, the
results from these field tests are not definitive because, as PNNL
noted in its final report, the tests did not use HEU and, therefore,
the results from the tests did not indicate how well PVT portal
monitors would be able to detect HEU in the field.[Footnote 15]
Moreover, the PVT portal monitors that PNNL used had only one radiation
detection panel as opposed to the four-panel PVT monitors that DHS
currently deploys at U.S. ports-of-entry. An expert at a national
laboratory told us that larger surface areas are more likely to detect
radiological or nuclear material. DNDO also stated that due to the
nature of the testing at the Nevada Test Site, the tests did not
provide the data needed for the cost-benefit analysis. According to
DNDO officials, this data would come from analysis of the performance
of fielded systems at U.S. ports-of-entry where the probability to
detect threats could be compared to false alarm rates.
DNDO's Cost-Benefit Analysis was Incomplete and Used Inflated Cost
Estimates for PVT Equipment:
DNDO officials told us they did not follow the DHS guidelines for
performing cost-benefit analyses in conducting their own cost-benefit
analysis.[Footnote 16] DNDO officials said their analysis was intended
to be an easy-to-understand assessment of the best investment for the
U.S. government. However, DNDO's simplified approach to the cost-
benefit analysis omitted many factors that could affect the cost of new
radiation portal monitors. For example, DNDO officials told us that
there are over 12 different types of ASP monitors, yet they only
estimated the cost of cargo portal monitors that would be used at land
border crossings. In reality, DNDO and CBP plan to deploy different
types of ASPs that would have varying costs, such as portal monitors at
seaports which would have higher costs. Additionally, DNDO did not
capture all the costs related to developing the different types of ASP
monitors.
DNDO has also underestimated the life-cycle costs for operations and
maintenance for both PVT and ASP equipment over time. DNDO analysis
assumed a 5-year life-cycle for both PVT and ASP equipment. However,
DNDO officials told us that a 10-year life-cycle was a more reasonable
expectation for PVT and ASP equipment. The analysis assumes that the
annual maintenance costs for PVT and ASP monitors will each equal 10
percent of their respective procurement costs. This means that
maintenance costs for PVTs would be about $5,500 per year per unit
based on a $55,000 purchase price and ASP maintenance costs would be
about $38,000 per year per unit based on a $377,000 purchase price.
With the much higher maintenance costs for ASPs and doubling the life-
cycle to 10 years, the long-term implications for these cost
differences would be magnified. As a result of this, DNDO's analysis
has not accounted for about $181 million in potential maintenance costs
for ASPs alone.
Furthermore, DNDO did not assess the likelihood that radiation
detection equipment would either misidentify or fail to detect nuclear
and radiological materials. Rather, DNDO's cost-benefit analysis
focuses on the ability of ASPs to reduce false alarms--alarms that
indicate nuclear or radiological material is in a container when, in
fact, the material is actually non-threatening, such as ceramic tile.
Reducing false alarms would reduce the number of secondary inspections
of non-threatening nuclear and radiological materials and therefore the
costs of those inspections. However, as required by DHS's guide to
performing cost-benefit analyses, DNDO's analysis does not include all
costs. In particular, the analysis does not include the potentially
much bigger cost of "false negatives." False negatives are instances in
which a container possesses a threatening nuclear or radiological
material, but the portal monitor either misidentifies the material as
non-threatening or does not detect the material at all, thus allowing
the material to enter the country. During the 2005 Nevada tests, the
incidence of false negatives among the three vendors who received
contracts ranged from about 45 percent to slightly more that 80
percent. This raises concerns because, as explained to us by a
scientist at a national laboratory, at this level of performance, ASPs
could conceivably misidentify HEU as a benign nuclear or radiological
material or not detect it at all, particularly if the HEU is placed
side by side with a non-threatening material such as kitty litter.
In addition, in recent testimonies before Congress, DNDO's Director has
cited the primary benefit of deploying ASP monitors as reducing
unnecessary secondary inspections.[Footnote 17] However, DNDO's
analysis does not fully estimate today's baseline costs for secondary
inspections, which makes it impossible to determine whether the use of
ASPs, as currently planned, will result in significant cost savings for
these inspections. Finally, the ASP contract award has exceeded DNDO's
estimate for total cost by about $200 million. The cost-benefit
analysis shows the total cost for deploying PVT and ASP monitors to be
about $1 billion, which covers all costs related to acquisition (for
both PVT and ASP), design, maintenance and physical inspection over 5
years. However, in July 2006, DHS announced that it had awarded
contracts to develop and purchase up to $1.2 billion worth of ASP
portal monitors over 5 years. Furthermore, the cost-benefit analysis
underestimates total deployment costs and does not account for other
major costs, such as physical inspections of cargo containers, an
additional procurement of 442 new PVT monitors, installation and
integration, and maintenance.
DNDO's Cost-Benefit Analysis Used Inflated Cost Estimates for PVT
Equipment:
DNDO overstated the purchase price of PVT monitors. Although DHS is
currently paying an average of about $55,000 per monitor, DNDO's cost-
benefit analysis assumed the PVT would cost $130,959--the highest
published manufacturers' price for the government.[Footnote 18]
According to DNDO's Director, DNDO chose the highest published price
because the current contract for portal monitors is going to expire,
and the portal monitors will probably cost more in the future. However,
the information DNDO provided us does not explain why DNDO assumes that
this future price will be more than double what DHS is currently
paying, as assumed in DNDO's analysis. PNNL officials told us that the
future price will almost certainly be lower than the price used in
DNDO's analysis.
Conclusions:
DNDO's cost-benefit analysis does not justify its recent decision to
spend $1.2 billion to purchase and deploy ASP technology. In
particular, DNDO used incomplete and unreliable data to evaluate the
costs and benefits of ASPs. For example, DNDO did not use its own test
results that showed that the new portal monitor technology could not
meet the cost-benefit analysis' main performance assumption of
correctly identifying HEU 95 percent of the time. In addition, the
ability of ASPs to correctly identify masked HEU falls far short of the
95 percent level of performance. Instead of relying on performance
data, DNDO relied on potential future performance to justify the
purchase of ASPs. While DNDO officials asserted that the current
performance levels of the ASPs will improve, they provided no
additional information as to how or when the 95 percent performance
goal will be achieved. Furthermore, DNDO's simplified approach to the
cost-benefit analysis omitted many factors that could affect the cost
of new radiation portal monitors, such as underestimating the life-
cycle costs for operating and maintaining the equipment over time by
about $181 million. For these reasons, DNDO's cost-benefit analysis
does not meet the intent of our March 2006 report recommendation to
fully assess the costs and benefits before purchasing any new
equipment.
Recommendations for Executive Action:
We recommend that DHS and DNDO conduct a new cost-benefit analysis to
justify the purchase of new radiation detection portal monitors by
using sound analytical methods, including actual performance data and a
complete accounting of all major costs and benefits as required by DHS
guidelines. We also recommend that DNDO conduct realistic testing for
both ASPs and PVTs in order to meet the Congressional requirement
outlined in the Homeland Security Appropriations Act for Fiscal Year
2007 that DHS certify that a "significant increase in operational
effectiveness" will be achieved by ASPs before spending additional
funds to purchase ASPs for deployment.
Agency Comments and Our Evaluation:
We provided DHS with a draft of this report for its review and comment.
Its written comments are presented in Enclosure 2. The Department
neither agreed nor disagreed with our recommendation, but continues to
stand behind the basic conclusions of its cost-benefit analysis that
the ASP program is a sound investment for the U.S. Government. In our
view, the cost-benefit analysis cannot be used as a reliable basis for
making a major procurement decision.
In its written comments, the Department stated that there are three
areas of disagreement and/or misunderstanding with GAO. In our view,
however, there are no misunderstandings on any of these issues. First,
although the Department agreed that performance tests of ASPs did not
meet DNDO's main performance assumption of correctly identifying HEU 95
percent of the time it passes through the portal monitors, these tests
were designed to determine which contractors would manufacture the
equipment, not determine the absolute capabilities of ASPs. However, in
our view, an objective and complete cost-benefit analysis should have
included empirical data on how well ASPs are currently performing.
Instead of relying on performance data, DNDO relied on potential future
performance to justify the purchase of ASPs.
Second, according to the Department, DNDO did not use performance data
of PVTs in its cost-benefit analysis from tests conducted at the Nevada
Test Site in 2005 because those tests were not designed to provide an
objective side-by-side comparison of ASPs and PVTs. However, the
purpose of the cost-benefit analysis was to determine the benefits, if
any, of using ASPs instead of currently deployed radiation detection
technology, including PVTs. The relative capabilities of the two
competing detection systems--ASPs and PVTs--should have been critical
to DNDO's analysis. However, DNDO missed an opportunity to collect
objective, empirical data on the relative capabilities of ASPs and PVTs
because the agency failed to design its side-by-side tests to measure
such differences. As a result, instead of having empirical data
available for its cost-benefit analysis, DNDO relied on assumptions of
future ASP performance and on limited, unreliable data drawn from tests
conducted in 2004 to assess the performance of PVTs. DNDO will not be
able to assess objectively whether ASPs offer any advantages over PVTs,
much less whether any such potential advantages are worth the ASPs'
considerable additional cost, until DNDO conclusively determines the
relative effectiveness of the two technologies.
Lastly, while the Department agreed that radiation detection portal
monitors should also be able to detect and identify radiological
materials in addition to HEU, it believes that HEU is the most
difficult material to detect and it will continue use HEU as a
reasonable threat baseline. We agree that HEU is the most difficult
material to detect, but we disagree that HEU should be used as the only
reasonable threat baseline to determine the performance of portal
monitors. As we reported, a complete cost-benefit analysis would
include an assessment of ASPs' ability to detect and identify a variety
of nuclear and radiological material, not just HEU. By excluding
radiological and nuclear materials other than HEU, DNDO's analysis did
not consider the number of secondary inspections that would be related
to these materials and hence it likely underestimated the costs of ASP
use.
We are sending copies of this correspondence to interested
congressional committees and members, the Secretary of Homeland
Security, and other interested parties. We will also make copies
available to others on request. In addition, this correspondence will
be available at no charge on GAO's Web site at [Hyperlink,
http://www.gao.gov]. Should you or your staff have any questions,
please contact me at (202) 512-6870 or by e-mail at aloisee@gao.gov.
Contact points for our Office of Congressional Relations and Public
Affairs may be found on the last page of this correspondence. Key
contributions to this report include Leland Cogliani, Nancy Crothers,
Jonathan Fremont, Jim Shafer, Daren Sweeney, and Eugene Wisnoski.
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
Enclosures - 2:
[End of Section]
Enclosure I: Briefing to House and Senate Committees on Appropriations,
August 21, 2006:
Briefing to House and Senate Committees on Appropriations:
August 21, 2006:
Analysis of the Domestic Nuclear Detection Office/Department of
Homeland Security's Cost Benefit Analysis for Next Generation Radiation
Detection Equipment:
Introduction:
The Domestic Nuclear Detection Office (DNDO), within the Department of
Homeland Security (DHS), is responsible for acquiring and supporting
the deployment of radiation detection equipment at U.S. ports-of-entry.
The purpose of the radiation detection equipment is to screen all
cargo, vehicles, and individuals coming into the United States for
radiological and nuclear materials, without delaying movement of this
traffic into the nation.
Current plastic portal monitors (PVT) are able to detect the presence
of radiation. DNDO has sponsored research, development, and testing
activities designed to produce portal monitors that can detect
radiation and identify the type of material. These new portal monitors
are known as "advanced spectroscopic portals" (ASP).
In our March 2006 report[Footnote 19], we recommended that once the
costs and capabilities of ASPs were well understood, and before any of
the new equipment was purchased, the Secretary of DHS work with the
Director of DNDO to analyze the benefits and costs of deploying ASPs.
We further recommended that this analysis focus on determining whether
any additional detection capability provided by the ASPs are worth the
additional costs.
In response to GAO's recommendation, in May 2006, DNDO issued a cost-
benefit analysis to help guide its strategy for the acquisition and
deployment of portal monitors.
DNDO's Cost-Benefit Analysis: Purpose and Goals:
The purpose of the analysis was to identify the best strategy that the
DNDO-Customs and Border Protection could use to meet their deployment
requirements for nuclear and radiological detection equipment at U.S.
ports of entry.
The analysis had three goals: to (1) provide a robust defense against
nuclear and radiological threats, (2) limit impacts to commerce, and
(3) provide a sound financial investment for the U.S government.
Objective:
The House and Senate Appropriations Committees asked us to review
DNDO's cost-benefit analysis to determine the extent to which it
provides a sound analytical basis for acquiring and deploying portal
monitors.
Scope and Methodology:
To conduct our review of DNDO's cost -benefit analysis, we:
* Analyzed documentation supporting the costs used for both currently
deployed and new equipment, such as the Independent Government Cost
Estimate for ASPs.
* Reviewed government test reports for ASP and PVT systems to assess
the validity of assumptions DNDO used in its analysis.
* Had discussions with officials from DNDO, Customs and Border
Protection, Department of Energy laboratories, National Institutes of
Standards and Technology, and representatives of the trucking and
shipping industries.
DNDO Relied on the Potential Performance of New Portal Monitors Rather
Than Its Own Test Results in Its Cost-Benefit Analysis:
DNDO assumed in its cost-benefit analysis that ASPs can correctly
detect and identify highly enriched uranium (HEU) 95 percent of the
time it passes through portal monitors.
In 2005, DNDO tested ASP capabilities to identify both bare, or
unmasked, HEU and HEU masked in a container with radiological material,
such as kitty litter.
Performance tests showed that ASPs identified HEU much less than 95
percent of the time. At best, the tested ASPs correctly identified
masked HEU only about half of the time.
DNDO did not use the results of these tests in its cost-benefit
analysis and instead assumed that the ASPs will reach that level of
performance in the future.
DNDO's Analysis May Not Accurately Reflect the Capabilities of PVTs to
Detect Radiological Materials:
DNDO officials acknowledged that DNDO tested the performance of PVTs
along with the ASPs in 2005, but did not use the results of these tests
in its cost-benefit analysis.
Instead, DNDO based its analysis on the performance of PVT monitors
that PNNL tested during 2004 in New York.
The PVT monitors that DHS used in the tests had only one radiation
detection panel as opposed to the four-panel PVT monitors that DHS
currently deploys at ports-of-entry.
Additionally, PNNL noted that the results from the tests did not
indicate how well PVT portal monitors would be able to detect HEU in
the field.
DNDO's Cost-Benefit Analysis was Incomplete:
DNDO officials told us they did not follow DHS guidelines for
performing cost-benefit analyses.
DNDO's cost-benefit analysis only considered the benefits of ASPs
ability to detect and identify HEU and did not consider ASPs ability to
detect and identify other nuclear and radiological materials.
A complete analysis would include an assessment of an ASPs ability to
identify a variety of radiological and nuclear sources, not just HEU.
DNDO's analysis does not include the bigger cost of instances in which
a container possesses a threatening radiological or nuclear material,
but the portal monitor either misidentifies the material as non-
threatening or does not detect the material at all, thus allowing the
material to enter the country.
DNDO analysis assumed a 5-year life-cycle for both PVT and ASP
equipment. However, DNDO officials told us that a 10-year life-cycle
was a more reasonable expectation for PVT and ASP equipment.
Maintenance costs for PVTs would be about $5,500 per year per unit
based on a $55,000 purchase price and ASP maintenance costs would be
about $38,000 per year per unit based on a $377,000 purchase price.
With the much higher maintenance costs for ASPs and doubling the life-
cycle to 10 years, the long-term implications for these cost
differences would be magnified. As a result of this, DNDO's analysis
has not accounted for about $181 million in maintenance costs for ASPs
alone.
DNDO's Used Inflated Cost Estimates for PVT Equipment:
Incalculating costs and benefits, DNDO overstated the acquisition costs
of PVTs.
DNDO assumed PVTs would cost about $131,000 per unit-the highest
published manufacturers' price for the government.
However, DHS's actual procurement cost for a PVT monitor currently
averages about $55,000.
DNDO's Analysis Clearly Underestimates Total Deployment Costs:
DNDO's analysis shows the total cost for deploying PVT and ASP monitors
to be about $1 billion; which covers all costs related to acquisition
(for both PVT and ASP), design, maintenance and physical inspection
over 5 years.
However, in July 2006, DHS announced that it had awarded contracts to
develop and purchase $1.2 billion worth of ASP portal monitors over 5
years.
The ASP contract award has exceeded DNDO's estimate for total cost by
about $200 million. This is before accounting for major aspects of the
total cost, such as the costs of physical inspections of cargo, an
additional procurement of 442 new PVT monitors, installation and
integration costs, and maintenance costs.
GAO's Conclusions and Recommendations:
DNDO's analysis is incomplete and unreliable.
* DNDO did not use its own test results and instead assumed relied on
potential performance of the new equipment.
* DNDO used inaccurate or incomplete cost data.
* The analysis does not include all costs and benefits for acquiring
and deploying portal monitors:
Thus, DNDO's cost benefit analysis does not justify its recent decision
to purchase and deploy ASP technology.
DNDO should conduct a new cost-benefit analysis to justify the purchase
of new radiation detection portal monitors by using sound analytical
methods.
DNDO should not spend any additional funds to purchase ASPs for
deployment until it conducts realistic testing for both ASPs and PVTs
that demonstrates that the new equipment provides superior detection
and identification capabilities when compared to existing technology.
Enclosure II: Comments from the Department of Homeland Security:
Domestic Nuclear Detection Office:
U.S. Department of Homeland Security:
Washington, DC 20528:
October 11, 2006:
Memorandum For: Gene Aloise:
Director, Natural Resources and Environment:
Government Accountability Office:
From: Vayl S. Oxford:
Director:
Domestic Nuclear Detection Office:
Subject: Comments on GAO Report titled: Combating Nuclear Smuggling:
DHS's Cost-Benefit Analysis to Support the Purchase of New Radiation
Detection Portal Monitors Was Not Based on Available Performance Data
and Did Not Fully Evaluate All the Monitors' Costs and Benefits, dated
October 12, 2006:
The Domestic Nuclear Detection Office (DNDO) has reviewed the subject
report and the briefing presented to the House and Senate Committees on
Appropriations dated August 21, 2006. Thank you very much for the
opportunity to comment. While the DNDO has concerns with some of the
report's findings, we remain committed to high fidelity testing prior
to all full scale acquisition decisions, including the Advanced
Spectroscopic Portal (ASP) program.
The DNDO met on multiple occasions with the GAO staff to discuss the
Cost Benefit Analysis (CBA) methodology, assumptions, data sources, and
results. In all instances, we agreed with GAO's suggestions and worked
to further refine the CBA, or provided written responses documenting
the technical rationale for the DNDO's approach. However, some
misunderstandings and/or disagreements remain between the DNDO and the
GAO, including:
* The GAO criticized the DNDO for assuming a probability of detection
of 95%, even though initial test results did not show this same
capability. However, the initial test results cited by the GAO were not
intended to determine the absolute capabilities of deployed systems;
rather, they were intended to support initial source selection
decisions. Again, we remain committed to high fidelity testing prior to
all full scale acquisition decisions. We plan to subject systems to
additional testing prior to full scale production to evaluate their
performance against stated specifications, including the requirement
for 95% probability of detection.
* The GAO stated that the DNDO tested the performance of PVT and ASP
systems side-by-side, but did not use these results in the CBA. Again,
the test series referenced was not intended to provide an objective
side-by-side comparison. Further testing at both the Nevada Test Site
and the New York Container Terminal will evaluate the validity of these
assumptions.
* The GAO stated that the CBA only evaluated systems' ability to detect
highly enriched uranium (HEU) and did not consider other threats. DNDO
agrees that threats other than HEU are equally important. However, we
believe that HEU poses the greatest challenge from a detection
standpoint, and serves as a reasonable threat baseline for the purpose
of this analysis.
The DNDO stands behind the basic conclusions of the CBA--that the
Advanced Spectroscopic Portal (ASP) program is a sound investment for
the USG and that the Joint DNDO-CBP Deployment Strategy, employing a
mix of PVT and ASP systems for primary inspection and ASP systems for
all secondary inspections is the optimal approach.
DNDO believes that this report requires further collaboration and we
look forward to continuing to work together on this important national
priority. Please let me know if you or your staff need additional
information; (202) 254-5688.
Attachments:
(360691):
FOOTNOTES
[1] The Departments of Energy, Defense, and State are also implementing
programs to combat nuclear smuggling in other countries by providing
radiation detection equipment and training to foreign border security
personnel.
[2] National Security Presidential Directive 43/Homeland Security
Presidential Directive 14, Domestic Nuclear Detection (April 15, 2005).
Congress recently passed a bill that would provide permanent statutory
authority for DNDO and its activities. See Security and Accountability
for Every Port Act of 2006, H.R. 4954, §§ 501-502 (2006) ("SAFE Port
Act"). As of October 12, 2006, the President had not yet signed the
bill.
[3] DOE manages the largest laboratory system of its kind in the world.
The mission of DOE's 22 laboratories has evolved. Originally created to
design and build atomic weapons, these laboratories have since expanded
to conduct research in many disciplines-from high-energy physics to
advanced computing.
[4] Homeland Security Appropriations Act for Fiscal Year 2007, Pub. L.
No. 109-295, tit. IV (2006). At the same time, Congress has directed
that all containers entering the 22 busiest U.S. ports be scanned for
radiation by December 31, 2007, and specified that to the extent
practicable, DHS is to deploy "next generation radiation detection
technology." See SAFE Port Act, § 121.
[5] GAO, Combating Nuclear Smuggling: DHS Has Made Progress Deploying
Radiation Detection Equipment at U.S. Ports of Entry, but Concerns
Remain, GAO-06-389 (Washington, D.C.: Mar. 22, 2006).
[6] DNDO also issued a revised analysis in June 2006.
[7] Federal Acquisition Regulation, 48 C.F.R. § 15.404-1(b)(2)(v).
[8] These test results involved identifying both HEU and depleted
uranium.
[9] These goals are now subject to the new requirements established by
Congress in section 121 of the SAFE Ports Act.
[10] Section 121 of the SAFE Ports Act reinforces this goal by
requiring that DHS utilize next generation radiation technology "to the
extent practicable", with conference report language noting that "such
technology can reduce nuisance alarms" and "speed effective alarm
resolution." See H.R. Conf. Rep. No. 109-711 (2006).
[11] DHS and DOE are collaborating in building a new Radiological and
Nuclear Countermeasures Test and Evaluation Complex at the Nevada Test
Site to support the development, testing, acquisition, and deployment
of radiation detection equipment. The facility is expected to become
fully operational in early 2007. Currently, an interim facility at NTS
is being used to test radiation detection equipment.
[12] NIST did not evaluate the PVTs or compare their performance to the
performance of the ASPs.
[13] The ability to detect masked HEU is based on DOE guidance on
performing the evaluation.
[14] The performance specifications contain a requirement for
detecting, not identifying, californium-252 with a 95 percent
probability. Californium-252 has similar radiological properties to
HEU. In addition, the performance specifications contain a requirement
for detecting, but not identifying, other radiological materials such
as cobalt-57, cobalt-60, barium-133, cesium-137, and americium-241.
[15] Pacific Northwest National Laboratory, A Sensitivity Comparison of
NaI and PVT Portal Monitors at a Land-Border Port-of-Entry, p. iii,
November 2004. For Official Use Only
[16] DHS, Capital Planning and Investment Control, Cost-Benefit
Analysis (CBA) Guidebook 2006, Version 2.0, February 2006. Traditional
rules of performing cost-benefit analyses include assessing the full
life-cycle costs for operation and maintenance, and determining the
level of confidence in cost data.
[17] Enlisting Foreign Cooperation in U.S. Efforts to Prevent Nuclear
Smuggling: Hearing Before the House Committee on Homeland Security,
Subcommittee on Prevention of Nuclear and Biological Attack, 109TH
Cong. (May 25, 2006) (statement of Mr. Vayl S. Oxford, Director, DNDO);
Detecting Smuggled Nuclear Weapons, Hearing Before the Senate Judiciary
Committee, Subcommittee on Terrorism, Technology, and Homeland
Security, 109TH Cong. (July 27, 2006) (statement of Mr. Vayl S. Oxford,
Director, DNDO).
[18] DNDO, Cost Benefit Analysis for Next Generation Passive Radiation
Detection of Cargo an the Nation's Border Crossings, May 30, 2006.
[19] See GAO, Combating Nuclear Smuggling: DHS Has Made Progress
Deploying Radiation Detection Equipment at U.S. Ports of Entry, but
Concerns Remain, GAO-06-389 (Washington, D.C.: Mar 22, 2006).
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548: