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OIG/98A-01 - Survey of NRC's Assistance Programs Under the Foreign Assistance Act for the New Independent States of the Former Soviet Union

April 24, 1998

Our office has completed a survey of the U.S. Agency for International Development (AID) funded assistance activities for four countries in the former Soviet Union (FSU): Russia, Ukraine, Armenia, and Kazakhstan. Our objectives were to identify the various assistance activities and associated expenditures for potential review, and to evaluate the related management controls. This survey, included in our fiscal year (FY) 1998 Annual Plan, was conducted from October 1997 through March 1998.

The Foreign Assistance Act (FAA) of 1961, as amended, provides the funding authority to conduct nuclear regulatory assistance in the FSU. Through the end of FY 1997, the U.S. Nuclear Regulatory Commission (NRC) has received $25,650,000 in funding from AID for assistance programs in the FSU. Formal nuclear safety assistance programs for Russia and Ukraine were established in 1992 as an outcome of the Lisbon Initiative. To date, the programs for these two countries have received $24,220,000. Since FY 1995, Armenia and Kazakhstan programs have received funding totaling $1,430,000. The objective of these assistance programs is to increase the capacity and stature of each country's regulatory body to ensure operational safety of the Soviet-designed reactors located in each country. NRC also conducts similar AID-funded assistance programs for several countries in Central and Eastern Europe (CEE).

From our work, we were satisfied that the management controls over the use of funds are adequate, but we identified two issues affecting program efficiencies. Because the agency is currently attempting to address these issues, we are sharing our observations at this time, rather than performing further review. Our observations are as follows:

Integration or consolidation of AID assistance efforts

NRC currently administers its AID-funded programs through two offices, the Office of the Executive Director for Operations (OEDO) and the Office of International Programs (OIP). The Russia and Ukraine programs are managed through the Technical Program Manager, OEDO, who oversees the use of AID funds allocated to these countries. The Priorities, or individual projects, of each country's programs are directed by a "Priority Leader" from the specializing program office. The Armenia and Kazakhstan programs are managed by one Senior Project Manager in OIP and similarly, the CEE program is managed by a Senior Program Manager in OIP.

During the agency's recent Program Review process, the Executive Council requested action in response to an Analytical Support Team's recommendation to integrate or consolidate assistance activities in order to minimize inefficiencies and duplication of efforts. Presently, OIP is conducting an analysis of the potential gains or impacts of integration/consolidation and will prepare a report for the Executive Council. We agree that there is the potential for duplicating efforts, because each of the AID assistance programs require similar activities, such as travel, funding coordination, and reporting to AID and the U.S. Department of State (DOS). We also believe that this lack of integration may cause inefficiencies between the various responsible offices resulting in possible duplication of assistance procured through Department of Energy laboratories, as well as miscommunications.

Impact of AID's funding method

Since FY 1995, at the direction of the Office of Management and Budget (OMB), the assistance programs for the FSU have received approximately $12 million of funds from AID through section 632(a) allocations of the FAA. These funds are an allocation of AID's appropriation to NRC and remain within AID's budget authority. At the end of each fiscal year, all unobligated balances are returned to AID and are later reallocated to NRC through AID's appropriation, a process that takes approximately three months. Prior to 1995, NRC received funds from AID through two other mechanisms also codified in the FAA: (1) 632(b) reimbursements, where NRC is reimbursed for expenditures, and (2) 632(a) transfers, where the budget authority is transferred from AID to NRC. Unlike the allocation method, neither of these two methods require an annual return of funds to AID.

NRC staff told us that the allocation method interrupts program activities for a few months each year, because funds are not available during AID's reallocation process. For example, travel, one of the key activities needed to provide foreign assistance, cannot be obligated during these periods, and foreign travel is not allowed to be pre-obligated through a blanket travel authorization. As a result, except for activities already obligated, NRC ceases its FSU-directed assistance activities from October until January, while funds are being reallocated. Because important program activities, such as travel, are not funded during this period each year, staff intends to revisit the funding mechanism and work with AID, DOS and OMB to improve the program's funding process. We support these efforts.

We have discussed our observations with OIP and OEDO management. At this time we do not intend to perform additional work, but will monitor the agency's progress in resolving these issues. Also, we are providing copies of this letter to cognizant staff at AID and DOS. If you have any questions, please call Thomas J. Barchi, Assistant Inspector General for Audits, at (301) 415-5915.