	Background

This section describes nuclear fuel production and uranium enrichment,  DOE’s and USEC’s involvement in uranium enrichment, and cleanup of  uranium enrichment plants. Since 1998, DOE and USEC Have Been Involved in 23 Transactions

Since USEC was privatized in 1998 through June 1, 2015, DOE and  USEC have engaged in 23 transactions (see app. Based on our analysis of documents  and interviews with DOE officials, we grouped these transactions into the  following six broad categories:
Establishment of USEC. DOE and USEC engaged in 3 transactions  to help establish the company as a private company. For example,  DOE transferred enriched uranium to USEC, as required by the USEC  Privatization Act, from 1998 to 2003. These transfers established  value for USEC in the marketplace. DOE and USEC engaged in 6 transactions for  national security purposes. Specifically, DOE engaged in one  transaction in 2012 to secure unobligated LEU from USEC to meet  national security needs for the production of tritium for up to 18  months, and DOE engaged in a second transaction later in 2012 to  secure unobligated LEU from USEC to meet national security needs  for the production of tritium for up to 15 years. Facilities management. DOE and USEC engaged in 5 transactions  regarding the operation and management of various facilities,  including the Portsmouth and Paducah GDPs, as well as other  facilities associated with the development of the American Centrifuge  technology. In another transaction, after USEC  ceased enrichment activities at the Portsmouth GDP, DOE contracted  with USEC from 2001 through 2011 for several activities associated  with maintaining the facility in a dormant condition and preparing the  facility for decontamination and decommissioning. Nuclear materials management and security. DOE and USEC  engaged in 3 transactions to support the management and security of  nuclear materials. In one transaction beginning in 1999, DOE agreed  to pay USEC to provide safeguards and security services for HEU that  DOE stored at the Portsmouth GDP. Issues from prior transactions. DOE and USEC engaged in 3  transactions to address issues with previous transfers of uranium  when DOE had inadvertently provided USEC with uranium that did not  conform to industry standards or more uranium than originally agreed  on by the parties. In a second transaction, in  2003, DOE transferred HEU to USEC to replace other material that  DOE transferred to USEC prior to privatization that did not conform to  industry standards. In the other two transactions, USEC and its subsidiaries paid  a fee for access to DOE restricted data related to the centrifuge  technology. DOE Identified Various Costs and Benefits of Some of the Transactions

DOE identified various monetary and nonmonetary costs and benefits of  the 23 transactions. However, for  transactions occurring prior to 2005, DOE officials were not always able  to provide definitive information about the costs and benefits of the  transactions independent of that which was stated in the transactional  documents. For transactions occurring after 2005—which mostly fell into the national  security category—the costs DOE identified were incurred through the  transfer of appropriated funds to USEC, transfer of various types of  uranium, and acceptance of responsibility for the future disposition of  depleted uranium tails. DOE provided technical comments that were  incorporated, as appropriate. GAO staff who made key contributions to  this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives of our review were to (1) identify transactions involving the  Department of Energy (DOE) and USEC Inc. (USEC, now known as  Centrus Energy Corp.) since USEC was privatized in 1998 and (2)  describe the costs and benefits, if any, of these transactions to DOE, as  identified by DOE. For the purpose of our review, we define a transaction as a contract or  agreement providing for an exchange of funds, uranium of any type, or  services between or involving DOE and USEC. We included in our scope  any transactions that occurred between USEC’s privatization on July 28,  1998, and present (July 1, 2015), as well as transactions that commenced  before July 28, 1998, but that continued to be executed after USEC was  privatized.
Why GAO Did This Study

DOE has had a long and complex relationship with USEC Inc. and its successor, Centrus Energy Corp. Until 2013, USEC, a government corporation that was privatized in 1998, was the only company enriching uranium that, according to DOE, could meet DOE's LEU needs for tritium production. However, USEC ceased enrichment operations in May 2013, and the future of its planned next-generation American Centrifuge enrichment facility is uncertain. GAO has previously reported on financial and other transactions involving DOE and USEC, including transactions that involved the transfer of uranium.
GAO was asked to report on the history of the financial relationship between DOE and USEC. This report (1) identifies transactions involving DOE and USEC since USEC was privatized and (2) describes the costs and benefits, if any, of these transactions to DOE, as identified by DOE. GAO defines a transaction as a contract or agreement providing for an exchange of monetary payments, uranium of any type, or services between or involving DOE and USEC occurring from USEC's privatization on July 28, 1998, through July 1, 2015. GAO analyzed key DOE and USEC documents and interviewed DOE and Centrus Energy Corp. officials.

What GAO Found

The Department of Energy (DOE) has engaged with USEC Inc. (USEC) in 23 transactions since USEC was privatized in 1998 through July 1, 2015. The 23 transactions fall into the following six categories:
Establishment of USEC . DOE engaged with USEC in 3 transactions to help establish the company as a private company. For example, from 1998 to 2003, DOE transferred enriched uranium, as required by the USEC Privatization Act, to USEC to establish commercial value for USEC.
National security . DOE engaged with USEC in 6 transactions for national security purposes. For example, DOE engaged in several transactions to secure domestic low-enriched uranium (LEU), used in nuclear reactors, for the production of tritium—a radioactive isotope of hydrogen used to enhance the power of nuclear weapons—and support the development of USEC's next-generation American Centrifuge uranium enrichment technology.
Facilities management . DOE engaged with USEC in 5 transactions regarding the operation and management of various facilities. For example, after USEC ceased enrichment operations at the Portsmouth Gaseous Diffusion Plant (GDP)—which it leased from DOE—DOE contracted with USEC from 2001 to 2011 to maintain the facility in a dormant condition and prepare it for future decontamination and decommissioning.
Nuclear materials management and security . DOE engaged with USEC in 3 transactions to support nuclear materials management. For instance, in a transaction beginning in 1999, DOE agreed to pay USEC to provide safeguards and security services for highly enriched uranium (HEU), which is used in nuclear weapons, that DOE stored at the Portsmouth GDP.
Issues from prior transactions . DOE engaged with USEC in 3 transactions to address issues with previous transfers of uranium. For example, in 2003, DOE transferred HEU to USEC to replace previously transferred material that turned out to be contaminated and that did not conform to industry standards.
Other . In 2 other transactions, USEC and its subsidiaries paid a fee for access to DOE restricted data related to the centrifuge technology. A third transaction involved a pilot project to determine the usability of certain uranium as nuclear fuel.
DOE identified various monetary and nonmonetary costs and benefits of the 23 transactions. DOE was able to identify the costs and benefits for most transactions that have occurred since 2005. For these transactions, DOE incurred costs through the transfer of appropriated funds and various types of uranium, as well as acceptance of responsibility for the future disposition of certain uranium. The benefits DOE received include monetary payments, LEU, and nonmonetary national security benefits. For transactions that occurred or began occurring prior to 2005, DOE was not always able to provide definitive information on its costs and benefits, in part because the agency's accounting system changed in 2004, and agency officials were not able to access information on certain transactions occurring prior to that time.

What GAO Recommends

GAO is not making recommendations in this report. DOE reviewed a draft of this report and provided technical comments that GAO incorporated as appropriate.