Summary: GAO discussed the status of the uranium enrichment program. GAO believes that Congress needs to reevaluate the basic purpose and structure of the enrichment program by: (1) defining program objectives that take into account the realities of the enrichment marketplace; and (2) examining alternatives to full-cost-recovery pricing. GAO found that: (1) the Department of Energy (DOE) proposed modifications to uranium enrichment services criteria that would redirect the program's emphasis from full cost recovery to an increased emphasis on competition, recovery of less than all of the government's costs, and individual contract terms and conditions; (2) lower prospects for growth, coupled with foreign competition and the emergence of a secondary enriched uranium market, have deteriorated the program's competitive position; and (3) DOE initiatives have affected the repayment of the government's unrecovered enrichment costs. GAO also found that: (1) the proposed criteria changes conflict with existing legislation; (2) the process used to modify enrichment criteria limits effective congressional participation in the enrichment program's reevaluation; (3) under the proposed criteria, DOE would determine which costs were not appropriate for recovery; (4) only half of the estimated unrecovered government costs would be repaid; (5) benchmarks that have been useful to monitor the program in the past would be removed; and (6) program changes which involve a major redirection in program emphasis should be accomplished by legislative changes which develop criteria consistent with the legislation.
