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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Subcommittee on National Security, 
Homeland Defense, and Foreign Operations, Committee on Oversight and 
Government Reform, House of Representatives: 

July 2012: 

Nonproliferation: 

Agencies Could Improve Information Sharing and End-Use Monitoring on 
Unmanned Aerial Vehicle Exports: 

GAO-12-536: 

GAO Highlights: 

Highlights of GAO-12-536, a report to the Ranking Member, Subcommittee 
on National Security, Homeland Defense, and Foreign Operations, 
Committee on Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

The global use of UAVs has increased significantly over time, raising 
concerns about their proliferation. MTCR and Wassenaar are the 
multilateral regimes that address UAV proliferation. MTCR seeks to 
limit the proliferation of weapons of mass destruction delivery 
systems, while Wassenaar seeks to limit the spread of certain 
conventional weapons and sensitive technologies with both civilian and 
military uses. This report is an unclassified version of a classified 
report issued in February 2012. GAO was asked to address (1) global 
trends in the use of UAV technology, (2) U.S. national security 
considerations concerning UAV proliferation, (3) multilateral and 
bilateral tools to control UAV proliferation, and (4) coordination of 
U.S. efforts to limit the spread of UAV technology. To conduct this 
review, GAO analyzed intelligence, licensing, and end-use monitoring 
data, and interviewed U.S. and foreign officials. 

What GAO Found: 

Since 2005, the number of countries that acquired an unmanned aerial 
vehicle (UAV) system nearly doubled from about 40 to more than 75. In 
addition, countries of proliferation concern developed and fielded 
increasingly more sophisticated systems. Recent trends in new UAV 
capabilities, including armed and miniature UAVs, increased the number 
of military applications for this technology. A number of new civilian 
and commercial applications, such as law enforcement and environmental 
monitoring, are available for UAVs, but these applications are limited 
by regulatory restrictions on civilian airspace. 

The United States likely faces increasing risks as countries of 
concern and terrorist organizations seek to acquire UAV technology. 
Foreign countries’ and terrorists’ acquisition of UAVs could provide 
them with increased abilities to gather intelligence on and conduct 
attacks against U.S. interests. For instance, some foreign countries 
likely have already used UAVs to gather information on U.S. military 
activities overseas. Alternatively, the U.S. government has determined 
that selected transfers of UAV technology support its national 
security interests by providing allies with key capabilities and by 
helping retain a strong industrial base for UAV production. For 
instance, the United Kingdom and Italy have used UAVs purchased from 
the United States to collect data on Taliban activity in Afghanistan. 

The United States has engaged in multilateral and bilateral diplomacy 
to address UAV proliferation concerns. The United States principally 
engaged the Missile Technology Control Regime (MTCR) to address 
multilateral UAV proliferation concerns. Since 2005, the United States 
proposed certain significant changes to address how MTCR controls 
UAVs, but members could not reach a consensus for these changes. Also, 
while the Wassenaar Arrangement (Wassenaar) controls the export of 
some key dual-use UAV components, it does not control other dual-use 
technologies that are commonly used in UAVs. The Department of State 
(State) has also used diplomatic cables to address the proliferation 
of UAV-related technologies bilaterally. State provided to GAO about 
70 cables that it sent from January 2005 to September 2011 addressing 
UAV-related concerns to about 20 governments and the MTCR. Over 75 
percent of these cables focused on efforts by a small number of 
countries of concern to obtain UAV technology. 

U.S. agencies coordinate in several ways to control the spread of UAV 
technology, but could improve their UAV-related information sharing. 
For instance, an interagency group reviews many license applications 
to export UAV technology. However, there is not a formal mechanism to 
ensure that licensing agencies have relevant and timely intelligence 
information when making licensing decisions. Also, State’s licensing 
database cannot provide aggregate data on military UAV exports State 
has authorized, which may impair the U.S. government’s ability to 
oversee the release of sensitive UAV technology. The Department of 
Defense (DOD) and State each conduct end-use monitoring of some UAV 
exports, but differences in the agencies’ programs may result in 
similar types of items being subject to different levels of oversight. 

What GAO Recommends: 

GAO recommends that State improve its export licensing database to 
better identify authorized UAV exports, that relevant agencies improve 
mechanisms for sharing information relevant to the export licensing 
process, and that State and DOD harmonize their UAV end-use monitoring 
approaches. The agencies generally agreed with the recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-12-536]. For more 
information, contact Thomas Melito at (202) 512-9601 or 
melitot@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Trends Show Rapid Growth in Global Acquisition, Development, and 
Military Application of UAVs: 

UAV Proliferation Presents Risks for the United States, but Selected 
Transfers Support Its Interests: 

The United States Has Used Diplomacy to Address UAV Proliferation 
Concerns with Limited Results: 

U.S. Agencies Coordinate to Control the Spread of UAV Technology, but 
Could Strengthen Their Approval, Monitoring, and Enforcement Efforts: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: List of MTCR and Wassenaar Members: 

Appendix III: Israel's Export Control System Since 2006: 

Appendix IV: Comments from the Department of Homeland Security: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Estimates of State and Commerce UAV-Related Licenses, Fiscal 
Years 2005 through 2010: 

Table 2: List of MTCR and Wassenar Members: 

Figures: 

Figure 1: Three Major Categories of UAVs: 

Figure 2: Principal UAV Licensing, Transfer, End-Use Monitoring, and 
Enforcement Agencies: 

Figure 3: Map of Countries That Acquired UAVs by December 2011: 

Figure 4: Heron TP-Strategic UAV Produced by an Israeli Manufacturer: 

Figure 5: Northrop Grumman's X-47B UCAV: 

Abbreviations: 

BIS: Bureau of Industry and Security: 

CBP: Customs and Border Protection: 

Commerce: Department of Commerce: 

CIA: Central Intelligence Agency: 

DCS: Direct Commercial Sales: 

DDTC: Department of State Directorate of Defense Trade Controls: 

DECA: Defense Export Control Agency: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

DOJ: Department of Justice: 

DSCA: Defense Security Cooperation Agency: 

DSS: Defense Security Service: 

ECCN: Export Control Classification Number: 

FAA: Federal Aviation Administration: 

FBI: Federal Bureau of Investigation: 

FMS: Foreign Military Sales: 

ICE: Immigration and Customs Enforcement: 

MTCR: Missile Technology Control Regime: 

MTEC: Missile Technology Export Control Group: 

NASA: National Aeronautics and Space Administration: 

NASIC: National Air and Space Intelligence Center: 

NEECN: National Export Enforcement Coordination Network: 

State: Department of State: 

UCAV: unmanned combat aerial vehicle: 

Wassenaar: Wassenaar Arrangement: 

UAV: unmanned aerial vehicle: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 30, 2012: 

[End of section] 

The Honorable John Tierney: 
Ranking Member: 
Subcommittee on National Security, Homeland Defense, and Foreign 
Operations: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Dear Mr. Tierney: 

The use of unmanned aerial vehicles (UAVs) has increased significantly 
in recent years.[Footnote 1] UAVs have demonstrated their 
effectiveness in recent conflicts, such as the wars in Iraq, 
Afghanistan, and Libya, where they have been used for intelligence, 
surveillance, and reconnaissance missions, as well as attack 
functions. UAVs are also increasingly being used for civilian purposes 
such as border security, environmental monitoring, and disaster 
relief. For example, the United States used UAVs to help the Japanese 
government survey the damage to the Fukushima nuclear power plant 
resulting from the March 2011 earthquake. The growing sophistication 
and availability of UAVs poses risks for U.S. interests. Consequently, 
the United States has sought to limit the spread of UAV technology 
through bilateral diplomacy and by working with like-minded supplier 
countries through multilateral regimes such as the Missile Technology 
Control Regime (MTCR) and the Wassenaar Arrangement (Wassenaar). 
[Footnote 2] In addition, the United States and other countries 
control some UAV exports through national export control licensing and 
enforcement efforts. 

In response to your request, we have updated our 2004 report on cruise 
missile and UAV proliferation, focusing solely on UAVs.[Footnote 3] 
This report is a public version of the prior classified report that we 
provided to you in February 2012, which addressed since 2005, (1) 
trends in the development, acquisition, and application of UAV 
technology worldwide; (2) U.S. national security considerations 
associated with transfers of UAV technology; (3) the extent to which 
the United States has engaged in multilateral and bilateral diplomacy 
to address UAV proliferation concerns; and (4) the extent to which the 
U.S. government has coordinated its export control efforts to limit 
the spread of UAV technology. The Departments of Defense (DOD), State 
(State), and Homeland Security (DHS) deemed some of the information in 
the prior report as classified, which must be protected from public 
disclosure, as did the Federal Bureau of Investigation (FBI) and the 
Central Intelligence Agency (CIA). Therefore, this report omits 
sensitive information about efforts by countries of concern and 
terrorists to obtain and use sensitive UAV technology, as well as 
details about the U.S. proposals that the multilateral regimes did not 
adopt. This report also omits sensitive information about U.S. uses of 
bilateral diplomacy to address UAV proliferation concerns, U.S. 
efforts to coordinate and use certain sensitive information as part of 
the licensing process, and U.S. government efforts to coordinate the 
enforcement of export controls on UAVs. Furthermore, this report omits 
the full text of two of the three recommendations contained in the 
classified report, as well as State's, DOD's, and the Department of 
Commerce's (Commerce) written comments, as these contained sensitive 
information. This report is part of a larger body of work involving 
export controls.[Footnote 4] 

To address these objectives, we obtained fiscal years 2005 through 
2010 export control licensing and end-use monitoring data from 
Commerce and State. We also obtained DOD fiscal years 2005 through 
2010 Foreign Military Sales (FMS) program and end-use monitoring data. 
Based on our analysis of the data and interviews with agency 
officials, we determined that the data were sufficiently reliable for 
our use. We reviewed Commerce, State, and DOD documents, as well as 
intelligence and open source private sector reports on the 
proliferation of UAV technology. In Washington, D.C., we met with 
officials from Commerce, State, and DOD involved in the licensing and 
transfer process, and those officials knowledgeable about U.S. 
activities within the two multilateral regimes that the United States 
principally uses to address UAV proliferation concerns. We also met 
with officials from agencies responsible for enforcing export control 
laws and regulations, including Commerce, DHS, and the Department of 
Justice (DOJ), as well as with U.S. government analysts knowledgeable 
about UAVs. In addition, we met with U.S. embassy and foreign 
government officials in three countries--Israel, Italy, and the United 
Kingdom. We selected these three countries based on analyses of DOD 
and State data and open source reporting showing that these countries 
either had extensive experience operating U.S.-made UAV systems or 
were a UAV producer. We also met with leading UAV manufacturers and 
industry associations in the United States, Israel, Italy, and the 
United Kingdom. In addition, we examined applicable laws and 
directives. Appendix I provides a more detailed description of our 
scope, and methodology. 

We conducted this performance audit from October 2010 to July 2012 in 
accordance with generally accepted government auditing standards. 
These standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Used only sparingly in past military operations, UAVs are now making 
national headlines as they are used in ways normally reserved for 
manned aircraft. UAVs come in a variety of sizes and configurations, 
ranging from as small as an insect to as large as a small commercial 
airliner. In our work, we focused on mini, tactical, and strategic 
UAVs. According to available analysis, mini and tactical UAVs 
constituted the vast majority of the UAV systems in operation from 
2005 to 2011, while strategic UAVs included some of the most versatile 
UAVs, typically capable of operating up to 30,000 to 45,000 feet in 
altitude with a maximum endurance of more than 20 hours. Figure 1 
briefly describes these three types of UAVs. 

Figure 1: Three Major Categories of UAVs: 

[Refer to PDF for image: illustrated table] 

Category: Altitude; 
Mini: Low; 
Tactical: Low to medium; 
Strategic: Medium to high. 

Category: Endurance; 
Mini: Short (about an hour); 
Tactical: Medium (up to several hours); 
Strategic: Long (ranges from hours to days). 

Category: Range; 
Mini: Close-range; 
Tactical: Limited to line-of-sight (approximately 300 kilometers or 
less) (about 186 miles); 
Strategic: Long range. 
    
Category: Example; 
Mini: Raven [photograph]; 
Tactical: Shadow [photograph]; 
Strategic: Global Hawk [photograph]. 
    
Sources: CIA (information); DOD (photos). 

[End of figure] 

Multilateral Export Control Regimes That Address UAVs: 

The two principal multilateral regimes that address exports of UAVs 
are the MTCR and Wassenaar. MTCR, established in 1987, is a voluntary 
association of 34 countries that share the goal of limiting the spread 
of ballistic and cruise missiles and UAVs capable of delivering 
weapons of mass destruction. Wassenaar, established in 1996, is a 
voluntary association of 41 countries that share the goal of limiting 
the spread of certain conventional weapons and sensitive dual-use 
items having both civilian and military applications.[Footnote 5] Both 
are consensus-based, requiring that all members must agree to any 
proposed changes in regime documents or activities. In both instances, 
members agree to restrict exports of sensitive technologies by placing 
them on commonly agreed to lists and incorporating these lists into 
their national export control laws and regulations. Members also 
conduct activities in support of the regimes, such as sharing 
information about denied license applications and conducting outreach 
to countries that are not members of the regimes. 

Wassenaar has two control lists: a munitions list and a dual-use list. 
The MTCR members control a common list of items, which is contained in 
the MTCR Annex. The Annex covers complete missile systems, including 
rocket systems and UAVs, as well as a broad range of equipment, 
software, and technology.[Footnote 6] The MTCR Annex consists of two 
categories of items: Category I and Category II. Under MTCR, complete 
UAV systems can be controlled as either a Category I or a Category II 
system, depending on their range and payload capacity. 

* Category I UAVs are considered the most sensitive, and include 
strategic UAVs capable of delivering a payload of at least 500 
kilograms (about 1,100 pounds) to a range of at least 300 kilometers 
(approximately 186 miles). MTCR member nations considering the export 
of these UAVs commit to apply a "strong presumption of denial" 
standard regardless of purpose, meaning that such transfers should 
occur only on rare occasions and only in instances that are well 
justified under the MTCR Guidelines. 

* Category II UAVs are considered less sensitive, consisting primarily 
of UAVs that do not meet Category I criteria, but are capable of 
flying at least 300 kilometers. While these items require review 
through national export control systems, these items are not subject 
to the MTCR "strong presumption of denial," except for exports judged 
by the exporting country to be intended for use in delivering weapons 
of mass destruction. 

* MTCR members have agreed to a "no undercut" policy for all MTCR-
controlled items, meaning that MTCR members have agreed to consult 
with each other before considering exporting an item on the list that 
has been notified as denied by another member pursuant to the MTCR 
Guidelines. 

Laws Governing Arms Exports and Sales of UAVs: 

Several U.S. laws authorize the sale or transfer of export controlled 
technologies from U.S. companies or the U.S. government to foreign 
countries, or in certain cases foreign entities. The Arms Export 
Control Act of 1976, as amended,[Footnote 7] provides the President 
the authority to control the sale or transfer of defense articles and 
services. Under the Arms Export Control Act, State's Directorate of 
Defense Trade Controls (DDTC)[Footnote 8] licenses direct commercial 
sale (DCS) exports of defense articles and services on the U.S. 
Munitions List,[Footnote 9] while DOD's Defense Security Cooperation 
Agency (DSCA) administers the FMS program under the supervision and 
general direction of State.[Footnote 10] In addition, the Arms Export 
Control Act, as amended, also requires end-use monitoring for the sale 
or export of defense articles and services, and delegates these 
responsibilities to the same agencies that administer the program. 
DDTC administers the Blue Lantern program to conduct end-use 
monitoring for defense articles exported under DCS, while DSCA 
administers the Golden Sentry program to monitor the end-use of 
defense articles transferred through FMS. 

In addition, the Export Administration Act of 1979, as amended, 
[Footnote 11] provides the President the authority to control the sale 
of dual-use technologies on the Commerce Control List, including 
certain dual-use components. Commerce's Bureau of Industry and 
Security (BIS) administers this license review process, with support 
from the Defense Technology Security Administration and other 
agencies.[Footnote 12] BIS also administers Commerce's end-use 
monitoring program for technologies covered by the Commerce Control 
List.[Footnote 13] 

The U.S. export control enforcement system consists of multiple 
agencies. Within DHS, Immigration and Customs Enforcement (ICE) 
investigates suspected export control violations involving both U.S. 
Munitions List and Commerce Control List items. In addition, DHS' 
Customs and Border Protection (CBP) inspects selected exports to 
determine whether proper licenses were obtained prior to shipment and 
may interdict suspicious items being shipped. Within Commerce, BIS' 
Office of Export Enforcement has authority to investigate violations 
involving Commerce Control List items. Within DOJ, the FBI can take 
the lead in certain export control investigations involving 
counterintelligence and counterterrorism. DOJ prosecutes suspected 
export control violations. Investigations can result in criminal 
prosecutions; fines; and imprisonment or administrative penalties, 
such as export denial orders barring a party from exporting any U.S. 
items for a specific period of time. Figure 2 shows the principal 
agencies that have a role in the export control process.[Footnote 14] 

Figure 2: Principal UAV Licensing, Transfer, End-Use Monitoring, and 
Enforcement Agencies: 

[Refer to PDF for image: photograph and agency logos] 

UAV: 

Enforcement agencies: 
ICE; 
CBP; 
FBI; 
DOJ; 
Commerce: 
* BIS; 
* Export; 
* Enforcement. 

Licensing and Transfer Agencies: 
State: 
* DDTC; 
DOD: 
* DSCA; 
Commerce: 
* BIS; 
* Export; 
* Administration. 

End-use monitoring agencies: 
State: 
* DDTC; 
DOD: 
* DSCA; 
Commerce: 
* BIS; 
* Export; 
* Enforcement. 

Source: GHAO analysis of information provided by State, Commerce, DOD, 
DHS, and DOJ; Corel draw (clip art). 

Note: While DSCA does not actually issue licenses for military UAVs 
and related technology transferred through FMS, we include them since 
they manage the U.S. government's process for reviewing and making 
recommendations to State on transfers of such items through FMS. For 
the purposes of this report, transfers include defense articles and 
services authorized for sale through direct commercial sales, as well 
as defense articles and services that the U.S. government sells to 
foreign governments and international organizations through FMS. 

[End of figure] 

There are also U.S. government agencies that gather and analyze 
information on the proliferation of UAV systems and related 
technologies and produce UAV-related threat assessments and other UAV-
related information. The Director of National Intelligence serves as 
the head of the intelligence community, establishing objectives and 
priorities for collection, analysis, production, and dissemination of 
national intelligence. Moreover, the Defense Security Service (DSS) 
provides threat assessments in support of its mission to oversee the 
protection of U.S. classified information and data in the hands of 
cleared DOD contractors. 

The executive branch is currently considering reforms to the U.S. 
export control system in an Export Control Reform Initiative, 
including the creation of a single control list and a single 
information technology system. This initiative could affect export 
control licensing and enforcement efforts involving UAVs and related 
technologies and components. 

Trends Show Rapid Growth in Global Acquisition, Development, and 
Military Application of UAVs: 

There has been rapid growth globally in UAV acquisition, development, 
and military applications. From 2005 to 2011, nations, including 
countries of proliferation concern and key allies, sought to improve 
their intelligence gathering and military aviation capabilities by 
developing and fielding their own UAV systems. Furthermore, militaries 
across the globe sought to expand the uses for UAVs, particularly in 
the area of armed strike missions. UAVs are also increasingly used in 
a number of civil and commercial applications, such as law 
enforcement, but national and international regulations place 
restrictions on most of these applications.[Footnote 15] 

Countries with UAVs Nearly Doubled in Seven Years: 

Our analysis of open source information shows a significant increase 
in the number of countries that acquired a UAV system since 2005. In 
2004, we reported that approximately 41 countries had acquired a UAV. 
[Footnote 16] Our review of current U.S. export licensing data and 
open source materials found that this number grew over the intervening 
period to at least 76 countries. Figure 3 provides a global picture of 
the countries that have acquired UAVs. 

Figure 3: Map of Countries That Acquired UAVs by December 2011: 

[Refer to PDF for image: world map] 

Algeria; 
Angola; 
Argentina; 
Australia; 
Austria; 
Azerbaijan; 
Belarus; 
Belgium; 
Botswana; 
Brazil; 
Bulgaria; 
Burundi; 
Canada; 
Chile; 
China; 
Colombia; 
Croatia; 
Czech Republic; 
Denmark; 
Egypt; 
Estonia; 
Ethiopia; 
Finland; 
France; 
Georgia; 
Germany; 
Greece; 
Hungary; 
India; 
Indonesia; 
Iran; 
Israel; 
Italy; 
Ivory Coast; 
Japan; 
Jordan; 
Kazakhstan; 
Latvia; 
Lebanon; 
Libya; 
Lithuania; 
Malaysia; 
Mexico; 
Morocco; 
Netherlands; 
New Zealand; 
Nigeria; 
Norway; 
Pakistan; 
Panama; 
Peru; 
Philippines; 
Poland; 
Republic of Korea; 
Romania; 
Russia; 
Serbia; 
Singapore; 
Slovakia; 
Slovenia; 
South Africa; 
Spain; 
Sri Lanka; 
Sweden; 
Switzerland; 
Syria; 
Taiwan[A]; 
Thailand; 
Trinidad and Tobago; 
Tunisia; 
Turkey; 
Uganda; 
Ukraine; 
United Arab Emirates; 
United Kingdom; 
United States. 

Source: GAO analysis of various unclassified sources; Map Resources 
(map). 

Note: Shaded countries have acquired UAV systems. 

[A] Although the United States does not have diplomatic relations with 
Taiwan, we have listed it as a separate country because whenever the 
laws of the United States refer or relate to foreign countries, 
nations, states, governments, or similar entities, such terms shall 
include and shall apply to Taiwan. For the purposes of this report, 
Taiwan is included as a country. 

[End of figure] 

According to available analysis, the majority of foreign UAVs that 
countries have acquired fall within the tactical category. Tactical 
UAVs primarily conduct intelligence, surveillance, and reconnaissance 
missions and typically have a limited operational range of at most 300 
kilometers. However, some more advanced varieties are capable of 
performing intelligence collection, targeting, or attack missions. 
Mini UAVs were also frequently acquired across the globe during this 
period. 

Several countries acquired UAVs from the United States, which 
increased its export of this technology from fiscal year 2005 to 
December 2011. U.S. export licensing data show an upward trend in 
approved military and dual-use UAV export licenses since 2005. 
Approved dual-use export licenses totaled almost $4 million from 
fiscal year 2005 to fiscal year 2010. For military DCS licenses over 
this same period, the total value of approved UAV licenses was at 
least $240 million.[Footnote 17] In addition, the United States sold 
$144 million worth of UAV technology to other governments through the 
FMS program from fiscal years 2005 to 2010. The United States exported 
a variety of UAV systems, ranging from mini UAVs, such as the Raven, 
to strategic systems, such as the Predator and Global Hawk. To date, 
the United States has exported a limited number of Category I UAV 
systems, sending Reapers and Predators to Italy, Reapers to the United 
Kingdom, and Global Hawk airframes to Germany and NATO as part of 
joint UAV development programs. Officials from two U.S. defense 
manufacturers that produce strategic UAVs both stated that there is 
additional demand internationally for Category I UAVs but that they 
are unable to meet this demand due to export control restrictions 
placed on these systems by the U.S. government. 

Many countries acquired their UAVs from Israel, one of the predominant 
global exporters of this technology, according to available analysis. 
Several key allies, such as Germany, France, and the United Kingdom, 
leased or purchased UAVs from Israel for use in Afghanistan. Countries 
such as India, Russia, and Georgia also acquired UAVs from Israel. 
According to Israeli UAV manufacturers, exports are critical to their 
UAV programs as they account for the majority of revenue from the 
production of a system. Israel exports both mini and tactical UAVs. In 
addition, Israel has exported the Heron I, which is a strategic UAV. 
Company officials at an Israeli manufacturer told us they are 
currently marketing the Heron TP, a strategic UAV that would fall 
under Category I of the MTCR (see figure 4). Because Israel has made 
several changes to its export control regime since 2006 and is one of 
the three countries that we visited, we provide further details about 
the changes that Israel has made to its export control regime since 
2006 in appendix III. 

Figure 4: Heron TP-Strategic UAV Produced by an Israeli Manufacturer: 

[Refer to PDF for image: photograph] 

Source: NASIC. 

[End of figure] 

Countries acquired UAVs from a limited number of other exporters, 
including Austria, South Africa, and Italy, who used foreign sales to 
support their developing UAV industries. An Austrian company produces 
a tactical rotary UAV that has been exported to a range of countries 
such as the United Arab Emirates and a South African company produces 
a range of systems for export including both mini and tactical UAVs. 
In addition, an Italian manufacturer has produced and exported the 
Falco UAV system to Pakistan. 

Countries of Concern and U.S. Allies Developed and Fielded UAVs: 

Both countries of concern and U.S. allies sought to develop and field 
their own UAVs from 2005 to the present. We were informed that the 
number of countries developing UAVs has increased dramatically from 
2005 to the present. Currently, there are over 50 countries developing 
more than 900 different UAV systems. This growth is attributed to 
countries seeing the success of the United States with UAVs in Iraq 
and Afghanistan and deciding to invest resources into UAV development 
to compete economically and militarily in this emerging area. We were 
also told that these programs benefited significantly from the 
availability of commercial UAV technology. Countries such as China and 
Iran made advances in UAV technology and successfully fielded a number 
of systems. China has pursued UAV development to obtain capabilities 
equal to current Western systems. Like many countries, China is 
developing mini and tactical UAV systems, but is also one of a small 
number of countries developing larger and more advanced systems, such 
as high-speed UAVs that are specially designed for combat.[Footnote 
18] Iran has developed and fielded tactical UAVs that are less 
sophisticated than Western designs, but still can perform missions, 
such as intelligence, surveillance, and reconnaissance and one-way 
strike missions. 

Throughout this period, the United States and Israel were the world 
leaders in UAV development. Both countries developed and successfully 
fielded a wide range of mini and tactical UAVs and also produced MTCR 
Category I systems. Israel and the United States invested in the 
development of new varieties of systems, such as rotary-wing UAVs, 
unmanned cargo aircraft, and advanced handheld micro UAVs. 

Many other nations have initiated their own UAV development programs. 
Countries such as South Africa, Singapore, Turkey, and nations in 
Western Europe, each developed UAVs alone or in cooperation with 
others. We were informed that many countries chose tactical UAVs for 
their development program. Tactical UAVs were chosen because they can 
easily incorporate available dual-use technology. Countries such as 
Italy, Germany, and South Africa have fielded and subsequently 
exported their UAV systems. In the last few years, countries such as 
Turkey, Russia, South Africa, and European consortiums established 
plans to develop their own strategic UAVs. According to available 
analysis, interest in armed UAVs has increased and development of 
these systems is expanding. However, in the near term, it is likely 
that only established UAV developers will be able to produce these 
systems, given the technical expertise required to successfully 
integrate weapons onto a UAV. 

UAV Military Applications Increased, but Civilian and Commercial 
Applications Remain Limited: 

We were told that the variety of applications for UAVs and U.S. 
military use of them has grown since 2005, although the majority of 
UAVs have been used for military intelligence, surveillance, and 
reconnaissance missions. While U.S. UAVs primarily perform 
intelligence, surveillance, and reconnaissance missions, the United 
States has also armed many of its strategic UAVs, such as the Predator 
and the Reaper, and is in the process of arming tactical UAVs, such as 
the Shadow. DOD reports that the U.S. military has increased its use 
of UAVs significantly, growing from just over 10,000 UAV flight hours 
in 2005 to more than 550,000 in 2010. In addition, the United States 
transferred armed Reapers to the United Kingdom in 2006 for use as 
part of NATO efforts in Afghanistan. Other countries are also seeking 
to expand the range of missions for their UAVs by pursuing systems 
with armed capabilities, according to available analysis. 

Militaries now also seek new ways to use this technology. For example, 
some military units use miniature handheld rotary UAVs, according to 
available analysis. The United States and other nations are 
researching specially designed high-speed unmanned combat aerial 
vehicles (UCAV) that can include stealth technology that will allow 
them to evade radar detection. The proposed design for the U.S. Navy 
UCAV currently in development is provided in figure 5. Additionally, 
the U.S. military recently began evaluating unmanned helicopter 
systems for use as cargo transport vehicles to free up pilots needed 
for critical combat missions. 

Figure 5: Northrop Grumman's X-47B UCAV: 

[Refer to PDF for image: photograph] 

Source: DOD. 

[End of figure] 

UAV industry groups, manufacturers, and market analysts stated that 
civil and commercial UAV applications continue to grow, even though 
current national and international airspace regulations place 
restrictions on most of these activities. In 2008, we reported that 
there were potential civil uses for UAVs, such as law enforcement and 
disaster monitoring, as well as commercial applications, such as real 
estate photography and pipeline surveying.[Footnote 19] Since then, 
civilian government entities--such as CBP, the National Aeronautics 
and Space Administration (NASA), the National Oceanic and Atmospheric 
Administration, and local law enforcement agencies--have acquired and 
used UAVs. NASA, for instance, used the Global Hawk system to track 
climate patterns in the arctic. Countries such as Australia, Brazil, 
and Japan used UAVs for purposes such as law enforcement, border 
protection, crop dusting, and environmental monitoring. These uses, 
however, are restricted by current national and international airspace 
regulations. In the United States, the Federal Aviation Administration 
(FAA) requires that a UAV operator obtain either a Special 
Airworthiness Certification or a Certificate of Authorization to fly a 
UAV.[Footnote 20] From 2005 to 2011, FAA issued 88 Special 
Airworthiness Certificates and as of March 2011 had 264 active 
Certificates of Authorization. Other countries' restrictions can be 
even more limiting, according to FAA officials. Italian defense 
officials we spoke with stated that their regulations require a 
certification for each UAV and allow flights only in a specially 
designated off-shore corridor. In Israel, the military controls the 
country's airspace and does not permit the use of nonmilitary UAVs, 
according to U.S. embassy and Israeli officials. 

Governments recognize the interest in UAV civilian and commercial 
applications and are addressing this issue. In the United States, FAA 
is developing regulations to permit greater use of small UAVs inside 
some U.S. airspace and plans to draft and publish these regulations by 
2013. Other countries also have taken steps to address this issue. For 
instance, officials from the United Kingdom's Civil Aviation Authority 
stated that they had established special airspace corridors for UAVs, 
which allow for testing and system development. Also, in October of 
2011, Italian UAV companies announced that they had performed joint 
test flights of their systems within civilian airspace for the first 
time. The International Civil Aviation Organization, an organization 
that governs international airspace and assists with the establishment 
of common national airspace regulations, has a task force working to 
address obstacles to integrating UAVs in national and international 
airspace. Organizations such as the International Civil Aviation 
Organization and FAA have identified several issues, including 
establishing (1) signal frequencies and bandwidths for UAVs to use 
without disrupting other transmissions; (2) standards for "sense and 
avoid" technology to help UAVs avoid mid-air collisions; and (3) 
airworthiness certification standards that establish the required 
specifications for UAVs to be allowed to fly. Once these issues are 
addressed, UAV market analysts estimate that the civil and commercial 
markets for these systems have a strong potential for growth. 

UAV Proliferation Presents Risks for the United States, but Selected 
Transfers Support Its Interests: 

The United States likely faces increasing risks as additional 
countries of concern and terrorist organizations acquire UAV 
technology. UAVs can provide countries and terrorists organizations 
with increased abilities to gather intelligence on and conduct attacks 
against U.S. interests. Alternatively, selected transfers of U.S. UAV 
technology support U.S. objectives by increasing allies' capabilities 
and by strengthening the industrial base for UAV production in the 
United States. 

Foreign Countries' UAV Acquisition Puts U.S. Military Assets at Risk: 

Available analysis has determined that foreign countries' acquisition 
of UAVs can pose a threat because it puts U.S. military assets at 
increased risk of intelligence collection and attack. We were told 
that the significant growth in the number of countries that have 
acquired UAVs, including key countries of concern, has increased the 
threat to the United States. Because some types of UAVs are relatively 
inexpensive and have short development cycles, they offer even less 
wealthy countries a cost-effective way of obtaining new or improved 
military capabilities that can pose risks to the United States and its 
allies. 

We were informed that currently, the potential threat to the United 
States primarily involves tactical UAVs, rather than more 
sophisticated, strategic systems. However, according to available 
analysis, countries of concern are pursuing more advanced UAVs through 
acquisitions from foreign suppliers and indigenous development. Such 
UAVs would be capable of flying higher, longer, and further and would 
be capable of a wider range of missions. 

According to a publicly released DSS report, many countries of concern 
seek to illegally obtain U.S. UAV technology as part of their strategy 
to advance their UAV capabilities. DSS reported in 2009 that foreign 
targeting of U.S. UAV technology through both overt and covert 
collection efforts had increased dramatically in recent years. 
[Footnote 21] According to DSS, the United States' acknowledged status 
as a global leader in UAV development makes the U.S. defense industry 
a primary focus of foreign collection attempts. The targeted 
technologies included engines, optics sensors, communications gear, 
and guidance and navigation systems. 

We were informed that by acquiring UAVs, countries can enhance their 
capability to gather intelligence, surveillance, and reconnaissance 
information on U.S. forces and other assets. UAVs can allow countries 
to collect potentially harmful data on the location, strength, and 
movement of U.S. troops that can be used to more effectively plan or 
conduct attacks against U.S. interests. Available analysis also 
suggests that the use of UAVs by foreign parties to gather information 
on U.S. military activities has already taken place. We were informed 
that as more countries acquire UAVs, such intelligence, surveillance, 
and reconnaissance collection efforts are likely to increase. 

Hostile countries could also use UAVs to attack U.S. interests. While 
only a limited number of countries have fielded lethal or weaponized 
UAVs, this threat is anticipated to grow, given the number of 
countries pursuing the acquisition or development of such systems, 
including countries of concern.[Footnote 22] According to others' 
analysis, as the number of countries with such capabilities increases, 
it will likely alter the nature of future conflicts because countries 
will be able to field a larger number of strike assets without risking 
their manned aircraft. 

Terrorist Organizations Could Use UAVs to Harm U.S. Interests, but 
Factors May Limit the Near-Term Risk: 

Available analysis has also shown that terrorist organizations' 
acquisition of UAVs to harm U.S. interests poses a risk for the United 
States. Certain terrorist organizations have acquired or are 
developing some form of UAV technology. For the most part, these 
organizations are currently limited to using smaller, more rudimentary 
UAVs, such as radio-controlled aircraft that are available worldwide 
from hobby shops or through the Internet. Hezbollah is one terrorist 
organization that has acquired and used UAV technology to date. 

Although no terrorist organization has successfully carried out an 
attack with a UAV to date, available analysis has found that there are 
likely some terrorist organizations interested in using UAVs to 
deliver both conventional and unconventional weapons. For example, in 
September 2011, the FBI arrested an individual in the United States on 
charges that he planned to crash radio-controlled unmanned airplanes 
loaded with explosives into the U.S. Capitol and the Pentagon. 

Available analysis has noted that there are likely advantages to using 
UAVs in terrorist attacks, but also factors that may limit the near-
term risk. For instance, in certain situations, small UAVs could 
potentially be more precise in conducting terrorist attacks than using 
other items, such as mortars or rockets. The impact of such attacks 
might be lessened though, given the inability of small UAVs to carry 
large explosives. However, if terrorists were able to equip UAVs with 
even a small quantity of chemical or biological weapons an attack 
could potentially produce lethal results. Certain challenges were 
cited in acquiring the technology and expertise necessary to field a 
UAV sophisticated enough to carry out more destructive attacks with 
conventional weapons. Larger, more sophisticated systems would 
potentially also be harder to operate without detection. 

Transfers of U.S. UAV Technology Increase Allies' Capabilities and 
Strengthen the Industrial Base for UAV Production: 

Although UAV proliferation poses risks, the U.S. government has 
determined that selected transfers of UAV technology can further 
national security objectives. The transfer of U.S. UAV systems to 
allies provides these countries with increased capabilities to 
contribute to U.S. efforts globally. It also helps ensure that allies' 
military equipment is interoperable with that of U.S. forces. Allies 
have used UAVs acquired from the United States to support a variety of 
U.S. objectives. For instance, coalition partners have successfully 
deployed U.S. UAVs to assist in the wars in Afghanistan and Iraq. The 
U.S. Air Force reported that Italy effectively used Predators 
purchased from the United States to locate roadside bombs and weapons 
caches in Iraq, supporting coalition efforts to stabilize the country 
in advance of national elections. Italy and the United Kingdom also 
successfully deployed U.S. UAVs in Afghanistan to collect 
intelligence, surveillance, and reconnaissance data on Taliban 
activity. State officials said that allowing such sales improved 
Italy's and the United Kingdom's abilities to function with the United 
States in an interoperable manner and provided U.S. and NATO 
commanders with additional assets. Allies also used UAVs purchased 
from the United States in support of such U.S. security objectives as 
counternarcotics and counterterrorism operations. 

Additionally, DOD has noted the importance of allowing selected 
transfers of UAV technology in order to strengthen the U.S. industrial 
base for UAV production. According to some U.S. government officials, 
the ability to sell American UAVs to foreign purchasers helps defray 
the U.S. government's acquisition costs. U.S. government officials 
also noted that opening larger potential markets to American UAV 
producers provides additional incentives for producers to invest 
resources in the research and development of UAV systems, and helps 
the United States retain a technological lead over foreign UAV 
producers. According to private sector representatives, UAVs are one 
of the most important growth sectors in the defense industry and 
provide significant opportunities for economic benefits if U.S. 
companies can remain competitive in the global UAV market. 

The United States Has Used Diplomacy to Address UAV Proliferation 
Concerns with Limited Results: 

The United States has used multilateral and bilateral diplomacy to 
address UAV technology advances and proliferation concerns. For 
instance, to address advances in UAV technology, the United States 
proposed several changes to the MTCR; however, MTCR members agreed to 
only one change. Moreover, nonmembers continue to acquire, develop, 
and export UAV technology. In addition to multilateral diplomacy, the 
United States used bilateral diplomacy in the form of demarches to 
foreign governments to address specific UAV proliferation concerns 
with countries.[Footnote 23] 

The United States Made Proposals to Address the Proliferation of UAVs 
through the MTCR but Members Did Not Agree to Most of the Changes: 

The United States proposed changes to address how the MTCR applies to 
UAVs, but MTCR members only reached a consensus to accept one of the 
changes. The United States principally focused these efforts through 
the MTCR because it addresses the potential use of UAVs to deliver 
weapons of mass destruction, according to State. According to 
documents provided by State and State officials, the United States 
proposed six UAV-related changes to the MTCR Annex and members 
accepted one. 

The five U.S.-sponsored UAV-related proposals that were not adopted 
were closely related. They were significant since they would have 
resulted in moving some UAVs currently categorized under MTCR Category 
I to Category II, according to State documents and State and DOD 
officials. However, MTCR members could not achieve a consensus to 
adopt the proposals. As we reported in 2004, both MTCR and Wassenaar 
use a consensus process that makes decision making difficult. MTCR 
last discussed these U.S. proposals in 2008 and removed them from its 
agenda the following year, pursuant to MTCR rules. 

MTCR members have adopted a total of 22 UAV-related technical changes 
during the 2005 to 2011 period, according to State. For instance, MTCR 
members adopted controls on turboprop systems used in Category I UAVs 
and inertial navigation systems in Category II UAVs, according to 
State officials. However, according to available analysis, only 7 
percent of UAV systems are subject to MTCR's strictest controls. 

The United States Made Proposals to Address the Proliferation of UAV-
Related Dual-Use Technologies, but Wassenaar Does Not Control Some Key 
Technologies: 

The United States proposed three major changes to the Wassenaar 
control list, which members adopted. The first, adopted in 2005, added 
to the control list equipment and components specially designed to 
convert manned aircraft to UAVs, as well as equipment specially 
designed to control UAVs and guidance and control systems for 
integration into UAVs, among other things. The second, adopted in 
2007, added to the control list, engines designed or modified to power 
a UAV above 50,000 feet. The third, adopted in 2008, refined the 
control policy on navigation, altitude, and guidance and control 
systems for UAVs. 

While Wassenaar applies to the export of some military and dual-use 
systems used on UAVs, it does not apply to other dual-use enabling 
technologies, according to available analysis. Some of these dual-use 
technologies are critical to the development of UAV programs in 
certain countries of concern; however, they are difficult to control 
because they have other commercial applications. 

Some Countries of UAV Proliferation Concern Are Not MTCR or Wassenaar 
Members: 

Regime members agree to provide greater scrutiny to trade in 
technologies identified as sensitive by the regimes through their 
national laws and regulations. Regime members also share license 
application denial and other information. Our most recent work shows 
that some countries that produce and export UAVs do not belong to MTCR 
or Wassenaar. This fact raises concerns about the potential for 
nonmembers to undermine the regimes' ability to limit UAV 
proliferation. 

The United States Has Also Used Bilateral Demarches to Address UAV 
Proliferation Concerns: 

In addition to employing multilateral diplomacy to address UAV 
proliferation concerns, the United States employed bilateral 
diplomacy, chiefly in the form of demarches, to address specific 
concerns with foreign governments. State provided to us approximately 
70 cables containing UAV-related demarches issued to 20 foreign 
governments and a multilateral regime during the period from January 
2005 to September 2011. Over 75 percent of the cables provided 
responded to efforts by a small number of countries of concern to 
obtain controlled and uncontrolled technologies for use in their UAV 
programs.[Footnote 24] While the regimes do not control the 
proliferation of all enabling technologies used by countries of 
concern to develop UAVs, the United States has issued demarches to 
foreign governments even for exports of certain uncontrolled 
technologies when these were clearly to be used for a military 
purpose. In addition, State cables show that several countries took 
actions in response to U.S. demarches. 

U.S. Agencies Coordinate to Control the Spread of UAV Technology, but 
Could Strengthen Their Approval, Monitoring, and Enforcement Efforts: 

U.S. agencies coordinate in a variety of ways to control the spread of 
UAV technology, but could strengthen their processes for approving, 
monitoring, and enforcing export control requirements on UAVs. First, 
U.S. agencies have established procedures for coordinating the review 
and approval of UAV transfers, but limitations in information sharing 
hamper these efforts. Second, DOD, State, and Commerce each conduct 
end-use monitoring of some UAV technology, but differences in the 
agencies' programs may result in similar items being subject to 
different levels of oversight. Third, U.S. agencies have coordinated 
UAV-related prosecutions and other enforcement actions, but the nature 
of UAV technology and general issues with export control 
investigations present enforcement challenges. 

Agencies Use an Interagency Process to Review and Approve UAV 
Transfers, but Limitations in Information Sharing Hamper This Process: 

Various U.S. government agencies, including Commerce, State, and DOD, 
play a role in the process to review and approve transfers of U.S. UAV 
technology to foreign purchasers. These agencies' decisions are guided 
by regulatory controls that have been established to govern the 
transfer of both military and dual-use UAV technology. Controls on 
military UAV systems and related technology are outlined in the U.S. 
Munitions List, while controls on dual-use UAV systems and related 
technology are listed in the Commerce Control List. The Commerce 
Control List contains three Export Control Classification Numbers 
(ECCNs) exclusively dealing with UAV systems and related items: 9A012, 
9A120, and 9B010.[Footnote 25] Additionally, we identified at least 29 
other ECCNs that include controls on components or materials that can 
be used in UAVs. Unlike the Commerce Control List, the U.S. Munitions 
List does not include sections that outline controls for UAVs 
specifically.[Footnote 26] Rather, controls for military UAV 
technology fall under several more general U.S. Munitions List 
categories. For instance, applicable controls for complete UAV systems 
are contained in Category VIII of the U.S. Munitions List, which deals 
with aircraft and associated equipment more broadly. According to 
State and Commerce officials, U.S. controls on UAVs are primarily 
based upon the MTCR and Wassenaar control lists. In addition, U.S. law 
establishes unilateral controls that limit the transfer of various 
items, including UAV technology, to particular countries. For 
instance, State noted that the U.S. trade embargos on countries such 
as Iran, North Korea, and Syria cover UAV technology, along with a 
wide array of other items. Additionally, the U.S. government has 
enacted laws that suspend the approval of any transfers of items on 
the U.S. Munitions List, including military UAV technology, to China. 

While State and Commerce are responsible for reviewing and approving 
export licenses for military and dual-use UAV technology respectively, 
the U.S. government has established several mechanisms to coordinate 
these decisions with other relevant agencies.[Footnote 27] For 
instance, State and Commerce, as the lead licensing agencies, "staff" 
out license applications to other relevant agencies, including DOD's 
Defense Technology Security Administration, for their review. State 
and Commerce officials noted that it is particularly important to 
provide licenses to DOD for review since DOD officials often have the 
technical expertise regarding particular items. Additionally, many UAV-
related license applications are reviewed by the Missile Technology 
Export Control Group (MTEC). The MTEC is an interagency body that is 
chaired by State's Bureau of International Security and 
Nonproliferation. It includes representatives from State's DDTC, DOD, 
Commerce, NASA, and the Department of Energy. During the weekly MTEC 
meetings, participants can make recommendations to approve or deny 
licenses or propose conditions to be placed on these licenses. 
According to State, the MTEC assesses whether license applications are 
consistent with U.S. laws and regulations, nonproliferation policy, 
and international commitments. For instance, in one case, the MTEC and 
the Missile Annex Review Committee[Footnote 28] worked with a U.S. UAV 
producer to determine what modifications the company needed to make to 
one of its existing UAV systems to ensure that it was not inherently 
capable of delivering at least a 500 kilogram payload to a range of at 
least 300 kilometers. The resulting design ensured that the UAV was 
classified as an MTCR Category II system and thus not subject to the 
"strong presumption of denial," if the company sought to export the 
system. 

State and DOD also coordinate decisions regarding the transfer of 
military UAV technology through the FMS program. For instance, DOD 
procedures in its Security Assistance Management Manual specify that 
DSCA or State may initiate coordination to approve or disapprove a 
transfer within 5 days of receiving the information copy of the Letter 
of Request, which is a formal request from a country to purchase an 
item through FMS. DSCA consults with State on these requests in order 
to determine if there are any immediate objections to the proposed 
sale within the U.S. government. Further, State must approve any arms 
transfer through FMS. 

Limitations in License Database: 

The U.S. government has authorized the export of a range of UAV 
technology, but database limitations impair its ability to oversee the 
release of such technology. The U.S. government approved the export or 
transfer of a range of complete military and dual-use UAV systems, as 
well as key UAV components, from fiscal years 2005 through 2010, but 
it has no comprehensive view of the volume of UAV technology it 
authorized for export. Specifically, State's licensing database was 
not designed to produce complete data on the number, types, and value 
of UAV technology that State has licensed for export. Since State's 
database organizes items by U.S. Munitions List category and 
subcategory, and the list has no dedicated category or subcategory for 
UAV technology, State lacks an effective means of querying the 
database to identify UAV-related licenses. In July 2009, State issued 
a request that exporters list in the "purpose" field of their export 
license application if an item was a "UAV-related license," covered 
under certain subcategories within Category VIII of the U.S. Munitions 
List. State issued this request to assist it in routing license 
applications to the appropriate internal unit for review, rather than 
to facilitate monitoring of the volume of UAV technology authorized 
for export, according to State officials.[Footnote 29] Although State 
has issued the request to exporters, it does not have procedures to 
ensure that exporters comply with this request and the request does 
not apply to UAV-related licenses involving items not covered by 
Category VIII. In announcing the request, State noted its intention to 
automate this process, but had not done so as of February 2012. 

In contrast, Commerce's database does allow for identification of UAV-
related items falling under the Commerce Control List's three UAV-
specific ECCNs. However, it has limitations in determining the extent 
to which certain UAV components have been authorized for export. The 
Commerce Control List contains at least 29 other ECCNs that control 
items that are used in UAVs, but can also be used for other purposes. 
For items controlled under these 29 ECCNs, Commerce's database does 
not provide a means for easily determining which items authorized for 
export are to be used in UAVs and which are to be used for other 
purposes, such as in manned aircraft. DOD's system for recording FMS 
cases is better able to provide a complete picture of UAV technology 
that has been transferred overseas via FMS. 

These limitations in the U.S. government's licensing data impair the 
ability of U.S. agencies and Congress to oversee the release of 
sensitive UAV technology. As a result, U.S. agencies may face 
additional challenges in working to effectively counter UAV 
proliferation. For instance, U.S. officials may lack complete 
information on relevant, past licensing decisions, when determining 
whether or not to grant an export license for a particular UAV item. 
Additionally, these data issues reduce U.S. agencies' ability to 
conduct analysis of denied UAV-related license applications to 
determine if there are particular trends in questionable parties' 
attempts to acquire UAV technology, according to U.S. government 
officials. 

Despite these limitations, we analyzed State and Commerce licensing 
data, as well as FMS data, to estimate the extent to which the U.S. 
government authorized the export of UAV technology in fiscal years 
2005 through 2010.[Footnote 30] In total, the U.S. government approved 
FMS transfers of complete UAV systems in 15 cases over the period. 
[Footnote 31] Additionally, we identified 1,278 UAV-related licenses 
that State processed over the period. Of these, State approved 90 
percent, denied 3 percent, and returned to the applicant without 
action 7 percent.[Footnote 32] We could not accurately determine the 
number of approved licenses that were for complete UAV systems, given 
limitations in State's database, but the data indicate that State 
authorized the export of several complete UAV systems including the 
Desert Hawk, the ScanEagle, and the Raven. From fiscal years 2005 
through 2010, we identified 134 licenses to export dual-use UAV 
technology that Commerce processed. It approved 74 percent of these 
applications, denied 2 percent and returned without action 24 percent. 
Of the 99 licenses that Commerce approved, we identified at least 55 
that appeared to involve complete dual-use UAV systems based upon the 
descriptions in Commerce's data. In addition to complete UAV systems, 
the U.S. government authorized the export of an array of UAV 
components and subsystems. Table 1 shows a breakdown of the estimated 
number of UAV-related licenses for fiscal years 2005 through 2010. 

Table 1: Estimates of State and Commerce UAV-Related Licenses, Fiscal 
Years 2005 through 2010: 

Agency: State; 
License applications total: 1,278; 
Licenses approved: 1,150; 
Licenses denied: 36; 
Licenses returned without action: 92. 

Agency: Commerce; 
License applications total: 134; 
Licenses approved: 99; 
Licenses denied: 3; 
Licenses returned without action: 32. 

Source: GAO analysis of State and Commerce data. 

[End of table] 

The U.S. government authorized the transfer of UAV systems to a 
variety of countries over fiscal years 2005 through 2010. For 
instance, it authorized the transfer of military UAVs to NATO allies 
such as Denmark, Italy, Lithuania, and the United Kingdom, as well as 
other countries such as Australia, Colombia, Israel, and Singapore. 

Limitations in Information Sharing: 

In addition to the U.S. government's limited ability to determine the 
volume of authorized UAV exports, U.S. licensing agencies have limited 
information sharing mechanisms with the intelligence community. Both 
State and Commerce officials stated that the intelligence community 
does not have a formal process in place to directly provide them 
timely and relevant intelligence to assist in the licensing process. 
For instance, intelligence agencies may be consulted by the MTEC on 
occasion, but they are not routinely represented at weekly meetings. 
Some intelligence agencies participate in the interagency Missile 
Trade Analysis Group, which is a State-chaired interagency working 
group responsible for stopping specific shipments of missile and UAV 
proliferation concern worldwide.[Footnote 33] Although the group is 
not directly involved in licensing issues, State officials noted that 
representatives from State's DDTC and Commerce's BIS attend the 
group's meetings to help ensure a strong working relationship with 
licensing agencies. Moreover, State officials stated that because both 
the MTEC and the Missile Trade Analysis Group are chaired by State's 
Bureau of International Security and Nonproliferation it helps ensure 
coordination and information-sharing on issues affecting both groups. 

According to State and Commerce officials, certain intelligence 
agencies previously had a more formalized role in the licensing 
process, but chose to remove themselves from it in 2008. For instance, 
State officials stated that certain intelligence agencies had 
previously participated in the MTEC and helped validate the bona fides 
of foreign parties in license transactions. Additionally, Commerce 
officials reported one intelligence agency had previously hired 
contactors to screen foreign parties in Commerce export license 
applications against intelligence reporting. According to Commerce 
officials, this agency decided to end its formalized support for the 
licensing process due to budget cuts and other priorities. State 
officials said that, since 2008, State has struggled to get timely and 
relevant intelligence information to assist in licensing decisions. 
Additionally, Commerce officials stated that they did not believe they 
were getting access to all pertinent intelligence information as part 
of their license review process. Some DOD officials also expressed 
concern with the lack of official mechanisms for the intelligence and 
licensing agencies to coordinate and noted that some derogatory 
information available to them on parties listed on license 
applications may not be getting factored into licensing decisions. 

According to U.S. government officials, the administration is 
currently discussing how the intelligence community can provide better 
support to the licensing agencies. Additionally, Commerce noted that 
it has received funding to establish its own intelligence center, 
known as the Strategic Intelligence Liaison Center, within BIS, to 
fill the gaps caused when the intelligence community stopped reviewing 
Commerce export licenses. The center will, among other things, check 
the names of parties in license applications against intelligence 
systems, as was previously done by the intelligence community. While 
the focus of the center will be on Commerce export licenses, Commerce 
officials stated that they are working with other relevant agencies to 
ensure that the information the center generates is available to them, 
as appropriate. Commerce stated that the center was established as of 
the end of 2011. 

Three Agencies Conduct End-Use Monitoring of UAVs, but Procedures Are 
Different for Similar Items: 

State, Commerce, and DOD each conducts end-use monitoring on some UAV-
related exports and transfers. Since our previous report on UAV 
proliferation, all three agencies have taken some steps to increase 
their end-use monitoring of UAVs and related items. 

In 2004, the director of the Office of Enforcement Analysis within 
Commerce's BIS issued a memo to his staff that highlighted the need to 
focus greater attention on conducting end-use monitoring of UAV 
exports. The memo identified certain types of items that should have 
priority for end-use monitoring, given their utility in developing 
UAVs. Unlike Commerce, State issued no specific guidance on how to 
target its end-use monitoring of military UAV technology. Although 
State has not issued UAV-specific end-use monitoring guidance, State 
has identified UAVs as an example of a sensitive commodity that might 
trigger a Blue Lantern check, given the negative impact on national 
security if the item were to be diverted or illicitly retransferred. 
[Footnote 34] State officials said that they consider a variety of 
factors when making a determination as to whether end-use checks on 
sensitive items, including UAV technology, are warranted. For 
instance, State may be more likely to do a Blue Lantern check if the 
end-user has no established history with controlled items, if the 
number of items ordered by the end-user is more than would reasonably 
be needed, if the shipment involves an illogical routing, or if the 
purchaser is paying in cash or at above market rates. 

Shortly after our 2004 report, DOD took steps to strengthen its end-
use monitoring of UAV technology transferred via FMS. In March 2004, 
DOD announced that MTCR Category I UAVs would be among those items 
subject to enhanced end-use monitoring under the Golden Sentry 
program.[Footnote 35] For those items subject to enhanced end-use 
monitoring, DOD officials stationed in the host country are required 
to conduct inventories of transferred items following delivery and at 
regular intervals thereafter to verify that the items are accounted 
for and being used in accordance with the terms and conditions of the 
transfer. DOD can also require enhanced end-use monitoring on non-
Category I UAVs, if the transfer is deemed to be of significant risk 
to warrant such a step. DOD officials reported that, as of February 
2012, there had only been one instance where DOD required enhanced end-
use monitoring for a non-Category I UAV.[Footnote 36] Items not 
requiring enhanced end-use monitoring are subject to routine end-use 
monitoring under the Golden Sentry program. Routine end-use monitoring 
is conducted in conjunction with other required security-related 
duties. For example, U.S. officials might observe how a host country's 
military is using U.S. equipment when visiting a military installation 
on other business. Given the large volume of defense articles 
transferred through FMS, DSCA officials have instructed DOD personnel 
to concentrate routine end-use monitoring efforts on a "watch list" of 
specific categories of items. DOD has included UAVs among the items on 
the watch list. However, some DOD officials that we interviewed, as 
well as officials interviewed by other GAO teams in 2011, noted that 
there was not clear guidance on the activities that constitute routine 
end-use monitoring and how to document these efforts.[Footnote 37] 

The majority of end-use monitoring done for UAV-related items has had 
favorable results, but agencies found problems in some cases. From 
fiscal years 2005 through 2010, State identified 45 UAV-related Blue 
Lantern checks that it conducted and Commerce identified 201 UAV-
related end-use checks that it conducted.[Footnote 38] Of the checks 
State identified as being UAV-related, 66 percent resulted in 
favorable findings, 16 percent in unfavorable findings, and another 18 
percent were inconclusive.[Footnote 39] Of the checks Commerce 
identified as being UAV-related, 58 percent were favorable, 6 percent 
were unfavorable, and the remaining 36 percent had limited or 
inconclusive results.[Footnote 40] Of the checks that were 
unfavorable, some identified significant concerns related to 
unauthorized end-users or end-uses. For instance, State conducted a 
Blue Lantern check as part of a request to amend a license application 
to allow for the provision of additional services to one country in 
support of a U.S. UAV it had already purchased. State found that the 
country was basing and operating the UAV in a manner that violated the 
U.S. government's prohibition against using U.S. Munitions List items 
in internationally disputed territory. Thus, the check was deemed 
unfavorable. 

Differences in Agencies' End-Use Monitoring Programs May Result in 
Different Levels of Oversight for Similar Items: 

All three agencies have conducted end-use monitoring on UAV 
technology, but differences in their respective end-use monitoring 
programs may result in similar types of items being subject to 
different levels of oversight. Further details of these differences in 
U.S. agencies' end-use monitoring programs for UAVs are addressed in 
the classified version of the report. 

U.S. agencies may also have differing levels of access to facilities 
and equipment when conducting end-use monitoring, contributing to 
differences in the level of oversight of exported items. Although DOD 
requires that countries agree to permit inventories and physical 
inspections as a condition of FMS transfers, State sometimes lacks 
this type of agreement from countries for items exported through DCS. 
In fact, U.S. government officials noted that some bilateral 
agreements prohibit U.S. officials from directly conducting end-use 
monitoring on State-licensed items. Even when State does have such 
authority, it inconsistently visits end-users to verify compliance 
with license conditions, in at least some countries. For instance, we 
reported in November 2011 that State infrequently visited end-users in 
Persian Gulf countries when conducting Blue Lantern post-shipment 
checks on night vision devices.[Footnote 41] 

Agencies Coordinated Efforts to Enforce UAV Export Controls, but the 
Nature of UAV Technology Creates Enforcement Challenges: 

U.S. agencies coordinated their UAV enforcement actions through 
several mechanisms, including the National Export Enforcement 
Coordination Network, and the Exodus Command Center, but officials 
acknowledged limitations with each. We have previously reported on 
challenges in enforcing export control laws and regulations more 
generally. Among other things, we found enforcement agencies have had 
difficulty coordinating cases and agreeing on how to proceed on 
investigations.[Footnote 42] 

The National Export Enforcement Coordination Network (NEECN) was 
designed to be a hub for coordination on export control 
investigations. Among other things, NEECN assisted law enforcement 
agencies in apprising each other of investigative leads, disseminating 
investigative leads to law enforcement field offices, providing 
support to ongoing investigations, and identifying proliferation 
trends. As of November 2011, NEECN was replaced by the new Export 
Enforcement Coordination Center, as part of the administration's 
export control reform initiative. To help ensure greater coordination, 
the administration has required key agencies to partner in this effort 
in contrast with NEECN, which was a voluntary effort and at times 
suffered from a lack of agency participation, according to some law 
enforcement officials.[Footnote 43] 

Another key coordination mechanism is the ICE-led Exodus Command 
Center. Enforcement agencies, including ICE and CBP, submit license 
determination requests through the center to confirm with State or 
Commerce whether a particular item requires a license, and if so, 
whether the required license has been obtained. During fiscal years 
2005 through 2010, law enforcement officials used the Exodus Command 
Center for license determination requests involving UAV-related 
technology; however, details of these requests are designated as 
sensitive but unclassified and are not reported here. Law enforcement 
officials noted that while the Exodus Command Center is a key tool, 
license determination requests can take a significant amount of time, 
thus impacting their ability to move forward on investigations or 
other enforcement actions. In March 2012, we issued a report that 
explores in more detail the challenges that law enforcement agencies 
face in investigating illicit transshipments, including license 
determination delays.[Footnote 44] 

U.S. agencies have worked together to take certain enforcement actions 
against violators of export control laws and regulations on UAV 
technology. Based on our analysis of DOJ reporting on export control 
enforcement prosecutions from October 2006 through June 2011, we 
identified at least seven prosecutions involving attempts to illegally 
export UAV-related technology. For instance, in 2009, a District of 
Columbia couple pleaded guilty to making false statements regarding 
the export of autopilots for mini UAVs to China. 

According to U.S. enforcement officials, they encountered certain 
difficulties enforcing export laws and regulations on UAVs that are 
common across all export control investigations. For instance, of the 
34 closed investigations that ICE identified for us as being UAV-
related in fiscal years 2005 through 2010, none of the cases resulted 
in a criminal prosecution. In the majority of the 34 cases, the 
investigations were closed as a result of investigators losing touch 
with the suspects outside of the country. We previously reported that 
many suspects in export control violation cases are located outside of 
the country and foreign governments may not always choose to cooperate 
with U.S. law enforcement officials.[Footnote 45] 

Law enforcement officials also identified two issues that make UAV 
cases particularly difficult to pursue. DOJ officials noted that it 
can be difficult to prosecute a case involving an export control 
violation, particularly those involving dual-use technologies, because 
proving the violation took place typically involves showing that the 
commodity in question was specifically designed for use in a 
technology or application requiring an export control license. For 
instance, in the 2009 case discussed previously, DOJ ultimately 
prosecuted the District of Columbia couple for making false statements 
and not for illegally exporting the autopilots to China. DOJ did this 
because prosecutors could not prove that the autopilots were specially 
designed for use in military UAVs, despite evidence that this was 
their intended use, according to DOJ officials. As part of the 
administration's efforts to move items on the U.S. Munitions List to 
the Commerce Control List, Commerce issued a proposed rule in the 
Federal Register in July 2011 defining what is meant by specially 
designed and requesting public comment on the proposed definition. 
[Footnote 46] The comment period for this proposed rule closed on 
September 13, 2011. After reviewing the comments submitted and further 
review of the issue, Commerce issued another proposed rule further 
revising the definition of "specially designed" in the Federal 
Register in June 2012.[Footnote 47] The comment period for this 
proposed rule will close on August 3, 2012. In addition, ICE, CBP, and 
Commerce officials noted that it is often difficult for law 
enforcement officials to determine whether violations are occurring 
because many law enforcement officials lack the technical skills to 
differentiate controlled UAV components from similar components used 
in model aircraft or ultralights, which are not subject to export 
control restrictions. Commerce officials also noted that the rapidly 
evolving nature of the technologies for use in UAVs could make it more 
difficult for law enforcement to readily identify these technologies 
in the future. According to ICE officials, to provide law enforcement 
officials with the technical skills to identify UAV-related 
technologies, ICE has provided UAV training to its agents in multiple 
locations throughout the country.[Footnote 48] Commerce has also 
provided technical training to law enforcement officials; however, 
this training did not specifically focus on UAV technologies, 
according to Commerce officials. 

Conclusions: 

Multiple factors highlight past and likely persistent limitations of 
U.S. efforts to control the proliferation of UAV technology through 
the export control process. First, the key trends in the acquisition, 
development, and applications of UAV technology globally show enormous 
growth in demand for military uses of UAVs, including for lethal 
applications, and an increasing ability of countries to acquire or 
develop their own systems. While only a few countries will have a near-
term ability to develop and field the most sophisticated systems, many 
are expected to have sufficiently useful UAVs. These could threaten 
U.S. forces and interests. Second, the U.S. government recognizes the 
risks related to the proliferation of UAV technology, but faces 
difficulties setting controls on systems and components that countries 
of concern are interested in obtaining. Third, the U.S. government 
used multilateral and bilateral mechanisms to restrict the 
proliferation of UAV technology to a great extent, but as we reported 
in 2004, the nonbinding and consensual nature of multilateral export 
control regimes can challenge the U.S. government's ability to achieve 
its objectives in these forums. 

While technological advances and the consensual nature of the 
multilateral export control regimes complicate the task of avoiding 
widespread proliferation to U.S. adversaries, the U.S. government can 
take steps to better coordinate its efforts to address national 
security considerations through its controls on the transfer and 
export of UAV technology. For instance, some agencies have routine and 
formal roles in reviewing licenses, but others have no formal 
mechanism to share significant information with each other. In fact, 
the role of some agencies with potentially important information to 
provide has diminished in recent years. Furthermore, U.S. government 
efforts to provide reasonable assurance that UAV exports and transfers 
are used as intended are marked by differing levels of protection 
through State and DOD end-use monitoring activities. As we previously 
reported on a similar situation involving night vision devices for 
Persian Gulf countries, major differences in the two agencies' 
monitoring programs need to be harmonized. Finally, certain 
information that would be useful to executive branch and congressional 
decision-making is unavailable because State's licensing database 
cannot readily identify all licenses authorizing military UAV exports. 
Thus the U.S. government cannot readily identify the full range of 
UAVs it has authorized for export to foreign countries. 

Recommendations for Executive Action: 

We are making three recommendations:[Footnote 49] 

* As part of the Administration's export control reform initiative, we 
recommend that the Secretary of State establish a mechanism in the 
licensing database to better enable the identification of licenses 
authorizing the export of UAVs and related components and technologies. 

* We recommend that all U.S. agencies with information relevant to the 
export licensing process should seek to improve mechanisms for 
information sharing. 

* To close gaps in the implementation of UAV end-use monitoring 
programs that may limit the ability of DOD and State to adequately 
safeguard defense articles upon their arrival and basing, we recommend 
that the Secretaries of State and Defense take steps to harmonize 
their approaches to end-use monitoring. Such steps might include 
developing a plan for how and when each agency's end-use monitoring 
approaches would be harmonized. 

Agency Comments and Our Evaluation: 

We provided a draft of our February 2012 classified report to State, 
DOD, Commerce, DHS, DOJ, and the CIA for their review and comment. 
State, DOD, Commerce, and DHS provided written comments. We have 
reprinted DHS' written comments in appendix IV. State's, DOD's, and 
Commerce's comments discussed classified information and cannot be 
publicly released; however, we have included an unclassified summary 
of their comments, as well as those of DHS. State, Commerce, and DOD 
also provided technical comments, as did the CIA, which we 
incorporated in the report as appropriate. 

State agreed with our recommendation to establish a mechanism in the 
licensing database to better identify licenses authorizing the export 
of UAVs and related components and technologies. According to State, 
the U.S. Munitions List is being rewritten to redefine its controls on 
UAVs and better differentiate them from controls on other military 
aircraft. State noted that these changes to the U.S. Munitions List, 
along with the introduction of USXports as the U.S. government's 
export control licensing case management system, will provide an 
opportunity to improve database collection and facilitate the 
identification of UAV licenses. 

State, DOD, and Commerce agreed with our recommendation to take 
additional steps to establish better interagency information sharing. 
According to State, the administration is currently trying to address 
such concerns as part of its export control reform initiative. Both 
DOD and Commerce noted that as part of the administration's export 
control reform initiative, a new unit, known as the Information Triage 
Unit, is being established to facilitate information sharing among 
various U.S. agencies. To begin implementing the functions of the 
Information Triage Unit, Commerce noted that it has established a 
Strategic Intelligence Liaison Center. DHS and Commerce noted the role 
of the Export Enforcement Coordination Center with respect to the 
exchange of export control-related information among certain U.S. 
agencies. 

State and DOD also agreed with our recommendation to harmonize their 
approaches to the end-use monitoring of UAVs. State said that it has 
and will continue to make improvements in its end-use monitoring 
program. State also said that the report lacks some critical 
perspective on the number and scope of transfers involving the most 
sophisticated UAVs. We acknowledge that the United States has to date 
transferred only a limited number of more sophisticated UAVs, but this 
does not lessen the importance of ensuring that UAVs the United States 
transfers to foreign recipients are well protected. Additionally, we 
note U.S. government officials we met with anticipate that the number 
of such UAVs transferred will increase in the future. Thus, the 
importance of effective U.S. end-use monitoring of UAVs will likely 
continue to increase over time. DOD stated that it welcomes the 
opportunity to work with State on the end-use monitoring issues raised 
in our recommendation. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to interested 
congressional committees, the secretaries and agency heads of the 
departments addressed in this report, and other interested parties. In 
addition, the report will be available at no charge on the GAO website 
at [hyperlink, http://www.gao.gov]. 

If you or your staff have questions about this report, please contact 
me at (202) 512-9601 or at melitot@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix V. 

Signed by: 

Thomas Melito: 
Director, International Affairs and Trade: 

[End of section] 

Appendix I: Scope and Methodology: 

To assess the global trends in the development, acquisition, and 
application of unmanned aerial vehicle (UAV) technology worldwide 
since 2005, we obtained, analyzed, and corroborated private sector 
open source and U.S. government reporting on U.S. and foreign UAV 
activities from various sources and spoke to representatives of U.S. 
private sector associations representing companies that manufacture 
UAVs. For this report, we defined the term "acquisition" to mean those 
countries that have obtained complete UAV systems, as well as the 
countries from which they acquired these UAVs. We defined the term 
"development" to mean those countries producing and supplying UAVs and 
the systems they are building. The term "applications" addressed the 
tasks that UAVs perform and the limitations in their capacity to 
achieve these tasks. Private sector associations we met with included 
the Association for Unmanned Vehicle Systems International and the 
Aerospace Industries Association. We also interviewed representatives 
of UAV manufacturers in the United States, as well as various analysts 
within the U.S. government who track UAV issues. We also obtained 
copies of their briefs as well as some of their reports. In addition, 
to get a better understanding of the regulatory and technological 
limitations that affect UAV development, we met with officials from 
the Federal Aviation Administration. As our trend assessment dealt 
with global trends, we also met with industry, trade association, and 
foreign government officials in three countries--Israel, Italy, and 
the United Kingdom--and obtained reports on their UAV programs. We 
selected these countries based on analyses of open source reporting 
and Department of Defense (DOD) and Department of State (State) data 
showing that these countries either have extensive experience 
operating U.S.-made UAV systems or are important producers of UAVs and 
related components. We traveled to Patuxent Naval Air Station in 
Patuxent, Maryland, to gain a firsthand understanding of the current 
state of UAV technology, observing the U.S. Navy's Broad Area Maritime 
Surveillance-Demonstrator system and the Shadow 200. The Broad Area 
Maritime Surveillance-Demonstrator UAV is based on the Global Hawk 
platform--a strategic UAV--while the Shadow 200 is a tactical UAV in 
use by the U.S. Army that is currently undergoing modification for use 
by the U.S. Marine Corps. 

To assess the national security considerations associated with the 
proliferation of UAV technology, we met with private sector and U.S. 
government analysts knowledgeable about UAVs. We also obtained and 
analyzed a range of private sector and unclassified and classified 
reports and briefings by the intelligence community discussing the 
threats associated with the spread of UAV technology to countries of 
concern and terrorist organizations. Additionally, we interviewed 
officials from State, the Department of Commerce (Commerce), and DOD 
to gather information on the key risks and benefits associated with 
the spread of UAV technology. To better understand the security 
considerations associated with transfers of U.S. UAV technology to 
U.S. allies, we met with foreign government and U.S. embassy officials 
in Italy to document the Italian Ministry of Defense's experience 
purchasing and operating U.S.-made systems. While in London, we were 
unable to meet with United Kingdom military officials knowledgeable 
about their experience purchasing and operating U.S. systems, but we 
obtained written responses to questions from the United Kingdom's 
Ministry of Defense and met with U.S. embassy officials familiar with 
the United Kingdom's experience. 

To assess the extent to which the U.S. government used the 
multilateral regimes and bilateral demarches to foreign countries to 
address UAV technology proliferation, we obtained and analyzed 
classified State reporting cables documenting the results of the 2005 
through 2009 Missile Technology Control Regime (MTCR) plenaries and 
other meetings. We also reviewed various MTCR and Wassenaar 
Arrangement (Wassenaar) documents, including the two regime's control 
lists and the various U.S. proposals submitted to the MTCR and 
Wassenaar. Additionally, we interviewed State, Commerce, and DOD 
officials to gather information on the steps that the U.S. government 
has taken through the regimes to work with other participants to 
control UAV proliferation. We also met with officials of the Wassenaar 
Arrangement Secretariat. We attempted to meet with MTCR officials, but 
were not able to due to scheduling limitations. To better understand 
the limitations of the multilateral regimes, we met with officials 
from State, Commerce, DOD, and other agencies. To assess the extent to 
which the United States used bilateral diplomacy to address UAV 
proliferation concerns, we obtained and analyzed approximately 70 
demarches presented to foreign countries during the January 2005 to 
September 2011 timeframe that State provided to us.[Footnote 50] We 
also interviewed State officials knowledgeable about the demarches. We 
did not conduct an independent assessment to determine whether our 
sample contained all the UAV-related demarches that State presented to 
foreign countries during this timeframe. 

To assess the extent to which the U.S. government has coordinated its 
export control efforts to limit the spread of UAV technology, we 
obtained and analyzed fiscal years 2005 through 2010 export licensing 
and end-use monitoring data from Commerce and State. We also obtained 
DOD fiscal years 2005 through 2010 Foreign Military Sales program and 
end-use monitoring data. To assess the reliability of these various 
data sets, we conducted interviews with relevant agency officials, 
reviewed agency documentation, reviewed past GAO assessments of the 
databases used to produce this data, and conducted our own reviews of 
the data provided by the agencies. We determined that the data were 
sufficiently reliable for our use; however, we identified certain 
limitations, including with State's licensing database in particular, 
which are discussed further below. We also reviewed Commerce, State, 
and DOD documents and reports and met with officials in Washington, 
D.C., involved in licensing, transfer, and end-use monitoring 
activities from these three agencies. We also met with agency 
officials from Commerce, Immigration and Customs Enforcement, Customs 
and Border Protection, the Federal Bureau of Investigation, and the 
Department of Justice responsible for enforcing export control laws 
and regulations. 

To analyze Commerce's UAV-related export control licensing data, we 
identified the 3 principal export control classification numbers 
(ECCNs) that exclusively control UAV systems and technology, as well 
as 29 additional ECCNs that include technology that could be used in 
UAVs, but can also be used for other purposes. To identify these 
ECCNs, we first conducted a search of the Commerce Control List to 
determine which ECCNs contained the terms: "unmanned aerial vehicle," 
"UAV," "unmanned aerial system," and "UAS." We also reviewed Commerce 
documentation discussing UAV-related ECCNs. Finally, we validated the 
choice of these ECCNs with officials from Commerce and the Defense 
Technology Security Administration and made modifications to our list 
based upon their input. We validated our list of ECCNs with Commerce 
and the Defense Technology Security Administration because Commerce 
manages the database used to track dual-use license applications and 
the Defense Technology Security Administration is the main agency that 
Commerce uses for technical assistance in conducting license reviews. 
We then analyzed Commerce export licensing data and quantified the 
number of license applications associated with each of these ECCNs 
during fiscal years 2005 through 2010. However, in the final report, 
we chose to limit our discussion to only those licenses involving the 
three ECCNS that are UAV-specific. We chose to do so because, through 
our own analysis and interviews with Commerce and Defense Technology 
Security Administration officials, we determined there was not a 
reliable way of identifying which of the more than 7,000 license 
applications involving the other 29 ECCNs included items that were to 
be used in UAVs, versus those licenses that included items to be used 
for other purposes, such as in manned aircraft. Because our final 
analysis does not include any license applications involving these 29 
ECCNs, our results may not have captured some UAV-related licenses; 
however, we believe the results are sufficiently reliable to provide a 
reasonable estimate of the number of UAV-related licenses submitted to 
Commerce in fiscal years 2005 through 2010. 

State's licensing database is organized according to U.S. Munitions 
List category and subcategory and there is no specific category or 
subcategory for UAVs and related technology. Thus, to analyze State's 
UAV-related licensing data, we obtained data for more than 7,000 
license applications that State had submitted to the Missile 
Technology Export Control Group (MTEC) during fiscal years 2005 
through 2010. While the majority of UAV licenses go before the MTEC, 
certain UAV-related licenses may not be captured within the data State 
provided, according to State officials. For instance, certain sensors 
or other types of payloads used in UAVs, but also used in other types 
of aircraft, might not be reviewed by the MTEC because they are not 
considered missile technology controlled by the MTCR, according to 
State officials. Additionally, the data provided by State included a 
significant number of licenses that were not UAV-related and instead 
pertained to other types of missile technology. To better identify the 
UAV-related licenses, we identified 34 key terms to use in filtering 
the data. These terms included both general terms that are commonly 
used to describe UAVs, such as "unmanned aerial system" and "UAS," and 
also specific terms that are the names of key UAV systems that are 
produced in the United States and abroad, such as "Predator" and 
"ScanEagle." We validated these terms with State and the Defense 
Technology Security Administration. We validated the choice of these 
terms with State and the Defense Technology Security Administration 
because State manages the database used to track U.S. Munitions List-
related license applications and the Defense Technology Security 
Administration is the main agency that State uses for technical 
assistance in conducting license reviews. We used these terms to 
assist in separating out those licenses that were UAV-related from 
those that were not. Nonetheless, we found that Direct Commercial 
Sales (DCS) data could not identify with certainty all licenses 
authorizing UAVs and related components without a manual review of 
tens of thousands of licenses. As a consequence, we could not 
accurately report the magnitude of DCS arms transfer authorizations 
for UAVs; however, we believe the results are sufficiently reliable to 
provide a general estimate of the number of UAV-related licenses 
submitted to State in fiscal years 2005 through 2010. 

To analyze State and Commerce end-use monitoring of UAV-related 
exports, we obtained end-use monitoring data from both agencies 
identifying the number, location, and type of UAV-related end-use 
monitoring checks conducted in fiscal years 2005 through 2010. Both 
State's and Commerce's end-use data have limitations because the 
agencies' databases are not designed to provide a means of 
automatically identifying end-use checks that are UAV-related. As a 
result, both agencies developed queries using terms such as "UAV" and 
"unmanned aerial vehicle." Based upon our discussions with agency 
officials, we believe that these queries identified the majority of 
relevant end-use check records, but some UAV-related checks may not 
have been captured in the queries. However, we determined that the 
agencies' end-use monitoring data is sufficiently reliable to provide 
a reasonable estimate of the number and types of checks performed by 
the two agencies. 

To analyze DOD's transfers of UAV technology via the Foreign Military 
Sales (FMS) program, we obtained from the Defense Security Cooperation 
Agency (DSCA) a breakdown of the number, country, and type of UAV 
technology transferred during fiscal years 2005 through 2010. To 
produce this data, DSCA developed a query of its 1200 system to 
identify relevant FMS transfers involving UAV technology. We also 
obtained Golden Sentry UAV-related end-use monitoring data from DSCA 
for the same period. 

To ensure the accuracy of the information contained in appendix III, 
we provided a copy of this appendix to Israeli government officials, 
who provided technical comments. We have incorporated their comments 
as appropriate. 

DOD, State, the Department of Homeland Security, the Federal Bureau of 
Investigation, and the Central Intelligence Agency deemed some of the 
information in our February 2012 report as classified, which must be 
protected from public disclosure. Therefore, this report omits 
sensitive information about efforts by countries of concern and 
terrorists to obtain and use sensitive UAV technology, as well as 
details about the U.S. proposals that the multilateral regimes did not 
adopt. This report also omits sensitive information about U.S. uses of 
bilateral diplomacy to address UAV proliferation concerns, U.S. 
efforts to coordinate and use certain sensitive information as part of 
the licensing process, and U.S. government efforts to coordinate the 
enforcement of export controls on UAVs. 

We conducted this performance audit from October 2010 to July 2012 in 
accordance with generally accepted auditing standards. These standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: List of MTCR and Wassenaar Members: 

Table 2: List of MTCR and Wassenaar Members: 

MTCR: 
Argentina; 
Australia; 
Austria; 
Belgium; 
Brazil[A]; 
Bulgaria; 
Canada; 
Czech Republic; 
Denmark; 
Finland; 
France; 
Germany; 
Greece; 
Hungary; 
Iceland; 
Ireland; 
Italy; 
Japan; 
Luxembourg; 
Netherlands; 
New Zealand; 
Norway; 
Poland; 
Portugal; 
Republic of Korea; 
Russia; 
South Africa; 
Spain; 
Sweden; 
Switzerland; 
Turkey; 
Ukraine; 
United Kingdom; 
United States. 

Wassenaar: 
Argentina; 
Australia; 
Austria; 
Belgium; 
Bulgaria; 
Canada; 
Croatia[B]; 
Czech Republic; 
Denmark; 
Estonia[B]; 
Finland; 
France; 
Germany; 
Greece; 
Hungary; 
Ireland; 
Italy; 
Japan; 
Latvia[B]; 
Lithuania[B]; 
Luxembourg; 
Malta; 
Mexico[B]; 
Netherlands; 
New Zealand; 
Norway; 
Poland; 
Portugal; 
Republic of Korea; 
Romania[B]; 
Russia; 
Slovakia[B]; 
Slovenia[B]; 
South Africa; 
Spain; 
Sweden; 
Switzerland; 
Turkey; 
Ukraine; 
United Kingdom; 
United States. 

Source: MTCR and Wassenaar. 

[A] Brazil is a member of MTCR, but not Wassenaar. 

[B] Croatia, Estonia, Latvia, Lithuania, Mexico, Romania, Slovakia, 
and Slovenia are members of Wassenaar, but not MTCR. 

[End of table] 

[End of section] 

Appendix III: Israel's Export Control System Since 2006: 

According to Israeli officials we spoke with, the changes that have 
occurred in Israel's export control system since 2006 were significant 
because they elevated the importance of export controls. For this 
reason, this appendix provides additional information about these 
changes. According to Israeli officials we spoke with, in general, the 
changes are designed to encourage more interagency coordination and to 
facilitate enhanced enforcement of export control laws. 

In July 2006, Israel established a single export control agency within 
the Ministry of Defense, named the Defense Export Control Agency 
(DECA). DECA is responsible for reviewing and consequently approving 
or denying applications for licenses that involve items, technologies, 
know-how, and services which are considered under the definition of 
defense exports. 

According to Israeli officials and documents, in cases where a license 
application involves purely military items or dual-use items that are 
destined for a military end-user, DECA bears full responsibility, 
although it is required to consult with the Ministry of Foreign 
Affairs. In these instances, the licensing process is a two-stage 
process with a marketing license preceding the export license. In 
cases of applications involving dual-use items destined for a civilian 
end-user, the Israeli Ministry of Industry, Trade, and Labor bears the 
responsibility, while consulting with DECA. In these cases, the 
licensing mechanism is a one-stage process, as it includes the 
issuance and granting of the export license alone. 

According to Israeli officials and documents, for license applications 
in which DECA bears full responsibility, a mechanism was established 
within the Ministry of Defense to coordinate the review of these 
licenses. This includes the establishment of advisory committees. In 
addition, a technical committee called the "MTCR Committee" reviews 
license applications involving possible technologies controlled by 
MTCR. That committee's task is to determine whether an item is 
contained within an MTCR control list and if so, what category. 

According to Israeli officials and documents, by law, DECA is solely 
responsible for enforcing export control directives and regulations. 
Within the framework of that responsibility, DECA is often assisted by 
Israeli Customs, which in practice, enforces most of the directives 
and regulations. In addition, DECA is responsible for conducting 
outreach to companies that export military and dual-use items, 
technologies, know-how, or services. 

According to Israeli officials that we spoke with, Israel also adopted 
export control legislation to control the export of both military and 
dual-use items, technologies, know-how, and services. According to 
Israeli documents, in July 2007, the Israeli Parliament enacted a new 
Defense Export Control Law, which entered into force in December of 
that year. This law elevated the importance of export controls in 
several ways, according to Israeli officials. For instance, Israeli 
officials stated that the law established a requirement for Israeli 
exporters to register before applying for any export control license 
and to create a new position within the company--director of export 
control. According to Israeli officials, the law also established 
periodic reporting, record-keeping, and inspection requirements; 
provided for new administrative penalties such as fines, suspensions, 
and revocations of licenses; and strengthened criminal penalties for 
those found violating the law. Moreover, according to Israeli 
documents, the Defense Export Control Law led the Ministry of Defense 
to establish separate lists of controlled technologies--one based on 
the MTCR Annex, two based on the Wassenaar munitions and dual-use 
lists, and a third dual-use list for transfers to the Palestinian 
Authority. 

The lists of controlled technologies are updated annually in two ways, 
according to Israeli officials. First, DECA meets with MTCR and 
Wassenaar Arrangement officials in outreach sessions conducted by the 
two regimes. The outreach sessions are designed in part to inform key 
countries that are not MTCR or Wassenaar Arrangement members about 
control list changes agreed to by member countries, according to 
Wassenaar Arrangement officials. In addition, DECA meets with export 
control counterparts from the United States, United Kingdom, Germany, 
and other countries, according to Israeli officials. 

With respect to license application approvals, the Israeli government 
typically imposes certain conditions, according to Israeli government 
and industry officials. For instance, DECA requires manufacturers to 
obtain re-export approval for all controlled components not made in 
Israel from the country of origin as a pre-condition for considering a 
license application. In addition, DECA typically imposes certain 
license conditions, for instance, requiring end-users to sign an end-
use or end-user certificate. According to Israeli government 
officials, approved licenses often state that technology cannot be 
transferred to a third party without authorization from DECA. 

According to Israeli government officials and documents, with respect 
to license applications involving UAV technology, the Israeli 
government typically imposes additional licensing conditions as well. 
For instance, license applications must specify under which MTCR 
category the UAV falls, if any. According to Israeli government and 
industry officials, for MTCR Category I UAVs such as the Heron TP, the 
Israeli government has adopted a "presumption of denial" standard. In 
instances where authorization is eventually given to export a Category 
I UAV, it is limited to MTCR member countries only. In cases where 
authorization is granted to export an MTCR Category II UAV, these may 
be marketed or sold to MTCR nonmember countries only as long as they 
provide a declaration that they fully adhere to MTCR controls. 

[End of section] 

Appendix IV: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

December 5, 2011: 

Thomas Melito: 
Director, International Affairs and Trade Team: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: [Redacted] 

Dear Mr. Melito: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Homeland Security (DHS) appreciates the 
U.S. Government Accountability Office's (GAO's) work in planning and 
conducting its review and issuing this report. 

The Department is pleased to note GAO's positive recognition of the 
DHS-led Export Enforcement Coordination Center (EECC), which serves as 
the primary government forum for the exchange of information and 
intelligence related to export enforcement. The EECC is staffed with 
full-time personnel from U.S Immigration and Customs Enforcement as 
well as individuals detailed from the U.S. Departments of Treasury, 
Defense, Justice, Commerce, Energy, and elsewhere. Specific functions 
of the EECC include: 

* Coordinating the de-confliction of criminal and administrative 
enforcement operations and coordination of industry enforcement 
outreach activity;   

* Serving as a conduit between federal law enforcement agencies and 
the U.S. Intelligence Community; 

* Acting as the primary point of contact between enforcement agencies 
and export licensing agencies for enforcement and licensing matters; 

* Resolving interagency conflicts not settled in the field; and; 

* Establishing government-wide statistical tracking capabilities for 
U.S. export enforcement activities. 

We noted that the report did not contain any recommendations for OHS. 
The Department remains committed to continuing its work with our 
interagency partners to improve our law enforcement capabilities to 
investigate violations of U.S. export control laws.  

Again, thank you for the opportunity to review and comment on this 
draft report. Technical and sensitivity comments were provided under 
separate cover. We look forward to working with you on future Homeland 
Security issues. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Thomas Melito, (202) 512-9601 or melitot@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, the following staff made key 
contributions to this the report: Joseph A. Christoff, Director 
(ret.); Jeff Phillips, Assistant Director; Lynn Cothern; Martin De 
Alteriis; Elias Lewine; Grace Lui; José M. Peña; and Ryan Vaughan. 
Mitch Karpman provided technical assistance in statistics and data 
analysis, Jena Sinkfield provided graphics support, and Sarah McGrath 
provided editorial assistance. Burns Chamberlain, Gifford Howland, 
Mason Calhoun, Drew Lindsey, Rachel Dunsmoor, Judith Williams, and 
Juan P. Avila provided additional technical assistance. 

[End of section] 

Footnotes: 

[1] While the term UAV has been in use for some time, the Department 
of Defense and the Federal Aviation Administration, among other U.S. 
and international organizations, now use the term unmanned aircraft 
systems, or UAS, when referring to these systems. For this report, we 
use the term UAV because it remains the official term used by both 
U.S. and multilateral export control bodies. 

[2] Multilateral export control regimes are voluntary, nonbinding 
arrangements among like-minded supplier countries that aim to restrict 
trade in sensitive technologies to peaceful purposes. Multilateral 
export control regimes are referred to as either regimes or 
arrangements, and countries invited to participate in them are 
variously referred to as members, participants, participating states, 
or partners. In this report, we use the term regimes and refer to 
participating countries as members. 

[3] GAO, Nonproliferation: Improvements Needed to Better Control 
Technology Exports for Cruise Missiles and Unmanned Aerial Vehicles, 
[hyperlink, http://www.gao.gov/products/GAO-04-175] (Washington, D.C.: 
Jan. 23, 2004). In [hyperlink, 
http://www.gao.gov/products/GAO-04-175], we found that cruise missiles 
and UAVs posed a growing threat to U.S. national security interests; 
multilateral export control regimes and national export controls were 
limited in their capacity to address cruise missile and UAV 
proliferation concerns' and the U.S. government had performed little 
end-use monitoring to verify that exporters and foreign recipients 
complied with licensing conditions. 

[4] For example, GAO, Persian Gulf: Implementation Gaps Limit the 
Effectiveness of End-Use Monitoring and Human Rights Vetting for U.S. 
Military Equipment, [hyperlink, http://www.gao.gov/products/GAO-12-89] 
(Washington, D.C.: Nov. 17, 2011), and GAO, Export Controls: Agency 
Actions and Proposed Reform Initiatives May Address Previously 
Identified Weaknesses, but Challenges Remain, [hyperlink, 
http://www.gao.gov/products/GAO-11-135R] (Washington, D.C.: Nov. 17, 
2010). 

[5] Appendix II contains a list of the MTCR and Wassenaar members. 

[6] The Annex is formally known as the Equipment, Software, and 
Technology Annex. The MTCR's documents include the MTCR Guidelines and 
Annex. The Guidelines define the purpose of MTCR and provide the 
overall structure and rules to guide the member nations and those 
adhering unilaterally to the Guidelines. 

[7] Arms Export Control Act, as amended, 22 U.S.C. §§ 2751-2799aa-2. 

[8] DDTC relies on other agencies, principally DOD's Defense 
Technology Security Administration, for technical assistance in 
conducting license reviews. 

[9] The U.S. Munitions List provides a list of the defense articles 
and services that require a license for export. 

[10] While DCS involves negotiations between a U.S. supplier and a 
foreign buyer, FMS involves negotiations between the U.S. government 
and a foreign government or organization. 

[11] 50 U.S.C. App. §§ 2401-2420. The Export Administration Act of 
1979, as amended, is not permanent legislation. Since August 21, 2001, 
the Export Administration Act has been in lapse. However, the 
President has continued the regulations in effect through Executive 
Order 13222 of August 17, 2001 (3 C.F.R., 2001 Comp 783 (2002)), which 
most recently was extended by Presidential Notice on August 12, 2011, 
under the authority provided by section 202(d) of the National 
Emergencies Act (50 U.S.C. § 1622(d)). 

[12] Within BIS, Export Administration administers the license review 
process. 

[13] Within BIS, Export Enforcement administers Commerce's end-use 
monitoring program. 

[14] As we discuss further in this report, there is no formal 
mechanism to ensure that licensing agencies have relevant and timely 
intelligence information when making licensing decisions. For this 
reason, the intelligence community is not represented in figure 2. 

[15] For our report, we looked at the acquisition of UAVs in terms of 
which countries have obtained complete UAV systems and who they had 
acquired those systems from. For development, we looked at which 
countries were building UAV systems and what they were building. The 
applications of UAVs addressed which tasks UAVs were performing and 
things that limited the tasks they were allowed to perform. 

[16] [hyperlink, http://www.gao.gov/products/GAO-04-175]. 

[17] We were unable to calculate a more precise figure for the 
military DCS licenses because of limitations in State's licensing 
database, which are discussed later in this report. 

[18] These vehicles are commonly referred to as unmanned combat aerial 
vehicles. 

[19] GAO, Unmanned Aircraft Systems: Federal Actions Needed to Ensure 
Safety and Expand Their Potential Uses Within the National Airspace 
System, [hyperlink, http://www.gao.gov/products/GAO-08-511] 
Washington, D.C.: May 15, 2008). 

[20] A Special Airworthiness Certification is issued to a private 
entity to allow it to fly their UAV for research, training, or testing 
purposes. A Certificate of Authorization is provided to a federal, 
state, or local government entity to allow it to fly a UAV under 
specific conditions as part of its duties. 

[21] See Defense Security Service, Targeting U.S. Technologies (2009). 

[22] Lethal UAVs are designed to conduct one-way attacks with the 
vehicle being destroyed upon detonation. Weaponized UAVs are two-way 
attack vehicles that fly to a target, fire their munitions, and then 
return. 

[23] A demarche is a formal diplomatic protest or representation. 

[24] To conduct our analysis of the extent to which the United States 
used bilateral diplomacy to address UAV proliferation concerns, State 
provided to us copies of UAV-related demarches. We did not conduct an 
independent assessment to determine whether our sample contained all 
the UAV-related demarches that State presented to foreign governments 
from January 2005 to September 2011. Appendix I provides a broad 
discussion of how we determined which demarches were UAV-related. 

[25] The Commerce Control List is divided into 10 broad categories 
(categories 0 through 9), with each category containing ECCNs that 
describe the specific controls on a particular item or type of item. 

[26] The U.S. Munitions List is divided into 21 broad categories, with 
each category further divided into subcategories. 

[27] The majority of UAV-related dual-use and military items exported 
commercially require an export license from Commerce and State, 
respectively. Approval to transfer military UAV items through the FMS 
program is granted by the U.S. government through a Letter of Offer 
and Acceptance. DOD's DSCA manages this process, but State has final 
authority regarding the approval of FMS transfers. 

[28] The Missile Annex Review Committee is an interagency working 
group led by State's Bureau of International Security and 
Nonproliferation. It is tasked with addressing technical issues 
related to the MTCR Annex. For instance, it reviews proposals for 
amending the Annex. At the request of groups such as the MTEC, it can 
also make determinations as to whether particular items are controlled 
by MTCR. 

[29] According to State officials, Category VIII licenses are 
automatically assigned to DDTC's Aircraft Division; however, the 
DDTC's Space and Missile Technology Division is responsible for 
reviewing UAV-related licenses. Thus, the new procedure was designed 
to ensure UAV licenses were routed correctly. 

[30] For Commerce's licensing data, we reported only those licenses 
for commodities controlled under the three UAV-specific ECCNs: 9A012, 
9A120, and 9B010. Although we identified another 29 ECCNs that control 
commodities that could be used in UAVs, we did not report on licenses 
involving these commodities because they are not exclusively used in 
UAVs. For State's licensing data, State provided us all licenses that 
had gone before the MTEC over the period from fiscal years 2005 
through 2010. While the majority of UAV licenses go before the MTEC, 
certain UAV-related licenses may not be captured within the data State 
provided. See appendix I for additional information about the 
limitations of the data and the steps we took to refine the data. 

[31] In several of these cases, countries also purchased various 
components, parts, and accessories in addition to the systems 
themselves. 

[32] If a license applicant fails to provide the necessary information 
for State to make a determination whether to approve or deny the 
license, State may return the application without action to the 
applicant. 

[33] The Missile Trade Analysis Group is led by State's Bureau of 
International Security and Nonproliferation and includes 
representatives from State's Bureau of Intelligence and Research and 
DDTC, as well as Commerce, DOD, the Department of Energy, DHS, the 
FBI, the National Security Agency, and the CIA. 

[34] State's DDTC administers the Blue Lantern program to monitor arms 
exported through DCS. 

[35] DOD's DSCA administers the Golden Sentry program to monitor arms 
transferred through FMS. 

[36] Details of this transfer are designated for official use only and 
are not reported here. 

[37] [hyperlink, http://www.gao.gov/products/GAO-12-89]. 

[38] To obtain this data on UAV-related end-use checks, State and 
Commerce queried their respective databases and provided us data on 
those end-use checks they deemed to be UAV-related over the period 
from fiscal years 2005 through 2010. 

[39] According to State, if the critical questions have been answered 
satisfactorily, the transaction appears legitimate, and the bona fides 
of the end-users or other parties are confirmed, the case will likely 
be closed "favorable." If the transaction's legitimacy cannot be 
confirmed, the consignees or end-user appear untrustworthy, or if 
there are other troubling discrepancies, the case will likely be 
closed "unfavorable." 

[40] According to Commerce, a check may result in a limited or 
inconclusive finding under a number of conditions. For instance, a 
check may be deemed limited if the official conducting the check 
cannot view the commodity in question on-site, but only the documents 
related to the sale, because the item was legally resold to another 
party. An inconclusive check may occur when the official conducting 
the check is unable to conclusively determine the end-use of an item 
because there is potentially conflicting or missing information, but 
there is not enough evidence to deem the check unfavorable. 

[41] See [hyperlink, http://www.gao.gov/products/GAO-12-89]. 

[42] See [hyperlink, http://www.gao.gov/products/GAO-11-135R]. 

[43] The Export Enforcement Coordination Center includes the 
Departments of Commerce, Defense, Energy, Homeland Security, Justice, 
State, and Treasury, as well as the Office of the Director of National 
Intelligence. 

[44] See GAO, Export Controls: Proposed Reforms Create Opportunities 
to Address Enforcement Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-12-246] (Washington, D.C.: Mar. 27, 
2012). 

[45] See GAO, Export Controls: Challenges Exist in Enforcement of an 
Inherently Complex System, [hyperlink, 
http://www.gao.gov/products/GAO-07-265] (Washington, D.C.: Dec. 20, 
2006). 

[46] 76 Fed. Reg. 41,958, Proposed Revisions to the Export 
Administration Regulations (EAR): Control of Items the President 
Determines No Longer Warrant Control Under the United States Munitions 
List (July 15, 2011). 

[47] 77 Fed. Reg. 36,409, "Specially Designed" Definition (June 19, 
2012). 

[48] This information was provided after the publication of our 
classified report in February 2012. 

[49] The full texts of the second and third recommendations were 
deemed to contain sensitive information and are not included here. 
They are included in our February 2012 report. 

[50] A demarche is a formal diplomatic protest or representation. 

[End of section] 

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