State Department Needs to Resolve Data Reliability Problems that Led to Inaccurate Reporting to Congress on Foreign Arms Sales
GAO-05-156R: Published: Jan 28, 2005. Publicly Released: Jan 28, 2005.
Under Section 655 of the Foreign Assistance Act, as amended, the Department of State reports annually to Congress on the aggregate dollar value and quantity of all defense articles and services that State licensed for direct commercial sale to each country. State's report is intended to be an accurate record to ensure that Congress and the public are informed regarding foreign arms sales by U.S. industry. In the course of a previous GAO review on the proliferation of man-portable air defense systems (MANPADS),we found that State reported to Congress that it had approved licenses for the commercial sale of Stinger missiles to foreign countries in five instances during fiscal years 2000 and 2002. However, U.S. government policy precludes the commercial sale of Stinger missiles, and State had not approved licenses for the commercial sale of Stinger missiles. State officials stated in May 2004 that the information the department had reported in its fiscal years 2000 and 2002 reports was incorrect. In response to our ongoing review, State submitted an amended 2002 report to Congress in September 2004 and posted corrected 2000 and 2002 reports to its Web site. Under the authority of the Comptroller General, we assessed the reasons for State's misreporting of Stinger missile sales authorizations in its fiscal years 2000 and 2002 Section 655 reports.
State officials attributed State's inaccurate reporting on the licensing of Stinger missiles for commercial sale to errors in the license data entry process. In addition, State's multioffice review of the draft Section 655 reports failed to discover the inaccurate reporting. Furthermore, we found data reliability problems that raise additional questions about the accuracy and reliability of data in State's Section 655 reports to Congress. Although State's report is intended to ensure that Congress and the public are informed about foreign arms sales by U.S. industry, deficiencies in State's processes for preparing its Section 655 report inhibit the ability of Congress to obtain accurate information needed to provide effective oversight of these weapons sales programs. To ensure that Congress obtains accurate information on foreign arms sales by U.S. industry, we recommend that the Secretary of State establish and implement procedures to resolve data reliability problems that affect direct commercial sales information in State's Section 655 report, including the review of data entered and database-design limitations.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: Prior to GAO's review, State had been unaware of any errors in its reporting to Congress but conceded that it had submitted inaccurate information to Congress. In response to GAO's recommendation, in FY2007, State's Directorate of Defense Trade Controls (DDTC) revised its procedures and format for reporting to Congress. The report to Congress now provides details of authorizations for direct commercial sales using standardized U.S. Munitions List (USML) Categories and Sub-categories, instead of using detailed commodity codes that were only used within DDTC; the inaccurate use of detailed commodity codes and the lack of proficiency of staff in deciding which of these specific codes to use was one of the reasons we cited for inaccurate data in State's reporting to Congress. Using the broader, standardized USML categories and sub-categories means that there is decreased possibility of entering inaccurate information. In addition, beginning in FY2007, DDTC began to standardize its review process for the information entered into the database, as well as the draft report. In January of 2008, DDTC initiated Standard Operating Procedures (SOPs) for preparing its annual report to Congress, including information detailing when, and by whom, data should be reviewed, and who should review the draft report before it is sent to Congress, to ensure accurate information is reported. The SOPs include milestones in the timeline for data reliability checks in the database, before the data is pulled out and inputted into the draft report to Congress. Finally, DDTC indicated that more of its licenses (almost 2/3) are submitted through D-Trade, a newer electronic licensing database, instead of an older system, DETRA. The system is more user-friendly and easier to perform data-reliability checks. State anticipates that a second iteration of D-Trade, due in 2009, will further improve accuracy and ease of use in reporting to Congress.
Recommendation: The Secretary of State should establish and implement procedures to resolve data reliability problems that affect direct commercial sales information in State's Section 655 report, including the review of data entered and database-design limitations.
Agency Affected: Department of State