Summary
In fiscal year 2008, the Foreign Military Sales (FMS) program sold over $36 billion dollars in defense articles and services to foreign governments. The Departments of State, Defense (DOD), and Homeland Security (DHS) all have a role in the FMS program. In 2003, GAO identified significant weaknesses in FMS control mechanisms for safeguarding defense articles transferred to foreign governments. In 2007, GAO designated the protection of technologies critical to U.S. national security a high-risk area. GAO was asked to (1) evaluate program changes State, DOD, and DHS have made since 2003 to ensure that unclassified defense articles transferred to foreign governments are authorized for shipment and monitored as required, and (2) determine what information DOD has to administer and oversee the FMS program. GAO conducted 16 case studies; analyzed U.S. port data and FMS agreements; reviewed program performance metrics; and interviewed cognizant officials.
Agencies involved in the FMS program have made some changes in the program but have not corrected the weaknesses GAO previously identified in the FMS program's shipment verification process, and the expanded monitoring program lacks written guidance to select countries to visit to ensure compliance with requirements. State--which is responsible for the program and approving FMS sales--has not finalized proposed regulatory revisions to establish DOD's role in the FMS shipment verification process, although the FMS agencies reached agreement on the proposed revisions about a year ago. DHS port officials, responsible for export enforcement, also continue to lack information needed to verify that FMS shipments are properly authorized. GAO found six FMS agreements that had unauthorized shipments, including missile components. In one case, 21 shipments were made after the agreement was closed. At the same time, DOD, which administers the FMS program and FMS agreements, lacks mechanisms to fully ensure that foreign governments receive their correct FMS shipments--in part because DOD does not track most FMS shipments once they leave its supply centers and continues to rely on FMS customers to notify the department when a shipment has not been received. With regard to monitoring defense articles once in country, DOD does not have written guidance to prioritize selecting countries for compliance visits using a risk management approach and has not yet visited several countries with a high number of uninventoried defense articles. DOD lacks information needed to effectively administer and oversee the FMS program. For example, within the last 10 years DOD has twice adjusted the surcharge rate--the rate charged to FMS customers to cover program administration costs--but it does not have information on program costs to determine the balance necessary to support the program in the future. Also, while DOD has a goal to release 80 percent of FMS agreements to a foreign government within 120 days of receiving its request to purchase defense articles, DOD officials stated they do not have the information needed to determine if the goal is reasonable. In addition, DOD lacks information to oversee the program, in large part due to the fact that FMS data reside in 13 different accounting, financial, and case implementation systems. DOD is in the process of defining its requirements for FMS program information before it moves forward with improving its data systems. In the meantime, DOD is relying on systems that do not provide it with sufficient, comparable data to oversee the program's performance.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
Anne Marie F. Lasowski
Government Accountability Office: Acquisition and Sourcing Management
(202) 512-4146
Recommendations for Executive Action
Recommendation: To establish procedures for DOD verification of FMS shipments, the Secretary of Defense should direct the Under Secretary of Defense for Policy to provide additional guidance to the military services on how to verify FMS shipment documentation.
Agency Affected: Department of Defense
Status: Open
Comments: In providing comments on this report, DOD concurred with this recommendation but has not yet taken any actions necessary to implement it.
Recommendation: To ensure Customs and Border Protection (CBP) port officials have the information needed to verify FMS shipments are authorized, the Secretary of State should direct the Assistant Secretary for Political-Military Affairs, the Secretary of Defense should direct the Under Secretary of Defense for Policy, and the Secretary of Homeland Security should direct the Commissioner of Homeland Security's U.S. CBP to coordinate on establishing a process for: (1) ensuring the value of individual shipments does not exceed the total value of the FMS agreement; (2) designating a primary port for each new and existing FMS agreement; (3) developing a centralized listing of these primary ports for use by CBP port officials; and (4) providing CBP officials with information on FMS agreements that were closed prior to fiscal year 2008.
Agency Affected: Department of Homeland Security
Status: Open
Comments: In providing comments on this report, DHS concurred with this recommendation and identified several specific actions that it plans to take, including reconvening an interagency working group to address FMS-related issues, obtaining a complete list of closed FMS agreements from DOD, and establishing a list of all primary ports for existing and new FMS agreements. DHS has not yet taken the actions necessary to implement this recommendation.
Agency Affected: Department of Defense
Status: Open
Comments: In providing comments on this report, DOD agreed to work with DHS to take action on this recommendation but has not yet taken any actions necessary to implement it.
Agency Affected: Department of State
Status: Open
Comments: In providing comments on this report, State concurred with this recommendation but has not yet taken any actions necessary to implement it.
Recommendation: To ensure that correct FMS shipments reach the right foreign customers, the Secretary of Defense should direct the Under Secretary of Defense for Policy to examine its existing mechanisms and determine if they can be used to improve tracking of FMS shipments.
Agency Affected: Department of Defense
Status: Open
Comments: In providing comments on this report, DOD concurred with this recommendation but has not yet taken any actions necessary to implement it
Recommendation: To ensure that FMS defense articles are monitored as required, the Secretary of Defense should direct the Under Secretary of Defense for Policy to create written guidance for selecting in-country visits that consider a risk-based approach.
Agency Affected: Department of Defense
Status: Open
Comments: In providing comments on this report, DOD partially concurred with this recommendation and agreed to include guidance that includes risk, among other factors, as a basis for selecting in-country visits. However, DOD has not yet taken any actions necessary to implement this recommendation.
Recommendation: To improve the administration and oversight of the FMS program, the Secretary of Defense should direct the Under Secretary of Defense for Policy to better determine the administrative costs of implementing the FMS program and develop metrics that allow Defense Security Cooperation Agency (DSCA) to comprehensively assess the performance of the FMS program.
Agency Affected: Department of Defense
Status: Open
Comments: In providing comments on this report, DOD partially concurred with this recommendation and agreed that rigorous data analysis and well-defined, targeted metrics are vital for FMS program administration, and that it will review metrics related to the program at its quarterly FMS forums. However, it has not yet taken any actions necessary to implement this recommendation.
