Iran Arms Sales:

DOD's Transfer of Arms to the Central Intelligence Agency

NSIAD-87-114: Published: Mar 13, 1987. Publicly Released: Apr 22, 1987.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) transfer of missiles and spare parts to the Central Intelligence Agency (CIA) for shipment to Iran.

GAO found that: (1) DOD properly treated the transfer as an interagency transfer under the Economy Act, rather than as a foreign military sale under the Arms Export Control Act; (2) the Arms Export Control Act's pricing and congressional reporting requirements were not applicable to the transfer; (3) DOD bypassed its normal review and approval channels because of the covert nature of the transfer; (4) DOD undercharged CIA $2.1 million for the missiles; and (5) while DOD covert arms transfers are ordinarily subject to congressional notification requirements, in this case a presidential intelligence finding that initiated the transfer ensured that the responsibility for meeting such requirements lay with the President.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: On March 29, 1989, GAO sent letters to DOD and CIA asking about the status of their efforts to correct the undercharge. Following a meeting between intelligence committee staffers and representatives of DOD, CIA and GAO, the chairmen of the two intelligence committees sent letters to three agencies involved in the reimbursement issue.

    Recommendation: DOD should adjust its billing to CIA to reflect the conclusions in this report.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD has concluded that reconversion of TOWs would not be practical, therefore, this recommendation is no longer applicable.

    Recommendation: In addition to adjusting the prices for items already transferred, DOD should obtain reimbursement from CIA for any costs to reconvert missiles which had been modified for shipment, but not sent.

    Agency Affected: Department of Defense


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