Security Assistance:

Need for Improved Reporting on Excess Defense Article Transfers

NSIAD-94-27: Published: Jan 18, 1994. Publicly Released: Jan 18, 1994.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) implementation of the excess defense articles (EDA) program, focusing on: (1) the scope and size of the EDA program; (2) the types of EDA transferred; (3) the EDA congressional reporting process; (4) the accuracy of EDA pricing and valuing procedures; and (5) EDA program management.

GAO found that: (1) between 1990 and 1992, DOD notified Congress of proposed EDA transfers totalling $3.5 billion in acquisition value with an estimated current value of $1 billion; (2) most EDA transfer recipients are countries in and around the North Atlantic Treaty Organization's (NATO) southern flank; (3) between 1990 and 1992, the EDA program grew by more than 50 percent; (4) although the current value of EDA transfers increased between 1990 and 1991, the value of EDA decreased in 1992 to $230 million; (5) Congress cannot accurately determine the total acquisition and current values of the EDA program because the services do not adhere to management guidelines, accurately report the aggregate value of EDA programs, and do not track EDA that are leased or transferred; (6) the military services lack incentives to effectively manage the EDA program because they do not receive a direct benefit when EDA are sold or granted; (7) DOD strengthening of EDA valuing practices would provide Congress with more complete information on the total amount of EDA assistance provided to foreign countries; (8) the services have had difficulty identifying EDA because of uncertainties about additional budget reductions and force structure composition; (9) proper identification of EDA would enable the Defense Security Assistance Agency (DSAA) to fulfill EDA requirements more effectively; and (10) although the Department of State has a policy to secure agreements with all EDA recipients whenever possible, several countries are exempted from these agreements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The military services have taken steps to ensure that their action officers are aware of the correct procedures for pricing excess defense articles and to make sure that exceptions to the pricing guidance were obtained from the Office of the DOD Comptroller when required. DSAA officials also held meetings with service representatives to reinforce the guidance. Specifically, the Air Force has taken steps to ensure compliance. It has established an internal management control and a routine training seminar.

    Recommendation: The Secretary of Defense should direct the military services to adhere to DOD pricing and valuing directives so that the data management system DSAA recently implemented contains accurate and reliable information on the EDA program.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Defense Security Assistance Agency (DSAA) met with service representatives to ensure that databases contain accurate and valid data. DSAA and Defense Reutilization and Marketing Service officials designed special software to meet the reporting requirements. The new procedures are documented.

    Recommendation: The Secretary of Defense should direct the military services to provide DSAA timely and consistent information on EDA transfers.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: Although information on leases and drawdowns implemented during FY 1993 was included in the FY 1995 Congressional Presentation for Promoting Peace, the information does not designate whether or not excess defense articles were provided under lease or drawdown authorities.

    Recommendation: The Secretary of Defense should direct the Director, DSAA, to maintain data on the types and values of EDA made available under both leasing and drawdown authorities and that this information be included in the CPD.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: The information on EDA grant transfers was included in the FY 1995 Congressional Presentation for Promoting Peace, which was delivered to Congress in March 1994.

    Recommendation: The Secretary of Defense should direct the Director, DSAA, to begin including the acquisition and current values of EDA grant transfers in the prior fiscal year in the Congressional Presentation Document (CPD) since grants constitute over 80 percent of all EDA transfers. This will provide COngress with relevant and needed information on this form of supplementary military assistance.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: While guidance on material management and property categorization distributed by the Under Secretary of Defense for Acquisition and Technology was reemphasized and discussed with military service representatives, DOD emphasizes that the final decision on declaring an item excess to service requirements is a force structure decision and therefore the final analysis is to be made by the military department concerned. As such, there is no guarantee that the military services will always properly identify items as excess defense articles.

    Recommendation: The Secretary of Defense should direct the military services to ensure that they comply with relevant departmental directives and guidelines for properly identifying EDA.

    Agency Affected: Department of Defense

 

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