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entitled 'Export Control: Army Guidance on Cooperative Research and 
Development Agreement Compliance with Export Control Laws and 
Regulations' which was released on April 8, 2002. 

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GAO-02-529R: 

United States General Accounting Office: 
Washington, DC 20548: 

April 8, 2002: 

The Honorable Claude M. Bolton Jr. 
Assistant Secretary of the Army for Acquisition, Logistics and 
Technology: 

Subject: Export Control: Army Guidance on Cooperative Research and 
Development Agreement Compliance with Export Control Laws and 
Regulations: 

Dear Mr. Secretary: 

We recently completed a review of cooperative research and development 
agreements (CRADA) at two Army laboratories: the Army Research 
Laboratory located at Adelphi, Maryland, and the Army Medical Research 
Institute of Infectious Diseases located at Fort Detrick, Maryland. 
[Footnote 1] This work was part of a larger review we undertook at the 
request of the chairman of the Subcommittee on National Security, 
Veterans Affairs, and International Relations of the House Committee on
Government Reform. We examined a sample of CRADAs at various federal 
laboratories to determine, among other things, whether federal 
agencies and laboratories were complying with export control laws when 
entering into CRADAs. 

Based on our work at the two Army laboratories, there is a need for 
the Army to clarify its guidance on technology transfers to ensure 
compliance with U. S. export control laws during the management review 
of potential CRADAs. Also, each Army laboratory needs to ensure that 
the results of such reviews are documented in the CRADA files. 

Army Regulation 70-57, "Military-Civilian Technology Transfer," states 
that at each laboratory, managers at all levels need to ensure that 
technology transfer activities do not conflict with export control 
regulations and policies governing militarily critical technology. 
However, the regulation is not specific on steps needed to ensure 
compliance with these regulations and policies. Further, it does not 
reference technology control requirements under the Department of 
State's international traffic in arms regulations or the Department of 
Commerce's export administration regulations. The former deals with 
the transfer of defense items and technology; the latter with items or 
technology that have both military and civilian uses. 

The regulation does require that laboratories consult with the Office 
of the United States Trade Representative when entering into a CRADA 
with a foreign-owned entity to determine, among other things, the 
extent to which the foreign country has adopted adequate measures to 
prevent inappropriate retransfer of technology. However, an official 
with the Office of the United States Trade Representative has informed 
federal laboratories that the Trade Representative does not have the 
expertise to make such a determination and has suggested that the 
laboratories consult with the State and Commerce Departments, which 
are the government agencies involved in export control. 

At the two Army laboratories we visited, officials involved with 
technology transfer described certain situations where they might 
review CRADAs for compliance with export control regulations and 
policies. However, based on their comments from, we could not 
determine to what extent these officials routinely reviewed CRADAs for 
compliance with U.S. export control regulations and policy. Further, 
we reviewed supporting documentation for 25 CRADAs at the two Army 
laboratories and found that none of the files reviewed contained 
documentary evidence that these CRADAs had been reviewed for 
compliance with export control regulations and policies. 

A committee consisting of legal and management officials from various 
major commands within the Army is in the process of revising Army 
Regulation 70-57. Because of your responsibility for Army policy 
related to technology transfer, we recommend that you direct this 
committee to include in the revised regulation, procedures that 
laboratory officials should follow to ensure that technology transfer 
activities do not conflict with U. S. export control regulations and 
policies. At a minimum, those procedures should require that 
appropriate laboratory officials determine if the Department of 
State's international traffic in arms regulations, the Department of 
Commerce's export administration regulations, or other appropriate 
Department of Defense guidance require control of the technology to be 
transferred. Further, the regulation should require that laboratory 
officials document the results of such determinations in the official 
CRADA files to assure that appropriate procedures are followed. 

To determine whether federal laboratories were complying with U.S. 
export control laws, we researched relevant laws and regulations, 
interviewed agency and laboratory officials responsible for oversight 
of CRADAs, and reviewed CRADA files for a sample of CRADAs that were 
active in fiscal years 1998 through 2001. 

We conducted our work from August 2001 through February 2002 in 
accordance with generally accepted government auditing standards. 

In commenting on a draft of this letter, DOD and Army officials 
concurred with our findings and recommendations. They pointed out that 
the current Army regulation contains a statement requiring 
consultation with the Office of the U.S. Trade Representative on 
CRADAs with foreign partners and language indicating that action 
should be taken to ensure compliance with export control regulations, 
policies governing military critical technology, and DOD's technology 
transfer control procedures. They also told us that they plan to 
include appropriate language to ensure compliance with export control 
laws, regulations, and policies, including the need for documentation, 
as part of the current revision of the regulation. 

We are providing a copy of this letter to the chairman of the 
Subcommittee on National Security, Veterans Affairs, and International 
Relations and will provide it to other interested parties on request. 
This letter will also be available on GAO's homepage at [hyperlink, 
http://www.gao.gov]. Should you or any of your staff have any 
questions concerning this letter or its recommendations, please 
contact me on (202) 512-4841. Major contributors to this letter were 
Thomas J. Denomme, Carlos M. Garcia, and Noel J. Lance. 

Sincerely yours, 

Signed by: 

Katherine V. Schinasi: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Footnote: 

[1] A cooperative research and development agreement is a written 
agreement between a federal laboratory and a non-federal partner to 
conduct specific research development efforts that are consistent with 
the laboratory's mission. Under such agreements, the non-federal 
partner agrees to provide funds, personnel, services, facilities, 
equipment, or other resources needed to conduct a specific research 
effort while the federal government agrees to provide similar 
resources but not funds directly to the partner. The Federal 
Technology Transfer Act of 1986 authorized government-owned government-
operated federal laboratories to enter into such agreements with 
private industry, and other governmental and educational entities. The 
National Competitiveness Technology Transfer Act of 1989 extended this 
authority to government-owned contractor-operated laboratories.