From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Defense Logistics Agreements with Foreign Partners

Description: The Department of Defense has agreements with more than 100
partner nations to provide logistics support, supplies, and services for
cash or in-kind reimbursement. Jason Bair joins the Watchdog Report to
talk about these agreements, and the more than $1 billion in overdue
reimbursements.

Related GAO Work: GAO-20-309, Defense Logistics Agreements: DOD Should
Improve Oversight and Seek Payment from Foreign Partners for Thousands
of Orders It Identifies as Overdue 

Released: March 2020

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[Jason Bair:] DOD really needs to improve its oversight and obtain
timely reimbursements.

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[Matt Oldham:] Welcome to GAO's Watchdog Report, your source for news
and information from the US Government Accountability Office. I'm Matt
Oldham.

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[Matt Oldham:] The Department of Defense provides billions of dollars of
logistic support, supplies, and services to more than 100 partner
countries through Acquisition and Cross-Servicing Agreements. And DOD
receives cash or In-Kind reimbursement in return. But DOD's own records
indicate they are owed more than $1 billion dollars in overdue
reimbursements. Jason Bair, in International Affairs and Trade Director
is with me to talk about oversight of this program. Thanks for joining
me Jason. 

[Jason Bair:] Thanks, Matt.

[Matt Oldham:] So, does this $1 billion dollars represent a large
portion of the support provided to foreign partners?

[Jason Bair:] Yeah, I'd say it's a substantial portion. As you
referenced, we looked at five years of the activity here, and it was
about $5 billion dollars. So, the billion dollars is about 20% of the
overall level of activity of sales that we saw here. 

[Matt Oldham:] And could you give some examples of the support and
services that DOD provides? 

[Jason Bair:] Absolutely. So, all of this falls under the kind of broad
umbrella of logistic support and supplies and services. So, for example,
we looked at a variety of transactions including things such as meals
that DOD provided, let's say if they were doing joint exercises or
training with other foreign partners. Sometimes it's things like housing
when we're doing these joint exercises. But it also includes things like
ammunition, fuel, aerial refueling for variety of reasons. I think one
of the examples that gets a decent amount of attention is that, we did
review the assistance including refueling ammunitions that DOD provided
to the Saudi-led Coalition in Yemen, they're in the process now of being
reimbursed for those using the access.

[Matt Oldham:] So, how does the Department of Defense keep track of what
they're owed and who owes them? 

[Jason Bair:] So, the good news is that they have a database that is
supposed to track off these transactions, and it's meant to make sure
that they have accurate information, including what's the status of the
repayment? The bad news is that during the course of our review when we
dug into that database, we found that they hadn't maintained quality
data on what the status of those transactions really was. So, for
example, when we looked into the details we found a lot of errors in how
the transactions were recorded. And so, in some cases, and I think it
was about 12% of the orders that we reviewed, DOD couldn't verify
whether the transactions had actually been reimbursed to the United
States or not.

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[Matt Oldham:] So, it sounds like these Acquisition and Cross -Servicing
Agreements allow DOD to support international military exercises and
coalition operations, but they're having issues keeping track of
information. And this could limit their ability to collect on the more
than $1 billion dollars in overdue reimbursements.

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[Matt Oldham:] So, how can DOD work toward collecting the money they're
owed and limit this from happening in the future?

[Jason Bair:] So, great question and that's kind of the root of where we
tried to come at with our recommendations. When we looked at all these
data and talked to a lot of the DOD officials, we identified a few
different reasons why there might be orders that had remained unpaid.
One category of them was that DOD hadn't always sent invoices. So, of
course we're not going to get repayment from foreign partners if we
hadn't asked them to pay us. Another category that we saw is that, DOD
maybe had sent the invoice, but they hadn't actively followed up in
order to collect that debt and hadn't implemented any kind of
accountability to make sure that they were going to get more timely
reimbursement. So, as a result kind of based on our findings, we have
made a number of recommendations that all identify steps so they can
improve the quality data, so that they have the information available to
take those next steps to collect the information that is due to the US
government. And you know, it's, again, getting back to the basics here.
In order to collect the money that's owed to us, we've got to have
accurate information about what the status is. And once you know the
status of it, you have to actually send the invoices to the foreign
partners in order to get that repayment. 

[Matt Oldham:] So, last question is, what's the bottom-line of this
report? 

[Jason Bair:] I think the bottom-line from our perspective is DOD really
needs to improve its oversight and obtain timely reimbursements. And for
me that falls into two big categories, two sets of changes that I think
we'd like to see. Kind of looking back, we want them to go back and
review their records and update them to make sure they've got accurate
information about what the reimbursement status is for things . And
where there are unpaid orders, we'd like to get the reimbursement for
that. But I think that the second piece is moving forward. They need to
solve some of these systemic issues in terms of the data and quality of
information that they have to make sure that we don't fall back into
this same kind of situation again. 

[Matt Oldham:] Jason Bair was talking about overdue reimbursements to
the Department of Defense for support, services and supplies given to
partner nations. Thank you for your time, Jason. 

[Jason Bair:] Thank you.

[Matt Oldham:] And thank you for listening to the Watchdog Report. To
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For more from the Congressional Watchdog, the US Government
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