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 [ Music ] [Jason Bair:] DOD really needs to improve its oversight and obtain timely reimbursements. [ Music ] [Matt Oldham:] Welcome to GAO's Watchdog Report, your source for news and information from the US Government Accountability Office. I'm Matt Oldham. [ Music ] [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. [ Music ] [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. [ Music ] [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 hear more podcasts, subscribe to us in Apple Podcasts. Make sure you leave a rating and review to let others know about the work we're doing. For more from the Congressional Watchdog, the US Government Accountability Office, visit us at gao.gov [ Music ]