Foreign Military Sales: Improved Army Controls Could Prevent Unauthorized Shipments of Classified Spare Parts and Items Containing Military Technology to Foreign Countries
GAO-04-327
Published: Apr 15, 2004. Publicly Released: May 17, 2004.
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Highlights
From 1993 through 2002, the Department of Defense (DOD) delivered over $150 billion in services and defense articles--including classified spare parts and unclassified items containing military technology--to countries through foreign military sales programs. GAO was asked to review whether the Army's key internal controls adequately restricted blanket orders for (1) classified spare parts and (2) unclassified items containing military technology. GAO was also asked to determine if periodic tests were conducted to validate the Army's system and its logic.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve internal controls over the Army's foreign military sales program and to prevent foreign countries from being able to obtain classified spare parts or unclassified items containing military technology that they are not eligible to receive under blanket orders, the Secretary of Defense should instruct the Secretary of the Army to modify existing policies and procedures, after consultation with the appropriate government officials, to cover items shipped in lieu of items ordered to also ensure the recovery of classified spare parts that have been shipped to foreign countries that may not be eligible to receive them under blanket orders. |
Closed – Not Implemented
DOD maintained that it does have procedures to recover erroneously shipped items as well as classified or controlled spare parts shipped to foreign countries that may not be eligible to receive them. However, the Defense Security Cooperation Agency has agreed to formally document these procedures in a written policy for the military departments to follow for recovering spare parts (classified and/or unclassified) erroneously shipped to foreign countries regardless of the reason for the shipment or the foreign country that received the items. Based on a review made since the report, the Defense Security Cooperation Agency believes there are sufficient validation edits in the military department security assistance legacy systems to ensure that only eligible security assistance customers can requisition and receive spare parts as authorized by their Foreign Military Sales (FMS) Letters of Offer and Acceptance. They said these edits do not allow a foreign country that does not have a current country-to-country agreement with DOD to requisition and or receive items. In the event that an incorrect part is shipped to an eligible FMS customer or the wrong FMS customer receives a part destined for another FMS customer, the Supply Discrepancy Report process currently in place provides a sufficient means of resolution. Consequently, the Defense Security Cooperation Agency believes a new policy memo is not required. The Agency is working closely with the military departments in the development and implementation of the Enhanced Freight Tracking System (EFTS). The EFTS will track FMS shipments from source of supply through final destination, which will greatly reduce the potential for erroneous shipments. However, GAO continues to believe that this recommendation is valid.
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| Department of Defense | To improve internal controls over the Army's foreign military sales program and to prevent foreign countries from being able to obtain classified spare parts or unclassified items containing military technology that they are not eligible to receive under blanket orders, the Secretary of Defense should instruct the Secretary of the Army to modify existing policies and procedures covering items, after consultation with the appropriate government officials, to cover items shipped in lieu of items ordered to also ensure the recovery of unclassified items containing military technology that have been shipped to foreign countries that may not be eligible to receive them under blanket orders. |
Closed – Not Implemented
DOD maintained that it does have procedures to recover erroneously shipped items as well as classified or controlled spare parts shipped to foreign countries that may not be eligible to receive them. However, the Defense Security Cooperation Agency has agreed to formally document these procedures in a written policy for the military departments to follow for recovering spare parts (classified and/or unclassified) erroneously shipped to foreign countries regardless of the reason for the shipment or the foreign country that received the items. Based on a review made since the report, the Defense Security Cooperation Agency believes there are sufficient validation edits in the military department security assistance legacy systems to ensure that only eligible security assistance customers can requisition and receive spare parts as authorized by their Foreign Military Sales (FMS) Letters of Offer and Acceptance. They said these edits do not allow a foreign country that does not have a current country-to-country agreement with DOD to requisition and or receive items. In the event that an incorrect part is shipped to an eligible FMS customer or the wrong FMS customer receives a part destined for another FMS customer, the Supply Discrepancy Report process currently in place provides a sufficient means of resolution. Consequently, the Defense Security Cooperation Agency believes a new policy memo is not required. The Agency is working closely with the military departments in the development and implementation of the Enhanced Freight Tracking System (EFTS). The EFTS will track FMS shipments from source of supply through final destination, which will greatly reduce the potential for erroneous shipments. However, GAO continues to believe that this recommendation is valid.
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| Department of Defense | To improve the Army system's internal controls aimed at preventing foreign countries from obtaining classified spare parts or unclassified items containing military technology under blanket orders, the Secretary of Defense should direct the Under Secretary of Defense for Policy to require the appropriate officials to modify the system so that it identifies blanket order requisitions for unclassified items containing military technology that should be reviewed before they are released. |
Closed – Implemented
According to the Army, in January 2004, the Centralized Integrated System for International Logistics (CISIL) (hereafter referred to as the system) was programmed to evaluate any supply status transaction where a substitute or replacement item is offered by an Item Manager. This edit identified instances where the Controlled Item Identification Code (CIIC) for the replacement/substitute item indicates a classified/sensitive item. The Army Central Case Manager will confirm the intent of the transaction with the Item Manager and take the appropriate action. In February 2004, according to the Army, CISIL performs a monthly edit check of CIICs on all open national stock number requisitions. This edit ensures that any catalog changes to CIICs are captured and systemically evaluated. This process is used to determine if action is required to cancel affected requisitions based on new classification of the item.
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| Department of Defense | To improve the Army system's internal controls aimed at preventing foreign countries from obtaining classified spare parts or unclassified items containing military technology under blanket orders, the Secretary of Defense should direct the Under Secretary of Defense for Policy to require the appropriate officials to periodically test the system and its logic for restricting requisitions to ensure that the system is accurately reviewing and approving blanket order requisitions. |
Closed – Implemented
In November 2004, the Defense Security Cooperation Agency sent a message to the three military departments requiring periodic, but no less than annual, testing of the requisition processing segments of the legacy systems, based on a recommendation found in GAO report 05-17 (Foreign Military Sales: DOD Needs to Take Additional Actions to Prevent Unauthorized Shipments of Spare Parts). This was followed by a conference call between the Agency and the military departments to discuss the procedures and the criteria to use during the testing. The first test will take place in May 2005 and Defense will monitor the results and provide recommendations for change as needed. In September 2005, the Army test of the Centralized Integrated System for International Logistics (CISIL) confirmed that edits worked as intended and that Central Case management personnel followed U.S. Army Security Assistance Command's established procedures ensuring effective review and control of requisitions for classified and sensitive materiel.
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Topics
Baseline security controlsForeign governmentsForeign military salesMilitary technologyForeign military sales agreementsForeign military sales policiesInternal controlsInventory control systemsRisk assessmentSpare partsSystems evaluationTechnologyTesting