Taxpayer Funds Spent on Equipment That Was Never Shipped to Yemen
GAO-15-685R: Published: Jul 15, 2015. Publicly Released: Jul 15, 2015.
What GAO Found
Since 2007, 200 parcels of equipment Yemen purchased using U.S. government-funded Foreign Military Financing (FMF) grants remain unshipped in a private warehouse in Virginia rather than meeting the intended goal of building and maintaining Yemeni security forces’ capability to counter threats such as al Qaeda in the Arabian Peninsula (AQAP). As permitted under the FMF program, Yemen chose to use contracted commercial freight forwarders to arrange for shipment of these articles to Yemen. The government of Yemen took ownership of the equipment upon delivery to its contracted freight forwarder. In April 2008, the contract between the government of Yemen and this freight forwarder ended. In August 2008, the equipment was transferred to the Virginia warehouse of another freight forwarder contracted by the government of Yemen. From 2008 to 2010, Yemen did not pay or made late payments to this freight forwarder. In 2010 and 2011 equipment continued to accumulate at the freight forwarder’s warehouse as political unrest prevented shipments to Yemen. The Department of Defense (DOD) convinced the freight forwarder to waive storage fees accumulated during this period. Once holds on shipments were lifted in 2012, disagreements between Yemen and its freight forwarder resumed. In fiscal year 2012, Yemen began paying the U.S. military to ship newly funded FMF equipment and no longer used its own commercial freight forwarder.
The 200 parcels of equipment intended for Yemen that remain in Virginia include some items that have expired while in storage and some that require special disposal. For example, the parcels include hazardous cargo that requires special disposal and low-grade explosives for airplane ejection seats that require special storage considerations. In addition, medical supplies have expired and batteries have corroded. Furthermore, night vision goggles at the warehouse require new export authorization forms or third-party transfer permission to be shipped. DOD determined the original value for some of the items, such as nearly $600,000 for night vision goggles, but has not determined the value of the rest of the equipment. DOD officials reported that this was because of a lack of time, resources and ready access to the equipment owned by the government of Yemen.
According to DOD officials, DOD faces limitations in accessing the equipment and mediating a resolution to the situation because it involves a private contract between the government of Yemen and its freight forwarder. However, although Yemen has legal custody of the equipment, DOD has taken some steps to help address the shipment challenges. According to DOD officials, they pressured Yemen to pay the freight forwarders the arrears. However, the most recent freight forwarder acknowledged it has not received storage and handling payments, and noted that it has also not received the necessary export licenses and shipping instructions. After completing an inventory in February 2015, the Office of Military Cooperation worked with the freight forwarder and Yemen, resulting in the freight forwarder agreeing to release the equipment for $8,000 if Yemen paid by May 1, 2015. DOD offered to reimburse the Yemeni government for this payment using funds previously earmarked for Yemen, if the embassy of Yemen paid the fee. The embassy of Yemen did not pay by the deadline. The embassy of Yemen indicated they did not have the funds available to pay due to the ongoing crisis in their country. The freight forwarder reported that it had moved the equipment to another warehouse in July 2015. According to DOD officials, Yemen is likely to use U.S. FMF funds if, as expected, DOD is involved in the final disposition. According to officials from the Department of State (State), any use of FMF funds to address the situation would require State approval and possibly consultation with Congress.
Why GAO Did This Study
Yemen has been an important partner in the fight against al Qaeda in the Arabian Peninsula (AQAP), a terrorist group based in Yemen that continues to plot against U.S. citizens and interests. To assist in countering the AQAP threat, the Department of State (State) committed $48 million of the $108 million allocated in Foreign Military Financing (FMF) funding from fiscal year 2007 through fiscal year 2014 to Yemen.
Senate Report 133-176 included a provision for GAO to review U.S. security assistance to Yemen. During the course of a previous review on the timeliness and maintenance of security assistance to Yemen, GAO became aware of shipments of U.S.-funded security assistance equipment that were transferred to Yemen but remain in a U.S. warehouse. This correspondence transmits a briefing, which describes (1) the status of U.S. FMF-funded equipment for Yemen that remains in a private warehouse in Virginia and (2) the steps the Department of Defense (DOD) has taken to resolve the final disposition of the equipment.
What GAO Recommends
We are not making any recommendations in this report.
Although State directs the FMF program, the Arms Export Control Act gives the Department of Defense (DOD) responsibility for procurement and delivery of FMF assistance.
Our previous review was issued as Yemen: DOD Should Improve Accuracy of Its Data on Congressional Clearance of Projects as It Reevaluates Counterterrorism Assistance, GAO-15-493 (Washington, D.C.: Apr. 28, 2015).
For more information, contact Charles Michael Johnson, Jr. at (202) 512-7331 or firstname.lastname@example.org.