Section 1206 of the National Defense Authorization Act of 2006 established a new program that gives the Department of Defense (DOD) the authority to spend up to $200 million of its own appropriations to train and equip foreign militaries to undertake counterterrorism or stability operations. Department of State (State) and DOD officials have cited the importance of this program in building capacity among partner nations to help fight the global war on terror. Moreover, they believe that compared with traditional security assistance programs funded by State, Section 1206 assistance will provide greater flexibility to respond quickly to emerging threats and opportunities. However, some believe that such a program should be funded in the foreign affairs budget, which is administered by State, to ensure that the Secretary of State has the authority to manage foreign policy decisions and bilateral relationships. To address Congress's questions about the new Section 1206 security assistance program, we examined (1) what criteria State and DOD use to select recipient countries and types of assistance, (2) how State and DOD coordinate the formulation and approval of Section 1206 programs, and (3) how State and DOD implement Section 1206 programs. As part of our audit work, we interviewed State and DOD headquarters officials involved in the Section 1206 program and officials involved in formulating fiscal year 2006 proposals at embassies and combatant commands. We also reviewed the program's authorizing legislation and State and DOD guidance.