Foreign Military Sales: DOD Needs to Take Additional Actions to  
Prevent Unauthorized Shipments of Spare Parts (09-NOV-04,	 
GAO-05-17).							 
                                                                 
Under Department of Defense (DOD) policy, the export of 	 
classified and controlled spare parts must be managed to prevent 
their release to foreign countries that may use them against U.S.
interests. GAO has issued a series of reports on the foreign	 
military sales program in which weaknesses in the military	 
services' internal controls were identified. This report	 
highlights (1) a systemic problem that GAO identified in the	 
internal controls of the military services'			 
requisition-processing systems and (2) a potential best practice 
that GAO identified in one service that provides an additional	 
safeguard over foreign military sales of classified and 	 
controlled parts.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-17						        
    ACCNO:   A13313						        
  TITLE:     Foreign Military Sales: DOD Needs to Take Additional     
Actions to Prevent Unauthorized Shipments of Spare Parts	 
     DATE:   11/09/2004 
  SUBJECT:   Foreign military sales				 
	     Foreign military sales agreements			 
	     Foreign military sales policies			 
	     Internal controls					 
	     Military forces					 
	     Spare parts					 
	     Best practices					 
	     Best practices reviews				 

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GAO-05-17

                 United States Government Accountability Office

                     GAO Report to the Secretary of Defense

November 2004

FOREIGN MILITARY SALES

DOD Needs to Take Additional Actions to Prevent Unauthorized Shipments of Spare
                                     Parts

                                       a

GAO-05-17

[IMG]

November 2004

FOREIGN MILITARY SALES

DOD Needs to Take Additional Actions to Prevent Unauthorized Shipments of Spare
Parts

  What GAO Found

At the time GAO conducted its reviews, the Army, the Navy, and the Air
Force were not testing their automated requisition-processing systems to
ensure that the systems were accurately reviewing and approving blanket
order requisitions for compliance with restrictions on the sale of
classified and controlled spare parts and operating in accordance with
foreign military sales policies. Blanket order requisitions are based on
agreements between the U.S. government and a foreign country for a
specific category of items for which foreign military sales customers will
have a recurring need. GAO's tests of the services' requisition-processing
systems showed that classified and controlled spare parts that the
services did not want to be released to foreign countries under blanket
orders were being released. GAO's internal control standards require
periodic testing of new and revised software to ensure that it is working
correctly, while the Office of Management and Budget's internal control
standards require periodic reviews to determine how mission requirements
might have changed and whether the information systems continue to fulfill
ongoing and anticipated mission requirements. DOD either concurred or
partially concurred with GAO's recommendations for testing the
requisition-processing systems. The department, however, does not have a
plan specifying the remedial actions to be taken to implement these
recommendations. Internal control standards requiring testing also will be
applicable to the Case Execution Management Information System, an
automated requisition-processing system that DOD and the military services
are developing to replace the existing individual military service
systems.

The Army's automated requisition-processing system incorporates a
potential best practice that helps to prevent the release of classified or
controlled parts that are not authorized under blanket orders to foreign
countries. The automated systems used by the Navy and the Air Force allow
country managers to override system decisions not to release to foreign
countries classified or controlled parts that are requisitioned under
blanket orders. GAO found instances where Navy and Air Force country
managers overrode the systems' decisions without documenting their reasons
for doing so. In contrast, the Army's system automatically cancels
requisitions that are made under blanket orders for classified or
controlled parts. Because the requisitions are automatically canceled,
country managers do not have an opportunity to override the system's
decisions. Compared with the Navy`s and the Air Force's systems, the
Army's system provides more stringent protection against releasing
classified or controlled parts that are not authorized under blanket
orders to foreign countries.

                 United States Government Accountability Office

Contents

     Letter                                                                 1 
                                    Results in Brief                        2 
                                       Background                           4 
               Testing of the Requisition-Processing Systems Is Needed to   
                  Improve Internal Controls for Foreign Military Sales      5 
                 Army's Practice Provides More Stringent Protection against 
                                                                        the 
                     Improper Release of Parts to Foreign Countries         7 
                                       Conclusions                          8 
                          Recommendations for Executive Action              9 
                           Agency Comments and Our Evaluation               9 
Appendix I            Comments from the Department of Defense            

Abbreviations EUR

DOD Department of Defense
GAO Government Accountability Office

This is a work of the U.S. government and is not subject to copyright
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separately.

                    Page i GAO-05-17 Foreign Military Sales

United States Government Accountability Office Washington, DC 20548

November 9, 2004

The Honorable Donald H. Rumsfeld The Secretary of Defense

Dear Mr. Secretary:

In response to a request from Senator Tom Harkin, we issued a series of
reports1 in which we analyzed Army, Navy, and Air Force internal controls2
over foreign military sales of classified and controlled cryptographic
parts3 requisitioned under blanket order cases.4 Under Department of
Defense (DOD) and service policy, the export of classified and controlled
parts must be managed to prevent their release to foreign countries that
may use them against U.S. interests. We assessed and tested whether key
internal controls, including the automated systems used by the services to
process requisitions received under blanket orders, adequately restricted
blanket order sales of classified and controlled spare parts to foreign
countries, and we determined whether periodic tests were conducted to
ensure that the services' systems were working as intended. During these
reviews, we

1 GAO, Foreign Military Sales: Improved Navy Controls Could Prevent
Unauthorized Shipments of Classified and Controlled Spare Parts to Foreign
Countries, GAO-04-507 (Washington, D.C.: June 25, 2004); 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 (Washington, D.C.: Apr. 15, 2004); Foreign Military
Sales: Air Force Does Not Use Controls to Prevent Spare Parts Containing
Sensitive Military Technology from Being Released to Foreign Countries,
GAO-03-939R (Washington, D.C.: Sept. 10, 2003); and Foreign Military
Sales: Improved Air Force Controls Could Prevent Unauthorized Shipments of
Classified and Controlled Spare Parts to Foreign Countries, GAO-03-664
(Washington, D.C.: July 29, 2003).

2 Internal control activities include the policies, procedures, and
processes that are essential for the proper stewardship of and
accountability for government resources, and for achieving effective and
efficient program results.

3 Classified parts are restricted for national security reasons;
controlled parts are not classified but contain military
technology/applications or are controlled cryptographic parts, hereafter
referred to as "controlled parts."

4 Blanket order cases are based on agreements between the U.S. government
and a foreign country for a specific category of items for which foreign
military sales customers will have a recurring need. The agreements have a
dollar ceiling and no definitive listing of items or quantities. Once a
blanket order case is established, a foreign country may submit
requisitions for spare parts. We refer to requisitions for parts under
blanket order cases as "blanket orders."

Page 1 GAO-05-17 Foreign Military Sales

identified weaknesses in the military services' internal controls, which
resulted in the release of parts that were not authorized for release
under a blanket order to foreign countries, and made a number of
recommendations to improve the services' internal controls. The purpose of
this report is to highlight (1) a systemic problem that we identified in
the internal controls of the military services' requisition-processing
systems and (2) a potential best practice that we identified in one
service that provides an additional safeguard over foreign military sales
of classified and controlled parts.

For this report, we analyzed the findings and recommendations of our prior
reviews. We also reviewed DOD's written comments on our prior reports. In
general, we concentrated our prior work on classified and controlled spare
parts that foreign countries requisitioned under blanket orders. As part
of our previous work, we verified whether the systems approved and
released requisitioned parts in accordance with DOD's and the services'
foreign military sales policies. Our prior reports provide a detailed
explanation of the scope and methodology we used to conduct each review.
For this report, we did not conduct new audit work. We conducted this
review in accordance with generally accepted government auditing standards
from July through September 2004.

At the time we conducted our reviews, the Army, the Navy, and the Air
Force were not testing their automated requisition-processing systems to
ensure that the systems were accurately reviewing and approving blanket
order requisitions for compliance with restrictions on the sale of
classified and controlled spare parts and operating in accordance with
foreign military sales policies. Our tests of the services' systems showed
that classified and controlled spare parts that the services did not want
to be released to foreign countries under blanket orders were being
released. GAO's internal control standards require periodic testing of new
and revised software to ensure that it is working correctly, while the
Office of Management and Budget's internal control standards require
periodic reviews to determine how mission requirements might have changed
and whether the information systems continue to fulfill ongoing and
anticipated mission requirements. DOD either concurred or partially
concurred with our prior recommendations for testing the
requisitionprocessing systems. The department, however, does not have a
plan specifying the remedial actions to be taken to implement these
recommendations. If actions are not taken to implement testing, the
potential benefits of these controls in preventing the inadvertent release
of classified or controlled spare parts may not be realized. In its
comments

  Results in Brief

Page 2 GAO-05-17 Foreign Military Sales

on our prior recommendations, DOD concurred with the need to test the
Army's system, stating that testing of the system and its logic would
occur, given the funding and guidance required to do so. DOD also
concurred with the need to test the Navy's system. DOD partially concurred
with the need to test the Air Force's system and stated that a program was
being developed to test new modifications to the Air Force's system and
that testing of old modifications would be an ongoing effort. However,
testing only the modifications to the Air Force's system, as DOD
commented, will not necessarily ensure that the system's logic is working
correctly. Subsequently, the Air Force reported that it had modified its
system and would be conducting annual tests of the system's logic.
Furthermore, internal control standards requiring testing will be
applicable to the Case Execution Management Information System, which DOD
and the military services are developing to replace the individual
military services' systems.

The Army's automated requisition-processing system incorporates a
potential best practice that helps to prevent the release of classified or
controlled parts that are not authorized under blanket orders to foreign
countries. The automated systems used by the Navy and the Air Force allow
country managers5 to override system decisions not to release classified
or controlled parts that are requisitioned under blanket orders to foreign
countries. We found instances where Navy and Air Force country managers
overrode the systems' decisions without documenting their reasons for
doing so. In contrast, the Army's system automatically cancels
requisitions that are made under blanket orders for classified or
controlled parts. Because the requisitions are automatically canceled,
country managers do not have an opportunity to override the system's
decisions. Compared with the Navy's and the Air Force's systems, the
Army's system provides more stringent protection against releasing
classified or controlled parts to countries that are not authorized to
receive them under blanket orders.

This report contains recommendations aimed at (1) ensuring that DOD and
the military services follow up on our prior recommendations by developing
specific plans to institute the required testing of their automated
systems, (2) incorporating required testing in the development of the Case
Execution Management Information System, and (3) determining if it would
be beneficial to modify the Navy's and the

5 Country managers are responsible for managing the sale of items to
foreign countries and perform supply and financial technical work.

                    Page 3 GAO-05-17 Foreign Military Sales

Air Force's requisition-processing systems so that the systems reject
requisitions for classified or controlled parts that foreign countries
make under blanket orders and preclude managers from manually overriding
system decisions, and to modify their systems as appropriate.

In its comments on a draft of this report, DOD generally agreed with the
report's recommendations.

                                   Background

The sale or transfer of U.S. defense items to friendly nations and allies
is an integral component of both U.S. national security and foreign
policy. The U.S. government authorizes the sale or transfer of military
equipment, including spare parts, to foreign countries either through
government-to-government agreements or through direct sales from U.S.
manufacturers. The Arms Export Control Act6 and the Foreign Assistance Act
of 19617 authorize the DOD foreign military sales program. From 1993
through 2002, DOD delivered over $150 billion worth of services and
defense articles to foreign countries through foreign military sales
programs administered by the military services. The articles sold include
classified and controlled cryptographic spare parts.

The Department of State sets overall policy concerning which countries are
eligible to participate in the DOD foreign military sales program. DOD
identifies military technology that requires control when its transfer to
potential adversaries could significantly enhance a foreign country's
military or war-making capability. Various agencies such as the Department
of State and DOD are responsible for controlling, in part, the transfer or
release of military technology to foreign countries.

The Defense Security Cooperation Agency, under the direction of the Under
Secretary of Defense for Policy, has overall responsibility for
administering the foreign military sales program, and the military
services generally execute the sales agreements with the individual
countries. A foreign country representative initiates a request by sending
a letter to DOD asking for such information as the price and availability
of goods and services, training, technical assistance, and follow-on
support. Once the foreign customer decides to proceed with the purchase,
DOD prepares a Letter of Offer and Acceptance stating the terms of the
sale for the items

6 Pub. L. No. 90-629, as amended. 7 Pub. L. No. 87-195, as amended.

Page 4 GAO-05-17 Foreign Military Sales

and services to be provided. After this letter has been accepted, the
foreign customer is generally required to pay, in advance, the amounts
necessary to cover the costs associated with the services or items to be
purchased from DOD and then is allowed to request spare parts through
DOD's supply system.

Generally, the military services use separate automated systems to process
requisitions from foreign countries for spare parts. While the Air Force
has retained responsibility for its system, responsibility for the Army's
and the Navy's systems was transferred to the Defense Security Assistance
Development Center in October 1997. The Center, which is part of the
Defense Security Cooperation Agency, has overall responsibility for
providing system information technology maintenance support, such as
testing the system. For blanket orders, the systems use various codes and
item identifiers to restrict the spare parts available to the countries.
In cases where the systems validate a requisition, the requisition is sent
to a supply center to be filled and shipped. In cases where the systems
reject a requisition, the requisition is sent to a country manager for
review. The country manager will either validate the requisition and
forward it to the supply center to be filled and shipped or reject the
requisition, in which case the requisition is canceled.

Our reviews showed that the Army, the Navy, and the Air Force were not
testing their automated systems to ensure that the systems were accurately
reviewing and approving blanket order requisitions for compliance with
restrictions and operating in accordance with foreign military sales
policies. Our tests of the services' automated systems used to manage
foreign countries' requisitions for spare parts made through blanket
orders showed that classified and controlled spare parts that the services
did not want released were being released to countries. For example, we
identified 5 out of 38 blanket order requisitions for which the Navy's
system approved and released 32 circuit card assemblies' controlled
cryptographic spare parts to foreign countries. According to Defense
Security Assistance Development Center officials, who are responsible for
this portion of the Navy's system, the system was not programmed to review
the controlled cryptographic items codes, and as a result, the system
automatically approved and released the parts requested by the foreign
countries. Navy and DOD officials were unaware that the system was not
reviewing controlled cryptographic parts prior to their release to foreign
countries.

  Testing of the Requisition-Processing Systems Is Needed to Improve Internal
  Controls for Foreign Military Sales

Page 5 GAO-05-17 Foreign Military Sales

For another example, the Air Force's system used controls that were based
on supply class restrictions and that were ineffective and resulted in
erroneously approving requisitions for shipment. Included in an item's
national stock number is a four-digit federal supply class, which may be
shared by thousands of items. The national stock number also contains a
nine-digit item identification number that is unique for each item in the
supply system. We found that countries requisitioning parts under the Air
Force's system could obtain a classified or controlled spare part by using
an incorrect, but unrestricted, supply class with an item's correct
national item identification number. The Air Force was unaware of this
situation until our test of the system identified the problem. In response
to our work, the Air Force corrected the problem.

GAO's internal control standards require periodic testing of new and
revised software to ensure that it is working correctly, while the Office
of Management and Budget's internal control standards require periodic
reviews to determine how mission requirements might have changed and
whether the information systems continue to fulfill ongoing and
anticipated mission requirements.8 The importance of testing and reviewing
systems to ensure that they are operating properly is highlighted in the
Federal Information Security Management Act of 2002.9 The act requires
periodic testing and evaluation of the effectiveness of information
security controls and techniques. Moreover, the act requires agencies, as
part of their information security program, to include a process for
planning, implementing, evaluating, and documenting remedial actions to
address deficiencies. Under guidance from the Office of Management and
Budget, agencies are to develop a Plan of Actions & Milestones to report
on the status of remediation efforts. This plan is to list information
security weaknesses, show estimated resource needs or other challenges to
resolving them, key milestones and completion dates, and the status of
corrective actions.

In commenting on our prior reports, DOD either concurred or partially
concurred with our recommendations for testing the services' requisition

8 GAO, Federal Information System Controls Audit Manual, GAO/AIMD-12.19.6
(Washington, D.C.: January 1999); Office of Management and Budget,
Management of Federal Information Resources (Washington, D.C.: November
2000); and GAO, Internal Control Management and Evaluation Tool,
GAO-01-1008G (Washington, D.C.: August 2001).

9 Pub. L. No. 107-347, S:S: 301-305.

                    Page 6 GAO-05-17 Foreign Military Sales

processing systems. The department, however, does not have a plan
specifying the remedial actions to be taken to implement these
recommendations. If actions are not taken to implement testing and
reviews, the potential benefits of these controls in preventing the
inadvertent release of classified or controlled spare parts may not be
realized.

o  	Regarding our recommendation to periodically test the Army's system,
DOD concurred and stated that testing of the Army system and its logic
would occur, given the funding and guidance required to do so.

o  	In response to our recommendation to periodically test the Navy's
system, DOD concurred.

o  Concerning our recommendation to periodically test the Air Force's

system, DOD partially concurred and stated that a program was being
developed to test new modifications to the Air Force's system and that
testing of old modifications would be an ongoing effort. Testing only the
modifications to the Air Force's system, as DOD commented, will not
necessarily ensure that the system's logic is working correctly.
Subsequently, the Air Force concurred with our recommendation and reported
that it had modified its system and would be conducting annual tests of
the system's logic.

The Defense Security Cooperation Agency and the military services are
developing a new automated system, the Case Execution Management
Information System, to process foreign military sales requisitions. The
new system will replace the services' existing legacy systems with a
standard DOD system. DOD expects to deploy the new system in fiscal year
2007. Internal control standards requiring testing will be applicable to
the new system.

Our reviews showed that the Navy's and the Air Force's systems allowed
country managers, who are responsible for managing the sale of items to
foreign countries, to override system decisions not to release to foreign
countries classified or controlled parts that are requisitioned under
blanket orders. We identified instances where Navy and Air Force country
managers overrode the systems' decisions without documenting their reasons
for doing so. For example, of the 123 Air Force requisitions we reviewed,
the Air Force's system identified 36 requisitions for country manager
review. For 19 of the requisitions, the managers overrode the system's
decisions and shipped classified and controlled spare parts without
documenting their reasons for overriding the system. The

  Army's Practice Provides More Stringent Protection against the Improper
  Release of Parts to Foreign Countries

Page 7 GAO-05-17 Foreign Military Sales

Conclusions

managers we queried could not provide an explanation for overriding the
system.

In 1999, the Army modified its system to reject requisitions that are made
under blanket orders for classified or controlled parts. As a result, Army
country managers were precluded from manually overriding the Army system's
decisions. Compared with the Navy's and the Air Force's systems, the
Army's system provides more stringent protection against releasing
classified or controlled parts that are not authorized for release under
blanket orders to foreign countries.

Preventing the inadvertent release of classified and controlled spare
parts that are not authorized for release under blanket orders to foreign
countries deserves the highest level of management attention. The
preemptive nature of testing and reviewing systems allows this internal
control to identify system weaknesses prior to the inadvertent release of
classified or controlled spare parts. Had the services conducted periodic
tests of their systems, the instances of releasing spare parts that DOD
did not want released that we identified in our reports could have been
significantly reduced, if not eliminated. Developing effective corrective
action plans is key to ensuring that remedial action is taken to address
significant information-system internal control deficiencies. We believe
the department could demonstrate its commitment to addressing this
systemic weakness by providing specific information on its planned
remedial actions.

Documenting country managers' decisions to override system decisions is a
control that could help prevent the release of classified or controlled
parts that are not authorized for release under blanket orders to a
foreign country. However, modifying systems, as the Army did, to reject
requisitions that are made under blanket orders for classified or
controlled parts and to preclude country managers from manually overriding
system decisions would provide more stringent protection against releasing
classified or controlled parts that are not authorized for release under
blanket orders to a foreign country.

                    Page 8 GAO-05-17 Foreign Military Sales

Recommendations for

  Executive Action

To reduce the likelihood of releasing classified and controlled spare
parts that DOD does not want to be released to foreign countries, we
recommend that you take the following three actions:

o  	Direct the Under Secretary of Defense for Policy, in conjunction with
the Secretaries of the Army and the Navy, and direct the Secretary of the
Air Force to develop an implementation plan, such as a Plan of Actions &
Milestones, specifying the remedial actions to be taken to ensure that
applicable testing and review of the existing requisition-processing
systems are conducted on a periodic basis.

o  	Direct the Under Secretary of Defense for Policy, in conjunction with
the Secretaries of the Army, the Air Force, and the Navy, to determine
whether current plans for developing the Case Execution Management
Information System call for periodic testing and, if not, provide for such
testing.

o  	Direct the Under Secretary of Defense for Policy, in conjunction with
the Secretary of the Navy, and direct the Secretary of the Air Force to
determine if it would be beneficial to modify the Navy's and the Air
Force's requisition-processing systems so that the systems reject
requisitions for classified or controlled parts that foreign countries
make under blanket orders and preclude country managers from manually
overriding system decisions, and to modify their systems as appropriate.

                                Agency Comments
                               and Our Evaluation

The Director of the Defense Security Cooperation Agency provided written
comments on a draft of this report for DOD and partially concurred with
one recommendation and concurred with two recommendations.

DOD partially concurred with our recommendation to develop a Plan of
Actions & Milestones specifying the remedial actions to be taken to ensure
that applicable testing and review of the existing requisitionprocessing
systems is conducted on a periodic basis. DOD stated that the services
have made appropriate changes to their systems in response to our prior
reports and routine maintenance and have tested the applications
accordingly. DOD also stated that, in lieu of a formal Plan of Actions &
Milestones, the military services, in concert with DOD, can institute a
practice of testing the applications on an annual basis, if those
applications are not otherwise changed and tested as a matter of routine
maintenance, to satisfy the requirement for periodic testing. We agree
that alternatives to a formal Plan of Actions & Milestones may address the
needed remedial actions. However, we believe any alternative should
specify the remedial actions to be taken to ensure that applicable testing

                    Page 9 GAO-05-17 Foreign Military Sales

and review of the existing requisition-processing systems are conducted on
a periodic basis, and we have modified our recommendation accordingly.

DOD concurred with our recommendation regarding the Case Execution
Management Information System. DOD stated that the system's software
program testing will adhere to software-testing standards in place at the
time of implementation, including testing to ensure that the functionality
of existing software code is not changed when the coding is modified or
enhanced.

DOD also concurred with our recommendation to determine if it would be
beneficial to modify the Navy's and the Air Force's requisition-processing
systems so that the systems reject requisitions for classified or
controlled parts that foreign countries make under blanket orders and
preclude managers from manually overriding system decisions, and to modify
their systems as appropriate. DOD stated that it will review the Navy's
and the Air Force's business processes, as well as the
requisition-processing systems. DOD noted that a better option may be to
mandate that country managers seek the appropriate waivers in accordance
with DOD policy to allow the release of a classified or controlled spare
part under a blanket order; provide sufficient documentation for doing so;
and make sure it is done as the exception, not the rule. We agree that
this option would enhance the Navy's and the Air Force's controls and
could help prevent the release of classified or controlled parts that are
not authorized for release under a blanket order to a foreign country.

DOD also provided technical and editorial comments, which we have
incorporated as appropriate.

DOD's comments are reprinted in appendix I of this letter.

As you know, 31 U.S.C. 720 requires the head of a federal agency to submit
a written statement of the actions taken on our recommendations to the
Senate Committee on Governmental Affairs and to the House Committee on
Government Reform not later than 60 days from the date of the report and
to the House and Senate Committees on Appropriations with the agency's
first request for appropriations made more than 60 days after the date of
the report. Because agency personnel serve as the primary source of
information on the status of recommendations, we request that DOD also
provide us with a copy of DOD's statement of action to serve as
preliminary information on the status of open recommendations. Please

                    Page 10 GAO-05-17 Foreign Military Sales

provide me with a copy of your responses. My e-mail address is
[email protected].

We are sending copies of this report to Senator Tom Harkin; the Senate
and House Committees on Armed Services; the Secretaries of the Army,
the Navy, and the Air Force; the Director, Office of Management and
Budget; and other interested congressional committees. The report is also
available on GAO's home page at http://www.gao.gov.

If you have any questions, please call me at (202) 512-8365. Key
contributors to this report were Thomas Gosling, Louis Modliszewski, and
R. K. Wild. Key contributors to our prior reports are listed in those
reports.

Sincerely yours,

William M. Solis, Director
Defense Capabilities and Management

                    Page 11 GAO-05-17 Foreign Military Sales

Note: GAO's comments supplementing those in the report's text appear at
the end of this appendix.

                    Page 12 GAO-05-17 Foreign Military Sales

Note: Page numbers in the draft report may differ from those in this
report.

                    Page 13 GAO-05-17 Foreign Military Sales

                                 See comment 1.

                                 See comment 1.

                    Page 14 GAO-05-17 Foreign Military Sales

                                 See comment 1.

                                 See comment 1.

                                 See comment 2.

                                 See comment 2.

                                 See comment 1.

                    Page 15 GAO-05-17 Foreign Military Sales

                                 See comment 1.

                    Page 16 GAO-05-17 Foreign Military Sales

              Appendix I: Comments from the Department of Defense

  GAO's Comments

(350586)

The following are GAO's comments on the Department of Defense's letter
dated October 8, 2004.

1. 	In our report, we modified the text to clarify that the parts were not
authorized for release under blanket orders. The title of this report is
consistent with the titles of our prior reports on this subject, as listed
on page 1, and we did not modify it as DOD suggests.

2. 	In response to DOD's comments, we modified the text to state that DOD
does not have a plan specifying the remedial actions to be taken to
implement our recommendations.

Page 17 GAO-05-17 Foreign Military Sales

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