Joint Strike Fighter: Management of the Technology Transfer	 
Process (14-MAR-06, GAO-06-364).				 
                                                                 
The Joint Strike Fighter (JSF) program is the Department of	 
Defense's (DOD) largest international cooperative effort to	 
develop and produce a major weapon system. Due to the breadth of 
international participation, the number of export authorizations 
needed to share information with partner governments, solicit	 
bids from suppliers, and execute contracts is expected to far	 
exceed past transfers of advanced military technology. In July	 
2003, GAO reported that managing these transfers and partner	 
expectations while avoiding delays has been a key challenge and  
recommended that industrial planning tools be developed and used 
to anticipate time frames for national disclosure and technology 
transfer decisions. This report examines DOD's response to this  
recommendation and identifies the practices DOD is using to	 
expedite license processing and avoid program delays.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-364 					        
    ACCNO:   A48917						        
  TITLE:     Joint Strike Fighter: Management of the Technology       
Transfer Process						 
     DATE:   03/14/2006 
  SUBJECT:   Defense capabilities				 
	     Defense procurement				 
	     Fighter aircraft					 
	     Foreign governments				 
	     International cooperation				 
	     International trade regulation			 
	     Licenses						 
	     Military policies					 
	     National policies					 
	     Prime contractors					 
	     Program management 				 
	     Technology transfer				 
	     Weapons systems					 
	     A-10 Aircraft					 
	     AV-8B Aircraft					 
	     F-16 Aircraft					 
	     F-22 Aircraft					 
	     F-22 Raptor Aircraft				 
	     F/A-18 E/F Aircraft				 
	     Fighting Falcon Aircraft				 
	     Harrier Aircraft					 
	     Hornet Aircraft					 
	     Joint Strike Fighter				 
	     Joint Strike Fighter program			 

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GAO-06-364

     

     * Results in Brief
     * Background
     * Actions Taken to Expedite License Processing and Avoid Progr
          * Anticipating Technology Transfer Needs
          * Expediting the JSF Licensing Process
          * Implementing Global Project Authorization and Making Use of
          * Addressing Disclosure Issues Early in the Program
     * Agency Comments
     * GAO Contact
     * Staff Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives

United States Government Accountability Office

GAO

March 2006

JOINT STRIKE FIGHTER

Management of the Technology Transfer Process

Joint Strike Fighter Joint Strike Fighter Joint Strike Fighter Joint
Strike Fighter Joint Strike Fighter Joint Strike Fighter Joint Strike
Fighter Joint Strike Fighter Joint Strike Fighter Joint Strike Fighter
Joint Strike Fighter Joint Strike Fighter Joint Strike Fighter Joint
Strike Fighter Joint Strike Fighter Joint Strike Fighter Joint Strike
Fighter Joint Strike Fighter

GAO-06-364

Contents

Letter 1

Results in Brief 2
Background 3
Actions Taken to Expedite License Processing and Avoid Program Delays 7
Agency Comments 14
Appendix I GAO Contact and Staff Acknowledgments 16
Related GAO Products 17

Table

Table 1: Joint Strike Fighter Partner Financial Contributions and
Estimated Aircraft Purchases 4

Abbreviations

AECA Arms Export Control Act

DDTC Directorate of Defense Trade Controls

DOD Department of Defense

DTSA Defense Technology Security Administration

FAR Federal Acquisition Regulation

GPA Global Project Authorization

ITAR International Traffic in Arms Regulations

JSF Joint Strike Fighter

MOU memorandum of understanding

NDPC National Disclosure Policy Committee

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separately.

United States Government Accountability Office

Washington, DC 20548

March 14, 2006

The Honorable Christopher Shays Chairman, Subcommittee on National
Security, Emerging Threats, and International Relations Committee on
Government Reform House of Representatives

Dear Mr. Chairman:

The Joint Strike Fighter (JSF) program is the Department of Defense's
(DOD) largest experiment to collaboratively develop and produce a major
weapon system with international partners to date with an estimated cost
of over $250 billion for the development and production phases of the
program. It is a joint program among the Air Force, Navy, Marine Corps,
and eight international partners for developing and producing a
next-generation fighter aircraft to replace aging inventories. Due to the
degree of international participation at both the government and industry
levels, a large number of export authorizations are necessary to share
project information with governments, solicit bids from partner suppliers,
and execute contracts. The transfer of technologies necessary to achieve
aircraft commonality goals in the JSF program is expected to far exceed
past transfers of advanced military technology. A key challenge for the
program has been managing the technology transfer process and partner
expectations while avoiding delays to the program.

In July 2003, we reported that due to the early involvement of
international partners in developing the system, the JSF program has had
to mitigate a particular set of challenges related to technology
transfers. We recommended that the JSF program ensure that
industrial-planning tools are developed and used to anticipate time frames
for national disclosure and technology transfer decisions.1 Subsequently,
you asked us to examine issues raised in our 2003 work related to
technology transfer and the JSF program and describe the status of DOD
planning efforts designed to address technology transfer and export
control requirements among the U.S. government, JSF prime contractors,
foreign partners, and foreign industry. Specifically, we identified the
practices DOD is using to expedite license processing and avoid program
delays.

1GAO, Joint Strike Fighter Acquisition: Cooperative Program Needs Greater
Oversight to Ensure Goals Are Met, GAO-03-775 (Washington, D.C.: July 21,
2003) and GAO, Joint Strike Fighter Acquisition: Managing Competing
Pressures Is Critical to Achieving Program Goals, GAO-03-1012T
(Washington, D.C.: July 21, 2003).

In carrying out our work, we reviewed the prime contractor's newly
developed international industrial plan and compared it to a prior GAO
recommendation. To determine the manner in which U.S. export control
processes are being applied in the JSF program, we interviewed and
gathered data from export control and JSF officials from DOD, the
Department of State, and the prime contractor. The international partners
did not discuss issues related to technology transfer with us due to the
status of current negotiations on a memorandum of understanding for the
production phase of the program. The partners generally expressed the
opinion that comments by them during negotiations would not be
appropriate. We conducted our review from March 2005 to January 2006, in
accordance with generally accepted government auditing standards.2

                                Results in Brief

Agencies have taken a number of actions to address technology transfer
issues associated with the JSF program. In response to our 2003
recommendation, the JSF Program Office tasked the prime contractor to
develop an international industrial plan to anticipate time frames for
national disclosure and technology transfer decisions. The Office of the
Secretary of Defense also issued guidance calling for the use of similar
industrial-planning tools for other development programs that include
foreign partners. Further, DOD is using a variety of practices to expedite
the processing of export control licenses for the JSF program. For
example, agencies have staff specifically dedicated to the JSF licensing
process to focus agency resources on the JSF program. In addition, agency
stakeholders provide consultation to license applicants on draft licenses,
and all formal license applications are prescreened to determine if they
are eligible for an abbreviated review process. The JSF prime contractor
and agency officials have also used options available to them under the
International Traffic in Arms Regulations, such as a Global Project
Authorization and an exemption used in obtaining bids and proposals from
foreign contractors.3 The Global Project Authorization was intended to be
a mechanism for approving the transfer of low technology, nonsensitive
items between pre-approved U.S. and foreign companies in about 5 days;
however, this mechanism's use has been limited. Additionally, to avoid
program delays, the JSF program office has certified 350 requests from
U.S. contractors to use the "bid and proposal exemption," allowing the
transfer of information without a license between approved U.S. and
foreign contractors for purposes of obtaining bids and proposals. Further,
due to the involvement of international partners in the early design phase
of the program, issues related to the releasability of classified
information, technologies, and systems will continue to be addressed as
they arise.

2The DOD Inspector General is also currently examining the JSF licensing
process.

3The unofficial term "bid and proposal exemption" is what the JSF program
office refers to in utilizing a regulatory exemption for disclosing
technical data pursuant to DOD authorization.

                                   Background

The JSF program began in 1996 and is the largest DOD acquisition program
to date with an estimated cost of over $250 billion for the development
and production phase of the program. The program's goals are to develop
and field a family of stealthy fighter aircraft for the Navy, Air Force,
Marine Corps, and U.S. allies. To achieve its mission, JSF will
incorporate low observable technologies, defensive avionics, advanced
onboard and offboard sensor fusion, internal and external weapons, and
advanced prognostic maintenance capability. The program intends to produce
three variants. The carrier suitable variant will complement the Navy's
F/A-18 E/F. The conventional take-off and landing variant will primarily
be a replacement for the Air Force's F-16 and A-10 aircraft and will
complement the F-22A. The short take-off and vertical landing variant will
replace the Marine Corps' F/A-18 and AV- 8B aircraft.

In October 2001, Lockheed Martin was awarded a contract to develop the
airframe and integrate the system components. Subsequently, Lockheed
Martin awarded multi-billion-dollar subcontracts to its development
teammates-Northrop Grumman and BAE Systems-for work on the center and aft
fuselage, respectively. In addition to the Lockheed Martin contract, DOD
has contracts with both Pratt & Whitney and General Electric to develop
two interchangeable aircraft engines. The program is currently in the
fifth year of an estimated 12-year development phase. The current
estimated cost for the development phase is about $41.5 billion.

The JSF program is an international cooperative program consisting of the
U.S. and eight foreign partners: the United Kingdom, Italy, the
Netherlands, Turkey, Denmark, Norway, Canada, and Australia. The JSF
program structure was established through a framework memorandum of
understanding (MOU) and individual supplemental MOUs between each of the
partner country's defense department or ministry and DOD, negotiating on
behalf of the U.S. government. These agreements identify the roles,
responsibilities, and expected benefits for all participants. Currently
DOD is negotiating one MOU for all partner countries related to the
production phase of the program.

The JSF program allowed foreign countries to become partners at one of
three participation levels during the system development and demonstration
phase of the program, based on financial contribution. In return for their
contributions, partner countries receive proportionate benefits, such as
number of staff represented in the program office, access to program data
and technology, and membership on management decision-making bodies. As
shown in table 1, the foreign partners plan on contributing over $4.5
billion, or about 11 percent, for the system development and demonstration
phase and are expected to purchase over 700 aircraft beginning in the 2012
to 2015 time frame. Israel and Singapore are involved as security
cooperation participants, a nonpartner arrangement, which offers limited
access to program information. According to DOD, foreign military sales to
these and other nonpartner countries could include an additional 1,500 to
3,000 aircraft.

Table 1: Joint Strike Fighter Partner Financial Contributions and
Estimated Aircraft Purchases

Dollars in millions
                    System development and demonstration          Productions
                                        Percentage                 Percentage
Partner       Partner      Financial   of total      Projected    of total
country       level   contributionsa      costs    quantitiesb  quantities
United        Level I                    $2,056       5.0         150  4.7 
Kingdom                                                               
Italy         Level II                    1,028       2.5         131  4.1 
Netherlands   Level II                      800       1.9          85  2.7 
Turkey        Level III                     175       0.4         100  3.2 
Australia     Level III                     144       0.3         100  3.2 
Norway        Level III                     122       0.3          48  1.5 
Denmark       Level III                     110       0.3          48  1.5 
Canada        Level III                     100       0.2          60  1.9 
Total partner                            $4,535      10.9         722 22.8 
United States                           $36,946      89.1       2,443 77.2 

Source: DOD and JSF Program Office.

aChart values do not reflect nonfinancial contributions from partners.

bPartner quantities are preliminary and were developed for U.S. planning
purposes. The estimates were developed by the United States in
collaboration with partner countries, but no specific national agreements
or arrangements have been established with partner countries for
production; therefore, these projected production quantities are subject
to change.

DOD has stated that the core objectives of armaments cooperation are to
increase military effectiveness through standardization and
interoperability and to reduce weapons acquisition costs by avoiding
duplication of development efforts with U.S. allies. According to DOD and
the program office, through its cooperative agreements, the JSF program
contributes to armaments cooperation policy in four areas

           o  political/military-expanded foreign relations;

           o  economic-decreased JSF program costs from partner
           contributions;

           o  technical-increased access to the best technologies of foreign
           partners; and

           o  operational-improved mission capabilities through
           interoperability with allied systems.

Under the Arms Export Control Act (AECA), DOD is provided the authority to
enter into cooperative programs with certain U.S. allies.4 In March 1997,
the Secretary of Defense directed that DOD engage allies in discussions as
early as possible to determine the potential for collaboration to meet
coalition needs and ensure interoperability among allied systems. DOD
guidance states that the department will give favorable consideration to
transfers of defense articles, services, and technology consistent with
national security interests to support these international programs.
Unlike other international cooperative programs, the JSF program does not
guarantee foreign or domestic suppliers a predetermined level of work
based on a country's financial contribution to the program. Instead,
foreign and domestic suppliers will generally bid competitively for JSF
work. DOD and the JSF Program Office use the term "best value" to describe
this competitive approach.5

4Section 27 of the AECA, 22 U.S.C. S: 2767 (2000).

5This is not necessarily the same as "best value" under the Federal
Acquisition Regulation (FAR), which is the expected outcome of an
acquisition that, in the Government's estimation, provides the greatest
overall benefit in response to the requirement. 48 C.F.R. S:S:. 2.101
(2005). Such a procurement is conducted competitively under FAR procedures
for contracting by negotiation using any one or a combination of source
selection approaches., 48 C.F.R, S:S: 15.002(b), 15.101 (2005).

The AECA also provides statutory authority for the control of defense
articles and services.6 The Department of State oversees the export of
military items and services.7 The Directorate of Defense Trade Controls
(DDTC) within the Department of State has been delegated the authority to
regulate arms exports and administer the arms export-licensing system. The
Defense Technology Security Administration (DTSA) represents DOD on export
control issues. DTSA provides technical and national security reviews of
and coordinates DOD's position on export license applications referred or
reviewed by DDTC. Due to the degree of international participation at both
a governmental and an industry level in the JSF program, a large number of
export authorizations are necessary to share project information with
governments, solicit bids from partner suppliers, and execute contracts.
The transfer of technologies necessary to achieve aircraft commonality
goals for the JSF program is expected to far exceed past transfers of
advanced military technology for other systems.

Before transfers are approved, the U.S. government must first determine if
weapons or technologies are releasable to the requesting country according
to the National Disclosure Policy. The National Disclosure Policy
establishes procedures and criteria for releasing classified or sensitive
military information to other countries. The National Disclosure Policy
Committee (NDPC) is responsible for managing the National Disclosure
Policy, making determinations whether to grant exceptions to the policy,
conducting security surveys of foreign governments including defense
industries, and determining delegated authority among the services.8 In
cases where a request for transfer exceeds that authority, the service can
forward the request to the NDPC for its review. For some sensitive
technologies, such as stealth, the case is also forwarded for review to a
special committee that focuses on that particular technology.

6Section 38 of the AECA, 22 U.S.C. S: 2778 (2000).

7The statutory authority of the President to regulate exports of defense
articles and services was delegated to the Secretary of State by Executive
Order 11958, as amended. The International Traffic In Arms Regulations
implement that authority 22 C.F.R. parts 120-130 (2005).

8The NDPC is composed of members of the State Department, DOD (Joint
Staff, Army, Navy, and Air Force) and special members such as Department
of Energy and the Central Intelligence Agency, among others (industry is
not represented on the NDPC).

     Actions Taken to Expedite License Processing and Avoid Program Delays

DOD and the JSF program office have taken the following four key actions
to avoid the potential negative effects on the program from delays in
obtaining licenses for transferring technology to partner countries and
foreign suppliers:

           o  In response to our 2003 recommendation, the JSF Program Office
           directed the prime contractor to develop an international
           industrial plan to anticipate time frames for national disclosure
           and technology transfer decisions.

           o  Agencies involved in the JSF export-licensing process are
           expediting the processing of license applications by dedicating
           staff to the JSF- licensing process, providing consultation to
           applicants on draft licenses, administering a prescreening process
           for the transfer of low technology and nonsensitive items, and by
           allowing addendums to be attached to license applications.

           o  The JSF prime contractor and agency officials have used options
           available to them under the International Traffic in Arms
           Regulations (ITAR), such as Global Project Authorization (GPA) and
           an exemption used in obtaining foreign contractor bids and
           proposals, to help facilitate the export control process and avoid
           program delays. The GPA was intended to allow for technology
           transfer decisions regarding certain technologies to be made in 5
           days or less; however, its use has been limited. Use of the bid
           and proposal exemptions is intended to avoid program delays by
           providing foreign contractors with information needed to compete
           for contracts without first obtaining an export license.

           o  Issues related to the releasability of classified information,
           technology, or systems to foreign partners are addressed as they
           arise in the JSF program because of the involvement of
           international partners in the early design phase of the program.
           According to DOD officials, they are incorporating new practices,
           such as stakeholder meetings, that are intended to facilitate a
           timely and collaborative decision-making process.

Anticipating Technology Transfer Needs

In July 2003, we reported that due to the early involvement of
international partners in developing the system, the JSF program has had
to mitigate a particular set of challenges related to technology
transfers. To address these challenges, the prime contractor needs to
anticipate time frames for national disclosure and technology transfer
decisions. The anticipation of these needs would allow for a timely
submission of license applications as well as providing time to identify
potential back-up suppliers, if necessary. Accordingly, we recommended
that the JSF Program Office direct the prime contractor to complete an
international industrial plan that

           o  identified current and potential contracts involving the
           transfer of sensitive data and technology to partner suppliers,

           o  evaluated the risks that unfavorable export decisions could
           pose for the program, and

           o  developed alternatives to mitigate those risks, such as using
           U.S. suppliers.

In response to our recommendations, in 2003 the JSF program office
instructed the prime contractor to complete an international industrial
plan. According to the prime contractor, the plan provides a roadmap that
represents potential licensing activities as a subset of the program
schedule. Specifically, the plan identifies the need for a license to
transfer certain technologies to foreign industry. It provides a mechanism
for the prime contractor to anticipate "need" dates for receiving export
licenses and provides a mechanism for identifying issues that may arise
concerning the releasability of information, technologies, or systems so
that early action can be taken to determine if an exception to the
National Disclosure Policy or an appropriate committee review should be
pursued.

In addition to the creation of the JSF prime contractor's international
industrial plan, DOD has added guidance to the Office of the Secretary of
Defense's Acquisition Guidebook calling for the development of similar
industrial-planning tools in all programs with significant international
involvement prior to the system design and demonstration phase. The
guidance further states that the plan should project when export licenses
will be required in support of the acquisition process and when critical
milestones regarding National Disclosure Policy implementation will need
to be addressed.

These plans are intended to provide for early planning for the program's
proposed technology releases to foreign industry. They also are intended
to provide early planning for higher level special technical reviews and
approvals in support of proposed technology releases to foreign industry.9
Further, they are intended to establish a detailed export license
approval-planning process for U.S.-foreign industry cooperation to meet
critical program and contract timelines. The guidance recommends the plan
include

9Such reviews could be related to areas such as low observable/counter low
observable, anti-tamper, or cryptology.

           o  a timeline that maps key projected export licenses against the
           program acquisition schedule;
           o  a definition of the technologies involved in each export
           license; and
           o  a list of U.S. contractors (exporters) as well as foreign
           contractors (end users) for each license.

Expediting the JSF Licensing Process

Agencies involved in the export-licensing process have employed a variety
of methods to expedite the processing of license applications. The
Directorate of Defense Trade Controls (DDTC) within the Department of
State has dedicated one staff member to the JSF program. Additionally, the
Defense Technology Security Administration (DTSA) within DOD has dedicated
staff to specifically deal with issues related to licensing, technical
aspects, and policy matters for the JSF program. These staffs coordinate
directly with JSF program office staff dedicated to the licensing process.

According to DTSA officials, along with dedicated staff, a new strategy is
being used to accelerate processing export licenses for the JSF program.
Officials across DOD provide advice and resolve issues with license
applicants through stakeholder meetings prior to formal submission of
license applications. DTSA officials described these stakeholder meetings
as a proactive measure to ensure that the license applications are ready
to be assessed when they are received. DTSA officials stated that this
process evolved in response to the concern that licensing delays could
affect the JSF program schedule and that while stakeholder consultation
could take up to six months, it usually resulted in a shorter approval
process. According to DTSA officials, these stakeholder meetings were
created because of the JSF program and are currently unique to the program
but would likely be incorporated into future large scale international
cooperative programs.

DTSA also prescreens all license applications to expedite the processing
of licenses that do not require review by other DOD entities. Once an
application is received from DDTC, it is prescreened by DTSA officials to
determine if it meets eligibility criteria for an abbreviated review
process. DTSA officials stated that criteria for determining eligible
items include low technology, nonsensitive items; items widely available
worldwide; and items that have previously been approved through the
process, among others. According to DTSA officials, prescreening has been
taking place for 1 year to 2 years, and the typical time frame for a
license in the abbreviated review process is 2 days to 5 days.

The use of addendums to supplement license applications is another
initiative that evolved in an effort to avoid delays in the JSF program.
When additional information or clarification is needed before a license
can be approved, officials from DDTC and DTSA have agreed to allow the
applicant to attach addendums that include more specific technical
information than initially provided. The addendums provide context and
clarity to the application. Previously, the license would have been
returned with no action, requiring a resubmission and restart of the
license process.

Implementing Global Project Authorization and Making Use of Bid and Proposal
Exemptions

Another mechanism for expediting license processing is the use of a Global
Project Authorization (GPA). The GPA is a comprehensive export
authorization for international cooperative projects authorized by the
ITAR.10 An approved U.S. company submits an "Implementing Agreement"
request to DDTC for authorization to export to an approved foreign
company. DDTC can evaluate the request and based on compliance with an
established set of conditions may authorize the transfer without sending
the request through the formal licensing process. An implementing
agreement under the GPA is expected to be approved in about 5 days.

The Department of State, DOD, and the prime contractor agreed to the GPA
for the JSF program based on the following conditions:

           o  Technologies available for transfer through a GPA implementing
           agreement are based on a predetermined list of unclassified, low
           technology, nonsensitive items.

           o  In using the GPA, both domestic and foreign companies must be
           on an approved list. The approved list was developed by the
           Department of State and DOD. There are currently 46 U.S. companies
           and 446 foreign companies that have been authorized to utilize
           implementing agreements under the GPA for the JSF program.

           o  Approved companies must follow a standard agreement format and
           special application process.

1022 C.F.R. S: 126.14 (2005).

While the GPA is designed to approve transfers within 5 days, its
usefulness has been limited. Of the 46 U.S. companies eligible to use the
GPA, only 3 have exercised that option. In 2005, only two implementing
agreements were approved, and they were actually submitted in 2004. Only
one implementing agreement was submitted in 2005, and it was returned
without action. Approved companies that wish to use the GPA must meet a
special set of compliance requirements, imposed by the State Department,
related to electronic record keeping and securing data. Officials from the
JSF program office, DTSA, and the prime contractor said that many
companies have chosen to use the traditional license process instead of
the GPA to avoid the extra costs and administrative burdens associated
with these compliance requirements, such as the investment associated with
the development of electronic databases. These issues also make the GPA
especially difficult to use for smaller companies. Further, the GPA was
authorized only for the system development and demonstration phase of the
program and would need to be reauthorized for the production phase.

Another practice used by the JSF program office to avoid program delays
and provide for competition among U.S. and foreign suppliers is the use of
an exemption under the ITAR for the purpose of obtaining bids and
proposals from foreign contractors. On March 8, 2004, DTSA issued guidance
to the military departments on how to certify the use of ITAR exemptions.
The guidance identifies five sections under the ITAR by which the U.S.
government may certify exemptions.11 Section 125.4(b)(1) of the ITAR12
provides that technical data, including classified information, may be
disclosed pursuant to an official written request or directive from the
U.S. Department of Defense without obtaining an export license. This
exemption has been unofficially labeled the "bid and proposal exemption"
by the JSF program office, because the primary use has been in the process
of obtaining bids and proposals from foreign contractors. According to Air
Force officials, the bid and proposal exemption is only certified for use
to export unclassified technical data to a foreign contractor if it is in
the interest of the U.S. government.

11The executive agent for disclosure is the Air Force for the JSF program.

1222 C.F.R. S: 125.4(b)(1) (2005).

Under this exemption, the JSF program allows approved U.S. contractors to
transfer technical data on proposed work to foreign contractors. The Air
Force periodically publishes an exemption certification that provides
scope and limits on the transfers, such as limiting the defense services
and technical data included in these exemptions to

           o  build to print - a defense article can be produced from
           engineering drawings without any technical assistance from a U.S.
           exporter-and

           o  build/design to specification - a foreign consignee can design
           and produce a defense article from requirement specifications
           without any technical assistance from the U.S. exporter.

These exemptions must not include

           o  design methodology - the underlying engineering methods and
           design philosophy utilized;

           o  engineering analysis - analytical methods and tools used to
           design or evaluate an article's performance against operational
           requirements; and

           o  manufacturing know-how - information that provides detailed
           manufacturing processes and techniques needed to translate a
           detailed design into a finished article.

The JSF Program Office must review, authorize in advance, and maintain a
record of all JSF technical data released under the authority of the
certification. So far, 350 requests from U.S. contractors to use the "bid
and proposal exemption" have been certified by the JSF program office.

Addressing Disclosure Issues Early in the Program

To prevent potential delays, decisions related to the releasability of
classified information, technologies, or systems to partner countries are
addressed as they arise throughout the development of the system. While
the Air Force, designated as the executive agent for disclosure for the
JSF program, has a certain level of delegated authority to disclose
classified military information to foreign governments and international
organizations, some requests exceed this authority. When a request exceeds
its delegated authority, the Air Force must submit a request to the
National Disclosure Policy Committee (NDPC) for an exception to the
National Disclosure Policy. Other committees that may approve transfers
include the Low Observable/Counter Low Observable Committee that
adjudicates requests to sell or transfer stealth technology and the
Committee on National Security Systems that adjudicates requests to sell
or transfer cryptologic information and technology.

According to DOD officials, planning for foreign disclosure issues is
challenging because there are numerous processes among multiple U.S.
government agencies and committees with delegated authority for management
of foreign disclosure and export control requirements. There are
additional difficulties in a cooperative program like the JSF program
because of the involvement of the international partners early in the
design phase. In the JSF program, the prime contractor's international
industrial plan is used to anticipate licensing needs and identify when
discussions of releasability of classified information, technologies, and
systems are necessary. In addition, the stakeholder meetings initiated by
DTSA have provided a mechanism for disclosure issues to be discussed prior
to the formal submission of a license. As a result, these discussions are
held as the concerns arise so they do not become major obstacles to the
program schedule. These practices are intended to resolve issues related
to the releasability of classified information, technologies, and systems
and to ensure decisions are made by the proper committees in a timely
manner to avoid delays to the license process.

For example, in cases where a request for transfer exceeds the Air Force's
delegated disclosure authority for a particular country, the Air Force can
seek an exception to the National Disclosure Policy. The National
Disclosure Policy establishes criteria and conditions for releasing
classified information, technology, or systems to other countries. The
NDPC determines if it is in the United States' interest to allow for the
transfer of information, technologies or systems by granting an exception
to National Disclosure Policy.13 The NDPC is composed of members of the
State Department, DOD (Joint Staff, Army, Navy, and Air Force) and special
members such as Department of Energy and the Central Intelligence Agency,
among others. In order for a disclosure exception to be granted, it must
be

13The NDPC is also responsible for managing the National Disclosure
Policy, conducting security surveys of foreign governments including
defense industries, and determining delegated authority among the
services.

           o  consistent with U.S. foreign policy,
           o  consistent with U.S. military and security objectives,
           o  provided the same degree of security protection by the
           recipient,
           o  beneficial to the U.S., and
           o  limited to information necessary for the purpose.

Although the NDPC seeks consensus within 10 days of a request, if any
member votes against approval of a request, there is a negotiation period
for no more than 20 days. If agreement still cannot be reached, the NDPC
chairman can make a decision. That decision can also be appealed to the
Deputy Secretary or Secretary of Defense. As of January 2006, the NDPC has
granted six exceptions, as amended, to the National Disclosure Policy for
the JSF program.

                                Agency Comments

A draft of this report was reviewed by the Department of Defense and the
Department of State. The agencies did not provide written comments on the
report. We received separate technical comments from the Department of
Defense and incorporated them as appropriate.

We are sending copies of this report to interested congressional
committees; the Secretary of State; the Secretary of Defense; the
Secretaries of the Navy and the Air Force; and the Commandant of the
Marine Corps. We will also make copies available to others upon request.
In addition, this report will be available at no charge on the GAO Web
site at http://www.gao.gov.

If you or your staff have any questions regarding this report, please
contact me at (202) 512-4841. Key contributors to this report are listed
in appendix I.

Sincerely yours,

Ann Calvaresi-Barr, Director, Acquisition and Sourcing Management

Appendix I: A Appendix I: GAO Contact and Staff Acknowledgments

GAO Contact

Ann Calvaresi-Barr (202) 512-4841

Staff Acknowledgments

In addition to the individual named above, Tom Denomme, Matthew Ebert,
Kevin Heinz, Karen Sloan, and Adam Vodraska made key contributions to this
report.

Related GAO Products Related GAO Products

Tactical Aircraft: Status of the F/A-22 and JSF Acquisition Programs and
Implications for Tactical Aircraft Modernization. GAO-05-390T . March
2005.

Tactical Aircraft: Opportunity to Reduce Risks in the Joint Strike Fighter
with Different Acquisition Strategy. GAO-05-271 . March 2005.

Defense Trade: Arms Export Control System in the Post-9/11 Environment.
GAO-05-234 . February 2005.

Joint Strike Fighter Acquisition: Observations on the Supplier Base.
GAO-04-554 . May 2004.

Defense Acquisitions: DOD Needs to Better Support Program Managers'
Implementation of Anti-Tamper Protection. GAO-04-302 . March 2004.

Joint Strike Fighter Acquisition: Managing Competing Pressures Is Critical
to Achieving Program Goals. GAO-03-1012T . July 2003.

Joint Strike Fighter Acquisition: Cooperative Program Needs Greater
Oversight to Ensure Goals Are Met. GAO-03-775 . July 2003.

Defense Trade: Better Information Needed to Support Decisions Affecting
Proposed Weapons Transfers. GAO-03-694 . July 2003.

Export Controls: Processes for Determining Proper Control of
Defense-Related Items Need Improvement. GAO-02-996 . September 2002.

Joint Strike Fighter Acquisition: Mature Critical Technologies Needed to
Reduce Risks. GAO-02-39 . October 2001.

Defense Acquisitions: Decisions on the JSF Will Be Critical for
Acquisition Reform. GAO/T-NSIAD-00-173 . May 2000.

Joint Strike Fighter Acquisition: Development of Schedule Should Be
Changed to Reduce Risks. GAO/NSIAD-00-74 . May 2000.

(120392)

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www.gao.gov/cgi-bin/getrpt? GAO-06-364 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Ann Calvaresi-Barr (202) 512-4841 or
[email protected].

Highlights of GAO-06-364 , a report to the Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations,
Committee on Government Reform, House of Representatives

March 2006

JOINT STRIKE FIGHTER

Management of the Technology Transfer Process

The Joint Strike Fighter (JSF) program is the Department of Defense's
(DOD) largest international cooperative effort to develop and produce a
major weapon system. Due to the breadth of international participation,
the number of export authorizations needed to share information with
partner governments, solicit bids from suppliers, and execute contracts is
expected to far exceed past transfers of advanced military technology.

In July 2003, GAO reported that managing these transfers and partner
expectations while avoiding delays has been a key challenge and
recommended that industrial planning tools be developed and used to
anticipate time frames for national disclosure and technology transfer
decisions. This report examines DOD's response to this recommendation and
identifies the practices DOD is using to expedite license processing and
avoid program delays.

Agencies have taken four key actions to expedite the processing of
licenses for transferring technology to partner countries and foreign
suppliers. Each of these practices is intended to anticipate time frames
needed for the processing of licenses or avoid delays to the JSF program
schedule.

           o  In response to GAO's 2003 recommendation, the JSF Program
           Office instructed the prime contractor to develop an international
           industrial plan that identifies the type of license needed to
           transfer certain technologies to foreign industry. The
           contractor's plan provides mechanisms for anticipating "need"
           dates for submitting license applications and for identifying and
           addressing potential issues related to the releasability of
           classified information, technologies, or systems. In addition to
           the contractor's plan, DOD has developed guidance calling for
           industrial planning tools in all programs with significant
           international involvement.

           o  Agencies involved in the JSF program are expediting the
           processing of license applications by dedicating staff to the JSF
           licensing process, providing consultation to applicants on draft
           licenses, administering a prescreening process for the transfer of
           low technology and nonsensitive items, and allowing addendums to
           be attached to license applications.

           o  The JSF prime contractor and agency officials have used options
           available to them under the International Traffic in Arms
           Regulations, such as Global Project Authorization (GPA) and an
           exemption used in obtaining foreign contractor bids and proposals,
           to help facilitate the export control process and avoid program
           delays. While GPA is designed to approve exports within 5 days,
           its use has been limited.

           o  Due to the early involvement of international partners in the
           design phase of the program, decisions related to the
           releasability of classified information, technologies, or systems
           to partner countries have been addressed as they arise throughout
           the development of the system.

Joint Strike Fighter
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