Foreign Military Sales: Changes Needed to Correct Weaknesses in End-Use
Monitoring Program (Letter Report, 08/24/2000, GAO/NSIAD-00-208).
Pursuant to a congressional request, GAO reviewed the Foreign Military
Sales Program, focusing on: (1) the Department of Defense's (DOD)
implementation of its requirement to observe and report on defense
articles and services transferred under the Foreign Military Sales
program; (2) DOD's implementation of requirements to perform end-use
checks; and (3) the extent to which DOD has satisfied the reporting
requirements of the end-use monitoring amendment to the Arms Export
Control Act.
GAO noted that: (1) DOD has not effectively implemented the requirement
that its field personnel observe and report on foreign governments' use
of U.S. defense articles and services transferred through the Foreign
Military Sales program; (2) because the extent of observation needed to
verify that defense articles and services are being used appropriately
will vary from country to country, DOD has not issued guidance
specifying what monitoring is required; (3) as a result, field personnel
interpret the requirements and the activities that they should perform
differently; (4) DOD has not effectively implemented requirements for
its field personnel to perform end-use checks in response to specific
standards or for selected weapon systems; (5) for example, field
personnel responsible for performing checks are not receiving the needed
information from Defense or Department of state officials; (6) as a
result, GAO identified 16 countries where end-use checks were not
performed in fiscal years 1997-1999, even though one of the standards
was met; (7) in addition, specific requirements have been established to
conduct end-use checks for selected weapon systems such as Stinger
missiles; (8) for some other weapon systems, such as Advanced Medium
Range Air-to-Air Missiles, sales agreements allow U.S. personnel to
conduct end-use checks; (9) for both of these weapon systems, the U.S.
relies on host country records to maintain accountability; (10) however,
the reliability of such records varies from country to country; (11) for
example, after performing a worldwide inventory of Stinger missiles, DOD
identified discrepancies in some countries' records, which left some
missiles unaccounted for; (12) further, according to GAO survey and
field visits, no end-use checks of Advanced Medium Range Air-to-Air
Missiles have ever been performed by U.S. personnel; (13) DOD has not
complied with the reporting requirements of the end-use monitoring
amendment to the Arms Export Control Act because it does not collect the
information needed to do so; (14) the amendment requires DOD to report
annually to Congress on actions taken to implement the end-use
monitoring program; (15) this report is to include a detailed accounting
of the cost and number of personnel associated with its program; and
(16) field personnel are currently not required to track the resources
they use in performing end-use monitoring activities and only routinely
report on the number of Stinger missile inspections conducted.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-00-208
TITLE: Foreign Military Sales: Changes Needed to Correct
Weaknesses in End-Use Monitoring Program
DATE: 08/24/2000
SUBJECT: Weapons systems
Foreign military sales
Monitoring
Reporting requirements
Foreign governments
International relations
Noncompliance
Foreign military arms sales
IDENTIFIER: DOD End-Use Monitoring Program
Foreign Military Sales Program
Advanced Medium Range Air-to-Air Missile
Stinger Missile
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GAO/NSIAD-00-208
Appendix I: List of Countries Included in Our Survey of End-Use Monitoring
20
Appendix II: Comments From the Department of Defense
21
Appendix III: Comments From the Department of State
24
Appendix IV: GAO Contacts and Staff Acknowledgments
25
National Security and
International Affairs Division
B-285781
August 24, 2000
The Honorable Benjamin A. Gilman, Chairman
Committee on International Relations
House of Representatives
Dear Mr. Chairman:
In July 1996, the Arms Export Control Act was amended to require an end-use
monitoring1 program for defense articles and services transferred through
the U.S. government's Foreign Military Sales program.2 The amendment also
requires an annual report from the Department of Defense to Congress on the
program's implementation. In response, in December 1996 the Department
expanded its monitoring program by requiring field personnel to initiate
end-use checks of U.S. defense articles and services sold to foreign
governments when specific circumstances develop, such as unusual political
or military upheaval in the recipient country. At the time, the monitoring
program included requirements that field personnel observe and report on
foreign governments' use of U.S. defense items and perform periodic physical
inspections of selected weapon systems. These requirements are still in
effect today.
This is the second in a series of reports that respond to your request that
we review the Foreign Military Sales program. Our first report addressed the
process for approving technology and arms transfers.3 This report focuses on
the Department of Defense's implementation of end-use monitoring
requirements. Specifically, we assessed (1) the implementation of the
Department of Defense's requirement to observe and report on defense
articles and services transferred under the Foreign Military Sales program,
(2) the Department's implementation of requirements to perform end-use
checks, and (3) the extent to which the Department has satisfied the
reporting requirements of the end-use monitoring amendment to the Arms
Export Control Act.
The Department of Defense has not effectively implemented the requirement
that its field personnel observe and report on foreign governments' use of
U.S. defense articles and services transferred through the Foreign Military
Sales program. Because the extent of observation needed to verify that
defense articles and services are being used appropriately will vary from
country to country, the Department has not issued guidance specifying what
monitoring is required. As a result, field personnel interpret the
requirements and the activities that they should perform differently. Field
personnel in 40 of the 68 countries we surveyed reported that they did not
carry out this requirement.4 Several field personnel told us that they are
unsure when to perform this function and do not have sufficient resources to
perform it.
The Department has not effectively implemented requirements for its field
personnel to perform end-use checks in response to specific standards or for
selected weapon systems. For example, while the Department identified five
circumstances, referred to as standards, under which field personnel should
initiate end-use checks of defense articles and services, it did not
establish procedures to ensure field personnel received the information
needed to initiate end-use checks or provide guidance on how to apply the
standards. Department officials assumed that the information needed to
initiate end-use checks on the basis of the standards would be available to
field personnel through State Department officials located at overseas
embassies. However, field personnel responsible for performing such checks
are not receiving the needed information from Defense or State Department
officials. As a result, we identified 16 countries where end-use checks were
not performed in fiscal years 1997-99, even though one of the standards was
met in these countries. In addition, specific requirements have been
established to conduct end-use checks for selected weapon systems such as
Stinger missiles. For some other weapon systems, such as Advanced Medium
Range Air-to-Air Missiles, sales agreements allow U.S. personnel to conduct
end-use checks. For both of these weapon systems, the U.S. relies on host
country records to maintain accountability. However, the reliability of such
records varies from country to country. For example, after performing a
worldwide inventory of Stinger missiles, the Department of Defense
identified discrepancies in some countries' records, which left some
missiles unaccounted for. Further, according to our survey and field visits,
no end-use checks of Advanced Medium Range Air-to-Air Missiles have ever
been performed by U.S. personnel.
The Department of Defense has not complied with the reporting requirements
of the end-use monitoring amendment to the Arms Export Control Act because
it does not collect the information needed to do so. The amendment requires
the Department to report annually to Congress on actions taken to implement
the end-use monitoring program. This report is to include a detailed
accounting of the cost and number of personnel associated with its program.
However, field personnel are currently not required to track the resources
they use in performing end-use monitoring activities and only routinely
report on the number of Stinger missile inspections conducted. In its 1997
report to Congress, the President reported only on the steps that the
Department was taking to implement the end-use monitoring program and did
not report on the cost and number of personnel associated with the program.
Until the Department of Defense tracks resources used, it will not be able
to provide Congress with specific end-use monitoring cost and personnel
information.
We have included recommendations in this report to correct weaknesses in the
implementation and reporting of end-use monitoring activities under the
Foreign Military Sales program. In written comments on draft of this report,
the Department of Defense generally agreed with the findings and
recommendations and stated that it will take steps to improve the
implementation of the Foreign Military Sales end-use monitoring program. The
State Department, in its written comments, expressed concern that the report
may suggest that it is responsible for the lack of an effective end-use
monitoring program for Foreign Military Sales because it has not shared
end-use violation reports with the Department of Defense. Although we agree
that the State Department is not responsible for the lack of an effective
program, we believe that a mechanism to provide the information contained in
the violation reports to field personnel is needed for the Department of
Defense to efficiently implement its end-use check standards.
In 1996, the Arms Export Control Act5 was amended to require the
establishment of an end-use monitoring program for defense articles sold,
leased, or exported under the act and the Foreign Assistance Act of 1961,
including articles transferred through the Foreign Military Sales (FMS)
program. The amendment requires that, to the extent practicable, the end-use
monitoring program provide reasonable assurance that the recipient is
complying with U.S. government requirements on the use, transfer, and
security of defense articles and services. The act prescribes specific
purposes for which U.S. defense articles and services may be used, such as
for internal security or legitimate self-defense, and also requires the
recipient to obtain U.S. consent before transferring U.S. defense articles
and services to other parties.6
The amendment also requires that, to the extent practicable, the monitoring
program provide for the end-use monitoring of defense articles and services
in accordance with the State Department's "Blue Lantern" standards. The
State Department developed and published these standards to identify
high-risk defense articles and services exported directly by U.S. defense
companies for regular end-use monitoring.7 In addition, the amendment
requires an annual report to Congress on the actions taken to implement the
end-use monitoring program. The report is to include detailed accounting of
costs and number of personnel associated with the program.
The Secretary of Defense is responsible for implementing end-use monitoring
under the FMS program. Within the Department of Defense (DOD), the Defense
Security Cooperation Agency (DSCA) is the principal agency for carrying out
DOD's security assistance responsibilities, including FMS end-use
monitoring. In 1996, in response to the amendment, DSCA reviewed its
policies and procedures for the accountability of defense articles and
services transferred through the FMS program. At the time, the end-use
monitoring program included −and still includes today--a requirement
that field personnel overseas observe and report, while performing other
duties, on the foreign country's use of U.S. defense articles, defense
services, and training. In addition, DSCA still requires field personnel to
physically inspect and account for Stinger missiles transferred to foreign
governments and includes, on a case-by-case basis, other monitoring
provisions in FMS agreements8 when certain sensitive weapon systems are
sold.
DSCA also developed a new requirement for field personnel to initiate
end-use checks of U.S. defense articles and services transferred through the
FMS program when one of five specific circumstances occurs. In December
1996, DSCA incorporated these circumstances, which it refers to as
standards, into a pamphlet on the end-use monitoring program. Beginning in
1997, a 30-minute presentation on new and existing end-use monitoring
requirements was included in training provided by the Defense Institute of
Security Assistance Management to security assistance personnel.
In most cases, U.S. military personnel assigned to overseas security
assistance offices are responsible for managing and implementing the FMS
program in their country of responsibility. They report through two chains
of command, the ambassador and the Unified Combatant Command.9 The
ambassador is responsible for directing, coordinating, and supervising all
U.S. government personnel within the overseas diplomatic mission. The
Unified Combatant Commands evaluate the performance of security assistance
personnel and approve staffing levels for all overseas security assistance
offices. The number of U.S. military field personnel assigned to overseas
offices varies considerably among countries. The law limits most overseas
offices to six or fewer military personnel with security assistance
management responsibilities. However, Congress authorized, and DOD assigned,
more than six military personnel to offices in nine countries.
Requirement
The Security Assistance Management Manual requires that field personnel
observe and report, during the course of their other duties, on foreign
governments' use of U.S. defense articles and services transferred through
the FMS program. The manual does not prescribe standard end-use monitoring
procedures because the extent of observation will vary considerably from
country to country. As a result, the level of observation of U.S.-supplied
defense equipment varies greatly. Because DSCA has not issued specific
guidance on when to perform the function, field personnel interpret the
requirement to observe and report differently and have different
interpretations of the activities they should perform. Field personnel in 40
of the 68 countries we surveyed told us that they did not carry out
day-to-day observation and reporting on host country use of U.S. defense
articles and services, while field personnel in 28 countries said they did.
For example, field personnel in one country we visited, where nine military
personnel are assigned to security assistance, told us that they had many
opportunities to visit foreign military facilities where U.S.-supplied
weapons were stored and to observe the use of such equipment. However, field
personnel in another country, where only four military personnel are
assigned to security assistance, told us that they spend most of their time
in their office or meeting foreign military officials, only occasionally
visiting military facilities, so do not observe the use of U.S.-supplied
weapons. Both countries purchased substantial amounts of U.S. defense
articles and services through the FMS program.
In 1991, we reported that U.S. military officials in seven countries we
visited interpreted the requirement to observe and report on host country
utilization of U.S. defense articles and services differently and told us
that they did not have structured programs to perform this function. 10 At
the time, we recommended that DSCA develop accountability standards for the
types and amount of control that a recipient country should apply to U.S.
defense items. We also recommended that DSCA revise the Security Assistance
Management Manual to specify the monitoring required to provide reasonable
assurance that recipient countries are meeting conditions pertaining to use,
security, and transfer of U.S. defense articles and services. As a result of
our recommendations, DSCA sent a message to field security assistance
offices in October 1991 reiterating monitoring guidance in the Security
Assistance Management Manual. However, it did not develop accountability
standards or specify the extent of monitoring needed.
According to several of them, field personnel are limited in carrying out
day-to-day observations because DSCA has not issued specific guidance on
when to perform this function or provided sufficient resources to perform
the function on a regular basis. Field personnel contrasted the lack of
guidance for end-use monitoring under the FMS program with the specific
guidance they are provided on how to monitor equipment granted to foreign
countries under the Military Assistance Program,11 which requires field
personnel to track equipment transferred under the program through detailed
inventories. Unified Command officials told us that they do not hold field
personnel accountable for not performing the observation function for
equipment transferred though the FMS program because of the lack of guidance
from DSCA. The officials also told us that they want field personnel to
spend their time on their primary duty, which is to work with foreign
governments on planning the acquisition of defense equipment.
DSCA has not effectively implemented requirements for its field personnel to
conduct checks that verify the end-use of U.S. defense articles and services
transferred under the FMS program. While DSCA identified five standards for
when field personnel should conduct end-use checks, it has not established
procedures to notify field staff of events that should trigger checks or
provided the guidance needed on when action is required. In addition,
certain weapon systems have specific requirements or provisions for end-use
checks that rely on host country records to maintain accountability.
Standards
DSCA identified five circumstances, which it refers to as standards, under
which field personnel are to perform end-use checks of defense articles and
services transferred through the FMS program. Field personnel are to perform
end-use checks when
� there is any indication that an Arms Export Control Act violation has
occurred;
� substantial problems or weaknesses are found when DOD reviews a foreign
government's adherence to U.S. requirements for protecting classified
military information;12
� significant and unusual political or military upheaval in the host country
is impending or has occurred;
� substantial defense interaction or other ties are developing between the
end user and another country whose interests are not compatible with those
of the United States; or
� countries unfriendly to the United States in the region are illicitly
seeking U.S. equipment of types held by the end user.
On the basis of information we obtained from the State Department and from
our survey of 68 overseas posts, we identified 20 countries where end-use
checks were required under one or more of these five standards in fiscal
years 1997-99. However, field personnel in only four of these countries
reported performing end-use checks during that time.13 In some of these
cases, field personnel did not receive information that one of the end-use
check standards applied. In other cases, field staff did not have sufficient
guidance to know when specific circumstances required end-use checks under
the standards.
For example, under the first standard, field personnel are required to
conduct an end-use check within 60 days of the State Department's
notification to Congress that an end-use violation has occurred. The main
purpose of these checks is to verify that the host country is committed to
proper control and use of U.S.-origin items. The State Department reported
12 countries to Congress for end-use violations in fiscal years 1997-99.
Field personnel in only one of these countries, however, responded in our
survey that they had carried out an end-use check. A DSCA official told us
that because the State Department is responsible for reporting end-use
violations to Congress, DSCA assumed that State Department personnel at the
embassy were notifying military field personnel of violations in their
country. However, DSCA officials did not actually determine whether a
mechanism was in place to notify field personnel. Field personnel in the
countries we visited told us that they sometimes learn about alleged
violations through their embassy but do not know whether the violations have
been reported to Congress, thereby requiring an end-use check.
From the establishment of the standard in 1996 through March 2000, the State
Department did not provide any information on end-use violations to DSCA.
State Department officials told us that due to the political sensitivity of
the violation reports, they only provide the reports to select members of
Congress and are not required to provide them to DSCA.14 According to these
officials, the information contained in these violation reports could
seriously harm U.S. relations with the country involved if it was
inadvertently released. In March 2000, DSCA and State officials developed a
procedure for State to provide DSCA with a summary of the information
contained in the violation reports. However, the State Department does not
plan to provide DSCA with the reports themselves. DSCA advised that without
the violation reports, field personnel would not have sufficient information
to determine when to conduct end-use checks on the basis of a specific
violation. Field personnel could benefit from such information by using it
to determine which countries have weaknesses in their ability or willingness
to protect U.S. technology. Field personnel could then more carefully
monitor sensitive or vulnerable defense equipment transferred to these
countries through the FMS program. In addition, information on a country's
ability or willingness to protect U.S. technology is one of the factors used
in the process of approving the transfer of U.S. defense equipment.
End-use checks are also required when weaknesses are identified as a result
of a DOD security survey. DOD's Office of International Security Programs
has a goal of performing these security surveys every 5 years to determine a
foreign government's adherence to U.S. requirements for protecting
classified military information. An interagency forum comprised of State,
DOD, and other agency officials uses the results of these surveys to
evaluate current export policies. While DSCA has access to summaries that
discuss these surveys, it does not get the detailed results of the surveys,
and it has not established a procedure to ensure that field personnel
receive them. Furthermore, DSCA has not provided guidance to field personnel
on when negative information in a security survey report should be
considered a weakness that requires an end-use check to be performed. Field
personnel in the countries we visited told us that there is no process in
place to provide them with results of the security surveys. They may learn
of the results through contacts with other personnel at the embassy, or if
they happen to be involved in coordinating the visit of the security survey
team, but they still do not have a consistent basis for initiating an
end-use check. Further, field personnel told us that because of the lack of
guidance, they are not sure when negative information in a security survey
would be considered a weakness requiring an end-use check.
The other three standards that require end-use checks are based on the
political or military environments of individual countries. While field
personnel may be aware of adverse conditions in their countries, DSCA has
not established guidance or procedures for field personnel to use in
determining when such conditions require an end-use check. For example,
significant military upheaval occurred in both Indonesia and Pakistan within
the last several years. As a result, the State Department determined that
both countries are no longer eligible to purchase U.S. defense articles and
services. However, end-use checks of U.S. defense items already provided
were not performed in either country in response to the standard. DSCA
officials believed that the State Department was responsible for notifying
field personnel that the criteria had been met for an end-use check to be
conducted. However, DSCA and State have never established a procedure for
providing notification to field personnel.
Currently, the end-use monitoring training that DSCA provides to field
personnel consists of a 30-minute presentation during the security
assistance management course at the Defense Institute of Security Assistance
Management. This training is intended to familiarize students with end-use
monitoring requirements. However, this training does not provide any
guidance or procedures on how to execute an end-use monitoring program at
overseas posts or when to initiate end-use checks in response to one of the
five standards.
DSCA relies primarily on host country records to maintain accountability of
weapon systems, such as the Stinger missile, that have specific end-use
check requirements. However, reliability of host country records varies.
Other weapon systems, such as the Advanced Medium Range Air-to-Air Missile
(AMRAAM), may have special monitoring provisions included in the terms of
the sale, but these provisions are not being implemented.
The Security Assistance Management Manual requires mandatory physical
inventory checks by U.S. personnel of Stinger man-portable air defense
missiles after delivery to foreign governments. These requirements are
included in FMS agreements for the missiles as a special condition of sale.
In 1998, DSCA revised the manual and reduced the scope of annual physical
checks by U.S. personnel. Prior to the change, U.S. personnel were required
to perform a 100-percent physical inventory of Stinger missiles each year.
U.S. personnel are now only required to physically inspect 5 percent of
missile inventories each year, but the purchasing country is required to
perform 100-percent inventories and allow U.S. personnel to review its
accountability records. DSCA eliminated the 100-percent annual inventories
after determining that having U.S. personnel perform inventories duplicated
the efforts of foreign government personnel. DSCA determined that these
duplicative efforts did not improve accountability to a degree that
justified the resource expenditures and were detracting from the overall
functions of field personnel. Field officials from the 13 countries in our
survey required to perform annual Stinger missile inventories reported that
they did so.
Because U.S. personnel physically inspect only 5 percent of Stinger missiles
each year, DSCA relies on foreign governments to account for the missiles in
their possession. According to one official with Stinger missile inventory
experience, the revised procedure relies on the foreign government to
perform an all-inclusive annual inventory, including an accounting of
expended items, and to provide this information to U.S. personnel. However,
relying on the foreign government's records may pose a risk to achieving
100-percent accounting of the missiles because the reliability of
accountability systems varies from country to country. For example, in one
country, the government prohibits U.S. field personnel from gaining access
to Stinger missiles located in certain parts of the country, limiting their
ability to check the adequacy of the host country's inventory. DOD has
discovered problems in the past with this country's accountability
procedures. Furthermore, DSCA completed a worldwide baseline inventory in
December 1999 that accounted for most, but not all, Stinger missiles and
identified security concerns in some countries. DSCA is investigating these
discrepancies by asking for more information from these foreign governments
on the disposition of the missiles.
While FMS agreements for the AMRAAM include provisions permitting U.S.
personnel to verify that purchasing countries have met security
requirements, including the verification of inventory numbers, end-use
checks have not been performed on the basis of these provisions. Although
this policy was formalized in 1999, the provisions were included in FMS
agreements for AMRAAM as early as 1994. According to Air Force officials, 11
AMRAAM agreements with 9 countries, out of a total of 29 agreements with 18
countries, contain provisions permitting end-use checks. However, none of
the field personnel in the nine countries that have these provisions
responded in our survey that they conducted any end-use checks on the basis
of these provisions. Field personnel that we visited told us that they would
need specific direction from DSCA or the military departments before they
would initiate end-use checks of AMRAAMs, and no specific direction has been
provided. Senior State Department and Air Force officials told us that the
purpose of these provisions is to provide authority for U.S. government
personnel to perform end-use checks if problems are suspected or identified
with the host country's accountability for the missiles. Because end-use
checks have not been performed under these provisions, information is not
available to evaluate the adequacy of the host countries' accountability for
these missiles.
According to information obtained from the 68 posts we surveyed, end-use
checks were required for only 1 other weapon system besides Stinger missiles
in fiscal years 1997-99. In one country, U.S. personnel annually audit the
effectiveness of the security measures taken to safeguard the classified
components and technology of the M1A1 tank, and particularly its armor.
Another country reported that the U.S. government is asking for special
end-use monitoring of the Patriot Advanced Capability-3 missile. The
monitoring may include unannounced inspections of sensitive missile
components.
The end-use monitoring amendment requires an annual report to Congress on
the actions taken to implement the end-use monitoring program that is to
include detailed accounting of costs and number of personnel associated with
the program. However, DSCA does not collect information on the activities
and resources expended for end-use monitoring and has not reported annually
to Congress as required.
DSCA does not require field personnel to track the allocation of time they
spend on specific FMS responsibilities, so it cannot track the personnel
costs of end-use monitoring activities. We previously reported that DSCA
does not have sufficient information to determine the actual costs of
administering the FMS program.15 Furthermore, officials at both Unified
Commands we visited do not use hours spent by field personnel on end-use
monitoring to justify manning requirements. The total authorized number of
military field personnel that may perform FMS responsibilities was 378 in
fiscal year 1999.
While field personnel submit periodic activity reports to security
assistance managers in the Unified Commands, officials told us that the
reports do not include end-use monitoring activities because they are not
being performed. The reports we reviewed did not include information on
end-use monitoring activities, except for Stinger missile inspections. Field
personnel advised us that they would report end-use monitoring information
only if they observed evidence of misuse of U.S. equipment.
In 1997, the President reported to Congress on end-use monitoring activities
performed under the Arms Export Control Act and the Foreign Assistance Act.
This report contained information on DOD's implementation of end-use
monitoring under the FMS program. In 1998, DOD reported to Congress through
the annual congressional presentation document16 on the level of end-use
monitoring training it provided to field personnel in fiscal year 1997. The
report did not include any information on DOD's end-use monitoring
activities or the resources that it expended on these activities. In 1999,
DSCA did not provide input to the congressional presentation document on
end-use monitoring during fiscal year 1998. DSCA officials attributed this
omission to staff changes. Although the most recent congressional
presentation document, issued in May 2000, contained supporting information
justifying the State Department's end-use monitoring program, it did not
contain any information about DSCA's end-use monitoring of
government-to-government transfers. A DSCA official advised us that he
prepared input on the agency's end-use monitoring program and did not know
why the State Department omitted it.
In response to the 1996 end-use monitoring amendment to the Arms Export
Control Act, DOD issued standards for end-use checks and established
training for overseas field personnel, but it did not issue implementing
guidance or procedures. Without them, DOD's end-use monitoring program
cannot provide assurances that foreign governments are adhering to
conditions placed on U.S. arms transfers. Because adherence to such
conditions is one of the components in the decision-making process of
approving arms transfers, information obtained from the end-use monitoring
program could also be used in the approval process. Further, because DOD has
not collected required information, Congress may be limited in its ability
to evaluate the implementation of the end-use monitoring program or to
determine if additional resources are needed.
To improve the implementation of the end-use monitoring program, we
recommend that the Secretary of Defense, with concurrence from the Secretary
of State,
� issue specific guidance to field personnel on what activities need to be
performed for the routine observation of U.S. defense equipment and
additional guidance for the monitoring of specific weapon systems;
� develop procedures to provide field personnel with the information
necessary to apply the five end-use check standards, including the
information contained in Arms Export Control Act violation reports, and
provide guidance on when to apply the standards;
� reconcile discrepancies in foreign governments' Stinger missile
inventories, where discrepancies exist; and
� comply with the 1996 end-use monitoring amendment by reporting required
information to Congress.
In written comments on a draft of this report, DOD generally agreed with our
findings and recommendations and stated that it plans to take steps to
improve the implementation of the Foreign Military Sales end-use monitoring
program. In response to our first recommendation on routine observation and
specific weapon monitoring, DOD stated that it has drafted an enhanced
end-use monitoring program that it will coordinate with the State
Department. The program would specifically target high-risk defense articles
for random annual end-use checks. In response to our other three
recommendations, DOD plans to (1) develop standardized information necessary
for field personnel to apply the five end-use check standards and provide
them with guidance on when to apply the standards, (2) task field personnel
to ensure that an action plan is in place to rectify any discrepancies in
Stinger missile inventories, and (3) require field personnel to report
work-years and dollars associated with Foreign Military Sales end-use
monitoring activities in order to comply with the Arms Export Control Act
reporting requirements. DOD's comments are reprinted in appendix II.
In written comments on a draft of this report, the State Department
expressed concern that the report may suggest that it is responsible for the
lack of an effective end-use monitoring program for Foreign Military Sales
because it has not shared end-use violation reports with DOD. State said
that the violation reports it prepares for Congress are based on information
that is frequently available to both State and DOD simultaneously and that
the violation reports are not an effective driver for initiating end-use
checks.
We agree that the State Department is not responsible for the lack of an
effective end-use monitoring program for Foreign Military Sales, but as we
state in our report, DOD needs the information contained in the end-use
violation reports to implement its end-use check standards. According to
DOD, the purpose of conducting end-use checks under this specific standard
is to verify, after the identification of a violation, that the foreign
government is committed to the proper control and use of U.S.-origin items.
In 1996, when DOD proposed this end-use check standard, it coordinated with
the State Department. On the basis of our discussions with both Defense and
State officials, there is no indication that the State Department raised
objections to the standards at that time. While the initial intelligence may
be available to both agencies, the State Department investigates allegations
to confirm the existence of a violation before it reports to Congress. A
separate investigation by DOD officials of the same allegations would
duplicate the State Department's efforts. In order to allow flexibility, we
did not recommend that the State Department provide the end-use violation
reports to DOD. We have modified our recommendation that the Secretary of
Defense develop procedures to provide field personnel with the actual
violation reports, and instead recommend that the Secretary provide the
information contained in the violation reports. We continue to believe that
sharing the information contained in the State Department's violation
reports is the most efficient means for field personnel to implement DOD's
current end-use check standards. The State Department's comments are
reprinted in appendix III.
To assess implementation of DOD's end-use monitoring requirements for
defense articles and services transferred under the FMS program, we
interviewed DOD and State officials at headquarters and field locations. We
obtained documentation on roles and responsibilities of organizations
involved in end-use monitoring. We obtained and reviewed laws, regulations,
policies, and procedures for end-use monitoring of defense articles and
services transferred through the FMS program in government-to-government
transfers and directly, under export licenses, by U.S. defense contractors
to foreign purchasers. To become familiar with the roles and
responsibilities of field personnel, we attended a training course for
security assistance officials assigned to overseas posts at the Defense
Institute of Security Assistance Management.
We also used the Internet to survey personnel assigned to 68 overseas posts
to determine the extent of end-use monitoring activities conducted in fiscal
years 1997-99. We visited two Unified Command headquarters offices and field
offices responsible for security assistance programs in five countries. Most
of the survey countries had purchased sensitive or significant defense
equipment. We selected countries by (1) reviewing a cumulative list of FMS
equipment purchased, as of August 1999, for all participating FMS entities
and (2) consulting with officials at DOD and State to obtain their input for
additions or deletions. Countries included in our survey are listed in
appendix I. After reviewing initial responses to our survey, we obtained
clarifications and additional information from 34 posts through e-mail
exchanges, telephone contacts, and field visits to five countries (listed
below). To evaluate end-use monitoring activities, procedures, resources,
and limitations, we visited the U.S. European Command, the U.S. Pacific
Command, and five countries in the areas of responsibility of these two
commands: Germany, Greece, Korea, Spain, and Thailand.
To determine the extent to which DOD has satisfied the reporting
requirements of the end-use monitoring amendment to the Arms Export Control
Act, we obtained copies of the initial report on the implementation status
sent by the President to Congress in August 1997 and of the annual
congressional presentation documents for fiscal years 1998-2001. We
discussed reporting requirements and the Department's compliance with the
requirements with officials responsible for input on end-use monitoring of
government-to-government transfers.
We performed our review between November 1999 and August 2000 in accordance
with generally accepted government auditing standards.
We are sending copies of this report to the Honorable Sam Gejdenson, Ranking
Minority Member, Committee on International Relations, U.S. House of
Representatives, and the Honorable Jesse Helms and the Honorable Joseph
Biden in their capacities as Chairman and Ranking Minority Member, Committee
on Foreign Relations, U.S. Senate. We are also sending copies to the
Honorable Madeleine K. Albright, Secretary of State; the Honorable William
S. Cohen, Secretary of Defense; and the Honorable Jacob J. Lew, Director,
Office of Management and Budget. We will also make copies available to
others on request. Please contact me at (202) 512-4841 if you have any
questions concerning this report. Contacts and key contributors to this
assignment are listed in appendix IV.
Sincerely yours,
Katherine V. Schinasi
Associate Director
Defense Acquisitions Issues
List of Countries Included in Our Survey of End-Use Monitoring
Argentina Korea
Australia Kuwait
Austria Latvia
Bahrain Lebanon
Belgium Lithuania
Bolivia Luxembourg
Botswana Malaysia
Brazil Mexico
Cameroon Morocco
Canada New Zealand
Chad Nicaragua
Chile Norway
Colombia Oman
Costa Rica Panama
Czech Republic Paraguay
Denmark Peru
Dominican Republic Philippines
Ecuador Portugal
Egypt Saudi Arabia
El Salvador Singapore
Estonia South Africa
Ethiopia Spain
Finland Sweden
France Switzerland
Germany Taiwan
Greece Thailand
Guatemala The Netherlands
Honduras Tunisia
Indonesia Turkey
Israel United Arab Emirates
Italy United Kingdom
Japan Uruguay
Jordan Venezuela
Kenya Yemen
Comments From the Department of Defense
Comments From the Department of State
GAO Contacts and Staff Acknowledgments
Katherine V. Schinasi (202) 512-4841
Thomas J. Denomme (202) 512-4287
In addition to those named above, John Neumann, Anne W. Howe, Paula J.
Haurilesko, Jack E. Edwards, David J. Henry, and Eric E. Petersen made key
contributions to this report.
(707450)
1. End-use monitoring refers to the procedures used to verify that foreign
governments are using and controlling U.S. defense articles and services in
accordance with U.S. terms and conditions of the transfer. Verification
measures, referred to as end-use checks, range from contacting the
appropriate foreign government representative for information to physical
inspection by U.S. personnel.
2. A security assistance program to transfer U.S. defense articles or
services to foreign governments and international organizations from
Department of Defense stocks or through Defense-managed contracts.
3. Foreign Military Sales: Review Process for Controlled Missile Technology
Needs Improvement (GAO/NSIAD-99-231, Sep. 29, 1999).
4. Using an Internet survey, we obtained end-use monitoring information from
military field personnel assigned to 68 countries. These countries
represented all of the countries that had purchased sensitive or significant
defense equipment through the Foreign Military Sales program, according to
Defense and State Department officials and our evaluation of program data.
5. 22 U.S.C. 2785.
6. 22 U.S.C. 2753-2754.
7. The State Department uses the Blue Lantern standards to conduct checks of
selected export license applications prior to approval to determine the
legitimacy of the transaction and the end-user. The State Department also
conducts checks after defense articles or services have been shipped to
determine whether they have been received by the authorized foreign entity
and, in some instances, whether they are being used in accordance with the
terms and conditions of the license.
8. FMS agreements are signed by the U.S. government and a recipient foreign
government or international organization and are used by DOD to sell U.S.
defense articles and services through the FMS program.
9. A Unified Combatant Command has operational control of U.S. combat forces
from two or more military departments and is normally organized on a
geographical basis.
10. Military Aid: Stronger Oversight Can Improve Accountability
(GAO/NSIAD-92-41, Dec.16, 1991).
11. Since the 1950s, the United States has provided military equipment to
foreign countries on a grant basis under the Military Assistance Program.
Beginning in 1982, funds from that program were merged into the FMS program
for recipients to purchase defense items through FMS credits. Equipment
transferred under the prior program is still subject to monitoring
requirements.
12. These reviews are conducted by DOD's Office of International Security
Programs in accordance with General Security of Military Information
Agreements in which the United States and another country agree to mutually
protect classified military information.
13. We did not ask field personnel to indicate which of the five standards
had been met.
14. The Arms Export Control Act requires that violations be reported to the
Speaker of the House of Representatives and the Committee on Foreign
Relations of the Senate. (22 U.S.C. 2753 (c), (e).)
15. Foreign Military Sales: Efforts to Improve Administration Hampered by
Insufficient Information (GAO/NSIAD-00-37, Nov. 22, 1999).
16. This document supports the State Department's request for resources to
carry out foreign operations, including DOD's security assistance programs.
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