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entitled 'Persian Gulf: Implementation Gaps Limit the Effectiveness of
End-Use Monitoring and Human Rights Vetting for U.S. Military
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
November 2011:
Persian Gulf:
Implementation Gaps Limit the Effectiveness of End-Use Monitoring and
Human Rights Vetting for U.S. Military Equipment:
GAO-12-89:
GAO Highlights:
Highlights of GAO-12-89, a report to congressional requesters.
Why GAO Did This Study:
The United States has authorized billions of dollars in arms sales and
exports to six Persian Gulf countries—Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia, and the United Arab Emirates (UAE). However, regional
tensions and civil conflicts have raised concerns about the security
and use of arms sold or exported to these countries. The Departments
of Defense (DOD) and State (State) established end-use monitoring
programs to ensure that these arms are used as intended. This report
assesses the extent to which DOD and State (1) safeguard U.S. military
technologies sold or exported to the Gulf countries, (2) provide
similar or differing levels of protection for the same military
technologies, and (3) vet recipients of U.S.-funded military training
and equipment for potential human rights violations. To address these
objectives, GAO reviewed laws and regulations, analyzed data and
documentation, and interviewed officials in Washington, D.C., and the
Gulf countries.
What GAO Found:
Gaps in implementation limit the effectiveness of U.S. efforts to
safeguard military equipment sold or exported to the Persian Gulf.
Under the Golden Sentry program, DOD did not document its efforts to
verify host country security and accountability procedures for
sensitive military equipment, and DOD personnel in five of six Gulf
countries did not document their activities to monitor less sensitive
items. Under its Blue Lantern program, State officials conducted
postshipment checks without visiting end-users of U.S. military
equipment in 10 of 13 cases GAO reviewed, and delays in requesting and
conducting checks have prevented State from verifying receipt of some
items. In addition, State closed post-shipment checks without
receiving confirmation of receipt in 2 of 13 cases GAO reviewed.
Figure: Examples of Military Equipment Subject to End-Use Monitoring
in the Persian Gulf:
[Refer to PDF for image: 3 photographs]
AIM-120 Advanced Medium Range Air-to-Air Missiles;
Night vision device;
Javelin Missile.
Source: DOD.
[End of figure]
DOD and State both treat night vision devices (NVD) as a sensitive
technology, but their end-use monitoring for these items varies
markedly, leaving them prone to diversion. Man-portable NVDs sold
through Foreign Military Sales (FMS) must be tracked by serial number,
inventoried following delivery, and inventoried periodically
thereafter. In contrast, State does not track NVDs by serial number or
conduct regular inventories for NVDs exported through direct
commercial sales (DCS). As a result, less advanced NVDs purchased
through FMS have received more rigorous monitoring than more advanced
NVDs purchased through DCS. In Saudi Arabia, DOD officials inventoried
thousands of second-generation NVDs that were purchased through FMS in
the early 1990s. Meanwhile, State approved licenses for the sale of
thousands of advanced, third-generation NVDs to Saudi Arabia since
2005, which are subject to less rigorous end-use monitoring.
State has conducted human rights vetting for hundreds of individuals
and units that were nominated for U.S.-funded training in the Gulf
countries, but has not conducted comparable vetting for anticipated
recipients of about $188 million in U.S.-funded equipment for Bahrain
and Oman. Such vetting is especially critical given Bahrain’s use of
its security forces to quell public demonstrations since Spring 2011.
In November 2010, State established a new system for human rights
vetting in the Gulf countries and has since vetted almost 800
individuals and units nominated for U.S.-funded training. However,
recipients of equipment are not screened through this system.
According to State, it does not vet recipients of equipment at the
individual or unit level because the recipients are not generally
known at the time that the assistance is approved, and State does not
have procedures in place to conduct vetting later in the acquisition
process.
What GAO Recommends:
DOD and State should harmonize their end-use monitoring for NVDs and
strengthen procedures to verify compliance with security and
accountability requirements, among other things. Also, State should
implement individual- and unit-level human rights vetting for
recipients of equipment. DOD agreed with all of the recommendations.
State agreed with two of the recommendations, but disagreed that it
should develop guidance on the use and timing of site visits and
closure of Blue Lantern cases. GAO believes the recommendations remain
valid on the need for policies, procedures, and guidance.
View [hyperlink, http://www.gao.gov/products/GAO-12-89] or key
components. For more information, contact Loren Yager at (202) 512-
4347 or yagerl@gao.gov.
[End of section]
Contents:
Letter:
Background:
Implementation Gaps Limit the Effectiveness of U.S. Efforts to
Safeguard Military Equipment in the Persian Gulf Countries:
DOD's and State's End-Use Monitoring Varies Significantly for NVDs
Purchased by Persian Gulf Countries:
State Conducts Human Rights Vetting for Recipients of U.S.-Funded
Training in Gulf Countries, but Does Not Conduct Comparable Vetting
for Recipients of Equipment:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: Comments from the Department of State:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Defense Articles Purchased by the Gulf Countries Requiring
Golden Sentry Enhanced End-Use Monitoring:
Table 2: Compliance Assessment Visits Conducted by DOD in the Gulf
Countries:
Table 3: Objectives of Prelicense and Postshipment Blue Lantern Checks:
Table 4: Number of Blue Lantern Checks Conducted in the Persian Gulf
Countries, Fiscal Years 2005 through 2010:
Table 5: Inventory Status for Defense Articles in the Gulf Countries
Requiring Enhanced End-Use Monitoring, as of August 23, 2011:
Table 6: Number of Individuals and Units in the Gulf Countries Vetted
through INVEST, as of August 15, 2011:
Table 7: Foreign Military Financing Received by Bahrain and Oman,
Fiscal Years 2005 through 2010:
Figures:
Figure 1: Map of Gulf Cooperation Council Countries:
Figure 2: Life Cycle of a Blue Lantern Check:
Figure 3: Examples of Man-Portable NVDs:
Figure 4: Number of NVDs in the Inventories of the Gulf Countries, as
of August 23, 2011, that Had Been Purchased Through FMS:
Figure 5: State's Human Rights Vetting Process in the Gulf Countries:
Abbreviations:
AECA: Arms Export Control Act of 1976:
DCS: direct commercial sales:
DOD: Department of Defense:
DSCA: Defense Security Cooperation Agency:
FMS: Foreign Military Sales:
INVEST: International Vetting and Security Tracking:
NVD: night vision device:
SCIP: Security Cooperation Information Portal:
State: Department of State:
UAE: United Arab Emirates:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
November 17, 2011:
The Honorable Ileana Ros-Lehtinen:
Chairman:
Committee on Foreign Affairs:
House of Representatives:
The Honorable Dan Burton:
House of Representatives:
The Honorable Mike Pence:
House of Representatives:
The Persian Gulf remains a region of significant national security
concern to the United States as Iran pursues nuclear weapons, the
United States continues to withdraw forces from Iraq, and political
upheaval threatens the stability of governments in the region.
Regional tensions, civil conflicts, and concerns about terrorist
groups obtaining weapons have raised questions about the security and
use of military equipment originating in the United States. From
fiscal years 2005 through 2010, the United States authorized billions
of dollars in arms sales and arms exports[Footnote 1] to Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)
[Footnote 2] to promote national security and foreign policy goals.
Transfers to the UAE are of particular concern, as the UAE has been
cited by Congress as a transshipment point for illicit exports to
Iran. In 1996, Congress required that the President establish a
program to provide for the end-use monitoring of arms sales and
exports. The Department of Defense (DOD) operates its Golden Sentry
program to monitor arms sold through Foreign Military Sales (FMS), and
the Department of State (State) operates its Blue Lantern program to
monitor arms exported through direct commercial sales (DCS).
You asked us to review arms sales and arms exports to the Persian
Gulf. This is the second of two reports on the subject. Our first
report found that DOD and State did not consistently document how arms
sales and arms exports to the Gulf countries advanced U.S. foreign
policy and national security interests.[Footnote 3] In addition, we
found that State's database for licensing defense exports did not
enable reliable estimates of the total value of authorized arms
exports to the Gulf countries. The database included an undetermined
amount of authorizations to U.S. military units stationed in those
countries and counted some license values twice. In comparison, we
were able to determine that DOD-administered FMS authorized $22
billion in arms sales to the Gulf countries from fiscal years 2005
through 2009.
This report assesses the extent to which DOD and State (1) safeguard
U.S. military technologies sold or exported to Gulf countries through
their end-use monitoring programs, (2) provide similar or differing
levels of protection for the same military technologies sold or
exported, and (3) vet recipients of military training and equipment
for potential human rights violations.
To address these objectives, we reviewed laws and regulations,
analyzed data and documentation related to DOD's and State's end-use
monitoring programs, and interviewed officials responsible for end-use
monitoring and human rights vetting in Washington, D.C., and the Gulf
countries. We reviewed and analyzed data and management reports from
DOD's Security Cooperation Information Portal detailing the status of
end-use monitoring activities in the Gulf countries, and reviewed DOD
assessments evaluating compliance with end-use monitoring
requirements. We drew a nongeneralizable sample of 34 Blue Lantern
checks--including 25 checks selected randomly and 9 selected
judgmentally--and reviewed State cables associated with these
checks.[Footnote 4] We also obtained and analyzed State export
licensing data to identify licenses for night vision devices (NVD)
authorized for export to the Gulf countries. To assess the extent of
human rights vetting for recipients of U.S. military equipment and
training in the Gulf countries, we reviewed State's human rights
vetting guidance, as well as data and documentation on vetting. We
conducted audit work in Saudi Arabia and the UAE, during which we met
with host country officials and observed end-use monitoring checks for
missiles and NVDs. We conducted phone interviews with U.S. officials
responsible for end-use monitoring and human rights vetting in the
countries that we did not visit--Bahrain, Kuwait, Oman, and Qatar.
We conducted this performance audit from October 2010 to November 2011
in accordance with generally accepted government auditing standards.
These standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. Appendix I
provides a more detailed description of our scope and methodology.
Background:
Gulf Cooperation Council:
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE are key U.S.
allies in the Persian Gulf (see figure 1). The countries are primarily
governed by longstanding ruling families under emirates and
monarchies, and, with the exception of Bahrain and Oman, each
possesses large oil or gas reserves. Together, these countries
constitute the Gulf Cooperation Council, which they established in
1981 as a means to coordinate on security concerns, among other
issues. The United States maintains close security ties with the Gulf
countries. For example, Saudi Arabia and the UAE are two of the
largest purchasers of U.S. arms in the world, the U.S. Navy's 5th
Fleet is headquartered in Bahrain, and U.S. Central Command operates
its forward command facilities in Qatar. Moreover, the United States
has designated Bahrain and Kuwait as major non-NATO allies.
Figure 1: Map of Gulf Cooperation Council Countries:
[Refer to PDF for image: map]
Depicted on the map:
Bahrain;
Kuwait;
Oman;
Qatar;
Saudi Arabia;
UAE.
Source: GAO; Map Resources.
[End of figure]
In the 1990s, the U.S. military presence in the Persian Gulf and
efforts to promote greater coordination among the Gulf Cooperation
Council states was primarily aimed at containing conventional threats
from Iraq and Iran. More recently, U.S. security cooperation has
focused on addressing transnational terrorism and proliferation
networks and confronting regional security threats, in particular
Iran. However, popular uprisings in the Persian Gulf and elsewhere in
the Arab world strained U.S. relations with some Gulf Cooperation
Council countries in 2011 and have drawn into focus the tension
between preserving existing security relationships and promoting human
rights. For example, human rights organizations and other observers
have noted that the government in Bahrain may have violated human
rights in its attempt to quell protests in February 2011 and suppress
dissent in their aftermath.
Laws Governing Arms Exports and Sales:
The Arms Export Control Act of 1976 (AECA) authorizes the President to
control the sale or export of defense articles[Footnote 5] and
services.[Footnote 6] The U.S. government sells defense articles and
services to foreign governments and international organizations
through FMS and authorizes the commercial export of defense articles
and services to foreign governments and other entities through DCS.
State has overall regulatory responsibility for both FMS and DCS, but
DOD's Defense Security Cooperation Agency (DSCA) administers FMS, and
the individual military departments implement the sale and delivery
process for FMS.[Footnote 7] State's Directorate of Defense Trade
Controls administers DCS by licensing exports from U.S. companies to
foreign entities.
The AECA, as amended, also requires end-use monitoring for the sale or
export of defense articles and services, and these responsibilities
are delegated to the same agencies that administer the programs. A
1988 amendment to the AECA required the President to develop standards
for identifying high-risk commercial exports for regular end-use
monitoring.[Footnote 8] In consultation with other agencies, State
developed a list of standards that may signal an illegal export or
diversion, and therefore warrant end-use monitoring.[Footnote 9] In
1996, Congress amended the AECA to require the President to establish
a program for monitoring the end-use of defense articles and defense
services sold, leased, or exported under the AECA, including through
FMS and DCS.[Footnote 10] The amendment specified that the program
should provide reasonable assurances that the recipient is complying
with restrictions imposed by the U.S. government on the use, transfer,
and security of the defense articles and defense services. DOD's DSCA
administers the Golden Sentry program to monitor the end-use of
defense articles and defense services transferred through FMS, and
State's Directorate of Defense Trade Controls administers the Blue
Lantern program to conduct end-use monitoring for defense articles and
defense services exported under DCS. U.S. officials located in the
Gulf countries conduct the monitoring for each program. DOD officials
at Security Cooperation Organizations[Footnote 11] conduct Golden
Sentry end-use monitoring and State officials at U.S. embassies
conduct Blue Lantern checks. Policies and procedures for the Golden
Sentry and Blue Lantern programs are outlined in DOD's Security
Assistance Management Manual and State's Blue Lantern Guidebook,
respectively.
Restrictions on Security Assistance Based on Human Rights Concerns:
A provision in the Foreign Assistance Act, as amended in 2008,
commonly referred to as the "Leahy Law," prohibits the United States
from providing any assistance under the act or AECA to any unit of the
security forces of a foreign country if there is credible information
that such unit has committed gross violations of human rights.
[Footnote 12] This law applies to assistance provided through the
International Military Education and Training and Foreign Military
Financing programs, among others. From 1997 through 2007, this
provision was included as an amendment to State's annual foreign
operations appropriation bills. In 2008, the Foreign Assistance Act
was amended to make these restrictions permanent. In addition, DOD's
annual appropriations bill contains a similar "Leahy" provision that
applies to DOD-funded training programs.[Footnote 13] This provision
prohibits any funding made available through DOD's appropriations bill
from being used to train a unit of security forces or foreign police
forces[Footnote 14] if State provides to DOD credible evidence of
gross human rights violations by such unit. According to DOD policy,
this provision applies to Joint Combined Exchange Training and the
Combating Terrorism Fellowship Program--two training programs that DOD
has funded in the Persian Gulf countries.
The State and DOD Leahy provisions do not apply to training and
equipment purchased through FMS or DCS using host country funds. These
purchases are subject to a separate human rights provision, which
limits security assistance to countries whose governments engage in a
consistent pattern of gross violations of human rights.[Footnote 15]
According to State, it reviews all arms sales and exports through FMS
and DCS for human rights concerns, among other things. State's review
process is described in greater detail in our previous report on arms
sales and arms exports to the Gulf countries.[Footnote 16]
Implementation Gaps Limit the Effectiveness of U.S. Efforts to
Safeguard Military Equipment in the Persian Gulf Countries:
DOD Monitors Military Equipment Based on Lists of Sensitive Items,
while State Monitors it Case-by-Case Based on Sensitivity and Other
Risk Factors:
DOD Conducts Two Levels of End-Use Monitoring and Periodic Compliance
Visits:
Under its Golden Sentry program, DOD conducts two levels of
monitoring--enhanced end-use monitoring and routine end-use
monitoring--based on a list of specific sensitive defense articles.
DOD conducts enhanced end-use monitoring for specifically identified
sensitive defense articles, services, and technologies. Letters of
Offer and Acceptance[Footnote 17] authorizing the sale of these items
to countries in the Persian Gulf and elsewhere may contain specialized
notes or provisos specifying that the purchaser must adhere to certain
physical security and accountability requirements.[Footnote 18] For
example, specialized notes for Advanced Medium Range Air-to-Air
Missiles require the purchaser to conduct semiannual inventories by
serial number and establish procedures to provide a continuous
accounting for the items. To verify compliance with these provisos,
DOD policy requires that it conduct serial number inventories for
items designated as requiring enhanced end-use monitoring following
delivery and at regular intervals thereafter. As of July 2011, DOD had
designated 16 defense articles that always require enhanced end-use
monitoring when sold though FMS.[Footnote 19] As of August 23, 2011,
the Gulf countries have purchased 9 of these 16 defense articles,
including NVDs and various missiles (see table 1).
Table 1: Defense Articles Purchased by the Gulf Countries Requiring
Golden Sentry Enhanced End-Use Monitoring:
Defense article: Communications Security Equipment[A];
Gulf country: Bahrain: [Check];
Gulf country: Kuwait: [Check];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Check];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Check].
Defense article: STINGER missiles and gripstocks;
Gulf country: Bahrain: [Check];
Gulf country: Kuwait: [Empty];
Gulf country: Oman: [Empty];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Empty].
Defense article: Night Vision Devices (NVD);
Gulf country: Bahrain: [Check];
Gulf country: Kuwait: [Check];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Check].
Defense article: Javelin missiles and command launch units;
Gulf country: Bahrain: [Empty];
Gulf country: Kuwait: [Empty];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Empty];
Gulf country: UAE: [Check].
Defense article: TOW-2B missiles;
Gulf country: Bahrain: [Empty];
Gulf country: Kuwait: [Check];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Empty].
Defense article: Advanced Medium Range Air-to-Air Missiles (AMRAAM);
Gulf country: Bahrain: [Check];
Gulf country: Kuwait: [Check];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Check].
Defense article: AIM-9X Advanced Sidewinder Air-to-Air missiles;
Gulf country: Bahrain: [Empty];
Gulf country: Kuwait: [Empty];
Gulf country: Oman: [Empty];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Empty].
Defense article: Harpoon Block II missiles;
Gulf country: Bahrain: [Empty];
Gulf country: Kuwait: [Empty];
Gulf country: Oman: [Check];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Empty];
Gulf country: UAE: [Check].
Defense article: Large Aircraft Infrared Countermeasures (LAIRCM)[B];
Gulf country: Bahrain: [Check];
Gulf country: Kuwait: [Empty];
Gulf country: Oman: [Empty];
Gulf country: Qatar: [Empty];
Gulf country: Saudi Arabia: [Check];
Gulf country: UAE: [Empty].
Defense article: Standoff Land Attack Missile Expanded Response (SLAM-
ER) missiles;
Defense article: Joint Air-to-Surface Standoff Missiles (JASSM);
Defense article: Joint Standoff Weapon (JSOW);
Defense article: Standard Missile-3 (SM-3);
Defense article: Tomahawk missile;
Defense article: Unmanned Aerial System (UAS)[C];
Defense article: Terminal High Altitude Area Defense (THAAD)[D];
Gulf country: The Gulf countries have not purchased any of these
defense articles.
Source: DSCA.
[A] Enhanced end-use monitoring for Communications Security Equipment
is administered by the National Security Agency and combatant
commands, rather than DSCA. DSCA does not track Communications
Security Equipment in its end-use monitoring database. Therefore, we
do not include such equipment in further analyses of end-use
monitoring in the Gulf countries that appear in this report.
[B] Saudi Arabia has purchased Large Aircraft Infrared Countermeasures
(LAIRCM) systems through FMS, but they have not yet been delivered.
[C] This refers to the most sensitive, category 1 unmanned aerial
systems only. All other unmanned aerial systems are covered under
routine end-use monitoring.
[D] On September 9, 2008, DSCA notified Congress of a possible sale of
three THAAD fire units and associated equipment and services worth
almost $7 billion. The UAE would be the first foreign purchaser of
this missile defense system, although, as of October 27, 2011, the
sale had not been finalized. The THAAD weapon system consists of
missiles, mobile launchers, ground based radars, a tactical operations
center, and support equipment. It intercepts ballistic missile
warheads at high altitudes, therefore reducing the probability that
debris and chemical or biological agents will reach the ground in
damaging amounts.
[End of table]
DOD conducts routine end-use monitoring for defense articles and
services sold through FMS that do not have any unique conditions
associated with their transfer. Routine end-use monitoring is
conducted in conjunction with other required security-related duties.
For example, U.S. officials might observe how a host country's
military is using U.S. equipment when visiting a military installation
on other business. Given the large volume of defense articles
transferred through FMS, DSCA officials have instructed DOD personnel
to concentrate routine end-use monitoring efforts on a "watch list" of
specific categories of items, including battle tanks, artillery
systems, fixed wing aircraft, and helicopters. All other defense
articles, such as uniforms, radios, and canteens, are still subject to
routine end-use monitoring, but receive a lower priority.
In addition to enhanced and routine end-use monitoring, DOD conducts
periodic Compliance Assessment Visits to review and evaluate the
Security Cooperation Organizations' and host nations' overall end-use
monitoring compliance programs. A Compliance Assessment Visit
evaluates a country's compliance with specific physical security and
accountability agreements, provisos, and other terms of sale. It may
include facility visits, records reviews, reviews of local security
procedures, and inventories of U.S. origin defense articles[Footnote
20]. As of October 27, 2011, DOD has conducted a Compliance Assessment
Visit in each of the Gulf countries except for Qatar, which has not
received any defense articles requiring enhanced end-use monitoring
except for Communications Security Equipment (see table 2). In May
2009, we reported that DOD did not have written guidance for selecting
countries for compliance visits and recommended that DOD create
written guidance that incorporated a risk-based approach.[Footnote 21]
According to DOD, it published written guidelines for identifying
countries to receive compliance visits in its May/June 2011 End-Use
Monitoring newsletter, and these guidelines will be included in
forthcoming revisions to the Security Assistance Management Manual.
These guidelines will be broad enough to take various factors into
consideration, including the political and military stability of the
region, the history of a country's compliance with the Golden Sentry
program, and the makeup of a country's inventory of defense articles
requiring enhanced end-use monitoring, among other factors.
Table 2: Compliance Assessment Visits Conducted by DOD in the Gulf
Countries:
Gulf country: Bahrain;
Fiscal year: 2005: [Check];
Fiscal year: 2006: [Empty];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Empty];
Fiscal year: 2009: [Empty];
Fiscal year: 2010: [Empty];
Fiscal year: 2011: [Check].
Gulf country: Kuwait;
Fiscal year: 2005: [Empty];
Fiscal year: 2006: [Check];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Empty];
Fiscal year: 2009: [Empty];
Fiscal year: 2010: [Empty];
Fiscal year: 2011: [Empty].
Gulf country: Oman;
Fiscal year: 2005: [Empty];
Fiscal year: 2006: [Empty];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Empty];
Fiscal year: 2009: [Check];
Fiscal year: 2010: [Empty];
Fiscal year: 2011: [Empty].
Gulf country: Qatar[A];
Fiscal year: 2005: [Empty];
Fiscal year: 2006: [Empty];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Empty];
Fiscal year: 2009: [Empty];
Fiscal year: 2010: [Empty];
Fiscal year: 2011: [Empty].
Gulf country: Saudi Arabia[B];
Fiscal year: 2005: [Empty];
Fiscal year: 2006: [Check];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Check];
Fiscal year: 2009: [Empty];
Fiscal year: 2010: [Empty];
Fiscal year: 2011: [Empty].
Gulf country: UAE;
Fiscal year: 2005: [Empty];
Fiscal year: 2006: [Empty];
Fiscal year: 2007: [Empty];
Fiscal year: 2008: [Empty];
Fiscal year: 2009: [Empty];
Fiscal year: 2010: [Check];
Fiscal year: 2011: [Empty].
Source: DSCA.
[A] DOD has not conducted a Compliance Assessment Visit in Qatar,
which has not received any defense articles through FMS requiring
enhanced end-use monitoring except for Communications Security
Equipment. End-use monitoring for Communications Security Equipment is
managed by the National Security Agency and combatant commands, and
DSCA does not track this equipment in its end-use monitoring database.
[B] DOD conducted its fiscal year 2006 Compliance Assessment Visit to
assess the end-use monitoring program for military equipment sold to
the Saudi Arabia National Guard. The fiscal year 2008 Compliance
Assessment Visit assessed the end-use monitoring program for military
equipment purchased by the Saudi Ministry of Defense and Aviation.
[End of table]
State Conducts End-use Monitoring on a Case-by-Case Basis by
Evaluating the Sensitivity of Items and Other Perceived Risk Factors:
Under its Blue Lantern program, State conducts end-use checks based on
a case-by-case review of export license applications against
established criteria or "warning flags" for determining potential
risks. However, unlike DOD, State does not maintain a list of specific
defense articles that are always subject to end-use monitoring. State
categorizes risk factors into three types of indicators:
* End-use/end-user indicators. These include unfamiliar end-users or
derogatory information on an end-user's business.
* Commodity indicators. These include requests for especially
sensitive technologies, such as NVDs, cruise missile technologies, or
unmanned aerial vehicles.
* Country/shipment indicators. These include transshipment through
multiple countries or countries of known diversion risk, or vague or
suspicious delivery dates or locations.
Since fiscal year 2005, State has conducted two types of end-use
monitoring checks in the Persian Gulf countries--prelicense checks and
postshipment checks.[Footnote 22] State conducts prelicense checks
prior to issuance of a license and conducts postshipment checks after
an export has been approved and shipped. Table 3 summarizes the
objectives of prelicense and postshipment checks.
Table 3: Objectives of Prelicense and Postshipment Blue Lantern Checks:
Prelicense check:
* confirm the bona fides of an unfamiliar consignee or end-user;
* ensure details of a proposed transaction match those identified on a
license application;
* confirm that the end-user listed on the license application has
ordered the items in question;
* verify the security of facilities where items may be permanently or
temporarily housed;
* help to ensure that the foreign party understands its
responsibilities under U.S. regulations and law.
Postshipment check:
* confirm that the licensed items exported from the United States have
been received by the party or parties named on the license;
* determine whether the items have been or are being used in
accordance with the provisions of that license;
* identify any parties involved in the transaction that are not listed
on the license application;
* inquire with the consignee and end-user as to the specific use and
handling of the exported articles, or other issues related to the
transaction.
Source: State.
[End of table]
Blue Lantern checks are often initiated when a State Compliance
Specialist or Licensing Officer in Washington, D.C., identifies one or
more risk factors associated with a transaction. A check may also be
initiated if an entity of concern is associated with a transaction
outlined in an export license application. As shown in figure 2,
State's Directorate of Defense Trade Controls requests a Blue Lantern
check by sending a cable to the U.S. embassy in the country that is
involved in the transaction. The cable may request that embassy
personnel make inquiries to confirm the bona fides of the specified
end-user or other parties to the transaction. It may also include
specific questions for the embassy to ask the subject or subjects of
the check. When embassy personnel have completed the check, they send
a return cable with their findings, and State determines whether to
close the case favorably or unfavorably. According to State, if the
critical questions have been answered satisfactorily, the transaction
appears legitimate, and the bona fides of the end-users or other
parties are confirmed, the case will likely be closed "favorable." If
the transaction's legitimacy cannot be confirmed, the consignees or
end-user appear untrustworthy, or if there are other troubling
discrepancies, the case will likely be closed "unfavorable."
Figure 2: Life Cycle of a Blue Lantern Check:
[Refer to PDF for image: illustration]
1) State sends cable to request check.
2) U.S. Embassy conducts inquiry of Persian Gulf company or
government.
3) Embassy sends cable responding to check to State.
4) State determines results of check:
Favorable; or;
Unfavorable.
Source: GAO analysis of State data; Map Resources (map); Nova
Development (clip art).
[End of figure]
From fiscal years 2005 through 2010, State conducted 169 Blue Lantern
checks in the Gulf countries, including 74 prelicense checks and 95
postshipment checks (see table 4).[Footnote 23] Saudi Arabia and the
UAE accounted for about 76 percent of these Blue Lantern checks.
According to data from State's export licensing database, over this
period, State approved 11,754 licenses for arms exports to the Gulf
countries,[Footnote 24] about one-third of which included provisos.
[Footnote 25]
Table 4: Number of Blue Lantern Checks Conducted in the Persian Gulf
Countries, Fiscal Years 2005 through 2010:
Gulf country: Bahrain;
Prelicense checks: 4;
Postshipment checks: 1;
Total: 5;
Percentage of total: 3.0%.
Gulf country: Kuwait;
Prelicense checks: 8;
Postshipment checks: 10;
Total: 18;
Percentage of total: 10.7%.
Gulf country: Oman;
Prelicense checks: 6;
Postshipment checks: 9;
Total: 15;
Percentage of total: 8.9%.
Gulf country: Qatar;
Prelicense checks: 0;
Postshipment checks: 2;
Total: 2;
Percentage of total: 1.2%.
Gulf country: UAE;
Prelicense checks: 41;
Postshipment checks: 46;
Total: 87;
Percentage of total: 51.5%.
Gulf country: Saudi Arabia;
Prelicense checks: 15;
Postshipment checks: 27;
Total: 42;
Percentage of total: 24.9%.
Gulf country: Total;
Prelicense checks: 74;
Postshipment checks: 95;
Total: 169;
Percentage of total: 100%.
Source: GAO analysis of State Blue Lantern data.
Note: This table excludes 23 checks that State classified as "no
action," in which State did not task an embassy with conducting a
check. It also excludes 8 checks that State classified as "no
response," in which State either did not receive a response from the
embassy or State deemed the response unsatisfactory.
[End of table]
DOD's Database Summarized the Current Inventory Status for Sensitive
Defense Articles, but Could Not Verify Past Inventories Conducted
Before July 2011:
While DOD's database provided a snapshot of the status of Golden
Sentry end-use monitoring in the Gulf countries as of August 23, 2011,
it could not confirm whether past inventories were conducted on
schedule in these countries. Because the database lacked this
capability, DOD does not currently have assurance that its personnel
in the Gulf countries completed past inventories on time, which may
have resulted in gaps in accounting for sensitive equipment shipped
through FMS. However, according to DOD officials, a new function that
DOD added to its end-use monitoring database will enable it to verify
completion of past inventories from July 2011 forward.
DOD tracks end-use monitoring for sensitive defense articles using the
Security Cooperation Information Portal (SCIP)--a web-based database
DOD designed to manage various security assistance activities,
including the Golden Sentry program. As shown in table 5, our analysis
of data from the SCIP indicated that the Gulf countries had received
14,367 sensitive defense articles requiring enhanced end-use
monitoring, as of August 23, 2011. According to information entered
into the SCIP by DOD personnel located in the Gulf countries, 946 of
these items had been disposed of by the host country, demilitarized,
or expended in training, and 63 could not be accounted for and were
determined to be lost inventory. DOD considers these defense articles
to be "inactive" and no longer requires regular inventories for them.
DOD personnel were able to observe and conduct serial number
inventories for slightly more than 80 percent of the 13,358 remaining
items for which regular inventories are required. They reported not
being able to observe or inventory the remaining items--predominantly
NVDs located in Saudi Arabia--because they were deployed or otherwise
unavailable for observation.
Table 5: Inventory Status for Defense Articles in the Gulf Countries
Requiring Enhanced End-Use Monitoring, as of August 23, 2011:
Defense article: STINGER missiles and gripstocks;
Observed or Inventoried: 99;
Not observed or inventoried: 0;
Disposed, demilitarized, or expended in training: 888;
Inventory loss: 0;
Total: 987.
Defense article: Night Vision Devices (NVD);
Observed or Inventoried: 7,964;
Not observed or inventoried: 2,521;
Disposed, demilitarized, or expended in training: 14;
Inventory loss: 50;
Total: 10,549.
Defense article: Javelin missiles and command launch units;
Observed or Inventoried: 863;
Not observed or inventoried: 0;
Disposed, demilitarized, or expended in training: 21;
Inventory loss: 0;
Total: 884.
Defense article: TOW-2B missiles;
Observed or Inventoried: 1,366;
Not observed or inventoried: 0;
Disposed, demilitarized, or expended in training: 18;
Inventory loss: 13;
Total: 1,397.
Defense article: Advanced Medium Range Air-to-Air Missiles (AMRAAM);
Observed or Inventoried: 349;
Not observed or inventoried: 24;
Disposed, demilitarized, or expended in training: 5;
Inventory loss: 0;
Total: 378.
Defense article: AIM-9X missiles;
Observed or Inventoried: 120;
Not observed or inventoried: 0;
Disposed, demilitarized, or expended in training: 0;
Inventory loss: 0;
Total: 120.
Defense article: Harpoon Block II missiles;
Observed or Inventoried: 36;
Not observed or inventoried: 10;
Disposed, demilitarized, or expended in training: 0;
Inventory loss: 0;
Total: 46.
Defense article: Large Aircraft Infrared Countermeasures (LAIRCM);
Observed or Inventoried: 4;
Not observed or inventoried: 2;
Disposed, demilitarized, or expended in training: 0;
Inventory loss: 0;
Total: 6.
Defense article: Total;
Observed or Inventoried: 10,801;
Not observed or inventoried: 2,557;
Disposed, demilitarized, or expended in training: 946;
Inventory loss: 63;
Total: 14,367.
Source: GAO analysis of DOD Golden Sentry data.
[End of table]
DOD also uses management reports generated by the SCIP to track Golden
Sentry end-use monitoring in the Gulf countries and elsewhere. For
example, the "Delinquent Inventory Report" identifies items that have
not been inspected or inventoried within a pre-determined amount of
time. According to DSCA officials, Golden Sentry program managers
generate these reports at least monthly to determine whether any items
in the countries under their responsibility are "delinquent." If the
report identifies that there are delinquent inventories, program
managers responsible for overseeing end-use monitoring activities in
that region will contact DOD personnel in country to seek an
explanation and determine a remediation plan. DSCA also uses country-
specific "Reconciliation Reports" to compare implemented FMS purchases
for defense articles requiring enhanced end-use monitoring with
defense articles that have been entered into the SCIP. This helps to
ensure that all defense articles requiring enhanced end-use monitoring
have been entered into the SCIP and are included in the schedule of
inventories for DOD personnel in that country.
DOD's end-use monitoring data and management reports did not include
documentation that would enable us to determine whether DOD had
completed required inventories in the Gulf countries prior to July
2011. The SCIP was capable of retrieving and displaying information on
previous inventories conducted for a single defense article (an
individual serial number), but it could not show whether past
inventories were completed on time or summarize all inventory
information for a country. Thus, determining whether past inventories
had been conducted as scheduled would require manual calculations
based on thousands of lines of serial number-specific information.
DSCA's management reports provided a real time snapshot of the status
of inventories in the Gulf countries, but they could not provide
similar information for past points in time. According to DSCA
officials, they added a new function to the SCIP in July 2011 that
will enable it to generate historical, country-level information
detailing whether past inventories were completed on time. They noted,
however, that the new feature will not provide historical information
on inventories conducted before the function was added.
DOD Officials at Gulf Country Posts Have Not Documented Some End-Use
Monitoring Efforts:
DOD personnel in the Gulf countries seldom document their efforts to
verify host country compliance with security and accountability
conditions for sensitive military equipment or activities they
undertake to monitor less sensitive items because DOD does not have a
formal policy requiring them to do so. Our Standards for Internal
Control in the Federal Government state that agencies should clearly
document transactions and all significant events, the documentation
should be readily available for examination, and all documentation
should be properly managed and maintained.[Footnote 26]
DOD Officials Do Not Document Efforts to Verify Host Country
Compliance with Security and Accountability Conditions for Sensitive
Defense Articles:
As part of enhanced end-use monitoring for sensitive defense articles,
DOD guidance requires that DOD personnel in the Gulf countries and
elsewhere verify host country compliance with the physical security
and accountability conditions that accompany the sale of sensitive
defense articles through FMS. DOD personnel conduct these activities
in conjunction with their scheduled serial number inventories of these
items. Advanced Medium Range Air-to-Air Missiles, for example, must be
secured according to U.S. government requirements, which include
perimeter fencing, lighting for exterior doors and along perimeter
barriers, doors, locks, keys, alarms, and surveillance. Countries that
purchase Advanced Medium Range Air-to-Air Missiles must also adhere to
certain accountability requirements. Specifically, they must conduct a
100 percent, serial number inventory of the missiles on a semiannual
basis and establish procedures that provide a continuous accounting of
receipt, transfer, storage, shipment, and when applicable, destruction
or demilitarization of the missiles. Similar security and
accountability conditions apply to other sensitive defense articles
purchased by the Gulf countries through FMS, including other missile
systems and NVDs.
DSCA and the various military departments have developed checklists
unique to each sensitive defense article for DOD personnel to use when
verifying host country compliance with security and accountability
requirements. However, five of the six DOD officials responsible for
Golden Sentry end-use monitoring in the Gulf countries that we
interviewed said that they used the checklists only as a loose guide
for verifying compliance with FMS security and accountability
conditions.[Footnote 27] Furthermore, most said that they did not fill
out the checklists during their end-use monitoring activities or
maintain documentation of these checklists after completion because
DOD has not formally required them to do so. As result, DOD does not
have documentation that the Gulf countries have fulfilled the security
and accountability requirements that accompany their purchase of
sensitive defense articles from the United States. According to the
DOD official in charge of the Golden Sentry program, the requirement
to use the checklists to verify compliance with host country security
and accountability conditions and document the results of these
efforts has been communicated to DOD personnel in the Gulf countries
through informal channels, such as end-use monitoring forums,
newsletters, and periodic Compliance Assessment Visits in these
countries. He said that these requirements would be formalized in
forthcoming revisions to the Security Assistance Management Manual.
DOD Officials Inconsistently Document End-Use Monitoring Activities
for Less Sensitive Items:
DOD conducts routine end-use monitoring for less sensitive defense
articles that do not have any unique conditions associated with their
sale, but officials in the Gulf countries inconsistently document
these efforts. DOD policy specifies that routine end-use monitoring
responsibilities are performed in conjunction with other required
security assistance duties. The Gulf countries have received tens of
thousands of defense articles through FMS that require routine end-use
monitoring, including combat aircraft, helicopters, armored personnel
carriers, small arms, and ammunition, among other things. According to
DSCA officials, they have instructed DOD personnel in the Gulf
countries and elsewhere to document their routine end-use monitoring
activities through memos for the record. However, of the six DOD
officials responsible for Golden Sentry end-use monitoring in the Gulf
countries we interviewed, only one said he documented routine end-use
monitoring efforts. The other DOD officials said that they did not
document their routine end-use monitoring activities because formal
policy does not require them to do so. DOD officials we interviewed in
one Gulf country said that they would prefer more specific guidance on
the activities that constitute routine end-use monitoring and how to
document these efforts. DSCA officials responsible for administering
the Golden Sentry program acknowledged that there are no formal
policies requiring DOD personnel to document their routine end-use
monitoring activities. Instead, they stated that they have
communicated these instructions to DOD personnel through end-use
monitoring forums, newsletters, and periodic in-country visits.
According to DSCA officials, forthcoming revisions to the Security
Assistance Management Manual will clarify requirements for conducting
and documenting routine end-use monitoring.
Inconsistent Use of Site Visits to End-Users, Delays in Requesting
Checks, and Closing Cases without Confirmation of Receipt Limit the
Effectiveness of Blue Lantern Monitoring:
State's Use of Site Visits to Verify End-User Compliance with License
Provisos is Inconsistent:
The AECA requires that end-use monitoring programs be designed to
provide reasonable assurance that the recipient is complying with the
requirements imposed by the United States government with respect to
use, transfers, and security of defense articles and defense services.
To address this requirement, State uses Blue Lantern postshipment
checks to confirm that items exported through DCS have been received
by the end-user and to determine whether those goods are being used in
accordance with the conditions of their licenses. Postshipment checks
are not automatic; rather, they are conducted if State determines they
are necessary based on certain risk factors. When State tasks an
embassy to conduct a postshipment check, State may include a request
to conduct a site visit to the end-user, but this is not required by
law or State policy.
We determined that State officials in the Gulf countries conducted
Blue Lantern postshipment checks without visiting end-users of U.S.
military equipment in 10 of 13 cases that we reviewed. Without
conducting a site visit, embassy officials would not have been able to
verify that items were being used in accordance with the terms of
their licenses. We drew a sample of 34 Blue Lantern checks--including
25 checks selected randomly and 9 checks selected judgmentally--and
requested the cables associated with those checks.[Footnote 28] (See
appendix I for more information on how we drew our sample.) Our sample
included 13 cases in which State tasked the embassy to conduct a
postshipment check for military equipment.[Footnote 29] Of those 13
checks, embassy officials in the Gulf countries conducted three site
visits to end-users of U.S. equipment.[Footnote 30] In the majority of
the 10 other cases, embassy officials made inquiries with the host
government end-users to confirm receipt of the items, but did not
conduct a site visit because the cable from State did not require them
to do so. Embassy officials did conduct site visits to private
companies acting as intermediaries in order to confirm that they were
reliable recipients of U.S. defense equipment in 5 of these 10 cases.
However, the risk that U.S. equipment could be lost or diverted is not
limited to intermediaries. In 2007, State reported to Congress that
Kuwait had lost 115 of its NVDs that it purchased from the U.S.
government through FMS.
State also requests postshipment checks to verify compliance with
specific conditions associated with the export of sensitive items.
Export licenses for sensitive items, such as NVDs, may include
conditions, or provisos, requiring the end-user to conduct regular
inventories of the items and ensure that they are being stored in
secure facilities. State's Blue Lantern Guidebook, which is designed
to help posts conduct Blue Lantern end-use checks, states that site
visits provide valuable information on security measures and inventory
procedures, as well as compliance with key licensing provisos.
However, again, State officials inconsistently[Footnote 31] use site
visits to verify compliance with conditions among end-users of
sensitive equipment in the Gulf countries because State requests, but
does not require, posts to conduct such visits. For example, embassy
officials in the UAE faxed the UAE military to confirm receipt of
sensitive equipment, but did not conduct an inventory or physically
verify that the equipment was being stored in secure facilities and
was being used in accordance with the purpose on the license, as State
had requested. In contrast, post officials in Saudi Arabia and Qatar
conducted site visits to confirm receipt of the equipment, performed
inventories, and verified that the equipment was stored in secure
facilities.
Delays in Requesting and Conducting Checks Prevented State from
Verifying Receipt of Some Items:
In some instances, embassy officials in the Gulf countries could not
confirm receipt of U.S. defense equipment or verify compliance with
security and accountability conditions imposed on the recipients of
this equipment because State waited for several years before
requesting the Blue Lantern check. For example, officials in Qatar
were unable to verify the location of a shipment of sensitive
equipment, in part, because State waited three years before requesting
the check. The check was for an April 23, 2008, shipment of NVDs, but
State did not send a cable to post requesting a check on these items
until April 22, 2011--three years later. As a result, when embassy
officials tried to conduct the check, they discovered that the
commercial end-user had relocated and they could not account for the
items. In another example, officials in Saudi Arabia experienced
difficulties accounting for 766 NVDs because more than three years
passed between the date of the first shipment and when State conducted
a Blue Lantern check. By the time the embassy official attempted to
conduct the check in May 2011--which was supposed to have included an
inventory of the 766 NVDs--the items had been issued to different
units located throughout the country and were not available for
inventory. As of July 2011, embassy officials had received written
confirmation showing where all but 128 of the NVDs were located, but
they could not conduct a serial number inventory or verify whether the
NVDs were being stored in secure facilities. According to State, it
not only has a responsibility to confirm receipt, but also to confirm
continued, authorized end-use and disposition of U.S. defense
articles. Accordingly, there may be instances in which conducting a
postshipment check well after an item's export, including years later,
provides useful information on the continued authorized end-use of the
defense article. However, we found that State did not conduct any
subsequent postshipment checks in the Gulf countries to confirm the
continued authorized end-use of the defense article, which would also
provide useful information on the disposition of defense articles.
Moreover, State lacks internal guidance that would help inform its
decision of when to conduct a postshipment check.
State Closes Some Cases without Receiving Confirmation of Receipt:
We identified some instances in which State closed Blue Lantern cases
before receiving confirmation from posts that the end-user had
received the items. After the embassy responds to a Blue Lantern
request, State officials in Washington, D.C., make a determination
whether to close the Blue Lantern case favorably or unfavorably.
According to the Blue Lantern Guidebook, if the critical questions
have been answered satisfactorily, the transaction appears legitimate,
and the bona fides of the end-users or other parties are confirmed,
the case likely will be closed favorable. When State requests a
postshipment check, it asks the U.S. embassy to verify that the end-
user received the U.S. defense equipment it ordered. We found two
cases in our sample of 13 postshipment checks, however, in which State
closed the Blue Lantern case as favorable without confirming that the
items had been received by the end-user. For example, in the UAE,
embassy officials were asked to verify receipt of a thermal imaging
camera by the UAE Armed Forces and to conduct a site visit to the
intermediary to determine if the company was a reliable recipient of
U.S. defense equipment. During the site visit, embassy officials
discovered that the thermal camera was still held by the intermediary
and had not yet shipped to the end-user, the UAE Armed Forces.
However, State closed the case as "favorable," without tasking post to
follow-up and confirm that the UAE Armed Forces had received the
thermal camera. In another case in Oman, State requested that embassy
officials verify that the Omani government end-user had received more
than 100 firearms, but they could not do so because the shipment was
being held by U.S. Customs and Border Protection. State closed the
case as "favorable," without waiting for post to confirm that the end-
user had received the firearms. In comments on a draft of this report,
State said that, after it facilitated the release of the shipment, an
intermediary Omani company provided written confirmation that it had
delivered the firearms to the Omani government. State also said that
it verified the bona fides of the respective transactions and that it
is standard practice to close certain cases prior to receiving
confirmation that the end-user had received the items.
DOD's and State's End-Use Monitoring Varies Significantly for NVDs
Purchased by Persian Gulf Countries:
U.S. Government Considers NVDs to Be a Sensitive Military Technology
Prone to Diversion:
The U.S. government considers NVDs to be a sensitive military
technology that is vulnerable to diversion.[Footnote 32] According to
DOD, control and security of NVDs continues to be a major national
security concern, and its policy is to treat these systems as a
valuable, limited, and sensitive national security resource to be
husbanded and invested in support of national security
objectives.[Footnote 33] NVDs provide U.S. forces a technological
advantage by facilitating the location, recognition, and defeat of
opposing forces during periods of low battlefield visibility, a
capability also sought by terrorist groups. Night vision technology
may be incorporated into man-portable devices, such as binoculars,
weapons sights, and thermal imagers, or devices mounted onto other
platforms, including helicopters and unmanned aerial systems.[Footnote
34] Figure 3 shows an example of a third-generation, head-mounted
night vision goggle and a thermal imaging device, both of which have
been purchased by the Gulf countries.
Figure 3: Examples of Man-Portable NVDs:
[Refer to PDF for image: 2 photographs]
Night vision goggle; [Source: DOD]
Therman Imager [Source: FLIR Systems, Inc.]
[End of figure]
The U.S. government has authorized the sale of NVDs to Gulf
governments through FMS and licensed exports of NVDs to private and
governmental entities in these countries through DCS.[Footnote 35] All
requests for the sale or export of NVDs are evaluated on a case-by-
case basis and undergo an interagency review, including a national
security review by the Defense Technology Security Administration.
[Footnote 36] The decision to release NVD technology to foreign end-
users is based on the type of equipment, the end-users' ability and
willingness to safeguard the equipment, and whether the end-use is
consistent with enhancing or maintaining U.S. national security (e.g.,
assisting in antiterrorist or antipiracy operations). NVDs are the
only military technology the Gulf countries have purchased through FMS
and DCS that require enhanced end-use monitoring (i.e., delivery
verification and regular inventories) when purchased through FMS.
DOD Guidance Requires Tracking and Inventorying Man-Portable NVDs
Purchased by Gulf Countries through FMS:
Until a policy change that took effect on October 1, 2011, DOD
guidance, some of which was not documented, required that DOD conduct
serial number inventories of man-portable NVDs purchased by the Gulf
countries following delivery and at regular intervals thereafter. To
facilitate these inventories, DOD tracks man-portable NVDs by serial
number in the SCIP. According to data from the SCIP, the Gulf
countries had received 10,550 NVDs through FMS, as of August 23, 2011
(see figure 4). NVDs purchased by Saudi Arabia constituted almost 70
percent of the total number of NVDs in the Persian Gulf countries
purchased through FMS.
Figure 4: Number of NVDs in the Inventories of the Gulf Countries, as
of August 23, 2011, that Had Been Purchased Through FMS:
[Refer to PDF for image: pie-chart]
Saudi Arabia: 7,187 (68.1%);
Kuwait: 1,543 (14.6%);
Bahrain: 930 (8.8%);
Oman: 619 (5.9%);
UAE: 271 (2.6%);
Total: 10,550.
Source: GAO analysis of DOD's Golden Sentry data.
[End of figure]
Before October 1, 2011, DOD guidance required that personnel in the
Gulf countries conduct 100 percent serial number inventories for all
NVDs following delivery. According to the DSCA Program Manager for the
Golden Sentry program, DOD personnel in these countries were then
required to conduct inventories of 50 percent of all second-generation
NVDs annually (100 percent biannually) and 100 percent of all third-
generation NVDs annually. However, the required frequency for these
inventories was not documented in formal DOD guidance. Instead, DSCA
could specify the required inventory frequency on a country-by-country
basis, and this requirement was subsequently reflected in the SCIP,
which DOD personnel in the Gulf countries use to plan and carry out
their inventories.[Footnote 37] On September 22, 2011, DOD issued a
new policy, effective October 1, 2011, which specified that NVDs sold
through FMS to non-NATO countries, including the Persian Gulf
countries, would be subject to a serial number inventory within 90
days of delivery, tracked by serial number in the SCIP database, and
inventoried annually thereafter. However, the policy provided DSCA
with discretion to modify the established criteria based on risk
assessments, record of compliance with security and accountability
measures, or reported end-use violations. Accordingly, DSCA
disseminated implementation guidelines through its End-Use Monitoring
newsletter which further refined the criteria for conducting Golden
Sentry inventories of man-portable NVDs. These guidelines reflect a
risk-based approach that stipulates differing requirements based on
the decade in which the items were purchased:
* NVDs purchased before December 31, 1990. These NVDs will no longer
require regular serial number inventories or tracking through enhanced
end-use monitoring. Instead, they will be covered under routine end-
use monitoring.
* NVDs purchased between January 1, 1991, and December 31, 2000. DOD
personnel will be required to establish a baseline count for these
NVDs and conduct at least one serial number inventory, after which
regular serial number inventories will no longer be required and the
NVDs will be covered under routine end-use monitoring.
* NVDs purchased on or after January 1, 2001. The end-use monitoring
requirements will not change for these NVDs. They will still require
100 percent annual inventories and tracking in the SCIP by serial
number.
State Does Not Systematically Conduct End-Use Checks for or Track All
NVDs in the Gulf Countries:
We found that State did not conduct end-use checks on all NVD
shipments to Gulf countries from fiscal years 2005 through 2010. The
Blue Lantern Guidebook, which outlines State's policies for the
program, states that Blue Lantern checks are selected based on
perceived risk factors, one of which is sensitive technologies, such
as NVDs. According to the State official who was in charge of the Blue
Lantern program until August 2011, State attempts to conduct end-use
monitoring checks on all shipments of complete NVD systems. He noted
that this is not a formal policy requirement, but rather an informal
objective to more closely align State's practices with DOD's.
According to State, complete NVD systems include night vision goggles,
monoculars, and image intensifier tubes--the technology that allows
one to view images through the goggles or monoculars. We reviewed
State's data on licenses for defense exports to the Gulf countries and
identified at least 34 licenses for 8,757 man-portable NVDs that were
exported to the Gulf countries from fiscal years 2005 through 2010,
all of which included security and accountability provisos.[Footnote
38] State conducted end-use checks on 9 of these 34 licenses, or about
26 percent of all such licenses.[Footnote 39] These checks covered
2,242 of the 8,757 NVDs exported to the Gulf countries during this
period. In contrast to DOD's end-use monitoring for NVDs, from fiscal
years 2005 through 2010, State did not conduct postshipment checks for
any NVDs authorized for export to the Gulf countries more than once.
In addition, State has not conducted any end-use checks on man-
portable, thermal imaging systems exported to the Gulf countries, as
of September 2011. According to U.S. Army night vision specialists,
thermal imaging technology enables warfighters to find and engage
targets in complete darkness, a capability that night vision goggles
based on image intensification technology do not have. From fiscal
years 2005 through 2010, State approved 44 licenses authorizing the
export of about 480 thermal imaging systems to the Gulf countries.
These included 6 licenses for 140 man-portable thermal imaging
systems, which are more prone to diversion. However, State did not
conduct any end-use checks on these sensitive items. In contrast, DOD
subjects these systems under its Golden Sentry program to enhanced end-
use monitoring. According to data from DOD's end-use monitoring
database, Bahrain purchased six thermal imagers through FMS that DOD
will track by serial number and monitor regularly.
Furthermore, State does not systematically track or record by serial
number NVDs that the Gulf countries have purchased through DCS.
According to State, it can determine the number and location of NVDs
exported through DCS by analyzing data from its export licensing
database and shipping data from the U.S. Census Bureau's Automated
Export System database. If necessary, it can also obtain serial
numbers for NVDs purchased through DCS by contacting the U.S.
exporter. For example, we identified one instance in which State
obtained serial numbers from a U.S. exporter at the request of embassy
personnel to enable an inventory of NVDs in Saudi Arabia. However,
unlike DOD, State does not systematically compile this information. As
a result, State does not have ready access to serial-number specific
information on the total number of NVDs in the inventories of the Gulf
countries, their location, and their current disposition.
Less Advanced NVDs Purchased through FMS Have Received More Rigorous
End-Use Monitoring than Advanced NVDs Purchased through DCS:
As a result of DOD's and State's different approaches to end-use
monitoring, some less advanced, second-generation NVDs purchased by
the Gulf countries through FMS have received more rigorous end-use
monitoring than more advanced third-generation NVDs purchased through
DCS. In some Gulf countries, the NVDs purchased through FMS and DCS
are included in the inventory of the same end-user. According to DSCA
officials, DOD personnel in Saudi Arabia have been required to track
and conduct annual serial number inventories on half of the almost
6,000 second-generation NVDs purchased by Saudi Arabia's Ministry of
Defense and Aviation and the Saudi Arabia National Guard through FMS
in the early 1990s. For example, DOD officials conducted their most
recent serial number inventory of the more than 4,000 NVDs in the
Saudi Arabia National Guard's inventory in February and March 2011 by
visiting 29 locations over a five-week period. Meanwhile, State has
approved at least 13 licenses for the sale of more than 11,000
advanced, third-generation NVDs to Saudi Arabia's Ministry of Defense
and Aviation through DCS since 2005. However, because these NVDs were
purchased through DCS, they will be subject to less rigorous end-use
monitoring than the older, less-advanced NVDs purchased through FMS.
The UAE Has Not Provided a Required NVD Compliance Plan to DOD:
DOD and State require entities in the Gulf countries that purchase
NVDs through FMS and DCS to meet comparable physical security and
accountability requirements. For example, DOD and State both require
the purchaser to secure the NVDs against loss, theft, or unauthorized
access. Both agencies also require that the purchaser conduct regular
inventories of the NVDs and make their records available to U.S.
government officials upon request. For NVDs purchased through FMS, DOD
also requires that the purchaser provide a written physical security
and accountability plan (NVD compliance plan) within 30 days of
acceptance of the Letter of Offer and Acceptance outlining how they
will comply with these requirements. However, as of August 18, 2011,
the UAE military had not provided an NVD compliance plan, despite
having purchased more than 300 NVDs through FMS since 2008.[Footnote
40] According to DSCA, it raised this concern as part of a May 2010
Compliance Assessment Visit in the UAE and again as recently as
October 24, 2011. DSCA officials stated that they would notify the UAE
that if they do not receive a signed NVD compliance plan by December
31, 2011, DSCA will cease to recommend NVD sales to the UAE through
FMS. DOD took similar action towards Saudi Arabia's Ministry of
Defense and Aviation in February 2011 because it had not furnished an
NVD compliance plan. In May 2011, the Ministry of Defense and Aviation
provided a copy of its compliance plan, and DOD subsequently resumed
consideration of NVD sales.
State Conducts Human Rights Vetting for Recipients of U.S.-Funded
Training in Gulf Countries, but Does Not Conduct Comparable Vetting
for Recipients of Equipment:
State Conducts Human Rights Vetting for Individuals and Units
Nominated for U.S.-Funded Training in the Gulf Countries:
Data from State's new vetting database indicate that State has
conducted human rights vetting for about 770 individuals and 12 units
in the Gulf countries that were nominated for U.S.-funded training.
U.S. laws prohibit certain types of assistance from being provided to
any unit of the security forces of a foreign country if there is
credible evidence that such unit has committed gross violations of
human rights.[Footnote 41] In keeping with these laws and State human
rights policies, State's policy is to vet security force units and
their commanders for unit training, and individual security force
members for individual training. DOD's policy requires that all DOD-
funded training events with foreign individuals and units be referred
to State for human rights vetting. State conducts the human rights
vetting process on behalf of DOD for DOD-funded programs.
The Gulf countries have received various types of U.S.-funded training
that is subject to State's and DOD's human rights laws.[Footnote 42]
For example, Bahrain and Oman received about $4.3 million in
assistance through the International Military Education and Training
program in fiscal years 2009 and 2010 to send officers to U.S. war
colleges and to receive English language or other technical training
in the United States.[Footnote 43] The same two countries also
received almost $2.5 million in Antiterrorism Assistance to improve
aviation security and responses to mass casualty events, among other
things. Over the same period, Oman, Saudi Arabia, and UAE received
about $2.4 million through the Export Control and Related Border
Security program, some of which funded training designed to help
customs officials and other enforcement agents identify controlled
commodities during inspections. Members of the security forces of the
Gulf countries have also participated in DOD-funded Joint Combined
Exchange Training exercises with U.S. special operations forces.
As shown in figure 5, State uses a multistep process for conducting
human rights vetting. The process begins at the U.S. embassy in the
home country of the unit or individual nominated for training when a
sponsoring office requests human rights vetting for security force
units or individuals that have been proposed for U.S.-funded training.
Names are first vetted by selected sections at the embassy by querying
databases frequently used by their offices and consulting other
relevant sources.[Footnote 44] For example, the consular section might
search its internal database, which includes information on
individuals that have applied for U.S. visas or may be ineligible for
U.S. visas, and the Department of Homeland Security might search its
enforcement database, which includes information on entities suspected
of or involved in violating federal laws. When vetting at post has
been completed, the list of candidates for training is transmitted to
State headquarters in Washington, D.C., where they undergo a second
stage of screening by officials in the Bureau of Near Eastern Affairs
and the Bureau of Democracy, Human Rights, and Labor. These officials
consult intelligence databases and other classified and unclassified
sources. If no derogatory information is found, State notifies the
embassy that the candidates have been approved, and training may
proceed.
Figure 5: State's Human Rights Vetting Process in the Gulf Countries:
[Refer to PDF for image: illustration]
Embassy vetting:
1) Sponsoring agency initiates vetting request at U.S. embassy:
Embassy point of contact enters names into INVEST;
Selected agencies vet names.
2) Agencies vet at embassy:
Agency point of contact records vetting results:
No hit: State performs further vetting; go to #4.
Yes hit:
3) Embassy evaluates hits:
Embassy records actions taken: [Decision point]:
Request guidance from Washington, D.C.
Reject; Suspend: No assistance provided;
State performs further vetting; go to #4.
Headquarters vetting:
4) State vets at headquarters in Washington, D.C.
State: INternal searches of intelligence agencies' databases and
external searches of the Internet and targeted websites;
State records vetting results:
No hit: approve; assistance provided to sponsoring agency;
Yes hit:
5) State evaluates hits;
State records actions taken {Decision Point];
Approve; assistance provided to sponsoring agency;
Reject; Suspend: No assistance provided.
Sources: GAO analysis of State documentation; Map Resources (map);
Nova Development (clip art).
[End of figure]
In November 2010, State implemented the International Vetting and
Security Tracking system (INVEST) in the Gulf countries to facilitate
the human rights vetting process.[Footnote 45] INVEST is a web-based
tracking system that was designed to provide a means of processing,
documenting, and tracking human rights vetting requests and results.
Prior to the implementation of INVEST, State used cables to
communicate vetting requests and results between State headquarters in
Washington, D.C., and the U.S. embassies in the Gulf countries. We
previously recommended that State strengthen the process for human
rights vetting of foreign security forces by establishing a systematic
monitoring mechanism that would ensure that vetting procedures are
carried out at overseas posts.[Footnote 46] State concurred with the
recommendation and took steps to establish a systematic monitoring
mechanism.
According to data from INVEST, State completed human rights vetting
for 766 individuals and 12 units in the Gulf countries between
November 16, 2010, when the new database was implemented, and August
15, 2011 (see table 6). State completed vetting for recipients of
training in weapons of mass destruction interdiction, anti-money
laundering strategies, and specialized English courses, among other
things. As of August 15, 2011, vetting for another 176 individuals in
the Gulf countries was in progress.
Table 6: Number of Individuals and Units in the Gulf Countries Vetted
through INVEST, as of August 15, 2011:
Gulf country: Oman;
Number of individuals: 161;
Number of units: 0.
Gulf country: UAE;
Number of individuals: 326;
Number of units: 4.
Gulf country: Qatar;
Number of individuals: 51;
Number of units: 4.
Gulf country: Bahrain;
Number of individuals: 85;
Number of units: 0.
Gulf country: Saudi Arabia;
Number of individuals: 90;
Number of units: 4.
Gulf country: Kuwait;
Number of individuals: 53;
Number of units: 0.
Gulf country: Total;
Number of individuals: 766;
Number of units: 12.
Source: State data from INVEST.
[End of table]
State Does Not Conduct Individual-and Unit-Level Human Rights Vetting
for Recipients of U.S.-Funded Equipment in the Persian Gulf:
In contrast to its vetting process for recipients of training, State
does not conduct individual-or unit-level human rights vetting for
recipients of U.S.-funded equipment in Gulf countries. U.S.-funded
equipment provided through certain programs is subject to the same
human rights provisions that apply to U.S.-funded training programs.
State has conducted human rights vetting for hundreds of individuals
and units that received U.S.-funded training in the Gulf countries,
but has not conducted comparable vetting for the anticipated
recipients of more than $188 million in U.S.-funded equipment for
Bahrain and Oman. From fiscal years 2005 through 2010, Bahrain and
Oman received about $148 million through the U.S.-funded Foreign
Military Financing program to purchase military equipment from the
United States, including NVDs, missile systems, helicopters, and small
arms (see table 7). In addition, Bahrain was authorized to receive
equipment valued at about $40 million through the Excess Defense
Articles program. According to State officials, recipients of U.S.-
funded equipment would only be vetted if the same entities that
received the equipment also received U.S.-funded training.
Table 7: Foreign Military Financing Received by Bahrain and Oman,
Fiscal Years 2005 through 2010:
U.S. dollars in millions.
Bahrain;
Fiscal year: 2005: $18.8;
Fiscal year: 2006: $15.6;
Fiscal year: 2007: $15.0;
Fiscal year: 2008: $4.0;
Fiscal year: 2009: $8.0;
Fiscal year: 2010: $19.0;
Fiscal year: Total: $80.4.
Oman;
Fiscal year: 2005: 19.8;
Fiscal year: 2006: 13.9;
Fiscal year: 2007: 13.5;
Fiscal year: 2008: 4.7;
Fiscal year: 2009: 7.0;
Fiscal year: 2010: 8.8;
Fiscal year: Total: $67.8.
Total;
Fiscal year: 2005: $38.7;
Fiscal year: 2006: $29.5;
Fiscal year: 2007: $28.5;
Fiscal year: 2008: $8.7;
Fiscal year: 2009: $15.0;
Fiscal year: 2010: $27.8;
Fiscal year: Total: $148.2.
Source: State's Congressional Budget Justifications.
[End of table]
According to State, vetting for the anticipated recipients of
equipment currently takes place through memos drafted by State and
cleared by the relevant regional bureaus at the time that funding is
allocated for the countries that will receive assistance. In these
memos, State regional bureaus confirm, in consultation with the
respective embassies, that they are not aware of credible evidence of
gross human rights violations by any units that might receive
assistance under the funding authorization. However, according to
State, the exact items to be financed and the exact units or
individuals to receive the items are not generally known at the time
the funding is obligated, and may not be known until many months or
even years later. The official that oversees human rights vetting at
State said that the anticipated recipient of equipment listed in the
funding allocation memos is typically not a specific unit or
individual, but rather a much higher-level entity, such as the
Ministry of Interior, in the country slated to receive assistance.
State does not currently have procedures in place to conduct vetting
later in the acquisition process when the exact recipient unit or
individual is known. However, according to State, it is developing
policy guidance and identifying procedures to standardize the
collection of timely information on recipient units of equipment in
order to conduct equipment vetting through INVEST and improve the
effectiveness of its vetting process. The procedures will likely
incorporate a two stage process. The first stage of vetting would be
initiated when State receives a formal request for equipment. During
this stage, the embassy, regional bureau, and the Bureau of Democracy,
Human Rights, and Labor would sign off on a memo similar to the
current method of vetting for U.S.-funded equipment. The second stage
would occur near the end of the acquisition process and before
shipment of the equipment when the exact recipient of the equipment is
known. During this second stage, the unit scheduled to receive the
equipment would be vetted through INVEST, similar to vetting for U.S.-
funded training.
Conclusions:
DOD and State established the Golden Sentry and Blue Lantern programs,
respectively, to provide reasonable assurance that arms sold or
licensed for export to foreign governments do not end up in the
possession of individuals or groups who pose a threat to the United
States or its allies. However, gaps in implementing these programs in
the Gulf countries may limit the ability of DOD and State to
adequately safeguard defense articles upon their arrival, storage, and
eventual use in those countries. For example, both DOD and State view
NVDs as a sensitive technology sought by terrorists, but their
approaches to monitoring NVDs varies widely. Paradoxically, more
modern third-generation NVDs sold to Gulf countries through direct
commercial sales receive less rigorous end-use monitoring than older,
less advanced NVDs purchased through FMS. Gaps in implementing State's
Blue Lantern monitoring program have resulted in State not physically
verifying receipt of some items or confirming some end-users'
compliance with license conditions--even though State has identified
the need for a postshipment check--thus reducing confidence in the
security of arms exported to these entities. Also, the absence of DOD
documentation of its efforts both to verify host country security and
accountability procedures for sensitive military equipment and to
monitor less sensitive items limits assurance that equipment sold
through FMS is being used as intended. Moreover, DOD's inability to
obtain a required compliance plan from the UAE, outlining its security
and accountability procedures for more than 300 NVDs purchased since
2008, erodes confidence in the security of arms sold to a country that
has been used by illicit actors to transship sensitive equipment. If
the UAE does not provide a compliance plan, DOD could consider not
recommending further NVD sales through FMS.
State and DOD have developed policies to prevent U.S. assistance from
being used to provide training for units or individuals who have
committed gross violations of human rights. However, State's absence
of procedures to conduct individual-and unit-level human rights
vetting of recipients of U.S.-funded equipment increases the risk that
such equipment may ultimately be used by violators of human rights.
Given recent unrest in some Gulf countries, this could result in U.S.-
funded equipment being misused to quell peaceful demonstrations.
Recommendations for Executive Action:
To close gaps in the implementation of end-use monitoring programs in
the Gulf countries that may limit the ability of DOD and State to
adequately safeguard defense articles upon their arrival, storage, and
eventual use in those countries, we recommend that the Secretaries of
Defense and State take steps to harmonize their approaches to end-use
monitoring for NVDs to ensure that they receive equal levels of
protection regardless of how they are obtained by foreign recipients.
Such steps might include developing a plan or schedule for how and
when each department's end-use monitoring approaches would be
harmonized.
We also recommend that the Secretary of Defense take the following two
actions:
* develop guidance requiring DOD officials to document their efforts
to verify host country security and accountability procedures for
sensitive equipment and their activities to monitor less sensitive
equipment, and:
* obtain from the UAE government an NVD compliance plan, as required
under the conditions of sale through FMS, or develop an appropriate
response.
We further recommend that the Secretary of State take two actions to
issue policies and procedures that:
* provide guidance to Compliance Specialists regarding when to request
embassy personnel to conduct postshipment checks, and when to close
checks, and:
* stipulate that when postshipment checks are requested, U.S. embassy
personnel should conduct site visits to end-users to physically verify
compliance with conditions associated with an export license.
To reduce the risk that U.S.-funded equipment may be used by violators
of human rights in the Gulf countries, we recommend that the Secretary
of State implement individual-and unit-level human rights vetting for
recipients of U.S.-funded equipment.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOD and State for their review
and comment. Both DOD and State provided written comments, which we
have reprinted in appendixes II and III, respectively. DOD and State
also provided technical comments, which we incorporated in this
report, as appropriate.
DOD and State both agreed with our recommendation to take steps to
harmonize their approaches to end-use monitoring for NVDs. DOD stated
that it welcomed this recommendation and offered to provide any
assistance needed to State to provide consistent monitoring of
sensitive technology regardless of the method through which the
transfer is made. State said that it intends to increase the number of
end-use checks on NVDs that are comparable to those sold through FMS.
However, State noted that human resource constraints in Washington,
D.C., and at its embassies around the world will pose the greatest
challenge to achieving full harmonization. Accordingly, it plans to
explore how existing DOD resources in-country may be leveraged to
support end-use monitoring for sensitive items exported through DCS.
DOD agreed with our recommendation to develop guidance requiring its
personnel to document efforts to verify host country security and
accountability procedures for sensitive equipment and activities to
monitor less sensitive equipment. DOD noted that forthcoming revisions
to the Security Assistance Management Manual will include new
requirements that address this recommendation. DOD also agreed with
our recommendation that it obtain from the UAE government an NVD
compliance plan, as required under the conditions of sale through FMS,
or develop an appropriate response. DOD stated that it has continued
to work with the UAE to obtain the plan and, on October 24, 2011, met
with UAE officials to inform them that NVD exports through FMS may be
affected if the UAE Ministry of Defense does not provide an NVD
compliance plan by December 31, 2011.
State disagreed with our recommendation to issue policies and
procedures stipulating that U.S. embassy personnel conduct site visits
to end-users as part of requested postshipment checks. State said that
we misinterpreted data from certain cases to reach the conclusions
that led to this recommendation and that we based our conclusion on
several isolated examples of Blue Lantern checks conducted in the Gulf
countries. However, our recommendation is based on our finding that
when postshipment checks were requested, State inconsistently used
site visits to verify whether defense articles had been received by an
end-user and whether items were being used in accordance with the
terms of their licenses. We drew this conclusion by analyzing a sample
of 13 postshipment checks which State requested for the Gulf countries
from fiscal years 2005 through 2010 and determining that U.S. embassy
officials conducted site visits to end-users for only 3 of these 13
checks. Embassy officials did conduct site visits to private companies
acting as intermediaries in order to confirm that they were reliable
recipients of U.S. defense equipment in some cases, but the risk that
U.S. equipment could be lost or diverted is not limited to
intermediaries. Separately, our report cited specific examples of Blue
Lantern checks to highlight State's inconsistent use of site visits.
For example, embassy officials did not conduct site visits to verify
receipt and confirm compliance with license conditions in the UAE,
even though they were requested to do so in their tasking from State,
whereas they did in Saudi Arabia and Qatar. In its comments, State
also noted that it accepts host government official assurances that
equipment was received and inventory control and accounting systems
were working in certain appropriate instances. However, without
conducting a site visit, State was not able to verify that items were
being used in accordance with the terms of their license, a key
objective of the Blue Lantern program. Therefore, we continue to
believe that our recommendation on the need for policies and
procedures on using site visits remains valid.
State also disagreed with our recommendation to provide guidance to
its Compliance Specialists on when to request embassy personnel to
conduct postshipment checks and when to close checks. We note that our
recommendation is not prescriptive and is designed to allow State
flexibility on when to request and close checks, but without losing
the opportunity to close them successfully. State commented that the
Blue Lantern checks cited in our report gave a misleading impression
and led to incorrect conclusions. Our report cited two instances when
State could not confirm receipt of NVDs or physically verify
compliance with security and accountability conditions for the
recipients of these items because it waited several years before
requesting a check. In the first instance, embassy officials in Qatar
could not verify the location of a shipment of NVDs, in part, because
State waited three years after shipment to request a check. State's
comments on this draft did not explain why State waited three years to
request this check. In the second instance, State intentionally waited
until after the second and last of two NVD shipments to Saudi Arabia
to request a check, at which point the items had been issued to
different units located throughout the country and were not available
for inventory. However, State offered no explanation for why it waited
18 months after final export to request the check. As we noted in the
report, State lacks internal guidance that would help inform its
decision of when to conduct a postshipment check.
We continue to believe that State Compliance Specialists could benefit
from guidance on when to close Blue Lantern cases and, therefore, we
have not modified our recommendation. In our report, we also cite 2
examples of postshipment checks among the 13 we reviewed in which
State closed Blue Lantern cases as favorable before receiving
confirmation from embassy officials that the end-user had received the
items. In its written comments, State noted that in both of these
cases embassy officials confirmed the bona fides of the transactions.
We have added language to the report to reflect State's comments.
While this statement is accurate, it misses our point. In both
instances, State also explicitly requested that embassy officials
verify receipt of the items by the end-user. Although embassy
officials reported back to State that they were not able to verify
receipt by the end-user, State closed both cases as favorable instead
of leaving these cases open until embassy officials could confirm
receipt.
State agreed with our recommendation to implement individual-and unit-
level human rights vetting for recipients of U.S.-funded equipment and
noted that it is already working on plans to improve human rights
vetting procedures with the aim of more effectively screening
recipients of equipment. According to State, this new approach will
permit equipment vetting to be conducted through INVEST much closer to
the time of delivery and should significantly improve effectiveness
over the current process, which relies on the information available
when funding for equipment is allocated, sometimes years before
delivery.
We are sending copies of this report to relevant congressional
committees, the Secretaries of Defense and State, and other interested
parties. In addition, the report will be available at no charge on the
GAO website at [hyperlink, http://www.gao.gov].
If you or your staff have questions about this report, please contact
me at (202) 512-4347 or at yagerl@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to
this report are listed in appendix IV.
Signed by:
Loren Yager:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To assess the extent to which the Department of Defense (DOD) and the
Department of State (State) safeguard U.S. military technologies sold
or exported to Persian Gulf countries[Footnote 47] through their end-
use monitoring programs, we reviewed relevant laws and regulations,
interviewed U.S. and host country officials, and analyzed end-use
monitoring and licensing data. For DOD's Golden Sentry end-use
monitoring program, we reviewed relevant program guidance in the
Security Assistance Management Manual and standard operating
procedures used by the Security Cooperation Organizations in the Gulf
countries. We also reviewed reports summarizing the findings from
DOD's Compliance Assessment Visits in the Gulf countries. We
interviewed and obtained documentation from U.S. officials in the
Defense Security Cooperation Agency, Defense Technology Security
Administration, and U.S. Central Command (CENTCOM). We also
interviewed officials representing military departments that implement
Foreign Military Sales (FMS), including the Navy International
Programs Office, the Office of the Deputy Assistant Secretary of the
Army for Defense Exports and Cooperation, and the Office of the Deputy
Under Secretary of the Air Force for International Affairs. We
traveled to Riyadh, Saudi Arabia, and Abu Dhabi, United Arab Emirates
(UAE), and interviewed U.S. officials in the respective Security
Cooperation Organizations responsible for conducting end-use
monitoring. We observed U.S. officials conducting end-use monitoring
for night vision devices (NVD) and Advanced Medium Range Air-to-Air
Missiles in Saudi Arabia and the UAE, respectively. We also
interviewed host country officials in these two countries to discuss
their end-use monitoring procedures. We conducted phone interviews
with U.S. embassy officials responsible for Golden Sentry end-use
monitoring in the other four Gulf countries.
To determine the total number of defense articles requiring enhanced
end-use monitoring in the Gulf countries and their inventory status,
we obtained and analyzed data from DOD's end-use monitoring database--
the Security Cooperation Information Portal (SCIP). Specifically, the
Defense Security Cooperation Agency queried the SCIP to provide us
with "Ad Hoc" reports for each of the Gulf countries, which included
information on the defense articles purchased by each country; the
date that these items were last inventoried; and their "disposition
status," that is, the status of their inventories. We cross referenced
these data by comparing the total count for each defense article in
the "Ad Hoc" report to the "SCIP Quantity" in each country's Enhanced
End-Use Monitoring Reconciliation Report, which includes all the
sensitive defense articles that have been purchased by the Gulf
countries and entered into the SCIP database, and were able to confirm
most quantities. As a result, we determined the SCIP data to be
sufficiently reliable for the purposes of this engagement. To
determine the total number of sensitive defense articles in the Gulf
countries that require enhanced end-use monitoring and the inventory
status of these defense articles, we collapsed the 12 "disposition
status" categories into 4 new categories--"observed or inventoried;"
"not observed or inventoried;" "disposed, demilitarized, or expended
in training;" and "inventory loss." We excluded defense articles that
had been purchased by the Gulf countries but had not yet been
delivered to these countries. Finally, we calculated the number of
defense articles that fell into each of these four categories.
For State's Blue Lantern program, we reviewed relevant program
guidance, including State's Blue Lantern Guidebook, and cables
associated with selected checks. We interviewed officials in State's
Directorate of Defense Trade Controls who administer the Blue Lantern
program and review export licenses. We also interviewed U.S. embassy
officials in the Gulf countries that conduct Blue Lantern checks. We
traveled to Saudi Arabia and the UAE to interview Blue Lantern points
of contact and conducted phone interviews with embassy officials in
the other four Gulf countries. In Saudi Arabia, we observed a Blue
Lantern postshipment check for NVDs. We also interviewed host country
officials in Saudi Arabia and the UAE to discuss their end-use
monitoring procedures. We obtained information from State on
"unfavorable" Blue Lantern checks in the Gulf countries that were
referred to enforcement and we reviewed State's Compliance Office
Reports detailing enforcement actions taken as a result of Blue
Lantern checks. Finally, we received a briefing from State officials
on potential violations of the Arms Export Control Act of 1976
involving the Gulf countries, which have been communicated to Congress
through section 3 reports.
To summarize the number and type of Blue Lantern checks conducted in
the Gulf countries, we obtained and analyzed data from State on checks
conducted in the Gulf countries from fiscal years 2005 through 2010.
These data included 23 checks classified as "no action," in which U.S.
embassies were not tasked by State to conduct a check, and 8 checks
classified as "no response," in which State either did not receive a
response from post or State deemed the response unsatisfactory. We
excluded these 31 checks from our analysis. To determine the
reliability of these data, we cross-referenced license numbers between
State's Blue Lantern and licensing databases, and we used State cables
to corroborate various fields in the Blue Lantern database. We
determined that these data were sufficiently reliable for our
purposes. To more closely examine how State carries out Blue Lantern
checks, we drew a nongeneralizable sample of 34 Blue Lantern checks--
including 25 selected randomly and 9 selected judgmentally--and
requested State cables for these checks. First, we selected a random
sample of 25 checks out of 77[Footnote 48] that State initiated
involving the Gulf countries during fiscal years 2009 and 2010.
[Footnote 49] We limited our sample to checks during these years to
increase the likelihood that the embassy officials who conducted these
checks would still be in their current positions, thereby enabling
further discussion about the specific details of the checks. We
stratified our sample by the results of the checks. Specifically, we
sampled 100 percent of the "unverifiable" cases, 50 percent of the
"unfavorable" cases, 25 percent of the "favorable" cases, and 25
percent of the "no action" cases. Our random sample included both
prelicense and postshipment checks and included at least one case from
each country. We also judgmentally selected an additional six cases
for our sample that involved checks on NVDs that were conducted during
fiscal years 2005 through 2010. We included checks on NVDs in our
sample because they are a sensitive military technology and are the
only item sold through both FMS and DCS to the Gulf countries that are
on DOD's list of items requiring enhanced end-use monitoring. In
addition, we judgmentally selected three cases from fiscal years 2005
through 2010 that were designated by State as priority level 2, or
higher priority, Blue Lantern checks. Priority level 2 checks are
based on more substantial indications that a violation of the
International Traffic in Arms Regulations may have occurred or will be
attempted. We requested both the cables from State to the embassy and
the embassy's response cable to State for each of our sample cases.
State was unable to provide us with the cables for 11 of the 34 cases
because officials decided not to send a cable requesting the embassy
to conduct a Blue Lantern check in those cases. Our final sample
included 23 cases--6 prelicense checks and 17 postshipment checks. Of
those 17 postshipment checks, 4 involved checks on brokers, and were
not associated with verifying the delivery of specific items on a
license. The remaining 13 postshipment checks consisted of 8 we
selected randomly and 5 we selected judgmentally. We then analyzed and
recorded information about each case, including the subject of the
check, the commodity checked, the time it took post to conduct the
check, license conditions, whether or not site visits were requested
and conducted, inventories requested and conducted, and any follow-up
that post indicated was necessary.
To assess the extent to which DOD and State provide similar or
differing levels of protection for the same military technologies sold
or exported to the Gulf countries, we interviewed DOD and State
officials in Washington, D.C., and the Gulf countries, as well as host
country officials in Saudi Arabia and the UAE. This included the
Defense Security Cooperation Agency and State's Directorate of Defense
Trade Controls, who oversee end-use monitoring for NVDs purchased by
the Gulf countries through FMS and DCS, respectively, and the Defense
Technology Security Administration, which is responsible for setting
policy and reviewing requests for the sale or export of NVDs. We
received a briefing on, and practiced using various types of image
intensification and thermal NVDs at the Army's Night Vision and
Electronic Sensors Directorate in Fort Belvoir, Virginia.
Additionally, we observed DOD and State officials conduct a serial
number inventory of NVDs in Saudi Arabia as part of a Blue Lantern
postshipment check. We reviewed DOD and State end-use monitoring
program guidance, DOD polices regarding the transfer and end-use
monitoring for NVDs, and NVD security and accountability requirements
included in DCS license provisos and FMS Letters of Offer and
Acceptance. We obtained and analyzed DOD end-use monitoring data on
the number of NVD systems subject to enhanced end-use monitoring in
the Gulf countries, and we reviewed Blue Lantern data and cables
associated with checks conducted on NVDs in these countries.
In order to identify export licenses for NVDs and determine the extent
to which State has conducted Blue Lantern postshipment checks on
shipments associated with these licenses, we requested State's defense
exports licensing data for the Gulf countries from fiscal year 2005
through May 2011. We checked the licensing data for duplicate records
and cross-referenced selected licenses for NVDs with information from
the Blue Lantern database and determined that these data were
sufficiently reliable for the purpose of identifying licenses for NVD
exports to the Gulf countries. To determine the universe of licenses
for exports to the Gulf countries that included NVD technology, we
first conducted a key word search on terms associated with NVD
technology--including "image intensifiers," "thermals," "night
vision," "infrared," and "Forward Looking Infrared (FLIR)" systems--in
pertinent database fields. To ensure that we captured all relevant
licenses for NVD technology, we also manually reviewed all licenses
for exports to the Gulf countries that included U.S. Munitions List
Category XII(c) items--the category that includes NVD technology.
Next, we pared down our master list in several ways. First, we limited
our list to licenses that were approved from fiscal years 2005 through
2010 to maintain consistency with the Blue Lantern data we received.
Second, we limited the licenses to those with security and
accountability provisos for permanent export to the Gulf countries by
checking the relevant fields in State's licensing data and then
vetting the list of licenses we developed with the Defense Technology
Security Administration to ensure that they all had security and
accountability provisos. Third, with the exception of image
intensifier tubes, we excluded licenses that were exclusively spare
parts for NVD systems, rather than full NVD systems. Finally, to make
an appropriate comparison with NVDs sold through FMS that are subject
to enhanced end-use monitoring, we further limited the DCS licenses to
those that may be used as man-portable systems. We identified 45
licenses for nonthermal NVDs and 6 licenses for thermal imaging
systems that met all of our criteria. We shared our list of NVD
licenses with the Army's Night Vision and Electronic Sensors
Directorate to confirm that the licenses were all NVDs and distinguish
those that were man-portable from those that were platform-mounted. We
also provided our list to State in order to verify whether shipments
had been made on these licenses as of September 9, 2011. State
verified that complete shipments had been made on 34 of the 45
licenses for man-portable NVDs authorized for export to the Gulf
countries.
To assess the extent to which DOD and State vet recipients of military
training and equipment for human rights concerns, we reviewed relevant
laws, including the "Leahy Law" in the Foreign Assistance Act and
DOD's 2011 appropriations bill, the most recent version of DOD's
"Leahy" provision. We also reviewed DOD's and State's vetting policies
and procedures, including State's Guide to the Vetting Process;
State's International Vetting and Security Tracking (INVEST) User
Guide; and standard operating procedures used by the U.S. embassies in
Kuwait, Saudi Arabia, and the UAE to conduct vetting. We interviewed
officials in State's Bureaus of Democracy, Human Rights, and Labor,
and Near Eastern Affairs that oversee and conduct vetting,
respectively, in Washington, D.C., and U.S. embassy officials that
conduct human rights vetting in the Gulf countries. To determine the
amounts of U.S.-funded training and equipment provided to the Gulf
countries that are subject to human rights vetting, we reviewed
State's annual Congressional Budget Justification documents, DOD's and
State's jointly-developed Foreign Military Training reports, and DOD
data on the value of Excess Defense Articles authorized for Bahrain.
To determine the number of individuals and units in the Gulf countries
that have been vetted through INVEST, we obtained data from State's
INVEST database. These data included information on the type of
training provided, the agency sponsoring the training, the funding
source, the event date, and the status of vetting, among other things.
We cross referenced these data with documentation of vetting we
obtained from U.S. embassies in Saudi Arabia and the UAE and
determined that these data were sufficiently reliable to describe the
number of individuals and units in the Gulf countries for which State
had completed human rights vetting. To determine State's process for
vetting recipients of U.S.-funded equipment in the Gulf countries for
human rights concerns, we interviewed officials from State's Bureau of
Democracy, Human Rights, and Labor, and received written responses to
questions from State's Bureau of Political-Military Affairs.
We conducted this performance audit from October 2010 to November 2011
in accordance with generally accepted government auditing standards.
These standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Assistant Secretary Of Defense:
International Security Affairs:
2400 Defense Pentagon:
Washington, D.C. 20301-2400:
November 10, 2011:
Mr. Loren Yager:
Director, International Affairs and Trade:
U.S. Government Accountability Office:
441 G Street. N.W.
Washington, D.C. 20548:
Dear Mr. Yager:
This is the Department of Defense (DoD) response to the Government
Accountability Office (GAO) draft report, GAO-12-89, "PERSIAN GULF:
Implementation Gaps limit the Effectiveness of End-Use Monitoring and
Human Rights Vetting for U.S. Military Equipment," dated October 13,
2011 (GAO Code 320813).
DoD has reviewed the draft report and welcomes periodic reviews of
important programs such as the end-use monitoring (EUM) of defense
articles and services. DoD appreciates recommendations meant to
enhance the oversight and effectiveness of these efforts. DoD sees
value in certain GAO recommendations, but is concerned that the
language used at times overstates possible flaws in our EUM efforts.
Our specific comments concurring with these recommendations are
attached.
Additional comments and recommendations to correct technical and other
factual information have been provided to GAO through separate
correspondence.
DoD appreciates GAO's feedback and assistance with our efforts at
continuous process improvement, and the Department also emphasizes
each U.S. security cooperation office identified in the draft report
was in compliance with existing DoD policy guidance at the time of the
GAO's audit. My point of contact on this matter is Mr. Chuck Handal.
He may be contacted at Shueri.handal@dsca.mil or by telephone 703-601-
3653.
Sincerely,
Signed by:
Mike Minahan:
Brig Gen, USAF:
Principal Director, Middle East Policy:
[End of letter]
GAO Draft Report Dated October, 2011:
GAO-12-89 (GAO Code 320813):
"Implementation Gaps Limit the Effectiveness of End-Use Monitoring and
Human Rights Vetting for U.S. Military Equipment"
Defense Security Cooperation Agency (DSCA) Comments On GAO Draft
Report On End-Use Monitoring In Gulf Cooperation Council Countries
(GCC):
The Defense Security Cooperation Agency (DSCA) appreciates the
opportunity to comment on this draft report. DSCA welcomes periodic
reviews of important programs such as end-use monitoring (LEM) of
defense articles and services, and looks forward to recommendations
meant to enhance the oversight and effectiveness of these efforts.
DSCA sees value in certain GAO recommendations, but is concerned that
the language used at times overstates possible flaws in our EUM
efforts. While the draft report highlights areas where the GAO
believes DoD could more thoroughly document its EUM activities, the
draft report confirms that there are no major accountability gaps in
DoD's EUM program for exports of defense equipment to the GCC via the
Foreign Military Sales (EMS) Program.
The report's primary recommendation is to take steps to harmonize
approaches in end-use monitoring of Night Vision Devices (NVD) with
the Department of State to ensure that NVDs receive equal levels of
protection regardless of how they are obtained by foreign recipients.
DSCA welcomes this recommendation and will provide any assistance
needed to the State Department to ensure these sensitive items are
appropriately monitored by both agencies.
DSCA concurs with the recommendation to develop written guidance
requiring DoD personnel to document and maintain records of EUM
activities related to DOD-to-foreign government transfers. Although
all inventories of equipment that requires enhanced EUM are documented
in a database, documenting visits to storage facilities and the host
nation security and accountability procedures will enhance the
monitoring program. DSCA has already drafted language for inclusion in
the updated version of the Security Assistance Management Manual
(SAMM), which provides this guidance.
DSCA also concurs with the recommendation to obtain a NVD Control Plan
from the United Arab Emirates (UAE). This requirement was highlighted
during a DSCA Compliance Assessment visit (CAV) in May 2010. Since the
CAV report was published, DSCA has been working with the U.S. Liaison
Office (USLO) to obtain the plan. In December 2010, the USLO formally
notified DSCA that coordination to draft the plan with the MoD was on-
going. Since that time, the OSLO has continued to work with the MoD to
obtain the plan. On 24 October 2011, DSCA met with UAE officials and
again formally discussed the requirement for the MoD to submit the NVD
Control Plan and stated that unless it is received by 31 December,
2011, future NVD exports via EMS may be affected. DSCA expects the MoD
will provide the plan by the requested date.
DSCA is concerned however, that the GAO report overstates any possible
implementation gaps in DoD's EUM program. Each of the security
cooperation offices (SCOs) identified in the draft report was in
compliance with existing Dot) policy guidance at the time of the GAO's
audit.
Additional. comments and recommendations to correct technical and
other factual information have been provided to the GAO through
separate correspondence.
Don Responses to GAO Recommendations:
Recommendation 1: To close gaps in the implementation of end-use
monitoring programs in Persian Gulf countries that may limit the
ability of DoD and State to adequately safeguard defense articles upon
their arrival, storage, and eventual use in those countries, we
recommend that the Secretaries of Defense and State take steps to
harmonize their approaches to end-use monitoring for NVDs to ensure
that they receive equal levels of protection regardless of how they
are obtained by foreign recipients. Such steps might include
developing a plan or schedule for how and when each agency's end-use
monitoring approaches would be harmonized.
DOD Response: Concur. As noted above, DSCA welcomes the opportunity to
assist the Department of State to provide consistent monitoring of
sensitive technology regardless of the method of which the transfer is
made.
Recommendation 2: To close gaps in the implementation of end-use
monitoring programs in Persian Gulf countries that may limit the
ability of DoD and State to adequately safeguard defense articles upon
their arrival. storage. and eventual use in those countries, we
recommend that the Secretary of Defense develop guidance requiring
Dot) officials to document their efforts to verify host country
security and accountability procedures for sensitive equipment and
their activities to monitor less sensitive equipment.
DOD Response: Concur. DSCA has developed written guidance requiring
DoD personnel to document and maintain records of EUM activities
related to DOD-to-foreign government transfers. This guidance will be
included in Chapter S of the updated Security Assistance Management
Manual and will require SCOs to document physical security and
accountability practices observed during inventories. These
observations will be recorded via memorandums for record and
maintained with enhanced EUM checklists for audit during future
DSCA-led Compliance Assessment Visits beginning on January I, 2012.
GAO Recommendation 3: To close gaps in the implementation of end-use
monitoring programs in Persian Gulf countries that may limit the
ability of DoD and State to adequately safeguard defense articles upon
their arrival, storage, and eventual use in those countries, we
recommend that the Secretary of Defense obtain from the UAE government
an NVD compliance plan, as required under the conditions of sale
through FMS, or develop an appropriate response.
DOD Response: Concur. DSCA highlighted the need for this plan as one
of its recommendations during the most recent CAV to the UAE in May
2010. Since the CAV report was published, DSCA has been working with
the U.S. Liaison Office (USLO) in UAE to obtain the plan. In December
2010, the USLO formally informed DSCA that efforts to obtain the NVD
Compliance Plan were in-progress. The UAE has provided a NVD Control
Plan for the Presidential Guard units and work has continued to obtain
a plan from the Ministry of Defense (MoD).
On 24 October 2011. DSCA met with UAE officials to formally discuss
the UAE's requirement to submit the NVD Control Plan and stated that
unless it is received by 31 December. 2011, future NVD exports via FMS
may be affected. Formal documentation of the meeting will be
provided as a record of the request in addition to a DSCA letter
addressed to the ranking visiting official. DSCA expects the MoD will
provide the plan by the requested date.
[End of section]
Appendix III: Comments from the Department of State:
Note: GAO comments supplementing those in the report text appear at
the end of this appendix.
United States Department of State:
Chief Financial Officer:
Washington, D.C. 20520:
November 4, 2011:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"Persian Gulf: Implementation Gaps Limit the Effectiveness of End-
Use Monitoring and Human Rights Vetting for U.S. Military Equipment,"
GAO Job Code 320813.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Steven Rice, Deputy Director, Bureau of Political-Military Affairs
at (202) 663-2803.
Sincerely,
Signed by:
James L. Millette:
cc: GAO — Joseph Christoff:
PM— Andrew J. Shapiro:
State/OIG — Evelyn Klemstine:
[End of letter]
Department of State Comments on GAO Draft Report:
Persian Gulf: Implementation Gaps Limit the Effectiveness of End-Use
Monitoring and Human Rights Vetting for U.S. Military Equipment
(GAO 12-89, GAO Code 320813):
Thank you for the opportunity to comment on your draft report entitled
"Persian Gulf Arms Transfer Monitoring: Implementation Gaps Limit the
Effectiveness of End-Use Monitoring and Human Rights Vetting for U.S.
Military Equipment."
With respect to the three recommendations GAO made in the report, we
accept the first, disagree with and ask you to reassess the second,
and are already working to address the third.
We will work to better harmonize State and Department of Defense (DoD)
approaches regarding the end-use monitoring of night vision devices
(NVDs) to ensure adequate levels of protection regardless of how they
are obtained by foreign recipients. As GAO noted, both State and DoD
fulfill end-use monitoring requirements pursuant to Section 40A of the
Arms Export Control Act. With respect to end-use monitoring for Direct
Commercial Sales (DCS), State identifies high-risk exports and
conducts end-use monitoring to provide reasonable assurances that
defense articles and services are used for purposes provided.
We must note that there are significant differences in resources that
State and DoD can draw on for end-use monitoring. Neither we nor
embassies around the world have the human resources to complete a 100%
check on all NVD exports. Overcoming this constraint will be one of
the greatest challenges for State and DoD to harmonize their
approaches. [See comment 1]
Further, the report does not consider that the number and type of NVDs
exported via FMS varies sometimes significantly from those exported
DCS. For instance, State licenses the export of large infrared devices
in small quantities. These devices are not "man portable" and are
often in a fixed location. (See the example below in BL 11002
regarding the presidential palace in the UAE.) We do not believe a
100% check is required of every NVD export transaction. [See comment
2]
Regardless, we will look for opportunities to improve and harmonize
practices on end-use monitoring of NVDs with DoD. As we informed GAO,
we intend to increase the number of end-use inquiries on NVDs that are
comparable to those sold via FMS — namely portable viewing devices in
significant quantity, which represent a high-risk of diversion. Where
practicable and appropriate we will request on-site visits and
physical accounting. We have and will continue to participate in DoD
end-use monitoring visits to foreign countries. We recently returned
from such a trip to Colombia. Finally, we will explore with DoD when
and how existing DoD resources in country may be leveraged to support
DCS exports.
Regarding your second recommendation, the Department of State
disagrees with GAO's conclusions on Blue Lantern site visits and the
manner in which the Department closes out post-shipment Blue Lantern
checks. A site visit by a U.S. official may not be feasible or
required for all NVD-related transactions. In certain appropriate
instances, we accept host government official assurances that hardware
has been received and inventory control and accounting systems are
working. We believe GAO has misinterpreted the data from certain cases
to reach its conclusions.
The report references particular State licenses and Blue Lantern
cases. In our view, these references lack a full accounting and
thereby give a misleading impression. For example, the draft report
concludes that the Department of State makes "inconsistent use of site
visits" in paragraph one, page 19. However, the Department believes
that the report reaches an incorrect conclusion. Accordingly, we
provide the following information on end-use inquiries for these
license transactions: [See comment 3]
050021404 (p.18-19) — Post made inquiries with UAE HQ and received
confirmation that the NVDs were received and were being used according
to authorized end-use and license provisos. We did not request a site
visit because we believed that written assurances from a host
government with an established record of favorable end-use monitoring
is sufficient. A more thorough accounting via mandatory site visit or
physical inspection takes place more commonly when the government end-
user is unknown, or the end-user is a private entity, which was not
the case. [See comment 4]
050949378 (p.18-19) — Physical inspection of 10 NVDs occurred. The
case was closed favorably.
1010477 (p.19 second paragraph) — Post made inquiries with the Saudi
Ministry of Defense, which conducted an inventory of NVDs located in
Khamis Mushayt, Riyadh and Tabuk. We did not request a site visit
because we were sufficiently satisfied with the assurances from Saudi
authorities. Much like the UAE example above, we accept assurances
from a host government that the items have been received and are being
used according to the provisions of U.S. Government authorization. In
this particular instance, the Saudi Ministry of Defense conducted a
physical count of NVDs at locations of multiple defense units across
the country and reported those findings to Post. In addition, this
inquiry remains open as we await completion of the MOD's audit. To
date, we have accounted for 638 of 766 NVDs.
As a point of clarification, the license was issued in March 2007.
Final export did not occur until October 2009. The end-use inquiry was
initiated in May 2011, 18 months after final export. We intentionally
waited until final export before initiating the post-license check.
The aim in this case was to make optimal use of resources by having a
single check cover all items exported. Thus, we achieved a full-scope
assessment of where all of the items were exported, to whom and for
what specific end-use. [See comment 5]
Regarding cases that were closed prior to receiving confirmation that
the end-user had actually received the items (p. 20 second paragraph),
both cases were closed favorably after Post confirmed the bona fides
of the respective transactions: [See comment 6]
BL 11002 (p.20, second paragraph): Abu Dhabi confirmed that one
thermal camera had been received and was in temporary storage until
the receipt of a second camera, at which point both items were to be
installed for security purposes in a Presidential palace. This is a
standard case closure practice for certain transactions and well
within the scope of the inquiries. We confirmed the bona fides of the
transaction and the end-user/use. End-use inquiries are conducted for
a variety of reasons. Physical receipt of items is only one reason.
[See comment 7]
BL11002 (p.20, second paragraph): Based on cable and e-mail exchanges
with Post, we confirmed that the Royal Court of Oman had placed an
order for the firearms and was a legitimate end-user. For GAO's
benefit, we note that when the firearms were initially exported from
the U.S., they were misrouted through Germany and were seized by
German authorities. The German government released the firearms after
the U.S. exporter obtained a DSP-61 temporary import license.
Unfortunately, that was not the proper procedure from the standpoint
of U.S. Customs & Border Protection (CBP), which seized the firearms
upon return to the U.S. The U.S. exporter then entered into a dispute
resolution process with CBP. Separately and without our knowledge of
the preceding, a Compliance official traveled to Oman for a CENTCOM
conference. While in country, he met with Royal Court and Omani import
company officials, both of whom discussed the delay and presented
their bona fides personally. Upon return, the Compliance official
contacted CBP and assisted in satisfactory resolution of the seizure
and eventual export to Oman. Compliance received written confirmation
from the Omani company that the firearms were received and delivered
to the Royal Court. [See comment 8]
The Department of State believes GAO misinterpreted the data from the
cases cited above resulting in incorrect findings. In light of the
additional information provided, the Department respectfully requests
that GAO reassess its conclusion in this area.
Finally, regarding your third recommendation, the Department of State
is already working on plans to improve human rights vetting procedures
with the aim of more effectively addressing equipment. As the report
notes, the Department is developing policy guidance and identifying
procedures to standardize the collection of timely information on
recipient units for equipment. This approach will permit equipment
vetting to be conducted through INVEST much closer in time to delivery
of the assistance, and should significantly improve effectiveness over
the current process, which relies on the information available when
funding for equipment is allocated.
As a point of clarification, the Department notes that the draft
report on the "highlight" page and again on page 29 may give the
impression that the INVEST vetting system introduced in November 2010
was adopted only for the GCC. This is not the case. The new INVEST
system for Leahy vetting was developed and rolled out worldwide, and,
in the case of countries under the Near Eastern Affairs Bureau, to
include the GCC, launched in November 2010. [See comment 9]
Unrelated to your recommendations, the Department notes that the
report's referring to "Persian Gulf countries" may connote that Iran
and Iraq are included in the subset of countries studied, which is not
the case. [See comment 10] Further, paragraph two currently states:
"With uprisings occurring throughout the Persian Gulf, this could
result in U.S.-funded equipment being misused to quell peaceful
demonstrations." The Department requests that GAO consider striking
this language, because this statement is inaccurate. Of the six GCC
countries, only Bahrain has experienced "uprising" on-going public
demonstrations. The term is misleading and does not reflect the
reality of the GCC countries. Furthermore, the sentence is speculative
and does not provide any context into how GCC countries might respond
to demonstrations. [See comment 11]
The Department of State also requests your reconsideration of
additional language. Paragraph three currently states: "Such vetting
is especially critical given Bahrain's use of its military to quell
public demonstrations since spring 2011." The Department requests that
GAO adjust this language to the following: "Such vetting is especially
critical given the regional unrest since spring 2011." We justify the
request by noting that Bahrain responded to public demonstrations with
a mix of security forces, rather than just military forces. The
Bahraini government's response to demonstrations is being examined by
the Bahrain Independent Commission of Inquiry (BIO), which is expected
to publish its report on November 23, 2011. Given the questions
surrounding the response, it is not accurate to single-out Bahrain's
military in the GAO report. [See comment 12]
Following are GAO's comments on the Department of State's letter dated
November 4, 2011.
GAO Comments:
1. We did not recommend that State conduct a 100 percent check on all
NVD exports; rather, we recommended that State and DOD take steps to
harmonize their approaches to end-use monitoring for NVDs to ensure
that these sensitive items receive equal levels of protection
regardless of how they are obtained. Nonetheless, in DOD's comments on
this draft it offered to provide any assistance needed to State to
ensure that sensitive items are appropriately monitored by both
agencies.
2. State asserted that our report does not consider that the number
and type of NVDs sold through FMS may vary from those exported through
DCS. However, we accounted for this possible difference by limiting
our analysis to a comparison of State's and DOD's end-use monitoring
for man-portable NVDs--the primary focus of DOD's end-use monitoring
for NVDs. Specifically, DOD conducts enhanced end-use monitoring
(i.e., delivery verification by serial number and regular follow-up
serial number inventories) for man-portable NVDs, whereas it conducts
routine end-use monitoring (i.e., observations in conjunction with
other duties) for platform-mounted NVDs, such as the larger infrared
devices cited by State. Accordingly, we did not recommend that State
or DOD conduct a 100 percent check on every NVD sale or export, but
rather that they harmonize their approaches to end-use monitoring for
NVDs to ensure equal protection for these sensitive items regardless
of the method of transfer.
3. State asserted that our conclusion on State's inconsistent use of
site visits is based on isolated Blue Lantern cases that give a
misleading impression. However, we drew our conclusion based on an
analysis of a sample of 13 postshipment checks that State requested in
the Gulf countries from fiscal years 2005 through 2010. We determined
that U.S. embassy officials conducted site visits to end-users for
only 3 of these 13 checks. Separate from this analysis, we cited
examples in our report of instances in which State did and did not
conduct site visits to end-users to verify receipt and confirm
compliance with license conditions for sensitive defense articles. For
example, we noted two instances in which embassy officials in Saudi
Arabia and Qatar conducted site visits to end-users to verify receipt
and confirm compliance with license conditions. In contrast, we cited
another example to illustrate an instance when embassy officials in
the UAE did not conduct a site visit, as requested by State.
4. State's assertion that it did not request a site visit in this
instance differs from our documentary evidence. For this postshipment
check, State requested that embassy officials verify the serial
numbers for a shipment of NVDs and confirm that all of the devices
were secure, functional, and being used only for the purpose stated on
the license. Moreover, State explicitly asked in its tasking cable
that embassy officials conduct a site visit to gather and verify this
information. However, as State notes in its comments, embassy
officials did not conduct a site visit in this instance. Instead, the
embassy received a fax from the UAE Armed Forces 14 months after the
check was requested stating that all the items had been fully
received. The fax did not comment on whether the NVDs were being used
in accordance with the authorized end-use and license provisos.
5. We cited this Blue Lantern check as an example of an instance in
which delays in requesting and conducting a check prevented State from
conducting a serial number inventory of a shipment of NVDs or
verifying that these items were being stored in secure facilities.
State said that it did not request a site visit because it was
sufficiently satisfied with assurances from the Saudi authorities that
the items had been received and were being used according to the
provisions of the export license. However, during our fieldwork in
Saudi Arabia, we accompanied an embassy official on the Blue Lantern
check in which he attempted to conduct a serial number inventory of
the 766 NVDs shipped on this license. However, the Saudi authorities
informed the embassy official that the devices had been issued to
units located throughout the country. As a result, he was unable to
independently verify that the NVDs had been received and were being
used in accordance with the provisions of their license. State further
asserts that it intentionally waited until final export before
initiating the postshipment check for these NVDs in order to make
optimal use of resources by conducting a single check to cover all of
the items exported. However, rather than initiate the check
immediately following final export, State waited an additional 18
months to conduct the check (more than three years after the first of
two shipments of NVDs). State's comments on this draft did not explain
why State waited 18 months after final export to conduct the check.
6. While State's written comments noted that, in both of these cases,
embassy officials confirmed the bona fides of the transactions, this
misses our point. We cited these two cases as examples of Blue Lantern
checks that were closed as favorable before receiving confirmation
that the end-user had received the items. In both of the cases cited
in our report, State explicitly requested in its tasking cables that
embassy officials verify receipt of the items by the end-user.
Although embassy officials reported back to State that they were not
able to verify receipt by the end-user, State closed both cases as
favorable instead of leaving these cases open until embassy officials
could confirm receipt.
7. We agree that officials from Embassy Abu Dhabi visited the
intermediary and confirmed the bona fides of this transaction.
However, State explicitly requested in its tasking cable that U.S.
officials verify receipt of the thermal imaging camera by the UAE
Armed Forces. In this instance, embassy officials were unable to
confirm receipt by the UAE Armed Forces because the camera was still
being held by the consignee. Rather than leave the Blue Lantern case
open until embassy officials could verify receipt, State closed the
case as favorable and did not request that Embassy Abu Dhabi conduct
any additional follow-up.
8. We agree that officials from Embassy Muscat visited the
intermediary and confirmed the bona fides of the transaction. However,
State asked in its tasking cable that Embassy Muscat verify that the
Royal Court received the firearms. When Embassy Muscat notified State
that the firearms had not yet been received by the Royal Court, State
closed the case as favorable. It was not until later that State
received written confirmation from the Omani intermediary that it had
received the firearms and delivered them to the Royal Court.
9. We agree and did not intend to imply that INVEST was implemented
only in the Persian Gulf countries. We revised the report to clarify
that INVEST was implemented worldwide in 2010 and 2011 to facilitate
human rights vetting.
10. We list the six Persian Gulf countries that are included in the
scope of this study in the Highlights page and on the first page of
the report. We do not believe any additional clarification is
necessary.
11. While Bahrain is the only Gulf country included in the scope of
this study to have experienced ongoing public demonstrations, Oman and
Saudi Arabia have also experienced some degree of political unrest in
2011. We have modified the language in the report to clarify this
distinction.
12. We agree and have revised the report to refer more broadly to
Bahrain's security forces, rather than Bahrain's military.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Loren Yager, (202) 512-4347 or yagerl@gao.gov:
Staff Acknowledgments:
Key contributors to this report were Joseph A. Christoff, Director
(ret.); Jeff Phillips, Assistant Director; Drew Lindsey, Analyst-in-
Charge; Juan Avila; Rachel Dunsmoor; and Adam Vogt. Martin de
Alteriis, Justin Fisher, and Mitchell Karpman provided assistance with
design and methodology, statistics, and data analysis, respectively.
Ashley Alley provided legal support, Etana Finkler and Jena Sinkfield
provided graphics support, and Sarah McGrath provided assistance in
editing and report preparation.
[End of section]
Footnotes:
[1] For the purposes of this report, arms sales refer to defense
articles and services that the U.S. government sells to foreign
governments and international organizations through Foreign Military
Sales. Arms exports refer to defense articles and services licensed
for export through the Department of State-administered direct
commercial sales . Arms sales and arms exports to the Gulf countries
include missile and missile defense systems, aircraft, and night
vision devices, among other things.
[2] Throughout this report, we refer to these six countries as the
Gulf countries.
[3] GAO, Persian Gulf: U.S. Agencies Need to Improve Licensing Data
and to Document Reviews of Arms Transfers for U.S. Foreign Policy and
National Security Goals, [hyperlink,
http://www.gao.gov/products/GAO-10-918] (Washington, D.C.: Sept. 20,
2010).
[4] We drew a random, stratified sample of 25 checks out of 77
conducted in the Persian Gulf countries in fiscal years 2009 and 2010.
In addition, we judgmentally selected 9 Blue Lantern checks from
fiscal years 2005 through 2010 because they were higher priority
checks or because they pertained to the export of night vision
devices, a sensitive military technology.
[5] Throughout this report, we use the terms "military equipment" and
"equipment" synonymously with "defense articles."
[6] AECA, as amended, 22 U.S.C. §§ 2751 et seq.
[7] DSCA's policies for implementing FMS are outlined in the Security
Assistance Management Manual.
[8] 22 U.S.C. § 2778(g)(7).
[9] Standards Identifying High-Risk Exports, 53 Fed. Reg. 37382 (Sept.
26, 1988).
[10] See section 40A(a)(2) of the AECA; 22 U.S.C. § 2785(a)(2). This
amendment also requires the President to establish an end-use
monitoring program for defense articles sold, leased, or exported
under the Foreign Assistance Act of 1961, which authorizes military
equipment transfers through security assistance programs such as the
Excess Defense Articles and Emergency Drawdown programs, among others.
[11] Security Cooperation Organizations are the DOD administrative
offices in foreign countries, under the legal authority of the U.S.
Ambassador and often co-located with the U.S. embassy. These
organizations act as the linkage between partner nations and all DOD
organizations for security cooperation issues, ranging from FMS to
combined exercises. They are also responsible for conducting Golden
Sentry end-use monitoring for defense articles sold through FMS.
[12] 22 U.S.C. § 2378d.
[13] This provision is included as a recurring amendment in DOD's
annual appropriations bill. For the most recent version of this
provision, see Section 8058 of the Department of Defense and Full-Year
Continuing Appropriations Act, 2011, Pub. L. No. 112-10 (Apr. 15,
2011).
[14] DOD's "Leahy" provision included foreign police forces for the
first time in fiscal year 2011.
[15] 22 U.S.C. § 2304(a)(2).
[16] [hyperlink, http://www.gao.gov/products/GAO-10-918].
[17] Letters of Offer and Acceptance are the FMS purchase agreements
between the United States and a foreign purchaser.
[18] These specialized notes are outlined in Chapter 5 of the Security
Assistance Management Manual.
[19] In some instances, DOD may also require country-specific,
enhanced end-use monitoring for other defense articles not included on
this list.
[20] DOD may also conduct Familiarization Visits and Investigation
Visits as part of its Golden Sentry end-use monitoring program.
Familiarization Visits are intended to help the host nation and
Security Cooperation Organization develop end-use monitoring
compliance plans. DOD has conducted Familiarization Visits in all of
the Gulf countries except for Qatar. Investigation Visits are designed
to examine possible violations of the AECA. DOD has not conducted any
Investigation Visits in the Gulf countries.
[21] GAO, Defense Exports: Foreign Military Sales Program Needs Better
Controls for Exported Items and Information for Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-454] (Washington, D.C.: May 20,
2009).
[22] State also occasionally conducts postlicense/preshipment checks
if new information comes to light indicating possible concerns about a
transaction which were not known at the time the license was approved.
According to State officials, it did not conduct any postlicense/
preshipment checks in the Gulf countries from fiscal years 2005
through 2010.
[23] Blue Lantern checks conducted from fiscal years 2005 through 2010
may not correspond to licenses approved during those years because
deliveries of items may occur within four years of a license approval.
[24] Approved licenses may not necessarily result in deliveries.
[25] Provisos impose limitations or other requirements on parties to
the export license. For example, a proviso might limit the technical
specifications of an item authorized for export or require the end-
user to provide security and accountability for an item.
[26] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[27] The DOD official responsible for Golden Sentry end-use monitoring
in Qatar said that he has not used a checklist because the only
defense article received by Qatar that requires enhanced end-use
monitoring is Communications Security Equipment, which is monitored by
United States Central Command (CENTCOM).
[28] We drew a random, stratified sample of 25 checks out of 77
conducted in the Gulf countries in fiscal years 2009 and 2010. In
addition, we judgmentally selected 9 Blue Lantern checks from fiscal
years 2005 through 2010 because they were higher priority checks or
because they pertained to the export of NVDs, a sensitive military
technology.
[29] Our sample of 34 checks included 27 checks classified as
postshipment checks. Of these, we excluded 10 checks from our analysis
because State closed the Blue Lantern case without tasking post to
conduct a check. We also excluded 4 checks for brokers because these
checks were not associated with a specific shipment of military
equipment. This left 13 postshipment checks that we included in this
analysis, including 8 we selected randomly and 5 we selected
judgmentally.
[30] One of the three site visits was conducted by DOD personnel in
Saudi Arabia.
[31] Inconsistent use of site visits can mean two things. In some
cases, State does not always request site visits as part of
postshipment checks. In other cases, when State requests a site visit
it is not conducted by embassy officials.
[32] NVDs are classified as Significant Military Equipment under
category XII(c) of the United States Munitions List.
[33] Department of Defense, Policy for International Transfer and
Export Control of Night Vision Systems, Equipment, Components,
Services, Technical Data, and Related Technology, June 12, 2009.
[34] According to DOD policy, night vision technology encompasses
thermal imaging, image intensification, and any other technology that
provides vision, imaging, or scene information in any portion of the
infrared spectrum. See Department of Defense, Policy for International
Transfer and Export Control of Night Vision Systems, Equipment,
Components, Services, Technical Data, and Related Technology, June 12,
2009.
[35] Night vision systems based on zero-and first-generation
technology are licensed by the Department of Commerce under its list
of controlled, dual-use items. We did not include these items in the
scope of our report.
[36] The review process for NVDs and other defense articles is
discussed at length in GAO's prior report on arms sales and exports to
the Persian Gulf. See [hyperlink,
http://www.gao.gov/products/GAO-10-918].
[37] According to DSCA, the required inventory frequency for second-
generation NVDs in Saudi Arabia was set at 50 percent annually (100
percent biannually) after completion of a Compliance Assessment Visit
in Saudi Arabia in 2007.
[38] We used State's licensing data to identify 45 licenses for man-
portable NVDs based on image intensification technology that were
authorized for export to the Gulf countries from fiscal years 2005
through 2010 and asked State to verify shipments on these licenses as
of September 9, 2011. State confirmed that the NVDs had fully shipped
on 34 of those 45 licenses.
[39] These included 8 postshipment checks for 1,862 man-portable NVDs
and 1 prelicense check for 380 man-portable NVDs.
[40] According to DOD officials, the UAE has an NVD compliance plan in
place for its Presidential Guard but not for the rest of its armed
forces.
[41] 22 U.S.C. § 2378d; for the most recent DOD provision, see also
Section 8058 of the Department of Defense and Full-Year Continuing
Appropriations Act, 2011, Pub. L. No. 112-10 (Apr. 15, 2011).
[42] According to State, training and equipment purchased by the Gulf
countries through FMS or DCS using their own funds is not subject to
these human rights restrictions and therefore not subject to State's
human rights vetting process. However, as part of its case-by-case
review of potential arms sales and exports, State takes into account
the human rights record of the intended recipient. This review process
is described in greater detail in our previous report on arms sales
and arms exports to the Persian Gulf. See GAO-10-918.
[43] Saudi Arabia also received a nominal amount of assistance through
the International Military Education and Training program in fiscal
years 2009 and 2010.
[44] Under State's policy, the political section is the only section
at post required to conduct vetting. Vetting by other sections is
optional and varies from post to post. In the Gulf countries, the
number of sections that conducted vetting ranged from three in the UAE
to seven in Saudi Arabia.
[45] State implemented INVEST worldwide in 2010 and 2011. The
countries in State's Bureau of Near Eastern Affairs, including the
Gulf countries, began using INVEST in November 2010.
[46] GAO, Security Assistance: Lapses in Human Rights Screening in
North African Countries Indicate Need for Further Oversight, GAO-06-
850 (Washington, D.C.: July 28, 2006).
[47] The Persian Gulf countries included in our study are Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Throughout this report we refer to these six countries as the Gulf
countries.
[48] State initiated 84 checks involving the Gulf countries between
fiscal years 2009 and 2010, but in order to draw our random sample, we
excluded 4 checks that we selected judgmentally as well as 3 checks
that were recorded twice in the data because they involved a check in
more than one Gulf country.
[49] Our sample is based on the date when Blue Lantern checks were
closed by State.
[End of section]
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