Foreign Military Sales:

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

GAO-05-17: Published: Nov 9, 2004. Publicly Released: Nov 9, 2004.

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Under Department of Defense (DOD) policy, the export of classified and controlled spare parts must be managed to prevent their release to foreign countries that may use them against U.S. interests. GAO has issued a series of reports on the foreign military sales program in which weaknesses in the military services' internal controls were identified. This report highlights (1) a systemic problem that GAO identified in the internal controls of the military services' requisition-processing systems and (2) a potential best practice that GAO identified in one service that provides an additional safeguard over foreign military sales of classified and controlled parts.

At the time GAO conducted its reviews, the Army, the Navy, and the Air Force were not testing their automated requisition-processing systems to ensure that the systems were accurately reviewing and approving blanket order requisitions for compliance with restrictions on the sale of classified and controlled spare parts and operating in accordance with foreign military sales policies. Blanket order requisitions are based on agreements between the U.S. government and a foreign country for a specific category of items for which foreign military sales customers will have a recurring need. GAO's tests of the services' requisition-processing systems showed that classified and controlled spare parts that the services did not want to be released to foreign countries under blanket orders were being released. GAO's internal control standards require periodic testing of new and revised software to ensure that it is working correctly, while the Office of Management and Budget's internal control standards require periodic reviews to determine how mission requirements might have changed and whether the information systems continue to fulfill ongoing and anticipated mission requirements. DOD either concurred or partially concurred with GAO's recommendations for testing the requisition-processing systems. The department, however, does not have a plan specifying the remedial actions to be taken to implement these recommendations. Internal control standards requiring testing also will be applicable to the Case Execution Management Information System, an automated requisition-processing system that DOD and the military services are developing to replace the existing individual military service systems. The Army's automated requisition-processing system incorporates a potential best practice that helps to prevent the release of classified or controlled parts that are not authorized under blanket orders to foreign countries. The automated systems used by the Navy and the Air Force allow country managers to override system decisions not to release to foreign countries classified or controlled parts that are requisitioned under blanket orders. GAO found instances where Navy and Air Force country managers overrode the systems' decisions without documenting their reasons for doing so. In contrast, the Army's system automatically cancels requisitions that are made under blanket orders for classified or controlled parts. Because the requisitions are automatically canceled, country managers do not have an opportunity to override the system's decisions. Compared with the Navy's and the Air Force's systems, the Army's system provides more stringent protection against releasing classified or controlled parts that are not authorized under blanket orders to foreign countries.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To reduce the likelihood of releasing classified and controlled spare parts that DOD does not want to be released to foreign countries the Secretary of Defense should direct the Under Secretary of Defense for Policy, in conjunction with the Secretaries of the Army and the Navy, and direct the Secretary of the Air Force to develop an implementation plan, such as a Plan of Actions & Milestones, specifying the remedial actions to be taken to ensure that applicable testing and review of the existing requisition-processing systems are conducted on a periodic basis.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In November 2004, the Defense Security Cooperation Agency sent an initial electronic mail to the Military Department representatives involved in the previous GAO spare parts audits (GAO-04-507 and GAO-05-327) requiring testing of the existing requisition processing systems beginning in or around May 2005. The tests were conducted and the results from the services confirmed that proper controls are in place for their systems. Follow-up testing will be conducted annually.

    Recommendation: To reduce the likelihood of releasing classified and controlled spare parts that DOD does not want to be released to foreign countries the Secretary of Defense should direct the Under Secretary of Defense for Policy, in conjunction with the Secretaries of the Army, the Air Force, and the Navy, to determine whether current plans for developing the Case Execution Management Information System call for periodic testing and, if not, provide for such testing.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Case Execution Management Information System (CEMIS) will be developed in accordance with all known US government and DOD standards for the acquisition and implementation of automated information technology systems. CEMIS software program testing will adhere to software-testing standards in place at the time of implementation, including testing to ensure that the functionality of existing software code is not changed when the coding is modified or enhanced.

    Recommendation: To reduce the likelihood of releasing classified and controlled spare parts that DOD does not want to be released to foreign countries the Secretary of Defense should direct the Under Secretary of Defense for Policy, in conjunction with the Secretary of the Navy, and direct the Secretary of the Air Force to determine if it would be beneficial to modify the Navy's and the Air Force's requisition-processing systems so that the systems reject requisitions for classified or controlled parts that foreign countries make under blanket orders and preclude country managers from manually overriding system decisions, and to modify their systems as appropriate.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: August 3, 2005. The Navy and Air Force business processes will be reviewed, as well as the requisition-processing systems, to determine the benefits of modifying the systems to mirror the Army system. The review is expected to be completed by mid 2006. In September 2005, as a result of system testing, DOD has determined that the existing controls in both systems are sufficient to preclude the unauthorized release of classified or controlled parts on blanket order cases. No modifications are planned for either system.

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