Defense Logistics Agreements: DOD Should Improve Oversight and Seek Payment from Foreign Partners for Thousands of Orders It Identifies as Overdue
Fast Facts
Weaknesses in the Department of Defense’s oversight of the support it has provided to foreign partners have resulted in thousands of overdue reimbursements.
Through its Acquisition and Cross-Servicing Agreements, DOD provides foreign partners with reimbursable support such as meals, aerial refueling, munitions (for example some used in Saudi-led Coalition activities in Yemen), and more. However, DOD has not consistently maintained quality data or requested reimbursement for thousands of these transactions, which it values at more than $1 billion.
We made 7 recommendations to improve DOD’s oversight of these transactions.
Aerial refueling is one example of support that may be exchanged through Acquisition and Cross-Servicing Agreements (ACSAs)
Aerial refueling
Highlights
What GAO Found
While generally providing required information to Congress, poor recordkeeping by the Department of Defense (DOD) and late notifications by the Department of State (State) have limited the accuracy and timeliness of information provided to Congress on acquisition and cross-servicing agreements (ACSA). DOD and State have Congressional notification requirements pertaining to ACSAs—agreements through which DOD exchanges logistic support, supplies, and services with foreign partners in return for cash or in-kind reimbursement. Documents indicate that DOD provided notice to Congress before designating 78 of 104 countries eligible for an ACSA. However, DOD did not have records for the remaining 26, in part because it lacks documented recordkeeping procedures. While State generally notified Congress about ACSAs' entry into force, it transmitted 41 percent of them after the statutory deadline, largely because DOD did not provide required information to State. These gaps and issues have reduced the accuracy and timeliness of information provided to Congress about ACSAs.
DOD has not maintained quality data to track ACSA orders and has not received reimbursement for thousands of orders. First, DOD does not have complete and accurate ACSA data. For example, for an estimated 12 percent of ACSA orders authorized from October 2013 through March 2018 in DOD's system of record, DOD could not determine whether it had received reimbursement for support provided to partners. According to DOD officials, such inaccuracies occur in part because DOD does not have a process to validate data in its system. Second, GAO estimates that DOD received full reimbursement for 64 percent of ACSA orders authorized from October 2013 through March 2018 (about 6,000 orders), but did not receive full reimbursement for 24 percent. Orders remain unpaid in part because DOD has not requested timely repayment or monitored reimbursement. These management weaknesses limit DOD's ability to obtain reimbursement for overdue ACSA orders, which, according to DOD, were valued at more than $1 billion as of November 2019.
Reimbursement Status for ACSA Orders in DOD's System of Record from October 2013 through March 2018, by Number of Orders
Note: These estimates are based on a generalizable sample of orders in which the United States provided support to foreign partners; have a margin of error of up to plus or minus 5.1 percentage points at the 95-percent confidence level; and represent the percentage of the number of orders, not the dollar value of orders.
Why GAO Did This Study
According to DOD, from fiscal years 2014 through 2019, it used ACSAs to provide billions of dollars of logistic support, supplies, and services to more than 100 partner countries. For example, this support included fuel and ammunition to assist international exercises and coalition operations, among other efforts.
Senate Report 115-262 included a provision for GAO to review ACSA management. This report examines the extent to which (1) agencies have provided information to Congress about ACSAs, and (2) DOD has tracked and received reimbursement for ACSA orders. GAO conducted content analysis of DOD and State ACSA documents, and analyzed a generalizable sample of ACSA orders authorized from October 2013 through March 2018 and recorded in DOD's system of record for ACSA orders. An ACSA order, also referred to as a transaction, documents an exchange of support between the United States and a foreign partner. In addition, GAO interviewed agency officials and conducted fieldwork at Shaw Air Force Base in Sumter, South Carolina.
Recommendations
GAO is making seven recommendations to DOD to improve ACSA recordkeeping and reimbursement, through steps such as better monitoring, periodic data reconciliation, and timely invoicing. DOD agreed with all seven recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Secretary of Defense | The Secretary of Defense should ensure that written ACSA guidance includes recordkeeping procedures related to ACSA congressional notifications and signature dates to help enable the provision of complete information for Congress. (Recommendation 1) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. At that time, DOD provided a copy of a February 2020 memorandum issued in response to our draft recommendation that outlined procedures to capture and preserve information about ACSA establishment, including the dates of DOD's congressional notifications of intent to designate countries for ACSAs and agreement signature dates. In April 2020, DOD provided evidence confirming appropriate distribution of the memorandum. In addition, from July through November 2020, DOD provided us with updated copies of their record of current ACSAs and key dates related to each, including for milestones such as congressional notification and signature dates.
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| Office of the Secretary of Defense | The Secretary of Defense should take steps, such as updating guidance, to help ensure the implementation of requirements related to providing information to State about newly signed ACSAs. (Recommendation 2) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. At that time, DOD provided a copy of a February 2020 memorandum issued in response to our draft recommendation that provided guidance related to DOD's provision of ACSA information to the Department of State for its congressional notifications under the Case-Zablocki Act. In April 2020, DOD provided us evidence about the distribution of that memorandum to appropriate individuals and we have closed the recommendation accordingly.
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| Office of the Secretary of Defense | The Secretary of Defense should take steps to verify the accuracy of ACSA order statuses recorded in DOD's system of record, and make corrections as appropriate. (Recommendation 3) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. Since then, DOD has taken several steps to verify the accuracy of data recorded in AGATRS and made corrections for thousands of ACSA transactions. For example, DOD identified and cancelled draft transactions that were never implemented and reviewed and corrected overdue orders that should have been marked completed. Moreover, officials noted that there are ongoing efforts to continue improving the accuracy of the data recorded in AGATRS, such as sharing quarterly overdue reports with DOD components to ensure their continued attention on closing transactions. The steps DOD has taken and its ongoing efforts will help ensure that it has reliable information available for overseeing the reimbursement of the millions of dollars of support provided to U.S. partners through ACSA transactions.
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| Office of the Secretary of Defense | The Secretary of Defense should implement a process to reconcile data in financial systems with the data and associated documents collected and stored in DOD's ACSA system of record on a periodic basis. (Recommendation 4) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. As of September 2024, DOD had updated formal guidance and created new tools and processes to reconcile data in financial systems with information in AGATRS--its ACSA system of record--on a periodic basis. For example, in July 2022, DOD issued updates to its Financial Management Regulation requiring that military services create standardized formats or naming conventions to identify ACSA orders in their financial systems to facilitate reconciliation with AGATRS. Similarly, in July 2024, DOD published an update to the Chairman of the Joint Chiefs of Staff Instruction on ACSAs that added a requirement that DOD components executing ACSA orders be able to track and identify ACSA transactions and related documents within their financial systems. In addition to updating guidance, DOD has created new tools and processes to periodically reconcile AGATRS transaction data with financial systems. For example, officials in the Office of the Secretary of Defense responsible for overseeing ACSAs explained that they use a data collection tool populated with data from AGATRS to solicit transaction status updates from each military service on a bi-monthly basis. The services use their own financial systems to provide transaction status information to validate and, if necessary, update AGATRS. In September 2024, officials confirmed that they plan to continue conducting these processes to reconcile AGATRS transaction data with financial system information and to address overdue orders. These efforts will help ensure DOD has quality data to track ACSA orders and secure reimbursement for support provided to U.S. partners.
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| Office of the Secretary of Defense | The Secretary of Defense should develop and implement a mechanism to record and track the extent to which it is meeting required time frames to receive reimbursement for ACSA orders. (Recommendation 5). |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. Since then, DOD launched an update of its ACSA system of record intended to capture key order dates in a standardized, operational format. Officials told us that these dates provide more accurate timeliness information on each order to better record and track the extent to which DOD is meeting required time frames to receive reimbursement for ACSA orders. GAO's review of nearly 30,000 orders in DOD's system of record for ACSA orders for sales to partner countries from January 2023 through June 2024 indicated that 99.9 percent included valid delivery dates in accordance with the updated guidance. DOD's efforts will help ensure ACSA transactions are reliably tracked to better secure timely reimbursement from partners.
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| Office of the Secretary of Defense | The Secretary of Defense should take steps to improve invoicing of ACSA orders, such as identifying ACSA orders recorded in DOD's system of record that have not been invoiced and sending invoices to partner countries. (Recommendation 6) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. Since then, DOD has taken several steps to improve invoicing for ACSA transactions. For example, in January 2021, DOD made some revisions to its Financial Management Regulations that provide some additional clarity regarding roles and responsibilities for managing overdue ACSA-related debt. In July 2024, DOD published an update of the Chairman of the Joint Chiefs of Staff Instruction on ACSAs that clarified roles and responsibilities for required billing and other payment actions, to include tracking such actions in DOD's system of record for ACSA transactions. Further, DOD officials stated, and GAO confirmed, that that DOD has completed some ACSA transactions that were overdue as of March 2020 because new invoices were sent to partners who then provided reimbursement. These actions to improve invoicing will help ensure timely reimbursement of ACSA support provided to U.S. partners.
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| Office of the Secretary of Defense | The Secretary of Defense should implement a process to monitor ACSA orders recorded as overdue in DOD's system of record, and take steps to resolve outstanding reimbursements, as appropriate. (Recommendation 7) |
DOD concurred with this recommendation in its official comment letter included as an appendix in GAO-20-309, published in March 2020. In the months following the issuance of our report, DOD began efforts to collect payments from foreign partners for overdue orders, including some identified among the sample of ACSA orders reviewed during our study. Since then, DOD has taken additional action to implement an ongoing process to monitor overdue orders and take steps to resolve outstanding reimbursements. For example, DOD regularly produces overdue reports using its ACSA system of record and distributes them to services and components that conduct ACSA transactions with a request that they use information from their financial systems to verify transaction status or make updates as appropriate. DOD also uses periodic, generally bi-monthly, meetings with ACSA action officers to review overdue orders and steps that may be necessary to resolve outstanding reimbursements. As of September 2024, officials stated that they plan to maintain these meetings for the foreseeable future, as they have been an effective way to address overdue orders. DOD's efforts have resulted in significant collections of outstanding repayments, and its new process to monitor overdue orders should help ensure more timely reimbursement of ACSA support provided to partners in the future.
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