Foreign Military Sales: Review Process for Controlled Missile Technology Needs Improvement
Published: 1999-09-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed how the Foreign Military Sales program safeguards technology and arms transfers, focusing on the: (1) process for deciding what technology may be transferred as part of a sale through the program; (2) controls for ensuring that technology transfer considerations have been weighed when reviewing requests and agreements; and (3) Department of Defense's (DOD) proposals to improve technology transfer procedures.
section_title: What GAO Found
paragraphs: GAO noted that: (1) the U.S. government relies on a complex process with many participants to determine what technology may be transferred as part of a sale through the Foreign Military Sales program; (2) technology transfer decisions begin with an interagency National Disclosure Policy Committee process; (3) when making overall policy decisions, the committee provides authority for the government to transmit classified information associated with military items but does not approve the actual transfer of those items; (4) it does not typically address whether systems must be sold through the Foreign Military Sales program or a direct commercial sale; (5) the committee has a process for reviewing exceptions to the National Disclosure Policy; (6) within the National Disclosure Policy framework, separate organizations within the military departments recommend whether the requested items under their jurisdiction may be sold and manage the sales; (7) the U.S. government has not established a process for ensuring that certain controlled items are fully and systematically identified when reviewing requests or approving agreements under the Foreign Military Sales program; (8) as a result of weaknesses in the review process, items controlled by an international missile nonproliferation agreement have been transferred under the program without proper review and approval; (9) as structured, DOD's proposals to reform the Foreign Military Sales program are primarily focused on reducing time for making technology transfer decisions; (10) in considering DOD's efforts to shorten the processing time, officials acknowledge the need to properly assess the national security risks and benefits of proposed transfers; (11) a DOD and industry working group proposes more rigorously implementing requirements to make technology transfer assessments early in the planning of a weapon program; and (12) such assessments are a means of expediting technology transfer decisions when responding to foreign customers' requests.

section_title: Letter
paragraphs: The U.S. government and the defense industry face growing challenges as  they attempt to maximize the benefits of international weapon sales while  operating within the statutory requirements that control defense exports to  protect national security and advance foreign policy. Over the years, the  U.S. government has sold certain sensitive military items through the  Foreign Military Sales program partly because the items are presumed by  some to be better controlled by the program than through direct  commercial sales. However, the process for making decisions about what  technology may be transferred under the program is not readily  understood. As part of a broad request to review the Foreign Military Sales  program, you asked us to look at how the program safeguards technology  and arms transfers. Specifically, we (1) identified the process for deciding  what technology may be transferred as part of a sale through the program,  (2) assessed the controls for ensuring that technology transfer  considerations have been weighed when reviewing requests and  agreements, and (3) examined the Department of Defense’s proposals to  improve technology transfer procedures.
subsections: section_title: Background
paragraphs: The United States generally exports military items and services either  through (1) U.S. government sales under the Foreign Military Sales (FMS)  program or (2) direct commercial arms sales by individuals and business  entities. The Arms Export Control Act authorizes the President to control  the export of all defense articles and services and to designate items that  are to be controlled under the U.S. Munitions List. The President delegated  the control of exports of Munitions List items to the Secretary of State and  the implementation of the FMS program to the Secretary of Defense. As  part of its responsibilities, the State Department regulates direct  commercial arms sales through export licenses and reviews and approves  arms sales under the FMS program. Within the Department of Defense  (DOD), the Defense Security Cooperation Agency is responsible for overall  administration of the FMS program, while the military departments  implement individual sales under the program. The Arms Export Control  Act generally excludes sales under the FMS program from the requirement  for munitions export licenses.
Specific policies and controls have been established for the transfer of  classified military intelligence and critical military technology and defense  articles. A presidential executive order prescribed a uniform system for  classifying, safeguarding, and declassifying national security information.  The National Disclosure Policy was established to provide a framework for  the approval or denial of the transfer of classified military information to  foreign governments and international organizations. A decision to  disclose or transmit information must satisfy several criteria. These include  that the transmission of information be consistent with U.S. foreign policy  and U.S. military and security objectives and result in benefits to the United  States. In addition, the foreign recipient must afford the information  substantially the same degree of protection as the United States provides it,  and the information must be limited to what is necessary to fulfill the  prescribed purpose. Although the policy prohibits the transmission of  certain classified information, technology, and defense articles to foreign  countries, it provides a process by which exceptions may be granted.  Procedures established under the National Disclosure Policy are also used  to consider the release of unclassified military information to foreign  entities.
The United States and other nations have agreed to limit the spread of  certain types of arms and technologies by establishing various international  agreements, or regimes. For example, in 1987 the United States and several  major trading partners created the Missile Technology Control Regime  (MTCR) to control the proliferation of missiles and related technology. This  regime, implemented through national legislation in each of the member  countries, consists of common export policy guidelines that include a list  of controlled items. There are two categories of controlled items. Category  I items are rarely approved for export. They include complete missile  systems and subsystems such as rocket engines and guidance sets.  Category II items comprise a wide range of commodities, including test  equipment and propellants. These items are evaluated on a case-by-case  basis and typically denied for sale if destined for use in weapons of mass  destruction. The U.S. government controls the two categories of items  through the U.S. Munitions List or through the Commerce Control List. The  Missile Technology Export Control committee is a U.S. interagency  working group that reviews proposed U.S. exports of missile technology  and evaluates them in terms of MTCR and U.S. nonproliferation policy.
section_title: FMS Program Relies on the Disclosure Process to Determine What Technology May Be Transferred
paragraphs: The U.S. government has a complex process with many participants to  determine what technology may be transferred as part of a proposed sale.  An interagency committee oversees the National Disclosure Policy and  considers exceptions to the policy when classified military information is  involved in the proposed transfer. The committee does not approve actual  foreign military sales but provides authority to transmit the classified  information associated with sales. In addition, military departments with  responsibility over certain weapon systems and technologies have  administrative processes to make disclosure decisions within their  jurisdictions. Each military department has its own process for making  disclosure decisions within its authority and for preparing proposed FMS  agreements.
subsections: section_title: National Disclosure Process Involves Multiple Agencies
paragraphs: The National Disclosure Policy Committee is responsible for formulating,  issuing, administering, and monitoring the implementation of the National  Disclosure Policy, as well as considering exceptions to the policy. Although  the committee is responsible for determining what classified military  information may be transmitted to a foreign government, it does not  approve the actual sale that transfers the information. The committee may  discuss actual sales in the context of considering exceptions to the policy.
The committee consists of general members and special members who  represent heads of various federal agencies, DOD components, and each  military department. General members vote on all issues and include the  Secretaries of State, Defense, Army, Navy, and Air Force and the Chairman  of the Joint Chiefs of Staff. Special members usually vote only on those  issues in which they have a direct interest. The committee is co-chaired by  the State Department and DOD.
The committee has a process for reviewing exceptions to the National  Disclosure Policy. As illustrated in figure 1, the committee’s executive  secretary distributes any request for an exception to policy to all relevant  members. The committee’s procedures allow a 30-day time frame for  reaching final decisions. The members present a position within 10 working days. If there is not unanimous agreement on the proposed  exception, the committee members work on achieving consensus. If they  are unable to do so, the committee chairman formulates a position and  informs the members within 10 working days. The chairman’s decision  becomes final unless appealed to the Secretary or the Deputy Secretary of  Defense by the cognizant department or agency within 10 working days.
Unlike in earlier times, when the FMS program was often favored over  commercial sales as the method of transfer for some sensitive weapon  systems, some committee representatives told us that today they typically  do not recommend that systems be sold through the FMS program and  often do not address the method of sale. According to several officials, both  methods of sale are equally secure in protecting technology. For example,  in early 1999 the committee agreed to change a long-standing policy that  required an advanced missile system to be sold through the FMS program.  The revised policy allows the system to be sold either through the FMS  program or directly by the contractor with State Department approval.  Irrespective of the method of sale, the purchasing country must agree to  security requirements, such as inventory of the equipment, and U.S.  government verification that the requirements have been met.
DOD’s policy is to remain generally neutral regarding the method of sale.  However, the policy allows for exceptions to permit FMS-only  recommendations based on criteria such as presidential directives,  legislation, and national or military department policies. While military  departments have recommended that certain weapon systems be sold only  through the FMS program, military officials we met with had widely  varying opinions about whether the FMS program affords greater control  than direct commercial sales. Some officials prefer selling sensitive items  through the FMS program because DOD officials are involved in  implementing every aspect of the sale under that program. Other officials  stated that defense contractors have strong incentives to adhere to export  control laws and will ensure that sensitive items are properly controlled  when sold directly by the contractor.
section_title: Military Departments Have Separate Disclosure and FMS Agreement Processes
paragraphs: Each military department has its own process for implementing the  National Disclosure Policy and for preparing FMS agreements. The  Secretary of Defense has delegated authority to implement the National  Disclosure Policy to military departments and other defense agencies for  information originated by or under the control of their organizations,  provided such information is in compliance with disclosure policy. The  military departments, in turn, have delegated some disclosure authority to  the heads of commands, agencies, and major staff elements within their  organizations. Major military commands we visited have delegated certain  authority to disclosure officers who work with weapon program offices on  international sales. Appendix I provides additional information on the  differences between military departments’ disclosure and FMS agreement  preparation processes. For example, the Army generally handles FMS  agreement preparations at the command level with higher level approval,  while the Air Force prepares FMS agreements at the Secretary level with  input from other headquarters and program offices. The Army maintains  disclosure as a security policy function held by the Deputy Chief of Staff for  Intelligence, while the Air Force and the Navy consider disclosure an  international function located with the Deputy Under Secretary of the Air  Force for International Affairs and the Navy International Programs Office,  respectively.
DOD organizations prepare Delegation of Disclosure Authority Letters or  component regulations to provide authority to disclosure officers to  transmit classified military information to foreign nationals as part of  weapon sales or other military activities. The disclosure letter explains  classification levels, categories, scope, and limitations on information,  including unclassified technical data, that may be disclosed to a foreign  recipient. Some FMS program officials, in consultation with disclosure  officers, refer to the disclosure letter as guidance when preparing FMS  agreements. Each military department has a mechanism for verifying that  the agreements do not exceed disclosure authority before referring them to  the Defense Security Cooperation Agency and State Department for final  approval.
Disclosure letters can be subject to interpretation. In matters that require  interpretation, disclosure officers contact program managers or engineers  for technical assistance. At military commands we visited, the disclosure  officers were in separate organizations from the FMS program  management offices. For weapon systems programs that had large  international sales, the disclosure officers were co-located in the program  offices to facilitate decisions. Some disclosure officers told us that they  want to retain a separate chain of command from the program offices so  they will remain independent from those who manage the sales.
section_title: Certain Controlled Technology Is Not Properly Identified and Reviewed Under the FMS Program
paragraphs: The U.S. government has not established a process for ensuring that certain  controlled items are fully and systematically identified when reviewing  country requests for information or approving agreements to purchase  items through the FMS program. While the State Department and many  DOD components review proposed FMS agreements, no one organization  is responsible for ensuring that all controlled items have been identified  and reviewed. As a result, controlled missile-related technology has been  transferred under the FMS program without proper review and approval.
subsections: section_title: DOD Focal Point for FMS Not Responsible for Making Technology Transfer Decisions
paragraphs: While the Defense Security Cooperation Agency is the principal  organization through which DOD carries out its security assistance  responsibilities, including administering the FMS program, it does not have  the mission or expertise to identify controlled technology and make  technology transfer decisions for DOD. The Defense Security Cooperation  Agency is responsible for raising issues, through appropriate channels,  when higher decision-making authority is required. It relies on the military  departments, as well as other DOD organizations, to identify technology  transfer concerns. A DOD directive requires certain DOD components to  conduct policy reviews, technical evaluations, operational and military  impact assessments, and intelligence assessments of all proposed  technology transfer cases. However, Defense Security Cooperation Agency  officials said they do not assess whether the military departments have  complied with this directive for controlled technology.
As required by policy, the Defense Security Cooperation Agency refers FMS  requests and agreements for major defense equipment to the Director,  Office of the Joint Chiefs of Staff, and the Office of the Under Secretary of  Defense for Acquisition and Technology. Joint Staff, in coordination with  the unified commands and the military departments, provides operational  and military mission impact assessments on technology transfers. DOD’s  Acquisition and Technology office is responsible for ensuring that the  proposed technology to be transferred does not threaten U.S. weapon  superiority. Security assistance policy requires coordination with these  organizations for all new security assistance requests and FMS agreements  for major defense equipment, including requests and agreements that are  expected to result in a notification to Congress or determined to be of a  sensitive nature. Defense Security Cooperation Agency country managers  determine whether or not to refer FMS requests and agreements that meet  major defense equipment criteria to the Joint Staff and the Acquisition and  Technology office. Items that do not meet the criteria are only occasionally  referred to these organizations.
The Defense Security Cooperation Agency is also responsible for notifying  the State Department of all requests for purchases through the FMS  program and for obtaining the Department’s approval for FMS agreements.  The State Department must provide its approval before any arms can be  transferred, including arms sold under the FMS program, but it relies on  DOD to provide information describing the proposed sale and the  sensitivity of the technology.
The Defense Security Cooperation Agency refers FMS requests and  agreements to the Defense Threat Reduction Agency on an ad hoc basis.  The Director of the Defense Threat Reduction Agency stated that the  Agency does not generally review FMS requests or agreements. However,  Defense Threat Reduction Agency officials told us they should be given the  opportunity to respond officially on all FMS major defense equipment or  sensitive items. Currently, the Defense Security Cooperation Agency does  not formally refer FMS requests or agreements to the Defense Threat  Reduction Agency and furnishes information copies on a limited number of  cases. Because one of the Defense Threat Reduction Agency’s principal  functions is to provide DOD’s recommendations on license applications, it  utilizes technical experts and intelligence sources to determine the  advisability of exporting a particular controlled item. The Defense Threat  Reduction Agency, in reviewing licenses, will examine the legitimacy of  foreign companies involved in the sale by using intelligence sources as well  as the State Department’s Watch List of export violators. Defense Security  Cooperation Agency officials stated that they informally discuss  intelligence assessments about FMS cases with Defense Threat Reduction  Agency officials. Defense Security Cooperation Agency officials told us  that they have an opportunity to review the Defense Threat Reduction  Agency’s intelligence assessments because most FMS cases have  associated commercial sales components that require an export license.  The export license review process identifies foreign companies that may be  involved in the sale.
The Defense Security Cooperation Agency also does not routinely refer  FMS requests or agreements to intelligence organizations such as the  Defense Intelligence Agency for review. According to DOD directives, the  Defense Intelligence Agency upon request provides intelligence reviews on  technology, goods, services, and munitions transfer cases to the Defense  Threat Reduction Agency for munitions licenses and to the National  Disclosure Policy Committee for exceptions.
section_title: Gaps in the FMS Review Process Led to Exports of Missile Technology Without Approval
paragraphs: The lack of clearly established responsibilities for FMS technology transfer  review has led to certain controlled items being transferred without proper  review and approval. For example, MTCR-controlled equipment has been  transferred under the FMS program without proper review and approval  for MTCR concerns. The State Department and DOD have no assurance  that MTCR-controlled items are routinely being reviewed for  nonproliferation concerns. As a result, both departments have begun  discussions to improve the review of MTCR items. The State Department  and DOD have organizations with expertise in reviewing MTCR-controlled  technology for export licenses but are not fully using them to review  proposed FMS agreements.
The State Department must provide its approval before any arms, including  those sold under FMS agreements, can be transferred. The Defense  Security Cooperation Agency submits proposed FMS agreements or  summaries to the State Department’s Bureau of Political-Military Affairs,  Office of Regional Security and Arms Transfer Policy (Regional Security  Office), for approval. When an FMS agreement involves missiles or  components that may fall under the MTCR, the Regional Security Office  refers the agreement to the State Department’s Office of Chemical,  Biological, and Missile Nonproliferation for review. However, because the  Regional Security Office does not have technical experts and may not know  which items are MTCR-controlled, officials told us that they rely on DOD to  identify whether or not MTCR-controlled items are included in an  agreement.
State Department Regional Security Office officials identified a deficiency  in the FMS review process for MTCR-controlled items in May 1999, when  reviewing a follow-on FMS agreement to a co-production agreement to  produce the M1A1 tank with a foreign government. The U.S. government  sold equipment under a series of FMS agreements beginning in 1989,  including a filament winding machine controlled by the MTCR, to this  foreign government to build a tank factory. Regional Security Office  officials reviewed this follow-on agreement and forwarded it to the MTCR  experts within the State Department for review. The MTCR experts initially  denied approval of the FMS agreement because they thought it was for the  sale of the filament winding machine. Because this machine is controlled  under category II of the MTCR, they were concerned that this export could  contribute to the foreign government’s missile production capabilities.  However, when State Department officials learned that the agreement was  for the sale of spares for a filament winding machine that had already been  exported, they approved the sale of the spares. State Department officials  told us that the original FMS agreements were not referred to the missile  experts for review because the filament winding machine was not  specifically listed in the information provided by the Defense Security  Cooperation Agency and was identified as test and support equipment.  Information was not provided that would have allowed a missile  technology expert to know that the agreement involved MTCR-controlled  technology.
State Department officials told us that several years ago there was another  incident involving a sale to the same country under the same series of FMS  agreements. The U.S. government sold an MTCR-controlled item, an  accelerator, without proper review by MTCR experts. According to State  Department officials, a subsequent export license application to sell an  accelerator to the same country was denied by the State Department  because the item was MTCR-controlled. The contractor questioned the  denial because the U.S. government had already sold an accelerator to the  same country. The State Department advised DOD officials about the  problem but does not know what corrective measures DOD took at that  time to ensure that MTCR-controlled items under FMS agreements were  being properly reviewed. DOD officials responsible for the M1A1 tank FMS  agreements said they were not contacted or made aware of the problem.
Sufficient information about weapon system components and equipment in  FMS agreements is necessary to identify MTCR-controlled items. Many  MTCR-controlled items may not be obvious- even to a technical expert- unless the items in an agreement are reviewed against the list of MTCR- controlled equipment. Some MTCR-controlled items are dual-use and  controlled by the Commerce Control List, resulting in confusion over who  is responsible for identifying and controlling these items.  Regional  Security Office officials assumed that DOD had identified all of the  technology issues in FMS agreements- including whether or not the  agreements covered MTCR-controlled technology. Although State  Department officials have discovered two such cases, they do not know  how many MTCR-controlled items may have been transferred under the  FMS program without proper review because there are no procedures in  place to identify such items. In addition to missile-related technology  proliferation concerns, State Department officials are concerned about the  transfer of sensitive technologies, such as medical testing equipment that  can be used to develop biological weapons, that are controlled by other  nonproliferation regimes.
Technical experts in the military departments, however, told us that they do  not review FMS agreements specifically for compliance with the MTCR.  Officials at various military departments, commands, and program offices  told us that they do not compare items to be transferred under FMS  agreements against the list of MTCR-controlled items. They stated that  MTCR compliance is the responsibility of either the State Department or  the Defense Security Cooperation Agency. According to State Department  and Defense Security Cooperation Agency officials, the military  departments also have technical experts who know what a particular item’s  capabilities are and exactly what equipment is being transferred under an  FMS agreement.
Defense Security Cooperation Agency officials said their agency does not  have the technical experts to identify sensitive technologies such as those  controlled by the MTCR. Since the Defense Security Cooperation Agency  learned of this coordination deficiency for missile-related technology, it has  taken steps to have military departments identify missile-related items in  proposed FMS agreements. The Defense Security Cooperation Agency sent  draft guidance to the military departments, in August 1999, advising them  of their responsibility to identify missile-related technology that is included  in proposed agreements and to certify that MTCR concerns have been  resolved. The Defense Security Cooperation Agency also plans to amend an  internal coordination document to ensure that agreements have been  properly reviewed for MTCR issues.
The State Department routinely reviews proposed FMS agreements that  meet the dollar threshold for congressional notification. However, State  Department officials said that many MTCR-controlled items are valued  below this dollar threshold. The State Department uses a list of FMS  agreements that the Defense Security Cooperation Agency provides and  that gives a general description of the item being sold as the basis for  approving the low dollar value agreements. The current process for  approving low dollar value agreements does not identify MTCR-controlled  items unless the State Department requests additional information to  identify such items.
The State Department and DOD currently do not fully utilize their  organizations that have expertise in reviewing MTCR-controlled items. For  example, the State Department established the Missile Technology Export  Control committee, an interagency working group, to review export license  applications involving MTCR-controlled items. However, while the State  Department committee representative reviews FMS agreements referred  by the Regional Security Office, the full committee does not review FMS  agreements for nonproliferation concerns. Defense Threat Reduction  Agency reviewers have technical expertise in weapon systems, as well as  knowledge of the types of items controlled by the MTCR, but they generally  do not identify MTCR-controlled items in agreements because the Defense  Security Cooperation Agency does not formally refer FMS agreements to  the Defense Threat Reduction Agency.
section_title: DOD’s Reinvention Initiatives Focus on Shortening Technology Transfer Approval Time
paragraphs: DOD has several ongoing reinvention initiatives that attempt to address  foreign customer and industry complaints about the FMS program,  including the perception that the technology transfer review process takes  too long. These initiatives contain proposals focused on shortening the  technology transfer review time, for example, by more rigorously  implementing DOD requirements for program documentation that assesses  what technology may be transferred.
The Defense Security Cooperation Agency organized a working group  comprised of DOD and industry officials to address complaints about the  technology transfer process. One of the group’s proposals is to encourage  National Disclosure Policy Committee members to make decisions in a  timely manner when acting on exception cases. Although aware of DOD’s  initiatives to make disclosure decisions more quickly, some committee  representatives said they need to research a case and assess the merits of a  proposed transfer from a national security perspective. Some officials  responsible for disclosure and releasability decisions also told us they have  been asked to make decisions more quickly.
Some of the initiatives address the need to improve information to support  technology transfer decisions. For example, the DOD and industry working  group is proposing more rigorous implementation of current requirements  to prepare weapon systems program documents that include technology  transfer assessments. This proposal is aimed at addressing technology  transfer considerations early in the development of the weapon system to  facilitate decision-making when export requests are received. In addition,  the Navy recommended pursuing an electronic policy distribution and  coordination system to facilitate the work of its internal technology  transfer review board and speed disclosure processing. The Army is also  sponsoring an initiative to develop an integrated classified database of  relevant records and documents such as the National Disclosure Policy and  weapon-specific program protection plans to support technology transfer  decisions. Air Force headquarters officials told us the Air Force recently  reviewed its approximately 800 Delegation of Disclosure Authority Letters  to ensure disclosure guidance for all Air Force programs was current. They  said one benefit of the review was to reduce the need to consult  headquarters staff when making disclosure decisions related to Air Force  programs, since officials in the field have current guidance.
The DOD and industry working group proposes that DOD conduct a  technical review of the U.S. Munitions List to identify items and  technologies that should be decontrolled because they are low-risk or  already widely available. However, the State Department has authority over  the U.S. Munitions List and, with DOD concurrence, is responsible for  determining what items are to be controlled.
Beside the FMS reinvention initiatives, DOD has chartered three high-level  advisory groups to study international industrial base issues in the context  of U.S. national security. These studies are ongoing, but the findings are  likely to have an impact on technology transfer policy and procedures.
To date, none of DOD’s initiatives specifically addresses the gaps in the  FMS technology transfer review process. For example, the DOD/industry  working group’s proposals address the need to establish disclosure and  technology transfer guidelines for controlled unclassified information. The  group emphasizes removing unnecessary restrictions. However, the  proposals do not address the need to establish clear responsibilities for  ensuring that certain controlled items, like those we found, are fully and  systematically identified and reviewed.
section_title: Conclusions
paragraphs: The Foreign Military Sales program does not have a systematic process to  identify and review certain controlled technologies. As a result, items  controlled by an international missile nonproliferation agreement were  sold through the Foreign Military Sales program without proper review and  approval.
section_title: Recommendations
paragraphs: To provide for proper review and approval of proposed exports of  controlled technologies through the Foreign Military Sales program, we  recommend that the Secretaries of State and Defense establish a process to identify all items on a proposed Foreign Military Sales agreement that  are controlled under the Missile Technology Control Regime or other  nonproliferation agreements by taking full advantage of the expertise  that resides in the Defense Threat Reduction Agency, the military  services, or elsewhere; refer the information to the State Department; direct the Missile Technology Export Control group or other  nonproliferation groups to review missile technology-related items or  other controlled items to ensure compliance with the nonproliferation  agreements; and reflect this process in ongoing reinvention efforts.
section_title: Agency Comments
paragraphs: In commenting on a draft of this report, DOD generally concurred that it  must develop and implement the processes necessary to strengthen  technology transfer controls over MTCR-controlled items proposed for  export under the FMS program. However, DOD did not agree with the title  of our draft report or our conclusion that responsibilities are unclear under  the FMS program. DOD pointed out that the material weaknesses we  identified occurred only in technology transfer cases involving MTCR- controlled items. We agree and modified the title and text to be more  precise. However, as we note in the report, the DOD and industry  reinvention working group recognized that confusion exists about the rules  governing the use and transfer of controlled unclassified information under  the FMS program. Such confusion goes beyond the transfer of MTCR- controlled items.
DOD concurred with the intent of our recommendation but solicited relief  from what it characterized as the daunting task of listing MTCR-controlled  items on all FMS documents, which it believes would impede the flow of  goods to foreign customers. Our recommendation does not limit DOD’s  flexibility in how it identifies MTCR-controlled items, as we recognize that  there may be different means of doing so. However, identifying controlled  items is the first step to ensuring that such items are reviewed for  nonproliferation concerns in compliance with U.S. export control laws.  Therefore, we have not modified our recommendation. The comments  from DOD are reprinted in appendix II. DOD also provided some technical  suggestions, which we have incorporated in the text where appropriate.
In commenting on a draft of this report, the State Department agreed with  our conclusions and stated that it is working with the Defense Security  Cooperation Agency to establish better procedures. The comments from  the State Department are reprinted in appendix III. The State Department  also provided technical suggestions, which we have incorporated in the  text where appropriate.
section_title: Scope and Methodology
paragraphs: To identify the process for making technology transfer decisions under the  FMS program, we determined which organizations were involved in the  FMS disclosure and approval processes and interviewed officials from  these organizations about their roles and responsibilities and the criteria  and guidance they used in performing their duties. Specifically, we spoke  with officials from the State Department’s Political Military Bureau and  multiple DOD offices, including the Office of the Under Secretary of  Defense for Acquisition and Technology, the Office of the Under Secretary  of Defense for Policy, the Defense Security Cooperation Agency, the  Defense Threat Reduction Agency, and the Defense Intelligence Agency.  We also spoke with officials from the Joint Chiefs of Staff, the U.S. Central  Command, the Central Intelligence Agency, and each of the military  departments as follows:
Department of the Army
Deputy Under Secretary of the Army (International Affairs)
U.S. Army Security Assistance Command
Tank-automotive and Armaments Command
Aviation and Missile Command
Apache Program Office
Program Executive Office, Tactical Missiles
Short Range Air Defense Office
Department of the Air Force
Deputy Under Secretary of the Air Force (International Affairs)
Air Force Materiel Command
Air Force Security Assistance Center
F-16 and F-15 System Program Offices
Advanced Medium Range Air-to-Air Missile Joint System Program
Department of the Navy
Naval International Programs Office
Naval Air Systems Command
E2C Program Office
F-18 Program Office At the military departments, we examined export weapons policy papers,  Delegation of Disclosure Authority Letters, Technology  Assessment/Control Plans, Program Protection Plans, FMS agreements,  and/or export licenses for selected weapons programs. In addition, we  reviewed the laws, regulations, DOD directives, and policies that govern  technology transfer and disclosure of information.
To assess controls for reviewing technology transfer considerations, we  examined coordination documentation from various DOD offices, Joint  Staff, and military departments. We reviewed the Defense Security  Cooperation Agency’s coordination requests to the Joint Chiefs and the  Office of the Under Secretary of Defense for Acquisition and Technology  and their responses from 1994 to 1998. The Defense Security Cooperation  Agency did not have these requests centrally maintained, so we relied on  the records of the recipient offices. In addition, we discussed with DOD  and State Department officials how they identified controlled technology  and reviewed it in accordance with relevant DOD policies and procedures,  governing laws and regulations, and MTCR guidelines. We compared the  coordination practices for FMS items with those for export licenses to  identify any similarities or differences among the reviewing organizations  and their level of expertise in making decisions. By comparing practices  with export control laws and policies, we identified areas of weaknesses  and discussed these with DOD and State Department officials.
To examine DOD’s proposals to improve technology transfer practices, we  obtained documents from the Defense Security Cooperation Agency and  the military departments regarding their FMS reinvention initiatives. We  spoke with government officials involved in these initiatives about their  proposed plans, the status of implementation of recommendations, and/or  the extent of coordination with other reinvention projects.
We performed our review between January and August 1999 in accordance  with generally accepted government auditing standards.
We are sending copies of this report to Representative Sam Gejdenson,  Ranking Minority Member, House International Relations Committee, and  Senator Jesse Helms and Senator Joseph Biden in their capacities as  Chairman and Ranking Minority Member of the Senate Foreign Relations  Committee. We are also sending copies to the Honorable Madeleine K.  Albright, Secretary of State; the Honorable William S. Cohen, Secretary of  Defense; and the Honorable Jacob J. Lew, Director, Office of Management  and Budget. We will make copies available to others on request. Please  contact me at (202) 512-4841 if you have any questions concerning this  report. Key contributors to this assignment were Anne-Marie Lasowski,  Anne Howe, and John Neumann.
section_title: Military Departments’ Disclosure and Foreign Military Sales Agreement Process
paragraphs: The first copy of each GAO report and testimony is free. Additional copies are $2 each.  Orders should be sent to the  following address, accompanied by a check or money order made  out to the Superintendent of Documents, when necessary, VISA and  MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address are  discounted 25 percent.
U.S. General Accounting Office P.O. Box 37050 Washington, DC  20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537.
Each day, GAO issues a list of newly available reports and  testimony.  To receive facsimile copies of the daily list or any list  from the past 30 days, please call (202) 512-6000 using a touchtone  phone.  A recorded menu will provide information on how to obtain  these lists.