Defense Trade: Clarification and More Comprehensive Oversight of Export Exemptions Certified by DOD Are Needed
Published: 2007-09-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Defense (DOD) activities, U.S. defense companies may export defense items. The Department of State (State) controls such exports through its International Traffic in Arms Regulations (ITAR), which provides for some exemptions from export licensing requirements. For a limited number of these exemptions, DOD may confirm--or certify--that the export activity qualifies for the use of an ITAR exemption. As part of an initiative, DOD is to make more effective use of ITAR exemptions, but little is known about the extent to which this is done. This report (1) describes DOD's approach for certifying exporters' exemption use in support of defense activities, (2) summarizes the use of selected DOD-certified exemptions, and (3) examines State and DOD's oversight of exemption use. GAO's findings are based on its review of export control law, regulation, and DOD guidelines; interviews with State, DOD, and defense industry officials; and a GAO-developed database of DOD certification letters.
section_title: What GAO Found
paragraphs: In support of defense activities, DOD prepares letters certifying that a proposed export qualifies for the use of certain ITAR exemptions by exporters. To guide this approach, DOD issued exemption certification guidelines in March 2004 to the military services because they are the DOD components primarily responsible for managing and implementing defense international cooperative programs. However, GAO found other DOD components that also certify the use of exemptions in support of international activities but are not subject to the DOD guidelines. Officials from State, which regulates and controls defense exports, have raised several concerns to DOD about its guidelines, including the use of one ITAR exemption by contractors and the comprehensiveness of the guidelines. While State and DOD officials have met and exchanged correspondence on these issues, to date, they have not resolved fundamental disagreements. A lack of common understanding of regulatory exemption use could result in inconsistent application of the regulations. The exemption certification letters from DOD components that we reviewed showed that over 1,900 exemptions were certified for about 270 exporters in calendar years 2004 through 2006. The majority of the certifications related to missile defense and Air Force programs and included the export of technical data. While most of the exporters identified in the DOD-certified exemption letters were defense contractors, other exporters included university laboratories and federally funded research and development centers. The United Kingdom, Australia, Canada, and the North Atlantic Treaty Organization were the most frequently cited recipients for exports under exemptions certified by DOD components. State and DOD lack comprehensive data to oversee the use of DOD-certified exemptions, limiting their knowledge of defense activities under this process. While DOD's guidelines provide for annual reporting to State on certified exemptions, this report captures data from the military services, but not from other DOD components. GAO identified 271 letters from nonservice components that were not included in DOD's 2006 report to State. In addition, DOD's report to State may not capture the magnitude of transfers certified for exemption use. For example, one letter that GAO reviewed certified the use of an exemption for more than 50 companies, but only the certification letter--not the actual transfers, which totaled 600 over a 3-year period--was captured in the cognizant military service's record keeping on exemption certifications. Furthermore, the details on these transfers were not included in DOD's report to State, limiting insight into the number of transfers under this certification.

section_title: Letter
paragraphs: As part of its efforts to promote cost sharing and increase interoperability  of defense assets, the Department of Defense (DOD) enters into defense  cooperative agreements with allies and friendly nations. In support of  these agreements and associated DOD activities, U.S. defense companies  may export defense items to foreign governments and defense companies.  The Department of State (State) controls the export of defense items,  requiring most to be licensed for export through its International Traffic in  Arms Regulations (ITAR). Under certain conditions, however, the ITAR  provides for exports to be exempt from license requirements and  establishes the criteria for such exemptions. For a limited number of  exemptions, DOD may confirm—or certify—in writing that the export  activity qualifies for the use of an ITAR exemption in support of DOD  activities, such as sharing of technical data related to DOD acquisition  programs. The use of exemptions, including those certified by DOD, and  compliance with the ITAR are ultimately the responsibility of the exporter.
Over the past decade, Congress has requested that we examine the U.S.  export control system, and we have reported on various problems in the  processes for this system. This report looks at how unlicensed exports in  support of DOD activities, such as defense cooperative programs, are  overseen. Specifically, in response to your request, this report (1)  describes DOD’s approach for certifying the use of export exemptions by  exporters in support of defense activities, (2) summarizes the use of DOD- certified exemptions that we identified and reviewed, and (3) examines  the extent to which State and DOD oversee the use of these exemptions.
To conduct our work, we identified DOD’s approach for certifying the use  of export exemptions by exporters in support of defense activities through  an examination of export control laws, regulations, DOD guidelines, and  practices. We also interviewed officials responsible for export controls  from State, DOD, and defense companies. To summarize the use of DOD- certified exemptions, we created a database of DOD certification letters  issued between 2004 and 2006 that we were able to identify and collect  from DOD components. From these data, we extracted information such  as the most frequent type of export and top foreign recipients and  summarized the results. We coordinated with State and DOD officials to  identify a list of DOD components certifying the use of exemptions.  However, the universe of all DOD-certified exemptions is unknown, and  additional exemption letters might exist. To examine the extent to which  State and DOD oversee the use of DOD-certified exemptions, we reviewed  DOD’s 2006 report to State on exemption certifications and discussed how  data were collected with cognizant officials. For more on our scope and  methodology, see appendix I. We performed our review from January  through July 2007 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: Authority for controlling the export of defense items is provided through  the Arms Export Control Act, and these exports are regulated through the  ITAR by State Department’s Directorate of Defense Trade Controls. While  most defense items require a license for export, the ITAR contains  numerous exemptions from licensing requirements that have defined  conditions and limitations. For exports that directly support DOD  activities, such as exports related to defense cooperative programs,  exporters may claim an exemption from licensing requirements pursuant  to the written request, directive, or approval of DOD.  In doing so, DOD  certifies that the export appropriately qualifies for one or more of a limited  number of applicable ITAR license exemptions. As with all exemptions,  the exporter decides whether to export using an exemption and bears  ultimate responsibility for complying with requirements in the ITAR.
In May 2000, the Administration announced 17 proposals as part of its  Defense Trade Security Initiative—an effort to facilitate cross-border  defense cooperation and streamline U.S. export controls. One proposal  was that DOD make more effective use of ITAR exemptions to facilitate  exports that further U.S. government interests in defense cooperation with  allies and friendly nations. To clarify exemption use, DOD’s Defense  Technology Security Administration (DTSA)—which is responsible for  developing and implementing DOD security policies on international  transfers of defense-related goods, services, and technologies—issued  guidelines in March 2004 for certifying U.S. exporters’ use of certain ITAR  exemptions. These guidelines were provided to the military services,  given that they are primarily responsible for managing and implementing  international defense cooperative programs.
section_title: Guidelines for DOD’s Certification of Exemption Use Have Raised Some Concerns by State
paragraphs: In support of defense activities, DOD components prepare letters  certifying the use of certain exemptions by exporters under State’s export  control regulations. The approach used by the military services for  certifying the use of ITAR exemptions is set forth in DOD guidelines.  Nonservice DOD components also certify the use of exemptions but are  not subject to the guidelines, which were not issued departmentwide.  Some of these nonservice components had created or were creating their  own guidelines, which could lead to confusion regarding certain  certification practices. State, as the regulator of defense exports, has  raised concerns about the guidelines not clearly explaining the purpose  and scope of the exemptions available to DOD, and State and DOD  disagree on contractors’ use of one exemption that has been certified by  DOD components.
subsections: section_title: Military Services’ Approach for Certifying ITAR Export Exemptions Is Set Forth in DOD Guidelines, but These Guidelines Were Not Issued DOD-wide
paragraphs: Some ITAR exemptions apply to exports that directly benefit DOD  activities, ranging from support of defense cooperative programs, such as  the Joint Strike Fighter, to providing equipment and technical services  necessary to support U.S. forces in foreign locations. For such  exemptions, DOD confirms whether the export activity appropriately  qualifies for the use of an exemption and typically documents this  confirmation in a written letter directly to the exporter or sometimes to  the cognizant DOD program office that the exemption will benefit.
Typically, the letters identify the ITAR sections that pertain to the  exemption, the type and purpose of the export, the destination country,  and a time frame for the export to occur (see fig. 1).
In March 2004, DOD issued guidelines to the military services that were  intended to provide a level of oversight for the exemption certification  process, such as establishing elements of authority and record-keeping  requirements. The guidelines included the following procedures for  certifying exporters’ use of ITAR exemptions in support of DOD’s  activities:    Established authorized exemption officials within each service to  certify the use of ITAR exemptions. These designated general officers  or senior executive service personnel in the military services are  responsible for overall management and oversight of the exemption  certification process.
Provided elements for the certification, to include (1) a tracking  number for the certification; (2) ITAR exemption citation number; (3)  name of the exporter for whom use of the exemption is certified; (4)  the reason/purpose for certifying use of the exemption and benefit to  the U.S. government; (5) description of the specific defense article,  service, or technical data exempted; (6) conditions and limitations as  necessary to establish a clearly defined scope for defense articles,  services, and technical data authorized for export and any handling,  control, or accountability measures deemed necessary; (7) the foreign  end users; and (8) the expiration date—not more than 1 year from date  of issue.
Required the military services to enter data on exemptions into a  centralized DOD database.
Stated that DTSA would annually report on the services’ exemption  certification data to State.
Restated requirements in the ITAR that exemptions may only be  certified for use by eligible U.S. persons registered with the  Department of State, Director of Defense Trade Controls; and that U.S.  persons must comply with ITAR requirements for use of exemptions,  including applicable criteria and limitations. DOD certifications do not  supersede other ITAR requirements for use of exemptions.
Listed five exemptions that relate to exports of defense items—such as  technical data pursuant to a written DOD request, shipments of defense  items by or for U.S. government agencies, or plant visits (classified or  unclassified) (see table 1).
DTSA officials stated that DOD has not determined the need for a  departmentwide directive or instruction on certifying the use of ITAR  exemptions. Because all nonservice DOD components currently are not  subject to existing DOD guidelines, officials at some nonservice  components that we spoke with had created or were in the process of  creating their own exemption guidelines. A lack of common guidelines  could lead to inconsistent certification practices. In addition, some  confusion exists regarding certain certification practices. For example, an  official from one of the four nonservice components questioned whether  the component could provide certifications for exporters with which it  had contracts or whether the cognizant military service that maintained  the overall contract would need to provide the certification. This official  continues to certify exemptions for such exporters with which it  contracts.
section_title: State and DOD Disagree on the Use of Certain Exemptions by Contractors and the Comprehensiveness of DOD’s Exemption Guidelines
paragraphs: State officials, who regulate and control the export of defense items, have  raised concerns about DOD’s exemption certification guidelines.  Specifically, DTSA provided State with proposed revisions to its guidelines  in April 2006, and in response, State provided DTSA with written  comments raising concerns with the guidelines. According to senior-level  export control officials at both State and DOD, they met to discuss areas  of disagreement but were unable to reach resolution. To date, State and  DOD have not resolved fundamental areas of concern.
First, State disagreed with DOD’s certification of exporters’ use of the  exemption under ITAR section 126.4(a). According to State officials,  language in this section indicates that the exemption is only designed  for use by U.S. government personnel for U.S. government end-use and  is not designed to be used by contractors. DTSA disagreed on this point  and stated that the section’s phrase “by or for any agency of the U.S.  government” indicates that the exemption can be used by contractors  when their work is directed by DOD for its own benefit. In the most  recent draft iteration of the guidelines, DTSA now plans to further  define responsibility for certifying this ITAR exemption, removing  some certification responsibility from the military services in an  attempt to provide greater control over its use. However, DTSA  officials stated that DOD plans to continue to certify the use of this  exemption.
Second, State indicated that the guidelines to the military services are  not clear on the purpose and scope of the exemptions available to  DOD. State suggested that DOD revise its guidelines to include (1)  ITAR sections 126.6(a) and 126.6(c) on foreign military sales to provide  further context, citing that their inclusion would inform the military  services that other ITAR exemptions are provided for the exclusive use  of DOD in the conduct of its official business, and (2) ITAR section  125.4(b)(3)—the provision of technical data in furtherance of a  contract between the exporter and the U.S. government if the contract  provides for the export of data—which State identified as one that may  be certified by DOD for use by exporters when conducting DOD’s  mission. State also noted that the use of each exemption is pursuant to  the conditions and terms specified in the ITAR and that the exporter  should be directed to the relevant ITAR sections. DTSA officials stated  that its guidelines only include those ITAR sections that specifically  provide for exemption use for exports at the direction or approval of  DOD. DTSA officials further stated that the foreign military sales  process is defined separately in the ITAR and that DOD has its own  system and process for reporting to State on foreign military sales.  (The complete text of cited ITAR sections under discussion can be  found in app. II.)
Finally, State suggested that DTSA be the certifying entity for all other  DOD components outside of the military services and that all certifying  organizations be trained in the evaluation of certification requests and  the application of DOD guidelines. DTSA officials plan to include in the  revised guidelines a provision that nonservice DOD components seek  guidance from their respective general counsel, as is the current  practice.
DOD is in the process of revising its guidelines, which are set to expire in  December 2007. These revisions are partially in response to State’s  concerns, and DOD is planning to submit them to State for its review.  However, to date, State and DOD officials have not reached agreement on  these issues, and the lack of common understanding of regulatory  exemption use could result in inconsistent application of the regulations.
section_title: DOD Components Certified the Use of Exemptions for a Variety of Programs and Foreign Recipients
paragraphs: On the basis of over 1,100 certification letters that DOD components  provided to us and our review of them, DOD components certified the use  of over 1,900 exemptions for multiple companies and various programs  from 2004 through 2006.  Most of the exemptions were for exports of  technical data or services for Air Force or missile defense programs and  for exports to long-standing allies.
We identified a number of DOD components that certified the use of ITAR  exemptions by exporters. These components varied widely in the number  of certifications they issued—ranging from 24 to more than 1,040. Table 2  summarizes highlights of our analysis of export exemptions certified by  various DOD components.
Of the components we identified, the Missile Defense Agency and the Air  Force provided us about 80 percent of the exemption certification letters  that we reviewed. Almost all of the certifications were for the export of  technical data or for the temporary export of defense items “by or for any  agency of the U.S. government for official use by such an agency.” About  half of the certifications were for the use of ITAR section 125.4(b)(1) for  the export of technical data, including classified information, typically  related to a particular program, such as Joint Strike Fighter or Upgraded  Early Warning Radar, with allies during discussions at scheduled meetings  or participation in technical conferences in foreign locations. In addition,  almost 30 percent of the certifications were for ITAR section 126.4(a),  such as exports of technical data, defense services, or hardware in support  of joint military exercises. ITAR section 126.4(a) is the one that State and  DOD disagree on its use by contractors. An additional 19 percent of the  certifications cited both of these ITAR sections. Less than 3 percent of the  ITAR exemptions identified were for transfers of software and hardware— primarily for use by U.S. forces outside of the United States, sometimes in  support of operations in Iraq. Twenty-one of the certifications issued by  two nonservice components cited ITAR section 125.4(b)(3)—technical  data in furtherance of a contract between the exporter and the U.S.  government if the contract provides for the export of data.
More than 270 exporters, including prime contractors and subcontractors,  were identified in exemption certification letters we reviewed. The most  frequently identified exporters were defense contractors, but university  laboratories and federally funded research and development centers were  also identified. Four major defense contractors represented one-fourth of  the exemption certifications, with one receiving over 200 certifications.  However, more than 80 percent of the exporters were identified five or  fewer times in the certifications we reviewed from DOD components. A  total of 266 different programs and activities were identified in the  certifications, with the Missile Defense Agency having the largest  number. Over 90 foreign destinations, including NATO, were identified on  DOD certifications. The most frequently cited destination country was the  United Kingdom—identified 900 times. Thirteen countries were only  identified once as exempted export destinations—some of which were  situations in which U.S. entities located in the countries were the  recipients, not the foreign government or industry of that country. Some  certifications were for exports to multiple countries within one geographic  region, such as Latin America.
section_title: State and DOD Lack Complete Data to Oversee Exemptions Certified by DOD
paragraphs: State and DOD lack comprehensive data to oversee the use of DOD- certified exemptions, limiting their knowledge of defense activities under  this process. DOD’s annual report to State on the use of exemptions  captures data from the military services but not from other DOD  components. In addition, the data may not capture the magnitude of  transfers certified for exemption use. Specifically, we found that one DOD  component used one letter to certify multiple companies’ use of an ITAR  exemption during a 1-year period. This information was not included in  the DOD component’s reporting on exemption certification use. In  addition, we found that some of the certification letters that we reviewed  lacked key information that could be helpful in overseeing exemptions  certified by DOD components.
The DOD exemption guidelines state that the military services must record  the exemption in a centralized DOD database. However, nonservice  components, such as the Missile Defense Agency—which had the largest  number of certifications from 2004 through 2006—do not record their  exemption certification data in the centralized DOD database, known as  USXPORTS. Instead, the nonservice components retain their own  records on certified exemptions. In addition, DOD guidelines provide that  DOD submit a report to State on exemptions certified for use on an annual  basis. In July 2007, DOD submitted its 2006 report to State based on the  data contained in USXPORTS. However, the utility of DOD’s report to  State on exemption use is limited in several areas. First, since DOD  collects data for only the military services, its exemption report to State  does not provide total exemption data for all DOD components.  Specifically, DOD’s report to State contained data on 161 certification  letters issued by the military services in 2006; for the same year, we  collected an additional 271 letters from nonservice components. Second,  for each certification letter, the report contains (1) a certification tracking  number, (2) certification date, (3) certifying organization, (4) destination  country or countries, (5) description of export, and (6) exporter name.  However, it does not contain other information that the DOD guidelines  specify for inclusion in the certification letters and maintenance in the  military services’ records on exemption certifications, such as which ITAR  exemption is being certified and the expiration date for each exemption.
Therefore, State does not have a complete report for the exemptions  certified for use by all of DOD’s components.
While the certification letters we reviewed frequently contained the  information as called for in the DOD exemption guidelines, some  differences existed that resulted in DOD not having insight into the  magnitude of transfers certified for exemption use. For example, for its  Joint Strike Fighter program, the Air Force issues an annual certification  letter—to more than 50 companies—that certifies their use of one ITAR  exemption for the purposes of responding to written requests from DOD  for a quote or bid proposal. These letters are broad in scope and do not  specify what technical data would be released for the program. When  these companies listed on the certification letter cite a specific need for  using this exemption throughout the year for an export, they submit their  request directly to the program office. However, because the Air Force  does not require the program office to report these specific data on these  program office approvals for transfers, it is likely that the Air Force lacks  comprehensive knowledge on exports transferred under the use of this  ITAR exemption. From 2004 through 2006, we found that the Joint Strike  Fighter program had authorized the release of more than 600 transfers of  technical data under the quote or bid proposal exemption containing  specific information—such as the types of technical data and related  drawings exported and the frequency of these exports—which the Air  Force lacks in its central record keeping on exemptions. Further, DOD’s  2006 report to State includes only the certification letter that was broad in  scope, but it does not include the magnitude of transfers under this  certification.
We found some variations in the type of information contained in the  certification letters provided by the military services and non-service  components, which can lessen DOD’s insight into the specific export  activities that DOD is certifying. For example, 163 did not specify  whether the foreign export destination entity was a foreign government,  foreign industry, or U.S. entity. Over 70 certifications—about 4 percent of  the total certifications we reviewed—did not contain an expiration date  for the exemption; for the remainder, the length of coverage from  certification date to expiration date ranged from less than 1 day to more  than 4.5 years. The scope of the letters ranged from covering one exporter  to covering multiple exporters, and about 30 percent of the certifications  that we reviewed included subcontractors. While covering more than one  exporter under one certification letter may create some workforce  efficiencies, it could limit DOD’s insight into exporters receiving  exemption certifications. In addition, this practice, while not specifically  addressed in the DOD guidelines, has raised concern among some  contractors that doing so could blur transparency and create some liability  issues. Export control officials from each of the four companies we spoke  with said they would prefer that each subcontractor have a separate  certification letter from DOD to provide a clearer record of, and decrease  their liability for, subcontractors’ exports.
section_title: Conclusions
paragraphs: While the exemption certification process is one way to facilitate defense  cooperation with friendly nations and allies, the U.S. government needs a  consistent approach to and knowledge of defense export activities  certified through this process. However, State and DOD have disparate  understandings of regulatory exemption use and guidance, and efforts to  resolve these differences have proven unsuccessful. Further, neither State  nor DOD has complete and accurate data to obtain sufficient knowledge of  the extent to which all DOD components are certifying the use of  exemptions for the export of defense items. Therefore, State and DOD  cannot readily identify in total and on a program-by-program basis the  defense items that DOD has certified for exemption use in support of  DOD’s activities.
section_title: Recommendations for Executive Action
paragraphs: To ensure a common understanding of the use of ITAR exemptions  available for DOD’s activities, we recommend that the Secretary of State  direct the Deputy Assistant Secretary for the Directorate of Defense Trade  Controls and the Secretary of Defense direct the Director of the Defense  Technology Security Administration to establish a work group to define  and resolve disagreements on exemption use and guidelines and to  document decisions reached. If the work group cannot reach agreement  before the existing DOD exemption guidelines expire, then it should  elevate the matter for resolution within its appropriate chain of command.  If needed, the Secretary of State should direct the Deputy Assistant  Secretary for the Directorate of Defense Trade Controls to revise the ITAR  to incorporate any necessary changes. Once agreement is reached, the  Secretary of Defense, with concurrence from the Secretary of State,  should direct that the guidelines be revised and made applicable to all  DOD components.
We are also recommending that the Secretary of Defense should direct the  Director of the Defense Technology Security Administration to ensure that  the revised exemption certification guidelines provide the appropriate  mechanisms for overseeing the exemption certification process, such as  the collection of data from all DOD components on exemptions they  certified.
section_title: Agency Comments
paragraphs: The Departments of Defense and State provided comments on a draft of  this report.  DOD also provided technical comments, which we  incorporated as appropriate. In commenting on our first recommendation,  Defense and State both concurred with the need to establish a work group  to define and resolve disagreements on exemption use and guidelines, and  to document decisions reached. State indicated that initial discussions  with DOD have begun, and DOD stated that it plans to codify the  understandings in a clear set of guidelines to be issued to DOD  components.
In its comments on our second recommendation, DOD did not agree,  stating that there is no existing mechanism whereby the U.S. government  can collect data from exporters to monitor exports of defense items made  under exemptions. DOD further stated that such a mechanism would  exceed DOD’s existing statutory and regulatory authority because the  ultimate responsibility for obtaining appropriate authorization to export  defense items rests with the exporter. Our intent was not for DOD to  collect information directly from exporters. Instead, our recommendation  is intended for DOD to expand its existing data collection of exemptions  certified by the military services to include those from all DOD  components. To clarify this intent, we modified the language in the  recommendation.
Formal written comments provided by DOD and State are reprinted in  appendixes III and IV, respectively.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter. We will then provide copies of this report to  interested congressional committees, as well as the Secretaries of Defense  and State; the Attorney General; the Director, Office of Management and  Budget; and the Assistant to the President for National Security Affairs. In  addition, this report will be made available at no charge on the GAO Web  site at http://www.gao.gov.
Please contact me at (202) 512-4841 or calvaresibarra@gao.gov if you or  your staff have any questions concerning this report. Contact points for  our Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Others making key contributions to this report  are listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: To describe the approach used by the Department of Defense (DOD) for  certifying the use of export exemptions for exporters, we reviewed export  control regulations and discussed with the Department of State and DOD  their interpretation of when DOD can certify that a specific export activity  qualifies for the use of certain export exemptions. We reviewed DOD’s  exemption certification guidelines, State’s response to the guidelines, DOD  components’ internal guidance on exemption certifications, and DOD  components’ practices. We also interviewed officials from State’s  Directorate of Defense Trade Controls—from the Licensing, Compliance,  Management, and Policy offices, and DOD’s Defense Technology Security  Administration about their views on the International Traffic in Arms  Regulations (ITAR) allowances for exemption use by exporters,  requirements for DOD to direct the use of certain ITAR exemptions, and  practices by DOD components that certify the use of exemptions by  exporters in support of DOD activities.
We collected and summarized DOD export exemption certification letters  for calendar years 2004 through 2006 to summarize the use of DOD- certified exemptions. We selected 2004 because the Defense Technology  Security Administration (DTSA) issued guidelines on the certification  process to the military services in that year. Prior to 2004, no formal  procedures existed for designating senior-level personnel in the military  departments for the authorization of ITAR exemption certifications.  Through interviews with knowledgeable State and DOD officials, we  created a list of DOD components potentially certifying the use of  exemptions. While this coordination helped identify the DOD components  certifying the use of exemptions, there may be other components that  were not included in this list and additional exemption letters might exist.  We then contacted the DOD components on our list to ask if they certified  exemptions between 2004 and 2006. While some components on our list  stated that they did not certify export exemptions, we collected  certification letters from those DOD components that did certify the use of  exemptions—the Air Force, Army, Navy, Missile Defense Agency, National  Geospatial-Intelligence Agency, National Security Agency, and the Office  of Acquisition, Technology, and Logistics. We created a database to  summarize information provided in these certification letters, such as the  exemptions certified, types of exports, and foreign recipients. In some  cases, DOD components provided separate letters for each exporter  receiving an exemption certification for an activity, while other  components combined all exporters onto one exemption certification  letter for an activity. Therefore, to get an equitable count, we separated  individual companies from exemption certifications granted for multiple  companies on one letter. The total number of exemption certification  letters provided by the DOD components to us was 1,142. After separating  out the individual companies from the certification letters, the total  number of ITAR exemptions certified by the DOD components for the  calendar years 2004 through 2006 totaled 1,960.
To examine the extent to which State and DOD oversee the use of export  exemptions certified by DOD, we reviewed DOD’s 2006 report on certified  exemptions provided to State in July 2007. We also interviewed DTSA  officials about the USXPORTS automation system and what it contains. To  gain a DOD acquisition program office perspective, we interviewed the  Joint Strike Fighter Program Office about its exemption certification  processes and practices. We compared the data of the program office with  the data from the cognizant military service. We also interviewed officials  from four of the companies—Boeing, Lockheed Martin, Northrop  Grumman, and Raytheon—who most often received certification letters to  gain their perspective on DOD components’ processes for and guidance to  exporters on DOD-certified exemptions. We examined the certification  letters we obtained from DOD components and identified differences  among information contained in the letters.
section_title: Appendix II: ITAR Sections Discussed in This Report
paragraphs: We discussed in this report a number of ITAR subparts and sections that  are cited in DOD certification letters, identified in DOD’s exemption  certification guidelines, or are under discussion between State and DOD.  These ITAR sections are cited below in their entirety.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: Comments from the Department of State
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact name above, Anne-Marie Lasowski, Assistant  Director; Lisa Gardner; Sharron Candon; Peter Grana; Arthur James, Jr.;  Karen Sloan; and Marie Ahearn made key contributions to this report.
section_title: Related GAO Products
paragraphs: Export Controls: Vulnerabilities and Inefficiencies Undermine System’s  Ability to Protect U.S. Interests. GAO-07-1135T. Washington, D.C.: July 26,  2007.
High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 31,  2007.
Export Controls: Challenges Exist in Enforcement of an Inherently  Complex System. GAO-07-265. Washington, D.C.: December 20, 2006.
Defense Technologies: DOD’s Critical Technologies List Rarely Informs  Export Control and Other Policy Decisions. GAO-06-793. Washington,  D.C.: July 28, 2006.
Export Controls: Improvements to Commerce’s Dual-Use System Needed  to Ensure Protection of U.S. Interests in the Post-9/11 Environment.  GAO-06-638. Washington, D.C.: June 26, 2006.
Joint Strike Fighter: Management of the Technology Transfer Process.  GAO-06-364. Washington, D.C.: March 14, 2006.
Defense Trade: Arms Export Control Vulnerabilities and Inefficiencies  in the Post-9/11 Security Environment. GAO-05-468R. Washington, D.C.:  April 7, 2005.
Defense Trade: Arms Export Control System in the Post-9/11  Environment. GAO-05-234. Washington, D.C.: February 16, 2005.
Foreign Military Sales: DOD Needs to Take Additional Actions to  Prevent Unauthorized Shipments of Spare Parts. GAO-05-17. Washington,  D.C.: November 9, 2004.
Nonproliferation: Improvements Needed to Better Control Technology  Exports for Cruise Missiles and Unmanned Aerial Vehicles. GAO-04-175.  Washington, D.C.: January 23, 2004.
Export Controls: Post-Shipment Verification Provides Limited  Assurance That Dual-Use Items Are Being Properly Used. GAO-04-357.  Washington, D.C.: January 12, 2004.
Nonproliferation: Strategy Needed to Strengthen Multilateral Export  Control Regimes. GAO-03-43. Washington, D.C.: October 25, 2002.
Export Controls: Processes for Determining Proper Control of Defense- Related Items Need Improvement. GAO-02-996. Washington, D.C.:  September 20, 2002.
Export Controls: Department of Commerce Controls over Transfers of  Technology to Foreign Nationals Need Improvement. GAO-02-972.  Washington, D.C.: September 6, 2002.
Export Controls: More Thorough Analysis Needed to Justify Changes in  High-Performance Computer Controls. GAO-02-892. Washington, D.C.:  August 2, 2002.
Export Controls: Rapid Advances in China’s Semiconductor Industry  Underscore Need for Fundamental U.S. Policy Review. GAO-02-620.  Washington, D.C.: April 19, 2002.
Defense Trade: Lessons to Be Learned from the Country Export  Exemption. GAO-02-63. Washington, D.C.: March 29, 2002.
Export Controls: Issues to Consider in Authorizing a New Export  Administration Act. GAO-02-468T. Washington, D.C.: February 28, 2002.
Export Controls: System for Controlling Exports of High Performance  Computing Is Ineffective. GAO-01-10. Washington, D.C.: December 18,  2000.
Defense Trade: Analysis of Support for Recent Initiatives.   GAO/NSIAD-00-191. Washington, D.C.: August 31, 2000.
Defense Trade: Status of the Department of Defense’s Initiatives on  Defense Cooperation. GAO/NSIAD-00-190R. Washington, D.C.: July 19,  2000.
Export Controls: Better Interagency Coordination Needed on Satellite  Exports. GAO/NSIAD-99-182. Washington, D.C.: September 17, 1999.
Export Controls: Some Controls over Missile-Related Technology Exports  to China Are Weak. GAO/NSIAD-95-82. Washington, D.C.: April 17, 1995.
Export Controls: Actions Needed to Improve Enforcement.   GAO/NSIAD-94-28. Washington, D.C.: December 30, 1993.