Foreign Military Sales: Expanding Use of Tools to Sufficiently Define Requirements Could Enable More Timely Acquisitions
Published: 2017-08-14T00:00:00

Fast Facts:
Foreign governments acquire billions of dollars of military goods and services every year through the foreign military sales program administered by the Department of Defense.
We found that several factors contributed to delays or higher prices in this program—such as federal budget uncertainty and equipment defects identified during testing.
In addition, some initial procurement requests lacked enough detail and required DOD follow-up, leading to significant delays in defining contract requirements.
We recommended that DOD use specific tools to help foreign customers define their requirements.

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. government procures billions of dollars in goods and services each year on behalf of foreign governments through the FMS program. Multiple federal agencies are involved in the FMS program; however, DOD manages the procurement process. The FMS program is a key component of national security and foreign policy.
House Report 114-537 included a provision for GAO to review certain aspects of DOD's acquisition process such as what effect, if any, certain types of contracts may have on the FMS process. This report addresses (1) how the use of firm-fixed-price contracts compares to other contract types awarded for FMS and the reasons they are used; and (2) the factors that may contribute to delays or potentially increase costs. GAO has other work addressing the FMS process and will issue separate reports.
GAO analyzed FMS procurement data for fiscal years 2007 through 2016, the most current data available to determine trends. GAO also selected a non-generalizable sample of 32 FMS cases from seven program offices, based on use of different contract types to procure the same item; reviewed relevant DOD and federal acquisition regulations and policies; and interviewed DOD officials.
section_title: What GAO Found
paragraphs: Over the past 10 years, firm-fixed-price contracts—where the contractor is paid a set amount regardless of incurred costs—accounted for 99 percent of contract awards and had the highest obligations for foreign military sales (FMS). But in recent years, there has been an increased use of fixed-price-incentive contracts—where the government and contractor share in cost savings and risks and the contractor's ability to earn a profit is tied to its performance. This trend is consistent with recent Department of Defense (DOD) contracting practices and aligns with department guidance that emphasizes the use of fixed-price-incentive contracts in certain instances where better pricing outcomes might be achieved. Contracting officers generally follow the same acquisition guidance for FMS procurements as they do for DOD and use various contract types based on assessed risks. For example, for decades, the Air Force had awarded firm-fixed-price contracts for FMS customers to procure an air-to-air missile, but in 2015 transitioned to a fixed-price-incentive contract when it realized the contractor could achieve cost savings through production efficiencies. Legislative changes in fiscal year 2017 call for DOD to use firm-fixed-price contracts for FMS unless a waiver is granted. DOD is in the early stages of implementing these revisions and is weighing various factors, such as how waivers will be reviewed.
GAO found several factors may contribute to delays or increased prices in FMS. For example, program officials noted that general acquisition issues, such as delayed contract awards and unforeseen events during production, can similarly affect FMS. Moreover, military department officials stated that the process for defining requirements is a significant challenge that affects expediency of FMS procurements. DOD guidance states that programs may combine FMS and domestic requirements onto a single contract as a way to lower prices and facilitate timely delivery. However, program offices GAO spoke with noted that adequately defining foreign customers' requirements may prevent them from doing so. To expedite requirements definition, the Air Force and Army implemented checklists to aid foreign partners and program offices when specifying requirements. The Navy developed but has not yet disseminated its checklists for use. GAO's analysis of 32 FMS cases showed that checklists were not always available to support procurements but that program offices that used them noted increases in timeliness. Expanding the use of checklists by DOD may better position DOD to obtain information needed to deliver equipment and services to FMS customers when needed.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD issue department-wide guidance for program offices to expand the use of tools, such as checklists, to aid FMS customers in specifying their requirements in a way that DOD can act upon in a timely manner. DOD concurred with GAO's recommendation.

section_title: Letter
paragraphs: Each year, the U.S. government reports billions of dollars in sales of  defense articles and services to foreign governments through the Foreign  Military Sales (FMS) program. In fiscal year 2016 alone, the program  reported sales of $33.6 billion, representing 1,075 FMS cases for defense  articles and services such as weapon systems, spare parts, technical  services, and logistics support to 115 countries. The FMS program is  considered an integral component of U.S. national security and foreign  policy that enhances the capabilities of our allies and supports increased  interoperability with the U.S. military, while also helping to sustain the  defense industrial base. The Department of State (State) has overall  responsibility for the program, including the approval of sales. However,  the Department of Defense (DOD) administers the FMS program and  manages procurements executed by acquisition programs within the  military departments and other DOD components on behalf of foreign  governments.
The FMS program has been criticized as being slow and cumbersome  and not keeping pace with foreign governments’ demand for U.S. defense  articles needed to train and equip their military forces. In recent years,  DOD has undertaken various initiatives intended to make the FMS  program more responsive and better able to meet customers’  expectations for timeliness and accurate pricing estimates, among other  things. For instance, the Defense Security Cooperation Agency (DSCA),  which is responsible for overseeing and administering the FMS program  within DOD, reported implementation of the Lead Nation Procurement  Initiative in July 2016, which is aimed at maximizing purchasing power for  North Atlantic Treaty Organization (NATO) members through joint  procurement of defense articles and services. At the same time, DSCA  also released updated guidance to help expedite the review process to  authorize the release of weapon systems for transfer to foreign countries  under the FMS program. Further, in the Fiscal Year 2017 National  Defense Authorization Act (NDAA), Congress required DOD to revise its  acquisition regulations to place new requirements on FMS contracting  and to seek ways to accelerate contracting and pricing for FMS.  Generally, the types of contracts that have been used for FMS are firm- fixed-price contracts—where the government pays the contractor a set  amount regardless of the contractor’s costs—and fixed-price-incentive  contracts—where the government and contractor share in cost savings  and risks and the contractor’s ability to earn a profit is tied to  performance.
Recognizing that challenges remain with the FMS process, the House  Report accompanying the Fiscal Year 2017 NDAA included a provision  for us to review certain aspects of DOD’s acquisition process, including  contract type selection, to determine their effect, if any, on FMS. This  report addresses 1) how the use of firm-fixed-price contracts compares to  other contract types awarded for FMS procurements and the reasons  they were used and 2) the factors that may contribute to delays and  potentially increase costs for FMS procurements.
To address both objectives, we selected a non-generalizable sample of  contracts awarded for FMS procurements between fiscal years 2011  through 2015, which represented the most current data available at the  time of our sample selection. To select this sample, we used procurement  data from the Federal Procurement Data System–Next Generation  (FPDS-NG) and FMS case data from the Security Cooperation  Information Portal (SCIP), which is managed by DSCA, to identify  acquisition programs from the Air Force, Army, and Navy that used a mix  of contract types to procure the same item for FMS. For example, we  selected the Advanced Medium-Range Air-to-Air Missile (AMRAAM)  program because it awarded both firm-fixed-price and fixed-price- incentive production contracts that included FMS procurements. Taking  this approach allowed us to gain insight into the reasons why programs  would use a different type of contract to procure the same item. Based on  this criterion, we selected a sample of 14 contracts from seven acquisition  programs. These contracts were used to procure goods or services for 32  individual FMS cases for various countries. Figure 1 below lists the  selected acquisition programs within our sample.
To determine trends in the contracts used by DOD to support FMS  procurements over the past 10 years, we analyzed contracting data from  FPDS-NG for fiscal years 2007 through 2016, which represented the  most current and complete data available to analyze trends over time. We  compared total obligations and the contract type used for FMS  procurements to those for DOD’s requirements for the same items and  services outside of the FMS program to determine the extent to which  there were similar trends in contracting. Based on our discussions with  officials about the data available as well as our review of contract  documents and electronic testing for obvious errors and missing values,  we determined that the data were sufficiently reliable for the purposes of  our reporting objectives. We interviewed program officials and contracting  officers with knowledge of the selected acquisitions to obtain information  on the factors that are considered when determining which contract type  is appropriate for FMS procurements. We reviewed defense acquisition  regulations and FMS guidance, such as the Security Assistance  Management Manual, to identify contracting requirements in place to  guide procurement of goods and services on behalf of foreign  governments. We interviewed officials from the Defense Procurement and  Acquisition Policy (DPAP) office to obtain their insights about trends in  contract types used for DOD and FMS procurements and to discuss the  resulting impact, if any, of DOD guidance, such as the Better Buying  Power memorandums, on contract type selection for DOD procurements.  In our discussions with DOD officials, we also discussed the implications  of recent legislative requirements that directed DOD to use firm-fixed- price contracts for FMS procurements and the status of DOD’s efforts to  implement this requirement and associated waiver process.
To gain insights about the factors that contributed to delays in the FMS  process or potential increased costs, we first obtained FMS case  development data reported in SCIP to determine how long it took for our  selected programs and their FMS customers to define FMS requirements  and develop government-to-government agreements for FMS. We  interviewed DSCA officials about their process for ensuring the accuracy  of the data reported in SCIP and determined that these data were  sufficiently reliable for the purposes of our reporting objectives. For each  of the seven acquisition programs and 32 FMS cases in our sample, we  reviewed contracts and other related documentation, FMS case  documentation such as letters of request from foreign governments and  letters of offer and acceptance provided by military departments, and  interviewed contracting and acquisition program officials to discuss the  challenges that programs may have faced when procuring items for FMS  customers. We also interviewed officials from DSCA, acquisition program  offices, and security cooperation offices within the military departments to  discuss the facts and circumstances regarding the letter of request  received from the FMS customer and the development of the letter of  offer and acceptance.
We conducted this performance audit from June 2016 to August 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: At its core, the FMS program is an acquisition process through which the  U.S. government procures military equipment, training, and other services  on behalf of foreign governments. Under the FMS program, foreign  governments pay the U.S. government to administer the acquisition of  defense articles and services on their behalf. Typically, weapon systems  made available for transfer or sale to foreign governments are systems  that have completed operational testing and are entering full rate  production. Multiple organizations have a role in the FMS program,  including DOD and State. Within DOD, DSCA and the military  departments play an extensive role in administering the program and  managing FMS acquisitions. DSCA carries out key administrative  functions, such as coordinating the formulation and execution of FMS  cases and conducting negotiations with foreign governments. The military  departments carry out the day-to-day implementation of procurements to  fulfill FMS agreements between the U.S. and foreign government.
subsections: section_title: Key Phases of the FMS Process
paragraphs: The FMS process is complex and involves multiple interactions between  foreign and U.S. governments and defense contractors. The FMS  process has five phases, as described in the DSCA Security Assistance  Management Manual and summarized below.  1)  Assistance request. The FMS process begins when a foreign  government submits a letter of request to State or DOD to  purchase defense articles or services. In the letter of request, the  foreign government may express interest in (1) obtaining a  preliminary cost estimate for the capabilities it needs, or (2)  requesting a letter of offer and acceptance that details the specific  items, quantities, cost, and schedule for the sale of military articles  and services. Defining the requirements to meet the desired  capability can be an iterative process that requires multiple  interactions between the foreign government and the military  department. For example, to sufficiently define the requirement,  DOD consults with the foreign government to identify not only the  weapon system but also support needed to achieve the desired  capability. Specifically, if a foreign government seeks to acquire  an aircraft, DOD will also ensure the customer considers factors  such as the operational environment in which the aircraft will be  used, the capacity of its forces to operate and maintain the  aircraft, and spare parts needed, among other things. According to  DOD, this approach helps ensure the foreign government is  adequately equipped to operate and sustain the defense items  obtained under the FMS program.  2)  Agreement development. The request is forwarded to the  military department responsible for the particular defense article,  which then provides preliminary pricing data or develops a sales  agreement between the United States and the foreign government  called a letter of offer and acceptance. A single DOD entity may  not have full responsibility for all aspects of the FMS agreement  and thus coordination within and across military departments may  be needed to obtain complete information on pricing and  availability to include in the letter of offer and acceptance. When  developing the agreement, DOD takes into account the specific  system and related support such as training, logistics, warranties,  and spare parts. Once the agreement has been drafted by the  military department, State and DSCA officials review and approve  the agreement and Congress is notified if the proposed sale  meets certain dollar thresholds and other requirements. The  military department then sends the agreement to the foreign  government for its acceptance and signature.  3)  Acquisition. In this phase, the responsible military departments  fulfill the FMS request from existing supply or procure defense  items and services. Once the letter of offer and acceptance has  been signed and funding has been received, DOD contracting  officers may solicit requests for proposals from industry and  negotiate prices, as necessary, to award contracts. During this  phase contracting officers make a determination about the best  acquisition strategy, including the appropriate contracting vehicle  to fulfill the FMS requirement, as articulated in the agreement. For  example, the contracting officer may determine the best approach  is to combine FMS and U.S. requirements on a single contract or  to place them on separate contracts depending on which  approach is deemed to be more cost effective and best meets  production schedules that align with the foreign customer’s  timeframes.  4)  Delivery. Upon the contractor’s delivery of items included in the  letter of offer and acceptance, the FMS customer will take custody  and make arrangements for their transport. The foreign customer  may pay the U.S. government to deliver these items or arrange for  a freight forwarder authorized to manage these deliveries.  5)  Case Closure. An FMS case is a candidate for closure when all  materiel and services have been delivered and the FMS customer  has not requested for the case to be kept open. Any remaining  funds may be made available to the foreign country.
Figure 2 summarizes the role of selected entities in the FMS process.
section_title: Contract Types Used for FMS
paragraphs: Each year, federal agencies procure a variety of products and services in  support of their respective missions and activities. Agencies acquire  products and services through contracts that specify the government’s  requirements, the price and payment arrangements agreed upon by the  government and the vendor, and other terms and conditions. There are  several different contract types and selection is the principal means that  DOD has for allocating cost risk between the government and the  contractor.
To fulfill FMS requirements, DOD generally follows the same acquisition  process it uses to meet its own military needs. In this regard, DOD follows  federal and defense acquisition regulations, which provide uniform  policies and procedures to guide the acquisition of goods and services. At  times, DOD may combine FMS purchases with its own procurements.  Similar to contracting approaches used for DOD’s requirements, DOD  contracting officers have, prior to recent legislation described below,  selected from among multiple types of contracts to acquire goods and  services on behalf of foreign governments as specified in the letter of  offer and acceptance.
Contract types generally fall under categories such as fixed-price and  cost-reimbursement. The Federal Acquisition Regulation (FAR) notes  that contract type selection should be based on the type, complexity, and  urgency of the requirement, the contractor’s technical capability, and the  extent of subcontracting and acquisition history. Further, consideration  should be given to the degree to which analysis can provide insight into  prices, the cost impact of uncertainties, and the reasonable allocation of  cost responsibility to the contractor. Each contract type comes with a  different level of cost or performance risk for the government and  contractor. The following is a brief description of fixed-price and cost- reimbursement contract types:
Fixed-price contracts provide for a firm price or, in appropriate cases,  an adjustable price. Examples of fixed-price contracts include:
Firm-fixed-price contracts which provide a price for the good or  service that is not subject to any adjustment on the basis of the  contractor’s costs during performance of the contract. This  contract type places upon the contractor maximum risk and full  responsibility for all costs and resulting profit or loss. It provides  maximum incentive for the contractor to control costs and perform  effectively and imposes a minimum administrative burden upon  the contracting parties.
Fixed-price-incentive contracts which provide for an adjustable  profit and establish the final contract price by a formula based on  the relationship of the final negotiated total cost to the total target  cost. A fixed-price-incentive contract allows the government to  share in contractor cost savings if the contractor underruns its  target cost although it must also share in contractor cost overruns  up to the contract’s ceiling price. According to acquisition  guidance, fixed-price-incentive contracts may be appropriate in  situations where there is more cost uncertainty, such as for  acquisition programs in the early production phase following  critical design review where significant developmental testing  remains. Incentive arrangements can be designed to achieve  specific objectives by motivating contractor efforts that might not  otherwise be emphasized and discouraging contractor inefficiency  and waste.
Cost-reimbursement contracts, such as cost-plus-fixed-fee contracts,  are used when requirements are not well defined or a lack of  knowledge does not permit costs to be sufficiently estimated to use a  fixed-price contract. These contracts establish an estimate of total  costs and a ceiling that the contract may not exceed without the  approval of the government. Under cost-reimbursement contracts, the  contractor is reimbursed for its reasonable costs of performance,  regardless of whether the work is completed. The government pays  the contractor’s allowable incurred costs to the extent specified in the  contract and may include an additional fee, or profit. By way of  example, cost-plus-fixed-fee contracts provide for payment to the  contractor of a negotiated fee that is fixed at the inception of the  contract. Additionally, incentive or award fees may be used to  motivate contractor performance.
Since 2010, DOD has issued guidance and updated regulations that have  emphasized the benefits of using fixed-price-incentive contracts, which  would also apply to FMS procurements. In June 2010, DOD issued the  first of its Better Buying Power memorandums that, among other things,  called on acquisition officials and contracting officers to use proper  contract types for development and procurement. The guidance  emphasized use of incentive contracts, in which the government shares  equally in cost increases or savings. Then in 2012, subsequent guidance  called for further consideration of fixed-price-incentive contracts,  particularly when moving from system development to production. In  addition to using fixed-price-incentive contracts during early production  efforts, DOD has also emphasized that these contracts may be useful  during the mature production phase of an acquisition program, especially  when programs have reason to conclude that there is a poor correlation  between the negotiated price and actual cost outcomes. Finally, defense  acquisition regulations articulate that, in instances where actual costs on  a firm-fixed-price production contract have varied by more than 4 percent  from negotiated costs, contracting officers should consider using fixed- price-incentive contracts for future procurements of the same system.
section_title: Recent Legislation Modified Contracting Requirements for FMS
paragraphs: The Fiscal Year 2017 NDAA called for DOD to revise its regulations by  June 2017 to require the use of firm-fixed-price contracts for FMS  procurements unless a waiver is granted or the foreign government states  a preference for an alternate contract type. In addition, DOD must  establish a pilot program to examine ways to accelerate the contracting  and pricing process for full rate production of major weapon systems for  FMS. The pilot program is to expire on January 1, 2020. Lastly, the NDAA  called for DOD to revise its acquisition regulations on the use of  undefinitized contract actions—actions that authorize contractors to begin  work and incur costs prior to reaching final agreement on contract terms,  specifications, or price. DOD has the authority to award undefinitized  contractual actions for its own procurements as well as for FMS.  However, these contractual actions, when used for FMS, were previously  exempt from a requirement in the Defense Federal Acquisition Regulation  Supplement to be definitized—that is, finalize the terms of the contract— within 180 days or before obligating 50 percent of the estimated contract  price, whichever occurs earlier. Pursuant to the NDAA, undefinitized  contractual actions for FMS acquisitions will now be subject to the same  definitization timeframe and obligation requirements as other  procurements.
section_title: Firm-Fixed-Price Contracts Are Widely Used for FMS but Use of Fixed-Price- Incentive Contracts Is Increasing
paragraphs: Between fiscal years 2007 and 2016, DOD primarily used firm-fixed-price  contracts to support FMS requirements. However, in recent years, there  has been an increase in the use of fixed-price-incentive contracts for FMS  procurements, which is consistent with DOD guidance that has  emphasized the use of these contracts. For the 32 FMS cases across the  seven acquisition programs that we reviewed, contracting officials used  various types of contracts to procure the same item in order to influence  better cost outcomes. DOD is in the early stages of implementing the  Fiscal Year 2017 NDAA requirement to use firm-fixed-price contracts and  is weighing various factors such as how waivers will be reviewed and  approved.
subsections: section_title: Firm-Fixed-Price Contracts Accounted for Nearly All FMS Procurements but Use of Fixed-Price-Incentive Contracts Has Increased
paragraphs: Over the past 10 years DOD used a mix of contract types to procure  defense articles and services on behalf of foreign customers through the  FMS program; however, firm-fixed-price contracts were most frequently  used, both in terms of number of contracts awarded and dollars obligated.  Specifically, of the more than 78,000 FMS contracts awarded to procure a  range of products and services, firm-fixed-price contracts accounted for  99 percent of contracts during fiscal years 2007 through 2016. Similarly,  when compared to other contract types, firm-fixed-price contracts had the  highest obligations, ranging from $7.8 billion to as high as $24.7 billion  during the 10-year period, as shown in figure 3.
While fixed-price-incentive contracts accounted for less than 1 percent of  overall FMS procurements over the 10-year period, these contract types  were among the fastest growing based on obligations. For example,  obligations grew from $0 to $9.4 billion and the number of fixed-price- incentive contracts grew from none in fiscal year 2007 to 12 contracts in  fiscal year 2016. We found that DOD’s increased use of fixed-price- incentive contracts for FMS procurements was similar to that of the  department’s increased use of these contracts to meet its own  requirements. We observed the increased use generally followed the  issuance of DOD guidance that emphasized the use of fixed-price- incentive contracts. Since 2010, DOD has issued various guidance which  pertain to FMS contracts, such as Better Buying Power memorandums,  that highlighted the benefits of using fixed-price-incentive contracts as a  means to achieve better pricing outcomes. Our analysis showed that  since the first issuance of Better Buying Power in 2010, obligations on  fixed-price-incentive contracts have been on the rise for contracts  awarded to meet FMS and DOD requirements, as illustrated in figure 4  below. While there was a decrease in obligations on fixed-price-incentive  contracts awarded for DOD’s requirements from fiscal year 2013 to 2014,  obligations on these contracts for DOD and FMS have generally  increased and consistently stayed above the levels prior to when  guidance emphasizing use of fixed-price-incentive contracts, where  appropriate, was issued in 2010.
section_title: Selected Programs Used a Mix of Contract Types for FMS to Influence Better Cost Outcomes
paragraphs: For the seven acquisition programs that we reviewed, contracting officers  used a mix of contract types to procure various defense articles and  services, such as missiles and aircraft, along with related components  and engineering services. In each of these programs, a combination of  different contract types was used for FMS development or production  requirements. For example, three of the seven acquisition programs we  reviewed initially awarded a cost-reimbursement contract for development  activities and then awarded a fixed-price contract as the procurement  transitioned to production. In two of these instances, the items being  procured for the foreign country were missiles that had been developed  for DOD but required some hardware and software customization to be  operational with the foreign customer’s aircraft fleet rather than U.S.  aircraft.
For example, on an individual FMS case to acquire the Joint Air-to- Surface Standoff Missile (JASSM), the program office first awarded a  cost-plus-fixed-fee contract because the scope of work to customize the  missile with new hardware and software to meet the foreign customer’s  needs was broad and requirements could not be sufficiently defined for a  firm-fixed-price contract. Despite the customization of the missile in the  development phase, production of the missile was largely the same as  that for DOD and relied on existing manufacturing processes. Realizing  this, contracting officials awarded a fixed-price-incentive contract in the  production phase, as the requirement was well-defined and leveraged  prior knowledge. On a subsequent FMS case to procure JASSM for a  different country that also required similar hardware and software  customization, a firm-fixed-price contract was awarded because the  program office and contracting officials had gained insight about the costs  from the prior FMS case that used a cost-plus-fixed-fee contract. While  cost-reimbursement contracts generally pose greater risk to the U.S.  government relative to fixed-price contracts, the government only  reimburses contractors for reported allowable costs.
In other instances, we found that programs transitioned from firm-fixed- price contracts to fixed-price-incentive contracts for FMS cases procuring  systems in the production phase. Consistent with DOD guidance,  programs used fixed-price-incentive contracts to incentivize contractor  performance and reduce costs for the U.S. and foreign governments. The  following two examples provide some insight into programs’ rationale for  transitioning to fixed-price-incentive contracts.
During contract negotiations for a production contract to acquire  rocket pods under the Guided Multiple Launch Rocket System  (GMLRS) for U.S. and foreign governments, the Army determined,  through its analysis of cost data provided by the contractor from a  previous contract, that the negotiated prices were substantially higher  than actual costs incurred. The Army had previously awarded firm- fixed-price contracts for GMLRS and subsequently discovered the  contractor had earned profits ranging up to 42 percent. Under firm- fixed-price contracts, the contractor bears full responsibility for all  costs and for the resulting profit or loss, providing maximum incentive  for the contractor to control costs. According to program officials,  because of this, contractors may factor in additional costs and thus  present higher offers to account for potential cost risks. Once Army  officials discovered the high profit rates, they switched to a fixed-price- incentive contract for subsequent awards to position the U.S.  government and FMS customers to share in any subsequent cost  savings.
Similarly, program officials for the AMRAAM had a history of using  firm-fixed-price contracts for decades, but in 2015 converted to fixed- price-incentive contracts because officials believed the contractor  would gain efficiency savings as more units were produced and that  both U.S. and foreign governments should share in those savings.  According to AMRAAM officials, this change in contracting strategy  was driven, in part, by their realization that the contractor was able to  reduce its production costs during previous firm-fixed-price contracts  by bundling purchases of common parts required to manufacture  AMRAAM and other types of missiles. Therefore, officials estimated  that savings could be gained to reduce the overall AMRAAM unit  costs. We found that the ceiling price of AMRAAM missiles was  reduced by 40 percent when the program awarded the fixed-price- incentive contract.
section_title: DOD Is Weighing Various Factors as It Takes Steps to Implement Legislative Contracting Requirements for FMS
paragraphs: The Fiscal Year 2017 NDAA called for DOD to revise its acquisition  regulations to require the use of firm-fixed-price contracts for items  procured under the FMS program, unless a waiver is granted or the  foreign customer states a preference for an alternate contract type. DOD  is in the early stages of implementing these changes. Officials stated that  in doing so it will be desirable for the department’s policy changes to  retain some flexibilities that allow contracting officers to consider the  unique circumstances of FMS cases when selecting a contracting  strategy. DOD’s revisions to its defense acquisition regulation are subject  to its rule-making process and may not be finalized until fiscal year 2018,  according to DPAP officials.
In revising its regulations, DOD is considering various factors, including  the impact on the FMS acquisition processes, potential adverse effects on  pricing, and the process to review and approve waivers. Officials from  DPAP and the program offices included in our review told us that  restricting contracting strategies to require firm-fixed-price contracts could  result in higher costs for the U.S. and foreign governments because it  may limit their ability to combine U.S. and foreign requirements onto the  same contract. DOD is also weighing whether programs will be required  to award separate firm-fixed-price contracts or use a single contract that  incorporates different line items and corresponding contract types for the  U.S. versus foreign portions. Combining requirements on the same  contract can allow the U.S. government and FMS customer to benefit  from economies of scale, which materialize in the form of cost savings  when additional units are procured. However, a decrease in the number  of units procured may have the opposite effect as it reduces economies of  scale, thus potentially leading to increased prices. For example, when the  Army significantly reduced the number of units it planned to procure of a  variant of the GMLRS rocket pods there was a resultant price increase of  about 64 percent for the FMS customer because the costs could not be  spread over as large a quantity as had been previously estimated. In  addition to cost savings, combining U.S. and foreign procurements on the  same contract can result in schedule benefits that may not be possible  when awarding separate contracts. According to DOD officials, using  separate contracts may result in additional administrative burdens to  negotiate, definitize, and award FMS contracts separately.
Further, when using firm-fixed-price contracts, the contractor bears the  risk if costs exceed the price of the contract. According to DOD officials,  contractors may estimate higher costs when negotiating contract price in  order to minimize their potential burden should costs increase. Officials  added that the increased prices that would be quoted in letters of offer  and acceptance may deter foreign customers from pursuing FMS  transactions. Recognizing this, DOD is taking steps to explore options to  ensure accurate price forecasting; however, these efforts are in the early  stages.
Pursuant to the Fiscal Year 2017 NDAA, DOD acquisition programs will  be able to request a waiver that permits them to award contracts other  than firm-fixed-price for FMS; however, the specifics of the waiver  process, including who will review and approve the waivers along with the  required documentation, if any, is not yet known. DPAP and program  officials told us that the waiver process could also result in additional  administrative burden that has the potential to add time to the FMS  process, which is a factor they will consider when revising the defense  acquisition regulations.
section_title: Variety of Factors Can Extend FMS Timeframes and Increase Costs, but Some DOD Programs Use a Checklist to Expedite Requirements Definition Challenges in Defining Requirements Can Slow the FMS Process, but Some Programs Use a Checklist to Minimize Delays
paragraphs: A variety of factors can prolong various phases of the FMS acquisition  process, but program officials we spoke to most commonly cited the  challenge in defining FMS customer’s requirements as a major  contributing factor. DSCA has established two performance goals to  better manage timeliness in the requirements definition process. The  military departments and programs have developed some checklists to  facilitate more timely completion of activities in the requirements definition  process but one-quarter of the FMS cases we reviewed were managed  by programs that do not have a checklist. DOD officials also cited  additional factors such as lengthy reviews of letters of offer and  acceptance to approve and finalize a sale, unanticipated events in the  production phase, and U.S. budget uncertainties.
Officials from DSCA and the military departments noted that timely  definition of the FMS customer’s requirement is a common challenge in  the FMS acquisition process. Defining the requirement—that is, the  materiel and services needed—occurs in the first phases of the FMS  process and is the linchpin to enable DOD to deliver the goods and  services to FMS customers by the time they need them and at a price  they can afford. Consistent with prior GAO findings, officials we spoke  with reiterated that the acquisition acumen of FMS customers varies and  some may not have the expertise or experience to identify requirements  and present a well-informed letter of request. Without properly defined  requirements in the FMS customer’s letter of request, DOD does not have  the information it needs to develop a letter of offer and acceptance that  can be presented to the FMS customer for signature. DOD considers a  letter of request actionable when it specifies, among other things, the  materiel or service needed, including the hardware, training, and support  services applicable to the operational environment in which the military  equipment will be used. This level of detail about the FMS customer’s  requirements enables the military departments to coordinate with the  respective program offices or other DOD components at the outset. In  addition, specifying these details enables the contracting officer to obtain  more accurate pricing data from the contractor and better estimate  delivery timeframes. When the circumstances are appropriate, DOD will  seek to synchronize FMS purchases with its own purchases of the same  item, which, as noted above, can result in cost savings and shorter  timeframes to award and execute the contract.
Program officials from six of the seven programs we reviewed noted that  letters of request from FMS customers can vary in detail and lack the  information needed to draft the letter of offer and acceptance. For  example, a request may include the number of missiles desired by the  FMS customer but lack information about the training and support  services to ensure the foreign government is able to use and maintain the  missiles. Delays in responding to the program office’s requests for  additional information can prolong the overall FMS acquisition for an  individual case. Further, program officials noted that, at times, an FMS  customer may end up modifying its FMS requirements because of  changes in its defense budgets and priorities, which, in turn, may  lengthen the FMS process.
DSCA has implemented performance goals for program offices to  sufficiently define requirements within specified timeframes with the goal  of developing and providing the letter of offer and acceptance as quickly  as possible. First, DSCA has instituted a goal for programs to define  requirements identified in the letter of request within 20 days so that  programs can begin constructing the letter of offer and acceptance. We  reviewed 32 FMS cases from across the seven programs in our sample  and found that program offices missed the 20-day goal in 14 cases. We  found there was wide variation in how long it took programs to achieve a  sufficiently defined letter of request, with some being sufficiently defined  the same day of receipt and others requiring additional time, up to 476  days. On average, it took all of the programs we reviewed nearly four  times longer than the DSCA goal, or about 78 days. DOD officials said  that a range of factors explains the causes for the wide variation in the  timeframes to define the requirement including (1) the complexity of the  acquisition, (2) foreign policy implications, (3) the degree of coordination  needed between the program offices and contractor, and (4) changing  customer requirements.
Second, DSCA has implemented a broader performance goal that seeks  to provide the FMS customer with a letter of offer and acceptance within  established timeframes. For this performance goal, referred to as the  anticipated offer date, military departments assign a deadline according to  DSCA policy for how long it should take for the department to provide the  letter of offer and acceptance that ranges from 45 to 150 days after  receipt of the letter of request. The amount of time for each case depends  on the complexity of the requirement outlined in the request. Of the 32  FMS cases that we reviewed, we found that anticipated offer dates were  available for only 28 cases. Of these 28 cases, we found that most had  not presented a letter of offer and acceptance by the goal dates that were  assigned when requests were received. Only 5 of the 28 cases we  reviewed sent a letter of offer and acceptance to the FMS customer on or  before the anticipated offer date. On average, the letter of offer and  acceptance was presented about 68 days after the anticipated offer date.  In one instance, the letter of offer and acceptance was presented to the  FMS customer as late as 329 days after the target date. According to  program officials, a letter of offer and acceptance may be delayed if an  FMS customer makes requests that result in changes to a letter of offer  and acceptance, such as changes in quantities to be procured or in the  payment schedule.
DSCA and the military departments have developed checklists or  templates to help facilitate a more efficient requirements definition  process. For example, DSCA has developed a generic checklist that  outlines the basic information that is required in the letter of request.  According to DSCA guidance, other checklists that are unique to  individual acquisition programs may be needed to ensure the requirement  is fully defined to account for not only the weapon system but also the  logistics and support services needed to deliver a complete and  sustainable capability to the FMS customer. Accordingly, the military  departments have developed a range of checklists, with some from the  Air Force and Army available to the public on the Internet.
The Air Force has developed checklists for specific weapon systems  such as missiles, global positioning systems, and various types of  aircraft. For example, the AMRAAM program developed a checklist in  2006 that is specific to the program, as illustrated in figure 5.
Similarly, the Army has developed generic and 25 system-specific  checklists for, among other things, artillery, aviation and missiles, and  satellite systems. For example, the Apache program developed a  template in 2014 that is used to guide discussions with foreign  governments that are interested in purchasing the helicopter. The  template captures items such as maintenance and support services,  potential software configurations, and unique country requirements  that ensure the procured helicopter provides a complete and  sustainable capability. According to officials, the Army is considering  the development of training for its security cooperation organization  workforce on the use of requirement checklists.
The Navy has developed a generic checklist and some system- specific checklists, using the Army’s checklists as a template.  However, a senior official from the Navy’s International Programs  Office said that the checklists have not been widely used yet as the  Navy is still determining the best way to disseminate these tools to  program offices and other appropriate Navy staff.
In our review of selected FMS cases, we found that more than half of the  32 cases had checklists available for use during requirements definition,  but for some cases such tools had not yet been developed. Specifically,  17 of 32 cases had checklists available for use while 15 did not at the  time requirements definition began, as seen in table 2. However,  programs for 7 of the 15 cases that did not have checklists have since  developed such tools.
Officials from multiple programs noted that using checklists helped to  facilitate quicker requirements development. According to AMRAAM  program officials, the use of the checklist developed by the program has  helped to reduce the time necessary to define requirements by as much  as 60 percent though formal analysis has not been completed. Similarly,  GMLRS program officials said that a checklist developed to facilitate  procurement of GMLRS rockets and the system that launches them has  reduced the time it takes to define requirements by about 30 to 60 days.  While Apache program officials did not identify how much time is saved  by using a checklist, they said that the tool is designed to capture the  unique configuration, production, and other requirements that are not  captured by DSCA’s generic checklist.
DSCA and the military departments continue to develop initiatives that are  in varying stages of implementation to help facilitate the timely definition  of FMS requirements. Among its initiatives, DSCA will update the  guidance it provides to foreign partners to promote more complete letters  of request at the outset of FMS cases. The Air Force has examined FMS  requirements changes, among other factors affecting FMS timeframes,  and established a goal to reduce the time between when the letter of  request is received and when the letter of offer and acceptance is  provided to the foreign customer for certain cases. Army officials said  they are studying the metrics regarding FMS process timeframes to  identify leading indicators for successful outcomes. As part of DOD’s  reform initiatives, expanding the use of checklists could supplement its  overall efforts to improve the timeliness of requirements definition in the  FMS process. Existing DOD guidance suggests, but does not require,  that program offices use checklists to help facilitate requirements  definition. Federal standards for internal controls call for agencies to  design responses that reduce the likelihood or magnitude of risks that can  impede agency objectives. Program officials noted that various  extenuating factors can hinder timely FMS acquisitions; however, they  also acknowledged there are benefits to using checklists to expedite  requirements definition, which is a key first step in the FMS process. As  such, programs may be missing opportunities to realize efficiencies in the  FMS process by not using readily available checklists that can help  facilitate timely requirements definition.
subsections: section_title: Delays during FMS Case Reviews May Prevent Synchronization of DOD and FMS Requirements
paragraphs: According to DOD program officials, the reviews conducted by the U.S.  and foreign governments after a program office develops a letter of offer  and acceptance can be lengthy and may affect a program’s ability to  synchronize FMS and U.S. procurements. A letter of offer and  acceptance that has been prepared by a program office requires review  from the relevant military department, State, Congress (known as  Congressional notification), and DSCA before being offered to the foreign  government for signature. Program officials said that delays in  completing DOD’s review of the letter of offer and acceptance and in  initiating Congressional notification may cause an FMS case to miss  program deadlines for placing FMS requirements on an upcoming  production contract, potentially resulting in increased unit costs due to  reduced economies of scale. In particular, officials said that DSCA delays  in notifying Congress of impending sales to FMS customers can delay the  overall process to approve the letter of offer and acceptance and places  proposed contracting timelines in jeopardy. Based on our analysis of  schedule data available for the FMS cases included in our sample, we  found that letter of offer and acceptance reviews by the State Department  and DSCA for our selected FMS cases took an average of about 18 days  once they were submitted by the military department, but in one case took  up to 221 days. DSCA officials stated that case complexity may contribute  to variation in how long reviews take. Our analysis of schedule data  available for complex FMS cases throughout DOD for fiscal years 2011  through 2016 found that it took about 10 days on average for letters of  offer and acceptance to be reviewed. DSCA has identified multiple  initiatives aimed at improving the efficiency of its FMS case review  processes, such as improved data sharing between DSCA and military  departments, minimizing the number of reviews that are necessary for  FMS cases, and reviewing quality assurance and coordination  requirements for processing letters of request and letters of offer and  acceptance.
Though officials report that long review periods by FMS customers can  result in delays, DSCA has identified an initiative to address this issue.  Program officials said that lengthy response times by foreign  governments to sign the letter of offer and acceptance may push FMS  purchases to the next available production contract, which could result in  a different price and schedule. Letters of offer and acceptance are  provided to foreign governments with an offer expiration date after which  the offer is no longer valid, as the pricing and schedule may change and  therefore need to be adjusted. FMS customers accepted letters of offer  and acceptance an average of about 104 days after they were provided.  Apache and AMRAAM program officials said that FMS customer delays in  signing a letter of offer and acceptance could result in an FMS purchase  being pushed to a different production contract because of limited space  on planned production lines. FMS requirements for these programs are  contracted as letters of offer and acceptance are agreed to and signed by  FMS customers. Because of high demand from multiple FMS customers,  production capacity may be reached before a particular offer is accepted.  In its October 2016 Vision 2020 report, DSCA described an initiative  aimed at finding ways to streamline foreign customers’ review and  acceptance of letters of offer and acceptance in order to prevent delays  and cost increases.
section_title: Contract Award Delays and Unforeseen Production Issues Are Not Unique to FMS Acquisitions
paragraphs: Program officials from all three military departments said delays in  awarding contracts could extend FMS schedules and increase costs and  that the use of undefinitized contract actions may reduce schedule risk to  FMS cases because they allow for work to start more quickly. Under the  DFARS, DOD is authorized to use undefinitized contract actions to permit  contractors to begin work immediately when time constraints do not allow  for negotiating a contract and defining its terms and conditions. Our  analysis of DOD-wide contracting data shows that all three military  departments used undefinitized contract actions to support FMS  procurements. Two Army programs we reviewed used these contract  actions to begin work on contracts that supported FMS and domestic  procurements. For example, GMLRS contracting officials said that  uncertainty surrounding the fiscal year 2013 and 2014 budgets for U.S.  procurements caused delays in defining domestic requirements and  prevented the timely award of the production contract that would also  support FMS cases. Further, contract awards for both FMS and domestic  procurements at Army Material Command may take as long as 700 days,  which GMLRS officials stated could result in even longer timeframes for  FMS cases. As a result of these circumstances, the GMLRS officials  stated the decision was made to use an undefinitized contract action to  help them adhere to FMS schedules. Similarly, Apache program officials  said that using an undefinitized contract action for production reduced the  time to procure helicopters by nearly a year—thereby meeting delivery  dates stated in letters of offer and acceptance—and also helped  synchronize purchases by different FMS customers, which in turn  resulted in lower prices.
While program offices may find schedule benefits from using undefinitized  contract actions, we have previously found that undefinitized contract  actions are not a desirable form of contracting, as the government bears  the majority of the cost and risk during the undefinitized period. In the  FMS cases we reviewed for the Apache and GMLRS programs, contract  definitization took between 516 and 1,296 days with as much as 75  percent of the estimated contract price obligated. Though FMS  procurements were exempt from requirements to definitize within 180  days or before 50 percent of the estimated contract price has been  obligated, the Fiscal Year 2017 NDAA now requires DOD to revise its  acquisition regulations to apply these requirements to FMS undefinitized  contract actions.
Similar to domestic acquisitions of defense systems, FMS acquisitions  may experience issues during production that can impact cost and  schedule. As our prior work has found, unforeseen performance and  management issues during the execution of an acquisition affect cost and  schedule for DOD procurements. Schedule delays or cost growth for  acquisitions may be a result of an unsound business case or honest  mistakes and unforeseen obstacles. We found that similar challenges  were experienced by programs during the procurement for the FMS  cases we reviewed. For example, the initial operating capability for a FMS  variant of the JASSM missile was late as a result of testing delays and  failures during live fire testing, which collectively has held up delivery. For  the AMRAAM program, rocket motor defects identified during production  caused FMS delivery dates to be revised. Finally, the Joint Standoff  Weapon program reported that FMS deliveries will be missed because of  delays in providing government furnished equipment resulting from export  controls issues that arose in a separate procurement for warheads. In  each of these instances, programs reported that steps were taken to  mitigate cost and schedule impacts.
section_title: Conclusions
paragraphs: The FMS program is a central component of the U.S. government’s  efforts to assist foreign governments by providing U.S. military equipment  and related services. Over the past decade, DOD and Congress have  established various reform efforts designed to expedite the FMS process,  yet there is continued concern that the process remains slow. The FMS  acquisition process continues to be hindered by insufficiently defined  requirements that do not fully articulate the desired equipment, training,  and other services and can, from the outset, impede timely delivery to  FMS customers. Although checklists, when developed and available for  use, help FMS customers and military departments define requirements  more efficiently, they have not been developed for all systems that are  procured under the FMS program. Using such tools, especially for  complex FMS requirements, may increase the potential for DOD to obtain  the full complement of information. More importantly, these tools can help  ensure DOD is well-positioned, at the outset, to deliver equipment and  services to the foreign government within agreed-upon timeframes.
section_title: Recommendation for Executive Action
paragraphs: To help increase efficiency when defining FMS requirements to be placed  on contract, we recommend that the Secretary of Defense issue  department-wide guidance for the military departments and DOD  components to expand the use of requirements checklists to develop  more comprehensive letters of request for FMS cases.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Defense (DOD) for  comment. In its comments, reproduced in appendix II, DOD concurred  with our recommendation. DOD also provided technical comments, which  we incorporated, as appropriate.
We are sending copies of this report to the appropriate congressional  committees and the Secretary of Defense. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or makm@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The House Report 114-537 that accompanied the National Defense  Authorization Act of Fiscal Year 2017 included a provision for GAO to  review certain aspects of Department of Defense’s (DOD) acquisition  process, including contract type selection, to determine their effect, if any,  on foreign military sales (FMS). We assessed 1) how the use of firm- fixed-price contracts compares to other contract types awarded for FMS  procurements and the reasons they were used and 2) the factors that  may contribute to delays and potentially increase costs for FMS  procurements.
To address both objectives, we selected a non-generalizable sample of  seven FMS programs that used more than one contract type for FMS  procurements between fiscal years 2011 and 2015, which represented  the most current data available at the time of our analysis, to procure  similar items or services. We used procurement data from Federal  Procurement Data System-Next Generation (FPDS-NG) and FMS case  data from the Defense Security Cooperation Agency’s Security  Cooperation Information Portal (SCIP) to identify examples from the Air  Force, Army, and Navy. Across the seven selected programs, we  reviewed 14 contracts that supported 32 individual FMS cases for various  countries. We used SCIP data to select pairs of contracts used to procure  the similar item or services. In some instances, each contract supported  multiple FMS cases. For example, we selected the Advanced Medium  Range Air-to-Air Missile (AMRAAM) program because it awarded both  firm-fixed-price and fixed-price-incentive production contracts that  included procurements for 15 FMS cases. Table 1 below lists the selected  acquisition programs that we reviewed.
For the Navy and Army, we combined SCIP and FPDS-NG data by  matching contract numbers contained in both systems to determine the  contract types used to purchase specific products and services for FMS.  To identify the specific programs for our review, we limited the universe  based on complexity of procurements as defined in guidance from the  Defense Security Cooperation Agency and determined the specific  services and products procured, as defined by the Military Article and  Service List identifiers. Using these data points, we looked for instances  where fixed-price-incentive contracts and at least one other contract type,  such as firm-fixed-price, was used. We limited our selection to contracts  between fiscal years 2011 and 2015, which represented the most current  and complete data available at the time we selected our sample. Using  the contracting office identifications, we determined the Army and Navy  commands where multiple contract types for the same item or services  were used most frequently and selected programs from these commands.  Based on these criteria, we selected the Joint Standoff Weapon and AIM- 9X missile programs from the Naval Air Systems Command at Patuxent  River, MD and the AH-64 Apache helicopter and Guided Multiple Launch  Missile System programs from the Army’s Aviation and Missile Command  at Redstone Arsenal, AL.
Because Air Force contract data are not available in the SCIP database,  we used a separate methodology to select our sample for this military  department. Air Force officials told us that there are no common data  points among its financial and contracting systems to link the contract  type with FMS case data reported in SCIP. We analyzed FMS obligations  data reported in FPDS-NG for fiscal years 2011 through 2015 to  determine which Air Force command obligated the most funding on fixed- price-incentive contracts. From within this command, we narrowed our  focus to the contracting locations that obligated more than $6 million  against fixed-price-incentive contracts and that had the most instances of  where at least one additional type of contract was used to purchase the  same product for FMS customers. We then analyzed all FMS contracts at  this contracting location to determine what items, as described in FPDS- NG, were procured for FMS using any combination of at least two types  of contract. We used the Electronic Document Access system—an online  system that provides access, storage, and retrieval of DOD contract  documents—to review the content of all FMS contracts used to purchase  these products and services to ensure that items were the same. Based  on this selection methodology, we identified AMRAAM and JASSM  missile systems from the Air Force Materiel Command’s offices at Eglin  Air Force Base as case studies.
To determine how DOD’s use of fixed price contracts compares to other  types of contracts for FMS procurements over the past 10 years, we  analyzed FPDS-NG data for fiscal years 2007 through 2016, which  represents the most current data available to analyze trends over time.  Based on our discussions with officials about the data available as well as  our review of contracting documentation and electronic testing for obvious  errors and missing values, we determined that the data were sufficiently  reliable for the purposes of our reporting objectives. We compared DOD  and FMS obligations for various contract types and interviewed officials  from the Defense Procurement and Acquisition Policy office to  understand the effects of certain DOD guidance, such as the Better  Buying Power memorandums, on FMS procurements. We reviewed  federal and defense acquisition regulations, DOD-wide and military  departments’ acquisition policies, and FMS guidance to identify  contracting requirements in place for the procurement of goods and  services on behalf of foreign governments. For the programs we selected,  we reviewed contract documentation, such as acquisition strategies and  determination and finding memorandums, and interviewed cognizant  program and contracting officials to determine the reasons why programs  use specific types of contracts for FMS procurements. In our discussions  with DOD officials, we also discussed the implications of recent legislative  requirements to use firm-fixed-price contracts for FMS procurements and  the status of DOD’s efforts to implement this requirement.
To identify the factors that may contribute to delays and potentially  increase costs for FMS procurements, we analyzed FMS case data  reported in SCIP to determine how long it took for selected programs in  our sample to define FMS requirements and develop government-to- government agreements. We interviewed DSCA officials responsible for  managing the system and reviewed system documentation to determine  that these data were sufficiently reliable for the purposes of our reporting  objectives. For each acquisition program and FMS case in our sample,  we reviewed contracts, other related procurement documentation, and  FMS case data such as letters of request and letters of offer and  acceptance, and conducted interviews with program and contracting  officials to discuss the challenges that programs faced when procuring  items for FMS customers.
We conducted this performance audit from June 2016 to August 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Candice Wright (Assistant  Director), Tom Twambly (Analyst-in-Charge), Emily Bond, Kurt Gurka,  Julia Kennon, Zachary Sivo, Leslie Stubbs, and Roxanna Sun made key  contributions to this report.