Nonproliferation: Agencies Could Improve Information Sharing and End-Use Monitoring on Unmanned Aerial Vehicle Exports
Published: 2012-07-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The global use of UAVs has increased significantly over time, raising concerns about their proliferation. MTCR and Wassenaar are the multilateral regimes that address UAV proliferation. MTCR seeks to limit the proliferation of weapons of mass destruction delivery systems, while Wassenaar seeks to limit the spread of certain conventional weapons and sensitive technologies with both civilian and military uses. This report is an unclassified version of a classified report issued in February 2012. GAO was asked to address (1) global trends in the use of UAV technology, (2) U.S. national security considerations concerning UAV proliferation, (3) multilateral and bilateral tools to control UAV proliferation, and (4) coordination of U.S. efforts to limit the spread of UAV technology. To conduct this review, GAO analyzed intelligence, licensing, and end-use monitoring data, and interviewed U.S. and foreign officials.
section_title: What GAO Found
paragraphs: Since 2005, the number of countries that acquired an unmanned aerial vehicle (UAV) system nearly doubled from about 40 to more than 75. In addition, countries of proliferation concern developed and fielded increasingly more sophisticated systems. Recent trends in new UAV capabilities, including armed and miniature UAVs, increased the number of military applications for this technology. A number of new civilian and commercial applications, such as law enforcement and environmental monitoring, are available for UAVs, but these applications are limited by regulatory restrictions on civilian airspace.
The United States likely faces increasing risks as countries of concern and terrorist organizations seek to acquire UAV technology. Foreign countries and terrorists acquisition of UAVs could provide them with increased abilities to gather intelligence on and conduct attacks against U.S. interests. For instance, some foreign countries likely have already used UAVs to gather information on U.S. military activities overseas. Alternatively, the U.S. government has determined that selected transfers of UAV technology support its national security interests by providing allies with key capabilities and by helping retain a strong industrial base for UAV production. For instance, the United Kingdom and Italy have used UAVs purchased from the United States to collect data on Taliban activity in Afghanistan.
The United States has engaged in multilateral and bilateral diplomacy to address UAV proliferation concerns. The United States principally engaged the Missile Technology Control Regime (MTCR) to address multilateral UAV proliferation concerns. Since 2005, the United States proposed certain significant changes to address how MTCR controls UAVs, but members could not reach a consensus for these changes. Also, while the Wassenaar Arrangement (Wassenaar) controls the export of some key dual-use UAV components, it does not control other dual-use technologies that are commonly used in UAVs. The Department of State (State) has also used diplomatic cables to address the proliferation of UAV-related technologies bilaterally. State provided to GAO about 70 cables that it sent from January 2005 to September 2011 addressing UAV-related concerns to about 20 governments and the MTCR. Over 75 percent of these cables focused on efforts by a small number of countries of concern to obtain UAV technology.
U.S. agencies coordinate in several ways to control the spread of UAV technology, but could improve their UAV-related information sharing. For instance, an interagency group reviews many license applications to export UAV technology. However, there is not a formal mechanism to ensure that licensing agencies have relevant and timely intelligence information when making licensing decisions. Also, States licensing database cannot provide aggregate data on military UAV exports State has authorized, which may impair the U.S. governments ability to oversee the release of sensitive UAV technology. The Department of Defense (DOD) and State each conduct end-use monitoring of some UAV exports, but differences in the agencies programs may result in similar types of items being subject to different levels of oversight.
section_title: What GAO Recommends
paragraphs: GAO recommends that State improve its export licensing database to better identify authorized UAV exports, that relevant agencies improve mechanisms for sharing information relevant to the export licensing process, and that State and DOD harmonize their UAV end-use monitoring approaches. The agencies generally agreed with the recommendations.

section_title: Letter
paragraphs: The use of unmanned aerial vehicles (UAVs) has increased significantly  in recent years. UAVs have demonstrated their effectiveness in recent  conflicts, such as the wars in Iraq, Afghanistan, and Libya, where they  have been used for intelligence, surveillance, and reconnaissance  missions, as well as attack functions. UAVs are also increasingly being  used for civilian purposes such as border security, environmental  monitoring, and disaster relief. For example, the United States used  UAVs to help the Japanese government survey the damage to the  Fukushima nuclear power plant resulting from the March 2011  earthquake. The growing sophistication and availability of UAVs poses  risks for U.S. interests. Consequently, the United States has sought to  limit the spread of UAV technology through bilateral diplomacy and by  working with like-minded supplier countries through multilateral regimes  such as the Missile Technology Control Regime (MTCR) and the   In addition, the United States  Wassenaar Arrangement (Wassenaar).and other countries control some UAV exports through national export  control licensing and enforcement efforts.
In response to your request, we have updated our 2004 report on cruise  missile and UAV proliferation, focusing solely on UAVs. This report is a  public version of the prior classified report that we provided to you in  February 2012, which addressed since 2005, (1) trends in the  development, acquisition, and application of UAV technology worldwide;  (2) U.S. national security considerations associated with transfers of UAV  technology; (3) the extent to which the United States has engaged in  multilateral and bilateral diplomacy to address UAV proliferation  concerns; and (4) the extent to which the U.S. government has  coordinated its export control efforts to limit the spread of UAV  technology. The Departments of Defense (DOD), State (State), and  Homeland Security (DHS) deemed some of the information in the prior  report as classified, which must be protected from public disclosure, as  did the Federal Bureau of Investigation (FBI) and the Central Intelligence  Agency (CIA). Therefore, this report omits sensitive information about  efforts by countries of concern and terrorists to obtain and use sensitive  UAV technology, as well as details about the U.S. proposals that the  multilateral regimes did not adopt. This report also omits sensitive  information about U.S. uses of bilateral diplomacy to address UAV  proliferation concerns, U.S. efforts to coordinate and use certain sensitive  information as part of the licensing process, and U.S. government efforts  to coordinate the enforcement of export controls on UAVs. Furthermore,  this report omits the full text of two of the three recommendations  contained in the classified report, as well as State’s, DOD’s, and the  Department of Commerce’s (Commerce) written comments, as these  contained sensitive information. This report is part of a larger body of  work involving export controls.
To address these objectives, we obtained fiscal years 2005 through 2010  export control licensing and end-use monitoring data from Commerce and  State. We also obtained DOD fiscal years 2005 through 2010 Foreign  Military Sales (FMS) program and end-use monitoring data. Based on our  analysis of the data and interviews with agency officials, we determined  that the data were sufficiently reliable for our use. We reviewed  Commerce, State, and DOD documents, as well as intelligence and open  source private sector reports on the proliferation of UAV technology. In  Washington, D.C., we met with officials from Commerce, State, and DOD  involved in the licensing and transfer process, and those officials  knowledgeable about U.S. activities within the two multilateral regimes  that the United States principally uses to address UAV proliferation  concerns. We also met with officials from agencies responsible for  enforcing export control laws and regulations, including Commerce, DHS,  and the Department of Justice (DOJ), as well as with U.S. government  analysts knowledgeable about UAVs. In addition, we met with U.S.  embassy and foreign government officials in three countries—Israel, Italy,  and the United Kingdom. We selected these three countries based on  analyses of DOD and State data and open source reporting showing that  these countries either had extensive experience operating U.S.-made  UAV systems or were a UAV producer. We also met with leading UAV  manufacturers and industry associations in the United States, Israel, Italy,  and the United Kingdom. In addition, we examined applicable laws and  directives. Appendix I provides a more detailed description of our scope,  and methodology.
We conducted this performance audit from October 2010 to July 2012 in  accordance with generally accepted government auditing standards.  These 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: Used only sparingly in past military operations, UAVs are now making  national headlines as they are used in ways normally reserved for  manned aircraft. UAVs come in a variety of sizes and configurations,  ranging from as small as an insect to as large as a small commercial  airliner. In our work, we focused on mini, tactical, and strategic UAVs.  According to available analysis, mini and tactical UAVs constituted the  vast majority of the UAV systems in operation from 2005 to 2011, while  strategic UAVs included some of the most versatile UAVs, typically  capable of operating up to 30,000 to 45,000 feet in altitude with a  maximum endurance of more than 20 hours. Figure 1 briefly describes  these three types of UAVs.
The two principal multilateral regimes that address exports of UAVs are  the MTCR and Wassenaar. MTCR, established in 1987, is a voluntary  association of 34 countries that share the goal of limiting the spread of  ballistic and cruise missiles and UAVs capable of delivering weapons of  mass destruction. Wassenaar, established in 1996, is a voluntary  association of 41 countries that share the goal of limiting the spread of  certain conventional weapons and sensitive dual-use items having both  civilian and military applications. Both are consensus-based, requiring  that all members must agree to any proposed changes in regime  documents or activities. In both instances, members agree to restrict  exports of sensitive technologies by placing them on commonly agreed to  lists and incorporating these lists into their national export control laws  and regulations. Members also conduct activities in support of the  regimes, such as sharing information about denied license applications  and conducting outreach to countries that are not members of the  regimes.
Wassenaar has two control lists: a munitions list and a dual-use list. The  MTCR members control a common list of items, which is contained in the  MTCR Annex. The Annex covers complete missile systems, including  rocket systems and UAVs, as well as a broad range of equipment,  software, and technology. The MTCR Annex consists of two categories  of items: Category I and Category II. Under MTCR, complete UAV  systems can be controlled as either a Category I or a Category II system,  depending on their range and payload capacity.
Category I UAVs are considered the most sensitive, and include  strategic UAVs capable of delivering a payload of at least 500  kilograms (about 1,100 pounds) to a range of at least 300 kilometers  (approximately 186 miles). MTCR member nations considering the  export of these UAVs commit to apply a “strong presumption of  denial” standard regardless of purpose, meaning that such transfers  should occur only on rare occasions and only in instances that are  well justified under the MTCR Guidelines.
Category II UAVs are considered less sensitive, consisting primarily of  UAVs that do not meet Category I criteria, but are capable of flying at  least 300 kilometers. While these items require review through  national export control systems, these items are not subject to the  MTCR “strong presumption of denial,” except for exports judged by  the exporting country to be intended for use in delivering weapons of  mass destruction.
MTCR members have agreed to a “no undercut” policy for all MTCR- controlled items, meaning that MTCR members have agreed to  consult with each other before considering exporting an item on the  list that has been notified as denied by another member pursuant to  the MTCR Guidelines.
subsections: section_title: Laws Governing Arms Exports and Sales of UAVs
paragraphs: Several U.S. laws authorize the sale or transfer of export controlled  technologies from U.S. companies or the U.S. government to foreign  countries, or in certain cases foreign entities. The Arms Export Control  Act of 1976, as amended, provides the President the authority to control  the sale or transfer of defense articles and services. Under the Arms  Export Control Act, State’s Directorate of Defense Trade Controls  (DDTC) licenses direct commercial sale (DCS) exports of defense  articles and services on the U.S. Munitions List, while DOD’s Defense  Security Cooperation Agency (DSCA) administers the FMS program  under the supervision and general direction of State. In addition, the  Arms Export Control Act, as amended, also requires end-use monitoring  for the sale or export of defense articles and services, and delegates  these responsibilities to the same agencies that administer the program.  DDTC administers the Blue Lantern program to conduct end-use  monitoring for defense articles exported under DCS, while DSCA  administers the Golden Sentry program to monitor the end-use of defense  articles transferred through FMS.
50 U.S.C. App. §§ 2401-2420. The Export Administration Act of 1979, as amended, is  not permanent legislation. Since August 21, 2001, the Export Administration Act has been  in lapse. However, the President has continued the regulations in effect through Executive  Order 13222 of August 17, 2001 (3 C.F.R., 2001 Comp 783 (2002)), which most recently  was extended by Presidential Notice on August 12, 2011, under the authority provided by  section 202(d) of the National Emergencies Act (50 U.S.C. § 1622(d)). administers Commerce’s end-use monitoring program for technologies  covered by the Commerce Control List.
The U.S. export control enforcement system consists of multiple  agencies. Within DHS, Immigration and Customs Enforcement (ICE)  investigates suspected export control violations involving both U.S.  Munitions List and Commerce Control List items. In addition, DHS’  Customs and Border Protection (CBP) inspects selected exports to  determine whether proper licenses were obtained prior to shipment and  may interdict suspicious items being shipped. Within Commerce, BIS’  Office of Export Enforcement has authority to investigate violations  involving Commerce Control List items. Within DOJ, the FBI can take the  lead in certain export control investigations involving counterintelligence  and counterterrorism. DOJ prosecutes suspected export control  violations. Investigations can result in criminal prosecutions; fines; and  imprisonment or administrative penalties, such as export denial orders  barring a party from exporting any U.S. items for a specific period of time.  Figure 2 shows the principal agencies that have a role in the export  control process.
There are also U.S. government agencies that gather and analyze  information on the proliferation of UAV systems and related technologies  and produce UAV-related threat assessments and other UAV-related  information. The Director of National Intelligence serves as the head of  the intelligence community, establishing objectives and priorities for  collection, analysis, production, and dissemination of national intelligence.  Moreover, the Defense Security Service (DSS) provides threat  assessments in support of its mission to oversee the protection of U.S.  classified information and data in the hands of cleared DOD contractors.
The executive branch is currently considering reforms to the U.S. export  control system in an Export Control Reform Initiative, including the  creation of a single control list and a single information technology  system. This initiative could affect export control licensing and  enforcement efforts involving UAVs and related technologies and  components.
section_title: Trends Show Rapid Growth in Global Acquisition, Development, and Military Application of UAVs
paragraphs: There has been rapid growth globally in UAV acquisition, development,  and military applications. From 2005 to 2011, nations, including countries  of proliferation concern and key allies, sought to improve their intelligence  gathering and military aviation capabilities by developing and fielding their  own UAV systems. Furthermore, militaries across the globe sought to  expand the uses for UAVs, particularly in the area of armed strike  missions. UAVs are also increasingly used in a number of civil and  commercial applications, such as law enforcement, but national and  international regulations place restrictions on most of these applications.
subsections: section_title: Countries with UAVs Nearly Doubled in Seven Years
paragraphs: Our analysis of open source information shows a significant increase in  the number of countries that acquired a UAV system since 2005. In 2004,  we reported that approximately 41 countries had acquired a UAV.review of current U.S. export licensing data and open source materials  found that this number grew over the intervening period to at least 76  countries. Figure 3 provides a global picture of the countries that have  acquired UAVs.
section_title: UAV Proliferation Presents Risks for the United States, but Selected Transfers Support Its Interests
paragraphs: The United States likely faces increasing risks as additional countries of  concern and terrorist organizations acquire UAV technology. UAVs can  provide countries and terrorists organizations with increased abilities to  gather intelligence on and conduct attacks against U.S. interests.  Alternatively, selected transfers of U.S. UAV technology support U.S.  objectives by increasing allies’ capabilities and by strengthening the  industrial base for UAV production in the United States.
subsections: section_title: Foreign Countries’ UAV Acquisition Puts U.S. Military Assets at Risk
paragraphs: Available analysis has determined that foreign countries’ acquisition of  UAVs can pose a threat because it puts U.S. military assets at increased  risk of intelligence collection and attack. We were told that the significant  growth in the number of countries that have acquired UAVs, including key  countries of concern, has increased the threat to the United States.  Because some types of UAVs are relatively inexpensive and have short  development cycles, they offer even less wealthy countries a cost- effective way of obtaining new or improved military capabilities that can  pose risks to the United States and its allies.
We were informed that currently, the potential threat to the United States  primarily involves tactical UAVs, rather than more sophisticated, strategic  systems. However, according to available analysis, countries of concern  are pursuing more advanced UAVs through acquisitions from foreign  suppliers and indigenous development. Such UAVs would be capable of  flying higher, longer, and further and would be capable of a wider range of  missions.
According to a publicly released DSS report, many countries of concern  seek to illegally obtain U.S. UAV technology as part of their strategy to  advance their UAV capabilities. DSS reported in 2009 that foreign  targeting of U.S. UAV technology through both overt and covert collection  efforts had increased dramatically in recent years. According to DSS,  the United States’ acknowledged status as a global leader in UAV  development makes the U.S. defense industry a primary focus of foreign  collection attempts. The targeted technologies included engines, optics  sensors, communications gear, and guidance and navigation systems.
We were informed that by acquiring UAVs, countries can enhance their  capability to gather intelligence, surveillance, and reconnaissance  information on U.S. forces and other assets. UAVs can allow countries to  collect potentially harmful data on the location, strength, and movement of  U.S. troops that can be used to more effectively plan or conduct attacks  against U.S. interests. Available analysis also suggests that the use of  UAVs by foreign parties to gather information on U.S. military activities  has already taken place. We were informed that as more countries  acquire UAVs, such intelligence, surveillance, and reconnaissance  collection efforts are likely to increase.
Hostile countries could also use UAVs to attack U.S. interests. While only  a limited number of countries have fielded lethal or weaponized UAVs,  this threat is anticipated to grow, given the number of countries pursuing  the acquisition or development of such systems, including countries of   According to others’ analysis, as the number of countries with  concern.such capabilities increases, it will likely alter the nature of future conflicts  because countries will be able to field a larger number of strike assets  without risking their manned aircraft.
section_title: Terrorist Organizations Could Use UAVs to Harm U.S. Interests, but Factors May Limit the Near-Term Risk
paragraphs: Available analysis has also shown that terrorist organizations’ acquisition  of UAVs to harm U.S. interests poses a risk for the United States. Certain  terrorist organizations have acquired or are developing some form of UAV  technology. For the most part, these organizations are currently limited to  using smaller, more rudimentary UAVs, such as radio-controlled aircraft  that are available worldwide from hobby shops or through the Internet.  Hezbollah is one terrorist organization that has acquired and used UAV  technology to date.
Although no terrorist organization has successfully carried out an attack  with a UAV to date, available analysis has found that there are likely  some terrorist organizations interested in using UAVs to deliver both  conventional and unconventional weapons. For example, in September  2011, the FBI arrested an individual in the United States on charges that  he planned to crash radio-controlled unmanned airplanes loaded with  explosives into the U.S. Capitol and the Pentagon.
Available analysis has noted that there are likely advantages to using  UAVs in terrorist attacks, but also factors that may limit the near-term risk.  For instance, in certain situations, small UAVs could potentially be more  precise in conducting terrorist attacks than using other items, such as  mortars or rockets. The impact of such attacks might be lessened though,  given the inability of small UAVs to carry large explosives. However, if  terrorists were able to equip UAVs with even a small quantity of chemical  or biological weapons an attack could potentially produce lethal results.  Certain challenges were cited in acquiring the technology and expertise  necessary to field a UAV sophisticated enough to carry out more  destructive attacks with conventional weapons. Larger, more  sophisticated systems would potentially also be harder to operate without  detection.
section_title: Transfers of U.S. UAV Technology Increase Allies’ Capabilities and Strengthen the Industrial Base for UAV Production
paragraphs: Although UAV proliferation poses risks, the U.S. government has  determined that selected transfers of UAV technology can further national  security objectives. The transfer of U.S. UAV systems to allies provides  these countries with increased capabilities to contribute to U.S. efforts  globally. It also helps ensure that allies’ military equipment is  interoperable with that of U.S. forces. Allies have used UAVs acquired  from the United States to support a variety of U.S. objectives. For  instance, coalition partners have successfully deployed U.S. UAVs to  assist in the wars in Afghanistan and Iraq. The U.S. Air Force reported  that Italy effectively used Predators purchased from the United States to  locate roadside bombs and weapons caches in Iraq, supporting coalition  efforts to stabilize the country in advance of national elections. Italy and  the United Kingdom also successfully deployed U.S. UAVs in Afghanistan  to collect intelligence, surveillance, and reconnaissance data on Taliban  activity. State officials said that allowing such sales improved Italy’s and  the United Kingdom’s abilities to function with the United States in an  interoperable manner and provided U.S. and NATO commanders with  additional assets. Allies also used UAVs purchased from the United  States in support of such U.S. security objectives as counternarcotics and  counterterrorism operations.
Additionally, DOD has noted the importance of allowing selected transfers  of UAV technology in order to strengthen the U.S. industrial base for UAV  production. According to some U.S. government officials, the ability to sell  American UAVs to foreign purchasers helps defray the U.S. government’s  acquisition costs. U.S. government officials also noted that opening larger  potential markets to American UAV producers provides additional  incentives for producers to invest resources in the research and  development of UAV systems, and helps the United States retain a  technological lead over foreign UAV producers. According to private  sector representatives, UAVs are one of the most important growth  sectors in the defense industry and provide significant opportunities for  economic benefits if U.S. companies can remain competitive in the global  UAV market.
section_title: The United States Has Used Diplomacy to Address UAV Proliferation Concerns with Limited Results
paragraphs: The United States has used multilateral and bilateral diplomacy to  address UAV technology advances and proliferation concerns. For  instance, to address advances in UAV technology, the United States  proposed several changes to the MTCR; however, MTCR members  agreed to only one change. Moreover, nonmembers continue to acquire,  develop, and export UAV technology. In addition to multilateral diplomacy,  the United States used bilateral diplomacy in the form of demarches to  foreign governments to address specific UAV proliferation concerns with  countries.
subsections: section_title: The United States Made Proposals to Address the Proliferation of UAVs through the MTCR but Members Did Not Agree to Most of the Changes
paragraphs: The United States proposed changes to address how the MTCR applies  to UAVs, but MTCR members only reached a consensus to accept one of  the changes. The United States principally focused these efforts through  the MTCR because it addresses the potential use of UAVs to deliver  weapons of mass destruction, according to State. According to  documents provided by State and State officials, the United States  proposed six UAV-related changes to the MTCR Annex and members  accepted one.
The five U.S.-sponsored UAV-related proposals that were not adopted  were closely related. They were significant since they would have  resulted in moving some UAVs currently categorized under MTCR  Category I to Category II, according to State documents and State and  DOD officials. However, MTCR members could not achieve a consensus  to adopt the proposals. As we reported in 2004, both MTCR and  Wassenaar use a consensus process that makes decision making  difficult. MTCR last discussed these U.S. proposals in 2008 and removed  them from its agenda the following year, pursuant to MTCR rules.
MTCR members have adopted a total of 22 UAV-related technical  changes during the 2005 to 2011 period, according to State. For instance,  MTCR members adopted controls on turboprop systems used in  Category I UAVs and inertial navigation systems in Category II UAVs,  according to State officials. However, according to available analysis, only  7 percent of UAV systems are subject to MTCR’s strictest controls.
section_title: The United States Made Proposals to Address the Proliferation of UAV- Related Dual-Use Technologies, but Wassenaar Does Not Control Some Key Technologies
paragraphs: The United States proposed three major changes to the Wassenaar  control list, which members adopted. The first, adopted in 2005, added to  the control list equipment and components specially designed to convert  manned aircraft to UAVs, as well as equipment specially designed to  control UAVs and guidance and control systems for integration into UAVs,  among other things. The second, adopted in 2007, added to the control  list, engines designed or modified to power a UAV above 50,000 feet. The  third, adopted in 2008, refined the control policy on navigation, altitude,  and guidance and control systems for UAVs.
While Wassenaar applies to the export of some military and dual-use  systems used on UAVs, it does not apply to other dual-use enabling  technologies, according to available analysis. Some of these dual-use  technologies are critical to the development of UAV programs in certain  countries of concern; however, they are difficult to control because they  have other commercial applications.
section_title: Some Countries of UAV Proliferation Concern Are Not MTCR or Wassenaar Members
paragraphs: Regime members agree to provide greater scrutiny to trade in  technologies identified as sensitive by the regimes through their national  laws and regulations. Regime members also share license application  denial and other information. Our most recent work shows that some  countries that produce and export UAVs do not belong to MTCR or  Wassenaar. This fact raises concerns about the potential for  nonmembers to undermine the regimes’ ability to limit UAV proliferation.
section_title: The United States Has Also Used Bilateral Demarches to Address UAV Proliferation Concerns
paragraphs: In addition to employing multilateral diplomacy to address UAV  proliferation concerns, the United States employed bilateral diplomacy,  chiefly in the form of demarches, to address specific concerns with  foreign governments. State provided to us approximately 70 cables  containing UAV-related demarches issued to 20 foreign governments and  a multilateral regime during the period from January 2005 to September  2011. Over 75 percent of the cables provided responded to efforts by a  small number of countries of concern to obtain controlled and  uncontrolled technologies for use in their UAV programs. While the  regimes do not control the proliferation of all enabling technologies used  by countries of concern to develop UAVs, the United States has issued  demarches to foreign governments even for exports of certain  uncontrolled technologies when these were clearly to be used for a  military purpose. In addition, State cables show that several countries  took actions in response to U.S. demarches.
section_title: U.S. Agencies Coordinate to Control the Spread of UAV Technology, but Could Strengthen Their Approval, Monitoring, and Enforcement Efforts
paragraphs: U.S. agencies coordinate in a variety of ways to control the spread of  UAV technology, but could strengthen their processes for approving,  monitoring, and enforcing export control requirements on UAVs. First,  U.S. agencies have established procedures for coordinating the review  and approval of UAV transfers, but limitations in information sharing  hamper these efforts. Second, DOD, State, and Commerce each conduct  end-use monitoring of some UAV technology, but differences in the  agencies’ programs may result in similar items being subject to different  levels of oversight. Third, U.S. agencies have coordinated UAV-related  prosecutions and other enforcement actions, but the nature of UAV  technology and general issues with export control investigations present  enforcement challenges.
subsections: section_title: Agencies Use an Interagency Process to Review and Approve UAV Transfers, but Limitations in Information Sharing Hamper This Process
paragraphs: Various U.S. government agencies, including Commerce, State, and  DOD, play a role in the process to review and approve transfers of U.S.  UAV technology to foreign purchasers. These agencies’ decisions are  guided by regulatory controls that have been established to govern the  transfer of both military and dual-use UAV technology. Controls on  military UAV systems and related technology are outlined in the U.S.  Munitions List, while controls on dual-use UAV systems and related  technology are listed in the Commerce Control List. The Commerce  Control List contains three Export Control Classification Numbers  (ECCNs) exclusively dealing with UAV systems and related items: 9A012,  9A120, and 9B010. Additionally, we identified at least 29 other ECCNs  that include controls on components or materials that can be used in  UAVs. Unlike the Commerce Control List, the U.S. Munitions List does  not include sections that outline controls for UAVs specifically. Rather,  controls for military UAV technology fall under several more general U.S.  Munitions List categories. For instance, applicable controls for complete  UAV systems are contained in Category VIII of the U.S. Munitions List,  which deals with aircraft and associated equipment more broadly.  According to State and Commerce officials, U.S. controls on UAVs are  primarily based upon the MTCR and Wassenaar control lists. In addition,  U.S. law establishes unilateral controls that limit the transfer of various  items, including UAV technology, to particular countries. For instance,  State noted that the U.S. trade embargos on countries such as Iran, North  Korea, and Syria cover UAV technology, along with a wide array of other  items. Additionally, the U.S. government has enacted laws that suspend  the approval of any transfers of items on the U.S. Munitions List, including  military UAV technology, to China.
While State and Commerce are responsible for reviewing and approving  export licenses for military and dual-use UAV technology respectively, the  U.S. government has established several mechanisms to coordinate  these decisions with other relevant agencies. For instance, State and  Commerce, as the lead licensing agencies, “staff” out license applications  to other relevant agencies, including DOD’s Defense Technology Security  Administration, for their review. State and Commerce officials noted that it  is particularly important to provide licenses to DOD for review since DOD  officials often have the technical expertise regarding particular items.  Additionally, many UAV-related license applications are reviewed by the  Missile Technology Export Control Group (MTEC). The MTEC is an  interagency body that is chaired by State’s Bureau of International  Security and Nonproliferation. It includes representatives from State’s  DDTC, DOD, Commerce, NASA, and the Department of Energy. During  the weekly MTEC meetings, participants can make recommendations to  approve or deny licenses or propose conditions to be placed on these  licenses. According to State, the MTEC assesses whether license  applications are consistent with U.S. laws and regulations,  nonproliferation policy, and international commitments. For instance, in  one case, the MTEC and the Missile Annex Review Committeewith a U.S. UAV producer to determine what modifications the company  needed to make to one of its existing UAV systems to ensure that it was  not inherently capable of delivering at least a 500 kilogram payload to a  range of at least 300 kilometers. The resulting design ensured that the  UAV was classified as an MTCR Category II system and thus not subject  to the “strong presumption of denial,” if the company sought to export the  system.
State and DOD also coordinate decisions regarding the transfer of military  UAV technology through the FMS program. For instance, DOD  procedures in its Security Assistance Management Manual specify that  DSCA or State may initiate coordination to approve or disapprove a  transfer within 5 days of receiving the information copy of the Letter of  Request, which is a formal request from a country to purchase an item  through FMS. DSCA consults with State on these requests in order to  determine if there are any immediate objections to the proposed sale  within the U.S. government. Further, State must approve any arms  transfer through FMS.
The U.S. government has authorized the export of a range of UAV  technology, but database limitations impair its ability to oversee the  release of such technology. The U.S. government approved the export or  transfer of a range of complete military and dual-use UAV systems, as  well as key UAV components, from fiscal years 2005 through 2010, but it  has no comprehensive view of the volume of UAV technology it  authorized for export. Specifically, State’s licensing database was not  designed to produce complete data on the number, types, and value of  UAV technology that State has licensed for export. Since State’s  database organizes items by U.S. Munitions List category and  subcategory, and the list has no dedicated category or subcategory for  UAV technology, State lacks an effective means of querying the database  to identify UAV-related licenses. In July 2009, State issued a request that  exporters list in the “purpose” field of their export license application if an  item was a “UAV-related license,” covered under certain subcategories  within Category VIII of the U.S. Munitions List. State issued this request to  assist it in routing license applications to the appropriate internal unit for  review, rather than to facilitate monitoring of the volume of UAV  technology authorized for export, according to State officials. Although  State has issued the request to exporters, it does not have procedures to  ensure that exporters comply with this request and the request does not  apply to UAV-related licenses involving items not covered by Category  VIII. In announcing the request, State noted its intention to automate this  process, but had not done so as of February 2012.
In contrast, Commerce’s database does allow for identification of UAV- related items falling under the Commerce Control List’s three UAV- specific ECCNs. However, it has limitations in determining the extent to  which certain UAV components have been authorized for export. The  Commerce Control List contains at least 29 other ECCNs that control  items that are used in UAVs, but can also be used for other purposes. For  items controlled under these 29 ECCNs, Commerce’s database does not  provide a means for easily determining which items authorized for export  are to be used in UAVs and which are to be used for other purposes,  such as in manned aircraft. DOD’s system for recording FMS cases is  better able to provide a complete picture of UAV technology that has  been transferred overseas via FMS.
These limitations in the U.S. government’s licensing data impair the ability  of U.S. agencies and Congress to oversee the release of sensitive UAV  technology. As a result, U.S. agencies may face additional challenges in  working to effectively counter UAV proliferation. For instance, U.S.  officials may lack complete information on relevant, past licensing  decisions, when determining whether or not to grant an export license for  a particular UAV item. Additionally, these data issues reduce U.S.  agencies’ ability to conduct analysis of denied UAV-related license  applications to determine if there are particular trends in questionable  parties’ attempts to acquire UAV technology, according to U.S.  government officials.
Despite these limitations, we analyzed State and Commerce licensing  data, as well as FMS data, to estimate the extent to which the U.S.  government authorized the export of UAV technology in fiscal years 2005  through 2010. In total, the U.S. government approved FMS transfers of  complete UAV systems in 15 cases over the period. Additionally, we  identified 1,278 UAV-related licenses that State processed over the  period. Of these, State approved 90 percent, denied 3 percent, and  returned to the applicant without action 7 percent. We could not  accurately determine the number of approved licenses that were for  complete UAV systems, given limitations in State’s database, but the data  indicate that State authorized the export of several complete UAV  systems including the Desert Hawk, the ScanEagle, and the Raven. From  fiscal years 2005 through 2010, we identified 134 licenses to export dual- use UAV technology that Commerce processed. It approved 74 percent  of these applications, denied 2 percent and returned without action   24 percent. Of the 99 licenses that Commerce approved, we identified at  least 55 that appeared to involve complete dual-use UAV systems based  upon the descriptions in Commerce’s data. In addition to complete UAV  systems, the U.S. government authorized the export of an array of UAV  components and subsystems. Table 1 shows a breakdown of the  estimated number of UAV-related licenses for fiscal years 2005 through  2010.
The U.S. government authorized the transfer of UAV systems to a variety  of countries over fiscal years 2005 through 2010. For instance, it  authorized the transfer of military UAVs to NATO allies such as Denmark,  Italy, Lithuania, and the United Kingdom, as well as other countries such  as Australia, Colombia, Israel, and Singapore.
In addition to the U.S. government’s limited ability to determine the  volume of authorized UAV exports, U.S. licensing agencies have limited  information sharing mechanisms with the intelligence community. Both  State and Commerce officials stated that the intelligence community does  not have a formal process in place to directly provide them timely and  relevant intelligence to assist in the licensing process. For instance,  intelligence agencies may be consulted by the MTEC on occasion, but  they are not routinely represented at weekly meetings. Some intelligence  agencies participate in the interagency Missile Trade Analysis Group,  which is a State-chaired interagency working group responsible for  stopping specific shipments of missile and UAV proliferation concern  worldwide. Although the group is not directly involved in licensing  issues, State officials noted that representatives from State’s DDTC and  Commerce’s BIS attend the group’s meetings to help ensure a strong  working relationship with licensing agencies. Moreover, State officials  stated that because both the MTEC and the Missile Trade Analysis Group  are chaired by State’s Bureau of International Security and  Nonproliferation it helps ensure coordination and information-sharing on  issues affecting both groups.
According to State and Commerce officials, certain intelligence agencies  previously had a more formalized role in the licensing process, but chose  to remove themselves from it in 2008. For instance, State officials stated  that certain intelligence agencies had previously participated in the MTEC  and helped validate the bona fides of foreign parties in license  transactions. Additionally, Commerce officials reported one intelligence  agency had previously hired contactors to screen foreign parties in  Commerce export license applications against intelligence reporting.  According to Commerce officials, this agency decided to end its  formalized support for the licensing process due to budget cuts and other  priorities. State officials said that, since 2008, State has struggled to get  timely and relevant intelligence information to assist in licensing  decisions. Additionally, Commerce officials stated that they did not  believe they were getting access to all pertinent intelligence information  as part of their license review process. Some DOD officials also  expressed concern with the lack of official mechanisms for the  intelligence and licensing agencies to coordinate and noted that some  derogatory information available to them on parties listed on license  applications may not be getting factored into licensing decisions.
According to U.S. government officials, the administration is currently  discussing how the intelligence community can provide better support to  the licensing agencies. Additionally, Commerce noted that it has received  funding to establish its own intelligence center, known as the Strategic  Intelligence Liaison Center, within BIS, to fill the gaps caused when the  intelligence community stopped reviewing Commerce export licenses.  The center will, among other things, check the names of parties in license  applications against intelligence systems, as was previously done by the  intelligence community. While the focus of the center will be on  Commerce export licenses, Commerce officials stated that they are  working with other relevant agencies to ensure that the information the  center generates is available to them, as appropriate. Commerce stated  that the center was established as of the end of 2011.
section_title: Three Agencies Conduct End-Use Monitoring of UAVs, but Procedures Are Different for Similar Items
paragraphs: State, Commerce, and DOD each conducts end-use monitoring on some  UAV-related exports and transfers. Since our previous report on UAV  proliferation, all three agencies have taken some steps to increase their  end-use monitoring of UAVs and related items.
In 2004, the director of the Office of Enforcement Analysis within  Commerce’s BIS issued a memo to his staff that highlighted the need to  focus greater attention on conducting end-use monitoring of UAV exports.  The memo identified certain types of items that should have priority for  end-use monitoring, given their utility in developing UAVs. Unlike  Commerce, State issued no specific guidance on how to target its end- use monitoring of military UAV technology. Although State has not issued  UAV-specific end-use monitoring guidance, State has identified UAVs as  an example of a sensitive commodity that might trigger a Blue Lantern  check, given the negative impact on national security if the item were to  be diverted or illicitly retransferred. State officials said that they consider  a variety of factors when making a determination as to whether end-use  checks on sensitive items, including UAV technology, are warranted. For  instance, State may be more likely to do a Blue Lantern check if the end- user has no established history with controlled items, if the number of  items ordered by the end-user is more than would reasonably be needed,  if the shipment involves an illogical routing, or if the purchaser is paying in  cash or at above market rates.
Shortly after our 2004 report, DOD took steps to strengthen its end-use  monitoring of UAV technology transferred via FMS. In March 2004, DOD  announced that MTCR Category I UAVs would be among those items  subject to enhanced end-use monitoring under the Golden Sentry  program. For those items subject to enhanced end-use monitoring,  DOD officials stationed in the host country are required to conduct  inventories of transferred items following delivery and at regular intervals  thereafter to verify that the items are accounted for and being used in  accordance with the terms and conditions of the transfer. DOD can also  require enhanced end-use monitoring on non-Category I UAVs, if the  transfer is deemed to be of significant risk to warrant such a step. DOD  officials reported that, as of February 2012, there had only been one  instance where DOD required enhanced end-use monitoring for a non- Category I UAV. Items not requiring enhanced end-use monitoring are  subject to routine end-use monitoring under the Golden Sentry program.  Routine end-use monitoring is conducted in conjunction with other  required security-related duties. For example, U.S. officials might observe  how a host country’s military is using U.S. equipment when visiting a  military installation on other business. Given the large volume of defense  articles transferred through FMS, DSCA officials have instructed DOD  personnel to concentrate routine end-use monitoring efforts on a “watch  list” of specific categories of items. DOD has included UAVs among the  items on the watch list. However, some DOD officials that we interviewed,  as well as officials interviewed by other GAO teams in 2011, noted that  there was not clear guidance on the activities that constitute routine end- use monitoring and how to document these efforts.
The majority of end-use monitoring done for UAV-related items has had  favorable results, but agencies found problems in some cases. From  fiscal years 2005 through 2010, State identified 45 UAV-related Blue  Lantern checks that it conducted and Commerce identified 201 UAV- related end-use checks that it conducted. Of the checks State identified as being UAV-related, 66 percent resulted in favorable findings,   16 percent in unfavorable findings, and another 18 percent were  inconclusive. Of the checks Commerce identified as being UAV-related,  58 percent were favorable, 6 percent were unfavorable, and the  remaining 36 percent had limited or inconclusive results. Of the checks  that were unfavorable, some identified significant concerns related to  unauthorized end-users or end-uses. For instance, State conducted a  Blue Lantern check as part of a request to amend a license application to  allow for the provision of additional services to one country in support of a  U.S. UAV it had already purchased. State found that the country was  basing and operating the UAV in a manner that violated the U.S.  government’s prohibition against using U.S. Munitions List items in  internationally disputed territory. Thus, the check was deemed  unfavorable.
All three agencies have conducted end-use monitoring on UAV  technology, but differences in their respective end-use monitoring  programs may result in similar types of items being subject to different  levels of oversight. Further details of these differences in U.S. agencies’  end-use monitoring programs for UAVs are addressed in the classified  version of the report.
U.S. agencies may also have differing levels of access to facilities and  equipment when conducting end-use monitoring, contributing to  differences in the level of oversight of exported items. Although DOD  requires that countries agree to permit inventories and physical  inspections as a condition of FMS transfers, State sometimes lacks this  type of agreement from countries for items exported through DCS. In fact,  U.S. government officials noted that some bilateral agreements prohibit  U.S. officials from directly conducting end-use monitoring on State- licensed items. Even when State does have such authority, it  inconsistently visits end-users to verify compliance with license  conditions, in at least some countries. For instance, we reported in  November 2011 that State infrequently visited end-users in Persian Gulf  countries when conducting Blue Lantern post-shipment checks on night  vision devices.
section_title: Agencies Coordinated Efforts to Enforce UAV Export Controls, but the Nature of UAV Technology Creates Enforcement Challenges
paragraphs: U.S. agencies coordinated their UAV enforcement actions through  several mechanisms, including the National Export Enforcement  Coordination Network, and the Exodus Command Center, but officials  acknowledged limitations with each. We have previously reported on  challenges in enforcing export control laws and regulations more  generally. Among other things, we found enforcement agencies have had  difficulty coordinating cases and agreeing on how to proceed on  investigations.
The National Export Enforcement Coordination Network (NEECN) was  designed to be a hub for coordination on export control investigations.  Among other things, NEECN assisted law enforcement agencies in  apprising each other of investigative leads, disseminating investigative  leads to law enforcement field offices, providing support to ongoing  investigations, and identifying proliferation trends. As of November 2011,  NEECN was replaced by the new Export Enforcement Coordination  Center, as part of the administration’s export control reform initiative. To  help ensure greater coordination, the administration has required key  agencies to partner in this effort in contrast with NEECN, which was a  voluntary effort and at times suffered from a lack of agency participation,  according to some law enforcement officials.
Another key coordination mechanism is the ICE-led Exodus Command  Center. Enforcement agencies, including ICE and CBP, submit license  determination requests through the center to confirm with State or  Commerce whether a particular item requires a license, and if so, whether  the required license has been obtained. During fiscal years 2005 through  2010, law enforcement officials used the Exodus Command Center for  license determination requests involving UAV-related technology;  however, details of these requests are designated as sensitive but  unclassified and are not reported here. Law enforcement officials noted  that while the Exodus Command Center is a key tool, license  determination requests can take a significant amount of time, thus  impacting their ability to move forward on investigations or other  enforcement actions. In March 2012, we issued a report that explores in  more detail the challenges that law enforcement agencies face in  investigating illicit transshipments, including license determination  delays.
U.S. agencies have worked together to take certain enforcement actions  against violators of export control laws and regulations on UAV  technology. Based on our analysis of DOJ reporting on export control  enforcement prosecutions from October 2006 through June 2011, we  identified at least seven prosecutions involving attempts to illegally export  UAV-related technology. For instance, in 2009, a District of Columbia  couple pleaded guilty to making false statements regarding the export of  autopilots for mini UAVs to China.
According to U.S. enforcement officials, they encountered certain  difficulties enforcing export laws and regulations on UAVs that are  common across all export control investigations. For instance, of the   34 closed investigations that ICE identified for us as being UAV-related in  fiscal years 2005 through 2010, none of the cases resulted in a criminal  prosecution. In the majority of the 34 cases, the investigations were  closed as a result of investigators losing touch with the suspects outside  of the country. We previously reported that many suspects in export  control violation cases are located outside of the country and foreign  governments may not always choose to cooperate with U.S. law  enforcement officials.
Law enforcement officials also identified two issues that make UAV cases  particularly difficult to pursue. DOJ officials noted that it can be difficult to  prosecute a case involving an export control violation, particularly those  involving dual-use technologies, because proving the violation took place  typically involves showing that the commodity in question was specifically  designed for use in a technology or application requiring an export control  license. For instance, in the 2009 case discussed previously, DOJ  ultimately prosecuted the District of Columbia couple for making false  statements and not for illegally exporting the autopilots to China. DOJ did  this because prosecutors could not prove that the autopilots were  specially designed for use in military UAVs, despite evidence that this  was their intended use, according to DOJ officials. As part of the  administration’s efforts to move items on the U.S. Munitions List to the  Commerce Control List, Commerce issued a proposed rule in the Federal  Register in July 2011 defining what is meant by specially designed and  requesting public comment on the proposed definition. The comment  period for this proposed rule closed on September 13, 2011. After  reviewing the comments submitted and further review of the issue,  Commerce issued another proposed rule further revising the definition of  “specially designed” in the Federal Register in June 2012. The comment  period for this proposed rule will close on August 3, 2012. In addition,  ICE, CBP, and Commerce officials noted that it is often difficult for law  enforcement officials to determine whether violations are occurring  because many law enforcement officials lack the technical skills to  differentiate controlled UAV components from similar components used in  model aircraft or ultralights, which are not subject to export control  restrictions. Commerce officials also noted that the rapidly evolving nature  of the technologies for use in UAVs could make it more difficult for law  enforcement to readily identify these technologies in the future. According  to ICE officials, to provide law enforcement officials with the technical  skills to identify UAV-related technologies, ICE has provided UAV training  to its agents in multiple locations throughout the country. Commerce  has also provided technical training to law enforcement officials; however,  this training did not specifically focus on UAV technologies, according to  Commerce officials.
section_title: Conclusions
paragraphs: Multiple factors highlight past and likely persistent limitations of U.S.  efforts to control the proliferation of UAV technology through the export  control process. First, the key trends in the acquisition, development, and  applications of UAV technology globally show enormous growth in  demand for military uses of UAVs, including for lethal applications, and an  increasing ability of countries to acquire or develop their own systems.  While only a few countries will have a near-term ability to develop and  field the most sophisticated systems, many are expected to have  sufficiently useful UAVs. These could threaten U.S. forces and interests.  Second, the U.S. government recognizes the risks related to the  proliferation of UAV technology, but faces difficulties setting controls on  systems and components that countries of concern are interested in  obtaining. Third, the U.S. government used multilateral and bilateral  mechanisms to restrict the proliferation of UAV technology to a great  extent, but as we reported in 2004, the nonbinding and consensual nature  of multilateral export control regimes can challenge the U.S.  government’s ability to achieve its objectives in these forums.
While technological advances and the consensual nature of the  multilateral export control regimes complicate the task of avoiding  widespread proliferation to U.S. adversaries, the U.S. government can  take steps to better coordinate its efforts to address national security  considerations through its controls on the transfer and export of UAV  technology. For instance, some agencies have routine and formal roles in  reviewing licenses, but others have no formal mechanism to share  significant information with each other. In fact, the role of some agencies  with potentially important information to provide has diminished in recent  years. Furthermore, U.S. government efforts to provide reasonable  assurance that UAV exports and transfers are used as intended are  marked by differing levels of protection through State and DOD end-use  monitoring activities. As we previously reported on a similar situation  involving night vision devices for Persian Gulf countries, major differences  in the two agencies’ monitoring programs need to be harmonized. Finally,  certain information that would be useful to executive branch and  congressional decision-making is unavailable because State’s licensing  database cannot readily identify all licenses authorizing military UAV  exports. Thus the U.S. government cannot readily identify the full range of  UAVs it has authorized for export to foreign countries.
section_title: Recommendations for Executive Action
paragraphs: We are making three recommendations:
As part of the Administration’s export control reform initiative, we  recommend that the Secretary of State establish a mechanism in the  licensing database to better enable the identification of licenses  authorizing the export of UAVs and related components and  technologies.
We recommend that all U.S. agencies with information relevant to the  export licensing process should seek to improve mechanisms for  information sharing.
To close gaps in the implementation of UAV end-use monitoring  programs that may limit the ability of DOD and State to adequately  safeguard defense articles upon their arrival and basing, we  recommend that the Secretaries of State and Defense take steps to  harmonize their approaches to end-use monitoring. Such steps might  include developing a plan for how and when each agency’s end-use  monitoring approaches would be harmonized.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of our February 2012 classified report to State, DOD,  Commerce, DHS, DOJ, and the CIA for their review and comment. State,  DOD, Commerce, and DHS provided written comments. We have  reprinted DHS’ written comments in appendix IV. State’s, DOD’s, and  Commerce’s comments discussed classified information and cannot be  publicly released; however, we have included an unclassified summary of  their comments, as well as those of DHS. State, Commerce, and DOD  also provided technical comments, as did the CIA, which we incorporated  in the report as appropriate.
State agreed with our recommendation to establish a mechanism in the  licensing database to better identify licenses authorizing the export of  UAVs and related components and technologies. According to State, the  U.S. Munitions List is being rewritten to redefine its controls on UAVs and  better differentiate them from controls on other military aircraft. State  noted that these changes to the U.S. Munitions List, along with the  introduction of USXports as the U.S. government’s export control  licensing case management system, will provide an opportunity to  improve database collection and facilitate the identification of UAV  licenses.
State, DOD, and Commerce agreed with our recommendation to take  additional steps to establish better interagency information sharing.  According to State, the administration is currently trying to address such  concerns as part of its export control reform initiative. Both DOD and  Commerce noted that as part of the administration’s export control reform  initiative, a new unit, known as the Information Triage Unit, is being  established to facilitate information sharing among various U.S. agencies.  To begin implementing the functions of the Information Triage Unit,  Commerce noted that it has established a Strategic Intelligence Liaison  Center. DHS and Commerce noted the role of the Export Enforcement  Coordination Center with respect to the exchange of export control- related information among certain U.S. agencies.
State and DOD also agreed with our recommendation to harmonize their  approaches to the end-use monitoring of UAVs. State said that it has and  will continue to make improvements in its end-use monitoring program.  State also said that the report lacks some critical perspective on the  number and scope of transfers involving the most sophisticated UAVs.  We acknowledge that the United States has to date transferred only a  limited number of more sophisticated UAVs, but this does not lessen the  importance of ensuring that UAVs the United States transfers to foreign  recipients are well protected. Additionally, we note U.S. government  officials we met with anticipate that the number of such UAVs transferred  will increase in the future. Thus, the importance of effective U.S. end-use  monitoring of UAVs will likely continue to increase over time. DOD stated  that it welcomes the opportunity to work with State on the end-use  monitoring issues raised in our recommendation.
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If you or your staff have questions about this report, please contact me at  (202) 512-9601 or at melitot@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 V.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess the global trends in the development, acquisition, and  application of unmanned aerial vehicle (UAV) technology worldwide since  2005, we obtained, analyzed, and corroborated private sector open  source and U.S. government reporting on U.S. and foreign UAV activities  from various sources and spoke to representatives of U.S. private sector  associations representing companies that manufacture UAVs. For this  report, we defined the term “acquisition” to mean those countries that  have obtained complete UAV systems, as well as the countries from  which they acquired these UAVs. We defined the term “development” to  mean those countries producing and supplying UAVs and the systems  they are building. The term “applications” addressed the tasks that UAVs  perform and the limitations in their capacity to achieve these tasks.  Private sector associations we met with included the Association for  Unmanned Vehicle Systems International and the Aerospace Industries  Association. We also interviewed representatives of UAV manufacturers  in the United States, as well as various analysts within the U.S.  government who track UAV issues. We also obtained copies of their  briefs as well as some of their reports. In addition, to get a better  understanding of the regulatory and technological limitations that affect  UAV development, we met with officials from the Federal Aviation  Administration. As our trend assessment dealt with global trends, we also  met with industry, trade association, and foreign government officials in  three countries—Israel, Italy, and the United Kingdom—and obtained  reports on their UAV programs. We selected these countries based on  analyses of open source reporting and Department of Defense (DOD)  and Department of State (State) data showing that these countries either  have extensive experience operating U.S.-made UAV systems or are  important producers of UAVs and related components. We traveled to  Patuxent Naval Air Station in Patuxent, Maryland, to gain a firsthand  understanding of the current state of UAV technology, observing the U.S.  Navy’s Broad Area Maritime Surveillance-Demonstrator system and the  Shadow 200. The Broad Area Maritime Surveillance-Demonstrator UAV  is based on the Global Hawk platform—a strategic UAV—while the  Shadow 200 is a tactical UAV in use by the U.S. Army that is currently  undergoing modification for use by the U.S. Marine Corps.
To assess the national security considerations associated with the  proliferation of UAV technology, we met with private sector and U.S.  government analysts knowledgeable about UAVs. We also obtained and  analyzed a range of private sector and unclassified and classified reports  and briefings by the intelligence community discussing the threats  associated with the spread of UAV technology to countries of concern  and terrorist organizations. Additionally, we interviewed officials from  State, the Department of Commerce (Commerce), and DOD to gather  information on the key risks and benefits associated with the spread of  UAV technology. To better understand the security considerations  associated with transfers of U.S. UAV technology to U.S. allies, we met  with foreign government and U.S. embassy officials in Italy to document  the Italian Ministry of Defense’s experience purchasing and operating  U.S.-made systems. While in London, we were unable to meet with  United Kingdom military officials knowledgeable about their experience  purchasing and operating U.S. systems, but we obtained written  responses to questions from the United Kingdom’s Ministry of Defense  and met with U.S. embassy officials familiar with the United Kingdom’s  experience.
To assess the extent to which the U.S. government used the multilateral  regimes and bilateral demarches to foreign countries to address UAV  technology proliferation, we obtained and analyzed classified State  reporting cables documenting the results of the 2005 through 2009  Missile Technology Control Regime (MTCR) plenaries and other  meetings. We also reviewed various MTCR and Wassenaar Arrangement  (Wassenaar) documents, including the two regime’s control lists and the  various U.S. proposals submitted to the MTCR and Wassenaar.  Additionally, we interviewed State, Commerce, and DOD officials to  gather information on the steps that the U.S. government has taken  through the regimes to work with other participants to control UAV  proliferation. We also met with officials of the Wassenaar Arrangement  Secretariat. We attempted to meet with MTCR officials, but were not able  to due to scheduling limitations. To better understand the limitations of the  multilateral regimes, we met with officials from State, Commerce, DOD,  and other agencies. To assess the extent to which the United States used  bilateral diplomacy to address UAV proliferation concerns, we obtained  and analyzed approximately 70 demarches presented to foreign countries  during the January 2005 to September 2011 timeframe that State  provided to us. We also interviewed State officials knowledgeable about  the demarches. We did not conduct an independent assessment to  determine whether our sample contained all the UAV-related demarches  that State presented to foreign countries during this timeframe.
To assess the extent to which the U.S. government has coordinated its  export control efforts to limit the spread of UAV technology, we obtained  and analyzed fiscal years 2005 through 2010 export licensing and end- use monitoring data from Commerce and State. We also obtained DOD  fiscal years 2005 through 2010 Foreign Military Sales program and end- use monitoring data. To assess the reliability of these various data sets,  we conducted interviews with relevant agency officials, reviewed agency  documentation, reviewed past GAO assessments of the databases used  to produce this data, and conducted our own reviews of the data provided  by the agencies. We determined that the data were sufficiently reliable for  our use; however, we identified certain limitations, including with State’s  licensing database in particular, which are discussed further below. We  also reviewed Commerce, State, and DOD documents and reports and  met with officials in Washington, D.C., involved in licensing, transfer, and  end-use monitoring activities from these three agencies. We also met with  agency officials from Commerce, Immigration and Customs Enforcement,  Customs and Border Protection, the Federal Bureau of Investigation, and  the Department of Justice responsible for enforcing export control laws  and regulations.
To analyze Commerce’s UAV-related export control licensing data, we  identified the 3 principal export control classification numbers (ECCNs)  that exclusively control UAV systems and technology, as well as 29  additional ECCNs that include technology that could be used in UAVs, but  can also be used for other purposes. To identify these ECCNs, we first  conducted a search of the Commerce Control List to determine which  ECCNs contained the terms: “unmanned aerial vehicle,” “UAV,”  “unmanned aerial system,” and “UAS.” We also reviewed Commerce  documentation discussing UAV-related ECCNs. Finally, we validated the  choice of these ECCNs with officials from Commerce and the Defense  Technology Security Administration and made modifications to our list  based upon their input. We validated our list of ECCNs with Commerce  and the Defense Technology Security Administration because Commerce  manages the database used to track dual-use license applications and  the Defense Technology Security Administration is the main agency that  Commerce uses for technical assistance in conducting license reviews.  We then analyzed Commerce export licensing data and quantified the  number of license applications associated with each of these ECCNs  during fiscal years 2005 through 2010. However, in the final report, we  chose to limit our discussion to only those licenses involving the three  ECCNS that are UAV-specific. We chose to do so because, through our  own analysis and interviews with Commerce and Defense Technology  Security Administration officials, we determined there was not a reliable  way of identifying which of the more than 7,000 license applications  involving the other 29 ECCNs included items that were to be used in  UAVs, versus those licenses that included items to be used for other  purposes, such as in manned aircraft. Because our final analysis does not  include any license applications involving these 29 ECCNs, our results  may not have captured some UAV-related licenses; however, we believe  the results are sufficiently reliable to provide a reasonable estimate of the  number of UAV-related licenses submitted to Commerce in fiscal years  2005 through 2010.
State’s licensing database is organized according to U.S. Munitions List  category and subcategory and there is no specific category or  subcategory for UAVs and related technology. Thus, to analyze State’s  UAV-related licensing data, we obtained data for more than 7,000 license  applications that State had submitted to the Missile Technology Export  Control Group (MTEC) during fiscal years 2005 through 2010. While the  majority of UAV licenses go before the MTEC, certain UAV-related  licenses may not be captured within the data State provided, according to  State officials. For instance, certain sensors or other types of payloads  used in UAVs, but also used in other types of aircraft, might not be  reviewed by the MTEC because they are not considered missile  technology controlled by the MTCR, according to State officials.  Additionally, the data provided by State included a significant number of  licenses that were not UAV-related and instead pertained to other types  of missile technology. To better identify the UAV-related licenses, we  identified 34 key terms to use in filtering the data. These terms included  both general terms that are commonly used to describe UAVs, such as  “unmanned aerial system” and “UAS,” and also specific terms that are the  names of key UAV systems that are produced in the United States and  abroad, such as “Predator” and “ScanEagle.” We validated these terms  with State and the Defense Technology Security Administration. We  validated the choice of these terms with State and the Defense  Technology Security Administration because State manages the  database used to track U.S. Munitions List-related license applications  and the Defense Technology Security Administration is the main agency  that State uses for technical assistance in conducting license reviews. We  used these terms to assist in separating out those licenses that were  UAV-related from those that were not. Nonetheless, we found that Direct  Commercial Sales (DCS) data could not identify with certainty all licenses  authorizing UAVs and related components without a manual review of  tens of thousands of licenses. As a consequence, we could not accurately  report the magnitude of DCS arms transfer authorizations for UAVs;  however, we believe the results are sufficiently reliable to provide a  general estimate of the number of UAV-related licenses submitted to  State in fiscal years 2005 through 2010.
To analyze State and Commerce end-use monitoring of UAV-related  exports, we obtained end-use monitoring data from both agencies  identifying the number, location, and type of UAV-related end-use  monitoring checks conducted in fiscal years 2005 through 2010. Both  State’s and Commerce’s end-use data have limitations because the  agencies’ databases are not designed to provide a means of  automatically identifying end-use checks that are UAV-related. As a  result, both agencies developed queries using terms such as “UAV” and  “unmanned aerial vehicle.” Based upon our discussions with agency  officials, we believe that these queries identified the majority of relevant  end-use check records, but some UAV-related checks may not have been  captured in the queries. However, we determined that the agencies’ end- use monitoring data is sufficiently reliable to provide a reasonable  estimate of the number and types of checks performed by the two  agencies.
To analyze DOD’s transfers of UAV technology via the Foreign Military  Sales (FMS) program, we obtained from the Defense Security  Cooperation Agency (DSCA) a breakdown of the number, country, and  type of UAV technology transferred during fiscal years 2005 through  2010. To produce this data, DSCA developed a query of its 1200 system  to identify relevant FMS transfers involving UAV technology. We also  obtained Golden Sentry UAV-related end-use monitoring data from DSCA  for the same period.
To ensure the accuracy of the information contained in appendix III, we  provided a copy of this appendix to Israeli government officials, who  provided technical comments. We have incorporated their comments as  appropriate.
DOD, State, the Department of Homeland Security, the Federal Bureau of  Investigation, and the Central Intelligence Agency deemed some of the  information in our February 2012 report as classified, which must be  protected from public disclosure. Therefore, this report omits sensitive  information about efforts by countries of concern and terrorists to obtain  and use sensitive UAV technology, as well as details about the U.S.  proposals that the multilateral regimes did not adopt. This report also  omits sensitive information about U.S. uses of bilateral diplomacy to  address UAV proliferation concerns, U.S. efforts to coordinate and use  certain sensitive information as part of the licensing process, and U.S.  government efforts to coordinate the enforcement of export controls on  UAVs.
We conducted this performance audit from October 2010 to July 2012 in  accordance with generally accepted auditing standards. These 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: List of MTCR and Wassenaar Members
paragraphs: Brazil is a member of MTCR, but not Wassenaar.
Croatia, Estonia, Latvia, Lithuania, Mexico, Romania, Slovakia, and Slovenia are members of  Wassenaar, but not MTCR.
section_title: Appendix III: Israel’s Export Control System Since 2006
paragraphs: According to Israeli officials we spoke with, the changes that have  occurred in Israel’s export control system since 2006 were significant  because they elevated the importance of export controls. For this reason,  this appendix provides additional information about these changes.  According to Israeli officials we spoke with, in general, the changes are  designed to encourage more interagency coordination and to facilitate  enhanced enforcement of export control laws.
In July 2006, Israel established a single export control agency within the  Ministry of Defense, named the Defense Export Control Agency (DECA).  DECA is responsible for reviewing and consequently approving or  denying applications for licenses that involve items, technologies, know- how, and services which are considered under the definition of defense  exports.
According to Israeli officials and documents, in cases where a license  application involves purely military items or dual-use items that are  destined for a military end-user, DECA bears full responsibility, although it  is required to consult with the Ministry of Foreign Affairs. In these  instances, the licensing process is a two-stage process with a marketing  license preceding the export license. In cases of applications involving  dual-use items destined for a civilian end-user, the Israeli Ministry of  Industry, Trade, and Labor bears the responsibility, while consulting with  DECA. In these cases, the licensing mechanism is a one-stage process,  as it includes the issuance and granting of the export license alone.
According to Israeli officials and documents, for license applications in  which DECA bears full responsibility, a mechanism was established  within the Ministry of Defense to coordinate the review of these licenses.  This includes the establishment of advisory committees. In addition, a  technical committee called the “MTCR Committee” reviews license  applications involving possible technologies controlled by MTCR. That  committee’s task is to determine whether an item is contained within an  MTCR control list and if so, what category.
According to Israeli officials and documents, by law, DECA is solely  responsible for enforcing export control directives and regulations. Within  the framework of that responsibility, DECA is often assisted by Israeli  Customs, which in practice, enforces most of the directives and  regulations. In addition, DECA is responsible for conducting outreach to  companies that export military and dual-use items, technologies, know- how, or services.
According to Israeli officials that we spoke with, Israel also adopted export  control legislation to control the export of both military and dual-use items,  technologies, know-how, and services. According to Israeli documents, in  July 2007, the Israeli Parliament enacted a new Defense Export Control  Law, which entered into force in December of that year. This law elevated  the importance of export controls in several ways, according to Israeli  officials. For instance, Israeli officials stated that the law established a  requirement for Israeli exporters to register before applying for any export  control license and to create a new position within the company—director  of export control. According to Israeli officials, the law also established  periodic reporting, record-keeping, and inspection requirements; provided  for new administrative penalties such as fines, suspensions, and  revocations of licenses; and strengthened criminal penalties for those  found violating the law. Moreover, according to Israeli documents, the  Defense Export Control Law led the Ministry of Defense to establish  separate lists of controlled technologies—one based on the MTCR  Annex, two based on the Wassenaar munitions and dual-use lists, and a  third dual-use list for transfers to the Palestinian Authority.
The lists of controlled technologies are updated annually in two ways,  according to Israeli officials. First, DECA meets with MTCR and  Wassenaar Arrangement officials in outreach sessions conducted by the  two regimes. The outreach sessions are designed in part to inform key  countries that are not MTCR or Wassenaar Arrangement members about  control list changes agreed to by member countries, according to  Wassenaar Arrangement officials. In addition, DECA meets with export  control counterparts from the United States, United Kingdom, Germany,  and other countries, according to Israeli officials.
With respect to license application approvals, the Israeli government  typically imposes certain conditions, according to Israeli government and  industry officials. For instance, DECA requires manufacturers to obtain re- export approval for all controlled components not made in Israel from the  country of origin as a pre-condition for considering a license application.  In addition, DECA typically imposes certain license conditions, for  instance, requiring end-users to sign an end-use or end-user certificate.  According to Israeli government officials, approved licenses often state  that technology cannot be transferred to a third party without authorization  from DECA.
According to Israeli government officials and documents, with respect to  license applications involving UAV technology, the Israeli government  typically imposes additional licensing conditions as well. For instance,  license applications must specify under which MTCR category the UAV  falls, if any. According to Israeli government and industry officials, for  MTCR Category I UAVs such as the Heron TP, the Israeli government  has adopted a “presumption of denial” standard. In instances where  authorization is eventually given to export a Category I UAV, it is limited  to MTCR member countries only. In cases where authorization is granted  to export an MTCR Category II UAV, these may be marketed or sold to  MTCR nonmember countries only as long as they provide a declaration  that they fully adhere to MTCR controls.
section_title: Appendix IV: Comments from the Department of Homeland Security
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgements
paragraphs: In addition to the contact named above, the following staff made key  contributions to this the report: Joseph A. Christoff, Director (ret.);   Jeff Phillips, Assistant Director; Lynn Cothern; Martin De Alteriis;   Elias Lewine; Grace Lui; José M. Peña; and Ryan Vaughan.   Mitch Karpman provided technical assistance in statistics and data  analysis, Jena Sinkfield provided graphics support, and Sarah McGrath  provided editorial assistance. Burns Chamberlain, Gifford Howland,  Mason Calhoun, Drew Lindsey, Rachel Dunsmoor, Judith Williams, and  Juan P. Avila provided additional technical assistance.