Foreign Military Sales: DOD Needs to Improve Its Use of Performance Information to Manage the Program
Published: 2017-08-22T00:00:00

Fast Facts:
The Department of Defense administers the Foreign Military Sales program, which sells military equipment and services to foreign partners and allies to help them improve their national security—and by extension, U.S. national security.
Congress has been concerned about how long foreign partners are waiting for the items and services they need.
While DOD has improved its responsiveness, it continues to fall short of its goals and has not assessed why. DOD also doesn't collect data on how long it takes to deliver the first item.
We made several recommendations to help DOD improve its performance data and analysis of the program.

Highlights:
section_title: Why GAO Did This Study
paragraphs: U.S. national security benefits from the timely provision of military equipment and services that enable foreign partners and allies to build or enhance their security capability. State has overall responsibility for the FMS program, while DOD administers the program through DSCA and implementing agencies in the military departments. Since 2009, DSCA has taken steps to improve the timeliness of the FMS process, but concerns remain that the delivery of FMS equipment is not timely, leaving foreign partners waiting for items needed to achieve security objectives.
House and Senate committees requested that GAO assess the FMS process. This report assesses (1) the extent to which DOD has met FMS timeliness goals, (2) FMS workload and workforce trends, and (3) actions DOD has taken to address recommendations to improve the FMS process made by GAO and others. GAO analyzed performance data for FMS from 2012 to 2016; workforce and workload data from the military departments; reviewed relevant DOD regulations and policies for FMS; and interviewed DOD officials.
section_title: What GAO Found
paragraphs: The Department of Defense's (DOD) performance on Foreign Military Sales (FMS) has improved, but DOD is not meeting two out of three performance metrics for the timely processing of FMS requests and does not collect data for the third metric. The first metric tracks the time taken from the receipt of a country's request for an item to when a Letter of Offer and Acceptance (LOA) is sent to the partner country for approval. As shown in the table, this metric is based on the complexity of the requests, and although DOD's timeliness has improved, it is still short of the 85 percent goal. The second missed metric is the time the Defense Security Cooperation Agency (DSCA) takes to review and approve FMS cases. The review time in 2016 was more than the 1 day goal. The third metric is the time DOD takes to deliver the first item to the recipient country; however, DSCA does not collect data on this metric and therefore does not know if it is meeting the goal. DOD officials cited several factors that adversely affect their ability to meet the timeliness goals, such as changing customer requirements or delays due to policy concerns regarding particular sales. However, because DOD has not collected data on one metric and has not identified the underlying causes for not meeting its goals, it does not know the extent to which these or other factors are impacting program delivery.
During fiscal years 2009 through 2016, the FMS workload increased and while the three military services' FMS workforces generally increased, DSCA's FMS workforce decreased. DSCA officials do not believe the size of their workforce has impacted timeliness; but the data provided to GAO shows that DSCA's timeliness has decreased as the size of its FMS workforce has decreased. A key principle of strategic workforce planning is that an agency's workforce must be aligned with its workload. However, DSCA lacks workload measures for its FMS workforce as a whole, and therefore cannot ensure that its workforce is sufficient to meet programmatic goals. Moreover, despite a DOD requirement, DSCA has not yet developed a workforce plan that could help identify any skill or competency gaps in its workforce. Officials said they planned to do so by the end of May 2018.
DOD has a taken some steps to address recommendations to improve the FMS process, but additional actions are still needed. For example, DOD implemented three of GAO's prior recommendations, such as establishing performance metrics, but has yet to establish a metric to assess timeliness of the acquisition phase. DOD has partially implemented several of the recommendations made by an internal DOD task force. For example, DOD has partially implemented the recommendations to enhance the skills of the FMS workforce. In addition, DSCA's efforts to standardize data that are maintained separately by the military services on a new information system have fallen behind schedule.
section_title: What GAO Recommends
paragraphs: GAO recommends that DSCA (1) collect data on delivery of items or services, (2) analyze FMS performance metric data to determine why goals have not been met, (3) develop a DSCA workforce plan, and (4) develop DSCA workload measures. DOD partially concurred with the first two recommendations, concurred with the third, and did not concur with the fourth. GAO continues to believe action is needed as discussed in the report.

section_title: Letter
paragraphs: U.S. national security benefits from the timely and deliberative provision  of military equipment and services to foreign partners and allies that  enable them to build or enhance their security capability. To support our  partner countries and allies, the U.S. government procures defense  equipment and services on behalf of the foreign partner through various  security cooperation and assistance programs such as the Foreign  Military Sales (FMS) program. The Department of State (State) has  overall responsibility for the program, including the approval of sales. The  Department of Defense’s (DOD) Defense Security Cooperation Agency  (DSCA) administers the FMS program along with the military departments  (the Army, the Air Force, and the Navy) and other DOD components on  the behalf of foreign governments. An advantage of using FMS is that  partner countries and allies can benefit from using the same acquisition  process as the U.S. military, including efficiencies due to economies of  scale. In recent years, Congress has expanded the number of security  cooperation programs to include several new programs implemented by  DOD, which focus on building partner capacity. The security assistance  provided through many of these programs uses the same acquisition  process and workforce as the FMS program and is referred to as  “pseudo-FMS.” Since fiscal year 2009, over 150 foreign partners, allies,  and international organizations signed agreements to purchase  equipment and services worth approximately $300 billion. In recent years,  congressional committees have expressed concern about the timeliness  of the FMS program and whether it has a sufficient workforce to meet  program requirements.
House Report numbers 114-154 and 114-537 and Senate Report 114- 255 include provisions for GAO to assess the FMS process. This report  assesses (1) the extent to which DOD has met performance goals with  respect to the timeliness of the FMS program, (2) DOD’s fiscal year 2009  through 2016 FMS workforce and workload trends and workforce  planning efforts, and (3) the actions DOD has taken to address  recommendations to improve FMS made by GAO and others since 2009.
To assess the extent to which DOD has met performance goals with  respect to the timeliness of the FMS program, we reviewed fiscal year  2009 through 2016 performance goals established by DSCA and the  military departments (the Army, the Air Force, and the Navy); the extent  to which those goals were met or not met; the data that were collected;  and the factors contributing to DSCA’s and the military departments’  ability to meet those goals. We also interviewed State and DSCA officials  as well as officials of the military departments. Fourteen U.S. government  agencies and DOD components process FMS cases. In this review, we  focused on the military departments because the Army, the Air Force, and  the Navy account for 95 percent of all cases; however, the performance  data is from all of the implementing agencies.
To assess DOD’s fiscal year 2009 through 2016 workload and workforce  trends and workforce planning efforts, we obtained fiscal year 2009  through 2016 workload data as well as authorized and actual workforce  data for the DOD workforce whose salaries are funded from the FMS  Administrative Surcharge Account of the FMS Trust Fund. We also  examined the legislative and other requirements for DOD to develop  workforce plans and reviewed the plans developed to determine whether  they specifically address the workforce that processes FMS cases. We  met with officials of DSCA and the military departments to discuss their  workforce plans and fiscal year 2009 through 2016 workload and  workforce trends.
To assess the actions taken by DOD to address recommendations made  since 2009 to improve FMS, we identified and reviewed prior reports by  GAO, the State and DOD Offices of the Inspectors General, and DOD’s  Security Cooperation Reform Task Force to identify recommendations for  improving FMS. We asked DSCA to provide us with documents on the  details of their implementation of these recommendations, including the  results and any analysis of the results. We also interviewed officials from  DSCA to identify actions that they had taken in response to these prior  recommendations. The ratings that we use in our analysis are as follows:  “Not implemented” means DOD provided no evidence that the  recommended actions were taken.  “Partially implemented” means that DOD provided evidence that some  portion of the recommended actions was taken.  “Implemented” means that DOD provided evidence that the  recommended actions were taken.
Appendix I contains additional details about our scope and methodology.
We conducted this performance audit from May 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 the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Security Cooperation and Assistance Programs
paragraphs: The United States provides military equipment and training to partner  countries through a variety of security cooperation and assistance  programs authorized under Title 22 and Title 10 of the U.S. Code as well  as various public laws. When foreign partners choose to use the FMS  program, they pay the U.S. Government to administer the acquisition of  materiel and services on their behalf. The United States also provides  grants to some foreign partners through the Foreign Military Financing  (FMF) program to fund the partner’s purchase of materiel and services  through the process used for FMS. DOD administers a number of security  cooperation programs that focus on building partner capacity with  appropriated funds. The Afghanistan Security Forces Fund and the  authority to build the capacity of foreign security forces are examples of  such security cooperation programs. The security assistance services  provided through these programs use the same workforce to manage and  acquire military equipment and services as the FMS program and are  referred to as pseudo-FMS. Both FMS and pseudo-FMS program  administrative costs are funded through FMS case surcharges that are  administered through the FMS Trust Fund. Figure 1 shows an F-15 Eagle  fighter, which is an example of an item that has been procured under  FMS.
section_title: The FMS and Pseudo- FMS Process
paragraphs: DSCA administers all FMS and pseudo-FMS cases and works with  various implementing agencies to execute them. DSCA’s workforce  establishes security assistance procedures and systems and provides  training, oversight, and guidance. DSCA’s workforce also implements a  small number of cases. The workforces of the implementing agencies and  their components are responsible for preparing, processing, and  executing security assistance agreements. This includes working with  foreign partners to determine requirements and managing cases.  Fourteen agencies and DOD components act as implementing agencies,  including the three military services—the Army, the Air Force, and the  Navy—which manage the vast majority of FMS and pseudo-FMS cases.  Each service has a designated component that leads and coordinates the  development and implementation of FMS and pseudo-FMS cases: the  Deputy Assistant Secretary of the Army for Defense Exports and  Cooperation, the Deputy Under Secretary of the Air Force for  International Affairs, and the Navy International Programs Office.
While the many steps of the process used for FMS and pseudo-FMS  cases can be grouped in different ways, they fall into five general phases:  assistance request, agreement development, acquisition, delivery, and  case closure. FMS and pseudo-FMS transactions follow the same five- phase process, but the roles, responsibilities, and actors involved can  differ. For example, in the assistance request phase for FMS cases, the  partner country identifies its needs and drafts a letter of request. For a  pseudo-FMS case, the U.S. combatant commands and in-country  security cooperation organizations identify needs and draft the request. In  the agreement development phase, for an FMS case, the implementing  agency, with input from the partner country, develops an assistance  agreement called a Letter of Offer and Acceptance (LOA). For a pseudo- FMS case, the implementing agency prepares the assistance agreement.  See figure 2 for the differences in each phase under the two programs.
section_title: DSCA Workload Measures
paragraphs: DSCA uses workload data obtained from two DOD systems to determine  each service’s future year funding for FMS and pseudo-FMS program  administrative costs. In fiscal year 2016, the three services began  reporting to DSCA on seven quantifiable workload measures that together  capture the workload required to implement FMS and pseudo-FMS  cases. According to DSCA officials, these seven workload measures  are used in a workload model to generate a funding target for each  military department, which DSCA allocates. Based on the funding  allocation, the military departments then determine the FMS  administrative surcharge workforce levels for each component that  processes FMS cases. According to DSCA officials, before developing  these seven measures, workload was self-reported to DSCA by the  military departments based on an estimation of their respective FMS  sales and other factors, such as undelivered value.
section_title: Information Systems
paragraphs: The implementing agencies use the Defense Security Assistance  Management System (DSAMS) to write their FMS and pseudo-FMS  cases. However, each military department also uses several systems,  specific to each military department, to manage their execution of these  programs. Since 2009, we have reported that DSCA has been working to  replace these various military department-specific legacy data systems  with the Security Cooperation Enterprise Solution (SCES). With SCES,  DSCA aims to improve its communications with the services and to  increase the efficiency of security cooperation programs. According to  DSCA, once deployed, SCES will serve as the primary requisition system  for DSCA and the three services.
section_title: DOD Has Improved the Timeliness of the FMS Process but Has Not Met Its Goals or Sufficiently Analyzed Performance Data
paragraphs: DSCA has established three measures of performance relating to FMS  case duration but has not met its goals for two of these metrics and does  not collect information on the third. The first metric tracks the time taken  from the receipt of a partner country’s request to the transmission of a  completed LOA to the partner country for approval. DOD’s timeliness has  improved, but it is not meeting this metric’s goal of 85 percent of LOAs  sent to partner countries within established time frames. DOD tracks  performance and establishes goals based in part on the complexity of the  cases. Specifically, simple cases that involve routine or repeat purchases  of the same item, such as spare parts, training, and technical support,  have an anticipated offer date (AOD) goal of 45 days. Standard cases  that include purchases by experienced users of FMS, such as a purchase  of a Blackhawk helicopter with all associated equipment and services,  have an AOD goal of 100 days. Complex cases involve factors that are  expected to substantially impact the time taken to complete the LOA or  involve significant modifications and, therefore, have an AOD goal of 150  days. For example, the sale of new F-35A Joint Strike Fighter  Conventional Take Off and Landing aircraft, which includes spares,  support equipment, technical orders, contractor services, program  management, software support, and training, would be categorized as  complex. Table 1 shows the percentage of FMS cases meeting the  timeliness goal for each type of LOA. In addition, appendix II provides  information on how FMS time frames compare with pseudo-FMS time  frames.
The second metric is the time taken for the review of FMS cases as they  are processed through DSCA headquarters. DSCA established this  performance measure in late 2013, with a goal of 1 day. However, we  found that, based on data provided by DSCA, it is not meeting this 1-day  headquarters review goal, and its performance with respect to this goal  has declined over time. The DSCA-provided data show that in fiscal year  2016, the average review time was approximately 1.97 days, up from  1.47 days in 2014. DSCA officials said that they would revisit the goal if  the average approval time were to exceed 2 days. Table 2 shows the  average time DSCA has taken to approve LOAs from fiscal year 2014 to  2016.
DSCA officials cited various factors adversely affecting the timeliness of  FMS cases, including shifting partner country requirements and delays  due to policy or financial reasons. For example, they reported that sales  have been put on hold as the United States tried to influence human  rights policies in some countries. In addition, DSCA officials said that  when pseudo-FMS cases, such as those to build partner capacity, are  prioritized due to the possibility that the availability of appropriated funds  may expire, traditional FMS cases are delayed as the workforce shifts  priorities. DSCA could not identify the amount of time these factors can  add to the FMS process. While DSCA hosts meetings with the military  departments periodically to review data, the evidence DSCA provided to  document the results of these meetings did not include an analysis to  identify the underlying causes of the failure to meet goals. DSCA  officials said that, collectively, the information systems of the  implementing agencies and DSCA could potentially be used to determine  the amount of time that each factor costs in the process but that doing so  would be time-consuming and difficult. However, because they have not  conducted this analysis, DSCA officials could not substantiate the relative  importance of the various factors affecting the timeliness of the FMS  process.
Federal internal control standards state that management should  establish activities to monitor performance measures and indicators.  These may include comparisons and assessments relating different sets  of data to one another so that analyses of the relationships can be made  and appropriate actions taken. These standards also require that  management conduct reviews at the functional or activity level to  compare actual performance to planned or expected results throughout  the organization and analyze significant differences. Without such an  analysis, it is uncertain whether DSCA will be able to accurately identify  the underlying root causes for the weak performance on timeliness for  FMS cases so that it can identify and implement effective corrective  measures and to analyze lessons learned and apply these across the  security cooperation enterprise.
The third metric is the time taken for DOD to deliver the first item or  service on an FMS case to the recipient country. DSCA established this  metric in August 2013, noting that the quick delivery of the initial  equipment and services is most important to U.S. partners. DSCA  established a goal that 50 percent of all LOAs for a given purchaser  country deliver the first article, service, or training within 180 days. This  goal recognized that a number of complex systems cannot be produced  within 180 days, but the majority of cases do not involve complex  acquisitions. DSCA officials stated that they have not collected data on  this delivery measure, although some of it resides within the individual  departments; thus, DOD’s performance on this metric cannot be  assessed. Federal standards for internal controls state that management  should use quality information to achieve the entity’s objective, including  obtaining relevant data. Until DSCA collects information on this metric, it  will not be able to determine whether it is achieving its goal.
section_title: The Military Departments’ Workload and Workforce Have Increased While DSCA’s Workforce Has Declined, and DSCA Has Not Developed a Workforce Plan
paragraphs: During fiscal year 2009 through 2016, the military departments’ FMS  workload and workforce generally increased; over the same time period,  DSCA, which does not have workload measures for its FMS workforce as  a whole, experienced a decrease in its workforce. Although DSCA is  required to develop a strategic workforce plan, and has plans to develop  one, it has not yet done so.
subsections: section_title: The Military Departments’ Workloads and Workforces to Process FMS and Pseudo-FMS Increased; DSCA’s Workforce Decreased
paragraphs: Fiscal year 2009 through 2016 data show that, for each military  department, the overall workload to process FMS and pseudo-FMS cases  generally increased, as did their overall workforces. DSCA and Army  officials stated that, while no one measure can provide a full picture of the  military departments’ workloads, implementing agencies use case line  data to measure workload trends because those data capture the amount  of work needed to procure each item in an FMS or pseudo-FMS case.  However, DSCA officials also noted that because the military  departments do not present case line data uniformly, the data cannot be  compared to one another. For example, while the Army’s logistics system  requires each item to be requisitioned separately, and typically identifies  each component in a weapons system as a separate case line, the other  military departments do not. According to DSCA, workload trends can  be affected by several factors, including partner country budgets,  exchange rates, prices of staple goods, import and export restrictions,  and regional instability. As a result, we used case line data to show  workload trends for each of the services separately, along with their  individual workforce trends in full-time equivalents (see tables 3, 4, and  5). The upward trend in case line data presented in each of these tables  is generally consistent with other workload measures, which are shown in  appendix III.
The data indicate that, from fiscal year 2009 through 2016, the Army’s  workload increased by about 47 percent, and its actual workforce  increased by about 42 percent (see table 3).
The data also show that, during the same time period, the Air Force’s  workload increased by about 48 percent, while its actual workforce  increased by about 45 percent (see table 4).
Finally, the data show that the Navy’s workload during fiscal year 2009  through 2016 increased by about 38 percent, while its actual workforce  increased by about 45 percent (see table 5).
In contrast to the upward trend in the workforces of the three military  departments, DSCA maintained a relatively stable workforce from 2009  through 2014 but then experienced a decrease in the workforce since  2014. DSCA officials attributed this decrease to the transfer of some  responsibilities and staff to another DOD component. In percentage  terms, from fiscal year 2009 through 2016, DSCA’s FMS authorized  workforce dropped by 3 percent, while its actual FMS workforce  decreased by 19 percent. See table 6 for DSCA’s authorized and actual  workforce that directly processes FMS and pseudo-FMS. DSCA officials  said that the drop in personnel has not adversely affected their capacity to  process FMS and pseudo-FMS. However, they expressed concern that a  continued drop—combined with continued increases in the workload— could adversely affect DSCA’s capacity to review, coordinate, and  perform financial management for FMS and pseudo-FMS cases.
section_title: DSCA Has Not Developed a Workforce Plan or Workload Measures for its FMS Workforce As A Whole
paragraphs: DSCA has not developed a workforce plan, although it is required to do  so. A DOD June 2016 requirement related to strategic human capital  planning applies to DOD components, such as DSCA, and calls for the  component heads to develop, manage, execute, and assess their  component’s strategic workforce plans, including manpower allocations  and resources. Under this requirement, components are expected to  also establish a methodology to assess the current state of their  respective workforces, identify skill and competency gaps and strengths,  and forecast emerging and future workforce requirements to support  DOD’s mission.
In October 2014, DSCA released a 6-year strategic plan to improve how  security cooperation programs are implemented, taking into account the  complexity of DOD’s security cooperation workforce. This plan, called  “Vision 2020,” was updated in October 2015 and October 2016. As part of  the Vision 2020 update, DSCA announced that it would address issues  involving DSCA’s headquarters workforce in a human capital strategic  plan. DSCA reported in October 2016 that it planned to complete the new  human capital strategic workforce plan by October 2017 and to publish it  separately from the Vision 2020 strategic plan. However, according to  DSCA officials, as of May 2017, DSCA had not yet begun developing its  plan. DSCA officials stated that the plan would probably not be ready by  the planned issue date. In commenting on a draft of this report, DSCA  stated that it was working to obtain the contractor support needed to  develop a human capital strategic plan. DSCA also stated that it planned  to obtain the contractor support by the end of fiscal year 2017 and to  complete the preparation of a human capital strategic plan within eight  months of having obtained the contractor support. Moreover, DSCA  stated that it was in the process of updating various human capital-related  instructions and policies.
In addition, as discussed previously, DSCA has not met its performance  time frames for reviewing FMS and pseudo-FMS. While DSCA collects  FMS workload data from the military departments, it does not have  workload measures for its own FMS workforce as a whole. In commenting  on a draft of this report, DSCA stated that it has developed workload  models and measures to help identify specific needs and provided  evidence for two such models, but it did not state that it has workload  measures for its FMS workforce as a whole. DSCA officials also stated  that the nature of their work, which, among other things, involves  overseeing the processing of cases, preparing policy memos and  congressional notifications, and managing the FMS Trust Fund, makes it  difficult to collect and quantify appropriate workload measures for their  workforce. However, without such key workload data, DSCA cannot  determine the cause for the decrease in timeliness as measured by their  metric and whether a declining FMS workforce is contributing to it. In May  2017, DSCA officials stated that they did not intend to include a workload  measure in their forthcoming human capital strategic plan.
According to Vision 2020, the human capital strategic plan, when  complete, is intended to enable DSCA to align its human capital to  support the goals of the agency’s strategic plan. Since 2001, we have  developed a significant body of work related to strategic workforce  planning. The work stresses the importance of strategic workforce  planning that includes, among other things, aligning an organization’s  human capital program with its current and emerging mission and  programmatic goals. Workforce planning that is linked to an agency’s  strategic goals is one of the tools agencies can use to systematically  identify the workforce needed for the future and to develop strategies for  shaping this workforce. One tool for ensuring that an agency’s workforce  is aligned with its current and emerging mission and program goals is the  use of appropriate workload measures, particularly quantifiable workload  measures, since these enable the agency to analyze and assess  workload trends with more precision. Because DSCA does not have  workload measures for its FMS workforce as a whole, it cannot be certain  if its forthcoming strategic workforce plan will be aligned with current and  emerging FMS mission requirements.
section_title: DOD Has Taken Steps to Address Recommendations Made by GAO and Others to Improve the FMS Process
paragraphs: DOD has taken some steps to address long-standing concerns about the  timeliness of FMS delivery. GAO, DOD’s Inspector General, and others  have made numerous prior recommendations to improve the FMS  process. DOD has taken steps to address three of the recommendations  GAO made in 2012 but has yet to implement the fourth—the  establishment of a performance measure to assess timeliness for the  acquisition phase of the security assistance process. Similarly, DOD  has implemented most of the recommendations made by the DOD  Inspector General. Furthermore, DOD has taken steps to address  recommendations made by its Security Cooperation Reform Task Force  in 2011 and 2012, but further steps are needed.
subsections: section_title: DOD Has Addressed All but One of GAO’s Previous Recommendations to Improve the FMS Process
paragraphs: In a 2012 report, GAO made four recommendations to improve the FMS  process. In 2012, we recommended that to improve the ability to measure  the timeliness and efficiency of the security assistance process, the  Secretary of Defense should establish performance measures to assess  timeliness for the acquisition phase, the delivery phase, and the case  closure phase of the security assistance process. To improve the ability of  officials responsible for security cooperation to obtain information on the  acquisition and delivery status of assistance agreements, we also  recommended that the Secretary of Defense establish procedures to help  ensure that DOD agencies are populating security assistance information  systems with complete data.
DOD has not established a performance measure to assess timeliness for  the acquisition phase of the security assistance process. According to  DSCA officials, they do not own the information systems or databases  that have the data necessary to measure the timeliness of the acquisition  phase. However, DOD has taken steps to respond to the other three  recommendations. Specifically, DSCA updated the Security Assistance  Management Manual (SAMM) in August 2013 to include a metric for the  delivery phase of standard requests. However, as discussed earlier in this  report, information provided by DSCA did not include timeliness data for  the delivery phase of the process, and DSCA officials reported that they  are not collecting data for this performance metric.
In addition, DSCA reported that it developed a tool within the Security  Cooperation Management Suite to capture case closure data from  implementing agencies. As of September 2015, DSCA reported that the  tool now included metrics and measurements for the “aging” of cases  within the different milestones and allowed for analysis of closure times  based on the type and relative complexity of categories or cases.
Finally, in response to our fourth recommendation, DSCA reported taking  a number of actions. In early May 2014, it finalized programming the  Enhanced Freight Tracking System (EFTS) that allows a daily upload of  available data for FMS and pseudo-FMS materiel. DSCA reported that by  mid-May 2014, EFTS had in-transit visibility over 75 percent of shipments.  In addition, DOD reported the establishment of an electronic link between  two of its information systems, which should improve the ability to share  contract information.
According to DSCA officials, the Security Cooperation Enterprise Solution  (SCES) was proposed as a way to solve the problems stemming from the  older, unique information systems maintained by each of the military  services, which contribute to DSCA’s inability to facilitate data collection  and analysis across the military departments. In 2012, DSCA officials told  us that they would begin piloting the new system in 2015 and that SCES  would be fully implemented by 2020. According to DSCA officials, the  deployment schedule for SCES is behind schedule and is being revised.  The pilot SCES deployment began on June 6, 2016. DSCA is working to  convert data currently in legacy systems and, once a sufficient number of  cases have been successfully executed in the pilot phase, limited  deployment will occur. As of May 2017, DSCA officials could not provide  a date for when this will happen.
section_title: DOD Has Addressed Most of the Recommendations Made by the Inspector General
paragraphs: Three reports by the DOD Inspector General, issued between 2009 and  2013, contained 10 recommendations related to FMS, 8 of which DOD  implemented. Examples of actions DOD has taken include the following:
A 2013 audit found that an FMS contract involved an unallowable  markup and made five recommendations to improve contracting  quality assurance procedures. For example, the Inspector General  recommended that the Deputy Assistant Secretary for Contracting,  Office of the Assistant Secretary of the Air Force for Acquisition,  assess practices for negotiating contracts and establish quality  assurance procedures for contracting officers. In response, the Air  Force established additional levels of oversight for contracting  personnel and planned to create and implement additional training.
A 2010 audit found that, although DSCA ensured that funds  appropriated for assistance to Afghanistan and Iraq that it processed  through the FMS network were used for their intended purpose and  were properly reported, improvements were needed to ensure  effective management of appropriated funds. Three recommendations  were made. For example, the Inspector General recommended that  the Director of DSCA perform a review of appropriated funds that  have expired to return excess funds to the original fund holders.  DSCA agreed to review excess appropriated funds that expired in  previous fiscal years and to return unneeded funds.
In addition, a 2009 audit evaluated the cash management of the FMS  Trust Fund, determined whether internal control was adequate, and  reviewed the management control program in place for the FMS Trust  Fund. Two recommendations were made, including that DSCA  discontinue transferring funds appropriated for the Afghanistan Security  Forces Fund and Iraq Security Forces Fund to the Foreign Military Sales  Trust Fund, and discontinue the use of administrative fee surcharges for  certain transactions. However, DSCA did not concur with either  recommendation and has not taken action to implement them.
section_title: DOD Has Taken Steps to Address the Recommendations Made by Its Security Cooperation Reform Task Force, but Implementation Is Uneven
paragraphs: At the request of the Secretary of Defense, DOD created the Security  Cooperation Reform Task Force (Task Force) in 2010 to study ways to  improve security cooperation and security assistance programs, including  FMS. The Task Force produced two reports. In its first report, the Task  Force made more than 50 recommendations addressed to the Secretary  of Defense for improving security cooperation processes. The second  report provided information on the status of the recommendations. Our  review of these two reports identified 17 recommendations that the Task  Force addressed to DSCA. We found that DOD had implemented one  recommendation and partially implemented 16 recommendations, as  summarized in table 7.
One of the Security Cooperation Reform Task Force recommendations  was that DOD “maintain an inventory of high-demand and long lead-time  items via the Special Defense Acquisition Fund (SDAF).” The SDAF is a  revolving fund that allows DOD and State to purchase select types of  defense equipment and services in anticipation of partner countries’  future FMS needs. The fund reduces the amount of time it takes the  United States to provide some items and enhances U.S. readiness by  reducing the need to divert assets to meet urgent partner needs. The best  candidates for purchase through SDAF are items that take a long time to  purchase, make, and deliver. According to documents provided by DSCA,  the use of the SDAF over the last 5 years has facilitated the sale of about  $584 million in procurements to purchase equipment for about 45  countries worldwide. For example, the DSCA response shows that the  SDAF has been used to purchase a stock of night vision devices that  typically have procurement lead-times of more than 18 months. DSCA  reports that this has allowed the United States to transfer the devices  more quickly to meet the urgent needs of partner countries, including  Afghanistan and Iraq. Overall, SDAF has cut FMS procurement lead- times for key equipment by 6 months or more, according to the  documents provided by DSCA.
subsections: section_title: DSCA Partially Implemented 16 Task Force Recommendations
paragraphs: DSCA officials provided some evidence that actions had been taken to  address the remaining 16 recommendations. We consider these  recommendations as partially implemented because the evidence  indicated that not all aspects of the recommendation were addressed. For  some of these recommendations, DSCA officials stated that the  recommended measures, or similar measures, would be undertaken as  part of the reforms mandated by the fiscal year 2017 NDAA.
For example, one of the task force’s recommendations was for DSCA to  establish and deploy Expeditionary Requirements Generation Teams  (ERGT) to partner countries. The task force recommended the ERGTs to  provide rapid support to partner countries and the U.S. country teams in  developing high-quality, precise requirements for security cooperation  cases. According to DSCA officials, the expeditionary teams were  popular with partner country officials who were relatively inexperienced  with the FMS process. DSCA officials said that the expeditionary teams  have been used only three times because forming and deploying the  teams turned out to be expensive and disruptive to the processing of  other FMS cases. DSCA was unable to provide documentation for the  number of times and for which countries ERGTs were used, what results  were obtained from using ERGTs, or a formal determination of the  effectiveness of using the ERGTs.
Another recommendation called for DSCA to “update the Security  Assistance Management Manual (SAMM) and amend the Defense  Federal Acquisition Regulation Supplement (DFARS)to direct that  implementing agencies—in specific instances when sensitive or classified  materials are being transported—use a clear, comprehensive “pre-case  transportation assessment” document for assessing transportation and  distribution requirements following receipt of a Letter of Request and  before issuance of an LOA.” According to DSCA officials, the change to  the SAMM was in the final stages of being approved as of May 2017. The  DSCA response to our request stated that, contrary to the  recommendation, officials were not considering an amendment to DFARS  for this purpose.
section_title: Conclusions
paragraphs: Foreign Military Sales totaled about $300 billion between fiscal year 2009  and 2016. In that time, the FMS workforce and workloads of the three  military departments have grown significantly, while the DSCA workforce  has decreased. Since 2009, DOD has implemented a number of reforms  designed to improve its capacity to deliver FMS assistance in a timely  manner. However, although performance for the program has improved,  two of the performance measures set for the program are generally not  being met. DSCA has not sufficiently analyzed the reasons for not  meeting these goals. For the third metric established to monitor the  timeliness of the delivery phase, DSCA is not collecting data and  therefore does not know how it is performing against this goal. Without a  comprehensive analysis of the entire FMS process facilitated by the  collection of data, DOD is unable to identify the reasons it is not meeting  its performance goals and to target efforts to address those reasons.
Further, as part of its Vision 2020 strategy, DSCA reported that it would  develop a strategic workforce plan by October 2017 but as of July 2017,  DSCA had not yet begun developing the plan. Finally, DSCA lacks  workload measures for its FMS workforce as a whole and, without such  key data, cannot be certain that its workforce plan, when complete, will  meet current and emerging program requirements.
section_title: Recommendations for Executive Action
paragraphs: We are making the following four recommendations to DOD:  The Acting Director of DSCA should take steps to ensure the collection of  data measuring the timeliness of the delivery of equipment and services  to recipient countries. (Recommendation 1)
The Acting Director of DSCA should analyze data on all performance  metrics to better identify deficiencies. (Recommendation 2)
The Acting Director of DSCA should develop a workforce plan.  (Recommendation 3)
The Acting Director of DSCA should develop workload measures for its  FMS workforce. (Recommendation 4)
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD and State for their review and  comment. DOD’s written comments are reproduced in appendix IV, and  its technical comments were incorporated as appropriate. State did not  provide comments.
In its comments, DOD partially concurred with our first and second  recommendations, concurred with our third recommendation, and did not  concur with our fourth recommendation.
In partially concurring with our first recommendation, DOD stated that  it intends to rescind or replace, in the near future, the metric  established to measure the time DOD takes to deliver the first items to  recipient countries. DOD commented that collecting data on when the  first spare part or support equipment is delivered does not provide  meaningful data. DOD also stated that DSCA will work with the  implementing agencies to establish a metric that will be useful in  tracking the delivery of defense articles and services to recipient  countries. Based on these comments and following discussions with  DSCA officials, we revised the recommendation to clarify the steps  DSCA should take.
In partially concurring with our second recommendation, DOD stated  that it will continue to gather and analyze data on performance metrics  for which it has established timelines and where the data are available  in security assistance or cooperation data systems. While we agree  that these actions are useful for DOD to oversee the execution of  security assistance, we continue to believe that DOD needs to  improve its analysis of performance data in order to identify the root  causes of any delays and determine the steps needed to improve the  timeliness of the process.
In concurring with our third recommendation to develop a workforce  plan for DSCA, DOD stated that DSCA is working with DOD’s  Washington Headquarters Services on workforce planning. DOD also  stated that DSCA is working to determine hard-to-fill positions and lay  out a plan for filling such positions and identifying gaps caused by  attrition. In addition, DOD stated that it planned to obtain contractor  support by the end of 2017 in order to develop a human capital  strategic plan and planned to publish the strategy within 8 months of  obtaining contractor support.
In disagreeing with our fourth recommendation, DOD noted that there  are not enough measureable requirements within a headquarters  activity to provide meaningful workload determinations, that the  workload at headquarters is independent of FMS volume, and that the  broad responsibilities across the agency have little relevance from  one area to another. We have clarified the report to reflect that  agencies can develop more than one workload measure and to more  clearly refer to the development of appropriate workload measures for  the agency’s FMS workforce. We also clarified our recommendation to  reflect that agencies can have more than one workload measure.  However, while we recognize that the work performed by some  organizations may be challenging to measure, we continue to believe  that a reliable measure of workload is integral to effective workforce  planning.
We are sending copies of this report to the Secretaries of Defense and  State and appropriate congressional committees. In addition, the report is  available at no charge on our website at http://www.gao.gov.
If you or your staff have any questions concerning this report, please  contact me at (202) 512-9601 or Melitot@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: House Report numbers 114-154 and 114-537 include provisions for  GAO to assess the Foreign Military Sales (FMS) process. This report  assesses (1) the extent to which the Department of Defense (DOD) has  met performance goals with respect to the timeliness of the FMS process,  (2) DOD’s FMS workforce planning efforts and fiscal year 2009 through  2016 FMS workload and workforce trends, and (3) the actions DOD has  taken to address recommendations made since 2009 to improve FMS. In  addition, appendix II provides information about how the timeframes for  processing FMS compare with the timeframes for processing certain  security cooperation cases authorized under Title 10 of the U.S. Code  and various public laws.
To perform our assessment, we first identified the principal agencies and  components that process FMS. Although 14 U.S. government agencies  and DOD components process FMS cases, the Departments of the Army,  Air Force, and Navy process 95 percent of all FMS cases. For this  reason, our review focuses on the FMS cases processed by these military  departments. Because the Defense Security Cooperation Agency (DSCA)  also plays a key role in the FMS process, we also included DSCA in our  assessment. We also collected data and met with officials of the Defense  Logistics Agency and the Defense Contract Management Agency to  better understand the role these agencies play in supporting the FMS  process. In addition, we collected data from and met with officials from  the Department of State, which is responsible for supervising and  directing FMS.
We reviewed established DSCA and military department performance  goals and determined the extent to which those goals were being met,  and, where applicable, the factors contributing to agencies not meeting  those goals. We interviewed officials from State, DSCA, and the military  departments and reviewed guidance in the Security Assistance  Management Manual to identify existing performance goals across FMS  case development and case execution and to identify the information  DSCA and the military departments collect to assess their performance  against established goals. We reviewed GAO’s Standards for Internal  Control  to assess the requirement for managers to compare actual  performance data to planned or expected results. For all performance  goals that we identified, we interviewed agency officials about how  performance was measured according to established goals and collected  data on how performance results were communicated throughout the  security assistance community. To assess the extent to which established  performance goals have been met, we reviewed and summarized  performance data and interviewed officials from DSCA. We reviewed data  on military department case development performance in terms of mean  case development time and DSCA’s anticipated offer date standards for  fiscal years 2010 through 2016. For the information presented in table 1,  the performance statistics are based upon the following number of cases:  We met with Navy and Air Force officials about systems for tracking  timeliness of case execution. Where the team’s review of case  performance data showed that agencies were not meeting established  performance goals, we interviewed agency officials and reviewed data on  cases whose processing times surpassed established goals to assess  what factors affected case duration. We interviewed officials from DSCA,  State, and the military departments to build a qualitative understanding of  the factors that have historically affected FMS case development and  execution times.
To assess DOD’s fiscal year 2009 through 2016 workload and workforce  trends, and workforce planning efforts, we obtained fiscal year 2009  through 2016 workload and workforce data from DSCA and the military  departments. In referring to the FMS workforce, we refer to DOD officials  who process FMS and whose salaries are paid for with funding from the  FMS Administrative Surcharge Account and not DOD officials who help  process FMS whose salaries are paid for with appropriated funds. We  also do not include officials assigned to security cooperation  organizations at U.S. embassies throughout the world. The FMS  Administrative Surcharge Account is part of the FMS Trust Fund, which is  used to collect, among other things, payments from foreign partners for  purchases of equipment and services through the FMS system. For  DSCA, we asked DSCA officials to provide us with data on the workforce  that processes FMS and not the workforce that supports the FMS  workforce by providing training and other services. We obtained both  authorized and actual FMS workforce data for DSCA and the military  departments, as well as some authorized and actual mission critical  occupation data. The Army, Air Force, and Navy all use the same  process and structure for both FMS and pseudo-FMS cases; for that  reason, we collected fiscal year 2009 through 2016 authorized and actual  pseudo-FMS workforce data. To address the extent to which DOD’s  existing workforce plans address the FMS workforce, we reviewed DOD’s  Fiscal Year 2010-2018 and Fiscal Year 2013-2018 strategic workforce  plans. In addition, we reviewed DOD’s April 2010 Defense Acquisition  Workforce Improvement Strategy, and its Fiscal Year 2016-2021  Acquisition Workforce Strategic Plan to determine the extent to which  these plans specifically address the FMS workforce. We also reviewed  various military department strategic plans, including the Air Force’s 2010  to 2018 strategic workforce plan, to examine the extent to which they  address the FMS workforce. In addition, we reviewed DSCA’s “Vision  2020” strategic plan. We interviewed appropriate officials from DSCA and  the military departments.
To assess the actions taken by DOD to address recommendations made  since 2009 to improve FMS processing, we conducted searches for and  queried relevant DOD officials about audits, studies or reports making  recommendations or suggesting reforms to improve the FMS process  since 2009. We identified and reviewed a total of two prior reports by  GAO, one report by the State Inspector General, and three reports by  the DOD Office of the Inspector General, as well as two reports by DOD’s  Security Cooperation Reform Task Force concerning aspects of the  Foreign Military Sales program. To determine the extent to which DOD  implemented the recommendations we requested documents providing  the details of the implementation including the number of times the  recommendation or reform was implemented, the results, and any  analysis of the results. We also interviewed DOD officials to ask them  about the recommendations and what was done by way of  implementation to determine the extent to which they had implemented  the recommendations. The ratings we used in this analysis are as follows:  “Not Implemented” means DOD provided no evidence that the  recommended actions were taken. “Partially Implemented” means that  DOD provided evidence that some portion of the recommended actions  was taken. This includes recommendations for which DOD provided only  testimonial evidence that the recommendation had been implemented.  “Implemented” means that DOD provided evidence that the  recommended actions were taken such as changes in policy, the  collection and use of data, records of transactions, results of initiatives  conducted, or records of reforms implemented. We discussed the  recommendations contained in these reports with appropriate DSCA  officials. In addition, we reviewed a memo discussing the status of  DSCA’s Security Cooperation Enterprise Solution and met with DSCA  officials to discuss the status of the system.
We collected the data used in our analyses from a number of DOD  systems. The data used to assess the extent to which DOD has met  performance goals with respect to the timeliness of the FMS process  were collected from DSCA’s Defense Security Assistance Management  System (DSAMS), and the Army’s Centralized Integrated System- Integrated Logistics system. The data used to assess workload and  workforce trends were collected from DSCA’s DSAMS, and DSCA’s  Business Objects Enterprise Reporting System and BeSMART systems,  as well as the Air Force’s Security Assistance Manpower Requirements  system, and DOD’s Defense Civilian Personnel Data System. To assess  the reliability of the performance, workload, and workforce data collected,  we reviewed existing information about the data and the systems that  produced them. We also interviewed agency officials knowledgeable  about the data and the systems that produced the data using a standard  set of questions. We found that the data provided to us were generally  reliable for purposes of our analysis, but that there were also some  limitations in the use of the data. For example, the military departments  differ in the definition of a “case line,” which makes it impossible to  compare case line workload data by military department. We discuss  these limitations, as appropriate, in the main part of the report.
We conducted this performance audit from May 2016 through 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  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comparative Information on Foreign Military Sales (FMS) and Pseudo- FMS Case Processing
paragraphs: The United States provides military equipment and training to partner  countries through a variety of programs. Foreign partners may pay the  U.S. government to administer the acquisition of materiel and services on  their behalf through the FMS program. The United States also provides  grants to some foreign partners through the Foreign Military Financing  (FMF) program to fund the partner’s purchase of materiel and services  through the process used for FMS. In recent years, Congress has  expanded the number of security cooperation programs to include several  new programs with funds appropriated to the Department of Defense  (DOD), as well as administered and implemented by DOD, that focus on  building partner capacity. In this report, we refer to these programs as  “pseudo-FMS” cases. FMS and pseudo-FMS transactions follow the  same process, but the roles, responsibilities, and actors involved can  differ. One important difference highlighted by DOD and Department of  State (State) officials is that with FMS, there is a much greater level of  involvement on the part of the partner country in defining requirements  and developing the Letters of Offer and Acceptance (LOA). As a result,  the amount of time it takes to develop FMS cases on average will tend to  exceed the time it takes for pseudo-FMS cases. According to DOD and  State officials, there may also be differences in the types of equipment  that tend to be provided via FMS as opposed to pseudo-FMS cases. For  example, pseudo-FMS is not typically used to provide complex weapons  systems with long production cycles such as advanced fighter aircraft.
According to DOD and State officials, pseudo-FMS cases are often  prioritized because the funds used for these programs generally are only  available for obligation for 1 or 2 years, depending on the program. These  officials note that funds for traditional FMF programs do not have such  time constraints. As a result, pseudo-FMS cases are, on average,  processed faster than FMS cases. Army and Air Force officials noted that  pseudo-FMS cases tend to be more labor intensive than FMS cases for  several reasons. For example, according to Air Force officials, pseudo- FMS cases often involve items that frequently require a new contract  because the item is not part of the Air Force inventory. For that reason,  Air Force officials noted that they cannot modify an existing contract to  add additional items. Army officials said that pseudo-FMS cases require  more work because of the nature of expiring funds. This requires an  acceleration of almost all their processes.
Figure 3 shows the average number of days it took to complete the case  development phase, which is measured by the processing time from  “Letter of Request Receipt” to “Document sent to purchaser.”
section_title: Appendix III: Fiscal Years 2009-2016 Army, Air Force, and Navy Foreign Military Sales (FMS) and Pseudo-FMS Workload
paragraphs: Tables 9, 10, and 11 present Army, Air Force, and Navy workload data  using six of the seven measures. It shows that the FMS and pseudo-FMS  workload of each of the services generally increased from fiscal years  2009 through 2016.
The Defense Security Cooperation Agency (DSCA) did not provide a  breakout of official sales data by military department but did provide these  data in the aggregate. These data are seen in Table 12.
section_title: Appendix IV: Comments from the Department of Defense
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Hynek Kalkus (Assistant  Director), Jeff Phillips (Assistant Director), Claude Adrien (Analyst-in- Charge), Wesley Collins, Lynn Cothern, Jessica Mausner, and Jose M.  Pena III made significant contributions to this report. Ashley Alley, Martin  de Alteriis, and Mark Dowling provided technical assistance.