For blanket order cases, the system uses  criteria such as an item’s national item identification number, a federal  supply class, or a federal supply group to restrict the parts available to  foreign military sales customers. We found that (1) controls based on supply class restrictions were  ineffective and resulted in erroneously approved requisitions for shipment,  and that written policies for recovering the erroneously shipped items did  not exist; (2) the Air Force did not validate modifications to its Security  Assistance Management Information System related to blanket orders or  test the system’s logic for restricting requisitions, and (3) command  country managers did not always document reasons for overriding either  the Security Assistance Management Information System or foreign  military sales case manager recommendations not to ship classified spare  parts. As a result of these inadequate internal controls, classified and  controlled spare parts were shipped to countries not authorized to receive  them. We found that because the Security Assistance Management Information  System was not properly programmed, it erroneously validated 35 blanket  order requisitions (of the 123 in our review), even though an incorrect  supply class number was used, because the countries used supply classes  that were not restricted. The restriction included an outline sequencer (national  stock number –1377010539320) used on ejection seats for various aircraft. Because supply class 1680 (miscellaneous aircraft  accessories and components) was not restricted and the Security  Assistance Management Information System did not verify that 1680 was  the correct supply class for national item identification number 010539320,  the system approved the requisition. Had the system validated the entire  13-digit national stock number, it would have found that the number was  incorrect and would not have approved the requisition. Failure to Validate the System Could Allow Unauthorized Shipments of Classified Spare Parts

The Air Force has not validated modifications to the Security Assistance  Management Information System that restrict parts that countries can  requisition, and has not tested the system’s logic for restricting  requisitions since 1998 to ensure that it is working properly. As a result,  modifications that were not properly made went undetected, and foreign  countries were able to requisition and obtain controlled spare parts that  the Air Force was trying to restrict. Although the Air Force later determined that the bushings  should not have been restricted, this example nevertheless demonstrates  the need to validate system changes. For 19 of the requisitions, command country managers  overrode the system recommendations and shipped classified and  controlled spare parts without documenting the reasons for overriding the  system. For example, the command country manager overrode the system  and shipped four classified target-detecting devices, but the case file did  not contain any documentation explaining why the command country  manager did so, and managers we queried could not provide an  explanation for the override. Recommendations for Executive Action

To improve internal controls over the Air Force’s foreign military sales  program and to minimize countries’ abilities to obtain classified or  controlled spare parts under blanket orders for which they are not eligible,   we are recommending that the Secretary of Defense instruct the Secretary  of the Air Force to require the appropriate officials to take the following  steps:    Modify the Security Assistance Management Information System so  that it validates country requisitions based on the requisitioned item’s  complete national stock number. Scope and Methodology

To determine the adequacy of the Department of the Air Force’s key  internal control activities aimed at preventing countries from  requisitioning and receiving classified and controlled spare parts that they  are ineligible to receive, we held discussions with officials from the Under  Secretary of Defense (Policy Support) International Security Program  Directorate; Deputy Under Secretary of the Air Force (International  Affairs); and the Air Force Materiel Command’s Security Assistance  Center, Dayton, Ohio.
Why GAO Did This Study

From 1990 through 2001, the Department of Defense delivered over $138 billion in services and defense articles--including classified and controlled parts--to foreign governments through its foreign military sales programs. Classified spare parts are restricted for national security reasons, while controlled parts contain technology that the military does not want to release. GAO was asked to review the Air Force's internal controls aimed at preventing countries from requisitioning and receiving classified or controlled spare parts that they are ineligible to receive.

What GAO Found

The Air Force's internal controls for its foreign military sales program using blanket orders are not adequate, placing classified and controlled spare parts at risk of being shipped to countries not authorized to receive them. The Air Force's system has erroneously approved foreign country requisitions for classified and controlled spare parts based on incorrect federal supply classes. The system approves items for shipment based in part on an item's federal supply class--not the item's entire national stock number, which is a combination of the supply class number and a part number unique to the item. GAO found that because the system was not properly programmed and countries used unrestricted supply class numbers, the system erroneously approved 35 of 123 selected requisitions reviewed. For example, one country ordered a controlled outline sequencer used on various aircraft by using a supply class that was unrestricted, but incorrect for the part it requisitioned. Because supply class 1680 was not restricted and the system did not verify that 1680 was the correct supply class for national item identification number 010539320, the system approved the requisition. Had the system validated the entire 13-digit national stock number, it would have found that the number was incorrect and would not have approved the requisition. In addition, the Air Force has no written policies or procedures in place for recovering items that have been shipped in error. The Air Force has not validated modifications to the Security Assistance Management Information System that restrict parts available to foreign countries and has not tested the system since 1998 to ensure that it is working properly. Because modifications were not validated, the Air Force did not detect improperly made modifications to the system, and foreign countries were able to requisition and obtain controlled spare parts that, at the time, the Air Force was trying to restrict. GAO identified 18 instances in which countries requisitioned and received a controlled part for which they were not eligible because programmers had entered the restrictions in the wrong area of the system. Although Air Force officials subsequently told us that the part was improperly restricted, this example nevertheless demonstrates the need to validate system changes. Air Force command country managers did not always document reasons for overriding the recommendations of the system or the foreign military sales case manager. For 19 of the 123 requisitions GAO reviewed, command country managers overrode the system recommendations and shipped classified and controlled spare parts without documenting the reasons for overriding the system. For example, a command country manager overrode the system and shipped four classified target-detecting devices without documenting the reasons for overriding the system.