As  part of its responsibilities, the State Department regulates direct  commercial arms sales through export licenses and reviews and approves  arms sales under the FMS program. The National Disclosure Policy was established to provide a framework for  the approval or denial of the transfer of classified military information to  foreign governments and international organizations. FMS Program Relies on the Disclosure Process to Determine What Technology May Be Transferred

The U.S. government has a complex process with many participants to  determine what technology may be transferred as part of a proposed sale. An interagency committee oversees the National Disclosure Policy and  considers exceptions to the policy when classified military information is  involved in the proposed transfer. The committee does not approve actual  foreign military sales but provides authority to transmit the classified  information associated with sales. The committee has a process for reviewing exceptions to the National  Disclosure Policy. Certain Controlled Technology Is Not Properly Identified and Reviewed Under the FMS Program

The U.S. government has not established a process for ensuring that certain  controlled items are fully and systematically identified when reviewing  country requests for information or approving agreements to purchase  items through the FMS program. These initiatives contain proposals focused on shortening the  technology transfer review time, for example, by more rigorously  implementing DOD requirements for program documentation that assesses  what technology may be transferred. Some of the initiatives address the need to improve information to support  technology transfer decisions. For example, the DOD and industry working  group is proposing more rigorous implementation of current requirements  to prepare weapon systems program documents that include technology  transfer assessments. Conclusions

The Foreign Military Sales program does not have a systematic process to  identify and review certain controlled technologies. As a result, items  controlled by an international missile nonproliferation agreement were  sold through the Foreign Military Sales program without proper review and  approval. Recommendations

To provide for proper review and approval of proposed exports of  controlled technologies through the Foreign Military Sales program, we  recommend that the Secretaries of State and Defense establish a process to identify all items on a proposed Foreign Military Sales agreement that  are controlled under the Missile Technology Control Regime or other  nonproliferation agreements by taking full advantage of the expertise  that resides in the Defense Threat Reduction Agency, the military  services, or elsewhere; refer the information to the State Department; direct the Missile Technology Export Control group or other  nonproliferation groups to review missile technology-related items or  other controlled items to ensure compliance with the nonproliferation  agreements; and reflect this process in ongoing reinvention efforts.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed how the Foreign Military Sales program safeguards technology and arms transfers, focusing on the: (1) process for deciding what technology may be transferred as part of a sale through the program; (2) controls for ensuring that technology transfer considerations have been weighed when reviewing requests and agreements; and (3) Department of Defense's (DOD) proposals to improve technology transfer procedures.

What GAO Found

GAO noted that: (1) the U.S. government relies on a complex process with many participants to determine what technology may be transferred as part of a sale through the Foreign Military Sales program; (2) technology transfer decisions begin with an interagency National Disclosure Policy Committee process; (3) when making overall policy decisions, the committee provides authority for the government to transmit classified information associated with military items but does not approve the actual transfer of those items; (4) it does not typically address whether systems must be sold through the Foreign Military Sales program or a direct commercial sale; (5) the committee has a process for reviewing exceptions to the National Disclosure Policy; (6) within the National Disclosure Policy framework, separate organizations within the military departments recommend whether the requested items under their jurisdiction may be sold and manage the sales; (7) the U.S. government has not established a process for ensuring that certain controlled items are fully and systematically identified when reviewing requests or approving agreements under the Foreign Military Sales program; (8) as a result of weaknesses in the review process, items controlled by an international missile nonproliferation agreement have been transferred under the program without proper review and approval; (9) as structured, DOD's proposals to reform the Foreign Military Sales program are primarily focused on reducing time for making technology transfer decisions; (10) in considering DOD's efforts to shorten the processing time, officials acknowledge the need to properly assess the national security risks and benefits of proposed transfers; (11) a DOD and industry working group proposes more rigorously implementing requirements to make technology transfer assessments early in the planning of a weapon program; and (12) such assessments are a means of expediting technology transfer decisions when responding to foreign customers' requests.