U.S. Management of Military Coproduction Programs Worldwide

GAO discussed U.S. government management of military coproduction programs, focusing on the controls used to ensure compliance with agreement restrictions on production quantities and third-party sales. GAO found that: (1) the Department of Defense (DOD) negotiated the agreements and managed the programs, while the Department of State managed third-party sales of U.S.-origin defense equipment; (2) DOD and State did not directly manage or monitor coproduction programs to ensure compliance with agreement restrictions, since they had only indirect controls, such as withholding critical components and commercial agreements and licensing channels; (3) a DOD directive did not contain specific requirements for military services or overseas security assistance organizations to ensure compliance with the agreements; (4) unauthorized third-party sales of coproduced items occurred in 5 of the 18 programs GAO reviewed; (5) although State took some actions to deal with noncompliance, it usually issued a diplomatic protest, rather than terminating foreign military sales credits; (6) DOD had no established procedures to close out programs that were no longer active; and (7) DOD revised its management manual to incorporate guidance on coproduction agreement provisions, DOD management responsibilities, and oversight functions related to ensuring compliance with agreement provisions. GAO believes that DOD and State should report all government-to-government agreements, regardless of the dollar value of the related sales, since they establish or enhance a foreign production capability for U.S.-origin weapons and systems.