U.S.-Korea M-16 Rifle Coproduction Program

GAO discussed South Korea's compliance with and U.S. monitoring of the memorandum of understanding regarding coproduction of U.S. M-16 rifles. GAO noted that Korea violated the understanding by: (1) exceeding authorized production quantities; and (2) entering into third-party sales agreements without U.S. permission. GAO also noted that: (1) the Department of Defense (DOD) assigned Army liaison officers for program monitoring and coordination; (2) the liaison officers focused on ensuring Korea's successful rifle production and relied on unverified production data the Korean government supplied; (3) the liaison officers did not forward activity reports to DOD, the Department of State, or the Army; and (4) DOD limited its involvement to responding to Korea's amendment requests and maintaining required coproduction status reports. In addition, GAO found that: (1) Korea and the U.S. M-16 manufacturer developed problems over royalty payments and mutually terminated their commercial agreement in 1983, although the understanding stayed in effect; and (2) neither State nor DOD acted on the issue of Korea's possible noncompliance with the understanding. GAO believes that DOD needs to improve its oversight of and establish procedures for ensuring and enforcing the protection of U.S. interests in this and other coproduction agreements.