U.S.-Israel Arrow/Aces Program

Cost, Technical, Proliferation, and Management Concerns Gao ID: NSIAD-93-254 August 23, 1993

The Pentagon lacks valid baseline information needed to assess the Arrow missile defense system's cost, schedule, and technical performance. Even though the Defense Department has no plans to buy the Arrow, such an analysis is needed to determine whether the Arrow is the most cost-effective U.S. alternative and the best choice for meeting Israel's needs. In addition, the United States could be drawn into funding most of the costs of the complete Israeli Arrow missile defense system in response to incremental Israeli government requests. The U.S. government has exercised inadequate control of the technology and funds it has supplied to the Arrow missile program. No U.S. agency has monitored or verified Israel's compliance with provisions of the Arrow licensing agreements. Moreover, no U.S. agency has comprehensive information on U.S. items and technology exported to the program to allow adequate U.S. oversight and help deter and detect unauthorized uses and transfers.

GAO found that: (1) Israel's estimate for additional funds needed to develop, produce, deploy, and support a completed Arrow missile defense system could be understated due to schedule and technical risks; (2) the United States could not determine whether the ACES program would be the most effective method to meet Israel's missile defense needs because the Department of Defense (DOD) has not applied acquisition policies and procedures, independently assessed ACES program baseline data, or analyzed cost-effective alternatives that could meet missile defense needs; (3) the United States could be responsible for providing the majority of the funds needed to complete the development and implementation of the Arrow program due to increasing demands from the Israeli government; (4) DOD and Department of State classified information regarding Israel's unauthorized sales of U.S. defense articles and technologies and missile proliferation activities affected the ACES decision; (5) U.S. agencies have not verified Israel's compliance with Arrow licensing agreements; and (6) the United States does not have adequate controls to effectively monitor potential technology transfer or funds mismanagement.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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