Defense Trade

The defense industry and foreign governments have expressed a high level of concern over the restrictions on cross-border defense trade. The Department of Defense (DOD) developed many initiatives to increase cooperation in the defense trade and improve relations with foreign countries. DOD, in developing its initiatives, relied on incomplete data and did not do the necessary analysis to determine the causes of the underlying problems that the new initiatives were supposed to resolve. It is unclear whether DOD's initiatives will: (1) improve the ability of U.S. and foreign forces to work together during wartime, and (2) reduce the gap in military capabilities between the United States and its allies.

GAO noted that: (1) to develop its defense cooperation initiatives, DOD largely relied on incomplete data and did not perform the analysis necessary to determine the underlying causes for problems it identified; (2) some of the initiatives addressed known problems, such as those that had been identified through efforts to modernize DOD's existing computer systems; (3) however, for others DOD had very little data or analysis demonstrating the underlying problems and how best to resolve them; (4) to streamline the process, DOD largely relied on data collected on the average processing time to develop timesaving initiatives, but it did not examine the reasons for lengthy processing time on particular cases; (5) as a result, the initiatives to shorten the processing time may not address any underlying problems in the decision-making process; (6) in addition, DOD justified its initiatives using examples of situations depicting problems with the export control system, but many of the examples were either not accurate or did not include information needed to understand the reasons the situation arose; (7) it is unclear whether DOD's initiatives will achieve the desired outcomes improving U.S. and foreign forces ability to operate together in coalition warfare scenarios, reducing a gap in military capabilities between the United States and its allies, and ensuring that U.S. companies successfully compete in overseas markets; (8) while the DOD's initiatives may help some companies share technology or successfully compete in overseas markets, they do not address many relevant factors that fall outside of the Department's sphere of influence and control; (9) a preference for domestic production appeared to influence a recent competition involving a European and a U.S. product; (10) the European government selected the European product even though the U.S. government provided assurances that access to U.S. technology would not be inhibited; (11) the effects on desired outcomes of the administration's Defense Trade Security Initiative proposals remain uncertain; (12) the Departments of State and Defense have not agreed on how to implement some proposals such as exempting exports to certain allies from licensing requirements; and (13) in addition, the Departments of State and Defense have agreed in principle on the need to enhance computer interconnectivity between the departments but have not agreed on how best to accomplish this objective.