Summary: In response to a congressional request, GAO reviewed U.S. military coproduction agreements and programs worldwide, focusing on: (1) how the Departments of Defense (DOD) and State manage the programs to ensure compliance with agreement restrictions on production quantities and third-country sales; (2) how DOD and State review and approve the programs; and (3) the remedies available if a foreign country fails to comply with quantity and sales restrictions.
GAO found that: (1) although DOD coproduction and international agreement directives did not clearly specify the procedures and criteria to use in the memorandum-of-understanding (MOU) review and approval process, DOD and State reasonably coordinated and reviewed the cases GAO reviewed; (2) DOD guidance did not require the military services or overseas security assistance organizations to monitor or ensure compliance with MOU restrictions on quantities and third-country sales; (3) DOD lacked established criteria for closing out or terminating oversight of coproduction programs when the programs were no longer active; (4) although DOD withheld certain critical components from foreign production and monitored the quantities that the United States purchased, it only controlled the end items produced, not unauthorized sales; (5) DOD revised its coproduction management guidance to provide more specific guidance on MOU provisions, including production validation clauses, management responsibilities, and compliance-related activities; (6) State usually issued a diplomatic protest against violations of sales agreements, since State and DOD considered suspension of foreign military sales (FMS) credits too severe; and (7) existing reporting requirements applied mostly to sales, rather than to coproduction MOU.
