Summary: Pursuant to a congressional request, GAO reviewed Israel's expenditures for U.S. military aid offshore procurements to determine: (1) whether the Defense Security Assistance Agency (DSAA) observed the legislative requirements governing those procurements; and (2) the effects of those procurements on Israel's military budget and domestic economy.
GAO found that: (1) Israel paid its contractors in local currency, and DSAA reimbursed it for eligible costs in hard currency; (2) DSAA did not observe the legislative requirement that Israel use offshore procurement funds only for the development and production of advanced weapon systems, since it reimbursed Israel for fuel, maintenance, and ammunition costs; (3) DSAA did not require Israel to account for the hard currency provided for offshore procurements; (4) Israel was spending an increasing amount of U.S. military aid outside the United States on offshore procurements; (5) legislation did not define advanced weapon systems and DSAA permitted Israel to determine what procurements were covered; and (6) DSAA lack of oversight on Israel's use of hard currency provided from offshore procurements appeared inconsistent with other administration oversight efforts.
