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DoD Oversight of Bilateral Agreements With the Republic of the Philippines DODIG-2019-004

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Objective:

We determined whether the DoD has proper oversight of logistical support provided through a bilateral agreement with the Republic of the Philippines. We focused on whether the Joint Staff Directorate for Logistics (the Directorate for Logistics) had visibility of logistical support, such as military equipment, weapons, and ammunition, sold through a bilateral agreement to the Republic of the Philippines from October 1, 2016, through May 31, 2018.

Background:

An Acquisition and Cross Servicing Agreement (ACSA), also referred to as a Mutual Logistic Support Agreement, is a bilateral agreement between the United States and authorized foreign countries to acquire or provide expedited or real-time logistic support, supplies, and services in exchange for reimbursement. Reimbursement may take the form of cash payments, the exchange of supplies or services of equal value, or an in-kind replacement. ACSAs are used primarily to benefit forward-deployed commands and forces and are not a routine source of supply for a foreign country.

On November 21, 2007, the U.S. Government initiated a bilateral agreement with the Republic of the Philippines that established the basic terms, conditions, and procedures to facilitate the mutual exchange of logistic support, supplies, and services. On October 23, 2017, the latest agreement was extended for an additional 5 years.

DoD Directive 2010.9 requires designated ACSA officials to have the knowledge and experience to execute authorized transactions. The Directive states that the combatant commands should provide the Chairman of the Joint Chiefs of Staff a quarterly summary report of ACSA transactions and relevant program information, if requested by the Chairman of the Joint Chiefs of Staff.

The Chairman of the Joint Chiefs of Staff Instruction 2120.01D states that the Directorate for Logistics serves as the Joint Staff advocate for ACSA Global Automated Tracking Reporting System (AGATRS) functionality and improvements. AGATRS is an unclassified, web-based system that provides a worldwide cradle‑to‑grave automated means of building, tracking, and managing ACSA transactions throughout their life cycle. AGATRS provides the service component commands, combatant commands, and the Joint Staff, among others, visibility of existing ACSAs that can be leveraged to obtain critical logistic support, supplies, and services to effectively and efficiently sustain U.S. and Coalition forces during contingencies and operations.

Finding:

The Directorate for Logistics did not have visibility of the logistical support sold to the Republic of the Philippines through the use of the bilateral agreement. Specifically, the Directorate for Logistics was unaware of 76 of the 77 ACSA line items executed with the Republic of the Philippines from October 1, 2016, through May 31, 2018.

This occurred because ACSA officials for the U.S. Pacific Air Force, U.S. Pacific Fleet, and U.S. Marine Corps Forces, Pacific did not understand how to build, track, and manage transactions in AGATRS and did not designate a primary ACSA Finance Program Manager to assist in processing transactions in AGATRS.

Furthermore, the Directorate for Logistics did not request that U.S. Indo-Pacific Command (USINDOPACOM) provide quarterly summary reports of all ACSA transactions within its area of responsibility because Directorate for Logistics officials believed the information should have been readily available to them in AGATRS.

As a result, the Directorate for Logistics did not have assurance that ACSA transactions, valued at $13 million, for logistic support, supplies, and services executed in the USINDOPACOM area of responsibility with the Republic of the Philippines were accurate and were reimbursed. Specifically, as of June 5, 2018, only $882,880 was reported as reimbursed by U.S. Army Pacific. In addition, the Directorate for Logistics may be unaware of additional transactions that may exist in the USINDOPACOM area of responsibility, such as transactions executed directly by the service component commands, because the service component commands did not use AGATRS as intended. Without awareness of all transactions, the DoD lacks assurance that only approved logistic support, supplies, and services are provided to authorized foreign countries in accordance with the negotiated bilateral agreements.

Recommendations:

We recommend that the Director for Logistics, Joint Staff, update Joint Knowledge OnlineTraining to reflect the most recent updates to AGATRS. We also request that USINDOPACOM report to the Directorate for Logistics all of the Mutual Logistics Servicing Agreements/ACSA transactions with the Republic of the Philippines for the period from October 1, 2016, through July 31, 2018, including the dollar value, current reimbursement status (opened or closed), and amount reimbursed.

We recommend that the U.S. Pacific Air Force; U.S. Marine Corps Forces, Pacific; and U.S. Pacific Fleet Commanders designate an ACSA Finance Program Manager and ensure that the individual completes the Joint Knowledge OnlineTraining that will provide access and the basic instruction for the ACSA Finance Program Manager to build, track, and manage transactions in AGATRS.

We also recommend that the U.S. Pacific Air Force; U.S. Marine Corps Forces, Pacific; and U.S. Pacific Fleet Commanders input and track all ACSA transactions from October 1, 2016, to present and all future transactions, in AGATRS.

We recommend that the U.S. Pacific Air Force and U.S. Pacific Fleet Commanders develop service componentspecific training programs for all ACSA command officials.

We recommend that the U.S. Pacific Air Force Commander also designate an ACSA Program Manager and ensure that the individual completes the Joint Knowledge OnlineTraining that will provide access and the basic instruction for the ACSA Program Manager to build, track, and manage transactions in AGATRS.

Management Actions Taken:

During the audit, we advised the Directorate for Logistics and the officials from the service component commands of the deficiencies in the ACSA program and our recommended improvements. The Directorate for Logistics and the Commanders for U.S. Marine Corps Forces, Pacific; U.S. Pacific Air Force; and U.S. Pacific Fleet agreed with our findings and immediately initiated corrective actions to address all recommendations.

The Directorate for Logistics has received funding and identified content updates needed for the Joint Knowledge OnlineTraining Course. The Joint Staff Directorate for Joint Force Development has begun the updates and anticipate completion in January 2019. The actions taken to update the Joint Knowledge OnlineTraining to reflect the updates to AGATRS address all specifics of the recommendation. We will close the recommendation when we verify that the content updates have been made.

The Directorate for Logistics requested that USINDOPACOM officials coordinate with the service component commands to provide a list of transactions reflecting items that were sold to the Republic of the Philippines since October 1, 2016. As a result, USINDOPACOM requested that the service component commands update AGATRS with each commands’ respective ACSA transactions. On September 5, 2018, USINDOPACOM provided an AGATRS-generated summary report to the Directorate for Logistics of the service component commands’ ACSA transactions. The actions taken addressed the specifics of the recommendation; therefore, the recommendation is closed.

U.S. Marine Corps Forces, Pacific; U.S. Pacific Air Force; and U.S. Pacific Fleet commanders designated ACSA Finance Program Managers. A U.S. Pacific Fleet official completed the necessary Joint Knowledge OnlineTraining to be designated as the ACSA Finance Program Manager and provided us the training completion certificate as verification. Therefore, the actions taken by U.S. Pacific Fleet officials were sufficient to close the recommendation. The actions taken by U.S. Marine Corps Forces, Pacific, and U.S. Pacific Air Force officials were sufficient to resolve the recommendation; officials for the U.S. Marine Corps Forces, Pacific, and U.S. Pacific Air Force should provide training certificates as proof of training completion to close the recommendation.

The U.S. Pacific Fleet Commander developed a service component-specific training program for all ACSA command officials. The action taken is sufficient to resolve the recommendation. We will close the recommendation when we verify the requirements for U.S. Pacific Fleet officials to administer the ACSA training. U.S. Pacific Air Force officials agreed to develop a component-specific training program.

USPACAF officials will begin development and implementation of the component-specific training program in the second quarter of FY 2019. The action taken is sufficient to resolve the recommendation. We will close the recommendation when we verify that U.S. Pacific Air Force officials developed the ACSA training program and requirements.

The U.S. Pacific Air Force designated an ACSA Program Manager. The actions taken by U.S. Pacific Air Force resolved the recommendation; officials for the U.S. Pacific Air Force should provide the necessary Joint Knowledge OnlineTraining certificate as proof of training completion to close the recommendation.

Lastly, U.S. Marine Corps Forces, Pacific; U.S. Pacific Air Force; and U.S. Pacific Fleet commanders input and tracked ACSA transactions from October 1, 2016, to present in AGATRS. U.S. Marine Corps Forces, Pacific, ACSA officials initiated 12 ACSA orders in AGATRS that included a total of 19 ACSA line items. U.S. Pacific Air Force ACSA officials initiated 4 ACSA orders in AGATRS that included a total of 57 ACSA line items. The actions taken by U.S. Marine Corps Forces, Pacific, and U.S. Pacific Air Force provides Joint Staff visibility of the service component commands’ ACSA transactions and are sufficient to resolve the recommendation. The recommendation will be closed once we verify that U.S. Marine Corps Forces, Pacific, and U.S. Pacific Air Force officials complete their ACSA orders in AGATRS. U.S. Pacific Fleet ACSA officials completed its one ACSA order in AGATRS that included a total of one ACSA line item; therefore, the actions taken were sufficient to close the recommendation.

This report is a result of Project No. D2018-D000RJ-0155.000.