Report | Jan. 12, 2022

Audit of the Department of Defense Foreign Military Sales Acquisition Process (DODIG-2022-053)

Audit

Publicly Released: January 14, 2022

Objective

The objective of this audit was to determine whether the DoD managed the acquisition of defense articles and services to meet partner country foreign military sales (FMS) requirements, and whether the metrics used by DoD components maximize the results of the FMS acquisition process. This audit focused on the timeliness of the DoD FMS acquisition process and the accuracy of FMS acquisition data that the DoD reported to Congress.

We conducted this audit in response to a reporting requirement contained in House Report 115‑676, to accompany the National Defense Authorization Act for FY 2019. This is the second audit report the DoD Office of Inspector General issued in response to the reporting requirement. The first audit report addressed the DoD FMS agreement development process.

 

Background

The U.S. Government procures defense equipment and services for foreign partners through various security cooperation and assistance programs, such as the FMS program. The Department of State has overall responsibility for the FMS program, while the DoD administers the program through the Defense Security Cooperation Agency (DSCA) and the Military Department Implementing Agencies (IAs).

According to DSCA officials, at the end of FY 2020, the DoD FMS program included 15,365 open cases, valued at $620 billion, and involved 163 countries and international organizations. The DoD FMS program requires foreign partners to submit a Letter of Request, which details the requested defense articles and services. IAs are organizations that the DSCA authorized to receive foreign partner requests for defense articles and services and are responsible for developing and processing sales agreements in accordance with DSCA policy. The IAs carry out the procurements to fulfill FMS agreements.

Section 887 of the National Defense Authorization Act for FY 2018 (Public Law 115‑91) established quarterly and annual congressional reporting requirements for the DoD to report on the status of its open FMS cases to include the status of the associated procurements.

 

Findings

The Military Department IAs managed the acquisition of defense articles and services to meet foreign partner FMS requirements. Of the 18 FMS cases reviewed, none had acquisition‑related delays that negatively affected the agreed‑upon period of performance for the delivery of defense articles and services. Instead, there were either no delays with the agreed‑upon period of performance or the delays resulted from circumstances outside the control of the Military Department IAs. Specifically,

  • no delays occurred for eight FMS cases as a result of the DoD FMS acquisition process,
     
  • delays occurred for seven FMS cases because foreign partners changed requirements, and
     
  • delays occurred for three FMS cases because of contractor‑related issues.

The delays that negatively affected the agreed‑upon period of performance for the delivery of defense articles and services were outside of the Military Department IAs control. Therefore, we are not making any recommendations related to the DoD’s management of its FMS acquisitions.

The DoD’s reporting on the status of its FMS acquisitions did not fully comply with the congressional reporting requirements. Specifically, the Military Department IAs used inconsistent processes to track and report FMS acquisitions, and we identified problems with Section 887 reporting for all 18 FMS cases reviewed. The Section 887 reporting problems included inaccurate, incomplete, and unsupported data. In addition, the Office of the Under Secretary of Defense for Acquisition and Sustainment did not obtain Section 887 reporting input from the Military Department IAs in a timely manner.

As a result, the DoD Section 887 reporting inaccurately reflected the status of the DoD FMS acquisition process and was not submitted to Congress in a timely manner. The inaccurate and untimely reporting negatively affects the usefulness of the information provided to Congress. In addition, there are ongoing DoD initiatives directed by the Deputy Secretary of Defense to automate the tracking and reporting on the status DoD FMS acquisitions. The incomplete, inaccurate, and unsupported data this audit identified negatively affects the quality of the information used to support those initiatives.

 

Recommendations

We recommend that the Assistant Secretary of the Army for Acquisition, Logistics, and Technology:

  • provide the results of all corrective actions initiated during the audit to improve the accuracy of Army FMS acquisition milestone system data; and
     
  • establish guidance, controls, and oversight to improve the accuracy of the FMS acquisition milestone data in Army automated information systems.

We recommend that the Under Secretary of Defense for Acquisition and Sustainment coordinate with the Military Department IAs and issue guidance to require that the milestones established for the FMS acquisition process are clearly defined and consistently applied to meet the reporting requirements of Section 887 of the National Defense Authorization Act for FY 2018.

 

Management Comments and Our Response

The Senior Audit Advisor for the Deputy Assistant Secretary of the Army for Defense Exports and Cooperation, responding for the Assistant Secretary of the Army for Acquisition, Logistics, and Technology, agreed with the recommendations. Specifically, the Senior Audit Advisor agreed that the Deputy Assistant Secretary of the Army for Defense Exports and Cooperation would provide the results of all corrective actions initiated during the audit to improve the accuracy of Army FMS acquisition milestone system data. In addition, the Senior Audit Advisor stated that the Deputy Assistant Secretary of the Army would develop a corrective action plan with milestones and coordinate with Army organizations to implement the established guidance and controls. The Senior Audit Advisor also stated that the Deputy Assistant Secretary of the Army would establish business rules to feed FMS data into the Army Common Operating Picture, the automated tool the Army uses to monitor its FMS acquisition process, and define roles and responsibilities.

The Acting Deputy Assistant Secretary of Defense for Platform and Weapon Portfolio Management, responding for the Under Secretary of Defense for Acquisition and Sustainment, agreed with the recommendations, stating that the Under Secretary will work with the Military Department IAs and issue guidance to resolve and codify the definitions and process improvements captured in the recommendation.

The comments addressed our recommendations; therefore, the recommendations are resolved and will remain open. We will close the recommendations once we verify that the information provided and actions taken by management fully address the recommendations. Please see the Recommendations Table on the next page for the status of recommendations.

This report is a result of Project No. D2020‑D000AX‑0174.000.