Military Readiness: Actions Are Needed to Enhance Readiness of Global Response Force to Support Contingency Operations

DOD must be able to rapidly deploy forces to respond to a range of worldwide contingencies, and in 2007 it established the GRF to enhance that capability. The GRF is a set, or “menu,” of forces from the military services, each of which possesses unique capabilities, and which the Secretary of Defense can deploy rapidly anywhere in the world.

House Report 114-537, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2017, included a provision for GAO to evaluate challenges DOD may be facing regarding the GRF. GAO reviewed the extent to which (1) DOD has used the GRF, and assessed any risks associated with its use of the GRF; and (2) GRF-assigned units are trained to meet GRF missions individually and as a joint force. GAO reviewed GRF deployment information from 2010 to 2017 and the GRF Execute Order, observed a training exercise, and interviewed knowledgeable officials.

The Department of Defense's (DOD) Global Response Force (GRF) has two distinct uses: one is to enhance DOD's ability to rapidly deploy forces in response to a range of worldwide contingencies with a tailorable joint force; and the other is to provide a set, or “menu,” of units that combatant commands can request to augment their capabilities in light of unexpected challenges when requirements exceed their capabilities. Since 2010, according to officials, DOD has used the GRF 35 times in support of worldwide contingencies, with 32 of those times involving deployment of individual GRF units to augment combatant commander needs, and 3 times involving their use as part of a joint task force. This predominant use of individual GRF units to augment combatant commanders' needs has diminished the set of units available for mission scenarios related to the GRF's use as a tailorable joint force. For example, when DOD deployed a ballistic missile defense unit as a part of the GRF to augment a combatant command's missile defense capabilities, the particular capability it supplied to the GRF was not available for participation in a tailorable joint force to respond quickly to a potential worldwide contingency, if such an event occurred. DOD does not know what risks it assumes to readiness for GRF mission scenarios due to its general reliance upon the GRF as an augmentation capability available to individual geographic combatant commands, because DOD has not assessed those risks. Without conducting a risk assessment and taking steps to address any identified risk to accomplishing the GRF's intended uses, DOD's attempt to satisfy one of the uses (that is, individual GRF-assigned units assisting combatant commands) may hamper the other use (that is, deployment of a joint task force for a contingency).

GRF units train individually to meet GRF missions, but DOD does not conduct any GRF-specific joint training exercises, and the individual GRF units have limited opportunities to train as part of an integrated joint force, according to DOD officials. While the GRF Execute Order calls for integrating elements of the GRF into existing joint training, the military services lack the authority to direct other services to supply forces for joint training exercises, even when those forces are currently on a GRF rotation. Moreover, since the disestablishment in 2011 of U.S. Joint Forces Command—which, among other things, was the lead agent for joint force training—and because units designated for the GRF mission may be assigned to different combatant commands or may be service-retained, no single commander has the authority to require joint force training of GRF units. As a result, no joint training exercises are specifically designed to exercise GRF units as a joint task force. Army officials told GAO that joint exercises are important because they give individual units from different services the opportunity to identify challenges and develop solutions, thereby enhancing the GRF's joint task force capability. Without an entity having the responsibility and authority to plan, direct, and conduct joint training exercises focused on GRF-assigned units deploying as a joint task force as appropriate, DOD risks undermining the effectiveness of the rapid deployment of a GRF joint task force in response to unforeseen worldwide contingencies.

GAO recommends that DOD (1) assess the risks assumed in its reliance upon the GRF as both an augmentation capability and a tailorable joint force; (2) design appropriate responses following the risk assessment; and (3) designate an authority to establish and enforce integrated joint training as appropriate for GRF-assigned units. DOD concurred with GAO's three recommendations.

According to the 2012 Capstone Concept for Joint Operations: Joint  Force 2020, after more than a decade of war, our nation and armed  forces are transitioning to a future in which the world is trending toward  greater stability overall, but is also potentially more dangerous than ever  before due to destructive technologies available to a disparate range of  adversaries. Consequently, the Department of Defense (DOD) needs the  ability to rapidly deploy forces to respond to a range of worldwide  contingencies. In 2007, DOD established the Global Response Force  (GRF) with the objective of providing the Secretary of Defense with an  array, or “menu,” of rapidly deployable forces, and thereby enhancing  DOD’s ability to respond quickly to worldwide contingencies or augment  the geographic combatant commands’ capability to respond to  unforeseen challenges.

House Report 114-537, accompanying a bill for the National Defense  Authorization Act for Fiscal Year 2017, included a provision for us to  evaluate challenges that DOD may be facing regarding the GRF. This  report reviewed the extent to which (1) DOD has used the GRF and  assessed any risks associated with its use, and (2) GRF-assigned units  are trained to meet GRF missions, both individually and as a joint force.

For objective one, we reviewed the Chairman of the Joint Chiefs of Staff  GRF Execute Order (EXORD) to identify the GRF’s documented global  missions, forces, and timelines. We reviewed the Joint Staff’s GRF  deployment information from 2010 to 2017 to understand the frequency of  GRF deployments and identify specific instances in which the GRF’s  ability to accomplish its missions was affected. To identify the extent to  which DOD has assessed any risks to mission readiness based on its  reliance on the GRF to serve its two identified uses, we also interviewed  senior officials from the Office of the Under Secretary of Defense for  Personnel and Readiness; Joint Staff; and Army, Marine Corps, Navy,  and Air Force headquarters; as well as conducted site visits to force  providers at Army Forces Command, Marine Forces Command, Navy  Fleet Forces Command, Air Force Air Combat Command, and U.S.  Transportation Command. We also interviewed U.S. Africa Command,  U.S. European Command, and U.S. Pacific Command officials, as well as  visited U.S. Central Command and U.S. Southern Command. We  compared DOD’s effort to assess risks against criteria in the Standards  for Internal Control in the Federal Government, which states that entities  should identify and analyze risk and define objectives.

For objective two, we reviewed the Chairman of the Joint Chiefs of Staff  GRF EXORD and DOD’s Guidance for the Defense Readiness Reporting  System to understand how GRF readiness is developed, reported, and  evaluated. We reviewed Standards for Internal Control in the Federal  Government to identify criteria for how agencies should develop an  organizational structure and assign responsibilities. We observed a  Deployment Readiness Exercise at Fort Bragg, North Carolina, that  demonstrated some potential benefits of training exercises for GRF units.  We also interviewed senior officials from the Joint Staff, military service  force providers, and geographic combatant commands to better  understand training practices for the GRF and its assigned units. See  appendix I for more details on our objectives, scope, and methodology.

We conducted this performance audit from May 2016 to October 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The GRF EXORD generally establishes the GRF as a set, or “menu,” of  forces from the military services—each of which possesses unique  capabilities—that the Secretary of Defense can deploy rapidly anywhere  in the world. According to Joint Staff officials, deployment is for a duration  that can range from a few weeks to several months. The GRF EXORD  was first issued in 2007 and, according to DOD officials, has been revised  several times to modify the number or types of assigned units. The  current version, which was issued in 2015, continues to identify two uses  for the GRF, described as follows:

One is to enhance DOD’s ability to respond quickly to a range of  worldwide contingencies. In this scenario, the GRF would generally be  used as a tailorable joint force. For example, in the event of a  humanitarian crisis such as an earthquake, GRF units possessing the  capabilities needed to meet the crisis can be combined into a joint  force and rapidly deployed to the affected area. In this scenario, the  GRF units selected would act together as a joint force under the GRF- supplied Joint Task Force headquarters or a preexisting one.

The other identified use of the GRF is to augment the capabilities of  geographic combatant commands in light of unexpected challenges.  In this scenario, GRF units would generally be deployed as individual  units or in groups. For example, a combatant command may on  occasion require additional intelligence, surveillance, and  reconnaissance capability, and accordingly a GRF unit possessing  that requisite capability can be taken from the GRF and temporarily  allocated to the combatant command for a certain period of time.

Although the GRF EXORD identifies these two intended uses, the  document does not prioritize one use over the other.

To meet the range of capabilities delineated in the GRF EXORD, the  services nominate and assign units to the GRF on a rotating basis for a  certain period of time. Each nominated and assigned unit possesses a  specific capability outlined in the GRF EXORD. These specific  capabilities correspond to the operational requirements of eight global  mission scenarios listed in the GRF EXORD. For example, the GRF  includes a Marine Expeditionary Unit and an Airborne Brigade Combat  Team because of the unique capabilities of those units. According to  DOD officials, once a force is assigned to the GRF, it is on alert status for  a period of typically 6 to 9 months, with a potential to be deployed.  Accordingly, services rotate units onto and off of the GRF in order to  maintain a high state of readiness, which, in turn, allows them to meet the  rapid response timeframes required by the GRF EXORD.

To gain access to units assigned to the GRF, according to Joint Staff  officials, combatant commanders submit an emergent request for forces  to the Joint Staff. Generally as part of the global force management  process, when a combatant command identifies an emergent requirement  for a force that cannot be met using units already assigned or allocated to  the combatant command, the combatant command then submits a  request for forces. If the Joint Staff, joint force providers, and military  services determine that a GRF-assigned unit is the most appropriate  solution for the combatant command’s requirement, the Joint Staff will  recommend it as the sourcing solution to the Secretary of Defense. Once  approved, the GRF-assigned unit will be allocated to the combatant  commander.

DOD Has Generally Used the GRF to Augment Combatant Command Capabilities and Has Not Assessed the Risk on Its Ability to Respond as a Joint Force

According to an official from the Joint Staff office responsible for  managing the GRF across DOD, since 2010 DOD has used the GRF 35  times in support of worldwide contingencies—with 32 of those uses  involving individual GRF units being deployed in support of or to augment  combatant commander needs. However, according to Joint Staff officials  overseeing the management of the GRF, DOD has not assessed the  extent to which it assumes risk associated with the potential unavailability  of GRF units for a short-notice deployment as a joint force in response to  a contingency, given the predominant use of the GRF as a resource for  combatant commands to obtain individual units. According to an official  from the Joint Staff, deployment of select GRF units as part of a joint task  force has occurred three times: once to Haiti in support of an earthquake  humanitarian response, and twice to Afghanistan in July 2010 and June  2011 in support of Operation Enduring Freedom. According to these  officials, GRF capabilities in support of Haiti included command and  control, security, and transportation and distribution of humanitarian  supplies. GRF units in support of Operation Enduring Freedom provided  force protection to coalition forces as well as train, advise, and assist  capabilities.

The predominant use—32 of 35 deployments—of individual GRF units to  augment a combatant commander’s needs has, in turn, diminished the  set of units available for mission scenarios related to the GRF’s use as a  tailorable joint force, and accordingly the capabilities available for  inclusion under a GRF joint task force. For example, Joint Staff officials  stated that DOD deployed a ballistic missile defense unit designated for  the GRF to a geographic combatant commander’s area of responsibility  to augment that combatant command’s missile defense capabilities.  According to Joint Staff officials, the deployment of individual GRF- assigned units is intended to be a temporary solution for a specified  period of time. According to these officials, the ballistic missile defense  unit’s deployment was extended beyond its original timeframe and it was  not replaced on the GRF menu of forces with another such unit because  there are not enough of these particular types of units to meet the  requirements across the combatant commands. Therefore, during the  ballistic missile defense unit’s deployment, the particular capability that  unit supplied to the GRF was not available as part of a tailorable joint  force to respond quickly to a potential worldwide contingency—the other  broad intended use of the GRF. Given that DOD has not defined an  acceptable level of risk—relative to the length of time during which units  remain committed to augmenting combatant commanders’ needs—DOD  lacked reasonable assurance that extending the ballistic missile defense  unit’s deployment would not surpass an acceptable level of risk to mission  for either of the GRF’s uses.

Two other units with capabilities particularly suited for use as part of a  joint force have also been deployed individually to augment combatant  command capabilities. One is U.S. Transportation Command’s Joint  Enabling Capabilities Command, which provides joint communications,  planning, and public affairs support to a joint force or joint task force  headquarters. A second is U.S. Transportation Command’s Joint Task  Force – Port Opening, which provides capabilities able to deploy within 12  to 36 hours to support the opening of a port, including the capability to  rapidly establish and initially operate an aerial or sea port of debarkation,  conduct cargo handling and movement operations to a forward  distribution node, and facilitate port throughput in support of contingency  operations. Like ballistic missile defense units, these two units are limited  in number. According to officials from U.S. Transportation Command,  because the units have been used primarily to augment geographic  combatant command capabilities, they are at times unavailable for use as  part of a tailorable joint force that can be used to respond quickly to  unforeseen worldwide contingencies. Because DOD has not defined the  risk it assumes in its use of GRF units, it cannot determine the likelihood  that units used to augment combatant commanders’ needs might be  required to constitute a joint force composed of GRF units, nor has DOD  defined the significance of the risk it incurs by not having a given  capability available to the GRF. Further, although DOD has used the GRF  primarily to augment combatant commanders’ needs, risks for both uses  should be identified and analyzed appropriately since neither use is  prioritized over the other. While DOD did not encounter issues accessing  GRF units that it required during any of the three instances in which the  GRF was deployed as part of a joint force, Joint Staff officials have  nonetheless raised an issue concerning the degree of risk that DOD  continues to assume by using GRF capabilities to augment combatant  commander needs that may be needed by the GRF to constitute a joint  force.

DOD officials stated that using GRF units to augment geographic  combatant command requirements leaves them unavailable for use as  part of a joint force ready to respond to an unforeseen worldwide  contingency. They stated that this is largely due to the fact that some  GRF units are limited in quantity but in high demand worldwide. For  example, according to DOD officials, while intelligence, surveillance, and  reconnaissance systems are in such high demand that they are  consistently used to augment combatant commanders’ requirements,  they are also typically used as an essential part of a joint force. As such,  there is a likelihood that a GRF joint force might require, but not have  access to these capabilities, thus potentially increasing the risk of not  accomplishing a given mission. DOD officials stated that in the event of a  crisis requiring the employment of GRF units as part of a joint task force,  GRF units currently employed elsewhere could be reassigned. It is  uncertain, however, whether such reassignment would enable a GRF  joint task force to meet its timeframes for deployment given that GRF  units are expected to be ready for deployment on very short notice.  Moreover, the potential effect of and risks associated with such an  occurrence—specifically, the unavailability of required forces to assemble  GRF units as part of a joint force—has not been assessed. The  identification and analysis of risks provides the basis for developing  appropriate risk responses, such as, in this case, further defining and  prioritizing the GRF’s intended uses and missions. Because DOD has not  identified or analyzed risks associated with the uses of the GRF, it may  lack reasonable assurance that this response will be sufficient to mitigate  the risks. Further, without identifying risk, DOD is not well positioned to  develop other risk-mitigating strategies, and to know when to activate  them.

Standards for Internal Control in the Federal Government establish that  management should assess risks related to achieving defined  objectives. Specifically, the standards state that management should  analyze the identified risks to estimate their significance and define  tolerances for levels of risk assumed, thereby providing a basis for  responding to the risks. The standards also call for management to  design responses such that risks are contained within the defined risk  tolerance for the identified objective. DOD has not assessed the risks to  readiness for mission scenarios that it might assume for both uses of the  GRF because of its general reliance upon the GRF as an augmentation  capability available to individual geographic combatant commands for  response to unforeseen challenges or opportunities.

Furthermore, we found that there are varying perspectives within DOD  concerning the intended uses of the GRF, although the GRF EXORD  generally identifies two overarching uses, as previously discussed.  Specifically, officials from the Office of the Under Secretary of Defense for  Personnel and Readiness and the Joint Staff stated the view that the  GRF is a menu of forces, each unit possessing unique capabilities that  can be used either individually to address geographic combatant  command-identified capability gaps or collectively as a joint force to react  to unforeseen worldwide contingencies. However, officials from U.S.  Africa Command and U.S. Central Command view the GRF primarily as a  pool from which they can draw forces, and it is these geographic  combatant commands that have most often requested those capabilities  provided by individual GRF units. Officials from the Army expressed  another perspective, based in large part on the requirement for the Army  to provide a joint task force headquarters for the GRF. Army officials said  that, in their view, the GRF serves primarily as a pool of forces from which  a joint task force can be created to meet unforeseen worldwide  contingencies.

Although the GRF EXORD generally identifies the two uses, it does not  prioritize the use of GRF assets to meet either. Additionally, DOD has not  defined the risk to meeting the objectives of either of the two uses, and,  thus does not have the necessary knowledge to determine when to  deploy units for one use or the other. As previously stated, DOD has used  the GRF to augment combatant commanders’ forces more frequently—32  out of 35 deployments—rather than retaining the units assigned to the  GRF to support a rapidly deploying joint force.

Conducting a risk assessment that identifies any risks associated with the  use of the GRF could help DOD to design responses, such as further  defining and prioritizing the GRF’s intended uses and missions in an effort  to mitigate any identified risks. Without conducting a risk assessment and  taking steps to address any identified risk to accomplishing either of the  GRF’s uses, DOD’s attempt to satisfy one of the two intended uses of the  GRF may inadvertently hamper the other intended use.

GRF Units Have Trained Individually to Meet GRF Missions, but They Have Not Trained as Part of an Integrated Joint Force

GRF units train individually to meet GRF missions, but there are no GRF- specific joint training exercises, and the individual GRF units have limited  opportunities to train as part of an integrated joint force, according to  DOD officials. Specifically, according to service officials, GRF readiness,  and that of assigned units, is based on the assigned force’s participation  in their respective service training exercises and are generally focused on  the respective units’ core missions or functions. In addition to service- level training, GRF units can also participate in joint training exercises  sponsored by one of the geographic combatant commands. These  commands can give authoritative direction to subordinate commands and  forces necessary to carry out missions assigned to the command,  including over all aspects of joint training. However, if GRF units are  service retained or assigned to different combatant commands, they  would not all fall under the authority of a single commander that could  direct joint training. According to military service officials, there are no  GRF-specific joint training exercises. However, according to some  combatant command officials, some joint training exercises have included  units currently assigned to the GRF. Few, if any of these exercises,  however, provide opportunities to conduct training for the GRF’s joint task  force headquarters in conjunction with GRF-assigned units. For example,  according to U.S. Southern Command officials, the Joint Staff’s 2017  Joint Task Force Forming Exercises will be held in U.S. Southern  Command’s area of responsibility, and will include the unit currently  assigned as the GRF’s Joint Task Force headquarters. However, the  exercise will not include any other GRF-assigned units. Therefore, the  training will not provide an opportunity for the GRF to demonstrate  readiness, gain efficiencies, or identify deficiencies associated with  deploying elements of the GRF as a tailorable joint task force.

Chairman of the Joint Chiefs of Staff Instruction 3500.01H, Joint Training  Policy for the Armed Forces of the United States, notes that U.S. forces  may be employed across the range of military operations, and that DOD  must support national security requirements with joint military capabilities  designed to adapt and succeed in any operational environment. It further  states that the department and its mission partners must prepare to  operate in a joint, interagency, intergovernmental, and multinational  environment. Finally, it notes that the joint training challenge is to be  responsive to all emerging and extant mission requirements of the  combatant commanders.

The need for interoperability is especially important for units assigned to  the GRF not only because the GRF EXORD requires that they be ready  for eight global mission scenarios, but because the overall GRF concept  suggests they need to be capable of integration into a tailorable joint  force. Underscoring this need for interoperability and jointness, the GRF  EXORD outlines that combatant commanders should integrate elements  of the GRF into Joint Exercise Program events to help sustain the  readiness and capabilities of those units to execute various mission  capability requirements. It also notes that combatant commanders  should conduct a training event with the GRF’s Joint Task Force-capable  headquarters at least once every 30 months in order to maintain the  headquarters’ readiness to support each geographic combatant  command. While these requirements are important to ensure the GRF  units receive the proper training and are integrated into combatant  command joint exercises, there are no specific GRF joint training  exercises that provide opportunities for individual units assigned to the  GRF to train as a tailorable joint task force.

Joint Staff and service officials told us that the GRF’s assigned forces do  not require additional or special training because they will perform the  core missions for which they train regardless of whether they are  deployed individually or as part of the GRF joint task force. These officials  stated, therefore, that existing training is sufficient to develop and  determine readiness of the GRF. However, the importance of exercising  the GRF Joint Task Force headquarters and associated GRF-assigned  units was demonstrated to us when we observed an Army-sponsored  joint training event involving GRF-assigned forces during a January 2017  Deployment Readiness Exercise at Fort Bragg, North Carolina, during  which several interoperability challenges arose. For example, the Army  and Air Force faced a challenge in calculating the weight of Army heavy  equipment being loaded onto Air Force aircraft preparatory to a simulated  airdrop mission. Based on the Army’s calculations, the equipment load  was well under the specified weight limit for the aircraft, but the Air  Force’s onboard computers showed the load as being over the limit.  While the cause of the difference in the two figures was not identified to  us at the time, Army officials suspected that it could be attributed to a  double-counting of the weight of the parachute. In another example,  inclement weather at Fort Bragg during the exercise caused ice build-up  on participating aircraft. This showed that the Air Force’s de-icing  capability was limited to a few aircraft at a time, which caused delays in  loading and preparing the aircraft for take-off. According to Army officials,  had the mission required more personnel, equipment, and aircraft, this  issue would have created a risk to meeting the GRF’s mission timelines.

Despite the challenges encountered during the exercise, Army officials  told us that exercises, such as the Deployment Readiness Exercise  conducted at Fort Bragg, are important because they give units from  different services the opportunity to identify challenges and develop  solutions. As a result, these exercises can enhance the GRF’s joint task  force capability. Additionally, a senior official from the Office of the Under  Secretary of Defense for Personnel and Readiness’ Force Training  Directorate told us that the ability to act jointly was very important in  military operations and noted the need for joint training.

Two studies conducted on behalf of DOD further underscore the  importance of joint exercises for developing GRF force readiness. The  first study, released by the Institute for Defense Analysis in 2015,  reported that the current joint exercise program did not ensure a proficient  and ready GRF. Specifically, the study identified three key issues  associated with GRF training. First, realistic interoperability training of  individual units assigned to the GRF was not sufficient to ensure overall  GRF readiness. Second, while the then-current version of the GRF  EXORD assigned joint training responsibilities to the services, according  to the study, the service responsible for the Joint Task Force-capable  headquarters element lacked the authority to direct the required level of  joint training for GRF elements provided by other services. Third, the  GRF, in its entirety, had not been exercised or deployed as a joint force  since its inception and thus had not demonstrated the ability to rapidly  deploy as an operationally coherent joint task force. The report  recommended that DOD designate a single commander with authority to  establish and enforce joint integrated training at the tactical level, make  changes to improve training for the GRF’s Joint Task Force headquarters,  and implement a joint demonstration campaign for the GRF. According to  Joint Staff officials, they are not aware of any actions taken in response to  these recommendations. The second study, released by RAND in 2016,  also emphasized that realistic exercises were key to ensuring and  validating the GRF’s readiness. The report added that current exercises  rarely included full and realistic force packages and recommended that  joint airborne exercises be designed explicitly to identify and assess the  implications of possible challenges and validate planning assumptions  about a GRF joint task force.

According to Army officials, a major factor inhibiting joint training  exercises focused at GRF-assigned units as a joint task force is the fact  that it can be difficult to get other services to agree to participate in  service-sponsored events because—as the Institute for Defense Analysis  study pointed out—services lack the authority to direct other services to  supply forces for joint training exercises, even when those forces are  currently on a GRF rotation. Moreover, since the disestablishment of U.S.  Joint Forces Command in 2011, which was responsible, among other  things, for being the lead agent for joint force training, there is no single  commander with the authority to require joint force training. As noted  above, although geographic combatant commanders may direct joint  training of forces under their command, units designated for the GRF  mission may come from forces assigned to different geographic  combatant commands or service-retained forces, according to officials.

According to a senior Office of the Under Secretary of Defense for  Personnel and Readiness’ Force Training Directorate official, the  challenge to conducting joint GRF training is that there is no entity having  authority and responsibility for such training. He noted that because the  GRF is department-wide and is not assigned to a single service or  geographic combatant command, there is no single advocate for the GRF  mission and training with the authority to direct the services and  geographic combatant commands with GRF-dedicated units to prepare  for the joint requirements inherent in the GRF mission. As a result, there  are no joint training exercises specifically designed to exercise GRF units  as a joint force. According to Standards for Internal Control in the Federal  Government, management should develop an organizational structure  with an understanding of the overall responsibilities, and assign these  responsibilities to enable the organization to operate in an efficient and  effective manner, comply with applicable laws and regulations, and  reliably report quality information. To achieve this, management should  assign responsibility and delegate authority to key roles throughout the  entity.

DOD has developed the GRF as a rapid response force available to react  to unforeseen contingencies or crises. While the GRF has responded to  worldwide contingencies, GRF units have been primarily used to augment  existing geographic combatant command capabilities. DOD has not  assessed the risks it assumes by its reliance upon the GRF for  augmenting combatant commanders’ forces as opposed to having the  GRF-assigned units available for allocation to a joint task force in  response to a contingency. Without performing a risk assessment and, as  appropriate, designing responses to mitigate any identified unacceptable  risks to accomplishing either of the two GRF uses, DOD cannot ensure  that the GRF is able to meet its mission. Additionally, without a  designated authority to establish and enforce integrated joint training for  GRF-assigned units as appropriate, DOD has not developed GRF- specific joint training exercises or fully integrated the GRF into existing  joint exercises. Without making improvements in these areas, DOD risks  the ability of the GRF to respond to unforeseen, worldwide contingencies  as an integrated joint force in a timely fashion with all the resources it  needs.

We are making the following three recommendations to DOD:

The Secretary of Defense, in conjunction with the Chairman of the  Joint Chiefs of Staff, should assess the risks to accomplishing both of  the GRF’s uses: that is, its use as an augmentation capability  available as needed to individual geographic combatant commands;  and its use as a tailorable joint force available for rapid response to a  specific threat. (Recommendation 1)

The Secretary of Defense, in conjunction with the Chairman of the  Joint Chiefs of Staff, should, as appropriate following the assessment  of risk, design responses, such as further defining and prioritizing the  GRF’s intended uses and missions, to mitigate any identified risks.  (Recommendation 2)

The Secretary of Defense, in conjunction with the Chairman of the  Joint Chiefs of Staff, should designate an authority to establish and  enforce integrated joint training for GRF-assigned units, as  appropriate. (Recommendation 3)

We provided a draft of this report to DOD for review and comment. In its  written comments, DOD concurred with our three recommendations and  noted planned actions to address them. DOD’s comments are reprinted in  their entirety in appendix II.

We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Under Secretary for Personnel  and Readiness, the Chairman of the Joint Chiefs of Staff; the Secretaries  of the Army, the Navy and the Air Force; and the Commandant of the  Marine Corps. In addition, the report will be available at no charge on the  GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-5431, or russellc@gao.gov. Contact points for our  Offices of Congressional Relations and of Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix III.

The objectives of our review were to examine the extent to which (1)  Department of Defense (DOD) has used the Global Response Force  (GRF) and assessed any risks associated with its use; and (2) GRF- assigned units are trained to meet GRF missions, both individually and as  a joint force.

For our objective of determining the extent to which DOD has used the  GRF and assessed any risks associated with its use, we reviewed the  Chairman of the Joint Chiefs of Staff GRF Execute Order (EXORD) to  identify the GRF’s overall uses and the global mission scenarios it is  intended to meet, as well as the operational requirements and forces  assigned to meet the requirements. We also interviewed the responsible  DOD officials to understand how DOD selects, designates, and validates  forces on the GRF, and the processes for making changes to the GRF  EXORD, as well as how DOD decides when to use GRF forces for either  of the two intended uses of the GRF. Also, we reviewed Standards for  Internal Control in the Federal Government to identify relevant internal  controls—specifically, that management should assess risks related to  achieving defined objectives, analyze the identified risks to estimate their  significance, define tolerances for levels of risk assumed, and design  responses such that risks are within the defined risk tolerance—and  compare them with DOD’s risk assessment efforts for the GRF. Also, we  reviewed the Joint Staff’s GRF deployment information from 2010 to 2017  to understand the frequency of GRF deployments and identify specific  instances in which the GRF’s ability to accomplish its missions was  affected—specifically, instances in which GRF capabilities were  unavailable for use during a GRF operation.

For our objective of determining the extent to which GRF-assigned units  are trained to meet GRF missions, both individually and as a joint force,  we reviewed the Chairman of the Joint Chiefs of Staff GRF EXORD and  DOD’s Guidance for the Defense Readiness Reporting System to  understand how GRF readiness is developed, reported, and evaluated.  We also reviewed DOD’s Joint Training Policy for the Armed Forces of  the United States to identify existing requirements related to joint training,  and documents related to GRF training to determine the extent to which  the frequency and types of GRF training meet overall joint training  requirements as well as training requirements established in the GRF  EXORD. We observed a Deployment Readiness Exercise at Fort Bragg,  North Carolina, to learn about the types of GRF training, as well as  challenges and potential benefits of training exercises for GRF units. We  also interviewed senior officials from the Joint Staff, military service force  providers, and geographic combatant commands to better understand  training practices for the GRF and its assigned units, as well as varying  perspectives regarding the challenges and potential benefits of GRF  training exercises for accomplishing GRF missions.

We interviewed senior officials from the Office of the Under Secretary of  Defense for Personnel and Readiness; Joint Staff; and Army, Marine  Corps, Navy, and Air Force headquarters, and conducted site visits to  force providers at Army Forces Command, Marine Forces Command,  Navy Fleet Forces Command, Air Force Air Combat Command, and U.S.  Transportation Command. We also interviewed officials from U.S. Africa  Command, U.S. European Command, and U.S. Pacific Command, and  visited U.S. Central Command and U.S. Southern Command. Our  interviews focused on understanding the degree to which DOD  organizations assess and maintain a consistent understanding of the risks  entailed in using GRF forces and gaining an understanding of the  challenges encountered in identifying, designating, and employing forces  on the GRF, as well as the extent to which the GRF’s ability to  accomplish its intended missions has been affected.

Appendix II: Comments from the Department of Defense

In addition to the contact named above, individuals who made key  contributions to this report include Guy LoFaro, Assistant Director; Adam  Anguiano; Alberto Leff; Michael Shaughnessy; Michael Silver; Yong  Song; and Cheryl Weissman.


Foreign Military Sales: Observations on DOD's Approach to Developing Price and Availability Estimates for Foreign Customers

DOD manages the procurement of billions of dollars in defense items and services on behalf of foreign customers through the FMS program. These sales help support the defense industrial base and are vital to U.S. foreign policy and national security interests.

The FMS process generally begins with a request by a foreign government for information about a U.S. defense item or service. Requests for price and availability data are an optional step in the process. DOD guidance is to generally respond to such requests within 45 days.

The fiscal year 2018 National Defense Authorization Act included a provision for GAO to review DOD's process for developing price and availability data for foreign customers. This report addresses, among other objectives, (1) price and availability requests DOD received from fiscal years 2014 through 2018, (2) how DOD develops price and availability data, and (3) the factors that can influence the timeliness of DOD's responses to foreign customers with price and availability data.

GAO analyzed DOD price and availability data for fiscal years 2014 through 2018, the latest data available; and reviewed documents for a non-generalizable sample of five price and availability responses—varying by estimate value—provided to foreign customers by the Army, Navy, and Air Force. GAO also interviewed defense contractors and DOD officials.

GAO is not making any recommendations at this time.

The Department of Defense (DOD) reported receiving 3,038 requests for Foreign Military Sales (FMS) price and availability data in fiscal years 2014 through 2018 from 93 countries across six geographic regions, as shown in the figure. Foreign customer requests included services and items such as training and support services for weapon systems, missiles, aircraft, and communication equipment.

Not all countries in each region submitted a price and availability request.

DOD officials indicated they generally strove to offer price and availability data that reflected rough order of magnitude estimates of total anticipated costs for a complete and sustainable capability. Contractors often provide input to DOD for these cost and schedule estimates. In the five examples GAO reviewed, DOD officials considered factors such as possible production delays and included anticipated costs for support services, operations, and sustainment, when needed. DOD officials also included FMS administrative charges and, as applicable, nonrecurring and transportation costs. GAO found that when DOD considered these factors in developing the response to the customer, at times, they made adjustments to the estimates provided by contractors to more fully reflect expected costs if the items are purchased.

Among the five examples, GAO found that response times ranged from 45 to 320 days and that a number of factors can affect timeliness. For example, the complexity of the system or capability the customer is interested in acquiring may require involvement from multiple program offices and defense contractors, requiring more time than the 45 days suggested by DOD's guidance.

Each year, the United States reports billions of dollars in sales of defense  items and services to foreign governments or international organizations.  Sales like these can occur through the Foreign Military Sales (FMS)  program, wherein the Department of Defense (DOD) manages the  procurement process on behalf of the foreign customer. Sales under FMS  are vital to U.S. foreign policy and national security interests, and these  types of sales also support U.S. defense contractors and suppliers. DOD  reported sales totaling over $55 billion under the FMS program for fiscal  year 2018. Further, according to DOD, the U.S. defense industry faces  increasing competition from other countries that also produce and sell  defense articles and services. U.S. defense contractors have also stated  that maintaining a competitive edge even from the outset when foreign  customers first request information to gauge the feasibility of a potential  purchase of defense items and services is important. DOD is responsible  for developing and providing responses to foreign customer requests for  price and availability data, which DOD describes as rough order of  magnitude estimates. When developing these data, DOD incorporates  input from U.S. defense contractors that provide the defense items and  services, as needed. However, questions have been raised about DOD’s  approach for providing estimates during the early stages of the FMS  process.

The fiscal year 2018 National Defense Authorization Act includes a  provision for GAO to review DOD’s process for developing price and  availability data. This report (1) describes FMS price and availability  requests DOD received from fiscal years 2014 through 2018, (2)  assesses DOD’s guidance on developing price and availability data, (3)  describes how DOD develops price and availability data for the requested  capability, and (4) identifies the factors that can influence the timeliness  for DOD to provide price and availability data to the customer.

To describe price and availability data requests DOD received, we  collected and analyzed data from the Defense Security Assistance  Management System for fiscal years 2014 through 2018, the latest data  available. In addition, we obtained information from officials in the  Defense Security Cooperation Agency (DSCA), responsible for managing  the system and administering the FMS program. To gain insights about  the system and the data produced, we also obtained information from  security assistance offices in the three military departments—Army, Navy,  and Air Force, which account for the majority of FMS acquisitions. We  assessed the reliability of FMS price and availability data by reviewing the  data for issues such as missing data elements and duplicates, among  other steps. We determined these data were sufficiently reliable for the  purposes of reporting information about price and availability requests.

To assess available guidance, we reviewed DSCA and Army, Navy, and  Air Force guidance for developing preliminary estimates in response to  requests for price and availability data. We compared the guidance to the  Standards for Internal Control in the Federal Government, which call for  agencies to use quality information to achieve their objectives.  Specifically, we reviewed the guidance to determine if it contained  attributes that contribute to quality information such as identifying the  information requirements and relevant data sources needed to develop  the price and availability data.

To describe how DOD develops price and availability data and illustrate  how these factors influence the process, we selected a non-generalizable  sample of five responses using fiscal year 2017 data provided by the  military departments. We generally selected the five responses to include  a mix of dollar values. The sample includes price and availability data  prepared by five offices—referred to as program offices—from the Army,  Navy, and Air Force. Because the sample is not generalizable, we  cannot report whether the five program offices’ practices are consistently  used across DOD for all price and availability responses. However, these  examples provide useful insights about the process and the assumptions  program offices considered when developing price and availability data.  For each example, we collected and analyzed the letter of request from  foreign customers, price and availability data, DOD’s response to the  customer, and available supporting documentation such as clarification of  the customer’s request, and data collected from defense contractors or other DOD program offices. We reviewed this information for the  assumptions and factors used in developing the data and the various  elements that make up the estimates, such as administrative charges and  costs for training and spare parts. We interviewed cognizant DOD  security assistance and program officials and defense contractor  representatives to understand the context and decisions made in  developing the price and availability data.

To identify factors that can influence the timeliness of responses, we  obtained information from security assistance and program offices within  the military departments and DSCA on their approach to develop price  and availability responses. We also obtained information from defense  contractors and foreign customers who, as stakeholders in the FMS price  and availability process, have broad insights and perspectives on the  process. To gather input from foreign customers, we interviewed  representatives from the Foreign Procurement Group who also solicited  information from its members on our behalf. We received responses  from 12 countries. To obtain contractor’s perspectives, we gathered  information from five companies through interviews and attended a  meeting hosted by the National Defense Industrial Association. Three of  the companies we obtained information from also provided cost and  schedule data for four of the examples in our sample. The information we  obtained from these foreign customers and defense contractors are not  generalizable to all foreign customers and defense contractors but,  nonetheless, provided insightful views on the FMS price and availability  process. We did not assess the timeliness of when DOD provided  responses to foreign customers because DOD does not consistently track  information regarding when price and availability data responses are  provided to customers, as discussed later in the report. However,  information we gathered for the five examples in our sample provided  some insight about how long it took DOD to provide a response to the  customer. Appendix I contains additional detail on our objectives, scope,  and methodology.

We conducted this performance audit from June 2018 to February 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The FMS program, which transfers defense articles and services to  international partners and organizations, is essentially an acquisition  process through which the U.S. government procures military equipment,  training, and other services on behalf of foreign customers. Multiple  organizations have a role in the FMS program. The Department of State  has overall responsibility for the program, including approving what  defense items and services can be sold to specific countries. DOD  administers the FMS program and manages the procurements executed  within the military departments on behalf of foreign governments. Within  DOD, DSCA carries out key functions such as supporting development of  policy for FMS. The military departments carry out the day-to-day  implementation of FMS procurements which can include providing price  and availability data at the customer’s request.

Typically, defense items—such as weapon systems—made available for  transfer or sale to foreign customers are systems that have completed  operational testing and are entering or have entered full rate production.  In addition, DOD also sells non-standard items, which are defined as  items that DOD does not currently manage and may include items that (1)  are commercially available, (2) DOD previously purchased and have  since been retired, or (3) were purchased in a different configuration for  DOD components. For example, a customer may express interest in  buying tanks that DOD no longer buys for its own needs. A customer may  also express interest in buying a tank that DOD currently procures but  with a radio communications configuration that is different from what DOD  uses.

A single DOD entity may not have full responsibility for all aspects of  responding to a foreign customer’s request to purchase U.S. defense  items and services. Under DSCA policy, FMS procurements must  generally be managed at “no cost” or “no profit” to the U.S. government.  DOD’s work related to developing price and availability data and other  FMS operations is generally paid for through the administrative charges  collected from foreign customers. Depending on the complexity of the  customer’s request, coordination within and across DOD components  may be necessary to obtain complete information on pricing and  availability. DOD may also need to coordinate with defense contractors  who ultimately develop and provide the equipment or services.

The FMS process generally begins when a foreign government submits a  letter of request to the Department of State or DOD to purchase defense  articles or services. In the letter of request, the foreign customer may  express interest in obtaining preliminary price and availability data for the  capabilities it seeks. While DOD describes price and availability data as  rough order of magnitude estimates, DSCA’s guidance does not define  the precision of these estimates. According to DOD, FMS price and  availability data are non-binding estimates for the defense items and  services and are not intended to be budget-quality estimates. Requests  for price and availability data can signal to DOD and defense contractors  the potential for future sales. DOD and contractors may also draw upon  these requests to forecast staffing needs and production line availability.

DOD security cooperation organizations working in U.S. embassies  around the world can assist potential customers with defining and refining  their requirements prior to submitting a request for price and availability  data. The security cooperation organizations engage in this early  coordination to help customers articulate their capability needs. This early  coordination also gives DOD components advance notice of upcoming  requests so they can initiate technology security and foreign disclosure  processes for the timely release of information.

Requests for price and availability data represent an optional step in the  process. Customers may forgo the price and availability process and  instead submit a formal assistance request for a letter of offer and  acceptance, which when signed by the customer and U.S. government  becomes an executable FMS case. Figure 1 illustrates where the option  to request price and availability occurs in the overall FMS process.

DOD Is Reconsidering Options to Implement Recent Legislative Change for FMS Price and Availability Process

The National Defense Authorization Act for Fiscal Year 2017 required  DOD to establish a process for defense contractors to provide input on  any differences regarding the appropriateness of government price and  availability data prior to delivery of formal responses to customers. In  response, DSCA issued a policy memorandum in October 2018 that was  rescinded 2 months later due to concerns about the sensitivity of  information to be shared with contractors. The policy memorandum had  instructed DOD components to formally request rough order of magnitude  estimates from the prime defense contractor if (1) the total value of the  primary article or service requested exceeds $50 million, and (2) the  customer has a preference for a non-competitive sole source acquisition  or only a single source exists for the primary defense item. Additionally,  the memorandum stated that DOD components will allow the prime  contractor 5 business days to provide feedback on the appropriateness of  the estimate for its items that is included in the price and availability  response prior to the customer receiving this response. The  memorandum had established a formal process to obtain contractor  feedback and resolve issues that may occur, such as differences between  the program office’s and prime contractors’ estimates, and emphasized  the importance of being aware of program deadlines when following the  process to coordinate with contractors. According to a DSCA official, this  new policy would have helped alleviate industry concerns about how  DOD incorporates estimates provided by industry to develop price and  availability responses provided to foreign customers. However, according  to DSCA officials, when implementing the process, DOD found that the  potential level of detail and precision in price and availability estimates  could provide an unfair competitive advantage to contractors coordinating  with DOD on price and availability responses to foreign customers. As  discussed in further detail later in the report, in some instances we found  price and availability estimates DOD offered included more precise  information than rough order of magnitude estimates. According to DSCA  officials, such information could offer the contractor insight into the  government’s pricing methodologies. DSCA subsequently rescinded the  October 2018 policy memorandum. DSCA plans to conduct a 120-day  review to reassess options to find a solution, if any, on what information  can be shared with contractors to satisfy the legal requirement to obtain  contractor input and feedback on price and availability estimates before  DOD responds to customers.

DOD Received about 3,000 Requests for Price and Availability Data over the Past 5 Years

From fiscal years 2014 through 2018, DOD reported receiving 3,038  requests for price and availability data from foreign customers from 93  countries and the North Atlantic Treaty Organization. Foreign customer  requests included services and items such as training and support  services for weapon systems, missiles and ammunition, aircraft, and  communication equipment. We found that most requests came from the  same foreign customers. Specifically, 10 customers accounted for 56  percent of requests, with one customer accounting for 28 percent of all  requests during the 5-year period within our review. Customers in the  Indo-Pacific region accounted for the largest share of requests, as shown  in figure 2.

Among DOD components, the military departments—Army, Navy, and Air  Force—received almost all price and availability requests, as shown in  figure 3. The Army received slightly more requests over the 5-year period,  closely followed by the Navy.

Foreign customers we obtained information from noted that they request  price and availability data to inform their acquisition strategy, obtain a  sense of affordability, and for budget planning. For example, when  considering potential acquisition strategies, some customers may request  data for different options, variants, or quantities of similar items or  services, resulting in multiple requests for price and availability data to  inform a potential purchase. In cases when a customer is interested in  procuring a specific item, the customer may request data to obtain  information about prices and lead times to determine affordability. The  customer may also request the data when considering whether to  purchase from the United States or from foreign countries.

Requesting price and availability data can also provide foreign customers  with information on whether the U.S. government will make the requested  defense item or service available for sale. While preliminary estimates are  not an official acknowledgement that the item or service will be made  available to the customer, the request can trigger a U.S. government  review that includes application of policies that govern the release of  certain technologies or systems and a discussion with the customer about  the item or service. In some cases, customers can receive responses with  partial information if some requested items are not available for release.

DOD does not collect data on which customers’ requests for price and  availability data resulted in a formal request to purchase defense items or  services under FMS. Army security assistance officials told us it can take  years between when price and availability data are provided and when a  customer submits a request for a letter of offer and acceptance, if at all.  For their part, customers we obtained information from noted that there  may be numerous reasons for why they might choose not to pursue a  potential sale. For example, the item or service could not be made  available within a timeframe to meet their needs; the overall capability  was not affordable; or price and availability estimates were higher than  estimates from other foreign sources.

The military departments do not consistently track information on the  status of responses sent to foreign customers. We found the Navy and  Army generally captured the status of a response in the system,  identifying when a response is in development, has been sent to the  customer, or has been canceled but, according to security assistance  officials, this information may not be entered consistently. In addition, the  Air Force does not generally update the status of a response in the  system. Further, Air Force security assistance officials told us the  department does not update data in the system to reflect that the Air  Force provided price and availability data to the customer. According to  DSCA and military department officials, there is no requirement that DOD  components record when a response is sent to a customer. A DSCA  official told us that DSCA does not have a specific need to monitor the  status of price and availability responses, in part because these are not  formal offers, and DOD prioritizes data collection for formal FMS cases— cases for which a signed agreement between the U.S. government and  foreign customer is in place.

DOD’s Guidance Allows for Flexibility in Developing Price and Availability Data and Reflects Leading Practices for Using Quality Information

DSCA has established DOD-wide guidance—the Security Assistance  Management Manual—for responding to foreign customers’ requests for  information on defense items and services available for purchase through  the FMS program. The manual includes some guidance on developing,  documenting, and communicating price and availability data to foreign  customers, but largely pertains to a customer’s request for a letter of offer  and acceptance with the intent to buy. Security assistance officials from  across the military departments told us they rely on the manual to guide  their efforts throughout the price and availability process, and that  DSCA’s guidance provides a framework for the process and is not always  prescriptive, allowing military departments latitude in how they implement  it. DSCA and military department officials we spoke with said that a  flexible process is needed to account for various circumstances specific  to each request. The price and availability process outlined in guidance  and described by DSCA and military department officials involves input  from numerous organizations within and external to DOD, as shown in  figure 4. The guidance states the process should be completed within 45  days.

Generally, we found that DSCA’s guidance reflected attributes conducive  to using quality information as called for by federal internal control  standards. For example, the standards call for agencies to define  information requirements and obtain relevant data from reliable sources.  DOD’s guidance reflects this, stating that price and availability data  should serve as rough order of magnitude estimates of the cost and  availability of defense items or services and are for rough-order planning  purposes. The guidance also  instructs officials to assess whether a foreign customer’s request  contains the necessary information to develop price and availability  data, such as the major item or service, quantity, anticipated delivery  schedule, and other specifications;  suggests that price and availability data also provide customers with  information about costs for not only buying equipment but also the  related operation and sustainment costs; assumes responses will include standard items—nonstandard items  identifies relevant data sources that the military departments can  consult to develop price and availability data, such as last contract  award, stock price, or information from defense contractors;  states that military departments and DSCA should use the Defense  Security Assistance Management System to prepare responses to  price and availability requests;  suggests that data should be itemized by separating main equipment  from training, technical publication, transportation costs, and other  elements, as applicable; and  states that responses should be developed and communicated to  customers within 45 days from when DOD receives the request.

In Selected Examples, DOD Included Comprehensive Data on Ownership Costs When Developing Price and Availability Responses

When selling defense items and services to foreign customers, military  department officials indicated that they strive to offer a complete and  sustainable capability, referred to as the total package approach. Using  this approach, DOD takes into account the related support, such as  training, logistics, spare parts, warranties, contractor support, and other  considerations necessary for operating and sustaining the defense items  or services being purchased. The total package approach represents the  initial and follow-on cost of owning and supporting the capability. For  example, a DOD program official may develop a cost estimate for the  capability, including several years of technical support for maintaining it.  DOD may also provide a customer with cost estimates for maintaining the  capability over the course of its expected lifetime.

Specifically, in the five examples we reviewed, we found that DOD  officials generally used a total package approach when developing price  and availability data. For example, military department officials developed  price and availability data that not only included the items and services  requested by the customer, but also included rough order of magnitude  estimates for additional costs to reflect the expected ownership costs.  Ownership costs may include development, procurement, operation, and  sustainment costs for the defense item, as part of a total package  approach. The timeframe of ownership costs provided may vary.  According to a DSCA official, ownership costs generally cover the first 2  years. In four of the five cases we reviewed, the customer requested a  capability and, in response, the program office provided estimates for not  only the equipment but also the support needed to achieve the desired  capability ranging from one week of training to five years of technical  support. For example, in one case, a customer requested data for a  complex naval weapon system that they had not previously used. Navy  program officials provided estimates for the system, spare parts, training,  and other items as requested by the customer. Program officials also  included estimates on radio navigation equipment and software that are  essential for the system to function as intended, but were not part of the  customer’s initial request. Officials stated that they included these  additional costs to give the customer a comprehensive view of the costs  to acquire, operate, and maintain the weapon system. In the fifth case,  program officials told us they did not have to include training or support as  this customer was replacing missiles in their inventory, previously  purchased through FMS. However, in considering the foreign customer’s  ownership costs, the officials said they included costs for containers for  storing the missiles.

For the selected examples, program officials obtained data from defense  contractors and previous sales, adjusting estimates from data sources to  ensure the price and availability estimate reflected what the customer  could expect to pay for the item or service—initial and follow-on cost of  owning and supporting the capability—if the customer decided to proceed  with the purchase. Defense contractors responsible for providing data for  four of the five examples told us they consider the quantity and specific  requirements of the request, such as training, spares, and support; as  well as inflation and anticipated production and delivery schedules in  some cases. We found that for the selected examples program officials  adjusted estimates from contractors and other data sources for a number  of reasons, such as to account for potential changes in production  schedules and adding program management support provided by the  U.S. government to administer system upgrades. By accounting for these  likely costs, program officials stated that they were providing the customer  with estimates that would more closely reflect expected costs if the  customer proceeded with the sale. For example:  In two of the responses we reviewed for missiles and communication  systems, Navy and Air Force officials increased contractors’  estimates, in part, to account for possible changes to production  plans. In the Navy response, for example, program officials increased  the contractor’s estimate for the missiles by approximately 14 percent.  Officials told us this was to account for possible changes in the  production schedule and quantity. Contractor representatives told us  that their estimate was based on a specific number of missiles being  produced in a certain production lot. Program officials told us that the  customer would not likely have a signed agreement in place to receive  missiles from that specific production lot. According to program  officials, this means the price per missile could be higher than  forecasted in the contractor’s initial estimate because there may be  fewer quantities in production, resulting in fixed production costs  spread among fewer missiles.

In an Army response we reviewed for non-standard upgrades to  several hundred tanks, the program official used estimates provided  by the contractor to develop the price and availability data. These tank  upgrades are considered non-standard because the U.S. government  no longer uses these tanks. In light of this, the program official  included costs for program management support provided by the U.S.  government because he said the magnitude of the program would  likely require an Army office to execute and manage the upgrades,  which is projected to last up to 10 years.

In an Air Force response we reviewed for a warning system, program  officials considered historical data from similar DOD contracts. The  program officials increased the price by $2.4 million dollars from past  procurements based on the customer’s request to add a new full-time  onsite engineer to support the warning system. This price also  included costs for housing, living allowance, and travel expenses.

Further, in our review of selected cases, we found that program officials  may include other charges in price and availability data, such as nonrecurring costs that are unique one-time program-wide  expenditures for certain major defense equipment sold under the FMS  program; a contract administration charge—generally, 1.2 percent of the value  of procured items—for services such as quality assurance and  inspection;  transportation costs for delivery of the item, which are generally  calculated based on rates established by DSCA; and an administrative charge—currently set at 3.2 percent of the total  value of the sale to recover civilian employee salaries and operational  costs for administering the FMS acquisition.

Various Factors Can Influence DOD’s Approach and the Timeliness of DOD’s Responses

Military department officials told us that various factors influence the level  of effort and information involved in developing price and availability data,  some of which may also affect how long a response takes and whether  the 45-day timeframe suggested by DSCA’s guidance is achieved. When  a foreign customer requests price and availability data, DOD and defense  contractors, if involved, expend time and resources to provide a  response, all without any certainty that a sale will materialize. As such,  DOD officials and defense contractors determine what level of response  is appropriate, given the nature of the customer’s request and whether it  includes non-standard items or items that require customization, among  other things. DSCA and Navy program officials said customers are  interested in receiving price and availability responses quickly and  recognize that timeliness is an area of concern with the FMS process, in  general. Over half of the 12 foreign customers we obtained information  from noted that they are concerned with the length of time DOD’s  responses can take. Lengthy response times could result in customers  missing opportunities to consider potential requests in upcoming budget  cycles. Several customers communicated that some responses took  considerably longer than 45 days, with some taking anywhere from 6 to  12 months. Among the five examples we reviewed, responses took from  45 to 320 days, as shown in table 1.

Program and security assistance officials we interviewed told us they  consider the following factors:

Customer interest and commitment. Insight into the degree of  customer commitment to purchase through FMS may influence the  time and resources military departments expend on developing a  price and availability response. For example, Air Force security  assistance officials told us that they may develop a more detailed  response if advised by in-country personnel that a request for price  and availability data will likely become a request for an actual  purchase.

Clarity and completeness of customer’s request. Customers may  submit requests that lack the clarity and details needed to develop  accurate data and estimate delivery timeframes. Several military  department officials told us that when reviewing the customer’s  requests for price and availability data, they often have discussions  with customers to clarify requirements and in some cases estimated  delivery schedules before developing a response. Defining the  customer’s requirement—even at this early stage—can be an iterative  process that requires multiple interactions between the foreign  customer and DOD officials. In one of the examples we reviewed, the  defense contractor was also involved. These discussions to clarify the  customer’s requirements can prolong the process, according to  several program officials.

Existing policy to release price and availability data. The U.S.  government’s relationship with the foreign customer and the type of  defense item or service being requested—such as a weapon system  with protected critical technologies versus medical evacuation  equipment—can influence the length of time to obtain necessary  approvals for the release of price and availability data, according to  Navy program and Air Force security assistance officials. Requests  for price and availability data may spur the U.S. government to review  the current list of countries that have access to particular critical  technologies, as shown in one Navy response to a request for a  ballistic missile defense system. Initially, the Navy’s Foreign  Disclosure Office determined the system would not be available for  potential release and the Navy program office excluded it from the  price and availability data. About a year later, according to Navy  officials, following a change in U.S. policy, the Foreign Disclosure  Office approved the release of price and availability data for the  system and the Navy included it in a subsequent price and availability  response.

Complexity of the request. Requests for a non-standard system,  integration with foreign components, or a complex system may cause  program offices to spend additional resources and time to develop  price and availability data. For example, in response to a request for a  complex weapon system to be integrated into a foreign customer’s  ship, Navy program officials said that they needed several months to  develop price and availability data due to the complexity of this  request, which required program officials to work with multiple  contractors and DOD entities to develop price and availability data. In  contrast, Army security assistance officials said that they generally  aim to conserve resources and time by developing price and  availability data based on standard items, even in instances when  customers may request non-standard or complex systems.

Existing workload. The volume of requests and competing priorities  can also affect the timeliness and the level of effort applied to the  response. For example, Army security assistance officials stated that  they may prioritize a customer’s request for a letter of offer and  acceptance, which initiates an executable FMS case, over a request  for price and availability data because there are not resources  available to do both at the same time.

Availability of requested item or service. When obtaining the items  from defense contractors, for example, military department officials  consider production schedule and quantity—both of which require  additional assumptions to estimate unknown costs. For items that are  in DOD’s inventory and will not be replaced, officials are to take into  account the item’s actual value when developing price and availability  data, according to a DSCA publication.

External factors. In cases where a customer is requesting price and  availability data to decide whether to purchase defense items or  services from the United States or another foreign government,  military departments may expend additional resources to develop  detailed price and availability data. For example, a Navy security  assistance official stated that when officials are aware the customer  plans to hold competitions between U.S. and foreign defense  contractors, they solicit more detailed technical and cost information  from defense contractors to present a competitive estimate.

Individually and combined, these factors, as well as the overall process,  can influence response times.

We provided a draft of this report to the Department of Defense (DOD) for  comment. DOD’s response letter is reproduced in appendix II. DOD  separately provided technical comments, which we incorporated as  appropriate.

We are sending copies of this report to the appropriate congressional  committees and the Acting Secretary of Defense. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or makm@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

In this report, we (1) described foreign military sales (FMS) price and  availability requests Department of Defense (DOD) received from fiscal  years 2014 through 2018, (2) assessed DOD’s guidance on developing  price and availability data, (3) described how DOD develops price and  availability data for the requested capability, and (4) identified factors that  can influence the timeliness for DOD to provide price and availability data  to the customer.

To describe requests for price and availability data DOD received from  foreign customers, we analyzed data from the Defense Security  Cooperation Agency (DSCA). We reviewed data for fiscal years 2014  through 2018, the most recent 5-year period available. DSCA and other  DOD components, including the military departments, use the Defense  Security Assistance Management System as a workflow resource to  process price and availability data requests, among other things. The  system does not track which of the estimates result in a letter of offer and  acceptance. To assess the reliability of Defense Security Assistance  Management System data, we tested for missing data, duplicates,  inconsistent coding, and compared data for five examples to price and  availability documentation we received from the Army, Navy, and Air  Force. We interviewed DSCA officials responsible for the data system to  identify the quality controls in place to help ensure the data are accurate  and reliable and discussed military department practices for using the  system with security assistance officials. We found that generally the  documentation for the five selected preliminary estimates matched the  data DSCA provided and requests matched across multiple datasets we  received from DSCA. Based on these steps, we determined the data  were sufficiently reliable to report examples of the types of items and  services requested and the number of requests DOD received by region,  DOD component, and foreign customer. We did not report the number of  responses DOD provided for these requests or how long it took DOD to  provide a response to foreign customers using this data because military  departments do not consistently update information in the Defense  Security Assistance Management System to track the status of responses  or dates when a response is provided to the customer.

To assess available guidance, we reviewed DSCA and Army, Navy, and  Air Force guidance for developing preliminary estimates in response to  requests for price and availability data. We compared the DOD-wide  guidance—the Security Assistance Management Manual—to the  Standards for Internal Control in the Federal Government, which call for  agencies to use quality information collected from relevant and reliable  sources. Specifically, we reviewed the guidance to determine if it  contained attributes that contribute to quality information such as  identifying the information requirements and relevant data sources  needed to develop the price and availability data.

To describe factors that DOD considers when developing price and  availability data and illustrate how these factors influence the process, we  selected a non-generalizable sample of five responses from fiscal year  2017 data provided by the military departments. Fiscal year 2017  represented the last complete year of data available when we selected  this sample. Because the sample is not generalizable, we cannot report  whether practices used among the responses are used across DOD for  all price and availability responses. However, these examples provide  useful insight into the process and the assumptions used when  developing price and availability data. We selected the five examples— one from Army, two from Navy, two from Air Force—to obtain a variety of  responses, including median and large case values and a median  response time. We determined there were inconsistencies in the data  provided, but that the data were sufficient for our purposes of selecting a  non-generalizable sample from across the military departments.

For each selected example, we collected and analyzed the letter of  request, price and availability data, DOD’s response to the customer,  supporting documentation if provided such as clarification of the  customer’s request, and data collected from defense contractors or  program offices. We reviewed the assumptions and factors used in  developing the data and the various elements that make up the data,  such as administrative charges and costs for training and spares. We  interviewed relevant DOD security assistance and program officials, and  defense contractor representatives to understand the context and  decisions made in developing, documenting, and communicating the  price and availability data.

To identify the factors that can influence the timeliness of responses, we  interviewed officials from DSCA and the Army, Navy, and Air Force. We  also obtained information from defense contractors and foreign customers  who, as stakeholders in the FMS price and availability process, have  broad insights and perspectives on the process. To gather input from  foreign customers, we interviewed representatives from the Foreign  Procurement Group who also solicited information from its consortium of  46 member countries on our behalf. We received responses from 12  countries—one of which was also a customer for one of the examples  included in our review. To obtain contractor’s perspectives, we gathered  information from five companies through interviews and attended a  meeting hosted by the National Defense Industrial Association. Three of  the companies we obtained information from were involved in providing  cost and schedule data for four of the examples in our sample. The  information we obtained from these foreign customers and defense  contractors is not generalizable to all foreign customers and defense  contractors. As mentioned previously, we did not assess the timeliness of  DOD’s responses because DOD does not consistently track when price  and availability data responses are provided to customers in the Defense  Security Assistance Management System. However, the information we  gathered for the five examples in our sample provided some insight about  how long it took DOD to provide a response to the customer.

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Candice Wright (Assistant  Director) and Leslie Ashton (Analyst-in-Charge) managed this review.  Bruna Oliveira, Carmen Yeung, Kurt Gurka, Robin Wilson, and Emily  Bond made significant contributions to the work.

Foreign governments buy billions of dollars of defense equipment and services through the U.S. Defense Department's foreign military sales program. These sales can bolster U.S. national security interests.

This report takes a look at one of the first steps in the sales process—when a government asks about the price and availability of equipment or a service.

From 2014 to 2018, DOD received about 3,000 such requests. Among other things, we looked at the timeliness of DOD's response process. In 5 cases we examined, responses took from 45 to 320 days. Sometimes responses can involve many contractors and DOD offices.