To obtain copies of Office of the Assistant Inspector General for Auditing Reports, contact the Secondary Reports Distribution Division of the Audit Followup and Technical Support Directorate at (703) 604-8937 or FAX (703) 604-8932.
Who Should Read This Report and Why? Civil service and uniformed officers responsible for controlling the release of technology or technical data detrimental to our national security should read this report. The report discusses the steps DoD needs to take to identify unclassified export-controlled technology and to ensure that DoD contractors, universities, and Federally Funded Research and Development Centers are preventing unauthorized disclosure to foreign nationals.
Background. Public Law 106-65, "National Defense Authorization Act for FY 2000," section 1402, "Annual Report on Transfers of Militarily Sensitive Technology to Countries and Entities of Concern," October 5, 1999, requires that the Inspectors General of the Departments of Commerce, Defense, Energy, and State, in consultation with the Director of Central Intelligence and the Director of the Federal Bureau of Investigation conduct annual reviews of the transfer of military technologies to countries and entities of concern. The United States Government restricts the release of critical technologies, including technical data, to foreign nationals through the Export Administration Regulations and the International Traffic in Arms Regulations. U.S. entities are generally required to obtain an export license before providing foreign nationals access to software or technology that is subject to export licensing requirements. Within DoD, multiple offices oversee the development and implementation of export control policies and control foreign nationals access. The Under Secretary of Defense for Acquisition, Technology, and Logistics is responsible for the implementation of DoD technology transfer policies for all research, development, and acquisition matters. The Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation is responsible for international technology transfers, including export controls and licensing, and the DoD Technology Security Program which includes the development of DoD positions on export licenses by the Defense Technology Security Administration. Three major activities within the Office of the Under Secretary of Defense for Intelligence also work to control foreign nationals access to export-controlled technology.
Results. DoD does not have adequate processes to identify unclassified export-controlled technology and to prevent unauthorized disclosure to foreign nationals. Of the 11 contractors, 6 universities, and 3 Federally Funded Research and Development Centers visited:
As a result, at least two contractors and one university granted foreign nationals access to unclassified export-controlled technology without proper authorization. Unauthorized access to unclassified export-controlled technology could allow foreign nations to counter or reproduce the technology and thus reduce the effectiveness of the technology, significantly alter program direction, or degrade combat effectiveness. Guidance on export-controlled technology should be developed and implemented to be commensurate with acquisition and classification guidance. Specifically, guidance should be developed to include responsibilities and requirements for DoD personnel and contractor, university, and Federally Funded Research and Development Center facilities. In addition, because DoD program managers and contracting officers are not required to incorporate specific Federal export requirements into the contract, those facilities who rely on the contract to identify export-controlled technology may not be aware that export-controlled technology exists. Therefore, the Defense Federal Acquisition Regulation Supplement should be changed to incorporate the requirements of Federal export laws and regulations and to ensure that DoD program managers and contracting officers incorporate the requirements into contractual language. Implementing the recommendations in this report should correct the management control weaknesses identified for both the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation. See the finding for the detailed recommendations.
Management Comments. The Under Secretary of Defense for Acquisition, Technology, and Logistics concurred with the recommendation. Specifically, the Under Secretary of Defense for Acquisition, Technology, and Logistics will initiate the process of changing the Defense Federal Acquisition Regulation Supplement in accordance with the recommendation, and the process will take an estimated 10 months to complete. The Director, Defense Research and Engineering will ensure that the DoD Components that issue science and technology contracts are aware of the Federal export regulations and the planned changes to the Defense Federal Acquisition Regulation Supplement. The Director, Defense Research and Engineering will also ensure that the science and technology contracts comply with those changes. The Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation concurred in general with the finding and recommendation. Specifically, the Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation stated that the revised guidance will be applicable to all export-controlled technology and should be issued in April 2004. However, she also stated that guidance already exists which clearly prohibits the transfer of controlled technology by all Government and private entities without an export license, authorization, or exemption; includes detailed Commerce Control List and U.S. Munitions List item references; and establishes points of contact to answer licensing questions. In addition, the Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation stated that teams of functional area experts will soon be available to brief program managers, research center personnel, and other interested parties on request. See the Finding section of the report for a discussion of the management comments and the Management Comments section of the report for the complete text of the comments.
Any comments or suggestions should be sent to: auditnet@dodig.mil