INSPECTOR GENERAL DEPARTMENT OF DEFENSE 4800 MARK CENTER DRIVE ALEXANDRIA, VIRGINIA

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1 INSPECTOR GENERAL DEPARTMENT OF DEFENSE 4800 MARK CENTER DRIVE ALEXANDRIA, VIRGINIA MEMORANDUM FOR DISTRIBUTION SUBJECT: Government Accountability Office (GAO) Weekly Activity Rep01i Attached for the week ending March 22, 2013, are two new GAO announcements and the highlights for three GAO final reports. There were four cases closed and one transferred to Audit Follow-Up during this period. Attachment: As stated cc: Electronic Distribution List ~ON!.. /).;{) Brett A. Ma~s~~ '---" Acting Assistant Inspector General for Communications and Congressional Liaison

2 Primary Action Office Survey / Review New Announcements TABLE OF CONTENTS GAO Activity Report March 22, 2013 Subject GAO Code and / or GAO Report Number 1. USD DOD Small Business Innovation Research (AT&L) (SBIR) Program Technology Transition Date of New Announcement: Navy Small Vessel Security Strategy Date of New Announcement: GAO Final Reports 1. USD PUERTO RICO: Characteristics of the Island s GAO (AT&L) Maritime Trade and Possible Effects of Modifying the Jones Act 2. USD SECURITY ASSISTANCE: Evaluations Needed GAO (P) to Determine Effectiveness of U.S. Aid to Lebanon s Security Forces 3. USD U.S. ASSISTANCE TO YEMEN: Actions Needed GAO (P) to Improve Oversight of Emergency Food Aid and Assess Security Assistance Closed, Terminated or Transferred Cases 1. Closed F-35 Joint Strike Fighter: Current Outlook Is GAO Improved, but Long-Term Affordability Is a Major Concern 2. Closed Launch Services New Entrant Certification Guide GAO R Closed Department of Defense Policies on Accommodating GAO R Children with Special Needs in Child Care Programs Closed CYBERSECURITY: National Strategy, Roles, and GAO Responsibilities Need to Be Better Defined and More Effectively Implemented

3 5. Transferred WARFIGHTER SUPPORT: DOD Needs Additional GAO Steps to Fully Integrate Operational Contract Support into Contingency Planning

4 ENCLOSURE ENCLOSURE INFORMATION ON NEW GAO ENGAGEMENT Engagement Subject: DOD Small Business Innovation Research (SBIR) Program Technology Transition Engagement Code: Source for the Worlc Consistent with our Congressional Protocols, GAO is beginning this work in response to a congressional mandate. Objectives: include: Assess the transition of technologies developed by small businesses through DOD's SBIR program, to Analysis of the extent to which SBIR program technologies are being incorporated into major weapon systems or major automated information systems; Review of existing procedures that facilitate the monitoring, evaluation, and transition-by both the SBIR program and the acquisition community-of SBIR technology projects into acquisition programs; and Consideration of additional actions or mechanisms that may be needed to facilitate the transition of SBIR technologies to acquisition programs. Agencies and Anticipated Locations to be Contacted: We anticipate working with the Office of the Secretary of Defense (Acquisition, Technology, and Logistics); Office of Small Business Programs; Defense Advanced Research Projects Agency Small Business Innovation Research program; Director, Defense Research and Engineering; Air Force, Army, and Navy Headquarters; Air Force Life Cycle Management Command; Air Force Research Laboratory; Air Force Small Business Innovation Research program; Office of the Assistant Secretary of the Air Force for Acquisition (Science, Technology, and Engineering); Army Research, Development and Engineering Command; Army Small Business Innovation Research program; Office of the Assistant Secretary of the Army (Acquisition, Logistics, and Technology); Navy Small Business Innovation Research program; Office of the Assistant Secretary of the Navy (Research, Development and Acquisition); Office of Naval Research; Naval Air Systems Command; Naval Sea Systems Command; and other offices within the Air Force, Army, Navy, and Department of Defense, as necessary.

5 ENCLOSURE ENCLOSURE INFORMATION ON NEW GAO ENGAGEMENT Engagement Subject: Small Vessel Security Strategy Engagement Code: Source for the Work: Consistent with our Congressional Protocols, GAO is beginning this work in response to a request made by the Chairman of the U.S. Senate Committee on Commerce, Science, & Transportation and Ranking Member of the House Committee on Homeland Security. Objective(s)/Key Question(s): (1) In developing the Small Vessel Security Strategy Implementation Plan, what risk and resource-based studies or other analyses, if any, did the Department of Homeland Security (DHS) and its component agencies conduct to determine the actions that would lead to the greatest reduction of risks associated with small vessels at the least cost? (2) To what extent has DHS provided guidance or taken other steps to implement the plan by maximizing interagency coordination and leveraging resources among port security stakeholders? Agencies and Anticipated locations to be Contacted: We will focus audit work at the headquarters locations and various field locations of DHS and its component agencies, principally the U.S. Coast Guard and Customs and Border Protection. Where the Department of Defense (DOD) is identified as a co-lead agency on specific actions in DHS's Small Vessel Security Strategy Implementation Plan, we would like to meet with knowledgeable DOD officials at headquarters locations and various field locations. The specific field locations will likely be at select domestic ports. For job design purposes, GAO plans to conduct a site visit to San Diego during the week of April Other specific field locations will be determined at a later date and GAO visits will be coordinated with the proper liaisons.

6 GAO March 2013 PUERTO RICO Characteristics of t he Island's Maritime Trade and Possible Effects of Modifying the Jones Act Highlights of GA , a report to congressional requesters Why GAO Did This Study Puerto Rico is subject to Section 27 of the Merchant Marine Act of 1920, known as the "Jones Act" (Act), which requires that maritime transport of cargo between points in the United States be carried by vessels that are (1 ) owned by U.S. citizens and registered in the United States, (2) built in the United States, and (3) operated with predominantly U.S.-citizen crews. The general purposes of the Jones Act include providing the nation with a strong merchant marine that can provide transportation for the nation's maritime commerce, serve in time of war or national emergency, and support an adequate shipyard industrial base. Companies (shippers) that use Jones Act carriers for shipping in the Puerto Rico trade have expressed concerns that, as a result of the Jones Act, freight rates between the United States and Puerto Rico are higher than they otherwise would be, and given the reliance on waterborne transportation have an adverse economic impact on Puerto Rico. This report examines (1) maritime transportation to and from Puerto Rico and how the Jones Act affects that trade and (2) possible effects of modifying the application of the Jones Act in Puerto Rico. GAO collected and analyzed information and literature relevant to the market and gathered the views of numerous public and private sector stakeholders through interviews and written responses. GAO is not making recommendations in this report. The Department of Transportation (DOT) generally agreed with the report, but emphasized that many of the issues related to the Jones Act are complex and multifaceted. DOT and others also provided technical clarifications, which GAO incorporated, as appropriate. View GA For more information, contact Lorelei St. James at (202) or What GAO Found Jones Act requirements have resulted in a discrete shipping market between Puerto Rico and the United States. Most of the cargo shipped between the United States and Puerto Rico is carried by four Jones Act carriers that provide dedicated, scheduled weekly service using containerships and container barges. Although some vessels are operating beyond their expected useful service life, many have been reconstructed or refurbished. Jones Act dry and liquid bulkcargo vessels also operate in the market, although some shippers report that qualified bulk-cargo vessels may not always be available to meet their needs. Cargo moving between Puerto Rico and foreign destinations is carried by numerous foreign-flag vessels, often with greater capacity, and typically as part of longer global trade routes. Freight rates are determined by a number of factors, including the supply of vessels and consumer demand in the market, as ell as costs that carriers face to operate, some of which (e.g., crew costs) are affected by Jones Act requirements. The average freight rates of the four major Jones Act carriers in this market were lower in 2010 than they were in 2006, hich was the onset of the recent recession in Puerto Rico that has contributed to decreases in demand. Foreign-flag carriers serving Puerto Rico from foreign ports operate under different rules, regulations, and supply and demand conditions and generally have lower costs to operate than Jones Act carriers have. Shippers doing business in Puerto Rico that GAO contacted reported that the freight rates are often- although not always- lower for foreign carriers going to and from Puerto Rico and foreign locations than the rates shippers pay to ship similar cargo to and from the United States, despite longer distances. However, data were not available to allow us to validate the examples given or verify the extent to which this difference occurred. According to these shippers, lower rates, as well as the limited availability of qualified vessels in some cases, can lead companies to source products from foreign countries rather than the United States. The effects of modifying the application of the Jones Act for Puerto Rico are highly uncertain, and various trade-offs could materialize depending on how the Act is modified. Under a full exemption from the Act, the rules and requirements that would apply to all carriers would need to be determined. While proponents of this change expect increased competition and greater availability of vessels to suit shippers' needs, it is also possible that the reliability and other beneficial aspects of the current service could be affected. Furthermore, because of cost advantages, unrestricted competition from foreign-flag vessels could result in the disappearance of most U.S.-flag vessels in this trade, having a negative impact on the U.S. merchant marine and the shipyard industrial base that the Act was meant to protect. Instead of a full exemption, some stakeholders advocate an exemption from the U.S.-build requirement for vessels. According to proponents of this change, the availability of lower-cost, foreign-built vessels could encourage existing carriers to recapitalize their aging fleets (although one existing carrier has recently ordered two new U.S.-built vessels for this trade), and could encourage new carriers to enter the market. However, as with a full exemption, this partial exemption could also reduce or eliminate existing and future shipbuilding orders for vessels to be used in the Puerto Rico trade, having a negative impact on the shipyard industrial base the Act was meant to support United States Government Accountability Office

7 March 2013 SECURITY ASSISTANCE Evaluations Needed to Determine Effectiveness of U.S. Aid to Lebanon's Security Forces What GAO Found The United States has kept strategic goals for Lebanon constant since 2007 and adjusted security assistance in response to political and security conditions. Since 2007, U.S. strategic goals for Lebanon have been to support the nation as a stable, secure, and independent democracy. According to U.S. officials, U.S. policy priorities include supporting the Government of Lebanon in establishing stability and security against internal threats from militant extremists and the influence of Iran and Syria. U.S. programs to help achieve these priorities include Foreign Military Financing, International Military Education and Training (IMET), International Narcotics Control and Law Enforcement (INCLE), Antiterrorism Assistance, Counterterrorism Financing, Export Control and Related Border Security, and Section 1206 and 1207 authorities. While strategic goals have not changed, program implementation has changed to meet conditions on the ground, according to U.S. officials. For example, the Department of State (State) delayed committing Foreign Military Financing funds to Lebanon for 3 months in 2010, following an exchange of fire between the Lebanese Armed Forces and Israeli forces. U.S. agencies allocated over $925 million for security assistance programs for Lebanon from fiscal years 2007 through 2012; State has disbursed and the Department of Defense (DOD) has committed the majority of the funds. Total U.S. Security Assistance Allocated for Lebanon, Fiscal Years Dollars (in thousands) Fiscal year Source: GAO analysis of State data. To date, State has evaluated only one of its security assistance programs for Lebanon, the INCLE program; neither State nor DOD has completed plans or established time frames to evaluate the other programs. State's evaluation policy requires that certain programs be evaluated periodically. Without such evaluations, State and DOD have little objective evidence to show that the programs have been effective or what the proper mix of programs should be. Evaluations can be facilitated through appropriate performance measurement. However, GAO and other agencies have previously reported deficiencies in how agencies measure program performance. For example, GAO found in 2011 that the I MET program evaluation efforts had few of the elements commonly accepted as appropriate for measuring performance. State and DOD are undertaking efforts to develop better performance indicators United States Government Accountability Office

8 GAO March 2013 U.S. ASSISTANCE TO YEMEN Actions Needed to Improve Oversight of Emergency Food Aid and Assess Security Assistance Highlights of GA , a report to congressional committees Why GAO Did This Study The terrorist group AQAP, one of the top threats to U.S. national security, is based in Yemen-a country facing serious economic and social challenges and undergoing a difficult political transition following civil unrest in Since 2007, State, DOD, and USAID have allocated over $1 billion in assistance to help Yemen counter AQAP and address other challenges. The three largest U.S. assistance programs in Yemen are USAID's Food for Peace program, which has provided emergency food aid, and DOD's Section 1206 and 1207(n) programs, which have provided training and equipment to Yemeni security forces. In response to a Senate report that directed GAO to review U.S. assistance to Yemen, and following up on GAO's Februarv 2012 report on the types and amounts of such assistance, GAO examined (1) the extent of progress made toward U.S. strategic goals for Yemen, (2) the extent of progress made by the Food for Peace and Section 1206 and 1207(n) programs, and (3) key challenges to U.S. assistance efforts. GAO reviewed agency documents and met with U.S. and Yemeni officials and implementing partners in Washington, D.C., and Sana'a, Yemen. What GAO Recommends GAO recommends that USAID improve performance reporting on Food for Peace efforts in Yemen and that DOD collect and analyze data on the effectiveness of the Section 1206 and 1207(n) programs in Yemen until security conditions permit an evaluation of these programs. USAID and DOD concurred with GAO's recommendations. View GA For more information, contact Charles Michael Johnson, Jr., at (202) or What GAO Found Progress toward U.S. strategic goals for Yemen has been mixed. The Departments of State (State) and Defense (DOD) and the U.S. Agency for International Development (USAID) have conducted numerous civilian and security assistance activities in support of these strategic goals (see figure below). Although some progress has been made since the civil unrest in 2011, obstacles remain to achieving each goal. For example, while there has been an orderly political transition to a new president, key milestones-such as convening a national dialogue to promote reconciliation-have been delayed. In addition, while Yemeni security forces have retaken territory seized by al Qaeda in the Arabian Peninsula (AQAP) in 2011, the security situation remains unstable. U.S. Goals for Yemen and Agencies Providing Assistance in Support Supporting government transition State USAID DOD Strengthening governance State USAID Sou ce: GAO analysis of State. DOD. and USAID dala. Providing humanitarian relief Stale USAID Encouf8ging economic; development State USAID Improving security and combating AQAP USAID data indicate that the Food for Peace program exceeded most of its annual targets between fiscal years 2008 and 2011 for the number of individuals in Yemen benefiting from food donations. However, reports to Congress about the program have lacked timeliness, accuracy, clarity, and consistency. With regard to the Section 1206 and 1207(n) programs, DOD has developed an evaluation process to assess the programs' effectiveness but has not conducted an evaluation in Yemen, citing security concerns. Consequently, limited information exists for decision makers to use in conducting oversight of these assistance programs and making future funding decisions. Security conditions and political divisions in Yemen pose key challenges to U.S. assistance efforts. First, Yemen's unstable security situation constrains U.S. training of Yemeni security forces, restricts oversight of civilian assistance projects, and endangers Yemeni nationals who work for the United States. For example, a Yemeni employee of the U.S. embassy was murdered in October 2012, and other Yemeni staff at the embassy, as well as their families, face threats. Second, because of leadership and coordination challenges within the Yemeni government, key recipients of U.S. security assistance made limited use of this assistance until recently to combat AQAP in support of the U.S. strategic goal of improving Yemen's security. However, according to DOD officials, recent actions by the Yemeni government to replace key leaders of security force units and reorganize security ministries have addressed some of these challenges. State DOD United States Government Accountability Office

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