Federal Workforce: Key Considerations for Agencies Returning Employees to Workplaces during Pandemics

Federal employees perform critical functions across multiple mission areas, from those vital to the long-term well-being of the country to those directly charged with aspects of public safety. Major emergencies, such as the COVID-19 pandemic, can pose threats to employees' safety and conditions may ebb and flow over an extended period. During these situations, federal agencies have a responsibility to provide an environment for employees to perform their jobs safely and effectively.

This statement provides (1) key considerations based on GAO's prior work for federal agencies as federal workers reenter the workplace; (2) an illustrative example of how the Census Bureau was forced to suspend major Decennial Census field operations and the process it used to resume operations; and (3) key practices for ensuring telework contributes to continuity of operations. This statement is based on a large body of GAO work on pandemic preparedness, reviews of the Decennial Census, and federal human capital management issued from July 2003 through June 2020.

The rapidly escalating challenges from the Coronavirus Disease 2019 (COVID-19) global outbreak present critical workforce issues for federal agencies to assess and address. GAO's prior work on pandemics and human capital issues has shown that agencies should consider a range of factors to carry out their missions while protecting their workforce and the members of the public with whom they interact.

Key considerations for federal workers' reentry to workplaces . As federal agencies manage operations during the COVID-19 pandemic and plan for their employees to safely return to workplaces, GAO's prior work has shown that it is important for agencies to identify mission essential functions that cannot be performed remotely when deciding who needs to return to the office. Agencies should also consider the exposure risk level and local conditions when deciding whether to reopen offices across the country. To protect employees as they reenter the workforce, it will be important for agencies to have appropriate protection measures in place. For example, agencies should consider how they can ensure adequate distribution of hygiene supplies. They should also consider changes to the work environment to reduce workplace hazards, and implement social distancing strategies.

How the Census Bureau decided to resume Decennial Census operations. The U.S. Census Bureau offers an example of how an agency suspended and resumed operations under the current pandemic. In March 2020, the U.S. Census Bureau suspended field operations of the Decennial Census and took a phased approach to resuming operations at its area census offices. As of June 11, all area census offices had resumed operations. Key aspects of resuming operations at area census offices included: (1) taking a phased approach to restarting operations, such as resuming operations that required less physical interaction first; (2) making operational changes to minimize face-to-face interactions; (3) addressing worker safety concerns; and (4) communicating pandemic plans to ensure continued operations.

Key practices for ensuring telework contributes to continuity of operations. Several key practices GAO previously identified are useful for agencies to help ensure telework contributes to continuity of operations during the current pandemic and in the future. Specifically, agencies should consider based on their current experiences whether: (1) their policies and guidance related to telework are sufficient to ensure that their workforces are telework ready and balances are struck between employees' personal circumstances and work responsibilities; (2) the extent to which their telework infrastructure, including technical support and security, is adequate to support increased telework; (3) procedures and standards are in place that ensure telework does not diminish organizational and employee performance; and (4) the processes, procedures, and tracking systems to collect data provide the information needed to evaluate the use of telework. These assessments will assist agencies in considering broader changes to their policies and procedures related to telework as employees are called back to their duty stations.

I am pleased to be here today to discuss how our previous work on  pandemics, the 2020 Decennial Census and federal telework, may inform  key decisions by federal agencies as they plan to safely return federal  employees to their official duty stations. In the event of emergencies  including the current Coronavirus Disease 2019 (COVID-19) pandemic,  federal employees responsible for supporting their agencies’ mission  essential functions are expected to continue their work in order to sustain  agency operations.

Federal employees perform functions across a multitude of mission  areas, from those vital to the long-term well-being of the country—such as  environmental protection, intelligence, social work, and financial  services—to those directly charged with aspects of public safety— including corrections, airport and aviation safety, medical services, border  protection, and agricultural safety. The rapidly escalating challenges from  the COVID-19 global outbreak present critical workforce issues for federal  agencies to assess and address. Major emergencies, such as the  COVID-19 pandemic, can pose threats to employees’ safety and  hazardous conditions may ebb and flow over an extended period. Federal  agencies have a responsibility to provide an environment for employees  to perform their jobs safely and effectively.

This statement provides (1) key considerations for federal agencies as  federal workers reenter the workplace; (2) an illustrative example of how  the Census Bureau (Bureau) was forced to suspend major Decennial  Census field operations and the process it used to resume operations;  and (3) key practices for ensuring telework contributes to continuity of  operations and lessons learned for telework to inform opportunities going  forward.

We have recently initiated reviews of federal agencies’ use of telework  and continuity of operations (COOP) plans in response to the COVID-19  pandemic. As part of that work, we plan to assess how agencies  incorporate the key considerations and practices we have identified  related to pandemic preparedness and telework. We also plan to review  the successes and challenges agencies experienced managing  operations throughout the COVID-19 pandemic, including lessons learned  and planned changes to better prepare agencies for the future.

This statement is based on our body of work on pandemic preparedness,  federal human capital management, and reviews of the Decennial  Census issued primarily between July 2003 and June 2020. More  detailed information on our objectives, scope, and methodology for that  work can be found in the issued reports.

We conducted the work on which this statement is based 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 the evidence obtained provides  a reasonable basis for our findings and conclusions based on our audit  objectives.

Key Considerations for Federal Workers’ Reentry to Workplaces

We have previously reported on how federal agencies were planning to  protect their federal workers during a pandemic, as well as lessons  learned from the H1N1 pandemic, the most recent pandemic experienced  by our nation prior to COVID-19. Based on these lessons, and further  informed by more recent events, we have identified key issues for federal  agencies to consider as their employees reenter the workplace.

Maintain Continuous Communication with Employees

Agencies should maintain continuous communication with employees,  and their representatives, during a pandemic. In particular, agencies  should identify employee concerns and communicate human capital  guidance such as pay, leave, staffing, and other human capital flexibilities  to employees to help to ensure the continuity of agencies’ operations and  mission essential functions. It is important that employees understand the  policies and requirements of their agencies, and the alternatives, such as  telework, that may be available to them. Continuous communication will  also help agencies to provide real-time information to employees as  conditions evolve.

Identify Mission-Essential Functions and Employees, and Classify Their Exposure Risk Level

Employees who must work onsite during a pandemic will face varying  levels of exposure risk. The level of risk depends, in part, on whether or  not they will be in close proximity to people potentially infected with the  virus. As a first step, it is important that agencies identify mission  essential functions that cannot be performed remotely, as well as the  related number of employees who will perform those functions and their  risk of exposure. Agencies should consider how they will continue to  update their determinations and monitor the associated risks, as these  factors could affect decisions on reentry as conditions evolve.

Make Decisions about Reentry Based on Local Conditions

It is important for federal agencies to factor-in local conditions of the  pandemic at the component and facility level in their determinations  regarding workforce reentry rather than applying across-the-board  decisions based on agencies’ headquarters locations. Agencies should  consider making decisions about reentry, including precautions and  safeguards agencies take, based on the local prevalence of the pandemic  at each site. As agencies consider local conditions for reentry, they  should share information and cooperate with other agencies located in  the same area. These reentry decisions could change over time as the  pandemic progresses, such as if there is a second or third wave of  outbreaks. It is important that agencies’ plans to protect their workforce  for a pandemic are operational at all levels of the organization; particularly  for those workers who have to perform mission-essential functions onsite.

Have Appropriate Protection Measures in Place to Protect Employees

To protect employees as they reenter their workplaces, agencies should  have appropriate protection measures in place, by exposure risk level.  For example, an agency could make changes to the work environment to  reduce workplace hazards, such as by installing sneeze guards as a  barrier between employees who must have frequent contact with other  employees or the public. Additionally, an agency could provide personal  protective equipment (PPE), such as surgical masks, gloves, and N-95  respirators, to employees which, if used correctly, can help prevent some  exposures.

Agencies will want to ensure that they have an adequate supply of  hygiene supplies, such as hand sanitizers, and a plan for distributing  those supplies within the agency. Some basic hygiene precautions, such  as encouraging employees to wash their hands or use a hand sanitizer  after they cough, sneeze, or blow their noses, can be implemented in  every workplace. Agencies will also want to provide supplemental  cleaning programs for common areas.

Avoiding crowded settings through social distancing strategies is one of  the best ways to prevent infection during an influenza pandemic.  Agencies can implement various social distancing strategies to avoid  situations that increase workers’ risk of exposure to a pandemic virus. For  those functions that can be performed remotely, agencies may consider  maximizing the use of telework, which is discussed in greater detail later  in this statement.

Other strategies agencies should consider include avoiding unnecessary  travel, restricting in-person meetings and gatherings, and allowing flexible  schedules to reduce the number of employees in the building at the same  time. Agencies should also consider workplace reconfiguration (such as  building walls or partitions between workstations), office-specific protocols  (such as limiting personal contacts among staff), and making decisions  about reopening office fitness and childcare centers as part of separate  risk-based decision processes.

Establish Protocols to Prioritize and Distribute Antivirals and Vaccines

When medical countermeasures—such as antivirals and vaccines—are  developed, it will be important for agencies to decide the extent to which  these countermeasures will be provided to employees. In cases where  countermeasures are going to be provided to employees, agencies  should consider actions necessary to procure them, and establish clearly- defined, well-documented, and consistently-applied protocols to prioritize  and allocate their distribution.

Decennial Census— Considerations Made as Area Offices Resume Field Operations

The Bureau presents an illustrative example on continuity of operations  and decision making for resumption of operations. The Bureau has both  permanent staff in headquarters and a large local field infrastructure of  248 Area Census Offices (ACO) with short-term staff to implement the  decennial census.

On March 11, 2020, the World Health Organization declared COVID-19 a  pandemic, just a day before invitations to respond to the 2020 Census  were scheduled to arrive in mailboxes across the country, and as peak  census operations were set to begin. In March and April 2020, the Bureau  suspended operations until June 1 and extended key operations. Since  that time, the Bureau announced it would resume operations at additional  ACOs each week, and as of June 11 all ACOs had resumed operations.  Key aspects of reopening Bureau ACOs included (1) a phased approach  to resuming operations, (2) operational changes in response to  challenges related to COVID-19, (3) addressing worker safety concerns,  (4) communicating pandemic plans to ensure continued operations, and  (5) contingency planning for risks.

The Bureau took a phased approach to resuming operations at its ACOs.  To make these decisions, the Bureau considered multiple factors  including whether the state in which each ACO was located had begun  phased reopening, whether data on federally established health criteria  supported the decision to restart, and whether the Bureau could meet the  safety needs of ACO employees and the public. In our late May survey of  ACO managers, responses on the Bureau’s efforts to reopen offices  varied. For example, 66 percent of ACO managers responding to our late  May survey reported satisfaction with the process of recalling office staff,  68 percent with readiness to conduct field operations, and 75 percent with  readiness to conduct office operations.

Operations resumed in a phased manner not only by office, but also by  function. As the Bureau resumed operations, it was able to resume  operations that required less physical interaction, such as Update Leave,  in which field staff deliver questionnaires to homes that might not receive  mail delivered to their doors. Operations that require interviewing  residents, such as Non-Response Follow Up, were delayed until August.

Operational Changes to Maintain Social Distance in Response to Challenges Related to COVID-19

The Bureau has also made a number of changes to its 2020 Census  operations to minimize face-to-face interactions. The Bureau modified its  Update Leave operation, directing field staff to update the addresses by  observation when delivering a questionnaire, instead of knocking on  doors to speak with residents.

To reduce in-person contact for the Group Quarters operation, which  enumerates facilities such as prisons, nursing facilities, and college  dormitories, Bureau officials told us they were contacting facilities to  encourage them to shift from in-person enumeration to electronic  responses. In late April, the Bureau also authorized its ACOs to call those  facilities that had previously opted to respond by providing a paper listing  of residents. Census staff asked the facilities to mail the listing back to the  ACO rather than having the ACO send staff to pick up the paper listing.

The Bureau stated that it will coordinate with federal, state, and local  health officials to put appropriate protocols and procedures in place and  ensure adequate PPE and cleaning supplies. In early May, the Bureau  announced that it had ordered this equipment for all field staff and that  these materials would be secured and provided before resumption of  operations.

Bureau officials told us they are distributing PPE and cleaning supplies to  its 248 ACOs on a rolling basis, prioritizing delivery to those ACOs that  were resuming major field operations, such as Update Leave. In our late  May survey, ACO manager satisfaction was relatively high regarding PPE  for staff conducting Update Leave (66 percent), the largest field operation  being conducted at the time. In contrast, managers at that time reported  some of their lowest satisfaction rates when asked about PPE adequacy  for their office and field workers more generally (34 and 43 percent,  respectively).

ACO managers reported higher satisfaction in late May than in early April  with their ACO’s ability to safely manage employees and operations  during the pandemic (increasing from 55 to 65 percent on average across  three questions on this topic). Despite this increase in confidence,  managers expressed concerns regarding worker safety in open-ended  comments. For example, in late May managers expressed concerns  regarding how fingerprinting of large numbers of staff—necessary to fulfill  the census mission—could be conducted safely under conditions of social  distancing. In addition, more than 15 comments in early April and 11 in  late May expressed concerns about the ability of the ACO management  teams to telework. These included concerns about the inadequate  number of laptops and who was expected to report to their local office.

Communicating Pandemic Plans to Ensure Continued Operations

The Bureau created a COVID-19 Internal Task Force to create a  communications plan and appropriate workforce flexibilities. The Bureau  sent emails to regional staff with updated information on delaying field  operations and prepared documents to answer questions about the  delays, office operating status, payroll, hiring, and training.

Responses to our surveys of ACO managers highlighted the need for the  Bureau to ensure open lines of communications. Between early April and  late May, respondent satisfaction increased regarding the timeliness and  clarity of Bureau communication about its pandemic plan; however,  satisfaction in these areas remained relatively low. Specifically, reported  satisfaction increased for communication timeliness (from 35 to 45  percent) and clarity (from 42 to 51 percent). More than 50 ACO managers  commented about communication challenges such as conflicting direction  from different sources and guidance received shortly before the  implementation date.

Contingency Planning for Risks Including an Epidemic

In May 2019, we reported that the Bureau did not have contingency plans  for many identified risks including for major disasters—such as an  epidemic—and recommended that it develop contingency plans for all  risks that did not have one. The Bureau updated its risk register for major  disasters to include a contingency plan.

According to the Bureau’s March 2020 risk register, the contingency plan  for any major disaster—including an epidemic—is rapid response,  meaning the Bureau would develop a plan to address the risk once it was  realized. Bureau officials told us that, depending on the type of major  disaster, response would vary widely and even if they had a more  detailed contingency plan for a pandemic it would have never addressed  the magnitude of the current national emergency that is taking place  across the country.

Key Practices for Ensuring Telework Contributes to Continuity of Operations during the Current Pandemic and Provides an Expanded Workforce Option in the Future

We have identified key practices in telework-related literature and  guidelines that federal agencies should implement in developing telework  programs. Also, in 2011, we reported that the Office of Personnel  Management, the General Services Administration, and the Federal  Emergency Management Agency had suggested several practices to  federal agencies, in various telework or emergency-related guidance  documents, for how to ensure telework is part of continuity of operations  planning. These practices generally align with those we previously  identified.

Based on this prior work, we have identified several practices that may be  especially useful for agencies to help ensure telework programs  contribute to continuity of operations during COVID-19 and other major  emergencies. These practices may be especially important if substantial  numbers of employees remain out of their workplaces for an extended  period or if agencies need to reverse their reentry decisions based on  changing public health circumstances. In addition, agencies’ experiences  with telework during the current pandemic may suggest opportunities to  increase the availability of telework in the future. These practices can be  grouped into four general categories: (1) policies and guidance related to  telework; (2) technology; (3) performance management; and (4) program  evaluation.

Policies and Guidance Related to Telework

Major emergencies, such as a pandemic, underscore the importance of  establishing and updating clear policies and guidance related to telework  as agencies’ continuity of operations may depend on employees working  remotely for extended periods. Agencies should assess whether their  policies and guidance were sufficient to ensure that their workforces were  telework ready and understood the agency’s expectation of employees  regarding teleworking during this emergency. The current crisis presents  an opportunity for agencies to assess their established policies or  requirements to ensure that they (1) balance employees’ personal  circumstances and work responsibilities, and (2) effectively facilitated  communication and engagement among teleworkers, managers, and  coworkers. Agencies should institute processes for communicating  human-capital guidance for emergencies (e.g., pay, leave, benefits) to  ensure they worked effectively.

For example, agencies should consider whether emergency employees  (including COOP employees) knew in advance about their mission critical  status. If not, agencies should ensure that, in case of future emergencies  including a potential resurgence of COVID-19, employees are notified  about requirements to report for work, remain at work, work at home, or  report to an alternative work site when government operations are  disrupted.

Similarly, agencies should consider whether their guidance on workplace  health and safety issues was adequate to ensure that teleworkers had  safe and adequate places to work off-site, and whether information- security training was provided to all individuals, or managers of  individuals, who teleworked during the current pandemic. It is important  for agencies to correct any identified deficiencies in the guidance and  training to improve the use of telework going forward, including for future  emergency situations that may again require telework.

We have reported that technology concerns are frequently cited barriers  to telework. To effectively use telework as a tool to continue operations  during major emergencies, agencies must have an appropriate  information technology infrastructure in place that allows large numbers of  employees to telework simultaneously. As such, it is important for  agencies to assess the extent to which their telework infrastructure was  adequate to support increased telework, especially during peak periods,  including whether technical support was sufficient, and address any  access and security issues they identify.

Ensuring established organizational performance standards are met is  important to maintaining agency operations whether employees are  physically present in the office or working remotely. During extended  periods of remote work, this could include setting expectations and  preferences for how employees communicate with supervisors before  telework arrangements begin. Agencies should consider whether their  existing procedures and standards meet the needs of employees who  teleworked and whether they ensured that telework did not diminish  employee and organizational performance.

Evaluation of telework may help agencies better understand the impact  their increased use of telework had on their ability to achieve goals and  accomplish missions, and could allow them to make adjustments to  telework moving forward as employees are expected to return to their  duty stations. As part of such an evaluation, agencies should assess  whether their processes, procedures, and tracking systems to collect data  provided the information needed to evaluate telework.

In conclusion, federal agencies have a responsibility to provide safe  workplaces for employees to perform their jobs. The evolving and growing  challenges from the COVID-19 pandemic present critical workforce safety  issues for federal agencies to assess and address as they seek to  continue their operations. As I have discussed today, agencies should  consider a number of factors when making decisions about employees  reentering workplaces. Lessons learned from previous pandemic  emergencies, as well as from telework use to ensure continuity of  operations, can be helpful as agencies navigate ongoing workforce safety  and productivity challenges. Consideration of these factors and lessons  learned from agencies’ current experiences may better prepare agencies  to address and respond to challenges from ongoing and future  emergencies.

Chairman Connolly, Ranking Member Hice, and Members of the  Subcommittee, this concludes my prepared statement. I would be happy  to respond to any questions you may have.

If you or your staff have any questions about this testimony, please  contact J. Christopher Mihm at (202) 512-6806 or MihmJ@gao.gov, or  Michelle B. Rosenberg at (202) 512-6806 or RosenbergM@gao.gov.

Individuals making key contributions to this testimony include Clifton G.  Douglas, Jr., Alexandra Edwards, Sarah E. Veale (Assistant Directors),  Keith O’Brien (Analyst-in-Charge), Ulyana Panchishin, Maya Chakko,  Karin Fangman, Steven Putansu, and Jacqueline Chapin. Key  contributors for the earlier work that supports this testimony are listed in  each product.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

We testified about key practices for agencies to consider as their workers re-enter the workplace during the COVID-19 pandemic or telework for sustained periods during this and other emergencies.

Communicating continuously with employees and considering local conditions when making workforce re-entry decisions

Ensuring sufficient hygiene supplies like hand sanitizer are available and implementing social distancing strategies (like reconfiguring the workplace and using telework when possible)

Assessing if technology and its support and security adequately sustain the increased use of telework, especially during peak periods


Military Equipment: Observations on the Transfer of Excess Humvees to Foreign Governments

DOD can declare defense equipment as excess to U.S. military needs and make it available for transfer as a grant or sale to foreign governments. The Foreign Assistance Act of 1961 authorizes these transfers as grants provided that they do not adversely affect the U.S. national technology and industrial base, among other things. In this regard, transfers pursuant to the Act must not limit U.S. companies' ability to sell new or used defense equipment to countries requesting the transfer.

The 2018 NDAA generally requires that Humvee transfers be modernized with a new powertrain and armor prior to being transferred. The Act also generally requires GAO to report on proposed and completed Humvee transfers and the process to determine if transfers will adversely affect the industrial base.

This report provides information on (1) excess Humvees requested and approved during fiscal years 2012 through 2018 and (2) how the Humvee manufacturer's perspectives on the proposed transfers have been addressed by DOD as part of the determination of any adverse industrial base effects.

GAO analyzed the latest DOD data on EDA Humvee transfers from fiscal years 2012 through 2018; reviewed DOD policies, guidance, and documents to gain insight into the process for determining industrial base effects of proposed transfers; and interviewed agency officials and Humvee manufacturer representatives.

Excess High Mobility Multipurpose Wheeled Vehicles (HMMWV)—commonly pronounced Humvees—are among thousands of items that the Department of Defense (DOD) can transfer to foreign governments at their request through the Excess Defense Articles (EDA) program. Twenty-three countries, primarily from the Middle East and Africa, requested 16,005 Humvees for the 7-year period GAO reviewed. DOD approves such requests if it determines:

excess U.S. inventory is available at the time of the request,

the request aligns with U.S. foreign policy objectives, such as using the vehicles to help combat terrorism, and

the U.S. industrial base will not be adversely affected by the transfer.

For example, DOD approved a country's request for excess Humvees for border security, counter-smuggling, and counter-terrorism efforts. DOD approved nearly half of the total Humvees requested for fiscal years 2012 through 2018 (see figure). However, DOD has halted further approvals since the start of fiscal year 2017 due to concerns expressed by the Humvee manufacturer and language in the FY 2018 National Defense Authorization Act (2018 NDAA) and conference report that generally says Humvees must be modernized at no cost to DOD.

GAO found that DOD considered the Humvee manufacturer's perspectives on proposed transfers and generally took steps to mitigate concerns about transfers that could siphon potential business from the manufacturer or compete with its sales efforts. Further, GAO found that generally, when the manufacturer objected to a transfer, the manufacturer withdrew its objection after receiving business opportunities to repair or upgrade vehicles for DOD or a requesting government's fleet. DOD officials also noted that most of the countries requesting Humvees through the EDA program find it cost-prohibitive to purchase new Humvees directly from the manufacturer. As a result, these countries rely on EDA Humvees to sustain their military fleets.

The U.S. government engages in various efforts to build the capacity of  foreign partners to address security-related threats and further U.S.  national security and foreign policy objectives. One such effort, the  Excess Defense Articles (EDA) program, allows for the transfer of  defense articles no longer needed by the military departments. Under the  EDA program, defense items can be transferred to foreign governments  or international organizations; at fundamentally no cost to the recipient  (via a grant) or at a percentage of the original acquisition value of the item  (via sale). High Mobility Multipurpose Wheeled Vehicles (HMMWV)— commonly pronounced Humvees— are one of thousands of such items  that can be transferred through the EDA program.

The Foreign Assistance Act of 1961 authorized the transfer of excess  defense items to foreign countries provided that, among other things,  such transfers do not adversely affect the U.S. national technology and  industrial base. The Defense Security Cooperation Agency (DSCA) within  the Department of Defense (DOD) has responsibility for determining  whether proposed transfers could adversely affect U.S. industries. In  recent years, the Humvee manufacturer, has expressed concerns that  transfers of excess Humvees to foreign governments have the potential to  limit the manufacturer’s ability to directly sell new or used vehicles to  requesting countries. The Fiscal Year 2018 National Defense  Authorization Act (NDAA) included certain requirements pertaining to the  transfer of excess Humvees. Among other things, the NDAA required that  any Humvees transferred to a foreign country must be modernized in a  manner consistent with vehicles that would be used for operational  purposes by the U.S. military. The corresponding conference report  stated an expectation that the vehicles are to be upgraded—with  a  modernized armored or armor-capable crew compartment and a new  modernized powertrain—at no cost to DOD, but at the foreign  governments’ own expense, unless a waiver is granted.

In light of concerns about how any adverse effect of proposed Humvee  transfers is being determined, the 2018 NDAA included a provision for  GAO to report on proposed and completed transfers of excess Humvees  that are provided via a grant pursuant to the Foreign Assistance Act.

This report provides information about (1) DOD’s approval of grant  transfers of excess Humvees requested by foreign governments from  fiscal years 2012 through 2018 and (2) how the Humvee manufacturer’s  perspectives on the proposed transfers have been addressed by DOD as  part of the determination of any adverse industrial base effects.

Pursuant to the 2018 NDAA, this report addresses transfers of excess  Humvees that are provided via a grant under the Foreign Assistance Act  and does not address excess defense items  that can be offered for  transfer to other entities such as U.S. state and local governments.  Transfers of EDA items to foreign governments under the Foreign  Assistance Act are generally referred to as grants. Transfers of EDA  items to foreign governments under the authority of the Arms Export  Control Act are referred to as sales. For purposes of this report, unless  otherwise indicated, transfers refer to grants.

To provide information about DOD’s approval of transfers of excess  Humvees, we analyzed data for fiscal years 2012 through 2018 (the latest  and most complete data at the time of our review) from the Army, DSCA,  and the Defense Logistics Agency (DLA). These data provided insight  about the countries that have requested EDA Humvees, the condition and  types of vehicles delivered to those countries, and delivery time frames.  We also reviewed documentation provided by countries requesting the  vehicles to identify the intended purpose of the request. We interviewed  agency officials responsible for the data to identify the quality controls in  place to help ensure the data are accurate and reliable. Furthermore, we  reviewed the data for issues such as missing data elements and  duplicates, among other steps. Based on these steps, we determined the  data were sufficiently reliable for the purposes of reporting information  about EDA Humvee transfer requests over our 7-year timeframe.

To provide information about how the Humvee manufacturer’s  perspectives on the proposed transfers have been addressed by DOD as  part of the determination of any adverse industrial base effects, we  reviewed documents and data, and interviewed officials from DSCA and  the Bureau of Industry and Security (BIS) within the Commerce  Department, which advises DSCA on industry effects of proposed EDA  transfers. We reviewed BIS policies and procedures related to the EDA  program to identify the factors BIS considers in making a  recommendation about the adverse effect of a proposed transfer. We also  reviewed data generated by BIS to identify the extent to which the  Humvee manufacturer objected to proposed transfers for the 7-year  period included in our review. We also reviewed data provided by the  Army on the number of Humvees procured for its use and for sale to  foreign governments through the Foreign Military Sales (FMS) program  from fiscal years 2012 through 2018. To gain insight about DSCA and  BIS’s approach to assess industrial base effects of proposed transfers,  we selected two transfer requests as illustrative case studies: a 2016  transfer for Afghanistan, which was the single largest proposed transfer,  and a 2016 transfer for Albania, which was the only proposed transfer for  which BIS did not sustain the Humvee manufacturer’s objection. We also  spoke with representatives from AM General to obtain their perspectives  on the EDA program and the effect of EDA transfers on their business.

We conducted this performance audit from February 2019 to February  2020 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 EDA program is one of several programs designed to build partner  capacity through the provision of excess defense equipment and services  to foreign governments or international organizations such as the North  Atlantic Treaty Organization (NATO). These excess items are provided as  part of U.S. security assistance efforts and help to support U.S. foreign  policy and national security objectives. The Foreign Assistance Act  permits the transfer of excess defense articles provided that such  transfers will not adversely affect the industrial base.  In particular, under  the Act, transfers must not reduce the opportunity for U.S. contractors to  sell new or used defense equipment to countries requesting the transfer.   Excess defense items can include aircraft, ammunition, clothing, radios,  trucks, and spare parts.  According to DOD officials, the vast majority of  EDA items are low- to medium-level technologies that, if not transferred,  would either be stored at cost to DOD or destroyed. Excess defense  items can be transferred as grants—as permitted by the Foreign  Assistance Act—or sold to eligible foreign governments at a reduced cost  in “as is, where is” condition pursuant to the Arms Export Control Act.   This means that the requesting foreign government is generally required  to pay all repair or refurbishment costs, as well as all costs associated  with transporting the EDA item—which can be located in the United  States or outside the continental United States. As previously mentioned,  for purposes of this report, transfers refer to grants of EDA items unless  otherwise indicated.

DSCA has overall responsibility for administering the EDA program. The  Director of DSCA has been delegated authority to make the determination  on whether a proposed transfer could adversely affect the industrial  base. The military departments determine when defense items are no  longer needed and can designate them as excess and, upon approval,  can offer them as EDAs. Multiple federal entities play a role in the EDA  program, as illustrated in figure 1.

Following the interagency coordination, if DSCA determines the proposed  transfer will not adversely affect industry and thus can proceed, DSCA  notifies Congress about proposed transfers that are valued at over $7  million or that contain significant military equipment. As part of the  congressional notification, DSCA provides information on (1) the purpose  for which the item is being provided to the country, (2) whether the item  has been previously provided to the country, (3) the current value and  original acquisition value of the item, and (4) its findings regarding how  industry will be affected by the proposed transfer. After a 30-day  congressional notification period, DSCA authorizes the proposed transfer  in consultation with State, provided that Congress does not object and all  agencies concur with the transfer.

DSCA follows the same process to review and approve all proposed EDA  transfers—including for excess Humvees. One unique difference for  Humvee transfers is a 2018 legislative requirement that Humvees be  modernized with an armored or armor-capable crew compartment and a  new modernized powertrain prior to a transfer, unless a waiver is granted.

Humvees, which are four-wheel drive military light trucks, have been part  of DOD’s light tactical wheeled vehicle fleet since the 1980s. While the  Army is the program office for Humvees, the vehicles have been used by  other military departments in support of their own combat operations.  Humvees were initially fielded to serve as a light, highly mobile and  unarmored vehicle and are commonly used for combat operations;  however, the Army National Guard also procures these vehicles for use in  homeland defense and natural disaster relief operations. In efforts to  adapt the Humvee to modern requirements for combat operations, the  Army has increased the performance and protection of the vehicle over  time.

Over the past 30 years, AM General has produced three models—the  M900, M1000, and M1100 series. The company no longer produces the  M900 and M1000 series for combat operations and certain parts and  components that are unique to these vehicles are obsolete or otherwise  not readily available. The M1100 series, which is still in production and  supports combat operations and many non-combat related operational  and support missions, offers newer capabilities such as increased weight  capacity. With the additional weight capacity, the 1100 series is the only  model that can support the added armor requirements under the new  legislative requirement without a substantial overhaul. Figure 2 highlights  some of the capabilities of the different Humvee models.

DOD’s light tactical wheeled vehicle strategy has changed since 2010,  following lessons learned from military operations in Iraq and Afghanistan.  DOD plans to shift from procuring new Humvees to sustaining existing  vehicles in its fleet. In its 2014 Tactical Wheeled Vehicle Strategy, the  Army stated plans to buy fewer new Humvees because the vehicle no  longer fully meets its evolving mobility or protection requirements. While  DOD decreased its procurement of Humvees for military operations, it  has plans to upgrade and refurbish existing vehicles. There are nearly  300,000 Humvees or vehicles with the Humvee chassis operating globally  by the U.S. military and other foreign governments. These vehicles are  expected to require ongoing maintenance and upgrades for the next 20 to  30 years.

DOD routinely conducts industrial base risk  assessments to gain insight on the viability of  current suppliers to meet its current and future  requirements. The assessment takes into  account a range of considerations including  (1) factors that could cause a current supplier  to go out of business or exit the market and  (2) the extent to which an existing supplier  relies on DOD, foreign military sales, or  commercial sales.  While these assessments  are not routinely conducted as part of the  excess defense article (EDA) transfer  process, they may be undertaken to provide  input on EDA transfers, as needed.

The Army has efforts underway to acquire a new vehicle—the Joint Light  Tactical Vehicle (JLTV)—to meet its future requirements. Although a  different manufacturer was awarded the JLTV contract, in its industrial  base risk assessment for this requirement, the Army stated it intends to  maintain two manufacturers—including AM General—to meet its ongoing  needs for light tactical wheeled vehicles. In a 2018 congressional briefing,  the Army’s Acquisition, Logistics, and Technology Command estimated  maintaining a relatively even mix of both vehicles—54,810 Humvees from  existing inventory and 49,099 new JLTVs—to sustain operations for the  foreseeable future. However, the Army is conducting a more  comprehensive review of its light tactical vehicle requirements and plans  to release its findings in an updated acquisition strategy expected in  2022.

DSCA Approved Almost Half of Humvee Requests to Aid Foreign Governments’ Security Needs, but Approvals Have Halted Since 2017

DOD approved nearly half of the total Humvees requested by foreign  governments for fiscal years 2012 through 2018. The requests were in  support of foreign governments’ security efforts, such as counterterrorism.  However, the number that was actually delivered was less than those  approved because DOD decreased the number or foreign governments  canceled their requests for various reasons. DSCA halted approvals of  EDA Humvee requests since the start of fiscal year 2017 and raised  concerns about the new statutory requirement to modernize Humvees  prior to transfer.

Nearly Half of EDA Humvee Transfer Requests Were Approved but Number Delivered Was Reduced for Various Reasons

DOD approved nearly half of the total Humvees requested by foreign  governments for fiscal years 2012 through 2018—7,612 vehicles of the  16,005 excess Humvees requested—but has not approved Humvee  requests made since the start of fiscal year 2017. Figure 3 shows the  number of Humvees requested and approved for transfer each fiscal  year.

The Majority of Humvee Requests Came from the Middle East and Africa Regions

In our analysis of data provided by the Army and DSCA, we found from  fiscal years 2012 through 2018, that 23 countries submitted requests for  Humvees, including some requests in fiscal year 2018. The delivery of  EDA items under the Foreign Assistance Act to certain countries is given  priority to the maximum extent feasible. These countries include certain  NATO countries, major non-NATO allies in the Middle East and Africa  regions, and the Philippines.  We found that the Middle East and Africa  regions accounted for 75 percent of the vehicles requested over this  period. Figure 4 shows the regional distribution of requests.

The majority of requests for Humvees from countries in the Middle East  and Africa regions were primarily to support various security-related  missions. For example, one country requested excess Humvees for  border security, counter smuggling, and counterterrorism operations.  Such security-related efforts by foreign countries align with the U.S. 2018  National Defense Strategy, which states DOD’s objective to prevent  terrorism globally and aid U.S. foreign partners in their counter-terrorism  efforts. Additionally, the strategy aims to strengthen alliances and attract  new partners by increasing interoperability to work together and  effectively achieve military objectives.

DSCA is required to state the comparative foreign policy benefits that the  United States would gain from a grant transfer rather than a sale when it  notifies Congress about a proposed transfer. In the documents we  reviewed, DSCA cited foreign policy benefits such as increasing the  capability of countries to take on a greater share of military operations,  supporting joint operations with NATO, or counterterrorism and counter- narcotics operations. For example, for one request, DSCA determined  that a requested transfer was in the U.S. national interest, as equipping  the foreign country’s armed forces with Humvees would allow them to  have an increased role in military operations in the Africa region. In turn,  this would reduce the country’s reliance on U.S. forces for NATO  operations.

In addition to requesting vehicles for security-related operations, some  countries planned to use vehicles for spare parts or had plans to refurbish  the vehicles on their own. We found that about two-thirds of the Humvees  delivered through the EDA program from fiscal years 2012 through 2018  were older models—either M900 or M1000 series—rather than the newer  M1100 series. Most countries receiving deliveries of older models were  seeking to replace existing vehicles in their fleet or to use EDA Humvees  for spare parts.

DSCA Halted Approvals and Cited Challenges Regarding New Statutory Requirements

As previously mentioned in this report, DSCA has not approved any EDA  Humvee requests since the start of fiscal year 2017. One reason,  according to our analysis of DSCA data, is the manufacturer’s objections  to proposed transfers. Another is because of the legislative provision in  the Fiscal Year 2018 NDAA that requires Humvees to be modernized with  an armored or armor-capable crew compartment and new, modernized  powertrain prior to transferring. The corresponding conference report  stated the conferees’ expectation that any modernization and  refurbishment work must generally be done at no cost to DOD. According  to DOD, the cost to modernize would be incurred by the requesting  foreign government. Since the provision’s enactment, DOD has not  exercised the authority to waive this legislative requirement for any  Humvee request. Foreign governments have not been willing to pay for  the modernization, so approvals have halted.

Since the enactment of the modernization requirement in December  2017, DSCA has received requests for 4,103 Humvees. According to  DSCA officials, when a foreign government submits a letter of request for  EDA Humvees, DSCA notifies the country of the modernization  requirement and its responsibility to pay for the cost to refurbish the  vehicles in accordance with the law. In DOD documents we reviewed,  foreign governments cited having limited budgets and being financially  unable to purchase defense equipment such as Humvees. As such, they  rely on the EDA program to acquire defense items. DSCA officials told us  that the modernization work is to be done at no cost to the U.S.  government; however, they added that paying the cost to modernize  Humvees can be cost-prohibitive for foreign governments.

Foreign governments can request, through DSCA, that the modernization  requirement be waived. Since December 2017, according to DSCA  officials, DSCA has received waiver requests from three foreign  governments but has not exercised the waiver authority. According to  DSCA officials, these requests likely will remain unapproved for the  foreseeable future; however, the provision requiring the refurbishment of  excess Humvees prior to transfer is set to expire in December 2020.  According to DSCA officials, DSCA plans to resume its normal EDA  approval process thereafter. Currently, according to DSCA officials, they  are encouraging foreign governments to look at other options to meet  their fleet requirements, including purchasing new Humvees. However,  DSCA officials acknowledge that, if a foreign government cannot afford to  buy new vehicles, DOD does not have any low-cost vehicles to offer as  an alternative solution.

However, DOD officials and Army documents we reviewed noted that  even if foreign governments were able to independently fund the  modernization costs, there are not sufficient quantities of the newer model  Humvees—M1100  series—in inventory that can support the additional  weight of the added armored capabilities for the modernized crew  compartment. According to DSCA documentation, the EDA program has  a little over a hundred vehicles that could be refurbished to the  modernization requirements. Additionally, most of the Humvees in DOD’s  inventory are older models that would first require a new expanded  vehicle chassis to withstand the weight of adding armor. The officials  likened the modernization process for the older model Humvees to  essentially building a whole new vehicle.

Determinations of Adverse Industrial Base Effects Are Driven by Increasing Objections from the Manufacturer, but Mitigation Actions Have Been Taken

DSCA’s determinations of whether there is an adverse industrial base  effect to approve Humvee transfers are largely based on objections from  the manufacturer about the proposed transfers. Since 2015, the Humvee  manufacturer has objected more frequently to the transfer of vehicles to  foreign governments. In all but one instance when the manufacturer  objected to a transfer, we found that DSCA and BIS took steps to address  concerns of the Humvee manufacturer and reach a resolution, such as  providing the manufacturer Humvee refurbishment work.

Manufacturer’s Objection Is the Primary Factor in DSCA’s Determination

DSCA’s decision on whether there is an adverse industrial base effect to  approve a transfer of Humvees is largely based on the manufacturer’s  perspective on a proposed transfer. DSCA has considerable latitude for  such decisions as the Foreign Assistance Act, as delegated, does not  specify how determinations should be made on whether proposed  transfers could adversely affect U.S. industries. Historically, DSCA has  sought input from BIS to aid its determination about potential industrial  base effects of proposed transfers. According to DSCA officials, all  proposed EDA Humvee transfers have undergone an assessment of  adverse industrial base effect by BIS. We found that BIS actively engages  the Humvee manufacturer on proposed transfer requests and supported  all but one objection from fiscal years 2012 through 2018. BIS’s standard  practice is to collect information from the prime contractor and other  suppliers to inform its recommendation to DSCA about possible industrial  base effects.

As part of its efforts regarding proposed Humvee transfers, BIS notified  AM General and provided information on all the transfer requests  including the requesting country; number of vehicles requested; the  vehicle model; and the country’s plans, if known, to repair or upgrade  EDA vehicles, including who the country intends to select for such work.  BIS officials told us that they request a response within 7 calendar days  on whether the manufacturer supports or objects to the proposed transfer.

In instances where the Humvee manufacturer objected to a transfer, BIS  required that the manufacturer provide an explanation of its objection. In  documents we reviewed, the manufacturer objected for various reasons,  including that a transfer would: (1) directly interfere with ongoing  marketing or planned sales to the requesting country, or (2) adversely  affect its business and that of its suppliers.

BIS’s standard procedure is to request proof of ongoing sales efforts if a  company states that a proposed transfer will interfere with potential sales.  In the cases where the Humvee manufacturer cited ongoing or planned  business development with a requesting country, BIS required that the  manufacturer provide information of its ongoing efforts to sell its vehicles  to the requesting country, including: documentation of recent or planned meetings with foreign government  officials and a timeline of the meetings; export licenses; and business plans.

If a manufacturer submits an objection, BIS will also check if they have  registered business activity with Commerce’s Advocacy Center, which  provides assistance to defense companies pursuing contracts with  overseas governments and government agencies. If BIS concludes the  Humvee manufacturer has a basis for its objection due to ongoing  business with the requesting country, it will recommend that DSCA not  authorize the transfer. According to DSCA officials, this is largely because  it considers the possibility that the transfer could dissuade requesting  foreign governments from purchasing new or used vehicles. Thus,  providing vehicles through the EDA program at no cost or a discounted  price to a foreign government could siphon potential business from the  manufacturer or could compete with the manufacturer’s sales efforts.  Under the Foreign Assistance Act, a transfer request cannot be fulfilled if  doing so will interfere with the manufacturer’s ability to sell equipment to  the requesting country. During fiscal years 2012 through 2018, we found  only one instance where DSCA, based on BIS’s recommendation, did not  support AM General’s objection. In that case—a request for Humvees  from Albania—DSCA moved forward and approved a Humvee transfer  because the manufacturer could not demonstrate ongoing business with  the requesting country.

Humvee Manufacturer Has Increasingly Objected to Transfers, Leading to Delays in Providing Vehicles to Requesting Countries

AM General has objected more frequently to the transfer of vehicles to  foreign governments since March 2015. In 2015, the JLTV production  contract was awarded to another contractor and the Humvee  manufacturer sold its commercial automotive plant, both of which  occurred in the wake of decreasing or nonrecurring DOD Humvee  procurements in comparison to past years. In total, the Humvee  manufacturer has challenged 11 transfer requests for over 4,000 vehicles  between fiscal years 2015 and 2018. The manufacturer told us that the  increasing number of proposed transfers is concerning because the  transfers amount to nearly 3 years’ worth of new vehicles it could produce  to sustain its production lines.

AM General representatives told us they will continue to object to the  transfer of older Humvee vehicles (M900 and M1000 models). For these  models, the representatives citied concerns that parts for these vehicles  are no longer in production, and thus the manufacturer cannot ensure  qualified parts are available for maintenance and repairs. They are also  concerned that older vehicles have the propensity to break down, which  could damage the Humvee brand internationally—particularly, if  counterfeit parts are used. In our review of documents describing  requesting countries’ use of vehicles, we found that older model vehicles  are, at times, accepted by foreign governments to use as spare parts to  maintain an existing fleet and to develop their workforce’s capability to  repair vehicles. However, we found that since 2015, the majority of  vehicles to which the manufacturer objected were the newer M1100  models—stemming largely from a single 2016 request for Afghanistan. To  support its objections to this transfer, AM General has stated that its own  international sales are an important source of revenue, particularly  because DOD has reduced its procurement of Humvees.

AM General representatives explained that proposed transfers through  the EDA program can threaten their company’s potential future sales to  foreign governments that may be less likely to purchase new Humvees if  DSCA approves transfers of used vehicles. According to the  manufacturer, each transfer is a potential one-for-one reduction of a  possible sale of a new vehicle to the requesting country, which can affect  its bottom line as well as the suppliers that provide parts and materials to  produce the Humvees. In our review of Army procurement data, we found  that many countries that requested excess Humvees have not purchased  them through the FMS program from fiscal years 2012 through 2018.  DSCA officials told us that most of the countries requesting Humvees  through the EDA program find it cost-prohibitive to purchase new Humvee  vehicles directly from the manufacturer. A new Humvee can cost between  $115,000 and $190,000 depending on the model and capabilities  included. As a result, these countries rely on EDA Humvees provided  through grants to sustain their military fleets. Figure 5 shows the number  of Humvees procured by DOD relative to the number of vehicles foreign  governments bought through the FMS program and those they were  granted via the EDA program.

We found that from fiscal years 2012 to 2018 AM General’s objections to  proposed EDA Humvee transfers have increased the time that it takes for  DSCA and BIS to review and make their determinations. If the  manufacturer did not object to a transfer, which was largely the case prior  to March 2015, BIS provided its recommendation to DSCA, on average,  within 21 days. However, our analysis showed that an objection to a  Humvee transfer on average added approximately 152 days to address  industry objections. DSCA officials acknowledged that the approval  process can be prolonged when the manufacturer objects to a proposed  transfer, potentially contributing to longer waiting periods for requesting  countries to receive the Humvees. In addition, the longer that vehicles  remain in storage, the more likely it is that they will require more repairs to  make them operational, resulting in increased costs to the requesting  foreign governments to refurbish them, according to a DSCA official.

Manufacturer representatives also told us they want to be involved earlier  in the process to provide input on the potential effects of proposed  transfers. We found that, on average, DSCA notifies BIS about 4 months  after a country submits its Humvee request and BIS reaches out to the  manufacturer a day or two later. A DSCA official explained that it can be a  challenge to involve the manufacturer earlier because the request is not  fully stable and could be revised for a number of reasons, including  countries canceling the request or changing requirements to obtain  different capabilities, and DOD internal policy considerations need to be  vetted before reaching out to the manufacturer.

Agencies Took Steps to Address Manufacturer’s Concerns

In recent years, DSCA and BIS have taken steps to address AM  General’s increasing objections to proposed transfers. In 2018, BIS  modified its approach to assess adverse effects of Humvee transfers to  consider an additional factor. Now, BIS considers the cumulative effect  and totality of previous EDA Humvee requests, in addition to assessing  each request on a case-by-case basis. According to BIS officials, this was  in response to the pattern of consistent objections that they were  receiving from the Humvee manufacturer. AM General acknowledged that  communication with DSCA and BIS about Humvee EDA transfers has  improved. For example, DSCA notified AM General about its decision to  sustain the company’s objection and, thus, not move forward on a  transfer request made in July 2019 for 2,000 vehicles. AM General told us  that in the past, DSCA did not notify AM General about whether it had  sustained or overruled the company’s objection to a proposed transfer.

AM General’s objections to EDA Humvee transfers have at times led to  additional business channels for the Humvee manufacturer. For example,  we found that the manufacturer received business opportunities from  EDA Humvee transfers to Afghanistan, Iraq, Jordan, and Thailand that  included, providing long-term sustainment and refurbishment of  Humvees, among other things. In response, the contractor withdrew over  a third of its objections between fiscal years 2012 and 2018 based on  receiving this type of work or reaching agreements with foreign  governments to provide fully operational Humvees. The remaining  transfers were cancelled; put on hold pending resolution with the Humvee  manufacturer; or in one case, moved forward with an objection in place.

The agreements to provide additional support can be financially beneficial  to the manufacturer and help sustain its production capabilities. For  example, we found that in 2012, the Humvee manufacturer objected to a  country’s transfer request of 250 vehicles, but withdrew their objection  after reaching an agreement with the foreign government to perform  much of the refurbishment work for those vehicles. In another case, we  found that for the 2016 proposed transfer of 2,461 vehicles to support the  Afghanistan National Security Force, the Humvee manufacturer objected,  citing concerns about the large number of vehicles requested, among  other concerns (see sidebar).  The proposed transfer of EDA Humvees  to Afghanistan was requested by DOD after a 2016 Senate report  expressed concerns about a lack of insight into the cost-benefit analysis  of procuring new equipment instead of refurbishing excess equipment.   In response to the proposed transfer, the manufacturer sent a letter to  BIS outlining their anticipated role in the Afghanistan transfer, including  obtaining Army contracts to add armor kits to  EDA vehicles, providing  new powered chassis, and if required, new Humvees.  The letter also  noted the Humvee manufacturer’s withdrawal of its objection to the  transfer. DSCA subsequently notified the manufacturer that it did not  agree with the terms AM General outlined in the letter to BIS and  specified that the proposed transfer would create business opportunities  for U.S. industry, including AM General, to refurbish EDA Humvees.  DSCA also added that it would continue to ensure that industry is notified  of all proposed Humvee EDA transfer requests so that industry can  provide input or express concerns.

According to DOD officials, the number of Humvees available for transfer  to Afghanistan was reduced as DOD decided to split the number of  available EDA Humvees in inventory at the time to meet requirements in  Afghanistan and Iraq. In total, 1,644 vehicles were identified for transfer to  Afghanistan. As part of this effort, according to information we received  from the Army, AM General, and the Office of the Undersecretary of  Defense for Policy, the Humvee manufacturer was awarded a contract to  provide armor kits for the 1,644 EDA Humvees being refurbished by the  Army’s Red River Depot. The manufacturer also provided other vehicle  parts as part of the EDA transfer request for Afghanistan. According to  DOD officials, it currently does not have plans to transfer additional  vehicles to Afghanistan to fulfill the remaining EDA vehicles requested as  part of the 2016 transfer request and will reevaluate future Afghanistan  requirements, as needed.

We provided a draft of this report to the Departments of Commerce and  Defense for review and comment. Both agencies provided technical  comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional  committees and the Secretaries of the Departments of Commerce and  Defense. In addition, this 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 II.

Appendix I: Objectives, Scope, and Methodology

This report provides information about (1) DOD’s approval of grant  transfers of excess High Mobility Multipurpose Wheeled Vehicles  (HMMWV)—commonly pronounced Humvees— requested by foreign  governments from fiscal years 2012 through 2018 and (2) how the  Humvee manufacturer’s perspectives on the proposed transfers have  been addressed by DOD as part of the determination of any adverse  industrial base effects. To provide information about DOD’s approval of  transfers of excess Humvees, we analyzed data for fiscal years 2012  through 2018 (the most recent available fiscal year at the time of our  review) from the U.S. Army Security Assistance Command, Defense  Security Cooperation Agency (DSCA), and the Defense Logistics Agency  (DLA). These data provided insight about the countries and geographic  regions that have requested excess defense article (EDA) Humvees as  well as the condition and types of vehicles delivered to foreign  governments. We also reviewed documentation provided by requesting  countries to identify the intended purpose of the request. We interviewed  agency officials responsible for the data to identify the quality controls in  place to help ensure the data are accurate and reliable.

To assess the reliability of each data source, we compared the data in  each DOD component’s data sets to ensure that the information was  complete and consistent. We did this by identifying common identifiers  used for the Humvee EDA transfers that occurred within the designated  7-year period. According to DSCA officials, the DSCA EDA database is a  consolidation of data provided annually by the military departments, and  DLA, and is manually entered into the database by DSCA officials.  Furthermore, we reviewed the data for issues such as missing data  elements and duplicates, among other steps.  Based on these steps  taken, we determined the data were sufficiently reliable for the purposes  of reporting information about EDA Humvee transfer requests. See table  1 of DOD data sources used to track information on excess defense  articles.

To provide information about how the Humvee manufacturer’s  perspectives on the proposed transfers have been addressed by DOD as  part of the determination of any adverse industrial base effects, we  reviewed documents, data, and interviewed officials from DSCA and the  Bureau of Industry and Security (BIS) within the Commerce Department,  that advises DSCA on industry effects of proposed EDA transfers. For  purposes of this report, unless otherwise indicated, transfers refers to  grants of EDA under the Foreign Assistance Act. We reviewed BIS  policies and procedures related to the EDA program to identify the factors  BIS considers in making adverse effect determinations. We also reviewed  data generated by BIS to identify the extent to which the Humvee  manufacturer objected to proposed transfers for the 7-year period  included in our review. We also reviewed data provided by the Army on  the number of Humvees procured for the Army’s use and for vehicles sold  to foreign governments through the Foreign Military Sales program from  fiscal years 2012 through 2018. To gain insight about DSCA and BIS’s  approach to assess industrial base effects of proposed transfers, we  selected two transfer requests as illustrative case studies: a 2016 transfer  for Afghanistan which was the single largest proposed transfer and a  2016 transfer for Albania as it was the only proposed transfer that BIS did  not sustain the manufacturer’s objection. We also spoke with  representatives from AM General to obtain their perspectives on the EDA  program and gain insight about the effect of EDA transfers on their  business.

Appendix II: GAO Contact and Staff Acknowledgments

Marie A. Mak, (202)-512-4841 or makm@gao.gov  In addition to the contact name above, Candice Wright (Assistant  Director) and Sameena Ismailjee (Analyst-in-Charge) managed this  review. James McCully, Lorraine Ettaro, Phillip Farah, Stephanie  Gustafson, Miranda Riemer, and Roxanna Sun made significant  contributions to this report.

Sometimes DOD determines that defense items—such as older model Humvees—are no longer needed. These vehicles are designated as excess and are made available to foreign countries upon request.

We found that 23 countries (mostly from the Middle East and Africa) requested excess Humvees from 2012-2018 to support activities like border security and counterterrorism operations. DOD approved nearly half of these requests.

The Humvee manufacturer expressed concerns that these requests might hurt its ability to sell new Humvees to these countries. However, DOD found that most of these countries could not afford to buy new Humvees.