The US Government Accountability Office (GAO) reported to Congress in December 2024 on failures of the Department of Defense (DOD) and other agencies in initiating and monitoring Reciprocal Defense Procurement (RDP) Agreements. The GAO prepared its report at the request of Congressional members who were concerned that DOD was not tracking purchases by foreign militaries under the agreements, and thus it was unable to determine whether they actually provide reciprocal access to the United States. In Agencies Should Improve Oversight of Reciprocal Defense Procurement Agreements, the GAO examined the degree to which DOD, the Department of Commerce (Commerce), and the Office of Management and Budget (OMB) have developed and followed processes to initiate and renew RDP Agreements and assessed and monitored the effects of the agreements. Based on findings of deficiencies, GAO concluded that unless the agencies improve their assessment methods and do more to monitor agreements, the US government cannot be sure whether existing and future agreements will help or hurt US industry and achieve their purposes. This post looks at the key findings of the GAO report, as well as the need for the US Trade Representative (USTR) to participate in the review of the RDP agreements, especially with countries that do not have trade agreements with the US.
The US has RDP agreements with 28 countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom (UK). In addition, DOD is engaged in discussions to negotiate RDP Agreements with Brazil, India, and South Korea.
Under the RDP Agreements, DOD and its partner country agree to waive “buy national” requirements. For all RDP partners, DoD waives application of the Buy American Act (generally requires federal agencies to buy US goods), restrictions on procurement of certain specialty metals, and the Balance of Payments Program (generally requires only domestic end products to be acquired for use outside the US). As a result of the waivers, GAO concluded that “RDP Agreements may have significant trade and economic implications for U.S. access to foreign defense markets as well as foreign access to the U.S. defense market.” Yet, it found federal agencies have not sufficiently monitored and assessed the economic effects of the defense agreements.
The GAO's detailed criticisms of agency oversight of RDP Agreements included:
-- “DOD has done little to monitor and assess the effects of the agreements on U.S. defense technology and the U.S. industrial base," as required by the National Defense Authorization Act for Fiscal Year (FY) 1989.
-- "DOD has skipped important due diligence steps for entering into and renewing RDP Agreements,” most of which have been in place for decades and include automatic extension provisions.
-- Commerce’s methodology for assessing these agreements is deficient; for example, it does not consider the effects of the agreements on services, even though 49% of DOD procurement (by value) was for services in FY 2022.
-- OMB’s Made in America Office has not developed a plan for reviewing the agreements to assess whether US domestic entities will have equal and proportional access to the RDP partner's defense markets, as required by the Infrastructure Investment and Jobs Act.
To remedy these deficiencies, GAO recommended that DOD and OMB improve their oversight of RDP Agreements and that Commerce address weaknesses in its methodology for assessing the agreements' potential effects on US industry.
GAO noted that USTR does not review the RDP Agreements. Without its involvement, the effects of potential defense procurement agreements with countries such as Brazil and India, which are not parties to the WTO Government Procurement Agreement (GPA), will not be considered. With the DOD as the largest US purchaser covered by the GPA, allowing countries to gain access to its procurement, without assurance that they will provide reciprocal access to their own markets may take away an important incentive to seek GPA membership, as discussed in an earlier post. USTR could play an important role in assessing whether RDP partners offer reciprocal procurement.
The GAO report pointed out the significant level of procurement conducted under RDP agreements. The US exported more defense items to the 28 RDP partner countries than it imported from them. Between 2019 and 2023, on average, the US sold an estimated $9.7 billion annually in defense items to those countries, while it purchased an estimated $5.2 billion annually from them. Three countries—Canada, Italy, and the UK—accounted for about half of US defense imports from RDP countries, while the top three countries, accounting for about 40% of US defense exports to RDP partners, were Israel, Japan, and the UK.
Jean Heilman Grier
January 28, 2025
Related Posts