DDTC Reports Rise in End-Use Checks, Licensed Defense Trade

DDTC said it closed 341 end-use checks in FY 2024, versus 284 in FY 2023, while spending more money to complete each check. U.S. foreign embassy officials working as part of the Blue Lantern program reported a total cost of about $287,000 for those 341 closed checks, a 155% increase from the FY 2023 estimate of $113,000.

“This increase can be attributed to a combination of two phenomena: a higher volume of checks conducted last year” and a “significant rise in cost per check,” DDTC said.

It also said embassy officials began to rely more heavily on in-person checks as opposed to virtual ones, whose use began during the COVID-19 pandemic but has steadily declined since. Because in-person checks require officials to physically inspect and verify “security apparatuses and hardware” exported abroad, they're “more costly than virtual checks due to the transportation, overnight billeting, and time-related expenses that visits to foreign facilities often require.”

In addition, the report attributed the increase in end-use checks to an “upsurge in defense trade” last year, partly due to ongoing conflicts around the world. As of Feb. 28, 2025, DDTC said it estimated that Direct Commercial Sales license adjudications for defense items and services rose 27.5% between FY 2023 and FY 2024.

The agency said it began checks on 292 export authorizations or authorization requests in 70 countries in FY 2024, with most taking place in Europe or parts of Asia. Of the 341 checks it completed, about 62% (213) were reported as having “favorable” results, which meant that DDTC confirmed the exports were “received and secured” by the right end-user.

The agency closed about 36% (123) of the checks as “unfavorable,” meaning DDTC’s findings were “inconsistent with information in the license application” or certain information about the export couldn't be verified. That percentage was slightly higher than the unfavorable rate from the previous five years, which DDTC said was around 30%.

The most common reasons for unfavorable closed end-use checks last year were “unresponsiveness of a foreign party” and “discrepancies between information provided by the visited party and what was actually authorized on the license,” DDTC said, which indicated that the foreign party was deemed an “unreliable recipient” of U.S. Munitions List items. The report said those unfavorable findings led DDTC to deny license applications involving certain foreign parties and remove parties from the scope of licenses. DDTC said the Country and End-Use Analysis (CEA) Division, which is responsible for Blue Lantern checks, recommended that DDTC remove parties on 206 active license applications.

The report also said DDTC referred the results of some unfavorable end-use checks to law enforcement agencies for civil or criminal investigation.

Europe and parts of Asia had the highest unfavorable rate at about 37%, mostly due to an unlicensed party receiving a controlled good. East Asia and the Pacific had the second-highest unfavorable rate at about 28%, mostly due to refusals by the foreign party to cooperate in a “timely manner” and unlicensed parties.

“In all instances, CEA has targeted those parties receiving an unfavorable check for either future outreach, further end-use inquiries, referral to DTCC, and/or addition to the Watch List,” the report said, referring to the internal DDTC screening list of entities that receive “extra scrutiny” from the agency when they appear on a license application.

The agency said it was able to carry out end-use checks last year in “non-permissive environments” as well, such as Ukraine, Israel and other regions in conflict. Three Blue Lantern checks were done in Ukraine, it said.

The State Department also released its annual report on Defense Department end-use monitoring for items transferred through the agency’s Foreign Military Sales program. The agency’s Golden Sentry program reviewed more than 905 letters of offer and acceptance and other transfer agreements in FY 2024 and carried out “physical security checks” in 105 countries.

The Defense Department also noted that in 2023 it introduced a new self-reporting process that allowed it to monitor certain weapons deliveries to “hostile” environments, such as Ukraine. Once “security and safety concerns no longer restrict DoD access, DoD officials will resume conducting routine site visits,” the agency said. “Due to ongoing hostilities in Ukraine, DoD continues to rely on its hostile security environment accountability practices to monitor Ukraine’s procedures to track transferred U.S. defense articles.”

The Pentagon said it didn't find “any compliance issues or concerns related to transfers of small arms and light weapons” in FY 2024. It plans to conduct both in-person and virtual compliance visits in FY 2025 and 2026 for Albania, Armenia, Austria, Australia, Azerbaijan, Bahrain, Bangladesh, Belgium, Brazil, Bulgaria, Burundi, Cameroon, Canada, Chad, Chile, Colombia, Costa Rica, Croatia, Djibouti, Egypt, France, Georgia, Honduras, Iraq, Ireland, Israel, Italy, Japan, Kazakhstan, Kosovo, Kuwait, Macedonia, Malta, Mauritania, Moldova, Mongolia, Nepal, the Netherlands, New Zealand, Nigeria, Norway, Pakistan, Paraguay, Peru, the Philippines, Poland, Romania, Senegal, Serbia, Slovakia, Slovenia, Spain, Sweden, Taiwan, Tajikistan, Thailand, Turkey, Ukraine, the U.K. and Uzbekistan.