The National Defense Authorization Act for Fiscal Year 2002 directed the U.S. General Accounting Office to determine whether the Department of Defense (DOD) overseas teachers' compensation package is adequate to recruit and retain qualified teachers. The Act also required GAO to determine whether or not any revisions to the law governing DOD overseas teachers' salaries were advisable. This document is a report of the study. The study addressed three questions: (1) What is the compensation package for teachers in DOD overseas schools, and how does it compare with compensation for teachers in the United States? (2) To what extent do DOD overseas schools experience difficulties recruiting and retaining well-qualified teachers? (3) What is the process for determining teacher salaries and paying teachers, and which aspects of the process, if any, could be improved? Following are some of the key findings: On average, salaries for teachers in DOD overseas schools are higher than those for teachers in stateside schools. Despite the compensation package, dissatisfaction exists among DOD overseas teachers over health-care access and costs. DOD appears to have little difficulty recruiting and retaining well-qualified teachers for overseas schools. An appendix describes the scope and methodology of the study. (WFA)