Recoupment of Transportation Costs Incurred by the United States Incident to Foreign Military Sales

Our advice was requested to the recoupment of transportation costs incurred by the United States incident to Foreign Military Sales. More specifically, it was asked whether DOD may be directed to reopen "closed" cases and attempt to recover the deficiencies caused by the omissions up to and including actual costs.

We believe that where the final cost of transportation services incident to a foreign military sale are not accurately reflected in billing because of inadvertent omissions, miscalculation or otherwise, the contract, in providing for the recovery of actual costs, provides a sufficient basis to attempt to recover those costs which were clearly contemplated by both parties for inclusion in the contract, provided the attempt is made within a reasonable time. Also, where the final cost of transportation services incident to a Foreign Military Sale are undercharged due to the use of a standard uniform percentage rate, the language of the contract provides a sufficient basis to attempt the retroactive recovery of undercharges on either open or closed cases.