Improvements Needed in Pricing Overhaul and Repair Services Performed for Foreign Countries

AFMD-84-12: Published: Dec 12, 1983. Publicly Released: Dec 12, 1983.

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GAO reviewed the adequacy of billings by the military services to foreign countries for material, labor, and other costs incurred in overhauling and repairing foreign military equipment.

GAO found several instances in which the military had significantly underbilled foreign customers for services during fiscal year 1982, including: (1) not billing for all required costs of materials used in overhaul and repair work, an estimated $3.1 million undercharge; (2) the Air Force's underbilling of West Germany an estimated $456,000 for engine overhauls because one of its commands did not follow Department of Defense pricing policies; and (3) the Air Force's not billing foreign customers and estimated $1 million in civilian labor costs incurred in performing repair and overhaul work.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the military services to examine their systems for collecting costs to ensure that all required costs of materials used in overhaul and repair of foreign countries' equipment are billed.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should direct the Air Force to make sure that: (1) all required costs of engine overhaul services are billed; and (2) all civilian labor costs for retirement are included in foreign customer billings.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: A May 23, 1984 memo from Office of the Secretary of Defense indicated concurrence with all recommendations and that actions had been completed. GAO is now in the process of verifying the dollar amount of quantifiable savings and preparing an accomplishment report.

    Recommendation: The Secretary of Defense should direct the military services to make every reasonable attempt to bill for and collect the $4.6 million in past undercharges for repair and overhaul work identified in this report.

    Agency Affected: Department of Defense

 

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