Improper Use of Industrial Funds by Defense Extended the Life of Appropriations Which Otherwise Would Have Expired

AFMD-84-34: Published: Jun 5, 1984. Publicly Released: Jun 5, 1984.

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Pursuant to a congressional request, GAO examined whether the life of Department of Defense (DOD) appropriations was being extended through improper use of working capital funds.

At six industrial fund activities visited by GAO, about $35.7 million of the $192.5 million in operation and maintenance (O&M) funded workload was carried over from fiscal year (FY) 1982 to FY 1983 through improper use of industrial funds. GAO found that industrial funds were improperly used because the activities did not adhere to existing statutes and regulations governing industrial fund operations and the use of O&M appropriations, resulting in extension of the availability of O&M funds which would have otherwise expired. GAO believes that the carryover found at the six activities may exist to some degree in other appropriations and at the other 79 defense industrial funds and related customer activities.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should, in order to facilitate industrial fund and customer activities satisfying these requirements, have the Secretaries of the military services ensure that additional guidance is provided to prohibit industrial fund activities from using subsidiary orders to extend the life of appropriations which would otherwise expire.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should, in order to facilitate industrial fund and customer activities satisfying these requirements, have the Secretaries of the military services ensure that, when a military service deems it to be appropriate, specific timeframes are developed DOD-wide or by type of industrial fund activity for satisfying the requirement that work be started within a reasonable amount of time.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should, in order to facilitate industrial fund and customer activities satisfying these requirements, have the Secretaries of the military services ensure that officials emphasize to industrial fund activities and their customers, which obligate funds based on estimated requirements, to deobligate those funds to the extent that estimated requirements do not materialize by fiscal year-end.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should have the Secretaries of the military services emphasize to industrial fund and customer activities the requirements in DOD and service regulations that customer order amendments are to be financed with expired appropriations only when there is no increase in the scope of work to be done.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should have the Secretaries of the military services emphasize to industrial fund and customer activities the requirements in DOD and service regulations that funds related to O&M funded Economy Act orders which are not used by an industrial fund by the end of the fiscal year are to be promptly deobligated.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should have the Secretaries of the military services emphasize to industrial fund and customer activities the requirements in DOD and service regulations that work on orders accepted by industrial funds is to be started within a reasonable amount of time.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: DOD has implemented this recommendation.

    Recommendation: The Secretary of Defense should have the Secretaries of the military services emphasize to industrial fund and customer activities the requirements in DOD and service regulations that project orders are to be placed by customers with industrial funds for only those items for which there is a bona fide need at the time of the order.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: DOD and the Navy implemented this recommendation in September 1985.

    Recommendation: The Secretary of Defense should have the Secretary of the Navy require that Navy industrial fund and customer activities comply with existing regulations which specifically prohibit: (1) combining dissimilar jobs on project orders to meet the requirements that at least 20 percent of requested work be accomplished in-house by the industrial fund; and (2) work which will be done entirely on outside contract from being requested on project orders.

    Agency Affected: Department of Defense

 

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