Financial Management:

Reliability of Weapon System Cost Reports Is Highly Questionable

AIMD-94-10: Published: Oct 28, 1993. Publicly Released: Oct 28, 1993.

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GAO reviewed the information systems the Army uses to identify, record, and report weapon system costs.

GAO found that: (1) the cost reports that the Army submitted to Congress did not clearly present all the relevant costs authorized by Congress; (2) current cost reports must be further analyzed, since support costs are recorded by type of cost rather than by weapon system; (3) the Army cannot adequately ensure that its weapon system cost reports are complete, accurate, and supportable; (4) the Army is creating conflicting cost values by not using historical cost data or current cost data in its weapon system cost reports; and (5) the Army's reported weapon system costs are not conducive to independent verification, since external and internal reports on weapon system costs are inconsistent and include significant unsubstantiated adjustments.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD did not concur with this recommendation because the Army manages by missions and programs, not by weapon systems. DOD also indicated that funding limitations would preclude implementation of this recommendation.

    Recommendation: To ensure that weapon system overhauls, modifications, and operating and support costs are readily identified and reported by weapon system, the Secretary of the Army should direct Army financial managers to assign appropriate weapon system Management Decision Package codes in conjunction with available codes in the Army's Standard Financial Information System to record overhaul, modification, operating, and support costs by weapon system.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Not Implemented

    Comments: The Army did not concur in this recommendation, stating that the SAR was a Department of Defense report and that the information to be included in SAR was specified by law (title 10, U.S.C., sec. 2432).

    Recommendation: To ensure that Congress receives useful, accurate information on weapon system costs, the Secretary of the Army should direct Army financial managers to supplement the Army's Selected Acquisition Reports (SAR) with information on all costs of weapon systems, including operating, support, and modification costs, which the Army uses in its own internal analyses.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: DOD indicated that it issued guidance on January 11, 1994 that reemphasized the importance of maintaining documentation of the rationale for, and calculations of, any changes made to information reported in previous SARs.

    Recommendation: To ensure that Congress receives useful, accurate information on weapon system costs, the Secretary of the Army should direct Army financial managers to maintain documentation detailing the rationale for, and calculation of, any changes made in information reported in previously issued SAR.

    Agency Affected: Department of Defense: Department of the Army

 

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