Skip to main content

Foreign Military Sales: Recovery of Nonrecurring Research, Development, and Production Costs

AIMD-99-148R Published: May 19, 1999. Publicly Released: May 19, 1999.
Jump To:
Skip to Highlights

Highlights

GAO provided information on the Department of Defense's efforts to recover the nonrecurring research, development, and production costs from its Foreign Military Sales (FMS) Program trust fund for items that were delivered to FMS customers.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Under Secretary of Defense (Comptroller) The Under Secretary of Defense (Comptroller) should take the actions necessary to ensure that the Air Force promptly pays bills and collects the over $152 million of outstanding nonrecurring costs owed by Saudi Arabia for the 26 F-15 aircraft.
Closed – Implemented
On April 29, 1999, the Under Secretary of Defense (Comptroller) issued a memorandum to the Director, Defense Security Cooperation Agency (DSCA) emphasizing the Department's financial policy requirements pertaining to the billing and collection of nonrecurrring costs. The memo also requested the DSCA to develop a plan for collecting the payments from Saudi Arabia for all outstanding amounts and that payments remain current thereafter. As of December 31, 1999, the Air Force had collected $152 million of outstanding nonrecurring costs owed by Saudi Arabia for the 26 F-15 aircraft. The Air Force also collected another $87.8 million of outstanding nonrecurring costs owed by Saudi Arabia for the subsequent deliveries of 15 F-15 aircraft. In total, DOD charged Saudi Arabia's trust fund account for $239,851,599 between June and December 1999.
Under Secretary of Defense (Comptroller) The Under Secretary of Defense (Comptroller) should reemphasize to the military services the need to expeditiously complete the review of other FMS cases involving nonrecurring costs to ensure that all amounts owed have been collected.
Closed – Implemented
The Deputy Chief Financial Officer noted that the Department issued a memorandum to the Military Departments reemphasizing DOD's financial policies and procedures for the reporting and collecting of nonrecurring costs from foreign customers.

Full Report

Office of Public Affairs

Topics

Debt collectionFighter aircraftForeign military arms salesForeign military sales policiesGovernment collectionsInternal controlsResearch and development costsTrust fundsMilitary forcesFinancial management