Review of the Pricing of Materiel Delivered to the Military Assistance Program by the Military Departments

B-133280: Published: Feb 29, 1960. Publicly Released: Feb 29, 1960.

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This document is GAO's report on the review of the pricing of materiel delivered to the military assistance program by the military departments. This review was limited to grant aid provided by the United States. GAO found that the military departments were being reimbursed by the military assistance program for deliveries of significant quantities of materiel that should be transferred without charge as excess stocks. Although significant reductions were made in certain areas in the prices charged the military assistance program for materiel being delivered from service stocks, reimbursable transfers of nonexcess equipment frequently were not being priced in accordance with the 1956 amendment to the Mutual Security Act. In general, the Department of the Navy had not adjusted its unit prices for condition and market value; the Department of the Air Force has made some reductions in the prices of aircraft but has not adjusted prices for other equipment; and the Department of the Army had reduced the prices of substantially all the major end items but not major assemblies or repair parts. Some of the latter are being transferred at replacement costs which greatly exceed original acquisition costs. In a number of instances the military departments were using incorrect prices for materiel delivered under MAP.

The Department of Defense had not required appropriate adjustment for amounts previously paid the military departments in excess of those authorized by law. We recognize the difficulty in arriving at an appropriate adjustment and that an approximation may be necessary. However, the Department of Defense and the military departments must comply with the existing provisions of law.

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