Improperly Subsidizing the Foreign Military Sales Program--A Continuing Problem
FGMSD-79-16
Published: Mar 22, 1979. Publicly Released: Mar 22, 1979.
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Highlights
Department of Defense (DOD) sales of articles and services to foreign governments have grown from $953 million in fiscal year (FY) 1970 to $13.4 billion in 1978. DOD has been improperly subsidizing the foreign military sales program by failing to recover an estimated $370 million during the past 6 fiscal years for quality assurance services performed by U.S. government employees on items sold to foreign governments. Since 1973 the government-provided quality assurance services have been specifically identified in Defense pricing instructions as a recurring support cost to be recovered.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should require the Secretary of Defense to provide a plan for overcoming the foreign military sales pricing problems. The plan should specify any organizational changes that will be made and set forth the number of additional personnel with a description of their duties to be assigned to these activities. If the Secretary determines that the expanded staff cannot be provided from present resources, then he should request an increase in the Department's personnel ceiling. |
Closed – Implemented
|
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should reconsider the previous recommendation to assign specific responsibility for ensuring effective and consistent implementation of foreign military sales pricing policies to a new or existing organization that can be sufficiently freed from other work to carefully follow up or monitor implementation of the policies in pricing systems. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should develop and implement practical procedures to recover the cost of government-provided quality assurance. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should direct responsible organizations to make a reasonable attempt to identify and recover undercharges on foreign sales resulting from nonrecovery of the costs of government-provided quality assurance services. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Topics
Contract administrationForeign military arms salesForeign military salesForeign military sales agreementsForeign military sales costsQuality assuranceForeign salesForeign governmentsMilitary forcesPurchase orders