Internal Controls:

Funding of International Defense Research and Development Projects

NSIAD-91-27: Published: Oct 30, 1990. Publicly Released: Oct 30, 1990.

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GAO reviewed the practices and procedures the Navy and the Office of the Secretary of Defense (OSD) used to disburse fiscal year (FY) 1988 funds provided for North Atlantic Treaty Organization (NATO) cooperative research and development projects, focusing on whether the Navy disbursed funds in accordance with the Department of Defense Authorization Act of 1986 and subsequent authorizations and appropriations acts.

GAO found that the Navy: (1) did not disburse the funds as authorized and used some of them inappropriately for administrative support services; (2) did not report to OSD on how it used FY 1988 funds until April 1990; (3) made misleading statements-of-purpose on contracts and work orders to show that funds were used for authorized projects; (4) used multiple agents to disburse funds, which made it difficult to account for the funds; and (5) approved projects without first obtaining memorandums of understanding. GAO believes that the Department of Defense (DOD) initiated corrective actions to establish appropriate controls and framework for handling future NATO cooperative research and development funds.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Preparation of the handbook is in process, but delays have occurred. A DOD official estimates the handbook will be issued late in 1992. DOD issued instructions in December 1992 which satisfies the recommendation. The handbook is still underway.

    Recommendation: The Secretary of Defense should issue written instructions for the implementation of NATO cooperative research and development programs.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD has initiated a reorganization and established a requirement for quarterly reports. The Navy is submitting quarterly reports.

    Recommendation: The Secretary of Defense should establish sufficient internal controls necessary for the Departments of Defense and the Navy to ensure that the funds made available for the program are used appropriately.

    Agency Affected: Department of Defense

 

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