Recovery of the Cost of Normal Inventory Operating Stock Losses on Sales of Articles to Foreign Governments

FGMSD-77-43: Published: Sep 8, 1977. Publicly Released: Sep 8, 1977.

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The Department of Defense (DOD) is losing millions of dollars on sales of articles to foreign governments because normal inventory losses are not being recovered. Pricing policies and systems used by military services to recover normal inventory losses are inadequate.

Sufficient management attention has not been given to the recovery of normal inventory losses on the sale of nonstock fund inventory items. It has been over 8 years since DOD issued instructions requiring the recovery of these losses from foreign governments on sales under supply support arrangements. Unless timely action is taken by DOD to change its policy guidance and by the military services to implement the guidance provided, additional millions of dollars of normal inventory losses related to the sale of secondary items to foreign governments will not be recovered.

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