Unauthorized and Questionable Use of Appropriated Funds to Pay Transportation Costs of Non-Appropriated-Fund Activities

LCD-76-233: Published: Jun 3, 1977. Publicly Released: Jun 3, 1977.

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Non-appropriated-fund activities provide members of the armed services with goods and services not furnished by the Government. These activities include post exchanges, liquor stores, clubs, and recreational facilities. The activities operate primarily with funds generated from their own operations, but the Department of Defense (DOD) gives them some appropriated-fund support.

In addition to the support authorized by DOD, millions in appropriated funds have been spent for transportation support that should have been funded by the non-appropriated-fund activities. Non-appropriated-fund activities did not always reimburse DOD for using the Defense Transportation System. Unreimbursed costs primarily related to the overseas transportation of foreign-made merchandise and personal property. The Navy financed overseas land transportation costs with appropriated funds, a practice inconsistent with Army and Air Force practices.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should: direct the non-appropriated fund activities to reimburse the appropriation for ocean costs incurred in excess of those applicable to shipment through the port of embarkation nearest the overseas destination; institute procedures for assuring that non-appropriated fund activities are properly charged for reimbursable transportation services, considering the need for both manual and mechanical controls over the correct use of transportation account codes; recover the unreimbursed costs for improper appropriated fund support provided non-appropriated-fund activities; direct the Secretary of the Navy to stop using appropriated funds for overseas land transportation of non-appropriated-fund property; and revise the applicable DOD directive to prohibit any foreign-made merchandise shipments from receiving support.

    Agency Affected:


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