Foreign Military Sales: Recovery of Nonrecurring Research, Development, and Production Costs

On April 29, 1999, the Under Secretary of Defense (Comptroller) issued a memorandum to the Director, Defense Security Cooperation Agency (DSCA) emphasizing the Department's financial policy requirements pertaining to the billing and collection of nonrecurrring costs. The memo also requested the DSCA to develop a plan for collecting the payments from Saudi Arabia for all outstanding amounts and that payments remain current thereafter. As of December 31, 1999, the Air Force had collected $152 million of outstanding nonrecurring costs owed by Saudi Arabia for the 26 F-15 aircraft. The Air Force also collected another $87.8 million of outstanding nonrecurring costs owed by Saudi Arabia for the subsequent deliveries of 15 F-15 aircraft. In total, DOD charged Saudi Arabia's trust fund account for $239,851,599 between June and December 1999.

The Deputy Chief Financial Officer noted that the Department issued a memorandum to the Military Departments reemphasizing DOD's financial policies and procedures for the reporting and collecting of nonrecurring costs from foreign customers.