How Military Sales Trust Funds Operate: Saudi Arabian and Iranian Funds Compared
FGMSD-80-26
Published: Jan 28, 1980. Publicly Released: Feb 25, 1980.
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Highlights
The Department of Defense (DOD) is requiring the military departments to estimate potential termination liability reserves for foreign military sales agreements. A report discussed the Saudi Arabian, Iranian, and other military sales trust funds and the need for a central clearinghouse controlling disbursements from military sales trust funds.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should ensure that the military departments uniformly implement DOD procedures for computing termination liability reserves. |
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 ensure that payment schedules include adequate termination liability reserves and that foreign governments are promptly billed. |
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 ensure that collections for possible contract termination costs be segregated in the trust fund and not be used for routine contractor payments. |
DOD has decided not to implement the recommendation because: (1) two other recommendations in this report were implemented; (2) this one is considered relatively less important; and (3) the report is over 3 years old. Therefore, GAO believes the recommendation should be dropped.
|
| Department of Defense | The Secretary of Defense should ensure that established procedures for pricing items diverted to second buyers are followed before funds are transferred to the Iranian trust fund. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Topics
Foreign military arms salesGovernment liability (legal)Trust fundsWeaponsMilitary salesForeign military salesExport controlsContract termination costsMilitary departmentsForeign military sales agreements