Foreign Military Sales: Efforts to Improve Administration Hampered by Insufficient Information
NSIAD-00-37
Published: Nov 22, 1999. Publicly Released: Nov 22, 1999.
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Highlights
Pursuant to a congressional request, GAO assessed the foreign military sales program to determine the changes needed to improve the viability of the program, focusing on: (1) whether the foreign military sales program has achieved full recovery of its administrative costs; (2) the Defense Security Cooperation Agency's (DSCA) basis for making administrative account adjustments; and (3) the effectiveness of various foreign military sales reinvention efforts in terms of cost recovery.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To make certain that future program decisions are made on the basis of adequate information, the Secretary of Defense should direct that current efforts to identify and collect cost information use a comprehensive and consistent definition of administrative tasks. |
Closed – Implemented
The Defense Security Cooperation Agency is implementing a performance based budgeting system to ensure that they have sufficient information to make program decisions. This new multi-year process is now being implemented with the fiscal year 2002 budget cycle and links the budget to corporate strategy, planning, and performance measures. As part of this effort, the Agency has also created a performance-based costing infrastructure to support the new budget process. According to the Agency, performance based costing provides them with a detailed costing structure that seamlessly links to the bugets core functions. This infrastructure is intended to align cost and performance measures to corporate strategy.
|
| Department of Defense | To enhance the value of the administrative budget as a management tool, the Secretary of Defense should develop and communicate to the military services guidance that requires consistent application of program management charges. |
Closed – Implemented
The Defense Security Cooperation Agency (DSCA) has implemented efforts to consistently define the use of program management, case management, and administrative budget funds. In July 2001, the issued a matrix that provides specific guidance to be used for the consistent application of funding sources when developing letters of offer and acceptance for the sale of defense equipment and services to foreign countries.
|
| Under Secretary of Defense (Comptroller) | To assure that the current foreign military sales administrative account balance is appropriate, the Under Secretary of Defense (Comptroller) should assess the amount of funds needed to complete existing sales commitments. If the administrative account balance exceeds the needed funds, the Secretary of Defense should identify alternative program uses for these funds. |
Closed – Implemented
The Defense Security Cooperation Agency (DSCA) and the DOD comptroller jointly developed the concept for a FMS administrative account "safety level" and developed a formula to calculate this level. They calculated the administrative budget's necessary reserve as $110 million in fiscal year 2000, $18 million in fiscal year 2001, $17 million in fiscal year 2002 and $45 million in fiscal year 2002. DOD did not agree with the second part of this recommendation and believes it undercuts the DSCA director's freedom to determine when to seek alternative uses of funds or an increase the FMS administrative balance. As a result they did not identify alternative uses for funds excess to the safety level.
|
| Department of Defense | To assure that the current foreign military sales administrative account balance is appropriate, the Under Secretary of Defense (Comptroller) should assess the amount of funds needed to complete existing sales commitments. If the administrative account balance exceeds the needed funds, the Secretary of Defense should identify alternative program uses for these funds. |
Closed – Implemented
The Defense Security Cooperation Agency (DSCA) and the DOD comptroller jointly developed the concept for a FMS administrative account "safety level" and developed a formula to calculate this level. They calculated the administrative budget's necessary reserve as $110 million in fiscal year 2000, $18 million in fiscal year 2001, $17 million in fiscal year 2002 and $45 million in fiscal year 2002. DOD did not agree with the second part of this recommendation and believes it undercuts the DSCA director's freedom to determine when to seek alternative uses of funds or an increase the FMS administrative balance. As a result they did not identify alternative uses for funds excess to the safety level.
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Topics
Administrative costsDefense budgetsDefense cost controlForeign military arms salesForeign military sales costsManagement reengineeringForeign military salesProgram managementU.S. Air ForceU.S. Army