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Air Force Does Not Recover All Required Costs of Modification Kits Sold to Foreign Governments

PLRD-82-111 Published: Aug 27, 1982. Publicly Released: Aug 27, 1982.
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Highlights

GAO conducted a review to determine whether Air Force procedures and practices ensure recovery of the costs of modification kits sold under the foreign military sales program and, if not, to identify those costs which are not being recovered.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Air Force The Secretary of the Air Force should revise and, to the extent practical, consolidate the various Air Force regulations and guidelines to bring them in line with the DOD pricing policy of full recovery of costs.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should specifically fix responsibility within the Air Force Logistics Command to ensure effective implementation of this policy.
Closed – Not Implemented
The position of the Office of the Assistant Secretary of Defense is that the responsibility is and has been fixed at the Air Force Logistics Command/AC, Comptroller organization.
Department of the Air Force The Secretary of the Air Force should effectively implement established procedures at the air logistics centers that will: (1) capture and accumulate direct cost data for in-house efforts so that administrative charges can be applied properly; and (2) ensure proper pricing for modification kits assembled for installation on foreign-owned equipment being overhauled at Air Force facilities.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should direct the Air Force Logistics Command to provide the air logistics centers with proper identification of the various recurring costs that should be charged directly or appropriately allocated to foreign governments.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should direct the Air Force Logistics Command to require air logistics centers to review their current operational procedures to ensure that they are in line with the full recovery policy and to identify and bill foreign governments for any undercharges. Specific areas that should be reviewed by all logistics centers are modification cases under which kits were: (1) installed on foreign-owned items being overhauled; and (2) assembled at Air Force facilities by Air Force personnel.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should direct the Air Force Logistics Command to require the San Antonio Air Logistics Center to specifically review all modification shipments made to foreign governments since October 1, 1978, and determine how much each foreign government was charged for technical publications. In cases where prices charged deviated from DOD pricing policies, revised billings should be submitted to the foreign governments.
Closed – Not Implemented
The Air Force and DOD have taken the position that it would not be cost-effective to reprice technical publications retroactively.
Department of the Air Force The Secretary of the Air Force should direct the Air Force Logistics Command to require the San Antonio Air Logistics Center to specifically review all modification sales to foreign governments made since October, 1, 1978, and apply the pricing criteria contained in the Air Force Logistics Command quality control program. In cases where pricing deviations are found, corrective billings should be promptly submitted.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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Topics

Auditing and Financial Management
Collection proceduresCost controlForeign military sales policiesLogisticsNational defense operationsPrice regulationSubsidiesMilitary forcesForeign governmentsPublications