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Inadequate Methods Used to Account For and Recover Personnel Costs of the Foreign Military Sales Program

NCJ Number
Date Published
34 pages
A General Accounting Office (GAO) review revealed that methods used to account for and recover personnel costs of the Foreign Military Sales Program were inadequate and could not respond to congressional or Defense Department requests for data.
The Foreign Military Sales Act requires that the Government be reimbursed by other countries for the full costs of the administrative personnel used in the program. GAO found that the manpower requirements contained in the Defense Department's (DOD'S) recommendations to Congress for fiscal 1977 appropriations were misleading, and a subsequent estimate on personnel requirements submitted by the department contained incomplete, inaccurate, and inconsistent information. GAO studied policies, procedures, and reports dealing with foreign military sales staff at several offices of the military services. None of the three military services had a system to identify the numbers of individuals actually working on foreign military sales, and all used inconsistent criteria when developing one-time estimates. The DOD usually charges a 2 percent surcharge on foreign military sales to recover the program's military costs, but GAO determined that DOD had no assurance that this amount was adequate. The costs of personnel administration were unknown because of an inadequate accounting system, and the factors included in the administrative surcharge to cover retirement costs of military and civilian personnel were underestimated. Congress needs reliable estimates of personnel requirements of the military sales program for planning and budgeting purposes, as well as to ensure recovery of administrative costs. In response to GAO'S criticisms, the DOD is developing a standard manpower accounting system, has agreed to review retirement and insurance factors involved in administrative costs, will credit surcharge collections to proper appropriations accounts, and will audit all cases to ascertain if countries were billed correctly for the surcharge. The appendixes contain DOD comments on the review and a list of principal officals responsible for the activities discussed in the reports. (Author abstract modified)