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B-174901 1 (1973-04-09)

handle is hein.gao/gaobaaggc0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE / / WASHINGTON, D.C. 20548 LM096408 DIVISION OF FINANCIAL AND GENERAL MANAGEMENT STUDIES AP9 B-174901 The Honorable The Secretary of Defense Dear Mr. Secretary: In our report to you on a fulcQst to the Government of producing weapons for sale to foreign -.govexrment-s (B-174901, - -d'9d-t hat: --Department of Defense (DOD) regulations required in- dustrial fund activities to charge foreign governments and other non-Federal Government customers for both funded and unfunded costs. --Unfunded costs include the cost of depreciation of plant and equipment, pay and allowances of military personnel, and certain other costs. --Army Materiel Command instructions did not require its industrial fund activities to include unfunded costs in their prices for work done for foreign governments; the activity we visited did not charge unfunded costs, resulting in a loss to the Government of about $336,000 during fiscal years 1969 and 1970. --The Assistant Secretary of Defense (Comptroller) on June 30, 1970, directed the Army to comply with DOD regulations. --The Army Materiel Command, on December 18, 1970, in- structed its industrial fund activities to add unfunded costs to the prices for orders received after December 1970, for work done for foreign governments. --The industrial fund activity we visited complied with the Army Materiel Command's instructions and added $326,000 in unfunded costs to their prices to foreign governments from January 1971 through June 1972. C1 /0% I)L/

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