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FGMSD-79-31 1 (1979-05-15)

handle is hein.gao/gaobaazej0001 and id is 1 raw text is: REPORT BY THE Comptroller General OF THE UNITED STATES The Defense Department Continues To Subsidize The Foreign Military Sales Program By Not Charging For Normal Inventory Losses GAO reported in September 1977 and August 1978 that the Defense Department was losing millions of dollars because normal inventory losses were not being recovered on foreign military sales. The Arms Export Control Act was amended in September 1978 to expressly require the recovery of these losses on certain inventory sales. Although the military services have since iden- tified almost $600 million in inventory losses, foreign governments have not been charged for their fair share of the losses as required by the act. As a result, the United States has lost millions of dollars. Also, these governments purchase hundreds of millions of dollars of items through sales for which the act does not require charges for inventory losses, thus creating a subsidy to foreign governments. GAO is recommending that a special effort be taken to charge other governments for inven- tory losses. GAO is also recommending that the Congress amend the Arms Export Control Act to require that charges be made for inven- tory losses on all inventory sales to foreign governments. This report was prepared at the request of Senator Charles H. Percy. \CV$D ST42 IIIIIIIihIIIIIIIlIIllIII/ II LM109357 k r #1 109357 /kD93~7 I FGMSD-79-31 MAY 15, 1979 1015rl

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