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FGMSD-79-47 1 (1979-07-25)

handle is hein.gao/gaobaaznd0001 and id is 1 raw text is: 



REPORT BY THE

Comptroller General



OF THE UNITED STATES
  ...STICTED   .Not to b  releeased ouf c e o, .ene,
  ,Accontn  Office except 9m the  asis Of specific apprOvai
  by the Office of Conressional Relatos.     •   RELESED
Financial And Legal Implications

Of Iran's Cancellation Of Arms

Purchase Agreements



Earlier this year, the Iranian government can-
celled and/or the Defense Department
reduced about $10.6 billion of Iran's $12.6
billion in undelivered foreign military sales
orders. Senators Max Baucus and Donald W.
Riegle, Jr. questioned GAO about the effects
of Iran's actions.

In summary, GAO said that one way to pro-
tect the financial interests of the United
States, would be for the Congress to amend
the Arms Export Control Act to require
purchasers to deposit, in advance, enough
funds to cover potential costs of a cancelled
contract. Until the Congress considers legisla-
tive changes, the Department of Defense
should take the initiative to collect potential
termination costs on all foreign military sales.

To solve continuing accounting and financial
management problems, the Congress and the
Secretary of Defense should adopt earlier
GAO recommendations to centralize account-
ing and financial management for the foreign
military sales program.                                     ! lo a



                                                               109986





                                       EFGMSD-79-47
  €1cCOU~%E                                                     JULY 25, 1979

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