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FGMSD-80-2 1 (1979-12-03)

handle is hein.gao/gaobaazzg0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON. D.C. 204 DIv[sLON OF FINANCIAL D DECEMBER 3, 197 GEN=RA MANAGEMENT STUDIESDEMBR317 B-165731 The Honorable Harold Brown lllIIIiIIII The Secretary of Defense 110987 Dear Mr. Secretary: Subject: Response to Defense Comptroller's Comments on GAO's Report Entitled Improperly Subsidizing the Foreign Military Sales Program--A Continuing Problem (FGMSD-79-16, Mar. 22, 1979) In a June 15, 1979, letter (OSD Case #5125), the Assistant Secretary of Defense (Comptroller) responded to our report cited above. In his response, the Assistant Secretary took exception to our recommendations. (See encl. I.) My purpose in this report is to respond to the Assistant Secretary's ob- jections and to reiterate the merits of our recommendations and the importance of your implementing them. / i . I , o , I 1 i I -. . In our subject March 1979 report, we(disclosed that during the past 6 fiscal years the Defense Department had not charged up to an estimated $370 million for quality assurance services provided on items sold to foreign countries, even though recov- ery of costs for these services had been required since at least 1970.) The problems encountered in not recovering these costs were indicative of Defense's continued failure to recover all costs for foreign military sales. 'Failure to recover these costs has largely resulted from inadequate implementation of Defense's pricing policies by the military departments and Defense agencies, and insufficient followup or monitoring of the departments' an a enciez' ac- tions by Defense policymakers.'.10 r 'ain recoueda was to assign to a new or existing organization the specific responr_ sibility for insuring effective and consistent implementation of foreign military sales pricing pblicies ....'That gan3za'tio.. should be sufficiently freed from other work to carefully(for-fi low up and monitor implementation of foreign military sales pricing policies. FGMSD-80-2 (903680)

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