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AFMD-83-86 1 (1983-07-25)

handle is hein.gao/gaobabnaq0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES WAS0INGTON, O.C. 20546 B- 212169 JULY 25,1983 The Honorable Mark 0. Hatfield Chairman, Committee on Appropriations United States Senate Dear Mr. Chairman: Subject: Review of Air Force Accounting Practices for Financing Depot Maintenance Contracts! Through Its Depot Maintenance Industrial Fund (GAO/AFMD-83-86) In Senate Report 97-580 on the fiscal 1983 Department of De- fense Appropriation Bill, your Committee asked us to look into the merits of the Air Force's current practice of financing depot main- tenance contracts through its depot maintenance industrial fund rather than through direct appropriation. The depot maintenance industrial fund--a working capital fund--uses customer orders for the repair of major end items of equipment to generate the budget- ary resources (authority to incur obligations) needed to finance depot maintenance contracts.1 The Committee asked us to determine whether depot maintenance contracts should be financed by direct appropriation and, if so, the earliest possible date for this transition. We discussed the request with your office and agreed that in evaluating the merits of the Air Force's current prac- tice, we would address our review toward determining whether the Air Force has effective controls to (1) ensure that obligations are not incurred for depot maintenance contracts in advance of appro- priations and (2) if such controls are lacking, whether the con- tracts should be financed by direct appropriations. The Committee's concern over this question was prompted by our earlier report entitled The Air Force Has Incurred Numerous Over- obligations In Its Industrial Fund (AFMD-81-53, Aug. 14, 1981). The report showed that the Air Force was illegally financing por- tions of depot maintenance contracts using obligation authority the industrial fund expected to receive from anticipated customer or- ders in the following fiscal year. This practice amounted to using appropriated funds before they were authorized by the Congress, which circumvented the appropriation and apportionment process and lSee encl. I for description of industrial fund operations and fi- nancing. {I Hi f{lu(903058) 121932

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