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NSIAD-96-50R 1 (1995-12-12)

handle is hein.gao/gaobaclaa0001 and id is 1 raw text is: GAO United States General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-270367 December 12, 1995 The Honorable Bud Cramer House of Representatives Dear Mr. Cramer: At your request, we examined allegations that the Defense Security Assistance Agency (DSAA) was mishandling two cases of foreign military sales (FMS) of multiple launch rocket systems (MLRS). The allegations cited violations of elements of the Arms Export Control Act and Department of Defense (DOD) regulations in the initial sale of nine MLRSs to Saudi Arabia and their subsequent sale to Greece, and the allowance of administrative offset costs1 in the Greek sale. This letter summarizes our findings, which we presented to your staff on November 6, 1995. BACKGROUND In 1990, DSAA began preparing an FMS case for the sale of the nine MLRSs to Saudi Arabia. Over the next 3 years, as the case was negotiated, implemented, and amended, Saudi Arabia underwent a defense financial restructuring and asked the United States to reverse the transaction. The United States agreed, provided that another buyer could be found and that Saudi Arabia would pay administrative, handling, and other costs associated with the transaction. When Greece agreed to buy the nine MLRSs, DSAA prepared and implemented an FMS case for the sale. 'Administrative offset costs are those costs associated with implementing compensation practices required of contractors by purchasing governments as a condition for the purchase of defense articles or services. GAO/NSIAD-96-50R Foreign Military Sales

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