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AFMD-81-62 1 (1981-09-10)

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REPORT BY TH?'


Comptroller General


OF THE UNITED STATES


Millions In Losses Continue

On Defense Stock Fund

Sales To Foreign Customers


The Department of Defense continues to sell
items to foreign customers from its stock fund
inventory for less than estimated replacement
cost. As a result, Defense appropriations are
subsidizing foreign sales by millions of dollars
each year--a practice the Congress wants De-
fense to avoid.

This report, prepared at the request of Sena-
tors Percy and Hollings, discusses pricing prob-
lems similar to those reported by GAO in
1978. In establishing sales prices, Defense
does not

   --adequately consider the impact of in-
   flation in determining replacement costs,
   and

   --update often enough the sales prices
   charged foreign customers.

GAO is recommending actions necessary to
improve Defense's pricing policies and proce-
du res forstock fund items sold from inventory.


r IFASED


116522


      AFMD-81-62
SEPTEMBER 10, 1981


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