Defense Trade: Department of Defense Savings From Export Sales Are Difficult to Capture
NSIAD-99-191
Published: Sep 17, 1999. Publicly Released: Oct 18, 1999.
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Highlights
Pursuant to a congressional request, GAO reviewed the export sales of five Department of Defense (DOD) weapon systems--the Hellfire missile, Advanced Medium Range Air-to-Air Missile (AMRAAM), High Mobility Multipurpose Wheeled Vehicle (HMMWV), Black Hawk Helicopter, and Aegis Weapon System, focusing on whether: (1) export sales reduced the price of the five weapon systems; (2) DOD waived the requirement to recover nonrecurring research and development and production costs associated with the sales; and (3) DOD included this information when notifying Congress about the sales or requesting budgetary authority to purchase weapon systems.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress may wish to consider requiring that the Secretary of Defense develop guidance to ensure that budget requests reflect actual and projected savings from foreign military sales. Congress may wish to consider requiring that the Secretary of Defense provide information on projected foreign military sales savings and waivers of nonrecurring costs when notifying Congress of proposed sales. Congress may wish to consider tasking the Secretary of Defense to assess the feasibility of collecting information that would quantify the impact of contractors' direct export sales on the price of U.S. weapon systems. If DOD is successful in collecting this data, it could also be reflected in budget requests and sales notifications. |
Closed – Not Implemented
|
Although GAO found that the Department did not consistently reduce military budgets to account for savings from export sales or provide enough information for Congress to do so, the Department plans no action because it believes that consideration of export sales is already a normal part of the budgeting process. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should develop guidance that will assist the military services in maximizing savings from export sales. |
Closed – Implemented
The Department agreed with the recommendation, and issued guidance that will assist the military services in maximizing savings from export sales.
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Topics
Defense cost controlDefense economic analysisDepartment of Defense contractorsFinancial managementForeign military salesMilitary budgetsPrices and pricingResearch and development costsWaiversWeapons systems