Armed Services Procedures for Handling Foreign Military Sales Need Improvement

Certain procedures and practices for handling direct foreign military sales at the Defense Logistics Agency and its subsidiary centers have resulted in unnecessary and illegal expenditures of appropriated funds, and may have adversely affected the Agency's ability to respond to the needs of U.S. military customers.

Defense policy provides that cooperative sales arrangements be considered in forecasting stock levels but that direct sales not be considered. However, direct sales of low value replenishment demand and numeric stockage objective type items to foreign customers are required to be included in forecasting demand by Agency policy. U.S. funds are used illegally according to law governing foreign military sales. This departure from established policy has increased stock levels significantly. Direct foreign sales requisitions should be placed on backorder if existing stocks are at reorder level; however, the requisitions are often considered to be "exceptions" and on-hand stocks are used, thus depleting stocks needed for U.S. military protection. Certain nonmaintained inventory items are automatically reviewed each quarter for possible reclassification to maintained items. Many items have been changed without meeting the maintained criteria, which is against Defense policy.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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