• A review has found that transport fees for the US FMS program may be inaccurate.
    A review has found that transport fees for the US FMS program may be inaccurate. USAF

The US Government Accountability Office (GAO) has released a report recommending changes to the oversight of transport fees for equipment sold under the Foreign Military Sales program (FMS) after finding that allies may have been charged too much.

The FMS program is the umbrella under which the US sells equipment ranging from fighter jets to air defences, as well as associated services and training, to allies around the world. It was worth almost half a trillion US dollars between 2007 and 2018.

The program operates on a ‘no profit no loss’ basis. As such, those allies must pay a fee to cover the transport costs incurred by the US Department of Defense (DOD). Those fees are overseen by the Defense Security Cooperation Agency (DSCA).

In its report, the GAO found that inadequate oversight from the DSCA resulted in an inadvertent US$400 million profit from transportation fees paid between 2007 and 2018.

“From fiscal years 2007 to 2018, DOD collected about $2.3 billion in fees into the FMS transportation accounts and expended about $1.9 billion from the accounts,” the report said. “The DSCA had allowed those account balances to grow substantially in recent years due in part to weaknesses in DSCA’s management oversight.

“DSCA’s financial oversight of expenditures from the FMS transportation accounts does not provide reasonable assurance that expenditures are allowable and paid from the correct account.”

According to the GAO, 19 per cent of reported expenditures during a three month period in 2019 were inaccurate, in some cases naming both the US Navy and the US Air Force as the entity responsible for one FMS transaction.

The GAO has now provided five recommendations to US Defence Secretary Mark Esper concerned with improving written record-keeping and review structures. 

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