July 30, 2018 / 8:53 PM / 18 days ago

Pentagon should tighten oversight of foreign military sales fees -report

WASHINGTON, July 30 (Reuters) - The Pentagon should tighten oversight of how it distributes close to $1 billion a year in fees it collects from ally countries when they buy U.S.-made weapons, a report by a government agency recommended on Monday.

The Government Accountability Office report warned that without sufficient oversight, administrative funds could by misused by the Pentagon. The GAO recommended better record keeping by the Defense Security Cooperation Agency (DSCA), which manages the Foreign Military Sales program.

DSCA oversaw $42 billion in equipment and service sales to U.S. allies in fiscal year 2017. That year, Pentagon agencies received $879 million in DSCA distributions of administrative fees for foreign military sales, the report said.

The Trump administration has been pushing to sell more weapons to U.S. allies. To make U.S. weapons more competitive, the Pentagon is also reducing the surcharge assessed to foreign governments buying weapons, a fee that covers administrative costs and to avoid any charge to U.S. taxpayers.

Congress required the GAO, an independent, nonpartisan agency, to review the DSCA use of the funds as part of normal operations.

In April, Reuters reported that DSCA would reduce its administrative surcharge on foreign arms sales to 3.2 percent from 3.5 percent as part of a broader effort to make U.S. weapons more competitive internationally.

Companies that stand to benefit from the Trump administration’s push to sell more arms overseas include Boeing Co and the other top U.S. defense contractors, Lockheed Martin Corp, Raytheon Co, General Dynamics Corp and Northrop Grumman Corp. (Reporting by Mike Stone in Washington; Editing by David Gregorio)

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