Excess Navy Ships Sold to Foreign Countries at Understated Prices.
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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Each of the 11 ships sold to foreign countries in fiscal years 1981 and 1982 was underpriced according to the Navys guidance. The ships were sold for a total of 5.2 million, whereas prices should have totaled 36.4 million. The prices were generally based on scrap value rather than the higher fair value. This value could be even greater, but the condition of the ships was not adequately determined. In addition, some conversion and overhaul costs were not charged as required, and many spare parts and other supplies were left on board at no cost to the recipients. According to Navy officials, there are often political and diplomatic considerations and pricing precedents that the Office of the Chief of Naval Operations perceives as outweighting approved pricing methods. The Navy has taken some corrective actions and is determining whether changes to policies are required. However, Defense does not agree with GAO that it provide Congress with more pricing information for certain ships which are to be sold.
- Economics and Cost Analysis
- Marine Engineering