Summary: The Defense Business Operations Fund maintains a contractual (buyer-seller) relationship with its customers, primarily the military services. Although the fund could have an estimated $85 billion in revenues by fiscal year 1994, which would make it one of the largest corporations in the world, the fund operates on a break-even basis by recovering the costs incurred in conducting its operations. The fund provides such essential goods and services as the overhaul of ships, tanks, and aircraft and the sale of more than five million kinds of vital inventory items, such as landing gears for aircraft. The Defense Department's (DOD) 1993 plan to improve fund operations underscored the need for policies and procedures governing fund operations, better financial reports, and reliable financial systems to accumulate and report on operation results. Although DOD has made progress in implementing the plan, key steps designed to improve the fund's policies, procedures, and systems are not scheduled to be completed until later this fiscal year or next fiscal year. As a result, the fund continues to face operational problems. Antiquated systems and flawed data will continue to seriously impair DOD's ability to obtain reliable data on the results of operations. Short-term efforts, such as improving the accuracy of the financial data in existing systems, must be given high priority if the fund's current operations are to improve. DOD will not achieve the fund's objectives until its systems are successfully upgraded.
