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Military Exports: Recovery of Nonrecurring Research and Development Costs

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Report Type Reports and Testimonies
Report Date May 31, 1995
Report No. NSIAD-95-147
Subject
Summary:

Since 1967, the Defense Department (DOD) has been recovering nonrecurring research and development and one-time production costs on sales of weapon systems to foreign governments. The intent of this effort was to control U.S. costs and the extent of weapons sales to foreign governments. In 1992, DOD canceled its policy of recovering nonrecurring costs on direct commercial sales in an effort to boost the competitiveness of U.S. firms in the world market. In 1995, several bills were introduced that could affect the recovery of nonrecurring costs on military sales. This report discusses (1) the government's recovery of nonrecurring research and development costs on sales of major defense equipment, (2) the effect of charging a flat or standard fee rather than the current pro rata fee, and (3) views from supporters and opponents of the recovery of these costs.

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