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Navy Ordnance: Analysis of Business Area Price Increases and Financial Losses

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Report Type Reports and Testimonies
Report Date March 14, 1997
Report No. AIMD/NSIAD-97-74
Subject
Summary:

The Navy ordnance business area increased prices 78 percent from fiscal years 1994 through 1996 and incurred about $212 million in losses during that same period. Most of these losses were due to actual overhead costs exceeding budgeted overhead costs. This situation has led to significant price increase that ultimately reduce purchasing power for the military services' operations and maintenance appropriation dollars. GAO is concerned that excessive operating costs may exist in many of the Defense Department's (DOD) logistics business activities and may be causing operations and maintenance appropriations to be used inefficiently. GAO will be examining additional DOD business activities to determine the extent of the problem.

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