Financial Management: Army Industrial Fund Did Not Recover Costs (Chapter
Report, 11/26/93, GAO/AIMD-94-16).

The Army Industrial Fund, which is supposed to break even, posted losses
from 1989 through 1991 for its maintenance and storage activities.
Depot maintenance, the largest activity, sustained losses of nearly $98
million on revenues of about $4 billion during that period.  In fiscal
year 1992, the fund was incorporated into the Defense Business
Operations Fund and its billing rates were adjusted to recover prior
year losses.  Fund maintenance operations, although profitable as of
late, project a loss for fiscal year 1994.  This report (1) determines
the reasons for the fund's continuing operating losses, (2) assesses the
impact that operating losses had on the fund's working capital and
identifies steps taken to minimize that impact, and (3) evaluates the
reasonableness of the Army's projected cost savings from the competition
initiative.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-94-16
     TITLE:  Financial Management: Army Industrial Fund Did Not Recover 
             Costs
      DATE:  11/26/93
   SUBJECT:  Industrial funds
             Defense cost control
             Army supplies
             Maintenance services contracts
             Military materiel
             Financial management
             Billing procedures
             Federal agency accounting systems
             Maintenance costs
             Funds management
IDENTIFIER:  Defense Business Operations Fund
             Army Industrial Fund
             M110 Howitzer
             M-25 Protective Mask
             
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