As a result the U.S. has lost as much as $107 million on those military sales GAO reviewed. The GAO evaluation was performed at the military services' headquarters in Washington, D.C., and at several arms production facilities operated by the Government. Pricing and financial management systems involved in foreign military sales were surveyed, and responsible officials were interviewed. Although GAO has brought this problem to the Secretary of Defense's attention since 1970, corrective actions have been inadequate and special efforts are needed. In this review, GAO found that DOD requirements that asset use charges be included in pricing had been ignored by the Air Force and the Navy. These services made no attempt to resolve uncertainties about how the asset charges should be applied; also, they ignored DOD audit reports which documented their failure to charge for asset use. While the Army did charge other governments for the use of Government-owned assets, one of its commands had not recovered about $1 million on three sales cases. DOD did not formulate a policy until 1975 for recovering the cost of using Government-owned assets in contractor facilities, thus losing over $30 million in three cases. These difficulties exemplify the general problems that DOD has experienced in determining whether its pricing policies were carried out effectively. The GAO report recommends that a task force be formed to monitor the military services' implementation of pricing policies and require that DOD officials make sure that new pricing requirements for foreign military sales are thoroughly understood. Reasonable efforts should be made to recover undercharges from other governments which resulted from omitting charges for use of Government assets since November 1973. The DOD agreed that pricing policies should be communicated to all services, and DOD training seminars are planned for this purpose. The DOD will not bill governments for undercharges because such actions would create ill will with foreign allies. The appendix contains information on the Government production facilities discussed in the report, a summary of previous GAO reports concerning the foreign military sales program, comments from DOD, armed services procurement regulations, and a list of officers responsible for the activities described in the review. (Author abstract modified)