Summary

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) operation of industrial funds to assess the adequacy of the information DOD provides to Congress for its use in overseeing fund operations.

GAO found that: (1) since industrial fund activities do not require annual appropriations, Congress relies on the information DOD provides on the results of industrial fund operations to carry out its periodic oversight of the funds; (2) before 1985, DOD reports on industrial fund activities highlighted operations at the fund level, but did not show the profit or loss for each individual activity group; and (3) inherent flexibility in the financing techniques for working-capital funds allowed DOD to have varying operating results at the activity group level. GAO also found that: (1) the 1985 industrial fund report to Congress was expanded and disclosed information such as revenue, cost of goods sold, and net operating results at the activity group level and included overall statistics on the prior year's operations and future estimates; and (2) the information on the performance of specific activity groups enabled Congress to monitor the funds' performance and strengthen its oversight on how appropriated funds are ultimately used by industrial funds.