From Saudi Arabia to Singapore, foreign buyers of American weapons may be wishing they shopped at Amazon for the free shipping, a report from the Government Accountability Office recently revealed.
More than $680 million has piled up in a Defense Department account to pay shipping fees on arms sales, growing by 1,300 percent since 2011, the watchdog found. The money comes from overcharging allies for delivering their weapons orders.
The bounty of shipping fees, a healthy amount in any checkbook, came as Pentagon accountants debated how to define the word "healthy."
"Internal guidance requires daily and annual reviews of the accounts to monitor for significant changes in account balances and to ensure the accounts maintain a 'healthy' level," the agency said in a 62-page report. "However, internal guidance does not define a significant change or 'healthy' level, such as a target range for the account balances."
The money is in the hands of the Defense Security Cooperation Agency, which "administers security cooperation programs that support U.S. policy interests and objectives identified by the White House, Department of Defense, and Department of State."
The agency doles out America's military aid money and, in this case, is the middle man on sales of everything from ammunition to fighter jets. With a hammerlock on an estimated 36 percent of the global arms export market, America sells more weapons overseas than Russia and China combined, a 2019 report from the Stockholm International Peace Research Institute found.
The Pentagon's foreign military sales program sent more than $55 billion in weapons and parts overseas last year. The number is expected to grow in 2019 and the sales book this month includes F-16 fighters to Morocco, F-35s to Poland, missiles to Japan and torpedoes to South Korea.
In each transaction the Pentagon applies an estimated shipping fee, which is deposited in the transportation account. But, the report found, the Pentagon these days has a penchant for overestimating actual shipping costs.
The watchdog said the Security Cooperation Agency doesn't "ensure that aggregate fees approximate aggregate costs."
But the Pentagon won't be issuing refunds.
In response to the report, Army Lt. Gen. Charles Hooper, boss of the security cooperation outfit, admitted there's a bit too much cash in the transportation account. And he's fixing that issue by moving it to another account to cover a fee dubbed "administrative surcharge."
That account covers the Pentagon's manpower and other costs in arms sales and similar transactions.
Hooper said he'd pull $130 million from the transportation sheet so its balance was so bloated.
"Thank you again for the report," the general wrote.
The transportation account got so large, in part, thanks to cheap oil.
Oil prices neared $140 per barrel in 2008, but that same barrel now sells for $57. The Pentagon has also cut its shipping rates, the agency said.
But how the shipping account piles up so much money remains a mystery, the report found.
The two changes together "could not fully explain the account balance," the Accountability Office said.