Defense Transportation:

Ineffective Oversight Contributes to Freight Losses

NSIAD-92-96: Published: Jun 18, 1992. Publicly Released: Jun 22, 1992.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts to prevent losses of government property in transit, focusing on: (1) the extent that defense property is lost in transit; (2) the DOD astray freight program, designed to recover misdirected government property; and (3) factors contributing to losses of DOD property in transit.

GAO found that: (1) in the past 2 years, the Defense Finance and Accounting Service (DFAS) has collected only $3 million each year for claims resulting from lost or damaged freight, although defense property documented as lost or damaged during fiscal year (FY) 1990 was worth $15 million; (2) because the DOD systems for identifying, reporting, and recovering lost freight and for monitoring carriers' performance are in disarray, DOD does not always know the extent of its in-transit losses; (3) DOD has neglected the astray freight program, and as a result, recoveries of lost freight have declined steeply to $9 million worth of property between FY 1986 and FY 1990, from $113 million between FY 1980 and FY 1985; (4) DOD allows many carriers to exceed the limits for freight loss or damage without penalty, and of 289 carriers that had filed claims against DOD in FY 1990, 129 had exceeded the limits; (5) although the government has permitted carriers to certify the delivery date and condition of their shipments, carriers erroneously certified delivery dates for 96 of 215 delivered shipments sampled by GAO; (6) the U.S. government permits self-certification because it believes the systems for identifying and reporting undelivered property are a sufficient check and balance, but certifying erroneous delivery dates can result in early payment and significant losses to DOD in some cases; (7) the lack of coordination and direction from the defense installations has contributed to the ineffectiveness of the Military Traffic and Management Command's (MTMC) key oversight programs; and (8) MTMC has not routinely analyzed information from all available sources, provided feedback to defense installations, or recommended corrective action to DOD.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Under the DOD Guaranteed Traffic Program, shippers are now given the option to purchase increased liability coverage. For non-guaranteed traffic, DOD expects to have an option plan in place by the first quarter of fiscal year 1996.

    Recommendation: The Commander, MTMC, should determine whether DOD is adequately protected when shipping items that significantly exceed carriers' liability and develop criteria for determining when transportation officials should use additional coverage.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  2. Status: Closed - Implemented

    Comments: Following a DOD study, it was decided to increase liability limits and give shippers the option to obtain additional coverage. (See previous recommendation action taken.)

    Recommendation: The Commander, MTMC, should amend the Freight Traffic Rules and provide similar measures in publications governing all motor traffic and other transportation modes, such as air, to eliminate maximum released valuation.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  3. Status: Closed - Implemented

    Comments: MTMC developed a TDR screen that allows analysis of trends and weaknesses in the transportation system. Access is available to all installations on-line to the Continental United States Freight Management System.

    Recommendation: The Commander, MTMC, should ensure that the Transportation Discrepancy Report data-base computer program functions as intended and that installations report transportation discrepancies to enable MTMC program managers to analyze trends and weaknesses in the transportation system and make recommendations for improvements to DOD.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  4. Status: Closed - Implemented

    Comments: MTMC implemented procedures to accelerate collection procedures when necessary.

    Recommendation: The Commander, MTMC, should inform the Director, DFAS, that MTMC plans to disqualify or suspend a carrier so that DFAS can accelerate collection procedures.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  5. Status: Closed - Implemented

    Comments: MTMC conducted activities to increase awareness and importance of reporting astray frieght, which included conducting 12 briefings in FY 1992 to various groups responsible for managing the program. MTMC CDR has stressed importance in speeches and newsletters. As a result, over $14 million has been recovered in FY 1992 and $7.7 million in the first half of FY 1993.

    Recommendation: To improve the transportation discrepancy report system and the astray freight program, the Secretary of Defense should direct top management at DOD installations to place more emphasis on participating in the astray freight program and the transportation discrepancy reporting system and ensuring that proper shipping and receiving procedures are practiced, including accurate preparation and transmission of the government bill of lading.

    Agency Affected: Department of Defense

  6. Status: Closed - Not Implemented

    Comments: After conducting a feasibility test, DLA said that implementing this recommendations would be cost prohibitive.

    Recommendation: To improve the transportation discrepancy report system and the astray freight program, the Secretary of Defense should direct the Director, Defense Logistics Agency, to determine the cost-effectiveness of labelling each box in a pallet or, at a minimum, labelling the boxes, such as the boxes on the top tier, that may become vulnerable to loss.

    Agency Affected: Department of Defense

  7. Status: Closed - Not Implemented

    Comments: DOD said that this recommendation would be cumbersome and impractical to implement.

    Recommendation: To improve the transportation discrepancy report system and the astray freight program, the Secretary of Defense should direct the service secretaries to automatically include the toll-free number for reporting astray freight on the government bills of lading.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: Training was given to 100 attendees at workshop which will be given every 6 months, plus other workshops, which included topics included in the recommendation.

    Recommendation: Although the recent DOD initiatives should greatly improve the astray freight program, the Commander, MTMC, should institute a training program that includes all the elements of identifying, recovering, and monitoring government freight. Training should include: (1) a clarification of the astray freight definition; (2) methods for targeting carriers for inspection of terminals and warehouses and for tracing and recovering freight; (3) historical data on freight recovered through the program; and (4) fraudulent practices and potential abuses in the transportation system.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  9. Status: Closed - Implemented

    Comments: Assignments were completed during first quarter 1993, plus assignment of additional personnel and workload redistribution resulted in adding new committees.

    Recommendation: Although the recent DOD initiatives should greatly improve the astray freight program, the Commander, MTMC, should systematically assign astray freight committees and members to carriers on the basis of data such as freight volume and the number of carrier terminals and warehouses in the area and on transportation discrepancy reports.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  10. Status: Closed - Implemented

    Comments: MTMC updated manual and published it in May 1993 and plans continuous updates as necessary.

    Recommendation: Although the recent DOD initiatives should greatly improve the astray freight program, the Commander, MTMC, should regularly update the astray freight manual to include specific policy, procedures, and guidance on identifying, recovering, and reporting astray government property.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  11. Status: Closed - Implemented

    Comments: Procedures and regulations were completed and incorporated in the astray freight manual.

    Recommendation: Although the recent DOD initiatives should greatly improve the astray freight program, the Commander, MTMC, should direct the Staff Judge Advocate and the Joint Military Astray Freight Committee program manager to codevelop procedures and regulations on the identification and recovery of DOD freight from commercial warehouses.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  12. Status: Closed - Implemented

    Comments: In July 8, 1992, in the Federal Register, MTMC requested carriers to participate in program, plus MTMC mentioned same at carrier conventions.

    Recommendation: Although the recent DOD initiatives should greatly improve the astray freight program, the Commander, MTMC, should require that all commercial carriers under contractual obligation to DOD inform the transportation official at the closest military installation when they have astray freight.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  13. Status: Closed - Implemented

    Comments: MTMC is taking actions to improve carrier performance, but actions in process are not fully responsive.

    Recommendation: To provide better protection against loss and damage, the Commander, MTMC, should ensure that carriers are assessed on all performance elements in either the Defense Traffic Management Regulation or the guaranteed traffic agreement, whichever is applicable: (1) that all available information, such as loss and damage claims data and transportation discrepancy reports, is used in making the assessment; and (2) that local transportation officials receive feedback on the extent that carriers perform satisfactorily.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  14. Status: Closed - Implemented

    Comments: MTMC consolidated many freight loss and damage responsibilities under a single directorate but did not take all the specific recommended actions.

    Recommendation: To provide better protection against loss and damage, the Commander, MTMC, should require the carrier performance program manager to: (1) evaluate all modes of freight traffic, including guaranteed traffic; (2) develop standard performance criteria, particularly on-time delivery requirements, and loss and damage limits, that are applicable to all freight traffic and are in the best interest of the government; (3) periodically verify that carriers certify correct delivery dates; and (4) amend the Defense Traffic Management Regulation to reflect the requirements in this recommendation.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  15. Status: Closed - Not Implemented

    Comments: MTMC believes that carriers are required to recertify. GAO disagrees with this interpretation and believes that the requirement should be clearly stated in the Carrier Qualification Regulation.

    Recommendation: To provide better protection against loss and damage, the Commander, MTMC, should revise the proposed Carrier Qualification Program regulation to include a requirement that a carrier qualified under the carrier qualification program be recertified if its participation level changes, for example, if the carrier increases the number of routes or regions covered.

    Agency Affected: Department of Defense: Department of the Army: Military Traffic Management Command

  16. Status: Closed - Implemented

    Comments: Capability to exchange information electronically is operational at 49 installations and projected for full operation by September 1995.

    Recommendation: The Secretary of Defense should direct the Commander, MTMC, and the Director, DFAS, to regularly exchange information to identify trends and weaknesses in transporting DOD freight.

    Agency Affected: Department of Defense

  17. Status: Closed - Implemented

    Comments: Three audits of DOD freight shipments are scheduled for FY 1992 and FY 1993.

    Recommendation: The Secretary of Defense and the DOD Inspector General should emphasize the importance of identifying weaknesses in transporting DOD property and taking corrective action.

    Agency Affected: Department of Defense

  18. Status: Closed - Implemented

    Comments: Three audits of DOD freight shipments are scheduled for FY 1992 and FY 1993.

    Recommendation: The Secretary of Defense and the DOD Inspector General should emphasize the importance of identifying weaknesses in transporting DOD property and taking corrective action.

    Agency Affected: Department of Defense: Office of the Inspector General

  19. Status: Closed - Implemented

    Comments: FY 1992 DOD annual statement of assurance identifies DOD transportation deficiencies.

    Recommendation: The Secretary of Defense should include those transportation deficiencies in the Federal Managers' Financial Integrity Act report.

    Agency Affected: Department of Defense

 

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