Defense Transportation:

Streamlining of the U.S. Transportation Command Is Needed

NSIAD-96-60: Published: Feb 22, 1996. Publicly Released: Feb 22, 1996.

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Pursuant to a congressional request, GAO reviewed whether the Department of Defense (DOD) is providing cost-effective and efficient transportation operations, focusing on: (1) the factors that increase DOD transportation costs; and (2) DOD efforts to reengineer its transportation operations.

GAO found that: (1) defense transportation costs are substantially higher than necessary; (2) DOD customers frequently pay prices for transportation services that are double or triple the cost of the basic transportation; (3) key factors driving these costs are the U.S. Transportation Command's (USTRANSCOM) fragmented and inefficient organizational structure and management processes, and the need to maintain a mobilization capability; (4) much of defense cargo today moves intermodally, by air, land, and sea transport, but USTRANSCOM retains an outdated and inefficient, modally oriented, organizational structure, with many collocated facilities; (5) each separate component command incurs operational and support costs, and customers receive bills from each component command for each mode of transportation, rather than a single intermodal bill from only one component; (6) separate billing systems are inefficient, adding people and costs, and confusing to customers who pay for the inefficiencies; (7) USTRANSCOM maintains an extensive water port structure, employing more than 1,200 people, at a cost in fiscal year 1994 of over $70 million; (8) the ports are largely unused during peacetime because most cargo moves commercially, but the port facilities do provide capacity that may be needed for a wartime surge; (9) DOD's guidance for handling the cost of maintaining a mobilization capability doe not cover all situations in which USTRANSCOM components charge their customers for costs that appear to be for mobilization requirements; (10) while DOD has recently begun reengineering the defense transportation system to improve its processes and reduce costs, it is not concurrently looking at how the organizational structure should be redesigned; (11) DOD will address organizational structure only after the process changes have been completed; and (12) GAO's work shows that the inefficiency of the organizational structure has been a long-standing issue in addressing the effectiveness of defense transportation, and waiting to address this issue until process improvements are made will likely represent a significant barrier to achieving the full benefits of the reengineering efforts.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has taken steps to streamline the defense transportation system. The Military Traffic Management Command (MTMC) established a Joint Traffic Management Office which merged and consolidated MTMC and Military Sealift Command transportation specialists to provide customers a single point of contact for acquiring some transportation services. MTMC has fully or substantially completed closing of 4 port detachments, 1 outport and 1 medium port command and downsized 1 river detachment and 5 medium port commands. However, more streamlining needs to occur. GAO's analysis shows that these actions, and other actions taken to reduce costs, have not resulted in lower rates charged to defense customers.

    Recommendation: The Secretary of Defense should direct that the defense transportation reengineering efforts simultaneously address process and organizational structure improvements. Specifically, the reengineering efforts should confront, at a minimum, the need for separate traffic management component command headquarters staff.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD has taken steps to streamline the defense transportation system. MTMC established a Joint Traffic Management Office which merged and consolidated MTMC and Military Sealift Command transportation specialists to provide customers a single point of contact for acquiring some transportation services. MTMC has fully or substantially completed closing of 4 port detachments, 1 outport and 1 medium port command, and downsized 1 river detachment and 5 medium port commands. However, more streamlining needs to occur. GAO's analysis shows that these actions, and other actions taken to reduce costs, have not resulted in lower rates charged to defense customers.

    Recommendation: The Secretary of Defense should direct that the defense transportation reengineering efforts simultaneously address process and organizational structure improvements. Specifically, the reengineering efforts should confront, at a minimum, the consolidation of separate field subordinate command traffic management staff.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD has taken action to streamline the defense transportation system. MTMC established a Joint Traffic Management Office which merged and consolidated MTMC and Military Sealift Command transportation specialists to provide customers a single point of contact for acquiring some transportation services. MTMC has fully or substantially completed closing of 4 port detachments, 1 outport and 1 medium port command, and downsized 1 river detachment and 5 medium port commands. However, more streamlining needs to occur. GAO's analysis shows that these actions, and other actions taken to reduce costs, have not resulted in lower rates charged to defense customers.

    Recommendation: The Secretary of Defense should direct that the defense transportation reengineering efforts simultaneously address process and organizational structure improvements. Specifically, the reengineering efforts should confront, at a minimum, the elimination of all remaining duplicative field-based subordinate command support staff.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD clarified that $119.6 million in readiness/mobilization costs should not be passed along to its defense customers to pay for transportation. Therefore, DOD removed $119.6 million in readiness/mobilization costs from the transportation working capital fund budgets for fiscal years 1998 and 1999. Current work on airlift costs and customer charges shows that the airlift customers continues to be charged for mobilization and readiness costs.

    Recommendation: The Secretary of Defense should clarify which USTRANSCOM mobilization costs should be passed along to its customers. The amounts and purpose of any such costs should be contained in transportation component command annual financial statements and in the budget justification statements submitted annually to Congress.

    Agency Affected: Department of Defense

 

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