Improvements Needed in DOD System for Controlling Material Shipments to DLA Depots and Customers

PLRD-82-81: Published: Jun 10, 1982. Publicly Released: Jun 10, 1982.

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GAO reviewed the Department of Defense's (DOD) practices and procedures for controlling material shipments to Defense Logistics Agency (DLA) depots and shipments from DLA distribution activities and vendors to military customers. GAO was primarily interested in whether: (1) DOD customers were receiving proper shipments of requisitioned material; and (2) the government received what it paid for when fast payment procedures were used.

GAO found that policies and procedures followed at some supply centers do not ensure the receipt of materials requisitioned by the military services from DLA and those purchased by DLA from vendors and contractors. This condition has resulted in instances where: (1) the government was not receiving material for which it had paid and had forfeited its recovery rights; (2) customers were being charged for material they did not receive; and (3) overdue material shipments costing millions of dollars were either written off as inventory losses or remained on the books as items due in for a considerable period of time.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: During a recent GAO evaluation of inventory management practices of the services and DLA, GAO found that DLA does not ensure that the government receives what it pays for. Receipt processing controls have not been sufficiently strengthened. GAO initiated a new assignment to evaluate fast pay procedures in DLA and the services. Recommendations of the current job will supercede those in this report.

    Recommendation: The Secretary of Defense should require the Director, DLA, to emphasize the importance of controlling material shipments and ensuring that the government receives what it pays for by: (1) strengthening processing controls; and (2) following up on reported deficiencies and assessing problem areas.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DLA and the military services developed training programs to educate depot and customer personnel on the correct use of material receipt procedures. Financial benefits from training cannot be reasonably estimated.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force to emphasize to DLA military customers the need to consistently follow established procedures for identifying, processing, and reporting shipping discrepancies, including container material shortages and overdue shipments.

    Agency Affected: Department of Defense

 

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