Defense Logistics Agency Customers Order Supplies Uneconomically

T-NSIAD-91-25: Published: Apr 23, 1991. Publicly Released: Apr 23, 1991.

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GAO discussed: (1) how much it cost the Defense Logistics Agency (DLA) to fill multiple orders for very low-cost items; and (2) how often customers ordered the same supply items more than once on the same day. GAO noted that: (1) DLA spent approximately $63 million more than the $22.6 million it charged its customers to fill low-value orders; (2) customers placed needless small orders for supplies and multiple orders for the same supplies on the same day in over 755,000 instances, involving over 1.8 million customer orders; (3) DLA operations cost could decrease by nearly $12.1 million if customers consolidated multiple orders; (4) DLA added a surcharge to each customer order based on a percentage of the total purchase value to recover the full cost of its operations; and (5) the surcharge did not encourage customers to change their ordering methods, since the surcharge consisted of a percentage of the value of the requisitioned item. GAO believes that if the Department of Defense levied a minimum charge per order sufficient to recover the full cost of filling the order, customers would be encouraged to submit fewer low-value orders.

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