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Pursuant to a congressional request, GAO examined the cost-effectiveness of the Defense Logistics Agency's (DLA) materiel returns program and the related policies and procedures that govern it.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. The Secretary of Defense should require the Director, DLA, to: (1) establish annually a minimum return limit based on the total cost to process a return; (2) apply that limit to all returns except when there are valid exceptions, such as when an item is unavailable in current inventories or is only available from a diminishing number of manufacturing sources; and (3) use acquisition price as the criterion for valuing returns.
Closed - Implemented
DLA is: (1) reviewing the Acquisition Objective for items that it manages with the goal of reducing requirements; (2) establishing a minimum dollar value for materiel returns; and (3) changing the regulations to require the acquisition cost to be used as a criterion for valuing returns. A system change request was developed and implemented on May 12, 1994. The change included a dollar minimum for customer returns and a reduction in the approved acquisition objective and also valued return items at their latest acquisition cost.

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