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Highlights

Pursuant to a congressional request, GAO reviewed the operations of the Defense Logistics Agency's (DLA) regional freight consolidation centers (RFCC), focusing on whether the centers: (1) realized the savings DLA projected; (2) timely delivered freight when required; and (3) maintained accountability for freight in transit.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. The Secretary of Defense should require the Director, DLA, to postpone the expansion of the regional freight consolidation program pending the results of the team's study.
Closed - Implemented
DOD stated that it did not plan to expand its RFCC operation but it might possibly relocate existing centers. Due to declining program savings, DLA, on December 22, 1993, decided to terminate the regional freight consolidation centers program. DLA was unable to determine if vendors were passing transportation savings on to DOD in the form of lower contract prices. Pool distribution operations have terminated because in some cases, RFCC increased transit times and associated costs.
Defense Logistics Agency 2. If the study shows that the benefits to be derived from using government freight rates outweighs the administrative burden, the Director, DLA, should: (1) stop consolidating vendor freight shipments at RFCC; and (2) use existing government freight rates to ship vendor freight directly to storage depots.
Closed - Implemented
The Department of Defense stated that it had established a review team to determine the extent to which government rates would save procurement costs. The team will examine current transportation and contracting policies and procedures used by DLA, the military services, and industry. Due to declining program savings, DLA, on December 22, 1993, decided to terminate the regional freight consolidation centers program. DLA was unable to determine if vendors were passing transportation savings on to DOD in the form of lower contract prices. Pool distribution operations have terminated because in some cases, RFCC increased transit times and associated costs.

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