Negotiation of Freight Rates by the Department of Defense

A review was conducted of the Department of Defense's (DOD) procedures and practices with regard to the negotiation of freight rates to determine if negotiations are conducted in the most efficient manner and result in the lowest rates obtainable for moving DOD cargo. Duplication of effort between headquarters and area commands was found on actions involving volume shipments, and shipping offices were generally not providing the Military Traffic Management Command (MTMC) with the required 30-day advance notice of shipment. MTMC analysts generally used existing rates on analagous commodities and prevailing rates on other shipping patterns as the basis for negotiations without considering either rates available by using other forms of transportation or making a comparison of the carrier's costs and revenues. Improvements in procedures would help MTMC to avoid some administrative costs and obtain more favorable consideration by carriers of its rates proposals.