Household Goods

In response to a congressional request, GAO reviewed the Military Traffic Management Command's (MTMC) proposed increase of carrier liability for the shipment of military members' household goods, to determine a fair and adequate carrier compensation rate.

GAO found that it could not determine fair and adequate carrier compensation, since: (1) it was too early to determine the impact of the increases on carrier performance; and (2) carriers might not perceive a single rate as adequate or fair, since performance levels vary widely. GAO also found that: (1) the new rate would compensate only carriers with good performance records, which should reduce government claims' cost and provide incentive for improved carrier performance; (2) if claims and performance continue at the 1985 levels, the government will transfer an estimated $3 to $4 million in costs to carriers under the increased liability program; and (3) under the new program, 28 percent of the carriers it examined would receive revenues greater than their increased costs. GAO believes that the current compensation rate under the increased liability program should continue until carrier performance data or additional cost information indicate needed changes.