DOD Commercial Transportation

The Defense Department (DOD) spends about $3 billion a year for commercial transportation services to move cargo, personnel, and their personal effects worldwide. DOD sometimes overpays its transportation bills or does not effectively negotiate for reduced rates. This report (1) looks at whether DOD is preventing excess payments to commercial carriers through preauditing--that is, auditing bills before payment--and (2) identifies other ways in which DOD could improve its traffic and travel management programs.

GAO found that: (1) DOD has implemented a preauditing system that has helped prevent millions of dollars in overpayments; (2) DOD could strengthen some auditing aspects and take steps to ensure that preaudits are thorough; (3) when overcharging occurred, DOD did not notify transportation officials who prepared the shipping documentation so that they could take the appropriate corrective actions to prevent future overcharges; (4) because the Military Sealift Command (MSC) has not developed and does not provide carriers with adequate proposal information, it is difficult for carriers to offer competitive rates and MSC ability to effectively evaluate those offers is weakened; (5) since transportation services are procured on a through basis, the MSC practice of soliciting and evaluating rates by segments distorts the rate offers' significance and complicates the evaluation process; and (6) the DOD process for negotiating rates for moving DOD personnel's domestic household goods inhibited competition by allowing carriers to meet the initial low bid during subsequent bidding phases.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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