Defense Inventory

The Defense Logistics Agency (DLA) routinely consolidates the packing of low priority shipments going to the same military installation at the same time. Yet Pentagon regulations do not allow consolidating the highest priority orders going to the same place at the same time, even though this would yield considerable savings. One DLA depot has estimated that it could save about $250,000 annually through consolidated packing of these priority orders. DLA depots generally pack and ship supply items in an efficient and effective way. DLA is incurring unnecessary costs, however, because of a new Army supply system that automatically expedites transportation for high priority requisitions that fail to show a required delivery date. This procedure contradicts a Pentagon directive allowing DLA depots to downgrade the transportation priority of requisitions when materiel is not needed within 20 days. GAO also found that recycling efforts varied from one military installation to another.

GAO found that: (1) DLA routinely consolidated low priority orders when appropriate, but under DOD regulations, it could not consolidate the 11 percent of orders that had the highest priority; (2) one depot shipped items to specific installations at regular intervals in dedicated trucks and without regard to their priority level, which resulted in occasional delayed shipments of priority items and the early delivery of routine orders; (3) individual packing did not usually make delivery faster, since all orders for a particular destination tended to arrive at the same time; (4) customers believed that the use of single large containers for multiple orders would reduce lost or misdirected shipments; (5) one DLA depot estimated it could save $250,000 annually by consolidating high priority orders; (6) consolidation of the highest priority orders would have little effect on timeliness of delivery; (7) in general, DLA depots efficiently and cost-effectively packed and consolidated orders; (8) the Navy required that shipboard items be packed in fire-retardant containers, but most of the special containers were discarded before the items were taken aboard due to space limitations; (9) DLA depots regularly downgraded orders that did not require premium transportation to save money; (10) the Army's new supply system automatically added the code for premium transportation on high priority requisitions that did not have a specific delivery date; (11) DLA depots too often overpacked small single items; and (12) the services' emphasis on recycling shipping materials varied from required recycling to voluntary recycling to no recycling at all.

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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