Defense Transportation

The Defense Department (DOD) spends more than $500 million annually to ship government property around the country, mostly by truck. Although DOD filed claims against freight carriers for $15 million worth of lost or damaged property in fiscal year 1990, GAO believes that these losses could be many times greater. DOD's systems for identifying, reporting, and recovering lost freight and for monitoring carriers' performance are in disarray. DOD does not always know when freight is missing, and military bases do not consistently or correctly report problems like undelivered and missing freight. Even when DOD files claims for lost freight, carriers are generally liable for only a fraction of the freight's value. Further, DOD continues to use carriers that have lost excessive amounts of freight. DOD needs to strengthen management of freight shipments to cut down on property thefts and losses.

GAO found that: (1) in the past 2 years, the Defense Finance and Accounting Service (DFAS) has collected only $3 million each year for claims resulting from lost or damaged freight, although defense property documented as lost or damaged during fiscal year (FY) 1990 was worth $15 million; (2) because the DOD systems for identifying, reporting, and recovering lost freight and for monitoring carriers' performance are in disarray, DOD does not always know the extent of its in-transit losses; (3) DOD has neglected the astray freight program, and as a result, recoveries of lost freight have declined steeply to $9 million worth of property between FY 1986 and FY 1990, from $113 million between FY 1980 and FY 1985; (4) DOD allows many carriers to exceed the limits for freight loss or damage without penalty, and of 289 carriers that had filed claims against DOD in FY 1990, 129 had exceeded the limits; (5) although the government has permitted carriers to certify the delivery date and condition of their shipments, carriers erroneously certified delivery dates for 96 of 215 delivered shipments sampled by GAO; (6) the U.S. government permits self-certification because it believes the systems for identifying and reporting undelivered property are a sufficient check and balance, but certifying erroneous delivery dates can result in early payment and significant losses to DOD in some cases; (7) the lack of coordination and direction from the defense installations has contributed to the ineffectiveness of the Military Traffic and Management Command's (MTMC) key oversight programs; and (8) MTMC has not routinely analyzed information from all available sources, provided feedback to defense installations, or recommended corrective action to DOD.

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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