Defense Transportation

The U.S. Transportation Command provides global air, land, and sea transportation services for the military in order to maintain a mobilization capability in peacetime and to meet national security needs in times of war. Its transportation services are offered through the Air Force Air Mobility Command. This report reviews airlift rates charged to customers. GAO discusses (1) the extent to which the Air Mobility Command has reliable information for managing airlift transportation services and (2) the factors affecting efficient cost control of airlift services.

GAO noted that: (1) the Air Mobility Command lacks accurate cost information to set rates and assess the economy and efficiency of its operations; (2) the Command does not have accurate data, reliable records, and effective systems to determine: (a) its operating costs for airlift services; and (b) the amount to charge its customers or to request from direct appropriations (the Air Force Airlift Readiness Account) for training and readiness costs; (3) its efforts to accumulate reliable financial information are hampered by nonintegrated systems and processes that contain numerous errors and inconsistencies; (4) the results of GAO's most recent financial statement audit work at the Department of Defense (DOD) highlight long-standing problems accumulating and reporting the full costs associated with all of DOD's working capital fund operations; (5) without reliable information, customers cannot verify airlift charges; (6) DOD financial management policy and practices create disincentives to control and recover full costs; (7) because the Command receives a payment that is intended to cover any shortfalls between revenue collections and full costs, there is little incentive to either control costs or recover the full costs of its peacetime airlift operations; (8) absent accurate cost data, the Command does not have a sound basis for estimating the amount it needs from direct appropriations for payment; (9) the requirements to use rates that are generally competitive with commercial billing rates shifts the focus from determining full costs of operations; (10) an emphasis is placed on estimating commercial rates rather than developing the full costs of missions; (11) DOD recognizes the need for reforms in the defense-wide working capital funds; and (12) however, the Defense Working Capital Funds Task Force is not addressing the transportation working capital funds issues.

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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