Audit of Carriers' Bills for Pipeline Movements

Each year the Department of Defense moves substantial volumes of petroleum fuels by pipeline, mainly in support of air bases throughout the United States. In fiscal year 1977, over 1.7 billion gallons of petroleum fuel were moved at a cost of $16.5 million. Management of the movements and payment of pipeline carriers' bills are the responsibility of the Defense Fuel Supply Center (DFSC), Defense Logistics Agency. The audit of carriers' bills and the collection of any overcharges are the responsibility of the Federal Supply Service, General Services Administration (GSA) unless delegated by it to another agency. A study was made of the procedures for the payment and audit of carriers' bills for the petroleum movement.

The volume of paid transportation bills is so great that the audit coverage is limited and overcharges can go undetected. The opportunity exists to significantly improve the audit process and thereby increase its effectiveness. This improvement can be achieved by integrating the audit function now being done by GSA into the DFSC program for the management of petroleum fuel movements. The procedure for auditing pipeline carriers' bills would be similar to the identification of variances between estimated charges and actual charges by the Military Traffic Management Command in its Traffic Management Analysis Program. The pipeline operation, however, offers several advantages such as: (1) the relatively small universe of rates for a few commodities; (2) being performed in the agency having a vested interest in conservation of its appropriation; and (3) the entire process can be completed within several months from the date of payment, whereas the GSA audit process can take a year or more.