Summary: In a February 1996 report (GAO/NSIAD-96-60), GAO found that customers using defense transportation services provided through the U.S. Transportation Command and two of its component commands paid relatively high overhead costs. GAO noted that fragmented traffic management processes, a modally oriented organizational structure, and mobilization costs are major factors driving higher transportation costs. GAO recommended that the military ensure that the efforts to reengineer defense transportation address both process and organizational structure improvements. In response, the Defense Department indicated that the U.S. Transportation Command would undertake an array of organizational and process-related improvements to reduce overhead and improve efficiency. In a December 1996 report to Congress, the U.S. Transportation Command identified more than $500 million in savings that it attributed to such improvements. In March 1997, the U.S. Transportation Command announced that savings had increased to nearly $780 million and that the savings through fiscal year 1999 will be passed on to peacetime customers in the form of incremental rate reductions. This report reviews the extent to which savings are or are projected to be reflected in the form of lower charges to defense customers. GAO focuses on (1) the extent to which the U.S. Transportation Command expects to achieve long-term savings in its operating and infrastructure costs and (2) charges regarding transportation rates and customer charges.
