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UN. T D S T.ATES GE NJIE P..: PC%;NTVNG OFFICE
AIL 'I', pl-
... ;_:, ';/WASHrINGTON, D'C. 2f54-''
B- Ld I I .
The Honorable
The Secretary of Defense
Dear Mr. Secretary:
We evaluated the tariff rate structure used by the industrially
funded Military Scalift Conanand (MSC) to determine whether the rates
charg, d cu.stoats wefe coamiensurat with the cost of s,-vYies providcd.
Wt l!n.d 'or :urvcy to the tar~ff structurc used for recovering
costs for .,, i ftinlg cargo.
tr.!,', r'vaionc of the HiSC rarlff struc- rv are sil{iIar to
th., ,]i-,cu--d in our report t the Congress entitld Increased
b'v of Financial Data and An Improved Tariff S%'stm Needed by tit,
MiIitary Airlift Cormnand (MAC) (B-i33025, Januji 3, 7-2). Tn
this rrport, we pointed out that MAC was not charzinp its custcy. rs
fo- channcl airlift servicecs rerderce on the basis of their con:t ani
that Lhis. cost information was ii.eded to prudently mann)re and use
airlift services. After ,e issued th report, your office requ,,sted
the Air F'orce to revise airlift tariffs so that revenues produced by
each airlift channel would approximatL the cost of providing that
rhannic I' service.
Details of our observations on the MSC tariff structure follow.
THlE [NfIiHSTRTAI. FUND AS
A 1.ANA;EMENT TOOL
Industrial funds ha- een estalIished to encourage better
minaldemrnnt by creating an envisonment similar to that nf private
ituhnLr. tind(r the industrial fund concept, cus-on-ers pay for the
t. Lvict-. iect ved a- they would when buying from co,-di,erca fi s;
they arc Lhus motivated to order only those items and services for
wli~ih there is a real need.
FGMSD- 75-51
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