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GAO-07-675R 1 (2007-05-08)

handle is hein.gao/gaocrptavfe0001 and id is 1 raw text is: Sai Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 May 8, 2007 Congressional Committees Subject: Defense Transportation: DOD Has Taken Actions to Incorporate Lessons Learned in Transforming Its Freight Distribution System The Department of Defense (DOD) transports second destination freight' from over 600 locations to thousands of destinations throughout the continental United States each year at a cost of approximately $900 million. In 2001, DOD conducted a prototype program to better understand whether commercial best practices-specifically the use of a third-party logistics provider2-could be applied to its freight transportation system and reduce costs. The prototype, which included a 1-year base agreement with two 1-year option periods, was conducted at selected Defense Logistics Agency (DLA) and military service shipping locations in the southeastern United States. At the conclusion of the first year, DLA exercised an option to extend the prototype at its shipping locations, whereas the military service shipping locations returned to DOD's previous freight shipping system due to dissatisfaction with the prototype's performance. On the basis of the prototype, DOD concluded that a third-party logistics provider could successfully integrate with DOD transportation processes if the program was designed and implemented correctly to capitalize on the benefits of using a third-party logistics provider while also addressing the performance problems that were experienced with the prototype. In 2004, the Under Secretary of Defense for Acquisition, Technology, and Logistics initiated the Defense Transportation Coordination Initiative (DTCI) to improve the reliability, predictability, and efficiency of moving materiel within the continental United States through a long-term partnership with a third-party logistics provider. DOD issued a request for proposals in June 2006 and plans to award a contract during fiscal year 2007. The DTCI contracting vehicle will be an indefinite-delivery, requirements-type 'Second destination transportation is the movement of freight among and between depots, logistics centers, and field activities. It excludes freight that is shipped from commercial suppliers to DOD locations. 2A third-party logistics firm, also known as a 3PL, provides logistics services to companies for part or all of a company's supply chain management functions, such as transportation or warehousing. GAO-07-675R Defense Transportation Coordination Initiative Page 1

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