Improvements Needed With Identifying Operating Costs Assessed to the Fleet Readiness Center Southwest
Abstract
We initiated this audit in response to a Defense Hotline allegation. Initially, our objective was to determine whether Defense Logistics Agency (DLA) correctly assessed surcharges for material shipments to Fleet Readiness Center Southwest (FRCSW); specifically, whether DLA appropriately assessed surcharges for standard orders and hazardous materials that relate to the agency s operating costs. However, DLA Aviation San Diego, California, officials did not use a surcharge to assess their operating costs for providing supply, storage, and distribution (SS&D) support to FRCSW. DLA Aviation San Diego officials assessed their total estimated operating costs to FRCSW through an annual fixed-price agreement. Therefore, we revised our objective to determine whether DLA Aviation San Diego officials correctly assessed their operating costs to FRCSW for providing SS&D support. See Appendix A for a discussion our scope and methodology. The complainant alleged that DLA Aviation San Diego officials incorrectly assessed a surcharge to FRCSW to recapture their operating expenses on standard and hazardous material orders. As a result, FRCSW cost centers overcharged customers on every material order. The Defense Hotline allegation was not substantiated. The surcharge discussed in the allegation was not charged or assessed by DLA to recapture their operating cost. The surcharge referred to in the Defense Hotline allegation was an internal FRCSW surcharge. The Comptroller, FRCSW implemented the surcharge to allocate and collect the costs for material management support from the individual cost centers. Although the Defense Hotline was not substantiated, the allegation directly resulted in identifying internal control weaknesses in DLA Aviation San Diego s process for estimating operating cost.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 02, 2012
- Accession Number
- ADA557575
Entities
Organizations
- Office of the Inspector General, U.S. Department of Defense