OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE

 3500 DEFENSE PENTAGON

 WASHINGTON, DC 20301-3500

 SUSTAINMENT

MEMORANDUM FOR SUPPLY PROCESS REVIEW COMMITTEE

SUBJECT: Approved Defense Logistics Management Standards Change 1431, Reimbursements of

Lateral Redistributions from a Credit to a Buy/Sell Process (Supply)

The Defense Logistics Management Standards change, as outlined in the attachment, is approved

for implementation. 

Addressees may direct questions to Rafael Gonzalez, e-mail: DEDSO.Supply@dla.mil. Others 

must contact their designated Process Review Committee representative available at https://

www.dla.mil/Defense-Data-Standards/Committees/Contacts/. 

 Leigh E. Method, SES 

 Deputy Assistant Secretary of Defense 

 for Logistics

Attachments:

As stated

cc:

OUSD(C)

DLA J6DS
Attachment, ADC 1431

Page 2

Approved Defense Logistics Management Standards Change 1431 

Reimbursements ofLateral Redistributionsfrom a Credit to a 

Buy/Sell Process (Supply) 

1. ORIGINATING SERVICE/AGENCY AND POC INFORMATION: Mr. Rafael

Gonzalez, Defense Enterprise Data Standards Office (DEDSO) Administrator, 

Rafael.Gonzalez@dla.mil.

2. REASON FOR CHANGE: Changes from the proposed to approved change are identified in green 

shade text. 

a. Bottom Line Up-Front: Align the Defense Logistics Management Standards 

(DLMS) with changes made to DoD 7000.14-R, Department of Defense Financial Management 

Regulation (DoD FMR) (Reference 10.a), to make lateral redistribution eligible reimbursements 

standardized as disbursements, preventing recording of negative collections. 

b. Background: The Defense Logistics Manual (DLM) 4000.25 detail conditions for 

an inventory control point or integrated materiel manager (ICP/IMM) to draw from a 

Component’s excess inventory as a reimbursable lateral redistribution to fill a requisition. 

Procedures call for the entity giving up the materiel to suppress billing functions, as the 

ICP/IMM is instructed to send a credit for the quantity of materiel filled. However, some 

Components recorded the credit under receivables as a “reverse sale” and “negative collection” 

to cancel out the revenue and cost of goods sold. This approach is not in accordance with the 

existing accounting treatments and posting logic documented in the DoD United States, Standard

General Ledger Transaction Library and causes a discrepancy at Treasury. In addition, the Army 

shared audit finding WA-2020-01 Treatment of Lateral Redistribution, with the Office of the 

Under Secretary of Defense (Comptroller) (OUSD(C)) to discuss unmatched distribution issues

stemming from inconsistencies in how Components record reimbursements for lateral 

redistribution. To address the issue, OUSD(C)) issued a policy memorandum on June 29, 2020 

(Reference 10.b) followed by changes to the DoD FMR, Volume 4, Accounting Policy, Chapter 

4, Inventory and Related Policy, which strengthen the policy on lateral redistributions to be 

reimbursed as a disbursement. 

The Office of the Deputy Assistant Secretary of Defense for Logistics (ODASD(Log)) 

amended DoD Manual (DoDM) 4140.01, Volume 5, DoD Supply Chain Materiel Management 

Procedures: Delivery of Materiel (Reference 10.c) in February 2023, aligning the DoDM with the 

FMR update by changing lateral redistribution from a “credit” to a “sale” process.

These policy changes require an update to the DLM 4000.25 procedures for lateral redistribution

to clarify the reimbursement to be processed as a sale.

Financial systems processing reimbursements for ICP/IMM lateral redistribution orders 

(LRO) can no longer “credit” an activity for their excess materiel sent to another activity. The 

ICP/IMM must buy the materiel from the activity. Likewise, the provider’s financial system 

must follow billing procedures to be reimbursed by the ICP/IMM for the materiel. 
Attachment, ADC 1431

Page 3

The bill from the activity providing the materiel cannot use the standard price, which is 

loaded with additional costs sellers incur that should not be part of the reimbursement to the 

activity. The ICP/IMM tracks the average acquisition cost to know the value which would be a 

relevant value to reimburse the activity. The ICP/IMM must communicate the average 

acquisition cost to the activity to facilitate the billing by the activity to the ICP/IMM. The 

activity is still allowed to include reimbursement for incurred packing, crating, handling, and 

transportation (PCH&T) costs in the bill.

Also, any discrepancies that are approved for financial compensation will be addressed 

between the ICP/IMM and the provider as a billing adjustment. 

3. CHANGE IN DETAIL: 

a. Technical Details: This change will:

(1) Add new qualifiers for Average Acquisition Cost to the DLMS 511R 

Requisition (Qualifier AV in 2/PO105/030) and the DLMS 940R Materiel Release (Qualifier 

AVA in 2/AMT01/0800) transactions. The new qualifiers will allow the ICP/IMM to 

communicate the average acquisition cost to the ICP/IMM (supplying Service) for the materiel. 

Component systems processing LROs must communicate to their financial systems to bill for 

shipped LRO materiel. Billing adjustments may be received from the ICP/IMM for approved 

discrepancy reimbursements.

(2) Remove the Billing Advice Code 27 from Reference 10.d. This code was 

originally established to inquire about a pending credit due to lateral redistribution. Given recent 

changes in the FMR, this code is no longer necessary. 

b. Revised Transaction Flow: Enclosure 3 depicts the process as outlined in Reference

10.b.

4. IMPLEMENTATION TARGET: DoD Components must evaluate each warehouse 

management system of record and their corresponding accountable property system of record 

(APSR) to determine the level of impact. DoD Components must also plan for implementation 

as soon as possible but not to exceed two fiscal years from approval of this change. 

a. Navy Implementation: Implementation timeline cannot be determined until the 

requirement is finalized in an ADC and further determined. 

5. TECHNICAL IMPACT:

a. Additions or Changes to Data Elements: Add new qualifiers for Average 

Acquisition Cost to the DLMS 511R implementation convention (IC) (Qualifier AV in 

2/PO105/030) and the DLMS 940R IC (Qualifier AVA in 2/AMT01/0800) to indicate the unit 

price stated, is an average weighted cost to represent the actual cost paid for a unit of materiel. 

See Enclosure 1 for details.
Attachment, ADC 1431

Page 4

b. Automated Information Systems (AIS): 

(1) This change will impact all ICP/IMM systems as they will no longer credit 

the materiel provider. Instead, when an LRO materiel provider agrees to fulfill the request, 

funds must be obligated in anticipation of billing from the materiel provider. Billing

adjustments approved for discrepancies noted by the requisitioner, will trigger billing 

adjustments to the materiel provider to reimburse the ICP/IMM.

(2) Although this change focuses on lateral redistribution, DEDSO is in the 

process of updating additional processes and procedures affecting the ability to credit. At a 

minimum, the following processes will be affected: materiel returns program, exchange of

reparable (carcass), Supply Discrepancy Reporting, and Product Quality Deficiency Reporting. 

Components must consider future changes/expansions currently under development when 

implementing this change.

(3) Navy Systems: Module Test and Repair Application (MTRA) will be 

impacted. 

c. Defense Automatic Addressing System (DAAS): Apply the appropriate system 

changes to support the new qualifiers in the DLMS 511R and 940R and update the 

corresponding DAAS mapping. 

6. PUBLICATION/POLICY IMPACT:

a. Defense Logistics Manual (DLM) 4000.25: See Enclosure 2 for detailed updates to:

(1) Volume 2, Supply Standards and Procedures:

(a) Chapter 11, Materiel Returns, Redistribution of Assets, Directed 

Discrepant/Deficient Materiel Returns and Retrograde Returns

(b) Chapter 17, Supply Discrepancy Reporting

(2) Volume 4, Military Standard Billing System – Finance:

(a) Chapter 2, Billing Procedures

(b) Chapter 4, Adjustment Procedures

(c) Chapter 6, Defense Automatic Addressing System

(d) Appendix 2.3, Billing Advice Codes

b. Non-DLM 4000.25 Publications: 

(1) DoD 7000.14-R, Department of Defense Financial Management Regulation 

(DoD FMR), Volume 4, Accounting Policy, Inventory and Related Property 
Attachment, ADC 1431

Page 5

(2) DoDM 4140.01, Volume 5, DoD Supply Chain Materiel Management 

Procedures: Delivery of Materiel

(3) DoD Components may need to update local policies or procedures. 

7. ASSUMPTIONS:

This change focuses on supporting specific changes in policy, addressing the 

original audit finding (WA-2020-01 Treatment of Lateral Redistribution) focused on problems 

caused by accounting for lateral redistribution credits. In addition to LROs, procedures for 

reimbursement of procurement offsets and the materiel returns program are described as credits 

issued to the provider that may have similar issues. Follow-on changes may develop pursuant to 

ultimate disposition of this change. 

8. FINANCIAL IMPROVEMENT AND AUDIT REMEDIATION (FIAR), MATERIAL 

WEAKNESS, AND AUDIT-RELATED INFORMATION:

a. Notice of Finding and Recommendations (NFR): “Treatment of Lateral 

Redistribution” is a recurring NFR issue reported in: 

NFR Reference ADVANA Key Linked NFR Condition ID Status

WA-2021-01 ARMY-2839 ARMY-2845 Open

WA-2020-01 ARMY-2050 ARMY-2051 Open

WA-2019-04 ARMY-1397 ARMY-1423 Open

(1) Condition (WA-2021-01): Army Working Capital Fund (AWCF) fulfills 

Defense Logistics Agency (DLA) backorders for material requisitions through a lateral 

redistribution process. DLA directs the AWCF to provide an item to a customer and then 

reimburses AWCF for the material. AWCF’s Logistics Modernization Program (LMP) records a 

collection (RD7) to GLAC 1010.1250 (Fund Balance with Treasury) and GLAC 1310 (accounts 

receivable). However, DLA reports the transaction to U.S. Treasury as a reverse disbursement 

(RD0), resulting in reconciling differences in the AWCF Fund Balance with Treasury Tier 3 

Department 97 Reconciliation and Reporting Tool (DRRT) Reconciliation that require manual 

efforts to match and resolve. Army did not effectively design its Fund Balance with Treasury 

Tier 3 DRRT Reconciliation controls to timely resolve variances resulting from differences in 

the accounting treatment of lateral redistribution collection transactions reported by DLA to the 

U.S. Treasury as reverse disbursements.

b. Corrective Action Plan (CAP) References: 

ADVANA Key Title CAP Ref. Status

ARMYCAP-4122 Lateral Redistribution WA-2019-04 Developed

(1 of 5 milestones closed)

DFASIPACAP-5008 Lateral Redistribution FBWT 

Variance Corrections WA-2019-04 Validated

(all 11 milestones closed)

c. Other FIAR, Material Weakness, and Audit-Related Information: 
Attachment, ADC 1431

Page 6

(1) The ADVANA NFR Database lists the following details for NFR WA2021-01, Treatment of Lateral Redistribution: 

Individual Deficiency 

Category: Control Deficiency Deficiency Type: Internal Controls(Non-IT), Policies and Procedures 

Aggregate Deficiency 

Category: Material Weakness (MW) DoD Wide MW Area:

B2R – Fund Balance with 

Treasury

(2) Navy: Relevant to FIAR compliance requirements, the process is still 

being reviewed and researched.

9. END-TO-END TESTING REQUIREMENTS: N/A

10. REFERENCES:

a. DoD 7000.14-R, “Department of Defense Financial Management Regulation (DoD 

FMR),” Volume 4, “Accounting Policy,” dates vary by chapter 

b. Under Secretary of Defense (Comptroller) Memorandum, “Accounting Treatment of 

Lateral Redistribution Activities (FPM 20-05),” June 29, 2020 

c. DoD Manual 4140.01, Volume 5, “DoD Supply Chain Materiel Management 

Procedures: Delivery of Materiel," February 7, 2023, as amended

d. Defense Logistics Manual 4000.25, “Defense Logistics Management Standards 

(DLMS),” Volume 4, “Military Standard Billing System – Finance,” Appendix 2.3, “Billing 

Advice Codes” 

11. PDC 1431 RESPONSE/COMMENT RESOLUTION: 

Component Response/Comment Disposition

1. DAAS Concur. As noted. 

2. DLA Concur with comment.

Comments:

1. What mechanism or process is DLA supposed to use to 

seek a bill adjustment from the TAV shipping activity?

2. The assumption that DLA will continue providing the 

Standard Price plus PCH&T to reimburse the 

Supplying Service for provision of excess retail 

materiel through Lateral Redistribution is incorrect. 

DLA will not implement these changes without the 

DEDSO Response:

1. Noted. This is outside of the 

scope of this change. DLA 

would need to submit a new 

PDC and propose changes to 

TAV shipping. 

2. Noted. The concern was 

related to the second paragraph 

under assumptions. DEDSO 

removed assumption below 

from section 7 to address 
Attachment, ADC 1431

Page 7

concurrent correction to the value of the 

reimbursement in the FMR, DoDM 4140.01, and DLM 

4000.25. We intend to non-concur if this is not 

removed.

3. The references are cited only for the Army. It is 

unclear if there are the same or similar NFRs and 

reconciling differences with the Air Force or Navy. An 

initial look at the DoD NFR database returned no 

results for NFRs for the other components. Ensure 

that all components and their SMEs receive and 

comprehend the proposed significant change to the 

process. Differences in the Services’ and DLA’s 

implementation timeframes/timelines could cause 

significant issues.

4. Should follow up continue indefinitely when no 

response is received or cease after a set number of days 

beyond ESD? Timely resolution will allow for 

deobligation of funds set aside in 11.17.4.1 

Recommend defining acceptable timeframes so that 

UCO and UDOs do not age.

5. C2.1.3. In-Storage Visibility Lateral Redistributions. 

When an Integrated Materiel Manager/Inventory 

Control Point (IMM/ICP) laterally redistributes 

materiel, reimbursement to the reporting activity and 

billing to the requisitioning activity will be affected

upon notification of receipt by the requisitioning 

activity. Review and align verbiage in 2.1.3 with 

revised process and timing on the PDC flowchart. This 

is related to FPM 19-10.

6. Proposed changes to P2P "buy process' would require 

changes to the budget formulation process and would 

likely require increased execution monitoring as well 

as changes in budget reporting. This change would 

also require additional material obligation authority.

DLA’s concern. 

“b.The billed amount for laterally 

distributed materiel will continue to be 

based on the cataloged unit price, with 

allowance for packing, crating, 

handling, and transportation 

(PCH&T). There are considerations 

for changing this approach since the 

cataloged unit price is based on 

incorporating a standard PCH&T 

expense into the cost of the materiel. 

As of yet, no policy change has 

required a change away from using the 

cataloged unit price plus relevant 

PCH&T when the ICP/IMM 

reimburses the materiel provider.”

3. Noted. This change requires 

a joint implementation.

4. Noted. This is outside of the 

scope of this change. DLA 

would need to submit a new 

PDC to address any concerns 

with time frames. 

5. Added the change to chapter 

2. As for the flow, OSD

Comptroller implementation of 

FPM 19-10 will affect the order 

of actions.

. Noted. 

3. ODASD

(Logistics)

Concurrence by signing PDC.

4. US Air Force Concur with comment.

Comments:

1. ILS-S will require MAJOR changes within the 

financial programs. Recommend DEDSO connect with 

DFAS for required updates to SMAS. The Air Force 

provided a copy of the PDC to DFAS personnel and 

noted our concern on 26 Oct 2022.

2. SMAS program changes MUST be provided by 

SMAS personnel (DFAS). SMAS personnel will need 

to accomplish the proposed changes and conduct 

testing to ensure this meets the requirements as stated 

in this PDC.

DEDSO Response:

Noted.

5. US Army No response provided N/A
Attachment, ADC 1431

Page 8

6. USMC No response provided N/A

7. US Navy Concur with comment.

Comments:

1. “Applicable to the Application for the Transaction 

Types used. However, I do not believe I have ever 

seen a lateral redistribution take place. I feel like it 

would need to be implemented in case instances of 

lateral redistribution takes place, even if rarely.” 

2. Resolution is pending review by the Finance PRC 

DEDSO Response:

Noted. The PDC was discussed 

during the PRC hosted back in 

September 2022. The finance 

reps were invited to the 

meeting. 

8. USTRANSCOM Abstain. As noted.
Enclosure 1, ADC 1431

Page 1

Enclosure 1 

Revise EDI X12 Implementation Conventions (IC) as shown:

Changes are identified by bold italics and deletions by single strikethrough text.

# Location DLMS 940R (4030)

Materiel Release

Reason

1. DLMS

Introductory Note

Add PDC 1431 to DLMS Introductory Note 7:

- PDC 1431, Reimbursements of Lateral Redistributions from a 

Credit to Buy/Sell Process

Adds change to 

the introductory 

notes.

2. 2/AMT01/0800 Add code AVA with DLMS Notes:

AVA Average Acquisition Cost 

DLMS Note:

1. Materiel managers perpetuate from the DLMS 511R in LROs 

to provide the average acquisition cost per unit of materiel to be 

used by the reporting activity to bill the materiel manager for any 

quantity filled.

Requirement for 

ICP/IMM to 

include in LRO, 

so bill from 

activity providing 

materiel to 

ICP/IMM can

properly price the 

materiel value.

2. At this time a local code ‘AVA’ is established for use in the 

940R, version 4030. A data maintenance action will be 

submitted for establishment of ‘AVA – Average Acquisition 

Cost” in a future version.

# Location DLMS 511R (4010)

Requisition

Reason

1. DLMS

Introductory Note

Add ADC 1431 to DLMS Introductory Note 7:

- ADC 1431, Reimbursements of Lateral Redistributions from a 

Credit to Buy/Sell Process

Adds change to 

the introductory 

notes.

2. 2/PO105/030 Add code AV with DLMS Notes:

AV Average Acquisition Cost 

DLMS Note:

1. Materiel managers use in LROs to provide the average 

acquisition cost per unit of materiel to be used by the reporting 

activity to bill the materiel manager for any quantity filled.

2. At this time a local code ‘AV’ is established for use in the 

511R, version 4010. A data maintenance action will be 

submitted for establishment of ‘AV – Average Acquisition Cost”

in a future version.

Requirement for 

ICP/IMM to 

include in LRO, 

so bill from 

activity providing 

materiel to 

ICP/IMM can 

properly price the 

materiel value.
Enclosure 2, ADC 1431

Page 1

Enclosure 2 

Make the following changes to Defense Logistics Manual (DLM) 4000.25. Additions are shown 

in red bold italics, and deletions in double strikethrough text. 

A. Modify DLM 4000.25, Volume 2, Supply Standards and Procedures, Chapter 11, 

Materiel Returns, Redistribution of Assets, Directed Discrepant/Deficient Materiel 

Returns and Retrograde Returns

C11.17. INVENTORY CONTROL POINT/INTEGRATED MATERIEL MANAGER

LATERAL REDISTRIBUTION OF RETAIL ASSETS

C11.17.1. Purpose. This paragraph outlines procedures for filling back orders by 

generating lateral redistribution orders for retail materiel that has been identified through 

an inter- or intra-DoD Component retail asset visibility system. Additionally, ICPs/IMMs 

may use these procedures to direct lateral redistribution when the total cost of such 

action is lower or when the wholesale level does not have stock available to meet a 

requisition’s required response time.

C11.17.2. Backorder Supplied by Lateral Redistribution. If a backorder is to be 

supplied by lateral redistribution of materiel identified by an inter- or intra-DoD 

Component retail asset visibility system, the lateral redistribution order (LRO) will 

contain appropriate data from the requisition, DLMS 940R, (Referral Order (For 

Domestic Shipment/With NSN/North Atlantic Treaty Organization (NATO) Stock 

Number)) in the document identifier, the RIC of the reporting activity, Distribution Code

2 for consumable materiel or Distribution Code 3 for reparable materiel, the billed 

ICP/IMM DoDAAC and fund code, materiel average acquisition cost, and the RIC of 

the receiving ICP/IMM. Conformance with SLOA/accounting classification requires 

any initiation of a financial business event to include SLOA mandated standard 

financial information system (SFIS) elements. The DLMS shipment status for 

ICP/IMM directed lateral redistribution supports inclusion of SLOA required 

elements. Pending full implementation of SLOA, DAAS will facilitate 

interoperability by updating selected SLOA data fields based upon the reporting 

activity’s Service/Agency and Fund Code. If discrete values for the SLOA data 

elements in the transaction do not match data elements from the SFIS Fund Code 

to Fund Account Conversion Table for the Fund Code in the transaction, reject 

with the DLMS 824R Reject Advice citing Reject Advice Code BU. The LRO will be 

forwarded through DAAS to the reporting activity. DLMS 945A, Materiel Release 

Advice (to ICP/IMM From Storage Activity) with Status Code BA will be provided to 

eligible status recipients.

C11.17.3. Reporting Activity Actions. The reporting activity will:

C11.17.3.1. Process the Lateral Redistribution Order on a Fill/Kill basis. 

Provide Status Code BA using DLMS 945A, Materiel Release Advice (to ICP From 

Storage Activity), for the quantity being filled and/or Status Code CB status for the
Enclosure 2, ADC 1431

Page 2

quantity not being filled (killed) to the receiving activity and include Distribution Code 2 

or 3.

C11.17.3.2. Supply Substitutions. Substitutions are allowed if the requiring 

activity/requisitioning activity and the supplying/holding activity are the same DoD 

Component. Do not substitute if the requiring/requisitioning activity and the 

supplying/holding activity are different DoD Components.

C11.17.3.3. Ensure Shipment. Ensure materiel is shipped, using DD Form 

1348-1A, to the activity identified in the LRO as the “ship-to” addressee. When the 

materiel is shipped, send DLMS 856S, Shipment Status (To ICP/IMM From Reporting 

Activities for LRO Shipments of Retail Assets), to the activity identified as the receiving 

activity in the LRO. The DLMS 856S must include the DoDAAC and fund code of the

activity to which the credit for the materiel and reimbursement for the packing, crating,

handling, and transportation (PCH&T) costs is to be provided; and Signal Code B and

Distribution Code 2 or 3. Conformance with SLOA/accounting classification requires any

initiation of a financial business event to include SLOA mandated standard financial

information system (SFIS) elements.12 The DLMS shipment status for ICP/IMM

directed lateral redistribution supports inclusion of SLOA required elements. Pending full

implementation of SLOA, DAAS will facilitate interoperability by updating selected SLOA

data fields based upon the reporting activity’s Service/Agency and Fund Code. If

discrete values for the SLOA data elements in the transaction do not match data

elements from the SFIS Fund Code to Fund Account Conversion Table for the Fund

Code in the transaction, reject with the DLMS 824R Reject Advice citing Reject Advice

Code BU. Retail activities will use Uniform Materiel Movement and Issue Priority

System (UMMIPS) time standards for processing LROs directed by the ICP/IMM. If 

invalid/missing fund code for Signal Code A, B, C, J, K, or L, reject with the DLMS 824R

Reject Advice citing Reject Advice Code BU

C11.17.3.4. Generate Billing. Establish Internal Records. Generate billing to 

the ICP/IMM for the materiel sent to the original requisitioner. The bill amount is 

calculated based on multiplying the quantity shipped by the average acquisition 

cost provided by the ICP/IMM, along with allowed Establish internal records to

receive credit for the materiel and reimbursement for PCH&T costs and not generate

billing instructions. 

C11.17.4. Inventory Manager Actions. ICP/IMM will:

C11.17.4.1. Record Obligation. Upon receiving DLMS 945A response 

from Reporting Activity, record an obligation for any quantity being filled by the 

Reporting Activity based on the average acquisition cost.

C11.17.4.21. Update Estimated Ship Dates. Use DLMS 945A, Materiel 

Release Advice (To ICP From Storage Activity), with Status Code BA and Distribution 

Code 2 or 3 to update ESDs.
Enclosure 2, ADC 1431

Page 3

C11.17.4.32. Generate Follow-Ups. Generate DLMS 940R, Materiel Release 

(From ICP/IMM to Reporting Activity or Storage Activity), follow-ups with Distribution 

Code 2 or 3 to the reporting activity as follows:

C11.17.4.32.1. When the initial Status Code BA or CB is not received on 

LROs within 10 calendar days.

C11.17.4.32.2. Upon receipt of Supply Status Code BA without an ESD and 

10 calendar days have elapsed since the transaction date of the DLMS 945A, Materiel 

Release Advice (To ICP From Storage Activity), Supply Status Code BA.

C11.17.4.32.3. Upon Receipt of Supply Status Code BA with an ESD and 

the ESD has expired.

C11.17.4.32.4. When no response is received to the previous follow-up and 

10 calendar days have elapsed. Continue to follow up until status is received, 

backorder is re-established, or final disposition.

C11.17.4.43. Provide Reinstatement and Status Notification. Reinstate the 

requisition and send appropriate status to eligible status recipients upon receipt of 

DLMS 945A, Materiel Release Advice (To ICP From Storage Activity)/Status Code CB 

with Distribution Code 2 or 3.

C11.17.4.4. Generate Billing. Upon receipt of DLMS 856S, Shipment Status (To

ICP/IMM from reporting activities for LRO shipments of retail assets), with Distribution

Code 2 or 3, generate billing transactions to the requisitioner and provide crediting

transactions for the materiel and PCH&T under the procedures of MILSBILLS

procedures, to the credit-to activity identified in DLMS 856S, Shipment Status. In

addition, ICP/IMM will send DLMS 856S, Shipment Status (To DAAS From

Service/Agency for Distribution), shipment status transaction to DAAS.

C11.17.4.5. Create Customer Supply/Status Transactions. When creating 

customer supply and status transactions as a result of processing DLMS 945A, Materiel 

Release Advice or DLMS 856S, Shipment Status Materiel Returns, transactions with 

Distribution Code 2 or 3, always use the distribution code that was in the original 

requisition.

B. Modify DLM 4000.25, Volume 2, Supply Standards and Procedures, Chapter 17, 

Supply Discrepancy Reporting

C17.3.5. Discrepancies Resulting from Lateral Redistribution Orders (LROs) on

Total Asset Visibility (TAV) Shipments. Coordination with the Military Service shipping 

activity is recommended prior to ICP resolution of the SDR.

C17.3.5.1. All SDRs submitted for DLA directed LROs where the item is 

managed by DLA, owned by Army’s Non-Army Managed Items (NAMI) Group, Supply
Enclosure 2, ADC 1431

Page 4

Directorate (Routing Identifier Code (RIC) AJ2), and shipped from an Army CONUS 

site, must be sent to NAMI for investigation, with an information copy to DLA (RIC 

SMS). This is normally accomplished via exception routing rules within DoD WebSDR. 

SDRs meeting these criteria will be assigned Document Type V. Any SDRs received 

directly by DLA will be forwarded to NAMI (RIC AJ2) via SDR forwarding reply citing 

Reply Code 504. NAMI will research the discrepancy and forward recommended 

disposition to DLA for final action. The NAMI action activity will provide recommended 

disposition to DLA within 25 calendar days using an SDR forwarding reply citing Reply 

Code 307. After 25 calendar days have elapsed and NAMI recommended resolution 

has not been received, DLA will follow-up for recommended disposition.

C17.3.5.2. Upon receipt of recommended disposition, DLA will review and 

provide final decision to the customer, along with an information copy to NAMI. DLA will 

be responsible for seeking a bill adjustment from reversing credit to the TAV shipping 

activity, issuing credit returning payment to the requisitioner, and deleting activities 

from the TAV process due to poor performance, in coordination with NAMI.

C17.3.5.3. If Army shipped the wrong item or an overage, NAMI will be 

responsible to provide the customer with disposition instructions and/or directions for 

returning the item back to Army. If the item is to be retained by the customer, NAMI will 

be responsible for financial actions as appropriate. DLA will not reimburse the shipper 

for wrong item or over shipments of Army issues relative to TAV.”

C. Modify DLM 4000.25, Volume 4, Military Standard Billing System - Finance, Chapter 

2, Billing Procedures

Intervening text not shown. 

C2.1.3. In-Storage Visibility Lateral Redistributions. When an Integrated Materiel 

Manager/Inventory Control Point (IMM/ICP) laterally redistributes materiel, reimbursement to the 

reporting activity and billing to the requisitioning activity will be effected upon notification of 

receipt by the requisitioning activity. The reporting activity bills the IMM/ICP per standard 

supply fulfilment procedures. The IMM/ICP may seek bill adjustments from the reporting 

activity for discrepancies the IMM/ICP has adjusted for the requisitioning activity.

Intervening text not shown. 

C2.2.2.1. Lateral Redistribution Credits Payments. Reimbursements for 

materiel laterally redistributed will be processed using the average acquisition cost 

provided by the ICP/IMM on the LRO at the standard price in effect at the time of

shipment. Credits Payments may be fully or partially reversed recouped by the 

IMM/ICP through a billing adjustment request when a validated discrepancy report 

documents the materiel was not shipped in a condition or quantity warranting full credit

payment.
Enclosure 2, ADC 1431

Page 5

D. Modify DLM 4000.25, Volume 4, Military Standard Billing System - Finance, Chapter 4 

Adjustment Procedures

C4.10.2.2. The portion of credits payment for materiel laterally 

redistributed may be fully or partially reversed recouped by the IMM when a 

discrepancy report documents the materiel was not shipped in a condition warranting 

full credit payment. 

Intervening text not shown. 

C4.11.7. Lateral Redistributions (In-Storage Visibility for Both Consumables and

Reparables). Offices promised credits for lateral redistributions (In-Storage Visibility

(ISV) for both consumables and reparables) will follow up on credits not received within

30 calendar days of the date shipment confirmation is submitted to the ICP/IMM. The

initial request must be made by submitting a Request for Billing Adjustment (DLMS

812R, DIC FAE) record citing BAC 27 to the ICP/IMM.

E. Modify DLM 4000.25, Volume 4, Military Standard Billing System - Finance, Chapter 

6, Defense Automatic Addressing System as follows: 

C6.6.1.2.9. In-storage Visibility Redistribution (ISVR) credit

reimbursement report ‘Lateral Redistribution.’

Intervening text not shown. 

C6.6.8. In-storage Visibility Redistribution Credit Reimbursement Report. This is a 

report of laterally redistributed materiel and ISV procurement offset reimbursements. It 

shows the number and dollar value of credits reimbursements for materiel, 

transportation, packing, crating, and handling by DoDAAC and/or RIC receiving the 

credit reimbursement. See Figure C6.F5 for an example of this report.

Figure C6.F5. In-storage Visibility Redistribution Credit Reimbursement Report.

F. Modify DLM 4000.25, Volume 4, Military Standard Billing System - Finance, Appendix

2.3 Billing Advice Codes as follow:

27 Material laterally redistributed as directed and shipment status (AS6) provided; 

however, credit billing not received. Request credit status Reserved.
Enclosure 3, ADC 1431

Page 1

Enclosure 3 

Lateral Redistribution Process (No Credit)

Acronyms:

DIC Document Identifier Code

DLMS Defense Logistics Management Standards 

ICP Inventory Control Point 

LRO Lateral Redistribution Order

MRA Materiel Receipt Acknowledgement 

MRC Materiel Release Confirmation 

PICA Primary Inventory Control Activity 

SOS Source of Supply