May 22, 1997

DLMSO

MEMORANDUM FOR: DISTRIBUTION

SUBJECT: Approved Defense Logistics Management System (DLMS)

Change 3, Material Returns Discrepancies (Staffed as

Proposed Change 6/6A) (Supply/MILSTRIP)

The Attachement is published as an approved change to the DoD

4000.25-1-M, Military Standard Requisitioning and Issue Procedures

(MILSTRIP), and DoD 4000.25-M, DLMS, Volume 2, Supply, Chapter 12,

Material Returns and Redistribution of Assets. The DoD Components

concurred in this change as modified during the Supply Process

Review Committee (PRC) Meeting May 5-9, 1997.

Addressees are advised not to file this change in the DoD

MILSTRIP or DLMS manual. This approved change is provided as a

planning document only. This is considered an administrative

change which will be incorporated in the next interim or formal

change to the applicable manuals.

Addressees may direct their questions to Ms. Ellen Hilert, 

DSN 427-6117 or 703-767-6117, e-mail: ellen_hilert@hq.dla.mil. 

Others may direct questions/comments to their Service/Agency

designated representative.

/s/

JAMES A. JOHNSON

Director

Defense Logistics Management 

Standards Office

Attachment
2

DISTRIBUTION:

Supply PRC Members:

USA AMCLG-SM /ATCL SAL

USN NAVSUP 4113A/NAVICP 101.1

USAF AFMC/LGIM

CMC LPS-1/LPP-2

DSAA COMPT-FMD

USCG G-SL

NIMA ST D 101 

DLA MMLSI

GSA FCSI

DAASC DSDC SLS

DSWA FCPNM

FAA AFZ-500

US TRANSCOM TC J3

NSA S711

cc:

ADUSD(L)MDM

SDR Focal Points (U.S.)

JLSC-DMP/MMA

DLA MMBC/MMLSD

BEAN SMPT

AMCLG SD
Approved DLMS Change 3

Attachment

1. ORIGINATOR:

a. Service/Agency: DLMSO 

b. Originator: Ellen Hilert, Supply Process Review

Committee (PRC) Chair, DLMSO, 703-767-6117, DSN 427-6117, or 

e-mail: ellen_hilert@hq.dla.mil 

2. FUNCTIONAL AREA: Supply

3. REQUESTED CHANGE:

a. Title: Material Returns Discrepancies

b. Description of Change: This proposal provides a

cautionary statement to advise Government activities returning

material that the returning activity may be held responsible for

costs incurred by the receiving activity when discrepant

conditions are reported and validated.

c. Procedures: Revise MILSTRIP Chapter 9, paragraph A/

DLMS, Volume 2, Chapter 12, paragraph 12.1 to include the

following new subparagraph.

“U.S. Government activities returning material are

cautioned that the returning activity may be held

responsible for costs incurred by the receiving

activity when discrepancies are reported and validated

in accordance with MILSTRIP reference (v) [or DLMS,

chapter 18]. This includes returns made in violation

of prescribed material returns procedures, returns

exhibiting packaging discrepancies, and returns of

reparable items unaccompanied by required technical

data. Recoupment action by the ICP against the

initiator may include all cost reimbursable actions

performed by the receiving activity such as

repackaging, marking, and disposal.”

4. REASON FOR CHANGE: 

a. This change was requested at the Military Standard

Billing System Focal Point Committee Meeting (MILSBILLS)(96-1),

May 7, 1996 in support of approved changes to the DLAR 4140.55/AR

735-11-2/SECNAVINST 4355.18/AFR 400-54, Reporting of Item and
2

Packaging Discrepancies. Additionally, this change supports the

DoD Care of Supplies in Storage (COSIS) Program for FY 97. In

accordance with this program, cost reimbursable actions in

receiving shall be documented using a Supply Discrepancy Report

(SDR). 

b. The inclusion of this cautionary statement within

MILSTRIP/DLMS procedural guidance for material returns provides

advance notice to the shipping activity that they will be held

responsible for reimbursable costs incurred as a result of

discrepant shipments. The goal is to greatly reduce the number

of such discrepancies by shifting the financial burden for

corrective actions to the initiator. 

5. ADVANTAGES/DISADVANTAGES: Inclusion of this cautionary

statement within the MILSTRIP Material Returns procedures is

intended to give visibility to all involved that discrepancies

occurring in material returns shipments may result in necessary

corrective actions for which the returning activity could be held

financially accountable. There are no known disadvantages. 

6. IMPACT: This change reflects an interface between MILSTRIP,

MILSBILLS, and SDR procedures. The wording is intended to focus

attention and provide a deterrent to discrepant shipments. This

change was proposed in conjunction with the DLMSO memorandum of

June 24, 1996, Approved SDR/Report of Discrepancy (ROD) Change 1

(U.S.), Reporting of Supply Discrepancies. The SDR change

includes guidance to receiving activities for documenting

material returns discrepancies which will support recoupment

action as appropriate. MILSBILLS Interim Change 97-1 (Enclosure

1) clarifies related billing procedures already in 

place.

Enclosure 
DLMSO April 18, 1997

MEMORANDUM FOR: DISTRIBUTION 

SUBJECT: Interim Change 97-1 to Military Standard Billing System

(MILSBILLS), “Reimbursements for Discrepant Materiel

Returns and Shipments”

In their February 1996 meeting, the DoD MILSBILLS Focal

Point Committee approved the DoD Supply Discrepancy Report

Administrator’s proposal to document MILSBILLS billing and

adjustment procedures for recovering costs associated with

discrepant materiel returns and shipments. The Committee agreed

that Vol IIB of DoD 7000.14-R authorizes recovery of costs

incurred for repackaging, disposal, and similar costs for

unauthorized returns, deficient packaging, and other item and

packaging discrepancy costs which are not included in the normal

cost recovery elements of the standard price. The Committee

authorized the Administrator to issue the attached change as an

administrative change to MILSBILLS. Please direct any questions

regarding this change to Mr. Dennis Thomas at 703-767-6128,

DSN 427-6128, or e-mail, dennis_thomas@hq.dla.mil.

/s/

JAMES A. JOHNSON

Director

Defense Logistics Management

Standards Office

Attachment
2

DISTRIBUTION:

DFAS-HQ (ADB)

DFAS-IN (AM)

DFAS-CL (ABB2)

DFAS-DE (ANBL)

DFAS-KC (ALOL)

DFAS-CO (ACA)

DLA-FOXS

NSA (N445)

DSAA (COMPT-FMD)

USCG/SD

GSA (BCAF)

DSDC-SSL

FAA (AFZ-500)

NOAA/NWS

DSDC-SSL

cc:

DFAS-IN (AAZ)

DFAS-DE (ADRCI)

CMC (RFL-A8)

DRMS-RF

FAA (AML-611)

FAA (AMZ-310)

FAA (AML-100)
3
Attachment

Interim Change 97-1

to

DoD Military Standard Billing System (MILSBILLS)

“Reimbursements for Discrepant Materiel Returns and Shipments”

Revise DoD 4000.25-7-M, Chapter 4, Section I, “ADJUSTMENTS FOR

DISCREPANCY REPORTS” to add the following new paragraph 7:

“7. Activities returning materiel may be held responsible for

costs incurred for repackaging, disposal, and similar costs for

unauthorized returns, deficient packaging, and other item and

packaging discrepancies which have been documented and validated

under supply discrepancy (SF 364) procedures. Although other,

mutually agreeable arrangements may be made, such costs will

normally be recovered under SF 1080 procedures and will be

supported by the validated discrepancy report. In addition, when

such returns are creditable, these discrepancy costs may be

offset against the credit to which the returning activity is

otherwise entitled.”