ADC 255 

Enclosure 

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ATTACHMENT TO ADC 255 

Storage Activity Accountability to Service Materiel Owners (Supply) 

1. ORIGINATOR: 

a. Service/Agency: Navy, DLA, and the Defense Logistics Management Standards Office (DLMSO)

b. Originator: 

(1) NAVSUP 4B1H, Navy Joint Physical Inventory Working Group (JPIWG) representative, 

commercial phone 717-605-7513, DSN 430-7513 

(2) DLA J-373, DLA JPIWG representative, 703-767-1606, DSN 427-1606 

(3) DLMSO, Ms. Mary Jane Johnson, JPIWG Chair, e-mail: Mary.Jane.johnson@dla.mil 

2. FUNCTIONAL AREA: Supply/Physical Inventory 

3. REFERENCES: 

a. DOD 4000.25-M, Defense Logistics Management System (DLMS) 

b. DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures 

(MILSTRAP) 

c. DLMSO Memorandum , November 8, 2006, subject: Joint Physical Inventory Working Group 

(JPIWG) Meeting, November 2, 2006 

d. DLMSO memorandum, April 2, 2007, subject: PDC 241, Storage Activity Accountability to 

Service Materiel Owners (Supply) 

e. DLMSO memorandum, May 22, 2007, subject: JPIWG Meeting, April 28, 2007 

f. DLMSO memorandum, July 6, 2007, subject: PDC 241A, Storage Activity Accountability to 

Service Materiel Owners (Supply) 

4. REQUESTED CHANGE: 

a. Title: Storage Activity Accountability to Service Materiel Owners 

b. Description of Change: According to DOD 4000.25-M, DLMS (reference 3.a.), Vol 2, 

chapter 6, paragraph C6.2.5.1, and DOD 4000.25-2-M, MILSTRAP (reference 3.b.), Chapter 7, 

paragraph C.7.2.5.1, the storage activity is responsible for “investigating and assessing financial 

liability for loss, damage and destruction of Government property”. Navy noted that the Defense 

Logistics Agency (DLA) Defense Distribution Depot (hereafter referred to as storage activity) notifies 

the Service materiel owners by transaction report each time an asset is lost by inventory or gained by 

inventory, or when such an inventory adjustment is reversed, however, the Services bear the financial 

impact associated with loss that may occur for service-owned materiel lost by the storage activity. 

There is no DOD (MILSTRAP/DLMS) requirement for the owning services to receive any explanation 

of the losses, gains or reversals; they just receive the transaction by which they must update their 

Service asset balances and Service financial accounts. Therefore, the Services have no knowledge of 

why Service assets that they had considered in their materiel requirements planning were not available 

to meet warfighter needs when required. 
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 Current MILSTRAP/DLMS procedures do however require that each time the storage activity 

does an adjustment that exceeds $16K in extended monetary value; the storage activity is required to 

do Causative research. Navy originally submitted this PDC to DLMSO proposing that “The storage 

activity will provide copies of the completed Causative Research Inventory Adjustment Vouchers 

(IAVs) for all inventory adjustments completed that quarter, valued at $16K or above, to the owning 

DOD Component, if requested by the Component.” However DLMSO notes DLAM 4140.2, (Joint 

DLA, Army, Navy, AF) Vol. 1, Chapter 5, prescribes the use of Inventory Adjustment Vouches (IAV) 

(DLA Form 433); but it does not prescribe submitting the IAVs to the Services. The IAV is a DLA 

form, and therefore cannot be promulgated by DOD. The process of converting the form to a DOD 

form would require a lengthy and costly process. By PDC 241 DLMSO proposed an alternative 

solution to serve the desired purpose of the original Navy change proposal, while not requiring 

conversion of the DLA IAV to a DOD form: the storage activity shall send a quarterly summary of 

the causative research results -- for each individual NIIN – to the commander of the storage activity 

concerned and to the inventory owners. The proposed requirement was further evaluated and revised 

by DLA and Navy after discussion at the April 18, 2007, JPIWG meeting, resulting in PDC 241A. 

c. Procedures: Revise DOD 4000.25-M (DLMS), Volume 2, chapter 6, subparagraph C6.4.6.1 

(and corresponding DOD 4000.25-2-M (MILSTRAP C7.4.6.1), as follows (change from current 

publication is identified by red, bold italics, change from PDC 241A is also double underscore and 

highlighted): 

“DLMS C6.4.6. Error Cause Feedback and Correction

 C6.4.6.1. Causative History Summary. The storage activity shall send a quarterly 

summary of the causative research results -- by the error classification code -- for each individual 

NIIN to the commander of the storage activity concerned and to the Inventory Owners (or the service 

International Logistics Control Activity in the case of FMS-owned materiel). The summary 

information shall be provided for all adjustments of extended dollar value greater than $16K and any 

adjustment of an item with a CIIC code that is Classified, Sensitive or Pilferable. and provide 

feedback to the commander of the storage activity concerned. As a minimum, the activity shall 

include a summary of the number and value of adjustments by error classification code As a 

minimum, the summary provided shall include, for each NIIN: supply condition code, DLMS 947I 

or MILSTRAP Document Identifier Code D8_ or D9_, quantity adjusted, routing identifier (RI) code 

of the storage activity making the adjustment, error classification code, controlled inventory item code, 

date created, date completed, and total adjusted dollar value. 

C6.4.6.2. Error Correction. 

C6.4.6.2.1. Storage Activity Commanders. Commanders at the storage activities 

shall use this information to identify and correct recurring errors in their operations (e.g., through 

established depot training programs, quality control checks and other actions as required). 

C6.4.6.2.2. Inventory Owners. Inventory Owners shall use this information as 

a means to gain insight into the adjustments and subsequent actions taken to resolve the error and to 

evaluate whether changes in procurement practices, cataloging data or other actions may be taken to 

prevent potential distribution errors. A single point of contact will be designated at the owner level to 

request information from DLA". 
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 d. REASON FOR CHANGE: 

 (1) The DOD components are required to store their wholesale inventories in DLA distribution 

Depots. The storage activity will make a decision on who has financial liability for the materiel that is lost, 

damaged or destroyed, and makes this decision without the owning Service. The DLA Depots have the 

accountable inventory record for materiel in their custody, but the owning Services are financially 

responsible for both the materiel, and for paying storage and physical distribution transactions costs to 

DLA. When materiel is lost or gained, the Services must bear the financial and readiness impacts, but have 

no information about why the inventory adjustment occurred. In order for the Components to be good 

managers for their assets, they must be able to get information to explain reasons for these inventory and 

financial adjustments. Navy raised this issue at the November 2, 2006, JPIWG Meeting (reference 3.c.). 

There was significant interest in discussion of this topic at the meeting and Navy agreed to develop a PDC 

to address the issue/concerns and recommend a solution. 

 (2) PDC 241 (reference 3.d.) proposed a DLMS/MILSTRAP revision to address this issue. 

PDC 241 generated discussion at the April 18, 2007, JPIWG meeting (reference 3.e.). During the 

JPIWG discussions, the Air Force representative cautioned that the proposed summary of physical 

inventory adjustment research and conclusions must not be used to “second guess” the Distribution 

Depot’s decisions but rather as a tool in understanding the reasons for the adjustment and subsequent 

decisions at the owner’s level. The DLA HQ and Distribution Depot Center representative reported 

that they have been taking a second look at the PDC to come up with a solution on how best to serve 

the Components. The action item from the meeting was that DLA further review and verify the 

requirements of PDC 241 and provide recommended changes based on this review to update the 

requirement as needed for staffing with the Components. PDC 241A (reference 3.f.) was the result of 

that effort. 

5. ADVANTAGES AND DISADVANTAGES: 

a. Advantages: Under this change, a storage activity that is accountable for a DOD component’s 

property/materiel must be able to provide insight to the materiel owner for physical inventory adjustments 

(loss, gain, reversal or no conclusive findings) and loss, damage or destruction of that property, since the 

DOD component owner/manager must bear the financial burden.

b. Disadvantages: This may cause some additional clerical workload at the storage activity, to 

summarize the reasons for physical inventory adjustments and send them to the requesting DOD 

component. However, as the DLA SWARM program continues to reduce the numbers of adjustments, the 

volume of adjustment information provided by DLA will also decrease.

6. IMPACT: 

a. Publication(s): 

(1) Revise DOD 4000.25-M (DLMS) and DOD 4000.25-2-M (MILSTRAP) as noted above. 

(2) Requires change to DLAM 4140.2, (Joint DLA, Army, Navy, AF) Vol. 1, Chapter 5 which 

prescribes the use of Inventory Adjustment Vouches (IAV) (DLA Form 433), to address providing 

information to Owning Services as addressed in this ADC.

(3) May require changes to other supporting DOD Component publications as needed.

 b. Procedures. Impacts procedures affected by publication changes, for Depot to provide information, 

and for Service owners to receive and process information. 
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7. PDC 241A COMMENTS AND DISPOSITION. The following comments were received: 

Organization COMMENT Disposition 

DSCA DSCA COMMENT on behalf of Army: On behalf of the Army, DSCA proposes 

the following change to paragraph C6.4.6.1 below. This change is based upon previous 

experience where storage activities have lost FMS-owned materiel that was awaiting 

maintenance action. It is conceivable that activities serving as FMS consolidation depots 

could also lose FMS owned materiel after receiving it and prior to shipping it to the FMS 

customer. 

PDC 241A excerpt, as modified by DSCA comment (see highlighted bold, blue, 

italicized text for DSCA comment): 

“C6.4.6.1. Causative History Summary. The storage activity shall send a quarterly 

summary of the causative research results -- by the error classification code -- for 

each individual NIIN to the commander of the storage activity concerned and to the 

Inventory Owners (or the service International Logistics Control Activity in the 

case of FMS-owned materiel). The summary ...” 

JPIWG 

concurred 

with change. 

Change 

incorporated

DLA Concur. 

Jack Marshall (DLA SPRC rep) and Terry Simpson (DLA JPIWG) rep 

Noted 

USA Concur. 

Jeff Bepko (Army JPIWG rep) 

Noted 

USN Concur. 

Emily Burt-Hedrick (Navy JPIWG rep) 

Noted 

USAF Concur. 

Don Kringen (Air Force JPIWG rep) 

Noted 

DLMSO As a future enhancement, recommend DLMSO and the JPIWG consider whether a 

DLMS transaction could be used to convey the report information in a remarks field, or 

other data field. This could not be done under MILSTRAP, but could be investigated for 

use under the variable length DLMS transaction capability as a DLMS automated 

functionality to support the requirement. The feasibility of the automated function would 

depend upon the level of detail needed. 

If not too voluminous, the individual adjustment actions could include the narrative for 

electronic transmission and later retrieval by the owner. There is an NTE, Note, segment 

in the header of the inventory adjustment which could be used for narrative (there is a 

potential mapping issue if multiple adjustments are included in a single transmission). 

There are specific NTE01 qualifiers which could identify a narrative explanations needed 

for each adjustment action. The transaction could use multiple notes for separate 

narratives, e.g., ACN, Action Taken, and REC, Recommendation, etc.) 

The automation concept would be to plan for DSS to capture the narrative in the DLMS 

format and transmit to the material owner. The material owner would then have the 

explanatory information in their application, eliminating the need for a manuallyprepared quarterly report. DDC and owners could query for summary information from 

their respective applications. 

A DAAS function to retain visibility of this information might be needed to support a 

mixed DLMS/MILS environment and elimination of the manual summary report. 

If this is feasible (and desired information is known at the time the DLMS transaction is 

created), this might be appropriate for consideration as a future DLMS enhancement. 

Comment 

provided for 

JPIWG 

information 

and 

consideration.