Defense Logistics: Greater Awareness of Recommendations and Improvements in Data Quality Needed to Resolve Container-Management Challenges
Published: 2014-11-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD uses DOD or commercial carrier shipping containers to transport supplies worldwide. Container management has been a long-standing challenge. DOD has paid detention fees of about $823 million from 2003 through 2012 for retaining containers longer than allowed, primarily due to operations within CENTCOM, including Afghanistan, where fees continue to accrue. GAO was asked to review DOD's efforts to address container-management challenges and the accumulation of detention fees.
This report assesses the extent to which (1) DOD policy and guidance incorporate recommendations addressing container-management challenges in CENTCOM's area of responsibility, and (2) DOD has managed and reduced detention fees for containers in Afghanistan since 2012. GAO reviewed prior audit reports to identify container-management recommendations; analyzed data such as container type and ownership from 2010 through 2013; and interviewed DOD officials.
section_title: What GAO Found
paragraphs: Since the early years of operations in Afghanistan and Iraq, Department of Defense (DOD) efforts to improve container management in the U.S. Central Command (CENTCOM) area of responsibility have included either updating existing or developing new container-management policy and guidance. However, the department cannot provide reasonable assurance that all recommendations addressing container management in the CENTCOM area of responsibility have been incorporated in DOD's policy or guidance, as appropriate. DOD officials incorporated some recommendations made by DOD audit agencies and other organizations aimed at improving container management into policy and guidance. For example, in August 2012 the commanders of CENTCOM and U.S. Transportation Command issued a joint memorandum outlining leadership's responsibility for container management in the CENTCOM area of responsibility that was a direct result of a 2012 Joint Logistics Board report that recommended corrective actions to enhance senior leaders' understanding of container management. However, DOD does not have a comprehensive list of the corrective actions that have been recommended over time. Without such a list, DOD cannot reasonably ensure that all of the recommendations have been incorporated into policy and guidance as appropriate. For example, of the 95 corrective actions that GAO identified from reports by DOD audit agencies and other organizations issued from 2003 through 2013, DOD officials could not provide information on steps taken to address 40 of the corrective actions.
Since 2012, DOD has taken steps to manage and reduce shipping container detention fees incurred due to the untimely return of commercial carrier-owned shipping containers in Afghanistan, but its ability to manage and reduce these fees is limited by inaccurate and incomplete data. In August 2012, DOD established the requirement that within 15 days of a shipping container's arrival: (1) receipt of the container was to be recorded by the unit in-theater, (2) the container was to be unloaded, and (3) the responsible carrier was to be notified that its container was available for pickup. DOD also developed a set of tracking metrics to monitor progress in meeting this requirement. However, incomplete and inaccurate data about the location and number of containers accruing detention fees hindered DOD's ability to manage and reduce detention fees for containers in Afghanistan. For example, GAO analysis of DOD's container-management system data and carrier delivery data for each month in 2013 showed that DOD had not recorded in the container-management system about 16 percent of the carrier-owned containers delivered and received in Afghanistan. DOD has identified factors, or procedural weaknesses, that may contribute to incomplete and inaccurate data; however, it has not assessed the extent to which these weaknesses have contributed to data inaccuracies, determined the root causes of these weaknesses, or developed a corrective-action plan for correcting them. Without an assessment of the root causes and a corrective-action plan, it will be difficult for DOD to have complete and accurate data, which could limit its ability to manage and reduce detention fees for containers in Afghanistan and in future contingency operations.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD (1) develop a list of recommendations and incorporate them into policy and guidance and (2) identify root causes for procedural weaknesses that contribute to inaccurate, incomplete container data and develop and implement a corrective plan. DOD concurred with the first recommendation and partially concurred with the second because it partially disagreed to whom GAO directed the recommendation. GAO concurred and modified the recommendation.

section_title: Letter
paragraphs: Afghanistan’s logistics environment is challenging for U.S. forces because  Afghanistan is a mountainous, arid, land-locked country with poorly  developed infrastructure, including few roads, no railway, and few airports  with limited amounts of paved runways. Further, the Department of  Defense’s (DOD) distribution of supplies and equipment into and within  Afghanistan—a major operational area in the U.S. Central Command  (CENTCOM) area of responsibility—is a complex process that involves  many organizations and utilizes both surface and air modes of  transportation over various routes. A major component of this distribution  process involves the use of shipping containers to transport goods to,  within, and from Afghanistan. For example, according to DOD container- management data, DOD managed, at its peak (January 2013),  approximately 107,000 containers in Afghanistan, which included a  combination of containers owned or leased by the U.S. government or  provided by commercial shipping companies as part of DOD’s shipping  contract with these carriers.
Container management for shipping containers, whether DOD-owned,  leased, or carrier-owned, involves the tracking, storage, shipment, use,  delivery, discharge, and return of the container to the common-user  container fleet or to the owning carrier. The management of these  containers has been a long-standing challenge for DOD. According to  DOD data, as of September 2014 the department has paid detention fees  of $823 million from fiscal years 2003 through 2012 for retaining carrier- owned containers used in Iraq and that are continuing to be used in  Afghanistan for longer periods of time than allotted contractually.currently estimates that detention payments for fiscal years 2013 and  2014 will be approximately $41 million and $40 million, respectively.
GAO, Warfighter Support: DOD Has Made Progress, but Supply and Distribution  Challenges Remain in Afghanistan, GAO-12-138 (Washington, D.C.: Oct. 7, 2011). The  two container-management systems in use that were not integrated were the U.S.  Transportation Command’s system used to track and manage government-owned and  carrier-owned shipping containers in use, including those in Afghanistan, and the U.S.  Army’s system used to track container location and status of government-owned  containers. remained, including in effectively tracking and managing cargo  containers.
Aspects of DOD container-management responsibilities reside with a  number of offices within the department. For example, the Office of the  Deputy Assistant Secretary of Defense for Transportation Policy is  responsible for establishing container-management policy. The Surface  Deployment and Distribution Command, the logistics directorates for each  of the military services, the Defense Logistics Agency, U.S.  Transportation Command, and CENTCOM all have responsibilities for  different facets of managing containers, including the purchasing,  shipping, managing, and returning of containers while they are being  used in theater.
Given the continued challenges DOD faces as it works to improve  container management and reduce detention fees, you asked us to  review DOD’s efforts to improve container management in the CENTCOM  area of responsibility in light of container detention fees. This report  examines the extent to which (1) DOD policy and guidance incorporate  recommendations by DOD audit agencies and other organizations that  address container-management challenges in the CENTCOM area of  responsibility, and (2) DOD has managed and reduced detention fees for  containers in Afghanistan.
To address the first objective, we reviewed DOD policy and guidance  pertaining to container management to develop our understanding of  container-management operations and roles and responsibilities. We then  reviewed reports issued from calendar years 2003 through 2013 by all  audit agencies we identified as having done work on the subject of  container management at DOD: the Army Audit Agency, the Naval Audit  Service, the Air Force Audit Agency, the DOD Office of Inspector  General, the Defense Contract Audit Agency, the Defense Contract  Management Agency, the Special Inspector General for Iraq  Reconstruction, the Special Inspector General for Afghanistan  Reconstruction, and GAO. We contacted and interviewed DOD logistics  and container-management officials from the Office of the Deputy  Assistant Secretary of Defense for Transportation Policy, U.S.  Transportation Command, CENTCOM, the U.S. Army, the U.S. Marine  Corps, the Surface Deployment and Distribution Command, and the  Defense Logistics Agency to discuss efforts to improve container  management and identify any additional reports and studies with findings  and recommendations involving container-management issues potentially  affecting DOD operations in CENTCOM’s area of responsibility. We also  interviewed DOD officials to determine whether the department had  undertaken efforts to identify recommendations addressing container  management. We then analyzed the relevant recommendations  contained in these reports and studies that we identified, noting the DOD  components responsible for implementing them, and then categorized the  recommendations based on common themes that emerged from our  review of the reports. As a result, we were able to identify whether certain  recommendations were repeated over the reporting period. We then  reviewed DOD policy and guidance pertaining to container management  to determine the extent that the recommendations we identified were  reflected in them. We compared DOD’s inclusion of recommendations  addressing container-management challenges into its policy and  guidance documents according to criteria outlined in Standards for  Internal Control in the Federal Government. concluded that the container data were sufficiently reliable to present  select findings, but identified limitations that are discussed later in this  report. Appendix I provides additional details on the scope and  methodology.
We conducted this performance audit from February 2013 to November  2014 in accordance with generally accepted government auditing  standards. These standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Shipping containers are reusable intermodal enclosures or flat, open  platforms that meet International Organization for Standardization (ISO)  container standards and are intended to be loaded with cargo and  shipped on or in a transportation conveyance. The containers DOD  uses are typically 20 to 40 feet long and 8 feet wide, some of which are  refrigerated for perishable goods.equipment and supplies to destinations in support of troops conducting  military operations worldwide, including Afghanistan. In austere  environments, DOD also uses containers for many other purposes such  as providing secure storage for goods and using container walls for force  protection.
DOD uses containers to transport  The containers DOD has managed in the CENTCOM area of  responsibility, including in Afghanistan, are owned or leased by DOD;  owned by coalition partners; owned by contractors supporting DOD; or  owned by commercial carriers operating under DOD’s Universal Services  Contract. The Universal Services Contract provides international cargo  transportation and distribution services using ocean common or contract  carriers, and offers regularly scheduled commercial liner service for  requirements that may arise in any part of the world. The contract is  primarily for DOD requirements and applies to services performed in  peacetime and exigency areas. Contract provisions include detention-fee  rates, container purchase options and prices, and maximum detention-fee  accrual periods, among other provisions. When carriers deliver goods  using their own containers, DOD has a contractually specified number of  days to return a container before incurring added fees—defined as “free- time” in the contract. After the free-time period ends, DOD accrues daily  detention fees until the carrier is notified that an empty container is  available for pickup. Under various circumstances, the contract also  allows DOD to acquire a carrier’s container, either through the payment of  a maximum amount of detention fees, or through payment of a  contractually set purchase price after a minimum amount of detention  fees has been paid.
As of August 2014, DOD’s container-management system comprises two  key information management systems—the U.S. Transportation  Command’s Integrated Booking System/Container Management Module  and the Army Container Asset Management System—along with the  persons and organizations using, updating, and managing the two  systems. The Surface Deployment and Distribution Command and  CENTCOM use the Integrated Booking System/Container Management  Module as their container-management system. The system provides  data on all container ownership types used in theater including  government-owned or leased, coalition partner-owned, and carrier-owned  containers in theater and estimates detention costs for containers that are  not returned to carrier owners prior to the end of the free-time period. The  Army Container Asset Management System records all containers in  DOD’s inventory and serves as the official property record for Army- owned containers. From the Army Container Asset Management System,  personnel can conduct studies on Army container status, location, and  disposition from data entered into the system by its users and data feeds  from other sources.
Detention fees, purchase prices, and maximum detention-fee accrual  periods in Iraq and Afghanistan varied, according to the Universal  Services Contract, depending on the size of a container and whether the  container is refrigerated. For example, in 2013, detention fees for carrier- owned containers ranged from $22 to $127 per day and could accrue  over periods ranging from 350 days to 700 days, at which point DOD  would become the de facto owner. Containers could also be purchased  prior to these maximum periods, but only after a minimum period of  detention is paid: 60 days for containers shipped under the 2013  Universal Services Contract or 90 days for containers shipped under  previous contracts. Purchase prices in 2013 ranged from $2,880 to  $31,500 depending on the size of a container and whether the container  was refrigerated. Figure 1 shows detention fees DOD accrued from fiscal  years 2003 through 2012. Fiscal year 2013 and 2014 data are excluded  from this figure because detention fees can accrue over a period of 350 to  700 days; therefore, payment of these fees for containers leased in a  given fiscal year may extend into subsequent fiscal years. Moreover, until  a contract is closed out, the contractor may continue to make detention- fee claims.
section_title: DOD Cannot Determine the Extent to Which Its Policy and Guidance Incorporate Recommendations to Improve Container Management in the CENTCOM Area of Responsibility
paragraphs: Since the early years of operations in Afghanistan and Iraq, DOD officials  have made efforts to improve container management in the CENTCOM  area of responsibility. One way they continue to improve container  management is by either updating existing or developing new container- management policy and guidance. To do so, they incorporated  recommendations by DOD audit agencies and other organizations aimed  at improving container management. However, it is uncertain whether all  of the recommendations have been incorporated into DOD policy as  appropriate because the department does not have a comprehensive list  of the recommendations that have been made over the years.
subsections: section_title: DOD’s Container- Management Policy and Guidance Incorporate Some Recommendations to Improve Container Management
paragraphs: Since the early years of operations in Afghanistan and Iraq, DOD officials  have made efforts to improve container management in the CENTCOM  area of responsibility. One way they continue to improve container  management is by either updating existing or developing new container  management policy and guidance based on recommendations made by  DOD audit agencies as well as other organizations. Specifically, these  policy and guidance changes have addressed various aspects of  container management including: (1) doctrine and planning for the use of  containers in a contingency environment, (2) leadership’s responsibility  for container management, and (3) efforts to improve the tracking and  inventorying of containers.
Doctrinal and planning guidance for Army units with distribution  responsibilities in the CENTCOM area of responsibility, which includes  responsibility for container management, is contained in three documents:  Army Regulation 56-4: Distribution of Materiel and Distribution Platform  Management, published in March 2007 and revised in September 2014;  Army Theater Distribution, published in May 2011; and Army Container  Operations, published in May 2013. However, according to Army  officials, both Army Theater Distribution and Army Container Operations  were informed by a recommendation made in a 2008 Army Audit Agency  report that container management in a contingency environment be  integrated into doctrine and planning. In addition, Army officials noted  that these documents also address a 2011 Army Audit Agency  recommendation that lessons learned about container management for  ongoing and future contingencies be institutionalized in the contingency  planning process.
Leadership’s responsibility for container management in the CENTCOM  area of responsibility is addressed in the Container Detention  memorandum signed by both the commander of U.S. Transportation  Command and CENTCOM in August 2012.Transportation Command officials, this memorandum was published as a  direct result of a recommendation made in a Joint Logistics Board report,  also published in 2012, that included additional recommendations aimed  at enhancing senior leaders’ understanding of container-management  challenges and detention-fee payments and enforcing compliance with  previously published container-management policy as outlined in  CENTCOM’s Container Management Letter of Instruction. Specifically,  the Container Detention memorandum states that compliance with  CENTCOM’s Container Management Letter of Instruction is mandatory  and that all subordinate commanders in theater are to ensure that their  respective units embrace container-management and detention-fee  reduction goals. Moreover, the Container Detention memorandum states  that subordinate commanders in the CENTCOM theater should report  container transactions in order to track the receipt, location, and  discharge of containers in accordance with procedures also specified in  the CENTCOM Container Management Letter of Instruction.
According to U.S.
The tracking and inventorying of containers in the CENTCOM area of  responsibility is addressed in the aforementioned CENTCOM Container  Management Letter of Instruction, initially issued in 2006 according to  U.S. Transportation Command officials and periodically updated  thereafter, most recently in January 2014. In this letter, CENTCOM  emphasizes the necessity for the timely entry of data for all containers  moving into, within, or out of the CENTCOM area of responsibility;  stresses the importance of maintaining accurate theater-wide container  inventories through a robust inventory management program; and details  the roles and responsibilities of the various DOD organizations that  constitute the theater container- management structure. According to  CENTCOM officials, the CENTCOM Container Management Letter of  Instruction and its periodic updates address concerns raised by Army  Audit Agency reports from 2005 and 2009 and the Joint Logistics Board’s  report of 2012 that recommended enhancing and clarifying the authority  of the theater container-management structure; conducting physical  inventories of containers in order to better track them; and completing  property-management functions for containers purchased in the  CENTCOM area of responsibility.
section_title: DOD Cannot Ensure That All Recommendations Addressing Container Management in the CENTCOM Area of Responsibility Have Been Incorporated in Policy and Guidance as Appropriate
paragraphs: Notwithstanding DOD’s efforts to improve container management in the  CENTCOM area of responsibility by either updating existing or developing  new policy and guidance in response to recommendations made by DOD  and other organizations, DOD cannot ensure recommendations have  been addressed in policy and guidance as appropriate. This is because,  according to DOD officials, no single office or entity within the department  has comprehensively identified all of the reports and recommendations  the various DOD and other organizations have made to improve container  management in the CENTCOM area of responsibility. Standards for  Internal Control in the Federal Government call for an organization’s  internal control processes to ensure that the findings of audits and other  reviews are promptly resolved.
When we asked key officials from DOD organizations that play some role  in or have some responsibility for container management to identify what,  if any, steps had been taken to address recommendations that have been  made by DOD and other organizations, the officials responded that this  information was not easily available without extensive work to compile.  Because DOD could not provide us with a comprehensive list of reports  and their associated recommendations addressing container- management challenges in the CENTCOM area of responsibility, we  conducted our own literature search and subsequently compiled a list of  25 reports and reviews issued by DOD and other organizations from 2003  through 2013. Included in these reviews and reports are 95  recommendations aimed at improving container management in the  CENTCOM area of responsibility (see table 1). Although this list may not  be comprehensive because our search was limited to the period 2003  through 2013, and DOD had no source or means to corroborate or verify  what we identified, when we requested that DOD provide us information  on the steps taken to address the recommendations we did identify, DOD  provided information on steps taken to address 55 of the 95  recommendations that we identified. However, DOD did not provide  answers for the remaining 40 recommendations.
According to Standards for Internal Control in the Federal Government,  internal control is an integral part of an organization’s management that  provides reasonable assurance that operations are conducted effectively  and efficiently, that financial reporting is reliable, and that applicable laws  and regulations are complied with. One of the standards of internal  control is Monitoring, which calls for agencies to assess the quality of  performance over time and ensure that the findings of audits and other  reviews are promptly resolved. In this vein, managers are to: (1) promptly  evaluate findings from audits and other reviews, including those showing  deficiencies and recommendations reported by auditors and others who  evaluate agencies’ operations; (2) determine proper actions in response  to findings and recommendations from audits and reviews; and (3)  complete, within established time frames, all actions that correct or  otherwise resolve the matters brought to management’s attention. A  second standard, Information and Communications, states that  information should be recorded and communicated to management and  others within the entity who need it and in a form and within a time frame  that enables them to carry out their internal control and other  responsibilities. However, based on DOD’s container-management  officials’ lack of comprehensive awareness of recommendations  described previously, DOD cannot reasonably assure that all  recommendations for the CENTCOM area of responsibility have been  addressed in policy or guidance, as appropriate. Without a  comprehensive list, DOD cannot reasonably assure whether it has  addressed all of the recommendations related to container management  operations as appropriate in policy or guidance, nor can it reasonably  assure that policymakers have the information available and incorporate it  as needed into new and existing container-management policies. DOD  could use our work as a starting point for identifying additional  recommendations to improve container-management policy and guidance  for the next contingency.
section_title: DOD Has Taken Steps to Manage and Reduce Shipping- Container Detention Fees in Afghanistan, but Its Ability to Manage and Reduce These Fees Is Limited
paragraphs: Since mid-2012, DOD has taken a number of steps to manage and  reduce shipping-container detention fees incurred for the untimely return  of commercial shipping containers used in Afghanistan. However, DOD’s  ability to manage and reduce container detention fees is limited by  inaccurate and incomplete data about the number and location of  containers accruing detention fees.
subsections: section_title: DOD Has Taken Steps to Manage and Reduce Shipping-Container Detention Fees
paragraphs: According to DOD, the department tracks the amount of detention fees it  accrues each fiscal year and has worked to manage and reduce these  fees through a variety of efforts. For example, in June 2012, a Joint  Logistics Board-directed container-management team issued a report that  included recommendations for improving global container management  that would reduce detention costs in CENTCOM. Subsequently, in August  2012, DOD implemented one of the team’s recommendations when the  commanders of the U.S. Transportation Command and CENTCOM  issued their joint memorandum—addressed to the military services, the  Defense Logistics Agency, U.S. Forces Afghanistan, and CENTCOM’s  component commands—directing them to focus specifically on improving  container-management operations to reduce detention fees. The joint  memorandum also established a requirement within the CENTCOM area  of responsibility that within 15 days of a shipping container’s arrival,  receiving organizations are to acknowledge receipt of the container,  unload the container, and notify the responsible carrier that its container  is available for pickup. In addition, according to the joint memorandum,  U.S. Transportation Command and CENTCOM developed a set of tracking metrics to monitor progress in meeting this requirement.Furthermore, in March 2013, U.S. Transportation Command’s  subordinate organization, the Surface Deployment and Distribution  Command, developed and began tracking data against container- management goals to support the drawdown from Afghanistan, according  to officials from the organization. The data included the number of  containers not released for carrier pickup and the number of containers  accruing detention fees for longer than 3 months. Lastly, in September  2013, according to CENTCOM officials, CENTCOM formed an assistance  team in Afghanistan to help operating bases focus on container  management in order to improve container inventory database accuracy  and reduce the number of containers, which could reduce detention fees.
Following the collective actions it has taken to manage and reduce  detention fees, DOD estimated that there would be a significant decrease  in fees for 2013 and 2014. Specifically, DOD estimated that the $57  million in detention fees paid in 2012 will be reduced to $41 million in  fiscal year 2013 and to $40 million in fiscal year 2014. DOD officials said  that they expected the decrease in detention fees because of a  combination of two factors: (1) a projected reduction in the number of  containers being shipped into Afghanistan as operations draw down  there, and (2) a reduction in the average detention fees that will be  accrued per container resulting from actions DOD has taken to reduce  and manage those fees. Because of insufficient data, however, according  to Surface Deployment and Distribution Command officials, DOD could  not determine the extent to which the expected decrease would be due to  actions the department has taken in theater to reduce and manage  detention fees or the expected decrease would be the result of other  factors such as there being fewer containers in Afghanistan as a result of  the drawdown. Further, according to Surface Deployment and  Distribution Command officials, because there is a lag in the time carriers  submit detention-fee invoices, it is difficult for DOD to determine a reliable  estimate for detention fees for containers in theater at a given time. The  officials said that they hope to have more reliable data after (1) operations  cease in Afghanistan, when remaining detention invoices and requests- for-equitable-adjustment detention-fee claims are received and  processed, and (2) the Universal Services Contract is closed out, which  will not occur until fiscal year 2016 or later.
section_title: DOD’s Incomplete and Inaccurate Container- Management Data Limits Its Ability to Manage and Reduce Detention Fees in Afghanistan
paragraphs: Although DOD has estimated that there will be a decrease in the amount  of detention fees it will pay, its ability to manage and reduce detention  fees for containers subject to them in Afghanistan is limited by incomplete  and inaccurate data on the number and location of containers in country.  Moreover, DOD has not assessed contributing factors to determine the  root causes for its incomplete and inaccurate data.
According to Standards for Internal Control in the Federal Government,  for an agency to run and control its operations, it must have relevant,  reliable information relating to internal events. In this regard, the DOD  Transportation Regulation specifies that combatant commanders are to  collect and maintain data on every container in theater. However,  DOD’s data on the number of carrier-owned containers subject to  detention fees is incomplete and inaccurate. Without relevant and reliable  data, DOD’s ability to monitor and reduce detention fees is limited. For  example, DOD concluded that the total number of containers in DOD’s  container-management system subject to detention fees were  understated because the invoices DOD received for the same period  indicated that there was a greater number of carrier-owned containers in  theater. Specifically, using data from DOD’s container-management  system on the number of carrier-owned containers used in the  CENTCOM area of operations (including in Afghanistan), container  managers estimated that detention fees for fiscal year 2011 would be  about $23 million. However, DOD received detention-fee invoices totaling  about $84 million for fiscal year 2011, about 3.7 times higher than  estimated, which represents approximately 5,200 containers that DOD  could not account for. According to Surface Deployment and Distribution  Command officials, improvements in data feeds and user data entry have  been made over the past 4 years as they have worked to resolve this  discrepancy but have not yet fully done so. Nonetheless they believe that  the discrepancy arose primarily from inaccuracies in inventory data.  Without accurate inventory data to validate invoices, DOD is at risk for  being overbilled, which happened during fiscal years 2010 and 2011  according to Surface Deployment and Distribution Command officials.  Specifically, investigations by the Surface Deployment and Distribution  Command and others beginning in 2010 led to recouping costs for  incorrect carrier-shipment billings, resulting in $3.9 million and $9.0 million  in detention-fee refunds to DOD for fiscal years 2010 and 2011,  respectively.
CENTCOM Container Management Letter of Instruction (Jan. 15, 2014). illustrates the portion of containers in Afghanistan with known and  unknown locations on October 31, 2013.
Moreover, our additional analysis indicated that, over the period  September 2010 through December 2013, 7,707 individual carrier-owned  containers had unknown locations recorded in the container-management  system with 572 of those individual shipping containers accruing  detention fees for 1 year or more. Without accurate location data, DOD’s  ability to locate, empty, and return those carrier-owned shipping  containers is limited, and detention fees, therefore, can continue to  accrue unabated until reaching the maximum allowed by contract— approximately twice the purchase price of the container.
DOD has identified several procedural weaknesses in the management of  containers in theater that may affect the accuracy and completeness of  container-management data. According to Surface Deployment and  Distribution Command officials, one procedural weakness is that  containers are not always being recorded in theater when received.  Specifically, the officials stated that the procedures for verifying the  receipt of a container at a base in Afghanistan do not require a receiving  unit representative to sign directly for shipping containers upon arrival  because operations at bases can be quite extensive, and waiting for a  receiving unit representative to arrive at the delivery point would create  or exacerbate backlogs. Therefore, according to Surface Deployment and  Distribution Command officials, the person manning the delivery point  when the container arrives signs for it, although that person has no  responsibility for entering any data into the DOD container-management  system. As a result, container managers may be unaware of containers  delivered to their areas of responsibility and not learn that such containers  are accruing detention fees until after DOD receives a bill from the carrier  for the detention fees. CENTCOM’s container management policy  specifies that within 48 hours of receiving a container the receiving unit  should record the event in DOD’s container-management system. In  addition, Standards for Internal Control in the Federal Government state  that events such as the receipt of goods (e.g., shipping containers and  their contents) should be promptly recorded to maintain their relevance  and value to management in controlling operations and making  decisions. However, our analysis of DOD’s container-management  system data and carrier delivery data for the end of each month in 2013  showed that DOD had not recorded in the container-management system  about 16 percent of the carrier-owned containers delivered and received  in Afghanistan. Moreover, according to U.S. Transportation Command  officials, without records of receipts, DOD does not always have complete  documentation to confirm whether or not delivery dates and resulting  detention fees claimed by the carrier are correct, and, as a result, has  accepted unsupported delivery claims and billings for detention fees. Until  the location of a container is determined, DOD may purchase containers  that are known to be lost to avoid further detention payments or it may  continue to pay the detention fees up to the maximum amount allowed by  contract—ranging from approximately $3,200 to $47,500 depending on  the type of container—at which time, DOD becomes the owner of that  container.
In addition, Surface Deployment and Distribution Command officials have  identified a variety of other procedural weaknesses that they stated led to  carrier-owned containers not being recorded in the container- management system, which may also affect the accuracy and  completeness of data. Specifically, they identified instances where the  following occurred:
Containers were shipped into the theater outside of the DOD  container-management system. For example, a carrier delivers a  container to the theater before it is recorded in DOD’s container- management system. This situation may occur when a unit orders  items that are shipped directly from a supplier or manufacturer instead  of through an intermediary military supply activity.
Container records were closed before the container was returned to  the specified pickup location without prior approval from the carrier for  this change. For example, a unit in theater unloads a container at a  location other than the original delivery point and records the  container as ready for carrier pickup without the carrier’s agreement to  the alternative location. Recording the container as ready for carrier  pickup causes DOD’s container-management system to disregard the  container as subject to detention fee accrual. However, without carrier  agreement to the alternative pick up location, detention fees continue  to accrue under the terms of the Universal Services Contract.
Container records were closed while the container was in use. For  example, an in theater container manager may mistakenly conclude  that because a container is no longer in a unit’s possession, it has  been returned to a carrier. The container manager, therefore,  designates the container record as inactive in DOD’s container- management system. However, the container may still be in DOD’s  possession and subject to detention fees.
Containers were recorded incorrectly as government-owned  containers. For example, a container manager in theater with a large  volume of containers may mistakenly code a carrier-owned container  as a DOD container. The DOD container-management system does  not consider these incorrectly coded containers as subject to  detention fees, however detention fees continue to accrue.
While DOD has identified the procedural weaknesses above that may  affect the completeness and accuracy of container-management data and  has, according to Surface Deployment and Distribution Command  officials, researched container data and taken other steps to resolve most  of these instances, the department has not assessed the extent to which  these weaknesses have affected the data. For example, the Joint  Logistics Board-directed container-management team recommended  more automated reporting to significantly reduce manually inventorying  containers, thereby improving the accuracy of inventory data. In  response, DOD contracted for the development of automated technology  for the recording of shipping containers as they enter and exit military  installations and, according to DOD officials, expects to complete an initial  evaluation of the selected technology after the end of fiscal year 2014.  According to DOD officials, the technology is intended to provide  irrefutable proof of a container’s movement, work without reliance on  satellite tags, and supplement or even replace the need for human  manual entry. However, DOD has not identified the root cause or causes  for the inaccurate inventory data that this recommendation and the  selected technology are intended to address, which is critical if the  department is to correct the procedural weaknesses that contribute to  inaccurate and incomplete data. Further, according to Surface  Deployment and Distribution Command officials, no DOD office has  identified the root causes of the other procedural weaknesses discussed  above or developed a corrective action plan with corrective measures to  address the root causes. In our process for determining agencies’  programs at high risk due to their greater vulnerabilities to fraud, waste,  abuse, and mismanagement or the need for transformation to address  economy, efficiency, or effectiveness challenges, we developed criteria  stated in our November 2000 report, Determining Performance and  Accountability Challenges and High Risks, which found that one step that  agencies can take to help resolve their programs’ performance and  accountability challenges is to develop a corrective action plan that  includes identifying root causes and effective solutions. For container  management, such a corrective plan would contain corrective measures  intended to help develop effective solutions for better locating and  confirming receipt of containers and verifying detention invoices as a  means to manage and reduce detention fees in current and future  contingencies. According to these criteria, for improving federal agency  performance and accountability, agencies can help resolve a program’s  performance and accountability challenges by developing a corrective  action plan that identifies root causes and effective solutions and provides  for completion of corrective measures in the near term. Further,  Standards for Internal Control in the Federal Government state that an  agency’s procedures are among the control activities that help ensure  actions are taken to address risks and are an integral part of an entity’s  implementing and accountability for stewardship of government resources  and achieving effective results. One reason DOD has not identified the  root cause or causes for the procedural weaknesses that contribute to  inaccurate or incomplete container-management data nor developed a  corrective-action plan with effective solutions that provide for completion  of corrective measures, according to Surface Deployment and Distribution  Command officials, is that the responsibility for handling containers in  Afghanistan is dispersed among CENTCOM, U.S. Transportation  Command, and U.S. Forces–Afghanistan and its subordinate units.  According to the officials, their command, which is a subordinate element  of U.S. Transportation Command, has attempted to improve the  completeness and accuracy of container-management data and to  identify root causes for its inaccuracy and incompleteness by focusing on  areas that fall within their responsibility, such as providing training on  managing containers and on assessing and improving the data systems.  However, they also noted that other factors affecting the completeness  and accuracy of container-management data fall outside of the Surface  Deployment and Distribution Command. According to Surface  Deployment and Distribution Command officials, other than the  command’s attempts, no other DOD office has assessed root causes for  the procedural weaknesses identified in this report or developed a  corrective-action plan to assess the procedural weaknesses and  determine their root causes.
According to Surface Deployment and Distribution Command officials with  global container management responsibilities, complete data on the  number of carrier-owned containers, including which containers are  accruing detention fees, would help DOD container managers achieve a  reduction in these fees. Until DOD assesses its procedural weaknesses,  identifies the root causes for those weaknesses, and develops and  implements a corrective-action plan to address them, the department is  limited in its ability to manage and reduce detention fees. Further,  because it will not have the information it needs to correct the deficiencies  in the data to better locate and confirm receipt of containers and verify  detention invoices until it does so, DOD will not have reliable data to  assess how well its efforts to manage and reduce detention fees are  working currently and in future contingencies.
section_title: Conclusions
paragraphs: The management of shipping containers has been a long-standing  challenge for DOD, a challenge that is particularly acute during  contingency operations and one that has been exacerbated in  Afghanistan given the harsh conditions that exist there. Recently, the  Deputy Secretary of Defense’s Global Container Policy and the August  2012 memo signed by the commanders of the U.S. Transportation  Command and CENTCOM demonstrate that DOD’s top leadership  recognizes the challenges container managers face in managing  containers and the need for reducing detention fees during this most  recent conflict. However, in order to proactively and successfully improve  future container-management operations and prevent the accumulation of  detention fees, DOD would benefit by being fully apprised of all  recommendations made by DOD audit agencies and other organizations  thus far and determining which actions would potentially resolve  container-management challenges. DOD could use our work as a starting  point for identifying additional recommendations to improve container- management policy and guidance for the next contingency. In addition,  until DOD assesses its procedural weaknesses, identifies the root causes  for those weaknesses, and develops and implements a corrective-action  plan to address them to help improve the quality of its container- management data, it will be difficult for the department to determine how  best to improve its container-management operations, including the  reduction of detention fees.
section_title: Recommendations for Executive Action
paragraphs: To help DOD to improve the overall management of shipping containers  for current and future contingencies, we recommend that the Secretary of  Defense take the following three actions.
To more fully incorporate recommendations into its policy and guidance  and to ensure that improvements to container management will be  sustained for future contingencies, we recommend that the Secretary of  Defense develop a comprehensive list of recommendations made by  DOD agencies and other organizations, and make the information  available for policymakers to incorporate, as appropriate, into new or  existing container-management policy and guidance. DOD could use our  work as a starting point for this assessment.
To help ensure DOD’s container-management system has more complete  and accurate data, and DOD is better positioned to assess progress in  managing containers to reduce detention fees, we recommend that the  Secretary of Defense direct the Commander CENTCOM to  identify the root cause or causes for the procedural weaknesses in the  handling of containers and the extent to which they contribute to the  incomplete and inaccurate recording of container-management data in  theater, and develop and implement a corrective action plan with effective  solutions for the root causes identified that provide for completion of  corrective measures.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for review and comment. In  written comments, DOD concurred with one of the three  recommendations and partially concurred with the two other  recommendations.   DOD’s comments are summarized below and  reprinted in appendix II. DOD also provided technical comments on the  draft report, which we incorporated as appropriate.
DOD concurred with the first recommendation that the Secretary of  Defense develop a comprehensive list of recommendations made by  DOD agencies and other organizations, and make the information  available for policymakers to incorporate, as appropriate, into new or  existing container-management policy and guidance.  DOD has  requested that we provide a listing of the 95 recommendations identified  during this review to use as a starting point for its assessment, to which  we agreed.
DOD partially concurred with the second recommendation that the  Secretary of Defense direct the Commander CENTCOM, to identify the  root cause or causes for the procedural weaknesses in the handling of  containers and the extent to which they contribute to the incomplete and  inaccurate recording of container-management data in theater. DOD  stated that it concurred with the recommendation, but added that  CENTCOM is responsible for theater container management and control  in its area of responsibility. DOD also stated that CENTCOM will  coordinate with U.S. Transportation Command to the extent that specific  theater actions affect overall global container management. We initially  drafted the recommendation to both CENTCOM and the U.S.  Transportation Command in order to ensure that action would be taken  from both commands; however, we agree with DOD that CENTCOM is  responsible and that coordination with U.S. Transportation Command to  the extent that specific theater actions affect overall global container  management is appropriate. Therefore, we modified the recommendation  accordingly.
DOD partially concurred with the third recommendation that the Secretary  of Defense direct the Commander CENTCOM, to develop and implement  a corrective action plan with effective solutions for the root causes  identified that provide for completion of corrective measures. DOD stated  that it concurs with the recommendation, but also stated that  implementing the recommendation is a CENTCOM responsibility.   Further, DOD stated that only CENTCOM may direct military Service  component commands to take specific actions in the CENTCOM area of  responsibility. DOD added that if resolution of the issues requires actions  beyond CENTCOM’s purview, then CENTCOM will refer specific actions  to the Joint Staff for assistance in obtaining resolution with other  commands and organizations.  We initially drafted the recommendation to  both CENTCOM and the U.S. Transportation Command in order to  ensure that action would be taken from both commands; however, we  agree with DOD that CENTCOM is responsible and that coordination with  the Joint Staff for assistance in obtaining resolution with other commands  and organizations is appropriate. Therefore, we modified the  recommendation accordingly.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the Commanders for CENTCOM  and the U.S. Transportation Command, and other interested parties.  In  addition, this report is available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-5431 or russellc@gao.gov.  Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report.  GAO staff who made key contributions to this  report are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess the extent to which Department of Defense (DOD) policy and  guidance incorporate recommendations that address container- management challenges in the U.S. Central Command’s (CENTCOM)  area of responsibility, we reviewed DOD-wide, combatant command, and  service-specific policy and guidance pertaining to container management  to develop our understanding of container-management operations and  roles and responsibilities. To identify recommendations made by DOD  audit agencies and other organizations that addressed container- management challenges, we researched websites and databases and  contacted officials as necessary from the following audit agencies: Army  Audit Agency, Naval Audit Service, Air Force Audit Agency, DOD Office  of Inspector General, Defense Contract Audit Agency, Defense Contract  Management Agency, Special Inspector General for Iraq Reconstruction,  Special Inspector General for Afghanistan Reconstruction, and GAO. We  interviewed DOD logistics and container-management officials from the  Office of the Deputy Assistant Secretary of Defense for Transportation  Policy, U.S. Transportation Command, CENTCOM, the U.S. Army, the  U.S. Marine Corps, Surface Deployment and Distribution Command, and  the Defense Logistics Agency to discuss challenges with and efforts to  improve container management, and identify additional reports or studies  with findings and recommendations involving container-management  issues. During this process, we observed that these recommended  corrective actions were generated over time and concluded that  development of such actions may be an ongoing effort.
To identify findings and recommendations relating to container- management issues potentially affecting DOD operations in CENTCOM’s  area of responsibility, we reviewed the reports and studies for the 10-year  period 2003 through 2013—the period DOD began tracking detention  fees for operations in Iraq and Afghanistan through the completion of field  work on this objective of our review. The recommendations we identified  may not be comprehensive because DOD did not have an alternative  source or means to corroborate or verify what we identified. Additionally,  the same or similar recommendations may appear in different reports and  therefore may be duplicated. We analyzed the relevant recommendations  to identify the organizations responsible for implementation and  categorized the recommendations to determine patterns and repetition  over time. We discussed the listing of recommendations with DOD  container-management officials to determine how the department  addressed the findings and recommendations. We then requested the  department provide us with the status of the recommendations we had  identified to determine whether actions were completed or implemented.  We reviewed DOD policy and guidance pertaining to container  management to determine the extent that the categories of  recommendations we identified were reflected in them. We also reviewed  the recommendations status updates DOD provided to identify instances  where DOD stated that recommendations had been incorporated into  container-management policy and guidance. We compared DOD’s  inclusion of recommendations addressing container-management  challenges into its policy and guidance documents against criteria for  recording and communicating important information to management as  contained in the Information and Communication, and Monitoring,  standards in Standards for Internal Control in the Federal Government.
To determine the extent to which DOD managed and reduced container  detention fees, we met with officials from the Office of the Deputy  Assistant Secretary of Defense for Transportation Policy, U.S.  Transportation Command, CENTCOM, U.S. Army, U.S. Marine Corps,  Surface Deployment and Distribution Command, and the Defense  Logistics Agency to develop an understanding of how DOD accrues and  pays detention fees, and manages shipping containers to reduce the  accumulation of detention fees. We observed the processes and  procedures by which invoices for detention fees are received, reviewed,  and paid. Also, we observed demonstrations of the DOD system used to  track and manage shipping containers used in the CENTCOM area of  responsibility and collected comprehensive listings of containers and  associated data for each container captured in these listings. We  observed demonstrations of DOD’s two key systems used in container  management for Afghanistan (the U.S. Transportation Command’s  Container Management Module and the Army Container Asset  Management System), collected information on the systems’ structure  and data content, and requested and collected various reports produced  in queries on 4 separate days, from April 2013 through December 2013,  for complete data on the number of containers in theater that officials  conducted at our request. From the U.S. Transportation Command’s  Container Management Module we then collected and analyzed complete  data sets for all shipping containers recorded for Afghanistan to  understand the densities and usages of shipping containers in  Afghanistan. This included determining locations where containers were  recorded and the ratios of carrier-owned containers to government-owned  containers; and identifying containers without recorded geographic  locations, the length of time carrier-owned containers had been in  Afghanistan, and the ratios of containers recorded as empty to those with  contents or occupants.
In Afghanistan, we met with U.S. Forces–Afghanistan officials and various  container control officers identified by officials from the Surface  Deployment and Distribution Command to discuss shipping-container  management and the accuracy of data recorded in the Container  Management Module. We also collected all available end-of-month DOD  listings—from September 2010 through December 2013—of carrier- owned shipping containers subject to detention-fee accruals for analysis.  We selected September 2010 because it was the first month for which  DOD had available end-of-month data. We concluded with December  2013 because it was the cutoff date for the analyses that we had planned  to conduct. We summarized and discussed our initial analysis with  officials from the Surface Deployment and Distribution Command to  ensure accurate interpretation of the data collected. We compared our  observations, data we collected, and our analyses with Standards for  Internal Controls in the Federal Government and DOD regulations such  as the Defense Transportation Regulation and CENTCOM’s Container  Management Policy Letter of Instruction that specify the need to  accurately and timely record data that has an effect on detention fee  accrual. We also assessed DOD’s efforts to improve its management of  container data against best practices for improving federal agency  performance and accountability found in Determining Performance and  Accountability Challenges and High Risks, and Standards for Internal  Control in the Federal Government, which address risks and  accountability for achieving effective results. GAO developed the criteria  for assessing performance and accountability for an agency’s major  program and mission areas and management functions by considering  the requirements of program-specific legislation as well as the  requirements of management-reform legislation, such as the Chief  Financial Officers Act of 1990, the Government Performance and Results  Act of 1993, the Government Management Reform Act of 1994, the  Federal Financial Management Improvement Act of 1996, and the  Clinger-Cohen Act of 1996.
We assessed the reliability of the data by reviewing related  documentation, interviewing knowledgeable officials, and testing the data  for obvious errors and completeness. We concluded the data were  sufficiently reliable to present selected findings on the completeness and  accuracy of the numbers and locations of shipping containers subject to  detention fees, but identified limitations that are discussed in this report.
We conducted this performance audit from February 2013 to November  2014 in accordance with generally accepted government auditing  standards. These standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  include Guy LoFaro, Assistant Director; Jim Ashley; Tracy Barnes;  Richard Burkard; Virginia Chanley; Grace Coleman; Larry Junek; Anne  McDonough-Hughes; Mary Catherine Hult; Carol Petersen; Pauline  Reaves; and John Strong.