Transportation pricing policy for the Foreign Military Sales programs.

Abstract

On 1 October, 1991 the Department of Defense implemented the Defense Management Review Decisions (DMRDs) in an effort to reorganize the supply system and reduce overall costs. These changes were implemented without regard for the Foreign Military Sales (FMS) program. This paper analyzes the changes forced on the FMS program since implementation of the DMRD initiatives and evaluates those changes in terms of the legislative requirement for cost recovery and effect on customer service. An analysis of the rates assessed FMS customers to use the Defense Transportation System is performed and are compared to the actual charges being billed to the FMS transportation trust fund account. An alternate transportation pricing model is reviewed for applicability and recommendations are made for changes to the FMS transportation pricing policy.