Audit Report

03-16-2016
Acquisition Processes and Contract Management
U.S. Army Military Surface Deployment and Distribution Command Needs to Improve its Oversight of Labor Detention Charges at Military Ocean Terminal Sunny Point (Project No. D2015-D000RA-0201.000)
DODIG-2016-061

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Objective

We determined whether the U.S. Army Military Surface Deployment and Distribution Command (SDDC) effectively planned and managed terminal operations to minimize the amount of labor detention charges incurred. Labor detention charges incurred when contractors were unable to perform their work because of factors beyond their control.

Finding

SDDC did not effectively plan and manage Military Ocean Terminal Sunny Point (MOTSU) terminal operations to minimize the amount of labor detention charges. We reviewed a statistical sample of 120 out of 1,260 service dates for which MOTSU incurred labor detention charges and identified that SDDC:

  • erroneously paid for contractor safety briefings as labor detention charges because the 596th Transportation Brigade (BDE) Contracting Officer’s Representative (COR) did not ensure that charges billed for the briefings were in accordance with the contract terms;
  • did not ensure contractor labor detention charge entries were accurate and complete because the 596th BDE COR did not effectively review the time records that supported labor detention charge invoices; and
  • did not recoup labor detention charges caused by other entities because SDDC resource management personnel misapplied a legal interpretation concerning installation service charge recoupments to the labor detention charges.

As a result, of the $3.1 million in labor detention charges incurred at MOTSU and paid by SDDC in FYs 2013 and 2014, SDDC improperly paid $1.2 million to the MOTSU’s terminal contractor and did not question for recoupment $438,562 in charges from other at-fault parties. The amount of improper payments and lost recoupment would likely be greater if all labor detention charges on the contract were reviewed.

Recommendations

We recommend that the Contracting Officer, U.S. Transportation Command:

  • direct the 596th BDE COR to ensure that charges billed for safety briefings are in accordance with the contract terms and take action to recoup costs from the contractor for safety briefings erroneously charged as detention time; and
  • ensure that the 596th BDE COR or other Brigade personnel properly review time records that support labor detention charge invoices.

In addition, we recommend that the Deputy Chief of Staff for Resource Management, SDDC: direct all BDEs to process and submit claims to the Deputy Chief for recouping detention charges caused by other entities; work with the Contracting Officer, U.S. Transportation Command and BDE CORs to review time records for ongoing MOTSU terminal contracts to identify labor detention charges subject to recoupment; and take action to recoup these costs.

Management Comments and Our Response

The Chief of Staff, United States Transportation Command, addressed all specifics of the recommendations, and no further comments are required.


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