Report: Air Mobility Command losing money
March 12, 2000
By Rod Hafemeister
Belleville News-Democrat

Air Mobility Command might be cheating itself out of $700 million a year by not billing enough for hauling cargo and passengers for the rest of the Air Force, the other military services and other government agencies, a congressional watchdog agency says.

The General Accounting Office, the investigative arm of Congress, released a report last week stating that a lack of accurate data on the actual cost of flying missions and poor records management caused the command to bill for only 74 percent of the actual costs of a sampling of
airlift flights in fiscal year 1997.

An annual program cost of about $2.7 billion would mean the command collected only about $2 billion. The shortfall would have to be made up from a special Airlift Readiness Account intended to support airlift training.

But officials at the command’s headquarters at Scott Air Force Base say that while there are some accounting problems that need to be fixed, the GAO report is based on too small a sample of flights and a failure to understand the overall system.

“They only looked at 24 missions. That’s a very small sample of what we fly — about 10,000 missions a year,” said Mike Nettemeier, a senior civilian in the command’s comptroller office. “I think there are some problems, but I’d like to say that we continue to work those problems.”

The GAO examined the records of 24 missions between Oct. 1, 1996, and Sept. 30, 1997. They included about 100 flights on a variety of aircraft, including C-5B, C-141, C-130, C-9, KC-135 and KC-10 flights as well as flights on civilian carriers contracted by Air Mobility Command.

Two of the 24 missions were not evaluated because there were insufficient records to compare cost to billing.

The GAO found that the amount billed to the customer varied from a low of 11 percent of the recorded cost to as much as 238 percent, with an average of 74 percent.

But Nettemeier said that the GAO sample was too small to get an accurate picture because the cost calculations are based on average costs, not the specifics of individual missions.

He also noted that the only missions billed at more than 100 percent involved C-130s operated by overseas commands, not directly under the control of Air Mobility Command.

Even given the often arcane nature of government accounting, how airlift is paid for can be especially confusing to an outsider.

In wartime, it’s simple: the money comes from special funds appropriated by Congress for the war effort.

But in peacetime, Air Mobility Command funds airlift through what’s called a working capital fund. Whether the flight involves routine scheduled cargo runs to Europe, an emergency airlift of relief supplies to Mozambique or carrying the president to a summit conference on Air
Force One, the agency requesting the flight is sent a bill that is supposed to cover the actual cost.

In one sense, it’s all taxpayers money. But to the Army, Navy, Marine Corps or other agency, it’s money from their operations and maintenance budgets, money they can’t use for other things.

One of GAO’s findings was that those customers often had difficulty verifying the accuracy of the bills they received, in part because cost documents are kept in a variety of different systems and different locations. The GAO also found that at least one organization, the Navy’s Atlantic Fleet, had received and refused to pay about $17.9 million in bills that actually belonged to other Navy customers for fiscal years 1994 through 1997.

Nettemeier said efforts are constantly being made to improve the overall accounting.

“I’m not sure the problem is as big as the GAO would lead you to believe,” he said. “We do about 10,000 missions a year and only about 1 or 2 percent come back as questionable charges.”

Even so, efforts are being made to improve that figure.

U.S. Transportation Command, Air Mobility Command’s parent unit also headquartered at Scott, is developing a Transportation Financial Management System to consolidate airlift, sealift and ground transportation accounting. It is expected to be operational by the middle of 2002.

“That’s going to give us a lot of visibility on our costs,” said Col. Ed Weeks, the command’s deputy comptroller and Nettemeier’s boss.

Perhaps the most controversial part of the GAO report, in Air Mobility Command’s view, was the statement that the command “has little incentive to either control costs or recover the full costs of peacetime airlift operations because it receives supplemental funding” through the Airlift
Readiness Account.

Weeks said that account is under constant scrutiny and was reduced 31 percent in the process of developing the fiscal year 2000 budget.

Originally Published, March 12, 2000, Belleville News Democrat, Belleville, Illinois
(c) 2000, Belleville News-Democrat, Belleville, Ill


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