DEFENSE SECURITY COOPERATION AGENCY 2800 DEFENSE PENTAGON WASHINGTON, D.C. 20301-2800	8/12/1998

MEMORANDUM FOR :

OFFICE OF THE DEPUTY UNDER SECRETARY OF THE ARMY
(INTERNATIONAL AFFAIRS)
ATTN: SAUS-IA-DSZ
DEPARTMENT OF THE ARMY

DIRECTOR, NAVY INTERNATIONAL PROGRAMS OFFICE
DEPARTMENT OF THE NAVY

DEPUTY UNDER SECRETARY OF THE AIR FORCE
(INTERNATIONAL AFFAIRS)
DEPARTMENT OF THE AIR FORCE

DIRECTOR, DEFENSE LOGISTICS AGENCY

DEPUTY DIRECTOR FOR SECURITY ASSISTANCE
DEFENSE FINANCE AND ACCOUNTING SERVICE - DENVER CENTER

SUBJECT :

Letter of Offer and Acceptance (LOA) Transportation Coding for Defense Working Capital Fund Items

With the implementation of the Defense Business Operating Find (DBOF) in October 1990, transportation charges were included within the price of DBOF (now DWCF) items. Unfortunately, duplicate transportation charges sometimes resulted when customers also paid for Collect Commercial Bills of Lading (CCBLs) covering these same items. While the military departments, in conjunction with the Defense Logistics Agency (DLA), have worked to settle discrepancies that occurred during the FY91-FY95 timeframe, we need to ensure that these duplicate charges do not occur in the future.

The Delivery Term Code (DTC) used in requesting DWCF items is key in determining what charges may be applied. When inputting requisitions, customers and military department personnel generally use the code fond in block (7) of the LOA. Unfortunately, at the time the LOA is written, it is unusually not know whether items will be provided from DWCF or from other sources. For this reason, DTC "4" is often recorded on block (7). DTC "4" indicate that the purchaser has fill responsibility at the point of origin, and usually results in a CCBL to ship material to a freight forwarder. This may result in a duplicate transportation charge.

To avoid this problem, effective immediately, LOAs and resultant requisitions for DWCF items should reflect DTC "5." DTC "5" carries a 3.75 percentage charge which should be computed only on the portion of the line/case that will not come from DWCF sources (DWCF items already include transportation within their price). As stated above, the mix of supply sources is often not known when the LOA is prepared. When the supply source is not known, the following applies:

1. We have researched DFAS-DE records for the types of cases/lines involved (i.e., spare parts, CLSSA) and have found that approximately 85 percent of the delivered dollar value on these lines reflect deliveries from DWCF sources. The remaining 15 percent dollar value represents deliveries from other sources.
2. Based on this data, we have determined that a .5625 percent (15 percent of 3.75) transportation charge should be included on LOAs for these types of lines when the source of supply is unknown.

Any new LOAs should be written to reflect DTC "5" for these types of items. Existing cases should include a DTC charge, if required, on the first modification/amendment processed after this memorandum. If a modification/amendment for other changes is not anticipated within the next 6 months, a modification should be processed specifically to implement these changes no later than 1 Mar 99. Customers should be instructed immediately to start busing DTC "5" when requisitioning these items.

Please note that these procedures do not preclude the use of DTC "4" when appropriate (i.e., Defense Reutilization Marketing Service items repair, etc.). Changes to LOA and requisition DTC usage only apply to blanket order articles, CLSSA, concurrent spare parts and other line items. If you have questions, please contact Beth Baker, DSAA/COMPT-FM, DSN 329-3737, email: bakerb@osd.pentagon.mil.

H. Diehl McKalip
Acting Director