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Late fees for military shipping containers soar

Oct. 4, 2012 - 04:13PM   |   Last Updated: Oct. 4, 2012 - 04:13PM  |  
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WASHINGTON Late fees for unreturned shipping containers have soared to record levels over the past 13 months despite the military's plans to cut their costs, in part because the military recently discovered invoices dating back six years, according to the Pentagon.

Since late summer 2012, the military has paid shipping companies $188 million for failing to return containers on time. Last year, USA Today first reported on the late-fee issue about $720 million from 2001 to 2011 prompting calls from Congress to rein them in and a Pentagon plan that goes into effect Monday to contain costs. The peak year for overdue containers was 2004, when the military racked up late fees of $128 million.

The metal shipping boxes, ranging from about 20 feet to 40 feet in length, have been stuffed with gear and sent to war zones in Iraq and Afghanistan over the past decade. Once there, troops repurpose them for shelter, storage, even bathrooms. Fees mount because shipping firms charge daily penalties for unreturned containers. Under a rent-to-own arrangement, the Pentagon can pay nearly $7,400 for a container worth $3,200.

The late fees declined to $17 million in 2008 before rising again with the surge of troops into Afghanistan. They totaled $39 million for the 2011 budget year that ends in September. Fees spiked in the past 13 months because the Pentagon paid invoices that dated to 2006, said Air Force Lt. Col. Melinda Morgan, a spokeswoman.

"How is that even possible?" said John Pike, executive director of, a defense policy website. "If my phone bill is a day late, my phone rings off the hook. This is too peculiar not to warrant a criminal investigation."

Scott Amey, general counsel for the Project on Government Oversight, said "poor financial management inside the government has been a problem for years, including late fees and duplicate payments. This type of problem is an inexcusable drain on public funds, yet the government is unwilling to correct its payment systems."

In January, Sens. Tom Carper, D-Del.; Scott Brown, R-Mass.; and Tom Coburn, R-Okla., told the Pentagon that it wasn't doing enough to cut the cost of late fees. A new shipping contract that extends the grace period for returning containers from 15 to 20 days and buying containers outright could save as much about $15 million.

This year, the Pentagon formed management teams to identify ways to reduce costs further, Morgan said. In August, the military issued guidance to commanders in the field about how to manage their use of containers.

"With these changes and efforts at all levels of the department, including theater teams that have pushed for better routine accountability and improved container data quality, we anticipate a reduction in container detention in the upcoming fiscal year," Morgan said.

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