Funding Ammunition Ports

The U.S. Army s Surface Deployment and Distribution Command SDDC asked RAND Arroyo Center to assess the mechanisms by which SDDC funds its two ammunition ports, Military Ocean Terminal Concord MOTCO and Military Ocean Terminal Sunny Point MOTSU. With a legacy of different histories, the two ports currently have different funding approaches and accounting systems. With both now managed by SDDC, consolidation to a single approach would seem desirable. The central question of this research inquiry is what the most appropriate financial structure would be. MOTSU currently has an arrangement in which Army appropriations are expected to fund 76 percent of the port s base operating and support BASOPS expenditures. The rest of BASOPS is funded by the Transportation Working Capital Fund TWCF with revenue generated from prices charged TWCF customers, e.g., the military services that want to ship ammunition into or out of the country. The TWCF additionally pays for contracted stevedore services at both MOTCO and MOTSU. At MOTCO, Army appropriations fund virtually all BASOPS costs there is no 76-24 BASOPS cost division as seen at MOTSU. In total, we estimate that in recent years the TWCF has funded about 60 percent of MOTSU annual outlays versus about 30 percent of MOTCO annual outlays. To assess the desirability of changing one or both ports financial arrangements, the RAND Arroyo Center study team interviewed subject matter experts at SDDC and Transportation Command TRANSCOM, Scott Air Force Base, Illinois at Army Materiel Command headquarters at the Redstone Arsenal, Alabama as well as at both MOTSU and MOTCO. We reviewed the literature on working capital fund pricing policies and also reviewed Department of Defense DoD financial regulations. We analyzed the ports recent workload and cost data and then briefed interim results to SDDC leaders and received extensive and valuable feedback from SDDC and port personnel.