REDUCTION IN OVERHEAD COSTS OF INVENTORY CONTROL POINTS.

SEC. 394. REDUCTION IN OVERHEAD COSTS OF INVENTORY CONTROL POINTS. (a) Report and Plan Required.—Not later than March 1, 1998, the Secretary of Defense shall submit to Congress a report containing a plan to reduce overhead costs of the supply management activities of the Defense Logistics Agency and the military departments (known as Inventory Control Points) so that the overhead costs for each fiscal year after fiscal year 2000 do not exceed eight percent of net sales at standard price by Inventory Control Points during that year. (b) Additional Report Requirement.—In addition to the plan, the report shall include the following: (1) An identification of inherently governmental, core and noncore functions in Inventory Control Points and Distribution Depots.111 STAT. 1718 (2) A description of efforts, other than prime vendor and virtual prime vendor, underway or proposed to improve the efficiency, incentives, and accountability in Department of Defense supply, inventory and warehousing services and rates. (3) An identification and description of the benchmarks established in the warehousing, distribution, and supply functions of the Department and the relationship of the benchmarks to performance measurement methods used in the private sector. (4) A description of the outcome-oriented performance measures that are currently being used to evaluate Inventory Control Points and Distribution Depots. (5) A specification of any legislative, regulatory, or operational impediments to achieving the requirement in subsection (a) and implementing best business practices in the warehousing, distribution, and supply functions of the Department. (c) Definitions.—For purposes of this section: (1) The term “overhead costs” means the total expenses of the Inventory Control Points, excluding— (A) annual materiel costs; and (B) military and civilian personnel related costs, defined as personnel compensation and benefits under the March 1996 Department of Defense Financial Management Regulations, Volume 2A, Chapter 1, Budget Account Title File (Object Classification Name/Code), object classifications 200, 211, 220, 221, 222, and 301. (2) The term “net sales at standard price” has the meaning given that term in the March 1996 Department of Defense Financial Management Regulations, Volume 2B, Chapter 9, and displayed in “Exhibit Fund—14 Revenue and Expenses” for the supply management business areas.