The Department Of Defense Can Improve Its Free-Asset Management

Gao ID: LCD-76-414 March 3, 1976

Pursuant to a congressional request, GAO provided information on the free-asset amounts available to the Department of Defense (DOD).

GAO noted that: (1) free assets accrue to DOD as receipts from sales of equipment not requiring in-kind inventory replacement; (2) the majority of free assets accrue from foreign military sales; (3) DOD gives to Congress estimates of free-asset funds which are used in the budget process to partially fund defense programs; (4) under this procedure: (a) free assets realized (as estimated) are used as directed in the budget; (b) failure of the military departments to realize the estimated free assets reduces the amounts available for procurement of equipment; and (c) the services can, with congressional oversight, apply amounts realized in excess of the estimates to other defense programs; (5) historically, the free-asset estimates given to Congress have been low; (6) if initial estimates were closer to the actual amounts of the free assets realized, funds initially appropriated for defense programs could be further reduced; (7) almost $1.1 billion in free assets were generated in DOD's procurement accounts during fiscal years 1972-1975; $66 million additional in free assets were generated in research and development appropriations during fiscal years 1974-1975; (8) because DOD has not provided the military departments with a standard definition of free assets, the services have developed their own definitions; (9) the Army has only limited control over its free-asset generations, because of problems concerning management of its customer-order program in general; and (10) some of these problems have impaired congressional oversight regarding the application of free assets.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: No director on record Team: No team on record Phone: No phone on record


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.