DOD's Management of Government Property Furnished to Defense Contractors

GAO discussed problems that the Department of Defense (DOD) has in controlling and accounting for property it furnishes to defense contractors to develop, produce, and maintain weapons systems and support military installations. GAO found that: (1) DOD furnishes billions of dollars in property to defense contractors each year; (2) until August 1986, there was no system in place for reporting the value of government property furnished to contractors; (3) although recent data show that the total amount of property on hand is about $26 billion, the figure may be larger because contractor records do not adequately account for this property and DOD has no overall system to verify contractors records; (4) DOD has not effectively implemented policies for relying on contractors to provide the property needed in government contracts; (5) DOD has not adequately implemented regulations designed to control contractor materiel requisitions; and (6) DOD has not adequately enforced acquisition regulations that require contractors to account for and safeguard government property and the government to maintain oversight over contractor management of the property. GAO believes that new DOD property policies should minimize potential fraud, waste, and abuse of government property, if properly implemented.