Defense Inventory

Pursuant to a congressional request, GAO provided information regarding the disposal of the Department of Defense's (DOD) unrequired inventory, focusing on: (1) unrequired inventory available for disposal and sale; (2) the condition of potential excess inventory and related storage costs; and (3) inventories disposed of and sales proceeds.

GAO found that: (1) in September 1989, DOD had about $34 billion worth of unrequired inventory, including $10.1 billion in its potential excess category; (2) the amount of inventory that DOD should dispose of could exceed its reported excess; (3) two-thirds of the potential excess inventory consisted of used materials that needed repairs; (4) the average annual storage costs for the potential excess inventory were about $101 million; (5) DOD turned over its excess inventory to the Defense Logistics Agency's Reutilization and Marketing Service for disposal; (6) DOD had property disposal regulations specifying when and what items could be abandoned or destroyed; (7) DOD valued its used property sold in fiscal year (FY) 1988 at $1.8 billion and $2.1 billion in FY 1989, with sale proceeds at $107.6 million and $139.7 million, respectively; (8) DOD deposited $72.4 million and $80.1 million, respectively, from the sale proceeds into the U.S. Treasury, and used the remaining proceeds to reimburse the military services for authorized expenses; and (9) DOD attributed its relatively low returns on sales of excess property to such factors as the condition of the property, limited civilian uses, and surcharges.