Federal Property Disposal

In disposing of surplus property, including aircraft parts, computers, furniture, and clothing, the Defense Department (DOD) is required to make its inventory available to many organizations. Thus, the best items are often taken through transfers and donations, leaving the least marketable items available for sale. These and other factors contribute to DOD's low rates of return. Although the private sector obtains higher rates of return than DOD does for similar items, it does not handle the quantities, types, and conditions of items that the military does. Thus, the private sector is able to develop disposal expertise and tailor its disposal strategies so it obtains higher rates of return. DOD recognizes that it needs to strengthen its management of property disposal, and it has adopted several commercial practices that should improve its operations. DOD is also involving the private sector in some aspects of the process, particularly in surplus property sales, to improve its rate of return and become more business-like. Also, aspects of DOD's disposal process that are not inherently governmental functions may be candidates for outsourcing.

GAO noted that: (1) DOD's disposal process is governed by numerous laws and regulations that require DOD's surplus property be made available to many organizations; (2) thus, the best items are taken through the transfer and donation process leaving the least marketable items available for sale; (3) this and other factors contribute to DOD's low rates of return; (4) although the private sector obtains higher rates of return than DOD for comparable items, it does not handle the quantities, types, and conditions of items that DOD does; (5) thus, the private sector is able to develop disposal expertise and tailor its disposal strategies so that it obtains higher rates of return; (6) DOD recognizes that it needs to improve its management of property disposal and has adopted or is planning to adopt a number of commercial practices that should help improve its operations; (7) DOD is also involving the private sector in certain aspects of process, particularly in the sales of surplus property, to improve its rate of return and become more business-like in its operations; and (8) in addition, aspects of DOD's disposal process that are deemed to be not inherently governmental functions may be outsourcing candidates--an aim GAO supported in recent legislative proposals.