Defense Inventory

This is the fourth in a series of reports on the Defense Department's (DOD) procedures for controlling excess items. GAO reported earlier on DOD's needless destruction of usable aircraft parts, on inappropriate sales of parts with military technology and flight safety risks, and on items not being properly controlled during shipment to disposal. (See GAO/NSIAD-98-7, Oct. 1997, GAO/NSIAD-98-182, Aug. 1998, and GAO/NSIAD-99-84, July 1999.) In this report, GAO found that internal control procedures designed to protect firearms, items with national security implications, and pharmaceuticals were not always followed at three of the seven defense components GAO visited. Instead of being separated, key duties in the areas of transport, destruction, and record keeping were done by the same person. Required certifications that sensitive excess items were actually destroyed were missing. Also, serial numbers were not always recorded on shipping documents as required. For example, GAO was unable to track what happened to three items slated for disposition: a digital computer used for defense countermeasures on the E-2 aircraft, a high-power simulator used to test early warning systems on aircraft, and 18 computers used to guide MK-46 torpedoes to a target. DOD guidance requires that excess firearms and pharmaceuticals be destroyed and removed from inventory records by coding the transactions as "inventory decreases associated with the destruction of the item." However, the military has been removing these items from inventory records by describing these transactions as "items being shipped to a disposal office." None of the items were actually shipped to a disposal office, but were instead destroyed or disposed of by the defense components that had the items. Weak management oversight and computer programming errors contributed to these transactions being incorrectly recorded. For example, during a 12-month period, the disposition of nearly $99 million of firearms and pharmaceuticals was incorrectly recorded in DOD's inventory records.

GAO noted that: (1) internal control procedures designed to protect firearms, items with national security implications, and pharmaceuticals were not always followed at three of the seven defense components GAO visited; (2) instead of being separated, key duties in the areas of transport, destruction, and record keeping were done by the same person; (3) required certificiations that sensitive excess items were actually destroyed were missing; (4) also, serial numbers were not always recorded on shipping documents as required: (5) although GAO was able to account for the items in 104 of 107 transactions reviewed, GAO was unable to trace the actual disposition of the items in 3 transactions; (6) while the number of these items potentially lost or stolen is small relative to the total defense inventory, it is still of concern because they could be misused if they get in the wrong hands; (7) DOD believed that the items involved in the three transactions had been destroyed, but it could not be certain since no documentation existed that would support its position; (8) when firearms, items with national security implications, and pharmaceuticals become excess and are no longer needed, DOD procedures require the component to destroy them and remove the items from inventory records by coding the transactions as "inventory decreases associated with destruction of the item;" (9) however, defense components have been removing these items from inventory records by recording these transactions as "items being shipped to a disposal office;" (10) none of the items, however, were actually shipped to a disposal office; and (11) these transactions were incorrectly recorded because of mistakes and unsupported inventory adjustments that occurred because of inadequate management oversight and training and computer systems programming errors.

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.

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