Inventory Management

The Defense Reutilization and Marketing Service transferred and disposed of nearly $18 billion worth of excess military property between 1996 and 1999. The excess property is available for reuse by military agencies and government contractors. The Service can also transfer property to federal agencies or donate property to qualified organizations. Inadequate control, as a result of inconsistent and incorrect data in the military's databases, has allowed organizations to obtain excess Defense Department (DOD) property to which they may not be entitled. In its investigation of the University of Alabama at Huntsville, GAO found that the University used an invalid activity code to obtain more than $3.5 million worth of excess DOD property to which it was not entitled. Similarly, a Florida Army National Guard unit was able to obtain excess property between 1998 and 1999 by using an invalid activity code that had been deleted in 1990. Officials at the Defense Logistics Agency were unable to explain why their computer system had failed to reject the invalid codes. DOD has exercised poor oversight over the management of excess DOD property provided to these organizations. GAO found that property obtained by the University of Alabama at Huntsville had not been inventoried as required, a significant portion could not be located, and some of the property had been misused or stolen. The University also failed to provide pertinent information to government officials, which limited the effectiveness of oversight efforts. Internal DOD studies have identified mismanagement of excess property by other universities.

GAO noted that: (1) inadequate control, as a result of inconsistent and incorrect data in DOD's databases, has allowed organizations to obtain excess DOD property to which they may not be entitled; (2) for example, the Defense Reutilization and Marketing Automated Information System contains invalid activity code data--and all activity codes are not recorded in the Defense Automatic Addressing System Center master file; (3) many central service points for military services and DOD activities do not validate and reconcile their files to the Defense Automatic Addressing System Center master file in a timely manner as required by regulation; (4) consequently, the data maintained by the various central service points for military services and DOD activities include activity address codes that are not recorded in the master file; (5) in GAO's investigation of the University of Alabama at Huntsville, GAO found that the University had used an invalid activity code to obtain over $3.5 million worth of excess DOD property to which it was not entitled; (6) the activity code was associated with an expired contract and it had been deleted several years earlier; (7) in addition, a Florida Army National Guard unit was able to obtain excess property between 1998 and 1999 by using an invalid activity code that had been deleted in 1990; (8) Defense Logistics Agency (DLA) officials were unable to determine why the Defense Reutilization and Marketing Automated Information System had failed to reject the invalid codes; (9) further, the activity code used by the University to obtain the excess property was a nonrequisitioning code, indicating that the activity was not authorized to use this code to requisition; (10) GAO determined that 65 nonrequisitioning codes had been used to obtain over $101 million in excess DOD property from fiscal year 1995 to the present and that there were no edits in the system to prevent it; (11) DOD has not exercised adequate oversight of the management and use of excess DOD property provided to selected universities and a Florida Army National Guard unit; (12) the property obtained by the University had not been inventoried as required, a significant portion could not be located, and some of the property had been misused or stolen; (13) the University had also failed to provide pertinent information to government officials, which limited the effectiveness of the officials' oversight activities; and (14) the Florida National Guard unit had failed to follow procedures in place to obtain and account for excess DOD property it had received in 1998 and 1999.

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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