United States General Accounting Office

GAO Report to the Chairman, Committee on

National Security, House of

Representatives

August 1998 DEFENSE

INVENTORY

Action Needed to

Avoid Inappropriate

Sales of Surplus Parts

GAO/NSIAD-98-182

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-280096 

August 3, 1998

The Honorable Floyd D. Spence

Chairman, Committee on National Security

House of Representatives

Dear Mr. Chairman:

As requested, we reviewed the Department of Defense’s (DOD) disposal

process for surplus parts with both military technology and flight safety

risks. Specifically, this report addresses DOD’s efforts to (1) identify and

destroy parts with military technology and (2) implement a flight safety

program to prevent aircraft parts with potential flight safety risks from

being sold through the disposal process. This report is a follow-on to our

1997 report that addressed DOD’s destruction of usable aircraft parts that

did not have military technology and flight safety implications.1

 The scope

and methodology of our work are described in appendix I.

Background The Federal Property and Administrative Services Act of 1949, as amended

(40 U.S.C. 471-486), places responsibility for the disposition of government

real and personal property with the General Services Administration. That

agency delegated disposal of DOD personal property to the Secretary of

Defense, who in turn delegated it to the Defense Logistics Agency. The

Defense Reutilization and Marketing Service, a component of the Defense

Logistics Agency, carries out the disposal function. The complexity of

DOD’s disposal process is characterized by the massive volume of excess

property that is handled. In fiscal year 1997, DOD disposed of millions of

items with a reported acquisition value (the amount originally paid for the

items) of almost $22 billion.

DOD’s Disposal Process DOD, through the Office of the Deputy Under Secretary of Defense

(Logistics), provides overall guidance for determining if parts should be

disposed of. The military services and the Defense Logistics Agency have

responsibility for determining if specific parts under their management are

excess to their needs. Parts that are excess enter the disposal process and

are sent to one of 154 worldwide Defense Reutilization and Marketing

Offices (DRMO), or disposal yards. DRMO personnel inspect the parts upon

receipt for condition; acquisition value; and special handling requirements,

1

Defense Inventory: Management of Surplus Usable Aircraft Parts Can Be Improved (GAO/NSIAD-98-7,

Oct. 2, 1997).

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such as those for military-sensitive items. DRMOs have disposition

priorities, consistent with legislative requirements, to make the excess

parts available for reutilization within DOD or transfer to other federal

agencies. Parts that remain are designated as surplus and can be donated

to eligible entities, such as state and local governments among many

others. After these priorities have been served, parts that remain may be

sold to the general public as usable items or scrap. Figure 1 shows the

process for disposing of parts.

Figure 1: Process for Disposing of Military Parts

Donations

to state

and local

governments

Other

defense

activities

Other

federal

agencies

Public

sale

Excess Surplus

Disposal of Parts With

Military Technology

The military services assign a code the first time they buy spare parts for

new aircraft, ships, land vehicles, and other military weapons and

equipment to indicate whether the parts contain technology conferring a

military capability. The military services are also responsible for reviewing

and validating the assigned codes once every 5 years. Because of concerns

about safeguarding military technology, DOD issued specific policies and

procedures relating to the disposal of these parts. For parts that have

military technology involving weapons, national security, or military

advantages inherent in them, DOD requires the parts to be demilitarized so

that the technology remains within DOD. Demilitarization makes the parts

unfit for their originally intended purpose, either by partial or total

destruction, before or as a condition of sale to the public. The term

includes mutilation, cutting, crushing, scrapping, melting, burning, or

alteration that destroys the military technology in the parts.

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Flight Safety Aircraft Parts

Program

DOD also has a program to identify and prevent parts with potential flight

safety risks from being sold through the disposal process. In our 1994

report,2

 we cited concerns from the Federal Aviation Administration and

the Department of Transportation’s Inspector General that DOD aircraft

parts, sold as scrap, illegally reentered civil aviation as usable. As a result,

in July 1995 DOD initiated a departmentwide Flight Safety Critical Aircraft

Parts program to identify and destroy surplus parts that could cause an

aircraft to crash if the parts fail during a flight. The goal of the program is

to prevent potentially dangerous parts from being sold by the DRMOs.

Results in Brief While DOD recognizes the dangers associated with selling surplus parts

with military technology to the public and has taken certain actions to

address the problem, DOD’s disposal offices have inadvertently sold surplus

parts with military technology intact. These sales occurred for three

reasons. First, the military services assigned the wrong demilitarization

codes to the parts. Because guidance was inadequate, codes assigned to

parts with military technology incorrectly indicated that the parts did not

contain the technology. DOD has been considering ways to address this

situation but has not yet reached a final decision. Second, an initiative

intended to correct inaccurately assigned demilitarization codes did not

ensure that data systems were updated with the corrected codes. As a

result, disposal offices continued to sell parts with military technology

intact after the codes for the parts were determined to be inaccurately

assigned. Personnel responsible for correcting the inaccurately assigned

codes did not always update their data systems with the corrected codes.

Third, the methods that the disposal offices used to demilitarize some

parts did not adequately destroy the military technology contained in the

parts. Guidance to disposal offices on how to destroy the military

technology inherent in some items was not adequate.

DOD and its components have not aggressively pursued implementation of

initiatives to prevent the sale of potentially dangerous flight safety critical

aircraft parts through the disposal system. DOD and the components have

not set timelines for implementing the flight safety program. Also, none of

the components have fully implemented all of the program initiatives, but

some have made greater progress than others. For example, at the time

our fieldwork was completed, the Army had identified over 4,500 aircraft

parts with flight safety implications, whereas the Navy had not identified

any aircraft parts with these implications. DOD plans to increase its

2

Commercial Practices: Opportunities Exist to Enhance DOD’s Sales of Surplus Aircraft Parts

(GAO/NSIAD-94-189, Sept. 23, 1994).

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B-280096 

interaction and involvement in the program, but the military services and

the Defense Logistics Agency continue to have problems accomplishing

flight safety program initiatives.

DOD Inadvertently

Sold Surplus Parts

With Military

Technology Intact

Because DOD has been lax in following its existing disposal policies and

procedures, it inadvertently sold or offered for sale parts with military

technology intact. This situation occurred because (1) the military services

assigned the wrong demilitarization codes to parts with military

technology that needed to be protected, (2) an initiative intended to

correct inaccurately assigned demilitarization codes did not ensure that

data systems were updated with the corrected codes, and (3) the methods

DOD used to demilitarize some parts did not adequately destroy the military

technology contained in the parts. DOD has some actions underway to

address these problems, but none have been fully implemented.

Demilitarization Codes Are

Not Accurately Assigned

Demilitarization codes are supposed to help the DRMOs determine which

parts have military technology that should be destroyed before the parts

are sold to the public as scrap or without the technology. However, DOD

investigations and our analysis of 264 judgmentally selected items

available for sale at 5 DRMOs showed that the military services often

assigned the wrong demilitarization codes to parts with military

technology that needed to be protected. When parts are miscoded, there is

a high probability that those without military technology will be

unnecessarily destroyed and those with military technology will be

inadvertently sold. Such actions waste time and resources; increase costs;

and, in the latter case, inadvertently make weapons and military

technology available to the public.

DOD has had problems with the accuracy of assigned demilitarization

codes for many years and has initiated several projects to address these

problems. For example, DOD (1) established liaisons in 1991 with federal

investigative agencies to help find miscoded parts with military technology

that are in the hands of the public, (2) assigned its own investigators, also

in 1991, to monitor DRMO activities and identify miscoded parts, and

(3) validated demilitarization codes from 1993 to 1995 for various weapon

systems.

Despite these initiatives, DOD documents show numerous instances of

military parts and equipment with military technology intact that continue

to be made available to the public. For example, in 1995 and 1997, DOD

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B-280096 

investigators identified hundreds of items that contained military

technology sold by disposal offices. Many of these items were classified at

the secret or confidential levels. The items included grenade launchers,

bomb ejector arming units, radar circuit card assemblies, a guided missile

launcher, key components of intercontinental ballistic missiles, weapon

system technical data, electronic warfare equipment, sophisticated

weapon fire control equipment, entire missiles and missile launchers,

automatic weapons, guided and cluster bombs, coders, decoders,

encoders, rocket launchers, secure communications equipment, and

military night vision devices.

The Defense Reutilization and Marketing Service also provided us with a

listing of 1,684 different items it identified as miscoded. The items

contained military technology but were incorrectly coded as having no

military technology implications. We obtained disposal office sales history

information for 881 of these items. There were 7,702 transactions involving

the sale of these 881 items to the public between 1995 and 1997. These

items included parts for weapons, guided missiles, and sensitive circuit

card assemblies.

Our analysis of 264 judgmentally selected items at 5 DRMOs showed that the

wrong demilitarization codes were continuing to be assigned to some

parts. The 264 items were recorded as either sold or available for sale to

the public. We selected these items because they were parts for weapons

and weapon systems but were shown in the disposal offices’ records as

having no military technology that needed to be protected. We reviewed

item characteristics and discussed the coding accuracy with disposal

office personnel. Disposal office officials told us that, in their judgment,

the demilitarization codes shown in the disposal offices records as having

no military technology implications were likely inaccurate for 145 of the

sample items.

For selected items that appeared to be inaccurately coded, we contacted

the item managers and equipment specialists and discussed the accuracy

of the assigned demilitarization codes. The item managers and equipment

specialists generally confirmed that the demilitarization codes for these

items were inaccurate. For example, one of the items that was available

for sale to the public at the DRMO in Kaiserslautern, Germany, was a

waveguide assembly used in communications equipment. The item was

coded as having no military technology implications. The equipment

specialist confirmed that the assigned demilitarization code was incorrect

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B-280096 

because the part contained technology involving special military satellite

communications. The specialist corrected the demilitarization code.

According to officials at the five disposal offices visited, miscoded items

account for 25 percent of their property management workload. They

explained that, because of constant employee turnover, receiving

personnel must be continually trained to screen for incorrect codes. Also,

potentially miscoded items have to be reported to the Defense

Reutilization and Marketing Service, and items with military technology

requiring demilitarization must be stored apart from other items.

Miscoding can have a significant impact on the disposal office workload.

For example, the Kaiserslautern DRMO had a backlog of 29 semi-truck

trailers full of material waiting to be processed for disposal. Officials

stated that time spent on miscoded items significantly affected their ability

to process the backlog and that more trailer loads of material were being

received daily.

DRMOs also inadvertently offered to sell some parts with military

technology intact because DRMO personnel made errors in consolidating

parts having military technology implications with parts not having these

implications. This occurred when several single items were accumulated

together and offered for sale as a batch lot. Although the batch lot was

recorded as having no military technology implications, some individual

parts in the lot contained protected military technology. For example, a

batch lot of 42 weapons parts available for sale to the public at the

Kaiserslautern DRMO contained 7 parts with military technology that should

have been destroyed (see fig. 2). DRMO personnel subsequently removed

the military technology items from the batch lot. DRMO supervisors stated

that action would be taken to educate personnel on the required content

of batch lots and that supervisory checks of batch lot contents would be

made periodically to ensure that no parts with military technology are

included in future batch lots.

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B-280096 

Figure 2: Batch Lot Containing Military

Technology Items

In our October 1997 report, we recommended that DOD improve the

accuracy of assigned demilitarization codes by providing its personnel

with guidance on selecting appropriate demilitarization codes that

includes the specific details necessary to make appropriate decisions. DOD

agreed with our recommendation and stated that it would work with the

military services and the Defense Logistics Agency to determine the

feasibility of departmentwide use of a worksheet that provides personnel

with the specific details necessary to make prudent decisions on selecting

the appropriate demilitarization codes. However, as of May 1998, DOD had

not started using a worksheet departmentwide.

Data Systems Are Not

Updated With Correct

Codes

Because DOD has had long-standing problems with the accuracy of

assigned demilitarization codes, in 1993 the Defense Reutilization and

Marketing Service developed a program for disposal offices to identify and

prevent items with military technology from being sold. However, the

disposal offices continued to sell parts with military technology intact

because personnel often did not update their data systems with corrected

codes.

Under the program, disposal office personnel check the assigned

demilitarization code. If the personnel believe an item has been miscoded,

the item is “challenged.” They send a written report concerning the

potential coding error to the Defense Reutilization and Marketing Service’s

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B-280096 

challenge program office where the item is then recorded in the program’s

database as an open case. Challenge program personnel conduct research

and discuss the assigned code with item managers and equipment

specialists from the military services. After the correct code is determined,

the item is recorded in the program’s database as a closed case. Challenge

program personnel are then supposed to manually enter the correct code

to the data system used by disposal offices to manage surplus parts, and

the equipment specialists are supposed to enter the correct code to the

data system used by the military services to catalog the characteristics of

the parts.

The disposal offices continued to sell parts with military technology intact

because the challenge program was not effectively implemented. Both

program personnel and equipment specialists did not update their data

systems with the corrected codes after challenge program cases were

closed. For example, disposal office personnel challenged the code for an

automatic machine gun firing mechanism, which indicated that the part

was appropriate for sale to the public. Research by challenge program

personnel revealed that the part should be destroyed because it is the

mechanism that enables the machine gun to fire automatically. However,

Defense Reutilization and Marketing Service sales records show that 10 of

the automatic machine gun mechanisms were later sold at a public auction

because challenge program personnel and military service equipment

specialists did not update their data systems with the correct code.

To determine if this problem continued to exist, we asked the Defense

Reutilization and Marketing Service to identify the number of instances in

which either challenge program personnel or equipment specialists did not

update their data systems with the corrected codes. Defense Reutilization

and Marketing Service analyses showed that challenge program personnel

did not enter corrected codes to the disposal data system for 2,920 of

35,981 (8 percent) closed cases. In November 1997, the Service corrected

this problem by implementing a computer program that automatically

updates the disposal data system when a case is closed in the challenge

program. This automation eliminates the need for manual updates to the

disposal data system. However, DOD has not corrected a larger problem

involving cataloging data system updates that have to be made by the

military services equipment specialists. The specialists had not updated

the required changes for 26,278 of the 35,981 (73 percent) closed cases that

the challenge program identified with incorrect codes. In June 1998, DOD

officials stated that the equipment specialists had attempted to update the

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B-280096 

cataloging data system but the system did not accept the changes. They

are researching the cause of the problem.

We also asked the Defense Reutilization and Marketing Service to

determine the number of instances in which the same item had different

demilitarization codes in the two data systems. In December 1997, the

Service compared the demilitarization codes in the cataloging data system

used by the military services with the codes for the same items in the data

system used by the disposal offices. The comparison identified 86,217

instances in which the same item had different demilitarization codes. We

did not make an analysis to determine which codes were correct.

However, the Defense Reutilization and Marketing Service official

responsible for the challenge program believed the disposal office data

system codes were more accurate than the codes in the cataloging data

system because the latter system had not been updated with challenge

program changes. The official said that only the military services can

update the cataloging system with the correct demilitarization codes.

Parts With Military

Technology Are Not

Adequately Destroyed

DOD 4160.21-M-1, Defense Demilitarization Manual, provides instructions

on how surplus parts with military technology should be destroyed.

However, DRMOs do not always adequately destroy parts with military

technology associated with weapons and weapon systems. In some cases,

parts containing recoverable military technology have been sold to the

public and foreign countries. Purchasers of demilitarized parts have put

them back together or reverse engineered the technology and

remanufactured the parts so they function as they did originally.

According to DOD officials, the lack of adequate guidance to DRMOs on how

to destroy the military technology inherent in some items has been a

long-standing problem. For example, when DOD conducted a study in 1995

to determine if parts were being sold with military technology, it identified

about 500 military weapons and weapon-related parts requiring

demilitarization that were being resold by private companies. This listing

included sensitive items such as F-18 guided missile launchers, technical

data for Apache and Cobra helicopters, and F-15 inertial navigation

systems. In some instances, the companies obtained the parts from

disposal offices that did not adequately destroy the military technology

before they sold the parts.

Guidance to DRMOs on how to destroy the military technology inherent in

some items continues to be inadequate. Officials at the five DRMOs told us

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B-280096 

that they still did not have adequate demilitarization instructions and, as a

result, the demilitarization process is simply a trial and error process. For

example, at the DRMO at Fort Hood, Texas, we noted a part used as an

ammunition feeder for an automatic gun was coded for total destruction,

but no specific guidance exists on how to destroy the part (see fig. 3).

DRMO officials stated that their demilitarization process previously involved

cutting the shaft of the feeder into two pieces. However, the officials

discovered that, when the part is demilitarized in this manner, it can be

welded back together and used as it was originally intended. The DRMO

personnel then began cutting off all of the feeders’ appendages, which

rendered the part unusable.

Figure 3: Ammunition Feeder for an

Automatic 30-Millimeter Gun

DOD Plans to Take

Corrective Action

At each of the DRMOs we visited, officials stated that losing military

technology through the disposal process is a serious problem that they

work on daily to prevent. DRMO officials said, however, that until the

accuracy of assigned demilitarization codes and the destruction guidance

are improved, disposal offices will continue to inadvertently sell some

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B-280096 

items with military technology that could be used by the public. To

overcome these problems, DOD is considering a proposal to assign the

responsibility for attaining accuracy in demilitarization coding to a single

office in the Defense Reutilization and Marketing Service and is planning

to provide the DRMOs with computerized images on how to destroy military

technology in military parts.

Historically, the military services have been responsible for assigning

demilitarization codes to parts for new weapon systems and for ensuring

that the assigned demilitarization codes are accurate throughout the life of

the weapon system. According to DOD, over 3,000 personnel in dozens of

locations are responsible for assigning demilitarization codes to

approximately 12,000 new items entering the DOD supply system each

month. These personnel are also responsible for validating code accuracy

for items already in the system. In a 1997 report,3 DOD’s Inspector General

recommended that DOD consolidate the responsibility to assign, challenge,

and maintain demilitarization codes into a single office within the Defense

Reutilization and Marketing Service. In its final comments to the Inspector

General’s report, DOD stated that it planned to proceed with the

consolidation. However, DOD has tasked the Defense Science Board to

study the entire DOD demilitarization program and plans to use the results

of this study, expected later in 1998, in deciding whether to implement the

consolidation.

DOD also is developing a system to provide DRMOs with computerized

images on how to destroy military technology in military parts. Defense

Logistics Agency officials said that the imaging system will include

instructions, illustrations, and destruction techniques on over 100,000

different parts. The officials said that the system will not need to include

images for all parts that contain military technology because a destruction

technique for a specific part in a weapon system can be used for all similar

parts in other weapon systems. According to Defense Logistics Agency

officials, the imaging system could be available to the DRMOs by late 1998

via the Internet. The officials also stated that the success of this system

will depend on whether the military services provide the required

instructions, illustrations, and techniques on how to demilitarize parts and

whether this information is kept up to date.

The Defense Reutilization and Marketing Service also has started two pilot

projects to centralize the demilitarization process at fewer DRMO locations.

The Service expects the centralized sites to destroy military technology

3

Coding Munitions List Items, DOD Inspector General, Audit Report No. 97-130, April 16, 1997.

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B-280096 

completely and consistently in accordance with imaging system

instructions.

Full Implementation

of Flight Safety

Program Has Not

Occurred

In July 1995, DOD began departmentwide implementation of a Flight Safety

Critical Aircraft Parts program that included six major initiatives to

address concerns about aircraft parts with safety risks being sold to the

public. However, DOD is making slow and uneven progress in implementing

these initiatives. DOD has not set timelines for implementing the program.

Further, none of the DOD components have fully implemented all of the

initiatives. As a result, DOD’s disposal offices continue to sell potentially

dangerous flight safety critical aircraft parts to the public.

Potential Dangers

Provided Impetus for the

Program

Recognizing the potential danger in having military aircraft parts with

flight safety risks sold through the disposal process and then being reused

on commercial and defense aircraft, DOD started to develop a flight safety

program in 1994. Prior to that time, DOD had been selling parts with

potential flight safety risks. In some instances, the potentially dangerous

parts reentered defense and civil aviation and may have been reused on

aircraft. According to the Department of Transportation’s Inspector

General, for example, a parts distributor misrepresented severely worn

aircraft parts as usable and sold them to a civil aviation industry customer

for reuse. The distributor bought worn out scrap military jet aircraft

engine combustion liner assemblies, attempted to refurbish the assemblies

by welding the cracks and in other ways making the assemblies appear

serviceable, and modified the assemblies so that they would fit the civil

aviation version of the jet engine.

Flight Safety Program Has

Six Key Initiatives

In May 1994, DOD formed a team that consisted of representatives from the

Office of the Deputy Under Secretary of Defense (Logistics), the military

services, the Defense Logistics Agency, the Federal Aviation

Administration, the General Services Administration, and the Coast Guard.

The team’s mission was to develop a departmentwide program to identify

and prevent parts with potential flight safety risks from being sold intact

through disposal offices. DOD defines a flight safety critical aircraft part as

any part, assembly, or installation containing a critical characteristic

whose failure, malfunction, or absence could cause a catastrophic failure

resulting in loss or serious damage to the aircraft, or an uncommanded

engine shutdown resulting in an unsafe condition. In May 1995, the team

identified six initiatives for the military services and the Defense Logistics

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Agency to follow when implementing the flight safety program. The

program initiatives were to

• standardize and incorporate the definition for items with flight safety

implications into regulations and directives and make procedural changes

as necessary;

• identify parts considered flight safety critical;

• code items with flight safety implications in provisioning, cataloging and

supply data systems and records, designating that special handling is

required when the item is sent to disposal;

• maintain historical documentation on all flight safety items;

• require that historical documentation accompany parts sent to disposal

offices and that flight safety items without historical documentation be

destroyed before disposal; and

• require parts manufacturers to provide an Airworthiness Approval Tag for

all flight safety items delivered to DOD that have both civil and military

aviation applications and develop procedures for providing the

Airworthiness Approval Tag to the disposal offices when such flight safety

items are no longer needed by DOD.

Under the program, parts with flight safety implications must either be

accompanied by paperwork showing that the parts are safe to use or the

parts must be destroyed. DOD began departmentwide implementation of

the flight safety program in July 1995.

Program Implementation

Varies by Component

The DOD directive initiating the flight safety program did not establish

milestones and priorities for accomplishing the program initiatives. DOD

gave the responsibility for setting program timetables and priorities to the

military services and the Defense Logistics Agency. However, our review

of documents and our discussions with officials from DOD and its

components showed that the components have not aggressively pursued

program implementation. As a result, after 3 years, none of the DOD

components have fully implemented all of the initiatives, but some have

made greater progress than others. The varying progress is illustrated by

two of the key initiatives discussed below.

Identifying Flight Safety Parts According to DOD, the military services must review the flight safety

characteristics of tens of thousands of aircraft parts and determining

which parts are flight safety critical is difficult. Table 1 shows that the

Army has made the most progress and the Navy has made the least in

identifying parts for inclusion in the flight safety program. Flight safety

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critical aircraft parts not identified may be sold through DOD’s disposal

system and reenter civil or defense aviation as usable.

Table 1: Aircraft Parts Identified With

Flight Safety Implications

DOD component

Number of parts with

flight safety implications Description of parts

Air Force 878 Mostly repairable engine

parts

Army 4,549 Repairable and

nonrepairable engine and

airframe parts

Navy 0 None identified at the time

of our fieldworka

Defense Logistics Agency 817 Nonrepairable engine and

airframe parts

a In June 1998, Navy officials stated that they recently identified 15,009 parts for inclusion in the

flight safety program.

As shown in table 1, the Army identified 4,549 items with flight safety

implications for inclusion in the program. The Army also identified 730

nonrepairable parts used on Army aircraft, but managed by the Defense

Logistics Agency, as having flight safety implications. The Army is

continuing its efforts to identify additional parts with flight safety

implications.

The Air Force identified 878 mostly repairable engine components as

having flight safety implications. The Air Force also identified 87

nonrepairable parts used on Air Force aircraft engines, but managed by

the Defense Logistics Agency, as having flight safety implications. The Air

Force has not developed any time frames for identifying airframe

components and other nonrepairable parts with flight safety implications.

The Navy has made the slowest progress among the military services in

identifying flight safety parts. The Navy official first assigned responsibility

for implementing the flight safety program initiatives said that, because of

higher priority work, the Navy initially could not allocate resources to the

program. However, in late 1997, the Navy started identifying aircraft parts

with flight safety implications.

Defense Logistics Agency officials stated that they do not have the

engineering expertise to assess flight safety implications of parts. This

responsibility rests with the military services, which have identified 817

flight safety parts managed by the Agency.

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Data System Changes One of the initiatives involves coding items with flight safety implications

in provisioning, cataloging, and supply data systems and records. The code

designates that special handling is required when the item is sent to

disposal. Each of the DOD components has to make data system changes to

accommodate flight safety identifier codes. The Air Force’s data systems,

in their current configuration, do not have the data fields needed to

recognize the flight safety identifiers. However, the Air Force anticipates

that all of the system changes necessary to implement the flight safety

identifiers will be completed in November 1998. As an interim measure,

the Air Force is separately tracking its flight safety items to ensure that

documentation showing whether the parts are safe to use accompanies the

items when they are processed at the DRMOs.

The Army also has to change its data system to include flight safety

identifier codes. This change is needed because the Army’s systems do not

have the data fields in place to include identifiers for parts with flight

safety implications. The Army plans to install a new automated system that

will include the identifier codes, but it has not projected a completion

date. As an interim measure, the Army is using a demilitarization code to

identify these items. DRMO representatives said that using this code

requires the disposal offices to call the item manager for disposition

instructions, which is extremely time-consuming and confusing because

demilitarization codes should be used only to identify the military

technology inherent in the part and not whether the part has flight safety

implications. An Army official responsible for the flight safety program

stated that identifying flight safety items in this manner causes additional

work but is warranted.

Similar to the other DOD components, the Navy’s and the Defense Logistics

Agency’s supply data systems do not have the data fields to include the

identifier codes for items with flight safety implications. The Navy is in the

process of revising the data fields to accommodate flight safety codes and

expects the changes to be completed in late 1998. The Defense Logistics

Agency expected to correct this problem in June 1998.

Potentially Dangerous

DOD Aircraft Parts Are

Sold by Disposal Offices

DOD’s slow progress in implementing flight safety program initiatives

results in the continuing sale of potentially dangerous flight safety critical

aircraft parts through the disposal system. In addition, some of the parts

that the military services identified as having flight safety implications

were sold through DOD’s disposal system without required paperwork

showing that the parts were safe to use.

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Disposal office sales information from October 1994 to March 1998 for

parts identified by the Air Force as having flight safety implications shows

the disposal offices sold 76,525 of these parts to the public without the

appropriate paperwork. For example, the Air Force identified a

compressor vane used on F-15 and F-16 aircraft engines as a flight safety

part. According to the Air Force engineer responsible for the engines, if

the compressor vane breaks during a flight, its metal fragments would

damage the engine and could cause the aircraft to crash. Disposal office

records show that, on March 6, 1996, the San Antonio DRMO sold 10,101 of

these compressor vanes at a public auction without knowing whether the

parts were safe to use.

Also, in February 1998, the Kaiserslautern DRMO was offering for sale three

tail rotor control assemblies used on the AH-1 Cobra helicopter (see 

fig. 4). If this part were to fail, the aircraft would spin uncontrollably and

crash. The parts were not accompanied by required documentation stating

it was safe to reuse them. DRMO officials said that they had not received

any notification from the Army that this item had flight safety implications.

Sales history information showed that this same part, described as being in

severely worn condition, was sold in July 1996 by the DRMO in Columbus,

Ohio, without any assurance that the part was safe to reuse.

Figure 4: Tail Rotor Control Assembly

Page 16 GAO/NSIAD-98-182 Defense Inventory
B-280096 

Conclusions While DOD recognizes the dangers associated with selling surplus parts

with military technology to the public and has taken certain actions to

address the problem, DOD’s disposal offices have inadvertently sold surplus

parts with military technology intact. These sales occurred for three

reasons. First, the military services assigned the wrong demilitarization

codes to the parts. Because guidance was inadequate, codes assigned to

parts with military technology incorrectly indicated that the parts did not

contain the technology. DOD has been considering ways to address this

situation but has not yet reached a final decision. Second, an initiative

intended to correct inaccurately assigned demilitarization codes did not

ensure that data systems were updated with the corrected codes. As a

result, disposal offices continued to sell parts with military technology

intact after the codes for the parts were determined to be inaccurately

assigned. Personnel responsible for correcting the inaccurately assigned

codes did not always update their data systems with the corrected codes.

Third, the methods that the disposal offices used to demilitarize some

parts did not adequately destroy the military technology contained in the

parts. Guidance to disposal offices on how to destroy the military

technology inherent in some items was not adequate.

DOD and its components have not aggressively pursued implementation of

initiatives to prevent the sale of potentially dangerous flight safety critical

aircraft parts through the disposal system. DOD and the components have

not set timelines for implementing the flight safety program. Also, none of

the components have fully implemented all of the program initiatives, but

some have made greater progress than others. For example, at the time

our fieldwork was completed, the Army had identified over 4,500 aircraft

parts with flight safety implications, whereas the Navy had not identified

any aircraft parts with these implications. DOD plans to increase its

interaction and involvement in the program, but the military services and

the Defense Logistics Agency continue to have problems accomplishing

flight safety program initiatives.

Recommendations We recommend that the Secretary of Defense take the following actions to

prevent the sale of parts with military technology and flight safety

implications.

• Develop an action plan with specific milestones for addressing the

problem of inaccurately assigned demilitarization codes. In developing the

plan, consider (1) the recommendations of the DOD Inspector General and

the Defense Science Board, (2) our previous recommendation to provide

Page 17 GAO/NSIAD-98-182 Defense Inventory
B-280096 

guidance on selecting appropriate codes, and (3) procedures to ensure

that items listed in different data systems have the same demilitarization

code in each system.

• Establish milestones for completing the imaging system that will provide

guidance on how to destroy the military technology inherent in items.

• Establish milestones for fully implementing the Flight Safety Critical

Aircraft Parts Program initiatives and institute requirements for the

Secretaries of the Army, the Air Force, and the Navy and the Director of

the Defense Logistics Agency to periodically report on the progress being

made.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD agreed with our

recommendations but expressed concerns that (1) the report does not

fully reflect the progress DOD continues to make in the reported areas and

(2) some of the statements in the report are based on information

requested of DOD personnel not in a position to provide such information.

DOD’s comments are included as appendix II.

With regard to our recommendation for developing an action plan to

address inaccurately assigned demilitarization codes, DOD stated that an

action plan addressing improvements needed in the demilitarization

program will be developed 6 months after publication of the Defense

Science Board’s final report, which is expected in the summer of 1998. DOD

further stated that the action plan will incorporate milestones for

completing the imaging system that will provide guidance on how to

destroy the military technology inherent in items. Regarding our

recommendation to establish milestones for complete implementation of

the flight safety program, DOD stated that new milestones for fully

implementing the program will be established no later than October 1998.

Also, DOD stated that the military services and the Defense Logistics

Agency will continue to report progress toward full implementation of the

flight safety program on a quarterly basis to the Office of the Secretary of

Defense.

Regarding DOD’s two concerns, our draft report recognized that DOD has

initiated several projects to address problems with the demilitarization

and flight safety programs. However, we modified the final report to

further recognize this in our results in brief and conclusions. With regard

to DOD’s comment on information sources, DOD was referring to our

discussions of demilitarization coding accuracy with disposal office and

Defense Reutilization and Marketing Service personnel. DOD stated that the

Page 18 GAO/NSIAD-98-182 Defense Inventory
B-280096 

personnel are not technically qualified to make decisions on coding

accuracy and that it is the equipment specialists who are responsible for

assigning demilitarization codes. Our report notes that our analysis

includes items that had been challenged and closed out after equipment

specialists had determined that they had been miscoded. Also, as stated in

the report, we judgmentally selected items for review to determine if they

had been coded correctly. For those we identified as miscoded, we

selectively confirmed our analysis with equipment specialists. Therefore,

these steps provide us with confidence that our findings are adequately

supported.

We are sending copies of this report to the appropriate congressional

committees; the Secretaries of Defense, the Army, the Navy, and the Air

Force; the Director, Defense Logistics Agency; and the Director, Office of

Management and Budget.

Please contact me at (202) 512-8412 if you or your staff have any questions

concerning this report. The major contributors to this report are listed in

appendix III.

Sincerely yours,

David R. Warren, Director

Defense Management Issues

Page 19 GAO/NSIAD-98-182 Defense Inventory
Contents

Letter 1

Appendix I 

Scope and

Methodology

22

Appendix II 

Comments From the

Department of

Defense

25

Appendix III 

Major Contributors to

This Report

27

Table Table 1: Aircraft Parts Identified With Flight Safety Implications 14

Figures Figure 1: Process for Disposing of Military Parts 2

Figure 2: Batch Lot Containing Military Technology Items 7

Figure 3: Ammunition Feeder for an Automatic 30-Millimeter Gun 10

Figure 4: Tail Rotor Control Assembly 16

Abbreviations

DOD Department of Defense

DRMO Defense Reutilization and Marketing Office

Page 20 GAO/NSIAD-98-182 Defense Inventory
Page 21 GAO/NSIAD-98-182 Defense Inventory
Appendix I 

Scope and Methodology

To determine the Department of Defense’s (DOD) policies and practices for

destroying military parts during the disposal process, we met with officials

and performed work at the Office of the Deputy Under Secretary of

Defense (Logistics), Washington, D.C.; Army, Navy, and Air Force

Headquarters, Washington, D.C.; the Defense Logistics Agency, Fort

Belvoir, Virginia; the Defense Reutilization and Marketing Service, Battle

Creek, Michigan; and the DOD Inspector General, Washington, D.C., and

Columbus, Ohio. We also reviewed policies, procedures, disposal and

transaction histories, and related records obtained from the Defense

Reutilization and Marketing Offices (DRMO) and item managers, and

documented disposal practices. We interviewed policy officials, DRMO

personnel, item managers, and equipment specialists.

To obtain information on how surplus parts with military technology and

flight safety implications are received and processed for sale, we

performed work at five DRMOs, located in San Antonio and Killeen (Fort

Hood), Texas, and in Germersheim, Kaiserslautern, and Seckenheim,

Germany. We selected these locations because, according to DOD records,

they sold large volumes of parts and equipment with military technology

implications. We also collected information from item managers,

equipment specialists, and policy officials at the Oklahoma City Air

Logistics Center, Tinker Air Force Base, Oklahoma; the San Antonio Air

Logistics Center, Kelly Air Force Base, Texas; the Army’s Aviation and

Missile Command, Huntsville, Alabama; the Naval Inventory Control Point,

Philadelphia, Pennsylvania; and the Defense Supply Centers, Columbus,

Ohio, and Richmond, Virginia.

To determine the adequacy of DOD’s policies and procedures to identify

and destroy parts with military technology, we discussed procedures,

problems, and challenges with officials from the Defense Logistics Agency

and the Defense Reutilization and Marketing Service; obtained data and

Defense Reutilization and Marketing Service analyses showing instances in

which parts got into the wrong hands through the disposal process and

had different demilitarization codes assigned to the same item in different

data systems; and judgmentally selected 48 items at the Texas DRMOs and

216 items at the Germany DRMOs involving the accuracy of assigned

demilitarization codes. We selected these items for review because they

were parts for weapons and weapon systems but at the time of selection

were coded in the DRMO’s records as having no military technology

content. We compared the assigned codes with the codes available in

DOD’s Demilitarization Manual and discussed the correct codes and

Page 22 GAO/NSIAD-98-182 Defense Inventory
Appendix I 

Scope and Methodology

military technology implications of the items with disposal office

personnel, item managers, and equipment specialists.

For historical perspective and illustrations of past problems, we reviewed

the results of prior DOD internal studies and DOD Inspector General reports.

We also used documentation and computer data obtained during our prior

work on disposal operations.

We used the same computer programs, reports, records, and statistics that

DOD, the military services, the Defense Logistics Agency, and the Defense

Reutilization and Marketing Service use to manage excess and surplus

inventories, make decisions, and determine the correct demilitarization

codes. We did not independently determine the reliability of all of these

sources. However, as stated above, we did assess the accuracy of the

demilitarization codes by comparing the codes assigned to the same item

in different data systems and by comparing assigned codes to the codes

available in the Demilitarization Manual.

To determine whether parts requiring demilitarization were being

adequately destroyed, we reviewed available guidance, interviewed

demilitarization personnel at the five DRMOs, and observed items being

destroyed.

To determine the status of DOD’s flight safety program, we identified DOD’s

program initiatives and documented the military services and the Defense

Logistics Agency’s progress in implementing the program initiatives. We

reviewed the policies, procedures, and related records of the military

services and the Defense Logistics Agency and held discussions and

performed work at the Office of the Deputy Under Secretary of Defense

(Logistics). We obtained sales history information from the Defense

Reutilization and Marketing Service to determine if some of the parts that

the military services have identified with flight safety implications were

sold through DOD’s disposal system without any paperwork showing that

the parts were safe to use. To further determine whether the parts

identified by the military services as having flight safety implications are

being sold through the disposal process, we obtained a listing of the flight

safety items identified by the Air Force and the Army. We compared these

items with the listing of parts being offered for sale by the Kaiserslautern

DRMO. We interviewed DRMO personnel to determine whether they were

aware that the items we identified had flight safety implications.

Page 23 GAO/NSIAD-98-182 Defense Inventory
Appendix I 

Scope and Methodology

We performed our review between November 1997 and May 1998 in

accordance with generally accepted government auditing standards.

Page 24 GAO/NSIAD-98-182 Defense Inventory
Appendix II 

Comments From the Department of Defense

Page 25 GAO/NSIAD-98-182 Defense Inventory
Appendix II 

Comments From the Department of Defense

Now on p. 17.

Now on p. 18.

Now on p. 18.

Page 26 GAO/NSIAD-98-182 Defense Inventory
Appendix III 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Charles Patton

James Murphy

Dallas Field Office Roger Tomlinson

Jackie Kriethe

Bonnie Carter

Frederick Lyles

(709297) Page 27 GAO/NSIAD-98-182 Defense Inventory
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