GAO

United States General Accounting Office

Report to the Chairman, Committee on 

Armed Services, House of 

Representatives

November 1999 DEFENSE 

INVENTORY

Inadequate 

Compliance With 

Controls for Excess 

Firearms and Other 

Sensitive Items

GAO/NSIAD-00-27

Page 1 GAO/NSIAD-00-27 Defense Inventory

Contents

Letter 3

Appendixes Appendix I: Scope and Methodology 16

Appendix II: Comments From the Department of Defense 18

Appendix III: GAO Contacts and Staff Acknowledgments 20

Tables Table 1: Reasons Item Disposition Was Incorrectly Recorded 10
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-282574 Letr

November 29, 1999

The Honorable Floyd D. Spence

Chairman, Committee on Armed Services

House of Representatives

Dear Mr. Chairman:

This is the fourth and final report in a series of reports responding to your 

request that we review the Department of Defense’s management 

procedures for controlling excess items. We previously reported on the 

Department’s needless destruction1

 of certain 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.2

This report responds to your request that we review the Department’s 

management controls for three types of sensitive excess items−firearms, 

items that are protected for national security reasons such as those with 

precision guidance technologies, and pharmaceuticals.3

 Specifically, we 

evaluated compliance with internal control procedures for (1) safeguarding 

excess firearms, items with national security implications, and 

pharmaceuticals and (2) recording the removal of such items from 

inventory records. Controlling these items is particularly important 

because they include military technologies and capabilities and are 

vulnerable to theft. 

1

 The Department refers to the destruction of military items, either by partial or total 

destruction that makes the item unfit for its originally intended purpose, as demilitarization.

2 Defense Inventory: Management of Surplus Usable Aircraft Parts Can Be Improved

(GAO/NSIAD-98-7, Oct. 2, 1997), Defense Inventory: Action Needed to Avoid Inappropriate 

Sales of Surplus Parts (GAO/NSIAD-98-182, Aug. 3, 1998), and Defense Inventory: Property 

Being Shipped to Disposal Is Not Properly Controlled (GAO/NSIAD-99-84, July 1, 1999).

3

 The Department refers to firearms as “small arms.” Small arms are defined as handguns; 

shoulder-fired weapons; light automatic weapons up to and including 50-caliber machine 

guns; recoilless rifles up to and including 106 millimeter; mortars up to and including 

81 millimeter; portable rocket and grenade launchers; and individually operated weapons 

that are portable and can be fired without special mounts or firing devices. Pharmaceuticals 

are drugs or other controlled substances requiring storage in a vault or safe. 
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Department internal control regulations require that defense components 

safeguard sensitive excess items and accurately record the location of 

these items in inventory records. To achieve this, Department regulations 

require separating work assignments, documenting item destruction 

events, and recording excess item serial numbers on shipping documents. 

The Department depends on its components to develop local procedures 

and instructions for implementing these regulations. The Department also 

depends on the component that has the excess firearms, items with 

national security implications, and pharmaceuticals to destroy and/or 

dispose of them and to record the transactions in inventory records. The 

Department uses other procedures for disposing of less sensitive excess 

items that involve sending the items to local disposal offices. To determine 

if the Department’s safeguarding and recording procedures were being 

followed, we judgmentally selected and reviewed 107 transactions valued 

at $3.9 million of excess firearms, items with national security implications, 

and pharmaceuticals disposed by defense components. The scope and 

methodology of our work are described in greater detail in appendix I.

Results in Brief 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 we 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. 

Although we were able to account for the items in 104 of 107 transactions 

reviewed, we were unable to trace the actual disposition of the items in 

3 transactions. These included a digital computer used for defensive 

countermeasures on the E-2 aircraft, a high power simulator used to test 

early warning systems on aircraft, and 18 computers used for guiding air or 

surface launched MK-46 torpedoes to a target. While the number of these 

items potentially lost or stolen is small relative to total defense inventory, it 

is still of concern because they could be misused if they get in the wrong 

hands. The Department 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. 

When firearms, items with national security implications, and 

pharmaceuticals become excess and are no longer needed, Department 

procedures require the component to destroy them and to remove the 

items from inventory records by coding the transactions as “inventory 
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decreases associated with destruction of the item.” However, defense 

components have been removing these items from inventory records by 

recording these transactions as “items being shipped to a disposal office.” 

None of the items, however, were actually shipped to a disposal office. 

Inventory, shipping, receipt, and disposal records showed that the items 

were instead destroyed or disposed of by the defense component that had 

the items. These transactions were incorrectly recorded because of 

mistakes and unsupported inventory adjustments that occurred because of 

inadequate management oversight and training and computer system 

programming errors. For example, for the 12-month period ending 

March 31, 1998, the disposition of almost $99 million of excess firearms, 

items with national security implications, and pharmaceuticals was 

incorrectly recorded in the Department’s inventory records. This incorrect 

information on the location of excess sensitive items was automatically 

provided to the Department’s In-transit Accountability System, causing the 

system’s reports to be erroneous and diminishing their value as a tool for 

tracking excess items. 

To improve controls over these sensitive excess items, we are 

recommending that the Secretary of Defense direct defense components to 

follow the Department’s procedures, provide increased management 

oversight and training on record keeping procedures, and correct computer 

programming errors.

Background The Department’s procedures for disposing of excess nonsensitive 

property and most sensitive property with military technologies involve 

sending the items to local disposal offices and recording the transactions as 

shipments to the disposal offices.4

 Unlike the items that are sent to disposal 

offices for disposition, the Department requires excess firearms, items with 

national security implications, and pharmaceuticals to be destroyed and 

disposed by the component that has the items and for recording the 

transactions as “inventory decreases associated with the destruction of the 

item.” The Department does not maintain information on the amounts of 

these excess sensitive items, but it estimates that annually it could be 

several hundred million dollars. 

4

 The Department also uses other sets of procedures for destroying and disposing of excess 

ammunition and explosives and chemical and nuclear weapons.
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Physical security over excess firearms, items with national security 

implications, and pharmaceuticals is more stringent than for other excess 

nonsensitive and sensitive items. Specifically, access to firearms is limited 

to authorized personnel and controlled by individual serial numbers at a 

central registry and at base and unit level registries. Items with national 

security implications and pharmaceuticals are stored separately from other 

material in a limited access area and secured under an approved locking 

system. Items with national security implications are also controlled by 

serial number at the unit level. Firearms, items with national security 

implications, and pharmaceuticals must be physically inventoried quarterly 

and missing items must be accounted for.

The Department’s problems with accountability over firearms, items with 

national security implications, and pharmaceuticals date back to the 1970s 

when many thefts of such items were discovered. The Department has 

developed procedures to control such items, but according to the 

Department’s and our audits, these procedures and their implementation 

are not always effective. For example, in March 1999, we reported that 

sensitive Navy items, including items with national security implications, 

were vulnerable to loss or undetected theft because the Navy did not follow 

control procedures.5

 Further, we, the Department’s Inspector General, and 

service auditors have reported on the Department’s ineffective asset 

control and accountability procedures leaving items vulnerable to loss or 

theft.6

Section 503 of the Antiterrorism and Effective Death Penalty Act of 1996 

required the Attorney General and the Secretary of Defense to conduct a 

joint study of the number and extent of thefts from military arsenals of 

firearms and other materials that are potentially useful to terrorists. The 

Department’s reported losses are not extensive relative to the total 

inventory of these items but are still a concern because of their potential 

danger should they get into the hands of terrorists or foreign countries. 

Specifically, the Department’s 1998 report under the act disclosed 

5

 Defense Inventory: Navy’s Procedures for Controlling In-transit Items Are Not Being 

Followed (GAO/NSIAD-99-61, Mar. 31, 1999).

6

 See our reports DOD Financial Management: More Reliable Information Key to Assuring 

Accountability and Managing Defense Operations More Efficiently

(GAO/T-AIMD/NSIAD-99-145, Apr. 14, 1999), Financial Management: Better Controls 

Essential to Improve the Reliability of DOD’s Depot Inventory Records (GAO/AIMD-99-132, 

June 28, 1999), and Inventory Management: Vulnerability of Sensitive Defense Material to 

Theft (GAO/NSIAD-97-175, Sept. 19, 1997).
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117 instances of losses of firearms and other materials of potential use to 

terrorists during the period October 1992 through November 1996.7

 Many of 

those losses occurred during training exercises, but 69 of the losses 

(59 percent) were attributed to theft and were never located. For example, 

nine thefts reported during fiscal year 1996 involved firearms, including a 

machine gun, which are still missing. 

Inadequate 

Compliance With 

Internal Controls 

Leaves Excess 

Sensitive Items

Vulnerable to Loss or 

Theft

Department regulations, which set up internal controls to safeguard excess 

firearms, items protected for national security reasons, and 

pharmaceuticals, were not always followed. Defense components at three 

of the seven sites we visited did not follow the Department’s internal 

control regulations. Specifically, (1) key duties in the areas of transport, 

destruction, and record keeping were done by the same person instead of 

being separated, (2) required certifications were missing from forms used 

to control the destruction of excess items protected for national security 

reasons, and (3) serial numbers were not always recorded on shipping 

documents. These conditions leave excess firearms, items protected for 

national security reasons, and pharmaceuticals vulnerable to loss or theft. 

For example, we were able to account for items in 104 of the 107 sample 

transactions reviewed. However, for three transactions, we could not trace 

the actual disposition of the items. The Department believes that the items 

involved had been destroyed, but it could not be certain since no 

documentation existed that would allow additional research.

Key Duties Not Separated Department regulations require key duties in the areas of transport, 

destruction, and accounting for excess items protected for national 

security reasons to be done by different people. However, at the Defense 

Distribution Depot in San Diego, California, the same person did these 

duties for the 24 Navy transactions we reviewed that included depth 

calculating and submarine countermeasure equipment. The employee 

transported the items several miles to a destruction site, destroyed the 

items, and upon returning to the depot, prepared the destruction 

documents from the list of items that were supposed to be on the truck. He 

then certified that the items had been destroyed. No independent check 

was made to determine if all items had been transported and destroyed. 

7

 This was a one-time reporting requirement and the most current information available.
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Depot officials explained that excess items had been handled in this 

manner for 20 years. 

Destruction Certifications 

Were Missing

A Department regulation requires that both the person that destroys 

military items and a government technical representative sign and date a 

certification that the items were destroyed. At the Naval Undersea Warfare 

Center in Keyport, Washington, we reviewed 17 transactions involving 

excess items protected for national security reasons disposed of by the 

Center during 1997 and 1998. Personnel at the Center’s excess, 

reutilization, and recycling site annotated on each shipping document the 

type of destruction action (e.g., shredding) performed on an item and the 

date of the action. However, neither the personnel at the site nor a 

government representative certified that the item was destroyed as 

required by Department regulations. For one transaction involving 

18 computers used for guiding air or surface launched MK-46 torpedoes to 

a target, there was no annotation or destruction certification. Center 

officials believe the computers in question were destroyed, but they could 

not be sure due to the control weaknesses. Center officials told us that they 

are developing additional instructions for their personnel to ensure that the 

Department’s regulation is followed. This action will improve the Center’s 

control of excess items protected for national security reasons. 

For 23 of 24 transactions we reviewed involving disposal of excess Navy 

items protected for national security reasons held by the Defense 

Distribution Depot in San Diego, California, the depot provided destruction 

certifications. No destruction certification existed for one item, a digital 

computer used for defensive countermeasures on the E-2 aircraft with 

technologies that could be used against the Department’s forces by a 

foreign military. Depot officials speculated that the computer had been 

destroyed and that the destruction certification had been misplaced.

At the Defense Distribution Depot in Norfolk, Virginia, we reviewed two 

transactions involving excess items to be protected for national security 

reasons and recorded as disposed of by the depot during 1998. The depot 

still had the items in its warehouse for one of the two transactions. 

However, there was no destruction certification for the other item, a high 

power simulator used to test early warning systems on Navy aircraft. Depot 

officials believe that the simulator had been destroyed and that the 

certification had been misplaced because there was an annotation on a 

logbook that the item was destroyed. However, the officials could not be 

certain this was the case. 
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Serial Numbers Not 

Recorded on Shipping 

Documents 

When excess items protected for national security reasons are shipped, 

Department regulations require the serial number of each item to be 

annotated on the shipping document. At the Naval Undersea Warfare 

Center in Keyport, excess items to be protected for national security 

reasons such as guidance systems on torpedoes and related shipping 

documents were accumulated together on pallets for transport to the 

Center’s excess, reutilization, and recycling site. Material movement 

documents8

 did not identify either the shipping documents or the serial 

numbers of the items on the pallets. Instead, the items were identified as a 

“pallet,” resulting in a loss of control over the individual items. Thus, the 

Center had no assurance either that the pallet included all items that were 

supposed to be sent or that all items arrived at the excess, reutilization, and 

recycling site. Center officials told us that earlier this year they recognized 

that their local procedures for implementing the Department’s regulation 

were deficient and that a moratorium was placed on disposing of items to 

be protected for national security reasons until improved procedures could 

be developed. Center officials told us additional instructions are being 

developed to ensure that the Department’s regulation is followed. 

Inadequate Oversight 

and Training Cause 

Continuing 

Inaccuracies in

Accountability System 

Reports

When firearms, items with national security implications, and 

pharmaceutical items become excess and are no longer needed, 

Department procedures require the defense component with the items to 

destroy9

 them and to remove the items from inventory records by coding 

the transactions as “inventory decreases associated with destruction of the 

items.” However, the components have been removing the items from 

inventory records by recording these transactions as “items being shipped 

to a disposal office.” None of the items, however, were actually shipped to a 

disposal office. Inventory, shipping, receipt, and disposal records showed 

that the items were instead destroyed or disposed of by the component that 

had the items. These items were incorrectly recorded because of mistakes 

and unsupported accounting adjustments that occurred because of 

inadequate management oversight and training and computer system 

programming errors. In both cases, the items could be deleted from the 

component’s inventory records. However, when the items were recorded as 

8

 The Naval Undersea Warfare Center used a locally developed material movement 

document known as Form 4430/4.

9

 These excess items may be destroyed on site, transported to another defense location for 

destruction, or turned over to a contractor for destruction.
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“items being shipped to a disposal office” information was automatically 

provided to the Department’s In-transit Accountability System, causing the 

system’s reports to be erroneous and diminishing its value as a tool for 

tracking excess items. 

We evaluated 107 transactions involving $3.9 million of items defense 

components had recorded in their inventory records as having been 

shipped to disposal offices. None of the items were actually sent to 

disposal offices. Inventory, shipping, receipt, and disposal records showed 

that the items instead were incinerated, shredded, or otherwise destroyed 

by defense components.10 Thus, the transactions should have been 

recorded as inventory decreases associated with destruction of the items. 

Table 1 shows the number of sample transactions in which the disposition 

of the items was incorrectly recorded in inventory records and the reasons.

Table 1: Reasons Item Disposition Was Incorrectly Recorded

The items were incorrectly recorded in inventory records because 

(1) personnel were not adequately trained on inventory transaction 

procedures and had mistakenly coded destroyed items as being sent to 

disposal offices, (2) personnel had made unsupported accounting 

adjustments to write off the items and make their books balance, and 

(3) the depot inventory system was programmed to automatically record all 

excess items as being sent to a disposal office, including sensitive items 

destroyed by the services. An underlying cause of these conditions was that 

management officials had not monitored the excess items transactions as 

close as they should have.

10 For three transactions, we could not trace the actual disposition of the items.

Reason for incorrect coding Number of occurrences

Coding mistakes 46

Unsupported accounting adjustments 12

Programming errors 49

Total 107
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Coding Mistakes Personnel at some locations were not adequately trained on inventory 

transaction procedures and had mistakenly coded excess firearms, items 

protected for national security reasons, and pharmaceuticals as sent to 

disposal offices. Specifically, records on 23 pharmaceutical transactions, 

including over one-quarter million dosages of morphine, showed that 

personnel at the Defense Supply Center, Philadelphia, Pennsylvania, had 

entered data in the inventory system that these drugs were sent to the local 

disposal office. Our review showed that none of these items were actually 

shipped to the disposal office. Inventory, shipping, receipt, and disposal 

records showed that the Defense Distribution Depot in Susquehana, 

Pennsylvania, where the drugs were stored, incinerated all drugs contained 

in the 23 shipments. Depot officials told us that the transactions should 

have been coded as inventory decreases due to destruction instead of 

shipments to the disposal office and should not have been recorded in the 

In-transit Accountability System. The officials told us they would correct 

the situation by providing instructions and training to personnel on 

transaction recording procedures.

Records on 17 transactions involving excess items protected for national 

security reasons showed that personnel at the Naval Undersea Warfare 

Center had entered data in the inventory system that showed the items 

were sent to the disposal office at Fort Lewis, Washington. Our review 

showed that none of these items were actually shipped to a disposal office. 

Inventory, shipping, receipt, and disposal records showed that the items 

were sent to and received by a private company to be destroyed in 

accordance with a contract between the company and the Center. During 

the 12-month period ending May 18, 1999, the Naval Undersea Warfare 

Center generated excess items protected for national security reasons 

totaling $10.3 million that were incorrectly coded as shipped to the Fort 

Lewis disposal office and automatically provided to the In-transit 

Accountability System. Center officials told us that the transactions should 

have been coded as inventory decreases due to destruction instead of 

shipments to the disposal office and should not have been recorded in the 

In-transit Accountability System. The officials told us they would correct 

the situation by providing instructions and training to personnel on 

transaction recording procedures.

Records on six transactions involving firearms showed that Marine Corps 

personnel at Camp Lejeune, North Carolina, had incorrectly coded the 

transactions into their inventory system as shipments to the local disposal 

office and their system automatically provided the incorrect information to 

the In-transit Accountability System. Our review showed that none of these 
B-282574

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items were actually shipped to the disposal office, but were sent to Marine 

Corps Logistics Bases in Albany, Georgia, and Barstow, California, for 

disposition. The transactions should have been coded as “item relocated to 

another storage site.”

Unsupported Accounting 

Adjustments

Personnel at some locations had made unsupported accounting 

adjustments to write off the items and make their books balance. 

Specifically, records on four firearms transactions showed that personnel 

at Fort Hood, Texas, had entered data in the inventory system that these 

firearms, including eight machine guns, were sent to the local disposal 

office, which is not authorized to accept firearms. Our review showed that 

none of these items were shipped to the disposal office. Army officials told 

us that these four transactions occurred when they discovered that the 

firearms were listed in their inventory records but were no longer on hand. 

No investigation was made to determine what had happened to the 

firearms. Personnel simply entered a “shipment to a disposal office” 

transaction code to write off the items and make their books balance. We 

also found eight transactions where Texas Army National Guard units had 

entered a “shipment to a disposal office” transaction code to write off 

firearms and make their books balance. After further review, we found that 

the firearms included in the four transactions at Fort Hood and the eight 

transactions by Texas Army National Guard units had been sent to and 

received by the Anniston and Rock Island Army Depots. The transactions 

should have been coded as “item relocated to another storage site.” 

Officials told us that the transactions occurred when they were 

transitioning to a new inventory system and did not get entered into the 

new system. 

Computer Programming At three locations we visited, computer programming caused excess 

sensitive items to be mistakenly recorded as sent to disposal offices. 

Specifically, records on 24 transactions involving items protected for 

national security reasons showed that the Defense Distribution Depot in 

San Diego had recorded the transactions in its inventory system as 

shipments to the disposal office at San Diego. Our review showed that none 

of these items were shipped to the disposal office. Depot officials told us 

that when the Navy item manager entered the transactions into their 

system to notify the depot that the items were excess, their system coded 

the transactions as shipments to a disposal office. The officials stated that, 

no matter how sensitive the excess item is, the depot system automatically 
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assigns a code to ship excess items to a disposal office even though their 

more sensitive items are destroyed. 

Records on nine pharmaceutical transactions and two transactions 

involving items protected for national security reasons at the Norfolk 

Distribution Depot showed that the depot had recorded in its inventory 

system that the items were sent to the local disposal office. Our review of 

inventory, shipping, receipt, and disposal records showed that none of 

these items were actually shipped to the disposal office but either were in 

inventory awaiting disposal or were destroyed. Depot officials said that 

when the item manager entered the transactions into their system to notify 

the depot that the items were excess, the depot system automatically 

coded the transactions as shipments to a disposal office. The officials said 

that even though disposal offices cannot accept items protected for 

national security reasons and controlled drugs, the depot system 

automatically assigns a code to ship all excess items to a disposal office 

regardless of the sensitivity of the item. The same situation existed for 

14 transactions involving items protected for national security reasons at 

the Defense Distribution Depot in Tobyhanna. 

Conclusions The Department’s controls over excess firearms, items protected for 

national security reasons, and pharmaceuticals are weakened because 

personnel do not follow the Department’s control procedures, leaving the 

items vulnerable to loss or theft. Key duties in the areas of transport, 

destruction, and record keeping were done by the same person instead of 

being separated, required certifications were missing from forms used to 

control the destruction of excess items protected for national security 

reasons, and serial numbers were not always recorded on shipping 

documents. Further, personnel are not adequately trained to record the 

disposition of these items and flawed computer programming logic caused 

records to show that sensitive items were sent to disposal offices when the 

items were not actually sent there. Also, management oversight of the 

transactions was lax leading to noncompliance with internal control 

procedures and inaccurate in-transit accountability reporting. Given the 

national security implications of the items and the control weaknesses 

noted, these matters warrant serious attention. 

Recommendations We recommend that the Secretary of Defense direct the Secretaries of the 

Air Force, Army, and Navy and the Director, Defense Logistics Agency, to 
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follow Department procedures for safeguarding excess firearms, items 

protected for national security reasons, and pharmaceuticals and require 

periodic reviews to ensure that the procedures are followed so that key 

duties in the areas of transport, destruction, and record keeping are 

separated, required destruction certifications are prepared, and serial 

numbers are recorded on shipping documents. We also recommend that 

the Secretary of Defense improve the reporting accuracy of the 

Department’s In-transit Accountability System by directing particular 

attention to training personnel and increased management oversight of 

inventory transaction procedures and to correcting computer system 

programming errors.

Agency Comments The Deputy Under Secretary of Defense (Logistics) provided written 

comments for the Department on a draft of this report. They are included in 

appendix II. The Department concurred with the report and its 

recommendations and recognized the importance of safeguarding firearms, 

items protected for national security reasons, and pharmaceuticals. The 

Deputy Under Secretary stated that the Department will emphasize in a 

memorandum to the service secretaries and the Director, Defense Logistics 

Agency, the need to follow proper procedures and conduct periodic 

reviews to ensure that key duties are separated, required destruction 

certifications are prepared, and serial numbers are recorded on shipping 

documents. Also, the Department has established a task force under the 

Joint Logistics Commander’s Materiel Management Group to revise the 

system used to control property in transit to disposal and enhance 

associated procedures and training. The estimated completion date for the 

development of recommendations by the task force is the second quarter of 

fiscal year 2000.

As arranged with your office, we plan no further distribution of this report 

until 10 days from its issue date unless you publicly announce the report’s 

contents earlier. At that time, we will send copies of this report to the 

appropriate congressional committees; the Honorable William S. Cohen, 

Secretary of Defense; the Honorable Louis Caldera, Secretary of the Army; 

the Honorable Richard Danzig, Secretary of the Navy; the Honorable F.W. 

Peters, Secretary of the Air Force; Lieutenant General Henry T. Glisson, 

Director, Defense Logistics Agency; and the Honorable Jacob Lew, 

Director, Office of Management and Budget. 
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Please contact me at (202) 512-8412 if you or your staff have any questions 

concerning this report. Key contributors to this report are listed in 

appendix III.

Sincerely yours,

David R. Warren, Director

Defense Management Issues
Page 16 GAO/NSIAD-00-27 Defense Inventory

Appendix I

Scope and Methodology ApApenednxidexiIs

To determine the Department of Defense’s compliance with internal 

control procedures for safeguarding excess firearms, items with national 

security implications, and pharmaceuticals that the military services are 

required to dispose of, we met with officials and performed work at the 

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

D.C.; Army, Navy, Marine Corps, and Air Force Headquarters, Washington, 

D.C.; the Defense Logistics Agency, Fort Belvoir, Virginia; and the Defense 

Reutilization and Marketing Service, Battle Creek, Michigan. We also 

reviewed policies, procedures, disposal and transaction histories, and 

related records obtained during visits to the following seven sites: the 

Defense Supply Center, Philadelphia, Pennsylvania; the Defense 

Distribution Depots in San Diego, California, Norfolk, Virginia, and 

Tobyhanna, Pennsylvania; Army III Corps, Fort Hood, Texas; the 2nd 

Marine Division, the 2nd Force Service Support Group, and Marine Corps 

Base, Camp Lejeune, North Carolina; and the Naval Undersea Warfare 

Center, Keyport, Washington. We also collected information from the Naval 

Inventory Control Point, Philadelphia, Pennsylvania; the Defense 

Distribution Depot, Susquehana, Pennsylvania; the Rock Island Arsenal, 

Rock Island, Illinois; and Army National Guard units in Austin, Fort Worth, 

and Terrell, Texas.

To determine the Department of Defense’s compliance with internal 

control procedures for recording the removal of firearms, items with 

national security implications, and pharmaceuticals, we used both data 

obtained during our prior work and new data. Specifically, we identified 

1,700 transactions of excess firearms, items protected for national security 

reasons, and pharmaceuticals valued at $98.9 million that had been 

reported as sent to disposal offices by the Department’s In-transit 

Accountability System report for the 12-month period ending March 31, 

1998. To have the most current and complete accountability data available, 

we obtained computerized records from the system showing transactions 

that occurred between January 1998 and February 1999. We identified 2,612 

transactions valued at $143 million of excess firearms, items protected for 

national security reasons, and pharmaceuticals that were reported as sent 

to disposal. Using both sets of data, we judgmentally selected for review 

107 transactions valued at $3.9 million. We selected these transactions 

based on the military sensitivity of the items in the shipments. We selected 

and reviewed 18 transactions of firearms, 57 transactions of excess items 

protected for national security reasons, and 32 transactions of 

pharmaceuticals. We used these 107 transactions to determine why the 

In-transit Accountability System included excess firearms, items protected 

for national security reasons, and pharmaceuticals as sent to disposal 
Appendix I

Scope and Methodology

Page 17 GAO/NSIAD-00-27 Defense Inventory

offices when these items are supposed to be disposed by the military 

services and to determine if the material was missing. We did not 

independently verify the overall accuracy of the Department’s database 

from which we obtained data but used it as a starting point for selecting 

shipments that we then tracked back to inventory, shipping, receipt, and 

disposal records and documents on individual transactions.

For each sample transaction, we analyzed inventory records, researched 

shipment records, and held discussions with service and Defense Logistics 

Agency personnel at the locations selected. Such information provided the 

basis for conclusions regarding the management controls over excess 

firearms, items protected for national security reasons, and 

pharmaceuticals that the military services are required to dispose.

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

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

the Defense Reutilization and Marketing Service use to control excess 

items that the military services are required to dispose. We did not 

independently determine the reliability of all these sources. 

For historical perspective and illustrations of past problems, we reviewed 

the results of prior defense studies and the Department’s Inspector General 

reports. We also used documentation and data obtained during prior work 

on disposal operations.

We performed our review from April through August 1999 in accordance 

with generally accepted government auditing standards. 
Page 18 GAO/NSIAD-00-27 Defense Inventory

Appendix II

Comments From the Department of Defense ApendxiI
Appendix II

Comments From the Department of Defense

Page 19 GAO/NSIAD-00-27 Defense Inventory

Now on p. 13.

Now on p.14.
Page 20 GAO/NSIAD-00-27 Defense Inventory

Appendix III

GAO Contacts and Staff Acknowledgments ApendxiI

GAO Contacts Ronald L. Berteotti, (214) 777-5702

Roger L. Tomlinson, (214) 777-5777

Acknowledgments In addition to those named above, Jackie L. Kriethe, Anthony B. Radford, 

David A. Schmitt, Patricia F. Blowe, and Robert C. Sommer made key 

contributions to this report.

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