According to DOD’s guidance for disposing of its excess personal property, the objectives of the defense material disposition process are to dispose of the property in a manner that ensures maximum use to satisfy valid needs, permits authorized donations of surplus property, obtains optimum monetary return to the U.S. government for property sold, and, among other things, minimizes the need for abandoning or destroying property. In order to reutilize excess and surplus property before initiating repair or new procurement, DOD components are to screen available excess property for those assets which could satisfy their valid needs. DLA’s Disposition Services executes the disposal of DOD’s personal property. DLA Disposition Services receives, classifies, segregates, demilitarizes, accounts for, and disposes of personal property that has been identified as “excess” to the military services’ needs. Before a military service determines that property it holds is excess and turns it in to Disposition Services, it may reallocate the property within the service, return it to a DLA distribution depot, sell it to a foreign government, or sell it or trade it in for property of the same type through the exchange/sales program. The Federal Property and Administrative Services Act of 1949, as amended, established GSA to, among other things, manage surplus federal property. The act authorizes the administrator of GSA to delegate surplus property management to the heads of other federal agencies, and the administrator has delegated management of DOD’s surplus property to the Secretary of Defense. DOD’s process for disposing of its excess personal property has changed over time as new laws have introduced eligible recipients in addition to DOD components and other federal agencies. Each new law allowed DOD discretion over the manner in which it implemented its disposal process with respect to new recipient programs, to include giving preference to non-federal special programs over some other federal agencies in claiming excess personal property. As shown in figure 1, subsequent laws have provided the Secretary with authority to reutilize, transfer, donate, or sell DOD’s excess personal property to entities other than DOD components or federal agencies. For example, the Department of Defense Authorization Act of 1986 authorized the Secretary of Defense to make available excess nonlethal supplies from DOD stocks for humanitarian relief purposes to eligible foreign countries and international organizations. Similarly, the National Defense Authorization Act of Fiscal Year 1997 authorized the Secretary of Defense to transfer DOD’s excess personal property to federal and state agencies through what is now known as the 1033 program. Appendix II provides additional information on DOD’s 12 current special programs, including the foreign security assistance and 1033 programs, which enable certain federal, state, or local organizations; nonprofit organizations; and selected foreign countries to receive DOD excess personal property. DOD’s policy is to identify any property that has a significant military or commercial technology application and control that property to prevent improper use. The military services assign demilitarization codes when property enters the DOD supply system, and DLA validates the accuracy of these codes when the property is turned in after being identified as excess. These codes indicate whether the property is available for reuse without restriction or whether specific restrictions apply, such as removal of classified components, destruction of sensitive military technology, or trade security control. DOD has procedures for demilitarizing such property, some of which may be screened for redistribution. The DOD Inspector General recently reported on inaccuracies in the initial assignment of demilitarization codes, noting that improper coding of property can result in an increased risk that sensitive military technology could be accidentally released to unauthorized individuals or in DOD spending unnecessary funds by over-controlling items that do not require demilitarization. DOD concurred with the recommendations that the Assistant Secretary of Defense for Logistics & Materiel Readiness revise demilitarization guidance, establish metrics, and require the military services to revise their respective demilitarization guidance and establish controls. We have previously reported significant issues with DOD’s program for the reutilization of its excess personal property. In 2005, we made 13 recommendations to improve the overall economy and efficiency of DOD’s reutilization program, including recommendations for better coordination between the predecessor to DLA Disposition Services (the Defense Reutilization and Marketing Service), DLA, and the military services with regard to data reliability and strengthened management oversight, accountability, and physical inventory control. Since that review, DOD has implemented all 13 recommendations and made some improvements to its disposal process, including developing written guidance and formal training to assist Disposition Services personnel and the military services in the proper assignment of condition codes for excess property being turned in. Additionally, in June 2014, in a review of DLA’s inventory management, we found that, in fiscal year 2013, DLA disposed of $855 million in items that its economic analyses determined should have been kept because there was risk that DLA would need to buy the same items again in the future. To ensure that DLA does not dispose of inventory that it would be more economical to keep, we recommended that it reassess and, if appropriate, revise its inventory- reduction goals and schedule in a way that minimizes the risks and costs of having to buy items again. As a result of our recommendation, in July 2014 DLA conducted and documented a re-examination of its on-hand inventory reduction goal for fiscal year 2014 and revised its on-hand inventory goal for fiscal year 2014. DLA’s adjustment to its goals resulted in less inventory needing to be disposed of to meet the goals, which reduced the risk that DLA might have to buy the same inventory again in the future. There are several stages in the process for disposing of DOD’s excess property in the United States. When a DOD component has identified property that it no longer needs, and there is no valid requirement for the property elsewhere within that component, it turns the property over to DLA Disposition Services. The redistribution of such property to other DOD components, special programs, federal agencies, and states helps to conserve the budgetary resources of those recipients. As DLA Disposition Services receives excess personal property, it holds the property for processing (i.e., screening, verifying, demilitarizing, and downgrading) and enters information about the property into its inventory management system—the Distribution Standard System—and its website, from which DOD components are able to screen property that could satisfy their requirements. Once excess property has been turned in by a service or other DOD component and processed by DLA Disposition Services, DOD’s disposal process redistributes it in one of three ways— by reutilizing the property within DOD or, in certain other organizations, through special programs; transferring the property to other federal agencies; or donating the property to state and local agencies or other organizations—before ultimately selling or destroying it if it is not claimed by a qualified organization. Figure 2 illustrates this process. Once usable property is identified as excess, turned in by a service or other DOD component, and received by DLA Disposition Services, it is disposed of through DOD’s “Reutilization, Transfer, Donation, and/or Sale” process. DLA officials explained that, in accordance with DLA guidance and policy, the disposal process is a four-stage process that includes 42 days (known as the “screening cycle”) during which potential recipients may screen, request, and obtain excess property at the stages in which they are eligible to do so, after which any remaining property may be sold. The property may spend a specific number of days in each stage, as identified in figure 3. If the property is not disposed of during one stage of the cycle, it moves on to the next stage. We discuss the disposal process in more detail in the sections that follow. DLA Disposition Services reallocates excess defense property during the 42-day disposal screening cycle that begins when Disposition Services receives the property and records the property in its accountable records. Potential recipients can obtain excess or surplus property at different and, in some cases, multiple stages of the cycle. DLA Disposition Services restricts the number of days during which specific organizations are allowed to screen property they may wish to obtain, either onsite or electronically on its website. According to DLA Disposition Services, a 7- day accumulation period precedes the 42-day disposal screening cycle. DLA Disposition Services officials stated that DOD components and special programs, including law enforcement agencies participating in the 1033 program, were allowed to screen and request property during the accumulation period. Each stage of the disposal process—reutilization, transfer, donation, and sales—is described in more detail below. Reutilization (first stage–days 1-14). After a service or other DOD component has turned in excess personal property, DLA Disposition Services posts information about that property on its website, called RTD Web, where DOD components can screen and determine whether to request it. Although it is not required by law or regulation, DOD allows special programs to screen and request this property at the same time. Officials from DLA Disposition Services told us that property requests made through its website are processed nightly; however, while any special program may screen and request excess property from the first through the fourteenth day of the disposal screening cycle, there is no guarantee that the program will receive the property. DOD components and other organizations can specify their excess property needs on a “want list,” and DLA Disposition Services’ website will automatically send notices when such property becomes available. Those components and other organizations may then screen the property on DLA Disposition Services’ website and place a request for it through the system. Measured in terms of original acquisition value, DOD disposes of most of its excess personal property in this stage.