National Defense Stockpile:

Improved Financial Plan Needed to Enhance Decision-making

GAO-01-17: Published: Jan 26, 2001. Publicly Released: Feb 27, 2001.

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The National Defense Stockpile is composed of strategic and critical materials that can be used in times of national emergency. The stockpile was established to minimize dependence on foreign sources of these materials. Because of changes in mobilization planning and modernization of weapon systems, stockpiling requirements for many materials have been reduced dramatically during the last two decades. The Defense Logistic Agency's Defense National Stockpile Center manages the stockpile program and is responsible for the sale of materials that exceed stockpile requirements. Concerns have arisen over whether existing cash balances and projected collections from stockpile gross sales will meet all expected stockpile transaction fund outlays for fiscal years 2000-2010. GAO found that the National Defense Stockpile transaction fund's projected long-term outlays exceed projected collections from gross sales. The projections do not include all likely outlays, so the timing and size of a gap between available funds and outlays is unclear.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In an April 2001 letter to GAO, the Administrator of the Stockpile stated that the Defense National Stockpile Center had taken steps to identify potential outlays associated with the disposal of hazardous materials and environmental cleanup. In addition, the Department of Energy is studying issues concerning the thorium nitrate stockpile. Also, the Defense National Stockpile Center has hired an engineering firm to conduct site visits to all Defense National Stockpile Center storage sites. Any potential outlays identified by the studies will be incorporated in the Center's long-range financial plan. In addition, any potential liabilities that are identified will also be incorporated in the Center's long-range financial plan.

    Recommendation: In order to assist decision-making regarding the use of funds in the transaction fund, the Administrator, Defense National Stockpile Center, should prepare a revised long-range financial plan that reflects all probable and reasonably measurable stockpile outlays for the disposal of hazardous materials and environmental cleanup. This plan should include the currently known probable costs and include goals and milestones for finalizing studies to determine probable costs for all other stockpile sites.

    Agency Affected: Department of Defense: Defense Logistics Agency: Defense National Stockpile Center

 

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