Property Management:

DOD Can Increase Savings by Reusing Industrial Plant Equipment

NSIAD-93-8: Published: Nov 6, 1992. Publicly Released: Nov 6, 1992.

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GAO reviewed the Defense Industrial Plant Equipment Center's (DIPEC) management and reutilization of industrial plant equipment.

GAO found that: (1) the Department of Defense's (DOD) plant divestiture practices allowed the military to sell government-owned, contractor-operated plants to government contractors; (2) the government may have to purchase replacement equipment sold in divestitures at increased costs; (3) in 1989, the Air Force sold an industrial plant for $18.1 million to a government contractor; (4) DOD had outstanding requirements for 174 pieces of plant equipment valued at $26 million; (5) the contractor sold several pieces of plant equipment to third parties after it purchased the facility; (6) industrial plant equipment policy encouraged the reuse of previously idle or excess plant equipment to minimize new procurements; (7) DIPEC rebuilt and overhauled plant equipment to like-new condition and saved half of the proposed replacement costs; and (8) DIPEC redistributed over 1,000 pieces of equipment costing $60 million, which displaced the purchase of about $125 million of new equipment.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Issues in this area will be addressed under a new assignment starting in September 1994 for the Senate Governmental Affairs Committee. At that time, GAO will determine whether this recommendation is still valid.

    Recommendation: To avoid unnecessary purchases of new industrial plant equipment and increase DOD savings, the Secretary of Defense should direct the Assistant Secretary of Defense, Production and Logistics to modify applicable DOD practices, directives, instructions, and regulations to require that each service report to DIPEC any idle or excess plant equipment when a divestiture decision is made on a government-owned plant and during negotiations for the sale of a plant.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: Issues in this area will be addressed under a new assignment starting in September 1994 for the Senate Governmental Affairs Committee. At that time, GAO will determine whether the recommendation is still valid.

    Recommendation: To avoid unnecessary purchases of new industrial plant equipment and increase DOD savings, the Secretary of Defense should direct the Assistant Secretary of Defense, Production and Logistics to modify applicable DOD practices, directives, instructions, and regulations to require that each service inform DIPEC of any decision to negotiate the sale of a plant to ensure that DIPEC has the opportunity to assess the condition of plant equipment for reuse elsewhere in DOD, in the event it becomes excess during negotiations.

    Agency Affected: Department of Defense

 

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