Commercial Practices: Opportunities Exist to Enhance DOD's Sales of Surplus Aircraft Parts
NSIAD-94-189
Published: Sep 23, 1994. Publicly Released: Oct 25, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed how the Department of Defense (DOD) markets and sells its surplus and scrap aircraft parts to the public, focusing on: (1) how DOD sales practices compare with those of the private sector; and (2) DOD ability to maximize sales and minimize improper use of scrap parts after they are sold.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should explore ways of providing greater financial incentives to enhance proceeds from the sale of usable surplus parts. One alternative would be to return a portion of the proceeds, generated from the sale of such parts, to both the Defense Reutilization and Marketing Office (DRMO) and the National Sales Office to help them carry out the operation of disposal activities more effectively. The additional funds could be used to enhance the expertise of disposal staff and familiarize them with all aspects of the surplus aircraft parts market that commercial airlines have found to be successful. |
Closed – Implemented
DLA recently adopted and implemented progressive private-sector practices, such as reengineering business processes to take full advantage of private-sector capabilities and assessing commodities' market or revenue potential. By applying these practices to DRMS' operations, DLA has, over last year, increased revenues by 13 percent, improved sales by 42 percent, and increased surplus property reuse by 3 percent. DLA also indicated that its performance was directly related to adopting best practices, such as focusing on commodity-oriented sales and using the World Wide Web to advertise the availability of surplus property. As a result of GAO's and DLA's efforts in encouraging private-sector practices for DRMS' disposal function, DLA reported that its improved business practices saved DOD more than $300 million over the last 2 fiscal years.
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| Department of Defense | The Secretary of Defense should direct the Director of the Defense Logistics Agency (DLA), in conjunction with the military services, to conduct a program to determine how: (1) commercial-type aircraft parts and their civil applications can best be identified for DOD disposal staff; and (2) parts that conform to an existing Federal Aviation Administration (FAA) certification or have potential to be FAA certified can be identified for DOD disposal staff and relevant information forwarded with the part. DOD could take a phased approach by initially testing these practices at a few DRMO before determining their applicability to the entire DOD disposal system. |
Closed – Implemented
The actions described above meet the intent of this recommendation.
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| Defense Logistics Agency | The Director, DLA, should conduct a program to test commercial marketing practices that could enhance sales of surplus aircraft parts. Among the practices that DLA should include in its test are: (1) separating commercial-type parts into sales lots that do not mix unlike conditions and manufacturers; (2) actively marketing these parts to a wide spectrum of potential customers; and (3) providing the technical training necessary for staff so they will know the parts they are selling and the markets they are selling to. |
Closed – Implemented
The intent of this recommendation was satisfied based on the initiatives and related successes reported by DRMS, as summarized above in status on the first recommendation.
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| Defense Logistics Agency | With respect to DOD scrap parts, the Director, DLA, should: (1) secure from buyers a warranty that stipulates DOD parts sold as scrap will be used only as such and not resold as usable; and (2) assess the cost-effectiveness of mutilating scrap parts in-house, especially those most vulnerable to being reused in the civil aviation market. |
Closed – Implemented
DRMS has developed and implemented warranty language for scrap and usable aircraft components. Its policy now requires all useable property, whether received as scrap, or downgraded to scrap, to be destroyed prior to removal from government premises, or by the buyer as a condition of sale, prior to the transfer of title. This action meets the intent of the recommendation.
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Topics
Aircraft componentsEquipment inventoriesFederal property managementGovernment owned equipmentInventory control systemsMilitary inventoriesProperty disposalSalesSpare partsSurplus federal property