Inventory Management:

Vulnerability of Sensitive Defense Material to Theft

NSIAD-97-175: Published: Sep 19, 1997. Publicly Released: Oct 22, 1997.

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Pursuant to a congressional request, GAO reviewed the actions taken by the Department of Defense (DOD) to correct weaknesses cited in GAO's September 1994 report on the military services' most sensitive category I missiles and to determine if problems still remained. GAO also reviewed DOD's oversight of category I rockets and the vulnerability of category I missiles and rockets and category II grenades, mines, and explosives to theft from U.S. military arsenals by terrorists or extremists.

GAO noted that: (1) DOD has taken actions to improve the oversight of category I handheld missiles; (2) it conducted a worldwide inventory of handheld missiles; established a new baseline inventory count as of December 31, 1994; and implemented procedures to track changes to the baseline; (3) DOD also established procedures to check containers to ensure that each had a missile and verify serial numbers; (4) DOD reemphasized physical security procedures to be followed at its facilities; (5) despite DOD's progress toward better oversight of handheld missiles, some weaknesses remain; (6) adjustments continue to be made to the baseline as additional missiles are located and errors are discovered; (7) discrepancies still exist between records of the number of missiles and GAO's physical count; (8) the missiles may be vulnerable to insider theft because DOD is not always selecting a representative sample of containers to be opened during maintenance checks; (9) some facilities are not fully complying with DOD physical security requirements; (10) although GAO was able to match the physical count of AT4 and light antitank weapon (LAW) rockets at each site visited with the item manager's records, GAO also found oversight weaknesses with the category I rockets; (11) the Marine Corps reported three AT4 rockets missing from shipments returning from the Persian Gulf after Operation Desert Storm; (12) the Naval Criminal Investigative Service reached no conclusions on whether the rockets were missing, lost, or stolen, and the investigations were closed; (13) the services have different procedures and requirements for maintaining oversight of the rockets; (14) DOD's accounting and related systems, including its logistics systems, are not integrated; (15) in accordance with the Chief Financial Officer's (CFO) Act of 1990, each agency is to establish an integrated financial management system; (16) establishing an integrated, general ledger controller system, which ties together DOD's accounting systems with its logistics and other key management systems, is critical if DOD is to effectively ensure oversight and control over its sensitive material; (17) GAO did not find any documentation that terrorists or other extremists had stolen any category I handheld missiles or rockets or category II munitions or explosives from DOD arsenals; (18) some weapons continue to be vulnerable to insider theft as quantities of various category II items have been stolen by uniformed or DOD civilians; and (19) DOD and intelligence sources did not have any indication that the stolen items were intended for terrorists.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The services have developed, or are developing, procedures for revalidating the category I baseline. For example, the Navy ammunition management system validates all transactions, and a physical inventory is conducted semiannually of all category I items. The Army has redesigned its industrial operations command quarterly audit system into a monthly reconciliation system. In addition, the Standard Army Ammunition System-Modernization (SAAS-MOD) has completed fielding worldwide, which reports all daily transactions and serial number data to the Worldwide Ammunition Reporting System (WARS). This system increases visibility of the category I missiles. It also reconciles and revalidates category I missile information from customer data. It also allows for the elimination of manual reporting of category I missiles.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force and the Commandant of the Marine Corps to develop a cost-effective procedure for periodically revalidating the category I inventory baseline by, for example, matching item managers' records with site records annually at a representative sample of storage sites.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: Army regulations require that all missile/rocket containers eventually be opened during maintenance checks. The Army has issued Ammunition Information Notice 36-97, addressing AT-4 and LAW rockets, and Missile Information Notice 97-05, addressing Category I missiles. SB 742-1, Ammunition Surveillance Procedures, establishes the Army policy on random selection of samples for inspections, and is applicable for Category I munitions. The Navy policy for cost-effective safeguards is in OPNAVINST 5530.13B, Physical Security Instructions for Conventional Arms, Ammunition and Explosives. Implementing procedures within NAVSEA two-10-AC-ORD require the opening and inspection of the container for which original seals have been removed, if it appears to have been tampered with, or if the lot or serial number ID is no longer legible.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force and the Commandant of the Marine Corps to develop a cost-effective procedure for opening containers of missiles and rockets, for example, by selecting a representative sample of pallets, rather than individual missiles and rockets, to inspect.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: Serial numbers for Category I rockets will be available within the Army Standard Depot System (SDS) across the custodial records during the first quarter of fiscal year 1998, and also in the Worldwide Ammunition Reporting System. Guidance will be issued to all Navy reporting activities to manage Category I rockets by serial number. Guidance was provided to Navy reporting activities via message 09199Z in July 1997.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force and the Commandant of the Marine Corps to manage category I rockets by serial number so that the item managers will have total visibility over the numbers and locations of rockets.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD Directive 4140.1-R, Material Management Policy, will include the following: "Upgrades/renovation or modification of a Category I missile or rocket will require a suffix be added to the original serial number assigned to the item. In no circumstances will the original serial number of the Category I missile or rocket be replaced in its entirety with another serial number." The information was inadvertently left out of the regulation during its last update a few years ago.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force and the Commandant of the Marine Corps to establish procedures for ensuring that serial numbers are not changed during upgrades and modifications of category I missiles and rockets.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: The Department has specific policy guidance in DOD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives (AA&E). More general DOD guidance to installation commanders on access and circulation controls is provided in DOD regulation 5200.8-R, DOD Physical Security Program.

    Recommendation: The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force and the Commandant of the Marine Corps to continue to emphasize compliance with physical security requirements.

    Agency Affected: Department of Defense

 

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