GAO discussed the Department of Defense's (DOD) process for disposing of surplus personal property, focusing on: (1) an overview of how the disposal process works and how it differs from private sector disposal systems; (2) the means used to dispose of personal property; (3) efforts to improve the efficiency and effectiveness of the current disposal operation; and (4) opportunities to improve aspects of the disposal function through competitive outsourcing.

GAO noted that: (1) DOD's disposal process is governed by numerous laws and regulations that require DOD's surplus property be made available to many organizations; (2) thus, the best items are taken through the transfer and donation process leaving the least marketable items available for sale; (3) this and other factors contribute to DOD's low rates of return; (4) although the private sector obtains higher rates of return than DOD for comparable items, it does not handle the quantities, types, and conditions of items that DOD does; (5) thus, the private sector is able to develop disposal expertise and tailor its disposal strategies so that it obtains higher rates of return; (6) DOD recognizes that it needs to improve its management of property disposal and has adopted or is planning to adopt a number of commercial practices that should help improve its operations; (7) DOD is also involving the private sector in certain aspects of process, particularly in the sales of surplus property, to improve its rate of return and become more business-like in its operations; and (8) in addition, aspects of DOD's disposal process that are deemed to be not inherently governmental functions may be outsourcing candidates--an aim GAO supported in recent legislative proposals.