Disposal of Obsolete and Excess Inventories Would Save Millions of Dollars

LCD-79-211: Published: May 16, 1979. Publicly Released: May 16, 1979.

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A large buildup of excess inventory has resulted from a 1973 self-imposed Department of Defense (DOD) moratorium on disposal of excess assets with potential foreign military applications. The moratorium was declared to prevent premature disposal of assets until better criteria were established for determining the needs of foreign governments. When DOD phases out a weapon system from its active inventory, it can offer foreign governments an opportunity to make a one-time purchase of spare parts to support the weapon system's remaining useful life. DOD can then dispose of the remaining inventory for the weapon system and end its support responsibility. This life-of-type buy policy could maximize the potential proceeds from the sale of excess items and reduce supply administration costs.

The Army is the only service that has used the life-of-type buy policy to dispose routinely of unneeded inventory. The Air Force and the Navy are retaining sizable inventories of excess items, some of which are peculiar to weapons that have been phased out of their systems. The military services could make better use of their storage facilities and reduce inventory and administrative supply costs if they immediately purged unneeded items from their inventories, either through life-of-type buys or through normal disposal practices.

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