Audit of the Reuse of Defense Logistics Agency Disposition Services Excess Property (DODIG-2022-105)

What We Did:

The objective of this audit was to determine whether DoD Components used excess Defense Logistics Agency (DLA)-managed property to fill existing needs (known as reutilization) before initiating new procurements for the same items.

What We Found:

In 2020, the Military Services reused 166,421 items, valued at $18.1 million, from excess property inventory in serviceable, like-new condition at DLA Disposition Services. The Military Services could have avoided purchasing up to an additional 132,838 DLA managed items, valued at $5.2 million, by reusing serviceable, like-new property already available at DLA Disposition Services.

The Military Services did not reuse up to 132,838 serviceable, like-new excess property because DLA Disposition Services and the Military Services did not sufficiently:

• promote awareness of excess property available at DLA Disposition Services although DoD policy required the DLA to promote awareness and DoD Components to maximize reuse of excess property, or

• address ordering personnel concerns about condition code accuracy and serviceability of the excess property at DLA Disposition Services.

In addition, the Military Services did not reuse property available from DLA Disposition Services because the Military Services and DLA systems did not communicate with each other. The lack of interoperability between the systems required ordering personnel to check and place orders for DLA Disposition Services property manually, which discouraged the reuse of excess property.

As a result of not reusing available excess property from DLA Disposition Services, the Military Services wasted up to $5.2 million by purchasing items that they could have obtained at little to no cost. Reusing serviceable, like-new property from DLA Disposition Services rather than initiating new purchases allows the Military Services to allocate funds to other critical areas and demonstrates good stewardship of taxpayer money.

What We Recommend:

We recommend that the Director of the DLA, in coordination with DLA Disposition Services:

• Promote excess property reuse by establishing and offering periodic educational sessions with Military Department headquarters and Military Service activities.

• Develop a process to track condition code inaccuracies for technical and non-technical items. Periodically summarize inaccurate condition codes and report the inaccuracies to Military Department headquarters and Military Service activities.

• Consider that the requirements for the replacement system include a capability to assist ordering personnel in identifying opportunities to reuse available excess property from DLA Disposition Services.

We recommend that Headquarters officials in the Army, Navy, and Air Force:

• Reinforce and periodically communicate to ordering activities DoD and Service-specific policies to promote maximizing reuse and DLA Disposition Services reuse resources.

• Establish a process to ensure that activity ordering personnel comply with DoD and Service specific policy for completing reuse training, including ensuring that all staff complete the training, and newly-hired ordering personnel are trained on the reuse of excess property within a few months of starting their duties.

• Reinforce DoD and Service-specific policy and guidance on proper assignment of condition codes when turning property in to DLA Disposition Services.

• Collaborate with DLA Disposition Services to identify and implement training, educational sessions, or another solution to improve condition code accuracy for items the Military Services turn in to DLA Disposition Services.

• Establish an internal control mechanism such as monitoring or periodic assessments to ensure assignment of accurate condition codes on turn in documentation.

• Review the DLA Disposition Services report on inaccurate condition codes and take action to identify why the inaccurate condition codes occurred and to mitigate future inaccurate condition code assignments.