DOD EXCESS PROPERTY SYSTEMS: TUESDAY, JUNE 7, 2005 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING COMMITTEE ON GOVERNMENT REFORM, Washington, DC. The subcommittee met, pursuant to notice, at 2:15 p.m., in room 2154, Rayburn House Office Building, Hon. Christopher Shays (chairman of the subcommittee) presiding. Present: Representatives Shays, Duncan, Dent, and Waxman. Staff present: Lawrence Halloran, staff director and counsel; J. Vincent Chase, chief investigator; Robert A. Briggs, clerk; Sam Raymond, intern; Andrew Su, minority professional staff member; Earley Green, minority chief clerk; and Jean Gosa, minority assistant clerk. Mr. SHAYS. A quorum being present, the Subcommittee on National Security, Emerging Threats, and International Relations hearing entitled, "DOD Excess Property Systems: Throwing Away Millions" is called to order. Following the frugal maxim, "One man's trash is another man's treasure," the Department of Defense [DOD], sells or donates equipment and commodities determined to be in excess of military needs. But now we find the Pentagon is throwing out a great deal of treasure with the trash, disposing of items at steep discounts through one program while other offices within DOD buy the same things new and at full price. Problems in the DOD excess property system are chronic, they're dangerous, and extensive. Three years ago this subcommittee discovered DOD continued to sell top-grade chemical protective suits on the Internet while military units were waiting to acquire exactly the same gear at 10 times the on-line cost. In 2003, we revealed the indiscriminate sale of biological lab equipment by DOD without an assessment of the risks it might be used against us by terrorists. Today, the true scope and costs of systemic weaknesses in the surplus supply chain come into clearer view. At the subcommittee's request, the Government Accountability Office [GAO], extensively audited and tested DOD excess property systems. Their report released this afternoon finds substantial waste and inefficiencies intractably embedded in sloppy, uncoordinated management and inventory control processes. The numbers we will hear are staggering. Each year DOD disposes of property that costs billions to acquire, yet GAO found at least $400 million י ! TOM DAVIS, VIRGINIA, CHAIRMAN CHRISTOPHER SHAYS, CONNECTICUT DAN BURTON, INDIANA ILEANA ROS-LEHTINEN, FLORIDA JOHN M. MCHUGH, NEW YORK JOHN L. MICA, FLORIDA GIL GUTKNECHT, MINNESOTA KE. SOUDER, INDIANA VEN C. LATOURETTE, OHIO .DO AUSSELL PLATTS. PENNSYLVANIA CHRIS CANNON, UTAH JOHN J. DUNCAN, JA, TENNESSEE CANDICE MILLER, MICHIGAN MICHAEL R. TURNER, OHIO DARRELL ISSA, CALIFORNIA VIRGINIA BROWN-WAITE, FLORIDA JON C. PORTER, NEVADA KENNY MARCHANT, TEXAS LYNN A WESTMORELAND, GEORGIA PATRICK T. MCHENRY, NORTH CAROLINA CHARLES W. DENT, PENNSYLVANIA Following the frugal maxim “One man's trash is another man's treasure," the Department of Defense (DOD) sells or donates equipment and commodities determined to be in excess of military needs. But now we find the Pentagon is throwing out a great deal of treasure with the trash, disposing of items at steep discounts through one program while other offices buy the same things new and at full price. Problems in the DOD excess property system are chronic, dangerous and extensive. Three years ago, this Subcommittee discovered DOD continued to sell top-grade chemical protective suits on the Internet while military units were waiting to acquire exactly the same gear at ten times the on-line cost. In 2003, we revealed the indiscriminate sale of biological lab equipment by DOD without an assessment of the risks it might be used against us by terrorists. Today, the true scope, and costs, of systemic weaknesses in the surplus supply chain come into clearer view. At the Subcommittee's request, the Government Accountability Office COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman CHRISTOPHER SHAYS, Connecticut DAN BURTON, Indiana ILEANA ROS-LEHTINEN, Florida JOHN M. MCHUGH, New York GIL GUTKNECHT, Minnesota TODD RUSSELL PLATTS, Pennsylvania JOHN J. DUNCAN, JR., Tennessee MICHAEL R. TURNER, Ohio GINNY BROWN-WAITE, Florida KENNY MARCHANT, Texas LYNN A. WESTMORELAND, Georgia PATRICK T. MCHENRY, North Carolina CHARLES W. DENT, Pennsylvania VIRGINIA FOXX, North Carolina HENRY A. WAXMAN, California WM. LACY CLAY, Missouri DIANE E. WATSON, California STEPHEN F. LYNCH, Massachusetts C.A. DUTCH RUPPERSBERGER, Maryland ELEANOR HOLMES NORTON, District of Columbia BERNARD SANDERS, Vermont (Independent) MELISSA WOJCIAK, Staff Director DAVID MARIN, Deputy Staff Director/Communications Director PHIL BARNETT, Minority Chief of Staff/Chief Counsel SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING THREATS, AND INTERNATIONAL CONTENTS Page 1 Hearing held on June 7, 2005 Estevez, Alan F., Assistant Deputy Under Secretary of Defense (Supply Chain Integration), Department of Defense; Major General Daniel Mongeon, Director for Logistics Operations, Defense Logistics Agency; and Colonel Patrick E. O'Donnell, Commander, Defense Reutilization and Marketing Service, Department of Defense Estevez, Alan F. Mongeon, Major General Daniel Kutz, Gregory D., Managing Director, Forensic Audits and Special Investigations, U.S. Government Accountability Office, accompanied by Gayle L. Fischer, Assistant Director, Forensic Audits and Special Investigations; John J. Ryan, Assistant Director/Special Agent, Forensic Audits and Special Investigations; and Keith Rhodes, Chief Technologist, Applied Research and Methods Letters, statements, etc., submitted for the record by: 11 Estevez, Alan F., Assistant Deputy Under Secretary of Defense (Supply 68 14 84 95 3 Waxman, Hon. Henry A., a Representative in Congress from the State of California, prepared statement of 6 |