Order Code RS20549
Updated May 11, 2007
Defense Surplus Equipment Disposal:
Background Information
Valerie Bailey Grasso
Analyst in National Defense
Foreign Affairs, Defense, and Trade Division
Summary
The Department of Defense (DOD), through the Defense Logistics Agency (DLA),
has a policy for disposing of government equipment and supplies considered “surplus”
for a different mission, or deemed unnecessary to the agency’s designated mission. The
effort to dispose of surplus military equipment dates back to the end of World War II,
when the federal government decided to reduce a massive inventory of surplus military
equipment by making such equipment available to civilians.1 At a July 25, 2006,
hearing before the House Government Reform Subcommittee on National Security,
Emerging Threats, and International Relations, Major General Bennie Williams, the
Defense Logistics Agency (DLA) Director of Logistics Operations, identified four target
areas for managing surplus military equipment: (1) processing controls for batch lot
items and materials requiring demilitarization; (2) processing of items coded with Local
Stock Numbers received at the Defense Reutilization and Marketing Service (DRMS);
(3) improved controls regarding access to DRMS inventory assets; and (4) reducing the
concurrent procurement of items available at DRMS.2
In FY2006, DLA identified, disposed of, and re-utilized approximately $20 billion
dollars of military surplus/excess materiel annually — items ranging from desks and
chairs to full weapons systems.3 Property is considered “excess” when one particular
agency decides that it is no longer needed, while property is considered “surplus” when
1 Disposal of surplus real property, including land, buildings, commercial facilities, and
equipment situated thereon, is assigned to the General Services Administration’s Office of
Property Disposal. For further information, see CRS Report RS20630, Surplus Federal Property,
by Stephanie Smith.
2 Statement of Major General Bennie Williams before the House Government Reform
Committee, Subcommittee on National Security, Emerging Threats and International Relations,
July 25, 2006.
3 From the DRMS website, at [http://www.drms.dla.mil].

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it is no longer needed by the federal government. After property is transferred to DRMS,
property is declared surplus after about 21 days. Surplus property can be reused,
transferred, donated, or sold; potential recipients include law enforcement agencies,
school systems, medical institutions, civic and community organizations, libraries,
homeless assistance providers, state and local government agencies, and the public.
“Disposal” is the process of redistributing, transferring, donating, selling, demilitarizing,
destroying, or other “end of life cycle” activities, and is the final stage before leaving
DOD’s control.4 In some cases, the act of demilitarization – of destroying the item’s
military offensive and defensive capability – accomplishes the disposal. About half of
such items are designated for the foreign military sales program, and about half are made
available to other government agencies, eligible donees, or sold to the public.5
Under DLA, DRMS is charged with the disposal of surplus and excess defense
equipment and supplies. DRMS was the precursor to the Defense Property Disposal
Service. Headquartered in Battle Creek, Michigan, DRMS has a total work force of
1,328 civilians and 11 active duty military personnel. DRMS has offices in 37 states and
14 countries (including Iraq and Afghanistan), providing support at major U.S. military
installations around the world. In Fiscal Year 2005, DRMS processed 3.4 million line
items, with an original acquisition value of over $20 billion.6
In June 2001, DRMS awarded a seven-year contract to Surplus Acquisition Venture,
LLC, for the exclusive right to sell military surplus items. The company established
Government Liquidation, LLC as the purchaser and reseller for aircraft parts, vehicles,
clothing and textiles, medical items, furniture, commercial kitchen equipment, and other
items. Government Liquidation is a subsidiary of Liquidity Services, Inc. (LSI), and holds
the exclusive contract with DRMS for the sale of surplus DOD property. Effective
December 1, 2006, LSI will establish new “centralized controlled property centers” in the
U.S. to achieve greater over inventory to prevent restricted property from being offered
for sale to the public.7
In 2005, DLA conducted a public-private completion for warehousing functions at
68 DRMS sites in the United States, including Hawaii. As a result of cost-comparison,
DRMS determined that it was more cost effective to retain the government employees
4 See the Acquisition Community Connection at the Defense Acquisition University, at
[https://acc.dau.mil].
5 For further discussion of excess defense property, and the demilitarization and disposal of
surplus military equipment, see CRS Report RL31675, Arms Sales: Congressional Review
Process and CRS Report RS20428, Excess Defense Articles: Grants and Sales to Allies and
Friendly Countries, both by Richard F. Grimmett, and CRS Report RL31686, Demilitarization
of Significant Military Equipment, by Valerie Bailey Grasso. Another source for information is
the Demilitarization and Disposal section of the Acquisition Community Connection at the
Defense Acquisition University.
6 Statement of Bennie Williams, Director, Defense Logistics Agency, before the House
Government Reform Subcommittee on National Security, Emerging threats, and International
Relations, July 26, 2006.
7 Press Release. Liquidity Services, Inc., to Develop and Implement New Inventory Assurance
Procedures under Its Surplus Contract with DOD. Yahoo! Finance. September 13, 2006,
accessed online at [http://biz.yahoo.com/bw/060913/20060913005623.htm;?.v=1]

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rather than convert to contractor performance. The final decision, to retain the
government’s Most Efficient Organization (MEO), was announced on October 7, 2005.8
Controlling Legal Authority
Authority for the disposal of surplus defense property can be found in Public Law
(P.L.) 94-519, 10 U.S.C. 381, which amends the Federal Property and Administrative
Services Act of 1949 (40 U.S.C. 484), P.L. 107-117, and in DOD Manual 4160.21, at
[http://www.dla.mil/dlaps/dod/416021m/guide.asp].
Major Recipients
State and Local Governments. If property cannot be reused or transferred to
other federal agencies, it may be donated to state and local government programs. Each
state has designated a “State Agency for Surplus Property Program,” which is a local
governing authority to receive and distribute all federal surplus property. The program
authorizes “screeners” to handle the logistics, and the state agency may charge a fee for
handling the transaction. Eligible recipients include, but are not limited to organizations
that promote public health, safety, education, recreation, conservation, and other public
needs, including veterans groups and Native American organizations. Some groups that
qualify as a “service education activity” may have a slight priority in the screening
process.
Law Enforcement Support Office (LESO). LESO administers 10 U.S.C.
Section 2576a, which transfers excess DOD equipment to federal and state law
enforcement agencies through the 1033 Program (FY1997 National Defense
Authorization Act). DLA estimates the LESO budget for FY2008 and FY2009 to be $1.3
million for each year.9 In addition, the 1122 Program (FY1994 National Defense
Authorization Act) authorizes state and local governments to purchase law enforcement
equipment for counter-drug activities. Each state appoints a “Point of Contact (POC)”
for this program; the POC may purchase items from any of the four inventory control
points managed by DLA. To order items, contact your State Agency for Surplus Property
Program.
Fire-Fighting Support Program. Title 10 U.S.C. 2576b authorizes the U.S.
Department of Agriculture Forest Service to manage the DOD firefighting property
transfers. An interagency agreement between DOD and the Forest Service is under the
authority of the Economy Act, 31 U.S.C. 1535. The Federal Excess Personal Property
(FEPP) Program, administered though the Forest Service, provides equipment to state and
territorial forestry programs for wildland and rural firefighting.10
8 Defense Logistics Agency Announces DRMS A-76 Results. October 7, 2005. Retrieved on
September 21, 2006, at [http://www.dla.mil/public_info/read_news.asp?track=255]
9 Defense Logistics Agency, Operation and Maintenance, Defense-Wide, FY2008/FY2009
Budget Estimates.
10 [http://www.fs.fed.us/fire/partners/fepp/].

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Humanitarian Assistance Program. 10 U.S.C. 25 authorizes DOD to provide
excess property as coordinated through the Defense Security Cooperation Agency, Office
of Humanitarian and Refugee Affairs.
Public Sales. Property not reused by DOD, transferred, or donated can be sold to
the general public through public auctions and sealed bidding. Munitions, explosives and
strategic items are not sold.
Other Programs
There are a number of special programs which may assist organizations which fail
to qualify for DRMS property as a DOD, federal, or donation customer. Such programs
include (but are not limited to) museums, educational institutions, National Guard and
Senior Reserve Officer Training Corps units, and the Civil Air Patrol.11
For Additional Information
The DLA Customer Contact Center is open 24 hours a day, 7 days a week. The
website can be accessed at [https://www.drms.dla.mil/html/customer_service.html].
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11 For further information, see [http://www.drms.dla.mil/rtd03/specialprograms.htm].

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