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Property Management: DOD Can Increase Savings by Reusing Industrial Plant Equipment

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Report Type Reports and Testimonies
Report Date Nov. 6, 1992
Report No. NSIAD-93-8
Subject
Summary:

Because the military's industrial plant divestiture practice allows the sale of government-owned, contractor-run plants containing equipment that may be needed elsewhere in the Defense Department, the government may end up having to buy replacement equipment at higher cost. For example, in 1989 the Air Force sold an industrial plant, including land, buildings, and 513 pieces of industrial plant equipment, to the contractor--General Electric--for $18.1 million. At the time, other military locations needed 174 pieces of the plant equipment with an estimated replacement value of $26 million. Within a few months after purchasing the plant, General Electric sold several pieces of plant equipment to third parties. Selling the plant to General Electric was contrary to the Pentagon's industrial policy, which encourages the reuse of existing idle or excess plant equipment to minimize new procurements.

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