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WHO'S MINDING THE STORES? At the Defense Department, it's no one, and the swollen inventory is an expensive mess

THE BALTIMORE SUN

The military's attic holds many surprises. Federal auditors were nosing around a Defense Department warehouse in Pennsylvania a few years ago when they discovered stack after stack of boxes containing jackets for hospital patients.

Some of the jackets had been in storage since 1945. The auditors began to count them, which took a while, with the total reaching 29,474. Since 1969, the garments had been used at the rate of about one a week. That gave the armed forces a 566-year supply.

Such an abundance, while notable, may not be all that unusual. For years, investigators say, the Pentagon has consistently over-bought and under-managed its supplies and spare parts.

Last week, President Clinton referred to this as he announced a wide-ranging performance audit of the federal government. One military warehouse, he noted, was found to hold 1.2 million bottles of nasal spray.

"Even with my allergies," the president joked, "I only need half that many."

The Defense Department says it is taking steps to remedy the problems. U.S. Comptroller General Charles A. Bowsher says it is still squandering billions.

The charges are separate from the continuing debate over whether the armed forces need more bombers, missiles, tanks and ships. Nor do they address questions pertaining to the cost of toilet seats and battlefield fax machines, or to military regulations that include 12 pages of specifications for the purchase of cream cookies.

At issue here is the Pentagon's management of its "secondary" inventory -- defined as replacement parts, supplies and consumable items. The amount spent on inventory grew from $44 billion in 1980 to $102 billion in 1990.

That was $40 billion more than it should have been, the General Accounting Office has concluded.

In December, Mr. Bowsher, who heads the GAO, the investigative arm of Congress, told Congress that the Pentagon "has wasted billions of dollars on excess supplies, burdened itself with the need to maintain them, and failed to acquire the tools or expertise to manage them effectively."

That same month, a staff report for the House Government Operations Committee called defense inventory management one of the 12 worst examples of government waste. Among the && others were the scandals at the Department of Housing and Urban Development and the bailout of the savings and loan industry.

"No one," the report said of military warehouses, "is minding the stores."

The Defense Department did not respond to several requests for comment.

Top department officials have previously reassured government auditors that they are trying to improve inventory management a number of ways. Among them: streamlined procedures, better computers and tighter controls.

"By almost every measure, the department initiatives during the last year have succeeded in reversing negative inventory management trends," Deputy Assistant Defense Secretary David J. Berteau wrote the GAO in 1991.

More than a year later, the GAO placed defense inventory in a high-risk category for "waste, fraud, abuse and mismanagement."

The Pentagon recently came under increased pressure from above to cut and save. Mr. Clinton has directed the Defense Department to reduce its budget by $60 billion over four years as his administration hunts for ways to trim the deficit.

Outside observers say cost-cutters have long ignored military inventory.

"With the astounding build-up in the Reagan and Bush years, they just had so much money they couldn't spend it fast enough," said Marcus Corbin, a defense analyst with the private Center for Defense Information. "Trying to save money by cutting down inventory sitting in a warehouse somewhere was a pretty low priority."

In the wake of the big spending, investigators found large problems. Many of them arose from bad record-keeping. Some apparently resulted from simple negligence.

The examples fill hundreds of pages of government reports and range from small to enormous: About $11,000 worth of sensitive howitzer sights were stored in stagnant rainwater. About $1.2 million in new engines became scrap after they were left outside to rust.

"The services have sometimes lost whole factories worth of equipment," the House Government Operations report stated. For instance, the Army Corps of Engineers "was unable to locate over $1.3 billion of equipment reported in the Corps' financial statements."

In 1991, the House report said, the Army had $2 billion in excess inventory and another $2 billion in items it was reselling -- for $50 million.

The Defense Department has proposed to fix this and similar situations in part by selling some of the goods it no longer needs.

Perhaps nowhere is this effort being pursued harder than at the National Defense Stockpile, which has begun to take on the look of a Cold War close-out sale.

The stockpile, established in 1946, is a $9 billion collection of 92 "critical" materials stored around the country. These are commodities that are not widely produced in the United States but that might be needed for fighting a three-year war.

As they market the bauxite, they also hope to find buyers for $63 million in mica, a substance used to make vacuum tubes for radios in the pre-transistor era.

The entire United States uses about 2 million pounds of mica a year. The Pentagon owns 10 times that.

There are 148,000 tons of vegetable tannin to unload. Tannin is used to cure leather.

About 2.7 million ounces of quinine and 68,000 pounds of morphine are not yet for sale. The quinine, for malaria, has been replaced by synthetics.

The morphine, for treating victims of a nuclear war, has been deemed expendable by the collapse of the Warsaw Pact.

Deputy Administrator Robert M. O'Brien remains confident that the stockpile will do its small part to offset government spending. Its sales list for this year includes sapphires, cadmium, manganese, nickel and copper.

"We're going to go out and sell those boogers," Mr. O'Brien said, "and return some money to Uncle."

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