Our objectives were to determine (1) the status of DOD’s efforts to implement the new federal accounting standard for disclosure of liabilities, such as aircraft disposal, and (2) whether an estimate of the minimum disposal liability for aircraft, including the removal and disposal of hazardous materials, could be made. DOD Has Not Implemented SFFAS No. The Congress has also recognized that disposal costs will be incurred and has emphasized the importance of accumulating and considering this information. For example, the National Defense Authorization Act for Fiscal Year 1995 requires the Secretary of Defense to determine, as early in the acquisition process as feasible, the life-cycle costs for major defense acquisitions, including the materials to be used and methods of disposal. 5 for reporting of a liability is that an amount be reasonably estimable. Information is available to develop cost estimates for each of the major aircraft disposal processes described in the previous section—demilitarization, storage maintenance, and hazardous materials removal and disposal. 5 for reportable liabilities. DOD and the military services have information available to develop cost estimates on each of the major aircraft disposal processes.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed: (1) the status of the Department of Defense's (DOD) efforts to implement the new federal accounting standard for disclosure of liabilities, such as aircraft disposal; and (2) whether an estimate of the minimum disposal liability for aircraft, including the removal and disposal of hazardous materials, could be made.

What GAO Found

GAO noted that: (1) DOD has not implemented the federal accounting standard that requires recognizing and reporting liabilities such as those associated with aircraft disposal, nor has DOD provided guidance to the military services; (2) aircraft disposal is an ongoing process and the cost can be reasonably estimated; (3) accordingly, these activities meet the criteria for a reportable liability; (4) information on the three major disposal processes--demilitarization, storage and maintenance, and hazardous materials removal and disposal--is available to develop cost estimates; (5) Congress has recognized the importance of accumulating and considering disposal cost information; and (6) in the National Defense Authorization Act for Fiscal Year 1995, Congress required DOD to develop life-cycle environmental costs, including demilitarization and disposal costs, for major defense acquisition programs.