Retain Secondary Items for Foreign Military Sales - A Sound Business Decision

The report examines current DoD retention policies for secondary items as they pertain to the supply support of foreign military sales (FMS) other than those programmed under Cooperative Logistics Supply Support Arrangements and grants-in-aid. The analyses indicates that retention of assets solely for FMS that otherwise would become DoD excess not only would improve supply support but would produce net revenues 6 to 13 times greater after all costs than under current disposal policies. The retention of less than five percent of the wholesale secondary item assets currently disposed of would not adversely affect the inventory reduction program or the base closure program. The report outlines the concept of an FMS Reserve; a methodology for computing the reserve limits based on each item's FMS demand, demand variance, and a prescribed probability of being sold within an established selling period; and the policy changes necessary to implement the concept. Retention policies, DoD excess, DoD potential reutilization stocks, foreign military sales, supply support, DBOF revenues, inventory reduction improved business practices, business decisions.