DAOD 3013-1, Disposal of Surplus Materiel

Identification

Date of Issue: 2012-02-28

Application: This DAOD is a directive that applies to employees of the Department of National Defence (DND employees) and an order that applies to officers and non-commissioned members of the Canadian Forces (CF members).

Supersession: CFAO 36-53, Materiel Disposal

Approval Authority: Assistant Deputy Minister (Materiel) (ADM(Mat))

Enquiries:

Definitions

Centrally-managed materiel (matériel géré au niveau central)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Controlled goods (marchandises contrôlées)
Has the same meaning as in DAOD 3003-0, Controlled Goods.
Disposal client (client de l’aliénation)
The person in a designated position who is responsible for conducting a disposal project or the disposal of surplus materiel, including the carrying out all activities required to dispose of the surplus materiel.
Disposal manager (gestionnaire de l’aliénation)
The person in a designated position who is responsible for managing a disposal project or the disposal of surplus materiel, including the overseeing of all activities required to dispose of surplus materiel and the provision of assistance to the disposal client in planning the disposal of surplus materiel in accordance with policies, instructions and procedures.
Disposal project (projet d’aliénation)
The process of planning, managing and executing the disposal of surplus materiel.
Fair market value (juste valeur marchande)
The optimum retail value of surplus materiel as determined by prevailing market conditions.
Locally-managed materiel (matériel géré au niveau local)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Major support system (système de soutien principal)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Major weapon system (système d’arme principal)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Materiel managed by a level one advisor (matériel géré au niveau du conseiller de niveau un)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Military artefact (artéfact militaire)
Any military pattern equipment or other materiel preserved for display by a museum, base, unit or other organization or as a monument.
Minor nationally-managed materiel (matériel accessoire géré au niveau national)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.
Other government department (autre ministère)
A department as this term is defined in section 2 of the Financial Administration Act, other than DND.
Salvage rights (droit de récupération)
The rights to recover a DND wreck.
Surplus materiel (matériel excédentaire)
Has the same meaning as in DAOD 3013-0, Surplus Materiel.

Abbreviations

Table of Abbreviations

This DAOD contains the following abbreviations:

Abbreviation Complete Word or Phrase
ADM(Mat) Assistant Deputy Minister (Materiel)
CADC Crown Assets Distribution Centre
CADD Crown Assets Distribution Directorate
CFRN Canadian Forces Registration Number
CFSP Computers for Schools Program
CO commanding officer
CTAT Controlled Technology Access Transfer
DDSAL Director Disposal, Sales, Artifacts and Loans
DGAEPM Director General Aerospace Equipment Program Management
DGIIP Director General International and Industry Programs
DGLEPM Director General Land Equipment Program Management
DGMEPM Director General Maritime Equipment Program Management
DGMSSC Director General Materiel Systems and Supply Chain
DG Proc Svcs Director General Procurement Services
DIL Proc Director Integrated Logistics and Procurement
DMPAP Director Military Pay and Accounts Processing
DMPP Director Materiel Policy and Procedures
DRMIS Defence Resource Management Information System
DSCO Director Supply Chain Operations
DSVPM Director Support Vehicles Program Management
ECS environmental chief of staff
EPM equipment program management/manager
FAM Financial Administration Manual
HAZMAT hazardous material
ITAR International Traffic in Arms Regulations
L1 advisor level one advisor
LCMM life cycle materiel manager
MND Minister of National Defence
NLSE NATO Logistics Stock Exchange
NMSO National Master Standing Offer
OGD other government department
PWGSC Public Works and Government Services Canada
US United States of America
VCDS Vice Chief of the Defence Staff

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Overview

Context

Under section 2 of the National Defence Act, materiel consists of all public property, other than real property, immovables and money, provided for the CF or for any other purpose under that Act, and includes any vessel, vehicle, aircraft, animal, missile, arms, ammunition, clothing, stores, provisions or equipment.

The DND and the CF may dispose of surplus materiel using any of the following methods:

Special considerations are taken into account in respect of the disposal of any of following surplus materiel:

PWGSC Disposal Organizations

In this DAOD:

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Operating Principles

Disposal Project Management

The Disposal Project Management Table approved by ADM(Mat) sets out the management process for the disposal of centrally-managed and locally-managed materiel and identifies the persons who may act as:

The Disposal Project Management Table is available in the Disposal of Surplus Materiel Guidance.

General Tasks

See the Canadian Forces Supply Manual, Volume 3, Chapter 10, for step-by-step procedures for the disposal of surplus materiel. The following table describes the general tasks normally involved in the disposal of surplus materiel, other than for a major disposal project:

Who? Tasks

authority to declare surplus

  • Declare materiel surplus to DND and CF requirements; and
  • approve alternative applications as described in the Alternative Applications block.

materiel manager as the EPM or LCMM

 
  • Identify, to their supporting organization and the disposal client, materiel that is recommended to be declared surplus to DND and CF requirements;
  • retire, once approval is received, the surplus materiel from service;
  • marshal the surplus materiel in as few locations as possible;
  • ensure proper care and custody of the surplus materiel;
  • perform life cycle management activities until disposal action is complete;
  • provide technical advice on the surplus materiel;
  • identify accessories and parts that are required to be kept in service;
  • provide input in identifying the use of the surplus materiel for alternative applications;
  • provide input to instructions for the movement of the surplus materiel and the timeline, including the identification of the surplus materiel by CFRN and serial number as applicable and other necessary information such as inventory category and allocation codes;
  • provide input, as required, to the disposal client in the preparation of a disposal plan;
  • provide the demilitarization and disposal instructions for the surplus materiel, as required, to the disposal client;
  • provide a disposal environmental assessment to the disposal client, as required; and
  • determine the appropriate consignee codes for the distribution of proceeds.

disposal manager as the EPM or LCMM
  • Assist a disposal client in determining the best way to dispose of the surplus materiel in accordance with applicable policies, instructions and procedures, including consulting with the DDSAL for advice and review as required;
  • ensure the disposal plan and other required documentation are completed and approved;
  • ensure any requirements in respect of controlled goods are met;
  • review disposal documentation to ensure that prudence, probity and integrity are demonstrated in the disposal process and ensure that the following are taken into consideration:
    • any special handling or technological concerns, e.g. for HAZMAT;
    • alternative applications;
    • obtaining the highest net value for the surplus materiel while minimizing processing and overhead costs;
    • providing an open opportunity for Canadians to acquire the surplus materiel;
    • any environmental or personal safety-related issues, or specific regulations applicable to the surplus materiel; and
    • any heritage value of the surplus materiel;
  • request the proper approvals through CTAT to sell the surplus materiel to potential buyers, including authority for materiel of US origin, as applicable, under the ITAR; and
  • oversee all activities required to dispose of the surplus materiel and ensure proper documentation is obtained.

disposal client
  • Draft all disposal documentation and submit for approval in accordance with A-FN-100-002/AG-006;
  • consider, within the surplus declaration, if there are alternative applications as described in the Alternative Applications block;
  • determine, in conjunction with the applicable disposal manager, the appropriate disposal method;
  • determine any specific restrictions on the disposition of the surplus materiel (e.g. if the disposal is subject to demilitarization or transfer controls associated with controlled goods under Part 2 of the Defence Production Act, see DAOD 3003-1, Management, Security and Access Requirements Relating to Controlled Goods,for additional information);
  • obtain the necessary funding, if required, to dispose of the surplus materiel; and
  • consult with the DDSAL to obtain advice and guidance as required.

CADD

As required:

  • market the surplus materiel;
  • execute sale transactions; and
  • report sales.

DMPAP
  • Receive the payment and process the financial information in DRMIS for allocation of the net proceeds in accordance with FAM Chapter 1019-2, Accounting for the Disposal of Surplus Assets and the Return of Proceeds from the Disposal of Surplus Assets.

Process for a Major Disposal Project

The following table describes the process normally to be used for a major disposal project involving a major support system or major weapon system:

Step Description Who? Tasks

1

Identification of surplus materiel

ECS
  • Identify to the VCDS, for approval, a major support system or major weapon system that is surplus to DND and CF requirements;
  • recommend jointly with the applicable EPM any use of the surplus materiel for alternative applications; and
  • recommend jointly with the Directorate of History and Heritage any distribution of the surplus materiel as a military artifact.
materiel manager as the EPM or LCMM
  • Provide technical advice on materiel surplus to requirements;
  • identify spare parts and other materiel that are common to other fleets and required to be kept in service;
  • provide input in identifying the use of the surplus materiel for alternative applications; and
  • inform command chiefs of environment about the status of ongoing engineering contracts related to the materiel to be declared surplus.

disposal client
  • Conduct a cost-benefit analysis to determine the best way to dispose of the surplus materiel in the most expeditious manner possible;
  • determine any restrictions on the disposal of the surplus materiel;
  • consider the heritage value of the surplus materiel;
  • determine if the disposal of the surplus materiel requires attention to any HAZMAT, environmental or personal safety-related issues, or specific regulations applicable to the materiel;
  • determine if the disposal of the surplus materiel is subject to demilitarization or transfer controls associated with controlled goods under Part 2 of the Defence Production Act and as outlined in DAOD 3003-1; and
  • draft appropriate documentation to obtain the declaration of the surplus materiel.

2

Declaration of surplus materiel approval

materiel manager
  • Provide input to the disposal client to conduct a cost-benefit analysis to determine the best way to dispose of the surplus materiel in the most expeditious manner possible; and
  • assist the disposal client in the preparation and presentation of the proposed surplus materiel distribution for alternative applications and determination of the quantity to be declared surplus to the VCDS.

disposal client
  • Present the analysis and recommendations, on the materiel to be declared surplus, to the VCDS for approval.

VCDS
  • Review and approve or not approve the declaration of the surplus materiel and alternative applications.
3

Disposal plan and briefing note

disposal manager
  • Assist the disposal client in determining the best way to dispose of the surplus materiel in accordance with applicable policies, instructions and procedures.  If the DDSAL is not the disposal manager, consult with DDSAL for advice as required;
  • ensure the disposal plan and other required documentation are completed and approved;
  • ensure any requirements in respect of controlled goods are met; and
  • review disposal documentation to ensure that prudence, probity and integrity are demonstrated in the disposal process and that the following are taken into consideration:
    • any special handling or technological concerns, e.g. for HAZMAT;
    • alternative applications;
    • obtaining the highest net value for the surplus materiel while minimizing processing and overhead costs;
    • providing an open opportunity for Canadians to acquire the surplus materiel;
    • any environmentally sensitive or personal safety-related issues or specific regulations applicable to the surplus materiel; and
    • any heritage value of the surplus materiel.

disposal client
  • Draft, with support from the DDSAL, a detailed disposal plan with input from the applicable EPM;
  • coordinate with the DDSAL, as appropriate, the identification of any restrictions or considerations related to controlled goods and include in the disposal plan;
  • request authorization to use revenue to offset the cost of disposal; and
  • prepare a statement of requirements to establish a contract if necessary.

materiel manager
  • Provide input to instructions for the movement of the surplus materiel and the timeline, including identification by CFRN, serial number and other necessary information such as inventory category and allocation codes;
  • provide input to the disposal client in the preparation of a detailed disposal plan;
  • provide the demilitarization and disposal instructions for the surplus materiel to the disposal client; and
  • provide the disposal environmental assessment to the disposal client.

4

Disposal

disposal manager
  • Oversee and coordinate the execution of the approved disposal plan and all activities required to dispose of the surplus materiel.

disposal client
  • Execute the approved disposal plan and coordinate all activities required to dispose of the surplus materiel.

CADD

As required:

  • market the surplus materiel;
  • execute sale transactions; and
  • report sales to the DDSAL.

DMPAP
  • Receive the payment and process the financial information in DRMIS for allocation of the net proceeds.

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Methods of Disposal

General

To ensure that the best overall outcome for the Government of Canada is achieved for the disposal of surplus materiel, the DND and the CF shall fully comply with the requirements set out in the Directive on Disposal of Surplus Materiel of the Treasury Board.

Alternative Applications

For a major support system or major weapon system to be declared surplus materiel, only the following alternative applications may be considered:

Note – A major support system or major weapon system declared to be surplus materiel may only be retained in exceptional circumstances with the approval of the VCDS.

For other surplus materiel, the following alternative applications may be considered:

If considering alternative applications, the loss of potential revenue generated through the normal disposal process and the cost of retaining the materiel in the CF inventory shall be considered.

Sale at Fair Market Value

If cost effective, the sale at fair market value of surplus materiel is the preferred method of disposal as follows:

Sales of this nature may be subject to transfer or other restrictions under:

Sale to a Limited Market or Sale at Less than Fair Market Value

If in the public interest, surplus materiel may be sold to a limited market or at a less than fair market value to the recipients set out in the Donations block. In which case, the surplus materiel may be made available for sale on a competitive basis to these recipients before the bidding process is opened to the general public. This method of disposal normally involves additional administrative expense and results in selling prices lower than fair market value due to the restricted number of bidders.

The decision to pursue this disposal method is made on a case-by-case basis and the approval by or on behalf of the MND is required.

Sales of this nature are processed through a CADC.

Sales of this nature may be subject to transfer or other restrictions under:

Trade-in at Fair Market Value

A disposal client may choose to arrange for a trade-in of surplus materiel at a fair market value. A trade-in may only be conducted with a valid contract.

When trading-in surplus materiel for which procurement through a standing offer is not mandatory, the DND and the CF shall ensure that trade-ins are transacted as an integral part of the contract for replacement materiel.

Since trade-ins are part of the procurement process, all staffing shall be conducted through the appropriate procurement office. The credit obtained for the materiel subject to trade-in shall reflect fair market value.

Trade-ins of a major support system or major weapons system shall be identified in divestment and disposal plans.

Trade-ins may be subject to transfer or other restrictions under:

Donation

Surplus materiel with marketable value is not normally donated unless the donation is deemed to be in the:

Surplus materiel may also be donated as a cost-avoidance measure (i.e. the cost of disposal would exceed the revenue that would be generated through the sale of the surplus materiel). For this type of donation, recipients are limited to recognized charitable or non-profit organizations.

Donations may be subject to transfer or other restrictions under:

The staffing of a proposed donation to the applicable disposal plan authority and the DDSAL is the responsibility of the office recommending the donation. All donations shall be approved prior to the donation being made.

Note – Surplus food donations are addressed in A-85-269-001/FP-001, Food Services Manual.

Destruction

If practical and cost effective, the preferred method of destruction of surplus materiel is:

Transfer to OGDs

As a method of disposal, transfer to an OGD may be considered. See the DAOD 3017 series for additional information on the transfer of materiel to OGDs.

Gratuitous Transfer

A gratuitous transfer may be considered as a cost avoidance measure (i.e. the cost of disposal would exceed the revenue that would be generated through the sale of the surplus materiel) to an organization listed in the Directive on Disposal of Surplus Materiel.

Transfer to Industry Canada for the CFSP

The DND and the CF shall offer right of first refusal to the CFSP of Industry Canada for the following:

The DND and the CF are:

The CFSP carefully monitors and records the configuration of incoming computers. Surplus computers are not to be cannibalized or otherwise rendered unusable prior to transfer. The practice of removing hard drives, random access memory or other essential components from computers before transferring them should only be done as required for controlled goods or to meet security requirements.

Note – This block does not apply to mainframe computers.

NATO Logistics Stock Exchange

The NLSE (formerly known as Stock Holding and Asset Requirements Exchange and Common Item Materiel Management) permits the:

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Special Considerations

Commercial Pattern Vehicles

The following table describes the disposal process for commercial pattern vehicles:

Who? Tasks

DSVPM
  • Manages the disposal process for commercial pattern vehicles and provides sales information to the DDSAL

a PWGSC authorized private sector marketing representative
  • Conducts the sale process.

DDSAL
  • Oversees the sale process;
  • reconciles sales data;
  • monitors the inventory of vehicles not sold; and
  • develops quarterly sales reports for senior management.

Warlike Materiel for Sale to the Private Sector

For security reasons, the sale of warlike materiel to the private sector is considered on a case by case basis at the discretion of the ADM(Mat) in accordance with the Directive on Disposal of Surplus Materiel. Subject to any necessary transfer approvals or other conditions prescribed by the materiel disposal authority or the party that holds the design rights to such materiel, the sale of surplus warlike materiel in serviceable or repairable condition for its originally intended purpose is generally limited to:

Surplus Materiel of US Origin

Some materiel used by the CF is controlled technology of US origin. The US Department of State regulates this materiel in accordance with the ITAR which:

For a major disposal project, any request for Department of State approval to transfer materiel to a third party is staffed by the DDSAL. All other transfer requests for Department of State approval are staffed by the CTAT Office or PWGSC (Washington).

Note – Obtaining approval may take several months.

Surplus Books

The DND and the CF shall place all surplus books in Canada in the care or custody of the Librarian and Archivist of Canada.

Controlled Goods

The Defence Production Act and Controlled Goods Regulations restrict the sale to authorized third parties of controlled goods that are declared to be surplus materiel. If authorized third parties cannot be found, the affected surplus materiel is demilitarized.

In addition to foreign-origin materiel, certain other materiel may also require the prior approval of a foreign government for the transfer of the materiel to a third party.

The advice of the CTAT Office shall be solicited before a request for approval to transfer such materiel to a third party is staffed to the applicable foreign government.

Note – Obtaining approval may take several months.

Surplus Materiel on Deployed Operations

If practical, the CADD puts in place disposal arrangements for use by units and contingents on deployed operations.

If it is not practical, a contingent commander shall request authorization from the appropriate disposal plan authority, in accordance with A-FN-100-002/AG-006, to make arrangements for in-theatre disposal in accordance with the Disposal of Surplus Materiel Guidance, Annex I, Disposal Instructions for Deployed Operations. In these instances, the advice and assistance of the DDSAL shall be solicited.

Sales, transfers, donations and gratuitous transfers are transfers and may be subject to restrictions under the Controlled Goods Regulations. A contingent commander shall submit transfer requests to the DDSAL.

Foreign Military Request for Surplus Materiel

If supported by a materiel disposal authority, a request by a foreign military for the gratuitous provision of surplus CF materiel shall be:

Military Artifacts

The heritage value of surplus materiel shall be taken into account prior to initiating disposal action. Following the satisfaction of museum, base and unit requirements, remaining materiel suitable for display shall be made available for sale through a CADC to external organizations on a competitive basis. Bidding shall initially be restricted to the following organizations:

Military artifacts of a lethal nature provided to CF or federal museums may remain in operable or restorable condition. Military artifacts sold or donated to external organizations shall be partially demilitarized and rendered inoperable. In addition, the recipient shall sign an end-use certificate stating that:

Surplus Materiel with Salvage Rights

Public requests to obtain salvage rights to materiel found on Canadian soil are processed through a CADC. Requests from OGDs are processed through the DDSAL.

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Responsibilities

Responsibility Table

The following table identifies the responsibilities associated with this DAOD:

The … is or are responsible for …

Assistant Deputy Minister (Finance and Corporate Services)
  • developing accrual accounting policies and procedures for recording the disposal of surplus materiel and the return of proceeds from disposal.

L1 advisors and materiel managers
  • administering the necessary procedures, instructions and related programs unique to their respective organizations to ensure compliance by DND employees and CF members in respect of the disposal of surplus materiel; and
  • identifying materiel managed by an L1 advisor as surplus materiel.

DGIIP – CTAT Office
  • providing expert advice, support and assistance in respect of the disposal of surplus materiel to foreign recipients; and
  • processing any request for the transfer approval of US or other foreign-origin controlled goods if not a major disposal project.

DGMSSC
  • developing and performing oversight activities for the disposal of surplus materiel; and
  • evaluating the effectiveness of the disposal of surplus materiel.

DGAEPM, DGLEPM and DGMEPM materiel managers

  • performing life cycle management activities;
  • identifying minor nationally-managed materiel as surplus materiel;
  • providing technical disposal and demilitarizing instructions, and coordinating the disposal of vehicles and other materiel beyond economical repair, if not a major disposal project; and
  • providing costs for the disposal of major support systems, major weapon systems and all other materiel, including costs for the following:
    • HAZMAT inspection and removal;
    • demilitarization;
    • reducing to scrap;
    • preparation for monuments;
    • preservation;
    • repair and overhaul contract close-out costs; and
    • any other associated costs.

DG Proc Svcs

  • managing matters related to the NLSE.

base, wing, station, contingent and depot commanders, unit COs and materiel managers

  • identifying locally-managed materiel as surplus materiel; and
  • carrying out disposal activities on all surplus materiel held at their location.

DSCO

  • monitoring and expediting the disposal of dormant stock.

DDSAL
  • developing, administering and managing the policy, rules, standards, processes and procedures for the disposal of surplus materiel within the DND and the CF;
  • managing the disposal of surplus materiel;
  • processing requests for transfer approval of US or other foreign-origin controlled goods if related to a major disposal project;
  • coordinating the demilitarization and preparation of vehicles for monuments; and
  • managing major disposal projects.

DSVPM
  • managing the NMSO for the remarketing of surplus fleets, commercial off-the-shelf vehicles and other related materiel;
  • acting as the single point of contactin the DND and the CF for all vehicle auction information;
  • providing effective tools and applications to remarketing authorities to maximize returns;
  • assisting clients and remarketing authorities with advice, instructions and planning for future sales;
  • conducting studies of the sales process, market trends and best practices;
  • managing service provider performance;
  • providing supporting technical sales data for auction service providers;
  • planning for future remarketing initiatives, pre-sale preparation and marketing; and
  • intiating requests, through the DDSAL, for transfer approval of US or other foreign-origin controlled goods as required.

DMPP
  • developing and promulgating materiel management policy in respect of surplus materiel.

References

Source References

Related References