oversight

Additional Precious Metals Can Be Recovered

Published by the Government Accountability Office on 1977-12-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                           DOCUMENT PZSUSE
04549 - [BZ634868]
Additional Precious Metals Can Be Recovered. LCD-77-228;
B-163084. December 28, 1977. 27 pp. + 6 appendices (10 pp.).
Report to Secretary, Department of Defense; Administrator,
General Services Administration; by Fred J. Shafer, Director,
Logistics and Communications Div.
Issue area: Facilities and Materiel management (700); materials:
    Conserving Scarce awm materials (1805).
Contact: Logistics and Communications Div.
Budget Function: National Defense: Department of Defense -
    Military (except procurement E contracts) (051).
Congressional Relevance; House Committee on Armed Services;
    Senate Committee on Arm4d Services.

          The Federal Government is a large user of items
containing gold and silver. in fiscal year (FT) 1976, Federal
agencies recovered S20. 2 millioa in gold and silver from
materials used in day-to-day operations. Additional gold and
silver estimated at $15.6 million could have been recovered.
Demonstration projects have shown that the Department of Defense
 (LOD) can identify, segregate, and sort gold and silver items in
electronic scrap and reclaim them economically. DOD is the
largest recoverer of gold. Silver is used more extensively than
gold, photographic and x-ray film contains silver, and film is
used by all agencies. Findings/Conclusions: The Department of
Defense recovers very little gold and silver from electronic
scrap even though it has demonstrated that recovery is
economically feasible. Instead, it continues to study the
feasibility of such recovery and is selling items with gold and
silver at scrap prices. Recovery from scrap in w! 1976 could
have yielded an estimated additional $11.6           Tventy-six
                                                     Twllion.
Federal agencies recovered only 36% of the recoverable silver
from photographic solutions. The other 64%, valued at an
estimated $4 million, was not recovered because some agencies do
not have recovery programs and others arc recovering less silver
than they should. Federal agencies have not diligently managed
recovery programs.   Recommendations: The Secretary of Defense
should: direct the Defense Logistics Agency to take the actions
necessary to segregate precious-metal-bearing electronic scrap,
accumulate it at selected locations, and extract the available
gold and silver. The Administrator of the General Services
Administration should require all agencies to immediately, and
annually thereafter, survey their cosponents to identify those
using fixer and its estimated silver content. The Administrator
should initially require these agencrea to report semiannually
to GSA on specified types of inforsmtion and should follow up
with these organizations to determine reasons why the agencies
are not recovering the maximum amount of silver and the actions
planned for doing so. (Author/SV)
     UNITED STATES
     GENERAL ACCOUNTING OFFICE
.4




     Additional Precious Metals
     Can Be Recovered
     Federal agencies in fiscal year 1976 recovered
     $20.2 mill.)n in gold and silver from materials
     used in day-to-day operations. But additional
     gold and silver estimated at $15.6 million
     could havetbeen recovered.
          --The Department of Defense recovers
            very little gold and silver from elec-
            tronic scrap even though it has demon-
            strated that recovery is economically
            feasible. Instead, it continues to study
            the feasibility of such recovery and is
            selling itermr with gold and silver at
            scrap prices. Recovery from scrap in tis-
           cal ·,'ear 1976 could have yielded an
           estimated additional $11.6 million.
          --Twenty-sixi Federal agencies recovered
            only 36 percent of the recoverable
            silver from photographic solutions. The
            other 6X percent, valued at an esti-
            mated $4 million, was not recovered
            because some agencies do not have
            recovery programs and others are recov'-
            ering less silver than they should
     General Services Administration needs to
     forcefully exercise its authoriT'/ under its
     Government-wide responsibility for precious
     metals programs to insure that agencies are
     diligently recovering the maximum gold and
     si Iver.

     LCD-77-228                                         DECEMBER 28, 1977
                                UNITED STATES GENERAL A&COUNTING OFFICE
                                        WASHINGTON, D.C. 20548


'_OGISTIC8 ANn COMMUNIC.TIONS
            DIVISION



        B-163084



       To the Secretary of Defense and the
       Administrator of General Services
             This report discusses the potential for Federal agencies
       to recover precious metals from material destined for dis-
       posal. Also discussed is a need for increased management
       attention by the Department of Defense, the General Services
       Admi: istration, and all Federal agencies having potential to
       recover precious metals.

            The report contains recommendations to the Secretary of
       Defense on page 13 and to the Administrator of General Serv-
       ices on page 24. As you kncw, section 236 of the Legislative
       Reorganization Act of 1970 requires the head of a Federal
       agency to submit a written statement on a.tions taken on our
       recommendations to the House Committee on Government Opera-
       tions and the Senate Committee on Governmental Affairs not
       later than 60 days after the date of the report and to the
       House and Senate Committees on Appropriations with the
       agency's first request for appropriations made more than
       60 days after the date of the report.
            We are sending copies of this report to the Acting
       Director, Office of Management and Budget; the Senate
       Committee on Governmental Affairs; the House Committee on
       Government Operations; and the Senate and House Committees
       on Appropriations and Armed Services.

                                                   Sincerely yours,




                                                   F. J. Shafer
                                                   Director
 GENERAL ACCOUNTING OFFICE               ADDITIONAL PRECIOUS METALS
 REPORT TO THE SECRETARY O"              CAN BE RECOVERED
 DEFENSE AND THE ADMINISTRATO'CR
 OF' GENERAL SERVICES


             DIGEST
           Recognizing the need to remove gold and
           silver from such used items as batteries,
           electronic components, photographic and
           X-ray films, Federal agencies over the
           years established recovery programs under
           the Government-wide Auspices of the Gen-
           eral services Administration. In 1976,
           S20 million in silver and $436,000 in gold
         . were recovered under these programs.

            Additional gold and silver in the Depart-
            ment of Defense's electronic scrap--
            estimated at $11.6 million--and silver in
            many Federal agencies' photographic
            solutions--estimated at $4 million--could
            have been recovered in fiscal year 1976
            but were not.

            GOLD AND SILVER RECOVERY FROM
            DEFENSE'S ELECTRONIC SCRAt
           Demonstration projects have shown that
           Defense can identify, segregate, and sort
           gold and silver items in electronic scrap
           and reclaim them economically.

           In 1975, items containing gold and silver
           were sort. from scrap at Hill Air Force
           Base, Utah, at a cost of $27,000.  Market
           value of this sorted scrap was $154,000--
           over six times its normal sales value of
           $25,000. (See p. 10.)
           Another project in early 1976 showed
           recovery of gold and silver to be profit-
           able.   Electronic scrap from Hill Air
           Force Base was smelted and assayed, and
           $46,000 in gold and silver was recovered.
           The value of the recovered metals was four
           times the recovery costs of $11,600. (See
           p. 10.)



  .St.
Talr      Upon removal, the repo.,
COwr     should b noted hereon.      i                  LCD-77-228
 These projects demonstrate the feasibility
 of recovering gold and si'ver from
                                    elec-
 tronic scrap.  Defense, instead of recover-
 ing the metals, has continued testing
                                        such
 recovery.  In the meantime, much electronic
 scrap is being sold -t n3minal prices.

 GAO recommends that the Spcretary
 direct the Defense Logistics Agencyof Defense
                                      to segre-
 gate and recover gold and silver from
                                        elec-
 tronic scrap.

The Defense Dcwartment stated that
Logistics Agency's responsibility   the
                                   to es-
tablish standards for recovery ar.
                                    to meas-
ure the efficiency and cost effectiveness
of recovery efforts is alreadN well
                                     de-
fined.   It said further that changes needed
in the program would be determined
consideration of this report and of after
                                     a re-
port being prepared by the Defense
                                    Audit
Service.

The issue is not whether resoonsibilitv
been defined, it is the continuing       has
                                    inaction
of Defense in not insisting on Departmnent-
wide implementation of a demonstrated
                                       profit-
able recovery program.  (See p. 13.)
SILVER RECOVERY FROM FIXER SOLUTION

 In fiscal year 1976, Federal agencies
recovered only 36 percent of the recover-
able silver from fixer solution--a
                                    poor
record.   General Services has not force-
fully exercised its role as monitor
                                     of
Government-wide precious metals recoverythe
program. Nor has General Services
itself that Federal agencies are in assured
                                     fact
recovering the metals and that recovery
maximum.   It receives data on silver re- is
covered but not on how much could
                                   have
been recovered.   If General Services had
pursued its role vigorously, it would
                                        have
been aware that:




                     ii
  -- Some agencies that should have had re-
     covery programs, did not.  (See p. 17.)
  -- There is a lack of cooperation within
     and among agencies to increase recovery.
     (See pp. 17 and 18.)
 -- Man-- components of agencies with recovery
    projrams are recovering less than they
    should,   (See p. 18.)
 -- Agencies using contractor services in the
    Washington, D.C., area are not recovering
    all silver in fixer.  (See p. 18.)
 Federal agencies have not diligently managed
 their recovery programs.   't-at are aware of
 how much silver they recover bit are unaware
 of the efficiency of their programs. (See
 p. 19.) Had each agency management estab-
 lished the means to evaluate its programs,
 it could have identified problems related
 the recovery of silver and taken correctiveto
 action.

 The Administrator of General Services
 should
 -- require each agency to survey its compo-
    nents, set goals, and monitor recovery
    in relation to goals;
 -- require more stringent reporting by agen-
    cies that would enable it to evaluate
    individual agency silver recovery pro-
    grams, thus causing agency management to
    focus more attention on its silver re-
    covery programs; and
-- follow up with agencies to determine why
   the agencies are not recovering the maxi-
   mum amount of silver and the actions
   these agencies plan to take to do so,
   (See p. 24.)
Although the Administrator did not disrute
GAO's findings and conclusions and agreed
that the recommendations could be adopted,
he set forth no positive plans to implement
the recommendations.  (See p. 27.)

Z~~P~~hS~as~~        iii
                      Co n t e n t s

                                                    Page
DIGEST                                                i
CHAPTER

  1       INTRODUCTION                               1
              Use and recovery of gold and silver    1
              Program responsibility                 3
              Scope of review                        4
  2       DOD'S ELECTRONIC SCRAP CONTAINS GOLD
            AND SILVER                               5
              Identifying, segregating,.and
                sorting is economical                g
              Reclaiming precious metals is
                economically feasible               10
              Total reclaimable metals              11
              Recent DOD actions                    11
              Conclusions                           12
              Recommendation.                       13
              Agency comments and our evaluation    13
  3       IMPROVE SILVER RECOVERY FROM FIXER
            SOLUTION                                14
              Maximum recoverable silver            14
              Need for GSA to better manage
                Government-wide program             17
              Need for agencies to better manage
                recovery from fixer                 19
              Data can be obtained for evaluation
                purposes                            19
              Evaluation can help identify
                program problems                    20
              Agency actions to improve silver
                recovery                            23
              Conclusions                           23
              Recommendations                       24
              Agency comments and our evaluation    24
                                                       Page
 APPENDIX

       I     Letter dated October 11, 1977, from the
               Principal Deputy Assistant Secretary
               of Defense (MRA&L), Department of
               Defense                                  28
      II     Letter dated August 22, 1977, from the
               Administrator of General Services
                                                       30
     III    Locations visited to observe operation
              of recovery programs
                                                       33
      IV    GAO computation of market value of
              metals recovered during Ogden Region
              project and estimated costs of
              recovery                                 35
      V     GAO computation of estimated net addi-
              tional revenue had precious metals
              been reclaimed from electronic scrap
              sold by the Disposal Service in fis-
              cal year 1976                            36
     VI     Principal officials responsible for
              administering activities discussed in
              this report
                                                       37

                         ABBREVIATIONS
DOD         Department of Defense
DLA         Defense Logistics Agency
GAO         General Accounting Office
GSA         General Services Administration
VA          Veterans Administration
                          CHAPTER 1

                        INTRODUCTION

     The Federal Government is a large user of items
containing gold and silve:.  These prerious motals are
used in batteries, electronic components, uniform buttons
and insignias, and photographic and X-ray film.  Recognizing
the need to recover gold and silver, the Federal Government
has become more involved in recovering them over the years.

     -- In 1954, the Navy began recovering silver from
        torpedo batteries.

     -- In the early 1960s, the Veterans Administration
        (VA) began recovery of silver from X-ray film.

     --In 1968, the Department of Defense (DOD) began
       a worldwide silver recovery program.  And in
       1969, DOD started a gold recovery program.

     -- Finally .n 1969, all Federal precious metals
        recovery programs were placed under the General
        Services Administration (GSA).

     How well these programs are working and what benefits
are resulting from them are the subject of this report.

USE AND RECOVERY OF GOLD AND SILVER

     Gold is used as a thin coating over some other base
metal such as copper because it does not corrode.  Much gold
is used in electronic components; also some is used in uni-
form buttons and insignias, eyeglass frames, and other items
used by the military services.

     DOD is the largest recoverer of gold.  In fisca' year
1976, it recovered 3,219 troy ounces valued at $436,000.
Most of DOD's gold is recovered at a facility in Pueblo,
Colorado, by using various chemical processes to strip gold
off base metal.  Gold can also be recovered by smelting and
then separating the base metals. DOD contracts with indus-
try for the latter process.

     Silver is used more extensively than gold.  All film--
photographic and X-ray--contains silver, and film is used
by all agencies.  Much silver is used by the Navy in bat-
teries for submarines, torpedos, sonobuoys, etc.  Silver is




                              1
also used in dental amalgams, electronic components,
alloys, and solder.                                  brazing

      Silver recovery methods depend on the source.
cially available equipment is used to recover          Commer-
                                               silver
film that goes into solution during the development from
Silver remaining on the film is recovered by           process.
                                              incineration
and smelting the ash. Most other silver undergoes
                                                      smelting.
      In fiscal year 1976, the Federal Government recovered
4.4 million ounces of silver valued at $19.8
                                              million. DOD--
the largest consumer of photographic materials--recovered
$17.1 million of silver mainly from these materials
                                                       and from
batteries used by the military services. VA with
health facilities and associated X-ray units        its  many
largest recoverer with $2.1 million of silver.was  the  second
                                                  Most other
agencies reclaimed silver but in lesser amounts,
all of it from photographic materials.             virtually

     Estimated silver recovered in fiscal year 1976
on agency data and its market value follows.        based

                                        Troy        Market
                Agency                 ounces        value
                                          (thousands)
     DOD                              3,788.3
     VA                                            $17,066.7
                                        487.6        2,140.8
     GSA                                 47.5
     Energy Research and                               208.6
       Development Administra-
        tion                             33.6
    National Aeronautics and                            147.3
       Space Administration              11.3           49.8
    Interior                             10.2
    Health, Education, and                              44.9
       Welfare                           10.0
    Agriculture                                         44.1
                                          8.2           36.0
    Smithsonian Institution               2.4
    Government Printing Office                          10.5
                                          2.2            9.6
    Library of Congress                   2.1
    Central Intelligence Agency                          9.1
                                          1.9            8.1
    Commerce                              1.8
    State                                                8.0
                                          0.4            1.9
    Justice                               0.2
    Environmental Protection                             1.0
      Agency                             0.2             0.8
        Total                        4,407.9      $19787.2


                              2
     Incentive to recover gold and silver is limited. DOD
and the agencies which participate in its precious metals
recovery program may use the precious metals as Government-
furnished material on their contracts for manufactured goods
and thereby reduce procurement costs. Other agencies gen-
erally sell reclaimed silver through GSA on the open market
to the highest bidder. Some receive the sales revenue. For
example, VA deposits this revenue in its revolving supply
fund to benefit all its hospitals and clinics. Most others
do not receive the revenue and it is deposited in the
Treasury. (See p. 26 for further discussion of this
subject.)
PROGRAM RESPONSIBILITY
     GSA is responsible for initiating Government-wide
precious metals recovery programs.  In the Federal Property
Management Regulations, GSA directs each agency to evaluate
recovery potential, implement recovery procedures, monitor
recovery programs, and submit a consolidated annual report
to GSA. Further, GSA directs each agency to establish and
maintain a program for silver recovery from used fixer solu-
tion and scrop film.

     Management of the recovery program varies among Federal
agencies. Within DOD, program management is the responsi-
bility of the Defense Logistics Agency (DLA).  The Defense
Property Disposal Service within DLA operates the program
through its five regional offices--three in the continental
United States and two overseas. The regional offices have
a global network of 193 property disposal offices and re-
covery facilities at Colts Neck, New Jersey, and Pueblo,
Colorado.

     The VA silver recovery program management, policy, and
direction is under the Department of Medicine and Surgery.
Operational responsibility for recovery at the 170 VA
hospitals/clinics is assigned to three VA supply depots in
the continental United States. Each supply depot evaluates
recovery potential, implements recovery procedures, and
monitors program results at hospitals in its service area.
     The remaining Federal agencies do not have extensive
management organizations for their recovery programs. Gen-
erally, each has designated a silver monitor responsible for
assuring recovery of si.ver from photographic materials and
preparing consolidated reports to GSA. Program management
and daily operations have been delegated to the many



                              3
components having recovery potential. These components
determine the economic feasibility of recovering silver
and the method of recovery and report their results to the
agency silver monitor.
SCOPE OF REVIEW

     We evaluated the Federal agencies' efforts in maximiz-
ing recovery of precious metals. This evaluation required
reviewing agency policies, procedures, and practices, as well
as interviewing agency officials and personnel operating
these programs.

     Our evaluation was limited to recovery of precious
metals from twc major sources--electronic scrap and photo-
graphic material--because these sources offered potential
to immediately increase recovery yields and could serve as
examples of need for management improvement.
     Because mos- civil agencies have decentralized program
management, ie used a questionnaire to obtain data from 251
components of these agencies to help us identify the maxi-
mum recoverable silver.  In addition, we visited 44 DOD in-
stallations and Federal agencies to observe and inquire into
the daily operations of their recovery programs.  (See app.
III.)
     Most of our fieldwork was performed between May 1976
and Jar uary 1977.




                             4
                         CHAPTER 2

                   DOD'S ELECTRONIC SCRAP

                  CONTAINS GOLD AND SILVER

     DOD has electronic scrap containing gold and silver
located in the United States and overseas.  Some of the
scrap we observed is shown in the photographs below and
on the next page.




        DAVIS - MONTHAN AIR FORCE BASE TUCSON, ARIZONA
NAVAL AMMUNITION DEPOT EARLE, COLTS NECK, NEW JERSEY




         HILL AIR FORCE BASE OGDEN, UTAH
     Gold and silver in this electronic scrap is in the form
of plated pins, circuit boards, connectors, and contact points,
as shown in the photographs below and on the next page.




                  ELECTROI:IC CONNECTORS
      CIRCU!T BOARD




CONTACT POINTS AND PINS
      While DOD recovers large amounts of silver from
batteries and other sources and some gold from uniform
buttons and insignias and eyeglass frames, it has
to recovev precious metals from its largest source hesitated
                                                    of gold--
electronic scrap. The Defense Property Disposal Service
assisted by the Bureau of Mines, Department of the
has studied how to reclaim gold and silver from thisInterior,
and found that it can be done at a reasonable cost. scrap
                                                      Despite
this finding, the Disposal Service continues to study
feasibility of such recovery.                          the
                                In the meantime, much elec-
tronic equipment is being sold as scrap without recovering
the gold and silver. We estimate that in fiscal year
about $11.6 million in additional revenue was lost     1976
                                                    because
the gold and silver was not recovered.

IDENTIFYING, SEGREGATING,
AND SORTING IS ECONOMICAL

     The key to recovering precious metals from
scrap is identifying, segregating, and sorting, electronic
                                                according
to Disposal Service officials and researchers. Two
posal Service offices have demonstrated that these Dis-
                                                   func-
tions are simple and economically feasible.
     First, gold and silver in the
Information on identifying gold and scrap must be identified.
                                     silver has been dissem-
inated to the disposal offices by the Disposal Service
series of memorandums entitled, "Tips on                 in a
                                          Precious Metal
Recovery," and in a kooklet containing pictures of
                                                    items
containing precious metals. A Disposal Service official
stated that this information is all a person needs
                                                    to iden-
tify gold and silver in electronic scrap.

     Once identified, items containing gold and silver
be segregated and sorted. Segregating means screening   can
                                                        com-
ponents being scrapped and setting aside those containing
items with precious metals. Sorting means extracting
containing plecious metals from a component using      items
and simple tools, like screwdrivers, pliers,      common
and punches. By disassembling the frame of awire  cutters,
                                              console, cir-
cuit boards may be pulled out by hand. Connectors
cut from wires. Pins can be punched out of plastic can be
                                                    holders.
     Electronic scrap that is not segregated and sorted
sold for about 10 cents a pound. When segregated        is
                                                  and
sorted, this same scrap can be sold at a substantially
higher price or the precious metals can be recovered.




                             9
     Example A
     Electronic scrap (273,000 pounds) was segregated and
sorted at Hill Air Force Base, Utah, in 1974 and 1975.
Items containing gold and silver were sorted from this
scrap at a cost of $27,000. The market value of this sorted
precious metals scrap was $154,000 or over six times its
normal sales value ($25,000).

     Example B

     At the Army Ammunition Depot, Pueblo, Colorado, in
1976, items containing precious metals were sorted from
general electronic scrap. During a 3-month period over
1,500 ounces of gold were recovered from this scrap. The
gold valued at $139 an ounce resulted in a return of over
300 percent on recovery costs of $45 an ounce. Included
was a nominal sorting cost of about $2 an ounce. (This
particular project benefited from a student employment
grant under which university students sorted the electronic
scrap. The Disposal Service paid only a portion of its
normal labor costs as the remainder was paid from grant
funds. However, we estimate that if regular Disposal Serv-
ice employees were used, recovery costs would have been
about $64 an ounce. This would still have resulted in a
return of over 200 percent on recovery costs.

RECLAIMING PRECIOUS METALS
IS ECONOMICALLY FEASIBLE

      The Ogden Region of the Disposal Service in early 1976
completed a project to ascertain the feasibility of reclaim-
ing gold and silver from electronic scrap. Gold, silver,
and ccpper worth over $46,000 were recovered from scrap
which ordinarily would have sold for $800. After spending
$11,600 to recover the metals, DOD realized a net of almost
$34,000.   (See app. IV.)
     The project involved the Ogden Region providing
administrative support and coordination, the Disposal Of-
fice at Hill Air Force Base segregating and sorting the
electronic scrap, and the Bureau of Mines at Salt Lake City
analyzing the reclaimed metal in bar and slag form to deter-
mine the precious metals content.

     While the overall project was profitable, different
types of items showed different results. Four items were




                             10
  profitable and two were not.
  as the quantity recovered of The profit or loss as well
  follows.                     gold, silver, and copper


                                                              Profit
    TyEe of item       Gold                                   or loss(-)
                                   Silver      C         oper per ton
                       (oz.)           (oz.)   (lbs.)        (percent)
  Electronic pins,
    chassis parts,
    and hardware       178             289     1,285            894
 Contact connector
    strips with
    gold-plated
    pins in plastic    200
 Circuit boards                        173         612          712
                        38             168         313
 Plugs and con-                                                  64
   nectors              74             130         228         184
 Black boxes intact
    (electronic sys-
   tems in aircraft)         .4
 Black boxes par-                       77         89          -70
   tially disas-
   sembled               1              98         63 -68
      In April 1976, the Ogden Region,
notified the Disposal                    based on its project,
metals was feasible andService  that: recovery of precious
                         economical for most items.
cooperation with the Bureau                            DLA, in
economical ways to recover   of  Mines,  is trying to develop
                            precious metals from black
                                                         boxes.
TOTAL RECLAIMABLE METALS
     We estimated the total additional
have been realized in fiscal             revenues that could
recovered from electronic     1976,  had gold and silver been
                           scrap.   This was done by project-
ing the results of the previously
covery projects at Hill Air         mentioned sorting and re-
                             Force Base and the Ogden Region
over the entire 12.2 million
sold by the Disposal Service pounds of electronic scrap
net additional revenue could in 1976. About $11.6 million
app. V.)                      have been realized.   (See
RECENT DOD ACTIONS

     In December 1976, 6 months
                                 after our initial inquiries
into precious metals recovery,
                                DOD formalized its


                                  11
 January 16, 1974, memorandum with the
                                         issuance of a dire-tive
 establishing policy and assigning management
 for the precious metals recovery program         responsibility
 directive, DLA was to establish standards   to  DLA.  Under this
 efficiency and cost effectiveness of         to  measure  the
 on quantity and value of precious metalrecovery   efforts  based
                                           content of items.
 DLA has taken some recent actions to
 from electronic scrap on a larger scalerecover aold and silver
 prior to the Ogden Region project.        than was being done
                                      DLA officials have stated,
 however, that they are not ready to
                                      take the final step of
 directing full reco,very on a DOD-wAde
                                         basis.
      The Ogden Region has directed
                                         disposal offices to
 sort electronic scrap. An Ogden off
will tame time for all the disposal        i stated that it
                                      -- Ices to begin sort-
 ing but that some have begun. We visited
 fices and found they were sorting.          two disposal of-
awards a contract for the recovery   Until   the Ogden Region
                                    of gold and silver, all
disposal offices are to stockpile the
                                        sorted scrap.
      Several disposal offices in the Memphis
Disposal Service have also segregated           Region of the
                                        and sorted electronic
scrap. This, however, was a limited
                                      effort to support a
one-time project to further demonstrate
                                          the economic feasi-
bility of recovering rather than part
                                       of a DOD-wide attempt
to recover gold and silver from electronic
                                              scrap.
      Officials of the Disposal Service are
judgment on the feasibility                 withholding
                             of recovering from all elec-
tronic scrap until the results are obtained
stration project in the Memphis Region.      from the demon-
                                          mhis project, how-
ever, is behind schedule by
believe that, on the basis ofseveral months. DLA officials
                               the two projects discussed
in this report, the Disposal Service
metals from all electronic            should recover precious
                            scrap. However, it has yet  to
direct recovery DOD-wide.

CONCLUSIONS
     Recovery of gold and silver from electronic
been demonstrated by the Disposal Service            scrap has
cally and economically feasible. While      to  be both  physi-
moved toward large-scale recovery,       the   Ogden  Region has
                                   DLA is reluctant to di-
rect recovery DOD-wide. Until this
                                    is done, electronic
scrap will continue to be sold without
being recovered. When considering      the precious metals
                                   the volume
scrap sold annually--12.2 million pounds         of electronic
                                          in fiscal year



                              12
1976--millions of dollars in additional revenue could be
realized annually if DOD would reclaim the total gold and
silver from this source.

RECOMMENDATION
     We recommend that the Secretary of Defense direct DLA
to take the actions necessary to segregate precious-metal-
bearing electronic scrap, accumulate it at selected loca-
tions, and extract the available gold and silver.

AGENCY COMMENTS AND OUR EVALUATION

     In commenting on a draft of this report, DOD has
reasserted its requirement that the costs of segregating
scrap and recovering precious metals be compared to costs
of alternative methods of disposition.  (See app. I.)    Ac-
cording to a DOD directive, DLA, as the program manager,   is
responsible for establishing standards to measure  the  effi-
ciency and cost effectiveness of recovery efforts.   It
points out that this responsibility is well defined  in the
DOD directive issued in December 1976.  Furthermore,   accord-
ing to DOD, changes needed in the program will be determined
after it considers our report and a report being prepared
by the Defense Audit Service concerning the precious metal
recovery program.

     We recognize the DOD directive has defined, and given
to DLA, the responsibility for managing the recovery program
which includes comparing the costs of alternative methods of
disposing of precious-metal-bearing materials. The issue is
not whether responsibility has been defined; it is the con--
tinuing inaction on the part of DOD to exercise its authority
and to insist on Department-wide implementation of a recovery
program that has demonstrated its profitability. Although
components of the Disposal Service have demonstrated that re-
covery of gold and silver from electronic scrap can be a
source of net revenues, DLA has not established a DOD-wide
program to accomplish such recovery. Therefore, we believe
that the Secretary of Defense should direct DLA to immedi-
ately establish Procedures and controls which will insure
the recovery of gold and silver from electronic scrap--
already proven profitable--at all locations throughout the
disposal system and measure the results.




                              13
                             CHAPTER 3
                    IMPROVE SILVER RECOVERY

                     FROM FIXER SOLUTION
      Our review into the programs of 26 Federal
                                                  agencies
for recovering silver from photographic fixer
showed that almost $4 million of silver--64    solution
total recoverable silver--went down the drainpercent  of the
                                               in fiscal
year 1976.   Although GSA has Government-wide responsibility
for precious metals recovery, it has not insured
cies (1) are in fact recovering precious metals that agen-
                                                  and (2) are
recovering maximum amounts.   Further, agencies responsible
for the actual recovery do not know how efficient
programs are because they (1) do not know who       their
the recovery, (2) have not established program should  make
(3) do not monitor results. Until GSA and       goals,  and
focus their attention on this program, most these  agencies
                                             silver recover-
able from fixer will continue to be lost.
MAXIMUM RECOVERABLE SILVER
     We estimate that in fiscal year 1976, 26 Federal
cies could have recovered from fixer solutions        agen-
of about 1.4 million troy ounces of silver.    a maximum
                                             Actual re-
covery, based on agency data, was 507,000
36-percent rate of efficiency.            troy ounces--a

     We estimated the maximum recoverable silver
                                                  from the
number of gallons of fixer used, as reported
cies, and potential recoverable silver data   by the  agen-
                                             provided
by the manufacturers of silver recovery equipment.     to us

     The equipment manufacturers
gallon of used fixer contains 0.5 said that the average
                                   ounce of silver. The
industry uses this figure as a rule of thumb
on the manufacturers' analysis of several     that is based
                                           thousand
of used fixer from Gove.nment and commercial        samples
                                              firms. This
average was substantiated by our analysis
vice data for certain DOD photographic and of Disposal Ser-
                                            X-ray facilities
consuming 584,00U gallons of fixer annually.

      The equipment manufacturers advised
batch processing with electrolytic silver us that centralized
                                           recovery equipment
is the most efficient method for extracting
                                             silver from
fixer. Und':r this method, used fixer is transported
central point and placed into the tank of             to a
                                           the electrolytic



                              14
 recovery unit where the silver is drawn out of fixer.
 manufacturers stated that this method can recover up to These
 percent of the silver and that other methods will be     95
 efficient. A Bureau of Mines investigation of health  less
                                                        facili-
 ties in the Salt Lake City area confirms this efficiency.
      Metallic replacement cartridges are widely used and if
 used properly can, according to manufacturers, also recover
up to 95 percent of the silver from fixing solutions.
cartridge is a plastic container packed with iron in     The
                                                      the
form of steel wool. The fixer flows through the steel
on the way to the drain. Through chemical reaction,     wool
                                                      the
iron replaces the silver in the solution and the silver
drops out and falls to the bottom as metallic sludge.
cording to experts in the field, the most effective way Ac-
use cartridges is to have them connected in tandem so     to
                                                       the
fixer rlows through both cartridges before it goes into
the drain. When only one cartridge is used in the recovery
operation, it is necessary to frequently test the off-flow
with litmus paper to assure that it does not contain
                                                      silver.
     While the 26 agencies recovered 36 percent of the maxi-
mum recoverable silver, the rate of recovery for individual
agencies ranged from zero to 90 percent. DOD had the
recovery potential but had one of the lowest rates of largest
recovery--2. percent. VA had the second largest potential
and recovered 79 percent. Agencies
potentials generally did not recover with small recovery
                                      any silver. The follow-
ing table shows the individual agencies' maximum recoverable
silver, 1/ efficiency rate, and the market value of silver.




1/Computed as follows:   Gallons of fixer consumed X 95 percent
                            Yield per galionecn


                             15
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                                                                                                                                                 16
NEED FOR GSA TO BETTER MANAGE
GOVERNMENT-WIDE PROGRAM

     As the Government-wide manager of silver recovery from
photographic materials, GSA requires annual reports front the
agencies on how much silver was recovered from fixer.   These
reports are received, but they are not sufficient for G3A to
determine if all agencies that should be recovering are
doing so and to evaluate whether maximum recovery is
achieved. GSA has not established the necessary management
controls and reporting to assure itself that the recovery
program is effective.

     Had GSA required agencies to report on the number of
components using fixer and what was being done with the
fixer, it would have been aware that some agencies were re-
covering a large percentage of silver and some were not.
With adequate reporting, GSA would have had a basis for
determining how the good performers do it and would have
been able to inform other agencies of the more successful
techniques. Silver monitors within each agency would have
been able to better evaluate recovery results from indivi-
dual photographic processing facilities. Further, if GSA
had required data enabling it to evaluate agency recovery
programs, it would have been in a position to inquire of
the agencies why maximum recovery was not achieved and
what actions were planned to achieve it. Such inquiries
in fiscal year 1976 would have disclosed the following
conditions.

     Example A
     There is a lack of intra-agency cooperation to increase
recovery results.

    -- The Energy Research and Development Administration
       at Oak Ridge, Tennessee, has 17 components that
       process film and use fixer. Although all components
       are at Oak Ridge, 5 recover silver and 12 do not.
       We estimate that over 2,100 ounces of silver annually
       are not being recovered.
    --At Fort Carson, Colorado, the Army hospital is re-
      covering silver from fixer solution. At the same
      time, we found two other components at this mili-
      tary installation not recovering. We estimate the
      two components annually use 1,150 gallons of fixer
      having a silver content of 264 ounces.



                            17
     Example B
     There is a lack of interagency cooperation to improve
upon program results. In Manila, for example, the VA Out-
patient Clinic and the printing plant for the U.S. Informa-
tion Service recover silver from used fixer. Yet, in the
same location, we found the U.S. Embassy dispensary discards
fixer without recovering the silver.

     Example C
     Many components within various agencies are not recover-
ing because they (1) consider it uneconomical to do so, (2)
have not been provided equipment, or (3) are unaware of the
silver recovery program.

     -- For the 20 agencies surveyed by our questionnaire,
        103 of the 251 components responding are not recover-
        ing. These components consume about 30,000 gallons
        of fixer annually with an estimated silver content
        of 15,000 ounces.
     -- We visited 13 military installations and found 14
        components not recovering. We estimate these com-
        ponents annually use 5,100 gallons of fixer with a
        silver content of 3,600 ounces.
     Example D
     Agencies using contractor services in the Washington,
D.C., area are not recovering all the silver from fixer
solutions. Under the GSA contract, the contractor recovers
the silver, refines it, and pays the Government a percentage
e  the current market price for silver. We checked
conLractor-installed equipment at 10 facilities and observed
five instances of silver going down the drain because con-
tractor personnel did not adequately monitor the equipment.
The contract does not require the contractor to pay for the
lost silver.

     The above-mentioned data would provide GSA with
insights into agency efficiency and the causes underlying
low efficiency rates. In addition, it would cause agen-
cies to focus more management attention on their silver
recovery programs. The agencies are responsible for manag-
ing their own programs efficiently and using the most effec-
tive means for recovering silver.




                             18
 NEED FOR AGENCIES TO BETTER
 MANAGE RECOVERY FROM FIXER
     GSA's stated policy is that
for its own program for recoveringeach agency is responsible
                                    silver from fixer solu-
tion. Such responsibility requires identifying agency
ponents using fixer, implementing recovery methods,       com-
monitoring program results. Most agencies are aware   and
much silver they recover.                              of how
                           But most are unaware of how effi-
cient their programs are because they do not know
                                                   who should
make the recovery, have not established program goals,
do not monitor results by component. Further, had         and
sisted that agency management establish the means   GSA   in-
                                                   to
ate its program, GSA and the agencies could identify   evalu-
lems related to the actual recovery of silver and      prob-
                                                   take
corrective action.
DATA CAN BE OBTAINED
FOR EVALUATION PURPOSES
     To evaluate silver r3covery    programs for fixer, an
agency needs data on the amounts    of fixer and film used, the
silver content of fixer, and the    silver recovered. We found
that this data is easy to obtain    within Lne agencies.
     VA has demonstrated that agencies can evaluate
silver programs. It sets annual goals for each of their
                                                    the 170
VA hospitals. The goals are set by the supply depots
on X-ray film data supplied by the hospital and film based
                                                      manu-
facturers' information on the quantity of silver recoverable
from fixer used to develop films.
     Recovered silver is shipped to the depots by the
hospitals. Supply depots monitor the operations by
ing results to goals. When necessary, supply depot compar-
                                                    person-
nel examine the hospitals' recovery operations to improve
efficiency.

     DOD's Property Disposal Service
goals--maximum recoverable silver--forhas not set recovery
                                        the many DOD facili-
ties using fixer, but it has demonstrated that it can
the data needed to set goals. We found also that 'tu obtain
identify the silver recovered by facility. Therefore,can
believe the Disposal Service has the means to evaluate we
DOD silver recovery program.                            the

     The Disposal Service has some data on fixer usage
228 locations around the globe which, collectively,     for
                                                    use



                               19
1.1 million gallons of fixer annually. For many of the DOD
facilities at these locations, a simple litmus paper test
was used to determine the silver content of the fixer.  The
Disposal Service could set recovery goals for these
facilities.

      It cannot, however, set DOD-wide goals because it does
not have fixer and silver content data for all DOD facili-
ties. The records maintained at the Disposal Service's
recovery office at Colts Neck, New Jersey, show that 192
additional locations recovered silver from fixer in fiscal
year 1976. Further, our analysis of the data for the 228
locations showed many instances where data was included for
medical and dental components but not for other components
normally found at military installations, such as photo-
grnphic laboratories, industrial X-ray laboratories, print-
inj plants, and hobby shops.

     Disposal Service officials are aware of the lack of
data for many DOD components consuming hundreds of thousands
of gallons of fixer annually with some silver content. They
had placed high priority on obtaining such data in fiscal
year 1977. This data, however, was to be used to make sure
that each facilitL had adequate recovery equipment rather
than to set goals.

     Our visits to other Government agencies and the
responses received to our questionnaire showed that these
agencies can determine the amount of fixer used annually.
With little additional effort, silver content can be deter-
mined either by the method VA uses or that used by some of
the DOD activities as discussed above.
EVALUATTSIN CAN HELP IDENTIFY PROGRAM PROBLEMS

     The ability to evaluate the silver recovery program can
assist in identifying problems precluding recovery of the
maximum amounts of silver. We believe program evaluations
would have enabled the agencies to identify problems hamper-
ing recovery of silver and would have irovided a basis for
takirg corrective action. Some proble - . we identified
follow.

Cartridges used to recover silver

     Much silver is lost when metallic replacement
cartridges are used because personnel do not adequately mon-
itor their use. When fixer passes through the cartridge too



                             20
 fast or when most of the steel
 recoverable silver flows throughwool has disintegrated,
                                   the cartridge and down
 the drain. The effectiveness of cartridges
 frequently through the use of litmus paper. must be tested
                                               Knowledgeable
 individuals infor-med us that they can determine
 cartridges have been used effectively            whether
                                        from physical examina-
 tion of their contents.

      -- in 1974 silver was recovered from 885
                                               cartridges
         used by 123 DOD facilities. Silver recovered
         averaged 35 ounces a cartridge and ranged
         zero to 122 ounces. Of the 885 cartridges,from
        or 6 percent, contained no silver.            54,
                                             Based
        dustry's rule of thumb that the average    on  in-
                                                 gallon
        of used fixer contains 0.5 ounce of silver
        manufacturers' recommendations              and
                                        that 220 gallons
        should pass through most cartridges
        are depleted, we believe that averagebefore they
        should be near 100 ounces of silver perrecovery
                                                 cartridge.
     --In 1976 the Disposal Service recovery
                                              operation
       at Colts Neck opened 140 cartridges received
       the preceding 2 years to determine whether    in
                                                   they
       had been used properly. Most cartridges--103,
       or 74 percent--had not been used properly.
     -- At 7 DOD facilities visited, we checked
        cartridges and found 12 instances where 29
        was flowing down the drain. The silver silver
        of the fixer going into the drain from content
                                                these
        cartridges ranged from 0.1 to 1.25 ounces
        gallon.                                    a

     -- At 7 locations serviced under the GSA
                                              contract,
        we found three instances where the fixer
        from the cartridge to the drain contained going
                                                   silver.
     Most technicians we visited at DOD facilities
aware that periodic testing of the cartridge        were
to prevent loss of silver but few were        was necessary
silver was being lost. Generally, theirable to explain why
cated a lack of understanding on when the explanations indi-
be changed.                                cartridge should




                              21
Electrolytic recovery equipment
on line with processors
     Silver was being lost when electrolytic recovery
equipment was hooked directly to the film developing proces-
sor. We attributed the losses to inefficiencies in the
method itself and inaction by personnel operating the
equipment.
     When electrolytic equipment is attached directly to the
processor, fixer flows from the processor to tie electro-
lytic equipment where it is to be desilvered.  Whenever the
electrolytic equipment is full and silver-laden fixer con-
tinues to flow into it, the fixer containing silver over-
flows into the drain.

     -- Disposal Service data for the 228 locations identi-
        fied 127 online electrolytic units. This data
        shows that 14 units had silver in the fixer going
        to the drain.
     -- During our visits to DOD installations, we observed
        five recovery units. Our tests of the fixer at the
        drain disclosed two instances of silver being lost.
     -- In similar tests for 11 facilities at civil agencies,
        we found 4 cases where silver was being lost.

     Our review of Disposal Service data and visits to
military installations also disclosed instances where silver
was lost because of a lack of action by operating and main-
tenance personnel.

     --At the 228 locations, the Disposal Service identified
       8 electrolytic recovery units losing silver because
       they needed repair or replacement. Five of eight
       were inoperable.
     -- At one Army hospital audited by the Army Audit
        Agency, 1,433 ounces of silver were lost in 1976
        because (1) recovery units were not turned on,
        (2) a recovery unit was not repaired for 2 months,
        and (3) silver sludge in the holding tanks was not
        reclaimed.

    -- A Navy hospital we visited had two recovery units
       broken down, one for 8 months and the other 2 months,
       in fiscal year 1976.  Because these breakdowns



                             22
       were not corrected promptly, we estimated 1,420
       ounces of silver went down the drain.
     -- We found a Navy dispensary had one recovery unit
        to service two X-ray machines, but only one was
        hooked up to the unit. About 480 ounces of silver
        annually was being lost.
AGENCY ACTIONS TO
MPROVE SILVER
            R    COVERY
     Some actions are underway in the agencies to improve
silver recovery in the future. Not in all instances, how-
ever, will the actions enable management to evaluate their
programs.

     VA, which makes extensive use of the centralized batch
processing method of recovery and has set goals for each
hospital, is conducting pilot programs at a few hospitals
see if additional internal controls are needed. These con-to
trols are intended to insure that all fixer is in fact being
processed through silver recovery equipment and that equip-
ment is used properly to recover the maximum silver.

     Tne Disposal Service is doing two things that should
increase program results.   First, it is exploring with
few military installations the feasibility of using the a
tralized batch processing method of recovery. Second, it  cen-
                                                            is
trying to identify all facilities using fixer and make sure
they have adequate equipment.

CONCLUSIONS
     Although GSA has Government-wide responsibility for
silver recovery programs from fixer, it does not require
sufficient data from the agencies to evaluate their pro-
grams. It does receive data on silver recovered but does
not receive data on each agencies' maximum recoverable sil-
ver. Without such data, GSA cannot be sure that agencies
are recovering the silver or that recovery is maximum.

     Most agencies need to improve their recovery results.
They have not established program goals against which to
compare results. Such comparison is needed to identify
program inefficiencies.




                             23
RECOMMENDATIONS

     We recommend that the Administrator of General Services
require all agencies to immediately, and annually there-
after, survey their components to identify those using fixer
and its estimated silver content. Further, the Administrator
should initially require these agencies to report semiannually
to GSA. These reports should show the following data, as well
as any other information which GSA believes is necessary for
better management of the program.

     -- Gallons of fixer used.

     -- Types and amounts of film processed.
     -- Estimated maximum recoverable silver.

     -- Method of estimation.

     --Silver recovered.

     -- Explanations of significant differences between
        estimated recoverable silver and silver actually
        recovered.

     -- Actions planned to maximize recovery.

     -- Type of recovery equipment.

     We also recommend that the Administrator follow up with
these organizations to determine reasons why the agencies are
not recovering the maximum amount of silver and the actions
planned for doing so.
AGENCY COMMENTS AND OUR EVALUATION

     The Administrator of General Services commented on our
findings and proposed recomnendations, and his letter is
included as appendix II.

     In response to our proposal that GSA require each
agency to survey its components and identify those using
fixer and the estimated silver content, GSA replied that it
has encouraged this but could make the survey mandatory.
The reply stated, however, that an annual survey would be
unnecessary because our proposal for more frequent and de-
tailed reporting by agencies would, in itself, require such
surveys. We believe that the intent of the surveys is to


                                 24
 search for and identify potential
                                    recovery locations. The
 intent of the reporting is to monitor
 these locations. We believe that       the progress made by
                                    the surveys should be
 made mandatory. Most agencies currentl.y
 surveys and, as a result, have not        do not perform such
                                     accLmulated the basic
 data they need to identify potential
 of silver. We also believe that       locations for recovery
 trols to insure that the surveys  GSA should establish con-
                                  are made.
      The Administrator suggested that
 GSA semiannually rather than quarterly,the agencies report to
 earlier draft report. We concur           as suggested in our
                                  and
 reporting be semiannual. We further   are  recommending that
                                       agree that when GSA is
 able to show that its silver recovery
 carried out efficiently by the Federal program is being
 ing could be made an annual requirement.agencies, the report-

      GSA also suggested that our recommendations
 to all Federal agencies rather than               be directed
 General Services. We are making      to the Administrator of
                                  our recommendations to GSA
 because GSA, by statutory authority,
 Government-wide management of preciousis responsible for
 programs.                               metal recovery

       On our proposal that followup by
 determine why agencies are not recoveringGSA would be needed to
 of silver and to ascertain agency              the maximum amount
 ery, GSA responded that it would    plans   for  improving recov-
                                    follow
 present resources. The Administrator        up  to the extent of
 ity for the Government-wide precious     has  given  responsibil-
                                        metals recovery program
 to his Property Rehabilitation Division.
 not established a followup procedure          This Division has
gram is being carried out as directed   to   insure  that the rro-
Management Regulations. We believe       in   the  Federal Property
 to be an essential ingredient of      positive-action followup
                                   any program. By adopting
the recommendations in this report,
                                       GSA should be in a posi-
tion to evaluate agency recovery
                                   actions,    compare results
with goals, identify successful and
results. In cases where re:;ults       less than successful
                                   are less than successful,
followup by the Government-.wide manager
is, in our opinion, the key element         of silver recovery
compliance with the program.          needed    to insure agency

     GSA has commented on three additional
that we advocate centralized batch          areas.  It states
trolytic silver recovery equipment, processing with elec-
                                     while other methods can
be as efficient. We recognize that
                                     metallic replacement
cartridges or online electrolytic
                                   equipment can be effective
if properly managed. We believe
                                  that the system installed

                               25
 should be compatible with the facility, the quantities of
 fixer to be processed, and other factors peculiar to each
 installation.   We have found, however, that at the facili-
 ties we visited, those with central batch processing were
 generally most efficient in recovering silver.   Central batch
 processing facilities also offer the advantage of being
                                                          able
 to service any number of photographic development labora-
 tories.  For example, a large processor of film who has cen-
 tral batch processing with electrolytic recovery equipment
 is in a position to accept fixer solution from nearby smaller
 units.

     GSA also questions why we do not discuss the limited
incentives to most Government agencies to recover gold
and silver.  Most agencies we reviewed also voiced the opin-
ion that recovery yields would be greater if incentives
                                                        were
incorporated in the recovery programs.

     VA does have direct incentive to recover, since
legislation allows it to directly receive proceeds from
                                                         the
sale of silver.   Those proceeds are deposited in their re-
volving supply fund.   VA is also among the most efficient
agencies in the recovery of silver from film and photo-
graphic material.   In most other agencies, the proceeds from
sale of silver are deposited in the Treasury.

      We believe that incentives would probably increase
recovery.   Also we recognize that although the law now re-
quires agencies to recover precious metals, it has assigned
Government-wide responsibility for precious metal recovery
to GSA.   Therefore, if GSA believes an incentive, such as
receipt of proceeds from recoveries, is needed to motivate
agencies to improve their programs, it should request the
necessary legislation.   In fact, GSA should be the agency
that would initiate any legislative action or policy changes
necessary to improve the program.   However, before GSA can
effectively implement any plans to improve silver recovery,
it needs the information and the basic data which is not
now accumulated but would be if the recommendations in this
report are adopted.

     Finally, GSA notes that we criticize the effectiveness
of a GSA contract to recover silver in the Washington, D.C.,
area but do not make conclusive judgments nor recommend
                                                         al-
ternatives.  This was only one of several examples we are
presenting where we found agencies either not recovering
silver or losing silver even though recovery attempts were
being made. We believe that GSA and the agencies need to



                             26
 establish management controls which will enable them to
 identify losses of precious metals, as cited in the examples,
 so that corrective actions can be initiated.

      Although the Administrator does not dispute our
 findings and conclusions and agrees that our proposals can
 be adopted, he set forth no positive plans to implement our
 proposals to improve the silver recovery program. We be-
 lieve that this is an excellent opportunity for GSA to take
 a leadership role and thereby not only increase the Govern-
 ment's recovery of silver but also demonstrate to all agen-
 cies the commitment of GSA to promotion of economy and ef-
 ficiency throughout the Government.

     The DOD comments (see app. I) to a draft of this report
questioned our estimate that 2 million gallons of fixer so-
lution are processed annually within DOD. They state that
only 446,744 gallons were issued to DOD activities by DLA
and that it would be unlikely that DOD could use four times
the amount of fixer that had been supplied by DLA.

      We found that DOD users of fixer solution obtain the
solutions through (1) DLA, (2) GSA contractors, and (3) local
purchasers. We also found survey data available at the De-
fense PreciousMetal Recovery Office, Colts Neck, New
Jersey, which identifies over 1.1 million gallons of fixer
being used annually by 228 activities which were included
in the surveys    We have identified an additional 192 activ-
ities not included in the surveys, which ship silver  flake
from fixer solution and recovery cartridges to the recovery
office.

     DLA is not the most frequently used source of fixer
solution, particularly photographic fixer.  Of the 446,744
gallons identified by DOD, only 1,940 gallons were of fixer
solution used in photographic processing; the remainder was
fixer used in X-ray processing. One DOD photo lab alone in
the Washington, D.C., area uses over 2JL,000 gallons of
photographic fixer solution.

      We realize that the 2-million-gallon estimate is an
estimate and that development of exact figures  would re-
quire considerable effort. However, DLA officials of the
precious metal recovery program have agreed that 2 million
gallons is a reasonable estimate. If our recommendations
in this report are adopted, using activities will be re-
quired to accumulate and report on the amounts of fixer
used and DOD will be in a position to establish goals,
monitor recovery, and better evaluate its program.


                            27
APPENDIX I
                                                                        APPENDIX I




                           ASSISTANT SECRETARY OF
                                                       DEFENSE
                                  RWASHINGTON 0 C 20301

            R
   MANPOWER.
RESERVE AFFAIRS
 AND LOGISTICS
                                                                  11 October    1977



        Mr. Fred J. Shafer
        Director
        Logistics and Communications Division
        General Accounting Office
        Washington, D.C. 20548

        Dear Mr. Shafer:
        This is in reply to your letter
                                        to the Secretary of Defense dated
        July 12, 1977 which forwarded your
                                           Draft Report entitled "Gold and
        Silver--Recover Them," LCD-77-228,
                                           for our review and comment (OSD Case
        #4666).

        The Draft Report implies; that the
        acted effectively in the recovery Department of Defense (DoD) has not
                                           of precious metals, noting a lack
       management direction in the segregation                                  of
                                                   and recovery of gold and silver
       from electronic scrap and stating
                                           that much of this scrap is being
       at nominal prices in lieu of recovery.                                 sold
       large potential for recovering silver       It also notes that DoD has a
                                                from photographic solutions but
       that the recovery rate is low.
                                         The
       that the Secretary of Defense direct Report contains a recommendation
                                               the Defense Logistics Agency (DLA)
       to take necessary actions to segregate
       precious metals and, at appropriately electronic scrap containing
                                                selected locations, accumulate it
       and extract the available gold and
                                             silver.
      We require the costs of segregating
      to be compared to alternative methodsscrap and recovering precious metals
      market value of the precious metals     of disposition, considering the
      We attempt to reduce the degree of and the full costs of the program.
                                          subjectivity in judging whether or
      not to recover the precious metals
      Manager, to establish standards to  by requiring DLA, as the Program
                                          measure  the efficiency and cost
      effectiveness of recovery efforts
                                         based on the quantity and value of
      precious metals contained in the                                       the
                                        items.
      A complete statement of DoD policies
      in the enclosed DoD Directive 4160.22,and responsibilities is contained
      Precious Metals," dated December        "Recovery and Utilization of
                                       1, 1976. (Enclosure 1.) We believe
                                                                            the




                                       28
APPENDIX I                                                            APPENDIX I




   Directive adequately covers the area addressed by the above recommenda-
   tion. You may wish to revise the Draft Report to make it clear that such
   direction is presently in effect. Defense Audit Service is currently
   completing en audit of the management of the precious metals program.
   We will consider the restelts of that audit, as well as your findings, in
   determining what changes are required to enhance the effectiveness of the
   DoD recovery program.

   In addressing t'h recovery of silver from photographic solutions by all
   F-deral Agencies the Draft Report states "DoD had the largest recovery
   Potential, but had one of the lowest rates of recovery--21 percent."
   This conclusion appears to be based on DoD usage of 2,000,000 gallons of
   solution in FY 1976. Information provided to your staff in November
   1976 indicated that DLA issues of photographic (hypo) solution totaled
   446,744 gallons, or less than one fourth the quantity cited in the
   Report. It is recognized that all the solution requisitioned in FY 1976
   was not necessarily used in FY 1976, and that other acquisition sources
   may have been utilized by some DoD units. However, it appears unlikely that
   the amount used could have been four times the issues made by DLA. It
   will be mutually beneficial if the figure of 2,000,000 gallons is
   verified for accuracy.

   At Enclosure 2 you will find comments not previously discussed which are
   intended to clarify specific portions of the Report. We appreciate the
   opportunity to offer comment on this Report in draft form.

                                        Sincerely,



   Enclosures                                        ROBERT B. PIRIE, JR.
    As Stated                                Principal Deputy Assistant Seortary
                                                      of Defense (MRA&L) .-




GAO note:       The two enclosures to this letter have not been
                included. Enclosure 1 was DOD Directive 4160.22
                establishing responsibilities for the precious
                metals program. Enclosure 2 comprised specific
                comments relating to material in the draft report
                which has been revised or changed in the final
                report.




                                     29
APPENDIX II                                                                 APPENDIX II

                               UNITED STATES OF AMERICA
                      GENERAL SERVICES ADMINISTRATION
                                  WASHINGTON, D.C.    SH


August 22,    1977


Honorable Elmer B. Staats
Comptroller General of
the United States
General Accounting Office                                                        '_
Washington, DC 20548                                                             ru

Dear Mr. Staatsu:

Thank you foe the opportunity to comment on the General Accounting Office ..
(GAO) report to the Congress entitled "Gold and Silver--Recover Them"     cn
(LCD-77-228) .

Since there is a variance in the recomtundations to the General Services
Administration (GSA) as cited in the digest, page "v," and page 30 of the
text, we are responding primarily to the latter.

     -"...that the Administrator of GSA require all agencies
   \to immediately and annually thereafter, survey their com-
     ponents to identify those using fixer and its estimated
     silve7 content."

We have endeavored to encourage agencies to survey their components in
the past by prescribing a survey format in Federal Property Management
RegulL-tons (FPMR) 101-42.4901, "Intra-agency survey format for evalu-
ating the recovery potential of activities not n-w recovering precious
metals." The survey format requests information from each activity on
tie estimated generation of used fixer solution and the average silver
content per gSllon. We can revise our FPMR to make this a mandatory
survey. However, the reporting requirement recommended in your second
recommendation requires the same type of information (i.e., gallons of
fixer ,aa,, estimated maximum recoverable silver, and method of
estimation) on a more frequent basis, and, in effect, requires that an
agency survey its components every time it prepares a report to GSA (see
comment on next recommendation).

     -"... (that) the Administrator should require quarterly
     reports by all alincies and co ponents showin at least,
     but not necessarily limited to, the following data:
     Gallons of fixer used; Types and amounts of film pro-
     tessed; Estimated maximum recoverable silver: Method of
     estimation; Silver recovered; Explanationn of signifi-
     cant differences between estimated recoverable silver
     and silver actually recovered: Actions planned to maxi-
     mize recovery; and Type of recovery equipaent."




                     Keep Freedom its rour Future With U.S. Savings Bonds


                                                30
 APPENDIX II                                                        APPENDIX II




FPMR 101-42.4902, "Format for annual consolidated report on activities
generating p:ecious metals," section (1), requires that agencies report
annually on some of the data described above. While our present report
:oes not require all of the information recommended, if properly filled
ort, we can determine whether all appropriate agency activities are
recovering silver, how many gallons of solution are being processed,
and the amount of silver recovered. We agree, however, that the data
you suggest we require .in such a report would enable us and the agencies
to better examine the efficiency of their components and, therefore, the
agency as a whole.

In light of efforts to reduce the number of reports required in the Fed-
eral Government, we. feel that a semi-annual (which we required up until
2 years ago), rather than a quarterly report, would be sufficient for
GSA and the agencies-,to monitor their progress. We propose that a semi-
annual report would satisfy the "more stringent reporting" recommenda-
tion noted on page. "v," and that your first two recommendations on page 30
be modified accordingly. We also feel that if and when Federal agencies'
silver recovery programs are operating efficiently, it would be suffi-
 lient to require an annual report as we do now.

     -- "...that the:Administrator follow-up with these organi-
     zations to determine reasons why the agencies are not
     recovering the maximum amount of silver and the actions
     these agencies plan to take to do so."

We plan to follow-up with agencies, to the extent that our present
resources will allow, to urge them to recover the maximum amount of
silver possible. We have attempted to encourage agencies to recover
silver in the past by revising FPMR 101-42.3, "Recovery of Precious
Metals and Critical Materials,"' hicb requires the report described
above; by updating (to reflect new t ;hnology and program experience)
our publication, a "Guide for the Recovery of Silver from Used Fixing
Solution and Scrap Film," which was designed to be of use to activi-
ties trying to determine the most effective methods of silver recovery
for their situation; and by developing a service contract covering the
eastern half of the United States which provides technical surveys of
photographic processing facilities to determine silver recovery poten-
tial and recommend methods for increasing the efficiency of silver
recovery programs. We hope to offer this service nationwide following
experience with the initial contract.

We further suggest that the second recommendation on page "v," that the
Administrator of GSA "require each agency to (1) survey its components,
 (2) set goals, and (3) monitor recovery in relation to goals," be
reworded so that the recommendation is directed to all lederal agencies
which generate silver scrap; and that (1) will read "survey its compo-
nents semi-annually, preparatory to reporting to GSA." The GAO report
could then be seat directly to heads of Federal agencies recommending
corrective action.




                                       31
APPENDIX II                                                      APPENDIX II




 With regard to the body of the report, there were several points made
 for which no conclusions or recommendations were drawn, and on which we
 would like to comment.

 Concerning the methods for extracting silver from fixer, the report
 appears to advocate centralized batch processing with electrolytic
 silver recovery equipment as the most efficient method for extracting
 silver from fixer. However, it is not always the most feasible due to
 the limitations of a facility or the lack of economical quantities.
 Since there will continue -o be situations where metallic replacement
 cartridges or electrolytic recovery equipment on-line with processors
 will be the most effective methods that can be used in a particular
 situation, we suggest that the report be modified accordingly. We
 feel that the report should also include mention of recovery systems
 in which the fixer solution, a source of potential pollutants, i&
 repeatedly reused rather than discarded.

 Mention is made of limited incentives to recover gold and silver, and
 that many agencies do not receive the sales revenue from reclaimed
 silver, but the issue is not discussed any further.

 Criticism of the effectiveness of GSA contractor recovery services in
 the Washington, D.C., area is made, but a conclusive Judgment or recom-
 mended alternative is not suggested.

 We would be happy to have representatives of our Property Rehabilitation
 Division (FWR) meet with GAO representatives to discuss the issues men-
 tioned above and any other aspects of the report. If this is agreeable,
 Mr. William S. Eckert, Director, Property Rehabilitation Division, may
 be coutacted (557-1743) to arrange such a meeting.

    cerely,   4I-M



 Je el/A olomon
 A    nistrator




GAO note:     Page references in this appendix may not correspond
              to pages of final report.




                                       32
     APPENDIX III
                                                                                                                                                                                                         APPENDIX                                      II

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                                                                                              34
APPENDIX IV                                           APPENDIX IV




               GAO COMPUTATION OF MARKET VALUE OF METALS

                 RECOVERED DURING OGDEN REGION PROJECT

                    AND ESTIMATED COSTS OF RECOVERY (See p. 10.)

                                                           Amounts
Market value   of metals:
    Gold   -   327.912 oz. @ $130 (rote a)               $42,628.56
    Silver -   634.085 oz. @ $4.40 (note a)                2,789.97
    Copper -   1,630.8 lbs. @ $.45 (note a)                  733.86
        Total market value                               $46,152.39
Estimated costs of recovery:
    Sorting (27,168 lbs. @ $.15)
      (notes b and c)                                    $ 4,075.20
    Smelting sorted scrap (note d)        $4,616.75
    Smelting slag (3,943 lbs. @ $.75)
      (note e)                            $2,957.25        7,574.00
        Total estimated costs                            $11,649.20
Market value over costs                                  $34,503.19
a/Data from Ogden Region, Defense Property Disposal Service,
  DLA.

b/The estimated pounds of electronic scrap sorted was based
  on the weight of sorted items smelted and the sorting
  project at Hill Air Force Base.

c/Sorting costs a pound taken from sorting project at Hill
  Air Force Base.

d/Costs obtained from smelting contract for this project.
e/Cost was determined based on slag resulting from this
  project and estimated cost to process slag furnished by
  Precious Metals Manager, Ogden Region of the Disposal
  Service.




                                35
APPENDIX V                                                          APPENDIX V




         GAO COMPUTATION OF ESTIMATED NET ADDITIONAL REVENUE

       HAD PRECIOUS METALS BEEN RECLAIMED FROM ELECTRONIC SCRAP

           SOLD BY THE DISPOSAL SERVICE IN FISCAL YEAR 1976

                                                        Amounts
     Revenues from estimated recoverable
       metals:
         Gold   - 107,382 oz. @ $138.59
           (notes a and b)                            $14,882,071
         Silver - 207,646 oz. @ $ 4.39
           (notes a and b)                                911,566
         Copper - 533,718 lbs. @$    .45
           (notes a and b)                                240,173
             Total additional revenue                  16,033,810
     Estimated costs of recovery:
         Sorting - 12,192,121 lbs. 6 $.15
           (notes a and c)                              1,828,818
         Smelting sorted scrap -
           2,682,066 lbs. @ s.50
           (notes a and d)               $1,341,133
         Smelting slag - 1,291,222 lbs.
           @ $.75 (note e)                  968,417     2,309,550
         Reduction in sales revenue
           (note f)                                    ___268,227
             Total estimated costs                      4,406,575
    Net additional revenue                            $11,627,215



    a/The Disposal service sold 12,192,121 pounds of electronic
      scrap in fiscal year 1976.  Using the sorting project at
      Hill Air Force Base as a basis for determining weight of
      items containing precious metals, it is estimated that
      2,682,266 pounds of the electronic scrap, or 1,341 tons,
      contained gold and silver.  The average yields of 80.076
      ounces gold, 154.844 ounces silver, and 398 pounds of
      copper a ton from the smelting project in Utah were applied
      to the 1,341 tons.

    b/Market values for gold and silver are the average of those
      used by the Disposal Service in fiscal year 1976 to pre-
      pare management reports, specifically, Precious Metals
      Recovery Expense/Cost.  Value of copper is the same as that
      used by the Ogden Region of the Disposal Service as shown
      in app. IV.

    ,/Sorting costs taken from sorting project at Hill Air Force
      Base.

    d,'Ccst to smelt was based on informal quotes obtained by the
       Disposal Service.

    e/Cost. based on percentage of slag under the smelting
      project in Utah and estimated cost tc process slag fur-
      nished by the Precious Metals Manager, Ogden Region of
      the Disposal Service.

    f/Based on actual sales of electronic scrap in fiscal year
      1976.




                                        36
 APPENDIX VI                                            APPENDIX VI



                  PRINCIPAL OFFICIALS RESPONSIBLE FOR
           ADMINISTERING ACTIVITIES DISCUSSED IN THIS REPORT

                                            Tenure of office
                                           From              To
                        DEPARTMENT OF DEFENSE
SECRETARY OF DEFENSE:
    Harold Brown                        Jan. 1977        Present
    Donald H. Rumsfeld                  Nov. 1975        Jan. 1977
                   GENERAL SERVICES ADMINISTRATION
ADMINISTRATOR:
    Joel W. Solomon                     Apr. 1977        Present
    Robert T. Griffin (acting)          Feb. 1977        Apr. 1977
    Jack Eckerd                         Nov. 1975        Feb. 1977




(943174)


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