The story was reported by the CBS Evening News Investigative Unit's Armen Keteyian, Phil Hirschkorn and Laura Strickler.
Thousands of pieces of excess military property – including items that could be deployed by criminal and terrorists – are being offered for sale to the public, according to a government report reviewed by CBS News.
Just last month, undercover investigators from the federal Government Accountability Office were able to spend over $1 million on "sensitive" items that are supposed to be destroyed.
The shopping list, fulfilled at two East Coast warehouses, included launcher mounts for shoulder-fired, "Dragon" missiles, which are used to destroy tanks, and digital signal converters used by the Navy's E-2 "Hawkeye" early-warning aircraft.
Security at the Pentagon's liquidator's warehouses was so lax, the GAO found, that employees even helped the undercover buyers load up their vans with the goods.
Connecticut Republican Rep. Chris Shays, who chairs the House Government Oversight Subcommittee on National Security, commissioned the report, which will be released next week when he plans to hold a hearing.
"We are selling property that shouldn't be sold, and we're selling to people we don't know who they are," Shays said in an interview. "You're seeing things that you wouldn't the average public to get, but you certainly wouldn't want terrorists to get."
The sales are also occurring over the Internet. Just go to www.govliquidation.com, a kind of eBay just for military surplus, and you'll find everything from camouflage parkas to computer microcircuits used in the F-14 fighter jets, only a mouse click away. The items are sent to the highest bidder. In all, 19 million were sold last year.
Undercover investigators posing as private citizens were able to obtain ceramic body armor coveted by our soldiers in Iraq, and "all band" antennas that are able to track aircraft.
"The body armor could be used in terrorist or other criminal activity. Many of the other military items have weapons applications that also would be useful to terrorists," the GAO report said.
Bill Angrick, the CEO of Liquidity Services Inc., a private company that operates the Web site for the Pentagon, as well as some warehouses (though not the two the GAO visited), told CBS News that the excess property and potential buyers are cleared by the government.
"The property we receive is first inspected and verified by the DOD and determined that it is appropriate for sale to the public," Angrick said.
He said buyers must submit their Social Security numbers and are subjected to a background check by another government agency, the Trade Securities Control Agency, before they can visit one of 50 warehouses, and can only do so with an appointment.
Still, the GAO found, not only is the Pentagon liquidating materials that ought to be destroyed, it is selling much of its surplus for pennies on the dollar.
For example, investigators bought gas engines from the Pentagon excess property liquidators for $355, for which the Marines had paid $3,191. And that ceramic body armor? Bought for $129 apiece; the military paid $1,471.
The GAO found these spending and selling habits demonstrate "continuing waste and inefficiency" by the Pentagon.
"You basically have a department that can't keep track of its inventory," Shays said. "If Wal-Mart can do it, we certainly in the government should be able to do it."
The congressman pointed in frustration to an investigator's purchase of a global positioning tool.
"When you buy a piece of equipment for over $340,000 and you sell it for $65, we've got a problem," Shays said. "That's quite a discount, but it is a tool, a piece of equipment, no one should have been able to buy. And they bought it over the Internet. Who the hell bought it?"
Many of the items for sale have been phased out by the U.S. military, but can still be put to lethal use, the GAO report said.
Eileen Lainez, a Defense Department spokesperson, told CBS News, "DOD is concerned about problems identified in the disposition of excess materiel. We are carefully assessing ways to eliminate errors and strengthen procedures governing these activities, and have already implemented procedures to strengthen the process."
By Armen Keteyian, Phil Hirschkorn and Laura Strickler