DISPOSAL OF STORES AND EQUIPMENT

Introduction
Disposal of stores is one of the most important functions of materials management in any
organization. This has become necessary as the equipment and other items tend to become
surplus/obsolete, unserviceable etc. over a period of time due to its long usage. The disposal
of this type of stores is needed to be done on periodic basis.

Public sector organisations regularly dispose of depreciated, redundant or excess stock need
to ensure they have standardised methods to manage the disposal of unwanted resources in a
transparent and accountable manner. 

Goods to be disposed of are public resources and, even if redundant or depreciated, may still
have financial value for the organisations. Consequently disposing of goods should be
carefully planned and conducted in a way that obtains value for money for the organisations
and reduces opportunities for exploitation by individual employees, private persons or
organisations.

The stores for disposal are divided into the following categories:
1. Surplus Stores – Items that are in working order but are not required for use in a
particular Section/Division/Institute and stock lying in stores for more than five years
shall be deemed as surplus unless there is any good reason to treat them otherwise.

2. Obsolete Stores – Items in working order but cannot be put into use effectively being
outdated due to change in technology/design.

3. Unserviceable stores – Items which are not in working order, outlived its normal span of
life and are beyond economic repair.

4. Scrap- Process waste, broken & any other item not covered above but has got resale
value.

5. Empties – Empty containers, crates, bottles, plastic jars, drums etc.

REASONS FOR DISPOSAL

Items can be available for disposal because they are:
i) Required to be disposed of under a particular policy;
ii) No longer required due to changed procedures, functions or usage patterns;
iii) Occupying storage space and not being needed in the foreseeable future;
iv) Reaching their optimum selling time to maximise returns;
v) No longer complying with occupational health and safety standards;
vi) Found to contain hazardous materials; and/or
vii) Beyond repair but able to be sold for scrap
DISPOSAL OPTIONS

Disposal of obsolete and surplus items shall be by

i) Transfer to government departments or other public entities, with or without financial

adjustment;
ii) Sale by public tender to the highest tenderer, subject to reserve price;
iii) Sale by public auction, subject to a reserve price; or
iv) Destruction, dumping, or burying as appropriate.
v) Trade-in

Choice of the most appropriate disposal option will normally be influenced by the nature of
the goods for disposal and by their location and market value.

In all cases, assets disposed of must be reported and subsequently removed from the asset
register. A more detailed description of each disposal option is set out below:

Public Tender
Other items may be disposed of by tender where the items are known to have a market value
but the amount is unclear. Tendering is the most expensive disposal procedure and should
only be undertaken where there is a clear net return to the Entity from such a process.

Sale
Sale involves assigning a price to the item(s) and publicising the items availability for sale
and the price in a suitable manner. This may range from a newspaper advertisement to a
general email notice.

To ensure a fair price is paid, an independent person (outside the Entity concerned and with
appropriate expertise eg. Information Technology Services in the case of computers) should
be involved and confirm that the sale price is appropriate.

Prospective buyers should be given adequate opportunity to inspect the goods prior to sale.
Collection or forwarding of the goods is normally contingent on the presentation to the Entity
of evidence of payment of the sale price.

Public Auction
An Entity may in some circumstances engage an agent (auctioneer) to undertake the disposal
by sale of goods by public auction. Where an auctioneer is to undertake sales on behalf of the
Entity by public auction, it is important to advise the auctioneer, in writing, of the Entity's
instructions relating to the sale. Information might include timeframe for sale, target revenue,
condition and location of assets, reserve price, and end-user restrictions.

This advice is the formal agreement or contract with the auctioneer and constitutes the
authority for the auctioneer to undertake the sale in accordance with the Entity's
requirements. The advice should be signed by the Head of Entity.
Transfer to another Procurement Entity
In some cases, an asset may have no use for one Entity but may be of value to another Entity.
In such case, the asset may, with the agreement of both Entities be transferred. Such transfer
may be at no cost to either Entity or entail a fee or price negotiated by the two Entities
concerned.

When evaluating the appropriateness of this option, it is important to consider whether the
surplus goods can be of use to another procurement entity. This means that the seller of the
goods must begin looking for potential buyers as soon as it is known that they will be surplus.

It should be noted that some procurement entities might have indicated an interest in certain
types of surplus goods. One such example is a desire to obtain information technology
equipment for educational purposes.

If a procurement entity has a preference for a particular surplus item, they need to promote
this intention themselves and ensure that the arrangement is effectively managed. If an
appropriate opportunity arises, entities are encouraged to consider this option and contact the
relevant procurement entity.

Destroyed or Cannibalised Plant and Equipment

Items with no market value and no use to any other Entity may be destroyed in an appropriate
and safe manner. An 'Asset Disposal' Form must be completed and authorised by the Head of
Entity and forwarded for updating the assets register