Civilian Marksmanship Program: Information on the Sale of Surplus Army Firearms

Since 1996, the Army has transferred more than 700,000 surplus rifles and handguns to CMP. The National Defense Authorization Act (NDAA) for Fiscal Year 1996 authorized CMP to sell certain types of surplus Army firearms to U.S. citizens, including M1 .30 caliber rifles. CMP reimburses the Army for the costs to prepare and transport surplus firearms to CMP.

The NDAA for Fiscal Year 2018 required the Army during fiscal years 2018 and 2019 to transfer to CMP surplus M1911 .45 caliber handguns, including not fewer than 8,000 in fiscal year 2018 and not more than 10,000 in any fiscal year, and included a provision for GAO to conduct a review of certain matters related to CMP. Among other things, GAO examined (1) the Army and CMP's procedures to address requirements governing the transfer and sale of firearms and (2) CMP's primary sources of revenue, costs and profits, and estimated future revenue associated with the sale of surplus firearms.

GAO reviewed applicable federal statutes and agreements between the Army and CMP; analyzed firearms transfer data, and CMP's Internal Revenue Service filings and internal financial documents; and visited both CMP's northern headquarters in Port Clinton, Ohio and its southern headquarters in Anniston, Alabama.

The Civilian Marksmanship Program (CMP) is a federally chartered, nonprofit corporation that, among other things, instructs U.S. citizens in marksmanship; promotes practice and safety in the use of firearms; and sells surplus Army firearms (see figure), ammunition, repair parts, and other supplies. CMP is required to give priority to activities that benefit firearms safety, training, and competition for youth and that reach as many youth participants as possible. CMP also charges fees for individuals to participate in some of its programs.

The Army and CMP have established procedures to address federal requirements for the transfer and sale of surplus firearms. Both organizations established procedures to carry out the transfer of surplus Army firearms as identified in a 2016 Memorandum of Understanding (MOU) and a 2018 Memorandum of Agreement, both between the Army and CMP. To address requirements for selling surplus firearms, CMP uses a combination of procedures, including an application requiring prospective customers to provide proof of citizenship and age, among other things, and a check against the National Instant Criminal Background Check System. Per the MOU, the Army's Tank-automotive and Armaments Command oversees the Army's costs and reimbursements from CMP for certain costs associated with storing, transporting, and administering the transfer of surplus firearms.

The primary source of CMP's revenues from fiscal years 2008 through 2017 was from the sale of surplus rifles, which, according to CMP's internal financial documents, generated $196.8 million in revenue. CMP also sold commercial ammunition and memorabilia, which, according to the same documents, generated $76.4 million in revenue. Further, according to its Internal Revenue Service filings for this time frame, CMP reported earning $49.8 million in interest and dividends from its investment account. CMP began selling surplus M1911 handguns in November 2018 and had just begun generating revenue from these sales at the time of GAO's review. The profit that CMP realized from the sales of surplus rifles could not be determined because CMP's methodology to calculate expenses did not account for all of CMP's costs associated with the sale of these rifles. GAO estimates future sales of CMP's surplus handgun and rifles currently available for sale could generate as much as $104.9 million, or enough to fund CMP's operations for several years. Further, as of September 30, 2017, CMP reported having cash of $3.6 million, and an investment account valued at $188.6 million. This could also allow CMP to continue operations for several years.

The National Defense Authorization Act (NDAA) for Fiscal Year 1996  authorized the Corporation for the Promotion of Rifle Practice and  Firearms Safety, which operates and is commonly referred to as the  Civilian Marksmanship Program (CMP), to sell certain types of surplus  Army firearms to U.S. citizens. Under this and subsequent acts, CMP  ceased being an Army program and became a Title 36 federally  chartered, 501(c) nonprofit corporation. Since 1996 the Army has  transferred more than 700,000 surplus rifles and handguns to CMP. The  majority of firearms sold by CMP have been different models of surplus  M1 rifles, a .30 caliber semi-automatic service rifle that began regular  production in 1937 and was the primary rifle used by U.S. troops in World  War II.

Memorandums of Understanding (MOU) between the Army and CMP,  first completed in September 1996 and most recently revised in  September 2016, establish the roles and responsibilities of the Army and  CMP regarding the transfer and sale of surplus firearms. The Army is  responsible for identifying, storing, and transferring authorized surplus  firearms to CMP. Although the Army incurs costs to prepare and transport  firearms identified as surplus for transfer to CMP, CMP reimburses the  Army for these costs. CMP then sells these firearms to eligible individuals  and gun clubs to fund its mission to promote marksmanship training and  firearm safety.

The NDAA for Fiscal Year 2018 required the Army during fiscal years  2018 and 2019 to transfer surplus .45 caliber M1911 handguns to CMP,  including not fewer than 8,000 in fiscal year 2018 and not more than  10,000 in any fiscal year, and included a provision for us to review certain matters related to CMP. This report (1) examines the Army’s and CMP’s  procedures to address requirements governing the transfer and sale of  firearms; (2) examines CMP’s primary sources of revenue, costs, and  profits, and estimated future revenue associated with the sale of surplus  firearms; and (3) compares certain aspects of CMP’s business operations  with those of five selected youth-focused, federally chartered nonprofit  corporations.

For objectives one and two, we focused on the transfer and sale of  surplus rifles and the associated costs and profits for fiscal years 2008  through 2017. We compiled 10 years of CMP’s sale of surplus rifles from  fiscal years 2008 through 2017 to understand the numbers of surplus  rifles transferred as well as CMP’s revenue, costs, and profits associated  with the sale of the of surplus rifles. We also reviewed transfer and sales  procedures from fiscal years 2018 and 2019 to provide a current status  regarding CMP’s sale of surplus M1911 handguns, which CMP began  selling in November 2018.

For objective one, we reviewed applicable federal statutes, including  relevant provisions from Title 36 and Title 18 of the U.S. Code, and the  agreements between the Army and CMP. We also visited both CMP’s  northern headquarters in Port Clinton, Ohio and its southern headquarters  in Anniston, Alabama. We visited CMP’s northern headquarters to  observe operations there and interview officials about CMP’s  marksmanship-related programs and to observe portions of one of those  programs, the National Matches. We visited CMP’s facilities in Anniston,  Alabama, to observe the sales and shipping processes for rifles and  handguns as well as the procedures used to evaluate and refurbish  surplus firearms, and to interview CMP officials about these processes  and procedures. We also visited the facilities and gun ranges at CMP’s  Talladega, Alabama facility. We reviewed documentation of  reimbursements CMP made to the Army, including cash collection  vouchers, and Tank-automotive Armament Command (TACOM) briefings  to CMP.

For objective two, we reviewed CMP’s annual Internal Revenue Service  (IRS) filings for fiscal years 2008 through 2017. The publicly available  filings (which we refer to as “IRS filings” throughout the report) include  information on CMP’s mission, programs, finances, and corporate  governance structure. In addition, we reviewed CMP’s internal financial  documents (profit and loss statements). We also interviewed CMP  officials to corroborate our understanding of the information provided in  CMP’s IRS filings and internal financial documents. We assessed the  reliability of the data by interviewing CMP officials to gain an  understanding of how CMP’s IRS filings and internal financial documents  are produced and found the data sufficiently reliable for our purposes. We  also analyzed surplus firearms transfer data and procedures and  interviewed officials from TACOM and the Defense Logistics Agency to  understand and describe the costs to the Army and CMP of obtaining,  storing, and transferring these surplus firearms to CMP. To assess the  reliability of the surplus firearms transfer data, we spoke with TACOM  officials for clarification and further explanation of the data provided,  including firearm nomenclature and identification codes, and found the  data to be sufficiently reliable for our purposes.

For objective three, we identified eight corporations from the 93 other  federally chartered, nonprofit corporations currently listed in subtitle II of  Title 36, U.S. Code, whose mission focused on the development,  education, or training of youth. Two of the corporations did not respond to  our request to meet and a third corporation declined to meet. Therefore,  the corporations with a youth-focused mission that we selected were the  Naval Sea Cadet Corps, the Civil Air Patrol, Big Brothers Big Sisters of  America, Future Farmers of America, and the Boy Scouts of America. For  the five selected federally chartered, nonprofit corporations, we reviewed the publicly available information on their websites to understand the  most current information regarding certain aspects of these corporations’  business operations. We developed a list of standard questions and  interviewed officials from all five corporations regarding certain aspects of  their business operations—including governance, organizational  structure, and funding sources—and regarding whether those  corporations had received any federal funding or resources. See  appendix I for a more detailed explanation of our scope and methodology.

We conducted this performance audit from May 2018 to February 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

In 1903, the War Department under President Theodore Roosevelt  established the National Board for the Promotion of Rifle Practice, today  known as CMP, with the general purpose of promoting the development  of marksmanship skills and preparing individuals in the event that they  were called upon to serve in the military. For the next several decades,  the Army managed and operated CMP. In 1990, we reported that CMP  was of limited value to military preparedness because, among other  things, CMP’s objectives and goals were not linked to Army mobilization  and training plans and program-trained personnel were not tracked. The  NDAA for Fiscal Year 1996 moved CMP out of the Army and established  CMP as a federally chartered, nonprofit corporation. The act also  required the Secretary of the Army to transfer all firearms, ammunition,  and funds from sales previously under the control of the Army program to  CMP.

The governing statutes for CMP and Army support of CMP activities are  generally found in chapter 407 of Title 36, U.S. Code. Among other  things, these provisions provide for the organization, governance  structure, and functions of CMP. These functions include instructing  U.S. citizens in marksmanship, promoting practice and safety in the use  of firearms, and conducting competitions. For purposes of training and  competition, CMP may issue or loan certain rifles, ammunition, repair  parts, and other supplies necessary for activities related to CMP to  affiliated organizations that provide firearms training to youth, the Boy  Scouts of America, 4-H Clubs, Future Farmers of America, and other  youth-oriented organizations. CMP is required to give priority to  activities that benefit firearms safety, training, and competition for youth  and that reach as many youth participants as possible. As one of its  functions, CMP conducts rifle and handgun marksmanship competitions  such as the annual National Matches. The National Matches is open to  members of the armed forces, the National Guard, the Reserve Officers’  Training Corps, and rifle clubs, among other entities, as well as to  civilians.

Additionally, CMP may sell certain surplus rifles and M1911 handguns to  affiliated organizations that provide training in the use of firearms, such as  gun clubs. Finally, CMP is authorized to sell to U.S. citizens who are  members of affiliated gun clubs, at fair market value, surplus .22 caliber  rimfire rifles, .30 caliber rifles, and .45 caliber M1911/M1911A1 handguns,  as well as ammunition, repair parts, and other supplies necessary for  target practice.

Agreements between the Army and CMP and the Role of the Army

The Army and CMP have entered into various agreements governing  their relationship. An MOU from 2016 currently delineates Army and CMP  responsibilities for, among other things, the transfer of surplus firearms  and associated parts and ammunition. Appendixes to the MOU identify  approximately 170 surplus rifles and handguns that may be transferred to  CMP. These surplus firearms include the M1 Garand .30 caliber rifle  and other rifles, such as the 1903 Springfield and 1917 Enfield. See figure  1 for a photograph of a surplus M1 .30 caliber rifle packed for shipment.

The Army provides a variety of support to CMP, including identifying and  reserving certain surplus firearms, ammunition, and parts. At CMP’s  request, the Army can transfer these firearms, ammunition, and parts to  CMP under procedures established in the MOU. TACOM is the executive  agent for small arms. Per the MOU between the Army and CMP,  TACOM provides various forms of support to CMP, including facilitating  transfers of surplus firearms from U.S. sources and recovery of firearms  from foreign countries before transfer to CMP. For surplus firearms  transfers within the United States, CMP reimburses the Army for the cost  of preparation and transportation, including for the Army’s standard depot  operations costs. The costs of the recovery of firearms, ammunition,  and parts from foreign countries are treated as incremental direct costs of  Army logistical support, and are also to be reimbursed by CMP.

The MOU contains further provisions related to Army and CMP  responsibilities and procedures, such as provisions regarding Army  support for competitions and the Small Arms Firing School, and CMP’s  role in the Army’s Ceremonial Rifle Program. The MOU also contains  procedures and responsibilities related to funding. Finally, the MOU  specifies certain management internal controls to be undertaken by CMP,  including those related to the sale of firearms and the accountability of  transferred materiel. CMP’s implementation and management of these  controls is to be assessed and documented in an audit report to the Army  required by the agreement.

To implement the transfer of surplus M1911 handguns, parts, and  accessories, the Army and CMP entered into a Memorandum of  Agreement in January 2018, and the Army began transferring the surplus  M1911 handguns to CMP the same month. The Memorandum of  Agreement establishes procedures and requirements for the Army and  CMP additional to those in the 2016 MOU. Among other things, it requires  CMP to provide the Army with transaction data for all surplus handguns  received and sold on a quarterly basis, including the number transferred  to CMP, the number sold, a listing of the serial numbers for handguns  sold, and any information CMP has regarding crimes committed with a  purchased M1911 handgun. The Memorandum of Agreement further  required CMP to take certain actions with respect to security and  accountability procedures for surplus M1911 handgun processing and  storage. See figure 2 for a photograph of surplus M1911 handguns.

Federal Requirements for Selling Firearms

Chapter 407 of Title 36, U.S. Code authorizes CMP to sell firearms to  individuals who (1) are U.S. citizens, (2) are legally of age, and (3) are  members of CMP-affiliated gun clubs. CMP’s sales of surplus firearms  are generally subject to applicable federal, state, and local law. For  example, the minimum age to purchase a rifle from a federal firearms  licensee (FFL) is 18, while the minimum age to purchase a M1911  handgun from an FFL is 21. Additionally, CMP must establish  procedures to obtain a criminal records check with federal and state law  enforcement agencies. Certain federal requirements and restrictions  related to the sale of firearms are contained in section 922 of Title 18,  U.S. Code. Among other things, section 922 prohibits selling or otherwise  disposing of firearms to certain prohibited persons.

Generally, only FFLs may engage in the business of dealing in firearms.  Additionally, FFLs generally may not sell firearms directly to out-of-state  customers other than another FFL. However, these restrictions do not  apply to CMP for the sale of surplus .22 caliber rimfire and .30 caliber  rifles. Specifically, CMP may sell these rifles without operating as an FFL  and ship these rifles directly to customers around the country, unless  prohibited by that customer’s state or local law. With respect to the sale  of the surplus M1911 handguns, CMP must obtain a license and operate  as an FFL.

The Army and CMP Have Established Procedures for the Transfer and Sale of Surplus Firearms

The Army and CMP Have Procedures to Address Requirements for the Transfer of Surplus Firearms

The MOU between the Army and CMP delineates a number of  responsibilities for both organizations regarding the transfer of surplus  firearms. Furthermore, we found that both organizations have established  procedures to carry out these responsibilities. Appendixes to the MOU list  approximately 170 firearms that the Army has identified as surplus to its  needs. If any of the surplus firearms described in the MOU are identified  by the Army in a domestic location, the Army reserves those firearms for  transfer to CMP pending a formal written request from CMP for the  transfer of the surplus firearms in question. For example, in fiscal year  2017 the Army identified and reserved for transfer to CMP more than  1,000 surplus rifles that various Department of Defense museums found  to be surplus to their needs. Under the MOU, once TACOM informs CMP  it has reserved surplus firearms that may be transferred, CMP can submit  a transfer request for the surplus firearms in writing to TACOM. CMP’s  written request must acknowledge that the requested materiel is on the  list of firearms approved for transfer; certify that CMP will provide all  security, oversight, and accountability—as required by law—of the  materiel; and describe how CMP will use the requested materiel.

TACOM facilitates the transfer of surplus firearms to CMP as required by  the MOU. In some instances, the Army directly ships surplus firearms  within the United States to CMP. In other instances, TACOM relies on the  Defense Logistics Agency (DLA) to ship the surplus firearms to CMP. If  DLA transfers the surplus firearms, the firearms are either shipped  directly to CMP or to the DLA facilities located in Anniston, Alabama,  where they are released to CMP. Under the MOU, CMP reimburses the  Army for certain costs associated with transportation, supply depot  operations, and administrative support. Both CMP and DLA officials told  us that surplus firearms located at DLA’s facilities in Anniston, Alabama,  did not incur shipping cost to the Army because CMP arranges the  transfer from the DLA facilities directly to CMP’s facilities also located in  Anniston, Alabama. For example, according to TACOM and CMP officials  the Army did not incur any transportation costs for transferring 8,000  surplus M1911 handguns to CMP in January 2018. According to an Army  official, this was because CMP transported 6,736 M1911 handguns from  the DLA facility, an additional 1,242 M1911 handguns from the Center of  Military History Museum Support Center, and 22 M1911 handguns from  TACOM facilities—all located in Anniston, Alabama—back to its own  facility in Anniston for storage.

In addition to firearms from domestic locations, the Secretary of the Army  may also recover certain surplus firearms furnished to foreign countries  on a grant basis under the Foreign Assistance Act and transfer them to  CMP. If the Secretary of the Army decides to transfer surplus firearms  from a foreign country, TACOM and the Office of the Administrative  Assistant to the Secretary of the Army works with the State Department,  Office of Defense Cooperation, representatives located in the respective  foreign country to recover and facilitate the transfer and shipment of  surplus firearms from these recipients to CMP. For example, according  to Army officials, CMP received approximately 100,000 surplus M1 rifles  in fiscal year 2018; more than 13,000 surplus M1 rifles were recovered  and transferred from Turkey in addition to nearly 87,000 surplus M1 rifles  from the Philippines.

After CMP receives the surplus firearms, the MOU requires CMP to  perform all accounting procedures required by the Army for inventory  control, including compiling the surplus firearms’ serial numbers.  According to CMP officials, CMP uses a commercial point of sale system  to track inventory and performs an audit of firearms stored at its facilities  annually. For example, according to CMP officials, to count and verify the  inventory of incoming shipments of surplus firearms, CMP staff open and  inspect each box of surplus firearms upon receipt of the firearms in their  facilities in Anniston, Alabama. CMP staff then inventory each firearm by  matching the unique serial number found on the receiver of each firearm  to the manifest included with the shipment. CMP then enters these firearms into its inventory using each firearm’s unique serial number. After  shipping firearms to CMP, the MOU requires TACOM to update the  Army’s Unique Item Tracking database for tracking the firearms, which it  does by serial number. By statute, title to a transferred firearm does not  vest with CMP until immediately before CMP delivers the firearm to an  eligible purchaser.

CMP Uses Sales Procedures and Federal Background Checks to Address Requirements Related to the Sale of Surplus Firearms

CMP primarily uses sales procedures and the Federal Bureau of  Investigation’s National Instant Criminal Background Check System  (NICS) to address requirements related to the sale of surplus firearms.  See figure 3 below for a description of several of the processes used by  CMP to address the requirements related to the sale of surplus firearms.

While various federal statutes and provisions from the agreements  between the Army and CMP apply to selling both the surplus rifles and  the surplus handguns, there are some differences. For example:

Because section 40733 of Title 36, U.S. Code, exempts CMP from  certain federal firearms requirements and restrictions, CMP can ship  surplus rifles directly to a customer’s home, unless that would conflict  with state or local laws applicable where the firearm is being shipped.  In contrast, CMP must operate as an FFL for selling surplus M1911  handguns and will ship purchased handguns to an FFL, such as a  certified gun shop, in the customer’s state. The local FFL repeats  the background check before turning over the firearm to the customer.

The MOU limits CMP’s sale of surplus rifles to eight per customer per  calendar year, while the Memorandum of Agreement limits CMP’s  sale of M1911 handguns to one per customer while it is in effect.

The minimum age to purchase any rifle from CMP, including surplus  rifles, is 18 while the minimum age for purchasing handguns, including  surplus handguns, is 21.

CMP is required to ship the surplus handguns with a security device  such as a trigger lock, which it is not required to do for the sale of  surplus rifles.

CMP uses sales procedures to address federal requirements and  agreements with the Army. According to CMP officials, the sales  procedures, specifically the application to purchase the surplus firearms  that customers are required to complete and have notarized, address  some of the federal requirements and agreements between the Army and  CMP for the sale of surplus firearms. According to CMP, customers are  required to mail the original completed application package, including  copies of substantiating documentation and notarization, to CMP in order  to apply to purchase a surplus firearm. The application includes a form  requiring potential customers to certify that they do not fall within any of  the categories of individuals prohibited from being sold or receiving a  firearm. The form must be signed and notarized, and specifically lists the  prohibited categories, as well as certain CMP-unique categories. As part  of the form, potential customers must also certify that by receipt or  possession of the firearm they will not be in violation of any state law or  published ordnance applicable where they reside. Additionally, applicants  must provide proof of the following:

Citizenship and age: Applicants must include a copy of a U.S. birth  certificate; passport; proof of naturalization; a military identification  card for certain ranks (active duty, reserve component, National  Guard, or retired); or any official government document that shows  that an individual was born in the United States or that otherwise  identifies U.S. citizenship. According to the application procedures, a  copy of a driver’s license is proof of age, but not of citizenship.

Membership in CMP-affiliated organization: Applicants are  required to provide a copy of their current membership card or  another proof of membership in a CMP-affiliated organization.  According to CMP, this requirement can also be satisfied by providing  proof of membership in one of the federally chartered veterans’  organizations such as the Veterans of Foreign Wars or American  Legion; proof of either current or retired military service; or proof of  current or retired status in a law enforcement department, agency, or  association.

Marksmanship or other firearms-related activity: Applicants are  required to show proof of participation in a marksmanship-related  activity or otherwise show familiarity with the safe handling of firearms  and range procedures. According to CMP, this can be accomplished  by providing documentation of current or past military or law  enforcement service, participation in a shooting competition,  completion of a marksmanship clinic that included live-fire training, a  concealed carry license, or a FFL license, among other things.

Proof of license, permit, or firearms owner identification card: If  the state or locality where the applicant resides requires a license,  permit, firearms owner identification card, or other documentation,  applicants are also required to include a photocopy of such a  document with the application for purchase of the surplus firearm.

Federal Firearms Licensee: Applicants purchasing surplus rifles who  reside in states or localities where shipments must be made to an FFL  and applicants purchasing surplus M1911 handguns must provide a  copy of the license for the FFL that will be receiving the shipped  firearm.

According to CMP officials, CMP staff verifies the completeness of the  application, including all required documentation while entering  applicants’ information into CMP’s commercial point of sale and inventory  system. According to CMP officials this involves staff entering the  customer’s data into the point of sale and inventory system and verifying  the customer’s name, address, proof of age, proof of citizenship, and  membership in a CMP-affiliated organization, among other data.

CMP uses a separate version of the same commercial point of sale and  inventory system to enter and verify customers’ information for the  purchase of surplus M1911 handguns. According to CMP officials this is  due in part to the requirement to operate as an FFL in order to sell the  surplus M1911 handguns. According to CMP, in addition to meeting  additional record-keeping requirements required of FFLs, using two  different systems helps CMP ensure it addresses certain sales  requirements included in the agreements it has with the Army. For  example, according to CMP officials, this helps them address the  Memorandum of Understanding and Memorandum of Agreement  provisions regarding the maximum number of sales of each type of  firearm per customer.

During our site visits to CMP’s southern headquarters in Anniston,  Alabama in August 2018 and November 2018 we observed CMP officials  processing applications from the public to purchase surplus firearms to  better understand how CMP addressed certain federal requirements and  agreements between the Army and CMP. Specifically, we observed 11  transactions from the receipt of an order through processing and  packaging for shipment. Six of these transactions involved rifles and five  involved handguns. The 11 transactions we observed were consistent  with the sales procedures we identified above. For example, in all cases,  we saw CMP staff verify and update customer information from the  application packet for existing customers of surplus rifles and input  customer information from the application packet for new customers of  both the surplus rifles as well as the surplus handguns.

We also observed that CMP staff could not move forward with the sale  without entering and verifying the information supplied in the application.  In one instance, we observed a CMP employee entering an application  for the purchase of a surplus rifle that had not been notarized and signed.  CMP employees stopped the process for this application and informed us  the applicant would be contacted directly and requested to provide the  required notarization in order for CMP to proceed with the sale. In another  instance, CMP staff demonstrated what would occur if information  pertaining to the documentation required to demonstrate membership in a  CMP-affiliated gun club was not entered. We saw that CMP employees  could not continue to the next screen without entering these data.

CMP addresses various other federal requirements for the sale of  firearms via background checks. Once the application procedures we  described above are completed, CMP staff then enter the prospective  customer’s information into the system used by the Federal Bureau of  Investigation to perform background checks. CMP intends this National  Instant Criminal Background Check System (NICS) to address certain  federal requirements for the sale of firearms that we identified above. For  example, the NICS background check analyzes various databases to  determine whether a prospective customer falls into any of the categories  of persons prohibited from being sold or receiving a firearm.

The prohibitions involve sale to or receipt by a prospective customer who  is under indictment for or has been convicted in any court of a crime  punishable by imprisonment for a term exceeding 1 year; is a fugitive  from justice; or has been convicted in any court of a misdemeanor crime  of domestic violence, among other things. The NICS background check  also searches databases to identify a prospective customer who has  been discharged from the U.S. Armed Forces under dishonorable  conditions, was a U.S. citizen but has since renounced his or her  citizenship, or is an unlawful user of or addicted to any controlled  substance.

Additionally, CMP uses the NICS background check to confirm the  applicant is of the minimum age necessary to purchase either a rifle or a  handgun. Specifically, CMP uses the NICS background checks to ensure  the applicant is at least 18 in order to purchase a surplus rifle or a  minimum of 21 in order to purchase a surplus handgun. If an age is  entered into NICS that is younger than the minimum age required for  purchasing a firearm, the system will not continue performing the  background check and will notify CMP staff that the buyer is not old  enough to purchase the firearm(s).

During our site visits to CMP’s southern headquarters in Anniston,  Alabama in August 2018 and November 2018 we observed CMP  employees performing the NICS background checks for 10 of 11  transactions, and we observed that the employees were unable to  proceed with the background check without certain required information.  Specifically, CMP employees demonstrated the result of a change to the  birthdate while processing the sale of a surplus M1911 handgun so that  the customer would be under 21 years of age. This resulted in the NICS  system automatically not allowing the background check to proceed.

TACOM Oversees the Charges and Reimbursements Funded by CMP for the Transfer of Surplus Firearms.

As previously discussed, the MOU requires (1) CMP to reimburse the  Army for certain costs associated with the transfer of firearms to CMP,  and (2) TACOM to account for the funds reimbursed by CMP.  Specifically, CMP is responsible for assuming or reimbursing TACOM for  certain costs associated with transportation, standard depot operations,  and administrative support. According to Army officials, these  administrative support costs include TACOM’s annual cost of one full-time  equivalent position to help administer the identification and shipment of  surplus firearms to CMP. The MOU also requires TACOM to provide  CMP with semi-annual reports identifying the reimbursable costs the  Army incurred for any firearms transfers. According to TACOM and CMP  officials, TACOM has met this requirement since at least fiscal year 2012  by providing briefings at CMP’s biannual Board of Director’s meetings.  CMP reimburses TACOM by depositing funds into a TACOM-managed  reimbursement account. TACOM uses the funds in this account to pay  the costs associated with transferring firearms to CMP. According to the  MOU, TACOM is also responsible for maintaining accountability of funds  provided by CMP in support of certain transportation, supply depot  operations, and administrative support. The MOU further provides that  administrative funding will be evaluated at the end of each fiscal year.

For fiscal years 2008 through 2015, TACOM did not have complete  information on the reimbursable costs incurred by the Army and on the  amounts CMP reimbursed the Army for those costs. This is because,  according to TACOM officials, information on transactions involving the  reimbursement account prior to fiscal year 2016 was maintained under a  different accounting system and could no longer be accessed. According  to TACOM officials, TACOM began using a new financial system in fiscal  year 2016 to track the information used to maintain accountability  including, among other things, the Army’s reimbursable costs and CMP’s  payments for those costs. For fiscal years 2016 and 2017, TACOM  officials provided us with examples of the documentation from the current  system demonstrating that in addition to tracking CMP’s reimbursement  payments TACOM tracks reimbursable costs for transportation, standard  depot operations, and administrative support using five specific categories of information: travel, labor, commercial transportation, intra- Army purchases, and contract service. For example, these documents  showed that CMP reimbursed the Army for a total of $5 million in fiscal  year 2017.

Sale of Surplus Firearms Has Been the Primary Source of CMP’s Revenue; Although Associated Profits Could Not Be Determined, Estimated Future Revenue Could Fund Operations for Several Years

CMP’s primary source of revenue from fiscal years 2008 through 2017  was the sale of surplus firearms. During this time frame, according to  CMP’s internal financial documents, CMP generated $196.8 million in  revenue from the sales of surplus Army rifles. However, the profit that  CMP realized from these sales could not be determined. CMP’s internal  financial documents show that CMP incurred $84.7 million in costs for  those sales, but CMP’s methodology for calculating costs associated with  the transfer and sale of surplus rifles did not account for depreciation and  administrative expenses. CMP officials anticipate generating additional  revenue from the future sale of surplus M1911 handguns and surplus  rifles that CMP currently has available to sell. We estimate these sales  could generate as much as $104.9 million, or enough to fund CMP’s  operations for several more years.

CMP’s Primary Source of Revenue Has Been from the Sale of Surplus Army Rifles

Based on our analysis of CMP’s IRS filings and the corporation’s internal  financial documents, we identified four primary sources of revenue, of  which the sale of surplus Army rifles accounted for the largest share.

Sale of surplus Army rifles. According to CMP’s internal financial  documents, CMP generated $196.8 million in revenue from the sale of  surplus Army rifles during fiscal years 2008 through 2017. The vast  majority of these firearms were M1 rifles (see app. II for additional details  on the specific types of rifles CMP sold during that time frame). Although the number of surplus rifles CMP sold varied from year to year, as shown  in figure 4, except for fiscal years 2012 and 2013, the number of rifles  sold has trended downward from fiscal years 2008 through 2017.

Sale of ammunition and memorabilia. CMP purchases bulk quantities  of commercially available ammunition at a discounted rate due to the size  of the order, and then sells this ammunition to its affiliated groups. CMP  also sells memorabilia such as T-shirts and hats. According to CMP’s  fiscal years 2008 through 2017 internal financial documents, the sale of  ammunition and memorabilia was CMP’s second largest source of  revenue and generated $76.4 million. Figure 5 shows boxes of  commercially purchased ammunition stored in CMP’s warehouse in  Anniston, Alabama.

Investment account income. CMP officials told us that CMP established  an investment account to ensure it had the financial resources to continue  to meet its mission should the transfer of surplus firearms from the Army  cease. According to CMP’s fiscal years 2008 through 2017 IRS filings,  CMP reported earning $49.8 million in interest and dividend income from  the corporation’s investment account. As seen in figure 6, CMP’s  investment account grew by approximately $88 million, from $100.3  million at the end of fiscal year 2008 to $188.6 million by the end of fiscal  year 2017.

Although CMP’s investment account grew over this 10-year period, in  some years CMP made net deposits into the account, and in other years  CMP had net withdrawals from the account. For example, CMP’s net  deposits from fiscal years 2008 through 2013 were $73.5  million. However, CMP had net withdrawals of $21.5 million from fiscal  years 2014 through 2017. CMP officials stated that they used withdrawals  from the investment account in those years to expand marksmanship- related programs and to finance construction of the Talladega  Marksmanship Park, completed in 2015, shown in figure 7.

Marksmanship-related programs. CMP charges fees for individuals to  participate in its marksmanship-related programs such as training  programs, matches, youth camps, and competitions. According to CMP’s  fiscal years 2008 through 2017 IRS filings, CMP generated approximately  $9.2 million in revenue from these fees. CMP’s IRS filings for those years  also indicate that CMP’s expenses associated with CMP’s marksmanship  programs exceeded revenue by approximately $85.8 million. According to  CMP officials, CMP heavily subsidizes participation fees for both matches  and youth camps to help make the corporation’s programs as accessible  as possible, and revenue generated from the sale of surplus firearms  covered any program deficits. Figure 8 shows competitors during the  National Matches event we observed in July 2018.

Other revenue. According to CMP’s fiscal years 2008 through 2017  internal financial documents, CMP also generated some additional  revenue from a variety of other sources. For example, CMP’s Talladega  Marksmanship Park has generated over $1.5 million in revenue from  range rental and match fees, among other things.

Profits from the Sale of Surplus Firearms Could Not Be Determined

CMP reported an overall profit of $125.9 million on its IRS filings for fiscal  years 2008 through 2017, but this amount includes all categories of  revenue and expense for business operations, not only those categories  specific to surplus rifle sales. We were therefore unable to use CMP’s  IRS filings to determine CMP’s profits from the sale of surplus rifles.

The amount of profit specific to surplus rifle sales also could not be  determined from CMP’s internal financial documents. CMP’s internal  financial documents showed $84.7 million in expenses to sell surplus  rifles in fiscal years 2008 through 2017, including costs associated with  labor, shipping, and other expenses to prepare the surplus firearms for  sale. This is less than the $196.8 million CMP’s internal financial  documents show CMP generated in revenue from the sale of surplus  Army rifles during fiscal years 2008 through 2017. However, in its internal  financial documents, the methodology CMP used to calculate the  expenses to sell surplus Army rifles did not include all of CMP’s expenses  for these sales. Specifically, the methodology CMP used did not account  for depreciation and administrative expenses.

CMP did not begin selling surplus M1911 handguns until November 2018,  and therefore had just begun generating revenue from these sales at the  time of our report. CMP’s internal financial documents reported some  costs associated with the surplus M1911 handguns. For example, in fiscal  year 2018, in response to an Army requirement, CMP spent  approximately $0.7 million upgrading a facility used to house CMP’s  M1911 handgun operations. CMP also reported expenses specific to the  M1911 handguns of just over $8,000 in fiscal year 2017.

CMP Could Generate Millions of Dollars in Future Revenue from the Projected Sale of M1911 Handguns and Surplus Rifles

According to CMP officials, CMP anticipates selling most, if not all, of the  M1911 handguns because there has been a higher demand for the  surplus M1911 handguns than the quantity available to CMP for sale. For  example, CMP officials reported that they received more than 19,000  orders for the 8,000 surplus M1911 handguns transferred from the Army  in January 2018. How much CMP will sell each surplus handgun for  depends on the quality, or grade, of the handguns as determined by  CMP. Specifically, CMP officials told us CMP will sell service grade  surplus M1911 handguns for $1,050, field grade handguns for $950, and  rack grade handguns for $850 each.

CMP officials reported that as of December 2018, CMP had sold 632  service grade surplus M1911 handguns for $1,050 each, which generated  $663,600 in revenue. Further, CMP officials told us they had determined  that 145 of the surplus M1911 handguns were in unsellable condition. As  a result, as of December 2018, 7,223 surplus M1911 handguns remained  from the original 8,000 CMP received from the Army. If CMP sold all of  the remaining handguns, we estimate that CMP could generate from  $6.14 million to $7.58 million in additional revenue, depending on the  grade of each surplus M1911 handgun sold. As of December 2018, CMP  officials told us they expected to complete the processing and sale of the  surplus M1911 handguns in the spring of 2019. We estimate that by the  time these sales are completed CMP could generate total revenue of from  $6.8 million to $8.2 million from the sale of surplus M1911 handguns.

CMP may also be able to continue to generate revenue from surplus rifles  that are currently available for sale. Based on CMP’s reported sales of  304,233 surplus rifles from fiscal years 2008 through 2017 and revenue  generated from these sales of $196.8 million, we determined the average  sale of these surplus rifles to be approximately $650 per rifle. According  to CMP, as of August 16, 2018 it had approximately 148,714 sellable  surplus rifles. Based on our calculation of the average sales price of  $650 per surplus rifle, we estimate CMP could generate approximately  $96.7 million in revenue from selling surplus rifles currently available for  sale. Combined with the potential revenue from the sale of M1911  handguns, we estimated CMP could generate from $103.5 million to  $104.9 million from the future sale of surplus firearms. Given CMP’s  fiscal year 2017 expenses of $15.8 million, and assuming a similar level  of future annual expenses, we estimate CMP could fund a similar level of  operations for several more years from the sale of all of the surplus  firearms it currently has available for sale.

Further, as discussed earlier, CMP has other sources of revenue. As of  September 30, 2017, CMP reported having cash of $3.6 million and an  investment account that was valued at $188.6 million, for a total of $192.2  million. This could also allow CMP to continue operations for several  additional years if it did not receive any additional transfers of surplus  firearms.

CMP and the Five Selected Corporations Have Similarities in Aspects of Their Business Operations, but Differ in Their Relationship with Members

In addition to CMP, we examined five other federally chartered  corporations–the U.S. Naval Sea Cadet Corps, the Civil Air Patrol, Big  Brothers Big Sisters of America, Future Farmers of America, and the Boy  Scouts of America–that have a similar focus on the development,  education, or training of youth. Four of the six corporations, including  CMP, have received federal funding or resources, and each of the six  corporations is governed by some form of a board of directors. However,  CMP’s relationship with members, which CMP officials refer to as  “affiliated groups” (e.g., gun clubs throughout the United States), differs  from the other five corporations we selected for comparison.

Organizational mission. All five of the other federally chartered  corporations we examined have a focus on the development, education,  or training of youth.

The Naval Sea Cadet Corps identifies itself as a national youth  leadership development organization that promotes interest and skill  in naval disciplines while instilling strong moral character and life skills  through leadership and technical programs modeled after the Navy’s  professional development system.

The Civil Air Patrol’s mission statement includes the development of  youth and promotion of air, space, and cyber power. Further, the Civil  Air Patrol identified that it promotes aviation and related fields through  aerospace/science technology engineering and math education and  by helping shape future leaders through its cadet program.

Big Brothers Big Sisters of America’s overall mission includes  providing children facing adversity with strong and enduring,  professionally supported relationships that change their lives for the  better, including helping children to achieve educational success.

Future Farmers of America’s mission statement involves making a  positive difference in the lives of students by developing their potential  for premier leadership, personal growth and career success through  agricultural education.

The Boy Scouts of America identified that its goal is to train youth in  responsible citizenship, character development, and self-reliance  through participation in a wide range of outdoor activities, and  educational programs, among other things.

Federal funding or resources. CMP, the Naval Sea Cadet Corps, the  Civil Air Patrol, and Big Brother Big Sisters of America received some  form of federal funding or resources during fiscal years 2015 through  2017. CMP is the only one of these four corporations that relies on the  transfer and sale of federally donated surplus firearms for the majority of  its revenue. According to officials from the corporations, the Naval Sea  Cadet Corps and the Civil Air Patrol rely on federal appropriations and  federal grants from the Navy and the Air Force, respectively. For  example, according to officials from the Naval Sea Cadet Corps, the  corporation received approximately $5.1 million in federal grants from the  Navy from fiscal years 2015 through 2017. Civil Air Patrol officials stated  that federal funds were the largest source of revenue. According to  officials from Big Brothers Big Sisters of America, the corporation  received approximately $3.8 million in federal grants from the Department  of Labor and $8.2 million in federal grants from the Department of  Justice’s Office of Juvenile Justice and Delinquency Prevention from  fiscal years 2015 through 2017. Officials from Big Brothers Big Sisters of  America told us that these grants were the corporation’s largest source of  funding. Officials at both Future Farmers of America and the Boy Scouts  of America told us they raise funds through membership dues and  merchandise sales, among other things, but do not receive any federal  funding or resources.

Organizational structure. The leadership structure of CMP and the five  selected federally chartered corporations was similar. That is, officials  from CMP and the five selected corporations told us that each corporation  has a board of directors or board of governors that may or may not have  term limits. For example, CMP’s Board of Directors includes 11 board  members with repeatable 2-year term limits, for which the Chairman of  the Board also serves as the Chief Executive Officer. According to Boy  Scouts of America officials, the corporation’s National Council’s Board of  Directors is elected through a nominating process and has no fixed term  limits. The Board of Directors in turn elects representatives to the  Executive Committee and there is also an Advisory Council. The Advisory  Council, according to Boy Scouts of America officials, reports to the  Board of Directors and comprises both former members of the board and  members who may become future directors on the board. According to  officials from Future Farmers of America, that corporation has a Board of  Directors of which four members are designated by the Department of  Education including a designated Chairperson, and these four members  serve open-ended terms. According to these officials, the remaining  members of the board not designated by the Secretary of Education  serve 3-year terms. The Civil Air Patrol has an 11-member Board of  Governors: four are appointed by the Secretary of the Air Force; four are  from its volunteer force; and three are from outside the corporation.

Organizational relationships. CMP’s relationship with what it refers to  as affiliated groups (e.g., gun clubs) throughout the United States, differs  when compared with the five federally chartered corporations we selected  for review. CMP is located in two facilities: one in Anniston, Alabama,  that, according to CMP officials, primarily handles sales and operations  and one in Port Clinton, Ohio, that, according to CMP officials, manages  mission-related programs, such as the National Matches. CMP also sells  surplus firearms to members of groups affiliated with CMP from  throughout the United States. But, while CMP officials identified 5,002  affiliated clubs throughout the United States and referred to them as  being “affiliated” with CMP, none of these entities are actually part of  CMP. According to CMP officials, the clubs pay a small annual fee to  become affiliated with CMP, which allows them to participate in CMP- sanctioned marksmanship matches and so that their members are eligible  to buy surplus firearms from CMP, among other things. In contrast,  according to officials from the other five selected corporations, those  corporations have members or affiliates throughout the United States— meaning that these members and affiliated groups are part of the  organization as a whole. For example, officials from the Boy Scouts of  America told us that they divide the country into regions, then local  councils, local districts, counties or communities, and then to local  sponsors of individual units or troops; all members are part of the Boy  Scouts of America. Similarly, Naval Sea Cadet Corps officials told us the  organization is comprised of regional and local units; there is open  communication between headquarters and the local units, and a  standardized training program is implemented at the local level.

Agency Comments, Third-Party Views, and Our Evaluation

We provided copies of a draft of this report to the Secretary of the Army,  the Civilian Marksmanship Program, and other interested parties for  comment. The Secretary of the Army and Civilian Marksmanship Program  provided technical comments, which we incorporated into this report as  appropriate.

We are sending copies of this report to appropriate congressional  committees and the Secretary of the Army. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-9627 or at maurerd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix III.

The National Defense Authorization Act for Fiscal Year 2018 required the  Army to transfer surplus M1911 handguns to the Civilian Marksmanship  Program (CMP) during fiscal years 2018 and 2019, including no fewer  than 8,000 in fiscal year 2018 and no more than 10,000 in any fiscal  year. The act also included a provision for us to review certain matters  related to CMP. This report (1) examines the Army’s and CMP’s  procedures to address requirements governing the transfer and sale of  firearms; (2) examines CMP’s primary sources of revenue, costs and  profits, and estimated future revenue associated with the sale of surplus  firearms; and (3) compares certain aspects of CMP’s business operations  with those of five selected youth-focused, federally chartered nonprofit  corporations  The scope of our review focused primarily on fiscal years 2008 through  2017. We compiled 10 years of the sale of surplus rifles from fiscal years  2008 through 2017 to understand the numbers of surplus rifles  transferred as well as the revenue, costs, and profits associated with the  sale of surplus rifles. To identify the requirements governing the transfer  and sale of surplus firearms, we reviewed applicable federal statutes  including relevant provisions from chapter 407 of Title 36, and section 922  of Title 18, U.S. Code, as well as agreements between the Army and  CMP such as the 2016 Memorandum of Understanding and the 2018  Memorandum of Agreement. We also reviewed transfer and sales  procedures from fiscal years 2018 and 2019 to provide a current status  regarding CMP’s sale of surplus M1911 handguns, which CMP began  selling in November 2018.

To identify procedures put in place by the Army to address the  requirements governing the transfer of firearms, we reviewed  documentation of reimbursements CMP made to the Tank-automotive  and Armaments Command (TACOM), the organization within the Army  responsible for facilitating the transfer of surplus firearms to CMP as well  as for managing the related reimbursement account. Our review of the  procedures associated with the reimbursement account included  obtaining cash collection vouchers submitted to the Army by CMP and  TACOM briefings presented at CMP’s biannual Board of Director’s  meetings. Further, we interviewed TACOM and Defense Logistics Agency  (DLA) officials to gain an understanding of how reimbursable costs are identified and requested from CMP. We also compared multiple source  documents related to transfers. To understand how TACOM identifies and  reports costs associated with the transfer of surplus firearms, we  reviewed documentation related to reimbursement for labor,  transportation, and standard depot operation costs associated with the  transfer of firearms from the Army to CMP.

To identify procedures put in place by CMP to address the requirements  governing the transfer and sale of firearms, we conducted site visits to  CMP’s northern and southern headquarters in Port Clinton, Ohio and  Anniston, Alabama, and observed the inventory and sales processes for  rifles and handguns. During our site visits to CMP’s southern  headquarters in Anniston, Alabama, in August 2018 and November 2018  we observed 11 examples of firearm transactions and compared the  procedures with various federal requirements and the agreements  between the Army and CMP. We also reviewed documentation of sale  order forms, and of CMP’s sales operating system processing an order in  order to identify how CMP enters and confirms certain information related  to sales. In addition, we interviewed CMP officials to obtain further  clarification on the organization’s sales processes.

To determine CMP’s primary sources of revenue, as well as the costs and  profits associated with the sale of surplus rifles, we reviewed financial  information provided by CMP. Our review included an analysis of CMP’s  IRS filings and internal financial documents for fiscal years 2008 through  2017. We used CMP’s IRS filings to provide information on revenue  generated from overall sales, investments, and programs, as well as on  the growth of CMP’s investment account. We relied on the internal  financial documents for a more granular account of the revenue CMP  generated specifically from the sale of surplus rifles as well as  commercially purchased ammunition and memorabilia. CMP officials  provided us with a methodology for determining which data within the  organization’s internal financial documents are revenue and expenses  specific to the sale of surplus rifles. We assessed the reliability of the data  by interviewing CMP officials to gain an understanding of how CMP’s IRS  filings and internal financial documents are produced and found it  sufficiently reliable for our purposes.

To assess the reliability of the surplus firearms transfer data provided by  TACOM we spoke with TACOM officials for clarification and further  explanation of the data provided, including firearm nomenclature and  identification codes. The additional information TACOM provided allowed  us to identify 17 different types of .22 or .30 caliber surplus rifles that  could be grouped together based on make, model, and/or caliber.  TACOM officials confirmed our groupings for the types of firearms  transferred from fiscal years 2008 through 2017, and we used the results  of our analysis to summarize the number and types of surplus rifles  transferred to CMP during this time frame. We found the data to be  sufficiently reliable for our purposes.

To determine potential future revenue associated with the sale of surplus  M1911 handguns we obtained current sales price information from CMP,  and used this information to project a range of potential future revenue  based on the number of surplus rifles and handguns CMP currently has  on hand. Specifically, to determine the range of potential revenue for the  sale of surplus handguns, we asked CMP to provide information on the  sales prices for each of the three grades of preordered M1911 handguns.  CMP reported that it had sold 632 surplus M1911 handguns as of  December 13, 2018 and further that it had identified another 145 surplus  handguns as unsellable. To determine the number of surplus handguns  remaining to be sold, we subtracted both the 632 surplus handguns CMP  reported as sold and the 145 surplus handguns CMP had determined to  be unsellable from the total of 8,000 surplus M1911 handguns the Army  originally transferred to CMP. To calculate the range of potential revenue  from the remaining 7,223 surplus M1911 handguns, we then multiplied  the 7,223 remaining surplus handguns by the lowest and the highest  sales prices, $850 and $1,050 respectively. This gave us a range of  revenue from the future sales of from $6.14 million to $7.58 million. We  then added the known $663,600 in revenue from the sale of the 632  service grade handguns CMP identified to our low and high end  calculations to determine the range of future revenue of from $6.8 million  to $8.2 million from the sale of surplus M1911 handguns.

To determine potential future revenue associated with the sale of surplus  rifles, we reviewed inventory and sales data provided by CMP and used  this information to estimate potential future revenue based on the average  price of the surplus rifles CMP has sold from fiscal years 2008 through  2017. Based on CMPs reported sales of 304,233 surplus rifles from fiscal  years 2008 through 2017 and revenue generated from these sales of  $196.8 million, we determined the average sale of these surplus rifles to  be approximately $650 per rifle. According to CMP, as of August 16,  2018, it had 228,791 rifles on hand, of which CMP identified 148,714 as  being in sellable condition. We then multiplied the number of rifles  available for sale as of August 2018 by $650, assuming the average sales  price would remain the same going forward, to obtain the potential future  revenue from the sale of surplus rifles. We then added the range of  potential surplus M1911 handgun sales to determine a potential range of  CMP’s future sales of surplus firearms. Given CMP’s fiscal year 2017  expenses of $15.8 million, and assuming those expenses remained the  same, CMP could fund a similar level of operations for several years from  the sale of all of the surplus firearms it currently has available to sell.

In order to compare CMP’s business operations with those of other  federally chartered nonprofit corporations, we focused on CMP’s youth- focused mission and identified eight other youth-focused, federally  chartered nonprofit corporations. Specifically, we reviewed 93 federally  chartered nonprofit corporations to identify corporations that focused on  the education, training, or development of youth. We developed a set of  relevant questions and interviewed officials from five of the eight federally  chartered nonprofit corporations we identified—the Naval Sea Cadet  Corps, the Civil Air Patrol, Big Brothers Big Sisters of America, Future  Farmers of America, and the Boy Scouts of America. Of the remaining  three corporations, two did not respond to our requests for meetings and  the third declined to meet. We posed the same questions to all the  corporations’ officials we met with and compared certain aspects of  CMP’s business operations with the federally chartered nonprofit  corporations regarding governance, organizational structure and  relationships, and funding sources.

We conducted this performance audit from May 2018 to February 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: Surplus Rifles Transferred from the Army to the Civilian Marksmanship Program from Fiscal Years 2008 through 2017

The Army transferred 279,032 surplus rifles to the Civilian Marksmanship  Program (CMP) from fiscal years 2008 through 2017. The surplus rifles  transfer data characterized rifles with different descriptions for  nomenclatures (e.g., M1903, Mossberg M144, and M1917 Enfield) and  firearm identification codes. Our analysis determined that the different  nomenclatures could be combined into 17 distinct groups because many  of the rifles were variants of the same type of .30 caliber rifle or carbine,  or .22 caliber rimfire rifle. The 17 types of rifles we identified were  grouped together based on make, model, and/or caliber.

Through our analysis, we determined that the majority of rifles transferred  to CMP by the Army from fiscal years 2008 through 2017 have been  surplus M1 rifles. Our analyses determined that 203,644 of the 279,032  surplus rifles transferred to CMP from fiscal years 2008 through 2017  were serviceable M1 rifles. The second largest type of surplus rifles  transferred during this period were drill rifles—rifles not capable of firing  live or blank rounds of ammunition—although CMP received nearly four  times the number of M1s as it did drill rifles. See table 1 for a description  of the surplus rifles transferred to CMP by the Army from fiscal years  2008 through 2017.

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Marilyn Wasleski, Assistant  Director; Scott Behen, Analyst-in-Charge; Mae Jones; Richard Kusman;  Amie Lesser; Rebecca Mendelsohn; Mike Shaughnessy; Mike Silver;  Carter Stevens; and Roger Stoltz made key contributions to this report.

Since 1996, the Army has transferred more than 700,000 surplus firearms to the Civilian Marksmanship Program, a federally chartered corporation that sells those firearms and promotes marksmanship and gun safety.

We reviewed how surplus firearms are transferred to the program and sold. We found the Army and the Program have procedures to address requirements for transferring and selling these firearms, and that the program generated $76.4 million in revenue from their sale from 2008 through 2017.

We estimate the Program could generate up to $104.9 million from available surplus firearms, enough money to fund its operations for several years.