The company, which operates as the federal unit of District-based Liquidity Services, receives items categorized as surplus or scrap. They could be new boots and sleeping bags or scrap metal and parts from the Pentagon every week. Government Liquidation then sells the inventory via online auctions, reaping financial returns for the Pentagon and for itself.
“It’s not panic, it’s a very orderly process, but these items have to go,” said Thomas B. Burton, president of Government Liquidation.
One of the company’s more than 200 nationwide locations used for storing inventory is Fort Meade, just south of Baltimore-Washington International Marshall Airport.
There, the company boasts a hulking pile of scrap made up of old filing cabinets, trash cans and assorted metal; a warehouse with items such as exercise equipment and medical supplies; and a parking lot of cast-off military trucks and trailers.
Some of the trucks work, and some don’t, but customers buy either way, said Justin Miller, who manages the location. According to Miller, some buyers use the vehicle for off-road driving, others for farming and some for community parades or other events.
Many of the company’s purchasers return; about 70 percent are repeat buyers, according to Burton.
“Most of our customers are small businesses,” he said, adding that some use their purchases to support or start their own enterprises. He recalled watching one buyer stuff 100 sleeping bags into his sedan as part of a plan to resell them.
Government Liquidation employs about 325 people, the majority of whom are in its operations group. Those employees take photos and videos of the inventory and figure out how to group it for sale. Items are posted on the site for 10 business days before a three-day auction, giving potential buyers time to submit questions online or to arrange an in-person visit. At the end of the auction period, the highest bidder wins and must pick up his or her purchase or arrange to have it shipped.
While it sounds simple, Government Liquidation, like any other company that works with the Pentagon, faces its share of regulation.
Some equipment the company sells requires what’s known as an end-use certificate, meaning that winning bidders have to indicate what they plan to do with the purchase and be vetted to ensure they’re not on a restricted list. The company also cross references its database against the government’s regularly changing list of items that require additional controls — though Burton said Government Liquidation does not sell dangerous or hazardous items.
The company touts the benefits it has brought to the government, returning more than $500 million in the past decade. But the model also reaps benefits for the company. Under its contracts with the Defense Department, Government Liquidation retains 25 percent of the profit for scrap. For surplus items, it purchases the goods from the Pentagon upfront for 1.8 percent of their original value.
In fiscal 2011 — which ended Sept. 30 — the company sold $190 million in scrap and surplus items.