I bought 2 6.5 motors from a Government Liquidation several years ago and the experience was just that.
1st is the paperwork, You have to fill out an End Use certificate stating what you plan on doing with the motors, #1 is that you dont plan on selling them to foreign nationals. Not that big of a deal but on your first buy you have to wait a period of weeks for your EUC to be approved. Again not big of a deal but just know that it takes a little time.
Second, Unless you live close enough to the base to inspect the actual lot, (you have to make an appointment) it is a toss up. The Gov Liquidation people use the military's DRMO Codes and list them in the auctions, Condition will be listed in a Letter number format such as "A3" etc. There is a key on the site which explains what codes mean what. Unserviceable generally means just that. Most non-running or Junk motors will have Red or green tags on them, These are service tags on the mechanic that inspected them. Red means the motor is not rebuildable and green means it is.
That being said the tags are just a brief inspection by a military mechanic on if they want to rebuild it. 1 of my motors had a red tag, inspection stated metal shavings in oil unserviceable. Motor had not been torn down, But the big hole in the oil pan was a clue. Tore down motor, which was 97 block and had just been rebuilt according to labels on motor, appeared clearances werent right when they installed crank or rod bearings, spun 2 crank bearings which in turn sent metal through crank oil passages starved lower end of oil rod end got so hot cap let go and sent it through the oil pan. in process knocked lower part of cylinder wall. Had machine shop inspect block, stated cylinder damage was not high enough to cause issues with ring or piston seal no cracks, junked crank rods and sold rest of motor to an individual for more than what I paid for both. He rebuilt it and is driving it to this day.
Second motor was Green tagged which according to DRMO is supposed to be rebuildable. This was a 2000 GM Improved casting block. Thicker mains etc. Motor again had nice size hole in oil pan, upon tear down, head gasket let go, hydrolocked motor rod snapped in half.
Internal knocked a chunk out of lower cylinder wall. Crank and all other rods good, Machine shop said cylinder needs to be sleeved but otherwise block is good. That motor is currently resting in my 85.
Moral of the story is you dont know what your gonna get. Condition codes and service tags are just a brief inspection and can be wrong and other documentation can be wrong. If the auction goes cheap enough or the base is close by it may be worth it, otherwise you may be better going another route.
01 Chevy HD - Gasser
85 K10 Suburbalanche with a Rebuilt 6.5 NA Diesel. Banks setup waiting on install
(Stolen-2008 and now proudly serving a Drug Cartel in Mexico)95 K2500 6.5LTD 5speed, 150,000 miles)