Internal Controls:

Federal Supply Service Depot Transportation Costs Can Be Reduced

GGD-87-63: Published: May 8, 1987. Publicly Released: May 8, 1987.

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GAO reviewed management controls over Federal Supply Service (FSS) supply distribution operations to assess how well FSS management control systems ensure that motor freight transportation costs are held to a minimum.

GAO found that FSS: (1) spends about $37 million to transport depot-stocked merchandise by motor freight carrier to federal agencies; (2) spends an additional $7 million annually to transport goods to federal agencies by other means; and (3) could save an estimated $3.8 million of the $37 million annually by consolidating shipments. GAO also found that FSS does not always consolidate shipments because: (1) it does not monitor depot performance in consolidating shipments, but monitors and holds depots accountable for meeting timeliness goals for processing and shipping agency orders; (2) its policy prohibits consolidating priority shipments with nonpriority shipments; and (3) its automated system requires depots to manually consolidate shipments, since the system processes orders separately according to the storage location of the merchandise within the depot. GAO noted that FSS is currently studying the feasibility of automating its depot operations, which would address the problems associated with producing shipping documents concurrently with order filling documents, but would not address the problems relating to different depot storage locations or the prohibition against merging priority and nonpriority orders.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Industrial funding legislation (H.R. 3484) was signed into law on December 22, 1987. Depots began operating under the industrial funding concept on February 2, 1988. Under industrial funding, FSS depots are accountable for all costs, including transportation.

    Recommendation: To realize the transportation cost savings available through consolidation of multiple shipments, the Administrator of General Services should direct the Commissioner, FSS, to modify the internal control system, which holds FSS depots accountable for meeting shipment timeliness goals, to include accountability for consolidating multiple, same-day shipments to the same customer agency.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: The depot automation project, scheduled for implementation in 1990, includes a procedure whereby shipping documents will be prepared after selection of material, thus eliminating multiple shipping documents to the same consignee. In the meantime, however, under industrial funding, depots will be manually consolidating shipments to reduce shipping costs.

    Recommendation: To realize the transportation cost savings available through consolidation of multiple shipments, the Administrator of General Services should direct the Commissioner, FSS, to include, as part of its depot automation project, the feasibility of modifying automated system processes to minimize the generation of documents that, without manual intervention by depot personnel, authorize multiple shipments.

    Agency Affected: General Services Administration

 

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