Commercial Versus Government Storage

LCD-76-241: Published: Oct 18, 1976. Publicly Released: Oct 18, 1976.

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Protests by the Department of Defense (DOD) of the use of government warehouses rather than commercial storage for the storage of household goods are discussed. A potential saving of $576,956 by using unused government-owned facilities at Kelly Air Force Base, Texas, was proposed.

A one-time saving of over $14 million and an annual saving of $700,000 is now indicated by DOD; however, if the space could be used in a way that would result in greater savings, GAO would support the alternative use. At the Oakland Army Terminal, DOD took exception to four cost elements: (1) storage in transit; (2) packing and draying; (3) opportunity costs; and (4) self-insured liability. DOD alleged that storage in transit costs would be incurred under both government and commercial storage and should be included in computations; these costs were included in computations under both alternatives. DOD believes that packing and draying costs would be incurred by conversion to a government storage operation; it is felt that such costs would be the same regardless of the facilities used.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Because the Oakland facility was vacant for a long period of time, the costs accounting principle of opportunity cost should be foregone. The subject of self-insured liability has little impact on comparative cost allowances.

    Agency Affected:

 

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