Consolidation of GSA Depot Function Can Save Millions and Improve the Use of Depot Resources

PLRD-82-109: Published: Aug 16, 1982. Publicly Released: Aug 16, 1982.

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GAO reviewed the General Services Administration (GSA) depot system for storing and distributing commonly used supply items.

Over the past 10 years, the system has been reduced from 25 to 15 depots; however, GAO believes that the system can be further reduced to 8 depots, which would save nearly $7 million annually in space costs. In addition, due to the high degree of commonality of supply items among the depots, inventory could be reduced by $25 million. GAO also believes that the consolidation could improve supply performance by using depot personnel more effectively. Since GSA uses an economic order quantity formula to manage common supply items, the number of receipts and the receipt processing work load would be reduced as well. Transportation costs could be increased by the proposed consolidation. However, the increases in transportation costs would be partially offset by savings resulting from fewer total shipments from suppliers. GAO estimates that the one-time personnel costs of consolidation would be about $3 million. Nonpersonnel costs would vary, depending on how the consolidation is accomplished. If consolidation is accomplished over an extended period, nonpersonnel costs could be minimized. As an alternative to consolidating the GSA depot system, GAO considered the potential benefits of transferring the depot function to the Defense Logistics Agency (DLA). However, due to higher staffing requirements at DLA depots, GAO believes that greater savings could be achieved by retaining and consolidating the function within the GSA depot system.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: As of June 30, 1986, the Federal Supply Service has taken action to close two additional depots beyond the seven included in the original report recommendations. The GSA depot system is still under study and additional depots may be closed as a result of these studies. According to GSA, these closings resulted in overall savings to the government.

    Recommendation: The Administrator of General Services should direct the Commissioner of the Federal Supply Service to immediately begin action to consolidate its depot system and assess the benefits of consolidating the inventory management and procurement functions along with the depot consolidation.

    Agency Affected: General Services Administration

 

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