GAO-04-664, Federal Acquisition: Increased Attention to Vehicle Fleets Could Result in Savings

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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

May 2004:

Federal Acquisition:

Increased Attention to Vehicle Fleets Could Result in Savings:

GAO-04-664:

GAO Highlights:

Highlights of GAO-04-664, a report to congressional requesters

Why GAO Did This Study:

Federal agencies spend about $1.7 billion annually to operate a fleet
of about 387,000 vehicles. During the last decade, concerns have been
raised about whether agencies have more vehicles than they need. In an
April 2002 letter to federal agencies, the Office of Management and
Budget stated that the size of the federal fleet seemed excessive.

GAO was asked to determine (1) the extent to which agencies ensure that
their fleets are the right size to meet agency missions, (2) whether
potential savings could result from the disposal of unneeded vehicles,
and (3) what actions are being taken on a governmentwide basis to
improve fleet management practices. GAO focused its review on the
justification for acquiring and retaining vehicles at the Departments
of Agriculture, Army, Homeland Security, Navy, and Veterans Affairs.

What GAO Found:

Because of a lack of attention to key vehicle fleet management
practices, the agencies GAO reviewed cannot ensure their fleets are
the right size or composition to meet their missions. Industry
practices for cost-efficient fleets include the development of
utilization criteria related to the mission of a vehicle and periodic
fleet assessments using these criteria to determine the appropriate
fleet size and composition. If unneeded vehicles are identified, they
are disposed of. However, the agencies GAO reviewed have not
established policies that contain clearly defined utilization criteria
that would allow them to determine the number and type of vehicles they
need. Further, agencies are not routinely conducting periodic fleet
assessments. Two agencies, the Navy and the Forest Service within the
Department of Agriculture, conduct assessments; however, these
assessments are either inconsistently applied or the results are not
enforced. Some agencies have begun to recognize the need to revise
their guidelines to provide better criteria for determining their
vehicle needs.

GAO’s work and reviews by inspectors general identified numerous
instances where agencies were retaining vehicles they did not need,
with potential savings ranging from thousands to millions of dollars if
these vehicles were eliminated. For example, the Department of the
Interior’s Inspector General reported that a significant portion of
the department’s 36,000 vehicles were underutilized and estimated
savings of $34 million annually if these vehicles were disposed of.

GSA’s Office of Governmentwide Policy and the Office of Management and
Budget have recently taken a number of actions to require agencies to
better manage and improve the cost-efficiency of their fleets. The
Office of Governmentwide Policy is currently revising the Federal
Management Regulation to require agencies to (1) appoint a central
fleet manager with control over all aspects of fleet management,
including fleet budgets, which are now generally controlled at the
local level; (2) establish utilization criteria and periodically review
fleet size; and (3) fund a fleet management information system. The
Office of Governmentwide Policy plans to work in a cooperative effort
with agencies to implement the revised regulation. However, based on
discussions with officials from the agencies GAO reviewed, GAO
anticipates that GSA will face opposition to its requirement for
centralized budget control over the fleets. In 2002, the Office of
Management and Budget began requiring agencies to report, as part of
their budget submissions, the size, composition, and cost of their
fleets for the current year and to project costs for the next 3 fiscal
years.

What GAO Recommends:

GAO is making recommendations to the General Services Administration
(GSA), the Office of Management and Budget, and the Departments of
Agriculture, Defense, Homeland Security, and Veterans Affairs on the
need to periodically assess fleet size and composition using
utilization criteria related to the mission of a vehicle. In written
and oral comments on a draft of this report, the agencies generally
agreed with GAO’s recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-664.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact David Cooper at (202)
512-4841 or cooperd@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Fleet Management Attention Is Needed to Ensure That Fleets Are the
Right Size and Composition:

Opportunities Exist to Dispose of Underutilized Vehicles and Realize
Potential Savings:

Governmentwide Initiatives to Improve Fleet Management Practices:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Comments from the Department of Agriculture:

Appendix III: Comments from the Department of Defense:

Appendix IV: Comments from the General Services Administration:

Appendix V: Comments from the Department of Homeland Security:

Appendix VI: Comments from the Department of Veterans Affairs:

Appendix VII: Reviews Identifying Excess Vehicles at Various Agencies:

Figures:

Figure 1: Approximate Number of Vehicles Operated by the Agencies
Included in Our Review:

Figure 2: Extent to Which Agencies' Policies Provide Mission-Related
Utilization Criteria and Agencies Conduct Periodic Fleet Assessments:

Abbreviations:

APHIS: Animal and Plant Health Inspection Service:

DHS: Department of Homeland Security:

FAST: Federal Automotive Statistical Tool:

GSA: General Services Administration:

NRCS: Natural Resources Conservation Service:

OGP: Office of Governmentwide Policy:

OMB: Office of Management and Budget:

TEMC: Transportation Equipment Management Centers:

United States General Accounting Office:

Washington, DC 20548:

May 25, 2004:

The Honorable Susan M. Collins:
Chairman:
Committee on Governmental Affairs:
United States Senate:

The Honorable Russell D. Feingold:
United States Senate:

Federal agencies spend about $1.7 billion annually to acquire, operate,
and maintain a fleet of about 387,000 trucks, passenger vehicles, and
other vehicles, such as ambulances and buses.[Footnote 1] These
vehicles can be leased from the General Services Administration (GSA)
or commercial companies or purchased by the agency. According to GSA
data, the size of the federal fleet has remained fairly constant over
the last 6 years. However, during the last decade, concerns have been
raised about whether agencies are acquiring more vehicles than they
need to meet their missions. These concerns culminated in an April 2002
letter to federal agencies, in which the Director of the Office of
Management and Budget (OMB), stated that the size of the federal fleet
seemed, in many cases, to be excessive and that significant reductions
may be in order.

You asked us to determine (1) the extent to which agencies ensure that
their fleets are the right size to meet agency missions, (2) whether
potential savings could result from the disposal of unneeded vehicles,
and (3) what actions are being taken on a governmentwide basis to
improve fleet management practices. We conducted our work at the
Departments of Agriculture, Army, Navy, Homeland Security, and Veterans
Affairs; all of which account for about 200,000 vehicles, or about
53 percent of the federal government's fleet. Within the Department of
Veterans Affairs, we focused on the Veterans Health Administration
because it is responsible for agencywide fleet management. Within
Agriculture, we focused our review on the Forest Service, Natural
Resources Conservation Service (NRCS), and Animal and Plant Health
Inspection Service (APHIS), which account for about 75 percent of
Agriculture's vehicles. Because the Department of Homeland Security
(DHS) was formed only recently and its various organizational elements
are currently operating under fleet policies from their legacy
agencies, we limited our review to the actions the department is taking
to leverage its buying power when acquiring vehicles and to develop
departmentwide fleet management guidelines. We interviewed officials
and analyzed information provided by these agencies, as well as GSA and
OMB. We focused our work on agencies' justifications for acquiring and
retaining vehicles and did not assess their vehicle operation,
maintenance, or disposal practices. We also talked with representatives
from private industry who are familiar with efficient fleet management
practices. A detailed discussion of our scope and methodology is in
appendix I. We conducted our review from September 2003 to April 2004
in accordance with generally accepted government auditing standards.

Results in Brief:

The agencies we reviewed cannot ensure that their vehicle fleets are
the right size and composition to meet agency missions because of a
lack of attention to key fleet management practices. Industry practices
for cost-efficient fleets include developing utilization criteria
related to the mission of a vehicle and conducting periodic fleet
assessments to determine whether fleets are the right size and
composition. If unneeded vehicles are identified, they are disposed of.
However, policies at the agencies we reviewed do not generally call for
clearly defined utilization criteria related to the mission of a
vehicle--such as the number of trips per day or hours on station--to
ensure that decisions to acquire and retain vehicles are based on a
validated need. In addition, most of the agencies do not conduct
periodic assessments of their fleets to determine whether they have the
right number and type of vehicles. The Navy and the Forest Service do
conduct assessments, but either they are done sporadically or the
results are not enforced. Some agencies have started to recognize the
need to pay more attention to fleet management and are taking steps to
revise their guidelines to provide better criteria to determine vehicle
needs.

Our work and reviews by inspectors general identified numerous
instances where agency fleets included a number of underutilized
vehicles. If these vehicles were disposed of, agencies could realize
savings ranging from thousands to millions of dollars. For example, the
Department of the Interior's Inspector General reported that a
significant portion of the department's fleet of approximately 36,000
vehicles is underutilized and estimated savings of $34 million if these
vehicles were eliminated from the fleet. Savings can also be realized
by changing the composition of the fleet--buying vehicles that are less
expensive and less costly to operate and maintain. For example,
officials at a Veterans Affairs medical center are replacing 15
passenger vans with less expensive sedans and minivans that will still
allow them to meet their community outreach goals.

GSA's Office of Governmentwide Policy and OMB have recently taken a
number of actions to require agencies to better manage and improve the
cost-efficiency of their fleets. The Office of Governmentwide Policy is
currently revising the Federal Management Regulation pertaining to
fleet management.[Footnote 2] The revised regulation will require
agencies to (1) appoint a senior level fleet manager at agency
headquarters with the authority for all aspects of fleet management,
including control over budget and local decisions; (2) establish
utilization criteria and periodically review fleet size; and (3) invest
in a fleet management information system. GSA plans to work
cooperatively with agencies to help them implement these requirements;
however, based on our discussions with agencies outside of GSA, we
anticipate strong opposition to the requirement that agencies
centralize budget control of the fleets. OMB has recently required
agencies, as part of their budget submissions, to report on the size,
composition, and cost for their fleets for the current year and to
project fleet costs over the subsequent 3-year period.

In this report, we make recommendations to GSA, OMB, and the
Departments of Agriculture, Defense, Homeland Security, and Veterans
Affairs on the need to periodically assess fleet size and composition
using utilization criteria related to the mission of a vehicle. In
written and oral comments on a draft of this report, the agencies
generally concurred with our findings and recommendations.

Background:

The size and cost of operating the federal vehicle fleet has been a
subject of concern for many years. In 1986, Congress enacted
legislation that required agencies, among other things, to collect and
analyze the costs of their motor vehicle operations, including
acquisition decisions, in order to improve the management and
efficiency of their fleets and to reduce costs.[Footnote 3] Two years
later, we reported that most agencies had not conducted the required
studies. In 1992, an interagency task force identified obstacles to
cost-efficient fleet management, including the continued lack of
compliance with the 1986 legislative requirements, and stated that
agencies lacked basic information to effectively and efficiently manage
their fleets. In 1994, we reported,[Footnote 4] among other things,
that successful fleet practices included oversight at the headquarters
level to ensure that uniform written policies and guidance are provided
throughout the organization and fleet management information systems to
provide accurate data about the fleet. We also reported that agencies
need to conduct periodic reviews to ensure their fleets are the right
size and composition.

The vehicle fleets at the agencies we reviewed are widely dispersed.
For example, the Army and Navy operate vehicles throughout the world,
while the Veterans Affairs fleet is spread across medical centers,
national cemeteries, and other locations throughout the country. The
approximate number of vehicles operated by the agencies included in our
review is shown in figure 1.

Figure 1: Approximate Number of Vehicles Operated by the Agencies
Included in Our Review:

[See PDF for image]

[End of figure]

The Office of Governmentwide Policy within GSA develops policies,
disseminated through the Federal Management Regulation, and bulletins
for agency vehicle fleet management. Federal agencies, however, are
responsible for managing their own fleets, including making decisions
about the number and type of vehicles they need and how to acquire
them. OGP also collects data from agencies via the Federal Automotive
Statistical Tool (FAST) concerning fleet size, composition, and costs.
Although GSA uses these data in annual reports to OMB on the
government's fleet size and costs, GSA officials told us that much of
the data are inaccurate because of the different systems agencies use
to collect and report information.

Fleet Management Attention Is Needed to Ensure That Fleets Are the
Right Size and Composition:

The agencies we reviewed cannot ensure that their vehicle fleets are
the right size and composition to meet their missions because of a lack
of attention to key fleet management practices. In particular, agencies
generally have not established policies with clearly defined
utilization criteria related to the mission of a vehicle to ensure that
decisions to acquire and retain vehicles are based on a validated need.
In addition, agencies have not implemented periodic assessments to
determine whether they have the right number and type of vehicles in
the fleet. Some agencies have begun to recognize the need to pay more
attention to fleet management and are taking steps to review their
guidelines in an effort to provide better criteria to determine vehicle
needs and to manage their fleets more efficiently.

Agency Policies Do Not Define Mission-Related Utilization Criteria and
Fleets Are Not Periodically Assessed:

Industry practice for cost-efficient fleets includes establishing
policies and procedures that contain clearly defined utilization
criteria related to the mission of a vehicle. These criteria are then
used to conduct periodic assessments of the fleet to identify
underutilized vehicles. As previously noted, our 1994 report
highlighted the importance of these fleet management practices.
However, as shown in figure 2, most of the agencies we reviewed do not
have clearly defined criteria and have not conducted periodic fleet
assessments. We did not include DHS in this chart because the agency is
still developing most of its fleet management guidelines, policies, and
vehicle utilization standards.

Figure 2: Extent to Which Agencies' Policies Provide Mission-Related
Utilization Criteria and Agencies Conduct Periodic Fleet Assessments:

[See PDF for image]

[End of figure]

The lack of appropriate utilization criteria means that local level
officials--who usually make the decisions to acquire and retain
vehicles--are not basing their decisions on a validated need. Some
agencies establish the number of miles traveled, such as the
12,000 miles per year in GSA's guidance, as a criterion to measure
vehicle utilization. However, this criterion is not appropriate for the
mission of some vehicles, such as those used for utility work, medical
transportation, or security. Therefore, agency officials often ignore
mileage standards. None of the agencies assigned a value to other
criteria, such as number of trips per day or hours on station, to
measure vehicle use when mileage is not an appropriate measure.

Following are some examples of cases we found where the application of
specific criteria related to the mission of a vehicle would give local
fleet managers a more accurate basis on which to make decisions about
fleet size:

* At one Veterans Affairs medical center, vehicles are used to
transport veterans from their homes to outpatient rehabilitation
activities in a metropolitan area outside of Boston. Veterans Affairs
officials told us that using only a mileage standard to justify the
need for the vehicles is inappropriate because they are used within a
confined area. The officials agreed that a better measure would be the
number of trips or the number of veterans served.

* The Department of Defense prescribes that the military services
establish utilization measures, such as passengers carried or hours
used, to measure the need for a vehicle when mileage is not
appropriate. However, neither Army nor Navy guidelines incorporate
these types of utilization criteria.

* Natural Resources Conservation Service policy includes only one
criterion to establish fleet size, which is a ratio of employees to
vehicles. The definition of employees includes full-and part-time
employees and volunteers, regardless of roles or job description.

Further, agencies generally do not conduct periodic assessments of
their fleets. Decisions about whether to acquire and retain vehicles
are made at the local level with little or no headquarters oversight.
These local-level decisions are frequently based on the availability of
funds rather than on a validated need. For example, directors of
Veterans Affairs medical centers and state conservationists at the
Natural Resources Conservation Service determine whether or not to
acquire vehicles based on the availability of funds. The Army allows
local commanders to acquire vehicles with available funds without
further justification within established allocation levels. However,
these levels have not been reviewed since 1991, 13 years ago.

The Navy and the Forest Service conduct periodic assessments of fleet
size, but the results of the assessments are either not enforced or not
conducted in a systematic manner. The Navy's Transportation Equipment
Management Centers (TEMC)[Footnote 5] conduct utilization assessments
to recommend fleet inventory levels for Navy commands, yet the commands
are not required to implement the recommended inventory levels. The
Forest Service's guidelines contain instructions for a systematic
review of vehicle utilization at local sites, but these reviews are not
consistently performed at the locations we visited, and the local sites
are not required to report the results of the reviews to agency
headquarters.

Some Agencies Are Taking Steps to Improve Fleet Management Practices:

Some agencies have begun to focus more attention on fleet management
practices that they believe will improve the efficiency of their
fleets. At the start of fiscal year 2004, the Army and Navy reorganized
to centralize the management of facilities and equipment, including
vehicles that are not related to combat forces, at various commands and
installations. The Navy established the Naval Installations Command and
the Army established the Installation Management Agency for this
purpose. Navy and Army officials told us that these organizations
should result in increased attention to fleet management, including the
enforcement of the TEMCs's recommended inventory level in the Navy and
the revision of outdated vehicle allocation levels in the Army.
Officials told us that these organizations will provide more
centralized oversight of the Army and Navy vehicle fleets, but
individual commands will continue to determine the need for vehicles
within the established inventory objectives or allocation levels. At
the time of our review, it was too early to determine the impact these
reorganizations will have on improving fleet management practices.

In addition, some agencies are reviewing their guidelines in an attempt
to include more specific requirements for fleet management. For
example, Veterans Affairs officials told us that they are developing a
vehicle manual with detailed guidance on how to measure utilization and
hope to issue it in the fall of 2004. Department of Defense officials
are in the process of revising the department's guidelines and are
considering requiring the application of utilization criteria tied to
the mission of a vehicle to determine the need for vehicles. In early
2003, DHS established a Fleet Commodity Council to review strategic
sourcing issues, including how the department can leverage its
purchasing power when acquiring vehicles. The council, made up of
agency fleet managers, meets quarterly. In addition, departmentwide
fleet management policies and guidelines are being developed and will
include criteria for justifying and assessing vehicle fleet sizes.

Opportunities Exist to Dispose of Underutilized Vehicles and Realize
Potential Savings:

Our work and reviews by inspectors general identified numerous
instances where agencies had an excessive number of vehicles in their
fleets. If these vehicles were disposed of, agencies could realize
savings ranging from thousands to millions of dollars, as illustrated
in the following examples:

* In February 2004, the Department of the Interior's Inspector General
reported that a significant portion of the department's fleet of
approximately 36,000 vehicles is underutilized and estimated savings of
$34 million.

* At the end of fiscal year 2003, Navy reviews of selected activities
estimated fleet savings of $3.7 million per year if installations
reduced their fleets based on recommendations from these reviews.

* In 2003, a U.S. Army Audit Agency report identified one Army garrison
that had retained 99 excess vehicles in its fleet.

* A 2001 Veterans Affairs' Inspector General report noted that
accountability over the department's owned vehicles at a medical center
could not be reasonably assured. For example, agency auditors found one
vehicle that had been parked behind a laundry facility and had not been
moved since it was purchased in 1997. The report described the
acquisition of the vehicle as unjustified.

Appendix VII contains additional examples of reports that highlight
potential savings if unnecessary vehicles were eliminated from
agencies' fleets.

In other cases, locations have reduced their fleet size--primarily
because of pressure to cut their budgets--and consequently realized
savings, as illustrated in the following examples:

* A Navy command decreased its fleet from 156 to 105 vehicles over the
course of a year, resulting in savings of about $12,000 per month. A
Navy official explained that the decrease in vehicles was driven by
cuts in the command's budget.

* A Veterans Affairs medical center, in an effort to find potential
savings, reduced its fleet by 12 vehicles, with estimated savings of
about $57,000 per year.

* In the 1990s, a Forest Service region eliminated 500 leased vehicles
when the agency reduced its workforce due to budget reductions,
according to a regional official.

However, because these reductions were not based on the application of
utilization criteria to identify vehicle needs, there is no guarantee
that the fleets are the right size to meet the agencies' missions.

Industry practice for cost-efficient fleets also calls for an
assessment of the type of vehicles being acquired. Savings can be
realized by changing the composition of the fleet--buying vehicles that
are less expensive and less costly to operate and maintain. We found
cases where local level officials had taken this step. For example, in
assessing the need for vehicles to expand community outreach services,
program officials at a Veterans Affairs medical center are replacing 15
passenger vans with less expensive sedans and minivans that will still
allow them to accomplish the program's goals. In another case, a local
Navy fleet manager was able to help a security organization reduce its
fleet costs by using less expensive trucks for carrying dogs used by
law enforcement officials.

Governmentwide Initiatives to Improve Fleet Management Practices:

As a result of a review of governmentwide fleet practices, GSA's Office
of Governmentwide Policy (OGP) and OMB are taking actions to require
agencies to better manage and improve the cost-efficiency of their
fleets. In 2002, OGP initiated a review of federal agencies' fleet
management practices in cooperation with OMB. Twenty-one agencies
responded to a GSA survey, which found, among other things, that the
vast majority of agencies lack utilization criteria by which to
determine vehicle needs and identify underutilized vehicles. The survey
further found that many agencies have little control over fleet budgets
and allocation levels for vehicles and lack effective fleet management
information systems. Based on the survey results, OGP is currently
revising the Federal Management Regulation to require agencies to
improve fleet management practices by, among other things,
(1) appointing a central fleet manager, (2) periodically reviewing
fleet size, and (3) funding a fleet management information system.

In 1994, we reported that the primary role of a central fleet manager
is to establish and monitor written policies, collect and analyze fleet
data, and look for opportunities to improve fleet operations. OGP
officials believe that effective fleet management requires centralizing
control at the headquarters level over all decisions related to fleet
size. Thus, OGP will require agencies to appoint a senior management
official with decision-making authority and control over all aspects of
the agency's fleet program, including the entire fleet budget and
approval of local-level decisions. However, we anticipate strong
opposition to this requirement, based on our discussions with agency
officials outside of GSA. Many of the headquarters officials we
interviewed believe that local-level fleet managers, given the right
tools, are in the best position to make decisions on the need for
vehicles and that centralized oversight, rather than control over the
budgets and decision making, would be more appropriate.

The revised regulation will also require agencies to develop criteria
against which to evaluate the need for vehicles and to use these
criteria in performing annual fleet assessments. OGP officials told us
that the regulation will not include examples of the different criteria
that could be used to determine vehicle needs. Instead, this type of
information will be incorporated in GSA bulletins issued periodically
to agencies and posted on the GSA Web site. Based on the results of the
2002 survey, OGP had planned to recommend that agencies base their
decisions about the need for vehicles on a staff-to-vehicle ratio;
however, officials told us they will require agencies to consider other
measures more appropriate to a vehicle's mission. As discussed above,
industry practices include establishing multiple utilization criteria,
such as mileage, number of trips per day and hours on station, because
of the differing nature of agency missions.

OGP further intends to require agencies to fund a fleet management
information system that would allow them to accurately collect
information on the cost to acquire, operate, and maintain their fleets.
This initiative will allow agencies to better forecast fleet funding
and make well-founded decisions about when to replace vehicles. OGP
plans to issue guidelines defining the minimum functional requirements
for the system. Officials we spoke with at Defense, DHS, and Veterans
Affairs stated that they believe that developing a fleet management
system is important, but they are at varying stages of exploring
options, requesting bids from contractors, and requesting funding.

While OGP believes it has the authority to require agencies to follow
its regulation and guidelines, enforcement will be another matter. OGP
officials plan to work with agencies in a cooperative effort, through
workshops and federal fleet conferences, to help them implement the
requirements in the upcoming regulation, which they expect to issue in
October 2004. They are also considering issuing "report cards" on the
progress agencies are making in implementing and following the revised
regulation.

OMB has also taken steps to hold agencies accountable for more
effective fleet management practices. In 2002, OMB began requiring
agencies, as part of their budget submission, to report the size,
composition, and cost of their fleets for the current year and to
project costs for the next 3 fiscal years.[Footnote 6] The narrative in
the report must also detail the reasons for any significant changes in
fleet size, discuss the methodology used to assign vehicles, and
identify any impediments to managing the fleets. Recognizing the
difficulties with collecting reliable data, GSA and OMB plan to work
with agencies to improve their data collection and reporting. Officials
believe that as agencies move to better fleet management information
systems, the data will improve.

Conclusions:

Despite long-standing concerns over the size of the federal fleet, the
agencies we reviewed still do not know if their fleets are the right
size and composition. Until agencies develop and apply utilization
criteria tied to the mission of the vehicles in their fleets, they will
not know how many vehicles they need to meet their missions. Moreover,
by not using such criteria to assess their fleets periodically,
agencies are missing the potential opportunity to identify excess
vehicles, reduce their fleets, and save money. While some agencies have
started to take actions to improve fleet management, at this time it is
unclear how successful these efforts will be in providing more
efficient fleet management. Because of its role in providing fleet
management policy, GSA's Office of Governmentwide Policy is in a
position to take the lead in assisting agencies to develop appropriate
utilization criteria and to assess their fleet size and composition.
That office, in conjunction with OMB, has taken steps to focus
attention at a governmentwide level on the need to improve fleet
management practices. However, the plan to require agencies to
centralize budget control over their fleets is a contentious one, and
it remains to be seen how agencies will respond once the draft
regulation is issued. In the meantime, additional measures are needed
to ensure that the federal government's fleet does not contain
excessive numbers of vehicles.

Recommendations for Executive Action:

To help agencies determine the appropriate size and composition of
their fleets, we recommend that the Administrator of GSA direct the
Office of Governmentwide Policy to include in the revised Federal
Management Regulation the following two requirements for agencies:

* develop utilization criteria related to the missions of the vehicles
and:

* conduct periodic assessments of the number and type of vehicles in
their fleets using these criteria.

To bring further attention to the potential budget impact of retaining
excessive vehicles, we recommend that the Director of OMB require
agencies, as part of the new reporting requirement in their budget
submissions, to report on (1) the criteria they used to determine the
need for vehicles and (2) the results of fleet assessments they have
conducted.

To ensure that agency fleets are the right size and composition to meet
their missions, we recommend that the Secretaries of the Departments of
Agriculture, Defense, Homeland Security, and Veterans Affairs take the
following three actions:

* establish guidance and policies that include clearly defined
utilization criteria to be used in validating the need for vehicles
based on their missions;

* require fleet managers to use these criteria in determining the need
for vehicles and in conducting periodic fleet assessments; and:

* establish effective oversight mechanisms to ensure that the
utilization criteria are defined and fleet assessments are carried out.

Agency Comments and Our Evaluation:

We received written comments on a draft of this report from GSA and the
Departments of Agriculture, Defense, Homeland Security, and Veterans
Affairs, and we received oral comments from OMB. All of the agencies
generally concurred with our findings and recommendations. The written
comments are reproduced in appendixes II through VI.

GSA noted that the primary contributor to the lack of progress in fleet
management improvement has been the absence of strong management
support for fleet reform and the consequent lack of resources for
acquiring management information systems. GSA observed, however, that
many agencies are becoming more aware of these issues. GSA also noted
that although our report discusses three revisions to the Federal
Management Regulation that GSA is in the process of drafting, these
three revisions are part of a comprehensive package of 10
recommendations for fleet management reform that came out of GSA's
Federal Fleet Review Initiative. We focused our review on the key
revisions directly related to the justification for acquiring and
retaining vehicles. GSA also stated that, while it agrees that local
managers are best qualified to know their requirements, only a central
manager can provide the consistent oversight, policy, and budget review
that has been lacking in many agencies, and it is this deficiency GSA
seeks to address by its requirement that each agency appoint a senior
management official with decision-making authority and control over all
aspects of the agency's fleet program, including the fleet budget. As
we note in our report, during the course of our audit work, it was
clear that the agency officials we spoke with were opposed to GSA's
position on this matter. We did not assess the ramifications of GSA's
proposal as part of our review. In addition, GSA expressed
disappointment that we did not recommend that agencies fund a fleet
management information system. Because we found that agencies are in
different stages of implementing such systems, and because GSA already
plans to require such systems in its revised Fleet Management
Regulation, we did not believe it was necessary for us to recommend
this action.

The Departments of Agriculture and Veterans Affairs agreed with our
recommendations but raised concerns about GSA's planned revision to the
Federal Management Regulation that would require agencies to centralize
budget authority for fleet management. Veterans Affairs strongly
opposes such a requirement. It noted that, in a system as large and
complex as the department's, such a massive administrative
responsibility would be unwieldy and inefficient and would require
significant additional resource support. The department believes that
oversight at the local level is the preferred approach to fleet
management. Agriculture noted that the budget is a complex process
involving detailed review and comparison of vehicle costs. It stated
that changing priorities, such as national emergencies, require intense
local management of the fleet to ensure a high state of mission-
readiness and that, therefore, increased centralization of the budget
process would not be in the best interest of overall fleet efficiency
and mission success. As we point out in our report, the issue of
centralized budget authority is a contentious one. It will need to be
addressed by the agencies, OMB, and GSA.

Agriculture also expressed concern that our recommendation on the need
to establish utilization criteria would lead to a set of national
criteria that all local fleet managers would be required to use. That
is not the intent of our recommendation. Our recommendation is aimed at
having each agency establish utilization criteria based on the specific
mission of the vehicles in its fleet. Where a single criterion such as
mileage, for example, is inappropriate, local officials need to have
alternative criteria available, such as hours on station or number of
clients served, to validate the need for vehicles. We believe it is the
responsibility of agencies to establish clearly defined utilization
criteria and guidelines to allow local officials to appropriately apply
these criteria.

The Department of Homeland Security (DHS) agreed with our
recommendations and emphasized that it has undertaken efforts, in a
relatively short time frame, to establish a departmentwide fleet
management program. It noted that the process used by its Bureau of
Customs and Border Protection for assessing vehicle utilization based
on a variety of factors is considered a best practice and will be
extended to the rest of the department. In addition, DHS stated that an
updated management directive on motor vehicle management sets forth the
requirement for maintaining systems for effective control and
accountability of motor vehicle assets and for maintaining the minimum
number of vehicles needed to meet requirements. The directive is
currently being reviewed within the department. In DHS's view, these
two actions meet the requirement to establish effective oversight
mechanisms to ensure that fleet utilization criteria are defined and
fleet assessments are carried out and reviewed on a regular basis.
While these are positive actions, DHS needs to ensure that oversight is
maintained and that periodic fleet assessments are conducted using the
appropriate criteria.

Veterans Affairs stated that it will address our recommendations with
several planned initiatives which, when completed, should rectify
identified weaknesses. For example, the department will convene a
national work group to develop a broad-based fleet management
operations manual that will include a section that defines utilization
criteria based on vehicle missions. The department is also reviewing
various options for establishing a systemwide software application to
be used as an oversight tool for managing the fleet.

The Department of Defense agreed with our recommendations. It stated
that action will be taken to ensure that utilization criteria, which
may be comprised of existing mileage goals or other appropriate
criteria, will apply to all nontactical vehicles. It will also require
components to review their vehicle inventories annually against fleet
assessments and to conduct on-site surveys or inspections on a minimum
3-year cycle (resources permitting) with the purpose of purging or
fully justifying underutilized vehicles.

In oral comments, OMB representatives told us that they agree with our
findings and recommendations and will consider incorporating the
recommended changes to agencies' reporting requirements in new guidance
for the fiscal year 2006 budget cycle.

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report until
30 days from its issue date. At that time, we will send copies of this
report to other interested congressional committees; the Administrator
of GSA; the Director of OMB; and the Secretaries of Defense, Army,
Navy, Agriculture, Veterans Affairs, and Homeland Security. We will
make copies of this report available to others upon request. In
addition, this report will be available at no charge on the GAO Web
site at http://www.gao.gov.

If you or your staffs have any questions regarding this report, please
contact me at 202-512-4841 or cooperd@gao.gov, or Michele Mackin,
Assistant Director at 202-512-4309 or mackinm@gao.gov. Major
contributors to this report include Marie Ahearn, Benjamin Howe,
Emma Quach, Richard Silveira, and Tatiana Winger.

Signed by:

David Cooper:
Director, Acquisition and Sourcing Management:

[End of section]

Appendix I: Scope and Methodology:

To determine the extent to which agencies can ensure that their fleets
are the right size, we obtained and analyzed agency policies and
guidelines on fleet management from the Departments of Agriculture,
Army, Navy, Defense, Homeland Security, and Veterans Affairs. These
agencies, according to GSA data, have some of the largest fleets in the
government. Because the Department of Homeland Security was only
recently formed, its organizational elements continue to operate their
vehicle fleets under the policies of their legacy agencies. Therefore,
we limited our review to the department's efforts to leverage its
buying power through a strategic sourcing initiative for vehicles and
to the steps it is taking to establish departmentwide guidelines on
fleet management. Although the Department of the Interior also has a
large fleet, we did not include it in our review because the Inspector
General recently issued a report on that department's vehicle
fleet.[Footnote 7] We did not assess agencies' policies on vehicle
operation, maintenance or disposal.

To illustrate how local, state and regional officials determine the
need for vehicles, we selected local, state and regional offices based
on location and number of vehicles within each agency. We obtained and
analyzed information and interviewed fleet managers and other officials
responsible for fleet management at these locations to identify the
controls, oversight, and criteria used to determine the need for
vehicles. Following are the locations we contacted or where we
conducted our work.

Department of Agriculture:

Natural Resources Conservation Service:

* Washington, D.C.

* State Conservationist Office, Athens, Ga.

* Southern Regional Office, Atlanta, Ga.

* Texas:

Animal and Plant Health Inspection Service:

* Washington, D.C.

* Wildlife Service, Athens, Ga.

* Wildlife Service, Wash.

* Veterinary Service, Iowa:

* Veterinary Services, Conyers, Ga.

* Veterinary Service, Eastern Regional Office, Raleigh, N.C.

Forest Service:

* Washington, D.C.

* Southern Region, Atlanta, Ga.

* Chattahoochee-Oconee National Forest, Gainesville, Ga.

* Daniel Boone National Forest, Ky.

* Land Between the Lakes National Recreational Area, Ky.

* Pacific Northwest Region, Oreg.

* Siuslaw and Willamette National Forests, Oreg.

Department of Homeland Security:

* Office of Asset Management, Washington, D.C.

* Federal Law Enforcement Training Center, Glynco, Ga.

* Customs and Border Protection, Washington, D.C.

* Transportation Security Administration, Arlington, Va.

Department of Defense:

* Office of the Assistant Deputy Under Secretary of Defense
(Transportation Policy), Washington, D.C.

Department of the Army:

* Headquarters, Department of the Army, Office of the Assistant Chief
of Staff for Installation Management, Washington, D.C.

* Fort Belvoir, Va.

* United States Military Academy, West Point, N.Y.

* Fort Carson, Colo.

Department of the Navy:

* Naval Facilities Engineering Command, Washington Navy Yard, D.C.

* Navy Public Work Center, Washington, D.C.

* Navy Public Works Center, Norfolk, Va.

* Naval Air Station, Joint Reserve Base, Fort Worth, Tex.

* Navy Public Works Center, Jacksonville, Fla.

* Naval Station Newport, Newport, R.I.

* Pacific Division, Naval Facilities Engineering Command,
Transportation Equipment Management Center, Pearl Harbor, Hawaii:

* Atlantic Division, Naval Facilities Engineering Command,
Transportation Equipment Management Center, Norfolk, Va.

Department of Veterans Affairs:

Veterans Affairs Health Administration:

* Headquarters, Washington, D.C.

* Medical Center, Bedford, Mass.

* Medical Center, Baltimore, Md.

* Medical Center, Jamaica Plain, Boston, Mass.

* Medical Center, Brockton, Mass.

We reviewed prior GAO and other audit agency reports, reviewed other
public documents, and contacted the following offices of inspectors
general:

* Department of Energy,

* Department of Defense,

* Department of Veterans Affairs,

* Department of Justice,

* Department of Treasury,

* Department of Transportation,

* Department of Homeland Security,

* Department of the Interior, and:

* Department of Agriculture.

We also contacted officials from the Naval Audit Service and the Army
Audit Agency.

To identify industry standards for efficient fleet management, we
discussed the fleet management practices contained in our 1994
report[Footnote 8] and the use of utilization criteria with three
industry fleet management consultants, one of whom was a contributor to
our 1994 report. We selected these consultants based on their
experience dealing with the fleet management practices in both the
public and private sectors. We also talked with the manager of the
Fleet Information Resource Center of the National Association of Fleet
Administrators.

To identify governmentwide steps to improve fleet management, we
collected, analyzed, and discussed information obtained from officials
at the Office of Management and Budget's Office of Transportation/GSA
Branch, GSA's Office of Governmentwide Policy, and GSA's Office of
Vehicle Acquisition and Leasing Services, which runs the leasing
program. We also discussed with GSA officials the Office of
Governmentwide Policy's proposed revisions to the regulation on fleet
management.

We conducted our review from September 2003 to April 2004 in accordance
with generally accepted government auditing standards.

[End of section]

Appendix II: Comments from the Department of Agriculture:
USDA:

United States Department of Agriculture:

Office of the Assistant Secretary for Administration:

Office of Procurement and Property Management:

300 7th Street Southwest
Room 302
Reporters Building:
Washington, DC 20024-9300:

TO: David Cooper:
Director, Acquisition and Sourcing Management:
General Accounting Office:

Signed by:

FROM: Glenn Haggstrom, Deputy Director Office of Procurment and
Property Management:

MAY 19 2004:

SUBJECT: Comments on General Accounting Office Draft Report,
GAO-04-664 "Federal Acquisition: Increased Attention to Vehicle Fleets
Could Result in Savings"

The Department of Agriculture (USDA) appreciates the opportunity to
take part in this important audit, and to provide comments on the
draft report.

The USDA fleet policy office, which is located in the Property
Management Division (PMD) of the Office of Procurement and Property
Management (OPPM), as well as agency fleet managers, found no
inaccurate statements about the USDA fleet in the draft report,
Further, USDA generally supports the conclusions and recommendations
for executive action as set forth in this draft report. We would like
to offer the following points for further consideration.

The draft recommends that the General Services Administration's (GSA)
Office of Governmentwide Policy (OGP) should promulgate new policy that
will require Federal Agencies to develop utilization criteria and to
conduct periodic assessments of the number and type of vehicles using
these criteria. USDA does not believe that a national control, or a
"set of national-level utilization criteria related to the missions of
the vehicles" will be in the best interests of the widely varied
missions and specific operating environments faced by a fleet the size
and geographic disbursal of the USDA fleet. The local fleet manager,
along with the local program manager, is still in the best position to
make those decisions, There are numerous situations in which
utilization criteria must be flexible enough to allow for "on-call"
emergency vehicles that may have low usage but still be available 24
hours a day, 365 days a year, to cover potential disasters.

The suggestion to centralize the budget controls over the fleet needs
to be considered further. Budget is a complex process including the
detailed review and comparison of costs incurred for keeping an older
vehicle beyond its normal life cycle versus purchase of a replacement
vehicle. Some programs are far more vehicle-intensive than others by
nature of the work performed.

Changing priorities, such as national emergencies, or emergency
prevention, require intense local management of the fleet to ensure a
high state of mission-readiness. Therefore, increased centralization of
the budget process for fleet is not in the best interest of overall
fleet efficiency and mission success, It is not just a matter of when
funds are available, but how to best use the funds to meet the needs of
the program.

USDA does support enhanced oversight of the fleet program in order to
ensure compliance with Departmental policy and goals, Increased
cooperation with agency motor vehicle staffs will allow for a
meaningful approach to establishing and evaluating utilization criteria
and fleet efficiency models for the individual agency fleets in USDA.

USDA disagrees with the idea of having GSA spend resources on
developing another fleet information system, Rather, USDA suggests an
interagency committee dedicated to cleaning up the current data in the
Federal Automotive Statistical Tool (FAST), as well as the data in the
GSA headquarters system on leased vehicles. USDA is working toward
enhanced internal property management information systems, including
fleet data, and would welcome the opportunity to work with GSA to
ensure a high level of compatibility between the USDA system and the
GSA system.

[End of section]

Appendix III: Comments from the Department of Defense:

Note: Page numbers in the draft report may differ from those in this
report.

DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS:
3500 DEFENSE PENTAGON:
WASHINGTON, DC 20301-3500:

MAY 17 2004:

Mr. David Cooper:

Director, Acquisition and Sourcing Management:
U.S. General Accounting Office:
Washington, D.C. 20548:

Dear Mr. Cooper:

This is the Department of Defense (DoD) response to the GAO draft
report, "FEDERAL ACQUISITION: Increased Attention to Vehicle Fleets
Could Result in Savings," dated May 5, 2004 (GAO Code 120284/GAO-04-
664)

The Department has reviewed the subject GAO draft report and concurs
with the recommendations, A detailed response is enclosed.

Sincerely,

Signed by:

Bradley Berkson:
Acting:

Enclosure As stated:

GAO DRAFT REPORT - DATED MAY 5, 2004 GAO CODE 120284/GAO-04-664:

"FEDERAL ACQUISITION: INCREASED ATTENTION TO VEHICLE FLEETS COULD
RESULT IN SAVINGS":

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretaries of the Army
and the Navy establish guidance and policies that include clearly-
defined utilization criteria based on the vehicle mission. (p. 14/GAO
Draft Report)

DOD RESPONSE: Concur: Action will be taken to ensure that utilization
goals will apply to all non-tactical vehicles (NTV). Utilization goals
may be comprised of existing mileage goals. If such goals are not
practical, other criteria will be developed for vehicles engaged in
special trades (such as time on station) or in a geographic area where
use is not adequately reflected by mileage.

RECOMMENDATION 2: The GAO recommended that the Secretaries of the Army
and the Navy require fleet managers to use the recommended utilization
criteria in determining the need for vehicles and in conducting
periodic fleet assessments. (p. 14/GAO Draft Report)

DOD RESPONSE: Concur: DoD policy will require Components to annually
review their vehicle inventory against fleet assessments.

RECOMMENDATION 3: The GAO recommended that the Secretaries of the Army
and the Navy establish effective oversight mechanisms to ensure that
utilization criteria are defined and fleet assessments are carried out.
(p. 14/GAO Draft Report)

DOD RESPONSE: Concur: Components will conduct on-site NTV management
surveys/inspections on a minimum three year cycle, resources
permitting, the purpose of which will be to purge or fully justify
under-utilized vehicles. The management of the NTV functions will be
included in internal audit programs.

[End of section]

Appendix IV: Comments from the General Services Administration:

Note: Page numbers in the draft report may differ from those in this
report.

GSA:

GSA Office of Governmentwide Policy:

MAY 17 2004:

Mr. David Cooper:
Director:
Acquisition and Sourcing Management:
General Accounting Office:
Room 4440A:
441 G Street, N.W.
Washington, D.C. 20548:

Dear Mr. Cooper:

Thank you for the opportunity to comment on the draft of GAO-04-664,
"Federal Acquisition: Increased Attention to Vehicle Fleets Could
Result in Savings." Overall, General Services Administration's (GSA)
Office of Governmentwide Policy is pleased with the report, and
endorses its findings and recommendations. However, there are several
points we wish to amplify or clarify.

Each of the points we wish to address before your report is finalized
is addressed in the enclosure.

Thank you again for the opportunity to comment, and for the exemplary
work of the review team. If you have any other concerns, pleases
contact me. Staff inquiries may be directed to Ms. Becky Rhodes, Deputy
Associate Administrator, Transportation and Personal Property, at (202)
501-1777.

Sincerely,

Signed by:

G. Martin Wagner,
Associate Administrator:

Enclosure:

May 17, 2004:
General Services Administration Office of Governmentwide Policy:

GSA/OGP RESPONSE TO GAO DRAFT REPORT GAO-04-664, FEDERAL ACQUISITION:
INCREASED ATTENTION TO VEHICLE FLEETS COULD RESULT IN SAVINGS:

At several points (pages 3, 11), the report mentions three revisions to
the Federal Management Regulation (FMR) that GSA is in the process of
drafting. In fact, the three mentioned are part of a comprehensive
package of ten recommendations for fleet management reform that came
out of the Federal Fleet Review Initiative, of which the survey
mentioned in the report is one part. Six of the ten will be
incorporated into the revision of the FMR.

The report states (page 3) that one of the three recommendations is
that agencies centralize budget control of fleets, and that strong
opposition to this requirement can be anticipated. Also, the report
states (page 11) that OGP's requirement that each agency appoint a
senior management official for the fleet program will generate
opposition, because "local-level fleet managers, given the right tools,
are in the best position to make the decisions on the need for vehicles
and that centralized oversight, rather than control over the budgets
and decision-making, would be more appropriate." GSA does not disagree,
but believes that agency fleet managers must play a role in the budget
process. Clearly, local managers are best qualified to know their
requirements. But only a central manager can provide the consistent
oversight, policy, and budget review that has been lacking in many
agencies, and it is this deficiency that GSA seeks to address. Moreover,
where resources are finite, only a central manager has the perspective
to weigh local requirements against one another and prioritize them in
accordance with the agency's overall mission. Only a central manager
with some authority in the budget process can ensure that funds are
efficiently allocated for stable replacement cycles, planning for
vehicle maintenance based on projected replacement schedules, and
targeting scarce resources to the areas of greatest need. If the
central manager has no influence on the budget allocation process, the
position will be ineffective and superfluous.

The report states (page 11) that "OGP had planned to recommend that
agencies based their decisions about the need for vehicles on a staff-
to-vehicle ratio..,," GSA has recognized from the beginning that
different missions require different vehicle allocation models. Staff-
to-vehicles is appropriate for certain missions, such as law
enforcement and perimeter security; a 24-hour patrol with three shifts
may be accommodated by one patrol vehicle. For administrative uses, the
number of trips per week or month may justify a vehicle. For
specialized functions, such as a truck equipped for use by a base
plumber or welder, the number of days used could be an appropriate
measure. Each function may have its own appropriate measure of use, and
GSA will present an array of potentially appropriate vehicle allocation
methodologies to agencies.

The report states (page 12) that GSA will require agencies to institute
a management information system for their fleets, and summarizes some
of the benefits of this action. However, it does not communicate the
vital importance of complete and accurate
management information. In addition to better funding forecasts and
better decisions about vehicle replacement, it will permit the kind of
accurate reporting necessary for agency management and OMB to make
resource decisions, and is crucial to the success of any vehicle
allocation methodology. No real progress can be made in the absence of
the reliable information about inventory, cost, and utilization that
only a comprehensive management information system can provide. GSA is
disappointed that this item does not appear in the Recommendations for
Executive Action (page 13). GSA believes it is important for GAO to
endorse this as a formal recommendation, emphasizing its importance to
agencies' leadership. Agency fleet managers, who are undivided in their
support of this initiative, need this kind of support as they request
the resources that will be required.

GSA suggests that the paragraph on page 12 beginning "While OGP
believes it has the authority,.." be extended to mention the series of
one-on-one meetings GSA has instituted with agency fleet managers to
review agency policies and operations and to discuss the status of
efforts to implement the recommendations of the Fleet Review
Initiative. Based on the meetings that have been held to date, these
are a valuable way to assess the effectiveness of the Initiative, to
share best practices, and to identify potential barriers to progress.

Finally, the report correctly notes the lack of progress in fleet
management improvement since the 1986 legislation (Pub. L. 99-272) and
the 1994 GAO Report (GAO/GGD-95-18). GSA would like to have it noted
that Federal fleet managers as a group have performed admirably, given
the lack of resources and high-level attention for this oft-overlooked
function. The primary contributor to the lack of progress has been the
absence of strong management support for fleet reform at the highest
levels within the agencies, and the consequent lack of resources for
acquiring the management information systems that are critical to the
success of all the other recommendations. GSA sincerely hopes that at
this time when many agencies are becoming more aware of these issues,
the added voice of GAO will prove decisive.

[End of section]

Appendix V: Comments from the Department of Homeland Security:

U.S. Department of Homeland Security:
Washington, DC 20528:

Homeland Security:

May 18 2004:

Mr. David Cooper:
Director, Acquisition and Sourcing Management:
U.S. General Accounting Office:
Washington, DC 20548:

Re: GAO-04-664, "Federal Acquisition: Increased Attention to Vehicle
Fleets Could Result in Savings"

Dear Mr. Cooper:

Thank you for the opportunity to review the draft report, "Federal
Acquisition: Increased Attention to Vehicle Fleets Could Result in
Savings". The Department of Homeland Security agrees with GAO's overall
recommendation for DHS. However, the Department wishes to emphasize the
proactive efforts that have been made in a relatively short time to
establish a Homeland Security wide fleet management program
incorporating an incredibly diverse variety of missions and operating
environments.

In regards to the recommendation concerning guidance and policies that
include clearly defined utilization criteria based on the mission, the
Bureau of Customs and Border Protection has a well developed process
for assignment and utilization of vehicles based on a variety of
factors including mileage, age, condition, terrain, use ratios, and
climatic conditions. This is a best practice which we will extend to
the rest of the Department.

Additionally, our Management Directive on Motor Vehicle Management has
been updated and is being circulated for review and comment at this
time. This Directive sets forth the requirement for maintaining systems
for the effective control and accountability of motor vehicle assets as
well as operating and maintaining the minimum number of vehicles
necessary to meet legitimate mission and transportation requirements.

It is our view that through these two actions we have met the
requirement to establish effective oversight mechanisms to ensure that
fleet utilization criteria are defined and fleet assessments are
carried out and reviewed on a regular basis.

We believe that significant progress has been and will continue to be
made in the area of fleet management. We have already built a
foundation for meeting the challenges noted in the report and will
continue to improve our program.

Sincerely,

Signed by:

Anna F. Dixon:

Director:
Bankcard Programs and GAO/OIG Liaison:

[End of section]

Appendix VI: Comments from the Department of Veterans Affairs:

DEPARTMENT OF VETERANS AFFAIRS:
UNDER SECRETARY FOR HEALTH:
WASHINGTON DC 20420:

Mr. David Cooper,
Director:
Acquisition and Sourcing Management:
U.S. General Accounting Office:
441 G Street, N.W.
Washington, D.C. 20548:

Dear Mr. Cooper:

Department of Veterans Affairs (VA) program officials have reviewed the
General Accounting Office's (GAO) Draft Report: FEDERAL ACQUISITION:
Increased Attention to Vehicle Fleets Could Result in Savings, and are
in agreement with the report's conclusions and concur with the
recommendations. We wish to highlight one note of contention, however,
regarding GAO's reporting of the General Services Administration's
proposed revision of the Federal Management Regulation to require
agencies to appoint a central fleet manager with control over all
aspects of fleet management, including fleet budgets. VA strongly
opposes a requirement for centralized budget control. In a system as
large and complex as VA's, such a massive administrative responsibility
would be unwieldy and inefficient and would require significant
additional resource support. To the fullest extent possible, VA
believes that oversight at the local level is the preferred approach to
fleet management.

VA nevertheless agrees with GAO that decisions about acquisition and
retention of vehicles are not always based on validated need and that
clearly defined utilization criteria, based on the vehicles' missions,
should be established at the national level. As GAO recommends,
effective oversight mechanisms must also be established to assure the
criteria are actually used.

The Veterans Health Administration's (VHA) Safety and Technical
Service, Office of the Deputy Under Secretary for Health for Operations
and Management, is addressing your recommendations with several planned
initiatives, which, when completed, should rectify identified
weaknesses. A national work group will soon be convened to develop a
broad-based fleet management operations manual that will include a
section that defines utilization criteria based on vehicle missions.
The criteria will stipulate basic requirements that apply in all
instances, while providing adequate flexibility in other areas to meet
unique facility needs. VHA anticipates that the manual will be ready
for distribution to field facilities in the first quarter of FY 2005.
At the same time, VHA is reviewing various options for establishing a
systemwide software application to be used as an oversight tool for
managing the fleet and for validating levels of facility compliance
with utilization criteria, VHA is still in the initial exploration
stage for this project and has not yet determined timelines for
completion. VHA will work with our colleagues in the Veterans Benefits
and National Cemetery Administrations and with VA staff offices to
ensure continuity across the Department.

Thank you for the opportunity to respond to this report.

Sincerely yours,

Signed by:

Jonathan B, Perlin, MD, PhD, MSHA,
FACP Acting Under Secretary for Health:

[End of section]

Appendix VII: Reviews Identifying Excess Vehicles at Various Agencies:

U.S. Army Audit Agency: Non-Tactical Vehicles, U.S. Army Garrison
Japan, August 2003;
Selected report findings: U.S. Army Garrison Japan does not effectively
use its nontactical fleet. Utilization data were only available for 430
of the 633 vehicles at the Garrison, and 235 of these vehicles had low
utilization. The reviewers identified about 99 excess vehicles,
representing about 16 percent of the fleet;
Potential dollar savings: Report did not estimate potential savings;
however, it noted that for the 99 excess vehicles, the estimated
replacement cost was about $3.8 million and maintenance cost was about
$42,000.

U.S. Army Audit Agency: Transportation Motor Pool Operations, 8th U.S.
Army, December 1997;
Selected report findings: A substantial portion of the nontactical
vehicle fleet within the 8th Army was underutilized. Each motor pool in
the study had a substantial number of vehicles with average utilization
rates of 50 percent or less, as shown below:
* 34 vehicles (representing 33 percent of the fleet),
* 61 vehicles (representing 39 percent of the fleet), and;
* 203 vehicles (representing 54 percent of the fleet);
Potential dollar savings: No estimate on potential savings.

U.S. Army Audit Agency: Management of Non-tactical Support Vehicles,
Fort Carson, Colorado, December 1996;
Selected report findings: Activities did not always effectively use
their nontactical support vehicles. Vehicle usage goals set by the
command were considerably below Department of the Army goals;
Potential dollar savings: About $109,600 if activities met command's
usage goals;
$465,100 if they met the Army's goals.

Navy Transportation Equipment Management Center (TEMC), Atlantic
Division: Selected Navy Transportation Equipment Management Center
reviews;
Selected report findings: At the end of fiscal year 2003, Navy reviews
of selected activities estimated cost avoidance of $3.7 million per
year if installations reduced their fleets by a total of 775 vehicles
to meet the recommended inventory level;
Potential dollar savings: $3.7 million per year cost avoidance.

Naval Audit Service: Management of Non-tactical (Administrative)
Transportation Vehicles, March 1998;
Selected report findings: Auditors found that 6,605 of the 24,387
vehicles in the review were not needed. The Navy did not have a
systematic mechanism within the transportation management structure to
enforce Navy policy on fleet management;
Potential dollar savings: $19.8 million annually.

Naval Audit Service: Government Vehicle Usage at Naval Air Station
Patuxent River, Md., December 1998;
Selected report findings: The Air Station retained 79 assigned vehicles
that were not needed to support mission requirements because the Public
Works Transportation Department did not have a systematic and
continuous process for the review and evaluation of vehicle
assignments. In addition, 141 of the 359 vehicle assignments were
without required justification;
Potential dollar savings: Report did not specify amount, but noted that
the Naval Air Station had unnecessary administrative transportation
costs as a result of excess vehicles.

Department of Veterans Affairs, Office of Inspector General: Review of
Selected Construction Contracts, Purchase Card Activities, and Vehicle
Administration at Veteran's Affairs Medical Center (VAMC), Clarksburg,
West Virginia, January 2001;
Selected report findings: Auditors could not account for all vehicles
at the facility. Poor supervision contributed to a lack of
accountability and records were incomplete and inaccurate. Poor
business decisions were made during the trade and acquisition of
vehicles. In one example, an acquisition was not justified because the
vehicle had been parked behind a laundry facility and not moved since
it was purchased in 1997. In fact, the keys were missing at the time of
the review;
Potential dollar savings: Not addressed as a whole. The purchase price
of the one vehicle that did not move was $1,800.

U.S. Department of Energy (DOE), Office of Inspector General, Office of
Audit Services: Richland Operations Office Fleet Management, January
2001;
Selected report findings: The size of the fleet was not appropriate
because Richland had not established or implemented controls required
by DOE's Property Management Regulation. The review found that 85
percent of 1,332 vehicles were used less than DOE's mileage standards,
and Richland could potentially reduce its fleet by 559 vehicles;
Potential dollar savings: $1.7 million annually.

U.S. Department of Energy (DOE), Office of Inspector General, Office of
Audit Services: Vehicle Use at Lawrence Livermore National Laboratory,
September 2000;
Selected report findings: The allotment of 516 on-site discretionary
vehicles was too large because the vehicles were measured in mileage
instead of number of trips, which was the standard for this laboratory. None of the 31 randomly selected on-site discretionary vehicles met the standard of 9.2 trips per day. Livermore would need to reduce its fleet by 363 vehicles to meet the established usage standard;
Potential dollar savings: $690,000 annually.

U.S. Department of Energy (DOE), Office of Inspector General, Office of
Audit Services: Vehicle Fleet Management at the Idaho National
Engineering and Environmental Laboratory, March 1999;
Selected report findings: The light vehicle fleet was larger than
necessary. The review found that 45 percent of the light vehicles were
used significantly less than the mileage standards and that Idaho could
potentially reduce its fleet by 86 vehicles;
Potential dollar savings: $321,000 annually in operation, maintenance
and replacement costs.

U.S. Department of the Interior, Office of Inspector General: Fleet
Management Operations, U.S. Department of the Interior, February 2004;
Selected report findings: The department and its bureaus were not
effectively managing its approximately 36,000- vehicle fleet. A
significant portion of the department's fleet was underutilized (44
percent);
Potential dollar savings: $34 million annually.

U.S. Department of the Interior, Office of Inspector General: Selected
Administrative Activities at the Colorado State Office, Bureau of Land
Management, March 1996;
Selected report findings: The state office did not complete its
required annual review and was not managing its vehicle fleet
efficiently. The review found that 20 of the 60 owned or leased
vehicles were underutilized and recommended a fleet reduction of up to
6 GSA vehicles;
Potential dollar savings: $22,000 annually for the 6 returned GSA
vehicles.

Source: GAO analysis and inspectors general reports:

[End of table]

[End of section]

FOOTNOTES

[1] This number does not include Postal Service vehicles or tactical
vehicles (those intended for use in combat).

[2] 41 CFR Part 102-34 (2003).

[3] Pub. L. No. 99-272, Sections 15301-15313 (Apr. 7, 1986).

[4] U.S. General Accounting Office, Federal Motor Vehicles: Private and
State Practices Can Improve Fleet Management, GAO/GGD-95-18
(Washington, D.C.: Dec. 29, 1994).

[5] TEMCs are responsible for the management of transportation
equipment at the Navy command level including assignment, replacement,
and approval of transportation equipment requirements.

[6] OMB Circular No. A-11, Preparation, Submission, and Execution of
the Budget, § 25.5 (2003).

[7] U.S. Department of the Interior, Office of Inspector General, Fleet
Management Operations, U.S. Department of the Interior; C-IN-MOA-0042-
2003 (Lakewood, Colo.: Feb. 2004).

[8] U.S. General Accounting Office, Federal Motor Vehicles: Private and
State Practices Can Improve Fleet Management, GAO/GGD-95-18
(Washington, D.C.: Dec. 29, 1994).

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