Federal Acquisition: Increased Attention to Vehicle Fleets Could 
Result in Savings (25-MAY-04, GAO-04-664).			 
                                                                 
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.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-664 					        
    ACCNO:   A10176						        
  TITLE:     Federal Acquisition: Increased Attention to Vehicle      
Fleets Could Result in Savings					 
     DATE:   05/25/2004 
  SUBJECT:   Agency missions					 
	     Cost control					 
	     Cost effectiveness analysis			 
	     Evaluation criteria				 
	     General management reviews 			 
	     Inventory control					 
	     Motor pools					 
	     Motor vehicles					 
	     Property and supply management			 
	     Property disposal					 

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GAO-04-664

United States General Accounting Office

                     GAO Report to Congressional Requesters

May 2004

FEDERAL ACQUISITION

         Increased Attention to Vehicle Fleets Could Result in Savings

                                       a

GAO-04-664

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

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.

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.

May 2004

FEDERAL ACQUISITION

Increased Attention to Vehicle Fleets Could Result in Savings

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.

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 [email protected].

Contents

     Letter                                                                 1 
                                    Results in Brief                        2 
                                       Background                           4 
                Fleet Management Attention Is Needed to Ensure That Fleets 
                                                                       Are 
                             the Right Size and Composition                 6 
              Opportunities Exist to Dispose of Underutilized Vehicles and 
                               Realize Potential Savings                    9 
                 Governmentwide Initiatives to Improve Fleet Management    
                                       Practices                           11 
                                      Conclusions                          13 
                          Recommendations for Executive Action             13 
                           Agency Comments and Our Evaluation              14 
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 31

Appendix VII	Reviews Identifying Excess Vehicles at Various Agencies 33

Figures

Figure 1: Approximate Number of Vehicles Operated by the Agencies Included
in Our Review 5

Figure 2: Extent to Which Agencies' Policies Provide Mission-Related
Utilization Criteria and Agencies Conduct Periodic Fleet Assessments 7

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

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protection in the United States. It may be reproduced and distributed in
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copyright holder may be necessary if you wish to reproduce this material
separately.

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.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

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

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.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.

2 41 CFR Part 102-34 (2003).

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.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,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.

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).

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

5%

Veterans Affairs 10,000

Department of Homeland Security 30,000

U.S. Department of Agriculture 42,000

Navy 49,000

Army 71,000

Source: GAO analysis of agency data.

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

Yes indicates that agency policies, procedures, or guidelines specifically
and completely address the issue. Somewhat indicates that the agency
policies, procedures, or guidelines address the issue in a general manner.

No indicates that agency policies, procedures, or guidelines do not
address the issue.

Source: GAO analysis.

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:

o  	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.

o  	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.

o  	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)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 Some agencies have begun to focus more attention
on fleet management Steps to Improve Fleet practices that they believe
will improve the efficiency of their fleets. At the Management Practices
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

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

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 	Our work and reviews by inspectors general identified
numerous instances where agencies had an excessive number of vehicles in
their fleets. If

to Dispose of these vehicles were disposed of, agencies could realize
savings ranging

Underutilized Vehicles 	from thousands to millions of dollars, as
illustrated in the following examples:

  and Realize Potential

Savings  o  	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.

o  	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.

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

o  	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:

o  	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.

o  	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.

o  	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.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.

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

Conclusions

Recommendations for Executive Action

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.

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

o  develop utilization criteria related to the missions of the vehicles
and

o  	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

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

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

o  establish effective oversight mechanisms to ensure that the utilization

  Agency Comments
  and Our Evaluation

criteria are defined and fleet assessments are carried out.

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 [email protected], or Michele Mackin,
Assistant Director at 202-512-4309 or [email protected]. Major
contributors to this report include Marie Ahearn, Benjamin Howe,
Emma Quach, Richard Silveira, and Tatiana Winger.

David Cooper
Director, Acquisition and Sourcing Management

                       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.1 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  o  Washington, D.C.
Conservation Service  o  State Conservationist Office, Athens, Ga.

o  Southern Regional Office, Atlanta, Ga.

o  Texas

    Animal and Plant Health  o  Washington, D.C. Inspection Service  o  Wildlife
    Service, Athens, Ga.

o  Wildlife Service, Wash.

o  Veterinary Service, Iowa

1 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).

                       Appendix I: Scope and Methodology

o  Veterinary Services, Conyers, Ga.

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

Forest Service  o  Washington, D.C.

o  Southern Region, Atlanta, Ga.

o  Chattahoochee-Oconee National Forest, Gainesville, Ga.

o  Daniel Boone National Forest, Ky.

o  Land Between the Lakes National Recreational Area, Ky.

o  Pacific Northwest Region, Oreg.

o  Siuslaw and Willamette National Forests, Oreg.

o

Department of

                                                                           o 
                                                        Homeland Security  o 
                                                                           o 

o

  Department of Defense

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.

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

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

o  Fort Belvoir, Va.

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

o  Fort Carson, Colo.

                             Department of the Navy

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

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

o  Navy Public Works Center, Norfolk, Va.

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

o  Navy Public Works Center, Jacksonville, Fla.

o  Naval Station Newport, Newport, R.I.

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

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

                       Appendix I: Scope and Methodology

  Department of Veterans Affairs

Veterans Affairs Health  o  Headquarters, Washington, D.C. Administration 
o  Medical Center, Bedford, Mass.

o  Medical Center, Baltimore, Md.

o  Medical Center, Jamaica Plain, Boston, Mass.

o  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

o  Department of Energy,

o  Department of Defense,

o  Department of Veterans Affairs,

o  Department of Justice,

o  Department of Treasury,

o  Department of Transportation,

o  Department of Homeland Security,

o  Department of the Interior, and

o  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 report2 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.

2 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).

Appendix I: Scope and Methodology

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.

Appendix II: Comments from the Department of Agriculture

Appendix II: Comments from the Department of Agriculture

Appendix III: Comments from the Department of Defense

Appendix III: Comments from the Department of Defense

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

Appendix IV: Comments from the General Services Administration

Appendix IV: Comments from the General Services Administration

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

Appendix IV: Comments from the General Services Administration

                     Page 29 GAO-04-664 Federal Acquisition

                     Page 30 GAO-04-664 Federal Acquisition

Appendix VI: Comments from the Department of Veterans Affairs

Appendix VI: Comments from the Department of Veterans Affairs

Appendix VII: Reviews Identifying Excess Vehicles at Various Agencies

Selected report findings Potential dollar savings

U.S. Army Audit Agency
Non-Tactical Vehicles, U.S. Army Garrison

             U.S. Army Garrison Japan does not Japan, August 2003.

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.

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.

Transportation Motor Pool Operations, 8th A substantial portion of the
nontactical

U.S. Army, December 1997. 	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:

o  	34 vehicles (representing 33 percent of the fleet),

o  	61 vehicles (representing 39 percent of the fleet), and

o  	203 vehicles (representing 54 percent of the fleet)

Management of Non-tactical Support Activities did not always effectively
use Vehicles, Fort Carson, Colorado, their nontactical support vehicles.
Vehicle December 1996. usage goals set by the command were No estimate on
potential savings.

About $109,600 if activities met command's usage goals; $465,100 if they
met the Army's goals.

considerably below Department of the Army goals.

Navy Transportation Equipment Management Center (TEMC), Atlantic Division

Selected Navy Transportation Equipment At the end of fiscal year 2003,
Navy $3.7 million per year cost avoidance.

Management Center reviews. 	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.

                              Naval Audit Service

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

Appendix VII: Reviews Identifying Excess Vehicles at Various Agencies

                     Government Vehicle Usage at Naval Air

                      The Air Station retained 79 assigned

Report did not specify amount, but noted that the Naval Air Station had
unnecessary administrative transportation costs as a result of excess
vehicles.

Station Patuxent River, Md., December 1998.

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.

Department of Veterans Affairs, Office of Inspector General
Review of Selected Construction Contracts, Auditors could not account for
all vehicles

Not addressed as a whole. The purchase price of the one vehicle that did
not move was $1,800.

Purchase Card Activities, and Vehicle Administration at Veteran's Affairs
Medical Center (VAMC), Clarksburg, West Virginia, January 2001.

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.

U.S. Department of Energy (DOE), Office of Inspector General, Office of
Audit Services

Richland Operations Office Fleet The size of the fleet was not appropriate
$1.7 million annually.

Management, January 2001. 	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.

Vehicle Use at Lawrence Livermore The allotment of 516 on-site
discretionary $690,000 annually.

National Laboratory, September 2000. 	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.

Vehicle Fleet Management The light vehicle fleet was  $321,000 annually in 
         at the Idaho               larger than               operation,      
National Engineering and necessary. The review found       maintenance and 
        Environmental                   that               replacement costs. 
Laboratory, March 1999.  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.           

Appendix VII: Reviews Identifying Excess Vehicles at Various Agencies

          U.S. Department of the Interior, Office of Inspector General

Fleet Management Operations, U.S. The department and its bureaus were not
$34 million annually.

Department of the Interior, February 2004 	effectively managing its
approximately 36,000-vehicle fleet. A significant portion of the
department's fleet was underutilized (44 percent).

Selected Administrative    The state office did not   $22,000 annually for 
      Activities at the             complete its           the 6 returned GSA 
    Colorado State Office,   required annual review and       vehicles.       
        Bureau of Land                was not            
Management, March 1996.  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.         

              Source: GAO analysis and inspectors general reports

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