Management, Acquisition, and Utilization of Warehouse Space Controlled by the Army, Navy, Air Force, Defense Supply Agency, and Various Civil Agencies in the Seattle and San Francisco-Sacramento Areas

Published by the Government Accountability Office on 1971-12-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   UNITED STATES GENERAL Accou
                                                  WASHINGTON,D.C.          20548


          The HonoraFle                                 /
   f      Tke Secretary          of Defense            .J

                   Attention:        Assistant       Secretary    oB Defense             llnllllllllllllllllllllllllllIlllllll

          Dezr    Pk.   Secretary:

                  3ie surveyed the management. acquisition,            and.utilization      of warehouse
           SpEC; co-trolled     'cy tll~k??i>-~N&$-
                                                .   9 -.'
                                                       Air  -- ,Force,
                                                                  -     Defense      Supply Agency. ar@             _ -7
          ?rarlbus civil     agencies in the Seattle       and San Francisco-Sacramento          areas.._
          Our code numter was 86273.

                 T?w survey        was made to evaluate management processes and opportunities
          Zor coordination           :./hich would contribute   to improved use of Government-owned
          warehouses and          reduce the need for commercially-leased        space or new con-
          struckion.     We       do not plan to review in detail       any of the matters  surveyed
          but we have the           following   observations  for your consideration.


                  Sme    Depprtpenr. ot' Del?ense ~rgrnizations         end ot,her r?encies were
          7srsir-     storpze space or kui1di.n;     new wreh_ouse spce when other orgPni?a-
           Lions in :heir       Tonerpl area ( or R: the snme installation)            had v;lcRnt. space
          or ?ere UsinE spece r"or o%solete,         slov-Voving,        or inactive     items of gues-
           tiara?- Ic re';~L;io~1 VPlue.      Management of warehouse spsce could hgve Feen
          !r:ore e?'ecsive     if respoT?sl'rle o-?Sicirls    had better      inform&ion      on now sprcp
          -1~s kein,? used and ha6 taken action          to elininat-.e    unnecessery storage of

                  _at vzst> instillations          visited,     warehouse utilioation      reports   were
          limited     to statis!iics        sho,-c,linx (in terms o? square footage)         gross space,
          risle     cnnd structural       losses, net spece, an< ,ret, used or vacant spece.
          N.one, :;his type ?C information                  can k'e misleading   Leceuse an activil;y
          showinr; Eood use of werehouse spree may be filling                      it with items such
          as xxx?en ppllets,           steel netting,         shackles,   cables, etc.,    b!hi.ch

                   --could      ' e stowed outside          or in sheds,    or

                   --could      ' F g'>soIete     or OF questionable         retention   v;llue.

                                                50 TH ANNIVERSARY          1921- 1971

       In some instances,     there was inadequate analysis               of the nature of
and future    use for the items in storage or to be stored before requesting
authority   to lease or construct         additional      storage facilities.         For
example, at the Defense Depot, Tracy, California,                  little    or no considera-
 tion was given to the economy of disposal versus retention                     of stocks before
requesting   more space.      If timely consideration           had been given to this,
costs expended to lease and eventually              construct    a new warehouse at Tracy
might have been avoided or materially             reduced.      Stocks at Tracy included
large quantities     of inactive      items which had been on hand for some time
and were of questionable        future use.

       The economy of disposal versus retention           was not considered    because
warehouse facility     managers did not have the information         available    for
evaluating   such alternatives.         We believe that there is a need for local
management to have better       information      on warehouse use, especially     on the
type of items being stored,        their need for being stored inside,         and the
quantities   of items that should be held in storage.

      We recommend that you consider establishing     requirements  for analyzing
the nature of items stored,    the need for the items, and the reasonableness
of the type of protection   afforded  the items prior to requesting    additional
warehouse space.


       On June 30, 1569, the Defense Depot, Tracy, awarded a contract           for
construction   of a $3.3 million    warehouse providing      300,000 square feet
of storage although at the time the Depot had over 400,000 square feet
of covered space vacant in its existing       facilities.      The decision to
proceed with the construction      was apparently      due more to momentum generated
by inclusion   of the project    in an approved military      construction  program
than from any real present or future need for the storage space.

        According to Depot records,   there was a critical      shortage of
warehouse space in 1966.      As  the Depot  was using   over  265,OGO     net square
feet of leased space in October 1967, it requested          approval for the $3.3
million    warehouse under the fiscal    year 1969 military     construction    program.

      The justification       for   the warehouse    stated:

      "Warehouse space at         the Defense Depot-Tracy,    California, is
      fully    utilized    and   over 300,000 GSF /Gross Square Feet7 of
      material       is in the   open along streets   and around warehouses.
      In addition       to the   covered storage located at Tracy proper,

-J-   .

                DDE is currently     utilizing      approximately    560,000 GS$ of
                leased space in six separate locations            in the Tracy-Stockton
                3re;l, and approximately       2,630,COO GSF of covered storage in
                eight separate west coast military          establishments.      Of this
                space, at least 3CO,G!IO GSF are considered            hard-core  and
                will continue to be required          after the SEA LSoutheast Asiq
                requirements   are eliminated."
                1   Depot personnel said 560,000          gross   square   feet   was comparable
                    to 265,000 net square feet.

                Depot reports  show that use of leased space reached its peak in
          December 1967 {use of 277,003 out of 287,303 net square feet leased),
          but a year later,   only 83,030 net square feet were being leased.    When
          the contract   was awarded in June 1969 for construction  of the warehouse,
          the Depot had 18,000 net square feet of leased space vacant as well as
          over !cCO,XIO net square feet vacant in its own warehouses.     At the time
          of our survey --a year later--the  amount of vacant covered space still
          exceeded 403,CCO net square feet.

                Depot records contained no information   as to why the contract   was
          awarded even though this additional    space apparently was not needed.

                   According to a representative    of the Defense Supply Agency, Washington
          officials      decided to proceed with the construction    even though there was
          vacant space at the Depot.         We were advised that this decision was based
          on expected future       demands for space, but no documentation    was prepared
          to support the decision.

                 Based on our limited        survey, we believe there may be a need for
          the Defense Supply Agency to assess the effectiveness                      of its management
          controls     to assure that appropriate           consideration       is given to halting
          or revising       construction    projects    when requirements         are eliminated    or
          sFgnificantl.y      reduced after     the initial      request for approval but before
          the construction         contract  has been awarded.          Consequently,      we recommend
          that you consider requiring           the Defense Supply Agency to establish
          procedures      for revalidation      of construction        projects    beIā€˜ore aWaId.ng
          the zontrac ts.

                The recormnendations      in this report are subject to the provisions
          of section 236 of the Legislative         Reorganization    Act of 1971.  We will
          appreciate    receiviny    copies of the statements      you furnish the specified
          congressional     committees in accordance with these provisions.

      Copies of this report are being sent to the House and Senate             .   32;
Comzittetls  on Appropriations  and Committees on Government Operations.       -   ,i-'- -
Copies 9r-3 bGng sent also to the Director,    Office of Management and
Budget; Uirxtor,     Defense Supply Agency; and the Secretaries of the
Army, Eavy, .a;nd Air Force.

                                          Sincerely   yours,

                                                                      ---4 -