Warehouse Space

The Department of Energy (Department) and its contractors use
warehouses for the storage of furniture, equipment, and office supplies. The Department had about 3.5 million total square feet of warehouse space of which about 493,400 square feet was leased from outside sources. The annual cost of these leases was over $2.5 million.

The purpose of the audit was to assess the efficiency of the Departments use of warehouse space. Our specific audit objective was to determine whether the Department was minimizing the need for warehouse space for the storage of furniture, office supplies, and equipment.

Although Federal Property Management Regulations require Government agencies to continuously review their space requirements and minimize the need for space, this was not always being accomplished throughout the Department. A review of four entities (entities are both Department and contractor operations) showed that the Department had more space than needed because about 76,000 square feet of warehouse space was used to store unusable, unneeded and/or excess furniture and equipment. In addition, office supplies were warehoused instead of adopting a just-in-time or equivalent delivery system. If two of the four entities relinquished 76,000 square feet of warehouse space, the
Department could save about $1 million in lease costs over the remaining lease periods. Additional savings could be achieved by implementing a just-in-time or equivalent delivery system to reduce space needed for office supplies inventory.

We recommended that the Department take action to dispose of excess and unneeded property, reduce the storage of office supplies, and establish stock levels for any furniture and office supplies that need to be warehoused. We also recommended specific actions be taken at three of the four entities reviewed that dealt with specific conditions identified at these locations.

The Assistant Secretary for Human Resources and Administration generally agreed with the finding and three of the four recommendations. However, management did not agree to relinquish leased warehouse space at DOE Headquarters until further studies are completed.

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