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

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

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

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: James G. Mitchell Team: General Accounting Office: General Government Division Phone: (202) 275-8676