Federal Warehouses: Assets in Need of Better Management

Vacant GSA Warehouse in Washington, DC (photo from GAO Report 15-41)
Vacant GSA Warehouse in Washington, DC (photo from GAO Report 15-41)

Ninety million square feet. That’s about three times the size of Manhattan’s Central Park. According to a new report to Congress from the US Government Accountability Office, that’s also the amount of warehouse space the federal government leases or owns for its civilian agencies, warehouse space comprising some 19,000 buildings across the country and its territories.

Foremost among these agencies are the General Services Administration (29,293,442 square feet), the Department of Interior (15,266,082 square feet), and the Department of Energy (11,475,630 square feet). GSA, of course, acts as a sort of landlord for the government, dispensing warehouse space to other agencies. Most of this space is considered “utilized” and “active,” though the GAO did note that among the warehouses were numerous unused buildings, some having been vacant for several years. “This discrepancy,” notes the GAO report, “raises questions about the transparency and usefulness of the Federal Real Property Portfolio (FRPP) warehouse data, which could be misinterpreted by decision makers, including Congress and the Office of Management and Budget.”

GAO Report Table 1

What is being stored in those warehouses? Having no statutory obligation to ask, the GSA has no answers. Individual agencies have a better idea; the Department of Interior, for instance, reports that its 10,000-odd warehouses, most owned rather than leased, are mostly used to store government records or equipment such as snowplows and firefighting gear, in keeping with its mission to safeguard natural resource and cultural assets. Some aspects of that mission require special facilities—for instance, as the report notes, the US Geological Survey holds ice core samples brought up from deep below the surface in places such as Greenland and Antarctica and are kept in deep-freeze units in an industrial warehouse in metropolitan Denver. Similarly, the Department of Energy has facilities storing such things as windmill blades for use in testing wind turbines, as well as warehousing nuclear waste and other unusual materials.

The report identifies challenges in acquiring, managing, and disposing of federal warehouses. Owing to atypical needs such as DOE’s ice core storage, for instance, warehouse spaces must sometimes be custom-designed; maintaining them can be costly, especially as they age; and disposing of them can be difficult, especially if a warehouse is so specialized that it cannot find a civilian user, has outlived its usefulness generally, or has been used for unusual and sensitive purposes such as storing hazardous materials. In such cases, disposal usually equates to demolition.

More, though, the report notes that many federal agencies have long misinterpreted FRPP standards for measuring utilization, a key factor in deciding whether the government has too much or too little warehouse space. Before 2013, the operative categories were simply “utilized” and “unutilized,” defined as a percentage of occupied space. The guidelines have now been made more rigorous with the addition of an “underutilized” category and definitions for each class: a utilization score of 40 or more is required for “utilization,” while 1 percent or less constitutes “unutilized.” By this measure, about 15 percent of GSA-held warehouse space is considered unutilized for the purposes of the report, adjusting for property that had been incorrectly categorized by the various agencies.

Of particular interest to our readers, the GAO report notes in passing that civilian agencies leased more than 1,100 warehouses nationwide, covering about 24 million square feet of space. This figure diverges from FRPP data, which puts the figure (as of 2013) at 600 warehouses—a discrepancy, to be sure. Whatever the case, the report calculates that rent for this space amounted to $170 million in 2013.

Confusion surrounds much of the present discussion in part because, as the report adds, GSA has not developed firm strategies for the best use of warehouse space, most of its efforts having gone to office space instead. “As agencies work to reduce their footprint,” the report notes, “this could be an ideal time to develop a strategic approach that would capitalize on broader trends, economies of scale, leading practices, and private industry experience in the warehouse area. The report concludes by noting that GSA agrees with its recommendation that it should “develop a government-wide strategy to promote effective and efficient practices in warehouse management.”

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