Waste in Federal Property Management

September 10, 2015
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The Inspector General (IG) of the Department of Homeland Security (DHS) has released a report finding waste in the department’s vast warehousing of equipment and supplies. Here are a few examples of the problems found by the IG:

Customs and Border Protection (CBP) leases a 54,000 square foot warehouse in Northern Virginia to store mostly excess furniture leftover from projects in which CBP reduced office space. CBP also stockpiles reams of printer/copier paper at this location and will pay about $934,000 per year to lease this warehouse. Many of the items in the warehouse appeared to be obsolete or broken. The annual lease cost exceeds our estimated value of these items.

… CBP leases a 41,129-square-foot GSA warehouse also located in Northern Virginia to support its Data Center and store new computer equipment CBP distributes to its field offices. In addition, CBP stores old computer equipment. CBP will pay about $502,000 each year to lease this warehouse. The iTeam estimated that about half of the items stored in this warehouse were old computer systems and other obsolete technologies.

… CBP leases a 6,500-square-foot GSA warehouse in Northern California to store old computers, broken equipment, old office furniture, and some books. CBP will pay about $74,000 each year to lease this warehouse. The warehouse is mostly empty and CBP does not actively manage or conduct physical inventories of the stored items.

These examples exemplify points made in my study, Why the Federal Government Fails.Well-managed businesses would not be holding onto piles of obsolete and broken furniture and computers, and paying for expensive storage. They have a bottom line to worry about, and face constant pressure to reduce costs. By contrast, federal government managers have little or no incentive to reduce costs, and so they don’t.

The new report on DHS inventory mismanagement is a microcosm of the broader waste in the government’s vast holdings of real property. The federal government owns or leasesmore than 275,000 buildings, including offices, hospitals, and warehouses. There is huge excess in these holdings, which cost $22 billion a year to maintain. The government has long been a poor manager of it assets, and the GAO has had federal property holdings on its “high risk” list for years.

To the Obama administration’s credit, it is taking modest steps to reduce the waste in federal property management. But the more fundamental issue is that the government is a vastly bloated enterprise that does too much and has little incentive to do it efficiently.

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