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The Challenge of Federal Warehousing: Opportunities for Sharing vs. Obstacles to Reform.

Government study finds agency storage needs declining, but space inventories holding steady.

Late in 1997, the General Services Administration's (GSA) Office of Governmentwide Policy (OGP) initiated a project to review the federal government's warehouse, distribution, and storage inventory. The purpose was to determine trends and identify efficiencies resulting from technological advances, and develop a governmentwide information sharing mechanism for best practices and lessons learned. Another goal of the project was to identity potential opportunities for improving the utilization of the federal government's real property to meet current and future warehouse needs through sharing opportunities.

Strategic Warehouse Inventory Needs Group (SWING)

To accomplish this task, OGP established a strategic warehouse inventory needs group (SWING) team comprised of experts from GSA's real property, personal property, and supply/distribution organizations. The SWING team was charged with the responsibility to identify all federal real property holdings within the United States and develop a geographically-delineated area to conduct the study. The objective was to find a contiguous three-state area with the highest concentration of space and diversity of federal agency activity. To this end, the SWING team set a 10,000 sq. ft. facility threshold and relied on the worldwide inventory (WWI), a database maintained by OGP and supported by all federal agencies that report federal real property holdings on an annual basis. The WWI is a valuable tool that has been used by both the federal government and the private sector to identify potential locations and ownership responsibilities for federal tenants worldwide.

Using the data available, the SWING team identified the states of Florida, Georgia, and Tennessee as the area most likely to provide for a successful project. In order to ensure applicability to both the public and private sectors, the team also visited several private sector companies whose operations center on storage and distribution functions.

Study Methodology

In May 1998, 21 federal land holding and tenant agencies, including representatives of OGP's Federal Real Property Council, attended a project kickoff meeting to discuss relevant federal real property-related issues. The department and agency representatives attending were from the following organizations:

Department of the Air Force

Department of Agriculture

Department of the Army

Department of Defense

Department of Education

Department of Energy

Department of Health and Human Services

Department of Housing and Urban Development

Department of the Interior

Department of Justice

Department of the Navy

Department of Transportation

Department of the Treasury

Department of State

Department of Veterans Affairs

Army Corps of Engineers

DOD: Defense Logistics Agency

Environmental Protection Agency

General Services Administration

DOJ: Unicor--Federal Prison Industry

National Aeronautics and Space Administration

Social Security Administration

Tennessee Valley Authority

The use of a kickoff meeting has been found by OGP to be beneficial to the success of projects by providing an opportunity to enlist the support of all the attending or participating federal agencies. The cooperation of these customer agencies is necessary as they provide local points of contact for the onsite visits.

Site Visits in the Southeast, Texas, and Ohio

The team visited 16 locations in Florida, 25 in Georgia, and 13 facilities in Tennessee during the execution of the study project. In addition to undertaking its own survey at each site, the team found itself conducting an open forum on issues in federal warehousing. An important aspect of the project was to enlist our hosts to provide us with their personal observations and insights regarding the state of the warehousing profession.

The diversity of missions and materials being housed for the many federal activities identified required the team to develop a threshold for selection of site visits. Among the items stored in the warehouses visited were everything from office supplies to airplane and ship parts to military vehicles to nuclear materials. Paper products stored included publications (some of which were well out-of-date) and tax forms. The mission of the large distribution centers, both government and private sector, required that they ship thousands of items daily. Loading dock bays were lined up with tractor-trailers being loaded for delivery. The team decided that warehousing locations with at least 10,000 sq. ft. would provide the most programmatic diversity to provide information and possibly resource sharing opportunities. In fact, the warehouses visited ranged in size from 10,000 sq. ft. to several million sq. ft. A total of approximately 39.3 million sq. ft. are contained in all 54 locations visited, including the four private sector sites in Florida and Georgia that participated in the study.

Since GSA is a major provider of office and facility management supplies, the team visited GSA's Federal Supply Service's Southwest Distribution Center in Fort Worth, TX. The visit to this facility was made to provide a perspective of an older facility comprised of several smaller warehouse buildings where multiple staging actions were necessary to prepare orders for shipping. Today's larger warehouses require less internal transportation to stage the delivery order. In addition, the team visited the Industrial Engineering Division at Wright-Patterson Air Force Base, Dayton, OH. This organization provides design services for all Air Force materials handling and warehouse functions worldwide and was referenced more than once during the visits to the Air Force locations within the three-state project.

Observations and Findings

As a result of the site visits and discussion, the team found many examples of good concepts and practices that are being used by both public and private sector organizations. In many instances, the innovative concepts that have been developed are location specific and relate to either the facility (real property) or the materials being stored (personal property).

Modifications and Structural Changes

Simple modifications, such as the addition of natural lighting (skylights), placement of large stand-alone fans for air movement on the warehouse floor, and use of higher racking systems, provide for more efficient warehouse operations. These small enhancements to the working environment provide a more comfortable feel to the employees and generally will result in more efficient worker performance.

Other, more technical or structural changes, such as using moveable/accordion storage units, vacuum lift systems, and computerized high-density storage racking systems, have improved the operating efficiency of the facilities. These more elaborate and expensive modifications provide the worker with enhancements that require less physical strain and therefore enables the worker to provide a higher level of effort for a longer period of time. In addition, some of these enhancements can reduce the amount of warehouse space needed. For example, the use of accordion storage units will reduce the amount of space needed by approximately 50 percent.

Use of Less Costly Methods

In the past, the federal government had maintained huge stockpiles of all kinds of materials from office and facility supplies to fire fighting equipment to military armaments, weapons, clothing, and anything else that would be need to support its troops in war as well as in peacetime. Today, the government is getting away from that concept. In fact, federal agencies have been moving more towards the use of the government purchase card and other credit cards for small orders of office-related supplies. The government-issued credit cards enables the holder to buy directly from vendors either by going to local supply stores or ordering through the Internet or telephone. The government is also using "just-in-time" and prime-vendor contracting. These methods provide a less costly and more efficient way for federal agencies to buy goods and services directly from the vendor instead of processing requests through government procurement offices.

Little Reduction in Space

In most instances, this has significantly reduced the need for warehouse space. Unfortunately, this change has occurred generally without a corresponding reduction in space occupied. Agencies are reluctant to release space once it is in their inventory. It is very difficult to reduce the number or size of facilities located on huge federal complexes.

GSA's Federal Supply Service (FSS), which had maintained many depot-like warehouse facilities around the United States, has been able to reduce its occupied storage needs and has gone from over 20 major warehouse facilities to four large warehouse operations and seven smaller warehouses. Since 1997, FSS has reduced its warehouse space by approximately 1.5 million sq. ft.

Several of the warehousing facilities visited by the team showed signs that they were not fully utilizing warehouse capacity. Several federal agencies had indicated that they were in the process of leasing additional space to relieve the perceived overcrowded conditions. In these cases, the perspective of the warehouse managers was not the same as that of the expertise represented on the team. In fact, it was very obvious that better use of the existing space would have resolved the space problems easily. Potential improvements to space utilization include adding additional levels of storage racking, improving inventory control of excess personal property, and better use of publishing technology in place of stockpiling hard copy forms and publications

Specific financial impacts and cost-benefit analyses associated with better space utilization at the facilities visited were not included in the scope of this project. Due to the enormous variety of mission needs, items stored, as well as operational equipment and systems in use within the many different storage facilities, it is not feasible to estimate specific savings to the federal government. Facilities visited during the execution of this project included open-sided sheds, World War II brick and wooden buildings in need of repair, and new and highly mechanized distribution centers. Without knowing the strategic plans and budgetary programs of the occupying agencies, it is also not feasible to develop estimates of site-specific savings and recommendations.

Potential for Significant Cost Savings

The project covered 8.4 percent of the federal government's approximately 467 million sq. ft. of warehouse space (448 million sq. ft. owned and 19 million sq. ft. leased) within the 50 states. Based on this sampling, the team strongly believes that if these same conditions and situations are representative nationwide, federal agencies could save substantial sums in reduced rents, utilities, repairs, labor, transportation, and damage to merchandise. Further, the government could generate additional revenues through the increased sales of both surplus real and personal property.

Many civilian agency representatives indicated that, while there is a prescribed process to get rid of old, unneeded personal property, working with GSA to process excess property seemed like a long and complicated process. The team found that this perception is caused by two factors. First, owner agency internal screening processes were in need of updating. Agencies found it easier to collect and store unneeded items rather than provide valuable personnel resources to go through the process to excess those items.

Due to reductions in personnel, agencies felt the amount of time needed to fill out forms and take care of the necessary administrative tasks was not viewed as critical to the agency mission. Secondly, the actual process used by GSA at times was longer than would be considered acceptable. Some agency comments indicated that the entire process to get rid of the unneeded items eventually was much too long and in the end they got nothing in return for the effort. However, agencies like the National Aeronautics and Space Administration (NASA) and the Tennessee Valley Authority (TVA) were pleased with GSA's excess property sales program.

Another reason for agencies' lack of enthusiasm at the disposal of excess property program is that most federal agencies lack authority to retain proceeds derived from the sales. Today, the proceeds from these sales must be deposited in the miscellaneous receipts of the US Treasury. However, GSA's OGP has developed a legislative initiative (S. 2805) to amend the Federal Property and Administrative Services Act (Property Act) of 1949, as amended, to authorize federal agencies to retain proceeds from certain dispositions of federal personal property to cover direct and indirect disposal costs. Perhaps sometime in the near future, federal agencies will be more willing to dispose of not only the personal property they no longer want or need, but also to re-deploy units of the truly underutilized real property they sometimes retain.

Opportunities for Real Property Sharing

During the development of this project, the team had hoped that in addition to finding some of the best practices and lessons learned in government warehousing programs, they would discover opportunities for the sharing of federal real property resources. While working on the site visits, the team did find three potential opportunities for space sharing. Two of these locations either were not configured for the proposed need or the availability could not be guaranteed. The availability of space at GSA's Southeast Distribution Center in Palmetto, GA has the potential to satisfy the expansion space needs of the National Archives and Records Administration (NARA) currently in an old and overcrowded warehouse in East Point, GA. However, this situation is tied to a complexity of budget and personnel issues and may not get resolved for some time. If this sharing opportunity comes to fruition, it has the potential to provide NARA with rental savings of approximately $500,000 annually for the next 10 years.

Other sharing opportunities that the study found are putting local government and private sector organizations together with the federal government's property. For example, consider TVA's Hartsville Investment Recovery Center, Hartsville, TN, and the Department of Energy (DOE), East Tennessee Technology Park, Oak Ridge. In this case, each agency is working with the local community to form economic "enterprise zones." Generally, this arrangement enables federal agencies to provide separate and secure access to unused warehouse space for outlease by a local community at favorable "rent" and may include minor building repair. Due to the security requirements found at some federal installations, these partnership agreements can be cumbersome to coordinate.

This article summarizes findings of GSA's study on "Strategic Storage Needs of the Federal Government." If you would like a copy of the report, contact Sheldon Greenberg on 202-501-0629 or via e-mail at sheldon.greenberg@gsa.gov. You may also access the report via the OGP website at: http://policyworks.gov/realproperty.

Sheldon Greenberg is the team leader of the Strategic Warehousing Inventory Needs Group (SWING) in GSA 's Office of Governmentwide Policy (OGP), Office of Real Property. The other members of the project team were Hank Aldag, OGP, Office of Real Property; Gary Thompson, OGP, Office of Transportation and Personal Property; and Michael Wayne of GSA 's Federal Supply Service, Office of Distribution Management.
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Author:GREENBERG, SHIELDON
Publication:The Public Manager
Geographic Code:1USA
Date:Sep 22, 2000
Words:2374
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