In DOE’s fiscal year 1997 Federal Managers’ Financial Integrity Act report accompanying its financial statements, the Department indicated that it had extensive inventories of real and personal property that is no longer necessary and that disposal of this property could save future storage, security, and maintenance costs. Federal Regulations Provide Guidelines for Real Property but DOE’s Guidance Does Not Include Criteria for Determining When Personal Property Is Excess

The federal property management regulations specify that executive agencies should dispose of real and personal property that is excess to their needs and include guidelines for determining when real property is unneeded or underutilized. The regulations then describe the disposal process to be used for any property determined to be excess. DOE’s Property Records Do Not Consistently Reflect When Property Is Excess

DOE’s recently revised guidance on property records requires contractors to record property already identified as excess. However, for personal property, without further guidance, these records will not provide information to help identify other personal property that is no longer needed. This database contains information such as the location, size, age, and acquisition cost of the property and the percentage of a facility being used. In July 1998, DOE added a new requirement to its real property records system by adding an “excess indicator” to show whether a property has been determined to be excess. The challenges cited by DOE officials include a lack of funding for the decontamination and decommissioning of excess real property and the existence of few incentives for program and field offices to identify property as excess. Among the problems noted in the report were that (1) DOE lacks policies and criteria for determining when materials are excess to the Department’s needs and (2) the function of declaring materials excess usually rests with program managers at DOE’s sites, who have little or no incentive to address the problem and who lack the resources and funding to identify and dispose of excess materials. However, without the program managers’ knowing the actual costs to maintain their property, there is little incentive to spend the resources necessary to dispose of it. Examples of Innovative Approaches to Identifying and Disposing of Excess Property

Innovative approaches to the identification and disposal of excess property have been developed at the field and program office levels. DOE generally disagreed with our assessment of the extent to which criteria exist. However, these regulations are general in nature and do not provide any specific guidance similar to that found in the real property regulations. Scope and Methodology

To determine what criteria DOE uses to guide the identification and disposal of excess property and whether DOE’s property records reflect what is no longer needed to carry out its missions, we reviewed the federal property management regulations and DOE’s property management regulations and guidance. 6, 1998).
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) efforts to identify and dispose of property that is excess to its needs, focusing on the: (1) criteria the Department uses to guide the identification and disposal of excess property; (2) extent to which the Department's property records reflect what is no longer needed to carry out its missions; and (3) challenges the Department believes exist in identifying excess property and the innovative approaches being used to dispose of this property.

What GAO Found

GAO noted that: (1) federal property management regulations include criteria to determine when real property is excess to an agency's needs; (2) however, neither federal property management regulations nor DOE's regulations and guidance include specific criteria to determine when personal property is no longer needed; (3) when property has been identified as excess, guidelines for the disposal process are well defined for both real and personal property; (4) DOE's property records do not consistently provide information that would help identify property that is no longer needed; (5) recent changes to DOE's regulations require that property records identify property that has already been determined to be excess; (6) in July 1998, DOE modified its real property records system to identify property that has been determined to be excess; (7) this system also provides additional information, such as the percentage of a facility currently in use, that could be used to identify other property that is no longer needed; (8) similarly, in May 1998, DOE revised its personal property management regulations to require that contractors' records include information on current usage, such as categorizing property as active, in storage, or excess; (9) however, these regulations do not provide criteria for determining when personal property should be placed in these categories; (10) DOE acknowledges problems with its identification and disposal of excess real and personal property; (11) Department officials cited, for example, a lack of funding for the environmental cleanup of the current inventory of excess real property and a lack of incentives to identify property as excess; (12) because the costs associated with the maintenance and storage of unneeded property are generally not separately identified, little incentive exists to spend the resources necessary to dispose of it; and (13) regardless of the problems, field and program offices have developed some innovative approaches to dispose of property, such as including a performance-based incentive in the site management contract to encourage the contractor operating the site to dispose of excess property during the fiscal year.