FEDERAL VEHICLE 

FLEETS

GSA Has 

Opportunities to 

Further Encourage 

Cost Savings for 

Leased Vehicles

Report to Congressional Requesters

May 2014

GAO-14-443

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-443, a report to 

congressional requesters.

May 2014

FEDERAL VEHICLE FLEETS

GSA Has Opportunities to Further Encourage Cost 

Savings for Leased Vehicles

Why GAO Did This Study

Agencies (excluding the U.S. Postal 

Service) spent about $1.1 billion in 

fiscal year 2012 to lease about 

190,000 vehicles from GSA. Recent 

legislative proposals have called for 

reductions in the cost and size of 

federal agencies’ fleets. Agencies may 

choose to have telematic devices 

installed in leased vehicles; the data 

these devices provide can be used to 

manage fleets. 

GAO was asked to review GSA’s 

vehicle-leasing program. This report 

addresses (1) whether and how GSA’s 

leasing rates, terms, and services 

support agency efforts to reduce fleet 

costs and (2) the views of selected 

experts regarding the cost-savings 

potential of telematics for fleets and the 

possible implications for GSA’s leasing 

program. GAO reviewed program 

policies; interviewed GSA officials; held 

two panel discussions with fleet 

managers from 10 agencies 

representing 80 percent of the leased 

fleet in fiscal year 2011; and 

interviewed 19 experts with knowledge 

about telematics or fleet management, 

as demonstrated by recommendations 

from fleet management associations, 

among other considerations. 

Responses from the panelists and 

experts are not generalizable.

What GAO Recommends

GAO recommends that GSA (1) 

examine the trade-offs of changing 

GSA’s lease-rate structure so that 

agencies pay for their actual fuel use 

and (2) request information on 

agencies’ experiences with telematics 

in their fleets and share this 

information with agencies. GSA agreed 

with GAO’s findings and 

recommendations.

What GAO Found

Some aspects of the General Service Administration’s (GSA) leasing rates, 

terms, and services support agency efforts to reduce fleet costs, while others do 

not. For example, GSA procures the vehicles it leases at a discount and passes 

those savings on to its customers, provides agencies with data analyses that can 

be used to eliminate unnecessary vehicles, and identifies fraud, waste, and 

abuse related to leased vehicles. However, GAO identified two areas where 

GSA’s rates and terms have not encouraged agency efforts to reduce fleet costs. 

First, under GSA’s leasing-rate structure, fuel costs are covered by a monthly fee 

based on miles traveled, among other things, but not on actual fuel used. This 

rate structure does not provide incentives for agencies to reduce some fuel costs

that may not be fully reflected by miles travelled, such as costs associated with 

idling or speeding. Principles for designing government fees suggest that having 

each agency pay for the fuel it actually uses could increase incentives to reduce 

fuel costs. GAO has previously found that government fee decisions also involve 

considering trade-offs and that other considerations, such as administrative 

burden, are important. Without examining the trade-offs of changing GSA’s rate 

structure so that agencies pay for the fuel they actually consume, GSA may be 

missing an opportunity to encourage agencies to minimize fuel costs and save 

taxpayer dollars. Second, lack of clear GSA guidance on what constitutes 

excessive wear and tear of leased vehicles can limit the ability of agencies to 

determine whether it is less expensive to lease or own vehicles. GSA just 

developed this guidance and is taking steps to implement it. 

The experts and federal fleet managers GAO consulted agreed that the use of 

telematics can facilitate cost savings for some fleets by providing fleet managers 

with information—such as data on vehicle location, speed, or condition—that 

they can use to reduce fleet size, fuel use, misuse of vehicles, and unnecessary 

maintenance. For example, a fleet manager at the Department of Energy’s Idaho 

National Laboratory reported that since fiscal year 2011, telematics data have 

helped officials at that facility decide to eliminate 65 leased vehicles for an 

estimated annual savings of approximately $390,000. However, various factors—

such as telematics’ cost, characteristics of the fleet, and the level of management 

support—influence the potential of telematics to facilitate cost savings for a given 

fleet. The federal fleet managers on GAO’s panels suggested that GSA lower the 

costs of telematic devices to improve the likelihood of achieving cost savings and 

to help allay management’s concerns about return on investment. They also 

suggested that GSA provide information on agencies’ experiences with 

telematics, such as studies or estimates of cost savings, to further support 

telematics’ adoption in the federal fleet. GSA officials noted that they are 

currently engaged in efforts to obtain lower prices on telematic devices, and while 

officials do not currently collect information on agencies’ experiences with 

telematics, they would be able to request it and share any information agencies 

voluntarily provide. One of GSA’s strategic objectives is to enhance relationships 

with its customers, in part by sharing information that drives improved decisionmaking. By not collecting and sharing information on federal agencies’ 

experiences with telematics, GSA may be missing an opportunity to help 

agencies determine whether to adopt telematics in their fleets and identify which 

devices or approaches have the greatest potential to facilitate cost savings. 

View GAO-14-443. For more information, 

contact Lori Rectanus at (202) 512-2834 or 

rectanusl@gao.gov. 
Page i GAO-14-443 Federal Vehicle Fleets

Letter 1 

Background 4

Some Aspects of GSA’s Leasing Rates, Terms, and Services 

Support Agency Efforts to Reduce Fleet Costs, While Others 

Do Not 7

Telematics Use Might, in Some Cases, Result in Cost Savings to 

Vehicle Fleets Leased from GSA 16

Conclusions 26

Recommendations for Executive Action 26

Agency Comments 27

Appendix I GSA’s Vehicle-Leasing Program Services, Structure, and Costs 28

Appendix II GSA’s Vehicle-Purchasing Program Services, Structure, and Costs 33

Appendix III Objectives, Scope, and Methodology 36

Appendix IV Fleet Characteristics That Experts Reported Could Influence Telematics’ 

Cost-Saving Potential 40

Appendix V Comments from the U.S. General Services Administration 41

Appendix VI GAO Contact and Staff Acknowledgments 42

Tables

Table 1: Number of Vehicles Leased by GSA, by Vehicle Type, 

Fiscal Years 2008-2012 5

Table 2: GSA Leasing Program Revenue and Costs, in 

Thousands, Fiscal Years 2008-2012 32

Table 3: GSA’s Purchasing Program Revenue and Costs, in 

Thousands, Fiscal Years 2008-2012 35

Contents
Page ii GAO-14-443 Federal Vehicle Fleets

Figures

Figure 1: Examples of Cost Savings That Can Be Achieved with 

Telematics 17

Figure 2: Location and Number of Staff Responsible for GSA’s 

Leasing Program 30

Abbreviations list

AFLA Automotive Fleet and Leasing Association 

AFV alternative fuel vehicles 

CBP Customs and Border Patrol 

FTE full-time equivalent 

GPS Global Positioning System 

GSA General Services Administration 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-443 Federal Vehicle Fleets

441 G St. N.W.

Washington, DC 20548

May 7, 2014

The Honorable Darrell Issa

Chairman

Committee on Oversight and Government Reform

House of Representatives

The Honorable John L. Mica

Chairman

Subcommittee on Government Operations

Committee on Oversight and Government Reform

House of Representatives

Federal agencies rely on a variety of vehicles—including passenger cars 

and trucks, and special purpose vehicles (e.g., ambulances and buses)—

to accomplish their missions and may lease or purchase these vehicles 

from the General Services Administration (GSA). Reported total costs 

associated with the federal fleet in fiscal year 2012, including both leased 

and owned vehicles, were about $2.9 billion for civilian and military 

agencies.1 From fiscal years 2002 through 2012, the overall number of 

leased and owned federal civilian and non-tactical military vehicles 

increased 19 percent, from about 364,000 to 441,000 vehicles. In recent 

years, Congress and the President have raised concerns about the size 

and cost of the federal fleet, and the President has directed agencies to 

take steps to eliminate non-essential vehicles. In addition, recent 

legislative proposals have been aimed at reducing the size and cost of 

agencies’ fleets.2

GSA’s leasing program provides over 40 percent of the vehicles that 

agencies use. In fiscal year 2012, agencies spent over $1.1 billion to 

lease about 190,000 vehicles from GSA. GSA offers various types of 

vehicles for lease and its rates and terms include the costs of fuel, 

 

1

The figures on agency leased and owned vehicles used in this report exclude vehicles 

owned or leased by the U.S. Postal Service. We have previously reported on the postal 

fleet. See GAO, United States Postal Service: Strategy Needed to Address Aging Delivery 

Fleet, GAO-11-386 (Washington, D.C.: May 5, 2011).

2

For example, legislation has been proposed that directs federal agencies to coordinate 

with the Office of Management and Budget to reduce vehicle budgets by 20 percent. See 

H.R. 37, 113th Cong. (2013); S. 417, 113th Cong. (2013).
 

Page 2 GAO-14-443 Federal Vehicle Fleets

maintenance, and various services. When leasing vehicles from GSA, 

agencies may choose to have telematic devices installed.3

To address both of our objectives, we reviewed applicable federal laws, 

federal fleet management regulations, GSA’s strategic and performance 

plans, GSA’s fleet guidance and policy, and other pertinent GSA 

documentation, and interviewed GSA officials. To determine whether and 

how GSA’s vehicle-leasing rates, terms, and services support or 

encourage agency efforts to reduce fleet costs, we convened two panels 

of federal fleet managers to obtain their views. We selected fleet 

managers who managed federal fleets with over 7,000 vehicles leased 

from GSA in fiscal year 2011, the most recent fleet data available at the 

time of our fleet manager selection.

Such devices, 

when used in vehicle fleets, provide information—including data on 

vehicle location, idling, and speed—that fleet managers can use to 

manage and reduce costs of fleet operations. You asked us to review 

GSA’s vehicle-leasing program. This report addresses (1) whether and 

how GSA’s leasing rates, terms, and services support or encourage 

agency efforts to reduce fleet costs and (2) the views of selected experts

regarding the cost-savings potential of telematics for fleets and the 

possible implications for GSA’s leasing program. In addition, we are 

providing requested information on the services provided by and structure 

and costs associated with GSA’s vehicle-leasing program and its 

purchasing program. These topics are discussed in appendixes I and II, 

respectively.

4 One panel consisted of managers 

from five civilian agencies: the Departments of Agriculture, Energy, 

Homeland Security, the Interior, and Veterans Affairs. The other panel 

consisted of managers from five military agencies: the U.S. Marine Corps, 

the Army Corps of Engineers, and the Departments of the Air Force, 

Army, and Navy.5

 

3

The term “telematics” refers to a technology that combines telecommunications and 

information processing to send, receive, and store information related to remote objects, 

such as vehicles.

While their views should not be used to generalize

about the views of all federal fleet managers, they do provide the 

perspective of those managing most of the federal leased fleet, as

4

Those agency fleets with over 7,000 leased vehicles represented over 80 percent of the 

federal fleet leased from GSA in fiscal year 2011. Additional agency fleets would have 

marginally increased the total number of vehicles under our review.

5

Most of the agencies were represented by one fleet manager and some were 

represented by two or three.
 

Page 3 GAO-14-443 Federal Vehicle Fleets

together they managed over 80 percent of the vehicles leased from GSA 

in fiscal year 2011. We also analyzed GSA’s leasing rate structure in 

relation to the principle of economic efficiency, which has often been used 

to assess the design of government fees.

6 To obtain information 

regarding telematics’ cost-savings potential, we spoke with 19 experts 

knowledgeable about telematics or fleet management, including 

consultants, representatives of associations, and fleet managers from 

corporations, government entities, and universities. We selected experts 

based on their knowledge of these topics, as demonstrated by their 

publications, participation as experts in prior relevant GAO work, or 

recommendation by other experts. We also sent a questionnaire to 15 of 

these 19 experts who manage fleets regarding the specific savings they 

had achieved through telematics, if any.7 Additionally, we reviewed 

literature on the cost savings associated with telematics. To understand 

the possible implications of the cost-savings potential of telematics for 

GSA’s leasing program, we obtained the views of the federal fleet 

managers who took part in the panels we convened. We also examined 

GSA’s telematics efforts in relation to GAO’s internal control standards, 

which include relevant, reliable, and timely communications,8

We conducted this performance audit from July 2013 to May 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

and GSA’s 

2014-2018 Strategic Plan. Further details about our scope and 

methodology can be found in appendix III.

 

6

See GAO, Federal User Fees: A Design Guide, GAO-08-386SP (Washington, D.C.: May 

29, 2008). Efficiency exists when the fee ensures that the government is providing the 

amount of the service that is economically desirable. Efficient fees increase awareness of 

the costs of government services, creating incentives to reduce costs where possible. 

GAO developed these criteria by reviewing economic and policy literature on federal and 

nonfederal user fees, including prior GAO work, and used case examples to illustrate 

different types of design elements and the impacts they may have.

7

We received 10 of 15 responses; several corporate fleet managers indicated that this 

information was proprietary. However, this information was not material to our findings, 

conclusions, or recommendations.

8

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
 

Page 4 GAO-14-443 Federal Vehicle Fleets

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Agencies are responsible for managing their vehicle fleets in a manner 

that allows them to fulfill their missions and meet various federal 

requirements. For example, agencies must determine the number and 

type of vehicles they need and how to acquire them, including whether to 

own or lease them. Various statutes, executive orders, and policy 

initiatives direct federal agencies to, among other things, collect and 

analyze data on costs, reduce fuel consumption, and eliminate nonessential vehicles. In addition, GSA has issued federal fleet-management 

regulations that include requirements regarding agencies’ fleetmanagement information systems, vehicle fuel efficiency, and vehicle 

utilization, among other things. GSA has also issued guidance to help 

agencies manage their fleets effectively and meet federal requirements, 

including guidance on assessing vehicle needs, using alternative fuel 

vehicles, and potential cost-saving techniques.

Federal agencies may approach GSA to lease some or all of the vehicles 

they determine necessary to meet their mission and program needs.9

Supported by a network of regional Fleet Management Centers, GSA 

manages the federal government’s vehicle-leasing program (called GSA 

Fleet), which leases vehicles to over 75 federal agencies. The size of the 

federal leased fleet ranged from about 195,000 vehicles in fiscal year 

2008 to about 199,000 vehicles in fiscal year 2011, but declined to about 

190,000 vehicles in fiscal year 2012.10

 

9

Federal agencies may also lease from commercial vendors in certain instances, such as 

when unique vehicles are not available for leasing through GSA. An agency must have 

specific statutory authority to lease passenger motor vehicles. 31 U.S.C. § 1343(b).

According to GSA officials, only an agency that lacks this specific authority or has not 

been delegated leasing authority is required to participate in the GSA centralized leasing 

program. Examples of when agencies may lease from commercial vendors include low 

speed electric vehicles and buses for the handicapped. According to GSA, agencies may 

elect to use commercial sources even when a vehicle is available through GSA.

See table 1 for additional 

information on the size of the leased fleet.

10In a May 2011 memorandum, the President called on federal agencies to determine the 

optimum size of their fleets and eliminate non-essential vehicles. Fiscal year 2012 was the 

first year that agencies were required to report to GSA on their progress as well as plans 

and targets for achieving the optimal inventory by the end of 2015.

Background
 

Page 5 GAO-14-443 Federal Vehicle Fleets

Table 1: Number of Vehicles Leased by GSA, by Vehicle Type, Fiscal Years 2008-

2012

2008 2009 2010 2011 2012

Passenger vehicles 118,433 120,907 120,207 120,785 115,203 

Trucks 71,616 72,335 72,568 73,448 70,140 

Other 4,818 4,833 4,863 4,978 4,972 

Total 194,867 198,075 197,638 199,211 190,315 

Source: 2012 GSA Federal Fleet Report.

GSA’s leasing rates are designed to recover all costs of its leasing 

program.11 GSA charges leasing fees to agencies monthly, based on a 

fixed rate and mileage rate determined by the type of vehicle. For 

example, a conventionally-fueled compact sedan has a fiscal year 2014 

fixed rate of $171 per month and mileage rate of $0.15 per mile traveled 

in each month. GSA’s fixed rate is designed to cover fixed costs such as 

the vehicle’s acquisition cost, administrative costs (including staff and 

facilities), and depreciation. The mileage rate is designed to cover 

variable costs such as fuel, maintenance, and repair and is based on 

mileage data collected through fleet cards.12 For each leased vehicle, 

GSA assigns a specific fleet card (a charge card) that is used to pay 

commercial vendors for fuel, maintenance, and repairs. Fleet card users 

enter odometer (mileage) readings at the gas pump at the time of 

purchase.13

In addition to the leasing rates, GSA has established lease terms to which 

agencies must adhere. The length of GSA leases varies, but is generally 

between 3 and 7 years for passenger vehicles and 7 to 12 years for 

trucks. GSA has established age and mileage thresholds for replacing 

 

11GSA is required by law to recover all costs it incurs in providing vehicles and services to 

federal customers. See 40 U.S.C. §605. For further information on the expenses and 

revenues of GSA’s leasing program, see appendix I.

12While the majority of GSA leases include fuel and maintenance, GSA has a limited 

number of leases that do not include fuel or maintenance and leases that include only 

maintenance for agencies with specific needs.

13Mileage data can also be collected through Mileage Express or File Transfer Protocol. 

Mileage Express is GSA’s web-based mileage reporting system. File Transfer Protocol is 

an electronic method of transferring data instantaneously from one database to another.
 

Page 6 GAO-14-443 Federal Vehicle Fleets

vehicles in regulations and guidance. For example, under GSA’s 

regulations, passenger vehicles may not be replaced until they have 

reached 3 years or 60,000 miles of use.14

As part of the leasing arrangement, GSA provides various services, 

including vehicle maintenance and accident management; support from 

fleet service representatives; provision of fleet cards; access to and 

analysis of data on agencies’ leased fleets, such as data on mileage, 

inventory, and fuel consumption; and identification and management of 

fraud, waste and abuse associated with leased vehicles. For further 

details on the services provided by GSA’s leasing program, see appendix 

I.

Decisions to replace or retain 

individual vehicles are made by the agency’s local fleet service 

representatives, located in regional Fleet Management Centers, who 

consider age and mileage as well as additional factors such as the 

vehicle’s condition and repair history. Agencies must return leased GSA 

vehicles with normal wear and tear and may be charged additional fees to 

cover damage or excessive wear and tear.

GSA also offers agencies the option of having telematic devices installed 

in the vehicles they lease.

15 Examples of telematics offered by GSA 

include devices that monitor speed, idle time, engine diagnostics, and the 

vehicle’s location. Telematic devices installed in fleet vehicles can provide 

managers of those fleets with a variety of information—including aspects 

of driver behavior, how well vehicles are running, their past and present 

locations, and miles travelled—that managers can use to manage their 

fleets. To gather this information, these telematic devices may use Global 

Positioning System (GPS) navigation, in-vehicle video recording, or data 

recorders integrated with the vehicle’s internal systems, among other 

technologies.

 

1441 C.F.R. 102-34.270. The vehicle replacement criteria in GSA’s regulations are 

minimum requirements. GSA’s guidance has more stringent standards than the 

replacement criteria in its regulations.

15Telematics in vehicles can be installed by the manufacturer as standard equipment, 

added as an after-market product, or accessed as a wireless mobile application.
 

Page 7 GAO-14-443 Federal Vehicle Fleets

GSA’s leasing rates, terms, and services help agencies keep fleet costs 

down in a variety of ways. For example, GSA procures the vehicles it 

leases at a discount and passes those savings on to its customers, 

provides agencies with data analyses that can be used to eliminate 

unnecessary vehicles, and identifies fraud, waste, and abuse related to 

leased vehicles. However, we identified two areas where GSA’s rates and 

terms have not encouraged agency efforts to reduce fleet costs. First, 

GSA’s monthly mileage rate, which covers agency fuel costs, does not 

provide incentives for agencies to reduce some fuel costs, such as costs 

associated with idling. Second, lack of clear GSA guidance on what 

constitutes excessive wear and tear of leased vehicles can limit the ability 

of agencies to determine whether it is less expensive to lease or own

vehicles. GSA is currently taking steps to develop such guidance.

GSA’s leasing rates, terms, and services help agencies minimize fleet 

costs in various ways, as discussed below.

GSA officials and our panels of civilian and military federal fleet 

managers16 told us that GSA’s vehicle lease rates are lower, for the most 

part, than the commercial sector and provide a more economical choice 

for federal agencies.17,

18

 

16Unless otherwise noted, views attributed to our panels reflect key messages or themes 

derived from these group discussions; for more information on our methods, see appendix 

III.

Although some agencies may choose to lease 

17However, some federal fleet managers we spoke to noted that GSA adds a surcharge 

for the purchase of hybrid and alternative fuel vehicles that can be costly. GSA officials 

explained that the Energy Policy Act of 2005 requires GSA to assess a surcharge to all 

customer agencies to recover alternative-fuel vehicle’s incremental costs. The alternative 

fuel surcharge covers the difference in cost between the alternative fuel vehicle and a 

comparable gasoline-fueled vehicle. Surcharges are assessed at the agency level 

depending on whether an agency is required to comply with Energy Policy Act alternative 

fuel mandates. According to GSA, this spreads the cost of higher priced alternative fuel 

vehicles across the entire federal fleet, allowing agencies to afford more alternative fuel 

vehicles each year. 

Some Aspects of 

GSA’s Leasing Rates, 

Terms, and Services 

Support Agency 

Efforts to Reduce 

Fleet Costs, While 

Others Do Not

Some Aspects of GSA’s 

Rates, Terms, and 

Services Support Efforts

to Reduce Fleet Costs

Leasing Rates
 

Page 8 GAO-14-443 Federal Vehicle Fleets

from commercial vendors, only about 3 percent of federally leased 

vehicles, many of which are not offered by GSA—such as utility trucks 

with cranes and luxury executive vehicles—are leased through the 

commercial sector.

According to GSA officials, the agency keeps leasing rates low by 

minimizing vehicle acquisition costs, maximizing resale values, and not 

having to make a profit. They pointed out that the agency has the ability 

to buy vehicles at a discount, at prices that average 17 percent below 

invoice, because it buys in volume from manufacturers, about 50,000 

vehicles annually. GSA is then able to pass these savings on to its 

customers and eventually resells the vehicles at a point when their resale 

value is still high. According to GSA officials, the agency’s vehicle 

maintenance program also contributes to its low lease rates by ensuring 

that vehicles are maintained in good condition, decreasing the need for 

costly maintenance and repair.

GSA’s vehicle lease terms can help keep down the cost of leasing to 

agencies. According to GSA officials, its vehicle lease terms, which 

include coverage of routine maintenance and repair, help ensure that 

vehicles receive proper maintenance and repair and encourage agencies 

to take care of their leased vehicles. According to GSA officials, ensuring 

vehicles received proper maintenance would be more difficult if GSA left it 

up to the leasing agencies. GSA officials believe these terms maximize 

the resale value of the vehicles for GSA, which, as noted, can help to 

keep overall leasing costs down.

19

 

18GSA has conducted an analysis that supports this same general conclusion; it found 

that GSA’s vehicle-leasing rates allowed agencies to lease vehicles for about half as much 

as it would cost them to lease from the commercial sector. We did not independently 

evaluate this analysis, as we had evidence from other sources supporting the same 

general conclusion, namely, that GSA’s rates were substantially lower than those 

available in the commercial sector.

In addition, GSA offers short-term 

vehicle rentals for up to 120 days. Such leasing arrangements allow 

agencies to meet short-term vehicle needs rather than lease vehicles for 

longer periods when not needed or rent them from commercial vendors, 

which can be more expensive. Short-term rentals are commonly used for 

special events, such as conventions, or seasonal needs.

19In fiscal year 2013, according to GSA officials, GSA received an average of 114 percent 

of automobile black book value for used, previously leased vehicles sold through auction.

The black book is a vehicle value guide issued weekly reflecting the latest prices of 

vehicles directly from automobile dealers.

Leasing Terms
 

Page 9 GAO-14-443 Federal Vehicle Fleets

Federal fleet managers told us that they found GSA’s analysis of data on 

their leased fleet, made possible through GSA’s fleet card, to be helpful in 

identifying underutilized leased vehicles within their fleet that can be 

disposed of or shared.20

GSA also helps agencies reduce costs by identifying fraud, waste, and 

abuse within their fleets. According to GSA, the agency’s Loss Prevention 

Team,

For example, GSA officials told us that if the 

agency identified two underused vehicles in the same location travelling 

5,000 miles annually, when the performance measure for full vehicle 

usage for each vehicle was 10,000 miles, it would suggest that the 

agency consider eliminating one of these vehicles. Some federal fleet 

managers also noted that GSA fleet data analysis helps agencies identify 

when inefficient driving practices may be occurring, particularly related to 

fuel purchases, within their fleets. According to GSA officials, GSA’s fleet 

service representatives analyze fuel use data to identify when vehicles 

record low miles per gallon, which may indicate that a vehicle idles too 

much or that vehicle has an engine problem, and works with the agency 

to resolve any issues found. According to one fleet manager on our 

military panel, GSA identified excessive idling in the agency’s fleet and 

worked collaboratively to curb it.

21

 

20Agencies’ use of GSA’s fleet cards allows GSA to collect various types of fleet data, 

including mileage as well as fuel, maintenance, and repair expenses. According to GSA 

officials, GSA’s internal fleet management system makes the fleet data gathered from the 

fleet card available to agencies for analysis. GSA’s fleet data analysis may provide value 

to agencies beyond fleet cost reduction. For example, one federal fleet manager told us 

that GSA’s reports of missed opportunities to use alternative fuel at nearby stations were 

valuable. Federal agencies are required to reduce petroleum consumption and increase 

alternative fuel use, so agencies can use these data to help meet these requirements. See 

Pub. L. No. 110-140, § 142 (Dec. 19, 2007); Exec. Order No. 13514, 72 Fed. Reg. 3919 

(Jan. 26, 2007).

in partnership with GSA’s Office of Inspector General, has 

detected fraud on an average of approximately 300 cards per year over 

the last 4 fiscal years. For example, in fiscal year 2012, the dollar amount 

of fraud identified and prosecutable by GSA was $517,000; in fiscal year

2011, it was $981,000. The per-case amount of identified fraud in fiscal 

21GSA’s Loss Prevention Team is a group within GSA Fleet whose mission is to prevent 

misuse and abuse within GSA’s vehicle leasing program. The Loss Prevention Team has 

a memorandum of understanding with the GSA Office of Inspector General (OIG) that 

specifies services, such as coordinating the initiation of investigations that the OIG is to 

provide for fleet charge card cases. GSA’s OIG is an independent unit that is responsible 

for promoting economy, efficiency, and effectiveness and detecting and preventing fraud, 

waste, and mismanagement in GSA’s programs and operations.

Leasing Services
 

Page 10 GAO-14-443 Federal Vehicle Fleets

years 2009 to 2012 ranged widely from $66 to $299,000. The larger 

amount involved a case in which an individual was found to have stolen 

and used multiple GSA fleet cards to purchase and then resell gasoline. 

In partnership with the Department of Justice, GSA seeks the prosecution 

of individuals believed to have committed fraud and seeks to recoup the 

money.

In addition to the identification of fraud, GSA’s leasing services can help 

with reducing the costs of accident management, according to some 

federal fleet managers. For example, one federal fleet manager noted 

that GSA’s management of the fault resolution process when government 

vehicles are involved in accidents with private vehicles helps reduce costs 

that agencies incur from accidents. GSA seeks to ensure that, when 

government drivers are not at fault, the party responsible for the accident 

reimburses the federal government. GSA’s vehicle maintenance program 

also helps reduce agency fleet costs, according to federal fleet manager 

panelists. GSA has national agreements with major maintenance and tire 

companies to provide discounted maintenance services and vehicle parts.

A GSA automotive technician, who is responsible for ensuring that the 

repairs are necessary and appropriately priced, must validate all repairs 

over $100.

22

According to GSA officials, its overall management of the leasing 

program—including its approaches for acquiring, maintaining, and 

replacing vehicles and the various services it offers to its customer 

agencies—provides economies of scale and a “unified way of conducting 

business” that ultimately reduces costs. For example, according to these 

officials, their centralized management of the leased fleet provides an 

enhanced ability to detect waste, fraud, and abuse related to leased 

vehicles and helps prevent duplicative fleet management operations in 

federal agencies that can be more costly.

 

22These technicians are part of GSA’s National Maintenance Control Center, which is 

responsible for the oversight and authorization of vehicle maintenance and repair. The 

center maintains complete computerized vehicle history records on all vehicles leased 

from GSA.
 

Page 11 GAO-14-443 Federal Vehicle Fleets

Under GSA’s leasing rate structure, the monthly mileage fee charged to 

agencies covers fuel costs, as well as other variable costs, such as those 

for vehicle maintenance. A customer agency’s mileage fee, which is 

determined by the miles its leased vehicles travel and GSA’s mileage rate 

per category of vehicle leased, may not fully reflect some fuel costs not 

associated with miles traveled. These include costs associated with some 

driver behaviors such as idling, speeding, and fast stops and starts.

GSA bases its mileage rate partly on the average cost of fuel per mile 

across all agencies for each category of vehicle available for leasing.23

 

23More specifically, in calculating its mileage rate for each vehicle category, GSA divides 

an estimate of the average fuel price per gallon for the upcoming year by the average 

miles per gallon performance of the vehicles in the category, and then adds an estimate of 

the average maintenance and repair costs per mile based on historic data.

According to GSA officials, the rate is designed to cover the leasing 

program’s overall variable costs, which GSA pays for, and is a good 

approximation of these costs. The fee each agency pays does not 

necessarily reflect the fuel it actually uses, however, as the rate is not 

designed to capture individual agencies’ fuel costs. Specifically, drivers of 

vehicles leased by some agencies may engage in behaviors such as 

idling, speeding, and fast stops and starts—which increase fuel use—to a 

greater extent than drivers in some other agencies, but all agencies would 

pay the same rate per mile for each category of vehicle leased. For 

example, according to Air Force officials, GSA identified excessive idling 

in leased vehicles at the Dover Air Force base and worked with the Air 

Force to curb it. In addition, vehicles used by DHS’s Customs and Border 

Patrol (CBP) in the desert on the southern border of the United States 

may need to idle often to keep the occupants of the vehicle cool during 

hot days. Yet with GSA’s monthly mileage rate, CBP generally pays 

based on the number of miles traveled, not the actual amount of fuel 

consumed by idling. According to GSA officials, the agency occasionally 

adds a surcharge to agency monthly mileage rates for excessive idling, 

which GSA evaluates on a month-by-month basis. GSA officials have 

Some Aspects of GSA’s

Vehicle Rates and Terms 

Do Not Encourage Agency 

Efforts to Reduce Certain 

Fleet Costs

Leasing Rate Structure
 

Page 12 GAO-14-443 Federal Vehicle Fleets

acknowledged that its mileage rate does not capture some fuel costs at 

the customer agency level, such as those associated with each agency’s 

idling or speeding.

The fuel costs of GSA’s leasing program are significant; they totaled 

about $431 million in fiscal year 2012. GSA has identified reducing the 

use of resources and environmental impacts as an agency goal,24 but its 

monthly mileage rate structure does not provide agencies with incentives 

to reduce the types of fuel use, cited above, that are not reflected in 

distance traveled. According to economic principles, when the price paid 

for a good does not reflect the full costs of that good, consumers will tend 

to use higher amounts of the good than is optimal from a societal 

standpoint. Therefore, under the current leasing rate structure in which 

some agencies may not bear the full cost of their fuel consumption, 

agencies may seek to have the government provide fuel levels that are 

economically inefficient. Also, as discussed later in this report, agencies 

may lack incentives to adopt telematics, which could lead to savings in 

fuel costs and other costs under certain circumstances, since their 

monthly leasing fees may not fully reflect any cost savings they achieve. 

Principles for designing government fees suggest that having each 

agency pay for the fuel it actually uses could foster greater efficiency by 

increasing 1) awareness of the costs of fuel and 2) incentives to reduce 

fuel costs not reflected in miles traveled.25

Some federal fleet managers on our panels acknowledged that paying for 

their own fuel might provide more of an incentive to reduce fuel use in 

leased vehicles. However, GSA officials and some panelists stated that 

they preferred the current structure. According to GSA officials and these 

panelists, including fuel costs as part of the mileage rate aids the 

customer agency’s budgeting because GSA assumes the risk of fuel price 

increases, allowing agencies to reduce uncertainties in managing fleet 

 

24GSA’s 2013 Annual Performance Report and 2015 Performance Plan cites providing 

savings to federal departments and agencies, including reducing resource use and 

environmental impact, as a strategic goal. Strategies identified to achieve this goal 

include reduced use of petroleum based fuel and the expansion of the use of alternative 

fuel vehicles government-wide. 

25GAO has previously found that efficiency is a key consideration in designing government 

fees. See GAO-08-386SP; User Fees: Additional Guidance and Documentation Could 

Further Strengthen IRS’s Biennial Review of Fees, GAO-12-193, (Washington, D.C.: Nov.

22, 2011); and Agricultural Quarantine Inspection Fees: Major Changes Needed to Align 

Fee Revenues with Program Costs, GAO-13-268, (Washington, D.C.: Mar. 1, 2013).
 

Page 13 GAO-14-443 Federal Vehicle Fleets

costs. GSA sets its mileage rate at the beginning of the year based on 

what it estimates fuel will cost over the course of the year. GSA, not the 

agencies, generally bears the cost burden of the increase in fuel prices. 

According to GSA officials, the agency imposes a surcharge on agencies 

if fuel prices rise to such an extent that GSA believes it cannot absorb the 

unanticipated level of costs and also issues a rate reduction when fuel 

prices significantly decline in a given fiscal year.26

GSA officials also cited reasons that, in their view, changes in the rate 

structure may not be needed or may not lead to reduced fuel costs.

According to these officials, improving agency incentives for reducing fuel 

use is not needed because agencies are legally required to reduce fuel 

costs.

In addition, GSA 

officials noted that its coverage of fuel costs reduces the fleetmanagement administrative burden on agencies and prevents duplication 

of management effort on the part of GSA and agencies.

27

GSA officials also pointed out that even if agency incentives to reduce 

fuel use in leased vehicles improve, agencies would have to develop the 

data systems, technology, and fleet expertise to be able to reduce 

activities such as idling and speeding. Furthermore, a fleet manager on 

one of our panels noted that fleet managers in his agency lacked control 

over the driver behaviors that lead to excessive fuel use because mission 

achievement was the focus of his superiors, not fleet concerns, so 

changing the rate structure would not affect fuel use. As discussed later in 

this report, agency use of telematics in leased vehicles, under certain 

GSA officials also told us that they can keep fuel costs down by 

using data on agency fuel purchases to identify when fuel use is well 

above expected levels and then take appropriate actions, including 

adding a fuel surcharge or determining if excessive fuel use is due to 

fraud, waste, or abuse. These officials noted, however, that the addition 

of a fuel surcharge has been an infrequent occurrence.

 

26In the last 5 years, GSA issued a surcharge in April 2008 to cover increases in fuel 

prices and rate reductions in May 2009 and May 2013 to account for a decline in fuel 

prices.

27Executive Order 13514, issued in 2009, directs federal agencies operating a fleet of at 

least 20 motor vehicles to reduce petroleum consumption by a minimum of 2 percent 

annually through the end of 2020, from a 2005 baseline. In addition, the Energy 

Independence and Security Act of 2007 requires federal agencies to achieve at least a 20 

percent reduction in annual petroleum consumption by 2015 based on a 2005 baseline. 

Pub. L. No. 110-140, § 142; Exec. Order No. 13514, 72 Fed. Reg. 3919.
 

Page 14 GAO-14-443 Federal Vehicle Fleets

conditions, could help agencies identify and reduce driver behaviors that 

cause excessive fuel use, but agencies do face some challenges in 

adopting these technologies.

We have not fully evaluated the pros and cons of changing GSA’s rates 

so that agencies pay for the fuel they actually consume, and according to 

GSA officials, no studies have been performed on its leasing rate 

structure.28 In a May 2008 report, we found that there are trade-offs to 

consider in designing government fees and that every design will have 

pluses and minuses.29

Federal fleet managers on both our civilian and military panels told us that 

they sometimes receive large unexpected charges, as much as 

thousands of dollars, from GSA during vehicle lease terms for damage 

done to vehicles beyond normal wear and tear. In fiscal year 2012, GSA 

issued damage charges for excessive wear and tear to 40,802 federal 

vehicles, or about 21 percent of its leased fleet, totaling about $18.5 

million. For vehicles charged an excessive damage bill, the average bill 

was about $453 per vehicle. The highest bill was $10,400, according to 

In addition to efficiency, which we have discussed, 

we found that considerations in designing fees include equity (meaning 

that everyone pays a fair share), the extent to which collections cover 

costs, and the administrative burden on agencies. While GSA has 

flexibility in administering its rate structure, GSA’s current leasing rate 

structure may not be fully equitable, as agencies that are more efficiently 

using fuel are to some extent subsidizing agencies that are less efficient 

because all agencies are charged the same mileage rate per category of 

vehicle. While GSA is required to collect adequate fees to cover the costs 

of its leasing program, the extent of the administrative burden for GSA 

and its customers of the current rate structure versus one in which 

agencies pay for their actual fuel costs is unclear and would depend on 

how any changes were implemented. Nevertheless, under the current 

rate structure, some excessive fuel use due to driver behaviors such as 

idling and speeding may be occurring, resulting in higher costs to 

taxpayers than would be the case if agencies paid for actual fuel 

consumed and therefore had increased incentives to minimize fuel use.

 

28However, according to GSA, leasing-program rates are evaluated annually to ensure 

cost recovery and competitive market position.

29GAO-08-386SP. 

Definition of Excessive

Wear and Tear
 

Page 15 GAO-14-443 Federal Vehicle Fleets

GSA. Fleet managers told us that these charges could considerably 

increase the cost of managing a leased fleet.30

According to some of our panelists, lack of a clear GSA policy or 

guidance defining excessive wear and tear limits an agency’s ability to 

decide whether it is more economical to lease or own vehicles. Without 

this information, agencies may be hindered in keeping overall fleet costs 

down because it is more difficult to estimate life-cycle costs for leased 

vehicles, estimates that serve as a basis for agencies making decisions 

about whether to lease or own a vehicle. Fleet managers told us that had 

they known that certain wear and tear would result in post-lease charges, 

they would choose to own the vehicle rather than lease it through GSA 

because ownership would have had lower life-cycle costs. Our past work 

has found and GSA’s fleet management guidance states that life-cycle 

cost analysis is an important practice to help manage fleet costs and 

determine whether to purchase or lease vehicles.31

Furthermore, federal fleet managers on both panels told us that what 

constitutes excessive wear and tear is often interpreted differently by 

GSA’s local fleet service representatives, who are responsible for making 

these determinations when agencies turn in vehicles. Federal fleet 

managers on the military panel proposed that GSA develop a policy that 

would clarify and standardize the definition of excessive wear and tear, 

making it less subject to interpretation by regional fleet service 

representatives. Appropriate policies are a useful internal control for 

agencies to help ensure that decisions and practices are applied 

consistently.32

During most of our review, GSA policies and guidance for its vehicleleasing program did not include a definition of excessive wear and tear. 

 

30According to GSA officials, many charges that are billed to agencies reflect repairs 

caused by driver behavior or operating conditions that would have been borne by the 

agency whether the vehicle was leased or owned. They also noted that most charges for 

excessive wear and tear are less than $250.

31Life-cycle cost analysis captures vehicle costs from acquisition to vehicle disposal. We 

have previously found that life-cycle cost analysis is a leading practice for managing 

fleets. See Federal Vehicle Fleets: Adopting Leading Practices Could Improve 

Management, GAO-13-659 (Washington, DC: July 31, 2013).

32GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21-3.1

(Washington, D.C.: Nov. 1, 1999).
 

Page 16 GAO-14-443 Federal Vehicle Fleets

GSA officials told us that the concept of normal wear and tear is 

discussed internally during ongoing regional and headquarters meetings, 

such as fleet service representative and Federal Fleet Policy Council33

The experts we consulted agreed that in some cases, telematics could

facilitate cost savings by providing fleet managers with information 

needed to reduce fleet size, fuel use, misuse of vehicles, and 

unnecessary maintenance. Federal fleet managers on our two panels 

agreed that telematics can produce cost savings under certain 

circumstances and that GSA should do more to support telematics use, 

including lowering costs of telematic devices and providing information on 

agencies’ experiences in using telematics in their fleets. GSA is taking 

steps to reduce telematics’ costs, but does not currently collect and share 

information about agencies’ experiences with telematics.

meetings, to aid in delivering consistent practices. In addition, GSA 

explained that GSA publications such as the Guide to Your GSA Fleet 

Vehicle serve as reference material for agencies as well as fleet service 

representatives, but a definition of excessive wear and tear is not 

provided in this guide. In March 2014, GSA completed development of 

guidance for fleet service representatives containing details on what 

constitutes normal and excessive wear and tear to leased vehicles. 

According to GSA officials, the agency will provide internal training as well 

as guidance to its customers on this issue through the spring and summer 

of 2014.

According to all of the experts we consulted, telematics have the 

potential, under certain circumstances, to provide cost savings to vehicle 

fleets. The experts identified various areas in which fleet managers can 

achieve cost savings, including fleet utilization, fuel use, misuse of 

vehicles, and maintenance (see fig. 1).34

 

33The Federal Fleet Policy Council consists of representatives from agencies operating a 

federal motor vehicle fleet. The council provides a mechanism for coordinating federal 

vehicle-management programs and policies, reviewing new technologies and automated 

systems, and analyzing the impact of current and proposed regulations, laws, Executive 

Orders, and international agreements.

34We also conducted a literature review, which supported the experts’ views regarding 

the areas in which cost savings could be achieved. We searched for studies that 

quantified cost savings; however, the information in the literature was typically anecdotal 

and could not be used to determine any potential cost savings to the federally leased fleet.

Telematics Use Might, 

in Some Cases, 

Result in Cost 

Savings to Vehicle 

Fleets Leased 

from GSA

Experts Reported That 

Telematics Can Result in

a Variety of Cost Savings, 

under Certain Conditions
 

Page 17 GAO-14-443 Federal Vehicle Fleets

Figure 1: Examples of Cost Savings That Can Be Achieved with Telematics

Fleet managers can achieve savings by analyzing the data provided by 

telematics devices and taking actions to reduce costs based on those 

data. For example, managers can reduce fleet size by eliminating 

vehicles with insufficient use and provide feedback to drivers to reduce 

wasteful, abusive, or dangerous behaviors such as speeding or 

unauthorized personal use. Fleet managers can also tailor vehicle 

maintenance based on improved knowledge of the vehicle’s actual 

condition and avoid unnecessary preventative maintenance. One expert, 

who is a fleet manager, reported that telematics helped him reduce his 

fuel costs by 8 to 15 percent among sections of his fleet with almost 

universal telematics installation, though he cautioned that these vehicles 
 

Page 18 GAO-14-443 Federal Vehicle Fleets

received telematics because they were the most likely to achieve savings. 

Another expert reported that telematics helped him reduce his fleet size 

by 7 percent over 60 months among the vehicles with telematics installed. 

(See sidebars for additional information on the experiences with 

telematics of selected experts who manage fleets).

Experts cautioned that it is not always possible to calculate a 

comprehensive return on investment. Experts told us that it can be 

challenging to quantify cost savings when a comparative baseline is not 

available, telematics are part of a larger improvement effort, or the type of 

savings are difficult to quantify financially (such as savings associated 

with safety improvements). For example, one expert noted that he was 

unable to calculate fuel savings because the devices had been installed 

on new plug-in hybrid vehicles; he was unable to differentiate between 

the fuel savings achieved by using plug-in hybrids and the fuel savings 

from actions taken in response to telematics data.

Furthermore, experts also noted that the potential return on investment 

from the adoption of any telematic technology will vary and that telematics 

will not achieve cost savings for every fleet. For example, two experts 

explained that telematics would not provide a return on investment for 

their own fleets because of how their vehicles are used. One noted that 

the vehicles are not used on a daily basis, so the benefits would not 

justify the costs. In addition, two experts explained that employees at their 

respective companies are authorized to use the vehicles for personal use, 

so after-market tracking devices would likely face opposition because of 

privacy concerns. Experts also noted that telematics can be a legal 

liability if information is gathered but not acted upon. For example, if 

telematics data shows that a driver regularly speeds but no corrective 

action is taken to stop this behavior, the employer may have a greater 

liability risk in the event that the driver is involved in an accident, 

according to one expert.
 

Page 19 GAO-14-443 Federal Vehicle Fleets

The experts we interviewed highlighted four key factors that influence 

telematics’ potential to facilitate cost savings in vehicle fleets:35

Cost of the technology selected: The experts emphasized that the cost of 

any telematics program must be accounted for when considering overall 

cost savings. As a result, costs must be carefully evaluated in comparison 

to projected savings to avoid a net loss. This comparison can be 

challenging because the term “telematics” encompasses a broad array of 

technologies, which results in a wide range of associated costs. For 

example, telematics can include original equipment installed by the 

manufacturer, after-market add-on systems, or mobile device applications 

and programs. Further, data can be transmitted via satellite or cellular 

connections on a regular basis or when a vehicle passes a fixed-data 

download station. Fixed download stations pose mostly upfront, fixed 

costs, whereas the cost for a satellite connection is typically levied in 

ongoing monthly data charges. In addition, fleets may rent telematic 

devices for a short period of time to obtain a snapshot of usage data, or 

may select a long-term contract for ongoing monitoring. Various 

combinations of device, data access, and contract type will have different 

costs, which in turn influences the potential return on investment.

Fleet characteristics: Experts reported that the characteristics of the fleet 

also affect the return on investment. For example, fleets that idle 

frequently will have more opportunity for fuel savings than fleets with 

carefully controlled fuel consumption. In addition, the number of miles 

driven may influence how much fuel can be saved. Experts also 

emphasized that the technology must be aligned with the fleet’s 

characteristics, or the likelihood for savings will be reduced or eliminated. 

For example, some kinds of telematic devices depend on satellite signals 

that can be impaired by tall buildings in urban areas. Other devices 

depend on wireless connectivity that may be limited in rural locations. Still 

others rely on all vehicles in a fleet returning to or passing by a central 

location on a regular basis. If data are received sporadically, fleet 

managers will have less detailed information on which to act, which 

reduces the potential for cost savings. More information on the fleet 

characteristics that experts noted could influence the cost savings 

potential of telematics can be found in appendix IV.

 

35These factors were raised during group discussions and were further confirmed during 

individual interviews with some of the participants. 
 

Page 20 GAO-14-443 Federal Vehicle Fleets

Management and organizational support: The experts we consulted 

reported that upper management support, fleet managers’ buy-in, and 

organizational culture will influence the degree to which telematics can 

facilitate cost savings, since these factors can either support or hinder the 

cost-savings actions taken in response to telematics data. The experts 

said that upper management support is necessary to secure funding, 

change policies in response to problems identified through telematics 

data, and ensure that corrective actions are taken in a timely manner.

Moreover, a fleet manager will need to have the time, ability, and desire 

to conduct analyses of the data to understand what changes are needed, 

unless the telematic device includes analytical support. In addition, some 

organizations may have cultures and structures that either embrace or 

reject monitoring efforts. For example, one expert noted that some unions 

support monitoring because of the safety benefits and liability protection, 

while other unions resist monitoring to prevent disciplinary actions against 

their members. 

Information technology systems: Experts also highlighted the importance 

of information technology systems that can efficiently collect and 

distribute the data provided by telematics devices. They noted that costsaving changes can be more effectively implemented when the data 

gathered by telematics are readily accessible and integrated with all 

relevant information systems. For example, if a fleet uses multiple 

telematic-service providers to address different aspects of the fleet, then 

the overall visibility will be compromised without an integrated platform.

The federal fleet managers on our two panels agreed that the use of 

telematics has the potential to reduce costs in the federally leased fleet.36

 

36Unless otherwise noted, views attributed to our panels reflect key messages or themes 

derived from these group discussions; for more information on methods, see appendix III.

While GSA currently provides leasing customers with various types of 

information, such as information on fuel use and potential fraud, based 

on data collected through its fleet payment card, fleet managers told us 

that telematics can provide information that is more detailed. In addition, 

telematics may also be able to reduce administrative costs, such as the 

Federal Fleet Managers 

Agreed That Telematics 

Can Reduce Costs and 

Suggested GSA Do More 

to Support Use of This 

Technology
 

Page 21 GAO-14-443 Federal Vehicle Fleets

cost of personnel to perform manual vehicle data collection. The majority 

of panelists’ fleets had at least some experience with telematics, and a 

few recently initiated or completed studies on or estimates of the 

outcomes of telematics use. For example, according to federal fleet 

managers with whom we spoke:

• The Air Force has installed a telematic device, designed to reduce 

unaccounted-for fuel loss, on approximately 30,000 vehicles at 171 

installations. While the Air Force predicts full system activation is one 

year out, an initial cost savings analysis will be conducted using three 

test sites in the summer of 2014. In addition to improving fuel 

accountability, telematics may also reduce the manpower required to 

conduct periodic vehicle and equipment inventories.

• The Department of Veterans Affairs regularly uses telematics in some 

vehicles and has realized some cost savings but found the return on 

investment to be better on some types of vehicles than others.37

• The Department of Energy has used telematics in some of its vehicles 

for approximately 5 years, and this use has led to savings in all of the 

cost categories previously discussed.

The 

agency plans to equip most vehicles with telematics by the end of 

2016.

38

• Some Marine Corps bases and recruiting districts regularly use 

telematics. In a separate interview from the panel discussions, a 

Marine Corps fleet manager stated that he believed telematics’ use at 

seven installations in the southwestern United States improved safety 

and helped defend Marines against fraudulent or erroneous accident 

claims. He stated that he believes telematics has been the single 

most effective tool for reducing vehicle-operating, maintenance, and 

For example, a fleet manager 

at Idaho National Laboratory reported that telematics data have 

helped inform decisions to eliminate 65 vehicles since fiscal year 

2011, with an estimated average annual savings of approximately 

$390,000 (including the cost of telematics on the remaining vehicles).

 

37The panelist from Veterans Affairs also noted that the department found that some 

volunteers were driving in excess of 90 miles per hour when taking veterans to medical 

appointments and took actions to stop such behavior. The panelist also noted that it is 

challenging to quantify the cost savings associated with these changes.

38These categories include fleet utilization, fuel use, vehicle misuse and abuse, and 

vehicle maintenance and repair.
 

Page 22 GAO-14-443 Federal Vehicle Fleets

abuse costs, but that no formal analysis has been conducted on the 

cost savings.

Federal fleet managers also agreed that the previously discussed factors 

(telematics’ costs, fleet characteristics, management and organizational 

support, and information technology systems) influence telematics’ costsaving potential for the federal fleet.39 They noted that cost, in particular, 

impedes further federal adoption of telematic devices. For some fleet 

managers the initial cost was the greatest financial concern, and for 

others, it was the rate of ongoing, monthly charges. A few fleet managers 

observed that because fuel and some other costs are included in GSA’s 

vehicle-leasing rate, it is more challenging for an agency to recoup the 

costs of using telematics in leased vehicles under the current rate 

structure.40

In addition, federal fleet managers on our panels told us that lack of upper 

management support sometimes poses challenges for federal agencies in 

adopting telematics. They said that the reasons for this lack of support 

include:

As discussed previously, GSA’s monthly mileage rate covers 

fuel costs as well as other variable costs of an agency’s leased fleet, 

based on the average cost of fuel and maintenance in each vehicle 

category. Therefore, agencies’ individual fees would not necessarily 

reflect all of the cost savings they achieve from telematics. Fleet 

managers from two agencies also noted that this reduces agencies’ 

incentives to use telematics.

• The potential savings from implementation of telematics can be minor 

in comparison with agency budgets and are not seen as a priority for 

agency leadership.

 

39Regarding information technology systems and their effect on the cost savings potential 

of telematics, GAO has previously found that some agencies’ fleet management systems 

do not capture all of the data elements recommended by GSA. Also, some of these 

systems are not integrated with other key agency systems. See GAO, Federal Vehicle 

Fleets: Adopting Leading Practices Could Improve Management, GAO-13-659

(Washington D.C.: July 31, 2013).

40We asked the 15 experts who were fleet managers which types of costs represent the 

largest expenditures for their fleets. Fuel and maintenance were in the three most 

frequently mentioned expense categories among those who responded, along with 

depreciation. 
 

Page 23 GAO-14-443 Federal Vehicle Fleets

• Funds are limited and investments in other areas may be viewed as 

providing a better return.

• Upper management officials are wary about making an investment in 

telematics if benefits may be challenging to quantify in financial terms

or if there is no known precedent in other agencies.

Given the potential of telematics to facilitate cost-saving decisions and the 

concerns about cost and management support, the panels of federal fleet 

managers proposed some changes, discussed below, that GSA could 

make to enhance agencies’ abilities to use telematics in their federally 

leased vehicles.41

Lower the cost of telematic devices: Both panels of federal fleet 

managers proposed that GSA lower the cost of telematic devices to 

improve the likelihood of achieving a cost-effective solution and to help 

allay management concerns about cost and return on investment. GSA 

Fleet offers agencies the option of having selected vendors install 

telematics devices in their leased vehicles. GSA negotiates discounts for 

these devices through an agreement it has established with vendors.42

 

41In addition, one of the experts we consulted recommended that GSA negotiate with auto 

manufacturers during future vehicle acquisitions to obtain access to data collected through 

manufacturer-installed telematic equipment. The expert noted that such telematics are 

increasingly becoming standard equipment. For example, the National Highway Traffic 

Safety Administration estimates that more than 96 percent of model year 2013 passenger 

vehicles are equipped with “black boxes” that collect data like speed, braking, and seatbelt 

use. Privacy groups and policy makers have noted that there are privacy concerns 

surrounding how the data from manufacturer-installed telematics are used, and there is 

pending legislation regarding data ownership. See GAO, In-Car Location-Based Services: 

Companies Are Taking Steps to Protect Privacy, but Some Risks May Not Be Clear to 

Consumers, 

However, federal fleet managers told us that the prices are still a barrier 

to increasing telematics’ use in federal fleets. The pricing of telematics 

devices and service plans available varies depending on many factors, 

including the desired capabilities, the quantity ordered, and the length of 

time the technology is required. For example, according to a GSA 

informational brochure, monthly costs for basic GPS tracking typically 

range from $22.50 to $32.50 per vehicle, or $810 to $1,170 for a 3-year 

GAO-14-81 (Washington, DC: Jan. 6, 2014). 

42GSA passes on the costs of telematics to customer agencies; it does not mark up prices 

or charge a service fee.
 

Page 24 GAO-14-443 Federal Vehicle Fleets

contract, though agencies can negotiate to obtain lower prices.43

One of GSA’s priorities, as stated in its 2012 Annual Performance Report

and reiterated in a 2013 memo from the Administrator to all GSA staff, is 

to use the purchasing power of the federal government to drive down 

prices, deliver better value, and reduce costs to their customer agencies. 

Agency officials explained that GSA has not pursued additional discounts 

for telematics because federal agencies have only recently begun to 

pursue the technology in significant quantity. GSA is currently engaged in 

efforts to secure new contracts for telematics devices for customers and 

hopes to have these available by the end of fiscal year 2014. As part of 

this effort, they are seeking to provide these devices at a lower cost to 

customers.

Because 

agencies’ leased fleets can include thousands of vehicles, the total costs 

of using telematics can be significant.

44

Provide information on federal agencies’ experiences with telematics:

Both panels noted that it would be helpful if GSA were to collect 

information on federal agencies’ experiences in using telematics in their 

fleets and share this information. Based on information provided by GSA 

officials, 12 of the 15 executive branch departments as well as some 

independent agencies, such as the Environmental Protection Agency and 

the National Aeronautics and Space Administration, acquired telematics 

for some portion of their fleets (owned or leased) between 2008 and 

2012. GSA’s Office of Government-wide Policy published an article 

relating the Marine Corps’ experiences with telematics in its fleet in 2006. 

However, GSA has not compiled information on agencies’ recent 

telematic efforts and therefore is unable to provide such information to 

agencies. Although GSA has not provided such information, it does 

regularly communicate with agencies regarding fleet management topics 

through various means, including providing information on its website and 

presenting webinars, among other approaches.

 

43Agencies also have the option of short-term telematics rentals through the GSA 

Schedule. Renting equipment for a few weeks to measure utilization patterns costs 

approximately $3 per day or $95 per vehicle per project, and includes analytic services. 

44However, GSA officials noted that they could not guarantee that this effort would result 

in lower prices.
 

Page 25 GAO-14-443 Federal Vehicle Fleets

Federal fleet managers agreed that knowing more about the experiences 

of other fleets would help them better understand how telematics might 

be applied in their own fleets and could be used to bolster support from 

upper management, program managers, and drivers. Such information 

could include descriptions of federal agencies’ efforts as well as studies 

or other information on results of these efforts, including estimates of cost 

savings achieved or nonfinancial benefits, such as enhanced program 

performance or improved safety and liability protection for employees. It 

could also include lessons learned from the experiences. One fleet 

manager on our military panel noted that the military services’ fleet 

managers already share their experiences with each other, and that such 

information sharing, facilitated by GSA, would also be beneficial for 

civilian agencies. Another panelist suggested that the studies performed 

by other federal fleets would be more credible than the studies provided 

by telematics vendors. GSA officials explained that while they do not 

currently collect this information, GSA’s Office of Government-wide Policy 

would be able to request information from agencies and share information 

that agencies voluntarily provided.

GAO has found that a key factor in helping agencies better achieve their 

missions and program results is through appropriate internal controls, 

which include relevant, reliable, and timely communications.45 In addition 

to internal communications, this includes communicating with, and 

obtaining information from, external stakeholders that may have an 

impact on the agency achieving its objectives. GSA is pursuing several 

strategic objectives that would be better supported by obtaining and 

sharing additional information about telematics with other federal 

agencies. One such objective is for GSA to enhance relationships with its 

customers, in part by improving customer knowledge, and sharing 

information that drives improved decision-making and performance in the 

fleet policy area.46

 

45GAO, Standards for Internal Control in the Federal Government, 

Another such objective is to help provide savings to 

federal agencies, including by providing them with information that can be 

useful in reducing fuel use. GSA has noted in strategic planning 

documents and during interviews that it strives to ensure that customers 

receive assistance that meets client needs and strives for a culture of 

continuous improvement. Without information, facilitated by GSA, about 

GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

46GSA 2014-2018 Strategic Plan. 
 

Page 26 GAO-14-443 Federal Vehicle Fleets

other agencies’ experiences with telematics, agencies may expend 

additional time and resources to find such information and identify 

devices that would best meet their needs and may encounter problems 

that could have been avoided. In addition, they may not be able to gather 

the internal support needed to start or increase the use of telematics in 

their leased fleets.

Given the amount that federal agencies pay GSA to lease vehicles— over 

$1.1 billion in fiscal year 2012—and concerns by Congress and the 

Administration about costs associated with federal agencies’ fleets, it is 

important for GSA to ensure that it is operating its leasing program in a 

manner that encourages agencies to minimize costs associated with their 

leased vehicles. While various aspects of GSA’s leasing rates, structures, 

and services support agency efforts to keep costs down, its current 

leasing rate structure does not provide incentives for agencies to take 

actions to reduce some types of fuel costs associated with poor driving 

behavior. Without an examination of the trade-offs of changing this rate 

structure so that agencies pay for the fuel they actually consume, GSA 

may be missing an opportunity to encourage agencies to minimize fuel 

costs and save taxpayer dollars or ensure that its leasing rate structure is 

the most appropriate one.

While telematic devices are not cost-effective for every vehicle fleet, 

under certain circumstances they could produce cost savings in fleets 

leased from GSA. GSA, through its existing resources and expertise, is 

well positioned to facilitate agencies’ adoption of telematics by offering 

these technologies to agencies at a reduced cost and by asking agencies 

to voluntarily provide information about their experiences with telematics 

that it can share. GSA is currently seeking to reduce prices for telematics.

By providing information on its website or through other methods on 

federal agencies’ experiences in using telematics in their fleets, such as 

information on agencies’ telematic efforts or studies or estimates of pilot 

or program results, GSA could help agencies better identify the 

circumstances under which devices or approaches might or might not 

achieve cost savings. Such information could also help agencies obtain 

support from upper management for telematics adoption or improve their 

existing telematics programs.

To help reduce costs associated with vehicles leased from GSA, we 

recommend that the Administrator of GSA take the following two actions:

Conclusions

Recommendations for 

Executive Action
 

Page 27 GAO-14-443 Federal Vehicle Fleets

1. examine and document the trade-offs of changing GSA’s vehicle 

leasing rate structure so that each agency pays for the fuel that it actually 

uses, and

2. request information from agencies on their experiences with telematics 

in their fleets, such as studies or estimates of cost savings achieved, and 

share this information with agencies through GSA’s website or other 

methods.

We provided a draft of this report to GSA for review and comment. GSA 

agreed with our findings and recommendations and said that it will take 

appropriate action to implement them. GSA reiterated its view that its 

centralized fleet management operations provide standardization, 

economies of scale, and the tools necessary for the effective and efficient 

management of the federal fleet. GSA’s comments are reprinted in 

appendix V. GSA also provided technical comments for our consideration. 

We incorporated these as appropriate.

We are sending copies of this report to interested congressional 

committees and the Administrator of GSA. In addition, this report will be 

available at no charge on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or rectanusl@gao.gov Contact points for our Office 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix VI. 

Lori Rectanus

Director, Physical Infrastructure Issues

Agency Comments
Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Page 28 GAO-14-443 Federal Vehicle Fleets

The General Services Administration (GSA) manages the vehicle leasing 

program (called GSA Fleet) and offers federal agencies a variety of 

vehicles for lease, including sedans, light and heavy-duty trucks, and 

specialty vehicles such as ambulances.

47

• support of fleet service representatives, located in regional offices, 

throughout the vehicle leasing process, including the selection of 

vehicles, maintenance, and disposal;

In addition, GSA provides 

various services to its leasing customers, including:

• provision and management of fleet cards to purchase fuel and 

maintenance and repair services; tracking of fuel, maintenance, and 

repair expenses; and identification of fraud, waste, and abuse;

• access to GSA’s Fleet Drive-thru system, which contains automated 

information on agencies’ fleets, including mileage, inventory, fuel 

consumption, and agency incurred expenses (such as bills for 

damage to leased vehicles);

• analyses of fleet data that, among other things, may identify 

underutilized vehicles to be eliminated or shared through examination 

of mileage and usage data;

• management of accident-related needs and maintenance, including 

authorizing and tracking repairs, working with third parties and 

insurance company officials to collect payments (for accidents in 

which a third party is at fault) and an automated vehicle recall 

program with major manufacturers; and

• access to GSA Fleet Solutions, which provides additional services 

such as a short-term rental program and telematics.

GSA Fleet provides support to its leasing customers through the following 

offices:

• Leasing Operations Division: responsible for monitoring vehicle 

expenses—including expenses associated with GSA’s accident and 

 

47GSA does not guarantee that it will offer the agency a new vehicle; sometimes, vehicles 

returned from other agencies are used to fill another agency’s request. However, GSA 

guarantees that even used vehicles will be in good mechanical and cosmetic condition. 

GSA Fleet procures new vehicles using GSA Automotive’s on-line procurement system.

GSA Automotive, which manages GSA’s vehicle-purchasing program, is discussed in 

appendix II.

Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Leasing Program Services

Leasing Program 

Structure and 

Organization
Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Page 29 GAO-14-443 Federal Vehicle Fleets

maintenance management services—and reviewing regional 

operations to identify opportunities to reduce costs and increase 

efficiency.

• Leasing Acquisition & Vehicle Remarketing Division: responsible for 

coordinating the leasing arrangement and delivery and subsequent

resale of leased vehicles.

• Regional Offices: provide day-to-day support to local customers.

• Motor Vehicle Management Team: provides support to GSA’s motor 

vehicle department as a whole, including both GSA Fleet and GSA 

Automotive. For more information on GSA Automotive, see appendix 

II.

o Systems Support Division: provides general information-systems 

support for the Office of Motor Vehicle Management, including 

information systems used to process and report fleet 

management data for the leased fleet.

o Business Management Division: provides general analytical 

support for the Office of Motor Vehicle Management.

Employees in these divisions—27 full-time equivalents (FTE)—are 

assigned to GSA’s central office located in Washington, D.C., while 82 

call center employees reporting to the central office are responsible for 

handling accident, maintenance, and repair needs for GSA’s leased fleet 

from offices in four GSA regions. There are 384 regional FTEs, of which 

334 are GSA’s fleet service representatives who serve as the primary 

point of contact for agency customers in GSA’s 11 regional offices. 

Additionally, 37 FTEs provide support to both GSA Fleet and GSA 

Automotive as part of the motor-vehicle management team. See figure 2 

for information on the location and staffing levels of GSA’s central and 

regional offices. GSA works with third-party vehicle dealers, maintenance 

facilities, and auction houses to deliver, store, maintain, and sell leased 

vehicles.48

 

48GSA uses a nationwide network of commercial auction firms to sell and dispose of 

vehicles. GSA uses sale proceeds to help purchase new vehicles.

As such, GSA does not maintain any parking or maintenance 

facilities for its leased fleet.
Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Page 30 GAO-14-443 Federal Vehicle Fleets

Figure 2: Location and Number of Staff Responsible for GSA’s Leasing Program

Note: The term full-time equivalent (FTE) is a standard measure of labor that equates to one year of 

full-time work.
Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Page 31 GAO-14-443 Federal Vehicle Fleets

GSA is required by law to recover all costs incurred in providing vehicles 

and services to federal customers.49 Since leasing activities operate 

through the use of a revolving fund that is reconciled each year, GSA 

Fleet does not receive appropriations through the annual budget cycle. 

GSA purchases vehicles through the GSA Automotive program 

(discussed in app. II); these vehicles are ultimately used for GSA’s 

centralized leasing program. The funding used to purchase these vehicles 

comes from GSA’s revolving fund. GSA leases to federal customers and 

recovers these costs, as well as vehicle maintenance and administrative 

costs through lease fees and the resale of vehicles at the end of their life 

cycle. See table 2 for more detailed information on the revenues and 

expenses of GSA Fleet’s leasing program.50 From fiscal years 2008 

through 2012, the difference between the program’s revenues and 

expenses was highest at about $70 million in fiscal year 2009 and lowest 

at about minus $47 million in fiscal year 2008. In fiscal year 2012, the 

highest expenses were those associated with vehicle depreciation, which 

accounted for about 42 percent of total expenses. The next largest 

expense in fiscal year 2012 was fuel for leased vehicles, which accounted 

for about 38 percent of total expenses. Overhead expenses accounted for 

about 4.9 percent of total expenses.

 

4940 U.S.C. § 605. 

50Because the data on expenses and revenue provided in this section were not material to 

the findings of this report, we did not assess the reliability of the data.

Leasing Program Costs
Appendix I: GSA’s Vehicle-Leasing Program 

Services, Structure, and Costs

Page 32 GAO-14-443 Federal Vehicle Fleets

Table 2: GSA Leasing Program Revenue and Costs, in Thousands, Fiscal Years 2008-2012

2008 2009 2010 2011 2012

Revenue

Net revenue – revenue from fixed monthly leasing fees and 

variable monthly mileage fees

$1,160,882 $1,171,869 $1,214,609 $1,237,041 $1,237,646

Expenses

Business unit expenses – costs associated with direct 

management and operation of the leasing program

$61,919 $62,174 $66,702 $66,074 $65,305 

Overhead expenses – overhead costs allocated to the Fleet 

program, such as costs of acquisition services, GSA 

corporate management, and office rent

$38,478 $43,937 $41,854 $51,912 $55,070 

Fleet vehicle related expenses – costs associated with 

maintenance and operation of leased vehicles, excluding 

fuel, and gains/losses resulting from vehicle sales

$189,550 $198,292 $174,207 $108,296 $93,964

Fuel costs – costs for fuel associated with leased vehicles $454,186 $291,393 $344,202 $426,841 $431,454

Depreciation– the cost of leased vehicles less estimated 

resale value, allocated over their estimated useful life.

$397,389 $427,691 $464,851 $473,627 $475,328

Total operating expenses $1,141,523 $1,023,486 $1,091,816 $1,126,750 $1,121,121

Operating results – Net revenue less total operating 

expenses

$19,360 $148,383 $122,793 $110,292 $116,525

Provisions and reserves – portion of GSA’s revolving 

vehicle acquisition fund reserved for cost increases in vehicle 

replacements in order to stabilize vehicle prices from year to 

year and to fund the incremental cost of alternative fuel 

vehicles (AFVs)a

($66,189) ($77,984) ($79,363) ($85,724) ($80,306 )

Net operating results – difference between revenue and 

costsb

 

($46,829) $70,399 $43,430 $24,568 $36,219

Source: GSA data.

Notes: Since these data were not material to the findings of this report, we have not assessed their 

reliability. 

Totals may not add due to rounding.

a

The incremental costs of alternative fuel vehicles (AFVs) are generated from a surcharge by GSA

applied to every vehicle in agencies’ fleets, as required by the Energy Policy Act of 2005.The 

alternative fuel surcharge covers the difference in cost between the alternative fuel vehicle and a 

comparable gasoline-fueled vehicle. Surcharges are assessed at the agency level depending on 

whether an agency is required to comply with Energy Policy Act alternative fuel mandates. According 

to GSA, this spreads the cost of higher priced alternative fuel vehicles across the entire agency, 

allowing the agency to afford more alternative fuel vehicles each year. 

b

When expenses are lower than the net revenue, extra funds are put back in to the leasing program’s 

revolving fund to account for fluctuations in cash flow and to fund capital projects approved by the 

Administrator.
Appendix II: GSA’s Vehicle-Purchasing 

Program Services, Structure, and Costs

Page 33 GAO-14-443 Federal Vehicle Fleets

GSA Automotive manages the vehicle purchasing program and offers an 

array of non-tactical vehicle products at a savings from the 

manufacturer’s invoice price, including alternative fuel vehicles, sedans, 

light trucks, ambulances, buses, and heavy trucks. In fiscal year 2012, 

federal agencies excluding the postal service owned about 245,000 

vehicles, including 118,000 passenger vehicles and 122,000 trucks. The 

number of owned vehicles has increased from about 224,000 vehicles in 

fiscal year 2008 to about 245,000 vehicles in fiscal year 2012. GSA 

provides various services to customers who purchase vehicles, including:

• access to GSA’s online ordering tool, AutoChoice, which provides 

information and pricing on available vehicles;

• access to GSA’s Automotive Express Desk, which handles vehicle 

requirements on an “unusual and compelling urgency” basis;

• engineering and technical assistance for ordering non-standard 

customized vehicles including design, construction, and project 

management through delivery of the custom vehicle; and

• use of the Federal Fleet Management System, a web-based fleet 

management information system that identifies, collects, and analyzes 

vehicle data (including data on costs incurred for the operation, 

maintenance, acquisition, and disposal of agency owned vehicles), 

offered at no additional cost.

GSA Automotive provides support to its purchasing customers through 

the following offices:

• Vehicle Purchasing Division: provides professional engineering, 

contracting, technical, and vehicle design services.

• Motor Vehicle Management Team: provides support to GSA’s motor 

vehicle department as a whole, including both GSA Fleet and GSA 

Automotive. For more information on the motor vehicle management 

team, see appendix I.

Employees in these divisions work out of GSA’s central office located in 

Washington, D.C., and GSA Automotive currently employs approximately 

18 FTEs. Purchased vehicles are delivered directly to a marshalling 

location by the manufacturer, where the customer picks up the vehicle. As 

such, GSA does not maintain parking or other facilities for vehicle storage 

at any point in the process.

Appendix II: GSA’s Vehicle-Purchasing 

Program Services, Structure, and Costs

Purchasing Program 

Services

Purchasing Program 

Structure and 

Organization
Appendix II: GSA’s Vehicle-Purchasing 

Program Services, Structure, and Costs

Page 34 GAO-14-443 Federal Vehicle Fleets

GSA is required by law to recover all costs incurred in providing vehicles 

and services to federal customers.1 Since GSA procurement activities 

operate through the use of a revolving fund that is reconciled each year, 

GSA Automotive does not receive appropriations through the annual 

budget cycle. GSA Automotive awards contracts for vehicles, provides 

information to agencies on pricing for evaluation, and places orders 

against the awarded contracts using their revolving fund. Using the 

previous year’s total purchases as a baseline, GSA contracts with auto 

manufacturers and other suppliers to procure vehicles for federal 

customers through “indefinite quantity, indefinite delivery” contracts.2 The 

costs associated with this acquisition process are recovered through a 

surcharge added to the vehicle price (which averaged about 1 percent of 

the price in fiscal year 2012). See table 3 for more detailed information on 

GSA’s purchasing program revenue and expenses.3 From fiscal years 

2008 through 2012, the difference between the program’s revenue and 

expenses was highest at about $10.5 million in fiscal year 2009 and 

lowest at about $4.1 million in fiscal year 2011. The highest expenses 

were those associated with the cost of vehicles sold to federal agencies 

and GSA’s leasing program, which accounted for about 99 percent of 

total expenses in fiscal year 2012. Overhead expenses accounted for 

about 0.4 percent of total expenses in fiscal year 2012.

 

1

40 U.S.C. § 605. 

2

 “Indefinite Delivery, Indefinite Quantity” contracts provide for an indefinite quantity, within 

stated limits, of goods or services during a fixed period of time. Agencies place separate 

task or delivery orders for individual requirements that specify the quantity and delivery 

terms associated with each order.

3

Because the data on expenses and revenue provided in this section were not material to 

the findings of this report, we did not assess the reliability of the data.

Purchasing Program 

Costs
Appendix II: GSA’s Vehicle-Purchasing 

Program Services, Structure, and Costs

Page 35 GAO-14-443 Federal Vehicle Fleets

Table 3: GSA’s Purchasing Program Revenue and Costs, in Thousands, Fiscal Years 2008-2012

2008 2009 2010 2011 2012

Net revenue – Customer agency payments for the cost of vehicles 

and GSA administrative fees 1,535,771 1,757,569 1,465,594 1,373,863 1,334,901 

Total cost of goods and services sold – acquisition cost to GSA 

of purchasing vehicles purchased by agencies and GSA’s leasing 

program 1,519,365 1,738,215 1,451,581 1,360,496 1,321,228 

Gross margin – total revenue minus total cost of goods and 

services 16,406 19,354 14,013 13,368 13,673 

Expenses

Business unit expense - costs associated with direct management 

and operations of the vehicle purchasing program 4,055 3,919 3,983 4,390 4,114 

Overhead expenses – overhead costs allocated to the purchasing 

program, such as costs of acquisition services, GSA corporate 

management, and office rent 4,275 4,946 4,764 4,863 5,118 

Total operating expenses 8,330 8,865 8,747 9,253 9,232 

Reserves – portion of GSA’s revolving acquisition fund reserved for 

strategic business investments $0 $0 $231 $0 $59

Net operating results – difference between revenue and costsa $8,076 $10,489 $5,034 $4,115 $4,382

Source: GSA data.

Note: Since these data were not material to the findings of this report, we have not assessed their 

reliability. Totals may not add due to rounding.

a

When expenses are lower than the net revenue, extra funds are put back in to GSA’s revolving fund 

to account for fluctuations in cash flow and to fund capital projects approved by the Administrator.
Appendix III: Objectives, Scope, and 

Methodology

Page 36 GAO-14-443 Federal Vehicle Fleets

The objectives of this report were to determine (1) whether and how 

GSA’s leasing rates, terms, and services support or encourage agency 

efforts to reduce fleet costs and (2) the views of selected experts 

regarding the cost savings potential of telematics for fleets and the 

possible implications for GSA’s leasing program. In addition, information 

on the services, structure, and costs associated with GSA’s vehicle 

leasing and purchasing programs is provided in appendixes I and II, 

respectively.

To determine whether and how GSA’s vehicle-leasing rates, terms, and 

services support or encourage agency efforts to reduce fleet costs, we 

reviewed applicable federal laws; federal management regulations; GSA’s

fleet guidance, policy, and strategic goals; and other pertinent GSA 

documentation; and interviewed GSA officials. We also convened two 

panels of federal fleet managers who managed federal fleets with over 

7,000 vehicles leased from GSA in fiscal year 2011, the most recent data 

available at the time of our fleet manager selection, to obtain their views 

on this question.1 One panel consisted of one or more managers from five 

civilian agencies (the Departments of Agriculture, Energy, Homeland 

Security, the Interior, and Veterans Affairs) and the other consisted of one 

or more managers from five military agencies (the U.S. Marine Corps, the 

Army Corps of Engineers, and the Departments of the Air Force, Army, 

and Navy).2

 

1

Those agency fleets with over 7,000-leased vehicles represented over 80 percent of the 

federal fleet leased from GSA in fiscal year 2011. Additional agency fleets would have 

marginally increased the total number of vehicles under our review.

While their views should not be used to generalize about the 

views of all federal fleet managers, they do provide the perspective of 

managers of most of the federal leased fleet, as they manage over 80 

percent of the vehicles leased from GSA in fiscal year 2011. To answer 

this research objective, we asked each panel an identical set of questions 

about the ways in which GSA’s rates, terms, and services encourage or 

support the reduction of fleet costs. We analyzed panel responses to our

questions, and in reporting the responses, we focused on those related to 

reducing fleet costs to the government as a whole rather than to a specific 

agency. Views attributed to the panels reflect key messages or themes 

derived from these discussions, but we did not attempt to quantify exactly 

how many federal fleet managers agreed with each statement or issue 

2

We did not count responses so the number of managers representing each agency did 

not affect our findings.

Appendix III: Objectives, Scope, and 

Methodology
Appendix III: Objectives, Scope, and 

Methodology

Page 37 GAO-14-443 Federal Vehicle Fleets

under discussion because this was not the goal of the panel and we did 

not poll or survey individuals. We then followed up with GSA to get its

views on perspectives and suggestions provided by agency fleet 

managers. In assessing GSA’s efforts to reduce agency fleet costs 

through its rates, terms, and services, we reviewed GSA’s fleet policy, 

guidance, and strategic goals to determine the extent to which agency 

suggestions for improvement might be part of the current GSA vehicleleasing framework. Additionally, we conducted interviews with officials 

from GSA’s vehicle-leasing program and Chief Financial Office and 

requested documentation of their expenditures, program policies, leasing 

rate structure, and agency-incurred leasing expenses, such as charges to 

agencies for damaged leased vehicles, in order to better understand how 

GSA’s vehicle-leasing program operates. We also analyzed GSA’s 

leasing rate structure in relation to the principle of economic efficiency, 

which has often been used to assess the design of government fees.3

To obtain information regarding telematics’ cost savings potential, we 

spoke with 19 experts—including consultants, representatives of 

associations, and fleet managers from corporations, government entities, 

and universities. Experts were selected based on their knowledge about 

fleet management or telematics. First, we reviewed the publications and 

conference history of associations and consultants that had recently 

participated in GAO work on fleet management or transportation 

technology to determine if they possessed expert knowledge of 

telematics. These entities included Accenture, Mercury Associates, the 

Intelligent Transportation Society of America, the National Association of 

Fleet Administrators, and the Automotive Fleet and Leasing Association. 

We determined that all five possessed expertise in this area. We then 

solicited nominations from these entities for individuals with expertise in 

fleet management and knowledge of telematics, and compared these 

In 

a May 2008 report, we noted that efficiency exists when the fee ensures 

that the government is providing the amount of the service that is 

economically desirable and that efficient fees increase awareness of the 

costs of government services, creating incentives to reduce costs where 

appropriate.

 

3

See GAO, Federal User Fees: A Design Guide, GAO-08-386SP (Washington, D.C.: May 

29, 2008). GAO identified this principle by reviewing economic and policy literature on 

federal and nonfederal user fees, including prior GAO work, and used case examples to 

illustrate different types of fee design elements and the impacts they may have.
Appendix III: Objectives, Scope, and 

Methodology

Page 38 GAO-14-443 Federal Vehicle Fleets

nominations against publications and relevant literature.4 We did not 

select experts in cases where we, in consultation with our methodologist, 

believed the nomination may have been biased by a conflict of interest, 

such as a contract, between the nominating party and the nominee, which

was likely to involve telematics. This process eliminated one nomination. 

We also reconsidered nominations when a company or organization, 

rather than a specific individual expert, was identified. We eliminated 

three nominations where we were uncertain that an individual expert 

could be reliably identified. After these eliminations, a total of 19 experts

remained, whose views we obtained during group and individual 

interviews. Because of the interactive nature of the group interviews, we 

collected common themes rather than tabulating individual responses. 

The views represented are not generalizeable to those of all experts on 

fleet management or telematics; however, we were able to secure the 

participation of a diverse, highly qualified group of experts and believe 

their views provide a balanced and informed perspective on the topics 

discussed. We reviewed literature on the cost savings associated with 

telematics. We searched journals, research papers, and fleet 

management publications from 2007 through 2013.5

Of the19 experts we consulted, 15 were current fleet managers. While not 

all of the fleet managers used telematics, they had knowledge of the 

topic. We sent a questionnaire to these 15 fleet managers regarding the 

specific savings, if any, they had achieved through telematics as well as 

information such as the size of their fleets and the percentage of their 

fleet that uses telematics. We received 10 responses. Two corporate fleet 

managers indicated that this information was proprietary; however, this 

information was not material to our findings, conclusions, or 

recommendations.

 

4

While we identified the Automotive Fleet and Leasing Association (AFLA) as a 

knowledgeable organization, the experts from that organization spoke in their capacities 

as fleet managers for private companies; therefore, we did not interview any individuals 

speaking on behalf of AFLA itself. 

5

Despite a search of multiple databases, including Transportation Research International 

Documentation (TRID), SciSearch and National Technical Information Service (NTIS), 

much of the relevant literature was anecdotal in nature. We did not find indications that the 

views provided by our experts substantially differed from the views or experiences 

described in the literature.
Appendix III: Objectives, Scope, and 

Methodology

Page 39 GAO-14-443 Federal Vehicle Fleets

To understand the possible implications for GSA’s leasing program of the 

cost-savings potential of telematics, we also obtained the views of the 

federal fleet managers who participated in the two panels previously 

described. We inquired about their views on the cost-savings potential of 

telematics’ use by federal agencies and GSA’s efforts related to 

encouraging telematics use in leased vehicles. We also interviewed GSA 

officials, requested and reviewed the information that GSA provides to 

federal customers on telematics, reviewed GSA’s publicly available 

information on telematics’ offerings, examined GSA’s policies and 

guidance regarding telematics, and assessed GSA telematics efforts in 

relation to GAO’s internal control standards, which include relevant, 

reliable, and timely communications,

6

To identify the services provided by, and the structure and expenses 

associated with, GSA’s vehicle leasing and purchasing programs, we 

interviewed GSA officials and reviewed data and documents regarding 

GSA services, expenses, and revenue. Because this information was not 

material to the findings of this report, we have not assessed the reliability 

of GSA’s cost and revenue data.

and GSA’s 2014-2018 Strategic 

Plan.

We conducted this performance audit from July 2013 to May 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

6

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Appendix IV: Fleet Characteristics That 

Experts Reported Could Influence Telematics’ 

Cost-Saving Potential

Page 40 GAO-14-443 Federal Vehicle Fleets

Current driver and asset 

performance

The most problematic fleets will have the greatest potential for cost savings, because they can 

substantially improve. For example, fleets that frequently idle may have more opportunities to save 

on fuel costs.

Size of the fleet Some telematic solutions involve fixed costs, such as the cost of a data download station. Such 

technology may not be cost effective for some smaller fleets.

Number of miles driven If a vehicle has low usage, ongoing telematics use may not produce a good return on investment. 

However, telematics may serve to determine whether the vehicle can be eliminated, which may 

produce cost savings.

Type of vehicle Telematics may have a higher return on investment in certain vehicle types, such as vehicles with 

poor fuel efficiency or specialized vehicles with higher operational costs.

Length of time vehicles are 

in service

Vehicles that are turned over quickly may not be able to recover upfront capital expenses or ongoing 

costs during the time the vehicle is in service.

Location of the vehicles 

(e.g., urban, rural, etc.) 

Some telematics require cellular service or a satellite connection to acquire and transmit data. Rural 

areas may not have such services, and urban areas can sometimes suffer from “urban canyons,” in 

which tall buildings impair signals. Lack of reliable data can affect the soundness of cost-saving 

decisions.

Physical dispersion of the fleet 

( i.e., fleet density)

Some technology, such as a data download station, may not be viable for fleets without a central 

location to which all vehicles covered by the telematic program report. In such cases, the available 

technology choices will be more limited, a factor that may affect cost. 

Source: GAO analysis of interviews with experts.

Appendix IV: Fleet Characteristics That 

Experts Reported Could Influence 

Telematics’ Cost-Saving Potential
Appendix V: Comments from the

U.S. General Services Administration

Page 41 GAO-14-443 Federal Vehicle Fleets

Appendix V: Comments from the

U.S. General Services Administration
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 42 GAO-14-443 Federal Vehicle Fleets

Lori Rectanus, (202) 512-2834 or rectanusl@gao.gov

In addition to the contact above, Judy Guilliams-Tapia (Assistant 

Director), Russell Burnett, Colin Fallon, Katherine Hamer, Kieran 

McCarthy, Josh Ormond, Alison Snyder, Jack Wang, and Crystal Wesco 

made key contributions to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(545098)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.