# Developing Solutions

/ Published May 1, 2019

It is no small challenge to inventory Defense Logistics Agency Energy’s Real Property infrastructure. 

The findings of the Ernst & Young fiscal year 2017 audit prompted the agency to perform a physical inventory in FY18 of approximately 17,000 assets associated with DLA infrastructure and led to the institution of new internal controls including the creation of the DLA Real Property Classification Guidebook.  

DLA Installation Management for Energy and the Real Property Task Force diligently worked together to inventory 539 Department of Defense locations to assess and inventory facilities such as bulk storage tanks, pump houses, piers, and gas stations. 

The task force was confronted with multiple challenges including the fact that each military service had its own unique way of categorizing real property. Unreconciled real property data made it difficult for the agency to ensure it had the number of assets on hand as indicated in the Accountable Property System of Record. DLA Energy needed to find a way to ensure the data in its inventory mirrored service-specific APSRs.

“Fixing the weaknesses would require significant changes in DLA’s inventory management strategy,” said Dr. Cliff Sands, the director of DLA Installation Management for Energy. “DLA Energy needed to both find the quick fixes and address the larger systemic issues.”

To address these weaknesses, the DLA Installation Management for Energy team developed the DLA Real Property Classification Guidebook. This guide provided a consistent inventory reporting process that improved DLA’s internal controls. 

“The good news was we had this great idea.” Sands said. “The challenge was the establishment and institution of a brand new process and audit guidebook at DLA.”  

The creation of the guidebook was vital to the reconciliation of DLA Energy fuel infrastructure around the world. The book assisted the DLA’s Real Property Officers and Task Force with the cooperative role they played in the reconciliation process.  

From piers and wharfs, to piping, electrical power transformers and pipelines, the guidebook offers guidance in determining the proper identification, classification and assignment for real property assets.

The guidebook now serves as a living document. 

“Assets are added and updated as teams visit sites and perform inventories,” Sands said. “We may come across facilities that need to be re-evaluated due to policy driven updates or new mission requirements.”

The guidebook contains the Office of the Secretary Of Defense DoD Real Property Categorization System. This is a hierarchical scheme of real property types and functions that serve as the framework for identifying, categorizing, and analyzing the DoD’s inventory of land and facilities around the world. 

DLA Installation Management for Energy Branch Chief for Property, Plant and Equipment Ralph Resch oversees the real property inventory and its team of four real property officers in Houston, Texas, and Fort Belvoir, Virginia. His team provided technical support to the RPTF regional teams during the inventory. Additionally, Installation Management for Energy accountable property officers, realty specialist, and fleet manager in Richmond provided valuable support to the overall effort. 

“DLA’s approach hit on all fronts and in doing so ensured the sustainment of DLA Energy’s infrastructure,” Resch said. “In total, DLA Energy encompasses 80% of DLA’s real property inventory.”  

Allen Merritt, DLA Installation Management for Energy real property officer, oversees the Navy and Marine Corps real property for DLA Energy and has 13 years of experience as an RPO. Merritt’s invaluable experience as a marine bulk fuel specialist for 20 years, combined with his involvement as an instructor, was instrumental in helping the RPTF non-Energy team members understand the fuel systems. 

“A clean audit is not going to happen overnight, but I am very confident that we are on the right track for success,” Merritt said.

“The guidebook breaks out the different military departments and provides a consistent approach in how we inventory service-specific DLA Energy assets,” Resch said. “The collective experiences of the RPOs were instrumental in the development of the guidebook and offered a wealth of experience and knowledge to the team.”

Robert Trusty, a 12-year DLA RPO and 24-year Air Force refueling operator veteran, was a vital team member in achieving a clean audit. Trusty manages the Air Force real property inventory for DLA Energy where his knowledge and experience helped the RPTF members understand the guidebook and the complexities of fuel systems. 

Seasoned RPOs, like Trusty, understand that while policy, directives and guidance play a key role in inventories, service specific policies may present challenges, Resch said. 

The guidebook will assist EY auditors in ensuring policies and procedures are consistent. It will also be instrumental in helping DLA Installation Management for Energy personnel inventory 100% of real property assets every three years to support the DoD’s goal of achieving an unqualified audit opinion.

“Being first out of the gate for DoD Real Property audit presented its challenges, but the agency did not let it deter its efforts in ensuring a clean audit,” Sands said.

“The agency’s ability to pull DLA assets and resources from within to inventory locations across the regions and establish a baseline for the agency was a huge challenge. The dedication of the 330 volunteers across DLA, combined with the DLA Energy RPOs, ensured the agency met its audit readiness goal,” he said.