Federal Vehicle Fleets: GSA Has Opportunities to Further Encourage Cost Savings for Leased Vehicles
Published: 2014-05-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 decision-making. 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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. 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.
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,  maintenance, and various services. When leasing vehicles from GSA,  agencies may choose to have telematic devices installed. 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.
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. 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. 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. 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, and GSA’s  2014-2018 Strategic Plan. Further details about our scope and  methodology can be found in appendix III.
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.
subsections: section_title: Background
paragraphs: 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 non- essential vehicles. In addition, GSA has issued federal fleet-management  regulations that include requirements regarding agencies’ fleet- management 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.  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.information on the size of the leased fleet.
section_title: Some Aspects of GSA’s Leasing Rates, Terms, and Services Support Agency Efforts to Reduce Fleet Costs, While Others Do Not
paragraphs: 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.
subsections: section_title: Some Aspects of GSA’s Rates, Terms, and Services Support Efforts to Reduce Fleet Costs
paragraphs: GSA’s leasing rates, terms, and services help agencies minimize fleet  costs in various ways, as discussed below.
subsections: section_title: Leasing Rates
paragraphs: GSA officials and our panels of civilian and military federal fleet  managers 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., Although some agencies may choose to lease  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.
section_title: Leasing Terms
paragraphs: 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   In addition, GSA offers short-term  keep overall leasing costs down.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.
section_title: Leasing Services
paragraphs: 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. 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.
GSA’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. 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.
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.
section_title: Some Aspects of GSA’s Vehicle Rates and Terms Do Not Encourage Agency Efforts to Reduce Certain Fleet Costs
subsections: section_title: Leasing Rate Structure
paragraphs: 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.  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  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, 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.
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  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. In addition, GSA  officials noted that its coverage of fuel costs reduces the fleet- management administrative burden on agencies and prevents duplication  of management effort on the part of GSA and agencies.
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. 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.
Executive 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. 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. 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. 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.
section_title: Definition of Excessive Wear and Tear
paragraphs: 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  GSA. Fleet managers told us that these charges could considerably  increase the cost of managing a leased fleet.
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.
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.
During most of our review, GSA policies and guidance for its vehicle- leasing program did not include a definition of excessive wear and tear.
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 Council  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.
section_title: Telematics Use Might, in Some Cases, Result in Cost Savings to Vehicle Fleets Leased from GSA
paragraphs: 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.
subsections: section_title: Experts Reported That Telematics Can Result in a Variety of Cost Savings, under Certain Conditions
paragraphs: 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).
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  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.
The experts we interviewed highlighted four key factors that influence  telematics’ potential to facilitate cost savings in vehicle fleets:  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.
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 cost- saving 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.
section_title: Federal Fleet Managers Agreed That Telematics Can Reduce Costs and Suggested GSA Do More to Support Use of This Technology
paragraphs: 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.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  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   The  investment to be better on some types of vehicles than others.agency plans to equip most vehicles with telematics by the end of  2016.
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   For example, a fleet manager cost categories previously discussed. 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).
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  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’ cost- saving potential for the federal fleet. 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. 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.
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:
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.
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.
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.  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  contract, though agencies can negotiate to obtain lower prices.agencies’ leased fleets can include thousands of vehicles, the total costs  of using telematics can be significant.
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.
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.
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. 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. 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  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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: To help reduce costs associated with vehicles leased from GSA, we  recommend that the Administrator of GSA take the following two actions:  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.
section_title: Agency Comments
paragraphs: 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.
section_title: Appendix I: GSA’s Vehicle-Leasing Program Services, Structure, and Costs
subsections: section_title: Leasing Program Services
paragraphs: 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. In addition, GSA provides  various services to its leasing customers, including:  support of fleet service representatives, located in regional offices,  throughout the vehicle leasing process, including the selection of  vehicles, maintenance, and disposal; 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.
section_title: Leasing Program Structure and Organization
paragraphs: 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  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. As such, GSA does not maintain any parking or maintenance  facilities for its leased fleet.
section_title: Leasing Program Costs
paragraphs: GSA is required by law to recover all costs incurred in providing vehicles  and services to federal customers. 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. 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.
section_title: Appendix II: GSA’s Vehicle-Purchasing Program Services, Structure, and Costs
subsections: section_title: Purchasing Program Services
paragraphs: 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.
section_title: Purchasing Program Structure and Organization
paragraphs: 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.
section_title: Purchasing Program Costs
paragraphs: GSA is required by law to recover all costs incurred in providing vehicles  and services to federal customers. 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. 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. 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.
section_title: Appendix III: Objectives, Scope, and Methodology
paragraphs: 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. 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).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   While their views should not be used to generalize about the  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 vehicle- leasing 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. 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.
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  nominations against publications and relevant literature. 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.
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.
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, and GSA’s 2014-2018 Strategic  Plan.
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.
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.
section_title: Appendix IV: Fleet Characteristics That Experts Reported Could Influence Telematics’ Cost-Saving Potential
paragraphs: Appendix IV: Fleet Characteristics That  Experts Reported Could Influence Telematics’  Cost-Saving Potential 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.
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.
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.
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.
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.
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.
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.
section_title: Appendix V: Comments from the U.S. General Services Administration
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.