DHS ‘Confused’ About
What a Warehouse Is

Audit: Agency wastes at least $1 million per year on unused space

Men in warehouse using digital tablet

The Department of Homeland Security (DHS) cannot effectively manage its warehouse space, in part due to "confusion" about what the definition of a warehouse is, according to a new audit.

The Office of Inspector General (OIG) found that the agency could save at least $1 million per year on leases for warehouses that are half empty or full of broken furniture.

"Although DHS has taken steps to assess its warehouses, it cannot effectively manage its warehouse needs because some of the components misclassify many of their warehouses," according to the audit. "We found buildings that should not have been on the Department’s warehouse inventory. Conversely, we found buildings that should have been classified as warehouses, but were not."

"Because the warehouse inventories are inaccurate, DHS cannot manage warehouses or demonstrate compliance with requirements to limit the size of real property inventories and reduce costs," the OIG said.

Part of the problem is confusion over the agency’s broad definition of warehouse.

"[T]here was confusion among the components concerning the definition of warehouses," the OIG said. "DHS adopted the Federal Real Property Council’s (FRPC) definition of a warehouse, which includes a diverse variety of buildings."

The Federal Real Property Council’s definition reads: "DHS Warehouse encompasses buildings used for storage, such as ammunition storage, covered sheds, and buildings primarily used for storage of vehicles or materials. Also included are underground or earth covered ammunition storage bunkers and magazines. This category excludes water reservoirs and POL [petroleum, oil, lubricant] storage tanks which are storage structures."

DHS has 1,628 warehouses across the country, the majority of which are operated by the U.S. Coast Guard (1,378). For its audit, the OIG examined a sample of 210 warehouses, finding 50 were misclassified, or nearly 25 percent.

Some of the discrepancies in DHS’s bookkeeping included Customs and Border Protection (CBP) listing a warehouse full of seized weapons and illegal drugs as a "laboratory," and Immigration and Customs Enforcement (ICE) listing a mobile storage container as a warehouse.

The OIG also found that the agency is not effectively managing existing warehouses, including a 54,000 square foot CBP building in Northern Virginia full of excess furniture.

The building costs $934,000 per year to lease and "many of the items in the warehouse appeared to be obsolete or broken."

"The annual lease cost exceeds our estimated value of these items," the OIG said. CBP said it plans to "dispose of excess items stored in the warehouse" by September 2015.

Another CBP warehouse that costs $502,000 per year is full of old and "obsolete" computer equipment. The OIG recommended that DHS consolidate the two warehouses, since they are only four miles apart.

A third warehouse identified by the OIG costs $74,000 a year to lease, even though it is "mostly empty." DHS does not have an inventory of the 6,500 square foot facility, which was used to store "broken equipment, old office furniture, and some books."

If DHS keeps the warehouse, it will cost taxpayers $400,000 until the lease expires in August 2020. The agency could terminate the lease for $24,000.

In all, the audit found DHS could save $1 million per year by addressing issues with the three warehouses.

"However, there may be other opportunities that we did not identify," the OIG said.