Audit of the Federal Energy Regulatory Commission leased warehouse space

The Federal Energy Regulatory Commission (Commission) stores furniture, automated data processing equipment, and office supplies in a warehouse located in Landover, Maryland. The annual operating cost for this space (25,830 square feet) approximates $455,000-$245,000 in lease costs and $210,000 for contractor personnel. The purpose of the audit was to assess the effectiveness of the Commission`s use of warehouse space. The specific audit objective was to determine whether the Commission was minimizing the need for warehouse space for the storage of office supplies, furniture, and equipment. Federal Property Management Regulations and prudent business practices require Government agencies to minimize their need for space. More space was being leased than needed because Commission officials understood that they were obligated by terms of the lease to -pay for the space until March 31, 2002. We found, however, that there was a misunderstanding by officials, and that the Commission could at any time relinquish warehouse space by giving 120 days notice. Because of this misunderstanding and the recent relocation of the Commission to a newly furnished facility, about 16,000 square feet of warehouse space was being used to store furniture and equipment that was no longer needed by the Commission. An additional 6,000 square feet of space was used to store office supplies instead of using a more frequent ordering program that would reduce space requirements