Motor Vehicle Fleet Performance Audit Jeff A. McMahan, CFE Oklahoma State Auditor & Inspector NSAA Annual Conference 2005 Wrightsville Beach, NC

Background 74 O.S. § B. of the Oklahoma State Statutes requires a written request from the Governor, an agency director, or a resolution from the Legislation to conduct a performance audit. Governor Brad Henry made an official request for a performance audit of the States motor vehicles in December 2003 to determine if the fleet was being used in an economical and efficient manner. The Department of Central Services-Fleet Management Division (FMD) is responsible for maintaining records of the States vehicles.

The scope was limited to include only passenger type vehicles (two and four door cars, SUVs, pick ups one ton or less, and vans) owned by the State. Colleges and universities were excluded. Scope

I. To determine if vehicle fleet records are adequately maintained so the State can accurately track the number of vehicles in its fleet, the usage of the vehicles in its fleet, and the costs associated with the fleet II. To determine if agencies utilize fleet management policies and procedures III. To determine if the vehicles in the States fleet are adequately utilized IV. To determine if vehicles are assigned to employees in only those instances where a true need exists V. To determine if state employees are driving their private vehicles and being reimbursed for mileage when it would be more economical to utilize the State motor pool Objectives

Inventory records maintained by FMD are not adequate. Duplicate and invalid VIN numbers 75% of a sample consisting of vehicle purchases were not included in the inventory. Objective I Vehicle Records

Vehicle operating cost information is not maintained or analyzed. Mileage, fuel costs, and maintenance costs had not been entered into the FMD system since Analysis on operating cost data was non- existent. There were 428 purchase requests in None of the requests were denied. Objective I Vehicle Records

Objective II Policies and Procedures Agencies often lack comprehensive fleet policies and procedures. A survey sent to 73 agencies revealed 62% of respondents did not have a vehicle replacement policy. 28% of respondents did not have a vehicle maintenance policy. 56% of respondents did not have a policy related to the assignment of vehicles to individuals.

Objective III Assigned Vehicles Driven Home Assigned vehicles driven to and from employees residences may be unjustified. 47 O.S. § A. and B. requires the following to commute in a State vehicle: Approval of the Governor Regularly receives emergency phone calls at the employees residence when not on duty…must have documentation Specific law enforcement agencies are authorized to commute in State vehicles.

Objective III Assigned Vehicles Driven Home A survey was sent to 73 state agencies to determine the number of employees driving a vehicle to and from their residences. We asked: Make, model, VIN Distinction between Governors approval or an after hour responder Number of calls responded to in 2003 Mileage at and vehicles identified through survey

Objective III Assigned Vehicles Driven Home A sample of 133 vehicles were selected. From this, we noted: Nine had the approval of the Governor. Only one of the nine had an approval letter for the time period. 70 reported they maintained no documentation to support whether or not they responded to after hour calls. 54 reported they did maintain documentation; however, 28 of the 54 responded to 10 calls or less. 19 out of 30 employees did not have commuting fringe benefits reported on their W-2. A reduction of 25% in commuting vehicles could produce savings of $3,000,000.

Objective III Assigned Vehicles Not Driven Home Mileage criteria indicates assigned vehicles not driven home are underutilized. 1,018 vehicles identified through survey as assigned but not driven home Selected a sample of 127 vehicles 29% of sample was driven less than 9,000 miles in 2003 (GSA standard is 12,000) which projects to approximately 300 vehicles across population. Estimated $2,500,000 in savings from reduction in underutilized vehicles

Objective III Agency Fleet Vehicles Mileage criteria indicates State agencies owned/leased fleet vehicles are underutilized. 3,137 vehicles identified through survey as agency fleet. Selected a sample of 131 vehicles 45% of sample was driven less than 9,000 miles in 2003 (GSA standard is 12,000) which projects to approximately 1,400 vehicles across the population. Estimated $11,500,000 in savings from reduction in underutilized vehicles

Objective III State Motor Pool Number of vehicles in State motor pools appears to be excessive. On average, 52 vehicles were available for lease each day. On average, 14 vehicles were used each day. No analysis on miles driven or days of use

The State has no process for evaluating cost effectiveness for use of State owned vehicles versus use of private vehicles. Analysis of break-even point had never been performed. Objective V Reimbursement vs. Use of State Car 2,133 ( ) =9,967 miles Total Annual Fixed Costs Reimbursement Cost Per Mile –Variable Operating Cost Per Mile 1,048 employees were reimbursed for more than 9,967 miles. Had the employees utilized a State vehicle, the State would have saved approximately $1,200,000.

Other Items Noted Additional justifications for sport utility vehicles is needed. The State owns 233 SUVs. Had the State purchased this number of sedans rather than SUVs, potential savings over the life of these vehicles would have been approximately $1,800,000.

Unauthorized agencies are acquiring vehicles. 22 agencies in addition to the Department of Central Services have the authority to purchase their own vehicles. FMD purchased vehicles on behalf of agencies without specific authority to purchase and charged them a $20 per month administrative fee…over $260,000 from 1986 to Other Items Noted

Cost of certain car washes, details, and fuel appears excessive. 38 instances of car washes/details greater than $50 with 13 of these $100 or more $142,941 in premium fuel purchases Approximately $10,000 in savings had unleaded fuel been purchased. Other Items Noted

A Funny Thing Happened on the Way to the Department of Corrections

Closing Comments Administration of fleet is inadequate. Lack of adequate policies Utilization Assignment Maintenance Decentralization FMD is not operating in a regulatory capacity 22 different agencies have the authority to purchase and own their vehicles.