Keeping Your Fleet Assets Sustainable, Accountable and Auditable

The job of managing a federal agency's fleet of vehicles has always been challenging because it requires a delicate balancing act. While meeting federal regulations on property accountability - i.e., operations management, asset management and risk management - officials in charge of fleet assets must also comply with a large variety of financial regulations, including those concerning financial auditability.

As the federal government becomes more focused on clean air, environmental impacts and sustainability, many more executive orders, public laws and guidelines have been put in place, making the balancing act even tougher. In addition to being accountable and auditable, federal fleets now have to be more sustainable, using less petroleum and producing fewer greenhouse gases (GHGs).

However, there is good news for federal fleet managers. They can manage this new balancing act effectively by

-carefully analyzing the overlapping impacts on fleet management of all three sets of requirements;
identifying compliance gaps;
-making changes to close the gaps; and
-establishing a dashboard so managers can see the impact each specific change has on all of the overlapping requirements.

The requirements

Within a federal agency, the fleet manager's first responsibility is accountability, which often comes under the purview of the agency's chief property officer. In managing federal fleets, "accountability" generally refers to the processes, systems and people that provide effective internal control of government vehicles throughout their lifecycles. The most important purpose of accountability is to ensure that vehicles are available to be used to execute the mission of the agency.

Examples of accountability rules and regulations date back as far as 1949, with the Federal Property and Administrative Services Act. Federal guides to fleet management identify many additional regulations, guidelines, reports and metrics for fleet accountability.

Many of the federal regulations on fleet accountability during the lifecycle are set by the General Services Administration (GSA). GSA publications, such as "New Vehicle Guide: Warranty, Delivery, Acceptance, and Recall of Motor Vehicles, set many of the other requirements for accountability.

Auditability is usually the responsibility of the agency's chief financial officer, whose job it is to comply with financial regulations. These go back at least to 1990, and include the Chief Financial Officers Act of 1990, the Federal Financial Management Improvement Act of 1996, and others set by the Government Accountability Office (GAO) and other agencies. When it comes to federal fleets, "auditability" generally refers to maintaining systems and business processes designed to ensure that the agency's financial statements present its financial condition accurately, including the value of its fleet assets. Another goal is to prevent waste, fraud and abuse in the management of agency vehicles.

To ensure auditability of property, plant and equipment (PP&E, which includes fleet assets), a financial manager must be able to document five "assertion activities" (key characteristics) of all assets (Figure 2). It should be noted however, that the financial assertions for existence and completeness (see the first two columns below) depend on accountability activities.  

Because the responsibilities of the chief property officer and the chief financial officer (CFO) are different, as are the regulations governing what they do, one of the biggest challenges for federal fleet managers is to reconcile accountability and auditability throughout the asset's lifecycle (Figure 3).  

 

In 2009, additions were made to the sustainability layer of requirements. On October 5, 2009, President Obama signed Executive Order (EO) 13514, Federal Leadership in Environmental, Energy and Economic Performance. It establishes "an integrated strategy towards sustainability in the Federal Government and makes reduction of greenhouse gas (GHG) emissions a priority for Federal agencies." The EO calls on federal fleet management to lead by example to help "create a clean energy economy that will increase our Nation's prosperity, promote energy security, protect the interests of taxpayers, and safeguard the health of our environment." Federal fleets are to reach this vision by lowering fleet GHG emissions through reduced petroleum consumption.

In particular, requirements set by EO 13514 include the following:

-Reducing the federal fleet's petroleum consumption 20 percent by FY (fiscal year) 2015, from FY 2005 consumption levels;

-Increasing alternative fuel use by 10 percent by FY 2015, from FY 2005 levels;

-Requiring agencies to acquire low-GHG vehicles; and

-Creating an overall agency plan for sustainability goals.

The EO also calls for each agency to hire a senior sustainability officer. Fleet managers, therefore, are now responsible to a third senior agency officer with another set of requirements and goals.

The balancing act

Meeting three complex sets of requirements would make any fleet manager's life difficult. All aspects - again, these are accountability, auditability and sustainability - must be considered at each lifecycle event. A fleet manager must not only keep the fleet in working order, he or she must also ensure that there are enough vehicles, and the right mix, to help an agency get its job done. The manager must also prove to the agency's CFO that the value of the fleet is being maintained, and that the activities of the cars and trucks can be justified economically. And now, the manager has to learn/comply with the new sustainability regulations.

Moreover, failing to meet any one of these standards could pose serious problems for the fleet manager and his or her agency. Poor accountability management can hurt the agency's ability to perform its mission because the right vehicles and equipment are not where they should be when they're needed. Failures of accountability can also land a fleet manager in the middle of a major news story about the agency's failure to perform.

Poor auditability can make it very difficult for the agency to manage its budget, and it can cost the agency credibility with congressional committees that provide funding. Like accountability, auditability failures can also lead to news stories about wasted public dollars and incompetent management.

Finally, if fleet managers fail to achieve sustainability goals, their agencies will lose credibility with an administration and Congress that have made cutting GHGs a high priority. Moreover, such failures open the door to charges of hypocrisy should critics determine that a self-professed "green" administration is buying gas-guzzlers.

Moving from the tightrope to solid ground

The good news is that there are steps agencies can take to manage the balancing act without having to worry about falling off a high wire.

The first step toward managing competing regulations is to create a compliance matrix: a sophisticated diagram that not only shows all of the accountability, auditability and sustainability requirements (including laws and rules), but also indicates where they apply in the lifecycle of the agency's vehicle fleet (Figure 4), identifies the organization responsible for the compliance, and documents the systems and data requirements.

In our experience, such matrices can help agencies break down the silos that too often separate fleet managers, chief property officers, CFOs and sustainability officers.

In particular, we have found that a matrix is most useful when an agency also creates a council of the key leaders charged with meeting the three sets of government requirements for agency fleets. The council can use the matrix to compare the fleet-management policies and procedures the agency has in place to the requirements it is required to meet. That helps agency leaders uncover the most important gaps they face as they strive to stay sustainable, accountable and auditable.

Moving forward…in balance

However, closing those compliance and operational gaps remains difficult, because a move toward compliance in one of the regulatory areas could make compliance in others more difficult. In addition to the compliance matrix, our approach includes working with representatives from each of the three potentially divergent components to develop a digital dashboard - a software application that brings together, from multiple systems, key data on the lifecycle and the latest requirements around sustainability, accountability and auditability.

Bringing these data and analyses together promotes transparency. A dashboard will not only allow fleet managers and agency leaders to see the combined impact of the three requirements, but it can also show officials, in real time, how actions they take in one area - accountability, for example - can affect their ability to achieve key goals in other areas. This will make it easier for fleet managers to understand the impacts and tradeoffs of their policy choices. For example, the dashboard will alert managers when, in taking a step toward sustainability, they may be reducing auditability or accountability. Most importantly, it can help fleet managers take actions that meet their obligations in all three compliance areas.

Building the dashboard requires the ability to link disparate kinds of data from different systems - the financial office, the property office and the sustainability organization. It also requires the knowledge to understand which data are more important to fleet managers.

Once in place, though, a dashboard can help agency officials get off the regulatory tightrope. By analyzing the impact of overlapping sets of regulations on the lifecycle of their fleet, and providing greater transparency and more information to fleet managers, a dashboard can help agencies improve compliance while achieving more effective and efficient performance.

The job of a federal fleet manager may be tougher than ever, but, with new procedures and tools to help, fleet managers can meet their new requirements and keep their agencies moving forward.

*Footnotes