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Who Should Read This Report and Why? This report concerns those managers who are specifically involved with the DoD alternative fuel vehicle program. It discusses impediments to program compliance and explains current Department actions.
Background. Public Law 102-486, "Energy Policy Act of 1992," directed Federal agencies to establish a program to promote the development of domestic replacement fuels, to include alternative fuel vehicle acquisition, operation, and fueling requirements. Executive Order No. 13149, "Greening the Government Through Federal Fleet and Transportation Efficiency," April 21, 2000, endorsed the alternative fuel vehicle acquisition requirements established by the Energy Policy Act of 1992 and directed Federal agencies to exercise leadership in the reduction of petroleum consumption through improvements in fleet fuel efficiency, and the use of alternative fuel vehicles and alternative fuels. DoD Components had about 12,500 alternative fuel vehicles in their fleets
Results.DoD has made limited progress in implementing an effective alternative fuel vehicle program. DoD did not meet the 75 percent alternative fuel vehicle acquisition goals for FYs 2000 and 2001, acquiring 47 and 62 percent, respectively, and is not likely to meet the goal in FY 2002. DoD had alternative fuels refueling capabilities on or near only 76 of about 5,300 operating sites nationwide and commercial alternative fuel facilities are insufficient to support the national alternative fuel vehicle program. Systems for tracking fuels usage for the DoD alternative fuel vehicle program were also inadequate. Furthermore, DoD did not include alternative fuels within the total energy management of petroleum fuels and until FY 2000 did not finance alternative fuels through the Defense Working Capital Fund. DoD has not met the Energy Policy Act of 1992 goals of increasing fleet fuel efficiency and reducing petroleum consumption through the use of alternative fuel vehicles and alternative fuels. Development and implementation of a comprehensive strategy will improve program compliance. Under Secretary of Defense for Acquisition, Technology, and Logistics and Under Secretary of Defense (Comptroller)/Chief Financial Officer support for the inclusion of alternative fuels within the Defense Working Capital Fund will increase program efficiency. For details of the audit results, see the Finding section of the report. See Appendix A for details on the management control program.
Management Comments and Audit Response. Management partially concurred with the recommendations. The Deputy Under Secretary of Defense (Installations and Environment) and the Assistant Deputy Under Secretary of Defense (Supply Chain Integration) in a combined response stated that the capitalization of either alternative fuels or alternative fuels infrastructure would not increase demand for alternative fuels. They stated that the Defense Energy Support Center should continue to provide accounting and reporting on alternative fuels that it has capitalized for, biodiesel and ethanol (E85), which are consumed by the Services. They also stated that the Defense Energy Support Center does not manage alternative fuels infrastructure, but does fund infrastructure maintenance, repair, and environmental compliance projects related to capitalized products. They agreed to continue the identification and conversion of existing infrastructure for alternative fuel use. They stated that the Defense Energy Support Center continues to work with the General Services Administration to capture off base fuel purchases through commercial credit card systems. The Director, Logistics Operations, Defense Logistics Agency stated that the Defense Energy Support Center should be involved in acquisition and supply of alternative fuels, but not the building of new infrastructure that has no commercial or private sector counterpart. The Under Secretary of Defense (Comptroller)/Chief Financial Officer stated two alternative fuels are included under Defense Working Capital Fund financing, and inclusion of additional fuels requires making a business case for economic feasibility. He stated his office would review alternative fuels on a regular basis to ensure appropriate financing. See the Finding section of the report for a discussion of management comments and the Management Comments section of the report for the complete text.
The comments provided by the Deputy Under Secretary of Defense (Installations and Environment) and the Under Secretary of Defense (Comptroller)/Chief Financial Officer were partially responsive. We consider actions taken to date by the Deputy Under Secretary of Defense (Installations and Environment) on this program, including publication of the Executive Order 13149 Compliance Strategy in July 2002, to be positive steps. However, the acquisition of vehicles capable of operating on alternative fuels and then operating them using petroleum-based fuels fails to maximize the Government's investment in those vehicles and slows DoD progress in achieving its goals for alternative fuels use. The lack of alternative fuels infrastructure, such as readily available refueling stations, contributes to the problem. We believe program success in near term is questionable unless those problems are addressed and Component program and fleet managers are held accountable for meeting the goals of alternative fuels use. The Under Secretary of Defense for Acquisition, Technology, and Logistics must closely monitor Component programs and implementation to achieve compliance goals. New strategies may be needed to achieve program success, including certain legislative initiatives to resolve infrastructure impediments.
Any comments or suggestions should be sent to: auditnet@dodig.mil