The U.S. Department of Justice’s Office of Inspector General recently released their audit findings regarding the FBI’s fleet fuel procurement program. A number of deficiencies were identified with the FBI’s purchasing controls including not verifying quantities and prices invoiced by their fuel suppliers. You might find it surprising that the FBI didn’t pay close attention to these details but fuel management is obviously not one of their core competencies. In fact, it’s easy to do a web search and find many government audit reports that identify significant issues with their associated departments’ fuel procurement procedures.
Government entities are typically required to conduct transparent and competitive bidding processes. As a result, they have the ability to select fuel suppliers and obtain favorable pricing farily well. However, like the FBI, they don’t always follow proper procedures for supplier selection. Furthermore, breakdowns in the process often occur after fuel contracts are signed. This is very common across all organizations, regardless of whether they are government-related or in the private sector, where they “set it and forget it.” Adequate resources are not being dedicated to thoroughly review subsequent transactions to verify quantities billed, audit pricing and fees for compliance with contract terms, and detect unusual activity that might indicate potential misuse or theft of fuel.
For many fleets, a fuel card is used to purchase fuel at truck stops and retail locations. Fuel cards are great tools that provide purchasing controls and detailed reports. Unfortunately for many fleets, they rely on fuel cards as the full extent of their fuel management program without realizing that pricing and tax errors can still occur, yet easily be overlooked due to the volume of transactions. It is not uncommon to find errors on invoices received directly from suppliers for bulk or mobile fuel too.
When purchasing fuel, a thorough transaction review can be more complex compared to other goods and services. Fuel prices typically change every day with the market which can make it difficult to know if the correct price was charged unless you understand the pricing formula. Applicable taxes also change somewhat frequently. In addition, various fees and surcharges are common line items on fuel invoices that can be subject to error. Besides just making sure the fuel being billed was actually received, all of the billing components must be validated.
If you’re concerned about reducing and controlling your fuel spend and don’t have the necessary resources or expertise, contact Conor Proud at Sokolis, [email protected] or 267-482-6159. We are the nation’s leading independent fuel management consulting team and can help you make sure that your fuel management program is running at peak efficiency.
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