Federal Real Property
Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to Hamper Reform Gao ID: GAO-07-349 April 13, 2007GAO prepared this report under the Comptroller General's authority to conduct evaluations on his own initiative to assist Congress. Federal real property is a high-risk area due to excess and deteriorating property, reliance on costly leasing, unreliable data, and security challenges. GAO's objectives were to determine (1) what progress the administration and major real property-holding agencies have made in strategically managing real property and addressing long-standing problems and (2) what problems and obstacles, if any, remain to be addressed. GAO reviewed documents and interviewed officials from the Office of Management and Budget (OMB) and nine agencies that hold 93 percent of federal property.
The administration and real property-holding agencies have made progress toward strategically managing federal real property and addressing long-standing problems. In response to the President's Management Agenda real property initiative and a related executive order, agencies have, among other things, established asset management plans; standardized data reporting; and adopted performance measures. Also, the administration has created a Federal Real Property Council (FRPC) and plans to work with Congress to provide agencies with tools to better manage real property. These are positive steps, but underlying problems still exist. For example, the Departments of Energy (Energy) and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA) reported during this review that over 10 percent of their facilities are excess or underutilized. Also, Energy, NASA, the General Services Administration (GSA), and the Departments of the Interior (Interior), State (State), and Veterans Affairs (VA) reported repair and maintenance backlogs for buildings and structures that total over $16 billion. The Department of Defense (DOD) reported a $57 billion restoration and modernization backlog. Also, Energy, Interior, GSA, State, and VA reported an increased reliance on leasing to meet space needs. While agencies have made progress in collecting and reporting standardized real property data, data reliability is still a challenge at DOD and other agencies, and agencies lack a standard framework for data validation. Finally, agencies reported using risk-based approaches to prioritize security needs, which GAO has suggested, but some cited obstacles such as a lack of resources for security enhancements. In past high-risk updates, GAO called for a transformation strategy to address the long-standing problems in this area. While the administration's approach is generally consistent with what GAO envisioned, certain areas warrant further attention. Specifically, problems are exacerbated by underlying obstacles that include competing stakeholder interests, legal and budgetary limitations, and the need for improved capital planning. For example, agencies cited local interests as barriers to disposing of excess property, and agencies' limited ability to pursue ownership leads them to lease property that may be more cost-effective to own over time.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-349, Federal Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to Hamper Reform
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
April 2007:
Federal Real Property:
Progress Made Toward Addressing Problems, but Underlying Obstacles
Continue to Hamper Reform:
GAO-07-349:
GAO Highlights:
Highlights of GAO-07-349, a report to congressional committees
Why GAO Did This Study:
GAO prepared this report under the Comptroller General‘s authority to
conduct evaluations on his own initiative to assist Congress. Federal
real property is a high-risk area due to excess and deteriorating
property, reliance on costly leasing, unreliable data, and security
challenges. GAO‘s objectives were to determine (1) what progress the
administration and major real property-holding agencies have made in
strategically managing real property and addressing long-standing
problems and (2) what problems and obstacles, if any, remain to be
addressed. GAO reviewed documents and interviewed officials from the
Office of Management and Budget (OMB) and nine agencies that hold 93
percent of federal property.
What GAO Found:
The administration and real property-holding agencies have made
progress toward strategically managing federal real property and
addressing long-standing problems. In response to the President‘s
Management Agenda real property initiative and a related executive
order, agencies have, among other things, established asset management
plans; standardized data reporting; and adopted performance measures.
Also, the administration has created a Federal Real Property Council
(FRPC) and plans to work with Congress to provide agencies with tools
to better manage real property. These are positive steps, but
underlying problems still exist. For example, the Departments of Energy
(Energy) and Homeland Security (DHS) and the National Aeronautics and
Space Administration (NASA) reported during this review that over 10
percent of their facilities are excess or underutilized. Also, Energy,
NASA, the General Services Administration (GSA), and the Departments of
the Interior (Interior), State (State), and Veterans Affairs (VA)
reported repair and maintenance backlogs for buildings and structures
that total over $16 billion. The Department of Defense (DOD) reported a
$57 billion restoration and modernization backlog. Also, Energy,
Interior, GSA, State, and VA reported an increased reliance on leasing
to meet space needs. While agencies have made progress in collecting
and reporting standardized real property data, data reliability is
still a challenge at DOD and other agencies, and agencies lack a
standard framework for data validation. Finally, agencies reported
using risk-based approaches to prioritize security needs, which GAO has
suggested, but some cited obstacles such as a lack of resources for
security enhancements. In past high-risk updates, GAO called for a
transformation strategy to address the long-standing problems in this
area. While the administration‘s approach is generally consistent with
what GAO envisioned, certain areas warrant further attention.
Specifically, problems are exacerbated by underlying obstacles that
include competing stakeholder interests, legal and budgetary
limitations, and the need for improved capital planning. For example,
agencies cited local interests as barriers to disposing of excess
property, and agencies‘ limited ability to pursue ownership leads them
to lease property that may be more cost-effective to own over time.
Figure: Examples of Excess Federal Facilities:
[See PDF for Image]
Source: VA and USPS.
From left to right: former Main VA Hospital Building, Milwaukee, WI;
former Main Post Office, Chicago, IL.
[End of figure]
What GAO Recommends:
GAO recommends that OMB, in conjunction with the Federal Real Property
Council, (1) develop a framework to better ensure the validity and
usefulness of key agency data; (2) develop an action plan for
addressing key problems, including reliance on leasing, security
challenges, and the effect of competing stakeholder interests; and (3)
create a clearer link between agencies‘ efforts under the real property
initiative and broader capital planning requirements. OMB agreed with
the report and concurred with its recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-349].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Mark L. Goldstein at
(202) 512-2834 or goldsteinm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The Administration and Major Real Property-Holding Agencies Have Taken
Actions to Strategically Manage Real Property and Address Some Long-
standing Problems:
Long-standing Problems in Real Property Largely Persist and Obstacles
Remain:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Selected Enhanced Real Property Authorities of Major Real
Property-Holding Agencies:
Appendix III: FRPC Inventory Data Elements and Descriptions:
Appendix IV: Comments from the Office of Management and Budget:
Appendix V: Comments from the General Services Administration:
Appendix VI: Comments from the National Aeronautics and Space
Administration:
Appendix VII: Comments from the Department of the Interior:
Appendix VIII: Comments from the Department of Homeland Security:
Appendix IX: Comments from the Department of Energy:
Appendix X: Comments from the Department of State:
Appendix XI: Comments from the Department of Veterans Affairs:
Appendix XII: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: Roles and Responsibilities under the Executive Order:
Table 2: Examples of Some Real Property Management Strategies Adopted
by Agencies:
Table 3: Status of Excess Property Challenges at the Major Real
Property-Holding Agencies:
Figures:
Figure 1: Real Property Initiative Framework:
Figure 2: FRPC Organization and Committees:
Figure 3: PMA Executive Branch Management Scorecard Standards for the
Real Property Initiative:
Figure 4: PMA Executive Branch Management Scorecard Results for the
Real Property Initiative:
Figure 5: Vacant Federal Property:
Abbreviations:
BRAC: Base Realignment and Closure:
CARES: Capital Asset Realignment for Enhanced Services:
DHS: Department of Homeland Security:
DOD: Department of Defense:
DOT: Department of Transportation:
EUL: Enhanced-use lease:
FCC: Federal Communications Commission:
FRPC: Federal Real Property Council:
FRPP: Federal Real Property Profile:
GSA: General Services Administration:
HHS: Department of Health and Human Services:
NASA: National Aeronautics and Space Administration:
NEPA: National Environmental Policy Act:
NPS: National Park Service:
OMB: Office of Management and Budget:
PBS: Public Buildings Service:
PMA: President's Management Agenda:
STAR: System for Tracking and Administering Real Property:
USAID: United States Agency for International Development:
USDA: United States Department of Agriculture:
USPS: United States Postal Service:
VA: Department of Veterans Affairs:
United States Government Accountability Office:
Washington, DC 20548:
April 13, 2007:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
In January 2003, we designated federal real property as a high-risk
area[Footnote 1] because of long-standing problems with excess and
underutilized property, deteriorating facilities, unreliable real
property data, and over-reliance on costly leasing. Federal agencies
were also facing many challenges in protecting their facilities against
the threat of terrorism. In addition, we found that these problems have
been exacerbated by obstacles that include competing stakeholder
interests in real property decisions, various legal and budget-related
limitations, the need for better agency capital planning, and the lack
of a strategic, governmentwide focus on real property issues. In our
2005 high-risk update, we reported that the administration had
initiated several key reform efforts that included issuing Executive
Order 13327 in February 2004 and adding the real property initiative to
the President's Management Agenda (PMA). We further noted that the
Departments of Defense (DOD) and Veterans Affairs (VA) continued to
make progress with the Defense Base Realignment and Closures (BRAC)
Commission and the VA Capital Asset Realignment for Enhanced Services
(CARES) decisions, respectively. We acknowledged that these efforts
were positive, but said that it was too early to judge whether the
administration's focus on this area would have a lasting impact.
For this report, our objectives were to determine (1) what progress the
administration and major real property-holding agencies have made in
strategically managing real property and addressing long-standing
problems, and (2) what problems and obstacles, if any, remain to be
addressed. To do this work, we obtained answers to a set of questions
that we posed to the nine[Footnote 2] federal real property-holding
agencies that hold 93 percent of the government's owned and leased
space. These agencies are DOD; VA; and the Departments of Energy
(Energy), Homeland Security (DHS), the Interior (Interior), and State
(State); the General Services Administration (GSA); the National
Aeronautics and Space Administration (NASA); and the United States
Postal Service (USPS). We also interviewed officials from the Office of
Management and Budget (OMB) because it oversees the implementation of
the executive order. We analyzed (1) agencies' written responses to our
questions and (2) pertinent laws, regulations, policies, and other
documents relating to these agencies' real property management. We
relied largely on the agencies' responses to assess their progress and
performed an assessment of the reliability of the information they
provided. We determined that this approach was adequate to meet our
objectives. Additional information about our methodology and the
agencies included in our review appears in appendix I. A summary of our
findings for this report was included in our high-risk update that was
released in January 2007.[Footnote 3] We prepared this report under the
Comptroller General's authority to conduct evaluations on his own
initiative as part of a continued effort to assist Congress with
oversight of real property issues. We conducted our work between April
2006 and February 2007 in accordance with generally accepted government
auditing standards.
Results in Brief:
The administration and major real property-holding agencies have made
progress toward strategically managing federal real property and
addressing some long-standing problems. In response to the executive
order and the PMA real property initiative, agencies covered under the
executive order have, among other things, designated senior real
property officers, established asset management plans, standardized
real property data reporting, and adopted various performance measures
to track progress. The administration has also established a Federal
Real Property Council (FRPC) that supports reform efforts. In addition,
the administration intends to work with Congress to provide agencies
with asset management tools to more effectively manage real property.
For example, VA, NASA, DOD, Energy, Interior, and USPS have limited
authorities that allow the agency to enter into enhanced-use lease
(EUL) agreements.[Footnote 4] Each agency has been provided its own
statutory authority, and the authority varies from agency to agency.
These agencies are also authorized to retain proceeds from the lease
and to use them for items specified by law, such as improvement of
their real property assets. Additionally, certain agencies such as GSA
and VA have been authorized to retain the proceeds from disposal of
their real property and to use these proceeds for their real property
needs.
Although progress toward strategically managing real property and
addressing some long-standing problems has been made, these problems
largely persist and the underlying obstacles remain. For example,
Energy, DHS and NASA reported that over 10 percent of their facilities
are excess or underutilized. In addition, Energy, NASA, GSA, Interior,
State, and VA reported repair and maintenance backlogs that total over
$16 billion. DOD reported a backlog of more than $57 billion, which
includes the cost of restoring and modernizing obsolete
buildings.[Footnote 5] Furthermore, Energy, Interior, GSA, State, and
VA reported an increased reliance on operating leases--an approach
which we have reported is generally more costly for long-term space
needs. While agencies have made progress in collecting and reporting
standardized real property data, data reliability is still a challenge
at some of the agencies, and agencies lack a standard framework for
data validation. Finally, all of the major real property-holding
agencies reported using risk-based approaches to prioritize security
needs, as we have suggested, but some cited a lack of resources for
security enhancements as an ongoing problem.
In our past high-risk reports, we called for a transformation strategy
to address the long-standing problems in this area. The
administration's approach is generally consistent with what we
envisioned, but certain areas warrant further attention. More
specifically, underlying obstacles, such as competing stakeholder
interests, legal and budgetary limitations, and a need for improved
capital planning, persist. For example, some agencies cited local
interests, such as historic preservation organizations or various
advocacy groups that want to keep the federal government in their
community, as barriers to disposing of excess property. Furthermore,
agencies' limited ability to pursue ownership often leads them to lease
property that may be more cost-effective over time for them to own.
Finally, long-term capital planning efforts to improve the efficiency
of government operations continue to be a challenge, and these efforts
are not clearly linked with the real property initiative. The federal
government has generally not planned or budgeted for capital assets,
such as real property, over the long term. We are making
recommendations aimed at (1) ensuring the validity of agency data, (2)
focusing reform efforts to better address the leasing problem and
security challenges, (3) and addressing obstacles that include
competing stakeholder interests and the need for improved capital
planning. OMB agreed with the report and concurred with its
recommendations. VA, Energy, DHS, GSA, and NASA generally agreed with
the report. State, DOD, Interior, and USPS did not state whether they
agreed or disagreed with the report and its recommendations. However,
State provided additional information for the report and Interior, DOD,
and USPS provided technical clarifications, which we incorporated,
where appropriate.
Background:
The federal real property portfolio is vast and diverse. The federal
government controls over $374 billion (gross value) in real property
assets worldwide.[Footnote 6] DOD, USPS, GSA, and VA hold the majority
of the owned and leased facility space, totaling over 3 billion square
feet of space. Numerous laws and regulations govern the acquisition,
management, and disposal of federal real property. The Federal Property
and Administrative Services Act of 1949, as amended (Property Act), is
the law that generally applies to real property held by federal
agencies, and GSA is responsible for the act's implementation.[Footnote
7] Agencies are subject to the Property Act unless they are
specifically exempted from it. Agencies may also have their own
statutory authority related to real property outside of the Property
Act. In addition, agencies must comply with numerous other laws related
to real property. For example, the Stewart B. McKinney Homeless
Assistance Act (McKinney Act), as amended, provides that property that
agencies have identified as unnecessary for mission requirements must
first be made available to assist the homeless.[Footnote 8] The
National Historic Preservation Act, as amended, requires agencies to
manage historic properties under their control and jurisdiction and to
consider the effects of their actions on historic
preservation.[Footnote 9] USPS, which is an independent establishment
in the executive branch, is authorized to sell, lease, or dispose of
property under its general powers.[Footnote 10] USPS is exempt from
most federal laws dealing with real property and contracting.[Footnote
11]
A number of federal laws enacted in the 1990s, including the Federal
Acquisition Streamlining Act, the Clinger-Cohen Act, and the Government
Performance and Results Act of 1993, placed increased emphasis on
improving capital decision-making practices. OMB has issued various
guidance and requirements for agencies to implement in developing
disciplined capital programming processes. For example, the Capital
Programming Guide is intended to provide agencies with a basic
reference for establishing an effective investment decision-making
process.[Footnote 12] Agencies are expected to have a disciplined
capital programming process, and the Capital Programming Guide and our
Executive Guide[Footnote 13] are intended to help them effectively
plan, procure, and use assets to achieve the maximum return on
investment. Under the guide, agencies have flexibility in implementing
the key principles.
Real property decisions draw considerable attention during
congressional deliberations over federal appropriations. Members of
Congress take a keen interest in federal facilities in their districts
and in the economic impact of any decisions. Several stakeholders other
than Congress, OMB, and the real property-holding agencies, have an
interest in how the federal government carries out its real property
acquisition, management, and disposal practices. These stakeholders
include state and local governments, business interests in the
communities where the real property assets are located, private sector
construction and leasing firms, historic preservation organizations,
various advocacy groups, and the public in general, which often views
the facilities as the physical face of the federal government in their
communities. At both the national and local levels, federal real
property practices also often attract significant media attention,
particularly when these practices are under scrutiny for waste and
mismanagement.
In response to our designation of federal real property as a high-risk
area, the President signed Executive Order 13327 in February 2004.
Shortly after the issuance of the executive order, the President added
the Federal Asset Management Initiative, commonly referred to as the
real property initiative, to the PMA. The executive order, which
applies to 24 executive branch departments and agencies[Footnote 14]
but not to USPS, established new federal property guidelines for these
agencies. To increase accountability for real property asset
management, the executive order called for each agency to establish the
position of Senior Real Property Officer. This officer is required to
prepare and submit to OMB an asset management plan that is intended to
ensure systematic agency procedures and actions related to real
property asset management. The executive order also called for
establishing a FRPC to develop guidance, collect best practices, and
help the Senior Real Property Officers improve the management of real
property assets. FRPC is to be composed of the Senior Real Property
Officers, the Controller of the Office of Management and Budget (OMB),
the Administrator of General Services, and any other officials or
employees permitted by the chair of FRPC. The Deputy Director for
Management for OMB is to be the chair, and OMB is to provide funding
and administrative support to the Council. OMB, FRPC and GSA all have
various roles and responsibilities under the executive order, as shown
in table 1.
Table 1: Roles and Responsibilities under the Executive Order:
Agency/Entity: OMB;
Role or responsibility designated by the executive order:
* Review the efforts of agencies in implementing their asset management
plans and achieving the governmentwide policies established in the
executive order;
* Develop legislative initiatives in consultation with the agencies to
improve federal real property management through the adoption of
appropriate industry management techniques and the establishment of
managerial accountability for implementing effective and efficient real
property management practices.
Agency/Entity: FRPC;
Role or responsibility designated by the executive order:
* Develop guidance for preparing and implementing agency asset
management plans;
* Work with GSA to establish asset management performance measures;
* Serve as a clearinghouse to executive agencies for best practices in
real property management.
Agency/Entity: GSA;
Role or responsibility designated by the executive order:
* Work with FRPC to establish information technology standards for the
government's database of real property assets;
* Provide policy oversight and guidance for executive agencies for
federal real property management;
* Publish common performance measures and standards adopted by FRPC;
* Work with FRPC to establish and maintain a single, comprehensive, and
descriptive database of all real property under the control of
executive agencies.
Source: GAO analysis of Executive Order 13327.
[End of table]
The real property initiative[Footnote 15] was added to the PMA, which
is an administration program that has raised the visibility of key,
govermentwide management challenges; increased the emphasis on
achieving outcome based results; and reinforced the need for agencies
to focus on sustaining improvements that address long-standing
management problems, including items on our high-risk list. The
Executive Branch Management Scorecard, which OMB administers, tracks
how well agencies are executing the governmentwide management
initiatives. The scorecard employs a simple grading system: green for
success, yellow for mixed results, and red for unsatisfactory. Scores
are based on scorecard standards for success that have been developed
for each initiative. The real property initiative focuses on the 15
largest landholding agencies,[Footnote 16] except for USPS; and, like
the executive order, the initiative is designed to ensure that property
inventories are maintained at the right size, cost, and condition to
support agency missions and objectives. The real property initiative's
framework consists of various layers, as shown in figure 1, which
include asset management decision-making tools that are intended to
help agencies right-size their inventories.
Figure 1: Real Property Initiative Framework:
[See PDF for image]
Source: OMB.
[End of figure]
To help agencies achieve these objectives, the base of the initiative's
framework specifies a complete and accurate inventory of all
constructed assets; asset management plans that systematize agency
procedures and actions related to asset management; and performance
metrics against which agencies can measure and evaluate asset
management performance. Also, the performance assessment tool segment
provides an analytical formula to help federal agencies better identify
and rank their assets using performance measurement data to highlight
properties that are nonmission-dependent, underutilized, costly to
operate, and in poor condition for possible disposal or rehabilitation.
The legislative authority segment is intended to help address barriers
and process inefficiencies that agencies currently encounter when
disposing of, transferring, constructing, or renovating assets in the
modern real estate market. The initiative also requires agencies to
develop a 3-year timeline that is updated annually and identifies the
specific real property reform activities that support their individual
asset management plans.
The Administration and Major Real Property-Holding Agencies Have Taken
Actions to Strategically Manage Real Property and Address Some Long-
standing Problems:
Pursuant to Executive Order 13327, the administration established the
FRPC to support reform efforts. As a result of the government's real
property initiative, agencies have taken preliminary steps to improve
the strategic management of real property and have adopted some of the
administrative tools necessary to do so, including asset management
plans. In addition, individual agencies have taken steps toward
addressing some of the long-standing problems and are implementing
various tools to prioritize reinvestment and disposal decisions. To
date, some individual agencies have received special authorities,
including the use of EUL agreements. Additionally, certain agencies
have been provided the authority to dispose of real property and to
retain the proceeds for their real property needs. (App. II contains
information on selected enhanced real property authorities for major
real property-holding agencies.)
The Administration and Agencies Have Made Progress Toward Strategically
Managing Federal Real Property:
Federal Real Property Council Established:
The administration established FRPC in 2004, which subsequently created
interagency committees to work toward developing and implementing a
strategy to accomplish the executive order. One such interagency
committee, the Asset Management Plan Committee, currently chaired by
GSA, develops governmentwide asset management strategies, such as
requirements for each agency's asset management plan. The Inventory and
Performance Measures Committee, currently chaired by DOD, is
responsible for the overall approach and direction of the new inventory
system, including new data definitions and reporting methodologies. In
addition, the committee develops metrics that can be used to assess and
benchmark the government's real property management performance. The
Systems Committee, chaired by the Department of Agriculture, is
responsible for identifying the information technology requirements of
the inventory system. The full FRPC meets quarterly, and the four
interagency committees meet at least quarterly (see fig. 2).[Footnote
17]
Figure 2: FRPC Organization and Committees:
[See PDF for image]
Source: FRPC Fiscal Year 2005 Federal Real Property Report.
[End of figure]
FRPC established asset management principles that form the basis for
the strategic objectives and goals in the agencies' asset management
programs.[Footnote 18] The asset management principles include the
following goals and objectives:
* support agency missions and strategic goals;
* use public and commercial benchmarks and best practices;
* employ life-cycle cost benefit analyses;
* promote full and appropriate utilization;
* dispose of unneeded assets;
* provide appropriate levels of investment;
* accurately inventory and describe all assets;
* employ balanced performance measures;
* advance customer satisfaction; and,
* provide safe, secure and healthy workplaces.
FRPC also developed a sample asset management plan and published
Guidance for Improved Asset Management in December 2004. The guidance
addresses published FRPC guiding principles, required components for
agency asset management plans, property inventory data elements, and
governmentwide performance measures. The asset management plan is
intended to systematize agency procedures and actions related to asset
management. According to FRPC's sample asset management plan and
guidance, the major sections of the asset management plan are supposed
to describe how the agency:
* addresses its mission and real property support in implementing its
missions and strategic goals, human capital and organizational
structure, decision-making framework, and owner's objectives;
* plans for and acquires real property assets, develops its capital
plan, prioritizes its list of acquisitions each fiscal year, measures
the effectiveness of its acquisition results, and identifies key
initiatives to improve financial management and acquisition
performance;
* operates its real property assets (including its inventory system,
operations and maintenance plans, asset business plans, or "building
block" plans, and periodic evaluation of assets), utilizes operational
measures, and implements key initiatives to improve operational
performance; and:
* disposes of unneeded real property assets, measures the effectiveness
of its redeployment actions, and identifies key initiatives to improve
the pace of disposition as well as its ability to dispose of difficult,
environmentally challenged properties.
In addition, the plan is to include a list of the agency's recent
disposals as a frame of reference and identify assets for disposal in
current and future years.
Enhanced Inventory System Developed:
FRPC worked with GSA to develop and enhance an inventory system known
as the Federal Real Property Profile (FRPP), which was designed to meet
the executive order's requirement for a single database that includes
all real property under the control of executive branch
agencies.[Footnote 19] The FRPC, with the assistance of the GSA Office
of Government-wide Policy, developed 23 mandatory data elements, which
include four performance measures. The four performance measures are
utilization, condition index, mission dependency, and annual operating
and maintenance costs. (App. III lists and describes the data
elements.) In June 2006, FRPC added a data element for disposition that
included six major types of disposition, including sale, demolition, or
public benefit conveyance. In addition, a performance assessment tool
has been developed, which is to be used by agencies to analyze the
inventory's performance measurement data in order to identify
properties for disposal or rehabilitation. To assist agencies in their
data submissions for the FRPP database, FRPC provided standards and
definitions for the data elements and performance measures through
guidance issued on December 22, 2004, and a data dictionary issued by
GSA in October 2005.[Footnote 20] The first governmentwide reporting of
inventory data for FRPP took place in December 2005, and selected data
were included in the fiscal year 2005 FRPP published by GSA, on behalf
of FRPC, in June 2006. Data on the four performance measures were not
included in this report.
Agencies Have Met Scorecard Standards to Varying Degrees:
Adding real property asset management to the PMA has increased its
visibility as a key management challenge and focused greater attention
on real property issues across the government. OMB has identified goals
related to the four performance measures in the inventory for agencies
to achieve in right-sizing their real property portfolios, which
include demonstrating results by:
* reducing the number of nonmission-dependent assets,
* increasing utilization of assets,
* improving the condition of assets, and:
* reducing the operating costs of assets or at least maintaining them
consistent with industry standards.
Specifically, it is the administration's goal to reduce the size of the
federal real property inventory by 5 percent, or $15 billion, by
disposing of unneeded assets by 2015. In October 2006, the
administration reported that $3.5 billion in unneeded federal real
property had been disposed of since 2004.
To achieve these goals and gauge an agency's success in accurately
accounting for, maintaining, and managing its real property assets so
as to efficiently meet its goals and objectives, the administration
established the real property scorecard in the third quarter of fiscal
year 2004. The scorecard consists of 13 standards that agencies must
meet to achieve green status, which is the highest status. These 13
standards include 8 standards needed to achieve yellow status, plus 5
additional standards. An agency reaches "green" or "yellow" status if
it meets all of the standards for success listed in the corresponding
column in figure 3 and red if it has any one of the shortcomings listed
in the "red" column.
Figure 3: PMA Executive Branch Management Scorecard Standards for the
Real Property Initiative:
[See PDF for image]
Source: OMB.
[End of figure]
OMB evaluates agencies quarterly, and agencies then have an opportunity
to update OMB on their progress toward achieving green status.
According to PMA real property scorecards, as of the first quarter of
fiscal year 2007, all of the 15 real property-holding agencies that are
part of the real property initiative have, at a minimum, met the
standards for yellow status as shown in figure 4.
Figure 4: PMA Executive Branch Management Scorecard Results for the
Real Property Initiative:
[See PDF for image]
Source: OMB scorecards.
Note: USPS is not part of the real property initiative and is not
evaluated using the Executive Branch Scorecard. However, USPS officials
reported that they are finalizing an asset management plan. The target
date for the official release of the asset management plan is the end
of the first quarter 2007, but the plan will be implemented in phases
and is currently under clearance review. We have ongoing work related
to USPS's management of real property, which we expect to issue in
2007.
[A] The real property initiative initially applied to 14 agencies, but
1 additional agency, USAID, that maintains a substantial real property
inventory, was added during the fourth quarter of fiscal year 2005.
[End of figure]
Among the 15 agencies under the real property initiative, 5 agencies--
GSA NASA, Energy, State, and VA--have achieved green status. According
to OMB, the agencies achieving green status have established 3-year
timelines for meeting the goals identified in their asset management
plans and have provided evidence that they are implementing their asset
management plans, using real property inventory information and
performance measures in decision making, and managing their real
property in accordance with their strategic plan, asset management
plan, and performance measures. Once an agency has achieved green
status, OMB continues to monitor its progress and results through PMA
using deliverables identified in its 3-year timeline and quarterly
scorecards. Each quarter, OMB also provides formal feedback to agencies
through the scorecard process, along with informal feedback, and
clarifies expectations. Yellow status agencies still have various
standards to meet before achieving green.
Agency Actions Intended to Address Some Long-standing Problems:
Besides responding to the administration's real property initiative,
some agencies have taken steps toward addressing some of their long-
standing problems, including excess and underutilized property and
deteriorating facilities. Some agencies are implementing various tools
to prioritize reinvestment and disposal decisions on the basis of
agency needs, utilization, and costs. For example, GSA and NASA
officials reported establishing models that integrate agency mission,
utilization, and cost considerations into asset management planning.
Specifically, NASA officials reported that they have taken steps to
better align holdings with agency space needs and priorities, which
includes an approach that incorporates operating costs and utilization
information. Likewise, GSA officials reported that GSA's Portfolio
Restructuring Strategy sets priorities for disposal and reinvestment
based on agency missions and anticipated future need for holdings. In
addition, GSA developed a methodology to analyze its leased inventory
in fiscal year 2005. This approach values leases over their life, not
just at the point of award; considers financial performance and the
impact of market rental rates on current and future leasing actions;
and categorizes leases by their risk and value. Examples of some real
property asset management strategies adopted by agencies are described
in table 2.
Table 2: Examples of Some Real Property Management Strategies Adopted
by Agencies:
Agency: GSA;
Property management strategy: In 2002, GSA began its Portfolio
Restructuring Strategy to create a portfolio capable of funding its own
long-term capital requirements out of the proceeds of current
operations. Under this initiative, GSA is reducing its reinvestment
liability by investing in financially sustainable properties and by
divesting itself of properties unable to generate sufficient revenue to
support full occupancy and reinvestment. In 2005, GSA further refined
its asset management strategy to include Core Asset Analysis, which
assigns holding periods to each government-owned asset and identifies
GSA's core assets based on utilization, customer need, and mission
dependency.
Agency: DOD;
Property management strategy: The Defense Base Closure and Realignment
Act of 1990, as amended, authorized a new round of base realignment and
closures (BRAC) in 2005, the fifth such round in recent years but the
first since 1995. The BRAC 2005 round continues the goal of previous
rounds of reducing excess infrastructure within the department and
achieving savings that could be applied to other priorities. However,
DOD expanded the focus of BRAC 2005 to include transformation issues,
to accommodate restationing of forces from overseas, and to improve
joint efforts among the military services. A primary objective of BRAC
2005 was to determine and implement opportunities for greater joint
activity among the DOD components. DOD officials noted that the amount
of funding provided to the Department's Base Closure Account in the
Revised Continuing Appropriations Resolution for fiscal year 2007 is
significantly less than requested.[A].
Agency: VA;
Property management strategy: The VA Capital Asset Realignment for
Enhanced Services (CARES) process aims to provide a systematic planning
process to prepare VA's facilities and campuses to meet veterans'
future health care needs through a systemwide assessment of the current
and future space needs and of the size, mission and locations of
facilities, compared with the number of projected enrollees and
forecasts of their anticipated utilization of medical services. In May
2004, the Secretary announced his CARES decisions and overall, the
CARES process identified more than 100 major construction projects in
37 states, the District of Columbia, and Puerto Rico. VA officials
estimate that, upon completion of the CARES plan, vacant space within
the Veterans Health Administration will be reduced by 42.5 percent.
Agency: NASA;
Property management strategy: NASA has a master planning initiative
under way to establish and improve master plans for all its field
centers, which each have unique missions. The master plans form the
foundation for integrating long-range mission requirements with
physical infrastructure. In addition, NASA has established a central
demolition fund to start removing obsolete facilities from its
portfolio. NASA uses an algorithm to prioritize capital repair projects
that takes into account utilization and facility costs and has begun a
"repair by replacement" program through which it demolishes older
costly facilities and constructs newer, cost-efficient facilities as
replacements.
Agency: State;
Property management strategy: State strategies to improve the disposal
process and eliminate surplus assets include its Property Utilization
Assessment Initiative, Disposal Initiative, and Decommissioning
Initiative. As part of its Property Utilization Assessment Initiative,
State reviews and analyzes the utilization of its overseas facilities
to determine if there are unused or underutilized properties.
Subsequently, as part of its Disposal Initiative, State conducts a
property-by-property analysis to determine if those properties
identified as unused or underutilized are candidates for disposal.
Disposal recommendations include an analysis of the performance
measures for the property under consideration. The Decommissioning
Initiative was initiated by the Bureau of Overseas Building Operations
because an increasing number of major facilities were being vacated as
a result of the New Embassy Compound construction program. In fiscal
year 2005, State sold properties in 20 countries, generating $36.7
million in proceeds, and decommissioned 23 properties.
Agency: Energy;
Property management strategy: In September 2003, Energy issued an order
that established a performance-based approach to real property life-
cycle management. This approach requires all sites to annually identify
all real property assets not fully utilized or excess to the mission
needs to facilitate reuse or disposal. A key element of Energy's real
property asset management is the establishment of Ten Year Site Plans
as the mechanism to link real property asset management to program
missions.
Source: GAO analysis of agencies' data.
[A] P.L. No. 110-5, 121 Stat. 8,40 (2007).
[End of table]
In addition to trying to align assets with their missions, some
agencies are taking steps to make the condition of core assets a
priority and address maintenance backlog challenges. For example,
Energy officials reported establishing budget targets to align
maintenance funding with industry standards as well as programs to
reduce the maintenance backlogs associated with specific programs.
Interior officials reported that the department has conducted condition
assessments for 72,233 assets as of fourth quarter fiscal year 2006. VA
reported establishing a facility condition assessment process that will
help identify the funding needed to improve the current infrastructure.
In addition, USPS officials reported having a program under way to
inspect replacement values and information on the condition of
facilities in order to better link condition assessments and
maintenance and repair funding.[Footnote 21]
Additional Efforts Made to Strategically Manage and Address Problems:
The Administration Intends to Work with Congress to Provide Agencies
with Tools to More Effectively Manage Real Property:
As mentioned previously, Executive Order 13327 requires that OMB, along
with landholding agencies, develop legislative initiatives to improve
federal real property management and establish accountability for
implementing effective and efficient real property management
practices. Some individual agencies have obtained legislative authority
in recent years to use certain real property management tools, but no
comprehensive legislation has been enacted.[Footnote 22] Accordingly,
the administration plans to support legislative reforms that would
allow agencies to have the funds necessary to cover the costs of
disposal; and streamline the federal transfer process, including the
actions needed to comply with the McKinney Act and the National
Environmental Policy Act (NEPA). A current OMB legislative initiative
involves a three-part approach that (1) identified demonstration
properties for disposal, (2) included a disposal pilot program in the
President's Fiscal Year 2007 and 2008 Budgets, and (3) enhanced
individual agency authorities.
* OMB staff reported that about 8 to 10 demonstration projects were
identified for disposal and resulted in mixed success. Among the
properties identified were the NASA Camp Parks site in California and
Federal Communication Commission (FCC) properties in California and
Hawaii. Both NASA and FCC were authorized to sell these sites and to
retain the proceeds from their sale.[Footnote 23] However, OMB staff
reported FCC had encountered impediments to disposing both FCC
properties. These impediments were: (1) proximity of the asset to a
military blast zone, and (2) presence of an endangered species.
* The President's 2007 and 2008 Budget Submissions included a proposal
for a Federal Real Property Disposal Pilot Program that would authorize
the Director of OMB to conduct a pilot program for the disposal of real
property that is not meeting federal government needs. The pilot would
have lasted 5 years and agencies would have recommended candidate
disposition properties to OMB. Properties identified for disposal under
this proposal would have been subject to, among other requirements, the
McKinney Act. The administration's proposal would have permitted
agencies to retain 20 percent of the net proceeds of sale from
properties that an agency disposes of through the pilot program. The
remaining 80 percent would have been deposited into the Treasury as
miscellaneous receipts. Congress did not act on this proposal, and OMB
staff believe that the Congressional Budget Office scoring will play an
important role in determining the shape of a permanent real property
reform solution.
* In its fiscal year 2005 appropriation act, GSA was authorized to
convey real property by sale, lease, exchange, or other means and to
retain the net proceeds in the Federal Buildings Fund to be used for
GSA's real property capital needs subject to an appropriation
act.[Footnote 24] In addition, in 2005, the U.S. Forest Service, within
USDA, was provided authority until September 30, 2008, to sell, lease
or exchange administrative sites of 40 acres or less under the
Secretary's jurisdiction and to retain the proceeds.[Footnote 25]
Some Agencies Have Special Legal Authorities to Manage Their Federal
Real Property Assets:
Some agencies have received special real property management
authorities, such as the authority to enter into EUL
agreements.[Footnote 26] These agencies are also authorized to retain
the proceeds of the lease and to use them for items specified by law,
such as improvement of their real property assets. DOD, Energy,
Interior, NASA, USPS, and VA are authorized to enter into EUL
agreements and have authority to retain proceeds from the lease. These
authorities vary from agency to agency, and in some cases, these
authorities are limited. For example, NASA is authorized to enter into
EUL agreements at two of its centers,[Footnote 27] and VA's authority
to enter into EUL agreements expires in 2011.[Footnote 28] In addition,
VA was authorized in 2004 to transfer real property under its
jurisdiction or control and to retain the proceeds from the transfer in
a capital asset fund for property transfer costs, including demolition,
environmental remediation, and maintenance and repair costs.[Footnote
29] VA officials noted that although VA is authorized to transfer real
property under its jurisdiction or control and to retain the proceeds
from such transfers, this authority has significant limitations on the
use of any funds generated by any disposal under this authority.
Additionally, GSA was given the authority to retain proceeds from
disposal of its real property and to use the proceeds for its real
property needs. In another example, using its BRAC authorities, DOD
estimated that it reduced its domestic infrastructure by about 20
percent, and about 90 percent of unneeded BRAC property is now
available for reuse. Substantial net savings of approximately $29
billion have been realized, according to DOD. After the previous BRAC
recommendations were adopted, DOD declared that 504,000 acres of
property were unneeded and available for transfer to other federal or
nonfederal entities. (App. II contains information on enhanced real
property authorities for major real property-holding agencies.)
Agencies with enhanced authorities believe that these authorities have
greatly improved their ability to manage their real property portfolios
and operate in a more businesslike manner:
* VA used its enhanced authorities to dispose of its underutilized
Lakeside Campus in Chicago. In January 2005, VA executed an EUL for the
Lakeside facility, and, in turn, received $28 million for the lease, as
well as the right to lease back space for 3 years to house its existing
outpatient clinic at Lakeside. In October 2005, the Secretary
determined that the department no longer needed the campus, and VA sold
it for an additional $22 million. VA officials reported that the
transaction resulted in a demonstrable improvement of services to
eligible veterans by permitting VA to offset the cost of implementing
CARES in Chicago and other locations, and avoid the future costs of
maintaining aging health care facilities.
* GSA officials successfully sold through auction the 1.9 million
square foot facility known as the Middle River site in Baltimore
County, Maryland for $37.5 million. GSA received specific authority in
its fiscal year 2005 appropriation act to sell the property and to
retain the sale proceeds.[Footnote 30]
Overall, the administration's efforts to raise the level of attention
to real property as a key management challenge and to establish
guidelines for improvement are noteworthy. The administrative tools,
including asset management plans, inventories, and performance
measures, were not in place to strategically manage real property
before we updated our high-risk list in January 2005. The actions taken
by major real property-holding agencies and the administration to
establish such tools are clearly positive steps. However, these
administrative tools and the real property initiative have not been
fully implemented, and it is too early to determine if they will have a
lasting impact. Implementation of these tools has the potential to
produce results such as reductions in excess property, reduced
maintenance and repair backlogs, less reliance on leasing, and an
inventory that is shown to be reliable and valid.
Long-standing Problems in Real Property Largely Persist and Obstacles
Remain:
Although clear progress has been made toward strategically managing
federal real property and addressing some long-standing problems, real
property remains a high-risk area because the problems persist and
obstacles remain. Agencies continue to face long-standing problems in
the federal real property area, including excess and underutilized
property, deteriorating facilities and maintenance and repair backlogs,
reliance on costly leasing, and unreliable real property data. Federal
agencies also continue to face many challenges securing real property.
These problems are still pervasive at many of the major real property-
holding agencies, despite agencies' individual attempts to address
them.
Long-standing Problems in Real Property Largely Persist:
The Federal Government Continues to Hold Many Unneeded Assets:
Although the changes being made to strategically manage real property
are positive and some realignment has taken place, the size of
agencies' real property portfolios remains generally outmoded. As we
have reported, this trend largely reflects a business model and the
technological and transportation environment of the 1950s.[Footnote 31]
Many of these assets and organizational structures are no longer
needed; others are not effectively aligned with, or responsive to,
agencies' changing missions. At the same time, technological advances
have changed workplace needs, and many of the older buildings are not
configured to accommodate new technologies. Furthermore, electronic
government has changed the way the public interacts with the federal
government, and this change will have significant implications for the
type and location of property needed in the 21st century.
As we have reported, many of the major real property-holding agencies
have undergone significant mission shifts over the last decade that
have affected their real property needs, and some agencies are working
to reduce their unneeded federal real property assets. After five
rounds of base closures and a 6-year demolition program that eliminated
over 86 million square feet of excess and obsolete real property
assets, DOD identified more unneeded facilities to be eliminated by
fiscal year 2013. DOD officials reported that the department has not
yet finished reporting all excess property because its property
holdings are so extensive, and it has just started to collect detailed
information on excess facilities for the FRPP.
Similarly, VA initiated its CARES process--the first comprehensive,
long-range assessment of its health care system's capital asset
requirements since 1981--to address its obsolete infrastructure. We
reported in August 2005 that CARES resulted in decisions to realign
inpatient services at some VA facilities and to leave services as
currently aligned at others.[Footnote 32] VA did not complete inpatient
alignment decisions agencywide for long-term care and mental health
services and for inpatient services at some facilities because it
lacked sufficient information on demand for such care and other
factors. We reported that VA, however, made some inpatient long-term
care and mental health alignment decisions for some locations.
While some major real property-holding agencies have had some success
in attempting to realign their infrastructures in accordance with their
changing missions, others still maintain a significant amount of excess
and underutilized property.[Footnote 33] For example, officials with
Energy, DHS, and NASA--which are three of the largest real property-
holding agencies--reported that over 10 percent of the facilities in
their inventories were excess or underutilized. While some agencies,
including Interior, State,VA, and USPS reported relatively low levels
of excess property, the need to address the problem at other agencies
is still significant. Table 3 describes the status of excess and
underutilized real property challenges at the nine major real property-
holding agencies.
Table 3: Status of Excess Property Challenges at the Major Real
Property-Holding Agencies:
Agency: DOD;
Status: DOD officials indicated that because its real property holdings
are so extensive and DOD has just begun collecting detailed excess
facility information, the department has not fully completed its
reporting of all excess property.
Agency: Energy;
Status: Energy officials reported that approximately 16 percent of
Energy's real property inventory has been identified as excess or
underutilized.
Agency: DHS;
Status: According to DHS officials, for the 2006 FRPP submission, the
percentage of underutilized real property is 9.7 percent.
Agency: Interior;
Status: In December 2006, Interior reported in the FRPP during fiscal
year 2006 that 1,181 assets of 185,527 were disposed, or less than 1
percent of the inventory. Officials reported that Interior is working
to address its excess and underutilized facilities, citing two major
initiatives undertaken at Interior: (1) Bureau of Land Management
(BLM), the Space Management Program and (2) Service First, to better
meet space needs and priorities.[A].
Agency: GSA;
Status: According to GSA officials, 258 buildings, with 13.8 million
rentable square feet (RSF), have been reported as excess property.
Additionally, 21 buildings, with 0.7 million RSF, are pending disposal
or demolition.
Agency: NASA;
Status: NASA officials reported that over 10 percent of all assets are
underutilized or not utilized at all.
Agency: State;
Status: According to State officials, the department's properties
showed a high level of utilization in 2005. Only about 1.5 percent of
the portfolio was reported as underutilized. State has identified 65
properties (less than 0.4 percent of the overseas portfolio for
government-owned assets) for potential disposal.
Agency: USPS;
Status: According to USPS officials, 1 percent of its inventory of
8,807 owned properties is considered excess or underutilized. Fewer
than 50 properties are considered excess.[B].
Agency: VA;
Status: According to VA officials, VA has moved from 98 percent
utilized space in fiscal year 2005 to 100 percent in fiscal year 2006.
In fiscal year 2006, VA disposed of 77 buildings, including 6 buildings
via sales, 19 buildings via demolition, and 52 buildings via EUL.
Source: GAO analysis of agencies' data.
[A] The Space Management Program is a top management initiative to
review space requirements and reduce space allocations across the
department. Started in 2003 and managed by the Office of Acquisition
and Property Management, the program is designed to strengthen
management decision making at all levels throughout the life cycle
(acquisition through disposition) of owned, leased and GSA-provided
space. The Service First Initiative is a cross-agency partnership
between BLM and the Department of Agriculture's U.S. Forest Service. It
was established several years ago with three broad goals to improve
customer service, increase operational efficiency, and enhance land
stewardship.
[B] As part of our ongoing work, we are reviewing USPS infrastructure
realignment plans.
[End of table]
The magnitude of the problem with underutilized or excess federal real
property continues to put the government at risk for lost dollars and
missed opportunities. As we have reported, underutilized or excess
property is costly to maintain. For example, according to GSA
officials, 188 assets accepted for disposal account for 8 million gross
square feet and $8.1 million in operating expenses that will be
eliminated upon completion of the disposal action. Another 6
underutilized assets with approximately 580,000 gross square feet and
$1.4 million in operating costs are projected for disposal in the next
5 years, pending customer relocation. However, it is too early to tell
whether GSA will be successful in disposing of these assets.
Furthermore, VA officials reported that VA has a significant number of
properties no longer located in places where veterans live, and many of
these properties are over 50 or 60 years old. Two examples of excess
federal properties are the former Main VA Hospital Building, in
Milwaukee, Wisconsin, and the former Main Post Office in Chicago,
Illinois, both of which are vacant (see fig. 5).
Figure 5: Vacant Federal Property:
[See PDF for image]
Sources: VA and USPS.
[End of figure]
Major Real Property-Holding Agencies Still Have Multibillion-Dollar
Repair and Restoration Backlogs:
Addressing the needs of aging and deteriorating federal facilities
remains a problem for major real property-holding agencies. According
to current estimates, tens of billions of dollars will be needed to
repair or restore these assets so that they are fully functional.
Furthermore, much of the federal portfolio was constructed over 50
years ago, and these assets are reaching the end of their useful lives.
Energy, NASA, GSA, Interior, State, and VA reported repair and
maintenance backlogs for buildings and structures that total over $16
billion. In addition, DOD reported a $57 billion restoration and
modernization backlog.
To determine whether agencies still have repair and restoration
backlogs, we asked each agency to provide updated estimates of their
backlogs, which we defined as needs in facilities for which major
upkeep, repair, and maintenance have not been funded and the repair and
maintenance on these assets has been postponed. We found that there was
variation in how agencies reported data on their backlog. Some agencies
reported deferred maintenance figures consistent with the definition
used for data on deferred maintenance included in their financial
statements.[Footnote 34] Others provided data that included major
renovation or restoration needs. More specifically,
* For DOD, facilities restoration and modernization requirements total
over $57 billion. Officials noted that the backlog does not reflect the
impact of BRAC 2005 or related strategic rebasing decisions that will
be implemented over the next several years. BRAC decisions that result
in closing installations will reduce the overall restoration and
modernization backlog. However, this benefit will be partially offset
by new requirements to restore and modernize facilities to accommodate
new missions at gaining BRAC installations.
* For Energy, the backlog in fiscal year 2005 for a portfolio valued at
$85.2 billion was $3.6 billion. Officials reported that Energy's real
property portfolio is aging and assets had been undermaintained in the
past; but the department has emphasized maintenance and has been
funding maintenance within accepted industry guidelines. Moreover,
Energy officials added that multiple real property owning programs have
established funding lines to address the existing backlog. Energy has
seen a stabilization of deferred maintenance and has indications that
the overall backlog has gone down.
* For Interior, officials reported an estimated maintenance backlog of
over $3 billion for buildings and other structures.[Footnote 35]
Officials reported that each bureau maintains its deferred maintenance
backlog based on condition assessments. Interior officials noted that
the maintenance backlog cannot be expressed as a static figure. For
example, in the case of the National Park Service (NPS), it is based on
a limited set of assets (buildings, roads, water and wastewater plants,
trails, and campgrounds) but does not include other assets such as
national landmarks and monument. The maintenance backlog is based on
preliminary condition assessments that were completed prior to the end
of fiscal year 2006. Interior officials noted that they are continually
finding out more about its assets as part of the comprehensive
assessments. Furthermore, every asset is not of equal priority,
according to Interior officials, and managers must make informed
decisions about where to invest dollars using management tools,
including performance metrics. Interior officials also reported that
the department has significantly improved its management of maintenance
and construction priorities and projects with the implementation of the
5-year plan, the facility condition index, and the asset priority
index.[Footnote 36]
* GSA's current maintenance backlog is estimated at $6.6 billion. GSA
officials cited obtaining additional sources of capital as the major
barrier in addressing the maintenance backlog. Specifically, officials
noted that additional appropriations are generally not available for
reinvestment or operating expenses, and GSA can rely only on what the
Federal Buildings Fund generates. According to officials, many of GSA's
buildings are in need of extensive renovation and the reinvestment
needs of the portfolio have not been met with available funding.
* For State, the maintenance backlog is estimated at $132 million,
which includes all of the deferred/unfunded maintenance and repair
needs for prior fiscal years. Officials noted that major rehabilitation
projects require funding of at least $100 million annually.
* For NASA, the restoration and repair backlog is estimated at over
$2.05 billion as of the end of fiscal year 2006. Officials noted that
having a maintenance backlog can result in further damage if, for
example, a roof leak is not repaired and water intrusion causes further
damage.
* For VA, the maintenance backlog for facilities with major repair
needs is estimated at $5 billion, and according to VA officials, VA
must address this aged infrastructure while patient loads are changing.
VA officials noted that VA has moved aggressively to address its
maintenance and repair backlog.
Despite Long-Term Cost, Several Agencies Reported That Reliance on
Leasing to Meet New Space Needs Is Increasing:
Many of the major real property-holding agencies continue to rely on
costly leased space to meet new space needs. As a general rule,
building ownership options through construction or purchase are the
least expensive ways to meet agencies' long-term requirements. Lease
purchases--under which payments are spread out over time and ownership
of the asset is eventually transferred to the government--are generally
more expensive than purchase or construction but are generally less
costly than using ordinary operating leases to meet long-term space
needs.[Footnote 37] For example, we testified in October 2005 that for
the Patent and Trademark Office's long-term requirements in northern
Virginia, the cost of an operating lease was estimated to be $48
million more than construction and $38 million more than lease
purchase. However, over the last decade we have reported that GSA--as
the central leasing agent for most agencies--relies heavily on
operating leases to meet new long-term needs because it lacks funds to
pursue ownership.
Operating leases have become an attractive option, in part because they
generally "look cheaper" in any given year, even though they are
generally more costly over time. Under current budget scorekeeping
rules,[Footnote 38] the budget records the full cost of the
government's commitment. Operating leases were intended for short-term
needs and thus, under the scorekeeping rules, only the amount needed to
cover the first year lease payments plus cancellation costs needs to be
recorded. However, the rules have been stretched to allow budget
authority for some long-term needs being met with operating leases to
be spread out over the term of the lease, thereby disguising the fact
that over time, leasing will cost more than ownership. Resolving this
problem has been difficult; however, change is needed because the
current practice of relying on costly leasing to meet long-term space
needs results in excessive costs to taxpayers and does not reflect a
sensible or economically rational approach to capital asset management.
Five of the nine largest real property-holding agencies--Energy,
Interior, GSA, State, and VA--reported an increased reliance on
operating leases to meet new space needs over the past 5 years.
According DHS officials, per review of GSA's fiscal year 2005 and 2006
lease acquisition data for DHS, there has been no significant increase
in GSA-acquired leased space for DHS. In addition, officials from NASA
and USPS reported that their agency's use of operating leases has
remained at about the same level over the past 5 years.
* Energy officials reported that the department has increasingly relied
on operating leases instead of federal construction over the past 5
years. Officials told us that the difficulty in obtaining funding for
major construction projects has made operating leases an attractive
alternative. In addition, Energy officials added that the department
scrutinizes lease proposals and compares the life-cycle costs for line
item construction and the operating lease to ensure the operating lease
is in the best interest of the department and the taxpayer.
* GSA officials reported that GSA's reliance on operating leases has
increased over the past 6 years. While the owned square footage has
decreased from 183.9 million in fiscal year 2000 to 174.4 million in
fiscal year 2006, the leased inventory has grown from 152.8 million to
172.3 million during the same period.
* According to Interior officials, the total square footage in direct
leases increased from 2.7 million to 3.7 million from fiscal year 2002
to fiscal year 2005.
* State officials reported that the department's reliance on operating
leases has increased to meet the growth of agencies overseas. Officials
reported that funding for short-and long-term operating leases is vital
for providing the space U.S. agencies need to perform their missions.
Specifically, in countries where the U.S. agencies' programmatic growth
is expected to be rapid or temporary, short-term operating leases
(i.e., those with initial lease terms of less than 10 years) might be a
more economical option and result in less risk than the construction of
government facilities.
* According to VA officials, the number of VA direct operating leases
has increased, with the leased square footage increasing over 4 million
in fiscal year 2004 to over 7 million in fiscal year 2006. VA officials
reported that VA needs a more flexible facility infrastructure to
accommodate changes in medical technology and shifts in demographic
data.
We did not analyze whether the leasing activity at these agencies,
either in the aggregate or for individual leases, resulted in longer-
term costs than if these agencies had pursued ownership. For short-term
needs, leasing likely makes economic sense for the government in many
cases. However, our past work has shown that, generally speaking, for
long-term space needs, leasing is more costly over time than direct
ownership of these assets.
Decision makers have struggled with how to balance transparency over
long-term costs and constraints on annual budgets since federal budget
scoring rules were established.[Footnote 39] As an alternative, we have
suggested scoring the budget authority for all operating leases up
front on the basis of the underlying time requirement for the space so
that all options are treated equally.[Footnote 40] If pursued, this
approach would pose implementation challenges, including the need to
evaluate the validity of agencies' stated space requirements. Finding a
solution for this problem has been difficult; however, the current
practice of relying on costly leasing to meet long-term space needs
results in excessive costs to taxpayers and does not reflect a sensible
or economically rational approach to capital asset management.
Furthermore, despite its significance, this problem has gone largely
unaddressed in the real property initiative. Without greater attention
to resolving this problem, the government will likely continue to
choose options that clearly cost taxpayers significantly more over the
long term.
Governmentwide Real Property Data Inventory Is in Early Stages, and
Data Reliability Is Still a Problem at the Agency Level:
While the administration and agencies have made progress in collecting
standardized data elements[Footnote 41] needed to strategically manage
real property, the long-term benefits of the new real property
inventory have not yet been realized, and this effort is still in the
early stages. The federal government has made progress in revamping its
governmentwide real property inventory since our 2003 high-risk report.
As previously mentioned, the first governmentwide reporting of
inventory data for FRPP took place in December 2005, and GSA published
the data on behalf of FRPC, in June 2006. According to the 2005 FRPP
report, the goals of the centralized database are to improve decision
making with accurate and reliable data, provide the ability to
benchmark federal real property assets, and consolidate governmentwide
real property data collection into one system. According to FRPC, these
improvements in real property and agency performance data will result
in reduced operating costs, improved asset utilization, recovered asset
values, and improved facility conditions, among others.
According to OMB staff, the first reporting for FRPP in 2005 included
information for 1.2 million assets and all agencies under the Chief
Financial Officers Act of 1990 (CFO Act) reported data to the FRPP. OMB
staff reported that some agencies requested and received waivers for
reporting a portion of their inventory or performance data in December
2005. Most of the waivers related to the agencies' ability to capture
the data early enough for the December 2005 reporting deadline. OMB
staff said that these waivers have expired for the December 2006
reporting. Also, OMB staff said that agencies reported performance
measure data to the FRPP as part of the FRPP fiscal year 2005
submission. Performance data were not reported in the publicly
available, governmentwide report.
According to OMB staff, the biggest challenge encountered by the FRPC,
in establishing the inventory data elements and performance measures,
was developing common definitions. Officials reported that it was
difficult to agree on one definition for elements such as square
footage (e.g., gross versus rentable) and value (e.g., book, appraised,
or replacement) when agencies use many working definitions for those
elements. According to OMB staff, FRPC has analyzed the results of the
initial inventory data reporting and determined that at this time, the
guidance does not need further revision. Currently, FRPC is working to
promote the identification and prioritization of assets for disposal;
assets that are in good condition and are highly used are considered
low priority, and assets that are in poor condition and have high
operating costs are considered high priority.
OMB staff reported that the subjective nature of some data elements was
also a challenge when attempting to make comparisons across agencies.
According to OMB staff, the FRPC guidance was drafted to allow each
agency to interpret mission criticality in an agency-specific manner.
For example, part of GSA's mission is to help federal agencies better
serve the public by providing workplaces. Therefore, GSA's fulfillment
of tenant agencies' space needs at a location would make that location
mission dependent from GSA's perspective. For agencies such as Energy,
officials reported that mission dependency is determined based on the
application of published definitions of mission critical, mission
dependent, and not mission dependent. These align with the guidance
promulgated by FRPC. Determination of mission dependency is made at the
asset level by site management with input from real property owning
programs.
It is important to note that real property data contained in the
financial statements of the U.S. government have also been problematic.
The CFO Act, as expanded by the Government Management Reform Act,
requires the annual preparation and audit of individual financial
statements for the federal government's 24 major agencies. The
Department of the Treasury is also required to compile consolidated
financial statements for the U.S. government annually, which we audit.
In March 2006, we reported that--for the ninth consecutive year--
certain material weaknesses[Footnote 42] in internal control and in
selected accounting and financial reporting practices resulted in
conditions that continued to prevent us from being able to provide the
Congress and the American people with an opinion as to whether the
consolidated financial statements of the U.S. government were fairly
stated in conformity with U.S. generally accepted accounting
principles. We also reported that the federal government did not
maintain effective internal control over financial reporting (including
safeguarding assets) and compliance with significant laws and
regulations as of September 30, 2005.[Footnote 43]
Individual Agencies Continue to Struggle with Data Reliability Issues:
While agencies have made significant progress in collecting the data
elements from their real property inventory databases for the FRPP,
data reliability is still a problem at some of the major real property-
holding agencies and agencies lack a standard framework for assessing
the validity of data used to populate the FRPP. Quality governmentwide
and agency-specific data are critical for addressing the wide range of
problems facing the government in the real property area, including
excess and unneeded property, deterioration, and security concerns.
Despite the progress made by the administration and individual agencies
in recent years, decision makers historically have not had access to
complete, accurate, and timely data on what real property assets the
government owns; their value; whether the assets are being used
efficiently; and what overall costs are involved in preserving,
protecting, and investing in them. Also, real property-holding agencies
have not been able to easily identify excess or unneeded properties at
other agencies that may suit their needs. More recent information on
agency data reliability issues shows that this problem has persisted.
* In April 2006, the DOD Inspector General (IG) reported weaknesses in
the control environment and control activities that led to deficiencies
in the areas of human capital assets, knowledge management, and
compliance with policies and procedures related to real property
management. As a result, the military departments' real property
databases were inaccurate, jeopardizing internal control over
transactions reported in the financial statements.[Footnote 44]
* According to agency officials, DHS's real property data inventory,
called its Real Property Information System, is mostly complete, but
some DHS components face challenges collecting some data elements,
including key performance measures such as condition indexes. According
to DHS officials, all DHS components met the latest requirements for
its FRPP data submission in December 2006. To meet the FRPP reporting
requirement, proxies were used for operating costs and condition
indexes as components work toward developing more robust data in these
areas.
* According to GSA's Office of the Inspector General (OIG) in 2005,
improvements were needed in management, operational, and technical
controls for GSA's System for Tracking and Administering Real Property
(STAR).[Footnote 45] Specifically, the IG concluded that additional
steps were needed to establish and achieve system-specific measures and
goals for long-term efficiency and effectiveness. Further, the IG
determined that GSA's Public Buildings Service (PBS) had not yet
completed a comprehensive data dictionary for STAR that can be
leveraged across the organization to effectively support business
functions. PBS acknowledged the need for improvement in the areas
identified in the OIG Audit Report and developed a corrective action
plan to address the two IG recommendations. The action plan to address
the recommendations included (1) an information paper that summarized
and provided a course of action to address the issue of establishing
STAR system-specific measures and goals for long-term efficiency and
effectiveness and (2) a complete system data dictionary designed to
capture the comprehensive nature of information in STAR and more
effectively leverage the system across the PBS organization, which has
been implemented by PBS. The data dictionary can be accessed by PBS
associates with an authorized user ID and password. According to GSA
officials, all audit recommendations have been addressed.
* Interior officials reported, during this review, that the department
is gradually strengthening its ability to identify excess property
through the use of performance measurement data, which is maintained in
the centralized governmentwide inventory system of real property
holdings.
* State officials reported, during this review, that State had a
shortage of timely and valid facility data needed to manage its
maintenance backlog. According to officials, the Bureau of Overseas
Building Operations (OBO) is addressing several problems in this
regard, including (1) several databases that are not linked together;
(2) the absence of a modern computerized maintenance management system;
and (3) OBO's lack of access to posts' assessments of critical
facilities, systems, and equipment. Officials reported that a new data
management system that will combine all of the databases and address
many of the current data challenges will be phased in, starting in
2007.
Compounding these issues is the difficulty each agency has in
validating its real property inventory data that are submitted to FRPP.
Validation of individual agencies' data is important because the data
are used to populate the FRPP. Because a reliable FRPP is needed to
advance the administration's real property initiative, ensuring the
validity of data that agencies provide is critical. In general, we
found that agencies' efforts to validate the data for the FRPP are at
the very early stages of development. For example, according to
Interior officials, the department had designed and was to begin
implementing a program of validating, monitoring, and improving the
quality of data reported into FRPP in the last quarter of fiscal year
2006.
Furthermore, according to OMB staff, there is no comprehensive review
or validation of data once agencies submit their real property profile
data to OMB. OMB staff reported that both OMB and GSA review agency
data submissions for variances from the prior reporting period.
However, agencies are required to validate their data prior to
submission to the GSA-managed database. OMB staff reported that some
agencies, as part of the PMA initiative, have provided OMB with plans
for ensuring the quality of their inventory and performance data. OMB
staff reported that OMB has not, to date, requested these plans of all
agencies. OMB staff reported that agencies provide OMB with information
that includes the frequency of data updates and any methods used for
data validation. In addition, according to OMB staff, OMB relies on the
quality assurance and quality control processes performed by individual
agencies. Also, OMB staff noted that they rely on agency IGs, agency
financial statements, and our reviews to establish the validity of the
data. Furthermore, OMB staff indicated that a one-size-fits-all
approach to data validation would be difficult to implement.
Nonetheless, a general framework for data validation that could guide
agencies in this area would be helpful, as agencies continue their
efforts to populate the FRPP with data from their existing data
systems. A framework for FRPP data validation approaches could be used
in conjunction with the more ad hoc validation efforts OMB mentioned
to, at a minimum, suggest standards for frequency of validation,
validation methods, error tolerance, and reporting on reliability. Such
a framework would promote a more comprehensive approach to FRPP data
validation.
Physical Security Is Still a Problem for Major Real Property-Holding
Agencies:
The threat of terrorism has increased the emphasis on physical security
for federal real property assets. All of the nine agencies reported
using risk-based approaches to some degree to prioritize facility
security needs, as we have suggested;[Footnote 46] but some agencies
cited challenges, including a lack of resources for security
enhancements and issues associated with securing leased space. For
example, DHS officials reported that the department is working to
further develop a risk management approach that balances security
requirements and the acquisition of real property and leverages limited
resources for all its components. In many instances, available real
property requires security enhancements before government officials can
occupy the space. Officials reported that these security upgrades
require funding that is beyond the cost of acquiring the property, and,
therefore, their acquisition is largely dependent on the availability
of sufficient resources.
In the security area, Energy officials reported that safeguards and
security programs are based on vulnerability and risk assessments, the
results of which are used to design and provide graded protection in
accordance with an asset's importance or the impact of its loss,
destruction, or misuse. In addition, Interior published the National
Monument and Icon Security Assessment Methodology in August 2004 to
quantify risk levels, identify needed security enhancements, and
measure risk reduction benefits at monument and icon assets. Interior
officials told us that the department hired a security manager to
provide oversight and a liaison function for its real property
holdings. Also, GSA officials reported that GSA, in conjunction with
Federal Protective Service, conducts periodic building security
assessments for all GSA-controlled buildings on a schedule determined
by each building's Department of Justice security level.[Footnote 47]
Threats and vulnerabilities are identified and designated low, medium,
or high risk, and countermeasures that address high-risk threats take
priority. NASA officials reported that NASA incorporates risk
management in all of its prioritization of security resources.
While some agencies have indicated that they have made progress in
using risk-based approaches, some officials told us that they still
face considerable challenges in balancing their security needs and
other real property management needs with their limited resources.
According to GSA officials, obtaining funding for security
countermeasures, for both security fixtures and equipment, is a
challenge, not only within GSA, but for GSA's tenant agencies as well.
In addition, Interior and NASA officials reported that their agencies
face budget and resource constraints in securing real property.
Interior officials further noted that despite these limitations,
incremental progress is made year after year in security.
Given their competing priorities and limited security resources, some
of the major real property-holding agencies face considerable
challenges in balancing their security and real property management
needs. We have reported that agencies could benefit from specific
performance measurement guidance and standards for facility protection
to help them address the challenges they face and help ensure that
their physical security efforts are achieving the desired
results.[Footnote 48] Without a means of comparing the effectiveness of
security measures across facilities, particularly program outcomes, the
U.S. government is open to the risk of either spending more money for
less effective physical security measures or investing in the wrong
areas. Furthermore, performance measurement helps ensure
accountability, since it enables decision makers to isolate certain
activities that are hindering an agency's ability to achieve its
strategic goals. Performance measurement can also be used to prioritize
security needs and justify investment decisions so that an agency can
maximize available resources.
Despite the magnitude of the security problem, we noted that this area
is largely unaddressed in the real property initiative. Without
formally addressing security, there is a risk that this challenge could
continue to impede progress in other areas. The security problem has an
impact on the other problems that have been discussed. For example, to
the extent that funding will be needed for a sustained investment in
security, the funding available for repair and restoration, preparing
excess property for disposal, and improving real property data systems
may be further constrained. Furthermore, security requires significant
staff time and other human capital resources and thus real property
managers may have less time to manage other problems.
Underlying Obstacles Hamper Agency Real Property Reform Efforts
Governmentwide:
In past high-risk reports, we called for a transformation strategy to
address the long-standing problems in this area. While the
administration's current approach is generally consistent with what we
envisioned and the administration's central focus on real property
management is a positive step, certain areas warrant further attention.
Specifically, problems are exacerbated by underlying obstacles that
include competing stakeholder interests and legal and budgetary
limitations. For example, some agencies cited local interests as
barriers to disposing of excess property. In addition, agencies'
limited ability to pursue ownership often leads them to lease property
that they could more cost-effectively own over time. Another obstacle-
-the need for improved long-term capital planning--remains despite OMB
efforts to enhance related guidance.
Several Agencies Cited Competing Stakeholder Interests as Impeding Real
Property Management Decision Making:
In addition to Congress, OMB, and the real property-holding agencies,
several other stakeholders have an interest in how the federal
government carries out its real property acquisition, management, and
disposal practices. These stakeholders include foreign governments;
state and local governments; business interests in the communities
where the assets are located; private sector construction and leasing
firms; historic preservation organizations; various advocacy groups;
and the public in general, which often views the facilities as the
physical face of the federal government in local communities. As a
result of competing stakeholder interests, decisions about real
property often do not reflect the most cost-effective or efficient
alternative, which would be in the interest of the agency or the
government as a whole, but instead reflect other priorities. In
particular, this situation often arises when the federal government
attempts to consolidate facilities or otherwise dispose of unneeded
assets.
Some major real property-holding agencies reported that competing
local, state, and political interests often impede their ability to
make real property management decisions, such as decisions about
disposing of unneeded property and acquiring real property. For
example, VA officials reported that disposal is often not an option for
most properties because of political stakeholders and constituencies,
including historic building advocates or local communities that want to
maintain their relationship with VA. In addition, officials said that
attaining the funding to follow through on CARES decisions is a
challenge because of competing priorities. Other agencies cited similar
challenges related to competing stakeholder interests.
* Interior officials reported that the department faces significant
challenges in balancing the needs and concerns of local and state
governments, historical preservation offices, political interests, and
others, particularly when coupled with budget constraints. If the
interests of competing stakeholders are not appropriately addressed
early in the planning stage, they can adversely affect the cost,
schedule and scope of a project. In addition, according to Interior
officials, unrequested earmarks can circumvent careful planning and
divert resources from more critical needs, such as reducing the
maintenance backlog.
* According to State officials, property disposal is affected by
multiple competing parties including host nations, local governments,
historic preservation groups, and political groups. Often, host
governments may have the authority to approve property sales and
purchases and also may assess large transfer fees or delay the issuance
of documents.
* Historically, proposed post office closures in urban, suburban, or
rural areas, and changes to postal infrastructure by USPS, have
provoked intense opposition because post offices are part of American
culture and business and are viewed as critical to the economic
viability of small towns and central business districts. Members of
Congress and other stakeholders have often intervened in the past when
USPS attempted to close post offices or consolidate facilities. Also, a
variety of factors enter into decisions about managing USPS facilities,
which include different statutory requirements, depending upon the type
of facility. For example, in 1976, Congress amended the Postal
Reorganization Act and established specific requirements for USPS when
planning to close a post office, including that USPS must consider the
effects on the community served, the employees of the facility, and
economic savings to USPS that would result from the closure, as well as
provide notice to customers.[Footnote 49] This amendment sought to
involve communities in decisions, which would help to ensure that these
decisions were made fairly and consistently. Recently, concerns have
been raised about the adequacy of USPS's communication with affected
communities as it implements changes to its mail processing network to
reduce excess capacity.[Footnote 50] In December 2006, legislation was
enacted that encouraged USPS to move forward to streamline its
distribution network, but it also required USPS to provide adequate
public notice to affected communities.[Footnote 51] We are currently
reviewing USPS's efforts related to realigning its mail processing
network and will be issuing a report on the results of that review.
Despite its significance, the obstacle of competing stakeholder
interests has gone unaddressed in the real property initiative. It is
important to note that there is precedent for lessening the impact of
competing stakeholder interests. BRAC decisions, by design, are
intended to be removed from the political process, and Congress
approves BRAC decisions as a whole. OMB staff said they recognize the
significance of the obstacle and told us that FRPC would begin to
address the issue after the inventory is established and other reforms
are initiated. Without addressing this issue, however, less than
optimal decisions that are not based on what is best for the government
as a whole may continue.
Legal and Budgetary Limitations Continue to Hamper Agencies' Disposal
Efforts:
As discussed earlier, budgetary limitations that hinder agencies'
ability to fund ownership lead agencies to rely on costly leased space
to meet new space needs. Furthermore, the administrative complexity and
costs of disposing of federal property continue to hamper some
agencies' efforts to address their excess and underutilized real
property problems. Federal agencies are required by law to assess and
pay for any environmental cleanup that may be needed before disposing
of a property--a process that may require years of study and result in
significant costs. As valuable as these legal requirements are, their
administrative complexity and the associated costs of complying with
them create disincentives to the disposal of excess property.
* We reported that VA, like all federal agencies, must comply with
federal laws and regulations governing property disposal that are
intended, for example, to protect subsequent users of the property from
environmental hazards and to preserve historically significant
sites.[Footnote 52] We have reported that some VA managers have
retained excess property because the administrative complexity and
costs of complying with these requirements were disincentives to
disposal.[Footnote 53]
* Energy officials reported that although an aggressive demolition and
decommissioning program reduced the agency's footprint by 9 million
square feet from fiscal year 2002 through fiscal year 2005, 16 percent
of their inventory remains excess or underutilized. According to Energy
officials, the department understands the need to screen excess real
property under the McKinney Act and follows this requirement. But,
officials noted that Energy would benefit from streamlining the process
because much of the portfolio being disposed of has no remaining useful
life and is most often located within a secure compound. In these
cases, demolition is the only viable method of disposition, and
screening requirements needlessly slow the process. Additionally, some
agencies reported that the costs of cleanup and demolition sometimes
exceed the costs of continuing to maintain a property that has been
shut down. In such cases, it can be more beneficial economically to
retain the asset in a shut-down status.
* GSA officials noted that GSA is challenged to balance funding for
assets that GSA needs to retain, such as those that will recapture
vacant space, with funding for the demolition of underutilized
properties that remain vacant until they can be torn down or
environmental remediation of assets prior to disposal.
* Interior officials reported that the department continues to face
several challenges in disposing of excess or underutilized real
property, including competing priorities for funding that includes
costs to cover environmental analysis and cleanup of hazardous
materials, or other costs associated with disposal, such as
deconstruction, demolition, or off-site removal. Interior officials
further noted that if the department was allowed to retain proceeds
from the sale of assets, it would facilitate the process by off-setting
the cost of disposal.
* State officials indicated that owning and disposing of properties in
an international environment presents challenges, including risks
associated with normal economic and real estate conditions. Depending
on the law of the host country, the host government may have the
authority to make decisions that affect the department's disposal
plans. Also, State officials said that, while not common, congressional
interest can sometimes lead to further study into the retention of
unneeded real property.
Given that agencies are required to fund the costs of preparing
property for disposal, the inability to retain any of the proceeds acts
as an additional disincentive. It seems reasonable to allow agencies to
retain enough of the proceeds to recoup the costs of disposal, and it
may make sense to permit agencies to retain additional proceeds for
reinvestment in real property where a need exists. However, in
considering whether to allow federal agencies to retain proceeds from
real property transactions, it is important for Congress to ensure that
it maintains appropriate control and oversight over these funds,
including the ability to redistribute the funds to accommodate changing
needs.
Need for Improved Capital Planning Still Exists:
Over the years, we have reported that prudent capital planning can help
agencies to make the most of limited resources, and failure to make
timely and effective capital acquisitions can result in acquisitions
that cost more than anticipated, fall behind schedule, and fail to meet
mission needs and goals. In addition, Congress and OMB have
acknowledged the need to improve federal decision making regarding
capital investment. A number of laws enacted in the 1990s placed
increased emphasis on improving capital decision-making practices and
OMB's Capital Programming Guide and its revisions to Circular A-11 have
attempted to address the government's shortcomings in this area.
Our prior work assessing agencies' implementation of the planning phase
principles in OMB's Capital Programming Guide and our Executive
Guide[Footnote 54] found that some agencies' practices did not fully
conform to the OMB principles and agencies' implementation of capital
planning principles was mixed.[Footnote 55] Specifically, while
agencies' capital planning processes generally linked to their
strategic goals and objectives and most of the agencies we reviewed had
formal processes for ranking and selecting proposed capital
investments, the agencies have had limited success with using
agencywide asset inventory systems and data on asset condition to
identify performance gaps. In addition, we found that none of the
agencies had developed a comprehensive, agencywide, long-term capital
investment plan. The agency capital investment plan is intended to
explain the background for capital decisions and should include a
baseline assessment of agency needs that examines existing assets and
identifies gaps and help define an agency's long-term investment
decisions. In January 2004, we recommended that OMB begin to require
that agencies submit long-term capital plans to OMB. Since that report
was issued, VA--which was one of our initial case study agencies--
issued its first 5-year capital plan. However, recent work in this area
showed that although OMB now encourages such plans, it does not collect
them, and the agencies that were included in this review did not have
agencywide long-term capital investment plans.[Footnote 56]
Shortcomings in the capital planning and decision-making area have
clear implications for the administration's real property initiative.
Real property is one of the major types of capital assets that agencies
acquire. Other capital assets include information technology, major
equipment, and intellectual property. OMB staff said that agency asset
management plans are supposed to align with the capital plans but that
OMB does not assess whether the plans are in alignment. We found that
guidance for the asset management plans does not discuss how these
plans should be linked with agencies' broader capital planning efforts
outlined in the Capital Programming Guide. In fact, OMB's asset
management plan sample, referred to as the "shelf document," which
agencies use to develop the asset management plans, makes no reference
to the guide. Without a clear linkage or crosswalk between the guidance
for the two documents, there is less assurance that agencies will link
them. Furthermore, there could be uncertainty with regard to how real
property goals specified in the asset management plans relate to longer
term capital plans.
Conclusions:
The executive order on real property management and the addition of
real property to the President's Management Agenda (PMA) have provided
a good foundation for strategically managing federal real property and
addressing long-standing problems. These efforts directly address the
concerns we raised in past high-risk reports about the lack of a
governmentwide focus on real property management problems and generally
constitute what we envisioned as a transformation strategy for this
area. However, these efforts are in the early stages of implementation,
and the problems that led to the high-risk designation--excess
property, repair backlogs, data issues, reliance on costly leasing, and
security challenges--still exist. As a result, this area remains high
risk until agencies show significant results in eliminating the
problems by, for example, reducing inventories of excess facilities and
making headway in addressing the repair backlog. Furthermore, the
current efforts lack an overall framework for helping agencies ensure
the validity of real property data in FRPP and do not adequately
address the costliness of long-term leases and security challenges.
While the administration has taken several steps to overcome some
obstacles in the real property area, the obstacle posed by competing
stakeholder interests has gone largely unaddressed, and the linkage
between the real property initiative and broader agency capital
planning efforts is not clear. Focusing on these additional areas could
help ensure that the problems and obstacles are addressed.
Recommendations for Executive Action:
We are making three recommendations to OMB's Deputy Director for
Management. We recommend that the Deputy Director, in conjunction with
FRPC, take the following three actions:
* Develop a framework that agencies can use to better ensure the
validity and usefulness of key real property data in the FRPP. At a
minimum, the framework would suggest standards for frequency of
validation methods, error tolerance, and reporting on reliability;
* Develop an action plan for how the FRPC will address key problems,
including the continued reliance on costly leasing in cases where
ownership is more cost effective over the long term, the challenges of
securing real property assets, and reducing the effect of competing
stakeholder interests on businesslike outcomes in real property
decisions; and:
* Establish a clearer link or crosswalk between agencies' efforts under
the real property initiative and broader capital planning guidance.
Agency Comments and Our Evaluation:
We provided a draft of this report to OMB, DOD, DHS, Energy, GSA,
Interior, NASA, State, USPS, and VA for review and comment. OMB agreed
with the report and concurred with its recommendations. OMB also
provided technical clarifications, which we incorporated, where
appropriate. OMB's comments are discussed in more detail below. OMB's
letter is contained in appendix IV without the enclosure that contained
the technical clarifications. Comments we received from GSA, NASA,
Interior, DHS, Energy, State, and VA are contained in appendixes V
through XI, respectively. VA, Energy, DHS, GSA, and NASA generally
agreed with the report. VA provided technical clarifications and
expanded comments in an enclosure that are discussed below. Interior,
DHS, and Energy also provided technical clarifications, which we
incorporated, where appropriate, but did not include in the appendixes.
Also, DHS provided information in its letter that identified activities
it was undertaking that relate to our recommendations. State, DOD,
Interior, and USPS did not state whether they agreed or disagreed with
the report's overall conclusions and recommendations. However, State
provided additional information for the report and Interior, DOD, and
USPS provided technical clarifications, which we incorporated, where
appropriate. State's comments are also discussed in more detail below.
Evaluation of OMB Comments:
In general, OMB agreed with our assessment that challenges remain in
meeting the goal of improving federal real property management. OMB
said that it is continuing to work to ensure that governmentwide
efforts will ultimately lead to improved asset management, the disposal
of unneeded federal real property, and the removal of federal real
property from our high-risk list. OMB indicated that significant
progress has been made in four main areas, including (1) all agencies
have established asset management plans, addressing acquisition,
operations, and maintenance, and disposition; (2) the FRPC has
established a standard catalog and identifies 23 data elements to be
captured on all assets in the federal portfolio; (3) agencies have
captured and reported the required constructed asset level inventory
and performance data to the FRPP governmentwide database; and (4)
agencies now have reliable performance information to assist them in
identifying underperforming assets suitable for investment or
disposition. OMB reported that tools are now in place for improved
asset management and that this has led to results that include data on
more than 1.2 million assets and more than $4.2 billion in disposals
completed since the real property initiative was established in 2004.
OMB agreed with our three recommendations and provided additional
information relating to them. Regarding the first recommendation to
develop a framework that agencies can use to better ensure the validity
and usefulness of key real property data in the FRPP, OMB reported that
it will work with the FRPC to take steps to establish and implement a
framework. OMB agreed that establishing a framework to ensure the
validity and usefulness of key real property data, especially
performance data, will lead to greater reliability of key data.
According to OMB, the framework that it will pursue will identify
acceptable validation methods, frequency, error tolerance, reliability,
and processes for reporting corrective actions.
For the second recommendation to develop an action plan for how the
FRPC will address key problems, OMB said that the FRPC is currently
drafting a strategic plan for addressing long-standing issues such as
the continued reliance on costly leasing in cases where ownership is
more cost effective over the long-term, the challenge of securing real
property assets, and reducing the effect of competing stakeholder
interests on businesslike outcomes in real property decisions. OMB
agreed that it is important to build upon the substantial progress that
has been realized by both the FRPC and the federal real property
community in addressing the identified areas for improvement. OMB said
that it will share the strategic plan with us once it is in place and
will discuss strategies for ensuring successful implementation. For our
third recommendation to establish a clearer link or crosswalk between
agencies' efforts under the real property initiative and broader
capital planning guidance, OMB stated that as agencies update their
asset management plans and incorporate updated guidance on capital
planning, progressive improvement in this area will be realized. OMB
also provided technical comments, which we incorporated into the final
report, where appropriate.
Evaluation of State Comments:
In commenting on our related work on long-term capital investment
plans, State said that its long-range overseas buildings plan qualifies
as a long-term capital plan. We agree that State's long-range overseas
building plan contains elements that qualify as a long-term capital
plan for OBO. However, our statement that agencies lacked such plans
refers to the Offices of Science and Environmental Management within
DOE and U.S. Customs and Border Protection within DHS, and not to
State.[Footnote 57] State asked us to change text related to funding
backlogs and reliance on leasing to emphasize the relative importance
of budgetary constraints in resolving maintenance backlogs. We agree
that the legal and budgetary limitations are obstacles, and we
discussed this extensively in the draft. We also relate these
limitations to more than just the challenge of funding real property
needs, but also to the policy environment these limitations create. As
such, we feel that the effect of legal and budgetary limitations as
underlying obstacles that exacerbate backlogs is accurately portrayed
and did not make the changes to the report that State requested. State
requested that the report acknowledge the limiting effect of scoring
rules on lease-purchase agreements. While it is true that the report
focuses on the scoring of operating leases, it also discusses the
tendency of agencies to choose operating leases over ownership options
(such as lease purchases) due to the way that operating leases are
scored.
State also pointed out that there are maintenance and repair costs
associated with property ownership, while operating leases typically
hold landlords responsible for maintenance and repair costs. As stated
previously in this report, we did not analyze whether the leasing
activity at these agencies, either in the aggregate or for individual
leases, resulted in longer-term costs than if these agencies had
pursued ownership. For short-term needs, leasing likely makes economic
sense for the government in many cases. However, our past work has
shown that, generally speaking, for long-term space needs, leasing is
more costly over time than direct ownership of these assets. State
believed our report should have more emphasis on maintenance and repair
costs associated with trade-offs between choosing operating leases or
property ownership options. We agree that maintenance and repair costs
are key factors and believe that our draft accurately explained the
importance of them. Lastly, State wanted us to remove a reference to
congressional interest in property disposals so that it would not be
misinterpreted by Congress. We chose to clarify the statement in the
report to more accurately represent State's response during our review.
Evaluation of VA Comments:
VA agreed with our general conclusion that progress has been made
toward addressing real property problems and that there is still work
to be done. However, VA stated that its progress is greater than we
portrayed in the draft and suggested several examples of its
initiatives. For example, in the area of data validation, VA stated
that VA's Capital Asset Management System provides a single means to
validate data from multiple source systems. In the area of unneeded
assets, VA stated that it has disposed of 156 buildings since fiscal
year 2004 and 146 buildings are planned for disposal in fiscal year
2007 and fiscal year 2008. VA further stated that it is implementing a
sustainment model and investing in sustainment needs, among other
things, to address its maintenance and repair backlog. Lastly, VA
stated that it has developed an assessment methodology for its
facilities, assessed those facilities considered most mission-
critical, and requested funding for physical security enhancements to
address the physical security of its facilities. Although our report
was largely based on the information VA provided to us during the time
of our review, we have included information on these initiatives and
incorporated other technical comments that VA provided, where
appropriate.
Regarding our discussion of the government's over-reliance on costly
operating leases, VA stated that it relies on operating leases because
of its need for a more flexible facility infrastructure and that VA's
mission has driven its increased use of this type of leasing. VA said
that it is true that it has increased its reliance on leasing to meet
space needs, but that the majority of its leases are outpatient or
store-front facilities. VA said that it does not use these leases
because they look cheaper in any given year, asserting that our draft
made this conclusion. In fact, our report did not state that VA enters
into operating leases for this reason. Instead, our report states that
operating leases have become an attractive option, in part because they
generally "look cheaper" in any given year, even though they are
generally more costly over time. This discussion in the report related
to leasing issues in general and was not specific to VA. Furthermore,
we included information in the report about VA's views on leasing. That
is, we stated that VA officials reported needing a more flexible
facility infrastructure to accommodate changes in medical technology
and shifts in demographic data. Finally, we stated that for short-term
needs, leasing likely makes economic sense for the government in many
cases.
We are sending copies of this report to the Director and Deputy
Director of OMB; Secretaries of DOD, DHS, Energy, Interior, State, and
VA; the Administrators of GSA, and NASA; and the Postmaster General of
the United States. Additional copies will be sent to interested
congressional committees. We will also make copies available to others
upon request, and the report will be available at no charge on the GAO
Web site at http://www.gao.gov.
If you have any questions about this report, please contact me at (202)
512-2834 or at goldsteinm@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this
report are listed in appendix XII.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to determine (1) what progress the administration
and major real property-holding agencies have made in addressing long-
standing problems and (2) what problems and obstacles, if any, remain
to be addressed. For the purpose of this review, we identified the
nine[Footnote 58] real property-holding agencies that are largest in
terms of owned and leased space. These agencies are the Departments of
Defense (DOD), Energy (Energy), Homeland Security (DHS), the Interior
(Interior), State (State), and Veterans Affairs (VA); the General
Services Administration (GSA); the National Aeronautics and Space
Administration (NASA), and the United States Postal Service (USPS).
Together, these agencies hold a majority of the federal government's
real property assets, totaling 93 percent of the total square footage
owned and leased by the federal government. We also interviewed
officials from the Office of Management and Budget (OMB) because it
oversees the implementation of Executive Order 13327, which addresses
federal real property management. Our January 2003 high-risk work
identified five long-standing problems in federal real property
management, including excess and underutilized property, deteriorating
facilities, reliance on costly leasing, and unreliable real property
data. Federal agencies were also facing many challenges in protecting
their facilities against the threat of terrorism.
To determine what progress these nine major real property-holding
agencies have made in addressing the five long-standing problems in
managing federal real property assets, we asked knowledgeable real
property officials at each of the nine agencies to provide written
responses to a standard list of questions. These questions addressed
what steps, if any, the agencies have taken to address the five
problems and to implement the requirements of Executive Order 13327,
which established guidelines for improving executive branch agencies'
real property management; created a new organization, the Federal Real
Property Council (FRPC); and supported a presidential initiative, the
President's Management Agenda (PMA) real property initiative. We
analyzed the written responses to our questions and reviewed supporting
documentation provided by agency officials. It is important to note
that although USPS is a major real property-holding agency, it is not
subject to Executive Order 13327. The list of questions administered to
USPS addressed the long-standing problems and real property management
efforts related to the requirements of the executive order.
In addition to reviewing the written responses to our questions, for
each major real property-holding agency, we obtained and reviewed
available information and related documentation on the agency's plans
to address the long-standing problems in managing its federal real
property assets, including its asset management plans and related real
property policies and reports. We also reviewed a number of our
previous reports and pertinent work by agency Inspectors General and by
the Congressional Research Service on real property management at the
major real property-holding agencies. Finally, we reviewed and analyzed
federal laws relating to real property for the major real property-
holding agencies and USPS.
Because the OMB is responsible for overseeing the implementation of
Executive Order 13327, we reviewed applicable federal laws and
authorities and interviewed knowledgeable OMB staff to obtain
information on OMB's oversight role--including FRPC activities--and
OMB's assessment of the progress made by major real property-holding
agencies in implementing the executive order. OMB staff also provided
us with information on OMB's guidance for implementing the PMA real
property initiative and related reports. In addition, we reviewed the
PMA's real property initiative standards and scorecards developed by
OMB to obtain additional information on each agency's implementation of
the executive order and governmentwide and individual agency efforts
related to real property management.
Agency officials and the representatives of stakeholder organizations
provided much of the data and other information used in this report. We
relied largely on agency responses to our questions to assess progress,
performed an assessment of the reliability of the data they provided,
and determined that the data were adequate for the purpose of our
review. When officials provided their views and opinions as
spokespersons for their organizations, we corroborated the information
with other officials. We prepared this report under the Comptroller
General's authority to conduct evaluations on his own initiative as
part of a continued effort to assist Congress with oversight of real
property issues. We conducted our work from April 2006 through February
2007 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II Selected Enhanced Real Property Authorities of Major Real
Property-Holding Agencies:
Agency: DOD[A];
Authority: Leases of nonexcess property of military departments;
Description of authority: The Secretary of a military department is
authorized to lease real property under the control of the department
that is not considered to be excess property if the Secretary considers
the lease to be advantageous to the United States. The term of the
lease may be up to 5 years unless the Secretary determines the term
should be longer to promote the national defense or for the public
interest. Lease payments shall be in cash or in-kind consideration for
an amount not less than fair market value. In-kind consideration
includes maintenance, alteration, protection, environmental
restoration, construction of new facilities, and providing facilities,
facilities operation support, or other services on the leased
property.[B] [10 U.S.C. § 2667].
Authority: Retention of proceeds/Leases of nonexcess property of
military departments;
Description of authority: Proceeds from leases are deposited in a
special account in the Treasury and are available to the Secretary of
that military department to the extent provided in an appropriation
act. At least 50 percent of proceeds can be used for maintenance,
protection, alteration, environmental restoration, construction of new
facilities, or facilities operation support at the military
installation where proceeds were derived. Proceeds received from leases
entered into at military installations to be closed or realigned under
a base closure law pending the final disposition of real property are
deposited in special DOD base closure accounts. [10 U.S.C. § 2667].
Agency: Energy;
Authority: Leasing of excess property;
Description of authority: The Secretary of Energy is authorized to
lease excess real property located at a DOE facility that is to be
closed or reconfigured and is not needed by DOE at the time the lease
is entered into if the Secretary considers the lease appropriate to
promote national security or is in the public interest. The term of the
lease may be up to 10 years with an option to renew the lease for up to
another 10-year term. Lease payments shall be in cash or in-kind
consideration for an amount not less than fair market value. In-kind
consideration includes services relating to the protection and
maintenance of the leased property. The authority to enter into leases
terminates on September 30, 2010. [42 U.S.C. § 7256].
Authority: Retention of proceeds/Leasing of excess property;
Description of authority: The Secretary shall use the funds received as
rent that the Secretary considers necessary to cover administrative
expenses of the lease, maintenance, and repair of the leased property,
or environmental restoration activities at the facility where the
leased property is located to the extent provided in an appropriation
act. [42 U.S.C. § 7256].
Agency: GSA;
Authority: Conveyance of property;
Description of authority: The Administrator of GSA, notwithstanding any
other provision of law, is authorized to convey by sale, lease,
exchange or otherwise, including through leaseback arrangements, real
property, or interests therein; [Section 412 of P.L. No. 108-447, 118
Stat. 2809, 3259 (2004)].
Authority: Retention of proceeds/ Conveyance of property;
Description of authority: The Administrator of GSA is authorized to
retain net proceeds from the disposition of real property in its
Federal Buildings Fund (FBF), which are to be used for GSA real
property capital needs to the extent provided in an appropriation act;
[Section 412 of P.L. No. 108-447, 118 Stat. 2809, 3259 (2004)].
Authority: Southeast Federal Center;
Description of authority: The Administrator of GSA is authorized to
enter into leases with private entities for the development of the
Southeast Federal Center. Agreements shall be for fair consideration
and may include in- kind consideration such as construction, repair,
remodeling, or maintenance of federal property, and providing office,
storage, or other usable space; [P.L. No. 106-407, 114 Stat. 1758
(2000)].
Authority: Retention of proceeds/Southeast Federal Center;
Description of authority: The Administrator of GSA is authorized to
retain from the proceeds amounts necessary to recover the expenses
incurred with respect to the property. Net proceeds are deposited in
FBF and available to the extent provided in an appropriation act; [P.L.
No. 106-407, 114 Stat. 1758 (2000)].
Authority: Middle River Depot Sale;
Description of authority: The Administrator of GSA is authorized to
sell the Middle River Depot at Middle River, Maryland; [Section 407 of
P.L. No. 108-447, 118 Stat. 2809, 3258 (2004)].
Authority: Retention of proceeds/Middle River Depot sale;
Description of authority: The proceeds of sale from the Middle River
Depot are to be credited to FBF for capital activities and available to
the extent provided in an appropriation act; [Section 407 of P.L. No.
108-447, 118 Stat. 2809, 3258 (2004)].
Agency: Interior;
Authority: Leases for National Park System (NPS);
Description of authority: The Secretary of the Interior is authorized
to enter into leases with any person or governmental entity for the use
of buildings and associated property administered as part of NPS.
Rental payments shall be for the fair market value, but can be adjusted
by the Secretary for amounts spent by the lessee for such expenses as
preservation, maintenance, restoration, and improvement of the
property. [16 U.S.C. § 1a-2].
Authority: Retention of proceeds/Leases for NPS;
Description of authority: Rental payments are deposited into a special
account in the Treasury where the availability of funds is not subject
to an appropriation act. Funds are available for infrastructure needs
such as facility refurbishment, repair, and replacement, and for
maintenance of the leased buildings and associated properties. [16
U.S.C. § 1a-2].
Authority: Housing for NPS employees;
Description of authority: The Secretary of the Interior is authorized
to lease federal land and interests in land for up to 50 years for the
construction of field employee quarters; [16 U.S.C. § 17o].
Authority: Retention of proceeds/Housing for NPS employees;
Description of authority: The proceeds from any lease are retained by
NPS and deposited into a special fund for maintenance and operation of
quarters. [16 U.S.C. § 17o].
Authority: Presidio of San Francisco;
Description of authority: Established the Presidio Trust, a wholly
owned government corporation, to manage the Presidio in the Golden Gate
National Recreation Area through a public/private partnership.
Authorized the Presidio Trust to enter into leases with any person,
firm, association, organization, corporation or governmental entity
necessary to carry out its authorized activities. Authorized the
Presidio Trust to establish procedures for lease agreements for the use
and occupancy of Presidio facilities; [16 U.S.C. § 460bb note].
Authority: Retention of proceeds/Presidio of San Francisco;
Description of authority: All proceeds and other revenues received by
the Presidio Trust are retained by the Trust and are available to the
Trust, without further appropriation, for such expenses as
administration, preservation, restoration, maintenance, or improvement
of Presidio properties.[16 U.S.C. § 460bb note].
Agency: NASA;
Authority: Enhanced-use leases (EUL) real property demonstration;
Description of authority: The Administrator of NASA is authorized to
enter into lease agreements with any person or entity, including
federal, state, or local governments, with regard to any real property
at two NASA centers. The lease shall be for fair market value and
payments may be in cash or in-kind consideration such as construction,
maintenance, or improvement of facilities, or providing services to
NASA such as launch and payload processing services; [42 U.S.C. §
2459j].
Authority: Retention of proceeds/EUL real property demonstration;
Description of authority: Cash consideration received for the lease is
to be used to cover the full costs to NASA in connection with the
lease. Any remaining cash shall be deposited in a capital asset account
available for maintenance, capital revitalization, and improvements of
real property assets at the two NASA centers; [42 U.S.C. § 2459j].
Authority: Camp Parks Military Reservation sale;
Description of authority: The Administrator of NASA is authorized to
sell its property at the Camp Parks Military Reservation in Alameda,
California; [Section 627 of P.L. No. 109-108, 119 Stat. 2290, 2342
(2005)].
Authority: Retention of proceeds/Camp Parks Military Reservation sale;
Description of authority: The Administrator of NASA is authorized to
retain the proceeds from the Camp Parks Military Reservation in
Alameda, California; [Section 627 of P.L. No. 109-108, 119 Stat. 2290,
2342 (2005)].
Agency: State;
Authority: Disposition of property;
Description of authority: The Secretary of State is authorized to sell,
exchange, lease, or license any property acquired in foreign countries
for diplomatic and consular establishments. [22 U.S.C. § 300].
Authority: Retention of proceeds/Disposition of property;
Description of authority: The Secretary of State is authorized to
retain proceeds from the disposition of properties in foreign
countries, which may be used to acquire, construct, and maintain
properties overseas; [22 U.S.C. § 300].
Agency: USPS;
Authority: Leasing;
Description of authority: USPS is authorized to acquire, in any lawful
manner, real property or any interest therein, as it deems necessary
and to lease, or otherwise dispose of, property or any interest
therein. [39 U.S.C. § 401(5)].
Authority: Leasing;
Description of authority: USPS is authorized to lease and maintain
buildings, facilities, equipment, and other improvements on any
property owned or controlled by it. [39 U.S.C. § 401(6)].
Authority: Retention of proceeds/Leasing;
Description of authority: USPS is authorized to keep the proceeds from
its real-estate transactions. [39 U.S.C. § 2401].
Agency: VA;
Authority: EUL;
Description of authority: The Secretary of VA is authorized to enter
into leases for up to 75 years with public and private entities for
underutilized and excess land that is under the Secretary's
jurisdiction or control. The EUL shall be for fair consideration, and
lease payments may be made for in-kind consideration such as
construction, repair, or remodeling of department facilities; providing
office, storage, or other usable space; and providing goods or services
of benefit to the department. The authority to enter into EUL
terminates on December 31, 2011. [38 U.S.C. §§ 8161-8169].
Authority: Retention of proceeds/EUL;
Description of authority: Expenses incurred by the Secretary of VA in
connection with EUL will be deducted from the proceeds of the lease and
may be used to reimburse the account from which the funds were used to
pay such expenses. The proceeds can be used for any expenses incurred
in the development of additional EUL. Remaining funds shall be
deposited in the VA Medical Care Collections Fund; [38 U.S.C. § 8165].
Authority: Disposal of EUL property;
Description of authority: If the Secretary of VA determines that during
the term of the EUL that the property is no longer needed, the
Secretary is authorized to initiate an action to dispose of the
property. [38 U.S.C. § 8164].
Authority: Retention of proceeds/Disposal of EUL property;
Description of authority: Funds received by VA from a disposal of EUL
property shall be deposited into the VA Capital Asset Fund and may be
used for property transfer costs such as demolition, environmental
remediation, and maintenance and repair to the extent provided in an
appropriation act. [38 U.S.C. §§ 8118, 8164, and 8165].
Authority: Transfer of Non-EUL property;
Description of authority: The Secretary of VA is authorized to transfer
real property under the Secretary's jurisdiction or control to a public
or private entity if the Secretary receives fair market value for the
property. The Secretary is authorized to accept less than fair market
value for the property if the transfer is made to an entity providing
services to homeless veterans. This authority to transfer real property
expires on November 30, 2011. [38 U.S.C. § 8118].
Authority: Retention of proceeds/Transfer of Non-EUL property;
Description of authority: Funds received by VA from a transfer of non-
EUL property shall be deposited into the VA Capital Asset Fund and may
be used for property transfer costs such as demolition, environmental
remediation, and maintenance and repair to the extent provided in an
appropriation act. [38 U.S.C. § 8118].
Authority: Authority to acquire sites for medical facilities;
Description of authority: The Secretary is authorized to acquire land
or interests in land for a medical facility site by purchase, lease,
condemnation, donation, or exchange. [38 U.S.C. § 8103].
Source: GAO analysis.
Notes:
This list of real property authorities is not intended to be all
inclusive. For purposes of this appendix, we have provided some
examples of an agency's authority relating to real property such as
enhanced use leasing authority or conveyance authority.
[A] For the Department of Defense, we have limited our description to
its authority relating to enhanced use leasing. Additionally, while DHS
was one of the nine agencies we reviewed, we did not include it in this
appendix since it was not provided any specific real property authority
under the Homeland Security Act of 2002.
[B] The John Warner National Defense Authorization Act for Fiscal Year
2007, P.L. No. 109-364, 120 Stat. 2083, 2263 (2006), included
additional limitations on the Secretary when entering into EULs
pursuant to 10 U.S.C. § 2667 for providing community support facilities
or providing community support services for morale, welfare, and
recreational programs.
[End of table]
[End of section]
Appendix III: FRPC Inventory Data Elements and Descriptions:
Data element number: 1;
Data element name: Real property type;
Definition: Identifies the asset as one of the following categories of
real property: land; building; or structure.
Data element number: 2;
Data element name: Real property use;
Definition: Indicates the asset's predominant use in one of the
following categories: land; building; or structure.
Data element number: 3;
Data element name: Legal interest;
Definition: Identifies a real property as being owned by the federal
government, leased by the federal government (i.e., as lessee), or
otherwise managed by the federal government.
Data element number: 4;
Data element name: Status;
Definition: Reflects the predominant physical/operational status of the
asset as active, inactive, or excess.
Data element number: 5;
Data element name: Historical status;
Definition: Identifies owned and leased property as National Historic
Landmark (NHL); National Register Listed (NRL); National Register
Listed; National Register Eligible; Noncontributing element of NHL/NRL
district; Not evaluated; Evaluated, Not Historic.
Data element number: 6;
Data element name: Reporting agency;
Definition: Refers to the federal government agency/bureau reporting
the property to the FRPC Inventory database.
Data element number: 7;
Data element name: Using organization;
Definition: Refers to the predominant federal government agency/bureau
(or other nonfederal government entity) occupying the property.
Data element number: 8;
Data element name: Size;
Definition: Refers to the size of the real property asset according to
appropriate units of measure. The unit of measure used for the three
real property types is as follows:
* For land, the unit of measure is acreage and the land is designated
as either rural acres or urban acres;
* For buildings, the unit of measure is area in square feet and
designated as gross square feet (GSF);
* For structures, a structure unit of measure table is provided that
contains reporting guidelines for the unit of measure for specific
types of structures.
Data element number: 9 (PM);
Data element name: Utilization;
Definition: Captures the rate of utilization for a building--that is,
the percentage of space (square footage) used for agency purposes; Is
reported;
* on a scale from 0 to 100;
* by building type--office, warehouse, hospital, laboratory, and
housing--and;
* by category-- overutilized, utilized, underutilized, or not utilized--
depending on where the utilization rate falls within percentage ranges
defined for each building type.
Data element number: 10;
Data element name: Value;
Definition: Defined as the functional replacement value; the cost of
replacing the existing constructed asset at today's standards. (value =
unit x unit cost x overhead factor).
Data element number: 11 (PM);
Data element name: Condition index;
Definition: Provides a general measure of a building or structure's
condition at a specific point in time; Is calculated;
* annually,;
* as the ratio of repair needs to plant replacement value (PRV); (CI =
(1 - $repair needs/$PRV) x 100;
* "Repair needs" is the amount necessary to restore a building to a
condition substantially equivalent to its original condition;
- Agencies and departments will initially use an existing process to
determine their repair needs;
- Agencies will later refine and standardize their definition of repair
needs;
* PRV is the cost of replacing an existing building so that it meets
today's standards;
* The higher the CI, the better the condition of the building;
* is reported;
* for an entire agency or department,;
* on a scale from 0 to 100 percent; Agencies and departments initially
set target CI levels in consultation with OMB.
Data element number: 12 (PM);
Data element name: Mission dependency;
Definition: The value a building brings to an agency's performance of
its mission as determined by the agency; May be categorized as;
* mission critical - without the building or land, the agency's mission
is compromised;
* mission dependent, not critical - falls between mission critical and
not mission dependent; or;
* not mission dependent - without the building or land, the agency's
mission is unaffected.
Data element number: 13 (PM); Data element name: Annual operating
costs; Definition: Includes costs for;
* recurring maintenance and repairs;
* utilities (plant operating and energy purchase costs);
* cleaning or janitorial services (pest control, refuse collection and
disposal, including recycling operations); and;
* roads/grounds (grounds maintenance, landscaping, and snow and ice
removal from roads, piers and airfields); Will be reported annually.
Data element number: 14;
Data element name: Main location;
Definition: Refers to the street/delivery address for the asset or the
latitude and longitude coordinates. Either of the following will be
provided for the constructed asset or parcel of land: street address;
or latitude and longitude (if no security concerns).
Data element number: 15;
Data element name: Real property unique identifier;
Definition: A code that is unique to an item of real property that will
allow for linkages to other information systems. The real property
unique identifier is assigned by the reporting agency and can contain
up to 24 alpha-numeric digits.
Data element number: 16;
Data element name: City;
Definition: Provides the four-digit Geo Location Codes (GLC) for the
city or town associated with the reported main location in which the
land parcel, building, or structure is located.
Data element number: 17;
Data element name: State;
Definition: Provides the two-digit GLC for the state associated with
the reported main location in which the land parcel, building, or
structure is located.
Data element number: 18;
Data element name: Country;
Definition: Provides the three-digit GLC for the country associated
with the reported main location in which the land parcel, building, or
structure is located.
Data element number: 19;
Data element name: County;
Definition: Provides the three-digit GLC for the county associated with
the reported main location in which the land parcel, building, or
structure is located.
Data element number: 20;
Data element name: Congressional district;
Definition: Provides the value for the congressional district
associated with the reported main location in which the land parcel,
building, or structure is located.
Data element number: 21;
Data element name: ZIP code;
Definition: Provides the five-digit ZIP code associated with the
reported main location in which the land parcel, building, or structure
is located and, if known, the additional four-digit zip code suffix.
Data element number: 22;
Data element name: Installation/ Subinstallation identifier;
Definition: Headquarters installations - Land, buildings, other
structures, and facilities, or any combination of these. Examples of
installations are a national forest, national park, hydroelectric
project, office building, warehouse building, border station, base,
post, camp, or an unimproved site. Provide a 24- digit alpha-numeric
code for the installation ID assigned by the reporting agency;
Subinstallation-Part of an installation identified by a different
geographic location code than that of the headquarters installation. An
installation must be separated into subinstallations (and reported
separately) when the installation is located in more than one state or
county. However, an agency may elect to separate an installation into
subinstallations, even if the installation is not located in more than
one state or county. Provide a six-digit alpha- numeric code for the
subinstallation ID assigned by reporting agency.
Data element number: 23;
Data element name: Restrictions;
Definition: Refers to limitations on the use of real property. Provides
one or more of the following values for each building, structure, and
parcel of land: environmental restrictions (cleanup-based restrictions,
etc.); natural resource restrictions (endangered species, sensitive
habitats, floodplains, etc.); cultural resource restrictions
(archeological, historic, Native American resources (except those
excluded by EO 13007, section 304 of the National Historical
Preservation Act), etc.); developmental (improvements) restrictions;
reversionary clauses from deed; zoning restrictions; easements
(including access for maintenance rights, etc.); rights-of-way; mineral
interests; water rights; air rights; other; nonapplicable.
Source: GSA, Interim FY 2005 Guidance for Real Property Inventory
Reporting as of October 11, 2005.
Note: PM = Performance measure.
[End of table]
[End of section]
Appendix IV: Comments from the Office of Management and Budget:
Executive Office Of The President:
Office Of Management And Budget:
Washington, DC. 20503:
The Controller:
Mar 23 2007:
Mr. Mark Goldstein:
Director, Physical Infrastructure:
U.S. Government Accountability Office:
440 G Street, NW:
Washington, DC 20548:
Dear Mr, Goldstein:
Thank you for the opportunity to comment on the Government
Accountability Office's (GAO's) draft report entitled "Federal Real
Property: Progress Made toward Addressing Problems, but Underlying
Obstacles Continue to Hamper Reform" GAO-07-349. In general, the Office
of Management and Budget (OMB) agrees with your assessment that
challenges remain in meeting the goal of improving Federal real
property management arid we arE continuing our work to ensure that
government-wide efforts will ultimately lead to improved asset
management, the disposal of unneeded Federal real property. and the
removal of Federal real property from the GAO High Risk list. We also
believe that. significant progress has been made including:
1. all agencies have established Asset Management Plan addressing
acquisition, operations and maintenance, and disposition;
2. the FRPC has established a standard taxonomy mid identified 23 data
elements to be captured on all assets in the Federal portfolio;
3. agencies have captured and reported to the Federal Real Property
Profile government-wide database, the required constructed asset level
inventory and performance data,
4. agencies now have reliable performance information to assist them in
identifying underperforming assets suitable for investment or
disposition.
The tools for improved asset management are in place and this has led
to real results. Data is now available on more than 1.2 million assets,
and more than $4.2 billion in disposals completed since the real
property initiative was established in 2004.
Below are OMB's specific responses to the three recommendations
included in the draft report:
Regarding the first recommendation to develop a framework that agencies
can use tea better ensure the validity and usefulness of key real
property data in tile FRPP, OMB agrees with the recommendation and will
be working with the Federal Real Property Council (FRPC) to take steps
to establish and implement a framework. To date, emphasis has been
placed on capturing the necessary inventory and performance measure
data resulting in more than l,2 million assets in the national
inventory database. OMB has required agencies to establish their own
internal validation process, consistent with their internal practices.
OMB agrees with the GAO recommendation that establishing a framework to
ensure the validity and usefulness of key data, especially performance
data will lead to greater reliability of key data. The framework that
we will pursue will identify acceptable validation methods, frequency,
error tolerance, reliability, and processes for reporting corrective
actions.
Regarding the second recommendation to develop an action plan for how
the FRPC will address key problems [including the continued reliance on
costly leasing in cases where ownership is more cost effective over the
long term, the challenges of securing real property assets, and
reducing the effect of competing stakeholder interests on businesslike
outcomes in real property decisions], the FRPC is currently drafting a
strategic plan for addressing these issues and other areas of
importance to the Federal real property community. OMB agrees that it
is important to build upon the substantial progress which has been
realized by both the FRPC and the Federal real property community in
addressing the identified areas for improvement. Once the strategic
plan is in place., we look forward to sharing the plan with GAO and
discussing strategies for ensuring successful implementation.
Regarding the third recommendation to establish a clearer link-or
crosswalk between agencies efforts under the real property initiative
and the broader capital planning process. OMB agrees that there is a
need within agencies to increase such coordination. OMB believes that
the emphasis placed on capital planning in the agency Asset Management
Plans as well as the greater emphasis on real property included in the
Capital Programming Guide version 2.0 (released June 2006) is a
critical first step. As agencies update their Asset Management annually
and work to incorporate the updated guidance of the Capital Programming
Guide in their planning process, progressive improvement in the area of
capital planning will be realized.
Again, we want to thank GAO for the opportunity to comment on this
draft report. look forward to our continuing work in the area of
improving Federal Real Property Asset Management.
Sincerely,
Signed by:
Linda M. Combs:
Controller:
Enclosure:
Technical Comments:
[End of section]
Appendix V: Comments from the General Services Administration:
GSA:
GSA Administrator:
March 23, 2007:
The Honorable David M. Walker:
Comptroller General of the United States:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Walker:
The U.S. General Services Administration (GSA) appreciates this
opportunity to submit agency comments on the Government Accountability
Office (GAO) draft report entitled "Federal Real Property: Progress
Made toward Addressing Problems, but Underlying Obstacles Continue to
Hamper Reform," GAO-07-349.
GSA agrees with the findings and recommendations. GSA will continue to
work with the Federal Real Property Council to address the
recommendations and to promote Federal Real Property Asset Management
initiatives on behalf of the Federal Government.
Again, thank you for the opportunity to comment on the draft report.
Should you have any questions, please contact me. Staff inquiries may
be directed to Mr. Kevin Messner, Associate Administrator, Office of
Congressional and Intergovernmental Affairs, at (202) 501-0563.
Cordially,
Signed by:
Lurita Doan:
Administrator:
cc: Mark Goldstein, Director, Physical Infrastructure:
U.S. General Services Administration:
1800 F Street, NW:
Washington, DC 20405-0002:
Telephone: (202) 501-0800:
Fax: (202) 219-1243:
www.gsa.gov:
[End of section]
Appendix VI: Comments from the National Aeronautics and Space
Administration:
National Aeronautics and Space Administration:
Headquarters:
Washington, DC 20546-0001:
March 23, 2007:
Office of Institutions and Management:
Mr. Mark Goldstein:
Director, Physical Infrastructure:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Goldstein:
We have reviewed the draft report entitled, "Federal Real Property:
Progress Made Toward Addressing Problems, But Underlying Obstacles
Continue to Hamper Reform" (GAO-07-349), and concur with the report
with no further comment.
Thank you for the opportunity to participate in the development of this
report. If you have any questions, please contact Albert Johnson at
(202) 358-1834.
Sincerely,
Signed by:
Charles H. Scales:
Associate Administrator:
Office of Institutions and Management:
[End of section]
Appendix VII: Comments from the Department of the Interior:
United States Department of the Interior:
Office Of The Assistant Secretary Policy, Management And Budget:
Washington, DC 20240:
Take Pride In America:
Mark Goldstein, Director:
Physical Infrastructure:
U. S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
Thank you for the opportunity to comment on GAO's draft report
entitled, "Federal Real Property: Progress Made Toward Addressing
Problems, but Underlying Obstacles Continue to Hamper Reform" (GAO-07-
349).
Enclosed are the Department of the Interior comments. If you have any
questions concerning the response, please contact Michael Keegan,
Associate Director, Facility and Property Management at 202-208-3347.
Sincerely,
Signed by:
R. Thomas Weimer:
Assistant Secretary:
[End of section]
Appendix VIII Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
March 26, 2007:
Mr. Mark L. Goldstein:
Director, Physical Infrastructure Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
RE: Draft Report GAO-07-349, Federal Real Property: Progress Made
toward Addressing Problems, but Underlying Obstacles Continue to Hamper
Reform (GAO Job Code 543171):
The Department of Homeland Security (DHS) appreciates the opportunity
to review and comment on the draft report referenced above. The
Government Accountability Office (GAO) makes three recommendations to
the Deputy Director for Management at the Office of Management and
Budget and the Federal Real Property Council (FRPC). We agree with the
intent of the recommendations and will work with other FRPC members and
Office of Management and Budget (OMB) officials in building a consensus
on how best to fulfill the recommendations' objectives. As noted below,
FRPC members are aware of the issues raised in the report. DHS also is
taking steps as a Department to address specific conditions.
GAO recommends that OMB in conjunction the FRPC:
1. Develop a framework that agencies can use to better ensure the
validity and usefulness of key real property data in the Federal Real
Property Profile (FRPP). At a minimum, the framework would suggest
standards for frequency of validation methods, error tolerance, and
reporting on reliability.
DHS completed its first data validation on selected assets in Seattle,
Washington and Washington, DC, two metropolitan areas where a diverse
cross-section of DHS components are located. FRPP data points were
validated by physical inspection and review of supporting
documentation. DHS has completed a Statement of Work to procure a more
robust data review. We expect to award the contract by the end of May.
2. Develop an action plan for how the FRPC will address key problems
including (a) the continued reliance on costly leasing in cases where
ownership is more cost effective over the long term, (b) the challenges
of securing real property assets, and (c) reducing the effect of
competing stakeholder interests on business- like outcomes in real
property decisions.
Council members and the organizations represented including DHS are
fully aware of leasing costs to the government, the immense challenge
of securing our assets, and stakeholder influence on real property
decisions. DHS is focused on collocation efforts and lease cost
reduction across our portfolio. We have completed a Statement of Work
to provide a strategic assessment of Department-wide high potential
collocation candidate space assignments/leases. We expect to award the
contract by the end of May. The FRPC and member organizations are
addressing to the best of their ability the challenges of securing
assets and addressing stakeholder influences in real property
decisions.
3. Establish a clearer link or crosswalk between agencies' efforts
under the real property initiative and broader capital planning
guidance.
In support of this recommendation, DHS recently completed a Statement
of Work to procure a complete assessment of our agency wide capital
planning processes with the objective of developing and implementing a
Headquarters Asset Management Review Board (AMRB) function. The AMRB
will be responsible for assuring that capital investment principles are
consistently applied across DHS components. We expect to award the
contract by the end of May.
The FRPC continues to do a remarkable job given the magnitude of the
task of providing guidance and oversight under the President's
Management Agenda and related Executive Order 13327-Federal Real
Property Asset Management. DHS appreciates the recognition that
progress is being made but realizes that work remains.
Technical comments have been provided under separate cover. Recommended
changes mentioned therein will enhance the accuracy of the report with
respect to the Department of Homeland Security.
Sincerely,
Signed by:
Steven J. Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix IX: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
Mar 2 6 2007:
Mr. Mark Goldstein:
Government Accountability Office:
Director, Physical Infrastructure:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
Thank you for providing the draft Governmental Accountability Office
(GAO) Report 07-349, "Federal Real Property - Progress Made toward
Addressing Problems, but Underlying Obstacles Continuing to Hamper
Reform" for comment.
The Department of Energy (DOE) accepts the conclusions in the draft
report. Recently, we have made great strides in Federal real property
management and we appreciate GAO's acknowledging these efforts. We will
continue to make progress and strive for excellence in Federal real
property management.
Please contact Paul Bosco, Director, Office of Engineering and
Construction Management and Senior Real Property Officer, if you have
any additional questions. He can be reached at (202) 586-1784.
Sincerely,
Signed by:
Ingrid Kolb:
Director, Office of Management:
[End of section]
Appendix X: Comments from the Department of State:
United States Department of State:
Assistant Secretary for Resource Management and Chief Financial
Officer:
Washington, D.C. 20520:
Mar 26 2007
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N. W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "Federal
Real Property: Progress Made Toward Addressing Problems, but Underlying
Obstacles Continue to Hamper Reform," GAO Job Code 543171.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact Jurg
Hochuli, Managing Director, Office of Resource Management, Overseas
Buildings Operations, at (703) 875-6352.
Sincerely,
Signed by:
Sid L. Kaplan (Acting):
cc: GAO - Dave Sausville:
OBO - Gen. Charles Williams:
State/OIG - Mark Duda:
U.S. Department of State's Comments on GAO Draft Report Federal Real
Property: Progress Made Toward Addressing Problems, but Underlying
Obstacles Continue to Hamper Reform (GAO-07-349 GAO Code 543171):
Thank you for the opportunity to comment on the draft report Federal
Real Property: Progress Made Toward Addressing Problems, but Underlying
Obstacles Continue to Hamper Reform.
1. Recognizing the Department's Long-Range Overseas Buildings Plan: On
page no. 58, the GAO report states, "The agencies included in our
follow-up review do not have agency wide long-term capital investment
plans." The Department believes that its Long-Range Overseas Buildings
Plan (LROBP) qualifies as a long-term capital plan. The Bureau of
Overseas Buildings Operations (OBO) has published the LROBP annually
since 2001, and each year the document covers a six-year planning
period. OBO referenced the LROBP on page nos. 7, 8, 16, and 18 of its
response to the GAO's inquiry. Accordingly, the Department requests
that the GAO reference the LROBP on page no. 58 of its report and in
other relevant paragraphs.
2. Eliminating backlogs: In the report's front-page summary and
"Results in Brief' section, the GAO states that maintenance backlogs
"are exacerbated [emphasis added] by underlying obstacles that include
...legal and budgetary limitations." This statement implies that budget
constraints merely worsen primary obstacles, which further implies that
such obstacles reside within agencies. The Department believes that
budget limitations are clearly the most significant barrier to
resolving maintenance backlogs. Accordingly, the Department requests
that the GAO change text in the front-page summary and the "Results in
Brief' section to accurately reflect the relative importance of
budgetary constraints in resolving maintenance backlogs.
3. Minimizing the use of operating eases: As with response no. 2 above,
the Department believes that budget limitations are the most
significant obstacle to minimizing the use of operating leases. On page
40, the GAO recommends scoring leases up front for the entire time
requirement to create, in effect, an accurate comparison of total costs
between leases, purchase contracts, and construction contracts. As the
GAO is aware, in many cases this scoring method would make operating
leases less cost-effective than other contracts. As a result, OBO would
be forced to try to purchase or construct new facilities, which OBO
often cannot accomplish because of funding limitations. At the very
least, operating leases provide a functional way to provide the space
required to support U.S. foreign policy goals.
In addition, the GAO report does not discuss the maintenance and repair
costs that are associated with property ownership. These significant
costs are difficult to meet, as evidenced by the maintenance backlogs
GAO discusses in this very report. Without proper maintenance,
buildings can deteriorate and lose significant value. Operating leases,
however, typically hold landlords responsible for maintenance and
repair costs.
Based on these comments, the Department requests that the GAO change
text in the front-page summary, the "Results in Brief" section, and
other relevant paragraphs, to accurately reflect the relative
importance of budget constraints in the Department's use of operating
leases. Moreover, the Department requests that the report acknowledge
the maintenance and repair costs that are associated with property
ownership.
4. Using lease-purchase agreements: The GAO report states that lease-
purchase agreements are generally more expensive than purchase or
construction contracts. The report does not mention that current
scoring rules from the Office of Management and Budget (OMB) diminish
the cost-effectiveness of lease-purchase agreements. If OMB's scoring
rules were changed, OBO could lease buildings and then purchase them
for a nominal amount at the end of the lease term. In their current
form, the rules would limit OBO to purchasing such buildings at their
fair market value, which would most likely be cost prohibitive.
Accordingly, the Department requests that the report acknowledge the
limiting effect of scoring rules on lease-purchase agreements.
5. Statement regarding Congressional interest: The Department requests
that the GAO remove the following comment on page 57: "Also, State
officials said that congressional interest can sometimes lead to the
retention of unneeded real property." Although the Department included
this statement in its response to the GAO's inquiry, and while it is a
true statement, the Department is sympathetic to Congressional
intentions regarding the retention of certain overseas properties. The
Department would not want Congress to misinterpret this comment.
[End of section]
Appendix XI: Comments from the Department of Veterans Affairs:
The Deputy Secretary Of Veterans Affairs:
Washington:
March 23, 2007:
Mr. Mark Goldstein:
Director, Physical Infrastructure:
U. S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
The Department of Veterans Affairs (VA) has reviewed your draft report,
Federal Real Property: Progress Made Toward Addressing Problems, but
Underlying Obstacles Continue to Hamper Reform (GAO-07-349), and agrees
with your general conclusion that progress has been made toward
addressing real property problems, and there is still work to be done.
However, VA believes its progress is greater than that portrayed in the
draft report. VA has a number-of unrecognized initiatives in place
toward sustained real property reform.
In the area of data validation, VA's Capital Asset Management System
provides a single means to validate data from multiple source systems.
In addition, VA's Management Quality Assurance Service conducts audits
related to capital asset management such as data validation.
In the area of unneeded assets, VA has disposed of 156 buildings since
fiscal year (FY) 2004, and 146 buildings (2.7 million gross square
feet) are planned for disposal in FY 2007 and FY 2008. VA's enhanced-
use lease (EUL) authority leverages under-performing property for the
"highest and best" return; for example, VA received $28 million for an
EUL of its Chicago Lakeside facility and, upon determining the campus
was no longer needed, sold it for an additional $22 million.
Regarding the maintenance and repair backlog, VA is implementing a
sustainment model; investing in sustainment needs, facility upgrades,
and replacements; and refining asset condition assessments.
To address the critical matter of physical security, VA has developed
an assessment methodology for its facilities, assessed the ones
considered most mission-critical, and requested funding for physical
security enhancements.
Enclosed are technical corrections and detailed comments in response to
your draft report.
VA appreciates the opportunity to comment on your draft report.
Sincerely yours,
Sincerely,
Signed by:
Gordon H. Mansfield:
Enclosure:
Department of Veterans Affairs (VA) Comments to Government
Accountability Office (GAO) Draft report, Federal Real Property:
Progress Made Toward Addressing Problems, but Underlying Obstacles
Continue to Hamper Reform (GAO-07-349):
Technical comments:
* Page 37 - while the reference to lease-purchase is generic to all the
agencies polled, VA does not "lease-purchase."
* Page 39 --Third bullet, last sentence, "VA direct leases through GSA
allow VA to terminate occupancy quickly." This sentence is somewhat
misleading as VA does not enter into "VA direct leases" with GSA. For
the most part, the Veterans Benefits Administration is the major VA
element that acquires space through GSA assignment with and Occupancy-
Agreement. The reason for this is that they can expand or reduce square
footage easier without a penalty simply by giving a 120-day notice. VHA
rarely obtains space through GSA mainly because they are seeking
clinical/medical space and not office space.
Expanded Remarks:
General:
Summary page. "While agencies have made progress in collecting and
reporting standardized real property data, data reliability is still a
challenge at DOD and other agencies and agencies lack a standard
framework for data validation."
VA Response:
It is true; data reliability is always a challenge. However, VA is
validating data now and has plans for more validation in the next year.
Currently, VA's Capital Asset Management System (CAMS) provides the
ability to view data collectively across multiple systems, an
invaluable tool for data validation. Inventory data is viewed alongside
financial, planning and workload data. Data can be viewed at a high
level summary or drilled down for detailed analyses. Discrepancies and
outliers can be investigated for accuracy and/or performance issues.
For the most part, data is updated monthly and provided for discussion
and analysis at the Deputy Secretary's Monthly Performance Review.
In addition, the VA Federal Real Property Officer has charged the VA
Management Quality Assurance Service (MQAS) with auditing capital asset
management assets to improve oversight. The MQAS capital asset
management review team audits internal controls related to capital
asset management, compliance with Federal and VA policies and
procedures, consistency with VA strategic goals and objectives, and
effectiveness of operations. To date, MQAS has audited VA programs such
as the non-recurring maintenance program and the enhanced-use lease
program. Future plans include potential audits in the FY2008-2009
timeframe in the following areas:
* Review of capitalized personal property inventory and accounting.
* Validation of data used to establish a baseline for implementing the
Presidential executive memorandum that requires all federal agencies to
achieve the energy, environment, and transportation measures outlined
in the memorandum.
* Validation of the data residing in VA's Capital Asset Inventory
database.
* Identification of underused space potentially available for
advantageous disposition.
* Review of claims process in regard to major and minor construction
projects.
* Leasing for community-based outpatient clinics.
CARES:
Pages 30-31. 'We reported that VA, however, made some inpatient long-
term care and mental health alignment decisions for some locations.
Despite this progress and the recent CARES decisions, VA continues to
face significant challenges with excess and underutilized real
property."
VA Response:
While VA does have significant challenges in its inventory of excess
and underused buildings, following are examples of how VA is addressing
this matter.
In August 2005, through its enhanced-use lease program (Title 38 U.S.C.
8161-8169), VA out-leased 38 underused buildings along with
approximately 50 acres of land to a developer that will restore the
existing buildings to ensure historical compliance at the VA Medical
Center (VAMC) campus in Leavenworth, Kansas. This project was made
possible after the right-sizing of the VAMC and the need for cemetery
expansion. This restoration will also bring to the campus services that
VA does not directly offer to the nation's veterans such as assisted
living, transitional housing for the homeless, and affordable housing.
By this project, the historical significance of the buildings were
preserved, the existing cemetery was expanded, additional services were
offered to veterans, and underused buildings and land were put back
into service to benefit our nation's veterans.
On various properties at the VAMC in Dayton, Ohio, through the enhanced-
use lease program, VA has been able to out-lease underused buildings to
private providers of transitional housing for the homeless. These
buildings, while they have very little fair market value (similar to
Leavenworth above), they have been put back into service by the private
sector to fulfill a need to provide housing for homeless veterans.
In September 2006, VA out-leased an entire campus of underused
buildings and land at the VAMC in Fort Howard, Maryland, to a private
developer who is going to restore the historical buildings for
commercial use, as well as provide affordable and assisted housing for
veterans and their families.
While there are significant challenges with excess and underused
buildings and land, we are using innovative ways to deal with the
situation in today's real estate market. The way to succeed is to make
it a win-win for the community and federal government. Reuse of federal
buildings/land, such as mentioned above, allows for transfer of
buildings from the federal to the non-federal community without
adversely affecting the local economy, community or VA facilities.
Capital Asset Fund:
Page 26. "In addition, VA was authorized in 2004 to transfer real
property under its jurisdiction or control and to retain the proceeds
from the transfer in a capital asset fund for property transfer costs,
including demolition, environmental remediation, and maintenance and
repair costs."
VA Response:
Although VA is authorized to transfer real property under its
jurisdiction or control and to retain the proceeds from such transfers,
it is important to note that this authority has significant limitations
on the use of any funds generated by any disposal under this authority.
Enhanced-Use Authority:
Page 27. "VA used its enhanced authorities to dispose of its
underutilized Lakeside Campus in Chicago. In October 2005, the
Secretary determined that the Department no longer needed the campus
and VA sold it for $22 million. VA officials reported that the
transaction resulted in a demonstrable improvement of services to
eligible veterans by permitting VA to offset the cost of implementing
CARES in Chicago and other locations, and avoid the future costs of
maintaining aging health care facilities."
VA Response:
The information above does not portray all the salient facts regarding
the Lakeside enhanced-use lease (EUL) and its subsequent disposal. It
is correct that VA disposed of its underused Lakeside Campus in Chicago
through the EUL legislation. In January 2005, VA executed an EUL for
the Lakeside facility and, in turn, received $28 million for the lease,
as well as the right to lease back space for 3 years to house its
existing outpatient clinic at Lakeside. In October 2005, the Secretary
determined that the Department no longer needed the.campus and VA sold
it for an additional $22 million; thus, the total for the EUL
transaction was $50 million. The lease-back provisions for the
outpatient clinic remained intact. VA's EUL program provides a proven
method of leveraging VA's diverse real estate portfolio and market
position. In addition, the program has brought significant cost savings
as well as the realignment of under-performing property to produce the
"highest and best" return to veterans, taxpayers and the government.
Maintenance and Repair Backlog:
Page 23. "VA is establishing a facility condition assessment process
that will help identify the funding needed to improve the current
infrastructure."
Page 36. "For VA, the maintenance backlog for facilities with major
repair needs is $4.9 billion and according to VA officials, VA must
address this aged infrastructure while patient loads are changing.
VA Response:
VA's current deferred maintenance backlog is approximately $5 billion;
this figure is continually updated to reflect the most recent data. It
is true that VA is establishing a facility condition assessment
process, and it is important to note that VA has moved aggressively to
address its maintenance and repair backlog. Some actions include:
* In accordance with Federal Real Property Council principals, VA has
developed a sustainment model to ensure that VA facilities will not
deteriorate further.
* VA has fully funded the sustainment needs in the FY 2007 ($517
million) and FY 2008 ($573 million) budget requests. (The sustainment
model estimated that VA needs approximately $500 million annually to
fund these needs.)
* VA is investing $2.5 billion in upgrading or replacing existing
facilities, which will reduce the backlog estimate.
* VA disposed of 77 buildings in FY 2006, reducing nonmission-dependent
and underused assets, some of which also needed condition improvements.
* VA is currently refining asset condition information. A revised
assessment of need and an updated strategy to address the backlog
figure will be completed in summer 2007.
Operating Leases:
Summary page. "VA reported an increased reliance on leasing to meet
space needs."
Page 4. "Furthermore, Energy, Interior, GSA, State and VA reported an
increased reliance on operating leases --an approach which we have
reported is generally more costly for long-term space needs."
Page 37. "Operating leases have become an attractive option, in part
because they generally "look cheaper" in any given year, even though
they are generally more costly over time."
Page 39. "According to VA officials, the number of direct operating
leases has increased, with the leased square footage increasing over 4
million in fiscal year 2004 to over 7 million in the fiscal year 2006.
VA officials reported that VA needs a more flexible facility
infrastructure to accommodate changes in medical technology and shifts
in demographic data. VA direct leases through GSA allow VA to terminate
occupancy quickly."
VA Response:
Factual Correction. VA strongly disagrees with the GAO premise
regarding leases. It is true that VA has an increased reliance on
leasing to meet space needs. However, it is not because they "look
cheaper in any given year." VA relies on operating leases because of
our need for a more flexible facility infrastructure. VA's mission
drives its increased use of leasing. The majority (822) of our leases
are outpatient or store-front facilities that can be moved or relocated
depending on the changes in medical technology and shift in demographic
data. This is true for both GSA and VA direct leases. GSA leases allow
VA the ability to terminate quickly as they are self- insured for
cancellation.
It is understood that building or purchasing facilities is more cost
effective over a 30-year life cycle. Unfortunately, there are too many
constraints for these to work for VA in all circumstances. This assumes
our mission and the delivery of services will be the same for a 30-year
period. Not only are veterans mobile, they require different methods of
healthcare and service delivery. The needs of today's veterans range
from the nursing home care or burial services of a World War II
veteran, to behavioral health or community outreach for Vietnam
veterans, to acute hearing loss of the returning Operation Enduring
Freedom/Iraqi Freedom veteran. CARES revolves around this understanding
of changing healthcare needs. VA will continue to need the flexibility
of operating leases to meet the needs of delivering services to
veterans.
A cursory review of the Veterans Health Administration (VHA) in FY 2007
would show there is almost a one-for-one of vacant space (7,414,926 SF)
to operational leased space (7,101,920 SF). Unfortunately, the
locations for underused space do not match the locations for needed
space. VA cannot stop leasing and meet ongoing needs. For example, VISN
8 has a significant increase in workload demands and the corresponding
space need. Outpatient visits in VISN 8 increased from 5.2 million in
FY 2004 to over 5.7 million by the end of FY 2006. In that same period,
leased space has increased from 687,406 to 845,588 square feet. Based
on projected workload, VISN 8 still has a need for half again as much
space (4,135,037 SF) as the currently available owned square feet.
Leased space can immediately meet the demands for veteran care in
already over-utilized space and allow for a reduction or realignment of
space based upon the changing healthcare environment and any potential
change in veteran needs.
The bottom line is that operating leases allow VA to provide the right
service at the right time and place. In FY 2007, VHA has 895
operational leases (both direct and GSA) for 7,101,920 square feet.
Ninety-one percent of those leases are for community-based support for
either referral inpatient service or secondary support which provides
actual or follow-up care. These community-based leases represent a
point of presence in the community that is vital anytime, but
especially when a nation is at war and must respond when and where the
need arises.
Physical Security:
Pages 4-5. "Finally, all of the major real property-holding agencies
reported using risk-based approaches to prioritize security needs, as
we have suggested, but cited a lack of resources for security
enhancements as an ongoing problem."
Page 48. "Physical Security Is Still a Problem for Major Real Property-
Holding Agencies. The threat of terrorism has increased the emphasis on
physical security for federal real property assets. All of the nine
agencies reported using risk-based approaches to some degree to
prioritize facility security needs, as we have suggested, but some
cited challenges, including a lack of resources for security
enhancements and issues associated with securing leased space."
Page 49. "While some agencies have indicated that they have made
progress in using risk-based approaches, some officials told us that
they still face considerable challenges in balancing their security
needs and other real property management needs with their limited
resources.
VA Response:
VA has made considerable progress in the area of physical security for
federal real property assets, demonstrating leadership in multi-hazard
protection of VA facilities. Accomplishments are as follows:
* Developed Physical Security Assessment Methodology for VA Facilities,
September 2002: This multi-hazard risk assessment process includes
identifying and ranking risks and vulnerabilities, with suggested
remedial actions to mitigate the major vulnerabilities at prioritized
mission critical facilities.
* FEMA Requested VA Assistance to Evolve VA's Assessment Process into a
System Suitable for Both Private and Other Public Facilities: This
collaborative effort resulted in FEMA's Reference Manual to Mitigate
Potential Terrorist Attacks Against Buildings (FEMA 426; Published
December 2003) and Risk Assessment: A How-To Guide to Mitigate
Potential Terrorist Attacks (FEMA 452, Published January 2005). DHS
took the unusual step of placing VA's seal with theirs on the cover of
FEMA 452 to express appreciation for VA's assistance.
* Beginning in FY 2005, included funding for Physical Security
Enhancements in Major Program Project Budget Requests.
* Completed Physical Security Assessments of 140 VA Most Mission .
Critical Facilities in 2006:
* Secretary Concurred in VA Physical Security Strategies Report in May
2006: The Report outlined 24 elements to enhance the protection of VA
facilities and improve their ability to remain in operation and protect
the safety of veterans, staff, and visitors. This program includes
requirements for four categories of VA facilities, both new and
existing, mission-critical which must remain in operation, and life/
safety protected facilities.
* Completed Final Draft of Physical Security Design Manual in December
2006: The manual is based on the Physical Security Strategies Report.
Physical Security Design Manual and related Design and Construction
Standards are to be issued in the second quarter of FY 2007.
Underutilized Real Property Disposal:
Page 21. "Some agencies are implementing various tools to prioritize
reinvestment and disposal decisions on the basis of agency needs,
utilization, and costs. For example, GSA and NASA officials reported
establishing models that integrate agency mission.etc.
Page 32. "According to VA officials, for fiscal year 2005, 2 percent of
the department's real property holdings have been identified as excess
or underutilized."
Page 32. "Furthermore, VA officials reported that VA has a significant
number of properties no longer located in places where veterans live,
and many of these properties are over 50 or 60 years old." The Main VA
Hospital Building in Milwaukee was pictured as an example of excess
federal property (page 33).
Page 52. "Some major real property-holding agencies reported that
competing local, state, and political interests often impede their
ability to make real property management decisions, such as decisions
about disposing of unneeded property and acquiring real property. For
example, VA officials reported that disposal is often not an option for
most properties because of political stakeholders and constituencies,
including historic building advocates or local communities that want to
maintain their relationship with VA. In addition, officials said that
attaining the funding to follow through on CARES decisions is a
challenge because of competing priorities."
Page 55. "We reported that VA, like all federal agencies must comply
with federal laws regulations governing property disposal that are
intended, for example, to protect subsequent users of the property from
environmental hazards and to preserve historically significant sites.
We have reported that some VA managers have retained excess property
because the administrative complexity and costs of complying with these
requirements were disincentives to disposal."
VA Response:
As a Department, VA has moved from 98 percent utilized space in FY 2005
to 100 percent in FY 2006. This high level of performance is due in
part to CARES, in part to VA moving aggressively to dispose of unneeded
assets, and in part to an increasing medical care need for veterans. It
is important to note that this performance is nationally based. There
are other VA assets that are overused while others are underused.
It is true that disposal of real property is not an easy process and
some properties may not be disposed in a timely manner. However, VA has
moved aggressively to dispose of underused or vacant properties. Actual
disposals are as follows:
* FY 2004 - 12 buildings:
* FY 2005 - 67 buildings, including 38 enhanced-use leases:
* FY 2006 - 77 buildings, including 6 buildings via sales, 19 buildings
via demolition, and 52 buildings via enhanced-use lease:
* FY 2007 - 4 buildings (calendar year, to date):
Planned disposals include an additional 99 buildings (2.2 million GSF)
in FY 2007 and 47 buildings (539,000 GSF) in FY 2008.
To further address underused assets, VA is conducting "site reviews"
that will identify packages or bundles of assets available for
disposal, including enhanced-use leases, to private sector developers
in exchange for funds supporting VA's capital needs. As part of its
capital asset management program, the Department is seeking to more
effectively assess and manage its real property assets. This is
because, during the development of the CARES reuse studies, VA
encountered a number of unrecorded encumbrances due to grants, out-
leases, licenses, permits and easements that had been executed at the
campus level. In order to better understand the Department's
commitments on each campus and to more effectively manage these assets,
it is important that VA collect and validate baseline data on all
relevant encumbrances and perform site assessments on every campus. As
a result of this initiative and in support of its mission, VA shall be
able to identify marketable sites as targets of opportunity to maximize
and monetize the value of its real property assets.
[End of section]
Appendix XII: GAO Contacts and Staff Acknowledgments:
GAO Contact:
Mark Goldstein (202) 512-2834:
Staff Acknowledgments:
In addition to the individual named above, Janice Ceperich, Anne Izod,
Susan Michal-Smith, and David Sausville made key contributions to this
report.
FOOTNOTES
[1] High-risk areas are those that either have greater vulnerabilities
to waste, fraud, abuse, and mismanagement or major challenges
associated with their economy, efficiency, or effectiveness.
[2] For the purposes of our review we focused on eight of the largest
real property-holding agencies and USPS, which is an independent
establishment in the executive branch and is among the largest property
holders in terms of owned and leased space.
[3] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.:
January 2007).
[4] EUL agreements are lease agreements for property under an agency's
control or custody that the agency can (1) enter into with a public or
private entity and (2) receive as payment under the lease either cash
or other consideration such as repairs of the facilities. For the
purposes of this report, we have stated that an agency has enhanced use
leasing authority if it is authorized to enter into an agreement as
defined in the prior sentence even if the agency's authority does not
specifically use the words enhanced use leasing.
[5] Deferred maintenance backlog includes deteriorating facilities for
which major upkeep, repair, and maintenance have not been funded and
the repair and maintenance on these assets has been postponed.
Estimates provided by DOD include restoration and modernization needs
and represent the actual measured need for major repairs (restoration),
renovations, modernization, and alterations.
[6] Department of the Treasury, 2006 Financial Report of the U.S.
Government (Washington, D.C.: Sept. 30, 2005).
[7] 40 U.S.C. § 101 et seq. The Property Act excludes certain types of
property, such as public domain assets and land reserved or dedicated
for national forest or national park purposes.
[8] 42 U.S.C.§ 11411.
[9] 16 U.S.C. § 470 et seq.
[10] 39 U.S.C. §§ 201 and 401.
[11] 39 U.S.C. § 410.
[12] OMB, Capital Programming Guide, V 2.0 Supplement to OMB Circular A-
11, Part 7: Planning Budgeting, and Acquisition of Capital Assets
(Washington, D.C.: June 2006).
[13] GAO, Executive Guide: Leading Practices in Capital Decision-
Making, GAO/AIMD-99-32 (Washington, D.C.: December 1998).
[14] The executive order applies to the Departments of Agriculture
(USDA), Commerce, Defense, Education, Energy, Health and Human Services
(HHS), Homeland Security (DHS), Housing and Urban Development (HUD),
the Interior, Justice (DOJ), Labor (DOL), State, Transportation (DOT),
the Treasury, and VA; the Environmental Protection Agency (EPA); NASA;
United States Agency for International Development (USAID); GSA; the
National Science Foundation, the Nuclear Regulatory Commission; the
Office of Personnel Management; the Small Business Administration; and
the Social Security Administration.
[15] The real property PMA initiative is a program initiative
applicable to the 15 largest landholding agencies.
[16] These agencies include the USDA, DOD, DOE, HHS, DHS, the Interior,
DOJ, DOL, State, DOT, and VA; the Army Corps of Engineers; GSA; NASA;
and USAID.
[17] As previously mentioned, USPS is not subject to the executive
order. However, USPS officials reported that they have a position
similar to that of Senior Real Property Officer.
[18] GSA published these principles and issued a Federal Management
Regulation bulletin to further explain the asset management principles
approved by FRPC. Real Property Asset Management Guiding Principles,
Federal Register, Vol. 71, No. 116, June 16, 2006, pp. 35087-35111.
[19] OMB officials told us that Federal Management Regulations require
all executive branch agencies, including independent agencies, to
report data for the FRPP. USPS is not subject to the executive order
but collaborated with OMB on data elements for the FRPP in 2005 that
did not include data on performance measures.
[20] FRPC, Guidance for Improved Asset Management (Washington, D.C.:
Dec. 22, 2004) and GSA, Office of Governmentwide Policy for the FRPC,
Interim FY 2005 Guidance for Real Property Inventory Reporting,
(Washington, D.C.: Oct. 11, 2005).
[21] As part of our ongoing work related to USPS facility management,
we plan to assess issues related to the maintenance of USPS facilities.
[22] In the 108th and 109th Congresses, the following real property
management reform bills were introduced: the Federal Property Asset
Management Reform Act of 2003, H.R. 2548,108th Cong. (2003); the Public
Private Partnership Act of 2003, H.R. 2573, 108th Cong. (2003); and the
Federal Real Property Disposal Pilot Program and Management Improvement
Act of 2005, H.R. 3134, 109th Cong. (2005).
[23] Section 627 of P.L. No. 109-108, 119 Stat. 2290, 2342 (2005)
authorized NASA to dispose of the property and retain the proceeds, and
Section 638 of P.L. No. 108-447, 118 Stat. 2809, 2922 (2004) authorized
FCC to dispose of the property and retain the proceeds.
[24] [24] Section 412 of P.L. No. 108-447, 118 Stat. 2809, 3259 (2004).
Although this authority was contained in GSA's annual appropriation act
for fiscal year 2005, GSA has determined that Section 412 is permanent
authority and OMB has concurred with that determination. We believe
GSA's position relating to the permanency of the provision of law is
reasonable. Within Section 412, GSA has the authority to retain the
proceeds from the sale or disposition of real property, which the use
of such retained proceeds is subject to an authorization in annual
appropriation acts. In addition, GSA has determined that it has a new
grant of authority relating to the conveyance of real property and is
formulating guidance on the use and availability of this as required by
OMB.
[25] Section 501 et. seq. of P.L. No. 109-54 (2005); 16 U.S.C. § 580d
note (uncodified).
[26] This authority allows the agency to lease real property under its
control or custody to public and private entities and to accept as
payment under the lease either cash or other consideration, such as
construction, maintenance, restoration, and repair of facilities, or
services that are of benefit to the agency.
[27] 42 U.S.C. § 2459j. Our ongoing work is looking at how NASA is
using the enhanced use leasing authority and also reviewing its
financial impact on NASA.
[28] 38 U.S.C. § 8169.
[29] In 2004, VA was authorized to transfer real property under its
control or custody that is not part of an EUL for fair market value and
to deposit the proceeds in VA's Capital Asset Fund. 38 U.S.C. § 8118.
[30] As mentioned previously, GSA has determined that it has permanent
authority to retain proceeds from the sale of its property and is no
longer dependent on special authority such as section 407 of P.L. No.
108-477, 118 Stat. 2809,3258 (2004).
[31] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-352T (Washington, D.C.: Feb. 16, 2005).
[32] GAO, VA Health Care: Key Challenges to Aligning Capital Assets and
Enhancing Veterans' Care, GAO-05-429 (Washington, D.C.: Aug. 5, 2005).
[33] GSA Management Regulations define not utilized property as an
entire property or portion of a property that is not occupied or used
for current program purposes of the accountable agency or property that
is occupied in caretaker status only. According to a GSA official,
property that is not utilized is generally considered vacant. The
regulations also define underutilized property as an entire property or
portion of a property that is used only at irregular periods or
intermittently by the accountable agency or property that is being used
for the agency's current program purposes that can be satisfied with
only a portion of the property. (41 C.F.R. 102-75.45 and 41 C.F.R. 102-
75.50).
[34] Deferred maintenance is defined by the Statement of Federal
Financial Accounting Standards No. 6, which includes the accounting
standards for deferred maintenance, as maintenance that was not
performed when it should have been or scheduled maintenance that was
delayed or postponed. Maintenance is the act of keeping fixed assets in
acceptable condition, including preventative maintenance, normal
repairs, and other activities needed to preserve the assets, so that
they can continue to provide acceptable services and achieve their
expected life. Maintenance excludes activities aimed at expanding the
capacity of assets or otherwise upgrading them to serve needs different
from those originally intended.
[35] It is important to note that the National Park Service, which has
responsibility for trails and recreation sites in addition to buildings
and other structures, has previously reported an estimated $5 billion
maintenance backlog. The estimated $3 billion maintenance backlog
reported here does not include roads, bridges, trails, irrigation, dams
or other water structures.
[36] The facility condition index is the ratio of accumulated deferred
maintenance to the current replacement value for a constructed asset.
The asset priority index is a measure of the importance of a
constructed asset to the mission of the installation where it is
located.
[37] According to VA officials, VA does not enter into lease-purchase
agreements.
[38] The extent to which capital costs are reflected in the budget
depends on how they are "scored." The Congressional Budget Office (CBO)
and OMB separately "score" or track budget authority, receipts,
outlays, and the surplus or deficit estimated to results as legislation
is considered and enacted. CBO develops estimates of the budgetary
impact of bills reported by the different congressional committees. OMB
also uses the scorekeeping guidelines to determine how much budget
authority must be obligated for individual agency transactions.
[39] GAO, Federal Real Property: Reliance on Costly Leasing to Meet New
Space Needs Is an Ongoing Problem, GAO-06-136T (Washington, D.C.: Oct.
6, 2005). According to the scoring rules (OMB Circular No. A-11, app.
B), in cases where the operating lease does not have a cancellation
clause or is not paid for by funds that are self-insuring, budget
authority to cover the total costs expected over the life of the lease
is to be scored in the first year of the lease.
[40] GAO, Budget Issues: Alternative Approaches to Finance Federal
Capital, GAO-03-1011 (Washington, D.C.: Aug. 21, 2003).
[41] As previously mentioned in this report, GSA, working under the
leadership of FRPC, collaborated with numerous agencies to develop
mandatory data elements, which include performance measures.
[42] A material weakness is a condition that precludes the entity's
internal control from providing reasonable assurance that
misstatements, losses, or noncompliance material in relation to the
financial statements or to stewardship information would be prevented
or detected on a timely basis.
[43] GAO, Fiscal Year 2005 U.S. Government Financial Statements:
Sustained Improvement in Federal Financial Management Is Crucial to
Addressing Our Nation's Financial Condition and Long-Term Fiscal
Imbalance, GAO-06-406T (Washington, D.C.: Mar. 1, 2006).
[44] DOD, Office of Inspector General, Internal Controls Related to
Department of Defense Real Property, D2006-072 (Arlington, VA: Apr. 6,
2006).
[45] PBS maintains an inventory system, the System for Tracking and
Administering Real Property (STAR). STAR includes key fields on the
number, size, location, use, type, occupants, and age of the assets and
tracks all space and customer occupancies in GSA's owned and leased
buildings. It is an automated database that is tied into core PBS
systems (including the accounting system) that tracks payments to
landlords for GSA leased locations.
[46] In GAO, Homeland Security: Further Action Needed to Coordinate
Agencies' Facility Protection Efforts and Promote Key Practices, GAO-05-
49 (Washington, D.C.: Nov. 30, 2004) we identified several key
practices in facility protection, which included using risk management
to allocate resources; leveraging security technology; coordinating
protection efforts and sharing information; realigning real property
assets to an agency's mission, thereby reducing vulnerabilities;
strategically managing human capital; and measuring program performance
and testing security initiatives.
[47] A study of federal facilities done by DOJ in 1995 resulted in
minimum-security standards and an evaluation of security conditions in
the government's facilities.
[48] GAO, Homeland Security: Guidance and Standards Are Needed for
Measuring Effectiveness of Agencies' Facility Protection Efforts, GAO-
06-612 (Washington, D.C.: May 31, 2006).
[49] 39 U.S.C. § 404(b).
[50] GAO, U.S. Postal Service: USPS Needs to Clearly Communicate How
Postal Services May Be Affected by Its Retail Optimization Plans, GAO-
04-803 (Washington, D.C.: July 13, 2004).
[51] Section 302 of the Postal Accountability and Enhancement Act, P.L.
No. 109-435, 120 Stat. 3198 (2006); 39 U.S.C. § 3691 note (uncodified).
[52] GAO-05-429.
[53] GAO-05-429.
[54] GAO/AIMD-99-32.
[55] GAO, Agency Implementation of Capital Planning Principles Is
Mixed, GAO-04-138 (Washington, D.C.: Jan. 16, 2004).
[56] GAO, Three Agencies' Implementation of Capital Planning Principles
Is Mixed, GAO-07-274 (Washington, D.C.: Feb. 23, 2007). This review
covers the Offices of Science and Environmental Management within DOE
and U.S. Customs and Border Protection within DHS.
[57] GAO-07-274.
[58] For the purposes of our review, we focused on the eight of the
largest major real property-holding agencies and USPS, which is an
independent establishment in the executive branch and is among the
largest property holders in terms of owned and leased space.
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