Federal Real Property
Proposed Civilian Board Could Address Disposal of Unneeded Facilities Gao ID: GAO-11-704T June 9, 2011The federal government holds more than 45,000 underutilized properties that cost nearly $1.7 billion annually to operate, yet significant obstacles impede efforts to close, consolidate, or find other uses for these properties. GAO has designated federal real property management as a high-risk area, in part because of the number and cost of these properties. The Office of Management and Budget (OMB) is responsible for reviewing federal agencies' progress in real property management. In 2007, GAO recommended that OMB assist agencies by developing an action plan to address key obstacles associated with decisions related to unneeded real property, including stakeholder influences. In May 2011, the administration proposed legislation, referred to as the Civilian Property Realignment Act (CPRA), to, among other things, establish a legislative framework for disposing of and consolidating civilian real property and that could help limit stakeholder influences in real property decision making. This statement identifies (1) progress the government has made toward addressing obstacles to federal real property management, (2) some of the challenges that remain and how CPRA may be responsive to those challenges, and (3) key elements of the Department of Defense's (DOD) base realignment and closure (BRAC) process that could expedite the disposal of unneeded civilian properties. To do this work, GAO relied on its prior work, and reviewed CPRA and other relevant reports.
In designating federal real property management as a high-risk area, GAO reported that despite the magnitude and complexity of real-property-related problems, there was no governmentwide strategic focus on real property issues and governmentwide data were unreliable and outdated. The administration and real-property-holding agencies have subsequently improved their strategic management of real property by establishing an interagency Federal Real Property Council designed to enhance real property planning processes and implementing controls to improve the reliability of federal real property data. Even with this progress, problems related to unneeded property and leasing persist because the government has not yet addressed other challenges to effective real property management, such as legal and financial limitations and stakeholder influences. CPRA is somewhat responsive to these challenges. For example, CPRA proposes an independent board that would streamline the disposal process by selecting properties it considers appropriate for public benefit uses. This streamlined process could reduce disposal time and costs. CPRA would also establish an Asset Proceeds and Space Management Fund that could be used to reimburse agencies for necessary disposal costs. The proposed independent board would address stakeholder influences by recommending federal properties for disposal or consolidation after receiving recommendations from civilian landholding agencies and independently reviewing the agencies' recommendations. CPRA does not explicitly address the government's overreliance on leasing, but could help do so through board recommendations for consolidating operations where appropriate. GAO is currently examining issues related to leasing costs and excess property. Certain key elements of DOD's BRAC process--which, like CPRA, was designed to address obstacles to closures or realignments--may be applicable to the disposal and realignment of real property governmentwide. These elements include establishing goals, developing criteria for evaluating closures and realignments, estimating the costs and savings anticipated from implementing recommendations, and involving the audit community. A key similarity between BRAC and CPRA is that both establish an independent board to review agency recommendations. A key difference is that while the BRAC process places the Secretary of Defense in a central role to review and submit candidate recommendations to the independent board, CPRA does not provide for any similar central role for civilian agencies.
GAO-11-704T, Federal Real Property: Proposed Civilian Board Could Address Disposal of Unneeded Facilities
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Federal Financial Management, Government
Information, Federal Services, and International Security, Committee
on Homeland Security and Governmental Affairs, U.S. Senate:
For Release on Delivery:
Expected at 2:00 p.m. EDT:
Thursday, June 9, 2011:
Federal Real Property:
Proposed Civilian Board Could Address Disposal of Unneeded Facilities:
Statement of David J. Wise, Director:
Physical Infrastructure Issues:
Brian J. Lepore, Director:
Defense Capabilities and Management Issues:
GAO-11-704T:
Chairman Carper, Ranking Member Brown, and Members of the Subcommittee:
Thank you for the opportunity to testify today on our work related to
excess and underutilized federal real property held by civilian
federal agencies, as well as our work on the military Base Realignment
and Closure (BRAC) process. The federal government occupies more owned
and leased buildings than it needs. In fiscal year 2009, 24
landholding agencies, including the Department of Defense (DOD),
reported 45,190 underutilized buildings with a total of 341 million
square feet, or 1,830 more such buildings than they reported the
previous fiscal year. These underutilized buildings cost $1.66 billion
annually to operate and are potentially valuable. The federal
government also leases more property than is cost-efficient, resulting
in millions of dollars of additional costs to the federal government.
Since 2008, the General Services Administration (GSA) has leased more
property than it owns[Footnote 1]--more than 8,000 buildings--even
though owning a federal building is often a more cost-effective way of
meeting an agency's long-term space needs.[Footnote 2] Because of
these and other issues, we have designated the management of federal
real property as a high-risk area.[Footnote 3] On May 4, 2011, the
administration proposed legislation, referred to as the Civilian
Property Realignment Act (CPRA).[Footnote 4] CPRA legislation has also
been introduced in the House of Representatives.[Footnote 5]
Differences exist between the House bill and the administration's
proposal. Throughout this statement, any reference to CPRA is the
administration's proposed legislation.
At the request of this subcommittee, we have recently begun two new
engagements related to federal real property management. The first
will examine how federal agencies designate excess federal real
property and what actions they are taking to better use remaining
property. The second will examine the leasing costs incurred by the
federal government.
Like GSA, DOD has faced long-term challenges in managing its portfolio
of facilities, halting degradation of facilities, and reducing
unneeded infrastructure to free up funds to better maintain the
facilities that it still uses and to meet other needs. DOD's
management of its support infrastructure is also on our high-risk
list, in part because of challenges DOD faces in reducing excess and
obsolete infrastructure.[Footnote 6] As you know, DOD has been working
through the BRAC process as one way to reduce the amount of unneeded
property that it owns and leases. This process, which is designed to
address the obstacles to matching needed infrastructure to the needed
workforce and missions, may also be applicable to civilian real
property management.
This statement discusses (1) progress the government has made toward
addressing obstacles to federal real property management; (2) some of
the challenges that remain for effective federal real property
management and how the administration's proposed CPRA could be
responsive to those challenges; and (3) key elements of the BRAC
process that could be applied to expedite the disposal of unneeded
civilian properties.
To address these objectives, we reviewed our previous work, reports by
the interagency Federal Real Property Council (FRPC), and CPRA. We
also visited an office and warehouse complex currently in the disposal
process that included multiple types of real property at one address.
This complex was judgmentally selected on the basis of its
characteristics and its geographic proximity to our field office in
Dallas, Texas. In addition, we reviewed the BRAC legislation and our
reports on DOD's BRAC process and are currently monitoring BRAC 2005
implementation. We shared the relevant information in this statement
with the Office of Management and Budget (OMB), GSA, and DOD
officials. OMB and GSA did not provide comment. DOD provided technical
comments which we incorporated as appropriate. We performed this work
from May 2011 to June 2011 in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
Background:
The federal real property portfolio is vast and diverse, totaling more
than 900,000 buildings and structures--including office buildings,
warehouses, laboratories, hospitals, and family housing--and worth
hundreds of billions of dollars. The six largest federal real property
holding agencies--DOD; GSA; the U.S. Postal Service; and the
Departments of Veterans Affairs (VA), Energy, and the Interior--occupy
87.6 percent of the total square footage in federal buildings.
Overall, the federal government owns approximately 83 percent of this
space and leases or otherwise manages the rest; however, these
proportions vary by agency. For example GSA, the central leasing agent
for most agencies, now leases more space than it owns.
The federal real property portfolio includes many properties the
federal government no longer needs. In May 2011, the White House
posted an interactive map of excess federal properties on its Web
site,[Footnote 7] noting that the map illustrates a sampling of over
7,000 buildings and structures currently designated as excess. These
properties range from sheds to underutilized office buildings and
empty warehouses. We visited an office and warehouse complex in Fort
Worth, Texas that was listed on the Web site. Ten of the properties
listed on the Web site as part of the Fort Worth complex were parceled
together and auctioned in May 2011, but the sale is not yet final. The
structures ranged from large warehouses to a concrete slab. (See fig.
1.) Work we are currently doing for this subcommittee on how federal
agencies designate excess federal real property will include visits to
other properties from around the country that are considered excess.
Figure 1: Several Structures Auctioned by GSA in May 2011 in Fort
Worth, Texas:
[Refer to PDF for image: 4 photographs]
One of four large warehouses:
Office building:
Empty guard house structures:
Concrete slab:
Source: GAO.
[End of figure]
After we first designated federal real property as a high-risk area in
2003, the President issued Executive Order 13327 in February 2004,
which established new federal property guidelines for 24 executive
branch departments and agencies. Among other things, the executive
order called for creating the interagency FRPC to develop guidance,
collect best practices, and help agencies improve the management of
their real property assets.
DOD has undergone four BRAC rounds since 1988 and is currently
implementing its fifth round.[Footnote 8] Generally, the purpose of
prior BRAC rounds was to generate savings to apply to other
priorities, reduce property deemed excess to needs, and realign DOD's
workload and workforce to achieve efficiencies in property management.
As a result of the prior BRAC rounds in 1988, 1991, 1993, and 1995,
DOD reported that it had reduced its domestic infrastructure, and
transferred hundreds of thousands of acres of unneeded property to
other federal and nonfederal entities. DOD data show that the
department had generated an estimated $28.9 billion in net savings or
cost avoidances from the prior four BRAC rounds through fiscal year
2003 and expects to save about $7 billion each year thereafter, which
could be applied to other higher priority defense needs. These savings
reflect money that DOD has estimated it would likely have spent to
operate military bases had they remained open. However, we found that
DOD's savings estimates are imprecise because the military services
have not updated them regularly despite our prior reported concerns on
this issue.[Footnote 9] The 2005 BRAC round affected hundreds of
locations across the country through 24 major closures, 24 major
realignments, and 765 lesser actions, which also included terminating
leases and consolidating various activities.[Footnote 10] Legislation
authorizing the 2005 BRAC round maintained requirements established
for the three previous BRAC rounds that GAO provide a detailed
analysis of DOD's recommendations and of the BRAC selection process.
We submitted the results of our analysis in a 2005 report and
testified before the BRAC Commission soon thereafter.[Footnote 11]
Since that time, we have published annual reports on the progress,
challenges, and costs and savings of the 2005 round, in addition to
numerous reports on other aspects of implementing the 2005 BRAC round.
[Footnote 12]
The Government Has Adopted a More Strategic Focus to Improve Real
Property Management and Has Taken Steps to Increase Data Reliability:
The administration and real-property-holding agencies have made
progress in a number of areas since we designated federal real
property as high risk in 2003. In 2003, we reported that despite the
magnitude and complexity of real-property-related problems, there had
been no governmentwide strategic focus on real property issues.
[Footnote 13] Not having a strategic focus can lead to ineffective
decision making. As part of the government's efforts to strategically
manage its real property, the administration established FRPC--a group
composed of the OMB Controller and senior real property officers of
landholding agencies--to support real property reform efforts. Through
FRPC, the landholding agencies have also established asset management
plans, standardized real property data reporting, and adopted various
performance measures to track progress. The asset management plans are
updated annually and help agencies take a more strategic approach to
real property management by indicating how real property moves the
agency's mission forward; outlining the agency's capital management
plans; and describing how the agency plans to operate its facilities
and dispose of unneeded real property, including listing current and
future disposal plans. According to several member agencies, FRPC no
longer meets regularly but remains a forum for agency coordination on
real property issues and could serve a larger role in future real
property management.
We also earlier reported that a lack of reliable real property data
compounded real property management problems.[Footnote 14] The
governmentwide data maintained at that time were unreliable, out of
date, and of limited value. In addition, certain key data that would
be useful for budgeting and strategic management were not being
maintained, such as data on space utilization, facility condition,
historical significance, security, and age. We found that some of the
major real-property-holding agencies faced challenges developing
reliable data on their real property assets. We noted that reliable
governmentwide and agency-specific real property data are critical for
addressing real property management challenges. For example, better
data would help the government determine whether assets are being used
efficiently, make investment decisions, and identify unneeded
properties.
In our February 2011 high-risk update, we reported that the federal
government has taken numerous steps since 2003 to improve the
completeness and reliability of its real property data.[Footnote 15]
FRPC, in conjunction with GSA, established the Federal Real Property
Profile (FRPP) to meet a requirement in Executive Order 13327 for a
single real property database that includes all real property under
the control of executive branch agencies.[Footnote 16] FRPP contains
asset-level information submitted annually by agencies on 25 high-
level data elements, including four performance measures that enable
agencies to track progress in achieving property management
objectives. In response to our 2007 recommendation to improve the
reliability of FRPP data, OMB required, and agencies implemented, data
validation plans that include procedures to verify that the data are
accurate and complete.[Footnote 17] Furthermore, GSA's Office of
Governmentwide Policy (OGP), which administers the FRPP database,
instituted a data validation process that precludes FRPP from
accepting an agency's data until the data pass all established
business rules and data checks. In our most recent analysis of the
reliability of FRPP data, we found none of the previous basic
problems, such as missing data or inexplicably large changes between
years.[Footnote 18] In addition, agencies continue to improve their
real property data for their own purposes. From a governmentwide
perspective, OGP has sufficient standards and processes in place for
us to consider the 25 elements in FRPP as a database that is
sufficiently reliable to describe the real property holdings of the
federal government. Consequently, we removed the data element of real
property management from our high-risk list this year.
CPRA Could Help Agencies Address Underlying Challenges to Disposing of
Unneeded Property:
The government now has a more strategic focus on real property issues
and more reliable real property data, but problems related to unneeded
property and leasing persist because the government has not addressed
underlying legal and financial limitations and stakeholder influences.
In our February 2011 high-risk update, we noted that the legal
requirements agencies must adhere to before disposing of a property,
such as requirements for screening and environmental cleanup, present
a challenge to consolidating federal properties.[Footnote 19]
Currently, before GSA can dispose of a property that a federal agency
no longer needs, it must offer the property to other federal agencies.
If other federal agencies do not need the property, GSA must then make
the property available to state and local governments and certain
nonprofit organizations and institutions for public benefit uses, such
as homeless shelters, educational facilities, or fire or police
training centers.[Footnote 20] As a result of this lengthy process,
GSA's underutilized or excess properties may remain in an agency's
possession for years and continue to accumulate maintenance and
operations costs. We have also noted that 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 21] The
average age of properties in GSA's portfolio is 46 years, and since
properties more than 50 years old are eligible for historic
designation, this issue will soon become critically important to GSA.
The costs of disposing of federal property further hamper some
agencies' efforts to address their excess and underutilized real
property problems. For example, federal agencies are required by law
to assess and pay for any environmental cleanup that may be needed
before disposing of a property[Footnote 22]--a process that may
require years of study and result in significant costs. In some cases,
the cost of the environmental cleanup may exceed the costs of
continuing to maintain the excess property in a shut-down status. The
associated costs of complying with these legal requirements create
disincentives to dispose of excess property.
Moreover, local stakeholders--including local governments, business
interests, private real estate interests, private-sector construction
and leasing firms, historic preservation organizations, various
advocacy groups for citizens that benefit from federal programs, and
the public in general--often view federal facilities as the physical
face of the federal government in their communities. The interests of
these multiple, and often competing stakeholders, may not always align
with the most efficient use of government resources and can complicate
real property decisions. For example, as we first reported in 2007, VA
officials noted that stakeholders and constituencies, such as historic
building advocates or local communities that want to maintain their
relationship with VA, often prevent the agency from disposing of
properties.[Footnote 23] In 2003, we indicated that an independent
commission or governmentwide task force might be necessary to help
overcome stakeholder influences in real property decision making.
In 2007, we recommended that OMB, which is responsible for reviewing
agencies' progress on federal real property management, assist
agencies by developing an action plan to address the key problems
associated with decisions related to unneeded real property, including
stakeholder influences. OMB agreed with the recommendation. The
administration's recently proposed legislative framework, CPRA, is
somewhat responsive to our recommendation in that it addresses legal
and financial limitations, as well as stakeholder influences in real
property decision making.
* With the goal of streamlining the disposal process, CPRA provides
for an independent board to determine which properties it considers
would be the most appropriate for public benefit uses.[Footnote 24]
This streamlined process could reduce both the time it takes for the
government to dispose of property and the amount the government pays
to maintain property.
* To provide financial assistance to the agencies, CPRA establishes an
Asset Proceeds and Space Management Fund from which funds could be
transferred to reimburse an agency for necessary costs associated with
disposing of property.[Footnote 25] Reimbursing agencies for the costs
they incur would potentially facilitate the disposal process.
* To address stakeholder influences, the independent board established
under CPRA would, among other things, recommend federal properties for
disposal or consolidation after receiving recommendations from
civilian landholding agencies and would independently review the
agencies' recommendations. Grouping all disposal and consolidation
decisions into one set of proposals that Congress would consider in
its entirety could help to limit local stakeholder influences at any
individual site.
CPRA does not explicitly address the government's overreliance on
leasing. In 2008, we found that decisions to lease selected federal
properties were not always driven by cost-effectiveness
considerations.[Footnote 26] For example, we estimated that the
decision to lease the Federal Bureau of Investigation's field office
in Chicago, Illinois, instead of constructing a building the
government would own, cost about $40 million more over 30 years. GSA
officials noted that the limited availability of upfront capital was
one of the reasons that prevented ownership at that time. Federal
budget scorekeeping rules require the full cost of construction to be
recorded up front in the budget, whereas only the annual lease
payments plus cancellation costs need to be recorded for operating
leases. In April 2007 and January 2008, we recommended that OMB
develop a strategy to reduce agencies' reliance on costly leasing
where ownership would result in long-term savings.[Footnote 27] We
noted that such a strategy could identify the conditions under which
leasing is an acceptable alternative, include an analysis of real
property budget scoring issues, and provide an assessment of viable
alternatives. OMB concurred with this recommendation but has not yet
developed a strategy to reduce agencies' reliance on leasing. One of
CPRA's purposes--to realign civilian real property by consolidating,
colocating, and reconfiguring space to increase efficiency--could help
to reduce the government's overreliance on leasing. Our current work
examines the efficiency of the federal government's real property
lease management in more detail.
Key Elements of DOD's BRAC Process That Could Expedite the Disposal of
Unneeded Civilian Properties:
DOD has undergone five BRAC rounds to realign DOD's workload to
achieve efficiencies and savings in property management, including
reducing excess properties. The BRAC process, much like CPRA, was
designed to address obstacles to closures or realignments, thus
permitting DOD to close or realign installations and its missions to
better use its facilities and generate savings. Certain key elements
of DOD's process for closing and realigning its installations may be
applicable to the realignment of real property governmentwide. Some of
these key elements include establishing goals, developing criteria for
evaluating closures and realignments, developing a structural plan for
applying selection criteria, estimating the costs and savings
anticipated from implementing recommendations, establishing a
structured process for obtaining and analyzing data, and involving the
audit community.
DOD's 2005 BRAC Process:
DOD's BRAC process was designed to address certain challenges to base
closures or realignments, including stakeholder interests, thereby
permitting the department to realign its missions to better use its
facilities, generate savings, and sometimes also resulting in the
disposal of property. The most recent defense base closure and
realignment round followed a historical analytical framework, carrying
many elements of the process forward or building upon lessons learned
from the department's four previous rounds. DOD used a logical,
reasoned, and well-documented process.[Footnote 28] In addition, we
have identified lessons learned from DOD's 1988, 1991, 1993, and 1995
rounds,[Footnote 29] and we have begun an effort to assess lessons
learned from the 2005 BRAC round.
DOD's 2005 BRAC process consisted of activities that followed a series
of statutorily prescribed steps,[Footnote 30] including:
* Congress established clear time frames for implementation;
* DOD developed options for closure or realignment recommendations;
* BRAC Commission independently reviewed DOD's proposed recommendations;
* President reviewed and approved the BRAC recommendations; and:
* Congress did not disapprove of the recommendations and thus they
became binding.
Key Elements That DOD Used to Develop Its 2005 BRAC Recommendations
That Could Benefit a Civilian Real Property Closure or Realignment
Process:
In developing its recommendations for the BRAC Commission, DOD relied
on certain elements in its process that Congress may wish to consider
as it evaluates the administration's proposed legislation for
disposing of or realigning civilian real property, as follows:
Establish goals for the process. The Secretary of Defense emphasized
the importance of transforming the military to make it more efficient
as part of the 2005 BRAC round. Other goals for the 2005 BRAC process
included fostering jointness among the four military services,
reducing excess infrastructure, and producing savings. Prior rounds
were more about reducing excess infrastructure and producing savings.
Develop criteria for evaluating closures and realignments. DOD
initially proposed eight selection criteria, which were made available
for public comments via the Federal Register. Ultimately, Congress
enacted the eight final BRAC selection criteria in law [Footnote 31]
and specified that four selection criteria, known as the "military
value criteria," were to be given priority in developing closure and
realignment recommendations. The primary military value criteria
include such considerations as an installation's current and future
mission capabilities and the impact on operational readiness of the
total force; the availability and condition of land, facilities, and
associated airspace at both existing and potentially receiving
locations; the ability to accommodate a surge in the force and future
total force requirements at both existing and potentially receiving
locations; and costs of operations and personnel implications. In
addition, Congress specified that in developing its recommendations,
DOD was to apply "other criteria," such as the costs and savings
associated with a recommendation; the economic impact on existing
communities near the installations; the ability of the infrastructure
in existing and potential communities to support forces, missions, and
personnel; and environmental impact. Further, Congress required that
the Secretary of Defense develop and submit to Congress a force
structure plan that described the probable size of major military
units--for example, divisions, ships, and air wings--needed to address
probable threats to national security based on the Secretary's
assessment of those threats for the 20-year period beginning in 2005,
along with a comprehensive inventory of global military installations.
[Footnote 32] In authorizing the 2005 BRAC round, Congress specified
that the Secretary of Defense publish a list of recommendations for
the closure and realignment of military installations inside the
United States based on the statutorily-required 20-year force-
structure plan and infrastructure inventory, and on the selection
criteria.
Estimate costs and savings to implement closure and realignment
recommendations. To address the cost and savings criteria, DOD
developed and used the Cost of Base Realignment Actions model (COBRA)
a quantitative tool that DOD has used since the 1988 BRAC round to
provide consistency in potential cost, savings, and return-on-
investment estimates for closure and realignment options. We reviewed
the COBRA model as part of our review of the 2005 and prior BRAC
rounds and found it to be a generally reasonable estimator for
comparing potential costs and savings among alternatives. As with any
model, the quality of the output is a direct function of the input
data. Also, DOD's COBRA model relies to a large extent on standard
factors and averages and does not represent budget quality estimates
that are developed once BRAC decisions are made and detailed
implementation plans are developed. Nonetheless, the financial
information provides important input into the selection process as
decision makers weigh the financial implications--along with military
value criteria and other considerations--in arriving at final
decisions about the suitability of various closure and realignment
options. However, according to our assessment of the 2005 BRAC round,
actual costs and savings were different from estimates.[Footnote 33]
Establish an organizational structure. The Office of the Secretary of
Defense emphasized the need for joint cross-service groups to analyze
common business-oriented functions. For the 2005 BRAC round, as for
the 1993 and 1995 rounds, these joint cross-service groups performed
analyses and developed closure and realignment options in addition to
those developed by the military services. In contrast, our evaluation
of DOD's 1995 BRAC round indicated that few cross-service
recommendations were made, in part because of the lack of high-level
leadership to encourage consolidations across the services' functions.
[Footnote 34] In the 1995 BRAC round, the joint cross-service groups
submitted options through the military services for approval, but few
were approved. The number of approved recommendations that the joint
cross-service groups developed significantly increased in the 2005
BRAC round. This was in part, because high-level leadership ensured
that the options were approved not by the military services but rather
by a DOD senior-level group.
Establish a common analytical framework. To ensure that the selection
criteria were consistently applied, the Office of the Secretary of
Defense, the military services, and the seven joint cross-service
groups first performed a capacity analysis of facilities and functions
in which all installations received some basic capacity questions
according to DOD. Before developing the candidate recommendations,
DOD's capacity analysis relied on data calls to hundreds of locations
to obtain certified data to assess such factors as maximum potential
capacity, current capacity, current usage, and excess capacity. Then,
the military services and joint cross-service groups performed a
military value analysis for the facilities and functions based on
primary military value criteria, which included a facility's or
function's current and future mission capabilities, physical
condition, ability to accommodate future needs, and cost of operations.
Involve the audit community to better ensure data accuracy. The DOD
Inspector General and military service audit agencies played key roles
in identifying data limitations, pointing out needed corrections, and
improving the accuracy of the data used in the process. In their
oversight roles, the audit organizations, who had access to relevant
information and officials as the process evolved, helped to improve
the accuracy of the data used in the BRAC process and thus
strengthened the quality and integrity of the data used to develop
closure and realignment recommendations. For example, the auditors
worked to ensure certified information was used for BRAC analysis, and
reviewed other facets of the process, including the various internal
control plans, the COBRA model, and other modeling and analytical
tools that were used in the development of recommendations.
There are a number of important similarities between BRAC and a
civilian process as proposed in the administration's CPRA. As a
similarity, both BRAC and CPRA employ the all-or-nothing approach to
disposals and consolidations, meaning that once the final list is
approved by the independent commission or board, it must be accepted
or rejected as a whole. Another important similarity is that both the
BRAC and proposed CPRA processes call for an independent board or
commission to review recommendations.
A key difference between BRAC and the administration's proposed CPRA
is that while the BRAC process placed the Secretary of Defense in a
central role to review and submit candidate recommendations to the
independent board, CPRA does not provide for any similar central role
for civilian agencies. The BRAC process required the Secretary of
Defense to develop and submit recommendations to the BRAC Commission
for review. In this role, the Office of the Secretary of Defense
reviewed and revised the various candidate recommendations developed
by the four military services and the seven separate joint cross
service groups. In contrast, the administration's proposed CPRA does
not place any official or organization in such a central role to
review and submit the recommendations proposed by various federal
agencies to the independent board for assessment and approval. Another
key difference between BRAC and CPRA is the time period in which the
commission will be in existence. CPRA, as proposed by the
administration, is a continuing commission which will provide
recommendations twice a year for 12 years, whereas, the BRAC
Commission convened only for those years in which it was authorized.
For example, after the most recent 2005 BRAC round, the Commission
terminated by law in April 2006. However, we believe the need for a
phased approach involving multiple rounds of civilian property
realignments is warranted given it may take several BRAC-like rounds
to complete the disposals and consolidations of civilian real property
owned and leased by many disparate agencies including GSA, VA,
Department of the Interior, Department of Energy, and others.
In closing, the government has made strides toward strategically
managing its real property and improving its real property planning
and data over the last 10 years, but those efforts have not yet led to
sufficient reductions in excess property and overreliance on leasing.
DOD's experience with BRAC could help the process move forward to
dispose of unneeded civilian real property and generate savings for
the taxpayer.
Chairman Carper, Ranking Member Brown, and Members of the
Subcommittee, this concludes our prepared statement. We will be
pleased to answer any questions that you may have at this time.
GAO Contacts and Staff Acknowledgments:
For further information on this testimony, please contact David Wise
at (202) 512-2834 or wised@gao.gov regarding federal real property, or
Brian Lepore at (202) 512-4523 or leporeb@gao.gov regarding the BRAC
process. Contact points for our Congressional Relations and Public
Affairs offices may be found on the last page of this statement. In
addition to the contacts named above, Keith Cunningham, Assistant
Director; Laura Talbott, Assistant Director; Vijay Barnabas; Elizabeth
Eisenstadt; Amy Higgins; Susan Michal-Smith; Crystal Wesco; and
Michael Willems made important contributions to this statement.
[End of section]
Footnotes:
[1] In this testimony, we refer to property that is owned by the
federal government and under the control and custody of GSA as GSA-
owned property.
[2] GAO, Federal Real Property: Strategy Needed to Address Agencies'
Long-standing Reliance on Leasing, [hyperlink,
http://www.gao.gov/products/GAO-08-197] (Washington, D.C.: Jan. 24,
2008).
[3] High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February
2011).
[4] Letter from Jacob J. Lew, Director, Office of Management and
Budget, to The Honorable Joseph R. Biden, President of the Senate (May
4, 2011) (available at [hyperlink,
http://www.whitehouse.gov/omb/financial_fia_asset] (last visited June
1, 2011)).
[5] H.R. 1734, 112th Cong. (2011).
[6] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[7] See [hyperlink,
http://www.whitehouse.gov/issues/fiscal/excess-property-map] (last
visited June 1, 2011).
[8] The first round in 1988 was authorized by the Defense
Authorization Amendments and Base Closure and Realignment Act, Pub. L.
No. 100-526, Title II (1988) (as amended). Subsequently, additional
BRAC rounds were completed in 1991, 1993, and 1995 as authorized by
the Defense Base Closure and Realignment Act of 1990, Pub. L. No. 101-
510, Title XXIX (1990) (as amended). The latest round--BRAC 2005--was
authorized by the National Defense Authorization Act for Fiscal Year
2002, Pub. L. No. 107-107, Title XXX (2001) (as amended).
[9] In addition, we have also reported that we believe that DOD's net
annual recurring savings estimates are overstated because they include
savings from eliminating military personnel positions without
corresponding decreases in personnel end-strength. DOD disagrees with
our position. GAO, Military Bases: Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment, [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-95-133] (Washington, D.C.: Apr.
14, 1995) and Military Base Realignments and Closures: Estimated Costs
Have Increased and Estimated Savings Have Decreased, [hyperlink,
http://www.gao.gov/products/GAO-08-314T] (Washington, D.C.: Dec. 12,
2007).
[10] DOD defines a major closure as a closure where plant replacement
values exceed $100 million and major realignments as actions with net
losses of 400 or more military and civilian personnel.
[11] GAO, Military Bases: Analysis of DOD's 2005 Selection Process and
Recommendations for Base Closures and Realignments, [hyperlink,
http://www.gao.gov/products/GAO-05-785] (Washington: D.C.: July 1,
2005) and Military Bases: Observations on the 2005 Base Realignment
and Closure Selection Process and Recommendations, [hyperlink,
http://www.gao.gov/products/GAO-05-905] (Washington, DC: July 18, 2005).
[12] See, for example, GAO, Military Base Realignments and Closures:
DOD Is Taking Steps to Mitigate Challenges, but Is Not Fully Reporting
Some Additional Costs, [hyperlink,
http://www.gao.gov/products/GAO-10-725R] (Washington, D.C.: July 21,
2010) and Military Base Realignments and Closures: Estimated Costs
Have Increased While Savings Estimates Have Decreased Since Fiscal
Year 2009, [hyperlink, http://www.gao.gov/products/GAO-10-98R]
(Washington, D.C.: Nov. 13, 2009).
[13] GAO, High-Risk Series: Federal Real Property, [hyperlink,
http://www.gao.gov/products/GAO-03-122] (Washington, D.C.: January
2003).
[14] [hyperlink, http://www.gao.gov/products/GAO-03-122].
[15] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[16] 40 U.S.C. § 524.
[17] GAO, Federal Real Property: Progress Made Toward Addressing
Problems, but Underlying Obstacles Continue to Hamper Reform,
[hyperlink, http://www.gao.gov/products/GAO-07-349] (Washington, D.C.:
Apr. 13, 2007).
[18] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[19] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[20] 42 U.S.C. § 11411; 40 U.S.C. §§ 550, 553.
[21] 16 U.S.C. §§ 470f, 470h-2.
[22] 42 U.S.C. § 9620.
[23] [hyperlink, http://www.gao.gov/products/GAO-07-349].
[24] The board would be composed of seven members appointed by the
President. At least two members must have experience in the private
sector and at least two members must have experience in the public
sector.
[25] The Asset Management Proceeds and Space Management Fund,
established by CPRA, is funded with appropriations, gross proceeds
received from the disposal of civilian real property pursuant to
recommendations by the Board, as well as certain net proceeds received
from the disposal of civilian real properties pursuant to
recommendations by the Board.
[26] [hyperlink, http://www.gao.gov/products/GAO-08-197].
[27] [hyperlink, http://www.gao.gov/products/GAO-07-349] and
[hyperlink, http://www.gao.gov/products/GAO-08-197].
[28] [hyperlink, http://www.gao.gov/products/GAO-05-785].
[29] GAO, Military Bases: Lessons Learned From Prior Base Closure
Rounds, [hyperlink, http://www.gao.gov/products/NSIAD-97-151]
(Washington, D.C.: July 25, 1997).
[30] See, GAO, Federal Real Property: Progress Made on Planning and
Data, but Unneeded Owned and Leased Facilities Remain, [hyperlink,
http://www.gao.gov/products/GAO-11-520T] (Washington, D.C.: Apr. 6,
2011).
[31] Section 2832 of the Ronald W. Reagan National Defense
Authorization Act for Fiscal Year 2005 (Pub. L. No. 108-375 (2004)).
[32] Section 3001 of the National Defense Authorization Act for Fiscal
Year 2002 (Pub. L. No. 107-107 (2001)), amended the Defense Base
Closure and Realignment Act of 1990 (Pub. L. No. 101-510 (1990)) to,
among other things, require DOD to develop a 20-year force structure
plan as the basis for its 2005 BRAC analysis to include the probable
end strength levels and major military force units needed to meet the
probable threats identified by the Secretary of Defense.
[33] As we reported in November 2009 [hyperlink,
http://www.gao.gov/products/GAO-10-98R], BRAC one-time implementation
costs rose to almost $35 billion in fiscal year 2010 compared with
DOD's initial estimate of $21 billion in 2005. Similarly, net annual
recurring savings dropped to $3.9 billion in fiscal year 2010 compared
with the $4.2 billion DOD estimated in 2005.
[34] [hyperlink, http://www.gao.gov/products/NSIAD-97-151].
[End of section]
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