General Services Administration's Practices for Altering Leased Buildings Should Be Improved

The General Services Administration (GSA) leases about 91.3 million square feet of space to accommodate federal departments and agencies at annual rents of $455 million. In fiscal year (FY) 1977, obligations for alterations to leased buildings were in excess of $36 million.

The following deficiencies in GSA contracting practices for altering leased buildings were identified: (1) excessive use of sole-source contracting with the building owners for alterations; (2) not preparing independent government estimates to aid in negotiating contract prices; (3) a single organizational unit responsible for preparing estimates, negotiating contracts, approving payments, and inspecting work; (4) performing major alterations before lease expiration without attempting to renegotiate the lease period or the rent; (5) failure to adequately consider purchase for construction of alternate space; (6) paying rent while space was not available for occupancy; and (7) failure to document inspections of alteration work. As a result of reviews and investigations, GSA instituted a new policy requiring competitive procurement and issued new procedures for inspecting alteration work. If properly implemented, these actions may correct some of the deficiencies. The Economy Act limits the amount that may be expended on alterations in a leased building, but it has not been effective in accomplishing this. Requiring specific congressional authorization of alterations would be more effective. GSA funding practices for alteration work have not always been sound, and year-end obligations for FY 1977 may be invalid or misclassified.

Recommendations

Our 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.

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