General Services Administration
Improvements Needed in Managing Delegated Authority of Real Property Activities Gao ID: GAO-07-1000 September 5, 2007The General Services Administration (GSA) issues different types of delegations, whereby agencies may request authority to perform certain real property activities, such as leasing space and maintaining property. Effective management of the program is critical to ensuring that federal dollars are well spent and adequate workspace is provided. GAO was asked to determine (1) what real property authority GSA has delegated to its tenant agencies, (2) what policies GSA used to manage delegated authority, and (3) reasons the tenant agencies requested delegated authority. GAO reviewed the law, federal regulations, and GSA policies relating to six types of delegated authority and interviewed GSA officials and officials from six select tenant agencies. GAO analyzed GSA data on delegations issued from fiscal years 1996 to 2006.
GSA delegated authority for operations and maintenance, utility services, lease management, administrative contracting officer, repair and alteration activities, and real estate leasing to its tenant agencies. However, GSA did not have complete or consistent data for key delegations. GSA officials believe the lack of complete data for repair and alteration delegations up to $100,000 was not problematic because they involve relatively small projects with limited program risk, and GSA has not noticed a pattern of problems that would warrant increased oversight. Regarding delegations of authority for real estate leasing, two offices within GSA collected separate sets of data. One office collected data on the number of general purpose lease delegations issued while another collected data on the number of lease delegations exercised for three different types of lease delegations (including general purpose, categorical, and special purpose). One office said its data are likely an undercount, and the different sets of data have not been reconciled. GSA is currently implementing several changes to improve its data collection for lease delegations and will issue separate oversight procedures that include a requirement to reconcile the two sources of lease delegation data. However, it is unclear when the oversight procedures will be issued. It is important to have accurate data on lease delegations because these delegations appear to be used more frequently than other delegation types. Federal agencies using these delegations may lack experience in acquiring office space, which could result in the government not receiving the best deal. We found that GSA had written policies and procedures for managing the six types of delegations we reviewed, but the guidance was not always current. GSA officials acknowledged the need to update some of its guidance and said the updates are in process, but it is unclear when these updates will be finalized. Further, GSA officials stated they did not always use mandated cost-effectiveness criteria when deciding to delegate authority for certain delegations due, in part, to staffing constraints. In addition, the procedures used for assessing cost-effectiveness were not always included in written guidance. The lack of updated guidance and limited use of mandated criteria inhibits GSA's ability to manage its delegations and determine if they are in the best interests of the government. According to the six tenant agencies we interviewed, the main reasons agencies sought delegations were the ability to complete their delegated real property activities in a timely manner and prioritize their own service requests, particularly in those cases where GSA's knowledge and expertise were less critical. Most of the six agencies we contacted plan to seek delegations in the future.
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-07-1000, General Services Administration: Improvements Needed in Managing Delegated Authority of Real Property Activities
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Report to the Ranking Member, Committee on Homeland Security and
Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
September 2007:
General Services Administration:
Improvements Needed in Managing Delegated Authority of Real Property
Activities:
GSA Delegations of Real Property Activities:
GAO-07-1000:
GAO Highlights:
Highlights of GAO-07-1000, a report to Ranking Member, Committee on
Homeland Security and Governmental Affairs, U.S. Senate
Why GAO Did This Study:
The General Services Administration (GSA) issues different types of
delegations, whereby agencies may request authority to perform certain
real property activities, such as leasing space and maintaining
property. Effective management of the program is critical to ensuring
that federal dollars are well spent and adequate workspace is provided.
GAO was asked to determine (1) what real property authority GSA has
delegated to its tenant agencies, (2) what policies GSA used to manage
delegated authority, and (3) reasons the tenant agencies requested
delegated authority. GAO reviewed the law, federal regulations, and GSA
policies relating to six types of delegated authority and interviewed
GSA officials and officials from six select tenant agencies. GAO
analyzed GSA data on delegations issued from fiscal years 1996 to 2006.
What GAO Found:
GSA delegated authority for operations and maintenance, utility
services, lease management, administrative contracting officer, repair
and alteration activities, and real estate leasing to its tenant
agencies. However, GSA did not have complete or consistent data for key
delegations. GSA officials believe the lack of complete data for repair
and alteration delegations up to $100,000 was not problematic because
they involve relatively small projects with limited program risk, and
GSA has not noticed a pattern of problems that would warrant increased
oversight. Regarding delegations of authority for real estate leasing,
two offices within GSA collected separate sets of data. One office
collected data on the number of general purpose lease delegations
issued while another collected data on the number of lease delegations
exercised for three different types of lease delegations (including
general purpose, categorical, and special purpose). One office said its
data are likely an undercount, and the different sets of data have not
been reconciled. GSA is currently implementing several changes to
improve its data collection for lease delegations and will issue
separate oversight procedures that include a requirement to reconcile
the two sources of lease delegation data. However, it is unclear when
the oversight procedures will be issued. It is important to have
accurate data on lease delegations because these delegations appear to
be used more frequently than other delegation types. Federal agencies
using these delegations may lack experience in acquiring office space,
which could result in the government not receiving the best deal.
We found that GSA had written policies and procedures for managing the
six types of delegations we reviewed, but the guidance was not always
current. GSA officials acknowledged the need to update some of its
guidance and said the updates are in process, but it is unclear when
these updates will be finalized. Further, GSA officials stated they did
not always use mandated cost-effectiveness criteria when deciding to
delegate authority for certain delegations due, in part, to staffing
constraints. In addition, the procedures used for assessing cost-
effectiveness were not always included in written guidance. The lack of
updated guidance and limited use of mandated criteria inhibits GSA‘s
ability to manage its delegations and determine if they are in the best
interests of the government.
According to the six tenant agencies we interviewed, the main reasons
agencies sought delegations were the ability to complete their
delegated real property activities in a timely manner and prioritize
their own service requests, particularly in those cases where GSA‘s
knowledge and expertise were less critical. Most of the six agencies we
contacted plan to seek delegations in the future.
What GAO Recommends:
GAO recommends that the Administrator of GSA (1) develop written
procedures for reviewing the different sources of its lease delegation
data to identify and determine an accurate count of the leases awarded
and (2) update the guidance for managing delegations, including
procedures for assessing the cost-effectiveness of certain delegations.
In response, GSA agreed with the report‘s findings and recommendations
and stated it will use them to improve its delegations programs. GSA
also provided written technical comments which we incorporated.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1000].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Kay E. Brown (202) 512-
7215, BrownKE@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
GSA Delegated Most Types of Real Property Authority but Did Not Have
Consistent or Complete Data for Certain Delegated Activities:
GSA's Written Policies and Procedures for Managing Certain Delegations
Were Not Always Current, and the Agency Did Not Always Use Mandated
Cost Effectiveness Criteria:
Agencies Primarily Request Delegated Authority to Receive Faster
Service and Most Said They Plan to Seek Delegations in the Future:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the General Services Administration:
Tables:
Table 1: Description of the Types of Real Estate Leasing Authority
Delegation:
Table 2: Number of Delegations to GSA's Tenant Agencies from Fiscal
Years 1996 - 2006:
Table 3: Guidance Containing Policies and Procedures by Type of
Delegated Authority:
Table 4: GSA's Use of Mandated Cost-Effectiveness Criteria When
Deciding to Delegate:
Table 5: Agencies We Contacted with the Most Delegations in Each
Category:
Figures:
Figure 1: Number of Delegations of Operations and Maintenance Authority
by Agency, from Fiscal Years 1996 - 2006:
Figure 2: Number of Delegations of Utility Services Authority by
Agency, from Fiscal Years 1996 - 2006:
Figure 3: Number of Delegations of Administrative Contracting Officer
Authority by Agency, from Fiscal Years 2000 - 2006:
Figure 4: Comparison of PBS and OGP Lease Delegation Data for Fiscal
Years 1996 - 2006:
Abbreviations:
DOC: Department of Commerce:
DOD: Department of Defense:
EPA: Environmental Protection Agency:
GSA: General Services Administration:
OGP: Office of Governmentwide Policy:
HHS: Department of Health and Human Services:
DHS: Department of Homeland Security:
DOI: Department of Interior:
DOJ: Department of Justice:
PBS: Public Buildings Service:
SSA: Social Security Administration:
United States Government Accountability Office:
Washington, DC 20548:
September 5, 2007:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
Dear Senator Collins:
The General Services Administration (GSA) serves as the federal
government's landlord and designs, builds, manages, and leases the
facilities supporting the needs of other federal agencies throughout
the government. Although GSA is responsible for managing over 8,000
government-owned and leased buildings, GSA's customer agencies may
request authority to perform for themselves certain real property
activities, such as leasing and maintaining their own space. GSA can
delegate the requested authority to the agencies. For example, in 1996,
GSA began a program to offer what are known as general purpose lease
delegations.[Footnote 1] Under this program, called "Can't Beat GSA
Leasing," federal agencies have the choice of using GSA as their
leasing agent or assuming responsibility of their own leasing. The
program was an outgrowth of GSA's commitment to streamline its leasing
operations, respond to the government's changing needs, and address
recommendations from client agencies. When GSA delegates its real
property authority, the delegations require the agencies to comply with
the applicable laws, regulations, and terms of the delegations. Under
the delegations, GSA can review the agency's performance to determine
whether the agency is meeting its responsibilities. If federal agencies
do not perform their delegated responsibilities efficiently, they
could, for example, pay more than GSA would charge for space, provide
substandard space for their employees, or damage the quality or value
of the space. Effective management of its delegations is critical for
GSA to help ensure that federal dollars are well-spent and adequate
workspace is provided for federal employees.
Given your interest in GSA's use of real property delegations of
authority, you asked us to determine (1) what real property authority
GSA has delegated to its tenant agencies, (2) what policies and
procedures GSA used to manage delegated real property authority, and
(3) reasons the tenant agencies requested delegated authority. To meet
these objectives, we reviewed the law, federal management regulations,
and GSA's existing policies and procedures for delegating real property
authority. We also interviewed GSA officials from the Public Buildings
Service (PBS), which is responsible for managing the delegations. In
addition, we interviewed officials from GSA's Office of Governmentwide
Policy (OGP), which provides oversight for delegations of real estate
leasing authority. We limited our review to the types of delegations
issued to and exercised by GSA's top 10 customers (its tenant agencies)
between fiscal years 1996 to 2006.[Footnote 2] Delegations are issued
when GSA grants authority to another agency to perform real property
activities and exercised when the agency actually uses the authority.
Further, we interviewed six tenant agencies with the highest number of
delegations to obtain information on their views and experiences with
the delegations. These six agencies are the Departments of Commerce,
Defense, Interior, and Justice; the Social Security Administration, and
the Environmental Protection Agency (EPA). We also contacted Judiciary
officials from the Administrative Office of the U.S. Courts to discuss
their decision to terminate certain delegations. In addition, we
obtained data from PBS and OGP on delegations issued and exercised. We
conducted data reliability testing and determined that the data used in
this report were sufficiently reliable for our purposes. A more
detailed discussion of our scope and methodology appears in appendix I.
We performed our review from August 2006 through June 2007 in
accordance with generally accepted government auditing standards.
Results in Brief:
GSA delegated authority for operations and maintenance, utility
services, lease management, administrative contracting officer
activities, repair and alterations, and real estate leasing to its
tenant agencies; however, GSA did not have complete or consistent data
for certain delegations of its authority. GSA generally requires
agencies to seek its approval before using delegations of real property
authority. However, GSA is required by law to issue delegations to
requesting agencies for repair and alteration projects in public
buildings that are not expected to exceed $100,000; in leased space,
GSA has issued a standing delegation under its general authority for
these types of projects. Additionally, GSA issued standing delegations
to allow agencies to enter into certain types of leases without having
to first obtain GSA's approval. GSA has collected data on the number of
delegations of authority for operations and maintenance, utility
services, lease management, administrative contracting officer
activities, and repair and alterations that exceed $100,000. It has not
collected data on delegations for repair and alterations with a value
up to $100,000. GSA officials told us they did not collect data for
repair and alterations delegations up to $100,000 because these
projects are relatively small with limited program risk, and the GSA
regional offices would identify and report any potential problems to
the central office. The officials added that they had not seen a
pattern of problems that would indicate a need for more oversight of
repair and alteration delegations that do not exceed $100,000.
Regarding real estate lease delegation data, in recent years, two
offices within GSA collected separate sets of data. PBS collected data
on the number of general purpose lease delegations issued while OGP
collected data on the number of leases awarded using three types of
lease delegations--general purpose, categorical, and special purpose.
Although OGP began collecting data in an oversight role for PBS
activities, OGP officials told us its data are likely an undercount and
the two different sets of data have not been reconciled. It is
important to have accurate data on delegations of real estate leasing
authority because these delegations appear to be used more frequently
than other delegation types. Federal agencies using these delegations
may lack experience in acquiring office space, which could result in
offices being housed in substandard buildings and the government not
receiving the best deal. GSA is implementing several changes to improve
its data collection for lease delegations, but guidance has not yet
been issued to address procedures for reviewing the various sources of
lease delegation data and developing an accurate count of leases
awarded using the delegations. According to GAO's Standards for
Internal Controls, managers need program data to determine whether they
are meeting their agencies' goals for accountability for effective and
efficient use of resources. Without accurate data on the number of
leases awarded using all three types of lease delegations, GSA is
missing an important management control to evaluate whether the
delegation of real estate leasing authority is operating as intended.
GSA had written policies to manage all six types of delegations we
reviewed; however, policies and procedures in certain documents were
not current, and GSA did not always use mandated criteria when deciding
whether to delegate real property authority. Specifically, the
delegations desk guide, which is intended as a reference guide for
those implementing GSA delegations, and the customer guide for real
property were both out of date. The lack of updated guidance could
limit GSA's ability to manage its delegations effectively. In addition,
GSA did not always use mandated criteria--namely determining whether a
delegation would be cost effective for the government--when deciding to
delegate real property authority. GSA used these mandated criteria when
delegating utility services and for the most recent delegations of
individual repair and alteration authority above $100,000 and
operations and maintenance authority. But all of the procedures used
for assessing the cost-effectiveness of delegations of repair and
alteration authority that exceed $100,000 and operations and
maintenance authority were not included in GSA's written guidance.
Moreover, GSA did not use the mandated criteria when delegating real
estate leasing authority, including general purpose and special purpose
leases up to 2,500 square feet, and administrative contracting officer
authority. GSA is updating its guidance for delegations of general
purpose leasing authority to include procedures for assessing cost-
effectiveness. It is also limiting the use of delegations of
administrative contracting officer authority because, in implementation
studies, GSA determined these delegations were not cost effective.
Finally, while GSA could not determine if it used mandated criteria
when delegating lease management authority, officials said that
delegations of lease management authority have limited financial risk.
The absence of written guidance for procedures used to assess the cost-
effectiveness of operations and maintenance delegations, individual
repair and alteration delegations above $100,000, and general purpose
leasing delegations and special purpose leasing delegations that exceed
2,500 square feet could limit GSA's ability to determine if delegations
are in the best interests of the government.
Of the six tenant agencies we contacted that had delegated real
property authority, most cited faster service as the main reason for
seeking the delegations. For example, officials from one agency told us
they requested repair and alterations delegations because they needed
to expedite the installation of blast mitigation material on windows in
GSA-controlled space to be compliant with increased security
requirements. Similarly, officials from two other agencies told us they
requested delegated leasing authority to provide a more timely response
to specific needs in selected buildings. We also heard from agencies
that said the delegated administrative contracting officer authority
and operations and maintenance authority gave them increased control
and flexibility to prioritize and fulfill agency needs. GSA officials
told us that in some cases delegated authority can provide greater
efficiency or allow for timelier service, as with some delegations of
operations and maintenance authority. However, in other cases the
officials do not believe that delegations allow for faster service,
such as with delegations of repair and alteration that exceed $100,000
and real estate leasing authority. GSA's view of the various types of
delegations is that it allows for greater efficiency in use of federal
contracting officer authority. Most of the agencies told us they plan
to seek delegations of real property authority in the future.
To improve GSA's ability to oversee the various delegated authorities,
we recommend that the Administrator of GSA (1) develop written
procedures for reviewing the different sources of its lease delegation
data to identify and determine an accurate count of the leases awarded
using all three types of leasing delegations and (2) update the
guidance for managing all delegations, including procedures for
assessing the cost-effectiveness of individual repair and alteration
delegations above $100,000, operations and maintenance delegations, and
general purpose leasing delegations and special purpose leasing
delegations that exceed 2,500 square feet.
We provided a draft of this report to GSA for comment. In response, GSA
agreed with the report's findings and recommendations and stated it
will use them to improve its delegations programs. GSA also provided
written technical comments, which we incorporated as appropriate. See
appendix II for GSA's written comments.
Background:
Congress created GSA in 1949 through the Federal Property and
Administrative Services Act to serve as a centralized property
management agency with one of its responsibilities to provide space to
federal agencies as economical as possible. The GSA Administrator may
delegate and may authorize successive redelegations of the real
property authority vested in the Administrator to any federal
agency.[Footnote 3] Federal agencies must exercise delegated real
property authority and functions according to the parameters described
in each delegation of authority document, and the agencies may only
exercise the authority of the Administrator that is specifically
provided within the delegation of authority.[Footnote 4] GSA officials
told us the ability of the GSA Administrator to delegate real property
authority is a tool provided by Congress to enable GSA to carry out its
various real property responsibilities. The delegations are not managed
as a single program, rather the various delegations, once granted, are
managed and administered in the appropriate PBS business line.
According to federal regulations,[Footnote 5] GSA may delegate
authority to federal agencies to conduct the following
activities:[Footnote 6]
Real estate leasing authority: This authority allows agencies to
perform all functions necessary to acquire leased space, including
procurement and administering, managing and enforcing the leases.
Agencies have the option to use one of three types of delegations of
real estate leasing authority granted by the GSA Administrator: general
purpose, categorical, and special purpose.[Footnote 7] See table 1 for
a description of the types of real estate leasing authority
delegations.
Table 1: Description of the Types of Real Estate Leasing Authority
Delegation:
Delegation type: General purpose leasing;
Description: A standing delegation, which was established in September
1996, that authorizes federal agencies to perform all functions related
to the leasing of general purpose space for a term of up to 20 years.
Delegation type: Categorical leasing;
Description: A standing delegation of authority, which was established
in June 1974, that authorizes federal agencies to acquire certain types
of space for particular agency activities, such as military recruiting
offices and space for antennas, depots and laundries for a term of up
to 20 years. Individual leases entered into under this delegation do
not require GSA approval if they are below the prospectus level and do
not include parking.[A].
Delegation type: Special purpose leasing;
Description: Twelve federal agencies have a standing delegation, which
was established in June 1974, to lease their own special purpose space
for a term of up to 20 years subject to any limitations specified in
the delegation. Special purpose leases up to 2,500 square feet do not
require GSA approval.
Source: GAO analysis of information provided by GSA.
[A] A prospectus is a justification for a proposed construction, lease,
or alteration project (which includes an alteration to a leased
building). A prospectus for a proposed lease is submitted when the cost
exceeds a legislatively established threshold, which is $2.54 million
for fiscal year 2007, and includes information on the project's size,
cost, location, and other features. For alterations to leased
buildings, the prospectus threshold is one-half the prospectus
threshold for a lease. An agency with delegated leasing authority
analyzes each lease to determine whether it needs a prospectus. GSA
then prepares a prospectus in consultation with the agency and submits
the prospectus to the appropriate House and Senate authorizing
committees.
[End of table]
In May 2005, GSA issued guidance that reemphasized and modified certain
procedures associated with the use of the general purpose, categorical,
and special purpose leasing delegations. GSA requires agencies to meet
several general conditions to use the real estate leasing authority
delegations, including (1) the agency must receive written confirmation
from the appropriate Assistant Regional Administrator that suitable
government-controlled space is not available before relocating
government employees from GSA controlled space; (2) the average annual
rent is below the prospectus level, as previously described; (3) agency
staff using the authority must meet the relevant contracting experience
and training requirements; (4) the agency must acquire and use the
space in accordance with all applicable laws and regulations for
federal space acquisition activities; (5) the agency must have the
capacity to perform all delegated leasing activities; and (6) the
agency must provide semi-annual reports to OGP on April 30 and October
31 that detail the leasing activities conducted under the delegations.
GSA retains the right to review each lease and the capacity of the
agency to perform the delegation and, if necessary, to revoke the
delegation. Agencies using the general purpose leasing delegation are
also required to provide the following information to the appropriate
GSA regional office: upon award of the lease, provide notification of
the award date and location of the property, including documentation
that the negotiated rental rate is within the prevailing market rental
rate for the class of building leased and provide 18 months advance
notice of lease expiration if there is a continuing need for the space
and the agency wishes to use the delegation again.[Footnote 8]
Administrative contracting officer authority: This authority allows the
agencies to manage the administration of one or more lease contracts
awarded by GSA and perform such duties as paying and withholding rent
and modifying lease provisions that do not change the length of the
lease or the amount of space under the lease.[Footnote 9] To obtain
this delegation, an agency must occupy at least 90 percent of the
building's GSA-controlled space or have the written concurrence of 100
percent of rent-paying occupants covered under the lease, and have the
technical capability to perform the lease. Agencies seeking a
delegation must submit a written request to the regional headquarters
where the building is located. If PBS staff at the region concurs with
the request, an agreement is drafted for the delegation of
administrative contracting officer authority and sent to the PBS
Commissioner and the GSA Administrator for approval. An administrative
contracting officer delegation lasts until the lease expires, or the
space reverts to GSA unless the agency or GSA agrees to terminate the
delegation.
Lease management authority: This authority allows agencies to manage
the administration of one or more lease contracts awarded by
GSA.[Footnote 10] To obtain this delegation, an agency must occupy at
least 90 percent of the building's GSA-controlled space or have the
written concurrence of 100 percent of rent-paying occupants covered
under the lease, and have the technical capability to perform the
lease. Agencies seeking a delegation must submit a written request to
the regional headquarters where the building is located. If PBS staff
at the region concurs with the request, a memorandum of understanding
is drafted and sent to the PBS Commissioner and the GSA Administrator
for approval. The term of the delegation lasts until the lease expires
and either agency is free to terminate at any time. In addition to this
process, GSA's contracting officers can delegate lease management
authority to qualified individuals, upon request, for specific leases.
Operations and maintenance authority: This authority, which was
established in 1983, allows agencies to manage and operate GSA-owned
and leased buildings on a day-to-day basis. Delegated functions may
include among others, maintenance, recurring repairs, and minor
alterations. To obtain this type of delegation, an agency must occupy
at least 90 percent of the space in the GSA-controlled facility or (1)
have the concurrence of 100 percent of the rent-paying occupants to
perform these functions, (2) demonstrate that it can perform the
delegated responsibilities, and (3) document that the delegation will
be cost effective. Agencies seeking this authority must first notify
the region where the space is located by submitting a formal request.
After regional staff has reviewed the request, it is forwarded to the
GSA Administrator for a final decision. The Administrator can then
grant or decline the request, with concurrence from applicable program
offices. A delegation of authority generally lasts until the space is
returned to GSA or the space is no longer needed. Delegation agreements
allow for either the agency or GSA to terminate a delegation in full or
in part.[Footnote 11]
Repair and alteration project authority: This authority allows agencies
to perform repair and alteration projects. With respect to repair and
alteration delegations, there is a statute relating to the delegation
of repair and alteration projects of $100,000 or less. This statute
provides that in accordance with standards prescribed by the GSA
Administrator, the Administrator shall delegate requests to an agency
for projects in public buildings when the estimated cost does not
exceed $100,000.[Footnote 12] Under GSA's general authority to delegate
its real property activities at 40 U.S.C. § 121, in January 1997, the
GSA Administrator granted blanket delegation authority in leased space
for repair and alteration projects up to $100,000 for an indefinite
term.[Footnote 13] According to GSA officials, the regions are
responsible for managing these delegations. The statute further
provides that the GSA Administrator may delegate to an agency projects
that are estimated to cost more than $100,000 when the Administrator
determines the delegation promotes efficiency and economy. According to
the Federal Management Regulation, GSA can delegate individual
alteration projects greater than $100,000 when the agency demonstrates
the ability to perform the delegated repair and alteration project
responsibilities and when such a delegation promotes efficiency and
economy.[Footnote 14] According to GSA officials, individual requests
for delegations of repair and alteration project authority greater than
$100,000, which are rarely received by GSA, are granted only by the
Administrator of GSA.[Footnote 15] The scope of the intended project
must be included in an agency's request for a delegation and is
reviewed first by the relevant GSA region and then by PBS central
office staff before being submitted to the Administrator with a
recommendation either to grant or refuse authorizing the
delegation.[Footnote 16] The term of delegation is for the duration of
the project and either party can terminate the delegation at any time.
If a delegated repair and alteration project is expected to exceed the
prospectus level, GSA will submit the proposed project to its
authorizing committees for review and approval.[Footnote 17]
Utility services authority: This authority allows agencies to negotiate
and execute utility services contracts for periods of more than 1 year
but not exceeding 10 years for their use and benefit.[Footnote 18]
Agencies also have the authority to intervene in utility rate
proceedings to represent the consumer interests of the federal
government, if so provided in the delegation of authority. Agencies
seeking utility delegations are required to submit their request to
PBS's Energy Center of Expertise, which procures utility services for
GSA's customer agencies. The requests must include a certification from
the acquiring agency's senior procurement executive that the agency has
an established acquisition program, personnel technically qualified to
deal with specialized utilities problems, and the ability to accomplish
certain contracting requirements. The Energy Center reviews the request
for compliance with the requirements and conducts an internal analysis
of federal utility needs in the specified area. Upon approval of the
agency's qualifications to perform the delegation, and a determination
that there is minimal if any additional federal utility needs in the
service area, a formal delegation of authority for a utility
acquisition letter is then prepared for the GSA Administrator's
signature.
GSA Delegated Most Types of Real Property Authority but Did Not Have
Consistent or Complete Data for Certain Delegated Activities:
GSA delegated authority for operations and maintenance, utility
services, lease management, administrative contracting officer
activities, repair and alterations, and real estate leasing to its
tenant agencies. However, as shown in table 2, GSA did not have
complete or consistent data on the number of delegations of repair and
alteration project authority up to $100,000 and real estate leasing
authority. GSA generally requires agencies to seek its approval before
using delegations of real property authority. However, GSA is required
by law to issue delegations to requesting agencies for repair and
alteration projects in public buildings that are not expected to exceed
$100,000; in leased space, GSA has issued a standing delegation under
its general authority for these types of projects. Additionally, GSA
issued standing delegations to allow agencies to enter into certain
types of leases without having to first obtain its approval. GSA
officials told us that they believe the lack of complete data for
delegations of repair and alteration project authority up to $100,000
was not problematic. GSA said these delegations are for small projects
with limited program risk; and according to GSA officials, the GSA
regional offices would identify and report any potential problems to
the central office. However, real estate lease delegations involve more
risk, and without accurate data on the number of leases awarded using
these delegations, GSA is missing an important management control to
assess their impact.
Table 2: Number of Delegations to GSA's Tenant Agencies from Fiscal
Years 1996 - 2006:
Type of delegated authority: Operations and maintenance;
Number of delegations to GSA's tenant agencies: 43;
Years for which data were available: GSA estimated that the majority of
the delegations were issued on or before 1989 for a term of 5 years and
subsequently redelegated without a defined term.
Type of delegated authority: Utility services;
Number of delegations to GSA's tenant agencies: 52;
Years for which data were available: 1996- 2006.
Type of delegated authority: Lease management;
Number of delegations to GSA's tenant agencies: 16[A];
Years for which data were available: 1996-2006.
Type of delegated authority: Administrative contracting officer;
Number of delegations to GSA's tenant agencies: 136[A];
Years for which data were available: 2000-2006.
Type of delegated authority: Repair and alteration project;
Number of delegations to GSA's tenant agencies: 1[B];
Years for which data were available: 1996-2006.
Type of delegated authority: Real estate leasing;
Number of delegations to GSA's tenant agencies: 594 (delegations
exercised as reported by OGP, includes all three types);
Years for which data were available: 1996-2006.
Type of delegated authority: Real estate leasing;
Number of delegations to GSA's tenant agencies: 190 (delegations issued
as reported by PBS, includes only general purpose);
Years for which data were available: 2001-2006.
Source: GAO analysis of GSA data.
[A] This number represents the cumulative number of unique leases with
this delegation.
[B] GSA reported one individual repair and alteration delegation over
$100,000 but did not collect data on blanket repair and alteration
delegations up to $100,000.
[End of table]
Operations and maintenance authority: GSA reported that its tenant
agencies exercised 43 delegations of operations and maintenance
authority from fiscal years 1996 to 2006, representing 203
buildings.[Footnote 19] As shown in figure 1, the Department of Defense
had the most delegations, representing 84 buildings and approximately 4
million square feet.
Figure 1: Number of Delegations of Operations and Maintenance Authority
by Agency, from Fiscal Years 1996 - 2006:
[See PDF for image]
Source: GAO analysis of GSA data.
[End of figure]
PBS officials did not have exact issuance dates for these delegations;
however, they estimated that the majority of the delegations were
originally issued on or before 1989 for a term of 5 years and
subsequently redelegated without defined terms. PBS officials said they
rarely receive requests for new operations and maintenance delegations.
Since 2000, GSA issued only one new delegation of this type to the
agencies included in our review. PBS officials also said that they
rarely decline requests for delegations of operations and maintenance
authority because PBS works with the agencies to determine that they
meet the requirements before they formally submit the request.
Utility services authority: GSA also reported 52 utility services
delegations from fiscal years 1996 to 2006 to agencies that had custody
or control of their facilities. As shown in figure 2, the Department of
Interior had the most delegations, all of which were for remote sites
of the Bureau of Indian Affairs and the Bureau of Reclamation.
Figure 2: Number of Delegations of Utility Services Authority by
Agency, from Fiscal Years 1996 - 2006:
[See PDF for image]
Source: GAO analysis of GSA data.
[End of figure]
Lease management authority: GSA reported that, for fiscal years 1996 to
2006, it delegated lease management authority for 16 leases to its
tenant agencies.[Footnote 20] GSA does not require the regional offices
to report these delegations to the central office, and the central
office does not routinely request or monitor information on these
activities. GSA officials said these delegations are self-correcting -
-meaning the limited authority provided under these delegations is
controlled by the GSA contracting officer, which minimizes the risk
that the agency could exceed the authority of the delegation.
Additionally, GSA officials said they had not seen a pattern of
problems that would indicate a need for more oversight of these
delegations.
Administrative contracting officer authority: GSA reported that, for
fiscal years 2000 to 2006, it delegated administrative contracting
officer authority for 136 leases to its tenant agencies.[Footnote 21]
But GSA did not have data for fiscal years 1996 to 1999 because the
database used to track these delegations did not have historical data
before fiscal year 2000. As shown in figure 3, all of the delegations
went to the Department of Commerce, the Department of Defense, and the
EPA. In addition, most of the delegated activity was in the National
Capital Region.[Footnote 22]
Figure 3: Number of Delegations of Administrative Contracting Officer
Authority by Agency, from Fiscal Years 2000 - 2006:
[See PDF for image]
Source: GAO analysis of GSA data.
[End of figure]
Repair and alteration project authority: GSA reported granting one
individual repair and alteration delegation above $100,000 to the EPA,
but did not have data for its blanket delegations of repair and
alteration authority up to $100,000 as these delegations are managed at
the regional level, and GSA does not require the regional offices to
report these delegations to the central office. GSA officials said that
regional staff would report to the central office any significant
issues or problems resulting from the blanket delegations, and based on
anecdotal evidence, they have not seen a pattern of problems that would
indicate a need for more oversight of these delegations.
Real estate leasing authority: Two separate offices in GSA collect
disparate sets of data on delegations of real estate leasing authority.
PBS requires the regional offices to report how many general purpose
leasing delegation requests are received and how many are issued, which
may or may not ultimately result in the requesting agency actually
awarding a lease. PBS reported that, for fiscal years 2001 to 2006, it
issued 190 lease delegations to its tenant agencies. However, PBS did
not have data from fiscal years 1996 through 2000 because, according to
PBS officials, the data were misplaced through various internal
reorganizations. In addition, PBS did not collect data on categorical
and special purpose delegations. Agencies are not required to notify
GSA prior to using the categorical lease delegation, except for leases
above the prospectus threshold as previously described and leases for
parking. Special purpose delegations also do not require GSA approval
unless the space exceeds 2,500 square feet. PBS officials stated that
they focus their management efforts on the general purpose lease
delegations because they have the authority to approve or disapprove
use of this delegation type, whereas agencies can generally use the
categorical and special purpose lease delegations without GSA approval.
Lastly, previous reviews of the general purpose lease delegation
program by OGP found, among other things, several instances where
federal agencies did not notify the relevant PBS office of its intent
to exercise the delegation of authority, making it difficult for PBS to
track these delegations.[Footnote 23]
The data that PBS has on real estate lease delegations are inconsistent
with the data that OGP collects. In 1996, OGP was asked to provide an
oversight role, serving as an "honest broker" between PBS and the
federal agencies. PBS officials told us the Office of Management and
Budget (OMB) and Congress, at the time, wanted independent oversight of
the delegations because they were concerned that agencies may not have
the expertise to obtain the best deal for the government. They also
viewed PBS as having an inherent conflict of interest when deciding
delegations. In other words, OMB and Congress believed that PBS could
stand to lose a significant amount of its leasing business due to the
delegations and therefore did not view PBS as an independent overseer
of the delegation program. According to GSA's guidance on delegations
of real estate leasing authority, federal agencies are to report to OGP
every 6 months on their delegated leasing activity for all three types
of lease delegations.[Footnote 24] OGP reported that GSA's tenant
agencies entered into 594 leases using the three different leasing
authorities from fiscal year 1996 through fiscal year 2006.[Footnote
25] However, OGP said the data likely undercount the number of
exercised lease delegations because the guidance did not define whether
agencies were to report all current delegations or only those awarded
within the 6 months of any given reporting period. In other words, some
agencies reported only those delegations issued during the 6-month
period and others reported all current delegations.
Both PBS and OGP acknowledged that their data were inconsistent, as
shown in figure 4. OGP and PBS did not review each other's lease
delegation data to determine an accurate count of the number of leases
awarded using the real estate leasing delegations.
Figure 4: Comparison of PBS and OGP Lease Delegation Data for Fiscal
Years 1996 - 2006:
[See PDF for image]
Source: GAO analysis of GSA data.
[End of figure]
According to PBS guidance for delegations of real estate leasing
authority, OGP compares the information that the agencies report
against delegation information provided by the PBS regions to determine
any underreporting by agencies. However, an OGP official told us that
OGP is not required to follow PBS guidance and in fact does not compare
its data with that provided by PBS. PBS officials acknowledged that OGP
is not bound by PBS's guidance for delegations of real estate leasing
authority, but it noted that OGP was involved in drafting the guidance.
GSA is implementing several changes to improve its data collection for
lease delegations. First, the Federal Real Property Council[Footnote
26] accepted OGP's recommendation to add a data field to the
governmentwide Federal Real Property Profile inventory system to track
the leasing authority used for space acquisition. Agencies are now
required to report real property assets by building and to specify
whether that asset is owned or leased. If the agency designates the
latter, it now must designate the authority under which the asset is
leased. According to GSA officials, this requirement is effective for
fiscal year 2007 and was included in guidance issued in June 2007. The
information will allow the Federal Real Property Council and GSA to
better understand the level of delegated leasing that occurs in the
federal government using the categorical, special purpose, and general
purpose leasing delegations. Additionally, according to GSA's draft
leasing guidance that is scheduled to be issued in September 2007, GSA
will no longer require the biannual reporting to OGP of general
purpose, categorical, and special purpose lease delegations. In its
place, OGP will accept the agency submissions for the Federal Real
Property Profile inventory, which, according to GSA officials, should
eliminate the agency confusion about the reporting period.[Footnote 27]
GSA has also committed to implementing recommendations from the August
2007 Inspector General report on the lease delegation program.[Footnote
28]
PBS is also drafting separate oversight procedures for delegations of
real estate leasing authority. According to PBS officials, the
procedures will include a requirement to reconcile the two sources of
lease delegation data: the Federal Real Property Inventory Report and
PBS. OGP will annually provide a listing of all delegation activity
from the Federal Real Property Profile database, and PBS will compare
that information with its centralized records. GSA officials said these
oversight procedures would be issued in September 2007.
According to GAO's Standards for Internal Controls, managers need
program data to determine whether they are meeting their agencies'
goals for accountability for effective and efficient use of
resources.[Footnote 29] GSA officials told us that they believe the
lack of complete data for delegations of repair and alteration project
authority up to $100,000 was not problematic.[Footnote 30] Repair and
alteration delegations that do not exceed $100,000 involve what GSA
considers to be small projects with limited program risk, and any
potential problems would be identified and reported to the central
office by the regions. Additionally, GSA officials said they had not
seen a pattern of problems with these delegations that would indicate a
need for more oversight. However, based on the data provided, agencies
use the lease delegations more often than other types of delegations.
Federal agencies using these delegations may lack experience in
acquiring office space, which could result in offices being housed in
substandard buildings and the government not receiving the best deal.
Without accurate data on the number of leases awarded using the real
estate leasing delegations, GSA is missing an important management
control to evaluate whether the delegation of real estate leasing
authority is operating as intended.
GSA's Written Policies and Procedures for Managing Certain Delegations
Were Not Always Current, and the Agency Did Not Always Use Mandated
Cost-Effectiveness Criteria:
Although GSA had written policies and procedures for managing all types
of delegations we reviewed, the policies and procedures in certain
documents were not always current. In addition, GSA did not always use
mandated criteria stated in the Federal Management Regulation--namely
determining whether a delegation would be cost effective for the
government--when deciding to delegate real property activities. GSA
said it used mandated criteria when delegating utility services and for
the most recent delegations of individual repair and alteration
authority above $100,000 and operations and maintenance authority.
However, GSA did not use the criteria when delegating real estate
leasing and administrative contracting officer authority and could not
determine if it used mandated criteria when delegating lease management
authority. GSA's procedures for assessing cost-effectiveness were not
always documented in GSA's written guidance, which could limit GSA's
ability to determine if the delegations are in the best interests of
the government in certain cases.
GSA Policies and Procedures for Managing Certain Delegations Were Not
Always Current:
We found that GSA had written policies and procedures for managing all
types of delegations, but the policies and procedures were not always
current. GSA's policies and procedures for issuing and managing
delegations are described in the following documents:
* Federal regulations and internal GSA policy letters and
memorandums,[Footnote 31]
* GSA's "Desk Guide --Delegations of Authority for Real Property
Management and Operating and Leasing," which states that it "is a
reference guide on policies, procedures, and practices for individuals
engaged in implementing the terms and conditions of the General
Services Administration delegation program and delegation agreements
for real property management authorities in federally owned and
operated space."
* Chapter 8 of GSA's "Customer Guide to Real Property," which,
according to GSA officials, serves as formal guidance to explain the
general procedures for issuing the different types of
delegations,[Footnote 32] and:
* GSA's "Standard Operating Procedures for Operation and Maintenance of
Delegated Real Property," which describes the agency's responsibilities
under a delegation of operations and maintenance authority.
Table 3 identifies the delegation types and the applicable documents
that outline the policies and procedures for the delegation.
Table 3: Guidance Containing Policies and Procedures by Type of
Delegated Authority:
Type of delegated authority: Real estate leasing;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[X];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [Empty].
Type of delegated authority: Administrative contracting officer;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[X];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [Empty].
Type of delegated authority: Lease management;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[X];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [Empty].
Type of delegated authority: Operations and maintenance;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[X];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [X].
Type of delegated authority: Repair and alteration;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[Empty];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [Empty].
Type of delegated authority: Utility service;
Guidance containing policies and procedures: Regulations and internal
policy letters and memorandums: [X];
Guidance containing policies and procedures: Delegations desk guide:
[Empty];
Guidance containing policies and procedures: Customer guide: [X];
Guidance containing policies and procedures: Standard operating
procedures: [Empty].
Source: GAO analysis of information provided by GSA.
[End of table]
Our review of the policies and procedures found that the desk guide has
not been updated to include current guidance for delegations of real
estate leasing, lease management, repair and alteration, and utility
services authority. For example, the section on delegations of real
estate leasing authority did not include the procedures associated with
the use of the real estate leasing delegations; procedures for
requesting lease management authority were not explained; and
delegations for repair and alteration project authority and utility
services authority were not discussed. In addition, the customer guide
did not distinguish between blanket repair and alteration authority,
which can be used for projects up to $100,000 and authority for
individual repair and alteration projects above $100,000.[Footnote 33]
As discussed earlier, the approval process for each differs. GSA
officials acknowledged the need to update the delegations desk guide
and the customer guide and said the updates are in process. According
to GAO's Standards for Internal Controls, written policies and
procedures are control activities that help ensure management's
directives are carried out and action are taken to control risks. The
lack of updated guidance could limit GSA's ability to manage its
delegations effectively.
GSA Did Not Always Use Mandated Criteria When Deciding to Delegate
Certain Real Property Activities, and the Procedures Used Were Not
Always Included in Written Guidance:
GSA did not always use mandated cost-effectiveness criteria when
delegating activities, as shown in table 4.
Table 4: GSA's Use of Mandated Cost-Effectiveness Criteria When
Deciding to Delegate:
Type of delegated authority: Utility service;
Mandated criteria used: Yes.
Type of delegated authority: Repair and alteration[A];
Mandated criteria used: Yes - for the most recent request above
$100,000 in 2006.
Type of delegated authority: Operations and maintenance;
Mandated criteria used: Yes - for the most recent request in 2006.
Type of delegated authority: Real estate leasing;
Mandated criteria used: No.
Type of delegated authority: Administrative contracting officer;
Mandated criteria used: No.
Type of delegated authority: Lease management;
Mandated criteria used: Unknown.
Source: GAO analysis of information provided by GSA.
[A] Since GSA is required either by law or has issued a blanket repair
and alteration delegation for projects that do not exceed $100,000, it
does not apply mandated cost-effectiveness criteria to these projects.
[End of table]
The Federal Management Regulation states that delegations are to be in
the government's best interest and specifies that GSA must evaluate
such factors as whether a delegation would be cost effective for the
government in the delivery of space. GSA used these mandated criteria
when delegating utility services and for the most recent delegations of
individual repair and alteration authority above $100,000 and
operations and maintenance authority. But all of the procedures used
for assessing cost-effectiveness of delegations of individual repair
and alteration authority above $100,000 and operations and maintenance
authority were not included in any of GSA's written guidance. Since GSA
is either required by law or has issued a blanket repair and alteration
delegation for projects that do not exceed $100,000; it does not apply
cost-effectiveness criteria to these delegations. Further, GSA
officials told us these delegations have limited financial risk and,
based on anecdotal evidence, they had not seen a pattern of problems
with these delegations. GSA did not use the criteria when delegating
real estate leasing authority and administrative contracting officer
authority, and it could not determine if mandated criteria were used
when delegating lease management authority. GSA officials told us they
are updating their guidance for delegations of general purpose real
estate leasing authority to include procedures for cost-effectiveness.
The officials also said they are limiting the use of delegations of
administrative contracting officer authority and that delegations of
lease management authority have limited financial risk, and thus it may
not be the best use of resources to develop procedures to determine
whether these delegations are cost effective.
To determine whether a delegation of utility services authority would
be cost effective, GSA identifies the federal presence--that is, the
number of federal agencies in a given area--within the utility service
area where the requesting facility resides. According to the Director
of the Energy Center, most delegation requests are for buildings in
areas where there is no other federal need for utility services.
Because it takes substantial resources for the center to negotiate
public utility contracts with a serving utility, the center generally
does not negotiate contracts for individual agency needs. Therefore,
the center determined it was cost effective to grant the delegations
when there were no additional federal needs requiring an area-wide
utility contract in the areas of the requested delegations.
PBS officials said they assessed cost-effectiveness prior to granting
the individual repair and alteration delegation to EPA. PBS required
EPA to submit a justification that demonstrated the delegation was in
the government's best interest and was cost effective. The
justification included a cost analysis as part of its management plan,
which GSA used to compare against its costs for similar work and other
data. Although PBS officials said they used these procedures, they
acknowledged that they have not been formalized in any written
guidance.
GSA recently began assessing the cost-effectiveness of operations and
maintenance delegations. Although GSA reviewed the operating costs of
agencies with operations and maintenance delegations in the early years
of the delegations, it did not assess cost-effectiveness of the
delegations. Agencies paid GSA rent for delegated buildings and, until
1997, GSA transferred back to the agencies an amount that GSA estimated
it would have spent in the absence of the delegation[Footnote 34] to
provide standard-level building service.[Footnote 35] To oversee how
agencies used this funding, GSA required agencies to submit an annual
building operations cost report.[Footnote 36] However, at GSA's
direction, agencies did not include funding it spent to provide night
and weekend building services because GSA considered these costs above
standard level. In 1990, we reported that GSA could not determine
whether the delegations were cost-effective because it lacked all cost
and performance data to oversee the operations and maintenance
delegations, and the data it required were frequently inaccurate or
sometimes never received.[Footnote 37]
Since our previous review, GSA has issued additional guidance for
delegations of operations and maintenance. The customer guide and desk
guide state that overall operating costs must be reasonable and not
exceed those that GSA would incur. Both guides add that facility
operating costs should be included in the delegation. Further, the desk
guide states that the operating costs should be derived from and
supported by the facility management plan. But the section on the
facility management plan in the standard operating procedures does not
address submission of building or facility operating costs. According
to GSA officials, the financial information provided by the agencies
will be compared with industry benchmarks to determine cost-
effectiveness.
However, GSA has not formalized the benchmark comparison procedure in
any of its guidance. GSA officials told us they have issued only one
new delegation of operations and maintenance authority since 2000, and
they performed an economic evaluation of the request.[Footnote 38]
In contrast, GSA did not consider cost-effectiveness prior to issuing
delegations for real estate leasing authority. GSA officials told us
that staffing and financial constraints limited their ability to assess
cost-effectiveness of real estate leasing authority and that initially
(at the beginning of the general purpose delegations in 1996) they had
no reason to believe the delegations were not cost effective. GSA does
require agencies that use the general purpose lease delegation to
provide documentation to the relevant GSA regional office that the
negotiated rental rate is within the prevailing market rental rate for
the class of building leased. If the negotiated rental rate exceeds the
market range, the agency is to provide information as to why the market
rate was exceeded.[Footnote 39] However, these procedures do not apply
to special purpose delegations over 2,500 square feet, where GSA has
the discretion to issue these delegations.[Footnote 40] In addition,
GSA officials acknowledged that they did not use the information or
know the degree to which agencies were in compliance with this
requirement and did not validate the market ranges used by agencies.
Under GSA's draft leasing guidance, which is scheduled to be issued in
September 2007, agencies using the general purpose leasing delegation
will be required to provide a narrative explaining why the granting of
the request is in the best interests of the government and a plan for
meeting or exceeding GSA's performance measures (lease cost). GSA will
use this and other information to determine whether the requesting
agency's exercise of the delegation is in the government's best
interest. Additionally, GSA will analyze each general purpose lease
awarded against the same GSA lease cost performance measure used for
GSA leases.
GSA also did not consider cost-effectiveness for delegations of
administrative contracting officer authority. According to GSA
officials, cost-effectiveness was not considered because the intent of
the delegation was not to reduce costs, but to improve service
delivery. GSA allows agencies with delegations of administrative
contracting authority to pay rent directly to the landlords instead of
GSA paying the rent to the landlords. In 2004, GSA reviewed these
delegations and found that the program was not revenue neutral, but
rather had a negative financial impact. This delegation type increased
their administrative costs because of the staff time needed to
reconcile the funds paid to the agencies with the amount the agencies
paid to the landlord.[Footnote 41] In addition, GSA officials said that
in certain cases, agencies were changing the terms of lease agreements
to make revisions to the space without GSA's knowledge, which resulted
in increased costs and financial liability to the government. For
example, as a part of the 2004 review, GSA found instances of space
alterations that were added to the lease agreements by the agency. The
space alterations required the government to restore the space to its
original condition; however, there was no explanation of the costs or
any indication of how the costs would be paid at lease expiration. The
review recommended discontinuation of the program by June 2005. GSA
decided to offer lease management authority delegations in place of new
administrative contracting officer authority delegations if desired by
the tenant agencies.
Finally, PBS central office officials could not determine if they used
mandated criteria when delegating lease management authority because
these delegations are managed at the regional level, and GSA does not
require the regional offices to report on these delegations to the
central office. Further, the central office does not routinely request
information on these activities. GSA officials told us there is limited
risk associated with delegations of lease management authority as these
delegations are structured to prevent the agencies from exceeding the
terms of the delegation. Therefore, it may not be the best use of
resources to develop and implement procedures to determine whether
these delegations are cost effective.
According to GAO's Standards for Internal Controls, written policies
and procedures are control activities that help ensure management's
directives are carried out and actions are taken to control risks. The
absence of written guidance for all procedures used to assess cost-
effectiveness for (1) delegations of individual repair and alteration
authority above $100,000, (2) operations and maintenance authority, (3)
general purpose leasing delegations and (4) special purpose leasing
delegations that exceed 2,500 square feet could limit GSA's ability to
determine if delegations are in the best interests of the government.
Agencies Primarily Request Delegated Authority to Receive Faster
Service, and Most Said They Plan to Seek Delegations in the Future:
Of the six tenant agencies we contacted with delegated real property
authority, five agencies cited timeliness and control as the main
reasons they sought delegations. Officials from all of the agencies we
contacted told us their decisions were not based on a lack of
satisfaction with GSA's performance. All of the agencies said they will
continue to seek delegations of real property authority in the future.
We also contacted the Judiciary, which was terminating its delegations,
and agency officials told us it was doing so because the delegations
were no longer cost effective.
Agency Officials Said They Sought Delegations to Improve Timeliness of
Real Property Activities:
Officials at five of the tenant agencies we contacted cited improved
timeliness as the main reason they sought their delegations. In
particular, these officials told us their respective delegations
provided them with the ability to complete their delegated real
property activities in a more timely fashion. For example, officials
from the Department of Commerce told us they are able to procure leased
space faster than GSA because they believe GSA's competing demands
prevent GSA officials from urgently locating space for the agency.
Similarly, Department of Interior officials stated that timeliness was
a major benefit of their delegations of real estate authority because
GSA officials cannot always make its needs a priority because of GSA's
large workload. Both the Departments of Commerce and Defense officials
said their administrative contracting officer authority delegations
provided them with increased control and direct access to the landlord,
which resulted in faster service. Officials from the Department of
Defense and the Social Security Administration said their delegations
of operations and maintenance activities provided them with the
flexibility to work closely with their own personnel to plan and
prioritize service requests in order to fulfill agency needs in a
timelier manner. Finally, the EPA said they requested repair and
alterations delegations because they needed to expedite the
installation of blast mitigation material on windows in GSA-controlled
space to be compliant with increased security requirements. An EPA
official said these delegations allowed them to complete their projects
in a more timely fashion because they had direct access to their
contractors. In contrast, officials at the Departments of Interior and
Justice said they sought delegations of utility service to obtain
stabilized pricing for utilities to protect them from market
fluctuations.
All of the agencies we interviewed that received real property
delegations said their decisions to seek delegations were not based on
a lack of satisfaction with GSA's performance in the given service but
rather were useful in certain circumstances where GSA's knowledge and
expertise were less critical. For example, the Departments of Commerce
and Interior said they primarily use lease delegations in remote areas
where GSA has a minimal presence. In these instances, both agencies
said it made sense for them to conduct the lease transactions because
they generally had more knowledge of these isolated real estate
markets. Both agencies added that their decisions to seek lease
delegations were not related to any dissatisfaction with GSA's leasing
program. Further, they said that it was sensible for them to use GSA to
acquire leased space in urban areas because of GSA's expertise with
these real estate markets. Officials from the Departments of Commerce
and Defense said their use of delegations of administrative contracting
officer authority was driven by their desire to leverage direct
payments to the landlord to help ensure better service. An official
from EPA told us that the agency's decision to seek a repair and
alteration delegation was not a result of any problems with GSA's
services. Finally, the Departments of Interior and Justice told us they
request delegations of utility authority when they have a need to
contract for utility services, and GSA determines that it is more
appropriate for the agency to obtain the contract.
GSA's view of the various types of delegations is that it allows for
greater efficiency in use of federal contracting officer authority.
Additionally, if utility connection and service is required in an
expedited fashion for operations and maintenance purposes, a delegation
of utility acquisition authority can allow for timelier services. GSA
officials acknowledged that the delegations of utility services allowed
for stabilized pricing and delegations of administrative contracting
officer authority and operations and maintenance allowed for timelier
services. However, GSA officials questioned whether the individual
repair and alteration delegation above $100,000 allowed for faster
service. GSA told us that EPA used a contractor from GSA's approved
list of contractors to perform these delegations and did not think the
work would be performed faster because of the delegation. Similarly,
GSA officials questioned whether agencies with lease delegations had
more market knowledge in remote areas or were able to complete lease
transactions in a more timely fashion. GSA added that agencies do not
always provide their space needs in a timely fashion which affects
GSA's ability to provide timely leasing services.
Agencies Plan to Seek Delegations in the Future:
Officials from all six agencies that we interviewed said they planned
to seek delegations in the future. Officials from the Department of
Commerce told us they do not necessarily want to increase their
delegations of real estate leasing authority, but they will continue to
seek lease delegations when the conditions are conducive. However,
department officials said they would like to increase the number of
administrative contracting officer authority delegations, but GSA has
been reluctant to issue additional delegations. Department of Interior
officials said they will continue to seek delegations for space
acquisition in remote areas and utility services when needed. Officials
from the Department of Defense said they do not plan to aggressively
pursue additional operations and maintenance delegations because many
of the delegated lease facilities are subject to base realignment and
closure and will continue to request delegations of administrative
contracting officer authority as needed. Social Security Administration
officials said they plan to maintain their current level of operations
and maintenance delegations. EPA said it plans to continue to seek
delegations of repair and alteration project authority as needed.
Finally, the Department of Justice told us it will continue to seek
delegations of utility services as needed.
While these six agencies told us they would likely continue to seek
delegations, one agency is terminating its delegations with GSA.
According to PBS officials, the Judiciary terminated authority for one
delegation of operations and maintenance and is currently terminating
three more. Judiciary officials from the Administrative Office of the
U.S. Courts stated that prior to terminating the delegations of
operations and maintenance authority, the tenant satisfaction level in
their delegated buildings was higher than in nondelegated buildings
because the court was aware of their tenants' operating needs and could
respond to repairs and service requirements faster than GSA. However,
their decision to terminate the delegation authority was driven by two
primary considerations. First, according to the officials, in 2004, GSA
shifted responsibility for all repairs, regardless of cost, to
delegated agencies with no adjustment to the rent GSA charges.
According to the officials, the office was required to repair and
maintain systems that were aging and significantly beyond their useful
life. The officials stated the shift of more responsibility to perform
costly repairs reduced the Judiciary's funds for preventive maintenance
on those aging systems. Second, for buildings without an operations and
maintenance delegation, GSA charges an appraised rate for operating
expenses based on local comparable buildings. However, according to the
officials from the Administrative Office of the U.S. Courts, the actual
cost for managing the delegated buildings was higher than what GSA was
charging for nondelegated buildings under its appraisal system for some
locations. Therefore, the Judiciary did not consider it cost effective
to continue the delegations because the operating costs were higher
than what GSA charges. GSA acknowledged that Judiciary's delegated
buildings were aging and that the rising expenses of operations and
maintenance delegations prompted the Judiciary's decision to terminate
the delegations. However, GSA told us it did not shift responsibility
for all repairs to the Judiciary. GSA officials explained that repair
activity for delegated buildings is divided between the tenant agency
and GSA. According to GSA, the Judiciary was responsible for routine
repairs, defined by GSA as items typically expensed to tenants by
private sector landlords. GSA was responsible for making necessary
replacements to the structure and building systems, which it considered
capital replacements.[Footnote 42]
Conclusions:
In managing its delegations, GSA lacked basic management controls such
as complete and consistent data and current written policies and
procedures. In particular, GSA had inconsistent data on delegations of
real estate leasing authority. GSA is currently implementing several
changes to improve its data collection for lease delegations and will
issue separate oversight procedures that include a requirement to
reconcile the two sources of lease delegation data. However, it is
unclear when the oversight procedures will be issued. GSA has written
policies and procedures for managing its delegations, but some of this
guidance is out of date. While GSA officials said updates to some of
the guidance are in process, it is unclear when these updates will be
finalized. Further, GSA also did not use mandated cost-effectiveness
criteria when deciding to delegate certain real property authority.
These basic management controls are the first line of defense in
safeguarding assets and providing effective stewardship of public
resources. In the absence of (1) accurate program data on the numbers
and types of key authorities delegated, (2) current policies and
procedures to help guide decisions to delegate, and (3) complete cost-
effectiveness analyses, GSA cannot ensure that delegations are an
efficient use of federal dollars or in the best interests of the
government.
Recommendations for Executive Action:
To improve GSA's ability to oversee the various delegated authorities,
we recommend that the Administrator of GSA take the following two
actions:
* develop written procedures for reviewing the different sources of its
lease delegation data to identify and determine an accurate count of
the leases awarded using all three types of leasing delegations and:
* update the guidance for managing delegations, including procedures
for assessing the cost-effectiveness of individual repair and
alteration delegations above $100,000, operations and maintenance
delegations, general purpose leasing delegations, and special purpose
leasing delegations that exceed 2,500 square feet.
Agency Comments:
We provided GSA a draft of this report for its review and comment. GSA
agreed with the report's findings and recommendations and stated it
will use them to improve its delegation programs. More specifically,
with respect to our first recommendation, GSA stated it is in the
process of implementing several changes to improve its data collection
for lease delegations. GSA noted that it has requested the Federal Real
Property Council to provide PBS the data on delegated leases listed in
the Federal Real Property Profile database. GSA agreed to compare
annually the agencies' data sent to GSA with the Federal Real Property
Profile database, as agencies will now be required to identify the
authority under which they acquired their leased assets. GSA further
agreed to develop written guidance for these new procedures. Regarding
our second recommendation, GSA said it would review and update, as
necessary, the guidance for managing its real property delegations. GSA
further noted that it has various types of delegations of authority
with unique policies and procedures to administer the specific
requirements of the delegation programs. GSA also provided written
technical comments, which we have incorporated in this report as
appropriate. GSA's letter is contained in appendix II without the
enclosure that contained the technical comments.
As agreed with your office, unless you publicly release its contents
earlier, we plan no further distribution of this report until 30 days
after the date of this letter. At that time, we will provide copies to
interested congressional committees and the GSA Administrator. We will
make copies available to others upon request. The report is available
at no charge on GAO's Web site at [hyperlink, http://www.gao.gov].
Contact points for our offices of Congressional Relations and Public
Affairs may be found on the last page of this report.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-7215 or brownke@gao.gov. Key contributors to
this report were Sally Moino, Assistant Director; Derrick Collins;
Susan Michal-Smith; Michael Mgebroff; Courtney Reid; Janay Sam; and
Sandra Sokol.
Sincerely yours,
Signed by:
Kay E. Brown:
Acting Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Given your interest in the General Services Administration's (GSA) use
of real property delegations of authority, we determined (1) what real
property authority GSA has delegated to its tenant agencies, (2) what
policies and procedures GSA uses to manage delegated real property
authority, and (3) reasons the tenant agencies requested delegated
authority.
To determine what real property authority GSA delegated to its tenant
agencies and the criteria GSA used when deciding to delegate those
activities, we reviewed, among other materials, the law, the Federal
Management Regulation, and the Federal Acquisition Regulation related
to GSA's authority to delegate real property functions; existing
policies and procedures for managing the delegations, including
internal Public Buildings Service (PBS) guidance on delegations of real
estate leasing authority and PBS's "Standard Operating Procedures for
Operation and Maintenance of Delegated Real Property;" previous Office
of Governmentwide Policy reviews of delegations of real estate leasing
authority; PBS summaries of the lease delegation program; and data on
the number of delegations by type and agency from fiscal years 1996 to
2006. We limited our review to delegations for the following agencies:
Departments of Commerce, Defense, Health and Human Services, Homeland
Security, Interior, Justice, the Treasury, Environmental Protection
Agency, the Judiciary, and the Social Security Administration. These
agencies were GSA's top 10 customers in annual rent for fiscal year
2005 as reported in GSA's State of the Portfolio. For the purposes of
our review, we did not include real property disposal authority or
delegations of security authority in our analysis. To assess the
reliability of the delegations data we (1) reviewed related
documentation, (2) conducted manual testing of certain source
databases, and (3) interviewed knowledgeable agency officials about the
quality of the data. As a result, we determined that the data were
sufficiently reliable for the purposes of this report.
Finally, to obtain information on the views and experiences of agencies
with delegations we interviewed officials from six agencies. To select
the agencies, we reviewed GSA's data on delegations to its tenant
agencies from fiscal years 1996 to 2006 and selected the two agencies
with the most delegations in each category for which we had data: real
estate leasing authority, administrative contracting officer authority,
operations and maintenance authority, repair and alteration project
authority, and utility service authority. Because we used a sample
selection method, our results are not generalizable to all agencies
that received delegations of real property authority. Table 5 provides
a listing of the agencies we selected and interviewed.
Table 5: Agencies We Contacted with the Most Delegations in Each
Category:
Delegation type: Real estate leasing;
Department of Commerce: [X];
Department of Interior: [X];
Department of Defense: [Empty];
Social Security Administration [A]: [Empty];
Environmental Protection Agency: [Empty];
Department of Justice: [Empty].
Delegation type: Administrative contracting officer [X];
Department of Commerce: [Empty];
Department of Interior: [X];
Department of Defense: [Empty];
Social Security Administration [A]: [Empty];
Environmental Protection Agency: [Empty];
Department of Justice: [Empty].
Delegation type: Operations and maintenance;
Department of Commerce: [Empty];
Department of Interior: [Empty];
Department of Defense: [X];
Social Security Administration [A]: [X];
Environmental Protection Agency:[Empty] ;
Department of Justice: [Empty].
Delegation type: Repair and alteration;
Department of Commerce: [Empty];
Department of Interior: [Empty];
Department of Defense: [Empty];
Social Security Administration [A]: [Empty];
Environmental Protection Agency: [X];
Department of Justice: [Empty].
Delegation type: Utility service;
Department of Commerce: [Empty];
Department of Interior: [X];
Department of Defense: [Empty];
Social Security Administration [A]: [Empty];
Environmental Protection Agency: [Empty];
Department of Justice: [X].
Source: GAO.
[A] We originally attempted to interview officials from the Department
of Treasury to discuss their operations and maintenance delegations,
but our request for an interview was unsuccessful. Subsequently, we
contacted officials from the Social Security Administration to discuss
their operations and maintenance delegations.
[End of table]
We also interviewed Judiciary officials from the Administrative Office
of the U.S. Courts to discuss its decision to return delegations of
operations and maintenance authority.
We performed our review from August 2006 through June 2007 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the General Services Administration:
GSA:
August 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 the
opportunity to review and comment on the draft report, "Improvements
Needed in Managing Delegated Authority of Real Property Activities,"
(GAO-07-1000). The Government Accountability Office recommends the
Administrator of General Services: (1) develop written procedures for
reviewing the different sources of its lease delegation data to
identify and determine an accurate count of the leases awarded using
all three types of leasing delegations; and, (2) update the guidance
for managing delegations, including procedures for assessing the cost-
effectiveness of individual repair and alteration delegations above
$100,000, operations and maintenance delegations, general purpose
leasing delegations. and special purpose leasing delegations that
exceed 2,500 square feet.
GSA agrees with the findings and recommendations and will use them to
improve our delegation programs.
Technical comments that update and clarify statements in the draft
report are enclosed and incorporated herein by reference. If 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:
Enclosure:
cc: Mark Goldstein, Director, Physical Infrastructure:
[End of section]
Footnotes:
[1] Besides general purpose, under certain circumstances, agencies have
the option to use two other types of delegations of real estate leasing
authority, including categorical and special purpose. See below for
additional information on the three types of leasing delegations.
[2] Based on annual rent in the fiscal year 2005 State of the
Portfolio, these 10 agencies include the Departments of Commerce,
Defense, Health and Human Services, Homeland Security, Interior,
Justice, Treasury, EPA, the Judiciary, and the Social Security
Administration.
[3] See 40 U.S.C. § 121, which provides that the GSA Administrator may
delegate its authority under the act except for (1) the authority to
prescribe regulations on matters of policy applying to executive
agencies; (2) the authority to transfer functions and reallocated
amounts from one component of GSA to another under certain situations;
and (3) other authority for which delegation is prohibited under the
act. GSA is not prohibited from delegating the authority for the real
property activities listed in the report.
[4] 41 C.F.R. § 102-72.20.
[5] 41 C.F.R. § 102-72.25.
[6] GSA also has the authority to delegate real property disposal but
reported that it had not delegated this activity from fiscal years 1996
through 2006; therefore, we excluded this type of delegation from our
review. In addition, the Homeland Security Act of 2002 transferred the
Federal Protective Service to the Department of Homeland Security, and
as a result the department now has responsibility for delegations of
security authority. GSA entered into a memorandum of understanding with
the department regarding security services and as a result defers to
the department for delegations of security authority.
[7] Some agencies have independent leasing authority, which allows the
agency to perform for themselves all necessary functions to acquire
leased space. For example, the Department of Veterans Affairs has the
authority to acquire leased space for medical facilities (38 U.S.C. §
8103) and the Securities and Exchange Commission has the authority to
enter into leases for office, meeting, storage space, and other space
necessary to carry out its functions (15 U.S.C. § 78d).
[8] Agencies that subsequently decide not to exercise the requested
authority must provide written notice of such to the relevant regional
administrator.
[9] GSA did not provide the actual date when this delegation was
established but estimated that it was prior to 1996.
[10] GSA did not provide the actual date when this delegation was
established but estimated that it was prior to 1996.
[11] GSA may revoke a delegation of operations and maintenance
authority if the agency does not comply with the terms of the
agreement, the agency falls below 90 percent occupancy and cannot
obtain the concurrence from all other rent paying tenants, or by mutual
agreement.
[12] 40 U.S.C. § 3313.
[13] The Federal Acquisition Streamlining Act of 1994 (FASA) enacted
simplified acquisitions to purchase supplies and services, which are
excepted from the Competition in Contracting Act's full and open
competition requirement. In most instances, the simplified acquisition
threshold is $100,000. Part 13 of the Federal Acquisition Regulation
establishes procedures for simplified acquisitions, which are designed
to promote efficiency and economy in contracting and to avoid
unnecessary burdens for agencies and contractors.
[14] 41 C.F.R. §102-72.65.
[15] GSA did not provide the actual date when this delegation was
established but estimated that it was prior to 1997.
[16] Oversight of the execution of the project is the responsibility of
the GSA region in which the work would occur.
[17] 40 U.S.C. § 3305(b).
[18] GSA did not provide the actual date when this delegation was
established but estimated that it was prior to 1997.
[19] One delegation was returned to GSA and terminated, and three are
in the process of being returned and terminated.
[20] This number represents the cumulative number of unique leases with
this delegation.
[21] This number represents the cumulative number of unique leases with
this delegation.
[22] The National Capital Region serves federal agency clients located
throughout Washington, D.C; Maryland (Montgomery and Prince George's
counties); and Virginia (the cities of Alexandria and Falls Church, and
Arlington, Fairfax, Loudoun, and Prince William counties).
[23] OGP's Office of Real Property Management reviewed the general
purpose lease delegation program in 1998, 2001, and 2005.
[24] Prior to guidance issued in May 2005, agencies were not required
to report categorical and special purpose leasing delegations to OGP.
OGP only collected data on the number of leases awarded using the
general purpose leasing delegation.
[25] This includes data from OGP's reviews of the general purpose lease
delegation program in 1998, 2001, and 2005. The 594 lease awards
include 282 from categorical lease delegations, 159 from special
purpose lease delegations, 73 from general purpose lease delegations
and 80 unknown. According to GSA officials, one agency did not report
the type of lease delegation used because it was not required. The
agency did not respond to GSA's request for the information.
[26] The Federal Real Property Council was established in 2004 and is
responsible for developing guidance, identifying best practices, and
helping agencies improve the management of real property assets.
[27] OMB rates agencies on the timeliness and accuracy of their Federal
Real Property Profile submission.
[28] GSA, Office of Inspector General, Review of Public Buildings
Service's Delegations of Authority to Lease Space, Report Number
A060082/P/6/R07004 (Aug. 24, 2007).
[29] GAO, Standards for Internal Control in the Federal Government,
GAO/ AIMD-00-21.31 (Washington D.C.: November 1999).
[30] GSA had data for the majority of the period we reviewed for
delegations of administrative contracting officer authority.
[31] This includes relevant sections of the Federal Management
Regulation published at 41 C.F.R., bulletins issued as supplemental
guidance, and the Federal Acquisition Regulation.
[32] References to delegations of utility services authority are
included in a different chapter.
[33] The desk and customer guides also did not explain that GSA defers
to the Department of Homeland Security for delegations of security
authority.
[34] Beginning in 1997, GSA required agencies to seek their own
congressional funding to support their operations and maintenance
delegations and adjusted agency rent, accordingly.
[35] GSA defined standard-level services as those building services
provided during a normal 50-hour work week (5 days at 10 hours per
day).
[36] In 2000, GSA eliminated the reporting requirement because GSA
considered the contracts that agencies used to procure operations and
maintenance services to be performance-based contracts in which cost is
not necessarily the primary consideration.
[37] GAO, General Services Administration: Delegated Buildings
Adequately Operated but Better GSA Oversight Needed, GAO/GGD-90-76
(Washington, D.C.: May 15, 1990).
[38] GSA officials also told us that they are reviewing delegations of
operation and maintenance authority that do not have a specified term
as well as any that are up for renewal. Officials are requiring
agencies to demonstrate the ability to manage and run the space but are
not specifically assessing cost-effectiveness.
[39] The documentation may include information from real estate
associations such as the Society of Industrial and Office Realtors.
[40] These procedures also do not apply to most categorical leasing
delegations and special purpose delegations up to 2,500 square feet
because GSA has issued standing delegations, which allow agencies to
use these delegations without obtaining approval from GSA.
[41] GSA officials told us typically, GSA charges rent payments to
agencies occupying leased space, and GSA then pays the landlord. Under
the administrative contracting officer delegations, GSA returns the
rent payment to the agency, and the agency pays the landlord directly.
[42] For example, according to GSA, the replacement of a part of a
system, such as a compressor or a fan, is considered repair; the
replacement of the entire system is considered a capital improvement.
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