Federal Real Property
Overreliance on Leasing Contributed to High-Risk Designation
Gao ID: GAO-11-879T August 4, 2011
In Process
The decision to lease rather than own space for federal operations is often influenced by factors other than cost-effectiveness, including budget issues and operational requirements. Over the years, GAO's work has shown federal building ownership often costs less than operating leases, particularly for long-term space needs, and increasing ownership in these cases could save millions of dollars. Starting in 2008, GSA, the central leasing agent for most agencies, has leased more space than it owns. As GAO has reported, though, federal budget scoring rules can create challenges for new construction. Specifically, budget authority for ownership options must be recorded fully up front in the budget to appropriately reflect the government's commitment. For GSA operating leases, however, only the budget authority needed to cover the annual lease payments is required. This reduces the upfront funding commitment but generally costs the federal government more over time. Federal agencies' decisions to lease rather than own space may also be driven by factors such as cost, security requirements, the need for flexibility, and smaller space needs. In such instances, leasing may be practicable. Although GSA's goal is to cover the administrative costs of private sector leases with fees it charges the tenant agencies, it has been unable to do so in recent years--losing more than $100 million in fiscal year 2009--raising concerns about the agency's management of its leased properties. CPRA may provide an opportunity to reduce the government's overreliance on leasing. CPRA does not explicitly address the government's overreliance on leasing, but one of CPRA's purposes--to realign civilian real property by consolidating or colocating operations and reconfiguring space to increase efficiency--could help to reduce the governments' overreliance on leasing. For example, CPRA could identify opportunities for federal civilian agencies--many of which currently are located in leased space--to colocate on U.S. Postal Service property. Through legislation, many agencies have received independent leasing authority through their enabling legislation or in appropriations acts. Other agencies have received leasing authority through a GSA delegation. GSA may delegate to agencies leasing authority for general purpose, categorical and special purpose space. In November 2007, GSA amended its delegations of leasing authority to increase oversight and facilitate compliance with all applicable laws and regulations governing the acquisition of leases after audits found instances in which agencies failed to meet the conditions of their leasing delegations.
GAO-11-879T, Federal Real Property: Overreliance on Leasing Contributed to High-Risk Designation
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Federal Financial Management, Government
Information, Federal Services, and International Security, Committee
on Homeland Security and Government Affairs, U.S. Senate:
For Release on Delivery:
Expected at 2:30 p.m. EDT:
Thursday, August 4, 2011:
Federal Real Property:
Overreliance on Leasing Contributed to High-Risk Designation:
Statement of David J. Wise, Director:
Physical Infrastructure Issues:
GAO-11-879T:
GAO Highlights:
Highlights of GAO-11-879T, a testimony before the Subcommittee on
Federal Financial Management, Government Information, Federal
Services, and International Security, Committee on Homeland Security
and Governmental Affairs, U.S. Senate.
Why GAO Did This Study:
The federal government‘s real property portfolio includes more than
900,000 buildings and structures worth hundreds of billions of
dollars. Many of these properties are leased from private-sector
owners, often at total costs that would exceed what the government
would pay for ownership. Overreliance on costly leased space was one
of several factors that contributed to GAO‘s designation of federal
real property management as a governmentwide high-risk issue. The
administration‘s proposed Civilian Property Realignment Act (CPRA)
would reform federal real property management and disposal. For this
subcommittee, GAO is currently examining opportunities for
consolidating federal operations and moving them from leased space to
federally owned sites.
This statement identifies (1) the factors that contribute to the
government‘s reliance on costly leasing, (2) how CPRA may provide an
opportunity to reduce reliance on leasing, and (3) federal agencies‘
independent leasing authorities and General Services Administration‘s
(GSA) delegations of leasing authorities. To do this work, GAO relied
on its prior work and reviewed CPRA and other relevant reports.
What GAO Found:
The decision to lease rather than own space for federal operations is
often influenced by factors other than cost-effectiveness, including
budget issues and operational requirements. Over the years, GAO‘s work
has shown federal building ownership often costs less than operating
leases, particularly for long-term space needs, and increasing
ownership in these cases could save millions of dollars. Starting in
2008, GSA, the central leasing agent for most agencies, has leased
more space than it owns. As GAO has reported, though, federal budget
scoring rules can create challenges for new construction.
Specifically, budget authority for ownership options must be recorded
fully up front in the budget to appropriately reflect the government‘s
commitment. For GSA operating leases, however, only the budget
authority needed to cover the annual lease payments is required. This
reduces the upfront funding commitment but generally costs the federal
government more over time. Federal agencies‘ decisions to lease rather
than own space may also be driven by factors such as cost, security
requirements, the need for flexibility, and smaller space needs. In
such instances, leasing may be practicable. Although GSA‘s goal is to
cover the administrative costs of private sector leases with fees it
charges the tenant agencies, it has been unable to do so in recent
years-”losing more than $100 million in fiscal year 2009-”raising
concerns about the agency‘s management of its leased properties.
CPRA may provide an opportunity to reduce the government‘s
overreliance on leasing. CPRA does not explicitly address the government
‘s overreliance on leasing, but one of CPRA‘s purposes-”to realign
civilian real property by consolidating or colocating operations and
reconfiguring space to increase efficiency-”could help to reduce the
governments‘ overreliance on leasing. For example, CPRA could identify
opportunities for federal civilian agencies”many of which currently
are located in leased space”-to colocate on U.S. Postal Service
property.
Through legislation, many agencies have received independent leasing
authority through their enabling legislation or in appropriations
acts. Other agencies have received leasing authority through a GSA
delegation. GSA may delegate to agencies leasing authority for general
purpose, categorical and special purpose space. In November 2007, GSA
amended its delegations of leasing authority to increase oversight and
facilitate compliance with all applicable laws and regulations
governing the acquisition of leases after audits found instances in
which agencies failed to meet the conditions of their leasing
delegations.
View [hyperlink, http://www.gao.gov/products/GAO-11-879T] or key
components. For more information, contact David Wise at (202) 512-2834
or wised@gao.gov.
[End of section]
Chairman Carper, Ranking Member Brown, and Members of the Subcommittee:
Thank you for the opportunity to testify today on our work related to
real property leasing among civilian federal agencies. The federal
real property portfolio is vast and diverse, totaling more than
900,000 buildings and structures--including office buildings,
warehouses, laboratories, hospitals, and family housing--worth
hundreds of billions of dollars. As we have reported, the federal
government leases more property than is cost-efficient, resulting in
millions of dollars of additional costs to the federal government.
[Footnote 1] Starting in 2008, the General Services Administration
(GSA), the central leasing agent for most agencies, has leased more
space than it owns;[Footnote 2] at the end of fiscal year 2010, leased
square footage exceeded owned 191 million to 179 million. Because of
this and other issues, we have designated the management of federal
real property as a high-risk area.[Footnote 3] On May 4, 2011, the
administration proposed legislation, referred to as the Civilian
Property Realignment Act (CPRA), to reform federal real property
management and disposal.[Footnote 4] Different CPRA legislation has
also been introduced in the U.S. House of Representatives. Throughout
this statement, any reference to CPRA is to the administration's
proposed legislation. In addition to our recent high-risk report, at
the request of this subcommittee, we have recently begun a new
engagement to examine federal real property leasing.
My testimony today addresses (1) the factors that contribute to the
government's reliance on costly leasing, (2) how CPRA may provide an
opportunity to reduce reliance on leasing, and (3) federal agencies'
independent leasing authorities and GSA delegations of leasing
authorities. To address these objectives, we reviewed our previous
work, reports by the interagency Federal Real Property Council and
GSA, and CPRA. We shared the relevant information in this statement
with the Office of Management and Budget (OMB) and GSA.
We performed this work from July 2011 to August 2011 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Leasing Decisions Are Often Driven by Factors Other than Cost-
Effectiveness:
One of the primary reasons we designated federal real property
management as high risk was the federal government's overreliance on
costly leased space to meet new space needs. Our work over the years
has shown that, over the long-term, operating leases often cost more
than federal building ownership, especially if they are used to meet
long-term space needs. As such, increasing ownership, when
appropriate, could save millions of dollars over the long-term.
Federal agencies rely extensively on leasing and leased buildings
covering 634.5 million square feet of space in fiscal year 2009, the
most current year for which data were available. GSA leases more than
8,000 assets and now leases more space than it owns. Building
ownership through construction or purchase is often one of the least
expensive ways to meet agencies' long-term requirements.
Alternatively, operating leases--in which periodic lease payments are
made over the specified length of the lease--are often the most
expensive way to meet long-term space needs. However, we have reported
that over time GSA has relied heavily on operating leases to meet new
long-term needs because it lacks funds to pursue ownership.[Footnote
5] For example, in 2008, we reported that if the federal government
had pursued ownership instead of an operating lease for the FBI
building in Chicago, Illinois, it could have saved $40.3 million over
30 years.[Footnote 6] While federal ownership is less expensive than
leasing in many cases, in certain situations it is not. For example,
the Department of Commerce's cyclical growth in leased space is due to
the short-term needs of the Census.
GSA's and Agencies' Decisions to Lease Are Not Always Driven by Cost-
Effectiveness Considerations:
The decision to lease rather than own space for federal operations is
often influenced by factors other than cost-effectiveness, including
budget issues and operational requirements. Pursuant to the budget
scoring rules adopted as a result of the Budget Enforcement Act of
1990, the budget authority to meet the government's real property
needs is to be scored--meaning recorded in the budget--in an amount
equal to the government's total legal commitment. For construction,
purchase, or capital leases, the budget authority for the full cost
must be recorded fully upfront in the budget to appropriately reflect
the government's commitment.[Footnote 7] However, for operating
leases, GSA is only required to record the government's commitment for
an annual lease payment.[Footnote 8] This reduces the upfront funding
commitment but generally costs the federal government more over time.
Agency operational requirements, such as immediate space needs,
security requirements, or a desire for flexibility, as well as short-
term or small space needs, are among the reasons why leasing is often
preferred by agencies and may be more economically advantageous than
ownership. From an operational standpoint, GSA and U.S. Postal Service
officials cited agency mission requirements as a reason they chose
leasing rather than building ownership for certain projects. For
instance, postal service officials said they strive to locate
buildings in areas that will optimize the efficiency of mail delivery.
Thus, when deciding between leasing and constructing a building, they
may consider operational factors such as the size of a facility,
traffic routes, access to parking, and convenience for the customer.
Other factors, such as short-term space needs or the need for a small
space, also may influence agencies' decisions to lease space. For
instance, GSA officials said that more than 200 GSA-owned and leased
buildings were damaged by Hurricane Katrina, necessitating the
relocation of 2,600 federal employees from 28 federal agencies, many
of which were GSA tenant agencies. To meet this emergency need, GSA
expanded its use of leases to house agencies in temporary space to
fulfill a short-term need.
We have raised the scorekeeping issue as a challenge in several
reports and testimonies over the past 20 years[Footnote 9] and believe
that if it is not addressed, reliance on leasing at a potentially high
cost will persist over the long-term. To that end, in April 2007 and
January 2008, we recommended that OMB, as the agency responsible for
reviewing agencies' progress on real property management, develop a
strategy to reduce agencies' reliance on costly leasing where
ownership would result in long-term savings.[Footnote 10] Such a
strategy could identify the conditions under which leasing is an
acceptable alternative, include an analysis of real property budget
scoring issues, and provide an assessment of viable alternatives. OMB
agreed with the need for a strategy to optimize agencies' use of and
spending on leased space that addresses how to identify those
instances where agencies are relying on costly leasing.
GSA Has Faced Operational Losses Related to Leasing in Recent Years:
Although GSA's goal is to break even on the administrative costs of
the facilities it leases from private sector owners, recent years have
seen significant losses, raising concerns about the management of its
leases. Tenant agencies pass lease payments plus a fee to GSA, which
retains the fee and then passes the lease payment on to the private
sector owner. However, GSA income statement losses within the leased
inventory, as measured by Funds from Operations,[Footnote 11]
increased dramatically in recent years to $102.9 million in fiscal
year 2009 before falling to $64.8 million in fiscal year 2010 (see
figure 1). According to GSA, losses in leased inventory are partially
attributable to the accounting treatment of different rent payments
and fees in accordance with financial statement reporting
requirements, but that it should still be able to cover all the extra
costs with the fee it charges tenant agencies. We plan to review this
issue further for this subcommittee.
Figure 1: Income Statement Losses in Funds from Operations for GSA's
Leased Inventory, Fiscal Years 2007-2010:
[Refer to PDF for image: vertical bar graph]
Fiscal year: 2007;
Funds from Operations: -$1.7 million.
Fiscal year: 2008;
Funds from Operations: -$41 million.
Fiscal year: 2009;
Funds from Operations: -$102.9 million.
Fiscal year: 2010;
Funds from Operations: -$64.8 million.
Source: GSA State of the Portfolio Report, fiscal year 2010.
[End of figure]
CPRA May Provide an Opportunity to Reduce Overreliance on Leasing:
In May 2011, the administration proposed legislation, CPRA, which may
provide an opportunity to reduce overreliance on leasing. While CPRA
does not explicitly address the government's overreliance on leasing,
one of CPRA's purposes--to realign civilian real property by
consolidating, collocating, and reconfiguring space to increase
efficiency--could help to reduce the government's overreliance on
leasing. CPRA would, among other things, establish a legislative
framework for disposing of and consolidating civilian real property.
CPRA provides for the establishment of an independent board that would
recommend federal properties for disposal, transfer, consolidation,
collocation, and reconfiguration after receiving recommendations from
civilian landholding agencies and independently reviewing the
agencies' recommendations. CPRA also provides for the independent
board to recommend, with the Postmaster General's agreement,
colocations of federal civilian offices into postal properties, many
of which are owned by the Postal Service. Additionally, the CPRA
framework could help limit stakeholder influence in real property
decision making. Grouping all disposal and consolidation decisions
into one set of proposals that Congress would consider in its entirety
could help to balance local stakeholder influences at any individual
location. We are currently examining the potential for consolidating
leased facilities onto federally owned sites in the same geographic
area for this Subcommittee.
Many Agencies Have Their Own Independent Statutory Leasing Authority
or Have Been Delegated Leasing Authority:
Many agencies have received their own independent statutory leasing
authority, which authorizes them to acquire leased space. Congress
provided these agencies with independent leasing authority either
through their enabling legislation or through an appropriations act.
The authority may be for a particular type of space or for general
leasing authority. For example, the Commodity Credit Corporation of
the Department of Agriculture has leasing authority for office space
and storage space, while other agencies, such as the Patent and
Trademark Office, have general leasing authority. Agencies with
independent statutory leasing authority and their respective
authorities are listed in appendix I.
GSA also has the authority to delegate leasing authority to agencies
and delegates the following types of leases:
* Categorical space delegation. This is a standing delegation of
authority from the Administrator of General Services to a federal
agency to acquire a type of space, such as antennas, depots, piers,
and greenhouses. All agencies are authorized to use the categorical
space delegations.
* Special purpose space delegation. This is a standing delegation of
authority from the Administrator of General Services to specific
federal agencies to lease their own special purpose space. Thirteen
specifically identified agencies have special purpose leasing
delegations for special types of space, subject to additional
limitations. For example, the Department of Commerce is delegated
authority to lease space for the Census Bureau; laboratories for
testing materials; classified and ordnance devices; calibration of
instruments; and atmospheric and oceanic research, maritime training
stations, and radio stations.
* Provider of choice authority delegation. This occurs when the
Administrator of General Services has issued a standing delegation of
authority to the heads of all federal agencies to accomplish all
functions relating to leasing of general purpose space for terms of up
to 20 years. Since 2007, GSA has limited the use of this type of
delegation to lease transactions of less than 20,000 square feet.
Additionally, according to GSA guidance, federal agencies must acquire
and use the space in accordance with all applicable laws, Executive
Orders, regulations, and OMB Circulars that apply to federal space
acquisition activities.
In November 2007, GSA modified the delegation process to amend its
delegations of leasing authority to acquire general purpose office
space and special purpose office space. Federal agencies must now
demonstrate the organizational capacity to acquire and administer the
lease and establish that it is cost-effective for GSA to authorize the
leasing delegation. GSA said it amended these delegations of authority
to increase oversight and to facilitate compliance with all applicable
laws and regulations governing the acquisition of leases, since
several recent audits of its delegation program had found instances in
which agencies failed to meet the conditions of their leasing
delegations. For example, agencies have failed to notify GSA before
conducting a specific leasing action and have used unauthorized
contracting personnel to execute contracts on behalf of the federal
government.
In closing, the government has made some progress toward strategically
managing its real property, but the issue remains high risk due, in
part, to an overreliance on costly long-term operating leases.
However, the administration's proposed CPRA legislation may provide an
opportunity to reduce leased properties by consolidating federal
operations onto government owned sites where appropriate.
Chairman Carper, Ranking Member Brown, and Members of the
Subcommittee, this concludes our prepared statement. We will be
pleased to answer any questions that you may have at this time.
GAO Contact and Staff Acknowledgments:
For further information on this testimony, please contact David Wise
at (202) 512-2834 or wised@gao.gov regarding federal real property.
Contact points for our Congressional Relations and Public Affairs
offices may be found on the last page of this statement. In addition
to the contact named above, Keith Cunningham, Assistant Director;
Elizabeth Eisenstadt; Jessica A. Evans; Hannah Laufe; Susan Michal-
Smith; and Susan Sachs made important contributions to this statement.
[End of section]
Appendix I: Independent Statutory Leasing Authority:
Table 1: Agencies That Have Independent Statutory Leasing Authority:
Agency: Appalachian Regional Commission;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 40 U.S.C. § 14306(a)(7).
Agency: Bonneville Power Administration;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 16 U.S.C. § 832a(c).
Agency: Central Intelligence Agency;
Type of independent statutory leasing authority: General leasing
authority for lease with a maximum 15-year term;
Statute: 50 U.S.C. § 403f(a)(7).
Agency: Coast Guard;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 14 U.S.C. § 92(f).
Agency: Corporation for the Promotion of Rifle Practice;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 36 U.S.C. § 40703.
Agency: Department of Agriculture, Commodity Credit Corporation;
Type of independent statutory leasing authority: Leasing authority for
office space and storage space;
Statute: 15 U.S.C. § 714b(h).
Agency: Department of Agriculture;
Type of independent statutory leasing authority: Authority to acquire
land, or interests therein for water conservation and soil erosion
purposes;
Statute: 16 U.S.C. § 590a.
Agency: Department of Agriculture;
Type of independent statutory leasing authority: Grants the Secretary
of Agriculture authority to establish a pilot program at the
Beltsville Agricultural Research Center and the National Agricultural
Library enhanced used leasing authority to enhance the use of real
property by leasing nonexcess property to an individual or entity;
Statute: Food Conservation and Energy Act of 2008, P. L. No. 110-246,
Section 7409.
Agency: Department of Defense;
Type of independent statutory leasing authority: Lease-purchase
authority for offices, troop housing, and other purposes on military
bases. May not exceed 32 years and shall provide that at the end of
the term title shall vest in the United States;
Statute: 10 U.S.C. § 2812.
Agency: Department of Homeland Security, Transportation Safety
Administration;
Type of independent statutory leasing authority: Authority to lease
real property or any interest therein;
Statute: 49 U.S.C. § 114(j)(1).
Agency: Department of Homeland Security;
Type of independent statutory leasing authority: Authority to acquire
land, including temporary use rights, adjacent to or in the vicinity
of an international land border when the Secretary deems the land
essential to control and guard the boundaries and borders of the
United States;
Statute: 8 U.S.C. § 1103(b).
Agency: Department of Homeland Security, Immigration and Customs
Enforcement;
Type of independent statutory leasing authority: Authority to lease
any existing prison, jail, detention center, or other comparable
facility suitable for such use;
Statute: 8 U.S.C. § 1231.
Agency: Department of Interior;
Type of independent statutory leasing authority: Leasing for National
Park System buildings and leasing in connection with the Fish and
Wildlife Service's duties relating to marine mammals;
Statute: 16 U.S.C. § 1a-2(k) and 16 U.S.C. § 1382(c).
Agency: Department Of Justice, Federal Bureau of Investigation, Drug
Enforcement Administration, and Federal Bureau of Prisons;
Type of independent statutory leasing authority: General authority to
acquire buildings by purchase or otherwise;
Statute: P. L. No. 106-113, Appendix, Title I (Nov. 29, 1999).
Agency: Department of Labor, Job Corps;
Type of independent statutory leasing authority: General leasing
authority in furtherance of workforce investments;
Statute: 29 U.S.C. § 2939(b).
Agency: Department of the Treasury;
Type of independent statutory leasing authority: Secretary's authority
to lease customs warehouses;
Statute: 19 U.S.C. § 1560.
Agency: Department of Veterans Affairs;
Type of independent statutory leasing authority: Leasing authority for
medical facilities;
Statute: 38 U.S.C. § 8103.
Agency: Federal Aviation Administration;
Type of independent statutory leasing authority: Leasing office space
and other special-use space;
general leasing authority and authority to lease airspace adjacent to
airports or other facilities not to exceed 20 years;
Statute: 49 U.S.C. § 106 and 49 U.S.C. § 40110.
Agency: National Aeronautics and Space Administration;
Type of independent statutory leasing authority: Leasing authority for
laboratories, research, and testing sites and facilities;
Statute: 51 U.S.C. § 20113(c).
Agency: National Cancer Institute;
Type of independent statutory leasing authority: General leasing
authority exclusive of Washington, D.C., or adjacent areas;
Statute: 42 U.S.C. § 285a-2.
Agency: National Institute of Health;
Type of independent statutory leasing authority: Leasing authority for
buildings in Washington, D.C., area;
Statute: 42 U.S.C. § 282(b)(14)(B).
Agency: National Institute of Standards and Technology;
Type of independent statutory leasing authority: Leasing authority for
rental of field sites and laboratory, office, and warehouse space;
Statute: 15 U.S.C. § 278e(c).
Agency: National Science Foundation;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 42 U.S.C. § 1870(e).
Agency: National Transportation Safety Board;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 49 U.S.C. § 1113(b)(1)(B).
Agency: Panama Canal Commission;
Type of independent statutory leasing authority: General leasing
authority for office space in the United States;
Statute: 22 U.S.C. § 3712a.
Agency: Patent and Trademark Office;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 35 U.S.C. § 2(b)(3).
Agency: Public Health Service, National Research Institute, National
Heart, Lung, and Blood Institute;
Type of independent statutory leasing authority: General leasing
authority exclusive of Washington, D.C., or adjacent areas;
Statute: 42 U.S.C. § 285b-3.
Agency: Rural Electrification and Telephone Service, Rural Telephone
Bank;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 7 U.S.C. § 942.
Agency: Securities and Exchange Commission;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 15 U.S.C. § 78d(b)(3).
Agency: Tennessee Valley Authority;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 16 U.S.C. § 831c(f).
Agency: United States Postal Service;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 39 U.S.C. § 401(5) and (6).
Agency: United States Trade Representative;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 19 U.S.C. § 2171.
Agency: Commodities Future Trading Commission;
Type of independent statutory leasing authority: General leasing
authority;
Statute: 7 U.S.C. § 16.
Agency: Office of the Comptroller of the Currency;
Type of independent statutory leasing authority: Authorizes the Office
of the Comptroller of the Currency authority to acquire real property
(or property interest) as the Comptroller deems necessary to carry out
the duties and responsibilities of the Office of the Comptroller of
the Currency;
Statute: Dodd Frank Reform and Consumer Protection Act, P.L. No. 111-
203, codified at 12 U.S.C. § 5416.
Source: General Services Administration.
Note: This list of agencies with independent authority dated April 9,
2009, was prepared by the General Services Administration. It is not
intended to be a complete list of all agencies that have independent
leasing authority because agencies may have acquired authority since
the list was initially compiled either through enabling legislation or
through their annual appropriations acts. While the list was updated
since 2009 to add two agencies, this update was not part of a major
effort to update the list. The General Services Administration,
through the Public Building Service, is authorized to lease office
space on behalf of federal agencies pursuant to the Federal Property
and Administrative Services Act of 1949, as amended § 40 U.S.C. 585.
The statute provides that such leases may be for a duration of up to
20 years. A variety of other agencies and executive branch entities,
including independent establishments, government corporations, and
commissions, have been vested with separate authority to enter into
leases for office space or general-use space.
[End of table]
[End of section]
Footnotes:
[1] GAO, Federal Real Property: Proposed Civilian Board Could Address
Disposal of Unneeded Facilities, [hyperlink,
http://www.gao.gov/products/GAO-11-704T] (Washington, D.C.: June 9,
2011).
[2] In this testimony, we refer to property that is owned by the
federal government and under the control and custody of GSA as GSA-
owned property.
[3] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: Feb. 16,
2011).
[4] Letter from Jacob J. Lew, Director, Office of Management and
Budget, to The Honorable Joseph R. Biden, President of the Senate (May
4, 2011), available at [hyperlink,
http://www.whitehouse.gov/omb/financial_fia_asset] (last visited July
26, 2011).
[5] See, for example, GAO, General Services Administration: Comparison
of Space Acquisition Alternatives--Leasing to Lease-Purchase and
Leasing to Construction, [hyperlink,
http://www.gao.gov/products/GAO/GGD-99-49R] (Washington, D.C.: Mar.
12, 1999) and General Services Administration: Opportunities for Cost
Savings in the Public Buildings Area, [hyperlink,
http://www.gao.gov/products/GAO/T-GGD-95-149] (Washington, D.C.: July
13, 1995).
[6] GAO, Federal Real Property: Strategy Needed to Address Agencies'
Long-standing Reliance on Leasing, [hyperlink,
http://www.gao.gov/products/GAO-08-197] (Washington, D.C.: Jan. 24,
2008).
[7] According to scorekeeping guidelines, a lease is classified as
either operating or capital, based on six criteria.If a lease meets
all six criteria, then it qualifies as an operating lease; otherwise,
it must be treated as a capital lease for purposes of budget scoring.
For a capital lease, budget authority is required for the net present
value of the total cost of the lease and property taxes (but not for
imputed interest costs and identifiable annual operating expenses).
[8] Generally, for operating leases for agencies other than GSA,
budget authority is required up front for the full cost of the lease
or the annual lease payment plus costs associated with cancellation.
[9] See, for example, GAO, Federal Real Property: Progress Made toward
Addressing Problems, but Underlying Obstacles Continue to Hamper
Reform, [hyperlink, http://www.gao.gov/products/GAO-07-349]
(Washington, D.C.: Apr. 13, 2007); Federal Real Property: Reliance on
Costly Leasing to Meet New Space Needs is an Ongoing Problem,
[hyperlink, http://www.gao.gov/products/GAO-06-136T] (Washington,
D.C.: Oct. 6, 2005); General Services Administration: Factors
Affecting the Construction and Operating Costs of Federal Buildings,
[hyperlink, http://www.gao.gov/products/GAO-03-609T] (Washington,
D.C.: Apr. 2, 2003); Supporting Congressional Oversight: Budgetary
Implications of Selected GAO Work for Fiscal Year 2003, [hyperlink,
http://www.gao.gov/products/GAO-02-576] (Washington, D.C.: Apr. 26,
2002); [hyperlink, http://www.gao.gov/products/GAO/T-GGD-95-149];
Public Buildings Budget Scorekeeping Prompts Difficult Decisions,
[hyperlink, http://www.gao.gov/products/GAO/T-AIMD-GGD-94-43]
(Washington, D.C.: Oct. 28, 1993); and Federal Office Space Increased
Ownership Would Result in Significant Savings, [hyperlink,
http://www.gao.gov/products/GAO/GGD-90-11] (Washington, D.C.: Dec. 22,
1989).
[10] [hyperlink, http://www.gao.gov/products/GAO-08-197] and
[hyperlink, http://www.gao.gov/products/GAO-07-349].
[11] Funds from Operations is derived by calculating the amount of
revenue remaining after deducting all direct and indirect expenses
(excluding depreciation) associated with operating a building, and
provides the Federal Buildings Fund with contributions to capital
towards future investments in renovations, repairs, and new
construction.
[End of section]
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