Public Buildings:

Own or Lease?

T-GGD-89-42: Published: Sep 26, 1989. Publicly Released: Sep 26, 1989.

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GAO discussed the General Services Administration's (GSA) efforts to reduce the proportion of costly leased space in its office space inventory. GAO noted that: (1) GSA estimated that its cost of leasing space would increase from $900 million in 1986 to $2 billion by the end of the next decade; (2) although the GSA building purchase program needed some management improvements, it provided an economical means for acquiring office space; (3) GSA could save $12 billion over 30 years if it undertook 43 proposed office construction projects, at a total cost of $3 billion, between fiscal years 1991 and 1995; (4) federal ownership of about 25 percent of the space that GSA proposed to lease in 1988 would save about $116 million over 30 years; (5) leasing was preferable in some cases, especially in terms of temporary office space needs; (6) the Federal Buildings Fund only annually generated an average of $97 million for construction and acquisition between 1975 and 1988; (7) the Office of Management and Budget did not plan to reimpose previous restrictions on rents GSA charged to tenant agencies; (8) the federal cash budget's failure to distinguish between capital investment outlays and current operational outlays makes leasing appear to be a cost-effective alternative; (9) GSA use of such alternative financing methods as purchase contracts and lease-purchase agreements did not result in the savings it could obtain through Department of the Treasury financing; and (10) GSA lacked a long-range facility plan to identify its overall space needs and economical ways to meet them.

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