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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

April 2007: 

Federal Real Property: 

Progress Made Toward Addressing Problems, but Underlying Obstacles 
Continue to Hamper Reform: 

GAO-07-349: 

GAO Highlights: 

Highlights of GAO-07-349, a report to congressional committees 

Why GAO Did This Study: 

GAO prepared this report under the Comptroller General’s authority to 
conduct evaluations on his own initiative to assist Congress. Federal 
real property is a high-risk area due to excess and deteriorating 
property, reliance on costly leasing, unreliable data, and security 
challenges. GAO’s objectives were to determine (1) what progress the 
administration and major real property-holding agencies have made in 
strategically managing real property and addressing long-standing 
problems and (2) what problems and obstacles, if any, remain to be 
addressed. GAO reviewed documents and interviewed officials from the 
Office of Management and Budget (OMB) and nine agencies that hold 93 
percent of federal property. 

What GAO Found: 

The administration and real property-holding agencies have made 
progress toward strategically managing federal real property and 
addressing long-standing problems. In response to the President’s 
Management Agenda real property initiative and a related executive 
order, agencies have, among other things, established asset management 
plans; standardized data reporting; and adopted performance measures. 
Also, the administration has created a Federal Real Property Council 
(FRPC) and plans to work with Congress to provide agencies with tools 
to better manage real property. These are positive steps, but 
underlying problems still exist. For example, the Departments of Energy 
(Energy) and Homeland Security (DHS) and the National Aeronautics and 
Space Administration (NASA) reported during this review that over 10 
percent of their facilities are excess or underutilized. Also, Energy, 
NASA, the General Services Administration (GSA), and the Departments of 
the Interior (Interior), State (State), and Veterans Affairs (VA) 
reported repair and maintenance backlogs for buildings and structures 
that total over $16 billion. The Department of Defense (DOD) reported a 
$57 billion restoration and modernization backlog. Also, Energy, 
Interior, GSA, State, and VA reported an increased reliance on leasing 
to meet space needs. While agencies have made progress in collecting 
and reporting standardized real property data, data reliability is 
still a challenge at DOD and other agencies, and agencies lack a 
standard framework for data validation. Finally, agencies reported 
using risk-based approaches to prioritize security needs, which GAO has 
suggested, but some cited obstacles such as a lack of resources for 
security enhancements. In past high-risk updates, GAO called for a 
transformation strategy to address the long-standing problems in this 
area. While the administration’s approach is generally consistent with 
what GAO envisioned, certain areas warrant further attention. 
Specifically, problems are exacerbated by underlying obstacles that 
include competing stakeholder interests, legal and budgetary 
limitations, and the need for improved capital planning. For example, 
agencies cited local interests as barriers to disposing of excess 
property, and agencies’ limited ability to pursue ownership leads them 
to lease property that may be more cost-effective to own over time. 

Figure: Examples of Excess Federal Facilities: 

[See PDF for Image] 

Source: VA and USPS. 

From left to right: former Main VA Hospital Building, Milwaukee, WI; 
former Main Post Office, Chicago, IL. 

[End of figure] 

What GAO Recommends: 

GAO recommends that OMB, in conjunction with the Federal Real Property 
Council, (1) develop a framework to better ensure the validity and 
usefulness of key agency data; (2) develop an action plan for 
addressing key problems, including reliance on leasing, security 
challenges, and the effect of competing stakeholder interests; and (3) 
create a clearer link between agencies’ efforts under the real property 
initiative and broader capital planning requirements. OMB agreed with 
the report and concurred with its recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-349]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Mark L. Goldstein at 
(202) 512-2834 or goldsteinm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Administration and Major Real Property-Holding Agencies Have Taken 
Actions to Strategically Manage Real Property and Address Some Long- 
standing Problems: 

Long-standing Problems in Real Property Largely Persist and Obstacles 
Remain: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Selected Enhanced Real Property Authorities of Major Real 
Property-Holding Agencies: 

Appendix III: FRPC Inventory Data Elements and Descriptions: 

Appendix IV: Comments from the Office of Management and Budget: 

Appendix V: Comments from the General Services Administration: 

Appendix VI: Comments from the National Aeronautics and Space 
Administration: 

Appendix VII: Comments from the Department of the Interior: 

Appendix VIII: Comments from the Department of Homeland Security: 

Appendix IX: Comments from the Department of Energy: 

Appendix X: Comments from the Department of State: 

Appendix XI: Comments from the Department of Veterans Affairs: 

Appendix XII: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Roles and Responsibilities under the Executive Order: 

Table 2: Examples of Some Real Property Management Strategies Adopted 
by Agencies: 

Table 3: Status of Excess Property Challenges at the Major Real 
Property-Holding Agencies: 

Figures: 

Figure 1: Real Property Initiative Framework: 

Figure 2: FRPC Organization and Committees: 

Figure 3: PMA Executive Branch Management Scorecard Standards for the 
Real Property Initiative: 

Figure 4: PMA Executive Branch Management Scorecard Results for the 
Real Property Initiative: 

Figure 5: Vacant Federal Property: 

Abbreviations: 

BRAC: Base Realignment and Closure: 
CARES: Capital Asset Realignment for Enhanced Services: 
DHS: Department of Homeland Security: 
DOD: Department of Defense: 
DOT: Department of Transportation: 
EUL: Enhanced-use lease: 
FCC: Federal Communications Commission: 
FRPC: Federal Real Property Council: 
FRPP: Federal Real Property Profile: 
GSA: General Services Administration: 
HHS: Department of Health and Human Services: 
NASA: National Aeronautics and Space Administration: 
NEPA: National Environmental Policy Act: 
NPS: National Park Service: 
OMB: Office of Management and Budget: 
PBS: Public Buildings Service: 
PMA: President's Management Agenda: 
STAR: System for Tracking and Administering Real Property: 
USAID: United States Agency for International Development: 
USDA: United States Department of Agriculture: 
USPS: United States Postal Service: 
VA: Department of Veterans Affairs: 

United States Government Accountability Office: 
Washington, DC 20548: 

April 13, 2007: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Henry A. Waxman: 
Chairman: 
The Honorable Tom Davis: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

In January 2003, we designated federal real property as a high-risk 
area[Footnote 1] because of long-standing problems with excess and 
underutilized property, deteriorating facilities, unreliable real 
property data, and over-reliance on costly leasing. Federal agencies 
were also facing many challenges in protecting their facilities against 
the threat of terrorism. In addition, we found that these problems have 
been exacerbated by obstacles that include competing stakeholder 
interests in real property decisions, various legal and budget-related 
limitations, the need for better agency capital planning, and the lack 
of a strategic, governmentwide focus on real property issues. In our 
2005 high-risk update, we reported that the administration had 
initiated several key reform efforts that included issuing Executive 
Order 13327 in February 2004 and adding the real property initiative to 
the President's Management Agenda (PMA). We further noted that the 
Departments of Defense (DOD) and Veterans Affairs (VA) continued to 
make progress with the Defense Base Realignment and Closures (BRAC) 
Commission and the VA Capital Asset Realignment for Enhanced Services 
(CARES) decisions, respectively. We acknowledged that these efforts 
were positive, but said that it was too early to judge whether the 
administration's focus on this area would have a lasting impact. 

For this report, our objectives were to determine (1) what progress the 
administration and major real property-holding agencies have made in 
strategically managing real property and addressing long-standing 
problems, and (2) what problems and obstacles, if any, remain to be 
addressed. To do this work, we obtained answers to a set of questions 
that we posed to the nine[Footnote 2] federal real property-holding 
agencies that hold 93 percent of the government's owned and leased 
space. These agencies are DOD; VA; and the Departments of Energy 
(Energy), Homeland Security (DHS), the Interior (Interior), and State 
(State); the General Services Administration (GSA); the National 
Aeronautics and Space Administration (NASA); and the United States 
Postal Service (USPS). We also interviewed officials from the Office of 
Management and Budget (OMB) because it oversees the implementation of 
the executive order. We analyzed (1) agencies' written responses to our 
questions and (2) pertinent laws, regulations, policies, and other 
documents relating to these agencies' real property management. We 
relied largely on the agencies' responses to assess their progress and 
performed an assessment of the reliability of the information they 
provided. We determined that this approach was adequate to meet our 
objectives. Additional information about our methodology and the 
agencies included in our review appears in appendix I. A summary of our 
findings for this report was included in our high-risk update that was 
released in January 2007.[Footnote 3] We prepared this report under the 
Comptroller General's authority to conduct evaluations on his own 
initiative as part of a continued effort to assist Congress with 
oversight of real property issues. We conducted our work between April 
2006 and February 2007 in accordance with generally accepted government 
auditing standards. 

Results in Brief: 

The administration and major real property-holding agencies have made 
progress toward strategically managing federal real property and 
addressing some long-standing problems. In response to the executive 
order and the PMA real property initiative, agencies covered under the 
executive order have, among other things, designated senior real 
property officers, established asset management plans, standardized 
real property data reporting, and adopted various performance measures 
to track progress. The administration has also established a Federal 
Real Property Council (FRPC) that supports reform efforts. In addition, 
the administration intends to work with Congress to provide agencies 
with asset management tools to more effectively manage real property. 
For example, VA, NASA, DOD, Energy, Interior, and USPS have limited 
authorities that allow the agency to enter into enhanced-use lease 
(EUL) agreements.[Footnote 4] Each agency has been provided its own 
statutory authority, and the authority varies from agency to agency. 
These agencies are also authorized to retain proceeds from the lease 
and to use them for items specified by law, such as improvement of 
their real property assets. Additionally, certain agencies such as GSA 
and VA have been authorized to retain the proceeds from disposal of 
their real property and to use these proceeds for their real property 
needs. 

Although progress toward strategically managing real property and 
addressing some long-standing problems has been made, these problems 
largely persist and the underlying obstacles remain. For example, 
Energy, DHS and NASA reported that over 10 percent of their facilities 
are excess or underutilized. In addition, Energy, NASA, GSA, Interior, 
State, and VA reported repair and maintenance backlogs that total over 
$16 billion. DOD reported a backlog of more than $57 billion, which 
includes the cost of restoring and modernizing obsolete 
buildings.[Footnote 5] Furthermore, Energy, Interior, GSA, State, and 
VA reported an increased reliance on operating leases--an approach 
which we have reported is generally more costly for long-term space 
needs. While agencies have made progress in collecting and reporting 
standardized real property data, data reliability is still a challenge 
at some of the agencies, and agencies lack a standard framework for 
data validation. Finally, all of the major real property-holding 
agencies reported using risk-based approaches to prioritize security 
needs, as we have suggested, but some cited a lack of resources for 
security enhancements as an ongoing problem. 

In our past high-risk reports, we called for a transformation strategy 
to address the long-standing problems in this area. The 
administration's approach is generally consistent with what we 
envisioned, but certain areas warrant further attention. More 
specifically, underlying obstacles, such as competing stakeholder 
interests, legal and budgetary limitations, and a need for improved 
capital planning, persist. For example, some agencies cited local 
interests, such as historic preservation organizations or various 
advocacy groups that want to keep the federal government in their 
community, as barriers to disposing of excess property. Furthermore, 
agencies' limited ability to pursue ownership often leads them to lease 
property that may be more cost-effective over time for them to own. 
Finally, long-term capital planning efforts to improve the efficiency 
of government operations continue to be a challenge, and these efforts 
are not clearly linked with the real property initiative. The federal 
government has generally not planned or budgeted for capital assets, 
such as real property, over the long term. We are making 
recommendations aimed at (1) ensuring the validity of agency data, (2) 
focusing reform efforts to better address the leasing problem and 
security challenges, (3) and addressing obstacles that include 
competing stakeholder interests and the need for improved capital 
planning. OMB agreed with the report and concurred with its 
recommendations. VA, Energy, DHS, GSA, and NASA generally agreed with 
the report. State, DOD, Interior, and USPS did not state whether they 
agreed or disagreed with the report and its recommendations. However, 
State provided additional information for the report and Interior, DOD, 
and USPS provided technical clarifications, which we incorporated, 
where appropriate. 

Background: 

The federal real property portfolio is vast and diverse. The federal 
government controls over $374 billion (gross value) in real property 
assets worldwide.[Footnote 6] DOD, USPS, GSA, and VA hold the majority 
of the owned and leased facility space, totaling over 3 billion square 
feet of space. Numerous laws and regulations govern the acquisition, 
management, and disposal of federal real property. The Federal Property 
and Administrative Services Act of 1949, as amended (Property Act), is 
the law that generally applies to real property held by federal 
agencies, and GSA is responsible for the act's implementation.[Footnote 
7] Agencies are subject to the Property Act unless they are 
specifically exempted from it. Agencies may also have their own 
statutory authority related to real property outside of the Property 
Act. In addition, agencies must comply with numerous other laws related 
to real property. For example, the Stewart B. McKinney Homeless 
Assistance Act (McKinney Act), as amended, provides that property that 
agencies have identified as unnecessary for mission requirements must 
first be made available to assist the homeless.[Footnote 8] The 
National Historic Preservation Act, as amended, requires agencies to 
manage historic properties under their control and jurisdiction and to 
consider the effects of their actions on historic 
preservation.[Footnote 9] USPS, which is an independent establishment 
in the executive branch, is authorized to sell, lease, or dispose of 
property under its general powers.[Footnote 10] USPS is exempt from 
most federal laws dealing with real property and contracting.[Footnote 
11] 

A number of federal laws enacted in the 1990s, including the Federal 
Acquisition Streamlining Act, the Clinger-Cohen Act, and the Government 
Performance and Results Act of 1993, placed increased emphasis on 
improving capital decision-making practices. OMB has issued various 
guidance and requirements for agencies to implement in developing 
disciplined capital programming processes. For example, the Capital 
Programming Guide is intended to provide agencies with a basic 
reference for establishing an effective investment decision-making 
process.[Footnote 12] Agencies are expected to have a disciplined 
capital programming process, and the Capital Programming Guide and our 
Executive Guide[Footnote 13] are intended to help them effectively 
plan, procure, and use assets to achieve the maximum return on 
investment. Under the guide, agencies have flexibility in implementing 
the key principles. 

Real property decisions draw considerable attention during 
congressional deliberations over federal appropriations. Members of 
Congress take a keen interest in federal facilities in their districts 
and in the economic impact of any decisions. Several stakeholders other 
than Congress, OMB, and the real property-holding agencies, have an 
interest in how the federal government carries out its real property 
acquisition, management, and disposal practices. These stakeholders 
include state and local governments, business interests in the 
communities where the real property assets are located, private sector 
construction and leasing firms, historic preservation organizations, 
various advocacy groups, and the public in general, which often views 
the facilities as the physical face of the federal government in their 
communities. At both the national and local levels, federal real 
property practices also often attract significant media attention, 
particularly when these practices are under scrutiny for waste and 
mismanagement. 

In response to our designation of federal real property as a high-risk 
area, the President signed Executive Order 13327 in February 2004. 
Shortly after the issuance of the executive order, the President added 
the Federal Asset Management Initiative, commonly referred to as the 
real property initiative, to the PMA. The executive order, which 
applies to 24 executive branch departments and agencies[Footnote 14] 
but not to USPS, established new federal property guidelines for these 
agencies. To increase accountability for real property asset 
management, the executive order called for each agency to establish the 
position of Senior Real Property Officer. This officer is required to 
prepare and submit to OMB an asset management plan that is intended to 
ensure systematic agency procedures and actions related to real 
property asset management. The executive order also called for 
establishing a FRPC to develop guidance, collect best practices, and 
help the Senior Real Property Officers improve the management of real 
property assets. FRPC is to be composed of the Senior Real Property 
Officers, the Controller of the Office of Management and Budget (OMB), 
the Administrator of General Services, and any other officials or 
employees permitted by the chair of FRPC. The Deputy Director for 
Management for OMB is to be the chair, and OMB is to provide funding 
and administrative support to the Council. OMB, FRPC and GSA all have 
various roles and responsibilities under the executive order, as shown 
in table 1. 

Table 1: Roles and Responsibilities under the Executive Order: 

Agency/Entity: OMB; 
Role or responsibility designated by the executive order: 
* Review the efforts of agencies in implementing their asset management 
plans and achieving the governmentwide policies established in the 
executive order; 
* Develop legislative initiatives in consultation with the agencies to 
improve federal real property management through the adoption of 
appropriate industry management techniques and the establishment of 
managerial accountability for implementing effective and efficient real 
property management practices. 

Agency/Entity: FRPC; 
Role or responsibility designated by the executive order: 
* Develop guidance for preparing and implementing agency asset 
management plans; 
* Work with GSA to establish asset management performance measures; 
* Serve as a clearinghouse to executive agencies for best practices in 
real property management. 

Agency/Entity: GSA; 
Role or responsibility designated by the executive order: 
* Work with FRPC to establish information technology standards for the 
government's database of real property assets; 
* Provide policy oversight and guidance for executive agencies for 
federal real property management; 
* Publish common performance measures and standards adopted by FRPC; 
* Work with FRPC to establish and maintain a single, comprehensive, and 
descriptive database of all real property under the control of 
executive agencies. 

Source: GAO analysis of Executive Order 13327. 

[End of table] 

The real property initiative[Footnote 15] was added to the PMA, which 
is an administration program that has raised the visibility of key, 
govermentwide management challenges; increased the emphasis on 
achieving outcome based results; and reinforced the need for agencies 
to focus on sustaining improvements that address long-standing 
management problems, including items on our high-risk list. The 
Executive Branch Management Scorecard, which OMB administers, tracks 
how well agencies are executing the governmentwide management 
initiatives. The scorecard employs a simple grading system: green for 
success, yellow for mixed results, and red for unsatisfactory. Scores 
are based on scorecard standards for success that have been developed 
for each initiative. The real property initiative focuses on the 15 
largest landholding agencies,[Footnote 16] except for USPS; and, like 
the executive order, the initiative is designed to ensure that property 
inventories are maintained at the right size, cost, and condition to 
support agency missions and objectives. The real property initiative's 
framework consists of various layers, as shown in figure 1, which 
include asset management decision-making tools that are intended to 
help agencies right-size their inventories. 

Figure 1: Real Property Initiative Framework: 

[See PDF for image] 

Source: OMB. 

[End of figure] 

To help agencies achieve these objectives, the base of the initiative's 
framework specifies a complete and accurate inventory of all 
constructed assets; asset management plans that systematize agency 
procedures and actions related to asset management; and performance 
metrics against which agencies can measure and evaluate asset 
management performance. Also, the performance assessment tool segment 
provides an analytical formula to help federal agencies better identify 
and rank their assets using performance measurement data to highlight 
properties that are nonmission-dependent, underutilized, costly to 
operate, and in poor condition for possible disposal or rehabilitation. 
The legislative authority segment is intended to help address barriers 
and process inefficiencies that agencies currently encounter when 
disposing of, transferring, constructing, or renovating assets in the 
modern real estate market. The initiative also requires agencies to 
develop a 3-year timeline that is updated annually and identifies the 
specific real property reform activities that support their individual 
asset management plans. 

The Administration and Major Real Property-Holding Agencies Have Taken 
Actions to Strategically Manage Real Property and Address Some Long- 
standing Problems: 

Pursuant to Executive Order 13327, the administration established the 
FRPC to support reform efforts. As a result of the government's real 
property initiative, agencies have taken preliminary steps to improve 
the strategic management of real property and have adopted some of the 
administrative tools necessary to do so, including asset management 
plans. In addition, individual agencies have taken steps toward 
addressing some of the long-standing problems and are implementing 
various tools to prioritize reinvestment and disposal decisions. To 
date, some individual agencies have received special authorities, 
including the use of EUL agreements. Additionally, certain agencies 
have been provided the authority to dispose of real property and to 
retain the proceeds for their real property needs. (App. II contains 
information on selected enhanced real property authorities for major 
real property-holding agencies.) 

The Administration and Agencies Have Made Progress Toward Strategically 
Managing Federal Real Property: 

Federal Real Property Council Established: 

The administration established FRPC in 2004, which subsequently created 
interagency committees to work toward developing and implementing a 
strategy to accomplish the executive order. One such interagency 
committee, the Asset Management Plan Committee, currently chaired by 
GSA, develops governmentwide asset management strategies, such as 
requirements for each agency's asset management plan. The Inventory and 
Performance Measures Committee, currently chaired by DOD, is 
responsible for the overall approach and direction of the new inventory 
system, including new data definitions and reporting methodologies. In 
addition, the committee develops metrics that can be used to assess and 
benchmark the government's real property management performance. The 
Systems Committee, chaired by the Department of Agriculture, is 
responsible for identifying the information technology requirements of 
the inventory system. The full FRPC meets quarterly, and the four 
interagency committees meet at least quarterly (see fig. 2).[Footnote 
17] 

Figure 2: FRPC Organization and Committees: 

[See PDF for image] 

Source: FRPC Fiscal Year 2005 Federal Real Property Report. 

[End of figure] 

FRPC established asset management principles that form the basis for 
the strategic objectives and goals in the agencies' asset management 
programs.[Footnote 18] The asset management principles include the 
following goals and objectives: 

* support agency missions and strategic goals; 

* use public and commercial benchmarks and best practices; 

* employ life-cycle cost benefit analyses; 

* promote full and appropriate utilization; 

* dispose of unneeded assets; 

* provide appropriate levels of investment; 

* accurately inventory and describe all assets; 

* employ balanced performance measures; 

* advance customer satisfaction; and, 

* provide safe, secure and healthy workplaces. 

FRPC also developed a sample asset management plan and published 
Guidance for Improved Asset Management in December 2004. The guidance 
addresses published FRPC guiding principles, required components for 
agency asset management plans, property inventory data elements, and 
governmentwide performance measures. The asset management plan is 
intended to systematize agency procedures and actions related to asset 
management. According to FRPC's sample asset management plan and 
guidance, the major sections of the asset management plan are supposed 
to describe how the agency: 

* addresses its mission and real property support in implementing its 
missions and strategic goals, human capital and organizational 
structure, decision-making framework, and owner's objectives; 

* plans for and acquires real property assets, develops its capital 
plan, prioritizes its list of acquisitions each fiscal year, measures 
the effectiveness of its acquisition results, and identifies key 
initiatives to improve financial management and acquisition 
performance; 

* operates its real property assets (including its inventory system, 
operations and maintenance plans, asset business plans, or "building 
block" plans, and periodic evaluation of assets), utilizes operational 
measures, and implements key initiatives to improve operational 
performance; and: 

* disposes of unneeded real property assets, measures the effectiveness 
of its redeployment actions, and identifies key initiatives to improve 
the pace of disposition as well as its ability to dispose of difficult, 
environmentally challenged properties. 

In addition, the plan is to include a list of the agency's recent 
disposals as a frame of reference and identify assets for disposal in 
current and future years. 

Enhanced Inventory System Developed: 

FRPC worked with GSA to develop and enhance an inventory system known 
as the Federal Real Property Profile (FRPP), which was designed to meet 
the executive order's requirement for a single database that includes 
all real property under the control of executive branch 
agencies.[Footnote 19] The FRPC, with the assistance of the GSA Office 
of Government-wide Policy, developed 23 mandatory data elements, which 
include four performance measures. The four performance measures are 
utilization, condition index, mission dependency, and annual operating 
and maintenance costs. (App. III lists and describes the data 
elements.) In June 2006, FRPC added a data element for disposition that 
included six major types of disposition, including sale, demolition, or 
public benefit conveyance. In addition, a performance assessment tool 
has been developed, which is to be used by agencies to analyze the 
inventory's performance measurement data in order to identify 
properties for disposal or rehabilitation. To assist agencies in their 
data submissions for the FRPP database, FRPC provided standards and 
definitions for the data elements and performance measures through 
guidance issued on December 22, 2004, and a data dictionary issued by 
GSA in October 2005.[Footnote 20] The first governmentwide reporting of 
inventory data for FRPP took place in December 2005, and selected data 
were included in the fiscal year 2005 FRPP published by GSA, on behalf 
of FRPC, in June 2006. Data on the four performance measures were not 
included in this report. 

Agencies Have Met Scorecard Standards to Varying Degrees: 

Adding real property asset management to the PMA has increased its 
visibility as a key management challenge and focused greater attention 
on real property issues across the government. OMB has identified goals 
related to the four performance measures in the inventory for agencies 
to achieve in right-sizing their real property portfolios, which 
include demonstrating results by: 

* reducing the number of nonmission-dependent assets, 

* increasing utilization of assets, 

* improving the condition of assets, and: 

* reducing the operating costs of assets or at least maintaining them 
consistent with industry standards. 

Specifically, it is the administration's goal to reduce the size of the 
federal real property inventory by 5 percent, or $15 billion, by 
disposing of unneeded assets by 2015. In October 2006, the 
administration reported that $3.5 billion in unneeded federal real 
property had been disposed of since 2004. 

To achieve these goals and gauge an agency's success in accurately 
accounting for, maintaining, and managing its real property assets so 
as to efficiently meet its goals and objectives, the administration 
established the real property scorecard in the third quarter of fiscal 
year 2004. The scorecard consists of 13 standards that agencies must 
meet to achieve green status, which is the highest status. These 13 
standards include 8 standards needed to achieve yellow status, plus 5 
additional standards. An agency reaches "green" or "yellow" status if 
it meets all of the standards for success listed in the corresponding 
column in figure 3 and red if it has any one of the shortcomings listed 
in the "red" column. 

Figure 3: PMA Executive Branch Management Scorecard Standards for the 
Real Property Initiative: 

[See PDF for image] 

Source: OMB. 

[End of figure] 

OMB evaluates agencies quarterly, and agencies then have an opportunity 
to update OMB on their progress toward achieving green status. 

According to PMA real property scorecards, as of the first quarter of 
fiscal year 2007, all of the 15 real property-holding agencies that are 
part of the real property initiative have, at a minimum, met the 
standards for yellow status as shown in figure 4. 

Figure 4: PMA Executive Branch Management Scorecard Results for the 
Real Property Initiative: 

[See PDF for image] 

Source: OMB scorecards. 

Note: USPS is not part of the real property initiative and is not 
evaluated using the Executive Branch Scorecard. However, USPS officials 
reported that they are finalizing an asset management plan. The target 
date for the official release of the asset management plan is the end 
of the first quarter 2007, but the plan will be implemented in phases 
and is currently under clearance review. We have ongoing work related 
to USPS's management of real property, which we expect to issue in 
2007. 

[A] The real property initiative initially applied to 14 agencies, but 
1 additional agency, USAID, that maintains a substantial real property 
inventory, was added during the fourth quarter of fiscal year 2005. 

[End of figure] 

Among the 15 agencies under the real property initiative, 5 agencies-- 
GSA NASA, Energy, State, and VA--have achieved green status. According 
to OMB, the agencies achieving green status have established 3-year 
timelines for meeting the goals identified in their asset management 
plans and have provided evidence that they are implementing their asset 
management plans, using real property inventory information and 
performance measures in decision making, and managing their real 
property in accordance with their strategic plan, asset management 
plan, and performance measures. Once an agency has achieved green 
status, OMB continues to monitor its progress and results through PMA 
using deliverables identified in its 3-year timeline and quarterly 
scorecards. Each quarter, OMB also provides formal feedback to agencies 
through the scorecard process, along with informal feedback, and 
clarifies expectations. Yellow status agencies still have various 
standards to meet before achieving green. 

Agency Actions Intended to Address Some Long-standing Problems: 

Besides responding to the administration's real property initiative, 
some agencies have taken steps toward addressing some of their long- 
standing problems, including excess and underutilized property and 
deteriorating facilities. Some agencies are implementing various tools 
to prioritize reinvestment and disposal decisions on the basis of 
agency needs, utilization, and costs. For example, GSA and NASA 
officials reported establishing models that integrate agency mission, 
utilization, and cost considerations into asset management planning. 
Specifically, NASA officials reported that they have taken steps to 
better align holdings with agency space needs and priorities, which 
includes an approach that incorporates operating costs and utilization 
information. Likewise, GSA officials reported that GSA's Portfolio 
Restructuring Strategy sets priorities for disposal and reinvestment 
based on agency missions and anticipated future need for holdings. In 
addition, GSA developed a methodology to analyze its leased inventory 
in fiscal year 2005. This approach values leases over their life, not 
just at the point of award; considers financial performance and the 
impact of market rental rates on current and future leasing actions; 
and categorizes leases by their risk and value. Examples of some real 
property asset management strategies adopted by agencies are described 
in table 2. 

Table 2: Examples of Some Real Property Management Strategies Adopted 
by Agencies: 

Agency: GSA; 
Property management strategy: In 2002, GSA began its Portfolio 
Restructuring Strategy to create a portfolio capable of funding its own 
long-term capital requirements out of the proceeds of current 
operations. Under this initiative, GSA is reducing its reinvestment 
liability by investing in financially sustainable properties and by 
divesting itself of properties unable to generate sufficient revenue to 
support full occupancy and reinvestment. In 2005, GSA further refined 
its asset management strategy to include Core Asset Analysis, which 
assigns holding periods to each government-owned asset and identifies 
GSA's core assets based on utilization, customer need, and mission 
dependency. 

Agency: DOD; 
Property management strategy: The Defense Base Closure and Realignment 
Act of 1990, as amended, authorized a new round of base realignment and 
closures (BRAC) in 2005, the fifth such round in recent years but the 
first since 1995. The BRAC 2005 round continues the goal of previous 
rounds of reducing excess infrastructure within the department and 
achieving savings that could be applied to other priorities. However, 
DOD expanded the focus of BRAC 2005 to include transformation issues, 
to accommodate restationing of forces from overseas, and to improve 
joint efforts among the military services. A primary objective of BRAC 
2005 was to determine and implement opportunities for greater joint 
activity among the DOD components. DOD officials noted that the amount 
of funding provided to the Department's Base Closure Account in the 
Revised Continuing Appropriations Resolution for fiscal year 2007 is 
significantly less than requested.[A]. 

Agency: VA; 
Property management strategy: The VA Capital Asset Realignment for 
Enhanced Services (CARES) process aims to provide a systematic planning 
process to prepare VA's facilities and campuses to meet veterans' 
future health care needs through a systemwide assessment of the current 
and future space needs and of the size, mission and locations of 
facilities, compared with the number of projected enrollees and 
forecasts of their anticipated utilization of medical services. In May 
2004, the Secretary announced his CARES decisions and overall, the 
CARES process identified more than 100 major construction projects in 
37 states, the District of Columbia, and Puerto Rico. VA officials 
estimate that, upon completion of the CARES plan, vacant space within 
the Veterans Health Administration will be reduced by 42.5 percent. 

Agency: NASA; 
Property management strategy: NASA has a master planning initiative 
under way to establish and improve master plans for all its field 
centers, which each have unique missions. The master plans form the 
foundation for integrating long-range mission requirements with 
physical infrastructure. In addition, NASA has established a central 
demolition fund to start removing obsolete facilities from its 
portfolio. NASA uses an algorithm to prioritize capital repair projects 
that takes into account utilization and facility costs and has begun a 
"repair by replacement" program through which it demolishes older 
costly facilities and constructs newer, cost-efficient facilities as 
replacements. 

Agency: State; 
Property management strategy: State strategies to improve the disposal 
process and eliminate surplus assets include its Property Utilization 
Assessment Initiative, Disposal Initiative, and Decommissioning 
Initiative. As part of its Property Utilization Assessment Initiative, 
State reviews and analyzes the utilization of its overseas facilities 
to determine if there are unused or underutilized properties. 
Subsequently, as part of its Disposal Initiative, State conducts a 
property-by-property analysis to determine if those properties 
identified as unused or underutilized are candidates for disposal. 
Disposal recommendations include an analysis of the performance 
measures for the property under consideration. The Decommissioning 
Initiative was initiated by the Bureau of Overseas Building Operations 
because an increasing number of major facilities were being vacated as 
a result of the New Embassy Compound construction program. In fiscal 
year 2005, State sold properties in 20 countries, generating $36.7 
million in proceeds, and decommissioned 23 properties. 

Agency: Energy; 
Property management strategy: In September 2003, Energy issued an order 
that established a performance-based approach to real property life-
cycle management. This approach requires all sites to annually identify 
all real property assets not fully utilized or excess to the mission 
needs to facilitate reuse or disposal. A key element of Energy's real 
property asset management is the establishment of Ten Year Site Plans 
as the mechanism to link real property asset management to program 
missions. 

Source: GAO analysis of agencies' data. 

[A] P.L. No. 110-5, 121 Stat. 8,40 (2007). 

[End of table] 

In addition to trying to align assets with their missions, some 
agencies are taking steps to make the condition of core assets a 
priority and address maintenance backlog challenges. For example, 
Energy officials reported establishing budget targets to align 
maintenance funding with industry standards as well as programs to 
reduce the maintenance backlogs associated with specific programs. 
Interior officials reported that the department has conducted condition 
assessments for 72,233 assets as of fourth quarter fiscal year 2006. VA 
reported establishing a facility condition assessment process that will 
help identify the funding needed to improve the current infrastructure. 
In addition, USPS officials reported having a program under way to 
inspect replacement values and information on the condition of 
facilities in order to better link condition assessments and 
maintenance and repair funding.[Footnote 21] 

Additional Efforts Made to Strategically Manage and Address Problems: 

The Administration Intends to Work with Congress to Provide Agencies 
with Tools to More Effectively Manage Real Property: 

As mentioned previously, Executive Order 13327 requires that OMB, along 
with landholding agencies, develop legislative initiatives to improve 
federal real property management and establish accountability for 
implementing effective and efficient real property management 
practices. Some individual agencies have obtained legislative authority 
in recent years to use certain real property management tools, but no 
comprehensive legislation has been enacted.[Footnote 22] Accordingly, 
the administration plans to support legislative reforms that would 
allow agencies to have the funds necessary to cover the costs of 
disposal; and streamline the federal transfer process, including the 
actions needed to comply with the McKinney Act and the National 
Environmental Policy Act (NEPA). A current OMB legislative initiative 
involves a three-part approach that (1) identified demonstration 
properties for disposal, (2) included a disposal pilot program in the 
President's Fiscal Year 2007 and 2008 Budgets, and (3) enhanced 
individual agency authorities. 

* OMB staff reported that about 8 to 10 demonstration projects were 
identified for disposal and resulted in mixed success. Among the 
properties identified were the NASA Camp Parks site in California and 
Federal Communication Commission (FCC) properties in California and 
Hawaii. Both NASA and FCC were authorized to sell these sites and to 
retain the proceeds from their sale.[Footnote 23] However, OMB staff 
reported FCC had encountered impediments to disposing both FCC 
properties. These impediments were: (1) proximity of the asset to a 
military blast zone, and (2) presence of an endangered species. 

* The President's 2007 and 2008 Budget Submissions included a proposal 
for a Federal Real Property Disposal Pilot Program that would authorize 
the Director of OMB to conduct a pilot program for the disposal of real 
property that is not meeting federal government needs. The pilot would 
have lasted 5 years and agencies would have recommended candidate 
disposition properties to OMB. Properties identified for disposal under 
this proposal would have been subject to, among other requirements, the 
McKinney Act. The administration's proposal would have permitted 
agencies to retain 20 percent of the net proceeds of sale from 
properties that an agency disposes of through the pilot program. The 
remaining 80 percent would have been deposited into the Treasury as 
miscellaneous receipts. Congress did not act on this proposal, and OMB 
staff believe that the Congressional Budget Office scoring will play an 
important role in determining the shape of a permanent real property 
reform solution. 

* In its fiscal year 2005 appropriation act, GSA was authorized to 
convey real property by sale, lease, exchange, or other means and to 
retain the net proceeds in the Federal Buildings Fund to be used for 
GSA's real property capital needs subject to an appropriation 
act.[Footnote 24] In addition, in 2005, the U.S. Forest Service, within 
USDA, was provided authority until September 30, 2008, to sell, lease 
or exchange administrative sites of 40 acres or less under the 
Secretary's jurisdiction and to retain the proceeds.[Footnote 25] 

Some Agencies Have Special Legal Authorities to Manage Their Federal 
Real Property Assets: 

Some agencies have received special real property management 
authorities, such as the authority to enter into EUL 
agreements.[Footnote 26] These agencies are also authorized to retain 
the proceeds of the lease and to use them for items specified by law, 
such as improvement of their real property assets. DOD, Energy, 
Interior, NASA, USPS, and VA are authorized to enter into EUL 
agreements and have authority to retain proceeds from the lease. These 
authorities vary from agency to agency, and in some cases, these 
authorities are limited. For example, NASA is authorized to enter into 
EUL agreements at two of its centers,[Footnote 27] and VA's authority 
to enter into EUL agreements expires in 2011.[Footnote 28] In addition, 
VA was authorized in 2004 to transfer real property under its 
jurisdiction or control and to retain the proceeds from the transfer in 
a capital asset fund for property transfer costs, including demolition, 
environmental remediation, and maintenance and repair costs.[Footnote 
29] VA officials noted that although VA is authorized to transfer real 
property under its jurisdiction or control and to retain the proceeds 
from such transfers, this authority has significant limitations on the 
use of any funds generated by any disposal under this authority. 
Additionally, GSA was given the authority to retain proceeds from 
disposal of its real property and to use the proceeds for its real 
property needs. In another example, using its BRAC authorities, DOD 
estimated that it reduced its domestic infrastructure by about 20 
percent, and about 90 percent of unneeded BRAC property is now 
available for reuse. Substantial net savings of approximately $29 
billion have been realized, according to DOD. After the previous BRAC 
recommendations were adopted, DOD declared that 504,000 acres of 
property were unneeded and available for transfer to other federal or 
nonfederal entities. (App. II contains information on enhanced real 
property authorities for major real property-holding agencies.) 

Agencies with enhanced authorities believe that these authorities have 
greatly improved their ability to manage their real property portfolios 
and operate in a more businesslike manner: 

* VA used its enhanced authorities to dispose of its underutilized 
Lakeside Campus in Chicago. In January 2005, VA executed an EUL for the 
Lakeside facility, and, in turn, received $28 million for the lease, as 
well as the right to lease back space for 3 years to house its existing 
outpatient clinic at Lakeside. In October 2005, the Secretary 
determined that the department no longer needed the campus, and VA sold 
it for an additional $22 million. VA officials reported that the 
transaction resulted in a demonstrable improvement of services to 
eligible veterans by permitting VA to offset the cost of implementing 
CARES in Chicago and other locations, and avoid the future costs of 
maintaining aging health care facilities. 

* GSA officials successfully sold through auction the 1.9 million 
square foot facility known as the Middle River site in Baltimore 
County, Maryland for $37.5 million. GSA received specific authority in 
its fiscal year 2005 appropriation act to sell the property and to 
retain the sale proceeds.[Footnote 30] 

Overall, the administration's efforts to raise the level of attention 
to real property as a key management challenge and to establish 
guidelines for improvement are noteworthy. The administrative tools, 
including asset management plans, inventories, and performance 
measures, were not in place to strategically manage real property 
before we updated our high-risk list in January 2005. The actions taken 
by major real property-holding agencies and the administration to 
establish such tools are clearly positive steps. However, these 
administrative tools and the real property initiative have not been 
fully implemented, and it is too early to determine if they will have a 
lasting impact. Implementation of these tools has the potential to 
produce results such as reductions in excess property, reduced 
maintenance and repair backlogs, less reliance on leasing, and an 
inventory that is shown to be reliable and valid. 

Long-standing Problems in Real Property Largely Persist and Obstacles 
Remain: 

Although clear progress has been made toward strategically managing 
federal real property and addressing some long-standing problems, real 
property remains a high-risk area because the problems persist and 
obstacles remain. Agencies continue to face long-standing problems in 
the federal real property area, including excess and underutilized 
property, deteriorating facilities and maintenance and repair backlogs, 
reliance on costly leasing, and unreliable real property data. Federal 
agencies also continue to face many challenges securing real property. 
These problems are still pervasive at many of the major real property- 
holding agencies, despite agencies' individual attempts to address 
them. 

Long-standing Problems in Real Property Largely Persist: 

The Federal Government Continues to Hold Many Unneeded Assets: 

Although the changes being made to strategically manage real property 
are positive and some realignment has taken place, the size of 
agencies' real property portfolios remains generally outmoded. As we 
have reported, this trend largely reflects a business model and the 
technological and transportation environment of the 1950s.[Footnote 31] 
Many of these assets and organizational structures are no longer 
needed; others are not effectively aligned with, or responsive to, 
agencies' changing missions. At the same time, technological advances 
have changed workplace needs, and many of the older buildings are not 
configured to accommodate new technologies. Furthermore, electronic 
government has changed the way the public interacts with the federal 
government, and this change will have significant implications for the 
type and location of property needed in the 21st century. 

As we have reported, many of the major real property-holding agencies 
have undergone significant mission shifts over the last decade that 
have affected their real property needs, and some agencies are working 
to reduce their unneeded federal real property assets. After five 
rounds of base closures and a 6-year demolition program that eliminated 
over 86 million square feet of excess and obsolete real property 
assets, DOD identified more unneeded facilities to be eliminated by 
fiscal year 2013. DOD officials reported that the department has not 
yet finished reporting all excess property because its property 
holdings are so extensive, and it has just started to collect detailed 
information on excess facilities for the FRPP. 

Similarly, VA initiated its CARES process--the first comprehensive, 
long-range assessment of its health care system's capital asset 
requirements since 1981--to address its obsolete infrastructure. We 
reported in August 2005 that CARES resulted in decisions to realign 
inpatient services at some VA facilities and to leave services as 
currently aligned at others.[Footnote 32] VA did not complete inpatient 
alignment decisions agencywide for long-term care and mental health 
services and for inpatient services at some facilities because it 
lacked sufficient information on demand for such care and other 
factors. We reported that VA, however, made some inpatient long-term 
care and mental health alignment decisions for some locations. 

While some major real property-holding agencies have had some success 
in attempting to realign their infrastructures in accordance with their 
changing missions, others still maintain a significant amount of excess 
and underutilized property.[Footnote 33] For example, officials with 
Energy, DHS, and NASA--which are three of the largest real property- 
holding agencies--reported that over 10 percent of the facilities in 
their inventories were excess or underutilized. While some agencies, 
including Interior, State,VA, and USPS reported relatively low levels 
of excess property, the need to address the problem at other agencies 
is still significant. Table 3 describes the status of excess and 
underutilized real property challenges at the nine major real property- 
holding agencies. 

Table 3: Status of Excess Property Challenges at the Major Real 
Property-Holding Agencies: 

Agency: DOD; 
Status: DOD officials indicated that because its real property holdings 
are so extensive and DOD has just begun collecting detailed excess 
facility information, the department has not fully completed its 
reporting of all excess property. 

Agency: Energy; 
Status: Energy officials reported that approximately 16 percent of 
Energy's real property inventory has been identified as excess or 
underutilized. 

Agency: DHS; 
Status: According to DHS officials, for the 2006 FRPP submission, the 
percentage of underutilized real property is 9.7 percent. 

Agency: Interior; 
Status: In December 2006, Interior reported in the FRPP during fiscal 
year 2006 that 1,181 assets of 185,527 were disposed, or less than 1 
percent of the inventory. Officials reported that Interior is working 
to address its excess and underutilized facilities, citing two major 
initiatives undertaken at Interior: (1) Bureau of Land Management 
(BLM), the Space Management Program and (2) Service First, to better 
meet space needs and priorities.[A]. 

Agency: GSA; 
Status: According to GSA officials, 258 buildings, with 13.8 million 
rentable square feet (RSF), have been reported as excess property. 
Additionally, 21 buildings, with 0.7 million RSF, are pending disposal 
or demolition. 

Agency: NASA; 
Status: NASA officials reported that over 10 percent of all assets are 
underutilized or not utilized at all. 

Agency: State; 
Status: According to State officials, the department's properties 
showed a high level of utilization in 2005. Only about 1.5 percent of 
the portfolio was reported as underutilized. State has identified 65 
properties (less than 0.4 percent of the overseas portfolio for 
government-owned assets) for potential disposal. 

Agency: USPS; 
Status: According to USPS officials, 1 percent of its inventory of 
8,807 owned properties is considered excess or underutilized. Fewer 
than 50 properties are considered excess.[B]. 

Agency: VA; 
Status: According to VA officials, VA has moved from 98 percent 
utilized space in fiscal year 2005 to 100 percent in fiscal year 2006. 
In fiscal year 2006, VA disposed of 77 buildings, including 6 buildings 
via sales, 19 buildings via demolition, and 52 buildings via EUL. 

Source: GAO analysis of agencies' data. 

[A] The Space Management Program is a top management initiative to 
review space requirements and reduce space allocations across the 
department. Started in 2003 and managed by the Office of Acquisition 
and Property Management, the program is designed to strengthen 
management decision making at all levels throughout the life cycle 
(acquisition through disposition) of owned, leased and GSA-provided 
space. The Service First Initiative is a cross-agency partnership 
between BLM and the Department of Agriculture's U.S. Forest Service. It 
was established several years ago with three broad goals to improve 
customer service, increase operational efficiency, and enhance land 
stewardship. 

[B] As part of our ongoing work, we are reviewing USPS infrastructure 
realignment plans. 

[End of table] 

The magnitude of the problem with underutilized or excess federal real 
property continues to put the government at risk for lost dollars and 
missed opportunities. As we have reported, underutilized or excess 
property is costly to maintain. For example, according to GSA 
officials, 188 assets accepted for disposal account for 8 million gross 
square feet and $8.1 million in operating expenses that will be 
eliminated upon completion of the disposal action. Another 6 
underutilized assets with approximately 580,000 gross square feet and 
$1.4 million in operating costs are projected for disposal in the next 
5 years, pending customer relocation. However, it is too early to tell 
whether GSA will be successful in disposing of these assets. 
Furthermore, VA officials reported that VA has a significant number of 
properties no longer located in places where veterans live, and many of 
these properties are over 50 or 60 years old. Two examples of excess 
federal properties are the former Main VA Hospital Building, in 
Milwaukee, Wisconsin, and the former Main Post Office in Chicago, 
Illinois, both of which are vacant (see fig. 5). 

Figure 5: Vacant Federal Property: 

[See PDF for image] 

Sources: VA and USPS. 

[End of figure] 

Major Real Property-Holding Agencies Still Have Multibillion-Dollar 
Repair and Restoration Backlogs: 

Addressing the needs of aging and deteriorating federal facilities 
remains a problem for major real property-holding agencies. According 
to current estimates, tens of billions of dollars will be needed to 
repair or restore these assets so that they are fully functional. 
Furthermore, much of the federal portfolio was constructed over 50 
years ago, and these assets are reaching the end of their useful lives. 
Energy, NASA, GSA, Interior, State, and VA reported repair and 
maintenance backlogs for buildings and structures that total over $16 
billion. In addition, DOD reported a $57 billion restoration and 
modernization backlog. 

To determine whether agencies still have repair and restoration 
backlogs, we asked each agency to provide updated estimates of their 
backlogs, which we defined as needs in facilities for which major 
upkeep, repair, and maintenance have not been funded and the repair and 
maintenance on these assets has been postponed. We found that there was 
variation in how agencies reported data on their backlog. Some agencies 
reported deferred maintenance figures consistent with the definition 
used for data on deferred maintenance included in their financial 
statements.[Footnote 34] Others provided data that included major 
renovation or restoration needs. More specifically, 

* For DOD, facilities restoration and modernization requirements total 
over $57 billion. Officials noted that the backlog does not reflect the 
impact of BRAC 2005 or related strategic rebasing decisions that will 
be implemented over the next several years. BRAC decisions that result 
in closing installations will reduce the overall restoration and 
modernization backlog. However, this benefit will be partially offset 
by new requirements to restore and modernize facilities to accommodate 
new missions at gaining BRAC installations. 

* For Energy, the backlog in fiscal year 2005 for a portfolio valued at 
$85.2 billion was $3.6 billion. Officials reported that Energy's real 
property portfolio is aging and assets had been undermaintained in the 
past; but the department has emphasized maintenance and has been 
funding maintenance within accepted industry guidelines. Moreover, 
Energy officials added that multiple real property owning programs have 
established funding lines to address the existing backlog. Energy has 
seen a stabilization of deferred maintenance and has indications that 
the overall backlog has gone down. 

* For Interior, officials reported an estimated maintenance backlog of 
over $3 billion for buildings and other structures.[Footnote 35] 
Officials reported that each bureau maintains its deferred maintenance 
backlog based on condition assessments. Interior officials noted that 
the maintenance backlog cannot be expressed as a static figure. For 
example, in the case of the National Park Service (NPS), it is based on 
a limited set of assets (buildings, roads, water and wastewater plants, 
trails, and campgrounds) but does not include other assets such as 
national landmarks and monument. The maintenance backlog is based on 
preliminary condition assessments that were completed prior to the end 
of fiscal year 2006. Interior officials noted that they are continually 
finding out more about its assets as part of the comprehensive 
assessments. Furthermore, every asset is not of equal priority, 
according to Interior officials, and managers must make informed 
decisions about where to invest dollars using management tools, 
including performance metrics. Interior officials also reported that 
the department has significantly improved its management of maintenance 
and construction priorities and projects with the implementation of the 
5-year plan, the facility condition index, and the asset priority 
index.[Footnote 36] 

* GSA's current maintenance backlog is estimated at $6.6 billion. GSA 
officials cited obtaining additional sources of capital as the major 
barrier in addressing the maintenance backlog. Specifically, officials 
noted that additional appropriations are generally not available for 
reinvestment or operating expenses, and GSA can rely only on what the 
Federal Buildings Fund generates. According to officials, many of GSA's 
buildings are in need of extensive renovation and the reinvestment 
needs of the portfolio have not been met with available funding. 

* For State, the maintenance backlog is estimated at $132 million, 
which includes all of the deferred/unfunded maintenance and repair 
needs for prior fiscal years. Officials noted that major rehabilitation 
projects require funding of at least $100 million annually. 

* For NASA, the restoration and repair backlog is estimated at over 
$2.05 billion as of the end of fiscal year 2006. Officials noted that 
having a maintenance backlog can result in further damage if, for 
example, a roof leak is not repaired and water intrusion causes further 
damage. 

* For VA, the maintenance backlog for facilities with major repair 
needs is estimated at $5 billion, and according to VA officials, VA 
must address this aged infrastructure while patient loads are changing. 
VA officials noted that VA has moved aggressively to address its 
maintenance and repair backlog. 

Despite Long-Term Cost, Several Agencies Reported That Reliance on 
Leasing to Meet New Space Needs Is Increasing: 

Many of the major real property-holding agencies continue to rely on 
costly leased space to meet new space needs. As a general rule, 
building ownership options through construction or purchase are the 
least expensive ways to meet agencies' long-term requirements. Lease 
purchases--under which payments are spread out over time and ownership 
of the asset is eventually transferred to the government--are generally 
more expensive than purchase or construction but are generally less 
costly than using ordinary operating leases to meet long-term space 
needs.[Footnote 37] For example, we testified in October 2005 that for 
the Patent and Trademark Office's long-term requirements in northern 
Virginia, the cost of an operating lease was estimated to be $48 
million more than construction and $38 million more than lease 
purchase. However, over the last decade we have reported that GSA--as 
the central leasing agent for most agencies--relies heavily on 
operating leases to meet new long-term needs because it lacks funds to 
pursue ownership. 

Operating leases have become an attractive option, in part because they 
generally "look cheaper" in any given year, even though they are 
generally more costly over time. Under current budget scorekeeping 
rules,[Footnote 38] the budget records the full cost of the 
government's commitment. Operating leases were intended for short-term 
needs and thus, under the scorekeeping rules, only the amount needed to 
cover the first year lease payments plus cancellation costs needs to be 
recorded. However, the rules have been stretched to allow budget 
authority for some long-term needs being met with operating leases to 
be spread out over the term of the lease, thereby disguising the fact 
that over time, leasing will cost more than ownership. Resolving this 
problem has been difficult; however, change is needed because the 
current practice of relying on costly leasing to meet long-term space 
needs results in excessive costs to taxpayers and does not reflect a 
sensible or economically rational approach to capital asset management. 

Five of the nine largest real property-holding agencies--Energy, 
Interior, GSA, State, and VA--reported an increased reliance on 
operating leases to meet new space needs over the past 5 years. 
According DHS officials, per review of GSA's fiscal year 2005 and 2006 
lease acquisition data for DHS, there has been no significant increase 
in GSA-acquired leased space for DHS. In addition, officials from NASA 
and USPS reported that their agency's use of operating leases has 
remained at about the same level over the past 5 years. 

* Energy officials reported that the department has increasingly relied 
on operating leases instead of federal construction over the past 5 
years. Officials told us that the difficulty in obtaining funding for 
major construction projects has made operating leases an attractive 
alternative. In addition, Energy officials added that the department 
scrutinizes lease proposals and compares the life-cycle costs for line 
item construction and the operating lease to ensure the operating lease 
is in the best interest of the department and the taxpayer. 

* GSA officials reported that GSA's reliance on operating leases has 
increased over the past 6 years. While the owned square footage has 
decreased from 183.9 million in fiscal year 2000 to 174.4 million in 
fiscal year 2006, the leased inventory has grown from 152.8 million to 
172.3 million during the same period. 

* According to Interior officials, the total square footage in direct 
leases increased from 2.7 million to 3.7 million from fiscal year 2002 
to fiscal year 2005. 

* State officials reported that the department's reliance on operating 
leases has increased to meet the growth of agencies overseas. Officials 
reported that funding for short-and long-term operating leases is vital 
for providing the space U.S. agencies need to perform their missions. 
Specifically, in countries where the U.S. agencies' programmatic growth 
is expected to be rapid or temporary, short-term operating leases 
(i.e., those with initial lease terms of less than 10 years) might be a 
more economical option and result in less risk than the construction of 
government facilities. 

* According to VA officials, the number of VA direct operating leases 
has increased, with the leased square footage increasing over 4 million 
in fiscal year 2004 to over 7 million in fiscal year 2006. VA officials 
reported that VA needs a more flexible facility infrastructure to 
accommodate changes in medical technology and shifts in demographic 
data. 

We did not analyze whether the leasing activity at these agencies, 
either in the aggregate or for individual leases, resulted in longer- 
term costs than if these agencies had pursued ownership. For short-term 
needs, leasing likely makes economic sense for the government in many 
cases. However, our past work has shown that, generally speaking, for 
long-term space needs, leasing is more costly over time than direct 
ownership of these assets. 

Decision makers have struggled with how to balance transparency over 
long-term costs and constraints on annual budgets since federal budget 
scoring rules were established.[Footnote 39] As an alternative, we have 
suggested scoring the budget authority for all operating leases up 
front on the basis of the underlying time requirement for the space so 
that all options are treated equally.[Footnote 40] If pursued, this 
approach would pose implementation challenges, including the need to 
evaluate the validity of agencies' stated space requirements. Finding a 
solution for this problem has been difficult; however, the current 
practice of relying on costly leasing to meet long-term space needs 
results in excessive costs to taxpayers and does not reflect a sensible 
or economically rational approach to capital asset management. 
Furthermore, despite its significance, this problem has gone largely 
unaddressed in the real property initiative. Without greater attention 
to resolving this problem, the government will likely continue to 
choose options that clearly cost taxpayers significantly more over the 
long term. 

Governmentwide Real Property Data Inventory Is in Early Stages, and 
Data Reliability Is Still a Problem at the Agency Level: 

While the administration and agencies have made progress in collecting 
standardized data elements[Footnote 41] needed to strategically manage 
real property, the long-term benefits of the new real property 
inventory have not yet been realized, and this effort is still in the 
early stages. The federal government has made progress in revamping its 
governmentwide real property inventory since our 2003 high-risk report. 
As previously mentioned, the first governmentwide reporting of 
inventory data for FRPP took place in December 2005, and GSA published 
the data on behalf of FRPC, in June 2006. According to the 2005 FRPP 
report, the goals of the centralized database are to improve decision 
making with accurate and reliable data, provide the ability to 
benchmark federal real property assets, and consolidate governmentwide 
real property data collection into one system. According to FRPC, these 
improvements in real property and agency performance data will result 
in reduced operating costs, improved asset utilization, recovered asset 
values, and improved facility conditions, among others. 

According to OMB staff, the first reporting for FRPP in 2005 included 
information for 1.2 million assets and all agencies under the Chief 
Financial Officers Act of 1990 (CFO Act) reported data to the FRPP. OMB 
staff reported that some agencies requested and received waivers for 
reporting a portion of their inventory or performance data in December 
2005. Most of the waivers related to the agencies' ability to capture 
the data early enough for the December 2005 reporting deadline. OMB 
staff said that these waivers have expired for the December 2006 
reporting. Also, OMB staff said that agencies reported performance 
measure data to the FRPP as part of the FRPP fiscal year 2005 
submission. Performance data were not reported in the publicly 
available, governmentwide report. 

According to OMB staff, the biggest challenge encountered by the FRPC, 
in establishing the inventory data elements and performance measures, 
was developing common definitions. Officials reported that it was 
difficult to agree on one definition for elements such as square 
footage (e.g., gross versus rentable) and value (e.g., book, appraised, 
or replacement) when agencies use many working definitions for those 
elements. According to OMB staff, FRPC has analyzed the results of the 
initial inventory data reporting and determined that at this time, the 
guidance does not need further revision. Currently, FRPC is working to 
promote the identification and prioritization of assets for disposal; 
assets that are in good condition and are highly used are considered 
low priority, and assets that are in poor condition and have high 
operating costs are considered high priority. 

OMB staff reported that the subjective nature of some data elements was 
also a challenge when attempting to make comparisons across agencies. 
According to OMB staff, the FRPC guidance was drafted to allow each 
agency to interpret mission criticality in an agency-specific manner. 
For example, part of GSA's mission is to help federal agencies better 
serve the public by providing workplaces. Therefore, GSA's fulfillment 
of tenant agencies' space needs at a location would make that location 
mission dependent from GSA's perspective. For agencies such as Energy, 
officials reported that mission dependency is determined based on the 
application of published definitions of mission critical, mission 
dependent, and not mission dependent. These align with the guidance 
promulgated by FRPC. Determination of mission dependency is made at the 
asset level by site management with input from real property owning 
programs. 

It is important to note that real property data contained in the 
financial statements of the U.S. government have also been problematic. 
The CFO Act, as expanded by the Government Management Reform Act, 
requires the annual preparation and audit of individual financial 
statements for the federal government's 24 major agencies. The 
Department of the Treasury is also required to compile consolidated 
financial statements for the U.S. government annually, which we audit. 
In March 2006, we reported that--for the ninth consecutive year-- 
certain material weaknesses[Footnote 42] in internal control and in 
selected accounting and financial reporting practices resulted in 
conditions that continued to prevent us from being able to provide the 
Congress and the American people with an opinion as to whether the 
consolidated financial statements of the U.S. government were fairly 
stated in conformity with U.S. generally accepted accounting 
principles. We also reported that the federal government did not 
maintain effective internal control over financial reporting (including 
safeguarding assets) and compliance with significant laws and 
regulations as of September 30, 2005.[Footnote 43] 

Individual Agencies Continue to Struggle with Data Reliability Issues: 

While agencies have made significant progress in collecting the data 
elements from their real property inventory databases for the FRPP, 
data reliability is still a problem at some of the major real property- 
holding agencies and agencies lack a standard framework for assessing 
the validity of data used to populate the FRPP. Quality governmentwide 
and agency-specific data are critical for addressing the wide range of 
problems facing the government in the real property area, including 
excess and unneeded property, deterioration, and security concerns. 
Despite the progress made by the administration and individual agencies 
in recent years, decision makers historically have not had access to 
complete, accurate, and timely data on what real property assets the 
government owns; their value; whether the assets are being used 
efficiently; and what overall costs are involved in preserving, 
protecting, and investing in them. Also, real property-holding agencies 
have not been able to easily identify excess or unneeded properties at 
other agencies that may suit their needs. More recent information on 
agency data reliability issues shows that this problem has persisted. 

* In April 2006, the DOD Inspector General (IG) reported weaknesses in 
the control environment and control activities that led to deficiencies 
in the areas of human capital assets, knowledge management, and 
compliance with policies and procedures related to real property 
management. As a result, the military departments' real property 
databases were inaccurate, jeopardizing internal control over 
transactions reported in the financial statements.[Footnote 44] 

* According to agency officials, DHS's real property data inventory, 
called its Real Property Information System, is mostly complete, but 
some DHS components face challenges collecting some data elements, 
including key performance measures such as condition indexes. According 
to DHS officials, all DHS components met the latest requirements for 
its FRPP data submission in December 2006. To meet the FRPP reporting 
requirement, proxies were used for operating costs and condition 
indexes as components work toward developing more robust data in these 
areas. 

* According to GSA's Office of the Inspector General (OIG) in 2005, 
improvements were needed in management, operational, and technical 
controls for GSA's System for Tracking and Administering Real Property 
(STAR).[Footnote 45] Specifically, the IG concluded that additional 
steps were needed to establish and achieve system-specific measures and 
goals for long-term efficiency and effectiveness. Further, the IG 
determined that GSA's Public Buildings Service (PBS) had not yet 
completed a comprehensive data dictionary for STAR that can be 
leveraged across the organization to effectively support business 
functions. PBS acknowledged the need for improvement in the areas 
identified in the OIG Audit Report and developed a corrective action 
plan to address the two IG recommendations. The action plan to address 
the recommendations included (1) an information paper that summarized 
and provided a course of action to address the issue of establishing 
STAR system-specific measures and goals for long-term efficiency and 
effectiveness and (2) a complete system data dictionary designed to 
capture the comprehensive nature of information in STAR and more 
effectively leverage the system across the PBS organization, which has 
been implemented by PBS. The data dictionary can be accessed by PBS 
associates with an authorized user ID and password. According to GSA 
officials, all audit recommendations have been addressed. 

* Interior officials reported, during this review, that the department 
is gradually strengthening its ability to identify excess property 
through the use of performance measurement data, which is maintained in 
the centralized governmentwide inventory system of real property 
holdings. 

* State officials reported, during this review, that State had a 
shortage of timely and valid facility data needed to manage its 
maintenance backlog. According to officials, the Bureau of Overseas 
Building Operations (OBO) is addressing several problems in this 
regard, including (1) several databases that are not linked together; 
(2) the absence of a modern computerized maintenance management system; 
and (3) OBO's lack of access to posts' assessments of critical 
facilities, systems, and equipment. Officials reported that a new data 
management system that will combine all of the databases and address 
many of the current data challenges will be phased in, starting in 
2007. 

Compounding these issues is the difficulty each agency has in 
validating its real property inventory data that are submitted to FRPP. 
Validation of individual agencies' data is important because the data 
are used to populate the FRPP. Because a reliable FRPP is needed to 
advance the administration's real property initiative, ensuring the 
validity of data that agencies provide is critical. In general, we 
found that agencies' efforts to validate the data for the FRPP are at 
the very early stages of development. For example, according to 
Interior officials, the department had designed and was to begin 
implementing a program of validating, monitoring, and improving the 
quality of data reported into FRPP in the last quarter of fiscal year 
2006. 

Furthermore, according to OMB staff, there is no comprehensive review 
or validation of data once agencies submit their real property profile 
data to OMB. OMB staff reported that both OMB and GSA review agency 
data submissions for variances from the prior reporting period. 
However, agencies are required to validate their data prior to 
submission to the GSA-managed database. OMB staff reported that some 
agencies, as part of the PMA initiative, have provided OMB with plans 
for ensuring the quality of their inventory and performance data. OMB 
staff reported that OMB has not, to date, requested these plans of all 
agencies. OMB staff reported that agencies provide OMB with information 
that includes the frequency of data updates and any methods used for 
data validation. In addition, according to OMB staff, OMB relies on the 
quality assurance and quality control processes performed by individual 
agencies. Also, OMB staff noted that they rely on agency IGs, agency 
financial statements, and our reviews to establish the validity of the 
data. Furthermore, OMB staff indicated that a one-size-fits-all 
approach to data validation would be difficult to implement. 
Nonetheless, a general framework for data validation that could guide 
agencies in this area would be helpful, as agencies continue their 
efforts to populate the FRPP with data from their existing data 
systems. A framework for FRPP data validation approaches could be used 
in conjunction with the more ad hoc validation efforts OMB mentioned 
to, at a minimum, suggest standards for frequency of validation, 
validation methods, error tolerance, and reporting on reliability. Such 
a framework would promote a more comprehensive approach to FRPP data 
validation. 

Physical Security Is Still a Problem for Major Real Property-Holding 
Agencies: 

The threat of terrorism has increased the emphasis on physical security 
for federal real property assets. All of the nine agencies reported 
using risk-based approaches to some degree to prioritize facility 
security needs, as we have suggested;[Footnote 46] but some agencies 
cited challenges, including a lack of resources for security 
enhancements and issues associated with securing leased space. For 
example, DHS officials reported that the department is working to 
further develop a risk management approach that balances security 
requirements and the acquisition of real property and leverages limited 
resources for all its components. In many instances, available real 
property requires security enhancements before government officials can 
occupy the space. Officials reported that these security upgrades 
require funding that is beyond the cost of acquiring the property, and, 
therefore, their acquisition is largely dependent on the availability 
of sufficient resources. 

In the security area, Energy officials reported that safeguards and 
security programs are based on vulnerability and risk assessments, the 
results of which are used to design and provide graded protection in 
accordance with an asset's importance or the impact of its loss, 
destruction, or misuse. In addition, Interior published the National 
Monument and Icon Security Assessment Methodology in August 2004 to 
quantify risk levels, identify needed security enhancements, and 
measure risk reduction benefits at monument and icon assets. Interior 
officials told us that the department hired a security manager to 
provide oversight and a liaison function for its real property 
holdings. Also, GSA officials reported that GSA, in conjunction with 
Federal Protective Service, conducts periodic building security 
assessments for all GSA-controlled buildings on a schedule determined 
by each building's Department of Justice security level.[Footnote 47] 
Threats and vulnerabilities are identified and designated low, medium, 
or high risk, and countermeasures that address high-risk threats take 
priority. NASA officials reported that NASA incorporates risk 
management in all of its prioritization of security resources. 

While some agencies have indicated that they have made progress in 
using risk-based approaches, some officials told us that they still 
face considerable challenges in balancing their security needs and 
other real property management needs with their limited resources. 
According to GSA officials, obtaining funding for security 
countermeasures, for both security fixtures and equipment, is a 
challenge, not only within GSA, but for GSA's tenant agencies as well. 
In addition, Interior and NASA officials reported that their agencies 
face budget and resource constraints in securing real property. 
Interior officials further noted that despite these limitations, 
incremental progress is made year after year in security. 

Given their competing priorities and limited security resources, some 
of the major real property-holding agencies face considerable 
challenges in balancing their security and real property management 
needs. We have reported that agencies could benefit from specific 
performance measurement guidance and standards for facility protection 
to help them address the challenges they face and help ensure that 
their physical security efforts are achieving the desired 
results.[Footnote 48] Without a means of comparing the effectiveness of 
security measures across facilities, particularly program outcomes, the 
U.S. government is open to the risk of either spending more money for 
less effective physical security measures or investing in the wrong 
areas. Furthermore, performance measurement helps ensure 
accountability, since it enables decision makers to isolate certain 
activities that are hindering an agency's ability to achieve its 
strategic goals. Performance measurement can also be used to prioritize 
security needs and justify investment decisions so that an agency can 
maximize available resources. 

Despite the magnitude of the security problem, we noted that this area 
is largely unaddressed in the real property initiative. Without 
formally addressing security, there is a risk that this challenge could 
continue to impede progress in other areas. The security problem has an 
impact on the other problems that have been discussed. For example, to 
the extent that funding will be needed for a sustained investment in 
security, the funding available for repair and restoration, preparing 
excess property for disposal, and improving real property data systems 
may be further constrained. Furthermore, security requires significant 
staff time and other human capital resources and thus real property 
managers may have less time to manage other problems. 

Underlying Obstacles Hamper Agency Real Property Reform Efforts 
Governmentwide: 

In past high-risk reports, we called for a transformation strategy to 
address the long-standing problems in this area. While the 
administration's current approach is generally consistent with what we 
envisioned and the administration's central focus on real property 
management is a positive step, certain areas warrant further attention. 
Specifically, problems are exacerbated by underlying obstacles that 
include competing stakeholder interests and legal and budgetary 
limitations. For example, some agencies cited local interests as 
barriers to disposing of excess property. In addition, agencies' 
limited ability to pursue ownership often leads them to lease property 
that they could more cost-effectively own over time. Another obstacle-
-the need for improved long-term capital planning--remains despite OMB 
efforts to enhance related guidance. 

Several Agencies Cited Competing Stakeholder Interests as Impeding Real 
Property Management Decision Making: 

In addition to Congress, OMB, and the real property-holding agencies, 
several other stakeholders have an interest in how the federal 
government carries out its real property acquisition, management, and 
disposal practices. These stakeholders include foreign governments; 
state and local governments; business interests in the communities 
where the assets are located; private sector construction and leasing 
firms; historic preservation organizations; various advocacy groups; 
and the public in general, which often views the facilities as the 
physical face of the federal government in local communities. As a 
result of competing stakeholder interests, decisions about real 
property often do not reflect the most cost-effective or efficient 
alternative, which would be in the interest of the agency or the 
government as a whole, but instead reflect other priorities. In 
particular, this situation often arises when the federal government 
attempts to consolidate facilities or otherwise dispose of unneeded 
assets. 

Some major real property-holding agencies reported that competing 
local, state, and political interests often impede their ability to 
make real property management decisions, such as decisions about 
disposing of unneeded property and acquiring real property. For 
example, VA officials reported that disposal is often not an option for 
most properties because of political stakeholders and constituencies, 
including historic building advocates or local communities that want to 
maintain their relationship with VA. In addition, officials said that 
attaining the funding to follow through on CARES decisions is a 
challenge because of competing priorities. Other agencies cited similar 
challenges related to competing stakeholder interests. 

* Interior officials reported that the department faces significant 
challenges in balancing the needs and concerns of local and state 
governments, historical preservation offices, political interests, and 
others, particularly when coupled with budget constraints. If the 
interests of competing stakeholders are not appropriately addressed 
early in the planning stage, they can adversely affect the cost, 
schedule and scope of a project. In addition, according to Interior 
officials, unrequested earmarks can circumvent careful planning and 
divert resources from more critical needs, such as reducing the 
maintenance backlog. 

* According to State officials, property disposal is affected by 
multiple competing parties including host nations, local governments, 
historic preservation groups, and political groups. Often, host 
governments may have the authority to approve property sales and 
purchases and also may assess large transfer fees or delay the issuance 
of documents. 

* Historically, proposed post office closures in urban, suburban, or 
rural areas, and changes to postal infrastructure by USPS, have 
provoked intense opposition because post offices are part of American 
culture and business and are viewed as critical to the economic 
viability of small towns and central business districts. Members of 
Congress and other stakeholders have often intervened in the past when 
USPS attempted to close post offices or consolidate facilities. Also, a 
variety of factors enter into decisions about managing USPS facilities, 
which include different statutory requirements, depending upon the type 
of facility. For example, in 1976, Congress amended the Postal 
Reorganization Act and established specific requirements for USPS when 
planning to close a post office, including that USPS must consider the 
effects on the community served, the employees of the facility, and 
economic savings to USPS that would result from the closure, as well as 
provide notice to customers.[Footnote 49] This amendment sought to 
involve communities in decisions, which would help to ensure that these 
decisions were made fairly and consistently. Recently, concerns have 
been raised about the adequacy of USPS's communication with affected 
communities as it implements changes to its mail processing network to 
reduce excess capacity.[Footnote 50] In December 2006, legislation was 
enacted that encouraged USPS to move forward to streamline its 
distribution network, but it also required USPS to provide adequate 
public notice to affected communities.[Footnote 51] We are currently 
reviewing USPS's efforts related to realigning its mail processing 
network and will be issuing a report on the results of that review. 

Despite its significance, the obstacle of competing stakeholder 
interests has gone unaddressed in the real property initiative. It is 
important to note that there is precedent for lessening the impact of 
competing stakeholder interests. BRAC decisions, by design, are 
intended to be removed from the political process, and Congress 
approves BRAC decisions as a whole. OMB staff said they recognize the 
significance of the obstacle and told us that FRPC would begin to 
address the issue after the inventory is established and other reforms 
are initiated. Without addressing this issue, however, less than 
optimal decisions that are not based on what is best for the government 
as a whole may continue. 

Legal and Budgetary Limitations Continue to Hamper Agencies' Disposal 
Efforts: 

As discussed earlier, budgetary limitations that hinder agencies' 
ability to fund ownership lead agencies to rely on costly leased space 
to meet new space needs. Furthermore, the administrative complexity and 
costs of disposing of federal property continue to hamper some 
agencies' efforts to address their excess and underutilized real 
property problems. Federal agencies are required by law to assess and 
pay for any environmental cleanup that may be needed before disposing 
of a property--a process that may require years of study and result in 
significant costs. As valuable as these legal requirements are, their 
administrative complexity and the associated costs of complying with 
them create disincentives to the disposal of excess property. 

* We reported that VA, like all federal agencies, must comply with 
federal laws and regulations governing property disposal that are 
intended, for example, to protect subsequent users of the property from 
environmental hazards and to preserve historically significant 
sites.[Footnote 52] We have reported that some VA managers have 
retained excess property because the administrative complexity and 
costs of complying with these requirements were disincentives to 
disposal.[Footnote 53] 

* Energy officials reported that although an aggressive demolition and 
decommissioning program reduced the agency's footprint by 9 million 
square feet from fiscal year 2002 through fiscal year 2005, 16 percent 
of their inventory remains excess or underutilized. According to Energy 
officials, the department understands the need to screen excess real 
property under the McKinney Act and follows this requirement. But, 
officials noted that Energy would benefit from streamlining the process 
because much of the portfolio being disposed of has no remaining useful 
life and is most often located within a secure compound. In these 
cases, demolition is the only viable method of disposition, and 
screening requirements needlessly slow the process. Additionally, some 
agencies reported that the costs of cleanup and demolition sometimes 
exceed the costs of continuing to maintain a property that has been 
shut down. In such cases, it can be more beneficial economically to 
retain the asset in a shut-down status. 

* GSA officials noted that GSA is challenged to balance funding for 
assets that GSA needs to retain, such as those that will recapture 
vacant space, with funding for the demolition of underutilized 
properties that remain vacant until they can be torn down or 
environmental remediation of assets prior to disposal. 

* Interior officials reported that the department continues to face 
several challenges in disposing of excess or underutilized real 
property, including competing priorities for funding that includes 
costs to cover environmental analysis and cleanup of hazardous 
materials, or other costs associated with disposal, such as 
deconstruction, demolition, or off-site removal. Interior officials 
further noted that if the department was allowed to retain proceeds 
from the sale of assets, it would facilitate the process by off-setting 
the cost of disposal. 

* State officials indicated that owning and disposing of properties in 
an international environment presents challenges, including risks 
associated with normal economic and real estate conditions. Depending 
on the law of the host country, the host government may have the 
authority to make decisions that affect the department's disposal 
plans. Also, State officials said that, while not common, congressional 
interest can sometimes lead to further study into the retention of 
unneeded real property. 

Given that agencies are required to fund the costs of preparing 
property for disposal, the inability to retain any of the proceeds acts 
as an additional disincentive. It seems reasonable to allow agencies to 
retain enough of the proceeds to recoup the costs of disposal, and it 
may make sense to permit agencies to retain additional proceeds for 
reinvestment in real property where a need exists. However, in 
considering whether to allow federal agencies to retain proceeds from 
real property transactions, it is important for Congress to ensure that 
it maintains appropriate control and oversight over these funds, 
including the ability to redistribute the funds to accommodate changing 
needs. 

Need for Improved Capital Planning Still Exists: 

Over the years, we have reported that prudent capital planning can help 
agencies to make the most of limited resources, and failure to make 
timely and effective capital acquisitions can result in acquisitions 
that cost more than anticipated, fall behind schedule, and fail to meet 
mission needs and goals. In addition, Congress and OMB have 
acknowledged the need to improve federal decision making regarding 
capital investment. A number of laws enacted in the 1990s placed 
increased emphasis on improving capital decision-making practices and 
OMB's Capital Programming Guide and its revisions to Circular A-11 have 
attempted to address the government's shortcomings in this area. 

Our prior work assessing agencies' implementation of the planning phase 
principles in OMB's Capital Programming Guide and our Executive 
Guide[Footnote 54] found that some agencies' practices did not fully 
conform to the OMB principles and agencies' implementation of capital 
planning principles was mixed.[Footnote 55] Specifically, while 
agencies' capital planning processes generally linked to their 
strategic goals and objectives and most of the agencies we reviewed had 
formal processes for ranking and selecting proposed capital 
investments, the agencies have had limited success with using 
agencywide asset inventory systems and data on asset condition to 
identify performance gaps. In addition, we found that none of the 
agencies had developed a comprehensive, agencywide, long-term capital 
investment plan. The agency capital investment plan is intended to 
explain the background for capital decisions and should include a 
baseline assessment of agency needs that examines existing assets and 
identifies gaps and help define an agency's long-term investment 
decisions. In January 2004, we recommended that OMB begin to require 
that agencies submit long-term capital plans to OMB. Since that report 
was issued, VA--which was one of our initial case study agencies-- 
issued its first 5-year capital plan. However, recent work in this area 
showed that although OMB now encourages such plans, it does not collect 
them, and the agencies that were included in this review did not have 
agencywide long-term capital investment plans.[Footnote 56] 

Shortcomings in the capital planning and decision-making area have 
clear implications for the administration's real property initiative. 
Real property is one of the major types of capital assets that agencies 
acquire. Other capital assets include information technology, major 
equipment, and intellectual property. OMB staff said that agency asset 
management plans are supposed to align with the capital plans but that 
OMB does not assess whether the plans are in alignment. We found that 
guidance for the asset management plans does not discuss how these 
plans should be linked with agencies' broader capital planning efforts 
outlined in the Capital Programming Guide. In fact, OMB's asset 
management plan sample, referred to as the "shelf document," which 
agencies use to develop the asset management plans, makes no reference 
to the guide. Without a clear linkage or crosswalk between the guidance 
for the two documents, there is less assurance that agencies will link 
them. Furthermore, there could be uncertainty with regard to how real 
property goals specified in the asset management plans relate to longer 
term capital plans. 

Conclusions: 

The executive order on real property management and the addition of 
real property to the President's Management Agenda (PMA) have provided 
a good foundation for strategically managing federal real property and 
addressing long-standing problems. These efforts directly address the 
concerns we raised in past high-risk reports about the lack of a 
governmentwide focus on real property management problems and generally 
constitute what we envisioned as a transformation strategy for this 
area. However, these efforts are in the early stages of implementation, 
and the problems that led to the high-risk designation--excess 
property, repair backlogs, data issues, reliance on costly leasing, and 
security challenges--still exist. As a result, this area remains high 
risk until agencies show significant results in eliminating the 
problems by, for example, reducing inventories of excess facilities and 
making headway in addressing the repair backlog. Furthermore, the 
current efforts lack an overall framework for helping agencies ensure 
the validity of real property data in FRPP and do not adequately 
address the costliness of long-term leases and security challenges. 
While the administration has taken several steps to overcome some 
obstacles in the real property area, the obstacle posed by competing 
stakeholder interests has gone largely unaddressed, and the linkage 
between the real property initiative and broader agency capital 
planning efforts is not clear. Focusing on these additional areas could 
help ensure that the problems and obstacles are addressed. 

Recommendations for Executive Action: 

We are making three recommendations to OMB's Deputy Director for 
Management. We recommend that the Deputy Director, in conjunction with 
FRPC, take the following three actions: 

* Develop a framework that agencies can use to better ensure the 
validity and usefulness of key real property data in the FRPP. At a 
minimum, the framework would suggest standards for frequency of 
validation methods, error tolerance, and reporting on reliability; 

* Develop an action plan for how the FRPC will address key problems, 
including the continued reliance on costly leasing in cases where 
ownership is more cost effective over the long term, the challenges of 
securing real property assets, and reducing the effect of competing 
stakeholder interests on businesslike outcomes in real property 
decisions; and: 

* Establish a clearer link or crosswalk between agencies' efforts under 
the real property initiative and broader capital planning guidance. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to OMB, DOD, DHS, Energy, GSA, 
Interior, NASA, State, USPS, and VA for review and comment. OMB agreed 
with the report and concurred with its recommendations. OMB also 
provided technical clarifications, which we incorporated, where 
appropriate. OMB's comments are discussed in more detail below. OMB's 
letter is contained in appendix IV without the enclosure that contained 
the technical clarifications. Comments we received from GSA, NASA, 
Interior, DHS, Energy, State, and VA are contained in appendixes V 
through XI, respectively. VA, Energy, DHS, GSA, and NASA generally 
agreed with the report. VA provided technical clarifications and 
expanded comments in an enclosure that are discussed below. Interior, 
DHS, and Energy also provided technical clarifications, which we 
incorporated, where appropriate, but did not include in the appendixes. 
Also, DHS provided information in its letter that identified activities 
it was undertaking that relate to our recommendations. State, DOD, 
Interior, and USPS did not state whether they agreed or disagreed with 
the report's overall conclusions and recommendations. However, State 
provided additional information for the report and Interior, DOD, and 
USPS provided technical clarifications, which we incorporated, where 
appropriate. State's comments are also discussed in more detail below. 

Evaluation of OMB Comments: 

In general, OMB agreed with our assessment that challenges remain in 
meeting the goal of improving federal real property management. OMB 
said that it is continuing to work to ensure that governmentwide 
efforts will ultimately lead to improved asset management, the disposal 
of unneeded federal real property, and the removal of federal real 
property from our high-risk list. OMB indicated that significant 
progress has been made in four main areas, including (1) all agencies 
have established asset management plans, addressing acquisition, 
operations, and maintenance, and disposition; (2) the FRPC has 
established a standard catalog and identifies 23 data elements to be 
captured on all assets in the federal portfolio; (3) agencies have 
captured and reported the required constructed asset level inventory 
and performance data to the FRPP governmentwide database; and (4) 
agencies now have reliable performance information to assist them in 
identifying underperforming assets suitable for investment or 
disposition. OMB reported that tools are now in place for improved 
asset management and that this has led to results that include data on 
more than 1.2 million assets and more than $4.2 billion in disposals 
completed since the real property initiative was established in 2004. 

OMB agreed with our three recommendations and provided additional 
information relating to them. Regarding the first recommendation to 
develop a framework that agencies can use to better ensure the validity 
and usefulness of key real property data in the FRPP, OMB reported that 
it will work with the FRPC to take steps to establish and implement a 
framework. OMB agreed that establishing a framework to ensure the 
validity and usefulness of key real property data, especially 
performance data, will lead to greater reliability of key data. 
According to OMB, the framework that it will pursue will identify 
acceptable validation methods, frequency, error tolerance, reliability, 
and processes for reporting corrective actions. 

For the second recommendation to develop an action plan for how the 
FRPC will address key problems, OMB said that the FRPC is currently 
drafting a strategic plan for addressing long-standing issues such as 
the continued reliance on costly leasing in cases where ownership is 
more cost effective over the long-term, the challenge of securing real 
property assets, and reducing the effect of competing stakeholder 
interests on businesslike outcomes in real property decisions. OMB 
agreed that it is important to build upon the substantial progress that 
has been realized by both the FRPC and the federal real property 
community in addressing the identified areas for improvement. OMB said 
that it will share the strategic plan with us once it is in place and 
will discuss strategies for ensuring successful implementation. For our 
third recommendation to establish a clearer link or crosswalk between 
agencies' efforts under the real property initiative and broader 
capital planning guidance, OMB stated that as agencies update their 
asset management plans and incorporate updated guidance on capital 
planning, progressive improvement in this area will be realized. OMB 
also provided technical comments, which we incorporated into the final 
report, where appropriate. 

Evaluation of State Comments: 

In commenting on our related work on long-term capital investment 
plans, State said that its long-range overseas buildings plan qualifies 
as a long-term capital plan. We agree that State's long-range overseas 
building plan contains elements that qualify as a long-term capital 
plan for OBO. However, our statement that agencies lacked such plans 
refers to the Offices of Science and Environmental Management within 
DOE and U.S. Customs and Border Protection within DHS, and not to 
State.[Footnote 57] State asked us to change text related to funding 
backlogs and reliance on leasing to emphasize the relative importance 
of budgetary constraints in resolving maintenance backlogs. We agree 
that the legal and budgetary limitations are obstacles, and we 
discussed this extensively in the draft. We also relate these 
limitations to more than just the challenge of funding real property 
needs, but also to the policy environment these limitations create. As 
such, we feel that the effect of legal and budgetary limitations as 
underlying obstacles that exacerbate backlogs is accurately portrayed 
and did not make the changes to the report that State requested. State 
requested that the report acknowledge the limiting effect of scoring 
rules on lease-purchase agreements. While it is true that the report 
focuses on the scoring of operating leases, it also discusses the 
tendency of agencies to choose operating leases over ownership options 
(such as lease purchases) due to the way that operating leases are 
scored. 

State also pointed out that there are maintenance and repair costs 
associated with property ownership, while operating leases typically 
hold landlords responsible for maintenance and repair costs. As stated 
previously in this report, we did not analyze whether the leasing 
activity at these agencies, either in the aggregate or for individual 
leases, resulted in longer-term costs than if these agencies had 
pursued ownership. For short-term needs, leasing likely makes economic 
sense for the government in many cases. However, our past work has 
shown that, generally speaking, for long-term space needs, leasing is 
more costly over time than direct ownership of these assets. State 
believed our report should have more emphasis on maintenance and repair 
costs associated with trade-offs between choosing operating leases or 
property ownership options. We agree that maintenance and repair costs 
are key factors and believe that our draft accurately explained the 
importance of them. Lastly, State wanted us to remove a reference to 
congressional interest in property disposals so that it would not be 
misinterpreted by Congress. We chose to clarify the statement in the 
report to more accurately represent State's response during our review. 

Evaluation of VA Comments: 

VA agreed with our general conclusion that progress has been made 
toward addressing real property problems and that there is still work 
to be done. However, VA stated that its progress is greater than we 
portrayed in the draft and suggested several examples of its 
initiatives. For example, in the area of data validation, VA stated 
that VA's Capital Asset Management System provides a single means to 
validate data from multiple source systems. In the area of unneeded 
assets, VA stated that it has disposed of 156 buildings since fiscal 
year 2004 and 146 buildings are planned for disposal in fiscal year 
2007 and fiscal year 2008. VA further stated that it is implementing a 
sustainment model and investing in sustainment needs, among other 
things, to address its maintenance and repair backlog. Lastly, VA 
stated that it has developed an assessment methodology for its 
facilities, assessed those facilities considered most mission- 
critical, and requested funding for physical security enhancements to 
address the physical security of its facilities. Although our report 
was largely based on the information VA provided to us during the time 
of our review, we have included information on these initiatives and 
incorporated other technical comments that VA provided, where 
appropriate. 

Regarding our discussion of the government's over-reliance on costly 
operating leases, VA stated that it relies on operating leases because 
of its need for a more flexible facility infrastructure and that VA's 
mission has driven its increased use of this type of leasing. VA said 
that it is true that it has increased its reliance on leasing to meet 
space needs, but that the majority of its leases are outpatient or 
store-front facilities. VA said that it does not use these leases 
because they look cheaper in any given year, asserting that our draft 
made this conclusion. In fact, our report did not state that VA enters 
into operating leases for this reason. Instead, our report states that 
operating leases have become an attractive option, in part because they 
generally "look cheaper" in any given year, even though they are 
generally more costly over time. This discussion in the report related 
to leasing issues in general and was not specific to VA. Furthermore, 
we included information in the report about VA's views on leasing. That 
is, we stated that VA officials reported needing a more flexible 
facility infrastructure to accommodate changes in medical technology 
and shifts in demographic data. Finally, we stated that for short-term 
needs, leasing likely makes economic sense for the government in many 
cases. 

We are sending copies of this report to the Director and Deputy 
Director of OMB; Secretaries of DOD, DHS, Energy, Interior, State, and 
VA; the Administrators of GSA, and NASA; and the Postmaster General of 
the United States. Additional copies will be sent to interested 
congressional committees. We will also make copies available to others 
upon request, and the report will be available at no charge on the GAO 
Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 
512-2834 or at goldsteinm@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made key contributions to this 
report are listed in appendix XII. 

Signed by: 

Mark L. Goldstein: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our objectives were to determine (1) what progress the administration 
and major real property-holding agencies have made in addressing long- 
standing problems and (2) what problems and obstacles, if any, remain 
to be addressed. For the purpose of this review, we identified the 
nine[Footnote 58] real property-holding agencies that are largest in 
terms of owned and leased space. These agencies are the Departments of 
Defense (DOD), Energy (Energy), Homeland Security (DHS), the Interior 
(Interior), State (State), and Veterans Affairs (VA); the General 
Services Administration (GSA); the National Aeronautics and Space 
Administration (NASA), and the United States Postal Service (USPS). 
Together, these agencies hold a majority of the federal government's 
real property assets, totaling 93 percent of the total square footage 
owned and leased by the federal government. We also interviewed 
officials from the Office of Management and Budget (OMB) because it 
oversees the implementation of Executive Order 13327, which addresses 
federal real property management. Our January 2003 high-risk work 
identified five long-standing problems in federal real property 
management, including excess and underutilized property, deteriorating 
facilities, reliance on costly leasing, and unreliable real property 
data. Federal agencies were also facing many challenges in protecting 
their facilities against the threat of terrorism. 

To determine what progress these nine major real property-holding 
agencies have made in addressing the five long-standing problems in 
managing federal real property assets, we asked knowledgeable real 
property officials at each of the nine agencies to provide written 
responses to a standard list of questions. These questions addressed 
what steps, if any, the agencies have taken to address the five 
problems and to implement the requirements of Executive Order 13327, 
which established guidelines for improving executive branch agencies' 
real property management; created a new organization, the Federal Real 
Property Council (FRPC); and supported a presidential initiative, the 
President's Management Agenda (PMA) real property initiative. We 
analyzed the written responses to our questions and reviewed supporting 
documentation provided by agency officials. It is important to note 
that although USPS is a major real property-holding agency, it is not 
subject to Executive Order 13327. The list of questions administered to 
USPS addressed the long-standing problems and real property management 
efforts related to the requirements of the executive order. 

In addition to reviewing the written responses to our questions, for 
each major real property-holding agency, we obtained and reviewed 
available information and related documentation on the agency's plans 
to address the long-standing problems in managing its federal real 
property assets, including its asset management plans and related real 
property policies and reports. We also reviewed a number of our 
previous reports and pertinent work by agency Inspectors General and by 
the Congressional Research Service on real property management at the 
major real property-holding agencies. Finally, we reviewed and analyzed 
federal laws relating to real property for the major real property- 
holding agencies and USPS. 

Because the OMB is responsible for overseeing the implementation of 
Executive Order 13327, we reviewed applicable federal laws and 
authorities and interviewed knowledgeable OMB staff to obtain 
information on OMB's oversight role--including FRPC activities--and 
OMB's assessment of the progress made by major real property-holding 
agencies in implementing the executive order. OMB staff also provided 
us with information on OMB's guidance for implementing the PMA real 
property initiative and related reports. In addition, we reviewed the 
PMA's real property initiative standards and scorecards developed by 
OMB to obtain additional information on each agency's implementation of 
the executive order and governmentwide and individual agency efforts 
related to real property management. 

Agency officials and the representatives of stakeholder organizations 
provided much of the data and other information used in this report. We 
relied largely on agency responses to our questions to assess progress, 
performed an assessment of the reliability of the data they provided, 
and determined that the data were adequate for the purpose of our 
review. When officials provided their views and opinions as 
spokespersons for their organizations, we corroborated the information 
with other officials. We prepared this report under the Comptroller 
General's authority to conduct evaluations on his own initiative as 
part of a continued effort to assist Congress with oversight of real 
property issues. We conducted our work from April 2006 through February 
2007 in accordance with generally accepted government auditing 
standards. 

[End of section] 

Appendix II Selected Enhanced Real Property Authorities of Major Real 
Property-Holding Agencies: 

Agency: DOD[A]; 
Authority: Leases of nonexcess property of military departments; 
Description of authority: The Secretary of a military department is 
authorized to lease real property under the control of the department 
that is not considered to be excess property if the Secretary considers 
the lease to be advantageous to the United States. The term of the 
lease may be up to 5 years unless the Secretary determines the term 
should be longer to promote the national defense or for the public 
interest. Lease payments shall be in cash or in-kind consideration for 
an amount not less than fair market value. In-kind consideration 
includes maintenance, alteration, protection, environmental 
restoration, construction of new facilities, and providing facilities, 
facilities operation support, or other services on the leased 
property.[B] [10 U.S.C. § 2667]. 

Authority: Retention of proceeds/Leases of nonexcess property of 
military departments; 
Description of authority: Proceeds from leases are deposited in a 
special account in the Treasury and are available to the Secretary of 
that military department to the extent provided in an appropriation 
act. At least 50 percent of proceeds can be used for maintenance, 
protection, alteration, environmental restoration, construction of new 
facilities, or facilities operation support at the military 
installation where proceeds were derived. Proceeds received from leases 
entered into at military installations to be closed or realigned under 
a base closure law pending the final disposition of real property are 
deposited in special DOD base closure accounts. [10 U.S.C. § 2667]. 

Agency: Energy; 
Authority: Leasing of excess property; 
Description of authority: The Secretary of Energy is authorized to 
lease excess real property located at a DOE facility that is to be 
closed or reconfigured and is not needed by DOE at the time the lease 
is entered into if the Secretary considers the lease appropriate to 
promote national security or is in the public interest. The term of the 
lease may be up to 10 years with an option to renew the lease for up to 
another 10-year term. Lease payments shall be in cash or in-kind 
consideration for an amount not less than fair market value. In-kind 
consideration includes services relating to the protection and 
maintenance of the leased property. The authority to enter into leases 
terminates on September 30, 2010. [42 U.S.C. § 7256]. 

Authority: Retention of proceeds/Leasing of excess property; 
Description of authority: The Secretary shall use the funds received as 
rent that the Secretary considers necessary to cover administrative 
expenses of the lease, maintenance, and repair of the leased property, 
or environmental restoration activities at the facility where the 
leased property is located to the extent provided in an appropriation 
act. [42 U.S.C. § 7256]. 

Agency: GSA; 
Authority: Conveyance of property; 
Description of authority: The Administrator of GSA, notwithstanding any 
other provision of law, is authorized to convey by sale, lease, 
exchange or otherwise, including through leaseback arrangements, real 
property, or interests therein; [Section 412 of P.L. No. 108-447, 118 
Stat. 2809, 3259 (2004)]. 

Authority: Retention of proceeds/ Conveyance of property; 
Description of authority: The Administrator of GSA is authorized to 
retain net proceeds from the disposition of real property in its 
Federal Buildings Fund (FBF), which are to be used for GSA real 
property capital needs to the extent provided in an appropriation act; 
[Section 412 of P.L. No. 108-447, 118 Stat. 2809, 3259 (2004)]. 

Authority: Southeast Federal Center; 
Description of authority: The Administrator of GSA is authorized to 
enter into leases with private entities for the development of the 
Southeast Federal Center. Agreements shall be for fair consideration 
and may include in- kind consideration such as construction, repair, 
remodeling, or maintenance of federal property, and providing office, 
storage, or other usable space; [P.L. No. 106-407, 114 Stat. 1758 
(2000)]. 

Authority: Retention of proceeds/Southeast Federal Center; 
Description of authority: The Administrator of GSA is authorized to 
retain from the proceeds amounts necessary to recover the expenses 
incurred with respect to the property. Net proceeds are deposited in 
FBF and available to the extent provided in an appropriation act; [P.L. 
No. 106-407, 114 Stat. 1758 (2000)]. 

Authority: Middle River Depot Sale; 
Description of authority: The Administrator of GSA is authorized to 
sell the Middle River Depot at Middle River, Maryland; [Section 407 of 
P.L. No. 108-447, 118 Stat. 2809, 3258 (2004)]. 

Authority: Retention of proceeds/Middle River Depot sale; 
Description of authority: The proceeds of sale from the Middle River 
Depot are to be credited to FBF for capital activities and available to 
the extent provided in an appropriation act; [Section 407 of P.L. No. 
108-447, 118 Stat. 2809, 3258 (2004)]. 

Agency: Interior; 
Authority: Leases for National Park System (NPS); 
Description of authority: The Secretary of the Interior is authorized 
to enter into leases with any person or governmental entity for the use 
of buildings and associated property administered as part of NPS. 
Rental payments shall be for the fair market value, but can be adjusted 
by the Secretary for amounts spent by the lessee for such expenses as 
preservation, maintenance, restoration, and improvement of the 
property. [16 U.S.C. § 1a-2]. 

Authority: Retention of proceeds/Leases for NPS; 
Description of authority: Rental payments are deposited into a special 
account in the Treasury where the availability of funds is not subject 
to an appropriation act. Funds are available for infrastructure needs 
such as facility refurbishment, repair, and replacement, and for 
maintenance of the leased buildings and associated properties. [16 
U.S.C. § 1a-2]. 

Authority: Housing for NPS employees; 
Description of authority: The Secretary of the Interior is authorized 
to lease federal land and interests in land for up to 50 years for the 
construction of field employee quarters; [16 U.S.C. § 17o]. 

Authority: Retention of proceeds/Housing for NPS employees; 
Description of authority: The proceeds from any lease are retained by 
NPS and deposited into a special fund for maintenance and operation of 
quarters. [16 U.S.C. § 17o]. 

Authority: Presidio of San Francisco; 
Description of authority: Established the Presidio Trust, a wholly 
owned government corporation, to manage the Presidio in the Golden Gate 
National Recreation Area through a public/private partnership. 
Authorized the Presidio Trust to enter into leases with any person, 
firm, association, organization, corporation or governmental entity 
necessary to carry out its authorized activities. Authorized the 
Presidio Trust to establish procedures for lease agreements for the use 
and occupancy of Presidio facilities; [16 U.S.C. § 460bb note]. 

Authority: Retention of proceeds/Presidio of San Francisco; 
Description of authority: All proceeds and other revenues received by 
the Presidio Trust are retained by the Trust and are available to the 
Trust, without further appropriation, for such expenses as 
administration, preservation, restoration, maintenance, or improvement 
of Presidio properties.[16 U.S.C. § 460bb note]. 

Agency: NASA; 
Authority: Enhanced-use leases (EUL) real property demonstration; 
Description of authority: The Administrator of NASA is authorized to 
enter into lease agreements with any person or entity, including 
federal, state, or local governments, with regard to any real property 
at two NASA centers. The lease shall be for fair market value and 
payments may be in cash or in-kind consideration such as construction, 
maintenance, or improvement of facilities, or providing services to 
NASA such as launch and payload processing services; [42 U.S.C. § 
2459j]. 

Authority: Retention of proceeds/EUL real property demonstration; 
Description of authority: Cash consideration received for the lease is 
to be used to cover the full costs to NASA in connection with the 
lease. Any remaining cash shall be deposited in a capital asset account 
available for maintenance, capital revitalization, and improvements of 
real property assets at the two NASA centers; [42 U.S.C. § 2459j]. 

Authority: Camp Parks Military Reservation sale; 
Description of authority: The Administrator of NASA is authorized to 
sell its property at the Camp Parks Military Reservation in Alameda, 
California; [Section 627 of P.L. No. 109-108, 119 Stat. 2290, 2342 
(2005)]. 

Authority: Retention of proceeds/Camp Parks Military Reservation sale; 
Description of authority: The Administrator of NASA is authorized to 
retain the proceeds from the Camp Parks Military Reservation in 
Alameda, California; [Section 627 of P.L. No. 109-108, 119 Stat. 2290, 
2342 (2005)]. 

Agency: State; 
Authority: Disposition of property; 
Description of authority: The Secretary of State is authorized to sell, 
exchange, lease, or license any property acquired in foreign countries 
for diplomatic and consular establishments. [22 U.S.C. § 300]. 

Authority: Retention of proceeds/Disposition of property; 
Description of authority: The Secretary of State is authorized to 
retain proceeds from the disposition of properties in foreign 
countries, which may be used to acquire, construct, and maintain 
properties overseas; [22 U.S.C. § 300]. 

Agency: USPS; 
Authority: Leasing; 
Description of authority: USPS is authorized to acquire, in any lawful 
manner, real property or any interest therein, as it deems necessary 
and to lease, or otherwise dispose of, property or any interest 
therein. [39 U.S.C. § 401(5)]. 

Authority: Leasing; 
Description of authority: USPS is authorized to lease and maintain 
buildings, facilities, equipment, and other improvements on any 
property owned or controlled by it. [39 U.S.C. § 401(6)]. 

Authority: Retention of proceeds/Leasing; 
Description of authority: USPS is authorized to keep the proceeds from 
its real-estate transactions. [39 U.S.C. § 2401]. 

Agency: VA; 
Authority: EUL; 
Description of authority: The Secretary of VA is authorized to enter 
into leases for up to 75 years with public and private entities for 
underutilized and excess land that is under the Secretary's 
jurisdiction or control. The EUL shall be for fair consideration, and 
lease payments may be made for in-kind consideration such as 
construction, repair, or remodeling of department facilities; providing 
office, storage, or other usable space; and providing goods or services 
of benefit to the department. The authority to enter into EUL 
terminates on December 31, 2011. [38 U.S.C. §§ 8161-8169]. 

Authority: Retention of proceeds/EUL; 
Description of authority: Expenses incurred by the Secretary of VA in 
connection with EUL will be deducted from the proceeds of the lease and 
may be used to reimburse the account from which the funds were used to 
pay such expenses. The proceeds can be used for any expenses incurred 
in the development of additional EUL. Remaining funds shall be 
deposited in the VA Medical Care Collections Fund; [38 U.S.C. § 8165]. 

Authority: Disposal of EUL property; 
Description of authority: If the Secretary of VA determines that during 
the term of the EUL that the property is no longer needed, the 
Secretary is authorized to initiate an action to dispose of the 
property. [38 U.S.C. § 8164]. 

Authority: Retention of proceeds/Disposal of EUL property; 
Description of authority: Funds received by VA from a disposal of EUL 
property shall be deposited into the VA Capital Asset Fund and may be 
used for property transfer costs such as demolition, environmental 
remediation, and maintenance and repair to the extent provided in an 
appropriation act. [38 U.S.C. §§ 8118, 8164, and 8165]. 

Authority: Transfer of Non-EUL property; 
Description of authority: The Secretary of VA is authorized to transfer 
real property under the Secretary's jurisdiction or control to a public 
or private entity if the Secretary receives fair market value for the 
property. The Secretary is authorized to accept less than fair market 
value for the property if the transfer is made to an entity providing 
services to homeless veterans. This authority to transfer real property 
expires on November 30, 2011. [38 U.S.C. § 8118]. 

Authority: Retention of proceeds/Transfer of Non-EUL property; 
Description of authority: Funds received by VA from a transfer of non-
EUL property shall be deposited into the VA Capital Asset Fund and may 
be used for property transfer costs such as demolition, environmental 
remediation, and maintenance and repair to the extent provided in an 
appropriation act. [38 U.S.C. § 8118]. 

Authority: Authority to acquire sites for medical facilities; 
Description of authority: The Secretary is authorized to acquire land 
or interests in land for a medical facility site by purchase, lease, 
condemnation, donation, or exchange. [38 U.S.C. § 8103]. 

Source: GAO analysis. 

Notes: 

This list of real property authorities is not intended to be all 
inclusive. For purposes of this appendix, we have provided some 
examples of an agency's authority relating to real property such as 
enhanced use leasing authority or conveyance authority. 

[A] For the Department of Defense, we have limited our description to 
its authority relating to enhanced use leasing. Additionally, while DHS 
was one of the nine agencies we reviewed, we did not include it in this 
appendix since it was not provided any specific real property authority 
under the Homeland Security Act of 2002. 

[B] The John Warner National Defense Authorization Act for Fiscal Year 
2007, P.L. No. 109-364, 120 Stat. 2083, 2263 (2006), included 
additional limitations on the Secretary when entering into EULs 
pursuant to 10 U.S.C. § 2667 for providing community support facilities 
or providing community support services for morale, welfare, and 
recreational programs. 

[End of table] 

[End of section] 

Appendix III: FRPC Inventory Data Elements and Descriptions: 

Data element number: 1; 
Data element name: Real property type; 
Definition: Identifies the asset as one of the following categories of 
real property: land; building; or structure. 

Data element number: 2; 
Data element name: Real property use; 
Definition: Indicates the asset's predominant use in one of the 
following categories: land; building; or structure. 

Data element number: 3; 
Data element name: Legal interest; 
Definition: Identifies a real property as being owned by the federal 
government, leased by the federal government (i.e., as lessee), or 
otherwise managed by the federal government. 

Data element number: 4; 
Data element name: Status; 
Definition: Reflects the predominant physical/operational status of the 
asset as active, inactive, or excess. 

Data element number: 5; 
Data element name: Historical status; 
Definition: Identifies owned and leased property as National Historic 
Landmark (NHL); National Register Listed (NRL); National Register 
Listed; National Register Eligible; Noncontributing element of NHL/NRL 
district; Not evaluated; Evaluated, Not Historic. 

Data element number: 6; 
Data element name: Reporting agency; 
Definition: Refers to the federal government agency/bureau reporting 
the property to the FRPC Inventory database. 

Data element number: 7; 
Data element name: Using organization; 
Definition: Refers to the predominant federal government agency/bureau 
(or other nonfederal government entity) occupying the property. 

Data element number: 8; 
Data element name: Size; 
Definition: Refers to the size of the real property asset according to 
appropriate units of measure. The unit of measure used for the three 
real property types is as follows: 
* For land, the unit of measure is acreage and the land is designated 
as either rural acres or urban acres; 
* For buildings, the unit of measure is area in square feet and 
designated as gross square feet (GSF); 
* For structures, a structure unit of measure table is provided that 
contains reporting guidelines for the unit of measure for specific 
types of structures. 

Data element number: 9 (PM); 
Data element name: Utilization; 
Definition: Captures the rate of utilization for a building--that is, 
the percentage of space (square footage) used for agency purposes; Is 
reported; 
* on a scale from 0 to 100; 
* by building type--office, warehouse, hospital, laboratory, and 
housing--and; 
* by category-- overutilized, utilized, underutilized, or not utilized--
depending on where the utilization rate falls within percentage ranges 
defined for each building type. 

Data element number: 10; 
Data element name: Value; 
Definition: Defined as the functional replacement value; the cost of 
replacing the existing constructed asset at today's standards. (value = 
unit x unit cost x overhead factor). 

Data element number: 11 (PM); 
Data element name: Condition index; 
Definition: Provides a general measure of a building or structure's 
condition at a specific point in time; Is calculated; 
* annually,; 
* as the ratio of repair needs to plant replacement value (PRV); (CI = 
(1 - $repair needs/$PRV) x 100; 
* "Repair needs" is the amount necessary to restore a building to a 
condition substantially equivalent to its original condition; 
- Agencies and departments will initially use an existing process to 
determine their repair needs; 
- Agencies will later refine and standardize their definition of repair 
needs; 
* PRV is the cost of replacing an existing building so that it meets 
today's standards; 
* The higher the CI, the better the condition of the building; 
* is reported; 
* for an entire agency or department,; 
* on a scale from 0 to 100 percent; Agencies and departments initially 
set target CI levels in consultation with OMB. 

Data element number: 12 (PM); 
Data element name: Mission dependency; 
Definition: The value a building brings to an agency's performance of 
its mission as determined by the agency; May be categorized as; 
* mission critical - without the building or land, the agency's mission 
is compromised; 
* mission dependent, not critical - falls between mission critical and 
not mission dependent; or; 
* not mission dependent - without the building or land, the agency's 
mission is unaffected. 

Data element number: 13 (PM); Data element name: Annual operating 
costs; Definition: Includes costs for; 
* recurring maintenance and repairs; 
* utilities (plant operating and energy purchase costs); 
* cleaning or janitorial services (pest control, refuse collection and 
disposal, including recycling operations); and; 
* roads/grounds (grounds maintenance, landscaping, and snow and ice 
removal from roads, piers and airfields); Will be reported annually. 

Data element number: 14; 
Data element name: Main location; 
Definition: Refers to the street/delivery address for the asset or the 
latitude and longitude coordinates. Either of the following will be 
provided for the constructed asset or parcel of land: street address; 
or latitude and longitude (if no security concerns). 

Data element number: 15; 
Data element name: Real property unique identifier; 
Definition: A code that is unique to an item of real property that will 
allow for linkages to other information systems. The real property 
unique identifier is assigned by the reporting agency and can contain 
up to 24 alpha-numeric digits. 

Data element number: 16; 
Data element name: City; 
Definition: Provides the four-digit Geo Location Codes (GLC) for the 
city or town associated with the reported main location in which the 
land parcel, building, or structure is located. 

Data element number: 17; 
Data element name: State; 
Definition: Provides the two-digit GLC for the state associated with 
the reported main location in which the land parcel, building, or 
structure is located. 

Data element number: 18; 
Data element name: Country; 
Definition: Provides the three-digit GLC for the country associated 
with the reported main location in which the land parcel, building, or 
structure is located. 

Data element number: 19; 
Data element name: County; 
Definition: Provides the three-digit GLC for the county associated with 
the reported main location in which the land parcel, building, or 
structure is located. 

Data element number: 20; 
Data element name: Congressional district; 
Definition: Provides the value for the congressional district 
associated with the reported main location in which the land parcel, 
building, or structure is located. 

Data element number: 21; 
Data element name: ZIP code; 
Definition: Provides the five-digit ZIP code associated with the 
reported main location in which the land parcel, building, or structure 
is located and, if known, the additional four-digit zip code suffix. 

Data element number: 22; 
Data element name: Installation/ Subinstallation identifier; 
Definition: Headquarters installations - Land, buildings, other 
structures, and facilities, or any combination of these. Examples of 
installations are a national forest, national park, hydroelectric 
project, office building, warehouse building, border station, base, 
post, camp, or an unimproved site. Provide a 24- digit alpha-numeric 
code for the installation ID assigned by the reporting agency; 
Subinstallation-Part of an installation identified by a different 
geographic location code than that of the headquarters installation. An 
installation must be separated into subinstallations (and reported 
separately) when the installation is located in more than one state or 
county. However, an agency may elect to separate an installation into 
subinstallations, even if the installation is not located in more than 
one state or county. Provide a six-digit alpha- numeric code for the 
subinstallation ID assigned by reporting agency. 

Data element number: 23; 
Data element name: Restrictions; 
Definition: Refers to limitations on the use of real property. Provides 
one or more of the following values for each building, structure, and 
parcel of land: environmental restrictions (cleanup-based restrictions, 
etc.); natural resource restrictions (endangered species, sensitive 
habitats, floodplains, etc.); cultural resource restrictions 
(archeological, historic, Native American resources (except those 
excluded by EO 13007, section 304 of the National Historical 
Preservation Act), etc.); developmental (improvements) restrictions; 
reversionary clauses from deed; zoning restrictions; easements 
(including access for maintenance rights, etc.); rights-of-way; mineral 
interests; water rights; air rights; other; nonapplicable. 

Source: GSA, Interim FY 2005 Guidance for Real Property Inventory 
Reporting as of October 11, 2005. 

Note: PM = Performance measure. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Office of Management and Budget: 

Executive Office Of The President: 
Office Of Management And Budget: 
Washington, DC. 20503: 
The Controller: 

Mar 23 2007:  

Mr. Mark Goldstein: 
Director, Physical Infrastructure: 
U.S. Government Accountability Office: 
440 G Street, NW: 
Washington, DC 20548: 

Dear Mr, Goldstein: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO's) draft report entitled "Federal Real 
Property: Progress Made toward Addressing Problems, but Underlying 
Obstacles Continue to Hamper Reform" GAO-07-349. In general, the Office 
of Management and Budget (OMB) agrees with your assessment that 
challenges remain in meeting the goal of improving Federal real 
property management arid we arE continuing our work to ensure that 
government-wide efforts will ultimately lead to improved asset 
management, the disposal of unneeded Federal real property. and the 
removal of Federal real property from the GAO High Risk list. We also 
believe that. significant progress has been made including: 

1. all agencies have established Asset Management Plan addressing 
acquisition, operations and maintenance, and disposition; 

2. the FRPC has established a standard taxonomy mid identified 23 data 
elements to be captured on all assets in the Federal portfolio; 

3. agencies have captured and reported to the Federal Real Property 
Profile government-wide database, the required constructed asset level 
inventory and performance data, 

4. agencies now have reliable performance information to assist them in 
identifying underperforming assets suitable for investment or 
disposition. 

The tools for improved asset management are in place and this has led 
to real results. Data is now available on more than 1.2 million assets, 
and more than $4.2 billion in disposals completed since the real 
property initiative was established in 2004. 

Below are OMB's specific responses to the three recommendations 
included in the draft report:  

Regarding the first recommendation to develop a framework that agencies 
can use tea better ensure the validity and usefulness of key real 
property data in tile FRPP, OMB agrees with the recommendation and will 
be working with the Federal Real Property Council (FRPC) to take steps 
to establish and implement a framework. To date, emphasis has been 
placed on capturing the necessary inventory and performance measure 
data resulting in more than l,2 million assets in the national 
inventory database. OMB has required agencies to establish their own 
internal validation process, consistent with their internal practices. 
OMB agrees with the GAO recommendation that establishing a framework to 
ensure the validity and usefulness of key data, especially performance 
data will lead to greater reliability of key data. The framework that 
we will pursue will identify acceptable validation methods, frequency, 
error tolerance, reliability, and processes for reporting corrective 
actions. 

Regarding the second recommendation to develop an action plan for how 
the FRPC will address key problems [including the continued reliance on 
costly leasing in cases where ownership is more cost effective over the 
long term, the challenges of securing real property assets, and 
reducing the effect of competing stakeholder interests on businesslike 
outcomes in real property decisions], the FRPC is currently drafting a 
strategic plan for addressing these issues and other areas of 
importance to the Federal real property community. OMB agrees that it 
is important to build upon the substantial progress which has been 
realized by both the FRPC and  the Federal real property community in 
addressing the identified areas for improvement. Once the strategic 
plan is in place., we look forward to sharing the plan with GAO and 
discussing strategies for ensuring successful implementation. 

Regarding the third recommendation to establish a clearer link-or 
crosswalk between agencies efforts under the real property initiative 
and the broader capital planning process. OMB agrees that there is a 
need within agencies to increase such coordination. OMB believes that 
the emphasis placed on capital planning in the agency Asset Management 
Plans as well as the greater emphasis on real property included in the 
Capital Programming Guide version 2.0 (released June 2006) is a 
critical first step. As agencies update their Asset Management annually 
and work to incorporate the updated guidance of the Capital Programming 
Guide in their planning process, progressive improvement in the area of 
capital planning will be realized.  

Again, we want to thank GAO for the opportunity to comment on this 
draft report. look forward to our continuing work in the area of 
improving Federal Real Property Asset Management. 

Sincerely, 

Signed by: 

Linda M. Combs: 
Controller: 

Enclosure: 
Technical Comments: 

[End of section] 

Appendix V: Comments from the General Services Administration: 

GSA: 
GSA Administrator: 

March 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 this 
opportunity to submit agency comments on the Government Accountability 
Office (GAO) draft report entitled "Federal Real Property: Progress 
Made toward Addressing Problems, but Underlying Obstacles Continue to 
Hamper Reform," GAO-07-349. 

GSA agrees with the findings and recommendations. GSA will continue to 
work with the Federal Real Property Council to address the 
recommendations and to promote Federal Real Property Asset Management 
initiatives on behalf of the Federal Government. 

Again, thank you for the opportunity to comment on the draft report. 
Should 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: 

cc: Mark Goldstein, Director, Physical Infrastructure: 

U.S. General Services Administration: 
1800 F Street, NW: 
Washington, DC 20405-0002: 
Telephone: (202) 501-0800: 
Fax: (202) 219-1243: 
www.gsa.gov: 

[End of section] 

Appendix VI: Comments from the National Aeronautics and Space 
Administration: 

National Aeronautics and Space Administration: 
Headquarters: 
Washington, DC 20546-0001: 

March 23, 2007: 

Office of Institutions and Management: 

Mr. Mark Goldstein: 
Director, Physical Infrastructure: 
Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

We have reviewed the draft report entitled, "Federal Real Property: 
Progress Made Toward Addressing Problems, But Underlying Obstacles 
Continue to Hamper Reform" (GAO-07-349), and concur with the report 
with no further comment. 

Thank you for the opportunity to participate in the development of this 
report. If you have any questions, please contact Albert Johnson at 
(202) 358-1834. 

Sincerely, 

Signed by: 

Charles H. Scales: 
Associate Administrator: 
Office of Institutions and Management: 

[End of section] 

Appendix VII: Comments from the Department of the Interior: 

United States Department of the Interior: 
Office Of The Assistant Secretary Policy, Management And Budget: 
Washington, DC 20240: 

Take Pride In America: 

Mark Goldstein, Director: 
Physical Infrastructure: 
U. S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

Thank you for the opportunity to comment on GAO's draft report 
entitled, "Federal Real Property: Progress Made Toward Addressing 
Problems, but Underlying Obstacles Continue to Hamper Reform" (GAO-07- 
349). 

Enclosed are the Department of the Interior comments. If you have any 
questions concerning the response, please contact Michael Keegan, 
Associate Director, Facility and Property Management at 202-208-3347. 

Sincerely, 

Signed by: 

R. Thomas Weimer: 
Assistant Secretary: 

[End of section] 

Appendix VIII Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

March 26, 2007: 

Mr. Mark L. Goldstein: 
Director, Physical Infrastructure Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

RE: Draft Report GAO-07-349, Federal Real Property: Progress Made 
toward Addressing Problems, but Underlying Obstacles Continue to Hamper 
Reform (GAO Job Code 543171): 

The Department of Homeland Security (DHS) appreciates the opportunity 
to review and comment on the draft report referenced above. The 
Government Accountability Office (GAO) makes three recommendations to 
the Deputy Director for Management at the Office of Management and 
Budget and the Federal Real Property Council (FRPC). We agree with the 
intent of the recommendations and will work with other FRPC members and 
Office of Management and Budget (OMB) officials in building a consensus 
on how best to fulfill the recommendations' objectives. As noted below, 
FRPC members are aware of the issues raised in the report. DHS also is 
taking steps as a Department to address specific conditions. 

GAO recommends that OMB in conjunction the FRPC: 

1. Develop a framework that agencies can use to better ensure the 
validity and usefulness of key real property data in the Federal Real 
Property Profile (FRPP). At a minimum, the framework would suggest 
standards for frequency of validation methods, error tolerance, and 
reporting on reliability. 

DHS completed its first data validation on selected assets in Seattle, 
Washington and Washington, DC, two metropolitan areas where a diverse 
cross-section of DHS components are located. FRPP data points were 
validated by physical inspection and review of supporting 
documentation. DHS has completed a Statement of Work to procure a more 
robust data review. We expect to award the contract by the end of May. 

2. Develop an action plan for how the FRPC will address key problems 
including (a) the continued reliance on costly leasing in cases where 
ownership is more cost effective over the long term, (b) the challenges 
of securing real property assets, and (c) reducing the effect of 
competing stakeholder interests on business- like outcomes in real 
property decisions. 

Council members and the organizations represented including DHS are 
fully aware of leasing costs to the government, the immense challenge 
of securing our assets, and stakeholder influence on real property 
decisions. DHS is focused on collocation efforts and lease cost 
reduction across our portfolio. We have completed a Statement of Work 
to provide a strategic assessment of Department-wide high potential 
collocation candidate space assignments/leases. We expect to award the 
contract by the end of May. The FRPC and member organizations are 
addressing to the best of their ability the challenges of securing 
assets and addressing stakeholder influences in real property 
decisions. 

3. Establish a clearer link or crosswalk between agencies' efforts 
under the real property initiative and broader capital planning 
guidance. 

In support of this recommendation, DHS recently completed a Statement 
of Work to procure a complete assessment of our agency wide capital 
planning processes with the objective of developing and implementing a 
Headquarters Asset Management Review Board (AMRB) function. The AMRB 
will be responsible for assuring that capital investment principles are 
consistently applied across DHS components. We expect to award the 
contract by the end of May. 

The FRPC continues to do a remarkable job given the magnitude of the 
task of providing guidance and oversight under the President's 
Management Agenda and related Executive Order 13327-Federal Real 
Property Asset Management. DHS appreciates the recognition that 
progress is being made but realizes that work remains. 

Technical comments have been provided under separate cover. Recommended 
changes mentioned therein will enhance the accuracy of the report with 
respect to the Department of Homeland Security. 

Sincerely, 

Signed by: 

Steven J. Pecinovsky: 
Director: 
Departmental GAO/OIG Liaison Office: 

[End of section] 

Appendix IX: Comments from the Department of Energy: 

Department of Energy: 
Washington, DC 20585: 

Mar 2 6 2007: 

Mr. Mark Goldstein: 
Government Accountability Office: 
Director, Physical Infrastructure: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

Thank you for providing the draft Governmental Accountability Office 
(GAO) Report 07-349, "Federal Real Property - Progress Made toward 
Addressing Problems, but Underlying Obstacles Continuing to Hamper 
Reform" for comment. 

The Department of Energy (DOE) accepts the conclusions in the draft 
report. Recently, we have made great strides in Federal real property 
management and we appreciate GAO's acknowledging these efforts. We will 
continue to make progress and strive for excellence in Federal real 
property management. 

Please contact Paul Bosco, Director, Office of Engineering and 
Construction Management and Senior Real Property Officer, if you have 
any additional questions. He can be reached at (202) 586-1784. 

Sincerely, 

Signed by: 

Ingrid Kolb: 
Director, Office of Management: 

[End of section] 

Appendix X: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary for Resource Management and Chief Financial 
Officer: 
Washington, D.C. 20520: 

Mar 26 2007 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N. W. 
Washington, D.C. 20548-0001: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, "Federal 
Real Property: Progress Made Toward Addressing Problems, but Underlying 
Obstacles Continue to Hamper Reform," GAO Job Code 543171. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact Jurg 
Hochuli, Managing Director, Office of Resource Management, Overseas 
Buildings Operations, at (703) 875-6352. 

Sincerely, 

Signed by: 

Sid L. Kaplan (Acting): 

cc: GAO - Dave Sausville: 
OBO - Gen. Charles Williams: 
State/OIG - Mark Duda: 

U.S. Department of State's Comments on GAO Draft Report Federal Real 
Property: Progress Made Toward Addressing Problems, but Underlying 
Obstacles Continue to Hamper Reform (GAO-07-349 GAO Code 543171): 

Thank you for the opportunity to comment on the draft report Federal 
Real Property: Progress Made Toward Addressing Problems, but Underlying 
Obstacles Continue to Hamper Reform. 

1. Recognizing the Department's Long-Range Overseas Buildings Plan: On 
page no. 58, the GAO report states, "The agencies included in our 
follow-up review do not have agency wide long-term capital investment 
plans." The Department believes that its Long-Range Overseas Buildings 
Plan (LROBP) qualifies as a long-term capital plan. The Bureau of 
Overseas Buildings Operations (OBO) has published the LROBP annually 
since 2001, and each year the document covers a six-year planning 
period. OBO referenced the LROBP on page nos. 7, 8, 16, and 18 of its 
response to the GAO's inquiry. Accordingly, the Department requests 
that the GAO reference the LROBP on page no. 58 of its report and in 
other relevant paragraphs. 

2. Eliminating backlogs: In the report's front-page summary and 
"Results in Brief' section, the GAO states that maintenance backlogs 
"are exacerbated [emphasis added] by underlying obstacles that include 
...legal and budgetary limitations." This statement implies that budget 
constraints merely worsen primary obstacles, which further implies that 
such obstacles reside within agencies. The Department believes that 
budget limitations are clearly the most significant barrier to 
resolving maintenance backlogs. Accordingly, the Department requests 
that the GAO change text in the front-page summary and the "Results in 
Brief' section to accurately reflect the relative importance of 
budgetary constraints in resolving maintenance backlogs. 

3. Minimizing the use of operating eases: As with response no. 2 above, 
the Department believes that budget limitations are the most 
significant obstacle to minimizing the use of operating leases. On page 
40, the GAO recommends scoring leases up front for the entire time 
requirement to create, in effect, an accurate comparison of total costs 
between leases, purchase contracts, and construction contracts. As the 
GAO is aware, in many cases this scoring method would make operating 
leases less cost-effective than other contracts. As a result, OBO would 
be forced to try to purchase or construct new facilities, which OBO 
often cannot accomplish because of funding limitations. At the very 
least, operating leases provide a functional way to provide the space 
required to support U.S. foreign policy goals. 

In addition, the GAO report does not discuss the maintenance and repair 
costs that are associated with property ownership. These significant 
costs are difficult to meet, as evidenced by the maintenance backlogs 
GAO discusses in this very report. Without proper maintenance, 
buildings can deteriorate and lose significant value. Operating leases, 
however, typically hold landlords responsible for maintenance and 
repair costs. 

Based on these comments, the Department requests that the GAO change 
text in the front-page summary, the "Results in Brief" section, and 
other relevant paragraphs, to accurately reflect the relative 
importance of budget constraints in the Department's use of operating 
leases. Moreover, the Department requests that the report acknowledge 
the maintenance and repair costs that are associated with property 
ownership. 

4. Using lease-purchase agreements: The GAO report states that lease- 
purchase agreements are generally more expensive than purchase or 
construction contracts. The report does not mention that current 
scoring rules from the Office of Management and Budget (OMB) diminish 
the cost-effectiveness of lease-purchase agreements. If OMB's scoring 
rules were changed, OBO could lease buildings and then purchase them 
for a nominal amount at the end of the lease term. In their current 
form, the rules would limit OBO to purchasing such buildings at their 
fair market value, which would most likely be cost prohibitive. 
Accordingly, the Department requests that the report acknowledge the 
limiting effect of scoring rules on lease-purchase agreements. 

5. Statement regarding Congressional interest: The Department requests 
that the GAO remove the following comment on page 57: "Also, State 
officials said that congressional interest can sometimes lead to the 
retention of unneeded real property." Although the Department included 
this statement in its response to the GAO's inquiry, and while it is a 
true statement, the Department is sympathetic to Congressional 
intentions regarding the retention of certain overseas properties. The 
Department would not want Congress to misinterpret this comment. 

[End of section] 

Appendix XI: Comments from the Department of Veterans Affairs: 

The Deputy Secretary Of Veterans Affairs: 
Washington: 

March 23, 2007: 

Mr. Mark Goldstein: 
Director, Physical Infrastructure: 
U. S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

The Department of Veterans Affairs (VA) has reviewed your draft report, 
Federal Real Property: Progress Made Toward Addressing Problems, but 
Underlying Obstacles Continue to Hamper Reform (GAO-07-349), and agrees 
with your general conclusion that progress has been made toward 
addressing real property problems, and there is still work to be done. 
However, VA believes its progress is greater than that portrayed in the 
draft report. VA has a number-of unrecognized initiatives in place 
toward sustained real property reform. 

In the area of data validation, VA's Capital Asset Management System 
provides a single means to validate data from multiple source systems. 
In addition, VA's Management Quality Assurance Service conducts audits 
related to capital asset management such as data validation. 

In the area of unneeded assets, VA has disposed of 156 buildings since 
fiscal year (FY) 2004, and 146 buildings (2.7 million gross square 
feet) are planned for disposal in FY 2007 and FY 2008. VA's enhanced- 
use lease (EUL) authority leverages under-performing property for the 
"highest and best" return; for example, VA received $28 million for an 
EUL of its Chicago Lakeside facility and, upon determining the campus 
was no longer needed, sold it for an additional $22 million. 

Regarding the maintenance and repair backlog, VA is implementing a 
sustainment model; investing in sustainment needs, facility upgrades, 
and replacements; and refining asset condition assessments. 

To address the critical matter of physical security, VA has developed 
an assessment methodology for its facilities, assessed the ones 
considered most mission-critical, and requested funding for physical 
security enhancements. 

Enclosed are technical corrections and detailed comments in response to 
your draft report. 

VA appreciates the opportunity to comment on your draft report. 
Sincerely yours, 

Sincerely, 

Signed by: 

Gordon H. Mansfield: 

Enclosure: 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) Draft report, Federal Real Property: 
Progress Made Toward Addressing Problems, but Underlying Obstacles 
Continue to Hamper Reform (GAO-07-349): 

Technical comments: 

* Page 37 - while the reference to lease-purchase is generic to all the 
agencies polled, VA does not "lease-purchase." 

* Page 39 --Third bullet, last sentence, "VA direct leases through GSA 
allow VA to terminate occupancy quickly." This sentence is somewhat 
misleading as VA does not enter into "VA direct leases" with GSA. For 
the most part, the Veterans Benefits Administration is the major VA 
element that acquires space through GSA assignment with and Occupancy- 
Agreement. The reason for this is that they can expand or reduce square 
footage easier without a penalty simply by giving a 120-day notice. VHA 
rarely obtains space through GSA mainly because they are seeking 
clinical/medical space and not office space. 

Expanded Remarks: 

General: 

Summary page. "While agencies have made progress in collecting and 
reporting standardized real property data, data reliability is still a 
challenge at DOD and other agencies and agencies lack a standard 
framework for data validation." 

VA Response: 

It is true; data reliability is always a challenge. However, VA is 
validating data now and has plans for more validation in the next year. 
Currently, VA's Capital Asset Management System (CAMS) provides the 
ability to view data collectively across multiple systems, an 
invaluable tool for data validation. Inventory data is viewed alongside 
financial, planning and workload data. Data can be viewed at a high 
level summary or drilled down for detailed analyses. Discrepancies and 
outliers can be investigated for accuracy and/or performance issues. 
For the most part, data is updated monthly and provided for discussion 
and analysis at the Deputy Secretary's Monthly Performance Review. 

In addition, the VA Federal Real Property Officer has charged the VA 
Management Quality Assurance Service (MQAS) with auditing capital asset 
management assets to improve oversight. The MQAS capital asset 
management review team audits internal controls related to capital 
asset management, compliance with Federal and VA policies and 
procedures, consistency with VA strategic goals and objectives, and 
effectiveness of operations. To date, MQAS has audited VA programs such 
as the non-recurring maintenance program and the enhanced-use lease 
program. Future plans include potential audits in the FY2008-2009 
timeframe in the following areas: 

* Review of capitalized personal property inventory and accounting. 

* Validation of data used to establish a baseline for implementing the 
Presidential executive memorandum that requires all federal agencies to 
achieve the energy, environment, and transportation measures outlined 
in the memorandum. 

* Validation of the data residing in VA's Capital Asset Inventory 
database. 

* Identification of underused space potentially available for 
advantageous disposition. 

* Review of claims process in regard to major and minor construction 
projects. 

* Leasing for community-based outpatient clinics. 

CARES: 

Pages 30-31. 'We reported that VA, however, made some inpatient long- 
term care and mental health alignment decisions for some locations. 
Despite this progress and the recent CARES decisions, VA continues to 
face significant challenges with excess and underutilized real 
property." 

VA Response: 

While VA does have significant challenges in its inventory of excess 
and underused buildings, following are examples of how VA is addressing 
this matter. 

In August 2005, through its enhanced-use lease program (Title 38 U.S.C. 
8161-8169), VA out-leased 38 underused buildings along with 
approximately 50 acres of land to a developer that will restore the 
existing buildings to ensure historical compliance at the VA Medical 
Center (VAMC) campus in Leavenworth, Kansas. This project was made 
possible after the right-sizing of the VAMC and the need for cemetery 
expansion. This restoration will also bring to the campus services that 
VA does not directly offer to the nation's veterans such as assisted 
living, transitional housing for the homeless, and affordable housing. 
By this project, the historical significance of the buildings were 
preserved, the existing cemetery was expanded, additional services were 
offered to veterans, and underused buildings and land were put back 
into service to benefit our nation's veterans. 

On various properties at the VAMC in Dayton, Ohio, through the enhanced-
use lease program, VA has been able to out-lease underused buildings to 
private providers of transitional housing for the homeless. These 
buildings, while they have very little fair market value (similar to 
Leavenworth above), they have been put back into service by the private 
sector to fulfill a need to provide housing for homeless veterans. 

In September 2006, VA out-leased an entire campus of underused 
buildings and land at the VAMC in Fort Howard, Maryland, to a private 
developer who is going to restore the historical buildings for 
commercial use, as well as provide affordable and assisted housing for 
veterans and their families. 

While there are significant challenges with excess and underused 
buildings and land, we are using innovative ways to deal with the 
situation in today's real estate market. The way to succeed is to make 
it a win-win for the community and federal government. Reuse of federal 
buildings/land, such as mentioned above, allows for transfer of 
buildings from the federal to the non-federal community without 
adversely affecting the local economy, community or VA facilities. 

Capital Asset Fund: 

Page 26. "In addition, VA was authorized in 2004 to transfer real 
property under its jurisdiction or control and to retain the proceeds 
from the transfer in a capital asset fund for property transfer costs, 
including demolition, environmental remediation, and maintenance and 
repair costs." 

VA Response: 

Although VA is authorized to transfer real property under its 
jurisdiction or control and to retain the proceeds from such transfers, 
it is important to note that this authority has significant limitations 
on the use of any funds generated by any disposal under this authority. 

Enhanced-Use Authority: 

Page 27. "VA used its enhanced authorities to dispose of its 
underutilized Lakeside Campus in Chicago. In October 2005, the 
Secretary determined that the Department no longer needed the campus 
and VA sold it for $22 million. VA officials reported that the 
transaction resulted in a demonstrable improvement of services to 
eligible veterans by permitting VA to offset the cost of implementing 
CARES in Chicago and other locations, and avoid the future costs of 
maintaining aging health care facilities." 

VA Response: 

The information above does not portray all the salient facts regarding 
the Lakeside enhanced-use lease (EUL) and its subsequent disposal. It 
is correct that VA disposed of its underused Lakeside Campus in Chicago 
through the EUL legislation. In January 2005, VA executed an EUL for 
the Lakeside facility and, in turn, received $28 million for the lease, 
as well as the right to lease back space for 3 years to house its 
existing outpatient clinic at Lakeside. In October 2005, the Secretary 
determined that the Department no longer needed the.campus and VA sold 
it for an additional $22 million; thus, the total for the EUL 
transaction was $50 million. The lease-back provisions for the 
outpatient clinic remained intact. VA's EUL program provides a proven 
method of leveraging VA's diverse real estate portfolio and market 
position. In addition, the program has brought significant cost savings 
as well as the realignment of under-performing property to produce the 
"highest and best" return to veterans, taxpayers and the government. 

Maintenance and Repair Backlog: 

Page 23. "VA is establishing a facility condition assessment process 
that will help identify the funding needed to improve the current 
infrastructure." 

Page 36. "For VA, the maintenance backlog for facilities with major 
repair needs is $4.9 billion and according to VA officials, VA must 
address this aged infrastructure while patient loads are changing. 

VA Response: 

VA's current deferred maintenance backlog is approximately $5 billion; 
this figure is continually updated to reflect the most recent data. It 
is true that VA is establishing a facility condition assessment 
process, and it is important to note that VA has moved aggressively to 
address its maintenance and repair backlog. Some actions include: 

* In accordance with Federal Real Property Council principals, VA has 
developed a sustainment model to ensure that VA facilities will not 
deteriorate further. 

* VA has fully funded the sustainment needs in the FY 2007 ($517 
million) and FY 2008 ($573 million) budget requests. (The sustainment 
model estimated that VA needs approximately $500 million annually to 
fund these needs.) 

* VA is investing $2.5 billion in upgrading or replacing existing 
facilities, which will reduce the backlog estimate. 

* VA disposed of 77 buildings in FY 2006, reducing nonmission-dependent 
and underused assets, some of which also needed condition improvements. 

* VA is currently refining asset condition information. A revised 
assessment of need and an updated strategy to address the backlog 
figure will be completed in summer 2007. 

Operating Leases: 

Summary page. "VA reported an increased reliance on leasing to meet 
space needs." 

Page 4. "Furthermore, Energy, Interior, GSA, State and VA reported an 
increased reliance on operating leases --an approach which we have 
reported is generally more costly for long-term space needs." 

Page 37. "Operating leases have become an attractive option, in part 
because they generally "look cheaper" in any given year, even though 
they are generally more costly over time." 

Page 39. "According to VA officials, the number of direct operating 
leases has increased, with the leased square footage increasing over 4 
million in fiscal year 2004 to over 7 million in the fiscal year 2006. 
VA officials reported that VA needs a more flexible facility 
infrastructure to accommodate changes in medical technology and shifts 
in demographic data. VA direct leases through GSA allow VA to terminate 
occupancy quickly." 

VA Response: 

Factual Correction. VA strongly disagrees with the GAO premise 
regarding leases. It is true that VA has an increased reliance on 
leasing to meet space needs. However, it is not because they "look 
cheaper in any given year." VA relies on operating leases because of 
our need for a more flexible facility infrastructure. VA's mission 
drives its increased use of leasing. The majority (822) of our leases 
are outpatient or store-front facilities that can be moved or relocated 
depending on the changes in medical technology and shift in demographic 
data. This is true for both GSA and VA direct leases. GSA leases allow 
VA the ability to terminate quickly as they are self- insured for 
cancellation. 

It is understood that building or purchasing facilities is more cost 
effective over a 30-year life cycle. Unfortunately, there are too many 
constraints for these to work for VA in all circumstances. This assumes 
our mission and the delivery of services will be the same for a 30-year 
period. Not only are veterans mobile, they require different methods of 
healthcare and service delivery. The needs of today's veterans range 
from the nursing home care or burial services of a World War II 
veteran, to behavioral health or community outreach for Vietnam 
veterans, to acute hearing loss of the returning Operation Enduring 
Freedom/Iraqi Freedom veteran. CARES revolves around this understanding 
of changing healthcare needs. VA will continue to need the flexibility 
of operating leases to meet the needs of delivering services to 
veterans. 

A cursory review of the Veterans Health Administration (VHA) in FY 2007 
would show there is almost a one-for-one of vacant space (7,414,926 SF) 
to operational leased space (7,101,920 SF). Unfortunately, the 
locations for underused space do not match the locations for needed 
space. VA cannot stop leasing and meet ongoing needs. For example, VISN 
8 has a significant increase in workload demands and the corresponding 
space need. Outpatient visits in VISN 8 increased from 5.2 million in 
FY 2004 to over 5.7 million by the end of FY 2006. In that same period, 
leased space has increased from 687,406 to 845,588 square feet. Based 
on projected workload, VISN 8 still has a need for half again as much 
space (4,135,037 SF) as the currently available owned square feet. 
Leased space can immediately meet the demands for veteran care in 
already over-utilized space and allow for a reduction or realignment of 
space based upon the changing healthcare environment and any potential 
change in veteran needs. 

The bottom line is that operating leases allow VA to provide the right 
service at the right time and place. In FY 2007, VHA has 895 
operational leases (both direct and GSA) for 7,101,920 square feet. 
Ninety-one percent of those leases are for community-based support for 
either referral inpatient service or secondary support which provides 
actual or follow-up care. These community-based leases represent a 
point of presence in the community that is vital anytime, but 
especially when a nation is at war and must respond when and where the 
need arises. 

Physical Security: 

Pages 4-5. "Finally, all of the major real property-holding agencies 
reported using risk-based approaches to prioritize security needs, as 
we have suggested, but cited a lack of resources for security 
enhancements as an ongoing problem." 

Page 48. "Physical Security Is Still a Problem for Major Real Property- 
Holding Agencies. The threat of terrorism has increased the emphasis on 
physical security for federal real property assets. All of the nine 
agencies reported using risk-based approaches to some degree to 
prioritize facility security needs, as we have suggested, but some 
cited challenges, including a lack of resources for security 
enhancements and issues associated with securing leased space." 

Page 49. "While some agencies have indicated that they have made 
progress in using risk-based approaches, some officials told us that 
they still face considerable challenges in balancing their security 
needs and other real property management needs with their limited 
resources. 

VA Response: 

VA has made considerable progress in the area of physical security for 
federal real property assets, demonstrating leadership in multi-hazard 
protection of VA facilities. Accomplishments are as follows: 

* Developed Physical Security Assessment Methodology for VA Facilities, 
September 2002: This multi-hazard risk assessment process includes 
identifying and ranking risks and vulnerabilities, with suggested 
remedial actions to mitigate the major vulnerabilities at prioritized 
mission critical facilities.  

* FEMA Requested VA Assistance to Evolve VA's Assessment Process into a 
System Suitable for Both Private and Other Public Facilities: This 
collaborative effort resulted in FEMA's Reference Manual to Mitigate 
Potential Terrorist Attacks Against Buildings (FEMA 426; Published 
December 2003) and Risk Assessment: A How-To Guide to Mitigate 
Potential Terrorist Attacks (FEMA 452, Published January 2005). DHS 
took the unusual step of placing VA's seal with theirs on the cover of 
FEMA 452 to express appreciation for VA's assistance. 

* Beginning in FY 2005, included funding for Physical Security 
Enhancements in Major Program Project Budget Requests. 

* Completed Physical Security Assessments of 140 VA Most Mission . 
Critical Facilities in 2006: 

* Secretary Concurred in VA Physical Security Strategies Report in May 
2006: The Report outlined 24 elements to enhance the protection of VA 
facilities and improve their ability to remain in operation and protect 
the safety of veterans, staff, and visitors. This program includes 
requirements for four categories of VA facilities, both new and 
existing, mission-critical which must remain in operation, and life/ 
safety protected facilities. 

* Completed Final Draft of Physical Security Design Manual in December 
2006: The manual is based on the Physical Security Strategies Report. 
Physical Security Design Manual and related Design and Construction 
Standards are to be issued in the second quarter of FY 2007. 

Underutilized Real Property Disposal: 

Page 21. "Some agencies are implementing various tools to prioritize 
reinvestment and disposal decisions on the basis of agency needs, 
utilization, and costs. For example, GSA and NASA officials reported 
establishing models that integrate agency mission.etc. 

Page 32. "According to VA officials, for fiscal year 2005, 2 percent of 
the department's real property holdings have been identified as excess 
or underutilized." 

Page 32. "Furthermore, VA officials reported that VA has a significant 
number of properties no longer located in places where veterans live, 
and many of these properties are over 50 or 60 years old." The Main VA 
Hospital Building in Milwaukee was pictured as an example of excess 
federal property (page 33). 

Page 52. "Some major real property-holding agencies reported that 
competing local, state, and political interests often impede their 
ability to make real property management decisions, such as decisions 
about disposing of unneeded property and acquiring real property. For 
example, VA officials reported that disposal is often not an option for 
most properties because of political stakeholders and constituencies, 
including historic building advocates or local communities that want to 
maintain their relationship with VA. In addition, officials said that 
attaining the funding to follow through on CARES decisions is a 
challenge because of competing priorities." 

Page 55. "We reported that VA, like all federal agencies must comply 
with federal laws regulations governing property disposal that are 
intended, for example, to protect subsequent users of the property from 
environmental hazards and to preserve historically significant sites. 
We have reported that some VA managers have retained excess property 
because the administrative complexity and costs of complying with these 
requirements were disincentives to disposal." 

VA Response: 

As a Department, VA has moved from 98 percent utilized space in FY 2005 
to 100 percent in FY 2006. This high level of performance is due in 
part to CARES, in part to VA moving aggressively to dispose of unneeded 
assets, and in part to an increasing medical care need for veterans. It 
is important to note that this performance is nationally based. There 
are other VA assets that are overused while others are underused. 

It is true that disposal of real property is not an easy process and 
some properties may not be disposed in a timely manner. However, VA has 
moved aggressively to dispose of underused or vacant properties. Actual 
disposals are as follows: 

* FY 2004 - 12 buildings: 

* FY 2005 - 67 buildings, including 38 enhanced-use leases: 

* FY 2006 - 77 buildings, including 6 buildings via sales, 19 buildings 
via demolition, and 52 buildings via enhanced-use lease: 

* FY 2007 - 4 buildings (calendar year, to date): 

Planned disposals include an additional 99 buildings (2.2 million GSF) 
in FY 2007 and 47 buildings (539,000 GSF) in FY 2008. 

To further address underused assets, VA is conducting "site reviews" 
that will identify packages or bundles of assets available for 
disposal, including enhanced-use leases, to private sector developers 
in exchange for funds supporting VA's capital needs. As part of its 
capital asset management program, the Department is seeking to more 
effectively assess and manage its real property assets. This is 
because, during the development of the CARES reuse studies, VA 
encountered a number of unrecorded encumbrances due to grants, out- 
leases, licenses, permits and easements that had been executed at the 
campus level. In order to better understand the Department's 
commitments on each campus and to more effectively manage these assets, 
it is important that VA collect and validate baseline data on all 
relevant encumbrances and perform site assessments on every campus. As 
a result of this initiative and in support of its mission, VA shall be 
able to identify marketable sites as targets of opportunity to maximize 
and monetize the value of its real property assets. 

[End of section] 

Appendix XII: GAO Contacts and Staff Acknowledgments: 

GAO Contact: 

Mark Goldstein (202) 512-2834: 

Staff Acknowledgments: 

In addition to the individual named above, Janice Ceperich, Anne Izod, 
Susan Michal-Smith, and David Sausville made key contributions to this 
report. 

FOOTNOTES 

[1] High-risk areas are those that either have greater vulnerabilities 
to waste, fraud, abuse, and mismanagement or major challenges 
associated with their economy, efficiency, or effectiveness. 

[2] For the purposes of our review we focused on eight of the largest 
real property-holding agencies and USPS, which is an independent 
establishment in the executive branch and is among the largest property 
holders in terms of owned and leased space. 

[3] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: 
January 2007). 

[4] EUL agreements are lease agreements for property under an agency's 
control or custody that the agency can (1) enter into with a public or 
private entity and (2) receive as payment under the lease either cash 
or other consideration such as repairs of the facilities. For the 
purposes of this report, we have stated that an agency has enhanced use 
leasing authority if it is authorized to enter into an agreement as 
defined in the prior sentence even if the agency's authority does not 
specifically use the words enhanced use leasing. 

[5] Deferred maintenance backlog includes deteriorating facilities for 
which major upkeep, repair, and maintenance have not been funded and 
the repair and maintenance on these assets has been postponed. 
Estimates provided by DOD include restoration and modernization needs 
and represent the actual measured need for major repairs (restoration), 
renovations, modernization, and alterations. 

[6] Department of the Treasury, 2006 Financial Report of the U.S. 
Government (Washington, D.C.: Sept. 30, 2005). 

[7] 40 U.S.C. § 101 et seq. The Property Act excludes certain types of 
property, such as public domain assets and land reserved or dedicated 
for national forest or national park purposes. 

[8] 42 U.S.C.§ 11411. 

[9] 16 U.S.C. § 470 et seq. 

[10] 39 U.S.C. §§ 201 and 401. 

[11] 39 U.S.C. § 410. 

[12] OMB, Capital Programming Guide, V 2.0 Supplement to OMB Circular A-
11, Part 7: Planning Budgeting, and Acquisition of Capital Assets 
(Washington, D.C.: June 2006). 

[13] GAO, Executive Guide: Leading Practices in Capital Decision- 
Making, GAO/AIMD-99-32 (Washington, D.C.: December 1998). 

[14] The executive order applies to the Departments of Agriculture 
(USDA), Commerce, Defense, Education, Energy, Health and Human Services 
(HHS), Homeland Security (DHS), Housing and Urban Development (HUD), 
the Interior, Justice (DOJ), Labor (DOL), State, Transportation (DOT), 
the Treasury, and VA; the Environmental Protection Agency (EPA); NASA; 
United States Agency for International Development (USAID); GSA; the 
National Science Foundation, the Nuclear Regulatory Commission; the 
Office of Personnel Management; the Small Business Administration; and 
the Social Security Administration. 

[15] The real property PMA initiative is a program initiative 
applicable to the 15 largest landholding agencies. 

[16] These agencies include the USDA, DOD, DOE, HHS, DHS, the Interior, 
DOJ, DOL, State, DOT, and VA; the Army Corps of Engineers; GSA; NASA; 
and USAID. 

[17] As previously mentioned, USPS is not subject to the executive 
order. However, USPS officials reported that they have a position 
similar to that of Senior Real Property Officer. 

[18] GSA published these principles and issued a Federal Management 
Regulation bulletin to further explain the asset management principles 
approved by FRPC. Real Property Asset Management Guiding Principles, 
Federal Register, Vol. 71, No. 116, June 16, 2006, pp. 35087-35111. 

[19] OMB officials told us that Federal Management Regulations require 
all executive branch agencies, including independent agencies, to 
report data for the FRPP. USPS is not subject to the executive order 
but collaborated with OMB on data elements for the FRPP in 2005 that 
did not include data on performance measures. 

[20] FRPC, Guidance for Improved Asset Management (Washington, D.C.: 
Dec. 22, 2004) and GSA, Office of Governmentwide Policy for the FRPC, 
Interim FY 2005 Guidance for Real Property Inventory Reporting, 
(Washington, D.C.: Oct. 11, 2005). 

[21] As part of our ongoing work related to USPS facility management, 
we plan to assess issues related to the maintenance of USPS facilities. 

[22] In the 108th and 109th Congresses, the following real property 
management reform bills were introduced: the Federal Property Asset 
Management Reform Act of 2003, H.R. 2548,108th Cong. (2003); the Public 
Private Partnership Act of 2003, H.R. 2573, 108th Cong. (2003); and the 
Federal Real Property Disposal Pilot Program and Management Improvement 
Act of 2005, H.R. 3134, 109th Cong. (2005). 

[23] Section 627 of P.L. No. 109-108, 119 Stat. 2290, 2342 (2005) 
authorized NASA to dispose of the property and retain the proceeds, and 
Section 638 of P.L. No. 108-447, 118 Stat. 2809, 2922 (2004) authorized 
FCC to dispose of the property and retain the proceeds. 

[24] [24] Section 412 of P.L. No. 108-447, 118 Stat. 2809, 3259 (2004). 
Although this authority was contained in GSA's annual appropriation act 
for fiscal year 2005, GSA has determined that Section 412 is permanent 
authority and OMB has concurred with that determination. We believe 
GSA's position relating to the permanency of the provision of law is 
reasonable. Within Section 412, GSA has the authority to retain the 
proceeds from the sale or disposition of real property, which the use 
of such retained proceeds is subject to an authorization in annual 
appropriation acts. In addition, GSA has determined that it has a new 
grant of authority relating to the conveyance of real property and is 
formulating guidance on the use and availability of this as required by 
OMB. 

[25] Section 501 et. seq. of P.L. No. 109-54 (2005); 16 U.S.C. § 580d 
note (uncodified). 

[26] This authority allows the agency to lease real property under its 
control or custody to public and private entities and to accept as 
payment under the lease either cash or other consideration, such as 
construction, maintenance, restoration, and repair of facilities, or 
services that are of benefit to the agency. 

[27] 42 U.S.C. § 2459j. Our ongoing work is looking at how NASA is 
using the enhanced use leasing authority and also reviewing its 
financial impact on NASA. 

[28] 38 U.S.C. § 8169. 

[29] In 2004, VA was authorized to transfer real property under its 
control or custody that is not part of an EUL for fair market value and 
to deposit the proceeds in VA's Capital Asset Fund. 38 U.S.C. § 8118. 

[30] As mentioned previously, GSA has determined that it has permanent 
authority to retain proceeds from the sale of its property and is no 
longer dependent on special authority such as section 407 of P.L. No. 
108-477, 118 Stat. 2809,3258 (2004). 

[31] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-352T (Washington, D.C.: Feb. 16, 2005). 

[32] GAO, VA Health Care: Key Challenges to Aligning Capital Assets and 
Enhancing Veterans' Care, GAO-05-429 (Washington, D.C.: Aug. 5, 2005). 

[33] GSA Management Regulations define not utilized property as an 
entire property or portion of a property that is not occupied or used 
for current program purposes of the accountable agency or property that 
is occupied in caretaker status only. According to a GSA official, 
property that is not utilized is generally considered vacant. The 
regulations also define underutilized property as an entire property or 
portion of a property that is used only at irregular periods or 
intermittently by the accountable agency or property that is being used 
for the agency's current program purposes that can be satisfied with 
only a portion of the property. (41 C.F.R. 102-75.45 and 41 C.F.R. 102- 
75.50). 

[34] Deferred maintenance is defined by the Statement of Federal 
Financial Accounting Standards No. 6, which includes the accounting 
standards for deferred maintenance, as maintenance that was not 
performed when it should have been or scheduled maintenance that was 
delayed or postponed. Maintenance is the act of keeping fixed assets in 
acceptable condition, including preventative maintenance, normal 
repairs, and other activities needed to preserve the assets, so that 
they can continue to provide acceptable services and achieve their 
expected life. Maintenance excludes activities aimed at expanding the 
capacity of assets or otherwise upgrading them to serve needs different 
from those originally intended. 

[35] It is important to note that the National Park Service, which has 
responsibility for trails and recreation sites in addition to buildings 
and other structures, has previously reported an estimated $5 billion 
maintenance backlog. The estimated $3 billion maintenance backlog 
reported here does not include roads, bridges, trails, irrigation, dams 
or other water structures. 

[36] The facility condition index is the ratio of accumulated deferred 
maintenance to the current replacement value for a constructed asset. 
The asset priority index is a measure of the importance of a 
constructed asset to the mission of the installation where it is 
located. 

[37] According to VA officials, VA does not enter into lease-purchase 
agreements. 

[38] The extent to which capital costs are reflected in the budget 
depends on how they are "scored." The Congressional Budget Office (CBO) 
and OMB separately "score" or track budget authority, receipts, 
outlays, and the surplus or deficit estimated to results as legislation 
is considered and enacted. CBO develops estimates of the budgetary 
impact of bills reported by the different congressional committees. OMB 
also uses the scorekeeping guidelines to determine how much budget 
authority must be obligated for individual agency transactions. 

[39] GAO, Federal Real Property: Reliance on Costly Leasing to Meet New 
Space Needs Is an Ongoing Problem, GAO-06-136T (Washington, D.C.: Oct. 
6, 2005). According to the scoring rules (OMB Circular No. A-11, app. 
B), in cases where the operating lease does not have a cancellation 
clause or is not paid for by funds that are self-insuring, budget 
authority to cover the total costs expected over the life of the lease 
is to be scored in the first year of the lease. 

[40] GAO, Budget Issues: Alternative Approaches to Finance Federal 
Capital, GAO-03-1011 (Washington, D.C.: Aug. 21, 2003). 

[41] As previously mentioned in this report, GSA, working under the 
leadership of FRPC, collaborated with numerous agencies to develop 
mandatory data elements, which include performance measures. 

[42] A material weakness is a condition that precludes the entity's 
internal control from providing reasonable assurance that 
misstatements, losses, or noncompliance material in relation to the 
financial statements or to stewardship information would be prevented 
or detected on a timely basis. 

[43] GAO, Fiscal Year 2005 U.S. Government Financial Statements: 
Sustained Improvement in Federal Financial Management Is Crucial to 
Addressing Our Nation's Financial Condition and Long-Term Fiscal 
Imbalance, GAO-06-406T (Washington, D.C.: Mar. 1, 2006). 

[44] DOD, Office of Inspector General, Internal Controls Related to 
Department of Defense Real Property, D2006-072 (Arlington, VA: Apr. 6, 
2006). 

[45] PBS maintains an inventory system, the System for Tracking and 
Administering Real Property (STAR). STAR includes key fields on the 
number, size, location, use, type, occupants, and age of the assets and 
tracks all space and customer occupancies in GSA's owned and leased 
buildings. It is an automated database that is tied into core PBS 
systems (including the accounting system) that tracks payments to 
landlords for GSA leased locations. 

[46] In GAO, Homeland Security: Further Action Needed to Coordinate 
Agencies' Facility Protection Efforts and Promote Key Practices, GAO-05-
49 (Washington, D.C.: Nov. 30, 2004) we identified several key 
practices in facility protection, which included using risk management 
to allocate resources; leveraging security technology; coordinating 
protection efforts and sharing information; realigning real property 
assets to an agency's mission, thereby reducing vulnerabilities; 
strategically managing human capital; and measuring program performance 
and testing security initiatives. 

[47] A study of federal facilities done by DOJ in 1995 resulted in 
minimum-security standards and an evaluation of security conditions in 
the government's facilities. 

[48] GAO, Homeland Security: Guidance and Standards Are Needed for 
Measuring Effectiveness of Agencies' Facility Protection Efforts, GAO-
06-612 (Washington, D.C.: May 31, 2006). 

[49] 39 U.S.C. § 404(b). 

[50] GAO, U.S. Postal Service: USPS Needs to Clearly Communicate How 
Postal Services May Be Affected by Its Retail Optimization Plans, GAO-
04-803 (Washington, D.C.: July 13, 2004). 

[51] Section 302 of the Postal Accountability and Enhancement Act, P.L. 
No. 109-435, 120 Stat. 3198 (2006); 39 U.S.C. § 3691 note (uncodified). 

[52] GAO-05-429. 

[53] GAO-05-429. 

[54] GAO/AIMD-99-32. 

[55] GAO, Agency Implementation of Capital Planning Principles Is 
Mixed, GAO-04-138 (Washington, D.C.: Jan. 16, 2004). 

[56] GAO, Three Agencies' Implementation of Capital Planning Principles 
Is Mixed, GAO-07-274 (Washington, D.C.: Feb. 23, 2007). This review 
covers the Offices of Science and Environmental Management within DOE 
and U.S. Customs and Border Protection within DHS. 

[57] GAO-07-274. 

[58] For the purposes of our review, we focused on the eight of the 
largest major real property-holding agencies and USPS, which is an 
independent establishment in the executive branch and is among the 
largest property holders in terms of owned and leased space. 

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