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Before the Committee on Transportation and Infrastructure, House of 

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 10:00 a.m. EST:
Thursday, January 22, 2009: 

Real Property: 

Infrastructure Investment Presents Opportunities to Address Long- 
standing Real Property Backlogs and Reduce Energy Consumption: 

Statement of Terrell G. Dorn, Director: 
Physical Infrastructure Issues: 


[End of section] 

Mr. Chairman and Members of the Committee: 

We welcome the opportunity to testify on infrastructure investment in 
federal buildings, including energy-saving opportunities in federal 
building construction and repair and alteration projects. Federal 
agencies have identified billions of dollars in reinvestment 
requirements to maintain their aging facilities and bring them up to 
current standards. In addition, according to Department of Energy (DOE) 
estimates, federal agencies will need over a billion dollars annually 
through 2015 for projects needed to meet congressional energy 
efficiency goals. As the nation's single largest energy consumer, the 
federal government spent approximately $17 billion in fiscal year 2007 
on energy use in buildings and vehicles. This total represents almost 1 
percent of all federal expenditures for 2007, and these costs have 
risen in recent years. Our testimony today discusses the potential 
benefits that may accrue from infrastructure investment, including 
energy reductions within federal buildings, and principles that could 
help guide infrastructure investment. Our comments are based on our 
body of work on repair and maintenance and energy management issues 
associated with federal real property. A list of our related products 
appears at the end of our statement. 

Infrastructure Investment Presents Opportunities to Address Long- 
standing Backlogs in Real Property and Reduce Energy Consumption: 

In January 2003, GAO designated federal real property as a high-risk 
area, in part because of deteriorating facilities and unreliable real 
property data. In 2007, we reported that major real-property-holding 
agencies, including the General Services Administration (GSA), and the 
administration had made progress toward managing their real property 
but underlying problems, such as backlogs in repair and maintenance, 
still existed. GSA, which serves as the landlord for most of the 
federal civilian government, held real property assets valued at about 
$36.4 billion in fiscal year 2007.[Footnote 1] A good portion of these 
assets are more than 30 years old. GSA has also reported about $7 
billion in capital reinvestment requirements over the next 10 years to 
address deficiencies it has identified in its federal buildings. Many 
of these deficiencies may be associated with older buildings that have 
antiquated heating and air-conditioning systems and electrical systems 
that need to be replaced with new, more efficient systems. In October 
2008, we reported that the six agencies we reviewed generally expected 
their backlogs to increase as the federal portfolio of real property 
continues to age and construction costs increase.[Footnote 2] 

The Chairman of the House Committee on Transportation and 
Infrastructure has recently proposed $10 billion for investment in 
federal buildings.[Footnote 3] This investment could provide an 
opportunity to address some of the long-standing problems associated 
with the federal government's aging real estate portfolio and to 
protect the government's long-term investment. Addressing these needs 
sooner rather than later can be cost-effective because, as we have 
reported, postponing repairs and maintenance generally leads to higher 
operating and maintenance costs. These higher costs are generally 
attributable to inefficiencies in the older equipment as well as the 
more rapid deterioration of buildings and equipment that have already 
begun to fail. Undertaking repair and maintenance projects should 
reduce overall operations and maintenance costs in the future. 

Infrastructure investment could also reduce energy costs and address 
important energy and water conservation measures as well as other 
measures outlined within the Energy Independence and Security Act of 
2007 (EISA).[Footnote 4] Among other things, EISA seeks to increase 
energy efficiency and the availability of renewable energy in federal 
buildings. According to GSA, about half of the agency's infrastructure 
needs involve the consumption and conservation of energy or water. 
Addressing these infrastructure needs could decrease energy consumption 
and costs and reduce operations and maintenance expenses. Furthermore, 
decreasing energy consumption in federal buildings may also lower their 
greenhouse gas emissions. Fuel types vary in the amount of greenhouse 
gases their combustion emits. For example, coal and oil emit greater 
quantities of greenhouse gases when they are burned than do other 
fossil fuels, such as natural gas. As figure 1 shows, about half (48 
percent) of the energy consumed in federal buildings in fiscal year 
2007 was electricity, and about half of the nation's electricity is 
generated from coal (49 percent), according to 2007 national data from 
DOE's Energy Information Administration. Thus, if the federal 
government reduced the amount of energy it consumed in its buildings, 
the government could decrease its greenhouse gas emissions. 

Figure 1: Energy Consumed in Federal Buildings by Energy Type, Fiscal 
Year 2007: 

[Refer to PDF for image] 

This figure is a pie-chart depicting the following data: 

Energy Consumed in Federal Buildings by Energy Type, Fiscal Year 2007: 
Electricity: 47.9%; 
Natural gas: 34.4%; 
Fuel oil: 7.8%; 
Coal: 4.9%; 
Other: 5.1%. 

Source: DOE draft data. 

Note: Numbers may not total 100 percent because of rounding. 

[End of figure] 

According to GSA officials, in keeping with EISA, GSA has begun to 
establish a program for accelerating the use of more cost-effective 
technologies and practices at GSA facilities. GSA officials said that 
such technologies and practices could reduce energy consumption within 
their facilities. In the spring of 2008, GSA reviewed the use of cost- 
effective lighting technologies in its facilities. GSA also indicated 
that it would evaluate the use of geothermal heat pumps in its 
buildings on a case-by-case basis as it undertakes major renovations of 
federal facilities.[Footnote 5] Furthermore, GSA officials told us, GSA 
is using other cost-effective practices in its facilities, such as 
reducing the need for artificial light by maximizing the use of natural 
light, better insulating buildings, and installing green (planted) 
roofs, which can absorb carbon dioxide and reduce stormwater runoff 
while also insulating facilities. According to GSA officials, the 
principal barrier to improving the energy performance of its existing 
buildings is the limited availability of capital for addressing a 
backlog of repairs and alterations that would improve energy or water 
conservation. GSA has been seeking to address this issue, in part, 
through an expanded, deliberate program to increase the use of 
alternative financing mechanisms--such as contracts with private 
companies that initially pay for energy improvements and then receive 
compensation from the agencies over time from the monetary savings 
realized from these projects--to meet energy goals. However, as our 
past work has shown, agencies entering into these contracts have not 
always been able to verify whether energy savings were greater than 
project costs. Furthermore, lack of expertise in energy management and 
high staff turnover may create challenges for negotiating and 
overseeing alternative financing mechanisms. Paying for energy 
efficiency improvements with up-front funding is generally the most 
cost-effective means of acquiring them and allows the federal 
government to reap the full benefits of the resulting savings. 

GAO's Guiding Principles Can Provide a Framework for Infrastructure 
Investment Decisions: 

An infusion of funding provides opportunities but also brings the 
challenge of ensuring the funds are spent effectively and efficiently 
on projects that can offer the greatest benefits. In May 2008, we 
identified a number of principles that could help guide a reexamination 
of federal infrastructure programs. Three of these principles may be 
particularly helpful in guiding federal infrastructure investments: 

* Create well-defined goals based on identified areas of national 

* Incorporate performance and accountability into funding decisions. 

* Employ the best tools and approaches to emphasize return on 

While these principles can apply to any investment projects, applying 
them to energy efficiency projects, which can often provide long-term 
reductions in energy costs and environmental benefits, may help 
agencies better address the challenges they face in meeting their 
energy goals. We have identified these challenges in our previous work. 
As federal agencies move forward with infrastructure investment 
projects, having well-defined goals and plans can help agencies define 
what they seek to accomplish, identify the strategies they will use to 
achieve results, and determine how well they will succeed in achieving 
planned results and objectives. Updating these goals and plans will 
also be important to reflect changing circumstances. Furthermore, the 
plans should contain a number of key elements, including approaches or 
strategies for achieving goals and provisions for obtaining reliable 
performance data needed to set goals, evaluate results, and improve 
performance. Measurement of results is a key element of accountability. 
Specifically related to energy, agencies have faced historical 
challenges with collecting and reporting reliable data, in part because 
of limited metering in federal buildings. Reliable data are critical 
for agencies to assess their progress toward their goals and identify 
opportunities for improvement. Implementing the advanced metering 
requirement[Footnote 6] in the Energy Policy Act of 2005[Footnote 7] 
may give agencies an important tool both to verify the return on 
investment of building repairs and modernization and to identify 
additional opportunities for energy and cost savings. Finally, 
employing the best tools and approaches can increase return on 
investment. While alternative financing mechanisms have allowed the 
federal government both to implement energy-saving projects and to use 
up-front funding for other priorities, the proposed infrastructure 
investment could provide up-front funding for energy projects too, 
thereby allowing them to be implemented more cost-effectively. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 
respond to any questions that you or Members of the Committee may have 
at this time. 

Contacts and Acknowledgments: 

For further information about this testimony, please contact Terrell 
Dorn on (202) 512-6923 or Other key contributors to this 
testimony include Jean Cook, Maria Edelstein, Elizabeth Eisenstadt, 
Mark Gaffigan, Karla Springer, Gary Stofko, Lisa Vojta, and Nicholas 

[End of section] 

Related GAO Products: 

Status of GSA's Implementation of Selected Green Building Provisions of 
the Energy Independence and Security Act of 2007. [hyperlink,]. Washington, D.C.: October 31, 

Federal Real Property: Government's Fiscal Exposure from Repair and 
Maintenance Backlogs Is Unclear. [hyperlink,]. Washington, D.C.: October 16, 

Green Affordable Housing: HUD Has Made Progress in Promoting Green 
Building, but Expanding Efforts Could Help Reduce Energy Costs and 
Benefit Tenants. [hyperlink,]. 
Washington, D.C.: October 7, 2008. 

Federal Energy Management: Addressing Challenges through Better Plans 
and Clarifying the Greenhouse Gas Emission Measure Will Help Meet Long- 
term Goals for Buildings. [hyperlink,]. Washington, D.C.: September 
30, 2008. 

Architect of the Capitol: Progress in Improving Energy Efficiency and 
Options for Decreasing Greenhouse Gas Emissions. [hyperlink,]. Washington, D.C.: June 18, 

Physical Infrastructure: Challenges and Investment Options for the 
Nation's Infrastructure. [hyperlink,]. Washington, D.C.: May 8, 

Economic and Other Implications of Switching from Coal to Natural Gas 
at the Capitol Power Plant and at Electricity-Generating Units 
Nationwide. [hyperlink,]. 
Washington, D.C.: May 1, 2008. 

Energy Efficiency: Important Challenges Must Be Overcome to Realize 
Significant Opportunities for Energy Efficiency Improvements in Gulf 
Coast Reconstruction. [hyperlink,]. Washington, D.C.: June 26, 

Legislative Branch: Energy Audits Are Key to Strategy for Reducing 
Greenhouse Gas Emissions. [hyperlink,]. Washington, D.C.: April 25, 

Federal Real Property: Progress Made Toward Addressing Problems, but 
Underlying Obstacles Continue to Hamper Reform. [hyperlink,]. Washington, D.C.: April 13, 

Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is 
Needed to Protect Government Interests. [hyperlink,]. Washington, D.C.: June 22, 

Federal Energy Management: Facility and Vehicle Energy Efficiency 
Issues. [hyperlink,]. 
Washington, D.C.: March 12, 2003. 

Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate 
Congressional Review. [hyperlink,], Washington, DC.: May 

Executive Guide: Effectively Implementing the Government Performance 
and Results Act. [hyperlink,]. Washington, D.C.: June 

[End of section] 


[1] Federal agencies, including the Department of Defense, reported 
holding real property assets valued at about $1.5 trillion and spending 
over $47 billion in fiscal year 2007 to maintain and operate these 

[2] GAO, Federal Real Property: Government's Fiscal Exposure from 
Repair and Maintenance Backlogs Is Unclear, [hyperlink,] (Washington, D.C.: Oct. 16, 

[3] According to the Chairman's proposal, GSA would receive $9.7 
billion ($6 billion for repairs and alterations and $3.7 billion for 
new construction), the Smithsonian Institution would receive $270 
million, and the Architect of the Capitol would receive $20 million. 

[4] Pub. L. No 110-140, 121 Stat. 1492 (2007). 

[5] Geothermal heat pumps can be used to heat, cool and, if so 
equipped, supply a facility with hot water by using the constant 
temperature of the earth as the exchange medium instead of the outside 
air temperature. Relative to air-source heat pumps, geothermal heat 
pumps are highly efficient, last longer, need little maintenance, and 
do not depend on the temperature of the outside air. 

[6] Advanced meters are capable of providing real-time data that feed 
directly into an agency's metering database, verifying savings from 
energy projects, and helping officials to identify potential energy- 
saving opportunities. 

[7] Pub. L. No. 109-58, § 103, 119 Stat. 594, 608--609 (2005) (codified 
at 42 U.S.C. § 8253(e)(1)). 

[End of section] 

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