Space Rental Rates Charged the Department of Agriculture by the General Services Administration

LCD-78-305: Published: Jan 18, 1978. Publicly Released: Jan 18, 1978.

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The Federal Property and Administrative Services Act of 1949 directs the General Services Administration (GSA) to charge agencies rent at rates approximating commercial charges for comparable facilities but does not contain criteria for computing these rates. To determine the approximate commercial rates for buildings for fiscal years (FY) 1975, 1976, and 1977, GSA used composite area rental rates adjusted by quality ratings assigned to each building. In response to a previous GAO report, GSA adopted a new method for determining rates in which each space is independently appraised and a fair annual rate, comparable to commercial rates, is established. Each year, one-third of GSA-controlled buildings are to be reappraised and rental rates maintained for 3 years. GSA officials believed that the Department of Agriculture's (USDA) rental payments for FY 1975, 1976, and 1977 were too low and did not accurately reflect comparable commercial rates. GSA estimates for USDA rental charges for FY 1978 and 1979 represent an increase of 13.6 percent over FY 1977 charges, and FY 1979 estimates represent a 7.7-percent increase in rental charges and a 2.9-percent increase in space over FY 1978. Because only about one-third of buildings received new rates for FY 1979, most of the USDA rental rates remained the same for FY 1979. Of 195 space assignments examined, 61 had rates different from 1978 rates with an average increase of about 3.5 percent. Previous problems involving inaccurate billings were eliminated.

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