FCC Did Not Act in the Government's Best Interest in Acquiring Leased Space

PLRD-81-39: Published: Jun 26, 1981. Publicly Released: Jun 26, 1981.

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GAO completed a review of five leases for office space which the Federal Communications Commission (FCC) negotiated under its independent leasing authority. GAO also reviewed the proposed terms and conditions of two additional leases which FCC had planned to enter into for consolidated office space. The FCC independent leasing authority is set to expire in September 1981, pending congressional action on the continuing resolution for its fiscal 1981 appropriation. In addition, FCC voted to defer action on the consolidated office space until the Senate confirmed the appointment of an FCC chairman.

GAO found several instances in which FCC did not fully follow Federal procurement policies and procedures or did not act in the Government's best interest in exercising its independent leasing authority. FCC did not prepare and issue a formal solicitation for offers for each lease setting forth space requirements and proposed terms and conditions. FCC agreed, or proposed to agree, to escalation of base rent according to a formula tied to annual increases in the Consumer Price Index. This type of escalation is contrary to General Services Administration (GSA) and Postal Service policy. FCC did not include certain standard Government lease clauses, such as the Economy Act limitation on annual rent. FCC also agreed to a provision on arbitration that appears to be inconsistent with a Comptroller General decision. FCC did not maintain negotiation memorandums and other standard forms and did not follow procedures prescribed by Federal procurement regulations as used by GSA. These deficient practices stemmed primarily from the FCC lack of leasing expertise and its failure to properly use the expertise and advice of its contracting officer. GAO believes that placing the function of the contracting officer at a higher level within the Office of the Executive Director would ensure that he is fully involved in leasing operations and would prevent the current deficient practices. FCC also exceeded its authority by entering into or planning to enter into multiple-year leases contingent solely upon the availability of appropriations.

Recommendation for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The FCC should, in any future acquisitions of leased space, follow the Federal procurement policies and procedures which GSA has implemented in its leasing program. This will encourage maximum competition and ensure acquisition of space to the best advantage of the Government. At a minimum the Commission should (1) prepare and issue a formal solicitation for offers setting forth space requirements and proposed lease terms and conditions; (2) include in all negotiations all standard contract clauses used by GSA to implement statutory requirements or to protect the Government's interests; (3) decline to accept lease provisions permitting annual escalation of base rent unless GSA accepts and implements such practices as standard Government policy; and (4) maintain in the lease files memoranda showing price and related negotiated lease terms and conditions. To ensure that these policies and practices are enforced, the FCC contracting officer should be fully involved in the leasing process, including solicitation for offers, negotiation of lease terms and rental rates, and contract award and administration. The FCC should not exceed its authority by entering into multi-year leases.

    Agency Affected: Federal Communications Commission


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