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Highlights

Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) Building Purchase Program (BPP) to determine whether: (1) the program's policies and procedures ensured that GSA used funds effectively; and (2) GSA ensured that purchased buildings met federal agencies' needs for quality space and GSA needs for minimum life-cycle operating costs.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
General Services Administration The Administrator of General Services should better ensure adherence to policies and procedures governing BPP by continuing to seek opportunities to purchase quality, modern office buildings in cities with a long-term federal presence, provided that the economic benefits of ownership exceed those of leasing or constructing equivalent space.
Closed - Implemented
GSA has no current plans to purchase a building, but continues to be receptive to opportunities for affordable purchases using funds remaining available for the program.
General Services Administration The Administrator of General Services should better ensure adherence to policies and procedures governing BPP by strengthening internal controls to ensure that economic analyses prepared for building purchases include complete and realistic estimates of all acquisition costs and that purchase prices do not exceed independently appraised values by amounts greater than Public Buildings Service policy allows.
Closed - Implemented
A memo was issued which updated and clarified the building purchase program order. It changed some procedures and strengthened the weight of consideration to be given to appraisal data.
General Services Administration The Administrator of General Services should better ensure adherence to policies and procedures governing BPP by not purchasing buildings which fail to meet program criteria without adequate justification.
Closed - Implemented
The new memorandum governing the program strengthened controls to ensure purchases outside the guidelines was justified.
General Services Administration The Administrator of General Services should revise the BPP order by including a specific definition of the limited kinds of repairs and alterations (R&A) which are integral to a building purchase and therefore may be included in a purchase contract without competition or prospectus approval.
Closed - Implemented
A memo was issued which updated and clarified the building purchase program order. It included new instructions which defined types of R&A, which is acceptable as part of the purchase, and time periods within which R&A must be completed. If GSA resumes purchasing buildings, new instructions should have the effect of precluding abuse of R&A provisions of the program.
General Services Administration The Administrator of General Services should revise the BPP order by establishing procedures that define when and for how long modifications can be made to construction contracts to prepare buildings for occupancy after the buildings have been purchased.
Closed - Implemented
A memo was issued as a result of the report specifically providing instructions relating to modifications to construction contracts made pursuant to a building purchase, which should help preclude recurrence of problems GAO found. The old order was silent on the issue of modifications.
General Services Administration The Administrator of General Services should revise the BPP order by specifying that CICA and FAR procedures must be used in contracting for construction services when they cannot be obtained from buildings' owners.
Closed - Implemented
The memo which revised the building purchase program order makes specific reference to CICA and FAR provisions and specifies that they will be followed when contracting for construction needed to prepare a purchased building for occupancy.
General Services Administration The Administrator of General Services should revise the BPP order by establishing procedures that require coordination between GSA and agencies designated to occupy purchased buildings to reduce or eliminate the delays that have occurred in occupying purchased buildings.
Closed - Implemented
New procedures were included in the memo which revised the building purchase order.
General Services Administration The Administrator of General Services should revise the BPP order by ensuring that the present value of the alternatives available under leveraged purchase arrangements, including all combinations of purchased and leased buildings, is compared with the present value of constructing the total space required.
Closed - Implemented
The memo revising the order did not address the situation that led to this recommendation. However, it is not likely that GSA will pursue such an approach given the limited funds available to the purchase program.
General Services Administration The Administrator of General Services should revise the BPP order by considering establishing a threshold higher than the 20 percent for all alternatives that combine purchases and leases, to offset the increased risk in such cases.
Closed - Implemented
The memo revising the order did not address the situation that led to this recommendation. However, it is not likely GSA will use such an approach given the limited funds available to the purchase program.
General Services Administration The Administrator of General Services should consider the policy and procedures improvements recommended in this report before purchasing any additional buildings if purchase opportunities arise before the BPP order is revised.
Closed - Implemented
The memo revising the building purchase program order would be applicable if GSA purchased additional buildings under the program. GSA has purchased no buildings since the report was issued.
General Services Administration The Administrator of General Services should develop standards defining quality for the purchase of special-purpose space, such as the Austin and Chamblee service centers, as has been done for purchases of commercial office buildings. The policy should require identifications of costs that both GSA and the occupying agencies can anticipate will need to be incurred to achieve the quality standards established.
Closed - Implemented
The memo revising the building purchase program order does not establish standards defining acceptable quality required for purchases of special-purpose space. However, GSA emphasized the need to carefully scrutinize such purchases.

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