Key Issues > High Risk > Managing Federal Real Property
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Managing Federal Real Property

This information appears as published in the 2015 High Risk Report.

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The federal government’s real property holdings are vast and diverse—comprising hundreds of thousands of buildings and permanent structures across the country, and costing billions of dollars annually to operate and maintain. Since federal real property management was placed on the High Risk List in 2003, the government has given high-level attention to this issue and has made strides in real property management, but continues to face long-standing challenges in managing its real property. For example, the federal government continues to maintain too much excess and underutilized property. It also relies too heavily on leasing in situations where ownership would be more cost efficient in the long run. In addition, the federal government faces ongoing challenges in protecting its facilities. Finally, effective real property management and reform are undermined by unreliable real property data. Specifically, despite a high level of leadership commitment to improve real property data, the federal government continues to face challenges with the accuracy and consistency of the Federal Real Property Profile (FRPP), causing the federal government to report inaccurate inventory and outcome information.

Managing Federal Real Property

The federal government has met the high-risk criterion for demonstrating leadership commitment to improving the management of real property by pursuing numerous reform efforts over multiple administrations. For example, the 2012 Freeze the Footprint policy is an example of the administration’s leadership commitment to improving the management of federal real property. The federal government has also made partial progress toward increasing its capacity, developing an action plan, and monitoring its progress toward improving real property management. For example, staff of the Office of Management and Budget (OMB) said that OMB is drafting a national real property strategy that could help implement our recommendation that the federal government take a more strategic approach toward excess property and high value leases. However, significant challenges in demonstrating progress in achieving tangible results remain. For example, we found that the results OMB reported from the first year of the administration’s Freeze the Footprint policy overstated the reductions for the four agencies we reviewed to the point where some of the reported decreases do not represent any decrease at all.

 

Excess and Underutilized Property

Excess and Underutilized Property

OMB and the real property-holding agencies have met the criterion for demonstrating leadership commitment toward reducing the amount of excess and underutilized federal real property, through more than a decade of management attention, beginning in 2004 with Executive Order 13327 and, more recently, by establishing the Freeze the Footprint policy in 2012 and by beginning to draft a national real property strategy. The federal government has partially met the criteria for capacity, action planning, and monitoring excess and underutilized real property. It has not met the criteria for demonstrating progress in reducing excess and underutilized real property.

In July 2014, the Administration released the first year results of the Freeze the Footprint policy, indicating that it reduced the federal government’s office and warehouse space by about 10.2 million square feet between fiscal years 2012 and 2013—exceeding its expectations. To assess the extent to which these results were reliable, we examined data from four of the six agencies that made the largest reductions in the first year of Freeze the Footprint reporting and found the data were not reliable—the actual space reductions at the four agencies we reviewed were overstated. For example, at least one of the two largest reported reductions for each of the 4 selected agencies were either overstated or did not represent a reduction at all.

We found that many reported reductions in square footage were due to factors other than actual space reduction, such as coincidence of when the reporting baseline was set, the re-categorization of space to another use or data errors, or the transfer of properties to the General Services Administration (GSA). Specifically, some agency officials explained that some of their largest reported square footage reductions in fiscal year 2013 were due simply to the timing of the fiscal year 2012 baseline. For example, the Department of Commerce (Commerce) opened an approximately 268,000 square foot building in 2012 into which it consolidated several other facilities totaling about 160,000 square feet. However, when the Freeze the Footprint baseline was set on September 30, 2012, Commerce was still transitioning into the new space and did not dispose of the previous facilities until later in fiscal year 2013, making an approximately 108,000 square foot increase appear to be a decrease of about 160,000 square feet. OMB officials told us that, while the timing of the 2012 baseline inaccurately made some agencies appear to have cut space, other agencies experienced the opposite effect. OMB provided us with examples which indicate that some agencies’ apparent space increases may have, in fact, represented steps of ongoing property relocation or consolidation efforts which were not finalized prior to the end of fiscal year 2013. However, in these cases, the net impact of these relocations or consolidations should become clear in the Freeze the Footprint reporting for fiscal year 2014.

In addition, weaknesses in FRPP data caused OMB to overstate some reductions. All four selected agencies confirmed that several square footage reductions reported for fiscal year 2013 were due to data errors or the re-measurement of space to comply with GSA standards. Further, many properties removed from agencies’ real property portfolios were simply returned to GSA and remain part of the existing federal footprint. For example, in fiscal year 2013, the Department of the Interior was credited with disposing of more than 41,000 square feet of office space in Lakewood, Colorado. However, GSA officials confirmed that this space was returned to GSA and remains vacant as GSA and Interior work to backfill the space as part of a larger plan to evaluate consolidation and cost saving opportunities in the area.

Agency officials also said that some of the incremental space reductions they did achieve in the first year of the Freeze the Footprint policy were the result of efforts underway before the policy began. For example, officials from the Department of the Interior explained that it consolidated several locations in Reston, Virginia, which reduced its overall square footage. While the actual consolidation occurred during the first year of the Freeze the Footprint policy, officials said that the consolidation had been in the planning process for 3 years, well before the policy came into effect. Although not directly attributable to the Freeze the Footprint policy, reductions like this do represent some progress in reducing excess and underutilized space. Officials at all four agencies did say that the policy is an incentive to reduce office and warehouse space going forward.

In addition, the federal government has partially met the criterion for having an action plan for addressing the excess and underutilized real property by beginning the process of developing a national real property strategy. However, OMB officials said that the strategy will not be completed until sometime in 2015. We will assess it against the high risk criteria at that time.

Costly Leasing

Costly Leasing

The Federal government continues to rely heavily on leasing of properties where it would be more cost efficient for the federal government to own. The federal government has met the criterion for showing leadership commitment to addressing the problem by focusing on limiting the federal real property footprint, trying to consolidate high-value leases and smaller leases as they expire, moving some high-value leases into government-owned space, and helping agencies increase space efficiency. However, GSA lacks an action plan, the capacity in terms of transparent data, and the monitoring tools necessary to demonstrate success in reducing its reliance on leasing. Specifically, GSA has not developed or applied criteria to rank and prioritize the potential long-term ownership solutions to current high-value leases among other capital investments. For example, in 2013 we found that high-value leases account for over one-third of GSA’s annual rent paid to private sector landlords and more than a quarter of the total lease square feet while representing just 3 percent of GSA leases. GSA, however, has not determined which of those leases would be the best candidates for ownership investments.

 

Physical Security

Physical Security

The Federal Protective Service (FPS) has met the criterion for showing leadership commitment to improve the physical security of federal facilities by issuing its Strategic Human Capital Plan in 2014 and reducing turnover in the director position. FPS also made progress in building capacity for better protecting federal facilities by assessing the vulnerabilities of federal facilities as we reported in 2013, but its methodology is not fully compliant with federal risk assessment standards. Moreover, FPS still faces challenges in developing an action plan and in monitoring and demonstrating progress. For example, while FPS has identified some measures that would help monitor progress in protecting federal facilities, FPS has not developed or implemented standards for measuring its performance in assessing risk at its facilities or obtaining feedback from its tenant agencies on the quality of security services provided.

 

 

 

Data Reliability

Data Reliability

The federal government has met the criterion for demonstrating leadership commitment to improving real property data to support decision making, and has made some progress in increasing its capacity to improve the reliability of the data, but lacks an action plan and an ability to effectively monitor or demonstrate progress. Related to leadership commitment and capacity, GSA took steps to improve the reliability of FRPP data, including changing how some variables are defined and eliminating some optional variables, but these changes have not yet sufficiently improved the overall reliability of the data and the federal government continues to lack an action plan for making additional improvements. For example, we found that the federal government’s real property data remains unreliable in the following areas, undermining its ability to monitor or demonstrate progress:

  •  As discussed above, the FRPP data that the OMB used as evidence that the federal government has made progress in reducing its overall amount of office and warehouse space were not reliable. Our analysis showed that weaknesses in the data overstated the reductions reported by the four agencies we reviewed.
  • Agencies use FRPP data related to the utilization of federal warehouses consistently. For example, GSA lists vacant warehouses as fully utilized as a matter of policy because part of its mission is to have warehouse space available if agencies need it.
  •  FRPP data related to the federal government’s 480,000 structures are not reliable on a government-wide basis, due to the different approaches agencies take in defining and inventorying structures. For example, agencies use different approaches to counting structures—undermining any cross-agency comparisons.
  •  We found that the $3.8 billion which agencies reported in 2012 as cost savings from real property disposal, space management, sustainability, and innovation activities were not reliable. Our analysis show that these cost savings included different assumptions, methodologies, and timelines that reduced the reliability of the data.

Congressional Action

Several real property reform bills were introduced in the 113th session of Congress that could have reduced barriers to further reducing excess and underutilized real property, but none of the bills were enacted. While Congress could take actions to reform real property and encourage agencies to implement our outstanding recommendations, we have not made any related matters for congressional consideration.

In order to improve the management of its real property, OMB, GSA, and FPS should implement our open recommendations including those to develop a national strategy and improve data reliability. For example, OMB, in conjunction with land-holding agencies, could improve its capacity and action plan by implementing our recommendation to develop a strategic plan for managing excess and underutilized real property. OMB officials said they are implementing the recommendation by drafting a national real property strategy—scheduled for completion sometime in 2015.

To develop an action plan for reducing the federal government’s overreliance on costly leasing, GSA should implement our recommendation to develop and apply criteria which rank and prioritizes potential long-term ownership solutions to current high-value leases, among other capital investments. GSA should also increase its capacity for reducing the government’s reliance on leasing by implementing our recommendation to enhance transparency in the information it provides to Congress when seeking authorization for new high value leases by including (1) estimates of the length of time that agencies are likely to need the space, (2) needed investments in the property, and (3) appropriate cost-to-lease comparisons with ownership options. Also, in conjunction with OMB, GSA should improve its ability to monitor and track progress by implementing our recommendation to set long-term, cross-agency goals for investments in ownership.

To further build capacity and to improve the federal government’s monitoring and demonstrating of progress in improving the security of federal facilities, FPS should implement our 2014 recommendation to develop and implement risk assessment methodologies at federal facilities that meet Interagency Security Committee standards. FPS should also improve its capacity by implementing our recommendation to determine which guards have not had screener or active-shooter scenario training and provide it to them. It could also develop an action plan with a schedule for implementing these GAO recommendations, which could further help FPS demonstrate progress in better protecting federal facilities.

GSA can assist in monitoring progress reducing excess and underutilized real property by implementing our recommendation to improve the reliability of FRPP by ensuring that its data are sufficiently complete, accurate, and consistent. In turn, this improvement would improve reliability in demonstrating progress in, for example, the federal government’s space reduction and cost savings statistics.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.
  • portrait of David Wise
    • David Wise
    • Director, Physical Infrastructure
    • wised@gao.gov
    • (202) 512-2834
  • portrait of Lori Rectanus