Defense Infrastructure:

Greater Management Emphasis Needed to Increase the Services' Use of Expanded Leasing Authority

GAO-02-475: Published: Jun 6, 2002. Publicly Released: Jun 6, 2002.

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The military services face significant challenges in addressing facility sustainment, restoration, and modernization needs with limited funds. These challenges are magnified by the 20 to 25 percent of the Department of Defense's (DOD) real property that it views as not being needed to meet current mission requirements, but that adds to costs. To reduce these costs and acquire additional resources to maintain its facilities, DOD has developed a multi-part strategy involving base realignment and closure, housing and utility privatization, competitive sourcing of non-inherently governmental functions, and demolition of facilities that are no longer needed. Although the services continue to use the leasing authority provided for traditional type of leases, they have made limited efforts to use the expanded leasing authority enacted by Congress in fiscal year 2001. The services have identified a number of impediments that have limited the use of the expanded leasing authority and that could adversely affect the program in the future.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In comments on a draft of this report, DOD partially concurred with the recommendation, citing that OSD has issued two policy memoranda identifying the goals and objectives to be achieved through enhanced use leasing (EUL). In July 2004, citing our audit report that DOD should accelerate the use of EUL, the Army Corps of Engineers issued an Enhanced Use Leasing Guide to help Army, Navy, Marine Corps, and Air Force installations in the execution of EUL projects and to promote EUL as another tool to address funding shortfalls in the operations and maintenance of facilities. In a recent briefing, a Corps official indicated that the Army's EUL program has increased from 5 projects pre-2004 to 14 projects in 2006. In April 2006, the Air Force Real Property Agency finalized its Enhanced Use Leasing Handbook to encourage the use of EUL. In a July 2006 briefing, an agency official indicated that the Air Force's EUL goals for 2006 and 2007 were 5 projects each, and that it had already identified another project for 2008. In a briefing from July 2006, an official from the Navy Installations Commands listed 10 EUL projects currently under consideration.

    Recommendation: To make better use of the expanded leasing authority , the Secretary of Defense should require the Under Secretary of Defense for Acquisition, Technology, and Logistics to work with the Secretaries of the Air Force, Army, and Navy to place greater emphasis on an expanded leasing program in the form of program goals and measurements to monitor progress in reducing infrastructure and base operations costs.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In comments on a draft of this report, DOD concurred with this recommendation and agreed that specific program guidelines and criteria for project selection would greatly assist installation commanders in identifying enhanced use leasing (EUL) opportunities. In July 2004, citing our audit report, the Army Corps of Engineers issued an Enhanced Use Leasing Guide to help Army, Navy, Marine Corps, and Air Force installations in the execution of EUL projects. The guide outlines each key step of the EUL process, highlights lessons learned, provides templates for individual EUL projects, and lists potential uses for EUL, such as office spaces, warehouse and industrial spaces, medical facilities, airfields and hangers, sport venues, and laboratories. In April 2006, the Air Force Real Property Agency finalized its Enhanced Use Leasing Handbook, which describes the EUL process, identifies roles and responsibilities, outlines the process to identify potential EUL projects, and explains other EUL concepts. The handbook is intended to encourage the use of EUL in the management of Air Forces assets.

    Recommendation: To make better use of the expanded leasing authority, the Secretary of Defense should require the Under Secretary of Defense for Acquisition, Technology, and Logistics to work with the Secretaries of the Air Force, Army, and Navy to place greater emphasis on an expanded leasing program in the form of specific program guidelines, such as criteria for project selection.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD officials do not plan on developing a new system to account for in-kind consideration for the department's leasing program.

    Recommendation: To make better use of the expanded leasing authority , the Secretary of Defense should require the Under Secretary of Defense for Acquisition, Technology, and Logistics to work with the Secretaries of the Air Force, Army, and Navy to place greater emphasis on an expanded leasing program by accurately accounting for all cash revenues and developing a new system to account for in-kind consideration to ensure that all of the benefits from leasing are captured.

    Agency Affected: Department of Defense

 

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