Real Property:

Infrastructure Investment Presents Opportunities to Address Long-standing Real Property Backlogs and Reduce Energy Consumption

GAO-09-324T: Published: Jan 22, 2009. Publicly Released: Jan 22, 2009.

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Federal agencies have identified billions of dollars in reinvestment requirements to maintain their aging facilities and bring them up to current standards. In addition, according to Department of Energy (DOE) estimates, federal agencies will need over a billion dollars annually through 2015 for projects needed to meet congressional energy efficiency goals. As the nation's single largest energy consumer, the federal government spent approximately $17 billion in fiscal year 2007 on energy use in buildings and vehicles. This total represents almost 1 percent of all federal expenditures for 2007, and these costs have risen in recent years. This testimony discusses the potential benefits that may accrue from infrastructure investment, including energy reductions within federal buildings, and principles that could help guide infrastructure investment. Our comments are based on our body of work on repair and maintenance and energy management issues associated with federal real property.

In January 2003, GAO designated federal real property as a high-risk area, in part because of deteriorating facilities and unreliable real property data. In 2007, GAO reported that major real-property-holding agencies, including the General Services Administration (GSA), and the administration had made progress toward managing their real property but underlying problems, such as backlogs in repair and maintenance, still existed. GSA, which serves as the landlord for most of the federal civilian government, held real property assets valued at about $36.4 billion in fiscal year 2007. A good portion of these assets are more than 30 years old. GSA has also reported about $7 billion in capital reinvestment requirements over the next 10 years to address deficiencies it has identified in its federal buildings. Many of these deficiencies may be associated with older buildings that have antiquated heating and air-conditioning systems and electrical systems that need to be replaced with new, more efficient systems. In October 2008, GAO reported that the six agencies GAO reviewed generally expected their backlogs to increase as the federal portfolio of real property continues to age and construction costs increase. The Chairman of the House Committee on Transportation and Infrastructure has recently proposed $10 billion for investment in federal buildings. This investment could provide an opportunity to address some of the long-standing problems associated with the federal government's aging real estate portfolio and to protect the government's long-term investment. Addressing these needs sooner rather than later can be cost-effective because, as GAO has reported, postponing repairs and maintenance generally leads to higher operating and maintenance costs. These higher costs are generally attributable to inefficiencies in the older equipment as well as the more rapid deterioration of buildings and equipment that have already begun to fail. Undertaking repair and maintenance projects should reduce overall operations and maintenance costs in the future. Infrastructure investment could also reduce energy costs and address important energy and water conservation measures as well as other measures outlined within the Energy Independence and Security Act of 2007 (EISA). Among other things, EISA seeks to increase energy efficiency and the availability of renewable energy in federal buildings. According to GSA, about half of the agency's infrastructure needs involve the consumption and conservation of energy or water. Addressing these infrastructure needs could decrease energy consumption and costs and reduce operations and maintenance expenses. Furthermore, decreasing energy consumption in federal buildings may also lower their greenhouse gas emissions. Fuel types vary in the amount of greenhouse gases their combustion emits. For example, coal and oil emit greater quantities of greenhouse gases when they are burned than do other fossil fuels, such as natural gas. As figure 1 shows, about half (48 percent) of the energy consumed in federal buildings in fiscal year 2007 was electricity, and about half of the nation's electricity is generated from coal (49 percent), according to 2007 national data from DOE's Energy Information Administration. Thus, if the federal government reduced the amount of energy it consumed in its buildings, the government could decrease its greenhouse gas emissions.

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