This is the accessible text file for GAO report number GAO-03-122 
entitled 'High-Risk Series: Federal Real Property' which was released 
on January 01, 2003.



This text file was formatted by the U.S. General Accounting Office 

(GAO) to be accessible to users with visual impairments, as part of a 

longer term project to improve GAO products’ accessibility. Every 

attempt has been made to maintain the structural and data integrity of 

the original printed product. Accessibility features, such as text 

descriptions of tables, consecutively numbered footnotes placed at the 

end of the file, and the text of agency comment letters, are provided 

but may not exactly duplicate the presentation or format of the printed 

version. The portable document format (PDF) file is an exact electronic 

replica of the printed version. We welcome your feedback. Please E-mail 

your comments regarding the contents or accessibility features of this 

document to Webmaster@gao.gov.



Performance and Accountability Series:



January 2003:



High-Risk Series:



Federal Real Property:



GAO-03-122:



The Series:



This report on federal real property is part of GAO’s high-risk series, 

first issued in 1993 and updated periodically. This series identifies 

areas at high risk due to either their greater vulnerabilities to 
waste, 

fraud, abuse, and mismanagement or major their greater vulnerabilities 

to waste, fraud, abuse, and mismanagement or major companion series 

entitled the Performance and Accountability Series: Major Management 

Challenges and Program Risks contains separate reports covering each 

cabinet department, most major independent agencies, and the U.S. 

Postal Service. The series also includes a governmentwide perspective 

on transforming the way the government does business in order to meet 

21st century challenges and address long-term fiscal needs. A list of 

all of the reports in this series is included at the end of this 
report.



GAO Highlights:



Highlights of a high-risk area discussed in the GAO report entitled 

High-Risk Series: Federal Real Property (GAO-03-122):



Why Area Is High Risk:



* Long-standing problems with excess and underutilized real property, 

deteriorating facilities, unreliable real property data, and costly 

space challenges are shared by several agencies. These factors have 

multibillion-dollar cost implications and can seriously jeopardize 

mission accomplishment.



* Federal agencies face many challenges securing real property due to 

the threat of terrorism.



What GAO Found:



Over 30 agencies control hundreds of thousands of real property assets

worldwide, including facilities and land, which are worth hundreds of

billions of dollars. Unfortunately, much of this vast, valuable 

portfolio reflects an infrastructure based on the business model and 

technological environment of the 1950s. Many of the assets are no 

longer  effectively aligned with, or responsive to, agencies’ changing 

missions and are therefore no longer needed. Further, many assets are 

in a n alarming state of deterioration; agencies have estimated 

restoration and repair needs to be in the tens of billions of dollars. 

Compounding these problems are the lack of reliable governmentwide data 

for strategic asset management, a heavy reliance on costly leasing 

instead of ownership to meet new needs, and the cost and challenge of 

protecting these assets against potential terrorism.



To address these challenges, Congress and the administration have

undertaken several efforts, including Defense Base Realignment and

Closures Commissions, the President’s Commission to Study Capital

Budgeting, and various legislative initiatives. While some of these 

efforts and other work by individual real property-holding agencies 

have had some success, much remains to be done governmentwide. 

Furthermore, despite these efforts, the problems have persisted and 

have been exacerbated by competing stakeholder interests in real 

property decisions; various legal and budget-related disincentives to 

businesslike outcomes; the need for better capital planning among 

agencies; and the lack of a strategic, governmentwide focus on real 

property issues.



Given the persistence of the problems and related obstacles, we have 

added federal real property as a new high-risk area. Resolving these 

problems will require high-level attention and effective leadership by 

both Congress and the administration. Also, because of the breadth and 

complexity of the issues, the long-standing nature of the problems, and 

the intense debate that will likely ensue, current structures and 

processes may not be adequate to address the problems. Thus, there is a

 need for a comprehensive, integrated transformation strategy for real 

property. Realigning the government’s real property, taking into 
account 

future workplace needs, will be critical to improving the government’s 

performance and ensuring accountability within expected resource 
limits.



[See PDF for image]



[End of figure]



What Remains to Be Done:



There is a need for a comprehensive and integrated real property 

transformation strategy that could identify how best to realign and 

rationalize federal real property and dispose of unneeded assets; 

address significant real property repair and restoration needs; develop 

reliable, useful real property data; resolve the problem of heavy 

reliance on costly leasing; and minimize the impact of terrorism on

real property.



An independent commission or governmentwide task force may be needed to 

develop this strategy. If resulting actions address the problems and 
are 

effectively implemented, agencies will be better able to recover asset 

values, reduce operating costs, improve facility conditions, enhance 

safety and security, and achieve mission effectiveness.



Contents:



Transmittal Letter:



Federal Real Property: A High-Risk Area:



Appendix:



Appendix: Lessons Learned and Leading Practices in Real Property:



GAO Contacts:



Related GAO Products:



Performance and Accountability and High-Risk Series:



This is a work of the U.S. Government and is not subject to copyright 

protection in the United States. It may be reproduced and distributed 

in its entirety without further permission from GAO. It may contain 

copyrighted graphics, images or other materials. Permission from the 

copyright holder may be necessary should you wish to reproduce 

copyrighted materials separately from GAO’s product.



Transmittal Letter January 2003:



The President of the Senate

The Speaker of the House of Representatives:



GAO’s high-risk update is provided at the start of each new Congress in 

conjunction with a special series GAO has issued biennially since 

January 1999, entitled the Performance and Accountability Series: Major 

Management Challenges and Program Risks. This report, which discusses 

federal real property, is a companion to GAO’s 2003 high-risk update, 

High-Risk Series: An Update (GAO-03-119). These reports are intended to 

help the new Congress focus its attention on the most important issues 

and challenges facing the federal government.



Long-standing problems in the federal real property area include excess 

and underutilized property, deteriorating facilities, unreliable real 

property data, and costly space. These factors have multibillion-dollar 

cost implications and can seriously jeopardize the ability of federal 

agencies to accomplish their missions. Federal agencies also face many 

challenges securing real property due to the threat of terrorism. Given 

the persistence of these problems and various obstacles that have 

impeded progress in resolving them, GAO is designating federal real 

property as a new high-risk area.



This report should help the new Congress and the administration attend 

to these problems and improve agency practices in the real property 

area for the benefit of the American people. For additional information 

about this report, please contact John H. Anderson, Jr., Managing 

Director, Physical Infrastructure Issues, at (202) 512-2834. GAO 

contacts for real property issues at specific agencies are listed at 

the end of this report.



Signed by David M. Walker:



David M. Walker

Comptroller General

of the United States:



[End of section]



Federal Real Property: A High-Risk Area:



Over 30 federal agencies control hundreds of thousands of real property 

assets--including both facilities and land--in the United States and 

abroad. These assets are worth hundreds of billions of dollars. 

Unfortunately, much of this vast and valuable asset portfolio presents 

significant management challenges and reflects an infrastructure based 

on the business model and technological environment of the 1950s. Many 

assets are no longer effectively aligned with, or responsive to, 

agencies’ changing missions and are therefore no longer needed. 

Furthermore, many assets are in an alarming state of deterioration; 

agencies have estimated restoration and repair needs to be in the tens 

of billions of dollars. Compounding these problems are the lack of 

reliable governmentwide data for strategic asset management, a heavy 

reliance on costly leasing instead of ownership to meet new space 

needs, and the cost and challenge of protecting these assets against 

potential terrorism.



To address these challenges, Congress and the administration have 

undertaken several efforts, including Defense Base Realignment and 

Closures Commissions and the President’s Commission to Study Capital 

Budgeting. In addition, Congress, the Office of Management and Budget 

(OMB), and the General Services Administration (GSA) have also 

recognized the need for and developed legislative proposals in recent 

years that were designed to address some of the problems. While some of 

these efforts and other work by individual real property-holding 

agencies have had some success, much remains to be done governmentwide. 

In most cases, the effectiveness of current and planned initiatives has 

yet to be determined. Despite these efforts and the sincerity with 

which the federal real property community has embraced the need for 

reform, the problems have persisted and have been exacerbated by 

competing stakeholder interests in real property decisions, various 

legal and budget-related disincentives to businesslike outcomes, the 

need for better capital planning among real property-holding agencies, 

and the lack of a strategic, governmentwide focus on federal real 

property issues.



Given the persistence of these problems and various obstacles that have 

impeded progress in resolving them, we are designating federal real 

property as a new high-risk area. Resolving these long-standing 

problems will require high-level attention and effective leadership by 

Congress and the administration. Also, because of the breadth and 

complexity of the issues involved, the long-standing nature of the 

problems, and the intense debate about potential solutions that will 

likely ensue, current structures and processes may not be adequate to 

address these problems. Given this situtation, there is a need for a 

comprehensive and integrated transformation strategy for federal real 

property, and an independent commission or governmentwide task force 

may be needed to develop this strategy. Such a strategy could be based 

on input from agencies, the private sector, and other interested 

groups. The strategy should also reflect the lessons learned and 

leading practices of public and private organizations that have 

attempted to reform their real property practices. These organizations 

have recognized that real property, like capital, people, technology, 

and information, is a valuable resource that, if managed well, can 

support the accomplishment of their missions and the achievement of 

their business objectives. In addition, as these organizations are 

recognizing, the workplace of the future will differ from today’s work 

environment.



For the federal government, technological advancements, electronic 

government, flexible workplace arrangements, changing public needs, 

opportunities for resource sharing, and security concerns will call for 

a new way of thinking about the federal workplace and the government’s 

real property needs. Realigning the government’s real property assets 

with agency missions, taking into account the requirements of the 

future federal role and workplace, will be critical to improving the 

government’s performance and ensuring accountability within expected 

resource limits. If actions resulting from the transformation strategy 

comprehensively address the problems and are effectively implemented, 

agencies will be better positioned to recover asset values, reduce 

operating costs, improve facility conditions, enhance safety and 

security, and achieve mission effectiveness.



The Federal Real Property Environment:



The federal real property environment has many stakeholders and 

involves a vast and diverse portfolio of assets that are used for a 

wide variety of missions. Real property is generally defined as 

facilities; land; and anything constructed on, growing on, or attached 

to land. According to the fiscal year 2001 financial statements of the 

U.S. government, the federal government’s real property assets are 

worth about $328 billion.[Footnote 1] In terms of facilities, the 

latest available governmentwide data from GSA indicated that as of 

September 30, 2000, the federal government owned and leased 

approximately 3.3 billion square feet of building floor area 

worldwide.[Footnote 2] As shown in figure 1, the Department of Defense 

(DOD), U.S. Postal Service (USPS), GSA, and Department of Veterans 

Affairs (VA) hold the majority of the owned facility space. Figure 1 

also shows that DOD, the Department of State (State), GSA, and USPS 

lease the most space.



Figure 1: Percentages of Federal Facility Space Owned and Leased 

Worldwide, by Agency:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



The makeup of the federal government’s facilities reflects the 

diversity of agencies’ missions and includes military bases, office 

buildings, embassies, prisons, courthouses, border stations, 

laboratories, and park facilities. In terms of land, available 

governmentwide data suggest that the federal government owns roughly 

636 million acres. The Departments of the Interior (DOI) and 

Agriculture (USDA) hold most of this land, which is about one-fourth of 

the total acreage of the United States. Figure 2 shows that the vast 

majority of federal land holdings are in the western United States.



Figure 2: Percentage of Federal Land Holdings in Major Regions of the 

United States:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Federal real property managers operate in a complex and dynamic 

environment. Numerous laws and regulations govern the acquisition, 

management, and disposal of federal real property. The Federal Property 

and Administrative Services Act of 1949, as amended (Property Act), is 

the law that generally applies to real property held by federal 

agencies; and GSA is responsible for the act’s implementation.[Footnote 

3] Agencies are subject to the Property Act, unless they are 

specifically exempted from it. Agencies may also have their own 

statutory authority related to real property. For example, VA has 

separate authority to enter into public-private partnerships to lease 

its property to nongovernmental entities; in turn, these entities 

develop, rehabilitate, or renovate the property.[Footnote 4] DOD has 

its own authority to outlease real property under its control for 5 

years or longer, if a determination is made that doing so will promote 

national defense or be in the public interest.[Footnote 5] USPS, which 

is an independent establishment in the executive branch, is authorized 

to sell, lease, or dispose of property under its general 

powers.[Footnote 6] USPS is exempt from most federal laws dealing with 

real property and contracting.[Footnote 7] Agencies must also comply 

with numerous other laws related to real property. For example, the 

Stewart B. McKinney Homeless Assistance Act, as amended, provides that 

property that agencies have identified as unnecessary for mission 

requirements must first be made available to assist the 

homeless.[Footnote 8] The National Historic Preservation Act, as 

amended, requires agencies to manage historic properties under their 

control and jurisdiction and to consider the effects of their actions 

on historic preservation.[Footnote 9]



Real property decisions draw considerable attention during 

congressional deliberations over federal appropriations. Members of 

Congress take a keen interest in federal facilities in their districts 

and in the economic impact of any decisions. In addition to Congress, 

OMB, and the real property-holding agencies, several other stakeholders 

also have an interest in how the federal government carries out its 

real property acquisition, management, and disposal practices. These 

stakeholders include state and local governments; business interests in 

the communities where the assets are located; private sector 

construction and leasing firms; historic preservation organizations; 

various advocacy groups; and the public in general, which often views 

the facilities as the physical face of the federal government in their 

communities. At both the national and local levels, federal real 

property practices also tend to attract significant media attention, 

particularly when these practices are under scrutiny for waste and 

mismanagement.



The Federal Government Has Many Assets It Does Not Need:



Despite significant changes in the size and mission needs of the 

federal government in recent years, the federal portfolio of real 

property assets in many ways still largely reflects the business model 

and technological environment of the 1950s. In the last decade alone, 

the federal government has reduced its workforce by several hundred 

thousand personnel, and several federal agencies have had major mission 

changes. With these personnel reductions and mission changes, the need 

for existing space, including general-purpose office space, has 

declined overall and necessitated the need for different kinds of 

space. At the same time, technological advances have changed workplace 

needs, and many of the older buildings are not configured to 

accommodate new technologies. Furthermore, the advent of electronic 

government is starting to change how the public interacts with the 

federal government. These changes will have significant implications 

for the type and location of property needed in the 21ST century. For 

example, as we reported in July 2001, greater consideration could be 

given to locating government facilities in rural areas if there is an 

economic advantage to the government of doing so.[Footnote 10]



Some of the major real property-holding agencies have undergone 

significant mission shifts that have affected their real property 

needs. For example, after the Cold War, DOD’s force structure was 

reduced by 36 percent. Despite four rounds of base closures, DOD 

projects that it still has considerably more property than it needs. 

The National Defense Authorization Act for Fiscal Year 2002,[Footnote 

11] which became law in December 2001, gave DOD the authority for 

another round of base realignments and military installation closures 

in 2005. In the mid-1990s, VA began shifting its role from being a 

traditional hospital-based provider of medical services to an 

integrated delivery system that emphasizes a full continuum of care 

with a significant shift from inpatient to outpatient services. 

Subsequently, VA has struggled to reduce its large inventory of 

buildings, many of which are underutilized or vacant. Although the 

Department of Energy (DOE) is no longer producing new nuclear weapons, 

it still maintains a facilities infrastructure largely designed for 

this purpose. Table 1 provides a summary of excess and underutilized 

property challenges at some of the major real property-holding 

agencies--DOD, VA, GSA, DOE, USPS, and State. Available data from GSA 

suggest that these agencies hold over 85 percent of the facilities--in 

terms of building floor area--in the federal portfolio.



Table 1: Excess Property Challenges at Some of the Major Real Property-

Holding Agencies:



Agency: DOD; Excess and underutilized property challenge: DOD still 

faces major infrastructure realignment challenges. After the Cold War, 

military force structure was reduced by 36 percent. Consequently, DOD 

was left with infrastructure it no longer needed for its military 

operations. Even with four rounds of base realignment and closures that 

reduced its holdings by 21 percent, DOD recognized that it still had 

some excess and obsolete facilities.[A] As a result, it implemented a 

centrally funded demolition program that succeeded in removing 62 

million square feet of facilities during fiscal years 1998 to 2001, and 

that is slated to reach 80 million square feet by the end of fiscal 

year 2003. However, DOD believes that there is still more to be done, 

leading Congress to give the department the authority for another round 

of base realignment and closure in the fiscal year 2002 defense 

authorization act, scheduled for fiscal year 2005. GAO designated DOD 

infrastructure as a high-risk area in 1997, a designation that remains 

today.b.



Agency: VA; Excess and underutilized property challenge: VA has 

struggled to respond to asset realignment challenges due to its mission 

shift to outpatient, community-based services.[C] We reported in 1999 

that VA had 5 million square feet of vacant space and that utilization 

will continue to decline.d VA has recognized that it has excess 

capacity and has an effort under way known as the Capital Asset 

Realignment for Enhanced Services (CARES) that is intended to address 

this issue. VA recently completed its initial CARES study involving 

consolidation of services among medical facilities in its Great Lakes 

Network (including Chicago) as well as expansion of services in other 

locations. VA identified 31 buildings that are no longer needed to meet 

veterans’ health care needs in this network, including 30 that are 

currently vacant..



Agency: GSA; Excess and underutilized property challenge: GSA 

recognizes that it has many buildings that are not financially self-

sustaining and/or for which there is not a substantial, long-term 

federal purpose. GSA is developing a strategy to address this problem. 

The L. Mendel Rivers Federal Building in Charleston, S.C., (see fig. 1) 

is a prime example of a highly visible, vacant federal building held by 

GSA.[E].



Agency: DOE; Excess and underutilized property challenge: After 

shifting away from weapons production, DOE had 1,200 excess facilities 

totaling 16 million square feet, and the performance of its disposal 

program had not been fully satisfactory, according to DOE’s Inspector 

General.[F] Facility disposal activities have not been prioritized to 

balance mission requirements, reduce risks, and minimize life-cycle 

costs. In some cases, disposal plans were in conflict with new facility 

requirements..



Agency: USPS; Excess and underutilized property challenge: The issue of 

excess and underutilized property will need to be part of USPS’s 

efforts to operate more efficiently. Facility consolidations and 

closures are likely to be needed to align USPS’s portfolio more closely 

with its changing business model.[G].



Agency: State; Excess and underutilized property challenge: State has 

taken steps to improve its disposal efforts; however, it still has a 

large number of unneeded properties that have not yet been sold.[H] 

Although State has taken steps to improve its disposal efforts and 

substantially reduce its inventory of unneeded properties, it reported 

that 92 properties were potentially available for sale as of September 

30, 2001, with an estimated value of more than $180 million. State has 

begun the disposal process for some of these properties. State will 

also need to dispose of additional facilities over the next several 

years as it replaces more than 180 vulnerable embassies and consulates 

for security reasons. Security also has become a primary factor in 

considering the retention and sale of excess property..



[A] U.S. General Accounting Office, Defense Infrastructure: Greater 

Management Emphasis Needed to Increase the Services’ Use of Expanded 

Leasing Authority, GAO-02-475 (Washington, D.C.: June 6, 2002).



[B] U.S. General Accounting Office, High-Risk Series: An Update, GAO-

01-263 (Washington, D.C.: Jan. 2001).



[C] U.S. General Accounting Office, VA Health Care: VA Is Struggling to 

Respond to Asset Realignment Challenges, GAO/T-HEHS-00-91 (Washington, 

D.C.: Apr. 6, 2000).



[D] U.S. General Accounting Office, VA Health Care: Challenges Facing 

VA in Developing an Asset Realignment Process, GAO/T-HEHS-99-173 

(Washington, D.C.: July 22, 1999).



[E] U.S. General Accounting Office, Public-Private Partnerships: Pilot 

Program Needed to Demonstrate the Actual Benefits of Using 

Partnerships, GAO-01-906 (Washington, D.C.: July 25, 2001).



[F] DOE Office of the Inspector General, Disposition of the 

Department’s Excess Facilities, DOE/IG-0550 (Washington, D.C.: Apr. 3, 

2002).



[G] U.S. General Accounting Office, U.S. Postal Service: Deteriorating 

Financial Outlook Increases Need for Transformation, GAO-02-355 

(Washington, D.C.: Feb. 28, 2002).



[H] U.S. General Accounting Office, State Department: Sale of Unneeded 

Overseas Property Has Increased, but Further Improvements Are 

Necessary, GAO-02-590 (Washington, D.C.: June 11, 2002).



[End of table]



The magnitude of the problem with underutilized or excess federal 

property puts the government at significant risk for lost dollars and 

missed opportunities. First, underutilized or excess property is costly 

to maintain. DOD estimates that it is spending $3 billion to $4 billion 

each year maintaining facilities that are not needed. In July 1999, we 

reported that vacant VA space was costing as much as $35 million to 

maintain each year.[Footnote 12] Costs associated with excess DOE 

facilities, primarily for security and maintenance, exceed $70 million 

annually.[Footnote 13] It is likely that other agencies that continue 

to hold excess or underutilized property are also incurring significant 

costs for staff time spent managing the properties and on maintenance, 

utilities, security, and other building needs. Second, in addition to 

day-to-day operational costs, the government is needlessly incurring 

unknown opportunity costs, because these buildings and land could be 

put to more cost-beneficial uses, exchanged for other needed property, 

or sold to generate revenue for the government. For example, in 1998, 

we reported that VA could reduce expenditures by an estimated $200 

million over the next 10 years by consolidating hospital services into 

three locations in Chicago, Ill., rather than continuing to operate 

four underutilized locations.[Footnote 14] Finally, continuing to hold 

property that is unneeded does not present a positive image of the 

federal government in local communities. Instead, it presents an image 

of waste and inefficiency that erodes taxpayers’ confidence. It also 

can have a negative impact on local economies if the property is 

occupying a valuable location and is not used for other purposes, sold, 

or used in a public-private partnership.



Case Examples: The L. Mendel Rivers Federal Building in Charleston, 

S.C., and St. Elizabeths Hospital in the District of Columbia:



Two examples of vacant, highly visible federal properties are the L. 

Mendel Rivers Federal Building in Charleston, S.C., and St. Elizabeths 

Hospital in the District of Columbia. The Charleston building, held by 

GSA, is a 7-story, 100,000-square-foot office building on just over 2 

acres (see fig. 3). The building is contaminated with asbestos and has 

been unoccupied since it sustained damage in 1999 from Hurricane Floyd. 

In July 2001, we reported that although there was a weak federal demand 

for space where the property is located, the property is located in a 

highly desirable location where land values are high and that there was 

a strong potential for private sector demand.[Footnote 15] GSA is 

currently exploring various options for disposing of this building.



Figure 3: The Vacant L. Mendel Rivers Federal Building in Charleston, 

S.C.



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Another example of vacant federal property is the west campus of the 

St. Elizabeths Hospital complex in the District of Columbia. The 

federal government owns almost all of the west campus of St. 

Elizabeths, which has 61 mostly vacant buildings containing about 1.2 

million square feet of space on 182 acres. St. Elizabeths began 

operations in 1855 as the “Government Hospital for the Insane.” During 

the Civil War, the hospital was used to house soldiers recuperating 

from amputations, and the property contains a civil war cemetery. Its 

name changed to St. Elizabeths in the early 1900s. In 1990, the 

property--which contains magnificent vistas of the rivers and the city-

-was designated a national historic landmark. This is the same 

designation given to the White House, the U.S. Capitol building, and 

other buildings that have historic significance. The Department of 

Health and Human Services (HHS), which is the holding agency that is 

responsible for the west campus, has not needed the property for many 

years. It has remained mostly vacant during this time, and HHS has 

recently taken steps to dispose of the property. However, in April 

2001, we reported that the property had significantly deteriorated and 

had environmental and historic preservation issues that would need to 

be addressed in order for the property to be disposed of or transferred 

to another federal agency.[Footnote 16] Figure 4 shows the vacant, 

boarded-up Center Building, which opened in 1855 and served as the main 

hospital building.



Figure 4: The Vacant Center Building, St. Elizabeths Hospital, District 

of Columbia:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



The Federal Portfolio Is in an Alarming State of Deterioration:



Restoration, repair, and maintenance backlogs in federal facilities are 

significant and reflect the federal government’s ineffective 

stewardship over its valuable and historic portfolio of real property 

assets. The backlog is alarming because of its magnitude--current 

estimates show that tens of billions of dollars will be needed to 

restore these assets and make them fully functional. This problem has 

accelerated in recent years due to the fact that much of the federal 

portfolio was constructed over 50 years ago, and these assets are 

reaching the end of their useful lives. A major commitment is necessary 

to either modernize these facilities or to dispose of them. As pointed 

out by the National Research Council in 1998, federal assets must be 

well maintained to operate adequately and cost effectively; to protect 

their functionality and quality; and to provide a safe, healthy, 

productive environment for the American public, elected officials, 

federal employees, and foreign visitors who use them every day. In 

recognition of the importance of addressing deferred 

maintenance,[Footnote 17] federal accounting standards require 

agencies to report deferred maintenance as supplementary information in 

their financial statements. As with the problems related to 

underutilized or excess property, the challenges of addressing facility 

deterioration are also prevalent at major real property-holding 

agencies.



DOD Facilities Are in Significant Need of Repair and Recapitalization:



Over the last decade, DOD reports that it has been faced with the major 

challenge of adequately maintaining its facilities to meet its mission 

requirements. DOD is responsible for more than 46,425 square miles in 

the United States and abroad--nearly 5-1/2 times the size of the state 

of New Jersey. DOD reports that it has a physical plant of some 621,850 

buildings and other structures with a replacement value of 

approximately $600 billion. Over time, these installations and 

facilities have been aging and deteriorating as funds to sustain and 

recapitalize the facilities have fallen short of reported 

requirements.[Footnote 18] At present, DOD reports that many of its 

installations and facilities are not adequate to meet the war-fighting 

and operational concepts of the 21st century.[Footnote 19] Commanders 

currently rate two-thirds of their infrastructure condition to be so 

poor that it significantly affects mission accomplishment and morale. 

Although DOD no longer reports data on backlog of repairs and 

maintenance, it reported in 2001 that the cost of bringing its 

facilities to a minimally acceptable condition was estimated at $62 

billion; the cost of correcting all deficiencies was estimated at $164 

billion.[Footnote 20]



DOD reported that it has not fully funded facility maintenance and 

recapitalization in recent years because of other budgetary priorities. 

However, facilities require both adequate maintenance and 

recapitalization funds to keep them in good condition and help fulfill 

their mission. For instance, without full sustainment, facilities 

perform poorly and deteriorate more quickly than would be expected, 

requiring the premature recapitalization of facilities. Even with full 

sustainment, the regular recapitalization of facilities is necessary to 

improve facilities’ conditions and performance and to extend the 

remaining useful life. Recapitalization is also necessary to modernize 

facilities that no longer meet new mission standards. DOD recently 

reported that even if all of the funding in its fiscal year 2003 

through 2007 future years defense program were appropriated, it would 

have a shortfall of some $16.5 billion to sustain and modernize 

facilities at a 67-year recapitalization rate, an average shortfall of 

$3.3 billion per year. The private sector replaces or modernizes 

facilities at an average rate of about once every 50 years, but defense 

facilities have fallen well short of that rate. For example, in fiscal 

year 2001, DOD facilities’ recapitalization rate was 192 years. At the 

same time, DOD officials also acknowledge having facilities in excess 

of their needs, which they expect to address in a new base realignment 

and closure round planned for 2005.



According to DOD, underfunding of facility maintenance and 

recapitalization results in an infrastructure that is less and less 

capable of supporting current military needs. In a recent annual 

Installations’ Readiness Report, DOD and the services described the 

condition of their existing facilities to Congress.[Footnote 21] 

According to the report:



* The majority of the Atlantic Fleet’s administrative facility 

inventory comprises inefficient, World War II-and post-era temporary 

and semipermanent structures. The age of these facilities, combined 

with long-term underfunding, has resulted in overall poor facility 

condition and a substantial backlog of repair needs. Typical 

deficiencies of administrative facilities were found in plumbing, air 

conditioning, fire protection, electrical systems, and in the general 

deterioration of finishes, due to age and wear. According to the Navy, 

administrative facilities score poorly in funding because priorities 

continue to focus on operations, training, maintenance, production, and 

quality of life facilities.



* The maintenance facilities operated by the Pearl Harbor Naval 

Shipyard and Intermediate Maintenance Facility in Hawaii are in poor 

physical condition. Significant deficiencies exist at the dry docks, 

machine shop, sawmill, sheet metal shop, and other facilities, 

significantly affecting the capability of the shipyard and the quality 

of workspaces available for assigned civilian workers and sailors. 

Widespread termite damage, decrepit restrooms, leaky roofs, uneven 

floors, corroded steel windows, and deteriorated paint and siding are 

typical of facility conditions. According to the Navy, consistent 

underfunding of maintenance facilities in past years has led to these 

poor conditions. Discretionary funding has scarcely been enough to 

retain dry dock and crane rail certification, and many other facilities 

receive only emergency-type repairs to keep them marginally functional.



* The Army Forces Command continues to work around its storage problems 

by using temporary or inadequate facilities. The “just-in-time” 

delivery concept allows for less storage space in some cases. However, 

some installations are using bunkers for storage, some of which are in 

poor condition. In addition to the effects of working in inadequate 

facilities, Forces Command reported that inadequate living conditions 

cause morale problems for single soldiers in barracks and married 

soldiers and their families assigned to family housing units.



* The Air Force’s Air Combat Command has had a number of its taxiways, 

ramps, and parking aprons shut down due to their poor conditions. For 

example, a taxiway at Dyess Air Force Base, Texas, was closed for a 

long period in 2001, which resulted in increased taxiing time, wasted 

fuel, and loss of flying time. At most installations, personnel who 

should be performing other types of work, such as aircraft maintenance, 

are used to sweep deteriorated runways, taxiways, ramps, and aprons 

several times daily to clean up debris. In addition, the command 

reported inadequate space for aircraft maintenance, inoperable hangar 

doors, leaky roofs, poor lighting, inadequate heating and cooling 

systems, and lack of fire suppression. These deficiencies delay 

repairs; limit flying; and require some work to be done in the open, 

making it subject to weather conditions.



Our recent review of the physical condition of recruit barracks showed 

that to varying degrees, most barracks were in need of significant 

repair, although some barracks were in better condition than 

others.[Footnote 22] We found that the exteriors of each service’s 

barracks were generally in good condition, but the barracks’ 

infrastructure often had repair problems that had persisted over time, 

primarily because of inadequate maintenance. The most prevalent 

problems across the services included a lack of or inadequate heating 

and air conditioning; inadequate ventilation (particularly in bathing 

areas); and plumbing-related deficiencies (e.g., leaks and clogged 

drains). Base officials told us that although these deficiencies had an 

adverse impact on the quality of life for recruits and were a burden on 

trainers, they were able to accomplish their overall training mission. 

Inadequate ventilation in recruit barracks, especially in central 

bathing areas that were often subject to overcrowding and heavy use, 

was another common problem across the services. Many of the central 

baths in the barracks either had no exhaust fans or had undersized 

units that were inadequate to expel moisture arising from shower use. 

As a result, mildew formation and damage to the bath ceilings, as shown 

in figure 5, were common.



Figure 5: Shower Ceiling Damage at Fort Jackson, S.C., Recruit 

Barracks:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Plumbing deficiencies were also a common problem in the barracks across 

the services. Base officials told us that plumbing problems--including 

broken and clogged toilets and urinals, inoperable showers, leaky 

pipes, and slow or clogged drainpipes and sinks--were recurring 

problems that often awaited repairs due to maintenance-funding 

shortages. Training officials told us that because of the inadequate 

bath facilities for the high number of recruits, they often had to 

perform “workarounds”--such as establishing time limits for recruits 

taking showers--in order to minimize, but not eliminate, adverse 

effects on training time.



Base officials at most of the locations we visited attributed the 

deteriorated condition of the recruit barracks to recurring inadequate 

maintenance, which they ascribed to funding shortages that had occurred 

over the last 10 years. Without adequate maintenance, facilities tend 

to deteriorate more rapidly. In many cases that officials cited, they 

were focusing on emergency repairs and not performing routine 

preventative maintenance.



Recognizing the need to halt degradation of DOD’s facilities, in 1998, 

the Deputy Secretary of Defense reinvigorated the Installations Policy 

Board and commissioned it to complete work on a strategic plan for 

facilities. The Defense Facilities Strategic Plan, published in August 

2001, was the result of years of work with the defense agencies and 

services to standardize and develop terminology, concepts, and models 

and to shape the information into an achievable long-range plan. 

However, the Plan provided only a framework for improving facilities 

and did not address all real property issues DOD faces. We are 

continuing to examine facility conditions, assessments, and 

recapitalization plans as part of our broader ongoing work on the 

physical condition and maintenance of all DOD facilities. For example, 

we are reviewing the physical condition and recapitalization plans for 

all active force facilities in DOD’s inventory; and we recently 

initiated a similar review for the reserve components’ facilities.



Interior Has A Multibillion-Dollar Backlog, Affecting Numerous National 

Treasures:



Interior has a significant deferred maintenance backlog that the 

Interior Inspector General (IG) estimated in April 2002 to be as much 

as $8 billion to $11 billon. While the dollar magnitude of the problem 

is only an estimate, the scope of the problem has been well documented 

by GAO, the IG, and Interior itself. For the past two decades, we have 

reported on the National Park Service’s (NPS) inability to properly 

maintain its physical assets. These include many of this country’s 

national treasures like Ellis Island, Independence Hall, Yellowstone 

National Park, and Mount Rushmore, just to name a few.[Footnote 23] 

Although a major part of NPS’s mission is to care for many of our 

natural, cultural, and historic treasures, it has not been able to 

properly maintain them. The backlog of NPS maintenance needs is 

growing, and the condition and utility of many invaluable assets are 

deteriorating. In 1997, we reported that when compared with other 

schools nationally, schools operated by the Bureau of Indian Affairs 

(BIA) were generally in worse condition, had more environmental 

problems, lacked certain key facilities, and were less able to support 

advancing technologies.[Footnote 24] BIA has reported a significant 

backlog of deferred maintenance in BIA facilities and that conditions 

in the educational facilities negatively affect the ability of children 

to perform.[Footnote 25]



In addition to NPS and BIA, Interior and its IG have done work 

indicating that the kind of problems we found at NPS and BIA reflect a 

departmentwide condition. In 1998, in recognition of growing concerns, 

Interior undertook a departmentwide analysis of its facilities 

maintenance situation. The analysis documented that there were 

widespread deferred maintenance problems and deterioration of assets 

throughout the constructed infrastructure managed by Interior’s major 

bureaus.[Footnote 26] Interior’s bureaus manage hundreds of dams and 

irrigation systems; over 34,000 buildings; 120,000 miles of roads; 

thousands of bridges; fish hatcheries; electric power and natural gas 

utility lines; campgrounds; and hundreds of parks and many nationally 

known recreational sites. In reporting the results of its analysis, 

Interior acknowledged that the physical condition of its facilities and 

the backlog of deferred maintenance needs have never been adequately 

documented on an Interior-wide basis. As a result of this report, as 

well as other considerations, Interior has identified the lack of a 

departmentwide maintenance capability as a mission-critical material 

weakness. More recently, in February 2002, the IG identified facility 

maintenance as one of the most significant management challenges facing 

Interior.



GSA Repair Backlog Estimated at $5.7 Billion:



GSA has struggled over the years to meet the repair and alteration 

requirements identified at its buildings. In March 2000, we reported 

that GSA data showed that over half of GSA’s approximately 1,700 

buildings needed repairs estimated at about $4 billion.[Footnote 27] 

More recently, in August 2002, we reported that this estimated backlog 

of identified repair and alteration needs was up to $5.7 

billion.[Footnote 28] This situation is not new. Over a decade ago, we 

reported that federal buildings had suffered from years of neglect and 

that actions were needed to bring some of them up to acceptable 

quality, health, and safety standards. In April 2001, we reported that 

delaying or not performing needed repairs and alterations in these 

buildings could have serious consequences, including health and safety 

concerns.[Footnote 29] The adverse consequences at several 

deteriorating federal buildings we visited included poor health and 

safety conditions due to dysfunctional air ventilation systems, 

inadequate fire safety systems, and unsafe water supply systems; higher 

operating costs associated with inefficient building heating and 

cooling systems; restricted capability to add new information 

technology because of obsolete electrical systems; and continued 

structural deterioration resulting from water leaks.



Our April 2001 report illustrated some of the adverse consequences of 

deferring repair and alteration needs. For example, the Eisenhower 

Executive Office Building (EEOB) in Washington, D.C.--which is one of 

our nation’s grandest and most historic buildings--had suffered water 

damage from its leaking roof. Its plumbing; electrical; heating, 

ventilation, and air conditioning; and domestic water supply systems 

were also seriously deteriorated and outdated. This situation has led 

to concern by GSA officials that the building’s cluttered electrical 

and water supply systems were a fire hazard. The electrical system also 

was not capable of handling 21ST century office technology, which is 

critical to tenant agencies’ accomplishing their missions. In another 

example, Federal Office Building 3 (FOB 3) in Suitland, Md., had a 

heating, ventilation, and air conditioning system that was incapable of 

providing proper air circulation or maintaining desired temperatures. 

This had resulted in the building containing levels of carbon dioxide 

that exceeded industry standards, thereby exposing tenants to 

unacceptable conditions. The water in FOB 3 was not drinkable due to 

the building’s deteriorated infrastructure. Figure 6 shows some of the 

conditions that we observed in these buildings.



Figure 6: Water Damage in EEOB in Washington, D.C., and Covered Water 

Fountain with Posted Warning Against Drinking the Water in FOB 3, 

Suitland, Md.



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Other Agencies Have Struggled with Deteriorating Facilities:



In 1998, the National Research Council concluded that agencies across 

the federal government have accumulated significant backlogs of 

maintenance and renovation needs and that many federal buildings 

require major repairs to bring them up to acceptable quality, health, 

and safety standards.[Footnote 30] Other major real property-holding 

agencies have documented repair backlogs and serious deterioration 

problems, including State, DOE, the Smithsonian Institution, and USPS.



More specifically:



* In July 2000, State’s IG reported that the management and maintenance 

of State’s 12,000 properties remained a significant challenge. State’s 

Under Secretary for Management testified in 1999 that costcutting over 

the past several years had resulted in poorly maintained properties and 

that the state of disrepair in many department-owned overseas buildings 

was shocking. In May 2002, State estimated its repair backlog to be 

$736 million.



* In September 2000, DOE’s IG reported that the condition of DOE’s 

infrastructure was deteriorating at an alarming pace and may be 

inadequate to meet future mission requirements.[Footnote 31] 

Specifically, this situation had resulted in delays in weapons 

modification, remanufacture, and dismantlement as well as in the 

process of surveillance testing of nuclear weapons components.



* Deterioration of the Smithsonian’s 400 buildings over the past decade 

has created a huge maintenance and restoration backlog.[Footnote 32] 

The President’s budget for fiscal year 2003 cited a recent report by 

the National Academy of Public Administration estimating this backlog 

at $1.5 billion over the next decade and stated that funding increases 

necessary to meet this need will not be possible under current budget 

constraints.



* USPS has a growing backlog of facility projects and has limited 

ability to finance needed improvements in its infrastructure--an 

unsustainable situation, given USPS’s need to maintain its massive and 

growing nationwide infrastructure.[Footnote 33]



As discussed earlier, the deterioration problem leads to increased 

operational costs, has health and safety implications that are 

worrisome, and can compromise agency missions. In addition, we have 

reported that the ultimate cost of completing delayed repairs and 

alterations may escalate because of inflation and increases in the 

severity of the problems caused by the delays.[Footnote 34] The overall 

cost could also be affected by government realignment. That is, to the 

extent that unneeded property is also in need of repair, disposing of 

such property could reduce the repair backlog. Another negative effect, 

which is not readily apparent but nonetheless significant, is the 

effect that deteriorating facilities have on employee recruitment, 

retention, and productivity. This human capital element is troublesome 

because the government’s ability to compete in the job market is often 

at a disadvantage in terms of the salaries agencies are able to offer. 

Poor physical work environments exacerbate this problem and can have a 

negative impact on potential employees’ decisions to take federal 

positions. Furthermore, research has shown that quality work 

environments make employees more productive and improve morale. 

Finally, as with excess or underutilized property, deteriorated 

property presents a negative image of the federal government to the 

public. This is particularly true when many of the assets the public 

uses and visits the most--such as national parks and museums--are 

deteriorated and in generally poor condition.



Key Decisionmakers Lack Reliable and Useful Data on Real Property 

Assets:



Compounding the problems with excess and deteriorated property is the 

lack of reliable and useful real property data that are needed for 

strategic decisionmaking. GSA’s worldwide inventory of property is the 

only central source of descriptive data on the makeup of the real 

property inventory, such as property address, square footage, 

acquisition date, and property type. However, in April 2002, we 

reported that the worldwide inventory contained data that were 

unreliable and of limited usefulness.[Footnote 35] For example, fiscal 

year 2000 data were not current for 12 of 31 real property-holding 

agencies. In fact, data for nine of the agencies had not been updated 

since before fiscal year 1997. Furthermore, we reported that the 

inventory did not contain certain key data--such as data related to 

space utilization, facility condition, historical significance, 

security, and age--that would be useful for budgeting and strategic 

management purposes.



In addition to problems with the worldwide inventory, real property 

data contained in the financial statements of the U.S. government have 

been problematic. The Chief Financial Officers Act of 1990 (CFO Act), 

as expanded by the Government Management Reform Act, required the 

annual preparation and audit of individual financial statements for the 

federal government’s 24 major agencies. The Department of the Treasury 

was also required to compile consolidated financial statements for the 

U.S. government annually, which we audit. In March 2002, we reported 

that--for the fifth consecutive year--we were unable to express an 

opinion on the U.S. government’s consolidated financial statements for 

fiscal year 2001. Various material weaknesses[Footnote 36] related to 

financial systems, fundamental recordkeeping and financial reporting, 

and incomplete documentation continued to (1) hamper the government’s 

ability to accurately report a significant portion of its assets, 

liabilities, and costs; (2) affect the government’s ability to 

accurately measure the full costs and financial performance of certain 

programs and effectively manage related operations; and (3) 

significantly impair the government’s ability to adequately safeguard 

certain significant assets and properly record various transactions. 

Because the government lacked complete and reliable information to 

support asset holdings--including real property--it could not 

satisfactorily determine that all assets were included in the financial 

statements, verify that certain reported assets actually existed, or 

substantiate the amounts at which they were valued.



Aside from the problematic financial data, some of the major real 

property-holding agencies have faced challenges in developing quality 

management data on their real property assets. Some of these problems 

were evident at DOD, the largest property-holding agency. In August 

2001, the Deputy Under Secretary of Defense for Installations and 

Environment issued a report that assessed DOD’s real property 

information systems from a management standpoint.[Footnote 37] The 

report concluded that DOD’s current real property information systems 

were not sufficiently timely, standardized, or easily accessible, thus 

hindering DOD’s ability to make informed strategic budget and policy 

decisions about real property issues. More specifically, the report 

said that DOD real property data were incompatible across DOD 

components; inaccessible to key users; and inaccurate and incomplete, 

necessitating application of complex and inefficient business rules in 

order to make the data usable.



The report said that these shortcomings result in (1) wasted money as 

analysts expend excessive resources to produce and obtain usable 

information; (2) inconsistent analyses that undermine credibility 

inside and outside DOD; and (3) flawed decisions based on poor 

information, producing unintended consequences. The report recommended 

that the Office of the Deputy Under Secretary of Defense for 

Installations and Environment maintain a Web-accessible, consolidated 

DOD real property inventory database for use by all DOD activities and 

analysts. It also recommended that the Under Secretary, in conjunction 

with the services and other defense agencies, create an incentive 

program for maintaining high-quality data and establish, publish, and 

enforce real property inventory data standards. DOD is moving to 

implement these recommendations and believes that the entire defense 

community will benefit from the advantages of an improved data system. 

Our work has also shown other problems with DOD real property data. For 

example, we reported in 2001 that DOD did not have an accurate 

inventory of historic properties.[Footnote 38] DOD also did not have an 

accurate inventory of formerly used defense sites, which is needed for 

environmental cleanup.[Footnote 39]



Other agencies have faced challenges in their efforts to develop 

quality management data. For example, we reported in June 2002 that 

State’s property inventory database contained inaccuracies, which could 

result in unneeded property not being identified.[Footnote 40] For 

example, a parking lot in Paris, purchased in 1948 and valued at up to 

$10 million, was not included in the inventory until after a 1998 IG 

visit highlighted its omission. The department stated that it is taking 

steps to improve the accuracy, and therefore the reliability, of its 

inventory, including taking immediate action when incorrect information 

is discovered. GSA has experienced significant, long-standing problems 

with data reliability and accuracy for the property it controls. 

Reports we have issued in recent years on problems with GSA’s repair 

and alterations program identified poor data as an underlying 

problem.[Footnote 41] VA has recognized that it has problems with its 

real property information and has undertaken several efforts to make 

improvements.[Footnote 42] Finally, Interior has no accurate inventory 

of the assets that need to be maintained or accurate data on the 

condition of the assets. As a result, the agency is unable to determine 

the size and scope of its maintenance needs; how much is needed to 

address these needs; and how much, if any, progress is being made 

toward closing the maintenance gap. Interior acknowledged this problem 

and has developed an approach for addressing it.



Quality governmentwide and agency-specific data will be critical for 

addressing the wide range of problems facing the government in the real 

property area, including excess and unneeded property, deterioration, 

and security concerns. Despite the significance of these problems, 

decisionmakers do not have access to quality data on what real property 

assets the government owns; their value; whether the assets are being 

used efficiently; and what overall costs are involved in preserving, 

protecting, and investing in them. Also, real property-holding agencies 

cannot easily identify opportunities to use excess or unneeded 

properties at other agencies that may suit their needs.



Reliance on Costly Leasing:



As a general rule, building ownership options through construction or 

purchase are the least expensive ways to meet agencies’ long-term 

requirements. Lease-purchases--where payments are spread out over time 

and ownership of the asset is eventually transferred to the government-

-are generally more expensive than purchase or construction but are 

generally less costly than using ordinary operating leases to meet 

long-term space needs. However, over the last decade we have reported 

that GSA--as the central leasing agent for most agencies--relies 

heavily on operating leases to meet new long-term needs because it 

lacks funds to pursue ownership. In 1995, we reported that GSA had 

entered into 55 operating leases for long-term needs that were 

estimated to cost $700 million more than construction.[Footnote 43] In 

1999, we reported that for nine major operating lease acquisitions GSA 

had proposed, construction would have been the least-cost option in 

eight cases and would have saved an estimated $126 million. Lease-

purchase would have saved an estimated $107 million, compared with 

operating leases but would have cost $19 million more than 

construction.[Footnote 44] A prime example of this problem was the 

Patent and Trademark Office’s long-term requirements in northern 

Virginia, where the cost of meeting this need with an operating lease 

was estimated to be $48 million more than construction and $38 million 

more than lease-purchase. In August 2001, we also reported that GSA 

reduced the term of a proposed 20-year lease for the Department of 

Transportation headquarters building to 15 years so that it could meet 

the definition of an operating lease. GSA’s fiscal year 1999 prospectus 

for constructing a new facility for this need showed the cost of 

construction was estimated to be $190 million less than an operating 

lease. The Securities and Exchange Commission used a similar approach 

by reducing the terms of a proposed 20-year lease for its facility to 

14 years.[Footnote 45] Although most of our work in this area has 

focused on GSA-controlled leases, other real property-holding agencies 

with leasing authority--such as State and VA--also face the same 

obstacles to ownership. USPS officials told us that they do not believe 

that USPS has an over-reliance on operating leases.



Operating leases--in which periodic lease payments are made over the 

specified length of the lease--have become an attractive option in part 

because they generally look cheaper in any given year. Pursuant to the 

scoring rules adopted as a result of the Budget Enforcement Act of 

1990, the budget authority to meet the government’s real property needs 

is to be scored--meaning recorded in the budget--in an amount equal to 

the government’s total legal commitment. For example, for lease-

purchase arrangements, the net present value of the government’s legal 

obligations over the life of the contract is to be scored in the budget 

in the first year. For construction or purchase, the budget authority 

for the full construction costs or purchase price is to be scored in 

the first year. However, for many of the government’s operating leases-

-including GSA leases, which, according to GSA, account for over 70 

percent of the government’s leasing expenditures and are self-insured 

in the event of cancellation--only the budget authority to cover the 

government’s commitment for an annual lease payment is required to be 

scored in the budget.[Footnote 46] Given this, while operating leases 

are generally more costly over time, compared with other options, they 

add much less to a single year’s appropriation total than these other 

arrangements, making this choice a more attractive option from an 

annual budget perspective, particularly when funds for ownership are 

not available. While the requirement for “up-front funding” permits 

disclosure of the full costs to which the government is being 

committed, the budget scorekeeping rules allow costly operating leases 

to “look cheaper” in the short term and have encouraged an overreliance 

on them for satisfying long-term space needs.



Decisionmakers have struggled with this matter since the scoring rules 

were established and the tendency for agencies to choose operating 

leases instead of ownership became apparent. We have suggested the 

alternative of scoring all operating leases up-front on the basis of 

the underlying time requirement for the space so that all options are 

treated equally.[Footnote 47] Although this could be viable, there 

would be implementation challenges if this were pursued, including the 

need to evaluate the validity of agencies’ stated space requirements. 

Another option--which was recommended by the President’s Commission to 

Study Capital Budgeting in 1999 and discussed by GAO[Footnote 48]--

would be to allow agencies to establish capital acquisition funds to 

pursue ownership where it is advantageous, from an economic 

perspective. To date, none of these options have been implemented, and 

debate continues among decisionmakers about what should be done. 

Finding a solution for this problem has been difficult; however, change 

is needed because the current practice of relying on costly leasing to 

meet long-term space needs results in excessive costs to taxpayers and 

does not reflect a sensible approach to capital asset management.



Security Is an Overarching Concern:



Terrorism is a major threat to federally owned and leased real property 

assets, the civil servants and military personnel who work in them, and 

the public who visits them. This was evidenced by the 1995 Oklahoma 

City bombing; the 1998 embassy bombings in Africa; the September 11, 

2001, attacks on the World Trade Center and Pentagon; and the anthrax 

attacks in the fall of 2001. Since the Oklahoma City bombing, the 

federal government has spent billions of dollars on security upgrades 

within the country and overseas. A study of federal facilities done by 

the Justice Department in 1995 resulted in minimum-security standards 

and an evaluation of security conditions in the government’s 

facilities. In October 1995, the President signed Executive Order 

12977, which established an Interagency Security Committee (ISC) to 

enhance the quality and effectiveness of security in nonmilitary 

federal facilities. Since the attacks on the World Trade Center and the 

Pentagon, the focus on security in federal buildings has been 

heightened considerably. Real property-holding agencies have gone on 

high alert and are employing such measures as searching vehicles that 

enter federal facilities, restricting parking, and installing concrete 

barricades. As the government’s security efforts intensify, the 

government will be faced with important questions regarding the level 

of security needed to adequately protect federal facilities and how the 

security community should proceed. Furthermore, the 1995 Justice study 

placed an emphasis on increasing security where large numbers of 

personnel are located. However, a risk-based approach--which GSA is 

using for the federal buildings it controls--appears to be more 

desirable in light of this new round of threats. In September 2001, we 

recommended that DOD identify installations that serve a critical 

military role and ensure that they receive a higher vulnerability 

assessment regardless of the number of personnel assigned at the 

installations.[Footnote 49] Since 1996, we have produced more than 60 

reports and testimonies on the federal government’s efforts to combat 

terrorism. Several of these reports have recommended that the federal 

government use risk management as an important element in developing a 

national strategy.[Footnote 50]



Recent GAO and IG reports have highlighted the problems and challenges 

facing agencies in the facility protection and security area:



* We reported in January 2001 that State’s most critical infrastructure 

need is to enhance protection of U.S. embassies and other overseas 

facilities in response to the increased threat of terrorism.[Footnote 

51] State has determined that not only does it need to enhance security 

at all existing facilities in the long term, it also must replace over 

180 facilities that may be vulnerable to attack. In addition, the 

administration has recognized a need to rightsize the number and 

location of staff at U.S. diplomatic posts in response to security and 

other concerns. The August 2001 President’s Management Agenda directed 

all agencies overseas to rightsize their presence; OMB, in coordination 

with State and other U.S. agencies operating overseas, is working to 

develop a process for rightsizing staff levels.



* In September 2001, we reported that the effectiveness of DOD’s 

antiterrorism program has been limited because the department has not 

(1) assessed all installations to identify vulnerabilities, (2) 

systematically evaluated installation structure to prioritize resource 

requirements, and (3) developed a complete assessment of potential 

threats to each installation.[Footnote 52] Specifically, since 1997, 

DOD’s antiterrorism program has been focused on avoiding mass 

casualties; therefore, its vulnerability assessment resources have been 

applied to installations with a high concentration of military 

personnel. Recently, in July 2002, DOD issued its minimum antiterrorism 

standards for new construction, major renovation, and leases of DOD 

buildings.



* Given that Interior is responsible for many high-profile facilities-

-such as Hoover Dam and national symbols like the Washington Monument 

and Statue of Liberty that millions of citizens visit every year--

security is a concern. In February 2002, the Interior IG identified 

security as one of the top management challenges facing the department.



* In April 2002, we reported that GAO special agents were able to 

breach security at four federal buildings in Atlanta.[Footnote 53] They 

entered the buildings without proper authority, carrying briefcases or 

packages, and bypassed the magnetometers and X-ray machines.



* Incidents of anthrax in the mail after the September 11, 2001, 

attacks have heightened the need to improve mail safety and security, 

which is likely to result in previously unexpected expenses for USPS. 

These expenses will be a particular challenge for USPS given its 

current financial condition. USPS will also be challenged in finding 

ways to protect its facilities against bioterrorism. In August 2002, we 

reported that while USPS planned to implement state-of-the-art air 

filtration systems at its processing facilities, it had not adequately 

tested the systems to confirm that they met their intended purpose of 

trapping anthrax.[Footnote 54]



* In September 2002, we reported that ISC has carried out some elements 

of its responsibilities but has made little progress on several other 

assigned responsibilities, such as developing and establishing policies 

for security in and protection of federal facilities, developing a 

strategy for ensuring compliance with security standards, overseeing 

the implementation of appropriate security in federal facilities, and 

developing a centralized security database of all federal 

facilities.[Footnote 55]



In addition to the clear challenges agencies will continue to face in 

securing real property assets, the security issue has an impact on the 

other problems that have been discussed. To the extent that more 

funding will be needed to increase security, funding availability for 

repair and restoration, preparing excess property for disposal, and 

improving real property data systems may be further constrained. 

Furthermore, real property managers will have to dedicate significant 

staff time and other human capital resources to security issues and 

thus may have less time to manage other problems. Another broader 

effect is the impact that increased security will have on the public’s 

access to government offices and other assets. Debate arose in the 

months after September 11, 2001, and continues to this day on the 

challenge of providing the proper balance between public access and 

security. In November 2002, the Department of Homeland Security was 

established and given responsibility to protect buildings, grounds, and 

property that are owned, occupied, or secured by the federal 

government--including any agency, instrumentality, or wholly owned or 

mixed government corporation--and the persons on the property.[Footnote 

56] This newly created department will play a large role in meeting 

this significant challenge.



Various Efforts Initiated, but Real Property Problems Persist Due to 

Factors that Require High-Level Attention:



Although the federal government faces significant, long-standing 

problems in the real property area, it is important to give Congress, 

OMB, GSA, and the major real property-holding agencies credit for 

proposing several reform efforts and other initiatives in recent years. 

Legislative proposals in the 107TH Congress (S. 1612[Footnote 57] and 

H.R. 3947[Footnote 58]) were aimed at improving real property data, 

establishing senior real property managers at agencies, developing 

asset management principles, and identifying specific conditions under 

which GSA and other agencies can enter into real property partnerships 

with the private sector. Although these proposed bills did not address 

some of the other major issues needing attention, such as the over-

reliance on costly leasing, they would have laid the foundation for 

beginning to address many of the long-standing problems in the real 

property area. To address the changing mission of DOD in the post-Cold 

War era, four rounds of restructuring by Base Realignment and Closures 

Commissions have reduced DOD’s infrastructure by about 21 percent. As 

mentioned earlier, the National Defense Authorization Act for fiscal 

year 2002 gave DOD the authority for another round of base realignment 

and military installation closures in 2005. DOD officials testified 

that these actions could result in recurring annual net savings of 

about $3 billion. Although DOD views the base realignment and closure 

process as having the greatest impact in terms of savings, this process 

is only one initiative in a multipart strategy to reshape military 

installations and make them more efficient. Other important initiatives 

include, but are not limited to, privatization of housing and 

utilities, competitive sourcing of noninherently governmental 

functions, demolition, and leasing of its real property and facilities 

to the private sector. However, we reported in June 2002 that DOD has 

made limited use of the authority it has to lease underused property to 

reduce infrastructure and base operating costs.[Footnote 59]



In the area of budgeting and capital planning, OMB issued its Capital 

Programming Guide as a supplement to OMB Circular A-11, part III, in 

1997.[Footnote 60] The purpose of the guide was to provide real 

property managers with a basic reference on principles and techniques 

for capital asset planning, budgeting, procurement, and management. In 

subsequent revisions to Circular A-11, part III, OMB increased emphasis 

on capital planning and decisionmaking. In June 2002, OMB issued a new 

section of A-11--section 800, Managing Physical and Financial Assets--

which requires agencies to include with their budget submissions to OMB 

self-assessments of their ability to manage their physical and 

financial assets. In discussing issues associated with real property 

management, OMB emphasized that effective property management is 

supported by the timely and accurate reporting requirement of the 

Improved Financial Performance Initiative of the President’s Management 

Agenda. OMB added that associated process and system enhancements are 

laying the groundwork for informed asset management capabilities and 

that early signs of progress have been seen in the area of agency 

vehicle fleets. OMB said that in 2003, specific monitoring of agency 

asset management practices would be part of the Improved Financial 

Performance Initiative. Additionally, OMB said that it is preparing to 

launch a related review of asset management practices and performance 

across the executive branch.



As a result of congressional debate in the mid-1990s about whether the 

Constitution should be amended to require the government to have a 

balanced budget every year, the President’s Commission to Study Capital 

Budgeting was established. The Commission’s February 1999 report made a 

number of recommendations, including improved strategic planning; 

greater use of benefit-cost assessments; establishment and subsequent 

assessment of capital acquisition funds as an experiment in a few 

agencies; full funding of capital projects before work begins; and 

incentives for better asset management.



In addition to DOD, other real property-holding agencies have important 

initiatives under way that are designed to address real property 

challenges. For example:



* VA has recognized that it can significantly reduce the funds used to 

operate and maintain its capital infrastructure and provide higher 

quality service by developing and implementing market-based plans for 

restructuring assets. As previously discussed, VA’s CARES effort is 

intended to accomplish this. CARES is a data-driven assessment of 

veterans’ health care needs within each of VA’s 21 service networks and 

the strategic realignment of capital assets and related resources to 

better serve the needs of veterans. CARES program officials are 

planning to provide realignment recommendations to the Secretary of 

Veterans Affairs by October 2003. In recent years, VA has also 

developed legislative proposals to establish a capital asset fund, 

which would, among other things, be aimed at improving its capability 

to dispose of unneeded real property by helping to fund related costs 

such as demolition, environmental cleanup, and repairs.



* State has taken steps to implement a more systematic process for 

identifying unneeded properties by (1) requesting posts to annually 

identify excess, underutilized, and obsolete property and (2) 

requesting its own staff and IG officials to place greater emphasis on 

identifying such property when they visit the posts. Although it still 

has a large number of properties that have not yet been sold, State has 

significantly increased its sales of unneeded properties in the last 5 

years. From 1997 through 2001, it sold 104 overseas properties for over 

$404 million, almost triple the proceeds generated in the previous 5-

year period.



* GSA began a major effort in 2001--known as the Portfolio 

Restructuring Initiative--to restructure its inventory to retain 

primarily strong, income-producing properties. As part of this effort, 

GSA has begun conducting periodic reviews of the financial and physical 

condition of the assets; focusing reinvestment funds on performing 

assets; and disposing of, or dealing with, properties that are not 

financially self-sustaining and/or for which there is not a 

substantial, long-term federal purpose. According to GSA, over 40 

percent of its buildings have expenses that exceed tenant rent revenue 

and have a minimal reserve for future building needs.



* USPS recognizes that continuing to address the issue of excess and 

underperforming real property assets will have to be a part of its 

needed transformation in light of its current financial crisis. USPS 

officials said they were currently expanding their current disposal 

efforts.



* As mentioned before, Interior has recognized the need for 

improvements in its real property data and has developed an approach 

for addressing the problems.



While some of the initiatives agencies have undertaken have had 

success, many are in the early stages of implementation; and in most 

cases, their effectiveness has yet to be determined. Furthermore, many 

of the needed reforms have not been initiated or successfully 

implemented. Despite these efforts and the sincerity with which the 

federal real property community has embraced the need for reform, the 

problems have persisted and have been exacerbated by several factors 

that will require high-level attention from Congress and the 

administration. These factors include competing stakeholder interests 

in real property decisions; various legal and budget-related 

disincentives to businesslike outcomes; the need for improved capital 

planning; and the lack of a strategic, governmentwide focus on federal 

real property issues.



Competing Stakeholder Interests:



Competing interests in real property decisions have been a part of the 

American political landscape since the country was founded. Members of 

Congress often pursue funding for federal projects in their districts, 

and the administration’s budget reflects the President’s spending 

priorities. While critics may see some of the projects as “pork 

barrel,” others see them as needed and worthwhile federal investments 

that reflect various policy priorities. In addition to Congress, OMB, 

and the real property-holding agencies themselves, several other 

stakeholders also have an interest in how the federal government 

carries out its real property acquisition, management, and disposal 

practices. These include foreign governments; state and local 

governments; business interests in the communities where the assets are 

located; private sector construction and leasing firms; historic 

preservation organizations; various advocacy groups; and the public in 

general, which often views the facilities as the physical face of the 

federal government in local communities. As a result of competing 

stakeholder interests, decisions about real property often do not 

reflect the most cost-effective or efficient alternative that is in the 

interest of the agency or the government as a whole but instead reflect 

other priorities. In particular, this situation often arises when the 

federal government attempts to consolidate facilities or otherwise 

dispose of unneeded assets. For example:



* DOD has found that infrastructure reductions are difficult and 

painful because achieving significant cost savings requires closing 

installations and eliminating military and civilian jobs in the 

affected communities. DOD’s ability to realign its infrastructure has 

been affected by parochialism among the military services, a cultural 

resistance to change, and congressional and public concern about the 

effects and impartiality of decisions.



* VA’s environment contains a diverse group of competing stakeholders 

who could oppose realignment plans that they feel are not in their best 

interests, even when such changes would benefit veterans.[Footnote 61] 

For example, medical schools that use VA hospitals to train students 

have been reluctant to change long-standing business relationships. 

Also, organized labor has appeared reluctant to support planning 

decisions that result in service restructuring, even when such 

decisions are in veterans’ best interests.



* Historically, proposed post office closures in urban, suburban, or 

rural areas, and changes to postal infrastructure by USPS, have 

provoked intense opposition because post offices are part of American 

culture and business and are viewed as critical to the economic 

viability of small towns and central business districts. Members of 

Congress and other stakeholders have often intervened in the past when 

USPS has attempted to close post offices or consolidate facilities.



* State’s disposal of unneeded overseas property has, in some cases, 

been delayed pending resolution of disputes with host governments that 

were restricting property sales.



It is important to note that the political process is the most 

legitimate way to balance competing stakeholder interests in the real 

property area. Because elected officials are tasked with balancing 

these interests, it is imperative that these decisionmakers be 

presented with information on the trade-offs associated with different 

options and that the costs are transparent and fairly stated.



Legal and Budgetary Disincentives:



The complex legal and budgetary environment in which real property 

managers operate has a significant impact on real property 

decisionmaking and often does not lead to businesslike outcomes. 

Although the Property Act is the law of general application governing 

federal real property, many other laws govern real property 

acquisition, management, and disposal. In addition, annual agency 

appropriation acts often specify additional new requirements, many of 

which are project-specific. In the acquisition area--as discussed 

earlier--budget scoring rules intended to promote budget discipline 

actually make costly operating leases an attractive option because 

their costs are spread out over time. We have also reported that 

public-private partnerships can be a viable option for redeveloping 

obsolete federal property when they provide the best economic value for 

the government, compared with other options, such as federal financing 

through appropriations or sale of the property. However, most agencies 

are precluded from entering into such arrangements. DOD, VA, and USPS, 

however, have this authority. S. 1612 and H.R. 3947 would have allowed 

most agencies to enter into such partnerships. In May 2002, the 

Congressional Budget Office concluded that the partnerships, like 

lease-purchase arrangements, should be recorded up front in the budget.



Resource limitations, in general, often prevent agencies from 

addressing real property needs from a strategic portfolio perspective. 

When available funds for capital investment are limited, Congress must 

weigh the need for new, modern facilities with the need for renovation, 

maintenance, and disposal of existing facilities, the latter of which 

often gets deferred. As the National Research Council has reported, 

facilities maintenance and repair are often deemed a low priority 

because facility program managers do not present a good case for 

funding. Also, the need to balance adequate congressional oversight 

with the desire to give agencies flexibility to pursue properties on 

the open market is an ongoing challenge. Lack of funds for building 

purchases often precludes federal real property managers from 

considering the purchase option when an opportunity arises that may be 

economically advantageous for the government.



In the disposal area, a range of laws intended to address other 

objectives challenges agencies’ efforts to dispose of unneeded 

property. For example, USPS is specifically precluded from closing 

small post offices solely for economic reasons.[Footnote 62] 

Furthermore, agencies are required under the National Environmental 

Policy Act to consider the environmental impact of their decisions to 

dispose of property. Generally speaking, agencies are responsible for 

environmental cleanup prior to disposal. Despite the importance of 

this, these costs can be considerable and can involve years of study. 

For example, we reported that St. Elizabeths Hospital in the District 

of Columbia had medical wastes, possible soil contamination, asbestos, 

lead paint, and other hazardous substance conditions that would have to 

be assessed through two phases of study and ultimately 

addressed.[Footnote 63] For property with historic designations--which 

is common in the federal portfolio--agencies are required by the 

National Historic Preservation Act to ensure that historic preservation 

is factored into how the property is eventually used. This is the case 

with St. Elizabeths, which is a National Historic Landmark.



The Property Act further specifies that unneeded property first be 

offered to other federal agencies; and the Stewart B. McKinney Homeless 

Assistance Act, as amended, sets forth a requirement that consideration 

be given to making unneeded property available to assist the homeless. 

Another factor in the disposal area is that most agencies cannot retain 

the proceeds from the sale of unneeded property. Given that agencies 

are required to fund the costs of preparing property for disposal, the 

inability to retain any of the proceeds acts as an additional 

disincentive. It seems reasonable to allow agencies to retain enough of 

the proceeds to recoup the costs of disposal, and it may make sense to 

permit agencies to retain additional proceeds for reinvestment in real 

property where a need exists. However, in considering whether to allow 

federal agencies to retain proceeds from real property transactions, it 

is important for Congress to ensure that it maintains appropriate 

control and oversight over these funds, including the ability to 

redistribute the funds to accommodate changing needs.



Need for Improved Capital Planning:



Over the years, we have reported that prudent capital planning can help 

agencies to make the most of limited resources, and failure to make 

timely and effective capital acquisitions can result in increased long-

term costs. GAO, Congress, and OMB have identified the need to improve 

federal decisionmaking regarding capital investment. GAO work during 

the 1990s identified a variety of federal capital projects in which 

acquisitions yielded poor results--costing more than anticipated, 

falling behind schedule, and failing to meet mission needs and 

goals.[Footnote 64] A number of laws enacted in the 1990s, including 

the Federal Acquisition Streamlining Act, the Clinger-Cohen Act, and 

the Government Performance and Results Act (GPRA) of 1993, placed 

increased emphasis on improving capital decisionmaking practices. OMB 

also has noted a lack of clear sense of mission for many programs, 

insufficient consideration of life-cycle costs, and failure to analyze 

and manage the risk inherent in capital asset acquisitions. OMB’s 

Capital Programming Guide and its revisions to Circular A-11 have 

attempted to fill these gaps. However, guidance on project analysis, 

selection, tracking, and evaluation historically has not been provided 

on a governmentwide basis. Furthermore, agencies have not always 

developed overall goals and strategies for implementing capital 

investment decisions, nor has the federal government generally planned 

or budgeted for capital assets over the long term.



Our work in recent years at the individual real property-holding 

agencies illustrated some of the challenges agencies have faced and 

showed that improvements in capital planning were needed. For example, 

we reported in 1999 that VA’s capital asset decisionmaking process 

appeared to be driven more by the availability of resources within VA’s 

different appropriations than by the overall soundness of 

investments.[Footnote 65] This resulted in VA spending millions more on 

leasing property instead of ownership because funds were more readily 

available in the appropriation that funds leases than in the 

construction appropriation. We recommended in January 2001 that DOD 

should develop a comprehensive long-range plan for its facilities 

infrastructure that addresses requirements, reinvestment, and 

maintenance and repair needs.[Footnote 66] Our work at USPS showed that 

a major site acquisition in California was completed before other 

options had been analyzed and while analysis of space requirements and 

costs was still under way.[Footnote 67]



Another concern we have identified in the capital decisionmaking area 

is that capital project funding requests in agencies’ budget 

justifications often lacked total project cost information; it was not 

always clear if the funding would provide a useful, stand-alone 

asset.[Footnote 68] For example, the U.S. Coast Guard’s fiscal year 

2001 budget justifications had “To Be Determined” under the estimated 

future cost requirement for several ongoing projects. Without this 

information, Congress cannot consider the full costs of proposed 

commitments. Finally, preliminary results of work we have under way 

assessing agencies’ implementation of the planning phase principles in 

OMB’s Capital Programming Guide show that some agencies’ principles do 

not conform to the OMB principles. For example, some agencies have had 

limited success with establishing asset inventories and maintaining 

good data on asset condition. The details of this review will be 

forthcoming. Improving agencies’ capital planning practices would be 

the foundation of any effort to improve the government’s performance in 

the real property area. Without a concerted effort in this area, it 

will be difficult for the government to ensure that the purchase of new 

assets will generate the highest and most efficient returns to 

taxpayers and that existing assets will be adequately repaired, 

maintained, and protected.



Lack of a Strategic, Governmentwide Focus on Real Property Issues:



The magnitude of real property-related problems and the complexity of 

the underlying factors that cause them to persist put the federal 

government at significant risk in this area. Real property problems 

related to unneeded property and the need for realignment; 

deteriorating conditions; unreliable data; costly space; and security 

concerns are shared by several agencies, have multibillion-dollar cost 

implications, and can seriously jeopardize mission accomplishment. 

Although some efforts in recent years have attempted to address real 

property issues with some limited success, these problems have 

persisted and will continue to grow in magnitude unless they are 

adequately addressed. To date, there has been no governmentwide, 

strategic focus on real property issues. Resolving these long-standing 

problems will require high-level attention and effective leadership by 

Congress and the administration. The President’s Council on Integrity 

and Efficiency (PCIE) has echoed this concern by identifying physical 

infrastructure as one of eight top agency management challenges 

warranting high-level attention and applying across 

government.[Footnote 69] In fact, PCIE’s August 2002 report on these 

challenges stated that the number of agency IGs that cited physical 

infrastructure as a management challenge for their agencies has doubled 

since the March 2001 report.[Footnote 70] PCIE attributed the increased 

attention on the physical infrastructure challenge to the September 11, 

2001, terrorist attacks. In its August 2002 report, the PCIE also 

stated that the physical infrastructure challenge would, in all 

likelihood, be facing the federal government for quite some time.



In addition, because of the breadth and complexity of the issues 

involved, the long-standing nature of the problems, and the intense 

debate about potential solutions that will likely ensue, current 

structures and processes may not be adequate to address the problems. 

Given this, there is a need for a comprehensive and integrated 

transformation strategy for federal real property, and an independent 

commission or governmentwide task force may be needed to develop this 

strategy. Such a strategy, based on input from agencies, the private 

sector, and other interested groups, could comprehensively address 

these long-standing problems with specific proposals on how best to:



* realign the federal infrastructure and dispose of unneeded property, 

taking into account mission requirements, changes in technology, 

security needs, costs, and how the government conducts business in the 

21ST century;



* address the significant repair and restoration needs of the federal 

portfolio;



* ensure that reliable governmentwide and agency-specific real property 

data--both financial and program related--are available for informed 

decisionmaking;



* resolve the problem of heavy reliance on costly leasing; and:



* consider the impact that the threat of terrorism will have on real 

property needs and challenges, including how to balance public access 

with safety.



To be effective in addressing these problems, it would be important for 

the strategy to focus on:



* minimizing the negative effects associated with competing stakeholder 

interests in real property decisionmaking;



* providing agencies with appropriate tools and incentives that will 

facilitate businesslike decisions--for example, consideration should 

be given to what financing options should be available; how disposal 

proceeds should be handled; what process would permit comparisons 

between rehabilitation/renovation and replacement and among 

construction, purchase, lease-purchase, and operating lease; and how 

public-private partnerships should be evaluated;



* addressing federal human capital issues related to real property by 

recognizing that real property conditions affect the federal 

government’s ability to attract and retain high-performing individuals 

and the productivity and morale of employees;



* improving real property capital planning in the federal government by 

better integrating agency mission considerations into the capital 

decisionmaking process, making businesslike decisions when evaluating 

and selecting capital assets, evaluating and selecting capital assets 

by using an investment approach, and evaluating results on an ongoing 

basis; and:



* ensuring credible, long-term budget planning for facility 

sustainment, modernization, or recapitalization.



The transformation strategy should also reflect the lessons learned and 

leading practices of organizations in the public and private sectors 

that have attempted to reform their real property practices. Over the 

past decade, leading organizations in both the public and private 

sectors have been recognizing the impact that real property decisions 

have on their overall success. More information on lessons learned and 

leading practices in the real property area is contained in the 

appendix.



If the federal government is to more effectively respond to the 

challenges associated with strategically managing its multibillion-

dollar real property portfolio, a major departure from the traditional 

way of doing business is needed. Better managing these assets in the 

current environment calls for a significant paradigm shift to find 

solutions. Solutions should not only correct the long-standing problems 

we have identified but also be responsive to and supportive of 

agencies’ changing missions, security concerns, and technological needs 

in the 21ST century. If actions resulting from the transformation 

strategy comprehensively address the problems and are effectively 

implemented, agencies will be better positioned to recover asset 

values, reduce operating costs, improve facility conditions, enhance 

safety and security, and achieve mission effectiveness.



In addition to developing a transformation strategy, it is critical 

that all the key stakeholders in government--Congress, OMB, and real 

property-holding agencies--continue to work diligently on the efforts 

planned and already under way that are intended to promote better real 

property capital decisionmaking, such as enacting reform legislation, 

assessing infrastructure and human capital needs, and examining viable 

funding options. Congress and the administration could work together to 

develop and enact needed reform legislation to give real property-

holding agencies the tools they need to achieve better outcomes, foster 

a more businesslike real property environment, and provide for greater 

accountability for real property stewardship. Congress and the 

administration could also elevate the importance of real property in 

policy debates and recognize the impact that real property decisions 

have on agencies’ missions. Solving the problems in this area will 

undeniably require a reconsideration of funding priorities at a time 

when budget constraints will be pervasive. However, experimenting with 

creative financing tools and allocating sufficient funding will likely 

result in long-term benefits.



Property-holding agencies can also help Congress and OMB by providing 

reliable data on their real property inventories and linking their real 

property planning efforts to their budgets and strategic plans. 

Agencies could also strengthen their efforts to share lessons learned, 

best practices, and performance measurement approaches that key 

decisionmakers can use to gauge progress and measure results. Without 

effective tools; top management accountability, leadership, and 

commitment; adequate funding; and an effective system to measure 

results, long-standing real property problems will continue and likely 

worsen. However, the overall risk to the government and taxpayers could 

be substantially reduced if an effective transformation strategy is 

developed and successfully implemented, reforms are made, and property-

holding agencies effectively implement current and planned initiatives.



[End of section]



Appendixes:



Appendix: Lessons Learned and Leading Practices in Real Property:



Over the past decade, leading organizations in both the public and 

private sectors have recognized the impact that real property decisions 

have had on their overall success. A 1993 study for the Industrial 

Development Research Foundation (IDRF) conducted by researchers from 

the Massachusetts Institute of Technology and Cornell University 

detailed the innovative practices of private sector organizations, 

specifically their transformation to recognizing and managing real 

property as a corporate resource equally as important as capital, 

people, technology, and information.[Footnote 71] The report concluded 

that leading organizations are recognizing that real property is 

another valuable capital asset that, if managed well, has an impact on 

mission accomplishment and achievement of business objectives.



General Motors (GM) is an example of a private sector firm that has 

recognized the impact that real property decisions have on an 

organization’s ability to meet its business objectives. In 1995, GM 

decided to consolidate the management of its extensive portfolio of 

real property into a single division called the Worldwide Facilities 

Group (WFG). Prior to this reorganization, each GM division had its own 

real property organization, staff, and processes. According to a GM 

executive, the creation of the WFG brought significant advantages to GM 

by reducing costs and deploying common practices across the company. 

This executive added that the benefits that GM experienced did not 

result from consolidation alone, but from the strategic management of 

real property as a business enterprise.



Our past work has also shown that foreign governments have recognized 

the need for transforming their real property management practices. In 

the mid 1990s, we examined and reported on methods that Australia, 

Canada, the United Kingdom, and Sweden used to restructure or reform 

their real property management organizations.[Footnote 72] Like the 

United States, these countries had long-standing structural and 

management problems that limited the ability of their real property 

organizations to meet customers’ real property needs. These countries 

recognized the need to manage real property assets as investments and 

to use them to meet mission needs. The countries also made a 

fundamental shift in their management philosophy for handling these 

assets by shifting from providing basic property needs at the least 

cost to managing real property in a more businesslike manner to better 

meet their customers’ mission needs and to maximize return on 

investment.



In 1998, we reported on leading practices in capital decisionmaking 

used by state and local governments and private sector organizations 

recognized for their outstanding capital decisionmaking practices, 

including the State of Maryland, Dayton, Ohio, and Ford Motor 

Company.[Footnote 73] We identified the general principles that leading 

organizations used to make capital investment decisions, such as for 

the acquisition or renovation of real property. One of these principles 

was integrating organizational goals into the capital decisionmaking 

process. Other principles included evaluating and selecting capital 

assets using an investment approach, balancing budgetary control and 

managerial flexibility when funding capital projects, using project 

management techniques to optimize project success, and evaluating 

results and incorporating lessons learned into the decisionmaking 

process. In addition, we noted that an important factor in successful 

capital decisionmaking is strategic planning. Through this process, an 

organization translates a vision and makes fundamental decisions that 

shape and guide what the organization is and what it does. We found 

that leading organizations use their strategic planning processes to 

link the expected outcomes of capital projects to the organizations’ 

overall strategic goals and objectives. In 1999, we reported on 

practices at federal agencies that were attempting to use more 

businesslike approaches through public-private partnerships. Among 

other things, we found that agencies that had successfully implemented 

public-private partnership projects had (1) developed their human 

capital to obtain needed expertise, (2) implemented strong planning 

efforts to protect the government’s interests, and (3) obtained 

congressionally enacted statutory authority to enter into the 

partnership.[Footnote 74]



GSA has recently undertaken research on leading practices in linking 

real property workplace management to agency mission.[Footnote 75] GSA 

noted that many agencies do not adequately focus their planning efforts 

on the assets they control. Further, GSA’s research showed that due to 

changing human capital needs, the impact of administrative services--

including real property--is likely to become more significant. By 

thinking strategically about the workplace and how administrative 

services affect the delivery of their missions, agencies can directly 

improve the productivity of their human capital. GSA recommended the 

following practices for integrating administrative services into the 

strategic planning process:



* Involve administrative support leaders in establishing strategic 

program priorities;



* Integrate key support functions into the strategic planning process;



* Communicate the message throughout the organization to ensure 

thoroughness of input, clarity of expectations, and authenticity of 

associates’ buy-in to agency strategies;



* Adopt tools for planning, managing, and evaluating support function 

contributions; and:



* Use analytical tools to set performance targets, standards, and 

measures for key administrative support objectives.



The physical workspace is evolving, and public and private 

organizations are recognizing that they can attain strategic mission 

objectives more efficiently when they pay attention to this area. In 

the case of the federal government, technological advancements, 

electronic government, flexible workplace arrangements, changing 

public needs, opportunities for interagency resource sharing, and 

security concerns will call for a different way of thinking about the 

federal workplace and the government’s overall real property needs. As 

previously discussed, major corporations and government agencies are 

recognizing their real property workspace can be a tool used to support 

their organizations’ missions and strategic plans, meet the needs and 

practices of their employees, and inexpensively accommodate change. 

Further, GSA has found that the flexibility to accommodate individual 

work styles and future organizational change is one of the most 

important elements of any workspace.[Footnote 76] However, there is 

recognition in the real property community that without high-level 

support, customer demand, and better assessment of workplace 

requirements, the federal government will be challenged in attaining 

this flexibility.



In August 2002, we sponsored a symposium with assistance from the 

National Research Council on leading real property practices and the 

major issues facing the federal government in this area. Panelists 

included representatives from federal and other public agencies, 

private companies, architectural and consulting firms, and a key 

congressional committee. Symposium attendees included officials from 10 

of the major real property-holding agencies. Overall, the participants 

agreed that federal real property is a problematic area, and they 

soundly confirmed the problems and challenges that we and others have 

identified. The participants were particularly concerned about the 

negative effect real property problems have on an organization’s 

ability to accomplish its mission and the impact that poor quality work 

environments have on an organization’s ability to attract and retain a 

quality workforce. In discussions of ways that the federal government 

could overcome the problems it is facing in this area, several 

recurring themes emerged. These included the following:



* the need for top-level support and commitment from Congress, OMB, and 

other real property holding-agencies to recognize the significance of 

these problems and seek solutions to resolve them;



* the need to integrate facilities with agency mission in strategic 

planning efforts;



* the need for a broader range of financing and management tools;



* the need for skilled people in the real property management area;



* the need to address the negative effects that budget scoring rules 

have on capital decisionmaking;



* the challenge of balancing security concerns with costs and the need 

for public accessibility; and:



* the need for high-quality data on real property assets to provide 

better information for strategic decisionmaking.



The panelists generally agreed that there would be no quick fixes for 

the federal real property dilemma. Moreover, they recognized that 

without effective reforms and strategies for addressing the challenges 

facing real property managers, the current crisis would only worsen and 

continue to negatively affect agencies’ missions.



[End of section]



GAO Contacts:



Subject(s) covered in this report: DOD real property issues; Contact 

person: Barry W. Holman, Director; Defense Capabilities and Management; 

(202) 512-5581; holmanb@gao.gov.



Subject(s) covered in this report: GSA and USPS real property issues; 

Contact person: Bernard L. Ungar, Director; Physical Infrastructure; 

(202) 512-2834; ungarb@gao.gov.



Subject(s) covered in this report: VA real property issues; Contact 

person: Cynthia A. Bascetta, Director; Health Care; (202) 512-7101; 

bascettac@gao.gov.



Subject(s) covered in this report: State real property issues; Contact 

person: Jess T. Ford, Director; International Affairs and Trade; (202) 

512-4128; fordj@gao.gov.



Subject(s) covered in this report: Interior real property issues; 

Contact person: Barry T. Hill, Director; Natural Resources and 

Environment; (202) 512-9775; hillbt@gao.gov.



Subject(s) covered in this report: DOE real property issues; Contact 

person: Gary L. Jones, Director; Natural Resources and Environment; 

(202) 512-3464; jonesgl1@gao.gov.



Subject(s) covered in this report: Federal budget and capital 

decisionmaking issues; Contact person: Susan Irving, Director; 

Strategic Issues; (202) 512-9142; irvings@gao.gov.



[End of table]



[End of section]



Related GAO Products:



Excess and Underutilized Property:



U.S. General Accounting Office, State Department: Sale of Unneeded 

Overseas Property Has Increased, but Further Improvements Are 

Necessary, GAO-02-590 (Washington, D.C.: June 11, 2002).



U.S. General Accounting Office, U.S. Postal Service: Deteriorating 

Financial Outlook Increases Need for Transformation, GAO-02-355 

(Washington, D.C.: Feb. 28, 2002).



U.S. General Accounting Office, Public-Private Partnerships: Pilot 

Program Needed to Demonstrate the Actual Benefits of Using 

Partnerships, GAO-01-906 (Washington, D.C.: July 25, 2001).



U.S. General Accounting Office, St. Elizabeths Hospital: Real Property 

Issues Related to the West Campus, GAO-01-434 (Washington, D.C.: Apr. 

16, 2001).



U.S. General Accounting Office, VA Health Care: VA Is Struggling to 

Respond to Asset Realignment Challenges, GAO/T-HEHS-00-91 (Washington, 

D.C.: Apr. 6, 2000).



U.S. General Accounting Office, U.S. Postal Service: Deficiencies 

Continue While Antelope Valley Project Status Remains Uncertain, GAO/

GGD-99-147 (Washington, D.C.: Aug. 31, 1999).



U.S. General Accounting Office, VA Health Care: Challenges Facing VA in 

Developing an Asset Realignment Process, GAO/T-HEHS-99-173 

(Washington, D.C.: July 22, 1999).



U. S. General Accounting Office, VA Health Care: Closing A Chicago 

Hospital Would Save Millions and Enhance Access to Services, GAO/HEHS-

98-64 (Washington, D.C.: Apr. 16, 1998).



Deterioriating Property:



U.S. General Accounting Office, Financial Condition of Federal 

Buildings Owned by the General Services Administration, GAO-02-854R 

(Washington, D.C.: Aug. 8, 2002).



U.S. General Accounting Office, Defense Infrastructure: Most Recruit 

Training Barracks Have Significant Deficiencies, GAO-02-786 

(Washington, D.C.: June 13, 2002).



U.S. General Accounting Office, Federal Buildings: Funding Repairs and 

Alterations Has Been a Challenge--Expanded Financing Tools Needed, GAO-

01-452 (Washington, D.C.: Apr. 12, 2001).



U.S. General Accounting Office, Park Service: Agency Is Not Meeting Its 

Structural Fire Safety Responsibilities, GAO/RCED-00-154 (Washington, 

D.C.: May 22, 2000).



U.S. General Accounting Office, Federal Buildings: Billions Are Needed 

for Repairs and Alterations, GAO/GGD-00-98 (Washington, D.C.: Mar. 30, 

2000).



U.S. General Accounting Office, School Facilities: Reported Condition 

and Costs to Repair Schools Funded by Bureau of Indian Affairs, GAO/

HEHS-98-47 (Washington, D.C.: Dec. 31, 1997).



Governmentwide Real Property Data:



U.S. General Accounting Office, Federal Real Property: Better 

Governmentwide Data Needed for Strategic Decisionmaking, GAO-02-342 

(Washington, D.C.: Apr. 16, 2002).



U.S. General Accounting Office, Government Financial Statements: FY 

2001 Results Highlight the Continuing Need to Accelerate Federal 

Financial Management Reform, GAO-02-599T (Washington, D.C.: Apr. 9, 

2002).



U.S. General Accounting Office, Environmental Liabilities: DOD Training 

Range Cleanup Cost Estimates Are Likely Understated,

GAO-01-479 (Washington, D.C.: Apr. 11, 2001).



U.S. General Accounting Office, Defense Infrastructure: Military 

Services Lack Reliable Data on Historic Properties, GAO-01-437 

(Washington, D.C.: Apr. 6, 2001).



Reliance on Costly Leasing:



U.S. General Accounting Office, Supporting Congressional Oversight: 

Budgetary Implications of Selected GAO Work for Fiscal Year 2003,

GAO-02-576 (Washington, D.C.: Apr. 26, 2002).



U.S. General Accounting Office, Budget Scoring: Budget Scoring Affects 

Some Lease Terms but Full Extent Is Uncertain, GAO-01-929 (Washington, 

D.C.: Aug. 31, 2001).



U.S. General Accounting Office, Accrual Budgeting: Experiences of Other 

Nations and Implications for the United States, GAO/AIMD-00-57 

(Washington, D.C.: Feb. 18, 2000).



U.S. General Accounting Office, General Services Administration: 

Comparison of Space Acquisition Alternatives--Leasing to Lease-

Purchase and Leasing to Construction, GAO/GGD-99-49R (Washington, D.C.: 

Mar. 12, 1999).



Building Security:



U.S. General Accounting Office, Building Security: Interagency Security 

Committee Has Had Limited Success in Fulfilling Its Responsibilities, 

GAO-02-1004 (Washington, D.C.: Sept. 22, 2002).



U.S. General Accounting Office, Diffuse Security Threats: USPS Air 

Filtrations Systems Need More Testing and Cost Benefit Analysis Before 

Implementation, GAO-02-838 (Washington, D.C.: Aug. 22, 2002).



U.S. General Accounting Office, Security Breaches at Federal Buildings 

in Atlanta, GA, GAO-02-668T (Washington, D.C.: Apr. 30, 2002).



U.S. General Accounting Office, Nuclear Security: Lessons to Be Learned 

from Implementing NNSA’s Security Enhancements, GAO-02-358 

(Washington, D.C.: Mar. 29, 2002).



U.S. General Accounting Office, Homeland Security: A Risk Management 

Approach Can Guide Preparedness Efforts, GAO-02-208T (Washington, D.C.: 

Oct. 31, 2001).



U.S. General Accounting Office, Combating Terrorism: Actions Needed to 

Improve DOD Antiterrorism Program Implementation and Management, GAO-

01-909 (Washington, D.C.: Sept. 19, 2001).



Capital Decisionmaking:



U.S. General Accounting Office, Budget Issues: Agency Data Supporting 

Capital Project Funding Requests Could Be Improved, GAO-01-770 

(Washington, D.C.: June 8, 2001).



U.S. General Accounting Office, VA Health Care: Capital Asset Planning 

and Budgeting Need Improvement, GAO/T-HEHS-99-83 (Washington, D.C.: 

Mar. 10, 1999).



U.S. General Accounting Office, Executive Guide: Leading Practices in 

Capital Decisionmaking, GAO/AIMD-99-32 (Washington, D.C.: Dec. 1998).



[End of section]



Performance and Accountability and High-Risk Series:



[End of section]



Major Management Challenges and Program Risks: A Governmentwide 

Perspective. GAO-03-95.



Major Management Challenges and Program Risks: Department of 

Agriculture. GAO-03-96.



Major Management Challenges and Program Risks: Department of Commerce. 

GAO-03-97.



Major Management Challenges and Program Risks: Department of Defense. 

GAO-03-98.



Major Management Challenges and Program Risks: Department of Education. 

GAO-03-99.



Major Management Challenges and Program Risks: Department of Energy. 

GAO-03-100.



Major Management Challenges and Program Risks: Department of Health and 

Human Services. GAO-03-101.



Major Management Challenges and Program Risks: Department of Homeland 

Security. GAO-03-102.



Major Management Challenges and Program Risks: Department of Housing 

and Urban Development. GAO-03-103.



Major Management Challenges and Program Risks: Department of the 

Interior. GAO-03-104.



Major Management Challenges and Program Risks: Department of Justice. 

GAO-03-105.



Major Management Challenges and Program Risks: Department of Labor. 

GAO-03-106.



Major Management Challenges and Program Risks: Department of State. 

GAO-03-107.



Major Management Challenges and Program Risks: Department of 

Transportation. GAO-03-108.



Major Management Challenges and Program Risks: Department of the 

Treasury. GAO-03-109.



Major Management Challenges and Program Risks: Department of Veterans 

Affairs. GAO-03-110.



Major Management Challenges and Program Risks: U.S. Agency for 

International Development. GAO-03-111.



Major Management Challenges and Program Risks: Environmental Protection 

Agency. GAO-03-112.



Major Management Challenges and Program Risks: Federal Emergency 

Management Agency. GAO-03-113.



Major Management Challenges and Program Risks: National Aeronautics and 

Space Administration. GAO-03-114.



Major Management Challenges and Program Risks: Office of Personnel 

Management. GAO-03-115.



Major Management Challenges and Program Risks: Small Business 

Administration. GAO-03-116.



Major Management Challenges and Program Risks: Social Security 

Administration. GAO-03-117.



Major Management Challenges and Program Risks: U.S. Postal Service. 

GAO-03-118.



High-Risk Series: An Update. GAO-03-119.



High-Risk Series: Strategic Human Capital Management. GAO-03-120.



High-Risk Series: Protecting Information Systems Supporting the Federal 

Government and the Nation’s Critical Infrastructures. GAO-03-121.



High-Risk Series: Federal Real Property. GAO-03-122.



FOOTNOTES



[1] This value does not include stewardship assets, which are not 

reported on the government’s balance sheet. These assets include 

wilderness areas, scenic river systems, monuments, defense facilities 

(including military bases), and national defense assets. Also, real 

property data contained in the financial statements of the U.S. 

government have been problematic. As discussed in more detail later, we 

were unable to express an opinion on the U.S. government’s consolidated 

financial statements for fiscal year 2001.



[2] U.S. General Services Administration, Summary Report of Real 

Property Owned by the United States Throughout the World, (Washington, 

D.C.: June 2001); U.S. General Services Administration, Summary Report 

of Real Property Leased by the United States Throughout the World, 

(Washington, D.C.: June 2001). As discussed in more detail later, we 

have reported that the governmentwide real property data that GSA 

compiles--often referred to as the worldwide inventory--have been 

unreliable and of limited usefulness. However, these data provide the 

only available indication of the size and characteristics of the 

federal real property inventory.



[3] 40 U.S.C. § 101 et. seq; the Property Act excludes certain types of 

property, such as public domain assets and land reserved or dedicated 

for national forest or national park purposes.



[4] 38 U.S.C. §§ 8161-8169.



[5] 10 U.S.C. § 2667.



[6] 39 U.S.C. §§ 201 and 401; for the purposes of this discussion of 

real property issues, we are defining agencies to include other 

government entities such as USPS, an independent establishment in the 

executive branch.



[7] 39 U.S.C. § 410.



[8] 42 U.S.C.§ 11411.



[9] 16 U.S.C. § 470 et. seq.



[10] U.S. General Accounting Office, Facilities Location: Agencies 

Should Pay More Attention to Costs and Rural Development Act, GAO-01-

805 (Washington, D.C.: July 31, 2001).



[11] P.L. 107-107, 115 Stat. 1012, 1342 (2001).



[12] GAO/T-HEHS-99-173.



[13] DOE/IG-0550.



[14] U.S. General Accounting Office, VA Health Care: Closing A Chicago 

Hospital Would Save Millions and Enhance Access to Services, GAO/HEHS-

98-64 (Washington, D.C.: Apr. 16, 1998).



[15] GAO-01-906.



[16] U.S. General Accounting Office, St. Elizabeths Hospital: Real 

Property Issues Related to the West Campus, GAO-01-434 (Washington, 

D.C.: Apr. 16, 2001).



[17] Deferred maintenance is maintenance that was not performed when it 

should have been or was scheduled to be and that, therefore, is put off 

or delayed for a future period.



[18] The term “sustain” refers to efforts required to keep a facility 

at its current physical condition using operation and maintenance 

funds. “Recapitalize” refers to efforts to improve condition or replace 

a facility with new construction, using either operation and 

maintenance or military construction funds.



[19] Defense Facilities Strategic Plan Working Group, Installations 

Policy Board, Defense Installations 2001: The Framework for Readiness 

in the 21st Century (Washington, D.C.: Aug. 2001).



[20] U.S. Department of Defense, Report to Congress: Identification of 

the Requirements to Reduce the Backlog of Maintenance and Repair of 

Defense Facilities (Washington, D.C.: Apr. 2001).



[21] U.S. Department of Defense, Quarterly Readiness Report to the 

Congress: Unclassified Annex, (Washington, D.C.: Oct.-Dec., 2001).



[22] U.S. General Accounting Office, Defense Infrastructure: Most 

Recruit Training Barracks Have Significant Deficiencies, GAO-02-786 

(Washington, D.C.: June 13, 2002).



[23] U.S. General Accounting Office, Park Service: Agency Is Not 

Meeting Its Structural Fire Safety Responsibilities, GAO/RCED-00-154 

(Washington, D.C.: May 22, 2000).



[24] U.S. General Accounting Office, School Facilities: Reported 

Condition and Costs to Repair Schools Funded by Bureau of Indian 

Affairs, GAO/HEHS-98-47 (Washington, D.C.: Dec. 31, 1997).



[25] BIA Office of Facilities Management and Construction, Operations 

and Maintenance Cost Comparison Study (Washington, D.C.: Dec. 2001).



[26] These include the Bureau of Reclamation, Fish and Wildlife 

Service, NPS, BIA, and Bureau of Land Management.



[27] U.S. General Accounting Office, Federal Buildings: Billions Are 

Needed for Repairs and Alterations, GAO/GGD-00-98 (Washington, D.C.: 

Mar. 30, 2000).



[28] U.S. General Accounting Office, Financial Condition of Federal 

Buildings Owned by the General Services Administration, GAO-02-854R 

(Washington, D.C.: Aug. 8, 2002).



[29] U.S. General Accounting Office, Federal Buildings: Funding Repairs 

and Alterations Has Been a Challenge--Expanded Financing Tools Needed, 

GAO-01-452 (Washington, D.C.: Apr. 12, 2001).



[30] National Research Council, Stewardship of Federal Facilities: A 

Proactive Strategy for Managing the Nation’s Public Assets (Washington, 

D.C.: National Academy Press, 1998).



[31] DOE Office of the Inspector General, Management of the Nuclear 

Weapons Production Infrastructure, DOE\IG-0484 (Washington, D.C.: 

Sept. 22, 2000).



[32] President’s Budget for Fiscal Year 2003.



[33] GAO-02-355.



[34] GAO-01-452.



[35] U.S. General Accounting Office, Federal Real Property: Better 

Governmentwide Data Needed for Strategic Decisionmaking, GAO-02-342 

(Washington, D.C.: Apr. 16, 2002).



[36] A material weakness is a condition that precludes an entity’s 

internal controls from providing reasonable assurance that 

misstatements, losses, or noncompliance material in relation to the 

financial statements or to stewardship information would be prevented 

or detected on a timely basis.



[37] U.S. Office of the Deputy Under Secretary of Defense for 

Installations and Environment, Assessment of DOD Real Property 

Information Systems (Washington, D.C.: Aug. 8, 2001).



[38] U.S. General Accounting Office, Defense Infrastructure: Military 

Services Lack Reliable Data on Historic Properties, GAO-01-437 

(Washington, D.C.: Apr. 6, 2001).



[39] U.S. General Accounting Office, Environmental Liabilities: DOD 

Training Range Cleanup Cost Estimates Are Likely Understated, GAO-01-

479 (Washington, D.C.: Apr. 11, 2001).



[40] U.S. General Accounting Office, State Department: Sale of Unneeded 

Overseas Property Has Increased, but Further Improvements Are 

Necessary, GAO-02-590 (Washington, D.C.: June 11, 2002).



[41] GAO/GGD-00-98; GAO-01-452.



[42] GAO-02-342.



[43] U.S. General Accounting Office, General Services Administration: 

Opportunities for Cost Savings in the Public Buildings Area, GAO/T-GGD-

95-149 (Washington, D.C.: July 13, 1995).



[44] U.S. General Accounting Office, General Services Administration: 

Comparison of Space Acquisition Alternatives--Leasing to Lease-

Purchase and Leasing to Construction, GAO/GGD-99-49R (Washington, D.C.: 

Mar. 12, 1999).



[45] U.S. General Accounting Office, Budget Scoring: Budget Scoring 

Affects Some Lease Terms but Full Extent Is Uncertain, GAO-01-929 

(Washington, D.C.: Aug. 31, 2001).



[46] According to the scoring rules (OMB Circular A-11, app. B), in 

cases where the operating lease does not have a cancellation clause or 

is not paid for with federal funds that are self-insuring, budget 

authority to cover the total costs expected over the life of the lease 

is to be scored in the first year of the lease.



[47] U.S. General Accounting Office, Supporting Congressional 

Oversight: Budgetary Implications of Selected GAO Work for Fiscal Year 

2003, GAO-02-576 (Washington, D.C.: Apr. 26, 2002).



[48] U.S. General Accounting Office, Accrual Budgeting: Experiences of 

Other Nations and Implications for the United States, GAO/AIMD-00-57 

(Washington, D.C.: Feb. 18, 2000).



[49] GAO-01-909.



[50] U.S. General Accounting Office, Homeland Security: A Risk 

Management Approach Can Guide Preparedness Effort, GAO-02-208T 

(Washington, D.C., Oct. 31, 2001).



[51] GAO-01-252.



[52] U.S. General Accounting Office, Combating Terrorism: Actions 

Needed to Improve DOD Antiterrorism Program Implementation and 

Management, GAO-01-909 (Washington, D.C.: Sept. 19, 2001).



[53] U.S. General Accounting Office, Security Breaches at Federal 

Buildings in Atlanta, GA, GAO-02-668T (Washington, D.C.: Apr. 30, 

2002).



[54] U.S. General Accounting Office, Diffuse Security Threats: USPS Air 

Filtrations Systems Need More Testing and Cost Benefit Analysis before 

Implementation, GAO-02-838 (Washington, D.C.: Aug. 22, 2002).



[55] U.S. General Accounting Office, Building Security: Interagency 

Security Committee Has Had Limited Success in Fulfilling Its 

Responsibilities, GAO-02-1004 (Washington, D.C.: Sept. 22, 2002).



[56] P.L. 107-296; Nov. 25, 2002.



[57] Title III of the Managerial Flexibility Act of 2001 (2001) is 

entitled Federal Property Asset Management Reforms.



[58] The Federal Property Asset Management Reform Act of 2002 (2002).



[59] GAO-02-475.



[60] In the most recent version, the guide is now a supplement to part 

7 of A-11. Also, part 8, Managing Federal Assets, has been added.



[61] U.S. General Accounting Office, VA Health Care: Capital Asset 

Planning and Budgeting Need Improvement, GAO/T-HEHS-99-83 (Washington, 

D.C.: Mar. 10, 1999).



[62] 39 U.S.C. 101(b).



[63] GAO-01-434.



[64] U.S. General Accounting Office, Executive Guide: Leading Practices 

in Capital Decisionmaking, GAO/AIMD-99-32 (Washington, D.C.: Dec. 

1998).



[65] GAO/T-HEHS-99-83.



[66] GAO-01-263.



[67] U.S. General Accounting Office, U.S. Postal Service: Deficiencies 

Continue While Antelope Valley Project Status Remains Uncertain, GAO/

GGD-99-147 (Washington, D.C.: Aug. 31, 1999).



[68] U.S. General Accounting Office, Budget Issues: Agency Data 

Supporting Capital Project Funding Requests Could Be Improved, GAO-01-

770 (Washington, D.C.: June 8, 2001).



[69] The President’s Council on Integrity and Efficiency, Report on Top 

Management Challenges Identified by Agency Inspectors General, 

(Washington, D.C.: Mar. 27, 2001).



[70] The President’s Council on Integrity and Efficiency, Report on Top 

Management Challenges Identified by Agency Inspectors General, 

(Washington, D.C.: Aug. 23, 2002).



[71] Michael Joroff, Marc Louargand, Sandra Lambert, and Franklin 

Becker, Strategic Management of the Fifth Resource: Corporate Real 

Estate (U.S.A.: The Industrial Development Research Foundation, 1993).



[72] U.S. General Accounting Office, Real Property Management: Reforms 

in Four Countries Promote Competition, GAO/GGD-94-166 (Washington, 

D.C.: Sept. 1994).



[73] GAO/AIMD-99-32.



[74] U.S. General Accounting Office, Public-Private Partnerships: Key 

Elements of Federal Building and Facility Partnerships, GAO/GGD-99-23 

(Washington, D.C.: Feb. 3, 1999).



[75] U.S. General Services Administration, Strategic Planning: Aligning 

Workplace Services Creates Value (Washington, D.C.: June 2002).



[76] U.S. General Services Administration, New Adventures in Office 

Space: The Integrated Workplace, A Planning Guide (Washington, D.C.: 

Feb. 2002).



GAO’s Mission:



The General Accounting Office, the investigative arm of Congress, 

exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability 

of the federal government for the American people. GAO examines the use 

of public funds; evaluates federal programs and policies; and provides 

analyses, recommendations, and other assistance to help Congress make 

informed oversight, policy, and funding decisions. GAO’s commitment to 

good government is reflected in its core values of accountability, 

integrity, and reliability.



Obtaining Copies of GAO Reports and Testimony:



The fastest and easiest way to obtain copies of GAO documents at no 

cost is through the Internet. GAO’s Web site ( www.gao.gov ) contains 

abstracts and full-text files of current reports and testimony and an 

expanding archive of older products. The Web site features a search 

engine to help you locate documents using key words and phrases. You 

can print these documents in their entirety, including charts and other 

graphics.



Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its 

Web site daily. The list contains links to the full-text document 

files. To have GAO e-mail this list to you every afternoon, go to 

www.gao.gov and select “Subscribe to daily E-mail alert for newly 

released products” under the GAO Reports heading.



Order by Mail or Phone:



The first copy of each printed report is free. Additional copies are $2 

each. A check or money order should be made out to the Superintendent 

of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. 

Orders should be sent to:



U.S. General Accounting Office



441 G Street NW,



Room LM Washington,



D.C. 20548:



To order by Phone: 	



	Voice: (202) 512-6000:



	TDD: (202) 512-2537:



	Fax: (202) 512-6061:



To Report Fraud, Waste, and Abuse in Federal Programs:



Contact:



Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov



Automated answering system: (800) 424-5454 or (202) 512-7470:



Public Affairs:



Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.



General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.



20548: