Federal Real Property: Improved Standards Needed to Ensure That Agencies' Reported Cost Savings Are Reliable and Transparent
Highlights
What GAO Found
Agencies reported real property cost savings of $3.8 billion in response to the June 2010 presidential memorandum from disposal, space management, sustainability, and innovation activities. Space management savings, defined by the Office of Management and Budget (OMB) as those savings resulting from, among other things, consolidations or the elimination of lease arrangements that were not cost effective, accounted for the largest portion of savings reported by all agencies, and for about 70 percent of the savings reported by the six agencies GAO reviewed--the General Services Administration (GSA) and the Departments of Agriculture (USDA), Energy (DOE), Homeland Security (DHS), Justice (DOJ), and State (State). The requirements of the memorandum, as well as agencies' individual savings targets and the time frame for reporting savings, led the selected agencies to primarily report savings from activities that were planned or under way at the time the memorandum was issued.
GAO's review of the six selected agencies identified several problems that affect the reliability and transparency of the reporting of cost savings in response to the June 2010 memorandum. In particular, the memorandum and subsequent guidance issued by OMB were not clear on the types of savings that could be reported, particularly because the term "cost savings" was not clearly defined. For example, officials from several agencies GAO reviewed said the guidance was unclear about whether savings from cost avoidance measures could be reported. In addition, the agencies interpreted the guidance differently and, in some cases, did not follow the guidance, practices that led to inconsistent reporting, for example:
- Agencies made different assumptions in reporting disposal savings: Two agencies reported one year of avoided operations and maintenance savings for the year in which the disposal occurred, while three agencies reported up to 3 years of savings depending on when disposals occurred during the 3-year period.
- Some agencies did not deduct costs associated with their disposals: State and DHS did not deduct the costs associated with their reported disposal savings. DOE deducted costs for some of its reported disposals savings, but did not deduct costs for disposals carried out by its Office of Environmental Management.
- Some agencies reported savings outside the time frame of the memorandum: GSA reported savings from a property exchange, but retained ownership of the site in 2013, after the deadline, fiscal 2012's end. USDA reported savings from office closures that occurred in fiscal year 2013.
Finally, OMB did not require agencies to provide detailed documentation of their reported savings or include specific information about agencies' reported savings on Performance.gov, limiting transparency. Agency officials stated that the memorandum broadened their understanding of real property cost-savings opportunities. However, establishing clearer standards for identifying and reporting savings would improve the reliability and transparency of the reporting of cost savings and help decision-makers better understand the potential savings of future initiatives to improve federal real-property management.
Why GAO Did This Study
In June 2010, the President issued a memorandum directing federal agencies to achieve $3 billion in real property cost savings by the end of fiscal year 2012 through a number of methods, including disposal of excess property, energy efficiency improvements, and other space consolidation efforts.
GAO was asked to review the cost savings agencies reported in response to the memorandum. This report (1) describes the cost savings agencies reported in response to the June 2010 presidential memorandum and how those savings were identified by selected agencies and (2) determines the extent that selected agencies' reporting of savings was reliable and transparent, and how, if at all, reporting of real property cost savings could be improved. GAO reviewed OMB guidance for implementing the memorandum, reviewed the cost savings agencies reported on the administration's Performance.gov website, and obtained documentation from and interviewed officials from six agencies and OMB staff about the agencies' reported cost savings. GAO selected the agencies based on their overall cost-savings targets and the types of savings measures implemented, among other things.
Recommendations
GAO recommends that the Director of OMB establish clear and specific standards to help ensure reliability and transparency in the reporting of future real-property cost savings. OMB generally agreed with GAO's recommendation.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Management and Budget | To improve future real property cost-savings initiatives and promote reliability and transparency, the Director of OMB, in collaboration with Federal Real Property Council agencies, develop clear and specific standards for: (1) identifying and reporting savings that help ensure common understanding of the various types of cost savings; (2) consistently reporting across categories and agencies; and (3) sufficiently documenting, validating, and reviewing results. |
In recent years, the federal government has undertaken initiatives to achieve cost savings associated with better management of excess and underutilized properties, and better use of remaining real property assets. In 2014, GAO reported that in response to a 2010 Presidential memorandum, federal agencies had identified real property cost savings of $3.8 billion from disposal, space management, sustainability, and innovation activities. These savings primarily related to space consolidations and the elimination of lease arrangements that were not cost effective. However, GAO's review of six selected agencies identified several problems that affected the reliability and transparency of the reporting of these cost savings. In particular, the memorandum and subsequent guidance issued by OMB were not clear on the types of savings that could be reported, particularly because the term "cost savings" was not clearly defined, resulting in data inconsistencies. GAO also found that the documentation of agencies' reported savings was limited because OMB did not establish specific standards that required agencies to provide detailed information in support of their reported cost savings or identify how OMB planned to review and validate the savings agencies reported. To improve future real property cost-savings initiatives and promote reliability and transparency, GAO recommended that OMB develop clear and specific standards for: (1) identifying and reporting savings that help ensure common understanding of the various types of cost savings; (2) consistently reporting across categories and agencies; and (3) sufficiently documenting, validating, and reviewing results. GAO confirmed in 2018 that OMB undertook an effort to identify the most suitable approach for reliably measuring agencies' cost savings from real property activities. OMB first considered a complex data model using data from the Federal Real Property Profile-a government real property database the General Services Administration manages-and data from GSA occupancy agreements, which specify the financial terms and conditions by which an agency occupies GSA-controlled space. OMB then considered another approach that supplemented these data with actual cost data from agencies' financial and procurement systems to estimate cost avoidance and investment costs. After determining that these approaches would pose too many challenges, such as how to separate cost reduction efforts in major projects and the varying capabilities of agencies' systems, OMB decided to adopt another approach. This involves focusing on rent cost avoidance and operation and maintenance cost avoidance using FRPP and GSA occupancy agreement data as a way to assess portfolio wide changes. While this approach did not attempt to estimate investment costs associated with space reductions, OMB concluded that it was the most defensible, repeatable, and accurate estimation method available given the complexity and labor intensive nature of other options. Furthermore, recent improvements to the validation and review processes associated with the FRPP will enhance the reliability and consistency of results. As a result of OMB's efforts to develop a standard for measuring savings that provides for an understandable, consistent, and reliable approach across agencies, decision makers will be better equipped not only to assess the results of real property reform efforts in the federal government, but also to take actions that will maximize these savings in the future.
|