Federal Real Property: DHS Has Made Progress, but Additional Actions Are Needed to Address Real Property Management and Security Challenges

Federal Real Property: DHS Has Made Progress, but Additional
Actions Are Needed to Address Real Property Management and
Security Challenges (22-JUN-07, GAO-07-658).

The Department of Homeland Security (DHS) has a large, diverse
portfolio of property it uses to carry out its mission. GAO's
objectives were to (1) describe DHS's real property portfolio;
(2) determine what challenges, if any, DHS faces in managing real
property and what actions it has taken in response to the
administration's real property initiative; (3) determine what
challenges DHS and the General Services Administration (GSA) face
in consolidating DHS's Washington, D.C. headquarters; and (4)
describe actions DHS has taken to help ensure the security of its
facilities. GAO reviewed documents and interviewed officials from
DHS, GSA, and other stakeholders, including the National Capital
Planning Commission (NCPC) and the District of Columbia (D.C.).
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-658
ACCNO: A71328
TITLE: Federal Real Property: DHS Has Made Progress, but
Additional Actions Are Needed to Address Real Property Management
and Security Challenges
DATE: 06/22/2007
SUBJECT: Cost analysis
Facility management
Facility security
Federal property
Federal property management
Homeland security
Physical security
Real property
Strategic planning

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GAO-07-658

* [1]Results in Brief
* [2]Background
* [3]DHS Has a Large and Diverse Real Property Portfolio

* [4]U.S. Coast Guard Has the Majority of DHS Property
* [5]Types and Locations of DHS Property

* [6]DHS Faces Several Challenges Managing Real Property but Has

* [7]DHS Faces the Challenge of Integrating the Real Property Man
* [8]Percentage of Underutilized Property Is Higher for DHS than
* [9]DHS Real Property Data Are Improving, but Some Components St
* [10]DHS Officials Believe That Better Tools Would Help Address L
* [11]Capital Planning Functions across DHS Are Relatively New
* [12]DHS Is Making Progress Meeting the Requirements of the Admin
* [13]OMB Has Upgraded DHS's Real Property Management Score

* [14]DHS Headquarters Consolidation Faces Challenges Related to I

* [15]Consolidation at St. Elizabeths Could Cost over $3.26 Billio
* [16]Key Stakeholders Are Concerned about Historic Preservation,
* [17]Master Plan Is Critical to the Consolidation's Outcome

* [18]DHS Has Taken Actions Intended to Improve the Security of It

* [19]DHS Has Taken Actions to Improve Communication among Compone
* [20]DHS Has Not Yet Fully Implemented Risk Management Practices
* [21]DHS Has an Incomplete Set of Facility Protection Performance
* [22]FPS Faces Ongoing Challenges
* [23]DHS Has Not Developed a Physical Security Plan As Required u

* [24]Conclusions
* [25]Recommendations for Executive Action
* [26]Agency Comments and Our Evaluation
* [27]Evaluation of DHS and GSA Comments
* [28]Evaluation of the D.C. Office of Planning Comments
* [29]Evaluation of NCPC Comments
* [30]Evaluation of the Advisory Council on Historic Preservation
* [31]Evaluation of U. S. Commission of Fine Arts Comments
* [32]GAO Comments
* [33]GAO Comments
* [34]GAO Contact
* [35]Acknowledgments
* [36]GAO's Mission
* [37]Obtaining Copies of GAO Reports and Testimony

* [38]Order by Mail or Phone

* [39]To Report Fraud, Waste, and Abuse in Federal Programs
* [40]Congressional Relations
* [41]Public Affairs

Report to the Ranking Member, Committee on Homeland Security and
Governmental Affairs, U.S. Senate

United States Government Accountability Office

GAO

June 2007

FEDERAL REAL PROPERTY

DHS Has Made Progress, but Additional Actions Are Needed to Address Real
Property Management and Security Challenges

GAO-07-658

Contents

Letter 1

Results in Brief 3
Background 6
DHS Has a Large and Diverse Real Property Portfolio 10
DHS Faces Several Challenges Managing Real Property but Has Made Progress
Addressing Them 17
DHS Headquarters Consolidation Faces Challenges Related to Its Cost and
Stakeholder Concerns 29
DHS Has Taken Actions Intended to Improve the Security of Its Facilities,
but Its Efforts Are Lacking in Certain Key Areas 46
Conclusions 58
Recommendations for Executive Action 59
Agency Comments and Our Evaluation 60
Evaluation of DHS and GSA Comments 61
Evaluation of the D.C. Office of Planning Comments 63
Evaluation of NCPC Comments 63
Evaluation of the Advisory Council on Historic Preservation Comments 64
Evaluation of U. S. Commission of Fine Arts Comments 64
Appendix I Scope and Methodology 66
Appendix II FRPC Inventory Data Elements and Descriptions 68
Appendix III Comments from the Department of Homeland Security 71
GAO comments 76
Appendix IV Comments from the General Services Administration 77
GAO Comments 86
Appendix V Comments from the District of Columbia Office of Planning 89
Appendix VI Comments from the National Capital Planning Commission 93
Appendix VII Comments from the Advisory Council on Historic Preservation
94
Appendix VIII Comments from the U.S. Commission of Fine Arts 97
Appendix IX GAO Contact and Staff Acknowledgments 99

Tables

Table 1: DHS Real Property Profile by Component 13
Table 2: DHS's Implementation of OMB's Real Property Initiative 28
Table 3: DHS Real Property Housing Scenarios for the Washington, D.C.,
Area 31
Table 4: Preliminary Estimate of the Cost to Develop the St. Elizabeths
Site 36

Figures

Figure 1: Profile of DHS's Real Property Portfolio 12
Figure 2: Percentage of Square Footage across DHS Components (Owned and
Leased) 14
Figure 3: Building-Usage Types across DHS 15
Figure 4: DHS Real Property Square Footage by State 16
Figure 5: DHS's Real Property Organization 26
Figure 6: The Administration Building on the West Campus of St. Elizabeths
33
Figure 7: View from St. Elizabeths West Campus Looking North 33
Figure 8: GSA's Proposed St. Elizabeths Standard Development Schedule 39

Abbreviations

AMP asset management plan
CAO Chief Administrative Officer
CIS Citizenship and Immigration Service
CBP Customs and Border Protection
DDOT District Department of Transportation
DO Departmental Offices
DHS Department of Homeland Security
FEMA Federal Emergency Management Agency
FLETC Federal Law Enforcement Training Center
FPS Federal Protective Service
FRPC Federal Real Property Council
GSA General Services Administration
HSPD-7 Homeland Security Presidential Directive Number 7
INS Immigration and Naturalization Service
ICE Immigration and Customs Enforcement
ISC Interagency Security Committee
NCPC National Capital Planning Commission
NEPA National Environmental Policy Act
NHPA National Historic Preservation Act
NTHP National Trust for Historic Preservation
OMB Office of Management and Budget
RPMC Real Property Management Committee
S&T Directorate for Science and Technology
SRPO Senior Real Property Officer
TAPS The Automated Prospectus System
TSA Transportation Security Administration
USSS U.S. Secret Service

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United States Government Accountability Office
Washington, DC 20548

June 22, 2007

The Honorable Susan Collins
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

Dear Senator Collins:

The Homeland Security Act of 2002 combined 22 federal agencies
specializing in various disciplines--such as law enforcement, border
security, biological research, computer security, and disaster
mitigation--into the Department of Homeland Security (DHS) to bring a
central focus to the government's efforts to prevent and respond to
terrorist threats. DHS is now the third largest federal agency, with an
estimated 180,000 employees and a budget authority of $42.8 billion for
fiscal year 2007. Much of DHS is housed in facilities managed by the
General Services Administration (GSA), including both government-owned
property and space GSA leases from the private sector. The Federal
Protective Service (FPS), which is located within DHS, protects GSA
buildings where DHS is a tenant, while DHS components are responsible for
protecting federal buildings under DHS's control that FPS does not
protect.

We have found over the years that many federal agencies face long-standing
challenges involving excess and underutilized property, deteriorating
facilities, unreliable property data, a heavy reliance on costly leasing,
and facility protection in the post-September 11 environment. These
findings led to our designation, in January 2003, of real property
management as a high-risk area.^1 In response to our high-risk
designation, the administration added a real property initiative to the
President's Management Agenda; and the President issued Executive Order
13327, which implements the real property initiative by outlining several
requirements intended to have agencies accurately account for, maintain,
and manage their real property assets. As such, in reviewing real property
management activities at DHS, we addressed the following questions:

^1GAO, High Risk Series: An Update, [42]GAO-07-310 (Washington, D.C.: Jan.
31, 2007).

1. What is the profile of DHS's real property portfolio?
2. What challenges, if any, does DHS face in managing its real
property portfolio and what actions has it taken in response to
the administration's real property initiative?
3. What challenges do DHS and GSA face in consolidating DHS's
headquarters in Washington, D.C.?
4. What actions has DHS taken to help ensure the physical security
of the facilities where it is located?

To answer our first question, we obtained and analyzed DHS and GSA real
property data. We also interviewed DHS and GSA real property officials and
a contractor that is helping DHS develop its real property inventory.
Although we identified challenges that DHS faces with collecting some real
property data elements, we determined that other data elements--such as
total number of buildings and structures--that we are presenting later in
the report were sufficiently reliable for the purposes of our review. To
answer our second question, we interviewed DHS real property officials
about challenges and considered the extent to which DHS has implemented
Executive Order 13327 as the basis for measuring DHS's progress in real
property management. For the first and second questions, we also
interviewed Office of Management and Budget (OMB) staff because OMB
oversees real property management governmentwide. To answer our third
question, we reviewed and analyzed key documents and interviewed DHS real
property officials from headquarters and GSA officials responsible for
assisting DHS with its headquarters consolidation efforts. This included
reviewing planning documents related to a proposed consolidation of DHS
headquarters on the West Campus of St. Elizabeths Hospital in the District
of Columbia. We also interviewed additional stakeholders, including
officials from the National Capital Planning Commission (NCPC) and the
District of Columbia Office of Planning. The stakeholders we contacted are
discussed in more detail in appendix 1. To answer the fourth question, we
interviewed DHS physical security headquarters officials and security
officials from DHS's various components. We also interviewed FPS officials
and GSA officials responsible for security at locations where GSA houses
DHS. We analyzed pertinent physical security documents and policies from
DHS and GSA. We conducted our work between March 2006 and April 2007 in
accordance with generally accepted government auditing standards.

Results in Brief

DHS's 10 major organizational components have a large and diverse real
property portfolio that consists largely of properties where DHS's legacy
agencies were housed before the department's creation. According to DHS
and GSA data, this portfolio includes more than 27,000 owned or leased
buildings and structures, totaling almost 78 million square feet. Property
in this portfolio generally falls into four categories: (1) federally
owned property that DHS controls; (2) federally owned property that GSA
controls and DHS rents from GSA as a tenant agency; (3) property that is
not federally owned that DHS leases through GSA, which acts as a leasing
agent for DHS and charges DHS rent to occupy the space; and (4) property
that is not federally owned that DHS leases directly without GSA
involvement. About 72 percent of DHS real property is federally owned,
either controlled by DHS or GSA, while about 28 percent of DHS real
property is federally leased, either directly from a nonfederal entity by
DHS or through GSA. These percentages are similar to governmentwide
percentages for these property categories. Seventy nine percent of federal
real property is federally owned, while 21 percent is leased or otherwise
managed. The U.S. Coast Guard (Coast Guard) occupies the bulk of DHS real
property, accounting for 69 percent of its buildings, 90 percent of its
structures, such as docks, piers, bridges, monuments, and statues, and
about 41 percent of its square footage. DHS's real property portfolio
reflects the diversity of its components' various missions and thus
includes office buildings, law enforcement training centers, laboratories,
border control sites, and detention facilities.

DHS faces challenges in the real property area, but has made progress
toward addressing them in response to the administration's real property
management initiative. One major challenge relates to DHS's creation as a
new federal department that combined 22 existing agencies, which has made
the development of a cohesive approach to real property management a
significant undertaking. For example, some components, most notably the
Coast Guard, arrived intact with stable real property portfolios as well
as strategies, an organization, and processes for managing assets. Others,
such as Customs and Border Protection and Immigration and Customs
Enforcement, were formed from multiple legacy agencies, each with
different real property portfolios and asset management strategies. Other
challenges DHS faces--including making better use of underutilized
property and ensuring data are reliable--are typical of those we have
found at other agencies in recent years. For example, DHS reported that
about 9.7 percent of its inventory was underutilized, and DHS has yet to
fully assess the reliability of its real property data. DHS also faces
other challenges common to many federal agencies, including various legal
and budget-related limitations that often do not lead to businesslike
outcomes and a need for improved capital planning. To address the
challenges, DHS has clearly benefited from the administration's focus on
improving real property management across government. On the
administration's agency scorecard for real property
management--established in fiscal year 2004 to measure each agency's
progress in implementing Executive Order 13327--DHS has achieved a
"yellow" status, which indicates progress in strategically managing real
property by, for example, designating a senior real property officer and
developing an OMB-approved asset management plan. However, we found that
DHS could do more to improve its capital decision-making practices by
embracing OMB's capital planning principles, such as developing a
departmentwide capital plan. We are recommending that DHS's Secretary use
OMB's capital planning principles to link DHS's long-term capital needs
with the asset management planning activities required under the
President's real property initiative.

Consolidating its Washington, D.C., area locations will be challenging for
DHS because of the costs involved, currently estimated to be at least
$3.26 billion, and key stakeholders' concerns about the redevelopment of
the West Campus of St. Elizabeths Hospital, DHS's preferred location. DHS
believes that by consolidating most of its headquarters operations,
greater efficiencies would result, its mission would be better integrated,
and the security of its facilities could be better managed. In the
Washington, D.C., area, DHS has seven core operating components from 22
legacy agencies in 53 locations, accounting for approximately 7 million
square feet of federally owned and leased office space with most leases
due to expire in the next 10 years. DHS is pursuing St. Elizabeths for its
consolidation, based on analyses conducted by GSA, and ultimately wants
4.5 million square feet of space at this location. The St. Elizabeths West
Campus has 61 buildings on 176 acres and is a National Historic Landmark
District. As the government's real property disposal agency, GSA gained
custody and control of the site after it was transferred in December 2004
from the Department of Health and Human Services. According to GSA and
DHS, the St. Elizabeths site is able to accommodate DHS's preferred amount
of development and is advantageous from a security perspective because of
its security setbacks, the space between a property's perimeter barrier
and a building's exterior.

GSA and DHS estimate that the overall consolidation would cost at least
$3.26 billion if 4.5 million square feet of office space, plus parking, is
developed at the St. Elizabeths West Campus. Using an analysis prepared by
GSA, DHS has also testified that a consolidation alternative of 4.5
million gross square feet would save an estimated $1 billion over 30 years
in current dollars over an alternative involving renewing leases, although
a revised GSA analysis--that assumes a lower rental rate for parking space
than office space--currently estimates cost savings at $743 million.
However, it is important to note that this cost-savings analysis does not
(1) use DHS's actual and projected leasing costs for locations where it is
currently housed; (2) include DHS costs to develop the site, which include
costs such as tenant building improvements and currently stand at $1.32
billion, or how those costs would vary depending on the alternative
chosen; and (3) examine a range of possible alternatives to house DHS and
their associated costs for the St. Elizabeths site. Additionally, GSA and
DHS could better support their case for consolidation at St. Elizabeths
West Campus with a thorough analysis of the savings they expect from
reducing the costs of physical security investment and hardening at
downtown leased locations. While GSA's analysis is useful to determine
whether a construction and leasing alternative is more cost effective, a
more comprehensive analysis that considers the additional factors above
would improve transparency and allow for more informed decision making. We
are recommending that DHS and GSA develop a more comprehensive cost
analysis to better justify the St. Elizabeths consolidation from the
perspective of the government, as a whole. In addition to the challenge of
obtaining funding for a series of projects of this magnitude, DHS and GSA
face objections from several key stakeholders that are concerned about
whether the project would comply with current historic preservation and
environmental laws. These stakeholders generally support federal use and
development of the property, up to 2.5 million square feet of office
space, but have concerns about the magnitude of the current alternatives
under consideration, given the designation of St. Elizabeths as a National
Historic Landmark District. There is also concern about the project's
effect on the local community, including the project's traffic impacts and
the availability of contracting and retail opportunities. However, some
community leaders have stated that they support locating federal
development at St. Elizabeths as an economic driver and magnet for
additional development and revitalization. Critical to the outcome of the
proposed consolidation is GSA's development of a Master Plan, currently
scheduled to be released in July 2007 for review and public comment with a
final Master Plan scheduled to be submitted by December 2007.

In recent years, DHS has taken actions intended to improve the security of
its facilities, but its efforts fall short in certain key areas, such as
fully implementing risk management across its components. Like other
federal agencies, DHS has made physical security improvements to its
facilities, such as adding pop-up bollards and installing bullet-resistant
glass. DHS has also designated a Chief Security Officer for the department
and established a Chief Security Officer Council to assist the Chief
Security Officer in evaluating security issues. DHS also plays an
important role in developing guidance for agencies to follow in protecting
federal facilities against the threat of terrorism through the Interagency
Security Committee (ISC), which DHS chairs. However, despite the actions
DHS has taken and its prominent role in facility protection
governmentwide, most DHS components have not fully implemented risk
management for facility protection, which we have recommended and DHS has
advocated for federal agencies. Risk management is useful for ensuring
that security resources are directed where they are needed most and yield
the greatest improvements in facility protection. Furthermore, despite
DHS's role in developing guidance for federal, state, and local officials
in performance measurement, no DHS components currently have a fully
developed set of agency- and facility-specific physical security
performance measures. And, FPS has not finalized a transformation
strategy, which we recommended almost 3 years ago, to address several
challenges FPS faced, including its expanding mission and issues related
to funding. We also found that DHS has not developed a physical security
plan, as all executive agencies are required to develop under Homeland
Security Presidential Directive 7 (HSPD-7). It is critical that DHS lead
by example in the physical security area, and we are therefore
recommending that DHS develop a physical security plan that addresses
DHS's plans to fully implement risk management and develop performance
measures for facility protection.

Background

The Homeland Security Act of 2002 combined 22 federal agencies
specializing in various disciplines into the Department of Homeland
Security. DHS is organized into directorates, components and agencies,
collectively referred to as components. Responsibility for real property
asset management resides in the [43]Office of the Under Secretary for
Management , which is also responsible for the DHS's budgets, expenditure
of funds, accounting and finance, procurement, human resources,
information technology systems, facilities and equipment, and the
identification and tracking of performance measurements.

The 10 major components with real property requirements and portfolios are
as follows:

o The [44]Federal Emergency Management Agency (FEM A) prepares the
nation for hazards, manages federal response and recovery efforts
following any national incident, and administers the National
Flood Insurance Program.
o The [45]Transportation Security Administration (TSA) protects
the nation's transportation systems to ensure freedom of movement
for people and commerce.
o [46]Customs and Border Protection (CBP) protects the nation's
borders to prevent terrorists and terrorist weapons from entering
the United States, while facilitating the flow of legitimate trade
and travel.
o [47]Immigration and Customs Enforcement (ICE) the largest
investigative arm of DHS, identifies and mitigates vulnerabilities
in the nation's border, economic, transportation, and
infrastructure security.
o The [48]Federal Law Enforcement Training Center (FLETC) provides
career-long training to law enforcement professionals to help them
fulfill their responsibilities safely and proficiently.
o [49]Citizenship and Immigration Services (CIS) administers
immigration and naturalization adjudication functions and
establishes immigration services policies and priorities.
o The [50]Directorate for Science and Technology (S&T) is the
primary research and development arm of DHS. It provides federal,
state, and local officials with the technology and capabilities to
protect the homeland.
o The [51]U.S. Coast Guard (Coast Guard) protects the public, the
environment, and U.S. economic interests--in the nation's ports
and waterways, along the coast, on international waters, or in any
maritime region as required to support national security.
o The [52]U.S. Secret Service (USSS) protects the President and
other high-level officials and investigates counterfeiting and
other financial crimes, including financial institution fraud,
identity theft, computer fraud, and computer-based attacks on the
nation's financial, banking, and telecommunications
infrastructure.
o Departmental Offices (DO) provide vision, strategic planning,
organizational structure, policy guidance, and executive
leadership.

Since January 2003, we have identified federal real property as a
high-risk area because of long-standing problems with excess and
underutilized property, deteriorating facilities, unreliable
property data, and a heavy reliance on costly leasing. Federal
agencies were also facing many challenges in protecting their
facilities against the threat of terrorism. In addition, we found
that these problems have been exacerbated by competing stakeholder
interests in real property decisions, various legal and
budget-related disincentives to businesslike outcomes, and the
need for better capital planning among agencies.

DHS must meet key real property management requirements
established in

o Executive Order 13327,
o Federal Real Property Asset Management Initiative (real property
initiative),
o Federal Real Property Council guidance, and
o OMB guidance for the real property initiative.

In response to our high-risk designation, the President signed
Executive Order 13327 in February 2004, Federal Real Property
Asset Management, which directs each executive agency such as DHS
to (1) appoint a Senior Real Property Officer (SRPO), (2) develop
and implement an asset management plan, (3) develop and use a real
property data inventory, and (4) develop and use performance
measures. The executive order also called for the establishment of
the interagency Federal Real Property Council (FRPC) to develop
guidance to implement the executive order, serve as a
clearinghouse for best practices, and facilitate the efforts of
the SRPOs. FRPC initially identified and defined 23 data elements
that must be captured and reported by the 15 largest federal
landholding agencies, including DHS (see app. II for a description
of these 23 data elements).^2 Four of the 23 data elements
established by FRPC are performance measures--utilization,
condition index, mission dependency, and annual operating and
maintenance costs. OMB is responsibile for overseeing the
implementation of these real property requirements through its
real property initiative, the goal of which is to ensure that
agencies maintain their property inventories at the right size,
cost, and condition to support agency missions and objectives.

The National Capital Planning Act of 1952, as amended, requires
federal agencies to prepare master plans for proposed development
using federal funds in consultation with NCPC, which provides
overall planning guidance for federal land and buildings in the
Washington, D.C., metropolitan area. A master plan should include
the present composition of a site and the plan for its orderly and
comprehensive long-range development, generally over a period of
20 years. NCPC has determined that a master plan is a required
preliminary stage of planning prior to agency preparation and
submission to NCPC of site and building plans for individual
projects. Master plans are necessary for sites on which more than
one principal building, structure, or activity is located or is
proposed to be located. A master plan also serves as the basic
planning document for intergovernmental coordination on
developments and projects within a site. GSA is preparing a Master
Plan for the St. Elizabeths site in conjunction with the
environmental impact statement that it must prepare for the site
under the National Environmental Policy Act (NEPA).

After the 1995 bombing of the Alfred P. Murrah Federal Building in
Oklahoma City, the Department of Justice created minimum security
standards for federal facilities. In October 1995, the President
signed Executive Order 12977, which established ISC. ISC was
expected to enhance the quality and effectiveness of security in,
and protection of, facilities in the United States that are
occupied by federal employees for nonmilitary activities and to
provide a permanent body to address continuing governmentwide
security issues for federal facilities. ISC is expected to have
representation from all the major federal departments and
agencies, as well as a number of key offices. ISC's specific
responsibilities under the executive order generally relate to
three areas: developing policies and standards, ensuring
compliance and overseeing implementation, and sharing and
maintaining information.

^2In August 2006, FRPC added a 24th data element on disposition of real
property.

In November 2004, we identified key practices that collectively
could provide a framework to guide agencies' facility protection
efforts, including allocating resources using risk management,
leveraging security technology, and measuring program performance.
We also identified obstacles to implementing these key practices,
including challenges in developing quality data to form the basis
for risk management, ensuring that technology performs as
expected, and determining how to measure the impact of various
facility protection approaches on improving facility protection.
In July 2004, we identified challenges facing FPS as it moved from
GSA to DHS.

Since September 11, 2001, the focus on protecting the nation's
critical infrastructure has grown considerably. The Homeland
Security Act of 2002 and other administration policies assigned
DHS specific duties associated with coordinating the nation's
efforts to protect critical infrastructure, and HSPD-7 stated that
Secretary of Homeland Security was responsible for coordinating
the overall national effort to identify, prioritize, and protect
critical infrastructure and key resources. Under the Homeland
Security Act of 2002, the FPS was transferred from GSA to DHS and,
as a result of this transfer, DHS assumed responsibility for
coordinating ISC in March 2003.

DHS Has a Large and Diverse Real Property Portfolio

DHS's 10 major organizational components have a large and diverse
real property portfolio that largely consists of the property
where DHS's legacy agencies were housed before the department's
creation. According to DHS and GSA data, this portfolio includes
more than 27,000 owned or leased buildings and structures totaling
about 78 million square feet, accounting for 2 percent of the
federal real property portfolio. As shown in figure 1, property in
this portfolio generally falls into four categories: (1) federally
owned property that DHS controls; (2) federally owned property
that GSA controls and leases to DHS as a tenant agency; (3)
property that is not federally owned that DHS leases through GSA,
which acts as a leasing agent for DHS and charges DHS rent to
occupy the space; and (4) property that is not federally owned
that DHS leases directly without GSA involvement.

As the federal government's real property manager, GSA provides
office space for most federal agencies, including DHS, and also
provides other types of space, such as laboratories and border
stations. The Federal Buildings Fund, which is administered by
GSA, is an intergovernmental revolving fund that GSA uses as a
means to finance the operating and capital costs associated with
federal space under its control or custody. GSA charges
agencies--including DHS--rent, and the receipts are deposited into
this fund. Congress exercises control over the fund through
appropriations that set annual limits--called obligational
authority--on how much of the fund can be expended for various
activities. In fiscal year 2006, DHS paid GSA approximately $828
million in rent for the lease of federally owned property held by
GSA and for property leased from a third party through GSA,
depicted in figure 1 as 16.5 percent and 24.9 percent,
respectively. Although DHS obtains 42.0 percent of its space
through GSA (fig. 1) more than one-half of DHS property does not
involve GSA. This property is either federally owned property held
directly by DHS or property DHS leased from a third party,
depicted as 55.2 percent and 3.5 percent, respectively, (fig. 1).
Overall, the percentages of DHS-occupied space that are federally
owned versus leased generally fall in line with trends for the
government, as a whole. About 72 percent of DHS real property is
federally owned, either controlled by DHS or GSA, while about 28
percent of DHS real property is federally leased, either directly
from a nonfederal entity by DHS or indirectly through GSA. By
comparison, 79 percent of federal property is federally owned,
while 21 percent is leased or otherwise managed.^3

^3Otherwise-managed properties are those owned by a state government or
foreign government that holds title to the real property, but has granted
rights for use to a federal government entity in other than a leasehold
arrangement.

Figure 1: Profile of DHS's Real Property Portfolio

U.S. Coast Guard Has the Majority of DHS Property

At the component level, the Coast Guard occupies the majority of
DHS real property, accounting for 69 percent of its buildings, 90
percent of its structures, and about 41 percent of its square
footage. As shown in table 1 and figure 2, CBP and ICE have the
second and third highest real property square footage, 19 percent
and 10 percent, respectively. CBP and ICE also lease the most
property, about 12 million square feet and 6 million square feet,
respectively. Fifty-five percent of DHS's square footage is
federally owned and under the control of DHS, while 41 percent is
leased through GSA. If Coast Guard real property is excluded from
the analysis of DHS real property, DHS components lease about 71
percent of the remaining real property, a higher rate of reliance
on leases than is found governmentwide. Some components, like ICE
and CIS, said that they preferred to lease much of their property
so that they would have the flexibility to move offices to
wherever immigration populations increase or clusters of activity
develop. For changing and short-term needs such as these, it may
make economic sense to lease. However, DHS is trying to reduce its
reliance on leasing for long-term needs. For example, in January
2007, CBP purchased the 10 acre Nogales Border Patrol Station in
Arizona for $5.4 million with 30 months remaining on a $90,000 per
month lease. This purchase saved CBP $2.7 million in future lease
payments through 2008 plus the cost of subsequent leases. In
another example, DHS hopes to consolidate its Washington, D.C.,
headquarters at the St. Elizabeths site to reduce its reliance on
leasing in the Washington, D.C., metropolitan area. As we have
reported, building ownership--rather than ordinary operating
leases--is often a less expensive way to meet agencies' long-term
space requirements.^4

Table 1: DHS Real Property Profile by Component

Occupied Percent Percent
square footage of total leased Percent
Component (SF) SF Leased SF SF Owned SF owned SF
Coast Guard 32,158,182 41.3 % 2,466,826 7.1 % 29,691356 69.1 %
CBP 15,077,506 19.4 11,764,095 33.7 3,313,411 7.7
ICE 7,866,571 10.1 6,463,027 18.5 1,403,544 3.3
FLETC 5,550,505 7.1 4,079 0.0 5,546,426 12.9
CIS 5,373,280 6.9 5,373,280 15.4 0 0
FEMA 2,922,833 3.8 1,918,223 5.5 1,004,610 2.3
USSS 2,459,577 3.2 2,184,049 6.3 275,528 0.6
TSA 3,397,519 4.4 3,397,519 9.7 0 0
DO 1,038,313 1.3 1,038,313 3.0 0 0
S&T 659,701 0.8 101,062 0.3 558,639 1.3
Other 1,331,850 1.7 146,370 0.4 1,185,480 2.8
Total 77,835,837 100 34,856,843 100 42,978,994 100

Source: GAO analysis of DHS and GSA real property data.

^4GAO, High Risk Series: Federal Real Property, [53]GAO-03-122
(Washington, D.C.: January 2003).

Figure 2: Percentage of Square Footage across DHS Components (Owned and
Leased)

Types and Locations of DHS Property

Not surprisingly, DHS's real property portfolio reflects the diversity of
its components' various missions and thus includes office buildings, law
enforcement training centers, laboratories, border control sites, and
detention facilities. Of over 11,700 buildings in its portfolio, three
building-usage types were most common: family housing, warehouses, and
offices (see fig. 3). Family housing, most of which is associated with the
Coast Guard, is the most common building type, accounting for about 2,900
buildings or 25 percent of DHS's building inventory. Offices and
warehouses account for about 2,400 and 2,350 buildings, respectively, or
21 percent and 20 percent of DHS's building inventory. In terms of square
footage, offices account for 44 percent of DHS's inventory, while family
housing and warehouses account for 17 and 6 percent, respectively.
Examples of other relatively common building usage types include service
buildings and institutional buildings.^5 By comparison, in 2005, offices
were the most common building type across the federal government,
accounting for 20 percent of the federal government's square footage,
while family housing and warehouses were second and third, accounting for
18 and 13 percent of the federal government's square footage, respectively
(fig. 3).

Figure 3: Building-Usage Types across DHS

As shown in figure 4, California has the most DHS real property square
footage. DHS also has a significant presence in Texas, Alaska, Florida,
Georgia, Virginia, Maryland, the District of Columbia, New York, and
Massachusetts. This is generally consistent with federal space
governmentwide, which is concentrated heavily in California, Texas,
Virginia, Maryland, and Florida.

^5Service buildings are used for service activities, such as maintenance
and repair shops, dry cleaning plants, post exchange stores, airport
hangars, and buildings primarily used for vehicle maintenance and repair.
Institutional buildings are used for institutional purposes other than
schools, hospitals, and prisons, such as libraries, chapels, outpatient
clinics, dining facilities, and buildings housing entertainment and
recreational activities.

Figure 4: DHS Real Property Square Footage by State

DHS Faces Several Challenges Managing Real Property but Has Made Progress
Addressing Them

In addition to the challenge associated with being a new federal
department, DHS faces other challenges that, in some key areas, are
typical of those we have found at other agencies in recent years. Since we
designated federal real property as a high-risk area in 2003, we have
reported on long-standing problems across several agencies that include
unneeded and deteriorating property, unreliable real property data, and
heavy reliance on costly leasing. In addition, deep-rooted obstacles,
including competing stakeholder interests, legal and budgetary
limitations, and a need for improved capital planning, continue to hamper
reform. DHS has taken steps to address the challenges, largely in response
to the administration's real property initiative.

DHS Faces the Challenge of Integrating the Real Property Management Activities
of 22 Legacy Agencies

DHS faces the major challenge of being a new federal department that
combined 22 existing agencies, making the development of a cohesive
approach to real property management a significant undertaking. Some
components, most notably the Coast Guard, arrived intact with stable real
property portfolios as well as established strategies, organization, and
processes for asset management. Others, such as CBP and ICE, were formed
from multiple legacy agencies, each with distinct real property portfolios
and asset management strategies that needed to be integrated to function
as one. Components such as TSA and S&T are relatively new federal
functions with growing portfolios and newly established real property
asset management organizations. DHS and OMB officials cited the
integration of DHS's 22 legacy agencies, whose primary missions are not
real property management, as one of the biggest challenges facing managers
of DHS real property. Examples of the challenge of integration at the
component level include the following:

o CBP, which was created through the consolidation of Customs, the
Border Patrol, and the inspective functions of the Immigration and
Naturalization Service (INS) and of the Agriculture and Plant
Health Inspection Service into a new parent organization, was
challenged with inventorying unique types of property (roads,
walls, and technical infrastructure) within the Border Patrol that
have not been inventoried in the past. CBP recently completed its
real property inventory of assets, including its border patrol
stations.
o ICE, formed in 2003 by combining the law enforcement arms of INS
and the former U.S. Customs Service, is facing the challenge of
increasing its real property staff to do all the needed real
property work. A senior ICE real property official said that very
few real property staff transitioned with ICE in 2003, so ICE's
real property program is behind the programs of most other DHS
components. This official said that ICE plans to have a complete
real property staff by the end of fiscal year 2007.
o CIS, which transitioned into DHS with the service and benefit
functions of INS, also faces transition challenges. According to
DHS officials, it did not receive any administrative staff and not
enough security staff, so CIS had to set up its own management
processes in these areas and start over.

DHS officials recognize the significant challenge they face
developing a cohesive approach to real property management at DHS.
To address this challenge and respond to the administration's real
property initiative, DHS created the Chief Administrative Officer
Council and the DHS Real Property Management Committee (RPMC) in
fiscal year 2004. Both were established to review and coordinate
DHS real property issues. The activities and makeup of these
councils will be discussed later as they relate to DHS's actions
in response to the real property initiative.

Percentage of Underutilized Property Is Higher for DHS than for
Some Other Large Agencies

In our update of the high-risk series for real property in 2007,
we reported that according to DHS, approximately 9.7 percent of
its inventory is underutilized.^6 DHS reported more combined
underutilized and excess property than some federal departments
that we surveyed.^7 For example, some departments, including the
Department of the Interior, the Department of State, and the
Department of Veterans Affairs report levels of underutilized or
excess property at or below 2 percent. Other agencies--including
the Department of Energy, the National Aeronautics and Space
Administration, and large real property holding agencies like
DHS--have similar or higher levels of underutilized property and
report that over 10 percent of the facilities in their inventories
were underutilized. Retaining excess and underutilized properties
is not the best use of federal dollars because properties are
costly to maintain and results in lost opportunities when they are
not put to more beneficial uses. In addition, continuing to hold
real property that may no longer be needed or that could be better
used does not present a positive image of the federal government
in local communities.

^6GSA Management Regulations define underutilized property as an entire
property or portion of a property that is used only at irregular periods
or intermittently by the accountable agency or property that is being used
for the agency's current program purposes that can be satisfied with only
a portion of the property. (41 C.F.R. 102-75.50).

^7GAO, Federal Real Property: Progress Made Toward Addressing Problems,
but Underlying Obstacles Continue to Hamper Reform, [54]GAO-07-349
(Washington, D.C.: Apr. 13, 2007).

At the time of our review, DHS was developing a Vacant Space
Report that its components will use to report on their
underutilized and excess real property. As new space requirements
arise, they will be evaluated against this Vacant Space Report to
determine if the new requirement can be accommodated in the
underutilized or excess space before DHS seeks new space. If no
suitable candidate can be found for excess real property, the
disposal process will be initiated. At the moment, a Vacant Space
Report is being developed for use only for the Washington, D.C.,
area. Underutilized space is tracked via DHS's Real Property
Information System. DHS currently follows the Coast Guard's
policies, procedures, and authorities for real property disposal.
This is in accordance with established DHS policy to continue
using legacy authorities, policies, and procedures under
Management Directive 560. DHS also follows Coast Guard policy
because the Coast Guard has about 69 percent of the federally
owned real property in the DHS portfolio.

DHS Real Property Data Are Improving, but Some Components Struggle
to Collect Complete Information on Some Data Elements

Overall, DHS real property data are mostly complete because DHS
has compiled an initial set of data on its real property
consistent with FRPC definitions.^8 DHS components provide data
for all data elements required under FRPC guidance, although some
data elements are temporary proxies. Some DHS components, such as
the Coast Guard and TSA, said that they have a robust real
property data inventory that they use daily in their decision
making. For example, a TSA real property official noted that TSA's
real property database is able to generate daily reports about TSA
real property needs. DHS as a whole is working toward providing
evidence to OMB that all its components use an accurate and
current inventory in their daily management decision making.

Although DHS components' data are mostly complete, some
components, such as CBP and ICE, are using data proxies for some
data elements until these components can develop more robust data
measures. The condition index, a measure of an asset's condition
at a particular point in time, is an example of a problematic
performance measure. A common problem for some components,
particularly the larger ones that were formed from multiple legacy
agencies, is finding the resources to fully develop certain data
elements, so components are developing proxies in the interim. For
example, as a proxy for a building's condition index--which,
according to a DHS official, would be expensive to perform--CBP
hired a consultant to do a mini-assessment of its properties. The
consultant rated each of CBP's properties on a scale of 1 to 5
(with 1 being in excellent condition and 5 being unusable.) CBP
will use these ratings to prioritize decisions about how best to
maintain its real property assets.

^8Although DHS has yet to assess the accuracy and reliability of its real
property data, we deemed the dataset complete and reliable enough to
report broadly on its profile.

CBP and ICE have not developed a true condition index for each of
their real property holdings because, according to DHS officials,
these components lack the funding to conduct full facility
condition assessments. These assessments are important because
they establish an ongoing process for monitoring facility
conditions and enable an agency to develop a comprehensive plan
for facility maintenance and building renewal. Data from the
assessments enable the agency to prioritize projects for budget
requests and increase the agency's accountability since the
assessments enable the agency to show a direct correlation between
its facility needs and budget plans. Full facility condition
assessments would also allow DHS to accurately estimate its
deferred maintenance backlog, which it is currently unable to
do.^9 DHS officials say there are disparities in how components
track deferred maintenance across the department and acknowledge
that this is a problem. DHS said it had to take a sample of
deferred maintenance in the department to estimate that its
deferred maintenance costs in fiscal year 2005 were between $497
million and $619 million.

Components such as the Coast Guard, CBP, and ICE use data proxies
to report annual operating and maintenance costs. These components
are having difficulty tracking costs for recurring maintenance and
repairs, utilities, cleaning and janitorial services, and
landscaping at the building level. For example, the Coast Guard
noted that tracking annual operating costs was difficult because,
although the Coast Guard can easily calculate the costs of
managing a facility (which consists of multiple buildings), the
agency does not have the systems in place to account for cost
streams at the building level. For example, the Coast Guard cannot
capture the costs of janitorial services and landscaping at the
building level. Without building-level cost information, it
becomes more difficult for the Coast Guard to identify how its
costs may be increasing over time, which could help the Coast
Guard take action to reduce costs. DHS is working to correct this
challenge within each of these components.^10

^9Deferred maintenance is maintenance that was not performed when
scheduled and is put off for the future.

^10In commenting on this report, CBP stated that although there are
ongoing difficulties in gathering some of this operating cost data,
changes made to CBP's enterprise system in fiscal year 2007 will allow CBP
to start tracking expenditures for specific utility and service contract
material groups by building. CBP is also working with local and regional
energy providers to update account and location information to provide
better tracking of utility costs.

The Coast Guard, CBP, FEMA, and ICE have also struggled to report
on various property restrictions, such as whether property has
historical, endangered species, developmental, or environmental
restrictions. Some components use a data proxy as a substitute for
fully researched data on restrictions. For example, since the
Coast Guard and CBP do not have data on which buildings have
lead-based paint and collecting these data for thousands of
buildings would take considerable time and resources, the agencies
are using each building's construction date as a proxy for
environmental restrictions. Buildings constructed after 1977, when
lead-based paint was banned from housing, are not restricted.
Without information on buildings' potential health hazards, such
as lead-based paint or asbestos, DHS real property managers cannot
make fully informed real property management decisions. DHS
officials noted that it was difficult for components with hundreds
or thousands of buildings and structures, such as the Coast Guard
and CBP, to review the thousands of documents associated with all
the buildings in their portfolios that would need to be reviewed
to accurately identify all restrictions.

Lastly, some components are not reporting all real property assets
to DHS's Real Property Information System. For example, the Coast
Guard's reported inventory did not include approximately 2.3
million square feet of GSA-leased space and 1.0 million square
feet of directly leased space. FEMA's real property inventory is
missing some disaster leases and structures. Having a real
property database with complete data on an agency's real property
assets is important for effective real property management
decision making. DHS's components are working to fully update this
information before their next submission to DHS's Real Property
Information System.

DHS Officials Believe That Better Tools Would Help Address Legal
and Budgetary Limitations

As at other federal agencies, we found that the complex legal and
budgetary environment in which real property managers operate has
a significant impact on real property decision making and often
does not lead to businesslike outcomes at DHS. For example, many
agencies, including DHS, are not authorized to retain any of the
proceeds from the sale of surplus property. We have reported that
this legal limitation can lead agencies to retain unneeded assets
that create maintenance and upkeep costs for the government. Coast
Guard officials said that having the authority to retain some
reasonable percentage of proceeds from disposal of surplus real
property would help offset the amount of time and cost it takes to
complete a sale.

To facilitate the disposal of federally owned historic
lighthouses, the National Historic Preservation Act (NHPA) was
amended to provide a mechanism for their disposal.^11 Under this
program, a senior Coast Guard official noted the agency works with
GSA to sell Coast Guard lighthouses to a responsible party. The
act authorizes the crediting of net proceeds from the public sale
of historic lighthouses under Coast Guard control to the Coast
Guard appropriation account that is used to maintain lighthouses
remaining under the Coast Guard's control.^12 According to this
official, a similar arrangement between DHS and a third party for
real property other than lighthouses would help DHS make better
use of its underutilized assets.

In addition to the authority to retain proceeds, Coast Guard
officials identified enhanced-use leasing as a real property
management tool that they do not have but that would enable them
to better manage their real property portfolio.^13 The Departments
of Defense and Veterans Affairs have been authorized to enter into
enhanced-use leasing agreements. Enhanced-use leasing encourages
innovative public-private partnerships that leverage underutilized
properties to generate revenues and reduce operating costs.

^11The National Historic Lighthouse Preservation Act of 2000 amended NHPA.
See 16 U.S.C. S 470w-7.

^1216 U.S.C. S 470w-8.

^13Enhanced-use lease agreements are lease agreements for property under
an agency's control or custody that the agency can (1) enter into with a
public or private entity and (2) receive as payment under the lease either
cash or other consideration such as repairs of the facilities.

Capital Planning Functions across DHS Are Relatively New

Over the years, we have reported that prudent capital planning can
help agencies to make the most of limited resources and that
failure to make timely and effective capital acquisitions can
result in increased long-term costs.^14 Real property is one of
the major types of capital assets that agencies acquire. Other
capital assets include information technology, major equipment,
and intellectual property. GAO, Congress, and OMB have identified
a need to improve federal decisions about capital investment. Our
Executive Guide,^15 OMB's Capital Programming Guide, and OMB's
revisions to Circular A-11 have been designed to provide guidance
to agencies for making capital investment decisions. However,
agencies are not required to use this guidance. Furthermore,
agencies have not always developed overall goals and strategies
for implementing capital investment decisions, nor has the federal
government planned or budgeted for capital assets over the long
term.

Our prior work assessing agencies' implementation of the planning
phase principles in OMB's Capital Programming Guide and our
Executive Guide found that some agencies' practices did not fully
conform to OMB's principles and that the agencies' implementation
of capital planning principles was mixed. Specifically, for the
agencies we reviewed, their capital planning processes were
generally linked to their strategic goals and objectives, and most
of them had formal processes for ranking and selecting proposed
capital investments; however, the agencies had limited success
using agencywide asset inventory systems and data on asset
condition to identify performance gaps. In addition, we found that
none of the agencies had developed a comprehensive, agencywide,
long-term capital investment plan.^16

^14Capital plans, covering 5 years or more, explain and justify an
agency's long-term capital asset decisions. These plans should be the
result of an executive review process that has determined the proper mix
of existing assets and new investments needed to fulfill the
organization's missions, goals, and objectives. Capital assets are land,
structures, equipment, and intellectual property that are used by the
federal government and have an estimated useful life of 2 years or more.

^15GAO, Executive Guide: Leading Practices in Capital Decision-Making,
[55]GAO/AIMD-99-32 (Washington, D.C.: December 1998).

^16GAO, Agency Implementation of Capital Planning Principles Is Mixed,
[56]GAO-04-138 (Washington, D.C.: Jan. 16, 2004).

During this review, we found that DHS's long-term capital planning
is relatively new and generally needs improvement. DHS does not
yet have a departmentwide capital plan but is working toward
developing one. DHS's Investment Review Process is designed to
promote sound capital asset decisions across the department.
However, we have reported that this process has problems, such as
reliance on interim guidance that has changed frequently over the
last 2 years, making it difficult for staff to know if they are
using the latest version. The Coast Guard has a well-established
capital planning function, but other DHS components have capital
planning functions that have just been formed. For example, CBP
established its capital planning process in November 2004, but has
not developed a comprehensive long-term capital plan, although it
does have documents that contain some elements of such a plan.^17
CIS's capital planning process, also established in 2004 after the
formation of DHS, uses a long-term strategic plan to assess the
current state of its real property assets and to work toward
developing a longer-term capital plan. Other DHS components, such
as ICE and FEMA, have long-term capital planning functions that
are in early stages or lack real property programs with long-term
capital plans. In February 2007, ICE developed a draft 20-year
leasing plan that charts real property inventory, lease
acquisition, and other key metrics. According to ICE officials,
the 20-year plan allows ICE the ability to forecast capital needs
and align staff and resources to execute projects. However,
although ICE has made progress, additional work is needed.

Without capital plans for each of its components, DHS will have
difficulty making the most of limited resources and making timely
and effective capital acquisitions that will reduce long-term real
property costs and free funding for mission-related activities.
Having capital plans for its components would be particularly
beneficial, given that DHS is a relatively new federal department
that inherited the real property portfolio held by its components'
former agencies and is now responsible for aligning its real
property assets with its current and future mission. Once plans
are developed and aggregated, linking the agencywide capital plan
with DHS's asset management plan, which we have recommended that
OMB require for other agencies, would be beneficial. Without a
clear linkage or crosswalk between these two plans, the
relationship between the real property goals specified in the
asset management plan and the agency's longer-term capital plans
could be uncertain.

^17GAO, Federal Capital: Three Entities Implementation of Capital Planning
Principles Is Mixed, [57]GAO-07-274 (Washington, D.C.: Feb. 23, 2007).

DHS Is Making Progress Meeting the Requirements of the
Administration's Real Property Initiative

DHS has taken several actions to implement key real property
management initiatives set forth in Executive Order 13327 and
other guidance documents.^18 First, DHS has designated its Chief
Administrative Officer (CAO) as DHS's Senior Real Property Officer
(SRPO). According to DHS officials, this official's functions as
SRPO and CAO are evenly split. As SRPO, this official serves on
the FRPC and coordinates the formulation and implementation of
real property management planning and policy for DHS. As CAO, the
official manages and directs the department's administrative
service functional areas, including asset management, occupational
safety and health, environmental planning and management, historic
preservation, and energy management. The CAO supervises a Senior
Executive Service-level Director of Asset Management who in turn
supervises an Assistant Director for Real Property. The CAO
reports to the Under Secretary for Management (see fig. 5).

^18See the background section of this report for background on the key
real property management requirements DHS is required to meet.

Figure 5: DHS's Real Property Organization

A key step in implementing these real property management initiatives and
in formulating a DHS-wide real property strategy was the creation of the
Chief Administrative Officer Council and the DHS Real Property Management
Committee in fiscal year 2004. Both were established to review and
coordinate DHS real property issues. The Council is chaired by the DHS
Chief Administrative Officer and includes all the senior real property
officers of the components. The Committee is chaired by the DHS
Headquarters Assistant Director of Asset Management for Real Property, and
the remaining members are real property chiefs representing the
components. The Committee plays a lead role in developing and implementing
DHS real property policies and processes, including DHS's asset management
plan.

The administration's Executive Order 13327 required DHS to develop and
implement an asset management plan (AMP),^19 develop a real property
inventory that tracks DHS's assets, and develop and use performance
measures. OMB approved DHS's AMP in June 2006. The objective of the AMP is
to foster an environment within DHS that will promote better asset
management and the disposal of unneeded federal properties. The plan is
also designed to implement the Real Property Initiative, the goal of which
is to ensure that real property inventories are maintained at the right
size, cost, and condition to support agency missions and objectives. DHS
says that the goals of the asset management plan are to help DHS provide
appropriate facilities and infrastructure, in an expert, cost-effective,
and timely manner to achieve the right mix of facilities for specified and
implied missions, professional working environments, and responsible
stewardship of public and private resources.

OMB Has Upgraded DHS's Real Property Management Score

In June 2006, OMB upgraded DHS' Real Property Asset Management Score from
red to yellow after DHS (1) designated a SRPO, (2) developed an approved
asset management plan, (3) developed a generally complete real property
data inventory, (4) submitted this inventory for inclusion into the
governmentwide real property inventory database, and (5) established
performance measures consistent with FRPC standards. In order to receive a
green designation, DHS developed an OMB-approved 3-year timeline (approved
in the 2nd quarter of fiscal year 2007) for implementing its asset
management plan, and is now implementing the plan and must now take steps
to demonstrate daily decision-making using real property data and
performance measures, and show that its strategic plans, asset management
plan, and performance measures are consistent (see table 2).

^19An asset management plan lays out an agency's plan to promote the
efficient use of its real property assets by, among other things,
accurately inventorying and describing its assets, aligning its assets
with its mission, and disposing of unneeded assets.

Table 2: DHS's Implementation of OMB's Real Property Initiative

Real property management action Implementation
Agency has an SRPO who actively serves on the FRPC. Yes
Agency has completed and maintained a comprehensive Yes
inventory and profile of agency real property.
Agency has established asset management performance Yes
measures.
Agency has provided timely and accurate information for Yes
inclusion into the governmentwide real property inventory
database.
Agency has developed an OMB-approved asset management plan. Yes
Agency has established an OMB-approved 3-year rolling Yes
timeline with date-certain deadlines by which agency will
address opportunities and determine its priorities as
identified in the asset management plan.
Agency has demonstrated steps taken towards implementation No
of the asset management plan.
Agency routinely uses accurate and current asset inventory No
information and asset maximization performance measures in
management decision making.
Agency's management of its property assets is consistent No
with the agency's overall strategic plan, asset management
plan, and performance measures.

Source: OMB.

DHS has developed an OMB-approved 3-year timeline to implement the goals
and objectives of its asset management plan. Consistent with the goals and
objectives of the asset management plan, DHS has developed the following
goals to be fulfilled through a series of initiatives over the next 3
years:

o Instill a culture of informed, results-based decision making;
o Achieve greater uniformity in real property policies and
approaches;
o Leverage human capital to maximize value added to real property
decisions;
o Deploy acquisition tools that promote effective asset
management;
o Identify requirements for long-term data management and begin
investment selection steps;
o Develop a measure to track customer satisfaction and use results
to continuously improve real property service delivery;
o Accelerate disposal of unneeded assets;
o Colocate appropriate facilities.

For example, DHS's Asset Management Real Property Division has
started to identify requirements for long-term data management and
to begin the investment review steps required by DHS to plan the
acquisition of a new system. In doing so, DHS has begun to define
a program of requirements for a real property asset management
data system. In addition, to develop a measure to track customer
satisfaction and use the results to improve real property service
delivery, RPMC will lead a task force to develop a customer
satisfaction survey applicable to all components. Also, with the
goal of instilling a culture of informed, results-based decision
making, DHS plans to implement and institutionalize the
appropriate use of key performance measures as the basis for real
property management decisions. Core performance measures will
include a mission dependency index, facility utilization rate,
facility condition index, and operating costs. DHS is currently
addressing comments by OMB to include additional milestones that
will lead to measurable results for the identified initiatives.
Furthermore, since DHS initially set a very aggressive goal of
meeting OMB's green standard by the end of 2007, DHS and OMB
agreed to the rebaselining of achieving the green standard to the
3rd quarter of 2008 to establish a more realistic implementation
schedule.

However, as discussed earlier, DHS has struggled with some
elements of assembling a complete real property data inventory,
including collecting data for some performance measures such as
facility condition. And, for DHS as for many other federal
agencies, it is too early to tell whether the implementation of
its asset management plan will be successful, although DHS appears
headed in the right direction. DHS officials have indicated that
among its next steps is to prioritize funding to fully assess the
condition of its facilities. Without complete facility condition
data, active and efficient stewardship of government real property
assets is difficult. DHS must also link its asset management plan
with its yet-to-be-developed capital plan.

DHS Headquarters Consolidation Faces Challenges Related to Its Cost
and Stakeholder Concerns

DHS components are currently dispersed throughout the Washington,
D.C., area, and DHS wants to better align its real property
portfolio in the area with its mission by consolidating its
headquarters facilities. GSA and DHS estimate that the total cost
of a DHS consolidation that involves 4.5 million square feet
space, plus parking--the amount of office space DHS says it
needs--will be at least $3.26 billion. According to GSA, this
estimate is a preliminary, planning-level estimate based on
alternatives currently under study. DHS believes that lessons
learned from Hurricane Katrina and the department's Second Stage
Review^20 have reinforced its need to be better integrated to
prepare for and respond to natural disasters or terrorist attacks
and to meet its mission of leading a unified national effort to
secure America. GSA has identified the West Campus of St.
Elizabeths site as the best candidate for the consolidation in the
Washington, D.C., area, but the cost of the planned consolidation
and stakeholders' concerns pose challenges for DHS. GSA is
currently preparing a Master Plan for the redevelopment of the
site as it incorporates stakeholder input. An official draft that
incorporates all stakeholders' input has not yet been presented to
stakeholders. A draft is due to be submitted to NCPC for review
and public comment in July 2007.

DHS states that consolidation of the core of its operations at St.
Elizabeths will better integrate the department. In the
Washington, D.C., area, DHS has seven core components in 85
buildings and 53 locations, accounting for approximately 7 million
gross square feet of government owned and leased office space. We
agree that DHS's current housing configuration is too dispersed
and needs to be better integrated. DHS anticipates that the end
state of the consolidation effort will result in DHS being down to
six to eight locations. DHS expects its need for office space to
grow to about 8 million square feet over the next 5 years. About
70 percent of DHS's space in Washington, D.C., is privately held
and is leased directly by DHS or through GSA.

According to DHS, its components' dispersion across multiple
locations creates less than ideal facility protection capabilities
and adversely affects communication, coordination, and cooperation
across components. In October 2006, DHS developed a plan for
consolidation called National Capital Region Housing Master Plan
for the Washington, D.C., area, which presents DHS's strategy for
consolidating its headquarters and operating components in the
Washington, D.C., area.^21 Under this plan, DHS would consolidate
its mission execution functions on the West Campus of St.
Elizabeths site in Washington, D.C., and it would also consolidate
its support services, such as procurement, but at a location other
than St. Elizabeths. In addition, DHS maintains that consolidation
will reduce the department's costs to manage its real property
portfolio by enabling the department to avoid the costs of
renewing leases for 4.7 million square feet of office space in the
Washington, D.C., metro area that expire over the next 10 years.
According to DHS, since its plan for consolidation at St.
Elizabeths uses a campus with security setbacks--the space between
a property's perimeter barrier and a building's exterior--it would
also save costs by reducing the need for extensive blast
protection hardenings throughout the campus.

^20DHS's Second Stage Review was a systematic evaluation of its
operations, policies, and structures completed in June 2005.

^21DHS was directed to submit a comprehensive headquarters master plan for
the future location of all DHS offices and components. See H. R. Conf.
Rep. No. 109-699, at 118 -119 (2006) accompanying the Department of
Homeland Security Appropriations Act for Fiscal Year 2007, P. L. 109-295
(2006). The Conference Report further stated that DHS was prohibited from
relocating Coast Guard headquarters or any other DHS component until DHS
completed the plan and GSA submitted a prospectus for congressional review
and approval. DHS submitted its National Capital Region Housing Master
Plan to Congress in October 2006.

The plan states that increased colocation and consolidation will
be necessary to achieve the following five objectives:

o improve mission effectiveness,
o create a unified DHS organization,
o increase organizational efficiency,
o size DHS's real property portfolio accurately to fit its
mission,
o reduce real property occupancy costs.

DHS considered a baseline scenario (existing conditions) and three
alternative housing scenarios to determine which scenario would
best accomplish these five objectives (see table 3).

Table 3: DHS Real Property Housing Scenarios for the Washington,
D.C., Area

Scenario Description
Baseline Existing conditions, 85 buildings in 53 locations.
Dispersed Multiple buildings averaging between 185,000 and
300,000 rentable square feet that consolidate
components or similar purpose facilities.
Mid-sized building Multiple buildings averaging between 300,000 and
850,000 rentable square feet, supported by several
smaller buildings, including unique facilities.
Campus Consolidation resulting in several campuses, including
one large campus, in addition to unique facilities that
require strategic locations.

Source: DHS.

DHS found that the colocation and consolidation benefits of the
campus scenario are more favorable than those of the other
scenarios and the estimated annual costs of the campus scenario
are 10 to 15 percent lower than for the baseline scenario.
Although the campus scenario involves higher short-term transition
costs than the alternative scenarios, DHS concluded that the
life-cycle and organizational benefits to DHS outweigh these
costs.

Consolidation at St. Elizabeths Could Cost over $3.26 Billion

The West Campus of St. Elizabeths has 61 buildings containing 1.1
million square feet of space on 176 acres located in the Anacostia
neighborhood of Southeast Washington, D.C. It is a National
Historic Landmark District. This designation recognizes the
exceptional national significance of the property and is the same
designation given to the White House and the Capitol. In
commenting on this report, the U.S. Commission of Fine Arts and
the Advisory Council on Historic Preservation noted other values
of the property, including the site's historic and cultural value
related to the history of the treatment of mental illness and
serving as a hospital site during the Civil War, and the
architectural value of many buildings that display the
Gothic-Revival architectural style. Figure 6 shows the
Administration Building on the campus. In addition to the
buildings on the West Campus, the National Historic Landmark
designation covers the landscaping and grounds, the scenic vistas
of the river and city, and the Civil War cemetery (see fig. 7).
GSA took custody and control of the site after it was transferred
in December 2004 from the Department of Health and Human Services,
which no longer needed the site. According to GSA, there was
extensive deterioration of all the buildings and the campus due to
lack of maintenance and preservation by Health and Human Services
prior to GSA taking custody and control. The buildings are in such
poor condition, restoration is needed, according to GSA and other
stakeholders.

Figure 6: The Administration Building on the West Campus of St.
Elizabeths

Figure 7: View from St. Elizabeths West Campus Looking North

The West Campus of St. Elizabeths is GSA's preferred site for
consolidation because, according to GSA, it (1) can accommodate
the 4.5 million square feet of office space, plus parking, DHS
maintains it needs and (2) is available immediately, which are two
key requirements for DHS. According to DHS, the occupancy plan is
based on the guiding principle that the campus must serve as the
central hub for leadership, operations coordination, policy, and
program management in support of the DHS's strategic goals.
According to DHS, a campus setting promotes those critical mission
execution functions that facilitate integrated decision making,
effective communications, cooperation, and coordination. GSA
analyzed available properties within the Washington metropolitan
area and determined that the West Campus of St. Elizabeths is the
only site capable of meeting these two core requirements.^22 No
single site under the federal government's control and custody can
accommodate DHS's need of 7 million square feet. Because the St.
Elizabeths West Campus is already owned by the federal government,
acquisition costs for the consolidation as a whole would be
low.^23 DHS also cites St. Elizabeths' location and capacity for
high-security features as additional reasons for selecting the
site. St. Elizabeths is located within 2.5 miles of the U.S.
Capitol and 3 miles from downtown D.C. In addition, St.
Elizabeths' terrain provides some natural buffer zones, while if
DHS is to remain in locations downtown, costly hardening of
buildings for security purposes would be required.

GSA and DHS estimate that the total cost of a DHS consolidation at
St. Elizabeths that involves 4.5 million square feet of office
space, plus parking, will be at least $3.26 billion, based on
alternatives currently under study.^24 According to GSA, $150 to
$200 million of this cost estimate includes the costs of
infrastructure improvements and design. Infrastructure costs
include the costs of installing utilities, fiber-optic lines, and
telephone lines, and also the costs of GSA's transportation
improvements on or adjacent to the site. According to GSA, the
total scope of transportation improvements will be determined when
the Record of Decision is signed by the GSA Regional
Administrator.^25 Other expenses included in the $3.26 billion
total include construction, renovation, information technology,
furniture, fixtures and equipment, and moving costs. (See table 4
for a summary of estimated costs to develop the St. Elizabeths
site.)^26 GSA's estimate includes the cost of transportation
improvements to streets, roads, and highways in the vicinity of
St. Elizabeths to support the federal redevelopment project. The
transportation improvement estimate ranges from $27 million to $40
million, of which the District Department of Transportation's
(DDOT) costs range between $4 million and $14 million, according
to GSA. GSA's estimate does not include all the mitigations--such
as dioxin remediation and landscaping--that may be required to
meet the concerns of stakeholders.^27 In addition, access to the
campus is dependent on transportation projects estimated to cost
over $1 billion to be borne by the D.C. government--costs that are
not part of the total estimate. These projects were planned by
DDOT before GSA formulated its plans to redevelop the St.
Elizabeths West Campus. The D.C. government has only approved
partial funding for these transportation improvements thus far.
DDOT is a cooperating agency for the Environmental Impact
Statement currently under development by GSA. According to GSA, it
is coordinating with the Federal Highway Administration and DDOT
to help ensure that regional projects planned for the area are
funded consistent with the St. Elizabeths West Campus development
schedule.

^22GSA's alternative location analysis lists locations that GSA considered
to house DHS and why each was eliminated from further study.

^23GSA is requesting funds in its fiscal year 2008 budget to purchase
about 2 acres of land from both the District of Columbia and CSX
Corporation; a similar request was submitted for land necessary to access
the site from Malcolm X Drive. This acreage is necessary to develop
entrance/exit points to the West Campus to reduce the increased traffic
generated by the new federal campus.

^24According to construction industry standards, estimates made during the
conceptual design phase of a construction project, the current phase of
the Coast Guard component of the St. Elizabeths development, generally
have a degree of accuracy of plus or minus 30 percent.

^25The Record of Decision is the [58]decision [59]document for an
[60]environmental impact statement that identifies all alternatives and
describes the reasons for the selection of an alternative.

^26Infrastructure costs include costs such as planning and design,
demolition of selected structures, utility upgrades, roadwork, perimeter
security, and landscape repair.

^27GSA has identified the presence of dioxin on-site. The cost of
remediation is unknown and would be borne by the Department of Health and
Human Services, as required by a Memorandum of Agreement signed when the
site was transferred to GSA in December 2004.

Table 4: Preliminary Estimate of the Cost to Develop the St.
Elizabeths Site

Type of cost Amount
Build out, design, moving and $1.32 billion
furnishings (DHS cost)
Construction and infrastructure $1.94 billion
(GSA cost)
Additional development costs (1) $4 to 14 million in off-site
improvements at the Malcolm X Interchange
funded by DDOT.

(2) Unknown mitigation costs such as
dioxin remediation funded by the
Department of Health and Human Services
and other mitigations funded by GSA.
Total $3.26 billion (plus additional development
costs such as mitigation costs)

Source: GSA and DHS.

Based on a GSA cost analysis, DHS has testified that without
federal construction at St. Elizabeths, the department will
continue to be housed in leased space resulting in an estimated $1
billion more in cost over a 30-year period compared with the
consolidation.^28 A revised GSA cost analysis received on June
13--that assumes a lower rental rate for parking space than office
space--estimates savings at $743 million. We did not assess the
assumptions that form the basis of either analysis, as they were
provided right before this report was published. Furthermore, it
is important to note that the analysis is not designed to assess
costs to the federal government as a whole and does not include
actual costs where DHS is currently housed. According to GSA, this
analysis is based on average rental rates for Washington, D.C.
While GSA's cost analysis is useful in determining whether
construction or leasing is more cost-effective, a more
comprehensive analysis that includes additional factors is
necessary to determine the cost of the St. Elizabeths development
to the government as a whole. For example, a more comprehensive
analysis could take into account (1) DHS's actual and projected
leasing costs for locations where it is currently housed;^29 (2)
DHS costs to develop the site--including costs such as tenant
building improvements, which stand at $1.32 billion--and how those
costs would vary depending on the alternative ultimately selected,
and (3) a range of leasing and construction alternatives and their
associated costs for the St. Elizabeths site, depending on the
square footage that actually goes to the St. Elizabeths West
Campus. A comprehensive cost analysis would improve transparency
and allow for more informed decision making. Actual and projected
leasing costs for the locations where DHS is currently housed
would provide a more accurate estimate of costs if a consolidation
at St. Elizabeths does not occur and serve as a baseline against
other consolidation alternatives. Accounting for all of DHS's
current locations in an analysis and identifying which leases
could potentially be replaced by space at St. Elizabeths would
also be helpful to decision makers in understanding the
consolidation. Furthermore, incorporating DHS costs such as tenant
building improvements and moving and furnishing costs--which stand
at an estimated $1.32 billion--and how those costs would vary
depending on the alternative ultimately selected, would be
important in order to evaluate St. Elizabeths costs from the
perspective of the federal government as a whole, not simply from
GSA's perspective. And, examining the costs of a range of varying
amounts of development at the site would be useful should funding
for the preferred option become difficult to obtain. Finally, GSA
and DHS could better support their case for consolidation at St.
Elizabeths West Campus with a thorough analysis of the savings
they expect from reducing the costs of physical security
investment and hardening at downtown leased locations.^30 A more
comprehensive St. Elizabeths cost analysis such as this would
improve transparency and help GSA, DHS, and key stakeholders,
including Congress, better assess the merits of the consolidation
from a cost perspective for the government as a whole.

^28DHS testified on the results of GSA's cost analysis on March 1, 2007,
before the House of Representatives Homeland Security Committee,
Subcommittee on Management, Investigations, and Oversight. GSA conducted
this analysis using the Automated Prospectus System (TAPS), a cost
analysis tool used by federal agencies to assist in real estate decision
making. GSA uses TAPS analysis to make decisions about leasing and new
construction options. GSA's St. Elizabeths cost analysis looked at the
present value of the cost of ownership over 30 years--not the overall
costs to develop St. Elizabeths, currently estimated at $3.26
billion--which occur at the front end of this 30 year period and then do
not recur. GSA's cost of ownership analysis does not include DHS's $1.32
billion in development costs, but does include costs for utilities and
repairs that would not be part of development costs.

^29According to GSA, DHS is currently paying an average of $30 per square
foot for its leased locations totaling $135 million annually. In addition,
in commenting on a draft of this report, GSA said that it has awarded a
contract to verify the DHS headquarters occupancies in the National
Capital Region and to develop scenarios that identify the most
cost-effective approach to achieve DHS's final housing solution,
recognizing DHS's colocation requirement. This study is scheduled for
completion in the fall of 2007.

^30GSA provided us with an analysis that compared the cost of providing
security to the Bureau of Alcohol, Tobacco, Firearms, and Explosives to
the cost of providing security at the St. Elizabeths West Campus. However,
because it was provided right before this report was published, we did not
assess it.

GSA and DHS are moving forward with requesting funding for the
first phase of the consolidation, and therefore a more
comprehensive analysis would better inform decision making. GSA
has tentatively developed a three-phased approach for managing the
consolidation, with construction funding originally requested for
the Coast Guard's new headquarters building in fiscal year 2007
and ending with final occupancy of the third phase in fiscal year
2015 (see fig. 8). According to GSA, the Coast Guard requires
fiscal year 2011 or earlier occupancy for their new headquarters
space, and timely Coast Guard occupancy is critical. Due to the
lack of funding for the St. Elizabeths project in the fiscal year
2007 Continuing Resolution, GSA is concerned that the overall
schedule may be delayed with corresponding adverse impacts on DHS
operations and integration. GSA and DHS are working together to
update the schedule and will work with Congress on options to
recover from any schedule slippage that results from not receiving
funding in fiscal year 2007. GSA and DHS have requested funds for
the project for fiscal year 2008.^31 DHS headquarters and
remaining components would relocate in the second and third
phases. During phase 1-a and 1-b, which extends from the end of
2007 to 2011, DHS anticipates bringing 3,860 employees to the
site. During phase 2, which ends in 2013 if construction begins in
2009, and Phase 3, which ends in 2015 if construction begins in
2011, DHS will add another 5,000 employees each, for a total of up
to 14,000 employees. While this three-phase approach distributes
costs across a number of years, according to DHS, it prolongs the
current fragmented DHS housing structure and could thus affect
mission performance. DHS intends to evaluate options to accelerate
construction and combine phases with GSA to the extent that
funding is available to do so. The Coast Guard would be the first
DHS component to move its headquarters under current plans.
Because of recent hiring, the Coast Guard has outgrown its current
primary headquarters location; the lease expires in May 2008.^32
Other Coast Guard offices in the Washington, D.C., area will also
be incorporated in the consolidation.

^31The Revised Continuing Appropriations Resolution for Fiscal Year 2007
specifically stated none of the funds appropriated or otherwise made
available for GSA's Real Property Activities, Federal Buildings Fund may
be obligated for the Coast Guard consolidation and development of St.
Elizabeths campus in the District of Columbia. P.L. No. 110-5, 121 Stat.
8, 57 (2007).

^32DHS said that this lease expiration will be bridged until the new
headquarters is completed.

Figure 8: GSA's Proposed St. Elizabeths Standard Development Schedule

GSA and DHS officials said that GSA would fund about $1.94 billion and DHS
would fund about $1.32 billion of the current estimated $3.26 billion
dollar total. Under the current GSA development schedule, the Coast Guard
is scheduled to be fully moved in by fiscal year 2011, if GSA receives
appropriations as requested. DHS stated that most of the DHS-specific
costs will be incurred, regardless of whether the St. Elizabeths West
Campus is developed because of the need to renew expiring leases over the
coming years. More specifically, funding activity and related planning
thus far have been as follows:

o To begin funding the consolidation, GSA was provided $24.9
million in fiscal year 2006 for the design phase of the Coast
Guard headquarters construction project. GSA also received $13
million for, according to GSA, identification of fire code
deficiencies, renovation cost estimates, a buildings demolition
study, master planning, NEPA studies, site exit analysis, a Campus
Design (infrastructure only), restoration of landscaping, cleaning
of storm water systems and underground pipe replacement, upgrades
to selected fire protection systems, repair of the wastewater
system, deferred maintenance, and repair and stabilization of
selected structures at the St. Elizabeths West Campus site in
fiscal year 2006.
o GSA and DHS did not receive any funding for DHS headquarters
consolidation for fiscal year 2007.^33 The Coast Guard and
Maritime Transportation Act of 2006 provided that the Coast Guard
cannot move any personnel, property, or other assets to St.
Elizabeths until the GSA Administrator submits a plan for the site
to certain congressional committees.^34 As required by law, the
plan should include, among other things, the design of facilities
for at least one federal agency other than the Coast Guard, which
houses no fewer than 2,000 employees. GSA is now developing a plan
in response to the act. GSA is also developing a Master Plan for
the St. Elizabeths site, which will be discussed in more detail
later.
o GSA's fiscal year 2008 request was about $347 million, the bulk
of which was for phase 1-a and phase 1-b of the proposed project.
Phase 1-a is proposed to provide 1.135 million square feet of
space and 650 parking spaces for the Coast Guard headquarters
facility, which will house 3,860 Coast Guard employees. Phase 1-b
is proposed to provide 203,000 square feet of shared support and
other space and 350 parking spaces. Phase 1-a and phase 1-b,
according to GSA, are required to fully support the Coast Guard's
operations, and therefore are scheduled to be completed together.
This request also includes $26 million for the design of phase 2.

^33Despite not receiving funding in fiscal year 2007, DHS states that due
to delays in the Master Plan and Environmental Impact Statement
development, the actual delay in the project due to the lack of fiscal
year 2007 funding is only about 2 to 4 months.

^34GSA was required to submit the plan to the House Committee on
Transportation and Infrastructure and the Senate Committee on Commerce,
Science, and Transportation and the Senate Committee on Environment and
Public Works. See P. L. No. 109-241, 120 Stat. 516, 523-524 (2006).

o After not receiving any funding in fiscal year 2007, DHS has
requested $120 million for fiscal year 2008 to continue with its
consolidation plans for the St. Elizabeths site. According to DHS;
DHS, GSA, and OMB have developed a balanced funding stream that
takes into account the lack of fiscal year 2007 appropriations. In
commenting on a draft of this report, GSA expressed concern about
its ability to meet the U.S. Coast Guard requirements within its
fiscal year 2008 St. Elizabeths budget of approximately $347
million. This funding will be used for Coast Guard headquarters
construction costs over and above what GSA is paying,
tenant-specific phase 2 and phase 3 design costs, and staffing
costs. This is a portion of the $1.32 billion that DHS estimates
is needed for all costs associated with the development of and
move to St. Elizabeths.
o The balance of project funding for phase 2 ($491 million) was to
be requested in a future fiscal year. The goal of phase 2 is to
provide 1.6 million square feet of highly secure housing plus
parking garages containing 2,000 spaces to consolidate other DHS
components.
o Phase 3 would add another 1.6 million square feet of space to
accommodate what DHS hopes will be the bulk of its remaining
components.

According to GSA, the final cost of the St. Elizabeths West Campus
development will depend, initially, on the final Master Plan
layout and density selected and then by the final design and
construction contracts awarded by the federal government. GSA is
currently preparing the Master Plan for the redevelopment of the
site and was originally exploring seven development scenarios that
ranged from 1.4 million to 4.5 million square feet of modern
office space (plus parking) that would reuse most of the historic
structures on the site. However, because the Coast Guard and
Maritime Transportation Act of 2006 stipulated that the Coast
Guard may not move to the site until, among other things, a plan
for the site includes a facility for at least one federal agency
other than the Coast Guard that houses no fewer than 2,000
employees, GSA said that it is no longer considering the two
alternatives that looked at developing only 1.4 million square
feet of space. Only the five alternatives that develop 3.0 million
and 4.5 million square feet of space (plus parking) will now be
considered.^35 DHS maintains that it currently plans to reuse 77
to 81 percent of the existing square footage that contributes to
the site's status as a National Historic Landmark, even in the
most intensely developed alternatives.

^35If parking is included, the square footage for each Master Plan
alternative ranges from 4.34 million square feet to 6.36 million square
feet.

GSA plans to issue a draft Master Plan for public comment in July
2007 and to submit the final Master Plan by December 2007.
According to GSA, GSA and NCPC have agreed to a 60 day review for
the preliminary and final St. Elizabeths West Campus Master Plan
submissions. As the central planning agency for the federal
government in the National Capital Region, NCPC is charged with
planning for the appropriate and orderly development of the
national capital and for the conservation of important natural and
historic features. To this end, NCPC is charged with preparing a
comprehensive plan for federal activities in Washington, D.C., and
reviewing the development plans for federal agencies for
consistency with the comprehensive plan. Under 40 U.S.C. S 8722,
NCPC has approval authority over site and building designs and
uses NCPC-approved Master Plans as the basis for subsequent
reviews and approvals. The U.S. Commission of Fine Arts was
established by Congress in 1910 as an independent agency to advise
the federal and District of Columbia governments on matters of
design and aesthetics that affect the appearance of the nation's
capital. One of the roles of the U.S. Commission of Fine Arts is
to provide advice on proposed building projects.

Key Stakeholders Are Concerned about Historic Preservation,
Environmental Issues, and Impact on the Local Community

In redeveloping St. Elizabeths, GSA must comply with the NHPA and
the NEPA. Under NHPA, federal agencies are required to consider
the effects of their activities on historic properties and to
undertake planning and actions necessary to minimize harm to the
historic property.^36 As part of the NHPA process, GSA is
consulting with the D.C. State Historic Preservation Officer, the
Advisory Council on Historic Preservation, NCPC, the U.S.
Commission of Fine Arts, and many other groups. NEPA provides for
the consideration of environmental issues in federal agency
planning and decisionmaking. NEPA requires federal agencies, such
as GSA, to prepare an environmental impact statement for actions
that may significantly affect the quality of the human
environment. GSA is conducting both reviews concurrently to avoid
duplication, since both are public processes and NEPA addresses
preservation issues as well as environmental concerns.

^3616 U.S.C. S 470f and 16 U.S.C.S 470h-2.

As part of its consultations with various organizations in
developing the Master Plan, DHS and GSA have encountered
objections from several key stakeholders that are concerned about
whether the project would comply with current historic
preservation and environmental laws. Views expressed are generally
the views of senior staff and do not represent the final positions
of the organizations themselves, which will officially provide
comment as consulting parties once GSA submits its draft Master
Plan in July 2007. According to January 19 and September 21, 2006,
letters submitted to GSA by NCPC's Executive Director, NCPC is
concerned that GSA's alternatives for the St. Elizabeths West
Campus thus far do not sufficiently protect the historic and
natural settings of the site. According to NCPC and other
stakeholders, including the U.S. Commission of Fine Arts, the
Advisory Council on Historic Preservation, the National Trust for
Historic Preservation, and the D.C. Office of Planning's Historic
Preservation Office, DHS's programmatic requirements are taking
precedence over the preservation and planning interests of the
campus itself. NCPC and other stakeholders are concerned that
developing 4.5 million square feet of office space, plus parking,
for DHS at St. Elizabeths will not protect the site's status as a
National Historic Landmark District. Some stakeholders maintain
that developing this much space, as well as other alternatives
that have been discussed involving 3.0 million square feet, will
have significant, adverse effects on the historic setting and
character of the site and make mitigation and minimization under
NEPA and NHPA difficult if not impossible to achieve. Stakeholders
generally support federal use and maintain that the site can hold
about 2.0 to 2.5 million square feet of development (plus parking)
without compromising the site's status as a National Historic
Landmark District.^37

In addition, according to the National Trust for Historic
Preservation (NTHP), each alternative requires a more thorough
exploration of options for off-site and underground parking, in
order to minimize harm to the maximum extent possible by reducing
the additional mass and bulk of aboveground structures in the
National Historic Landmark District. During our review DHS
maintained that it currently plans to reuse 77 to 81 percent of
the existing square footage that contributes to the site's status
as a National Historic Landmark District, even in the most
intensely developed alternatives.

^37According to the District of Columbia Historic Preservation Office, a
few years ago the District of Columbia Office of Planning conducted a
study of St. Elizabeths for the purpose of a redevelopment plan. That
study proposed 2.7 million gross square feet for the West Campus prior to
any preservation reviews. In addition, both NCPC and the D.C. State
Historic Preservation Officer point to GSA's own August 2005 Land Use
Feasibility Study, which lays out the risks associated with various
development scenarios, to illustrate risks to historic resources under the
alternatives considered. Of the eight scenarios considered, only the 1.6
million square foot scenario was not high risk for protecting St.
Elizabeths as a National Historic Landmark.

GSA does not concur with stakeholders views on historic
preservation issues. According to GSA, it will, to the maximum
extent possible, undertake planning and actions necessary to
minimize harm to the landmark as is required by the National
Historic Preservation Act. GSA acknowledged that it had not yet
developed an alternative that reflected the views of many of the
stakeholders, but stated that a draft Master Plan would be
available for review in July 2007 and that certainly this was
possible.

Furthermore, according to the NCPC Executive Director in a
September 2006 letter, the proposed St. Elizabeths development
does not address a number of significant policies in the
Comprehensive Plan for the National Capital: Federal Elements,
including policies to sustain exemplary standards of historic
property stewardship and to preserve open space at St. Elizabeths
for public use and enjoyment of views from the site.^38 GSA noted
that although it may not address the policies discussed above
because sometimes there are trade-offs that must be made in the
process of developing a site, it does address the vast majority of
the Comprehensive Plan.

In addition, some stakeholders assert that GSA has not adequately
considered other DHS headquarters alternatives. For example, in a
letter dated January 26, 2007, the NTHP suggested that GSA could
explore financing the acquisition of an alternative site by
disposing of the St. Elizabeths campus for preservation-sensitive
development. GSA responded by stating that it is statutorily
obligated to first consider land that it owns to meet government
housing needs. In addition, GSA argues that it does not make
financial sense to pay for a lease or the costs of a land swap
when the St. Elizabeths site can meet DHS's needs if National
Historic Landmark issues can be resolved satisfactorily. Moreover,
according to GSA, it will be able to preserve the site's historic
and natural character while developing 4.5 million gross square
feet of office space, plus parking. Overall, the debate centers on
how much development the site can accommodate while protecting the
site's status as a National Historic Landmark District.

^38We do not address the issue of public access in detail in our report,
but in general, most stakeholders with whom we talked supported some type
of limited public access to the site such as access to the Point for
certain holidays and access by permit to the Civil War cemetery. Most
stakeholders acknowledged that unlimited access was not a realistic
option. We agree with DHS that in the post 9-11 security environment,
access to the site is a complicated issue.

In addition to concerns about the historic preservation and
environmental issues related to DHS's consolidation at St.
Elizabeths, D.C. planning officials and residents of the community
have concerns about how the proposed development will affect those
living in the area. The residents of Ward 8, the community that
would be most affected by the St. Elizabeths development, are
primarily concerned about increased traffic and whether the
potential economic benefit of job availability, contracting
opportunities, and retail possibilities will materialize. A D.C.
planning official also expressed concern that a federal presence
there will offer no taxable infrastructure, require increased
public service response (fire, ambulance, hospital), and expose
the community to the risk of a terrorist attack. However, some
community leaders have stated in various public forums that they
support locating federal development at St. Elizabeths as an
economic driver and magnet for additional development and
revitalization.

Master Plan Is Critical to the Consolidation's Outcome

Critical to the outcome of the proposed consolidation is GSA's
development of the Master Plan, currently scheduled to be released
for comment by July 2007 and submitted by December 2007 to NCPC
for review and public comment. A completed plan should allow a
better estimation of the overall costs of this consolidation and
should incorporate stakeholders' concerns. Most stakeholders we
contacted--including NCPC, the Advisory Council on Historic
Preservation, and the D.C. Planning Office--acknowledge that GSA's
outreach to the local community, review agencies, and interested
consulting parties has been extensive, even though many
stakeholders believe that GSA has not sufficiently incorporated
stakeholders' concerns into the five current Master Plan
alternatives by adding an additional alternative that accommodates
their concerns. GSA has not developed an additional alternative,
but says it has made modifications to the existing alternatives,
including moving development away from vistas and sight lines,
preserving a majority of the historic buildings, and limiting the
height of new buildings on the site.

Federal agencies are required to consult with NCPC prior to the
preparation of construction plans originated by the agency for
proposed developments and projects within the National Capital
Region. According to NCPC, once GSA's draft Master Plan is
completed, NCPC will review it for compliance with federal
environmental and historic preservation laws. NCPC will prepare a
report with recommendations to the agency, which GSA must
consider. GSA hopes its efforts to reach out to stakeholders and
resolve their concerns will conclude with an agreement with the
D.C. State Historic Preservation Officer and Advisory Council on
Historic Preservation as signatories.

DHS Has Taken Actions Intended to Improve the Security of Its
Facilities, but Its Efforts Are Lacking in Certain Key Areas

DHS has taken a number of actions intended to improve the security
of its facilities. Like other federal agencies, DHS has made
physical improvements at the individual building level, such as
adding pop-up bollards, installing bullet-resistant glass, and
implementing access controls in many buildings across the
department. For example, ICE is using new smart-card technology
through a security pilot project at several of its facilities
across the country, including Federal Plaza in New York City. The
Coast Guard is using the latest technology to evaluate the
credentials of contractors. FLETC is using bullet-resistant glass
at key access control points and pop-up bollards to repel
unauthorized vehicles. FLETC has also established fingerprint
systems and captures facial images via digital cameras to improve
access control. FEMA has installed pop-up bollards and added
surveillance cameras to its headquarters in downtown Washington.
TSA told us that it utilizes closed circuit television, contract
security guards, access control, intrusion detection and vehicle
security barriers. TSA also told us that it has established
network connectivity for its closed circuit television at its
Washington, D.C. facilities, enabling the TSA Chief Security
Officer and his headquarters staff to monitor each facility.

DHS security officials said that increasing the use of
technologies like access controls, while requiring an initial
up-front investment, would save DHS money in the long run since
fewer guards would be needed. It would also improve security they
said. At DHS's Nebraska Avenue Complex, for example, where some of
DHS' headquarters offices are located, DHS uses glass-partitioned
turnstiles with access control card readers to give cleared
employees access at this location. Employees swipe their access
card and if the card is approved, the turnstile opens. The access
control validates the card without involving guards. DHS has
backed up this system through the use of closed circuit television
cameras that monitor the turnstiles. All activity is recorded by
digital video that can be reviewed if necessary following a
breach. By efficiently using technology to supplement and
reinforce other security measures, DHS can more effectively
address vulnerabilities that are identified by the risk-management
process with appropriate countermeasures. Our past work showed
broad concurrence among GAO, Inspectors General, facility security
experts, and agency experts that making efficient use of security
technology to protect federal facilities is a key practice.^39

DHS Has Taken Actions to Improve Communication among Components
and across Functional Lines

Besides taking actions at the individual building level, DHS has
implemented several management changes intended to improve
facility protection. DHS has designated a Chief Security Officer
for the department and established a Chief Security Officer
Council to assist the Chief Security Officer in evaluating
security issues.^40 In addition, DHS's Chief Administrative
Officer, Chief Security Officer, and ISC personnel are working
together to integrate physical security programs and plans into
DHS's overall real property management program. DHS real property
management officials and physical security officials have begun to
communicate and coordinate regularly through meetings. For
example, DHS real property and security officials are
collaborating on the design of the St. Elizabeths site
headquarters buildings to ensure that building designs are
properly evaluated from a security perspective. The security
coordinator makes certain that security features are considered
early and incorporated into each building's design. This
coordination should reduce the need for making costly changes
later or creating security risks that are impossible to mitigate
later. The coordination has also led to discussions about
including physical security data, such as data on compliance with
ISC standards and security levels, in DHS's Real Property
Information System. Coordination also allows DHS's physical
security officials to provide input upfront about how real
property decisions affect physical security. For example, if DHS
decides to rent one floor of a particular office building,
consideration must be given to the consequences of DHS's presence
there. DHS often ends up needing to secure the entire building,
which can be costly, or DHS cannot afford to secure the entire
building, which may pose a security risk. DHS currently occupies
about 2,400 office buildings that are leased or owned, so there is
considerable potential for security savings if security is
considered upfront.

^39GAO, Homeland Security: Further Actions Needed to Coordinate Federal
Agencies' Facility Protection Efforts and Promote Key Practices,
[69]GAO-05-49 (Washington, D.C.: Nov. 30, 2004).

^40OMB has directed DHS to move the chairman of the Interagency Security
Committee in fiscal year 2008 to DHS's Office of the Under Secretary for
National Protection and Programs.

DHS has also improved internal security coordination in other
ways. For example, DHS has formed the Facility Security
Commodities Council, which meets once every 2 months to discuss
security issues and share information, such as which companies are
providing the best contract guard service, what to include in a
standard contract for guard forces, or how to add on to security
equipment contracts to get security equipment such as X-ray
machines less expensively. Information sharing and coordination
among organizations are crucial to producing comprehensive and
practical approaches and solutions to address terrorist threats
directed at federal facilities. Our work showed a broad
consensus--on the basis of prior GAO and Inspector General work
and information from agencies and the private sector--that by
having a process in place to obtain and share information on
potential threats to federal facilities, agencies can better
understand the risk they face and more effectively determine what
preventive measures should be implemented. Establishing a means of
coordinating and sharing information is crucial to determining the
appropriate amount of security for facilities.

DHS also plays an important role in developing guidance for
federal agencies and its own components to follow in protecting
federal facilities against the threat of terrorism through ISC,
which DHS chairs. ISC, which includes representatives of all the
major property-holding agencies and was established after the
bombing of the Oklahoma City federal building in 1995, has a range
of governmentwide responsibilities relating to protecting
nonmilitary facilities. These generally involve developing
policies and standards, ensuring compliance and overseeing
implementation, and sharing and maintaining information. To ensure
that DHS itself follows ISC guidance, draft DHS Management
Directive 11001 formalizes the requirement that DHS components
meet ISC standards.^41 The compliance reporting process will begin
in 2008. For example, beginning in 2008, each component must
report how many of its buildings are in compliance with Management
Directive 11001 and, if not, it must provide an explanation. DHS
has also recently developed a compliance checklist, which provides
a baseline of basic physical security considerations that DHS's
components can use in determining what facility protection
activities they need to undertake.

^41Management directives for DHS are under a top to bottom review by order
of the Deputy Secretary. The issuance of Management Directive 11001 is
dependent on the results of the review.

DHS Has Not Yet Fully Implemented Risk Management Practices for Its
Facilities

Despite these improvements and DHS's prominent role in facility
protection governmentwide, most DHS components have not fully
implemented risk management for facility protection, which we have
recommended and DHS has advocated for other agencies, or the
components use risk management tools that DHS officials said have
limited capabilities. DHS components are in the process of
determining risk management methodologies to assist in
prioritizing resources. Some components, such as ICE, currently
use a risk management tool with capabilities that, according to
FPS officials, are not as robust as necessary to fully prioritize
security needs. FPS, located within ICE and responsible for
protecting thousands of federal facilities, conducts security risk
assessments for ICE and for all DHS space leased through GSA using
risk management software. FPS officials said that this tool is not
sophisticated enough to effectively allow them to prioritize
physical security improvements building by building. FPS officials
have three primary concerns about the current risk management
tool. First, current risk management software does not allow FPS
to compare risks from building to building so that security
improvements to buildings can be prioritized. Second, current risk
assessments need to be categorized more precisely. Too many
assessments are simply categorized as high or low, which does not
allow for a refined prioritization of security improvements.
Third, the risk management tool does not allow for tracking the
implementation status of security recommendations based on
assessments. CIS also uses FPS's risk management tool to conduct
its risk assessments. According to FPS, FPS is leading the
development of a new software tool that will meet obligations
under the National Infrastructure Protection Plan. In partnership
with other DHS components, including CBP and FEMA, this risk
assessment and management program will be made available to all
government entities in need of a risk assessment methodology. FPS
expects this tool to be available by fiscal year 2008.

Some components are closer to fully implementing risk management
practices to prioritize resources than others. For example, the
Coast Guard has an initiative under way to tier its assets into
categories to help prioritize facility protection resources for
the assets that are most critical to DHS's core mission. The Coast
Guard has been conducting vulnerability assessments within each
tier for the past year and a half. Components such as FEMA and TSA
do not use formal risk assessment tools to prioritize security
resources across the component. FEMA, for example, prioritizes
security resources through the judgments of security officials
using criteria such as the seriousness of the security issue, the
location, and the resources available at the time. TSA noted that
although it does not use a formal risk assessment tool to
prioritize resources across the department, it has conducted a
risk assessment for its headquarters and Transportation Security
Operations Center, based on threat and vulnerability assessments
and incorporated additional appropriate security measures across
its facilities.

DHS headquarters security officials said that while DHS components
do not have a formal, common tool to conduct risk assessments to
prioritize funding for facility protection, components can rely on
ISC criteria and DHS's June 2006 National Infrastructure
Protection Plan for risk management guidance.^42 ISC places
federal facilities in five different categories (with
corresponding security standards) based on factors such as
building size, agency mission and function, tenant population, and
level of public access. For example, a level II building is
defined as having between 2,500 to 80,000 square feet and between
11 and 150 employees engaged in routine activities with a moderate
level of public access. A level IV building is defined as
occupying more than 150,000 square feet of space and housing more
than 450 employees with a "high volume of public contact." At each
level of security, ISC specifies minimum security standards that
must be met.^43 The National Infrastructure Protection Plan risk
management framework establishes a process for combining
consequence, vulnerability, and threat information to produce a
comprehensive, systematic, and rational assessment of risk that
drives protection activities for a component. According to senior
DHS headquarters security officials, each component within DHS
must develop its own risk assessment program and ensure that they
are aligned with its mission and needs.

A more robust risk management approach can help DHS make decisions
systematically and is consistent with the National Strategy for
Homeland Security and DHS's strategic plan, which have called for
the use of risk-based decisions to prioritize DHS's resource
investments in homeland security-related programs. Likewise, the
President and Congress have widely supported a risk management
approach for homeland security, and the Secretary of Homeland
Security has made risk management the centerpiece of departmental
policy. Allocating resources using risk management is a systematic
and analytical process to consider the likelihood that a threat
will endanger an asset, such as real property, and identify,
evaluate, select, and implement actions that reduce the risk or
mitigate the consequences of an event. Although risk management
principles can be applied to facility protection in various ways,
our past work has shown that most risk management approaches
generally involve identifying potential threats, assessing
vulnerabilities, identifying the assets that are most critical to
protect, in terms of mission and significance, and evaluating
mitigation alternatives for their likely effect on risk and their
cost. In short, risk management is useful for ensuring that
security resources are directed where they are needed most. Our
past work has also shown that there was consensus in the security
community--including GAO, inspectors generals, agencies, national
experts, and the private sector--that using risk management
practices provides the foundation for an effective facility
protection program.

^42The National Infrastructure Protection Plan provides the overarching
approach for integrating the nation's many critical infrastructure and key
resource protection initiatives into a single national effort.

^43Under its Action Plan for 2007 and 2008, the Interagency Security
Committee has a work group updating the physical security standards for
existing buildings, which includes updates to building levels I to V and
the Department of Justice's Vulnerability Assessment of Federal
Facilities, published in 1995.

Some agencies we have reported on use more robust methods of risk
management. For example, as we reported in June 2005, the
Department of the Interior (Interior) has developed a uniform risk
assessment and ranking methodology called the National Monuments
and Icons Assessment Methodology.^44 According to information from
Interior, this methodology is specifically designed to quantify
risk, identify needed security enhancements, and measure
risk-reduction benefits at icons and monuments. The National
Monuments and Icons Assessment Methodology has a consequence
assessment phase and a risk assessment phase. During the
consequence assessment phase, there is an asset tier ranking
process, in which each asset's iconic significance is subjectively
determined. Specific attack scenarios--involving threats such as
chemical/biological agents, aircraft, or improvised explosive
devices--are used to evaluate security at each asset and score
attack consequences. Consequence categories include casualties,
economic impact, and length of disruption. During the risk
assessment phase, Interior uses the methodology to determine the
effectiveness of existing security systems for preventing or
mitigating the specified attack scenarios. Using risk values
calculated from this comparison, Interior assigns asset risk
ratings of high, medium, or low, and formulates specific
mitigation recommendations. Before developing this approach,
Interior did not have a uniform, comprehensive risk management
approach for icons and monuments. It relied instead on the
judgment of senior officials in determining where resources should
be directed, and the risk assessments completed at individual
sites were done by a number of external experts using different
methodologies.

^44GAO, Homeland Security: Actions Needed to Better Protect National Icons
and Federal Office Buildings from Terrorism, [70]GAO-05-790 (Washington,
D.C.: June 24, 2005).

DHS Has an Incomplete Set of Facility Protection Performance
Measures to Help Ensure Agency Accountability for Meeting Program
Goals

Under HSPD-7, the Government Facilities Sector, for which ICE is
responsible, is tasked with establishing performance measure
guidance for federal, state, and local governments so that they
can better assess the effectiveness of their facility protection
programs. ISC is working with the Government Facilities Sector to
develop this performance measure guidance. It is expected that
this guidance will be complete at the end of fiscal year 2007.
This guidance is designed to measure agency-level performance; it
does not address facility-specific performance measures.

Even though DHS has a leadership role in this area, none of its
components had a fully established set of agency- and facility-
specific physical security performance measures to evaluate the
effectiveness of physical security programs at the time of our
review. Some components are in the process of developing measures
or have an incomplete set. For example, TSA does not have a set of
performance measures to fully evaluate how it protects its
facilities, but said it was currently considering using
performance measures such as the number of unauthorized people who
enter a building or the number of people who are blocked at
entrances. TSA also noted that it considers its facility
protection to be successful because it has no known breach in its
headquarters and Transportation Security Operations Center. FEMA
officials told us that in order to assess its progress in
improving security, the agency needs to develop performance
measures that allow it to track security assessments and
recommendations. FPS, located within ICE, currently has a number
of performance measures to assess facility protection
effectiveness, but noted that the measures could be improved. FPS
said that it tracks measures such as whether building
countermeasures are working as designed, whether countermeasures
are deployed on time, and how quickly FPS responds to calls for
service. FPS officials said that upgraded risk assessment software
would aid them in tracing facility protection performance
measures. For example, FPS said that it would like to better track
how long it takes for its MegaCenters,^45 which are FPS's regional
emergency call centers, to respond to alarm calls. FPS is tracking
call response times to some degree now but is unable to
distinguish between major and minor calls, which officials said
can create misleading data. In September 2006, we reported that
performance measures for assessing MegaCenter operations are not
always clearly stated or measurable and do not address
governmentwide priorities of efficiency, cost of service, and
outcome--which are among the attributes of successful performance
measures that we have identified.^46 Other DHS components noted
that some facility protection efforts can be difficult to measure.
For example, CIS and TSA noted that it is difficult to demonstrate
when an agency has stopped or deterred an attempted unauthorized
entrance to a building with security countermeasures or best
practices because it is typically not possible to know when such
unauthorized attempts occur.

Performance measurement can ensure accountability for achieving
broad program goals and improving security at the individual
facility level. At the agency level, we have reported that tying
security goals to broader agency mission goals can help federal
agencies measure the effectiveness and ensure the accountability
of their security programs. Our work has shown a consensus among
various stakeholders that performance measurement is a key
practice that agencies should follow. Using performance
measurement for facility protection is a practice that--according
to our review--is in the early stages of development at DHS at the
agency- and facility-specific levels. In May 2006, we reported on
performance measures that organizations outside the U.S.
government--including private-sector firms, state and local
governments, and foreign government agencies--use to help improve
the security of facilities, inform risk-management and
resource-allocation decisions, and hold security officials and
others in their organizations accountable for security
performance.^47 These included output measures, such as the
average time needed to process background screenings, and outcome
measures, such as the change in the total number of security
incidents relating to thefts, vandalism, and acts of terrorism.
For example, an agency in Australia monitors an outcome
measure--the impact of additional security expenditures on a
facility's risk rating--while controlling for existing security
enhancements that mitigate the risk, such as the number of guard
patrols and the adequacy of access control systems (e.g.,
electronic locks). In another example, each business line in one
financial services organization conducts security compliance
reviews of its facilities, including confirming the presence of
required key security equipment and determining whether staff are
following security policies.

^45FPS MegaCenters provide three primary security services: alarm
monitoring, radio monitoring, and dispatching of FPS police officers and
contract guards.

^46GAO, Homeland Security: Federal Protective Service Could Better Measure
the Performance of Its Control Centers, [71]GAO-06-1076 (Washington, D.C.:
Sept. 29, 2006).

^47GAO, Homeland Security: Guidance and Standards Are Needed for Measuring
the Effectiveness of Agencies' Facility Protection Efforts, [72]GAO-06-612
(Washington, D.C.: May 31, 2006).

FPS Faces Ongoing Challenges

FPS protects buildings under GSA's control, including those where
DHS is a tenant. After the creation of DHS, FPS moved from GSA to
the new department effective March 1, 2003. In fiscal year 2007,
FPS has 1,208 full-time employees, including special agents,
police officers, inspectors, and support personnel.^48
Approximately 15,000 contract security guards support FPS's
workforce. FPS is required to protect about 8,800 buildings under
GSA's control, many of which are leased by DHS. Even though it has
the authority, FPS does not protect any DHS buildings outside GSA
space because it lacks resources. Most DHS components rely on
security arrangements that existed before DHS was formed in 2003.
The demands of its facility protection responsibilities to protect
GSA facilities challenge FPS. FPS charges a basic security fee for
services such as law enforcement and regular building security
assessments, but this fee does not adequately cover the costs of
the basic security services that FPS is required to provide. One
of the tasks that FPS must conduct in its role as a protector of
federal buildings is building security assessments. Building
security assessments are a type of security evaluation to
determine how susceptible a facility is to various forms of threat
or attack. These assessments include countermeasures to reduce
threats and thereby decrease vulnerability.^49 DHS officials said
that some components conduct their own building security
assessments over and above the security assessment conducted by
FPS. DHS components sometimes conduct their own assessments
because FPS's assessments are not always timely or of sufficiently
high quality.

^48The President's fiscal year 2008 budget request provides for 950
full-time employees.

^49Security assessments for existing buildings are conducted on a cyclical
schedule based on the buildings' designated Department of Justice security
level--every 2 years for Level 4; every 3 years for Level 3, and every 4
years for Levels 1 and 2. FPS uses Federal Security Risk Management
software to assist in developing building security assessments.

Senior DHS physical security officials said that FPS does not have
the staff resources to conduct all of these regular assessments in
a timely manner, but these officials also say problems with the
quality of the assessments are most likely attributable to a lack
of quality training for FPS personnel in conducting the
assessments. Conducting extra assessments wastes resources, while
not completing assessments in a timely fashion imperils the
security of DHS facilities. FPS agreed that it does not have an
adequate number of building security assessors for the number of
buildings in its inventory. FPS estimated that there are about 450
inspectors for about 8,800 GSA buildings that FPS is required to
protect. FPS said that in some areas, especially in the western
United States, a single inspector must cover all of the buildings
over a wide area. FPS said that some inspectors are responsible
for as many as 50 buildings, and each inspection can take 1 week
or more. FPS noted that inspectors have responsibilities other
than inspections, such as teaching security training classes,
crime prevention, and law enforcement patrol and response.
However, because of the large geographic areas some inspectors are
required to cover, they must spend a significant amount of time
and travel funds performing inspections. According to FPS, the
time it takes to conduct assessments, travel, and perform other
duties can make it difficult to conduct timely inspections. FPS
believes that an increased number of inspectors in some regions
would help save money in the long run by cutting travel
expenses.^50

In order to solve this problem, senior DHS physical security
officials suggested that DHS establish consistent building
security assessment training. This training would provide a core
basis for conducting assessments across DHS, regardless of whether
FPS or the components conduct them and would help ensure that
assessments are completed consistently. One senior DHS security
official noted that GSA has a 4 to 5 week training course for
procurement that might serve as a model for how DHS could conduct
the assessment training. DHS's Federal Law Enforcement Training
Center recently completed a feasibility study that proposed the
creation of a standard physical security training program for all
federal agencies involved in physical security. Physical security
assessment training would be part of this physical security
training program. Security assessment training would help ensure
that assessments are completed consistently and do not need to be
conducted twice.^51

^50In commenting on our report, ICE officials noted that FPS was
transitioning to an inspector-based workforce that will increase the
number of inspectors assigned to the protection of federal facilities. FPS
will use a risk-based staffing model to assign inspectors to the highest
risk facilities.

^51In commenting on our report, ICE noted that FPS plans to revise the
Physical Security Academy curriculum in fiscal year 2008 to support
training on the use of a new Risk Assessment and Management Program. In
addition, FPS is partnering with the DHS Office of Security and Federal
Law Enforcement Training Center in an effort to develop a standardized
physical security training program for all federal agencies, drawing in
part upon the experiences of the FPS Physical Security Academy.

As we reported in July 2004, maintaining a means of funding FPS
that will ensure adequate protection of federal facilities and
allow FPS to meet homeland security responsibilities is a
challenge. DHS maintains that the funding FPS receives from basic
security fees is not nearly enough for FPS to provide adequate
basic security service.^52 FPS reported in November 2006 that it
faced a funding shortfall of $60 million. FPS officials said that
FPS cannot always provide basic security services requested by
some DHS and other non-GSA entities because FPS lacks funding for
additional employees. For example, FPS has received requests for
security services from Indian Reservation Hospitals and the Social
Security Administration that it was not able to fulfill.

Compounding the challenges FPS faces, FPS officials noted that DHS
components are often unable to implement recommendations in FPS
assessments. For example, CIS is aware that it needs bollards and
garage and driveway barriers at its headquarters building, but it
has not been able to prioritize funding to implement these
measures. In other instances, FPS noted that it may conduct a
security assessment for a component, but because of a lack of
funding or a lag in funding, recommendations are not implemented
for 18 to 24 months. That leaves a component vulnerable for as
long as 2 years, and by that time, the recommendation may have
changed in priority. In addition, some components, such as FEMA,
CIS, and S&T, said that the response time and quality of FPS's
security assessments need improvement, partially because of the
demands placed on FPS by its expanding mission. Senior DHS
physical security officials said that FPS needs to redefine its
role and core mission to focus on work that it can handle, given
its budget and the training and qualifications of its employees.
In response to our recommendation of almost 3 years ago, FPS is
developing a transformation plan, although this plan has not been
finalized.^53

^52FPS provides three categories of security services: (1) basic security,
(2) building-specific security, and (3) tenant-specific security. Basic
security is provided by DHS (ICE/FPS) to GSA-controlled properties and
includes law enforcement, such as building alarm monitoring, and physical
security, such as building security assessments. Basic security fees are
included in fees paid directly to FPS on a cost-per-square foot basis. The
basic security fee is currently capped at 39 cents per square foot,which
DHS and FPS maintain is not nearly enough to cover costs for basic
security services. The President's fiscal year 2008 budget proposes to
increase the current basic security from 39 cents to 57 cents per square
foot. Building-specific security is provided in addition to the basic
security provided in a particular building as a result of DHS building
security assessment recommendations. Examples of building-specific
security measures include contract guards, security equipment, and
security fixtures. Agencies pay for these security services out of their
own budget if they determine that they want them. Tenant-specific security
includes additional reimbursable services and equipment for agencies to
meet their HSPD-12 requirements, which include card readers and contractor
background suitability determinations. Most of FPS's funding comes from
the building-specific and tenant-specific security that it provides.

^53GAO, Homeland Security: Transformation Strategy Needed to Address
Challenges Facing the Federal Protective Service, [73]GAO-04-537 ,
(Washington, D.C.: July 14, 2004.)

DHS Has Not Developed a Physical Security Plan As Required under HSPD-7

DHS clearly faces a number of challenges related to the protection
of its own facilities but has not developed a physical security
plan. The challenges DHS faces--such as implementing risk
management, measuring performance, and funding needed security
enhancements--are similar to those faced by many agencies. HSPD-7
recognized the need for an organized, carefully considered
approach to protecting physical assets, including facilities, and
required that all federal departments and agencies develop
physical security plans. Specifically, HSPD-7 states:

"By July 2004, the heads of all Federal departments and agencies
shall develop and submit to the Director of the OMB for approval
plans for protecting the physical and cyber critical
infrastructure and key resources that they own or operate. These
plans shall address identification, prioritization, protection,
and contingency planning, including the recovery and
reconstitution of essential capabilities."

DHS officials believe that the 2006 National Infrastructure
Protection Plan, which provides an overarching approach for
integrating the nation's many critical infrastructure and key
resource protection initiatives into a single national effort,
serves as DHS's physical security plan. However, the National
Infrastructure Protection Plan does not address the
"identification, prioritization, protection, and contingency
planning, including the recovery and reconstitution of essential
capabilities," specifically for DHS-occupied facilities. Having
such a plan would be particularly useful for DHS and its
stakeholders--including OMB and Congress--in devising a course of
action for protecting DHS facilities and making associated funding
trade-offs. Furthermore, it is imperative that DHS, as the
government's central agency for protection against terrorism, lead
by example in formulating how the department itself is approaching
the range of difficult challenges that agencies across government
also face in the facility protection area.

Conclusions

Like other agencies, DHS faces real property challenges, including
excess and deteriorating property, data quality issues, reliance
on costly leasing, and the threat of terrorism against its
facilities. DHS also faces funding and budgetary limitations,
which are often at odds with businesslike decisions. Given the
size and diversity of DHS's portfolio, the challenges it faces,
and the importance of DHS's mission, it is critical that DHS
implement the requirements of the President's real property
initiative, which DHS has made progress in doing recently. As
DHS's efforts to strategically manage its property progress,
greater emphasis on long-term capital planning, which needs
improvement, could help DHS make the most of limited resources and
make timely and effective capital acquisitions. It would be
particularly beneficial for DHS to link such capital planning
efforts--such as the development of a departmentwide long-term
capital plan--to its asset management planning efforts under the
real property initiative, because DHS inherited the real property
held by its components' former agencies and is faced with
realigning these assets in the coming years. Shortcomings in the
capital planning area have clear implications for the
administration's real property initiative. Real property is one of
the major types of capital assets that agencies require. Since
asset management plans developed under the real property
initiative are intended to guide agencies' year-to-year real
property management actions, capital plans could provide a useful
longer term context for agencies' real property decisions.

DHS faces a number of significant challenges related to its
planned consolidation of Washington, D.C., headquarters operations
on the West Campus of St. Elizabeths, which is a National Historic
Landmark District. DHS believes that by consolidating most of its
headquarters operations, greater efficiencies would result,
mission integration would occur, and the security of its
facilities could be better managed. The cost of the consolidation
could be at least $3.26 billion, according to GSA. GSA has
conducted some analysis to justify developing the West Campus of
St. Elizabeths to consolidate DHS's headquarters. However, GSA and
DHS lack a more comprehensive cost analysis that would improve
transparency and in the context of all the other factors--such as
programmatic and security goals--would help decision makers,
including Congress, better understand the cost trade-offs of
developing a variety of densities and configurations at the site
and assess the merits of the consolidation from the perspective of
the federal government as a whole.

In the area of security for the buildings DHS itself occupies, DHS
has implemented a number of management- and building-specific
actions. However, DHS has not fully implemented risk management
for facility protection across all of its components, has not
developed a full set of performance measures, and has not
developed a physical security plan as is required under HSPD-7.
DHS has also lagged in developing a transformation strategy to
address problems at FPS, which we recommended almost 3 years ago.
With its critical role in protecting federal real property against
the threat of terrorism and other criminal activity and given its
expanding mission and funding and staffing shortfalls, FPS could
benefit from a transformation strategy that effectively makes the
case for what type of organization it believes it should become
and provides a road map for getting there. We made this
recommendation previously in July 2004. FPS has drafted, but not
finalized, such a plan. Although the challenges DHS faces are
similar to those other agencies have faced, it is critical that
DHS lead by example in protecting its own facilities against the
threat of terrorism.

Recommendations for Executive Action

We recommend that the Secretary of Homeland Security take the
following two actions:

o In order to make the most of limited resources and to make
timely and effective capital acquisitions that will result in a
decrease of long-term real property costs, the Secretary should
use the Office of Management and Budget's capital planning
principles to link DHS's long-term capital needs with the asset
management planning activities required under the President's real
property initiative.
o In order to lead by example by formulating how the department
itself is approaching the range of difficult challenges that
agencies across government face in the facility protection arena,
the Secretary should develop a physical security plan for DHS, as
required by HSPD-7, that addresses DHS's plans to fully implement
risk management and develop performance measures for facility
protection.

We recommend that both the Secretary of Homeland Security and
Administrator of the General Services Administration take the
following action:

o In order to better support DHS's preferred course of action at
St. Elizabeths, the Secretary and Administrator should jointly
perform a comprehensive analysis of the costs, from the
perspective of the federal government as a whole, that would
result if DHS headquarters operations are consolidated at St.
Elizabeths, and compare these costs to the costs of other
alternatives at the St. Elizabeths campus.

Agency Comments and Our Evaluation

We provided a draft of this report to DHS, GSA, NCPC, the Advisory
Council on Historic Preservation, the U.S. Commission of Fine
Arts, and the D.C. Office of Planning. DHS concurred with our
recommendations to link DHS's long-term capital needs with its
asset management planning activities and to develop a physical
security plan, but it only partially agreed with our
recommendation to develop a comprehensive cost analysis, from the
perspective of the government as a whole, for the St. Elizabeths
site. DHS's comments are discussed below and are contained in
appendix III, along with our specific comments on issues raised by
DHS. DHS also provided technical clarifications, which we
incorporated, where appropriate. GSA partially agreed with the
findings related to the potential development of St. Elizabeths,
but it did not concur with our recommendation that GSA and DHS
perform a comprehensive analysis of the costs to consolidate DHS's
headquarters at the St. Elizabeths site. GSA's comments are
discussed below and are contained in appendix IV, along with our
specific comments on issues raised by GSA. GSA also provided
technical clarifications, which we incorporated, where
appropriate. Comments received from NCPC, the Advisory Council on
Historic Preservation, the U.S. Commission of Fine Arts, and the
D.C. Office of Planning are contained in appendixes V through
VIII, respectively, and are discussed below in more detail. NCPC,
the Advisory Council on Historic Preservation, the D.C. Office of
Planning, and the U.S. Commission of Fine Arts commented on the
St. Elizabeths portion of the report. NCPC said that the document
is an accurate reflection of NCPC's concerns and understanding of
the project. NCPC also emphasized that all comments in the report
are those of staff and not of NCPC itself. The D.C. Office of
Planning generally agreed with the findings of the report and
provided additional information, which we have incorporated in
this report as appropriate. The U.S. Commission of Fine Arts did
not comment on our recommendation related to DHS's consolidation
and provided additional information, which we incorporated as
appropriate. The Advisory Council on Historic Preservation agreed
with our recommendation that DHS and GSA jointly perform a
comprehensive cost analysis for the variety of alternatives at the
St. Elizabeths site and provided additional information, which we
incorporated as appropriate.

Evaluation of DHS and GSA Comments

DHS concurred with our recommendations to link DHS's long-term
capital needs with its asset management planning activities and to
develop a physical security plan, but it only partially agreed
with our recommendation to develop a comprehensive cost analysis
for the St. Elizabeths site. According to GSA and DHS, GSA is
actively engaged in determining the overall real property costs
for DHS in the Washington, D.C., area. However, DHS stated that
the recommendation ignores the fact that DHS cannot operate
effectively, as currently housed, and believes that consolidation
is a requirement, not a desire. DHS also stated that it will not
renew a lease after it expires unless it consolidates functions,
improves efficiencies, eliminates duplication and is economically
feasible. DHS further stated that our draft report did not
acknowledge that the "status quo" scenario is not acceptable. GSA
did not concur with our recommendation regarding a comprehensive
cost analysis. GSA stated that such an analysis would be
misleading and ignores the fact that DHS's current housing
configuration is unacceptable. GSA also stated that DHS would not
renew leases in place, but that the department would seek to
consolidate its headquarters functions through another vehicle.

We agree that DHS's current housing configuration is not optimal
and did not suggest that the status quo should be maintained.
Instead, our report intends to convey our belief, on the basis of
work done for this review, that Congress needs better information
on the costs associated with redeveloping St. Elizabeths--for a
range of alternatives and from the perspective of the government
as a whole--in order to fund and oversee a construction
undertaking of this magnitude. Understanding the costs associated
with the "status quo," which would involve renewing current leases
and finding other housing solutions, would serve as an important
baseline for comparison. Having a comprehensive analysis of the
costs of various development scenarios at the St. Elizabeths site,
including DHS's and GSA's preferred development of 4.5 million
square feet of office space (plus parking) would improve
transparency and help Congress better understand the costs and
operational trade-offs of development at various densities and
configurations at the site. We are concerned that DHS and GSA will
only analyze the 4.5 million square foot options. We believe that
the merits of other options could be evaluated, given the concerns
expressed by key stakeholders regarding the DHS- and GSA-preferred
density level and the fact that funding availability for the
project as a whole has not been determined by Congress.

If anything less than the DHS- and GSA-preferred alternative is
unacceptable, as DHS and GSA have maintained, a comprehensive
analysis could be the vehicle for making this case to Congress. In
this regard, an assessment of DHS's current configuration would
help Congress fully understand why the status quo, or lesser
densities than DHS and GSA are pursuing, are unacceptable. The
analysis could also help stakeholders understand the long-term
costs to the federal government as a whole--whether incurred by
DHS, GSA, or the Department of Health and Human Services, as well
as the District of Columbia--and how these long-term costs would
vary depending on the amount of square footage developed at the
St. Elizabeths site.

It is also important to note that in the report, in the interest
of being fair and balanced, we describe the arguments of DHS and
GSA for consolidation, while also describing the concerns of
stakeholders, so that Congress can understand the various
viewpoints. We are also fully aware, as GSA stated in its
comments, that GSA has conducted some analysis to justify
developing the West Campus of St. Elizabeths to consolidate DHS's
headquarters. We also agree that use of the St. Elizabeths site
for DHS's headquarters would make use of previously underutilized
federal property and that excess and underutilized property has
been a GAO concern in previous reports. However, as discussed
above, a more comprehensive cost analysis--in the context of all
the other factors, such as programmatic and security goals--would
help decision makers better understand the cost trade-offs of
developing a variety of densities and configurations at the site.

After sending us its official comments, GSA revised its estimate
of the cost to develop St. Elizabeths to $3.26 billion with GSA
incurring $1.94 billion of costs and DHS incurring $1.32 billion
of costs. GSA also provided updated transportation improvement
estimates to streets, roads, and highways in the vicinity of St.
Elizabeths to support the federal redevelopment project. Updated
total costs for transportation improvements range from $27 million
to $40 million, of which DDOT's costs range between $4 million and
$14 million, according to GSA. GSA has budgeted for the difference
between total costs and what DDOT will pay, based on current GSA
estimates. For the purposes of this report, we used GSA's most
recent estimates. However, we believe that these changing cost
estimates, and the confusion about them that we encountered,
demonstrate the value of a comprehensive cost analysis that would
improve transparency and allow for more informed decision making.

We also examined the additional information that DHS and GSA
provided to us after agency comments. We incorporated this new
information as appropriate, but it did not change our
recommendation that DHS and GSA should jointly conduct a more
comprehensive cost analysis.

Evaluation of the D.C. Office of Planning Comments

The D.C. Office of Planning agreed with our recommendation calling
for a comprehensive analysis of the cost to develop St. Elizabeths
under various development scenarios for the St. Elizabeths. The
Office of Planning also appreciated the thorough and thoughtful
assessment of the numerous effects that arise from the potential
consolidation of DHS operations on the West Campus of St.
Elizabeths Hospital. It also provided additional comments. For
example, the Office of Planning clarified that it supported
federal development at the St. Elizabeths West Campus but is
concerned with the magnitude of the project and its effects. The
Office of Planning also expressed concern that GSA is not
considering a development alternative of 2.0 to 2.5 million square
feet of office space that aligns with the views of most of the
stakeholders and consulting parties. The office is also concerned
about how to control growth at the St. Elizabeths site once an
agreed upon square footage is established. Lastly, the office said
that eliminating the lowest density alternatives--and failing to
explore all of the feasible alternatives--is contrary to both the
expressed intention of the Master Plan document itself and to the
letter and spirit of both the NEPA and the regulations
implementing Section 106 of the National Historic Preservation
Act. See appendix V for the full comments provided by the D.C.
Office of Planning.

Evaluation of NCPC Comments

NCPC, in a letter from its Executive Director, said that our
report is an accurate reflection of NCPC's concerns and
understanding of the project. NCPC also noted that it has not yet
had the opportunity to formally review and comment on the St.
Elizabeths project. As a result, all comments are those of the
staff and not of NCPC itself. See appendix VI for the full
comments provided by NCPC.

Evaluation of the Advisory Council on Historic Preservation Comments

The Advisory Council on Historic Preservation (Council) agreed
with our recommendation that DHS and GSA jointly perform a
comprehensive cost analysis for a variety of alternatives at the
St. Elizabeths site. The Council letter stated that insufficient
information has been provided to demonstrate how much cost savings
may be realized by DHS through the redevelopment of the St.
Elizabeths campus in comparison to other alternatives. The Council
letter also stated that many other consulting parties continue to
express this concern in the context of the National Historic
Preservation Act consultation process and that further
justification and explanation would facilitate more effective
consultation. The Council letter also stated that the report
adequately documents the concerns of stakeholders and the
challenges faced in addressing these concerns. Lastly, the Council
letter stated that it would like to see further discussions on the
importance of the National Historic Landmark District and the
criteria that the National Park Service utilizes for determining
the site's historic significance. See appendix VII for the full
comments provided by the Advisory Council on Historic
Preservation.

Evaluation of U. S. Commission of Fine Arts Comments

The U.S. Commission of Fine Arts (Commission) did not comment on
our recommendations, but said that our report did not fully
discuss the value of the St. Elizabeths property. The Commission
acknowledged that we discussed the impact of the DHS consolidation
on traffic, the cost of providing public services, and the
economic revitalization of the community. However, the Commission
said that we did not adequately discuss the site's historic and
cultural value related to the history of the treatment of mental
illness and as a hospital site during the Civil War, the
architectural value of many buildings, or the ecological value of
the site, including serving as a habitat for endangered species.
We incorporated a discussion of these factors into our report. The
Commission also stated that other values of St. Elizabeths include
its value as potentially positive generator of urban development
and its stunning views. We believe that we captured these points
with our statement that some community leaders support locating
federal development at St. Elizabeths as an economic driver and
magnet for additional development and revitalization and our
discussion of the scenic views of the District being available
from the site. See appendix VIII for the full comments provided by
the U.S. Commission of Fine Arts.

As agreed with your office, unless you publicly announce the
contents of this report earlier, we plan no further distribution
until 30 days from the report date. At that time, we will send
copies to the Secretary of DHS, the Administrator of GSA, the
Chairman and Executive Director of NCPC, the Chairman of the
Advisory Council on Historic Preservation, the Secretary of the
U.S. Commission of Fine Arts, and the Director of the D.C. Office
of Planning. Additional copies will be sent to interested
congressional committees and the Director of OMB. We will also
make copies available to others upon request, and the report will
be available at no charge on the GAO Web site at
[61]http://www.gao.gov .

If you have any questions about this report, please contact me at
(202) 512-2834 or at [62][email protected] . Contact points for
our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made key
contributions to this report are listed in appendix IX.

Sincerely yours,

Mark L. Goldstein
Director, Physical Infrastructure Issues

Appendix I: Scope and Methodology

To answer our first question, we obtained and analyzed Department
of Homeland Security (DHS) and General Services Administration
(GSA) real property data from DHS's Real Property Information
System, DHS's centralized real property database and GSA's Federal
Real Property Profile, its centralized real property database. We
also interviewed (1) DHS real property officials from
headquarters, (2) DHS officials responsible for DHS's Real
Property Information System, (3) a contractor that is helping DHS
develop its real property inventory, and (4) GSA officials
responsible for GSA's Federal Real Property Profile. In addition
to assessing the information we obtained about the data from these
interviews, we conducted electronic testing of the data. These
tests included logic tests, tests for duplicates, and checking
frequencies and values for outliers. It was during this assessment
and our interviews that we discovered deficiencies with some of
the data elements. For example, some DHS components are using data
proxies for some data elements--such as condition index, operating
costs, and restrictions--until these components can develop more
robust data measures. We do not present data on any of these data
elements--which DHS acknowledges it is working to improve--in the
body of the report. However, we determined that the DHS and GSA
real property data (such as total number of buildings and
structures) that we are presenting in the report were sufficiently
reliable for the purposes of our review.

To answer question 2, we interviewed DHS real property officials
from headquarters and DHS's various components about challenges
and used Executive Order 13327, which implements the real property
initiative of the President's Management Agenda, as the basis for
measuring DHS's progress in real property management. For
questions 1 and 2, we also interviewed Office of Management and
Budget (OMB) staff because of OMB's oversight role in real
property management. We reviewed and analyzed key pertinent
documentation, including DHS's asset management plan, Federal Real
Property Council guidance, OMB's assessment of DHS's progress, and
OMB guidance.

To answer question 3, we reviewed and analyzed key documents,
reviewed the relevant authorities, and interviewed DHS real
property officials from headquarters and GSA officials responsible
for assisting DHS with its headquarters consolidation efforts.
This included reviewing planning documents, including GSA's
location alternatives analysis to comply with the NEPA, GSA's 2005
land use feasibility analysis, DHS's 2006 housing master plan, and
GSA's master planning documents, related to a proposed
consolidation of DHS headquarters on the West Campus of St.
Elizabeths Hospital in the District of Columbia. We also
interviewed additional stakeholders, including officials from the
National Capital Planning Commission (NCPC), the Advisory Council
on Historic Preservation, the U.S. Commission of Fine Arts, the
Council on Environmental Quality, the State Historic Preservation
Officer, and Ward 8 Coordinator from the D.C. Office of Planning.

To answer the fourth question, we interviewed DHS physical
security headquarters officials and officials from DHS's various
components. We also interviewed Federal Protective Service
officials and GSA officials responsible for security at locations
where GSA houses DHS. We analyzed Homeland Security Presidential
Directive Number 7 and pertinent physical security documents and
policies from DHS and GSA. We conducted our work between March
2006 and April 2007 in accordance with generally accepted
government auditing standards.

Appendix II: FRPC Inventory Data Elements and Descriptions

Data
element
number Data element name Definition
1 Real property type Identifies the asset as one of the
following categories of real
property: land; building; or
structure.
2 Real property use Indicates the asset's predominant use
in one of the following categories:
land; building; or structure.
3 Legal interest Identifies a real property as being
owned by the federal government,
leased by the federal government
(i.e., as lessee), or otherwise
managed by the federal government.
4 Status Reflects the predominant
physical/operational status of the
asset as active, inactive, or excess.
5 Historical status Identifies owned and leased property
as National Historic Landmark (NHL);
National Register Listed (NRL);
National Register Listed; National
Register Eligible; Noncontributing
element of NHL/NRL district; Not
evaluated; Evaluated, Not Historic.
6 Reporting agency Refers to the federal government
agency/bureau reporting the property
to the FRPC Inventory database.
7 Using organization Refers to the predominant federal
government agency/bureau (or other
nonfederal government entity)
occupying the property.
8 Size Refers to the size of the real
property asset according to
appropriate units of measure. The
unit of measure used for the three
real property types is as follows:

o For land, the unit of measure is
acreage and the land is designated
as either rural acres or urban
acres.
o For buildings, the unit of
measure is area in square feet and
designated as gross square feet
(GSF).

For structures, a structure unit of
measure table is provided that
contains reporting guidelines for the
unit of measure for specific types of
structures.
9 (PM) Utilization Captures the rate of utilization for
a building--that is, the percentage
of space (square footage) used for
agency purposes.

Is reported

o on a scale from 0 to 100;
o by building type--office,
warehouse, hospital, laboratory,
and housing--and
o by category--overutilized,
utilized, underutilized, or not
utilized--depending on where the
utilization rate falls within
percentage ranges defined for each
building type.
10 Value Defined as the functional replacement
value; the cost of replacing the
existing constructed asset at today's
standards. (value = unit x unit cost
x overhead factor)
11 (PM) Condition index Provides a general measure of a
building or structure's condition at
a specific point in time.

Is calculated

o annually,
o as the ratio of repair needs to
plant replacement value (PRV); (CI
= (1 - $repair needs/$PRV) x 100.
o "Repair needs" is the amount
necessary to restore a building to
a condition substantially
equivalent to its original
condition

o Agencies and departments
will initially use an
existing process to
determine their repair
needs.
o Agencies will later
refine and standardize
their definition of repair
needs.

o PRV is the cost of replacing an
existing building so that it meets
today's standards.
o The higher the CI, the better
the condition of the building.

Is reported

o for an entire agency or
department,
o on a scale from 0 to 100
percent.

Agencies and departments initially
set target CI levels in consultation
with OMB.
12 (PM) Mission dependency The value a building brings to an
agency's performance of its mission
as determined by the agency

May be categorized as

o mission critical - without the
building or land, the agency's
mission is compromised;
o mission dependent, not critical
- falls between mission critical
and not mission dependent; or
o not mission dependent - without
the building or land, the agency's
mission is unaffected.
13 (PM) Annual operating costs Includes costs for

o recurring maintenance and
repairs;
o utilities (plant operating and
energy purchase costs);
o cleaning or janitorial services
(pest control, refuse collection
and disposal, including recycling
operations); and
o roads/grounds (grounds
maintenance, landscaping, and snow
and ice removal from roads, piers
and airfields).

Will be reported annually.
14 Main location Refers to the street/delivery address
for the asset or the latitude and
longitude coordinates. Either of the
following will be provided for the
constructed asset or parcel of land:
street address; or latitude and
longitude (if no security concerns).
15 Real property unique A code that is unique to an item of
identifier real property that will allow for
linkages to other information
systems. The real property unique
identifier is assigned by the
reporting agency and can contain up
to 24 alpha-numeric digits.
16 City Provides the four-digit Geo Location
Codes (GLC) for the city or town
associated with the reported main
location in which the land parcel,
building, or structure is located.
17 State Provides the two-digit GLC for the
state associated with the reported
main location in which the land
parcel, building, or structure is
located.
18 Country Provides the three-digit GLC for the
country associated with the reported
main location in which the land
parcel, building, or structure is
located.
19 County Provides the three-digit GLC for the
county associated with the reported
main location in which the land
parcel, building, or structure is
located.
20 Congressional district Provides the value for the
congressional district associated
with the reported main location in
which the land parcel, building, or
structure is located.
21 ZIP code Provides the five-digit ZIP code
associated with the reported main
location in which the land parcel,
building, or structure is located
and, if known, the additional
four-digit zip code suffix.
22 Installation/Subinstallation Headquarters installations - Land,
identifier buildings, other structures, and
facilities, or any combination of
these. Examples of installations are
a national forest, national park,
hydroelectric project, office
building, warehouse building, border
station, base, post, camp, or an
unimproved site. Provide a 24-digit
alpha-numeric code for the
installation ID assigned by the
reporting agency.

Subinstallation - Part of an
installation identified by a
different GLC than that of the
headquarters installation. An
installation must be separated into
subinstallations (and reported
separately) when the installation is
located in more than one state or
county. However, an agency may elect
to separate an installation into
subinstallations even if the
installation is not located in more
than one state or county. Provide a
six-digit alpha-numeric code for the
subinstallation ID assigned by
reporting agency.
23 Restrictions Refers to limitations on the use of
real property. Provides one or more
of the following values for each
building, structure, and parcel of
land: environmental restrictions
(cleanup-based restrictions, etc.);
natural resource restrictions
(endangered species, sensitive
habitats, floodplains, etc.);
cultural resource restrictions
(archeological, historic, Native
American resources (except those
excluded by EO 13007, section 304 of
the National Historical Preservation
Act), etc.); developmental
(improvements) restrictions;
reversionary clauses from deed;
zoning restrictions; easements
(including access for maintenance
rights, etc.); rights-of-way; mineral
interests; water rights; air rights;
other; nonapplicable.

Source: GSA, Interim FY 2005 Guidance for Real Property Inventory
Reporting as of October 11, 2005.

Note: PM = Performance measure.

Appendix III: Comments from the Department of Homeland Security

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

See comment 2.

See comment 1.

GAO Comments

The following are GAO's comments on the Department of Homeland
Security letter dated June 12, 2007.

1. DHS describes the value of GSA's Automated
Prospectus System (TAPS) in its comments. While we
agree that a TAPS analysis is a good tool to make
decisions about leasing and new construction options,
it does not allow a comprehensive analysis of the
costs of various development scenarios at the St.
Elizabeths site that would help decision makers
better understand the costs of the trade-offs of
developing a variety of densities and configurations
at the site. In addition, DHS is incorrect in stating
that GSA's TAPS analysis includes DHS's costs of
$1.32 billion. GSA acknowledged in its comments that
DHS costs are not part of the TAPS analysis, but
argues that the costs would not vary significantly,
depending on the alternative selected at St.
Elizabeths so the costs exclusion does not affect the
validity of the analysis.
2. DHS stated that the staff of the consulting
parties advance the position that the St. Elizabeths
campus should be open for public use and that the St.
Elizabeths campus has never been open for unfettered
public use. We do not address the issue of public
access in detail in our report, but in general, most
stakeholders with whom we talked supported some type
of limited public access to the site such as access
to the Point for certain holidays and access by
permit to the Civil War cemetery. Most stakeholders
acknowledged that unlimited access was not a
realistic option. We agree with DHS that in the post
9-11 security environment, access to the site is a
complicated issue. As DHS states, we believe that
working with the community to come to an agreement
about limited public access to portions of the campus
consistent with threat levels and providing July 4th
access to view fireworks is a reasonable way to
proceed.

Appendix IV: Comments from the General Services Administration

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

See comment 2.

See comment 1.

See comment 4.

See comment 3.

See comment 7.

See comment 6.

See comment 5.

See comment 8.

See comment 9.

See comment 11.

See comment 12.

See comment 10.

GAO Comments

The following are GAO's comments on the General Services
Administration letter dated June 6, 2007.

1. We have updated the report to include the updated
transportation costs to be borne by GSA and the
District Department of Transportation that were
provided to us after receiving agency comments. These
transportation cost estimates supersede those
provided in the agency comments.
2. We disagree with GSA's statement that we double
counted project infrastructure costs. The $2 billion
estimate for GSA's portion of St. Elizabeths
development costs, which was included in the draft
report we sent to GSA, was based on estimates
discussed at interviews conducted with GSA on
November 29, 2006, as well as follow-up telephone
conversations with GSA in February and March 2007.
Also, in a February 8, 2007, letter from GSA, we were
provided documentation that listed development costs
for St. Elizabeths at about $2 billion. After sending
us official agency comments, GSA revised its estimate
of the cost to develop St. Elizabeths to $3.26
billion with GSA incurring $1.94 billion of costs and
DHS incurring $1.32 billion of costs. Since GSA's
current estimate stands at $3.26 billion, we will use
this estimate in our report; but we believe that
these changing cost estimates--and the confusion
about them--demonstrate that a comprehensive cost
analysis would, in our view, improve transparency and
allow for more informed decision making.
3. We disagree that including DHS's actual costs for
its current locations as a baseline would be
misleading. We agree that DHS's current housing
configuration is not optimal and that DHS may pursue
other alternatives other than renewing current
leases. However, it would be useful for congressional
decision makers to have an analysis of what DHS is
currently paying and will pay in leases over a
30-year period as a baseline and compare the 30 year
cost under that scenario with the 30-year cost of
ownership under other configurations and square
footages at the St. Elizabeths site (2.5, 3.0, and
4.5 million square feet).
4. We are not saying that DHS tenant-specific costs
would vary significantly if DHS moved to a different
location than St. Elizabeths. We are suggesting that
a comprehensive cost analysis of how DHS costs would
vary, depending on the configuration and square
footage developed at the St. Elizabeths site and
would be useful to decision makers. For example, if 3
million square feet of office space were developed at
St. Elizabeths, DHS's costs, such as build-out costs,
moving costs, and remaining leasing costs, would be a
certain amount. However, if 4.5 million square feet
of office space were developed at St. Elizabeths,
these DHS costs would certainly vary to some degree.
An understanding of the degree to which these costs
might vary, depending on the alternative selected,
would promote informed decision making.
5. As discussed earlier, we believe that a
comprehensive analysis of the costs of various
development scenarios at the St. Elizabeths site
ranging from zero development (for use as baseline)
to DHS's and GSA's preferred development of 4.5
million square feet of office space (plus parking),
or higher, would help decision makers at GSA, DHS,
and Congress better understand the cost trade-offs of
developing a variety of densities and configurations
at the site. A comprehensive cost analysis would also
help stakeholders understand the long-term costs to
the federal government, whether incurred by DHS, GSA,
or the Department of Health and Human Services, as
well as the District of Columbia government and how
these long-term costs would vary, depending on the
amount of square footage developed at the St.
Elizabeths site. We would not limit the analysis to
those solutions that fully meet DHS's colocation
need, since alternatives that partially meet DHS's
colocation needs could be explored if only to
understand the trade-offs of developing a variety of
densities and configurations at the site.
6. We agree that a stay-in-place scenario is not a
good alternative for DHS. However, we believe that an
understanding of current and projected leasing costs
would provide a useful baseline of comparison against
other alternatives for decision makers. GSA's
economic analysis does this to some degree, but in
our view it does not explore a complete range of
alternatives for the St. Elizabeths site.
7. We disagree. Based on the interviews conducted and
letters provided by NCPC, the D.C. Office of
Planning, Advisory Council on Historic Preservation,
and National Trust for Historic Preservation, we
believe that stakeholders generally maintain that 2.0
to 2.5 million square feet of office space can fit on
the site, plus parking, without compromising the
site's historic character. Only the U.S. Commission
of Fine Arts expressed a preference for a lower
amount of office development on the site.
8. We agree that stakeholder statements in our report
do not reflect agencies' official positions, but we
believe they accurately reflect the concerns or views
of key stakeholders that are senior officials in
these organizations. We have added a statement in our
report that states views expressed are generally the
views of key staff, not official positions of the
organizations themselves who will officially provide
comment as consulting parties once GSA submits its
draft Master Plan in July 2007. We also attribute
some statements to an individual within a particular
agency or cite the letter from which any statements
came. For example, NCPC expressed its views of the
potential consolidation of DHS at the St. Elizabeths
campus through letters signed by its Executive
Director on January 19, 2006, and September 21, 2006.
An analysis and description of the debate around the
development of St. Elizabeths would not be complete
without this context of stakeholder concerns. In our
view, it would not be appropriate to wait until after
the Record of Decision regarding the St. Elizabeths
site became final to inform Congress of stakeholder
concerns since congressional debate about, and
discussion of, funding for the project is already
under way.
9. We do not believe that describing the concerns of
stakeholders is inappropriate, even though GSA has
not issued its draft environmental impact statement.
As discussed above, an analysis and description of
the debate around the development of St. Elizabeths
would not be complete without this context of
stakeholder concerns. In our view, it would not be
appropriate to wait until after GSA's Record of
Decision regarding the St. Elizabeths site became
final to inform Congress of stakeholder concerns as
this is an ongoing and deliberative process. We
acknowledge that GSA has attempted to fully engage
stakeholders as it works through the complexities of
the project.
10. We agree that the St. Elizabeths site's
infrastructure costs, building conditions, and
historic preservation demands make providing
cost-effective housing for federal agencies a
challenge. That is precisely why a comprehensive cost
analysis of the total costs to the federal government
as a whole, at varying square footages, at the St.
Elizabeths site would be beneficial. We believe that
such an analysis would lead to more informed decision
making.
11. See comment 10.
12. GSA correctly notes that our audit focus has
changed from evaluating DHS's plans to consolidate
its headquarters in Washington, D.C. to a focus on
the challenges that DHS and GSA face in consolidating
DHS's headquarters in Washington, D.C. Given the
large role that GSA plays in efforts to consolidate
DHS's headquarters at the West Campus of St.
Elizabeths, we determined during our engagement that
a focus on the challenges that both DHS and GSA face
was warranted. During the course of the engagement,
most of the discussions with GSA focused on the
challenges it faces as it assists DHS in its need to
consolidate.

Appendix V: Comments from the District of Columbia Office of Planning

Appendix VI: Comments from the National Capital Planning Commission

Appendix VII: Comments from the Advisory Council on Historic Preservation

Appendix VIII: Comments from the U.S. Commission of Fine Arts

Appendix IX: GAO Contact and Staff Acknowledgments

GAO Contact

Mark Goldstein, 202-512-2834

Acknowledgments

In addition to the individual listed above, David Sausville,
Assistant Director; Michaela Brown; Tonnye Conner-White; George
Depaoli; Sharon Dyer; Brandon Haller; Grant Mallie; Kieran
McCarthy; Joshua Ormond; and Susan Michal-Smith made significant
contributions to this report.

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[74]www.gao.gov/cgi-bin/getrpt?GAO-07-658 .

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Highlights of [75]GAO-07-658 , a report to the Ranking Member, Committee
on Homeland Security and Governmental Affairs, U.S. Senate

June 2007

FEDERAL REAL PROPERTY

DHS Has Made Progress, but Additional Actions Are Needed to Address Real
Property Management and Security Challenges

[76]What GAO Recommends

GAO recommends that DHS (1) use capital planning principles to link its
capital needs with its asset management plan and (2) develop a physical
security plan. GAO also recommends that DHS and GSA (3) develop a more
comprehensive analysis of the costs to the government as a whole for DHS's
headquarters consolidation. DHS agreed with the first two recommendations.
GSA did not agree with the third recommendation, while DHS partially
agreed. GAO maintains that such an analysis is needed. GAO also obtained
comments from other stakeholders.

DHS's 10 major organizational components have a portfolio that includes
more than 27,000 owned or leased buildings and structures totaling about
78 million square feet. About 72 percent of DHS real property is federally
owned, while about 28 percent of DHS real property is federally leased.
The U.S. Coast Guard has the majority of DHS real property, accounting for
69 percent of its buildings and about 41 percent of its square footage.
DHS faces challenges but has made progress toward addressing them in
response to the administration's real property management initiative. One
major challenge relates to DHS being a new federal department that
combined 22 existing agencies, which has made the development of a
cohesive approach to real property management a significant undertaking.
On the administration's scorecard for real property management, DHS has
achieved a "yellow" status, which indicates progress in strategically
managing real property by, for example, designating a senior real property
officer and developing an OMB-approved asset management plan. However, DHS
could do more to link its capital decision-making practices to its real
property initiatives.

Consolidating DHS's Washington, D.C., area locations will be challenging
because of the costs involved, estimated to be at least $3.26 billion, and
stakeholders' concerns about the redevelopment of the West Campus of St.
Elizabeths Hospital-- DHS's preferred location--which is under the control
of GSA and is a National Historic Landmark District. DHS believes that by
consolidating most of its headquarters operations, greater efficiencies
would result, its mission would be better integrated, and security of the
facilities could be better managed. DHS has testified that an estimated $1
billion would be saved over 30 years through the consolidation, although a
revised analysis estimates cost savings at $743 million. However, this
savings analysis does not (1) use actual and projected leasing costs for
locations where DHS is currently housed, (2) include DHS costs of $1.32
billion to develop the site, and (3) examine a range of square footage
alternatives. A more comprehensive analysis would improve transparency and
help key stakeholders, including Congress, make more informed decisions
about the consolidation. Also, several key stakeholders are concerned
about compliance with historic preservation and environmental laws and the
effect the project will have on the local community, although some
community leaders support it. In July 2007, GSA plans to issue a draft
Master Plan for stakeholder review that, according to GSA, will address
these concerns.

In recent years, DHS has taken actions intended to improve the security of
its facilities, but its efforts fall short in certain key areas. DHS has
designated a Chief Security Officer for the department and has established
a Chief Security Officer Council to evaluate security issues. However,
most DHS components have not fully implemented risk management for
facility protection, which DHS has advocated for other agencies, nor has
DHS developed a physical security plan, as required by HSPD-7.

References

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