    Federal Real Property: An Update on High-Risk Issues (24-MAY-07,
    GAO-07-895T).

    In January 2003, GAO designated federal real property as a
    high-risk area due to long-standing problems with excess and
    underutilized property, deteriorating facilities, unreliable real
    property data, and costly space challenges. Federal agencies were
    also facing many challenges protecting their facilities due to
    the threat of terrorism. This testimony is based largely on GAO's
    April 2007 report on real property high-risk issues (GAO-07-349).
    The objectives of that report were to determine (1) what progress
    the administration and major real property-holding agencies had
    made in strategically managing real property and addressing
    long-standing problems and (2) what problems and obstacles, if
    any, remained to be addressed.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-895T
        ACCNO:   A69910
      TITLE:     Federal Real Property: An Update on High-Risk Issues
         DATE:   05/24/2007
      SUBJECT:   Federal agencies
    	     Federal property
    	     Federal property management
    	     Inventory control
    	     Property disposal
    	     Real property
    	     Standards
    	     Strategic planning
    	     Surplus property
    	     GAO High Risk Series

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    GAO-07-895T

         * [1]The Administration and Major Real Property-Holding Agencies

              * [2]Agencies Have Met Scorecard Standards to Varying Degrees
              * [3]Agency Actions Intended to Address Some Long-standing Proble
              * [4]Further Efforts Made to Strategically Manage and Address Pro

         * [5]Long-standing Problems in Real Property Largely Persist and

              * [6]The Federal Government Continues to Hold Many Unneeded Asset
              * [7]Major Real Property-Holding Agencies Still Have Multibillion
              * [8]Despite Long-Term Cost, Several Agencies Reported That Relia
              * [9]Governmentwide Real Property Data Inventory Is in Early Stag
              * [10]Individual Agencies Continue to Struggle with Data Reliabili
              * [11]Physical Security Is Still a Problem for Major Real Property
              * [12]Underlying Obstacles Hamper Agency Real Property Reform Effo

                   * [13]Several Agencies Cited Competing Stakeholder Interests
                     as Im
                   * [14]Legal and Budgetary Limitations Continue to Hamper
                     Agencies'
                   * [15]Need for Improved Capital Planning Still Exists

              * [16]Federal Real Property Reform Efforts Still in Early Stages

         * [17]Contact and Acknowledgments
         * [18]GAO's Mission
         * [19]Obtaining Copies of GAO Reports and Testimony

              * [20]Order by Mail or Phone

         * [21]To Report Fraud, Waste, and Abuse in Federal Programs
         * [22]Congressional Relations
         * [23]Public Affairs

    Testimony

    Before the Subcommittee on Federal Financial Management, Government
    Information, Federal Services, International Security, Committee on
    Homeland Security and Governmental Affairs, U.S. Senate

    United States Government Accountability Office

    GAO

    For Release on Delivery
    Expected at 10:00 a.m. EDT
    Thursday, May 24, 2007

    FEDERAL REAL PROPERTY

    An Update on High-Risk Issues

    Statement of Mark L. Goldstein, Director
    Physical Infrastructure

    GAO-07-895T

    Mr. Chairman and Members of the Committee:

    We welcome the opportunity to testify on the actions that are needed to
    address the long-standing problems that led to our designation of federal
    real property as a high-risk area. As you know, at the start of each new
    Congress since 1999, we have issued a special series of reports, entitled
    the Performance and Accountability Series: Major Management Challenges and
    Program Risks. In January 2003, we designated federal real property a
    high-risk area as part of this series, and we issued updates on this area
    in January 2005 and January 2007.1 My testimony is based largely on a
    recent report on federal real property high-risk issues,2 and other GAO
    reports and testimonies on real property issues. My testimony focuses on
    the progress made by the administration and major real property-holding
    agencies3 to strategically manage real property and address long-standing
    problems, and what problems and obstacles, if any, remain to be addressed.
    I will also provide an update of the President's Management Agenda (PMA)
    executive branch management scorecard results for the real property
    initiative for the second quarter of fiscal year 2007.

    Summary

    The administration and major real property-holding agencies have made
    progress toward strategically managing federal real property and
    addressing some long-standing problems. In response to the PMA real
    property initiative and a related executive order, agencies covered under
    the executive order have, among other things, designated senior real
    property officers, established asset management plans, standardized real
    property data reporting, and adopted various performance measures to track
    progress. The administration has also established a Federal Real Property
    Council (FRPC) that supports reform efforts. In addition, the
    administration intends to work with Congress to provide agencies with
    asset management tools to more effectively manage real property. For
    example, VA, NASA, DOD, Energy, Interior, and USPS have limited
    authorities that allow the agency to enter into enhanced-use lease (EUL)
    agreements. Each agency has been provided its own statutory authority, and
    the authority varies from agency to agency. These agencies are also
    authorized to retain proceeds from the lease and to use them for items
    specified by law, such as improvement of their real property assets.
    Additionally, certain agencies such as GSA and VA have been authorized to
    retain the proceeds from disposal of their real property and to use these
    proceeds for their real property needs.

    1GAO, High-Risk Series: Federal Real Property, [24]GAO-03-122 (Washington,
    D.C.; Jan. 2003); the report on real property is a companion to GAO's 2003
    high-risk update, GAO, High-Risk Series: An Update, [25]GAO-03-119
    (Washington, D.C.: Jan. 2003); GAO, High-Risk Series: An Update,
    [26]GAO-05-207 (Washington, D.C.; Jan. 2005), and High-Risk Series: An
    Update, [27]GAO-07-310 (Washington, D.C.: Jan. 2007).

    2GAO, Federal Real Property: Progress Made Toward Addressing Problems, but
    Underlying Obstacles Continue to Hamper Reform, [28]GAO-07-349
    (Washington, D.C.: Apr. 13, 2007).

    3For the purpose of this review, we are focusing on eight of the largest
    real property-holding agencies (these agencies are the Departments of
    Defense (DOD), Energy (Energy), Homeland Security (DHS), the Interior
    (Interior), State (State); and Veterans Affairs (VA); the General Services
    Administration (GSA); the National Aeronautics and Space Administration
    (NASA). Also included is the United States Postal Service (USPS), which is
    an independent establishment in the executive branch and is among the
    largest property holders in terms of owned and leased space.

    Although progress toward strategically managing real property and
    addressing some long-standing problems has been made, these problems
    largely persist and the underlying obstacles remain. For example, Energy,
    DHS and NASA reported that over 10 percent of their facilities are excess
    or underutilized. In addition, Energy, NASA, GSA, Interior, State, and VA
    reported repair and maintenance backlogs that total over $16 billion. DOD
    reported a backlog of more than $57 billion, which includes the cost of
    restoring and modernizing obsolete buildings. Furthermore, Energy,
    Interior, GSA, State, and VA reported an increased reliance on operating
    leases--an approach which we have reported is often more costly for
    long-term space needs. While agencies have made progress in collecting and
    reporting standardized real property data, data reliability is still a
    challenge at some of the agencies, and agencies lack a standard framework
    for data validation. Finally, all of the major real property-holding
    agencies reported using risk-based approaches to prioritize security
    needs, as we have suggested, but cited a lack of resources for security
    enhancements as an ongoing problem.

    In our past high-risk reports, we called for a transformation strategy to
    address the long-standing problems in this area. The administration's
    approach is generally consistent with what we envisioned, but certain
    areas warrant further attention. More specifically, underlying obstacles,
    such as competing stakeholder interests, legal and budgetary limitations,
    and a need for improved capital planning, persist. For example, some
    agencies cited local interests, such as historic preservation advocates or
    various advocacy groups that want to keep the federal government in their
    community, as barriers to disposing of excess property. Furthermore,
    agencies' limited ability to pursue ownership often leads them to lease
    property that may be more cost-effective over time for them to own.
    Finally, long-term capital planning efforts to improve the efficiency of
    government operations continue to be a challenge, and these efforts are
    not clearly linked with the real property initiative. The federal
    government has generally not planned or budgeted for capital assets, such
    as real property, over the long term. In our April 2007 report,4 we made
    recommendations aimed at (1) ensuring the validity of agency data, (2)
    focusing reform efforts to better address the leasing problem and security
    challenges, (3) and addressing obstacles that include competing
    stakeholder interests and the need for improved capital planning. OMB
    agreed with the report and concurred with its recommendations. VA, Energy,
    DHS, GSA, and NASA generally agreed with the report. State, DOD, Interior,
    and USPS did not state whether they agreed or disagreed with the report
    and its recommendations.

    The Administration and Major Real Property-Holding Agencies Have Taken Actions
    to Strategically Manage Real Property and Address Some Long-standing Problems

    Pursuant to Executive Order 13327, the administration has taken several
    key actions to strategically manage real property. FRPC was established in
    2004, which subsequently created interagency committees to work toward
    developing and implementing a strategy to accomplish the executive order.
    FRPC developed a sample asset management plan and published Guidance for
    Improved Asset Management in December 2004. In addition, FRPC established
    asset management principles that form the basis for the strategic
    objectives and goals in the agencies' asset management programs and also
    worked with GSA to develop and enhance an inventory system known as the
    Federal Real Property Profile (FRPP). FRPP was designed to meet the
    executive order's requirement for a single database that includes all real
    property under the control of executive branch agencies. The FRPC, with
    the assistance of the GSA Office of Government-wide Policy, developed 23
    mandatory data elements, which include four performance measures. The four
    performance measures are utilization, condition index, mission dependency,
    and annual operating and maintenance costs. In addition, a performance
    assessment tool has been developed, which is to be used by agencies to
    analyze the inventory's performance measurement data in order to identify
    properties for disposal or rehabilitation. In June 2006, FRPC added a data
    element for disposition that included six major types of disposition,
    including sale, demolition, or public benefit conveyance. Finally, to
    assist agencies in their data submissions for the FRPP database, FRPC
    provided standards and definitions for the data elements and performance
    measures through guidance issued on December 22, 2004, and a data
    dictionary issued by GSA in October 2005. The first governmentwide
    reporting of inventory data for FRPP took place in December 2005, and
    selected data were included in the fiscal year 2005 FRPP published by GSA,
    on behalf of FRPC, in June 2006. Data on the four performance measures
    were not included in the FRPP report.

    4 [29]GAO-07-349 .

    Agencies Have Met Scorecard Standards to Varying Degrees

    Adding real property asset management to the PMA has increased its
    visibility as a key management challenge and focused greater attention on
    real property issues across the government. OMB has identified goals
    related to the four performance measures in the inventory for agencies to
    achieve in right-sizing their real property portfolios and it is the
    administration's goal to reduce the size of the federal real property
    inventory by 5 percent, or $15 billion, by disposing of unneeded assets by
    2015. In October 2006, the administration reported that $3.5 billion in
    unneeded federal real property had been disposed of since 2004.

    Figure 1: PMA Executive Branch Management Scorecard Standards for the Real
    Property Initiative

    To achieve these goals and gauge an agency's success in accurately
    accounting for, maintaining, and managing its real property assets so as
    to efficiently meet its goals and objectives, the administration
    established the real property scorecard in the third quarter of fiscal
    year 2004. The scorecard consists of 13 standards that agencies must meet
    to achieve green status, which is the highest status. These 13 standards
    include 8 standards needed to achieve yellow status, plus 5 additional
    standards. An agency reaches "green" or "yellow" status if it meets all of
    the standards for success listed in the corresponding column in figure 1
    and red if it has any of the shortcomings listed in the "red" column.

    OMB evaluates agencies quarterly on progress and agencies then have an
    opportunity to update OMB on their status towards achieving green.
    According to PMA real property scorecards, for the second quarter of
    fiscal year 2007, the Department of Labor is the only real
    property-holding agency included in the real property initiative that
    failed to meet the standards for yellow status as shown in figure 2. All
    of the other agencies, have, at a minimum, met the standards for yellow
    status.

    Figure 2: PMA Executive Branch Management Scorecard Results for the Real
    Property Initiative

    Among the 15 agencies under the real property initiative, 5 agencies--GSA
    NASA, Energy, State, and VA--have achieved green status. According to OMB,
    the agencies achieving green status have established 3-year timelines for
    meeting the goals identified in their asset management plans; provided
    evidence that they are implementing their asset management plans; used
    real property inventory information and performance measures in decision
    making; and managed their real property in accordance with their strategic
    plan, asset management plan, and performance measures. Once an agency has
    achieved green status, OMB continues to monitor its progress and results
    through PMA using deliverables identified in its 3-year timeline and
    quarterly scorecards. Each quarter, OMB also provides formal feedback to
    agencies through the scorecard process, along with informal feedback, and
    clarifies expectations. Yellow status agencies still have various
    standards to meet before achieving green.

    Agency Actions Intended to Address Some Long-standing Problems

    In addition to addressing their real property initiative requirements,
    some agencies have taken steps toward addressing some of their
    long-standing problems, including excess and underutilized property and
    deteriorating facilities. Some agencies are implementing various tools to
    prioritize reinvestment and disposal decisions on the basis of agency
    needs, utilization, and costs. For example, GSA officials reported that
    GSA's Portfolio Restructuring Strategy sets priorities for disposal and
    reinvestment based on agency missions and anticipated future need for
    holdings. In addition, GSA developed a methodology to analyze its leased
    inventory in fiscal year 2005. This approach values leases over their
    life, not just at the point of award; considers financial performance and
    the impact of market rental rates on current and future leasing actions;
    and categorizes leases by their risk and value.

    Additionally, some agencies are taking steps to make the condition of core
    assets a priority and address maintenance backlog challenges. For example,
    Energy officials reported establishing budget targets to align maintenance
    funding with industry standards as well as programs to reduce the
    maintenance backlogs associated with specific programs. In addition,
    Interior officials reported that the department has conducted condition
    assessments for 72,233 assets as of fourth quarter fiscal year 2006.

    Further Efforts Made to Strategically Manage and Address Problems

    As mentioned previously, Executive Order 13327 requires that OMB, along
    with landholding agencies, develop legislative initiatives to improve
    federal real property management and establish accountability for
    implementing effective and efficient real property management practices.
    Some individual agencies have obtained legislative authority in recent
    years to use certain real property management tools, but no comprehensive
    legislation has been enacted. Some agencies have received special real
    property management authorities, such as the authority to enter into EUL
    agreements.5 These agencies are also authorized to retain the proceeds of
    the lease and to use them for items specified by law, such as improvement
    of their real property assets. DOD, Energy, Interior, NASA, USPS, and VA
    are authorized to enter into EUL agreements and have authority to retain
    proceeds from the lease. These authorities vary from agency to agency, and
    in some cases, these authorities are limited. For example, NASA is
    authorized to enter into EUL agreements at two of its centers,6 and VA's
    authority to enter into EUL agreements expires in 2011.7 In addition, VA
    was authorized in 2004 to transfer real property under its jurisdiction or
    control and to retain the proceeds from the transfer in a capital asset
    fund for property transfer costs, including demolition, environmental
    remediation, and maintenance and repair costs.8 VA officials noted that
    although VA is authorized to transfer real property under its jurisdiction
    or control and to retain the proceeds from such transfers, this authority
    has significant limitations on the use of any funds generated by any
    disposal under this authority. Additionally, GSA was given the authority
    to retain proceeds from disposal of its real property and to use the
    proceeds for its real property needs. Agencies with enhanced authorities
    believe that these authorities have greatly improved their ability to
    manage their real property portfolios and operate in a more businesslike
    manner.

    Overall, the administration's efforts to raise the level of attention to
    real property as a key management challenge and to establish guidelines
    for improvement are noteworthy. The administrative tools, including asset
    management plans, inventories, and performance measures, were not in place
    to strategically manage real property before we updated our high-risk list
    in January 2005. The actions taken by major real property-holding agencies
    and the administration to establish such tools are clearly positive steps.
    However, these administrative tools and the real property initiative have
    not been fully implemented, and it is too early to determine if they will
    have a lasting impact. Implementation of these tools has the potential to
    produce results such as reductions in excess property, reduced maintenance
    and repair backlogs, less reliance on leasing, and an inventory that is
    shown to be reliable and valid.

    5This authority allows the agency to lease real property under its control
    or custody to public and private entities and to accept as payment under
    the lease either cash or other consideration, such as construction,
    maintenance, restoration, and repair of facilities, or services that are
    of benefit to the agency.

    642 U.S.C. S 2459j.

    738 U.S.C. S 8169.

    8In 2004, VA was authorized to transfer real property under its control or
    custody that is not part of an EUL for fair market value and to deposit
    the proceeds in VA's Capital Asset Fund. 38 U.S.C. S 8118.

    Long-standing Problems in Real Property Largely Persist and Obstacles Remain

    Although clear progress has been made toward strategically managing
    federal real property and addressing some long-standing problems, real
    property remains a high-risk area because the problems persist and
    obstacles remain. Agencies continue to face long-standing problems in the
    federal real property area, including excess and underutilized property,
    deteriorating facilities and maintenance and repair backlogs, reliance on
    costly leasing, and unreliable real property data. Federal agencies also
    continue to face many challenges securing real property. These problems
    are still pervasive at many of the major real property-holding agencies,
    despite agencies' individual attempts to address them.

    The Federal Government Continues to Hold Many Unneeded Assets

    Although the changes being made to strategically manage real property are
    positive and some realignment has taken place, the size of agencies' real
    property portfolios remains generally outmoded. As we have reported, this
    trend largely reflects a business model and the technological and
    transportation environment of the 1950s.9 Many of these assets and
    organizational structures are no longer needed; others are not effectively
    aligned with, or responsive to, agencies' changing missions. While some
    major real property-holding agencies have had some success in attempting
    to realign their infrastructures in accordance with their changing
    missions, others still maintain a significant amount of excess and
    underutilized property.10 For example, officials with Energy, DHS, and
    NASA--which are three of the largest real property-holding
    agencies--reported that over 10 percent of the facilities in their
    inventories were excess or underutilized. The magnitude of the problem
    with underutilized or excess federal real property continues to put the
    government at risk for lost dollars and missed opportunities. Table 1
    describes the status of excess and underutilized real property challenges
    at the nine major real property-holding agencies.

    9GAO, 21st Century Challenges: Reexamining the Base of the Federal
    Government, [30]GAO-05-352T (Washington, D.C.: Feb. 16, 2005).

    10GSA Management Regulations define not utilized property as an entire
    property or portion of a property that is not occupied or used for current
    program purposes of the accountable agency or property that is occupied in
    caretaker status only. According to a GSA official, property that is not
    utilized is generally considered vacant. The regulations also 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. 102-75.45 and 41 C.F.R. 102-75.50).

    Table 1: Status of Excess Property Challenges at the Major Real
    Property-Holding Agencies

    Agency   Status
    DOD      DOD officials indicated that because its real property holdings
                are so extensive and DOD has just begun collecting detailed
                excess facility information, the department has not fully
                completed its reporting of all excess property.
    Energy   Energy officials reported that approximately 16 percent of
                Energy's real property inventory has been identified as excess or
                underutilized.
    DHS      According to DHS officials, for the 2006 FRPP submission, the
                percentage of underutilized real property is 9.7 percent.
    Interior In December 2006, Interior reported in the FRPP during fiscal
                year 2006 that 1,181 assets of 185,527 were disposed, or less
                than 1 percent of the inventory. Officials reported that Interior
                is working to address its excess and underutilized facilities,
                citing two major initiatives undertaken at Interior; (1) Bureau
                of Land Management (BLM), the Space Management Program and (2)
                Service First, to better meet space needs and priorities.a
    GSA      According to GSA officials, 258 buildings, with 13.8 million
                rentable square feet (RSF), have been reported as excess
                property. Additionally, 21 buildings, with 0.7 million RSF, are
                pending disposal or demolition.
    NASA     NASA officials reported that over 10 percent of all assets are
                underutilized or not utilized at all.
    State    According to State officials, the department's properties showed
                a high level of utilization in 2005. Only about 1.5 percent of
                the portfolio was reported as underutilized. State has identified
                65 properties (less than 0.4 percent of the overseas portfolio
                for government-owned assets) for potential disposal.
    USPS     According to USPS officials, 1 percent of its inventory of 8,807
                owned properties is considered excess or underutilized. Fewer
                than 50 properties are considered excess.b
    VA       According to VA officials, VA has moved from 98 percent utilized
                space in fiscal year 2005 to 100 percent in fiscal year 2006. In
                fiscal year 2006, VA disposed of 77 buildings, including 6
                buildings via sales, 19 buildings via demolition, and 52
                buildings via EUL.

    Source: GAO analysis of agencies' data.

    aThe Space Management Program is a top management initiative to review
    space requirements and reduce space allocations across the department.
    Started in 2003 and managed by the Office of Acquisition and Property
    Management, the program is designed to strengthen management decision
    making at all levels throughout the life cycle (acquisition through
    disposition) of owned, leased and GSA-provided space. The Service First
    Initiative is a cross-agency partnership between BLM and the Department of
    Agriculture's U.S. Forest Service. It was established several years ago
    with three broad goals to improve customer service, increase operational
    efficiency, and enhance land stewardship.

    bAs part of our ongoing work, we are reviewing USPS infrastructure
    realignment plans.

    Major Real Property-Holding Agencies Still Have Multibillion-Dollar Repair and
    Restoration Backlogs

    Addressing the needs of aging and deteriorating federal facilities remains
    a problem for major real property-holding agencies. According to recent
    estimates, tens of billions of dollars will be needed to repair or restore
    these assets so that they are fully functional. Furthermore, much of the
    federal portfolio was constructed over 50 years ago, and these assets are
    reaching the end of their useful lives. Energy, NASA, GSA, Interior,
    State, and VA reported repair and maintenance backlogs for buildings and
    structures that total over $16 billion. In addition, DOD reported a $57
    billion restoration and modernization backlog.11 We found that there was
    variation in how agencies reported data on their backlog. Some agencies
    reported deferred maintenance figures consistent with the definition used
    for data on deferred maintenance included in their financial statements.12
    Others provided data that included major renovation or restoration needs.
    More specifically,

               o For DOD, facilities restoration and modernization requirements
               total over $57 billion. Officials noted that the backlog does not
               reflect the impact of 2005 Base Realignment and Closures (BRAC) or
               related strategic rebasing decisions that will be implemented over
               the next several years.
               o For Energy, the backlog in fiscal year 2005 for a portfolio
               valued at $85.2 billion was $3.6 billion.
               o For Interior, officials reported an estimated maintenance
               backlog of over $3 billion for buildings and other structures.13

    11To determine whether agencies still have repair and restoration
    backlogs, we asked each agency to provide updated estimates of their
    backlogs, which we defined as needs in facilities for which major upkeep,
    repair, and maintenance have not been funded and the repair and
    maintenance on these assets has been postponed.

    12Deferred maintenance is defined by the Statement of Federal Financial
    Accounting Standards No. 6, which includes the accounting standards for
    deferred maintenance, as maintenance that was not performed when it should
    have been or scheduled maintenance that was delayed or postponed.
    Maintenance is the act of keeping fixed assets in acceptable condition,
    including preventative maintenance, normal repairs, and other activities
    needed to preserve the assets, so that they can continue to provide
    acceptable services and achieve their expected life. Maintenance excludes
    activities aimed at expanding the capacity of assets or otherwise
    upgrading them to serve needs different from those originally intended.

    13It is important to note that the National Park Service, which has
    responsibility for trails and recreation sites in addition to buildings
    and other structures, has previously reported an estimated $5 billion
    maintenance backlog. The estimated $3 billion maintenance backlog reported
    here does not include roads, bridges, trails, irrigation, dams or other
    water structures.

    	        o GSA's current maintenance backlog is estimated at $6.6 billion.
               o For State, the maintenance backlog is estimated at $132 million,
               which includes all of the deferred/unfunded maintenance and repair
               needs for prior fiscal years.
               o For NASA, the restoration and repair backlog is estimated at
               over $2.05 billion as of the end of fiscal year 2006.
               o For VA, the maintenance backlog for facilities with major repair
               needs is estimated at $5 billion, and according to VA officials,
               VA must address this aged infrastructure while patient loads are
               changing.

    			  Despite Long-Term Cost, Several Agencies Reported That Reliance
    			  on Leasing to Meet New Space Needs Is Increasing

               Many of the major real property-holding agencies continue to rely
               on leased space to meet new space needs. As a general rule,
               building ownership options through construction or purchase are
               often the least expensive ways to meet agencies' long-term
               requirements. Lease purchases--under which payments are spread out
               over time and ownership of the asset is eventually transferred to
               the government-- are often more expensive than purchase or
               construction but are generally less costly than using ordinary
               operating leases to meet long-term space needs.14 For example, we
               testified in October 2005 that for the Patent and Trademark
               Office's long-term requirements in northern Virginia, the cost of
               an operating lease was estimated to be $48 million more than
               construction and $38 million more than lease purchase. However,
               over the last decade we have reported that GSA--as the central
               leasing agent for most agencies-- relies heavily on operating
               leases to meet new long-term needs because it lacks funds to
               pursue ownership.

               Operating leases have become an attractive option, in part because
               they generally "look cheaper" in any given year, even though they
               are often more costly over time. Under current budget scorekeeping
               rules,15 the budget generally should record the full cost of the
               government's commitment. Operating leases were intended for
               short-term needs and thus, under the scorekeeping rules, for
               self-insuring entities, only the amount needed to cover the first
               year lease payments plus cancellation costs needs to be recorded.
               However, the rules have been stretched to allow budget authority
               for some long-term needs being met with operating leases to be
               spread out over the term of the lease, thereby disguising the fact
               that over time, leasing will cost more than ownership. Resolving
               this problem has been difficult; however, change is needed because
               the current practice of relying on costly leasing to meet
               long-term space needs result in excessive costs to taxpayers and
               does not reflect a sensible or economically rational approach to
               capital asset management, when ownership would be more cost
               effective.

    14According to VA officials, VA does not enter into lease-purchase
    agreements.

    15The extent to which capital costs are reflected in the budget depends on
    how they are "scored." The Congressional Budget Office (CBO) and OMB
    separately "score" or track budget authority, receipts, outlays, and the
    surplus or deficit estimated to results as legislation is considered and
    enacted. CBO develops estimates of the budgetary impact of bills reported
    by the different congressional committees. OMB also uses the scorekeeping
    guidelines to determine how much budget authority must be obligated for
    individual agency transactions.

               Five of the nine largest real property-holding agencies--Energy,
               Interior, GSA, State, and VA--reported an increased reliance on
               operating leases to meet new space needs over the past 5 years.
               According to DHS officials, per review of GSA's fiscal year 2005
               and 2006 lease acquisition data for DHS, there has been no
               significant increase in GSA acquired leased space for DHS. In
               addition, officials from NASA and USPS reported that their
               agency's use of operating leases has remained at about the same
               level over the past 5 years.

               We did not analyze whether the leasing activity at these agencies,
               either in the aggregate or for individual leases, resulted in
               longer-term costs than if these agencies had pursued ownership.
               For short-term needs, leasing likely makes economic sense for the
               government in many cases. However, our past work has shown that,
               generally speaking, for long-term space needs, leasing is often
               more costly over time than direct ownership of these assets.

    			  Governmentwide Real Property Data Inventory Is in Early Stages,
    			  and Data Reliability Is Still a Problem at the Agency Level

               While the administration and agencies have made progress in
               collecting standardized data elements16 needed to strategically
               manage real property, the long-term benefits of the new real
               property inventory have not yet been realized, and this effort is
               still in the early stages. The federal government has made
               progress in revamping its governmentwide real property inventory
               since our 2003 high-risk designation. The first governmentwide
               reporting of inventory data for FRPP took place in December 2005,
               and GSA published the data on behalf of FRPC, in June 2006.
               According to the 2005 FRPP report, the goals of the centralized
               database are to improve decision making with accurate and reliable
               data, provide the ability to benchmark federal real property
               assets, and consolidate governmentwide real property data
               collection into one system. According to FRPC, these improvements
               in real property and agency performance data will result in
               reduced operating costs, improved asset utilization, recovered
               asset values, and improved facility conditions, among others.

               It is important to note that real property data contained in the
               financial statements of the U.S. government have also been
               problematic. The CFO Act, as expanded by the Government Management
               Reform Act, requires the annual preparation and audit of
               individual financial statements for the federal government's 24
               major agencies. The Department of the Treasury is also required to
               compile consolidated financial statements for the U.S. government
               annually, which we audit. In March 2007, we reported that--for the
               tenth consecutive year--certain material weaknesses17 in internal
               controls and in selected accounting and financial reporting
               practices resulted in conditions that continued to prevent us from
               being able to provide the Congress and the American people with an
               opinion as to whether the consolidated financial statements of the
               U.S. government were fairly stated in conformity with U.S.
               generally accepted accounting principles. Further, we also
               reported that the federal government did not maintain effective
               internal control over financial reporting (including safeguarding
               assets) and compliance with significant laws and regulations as of
               September 30, 2006.18

    16As previously mentioned in this report, GSA, working under the
    leadership of FRPC, collaborated with numerous agencies to develop 23
    mandatory data elements, which include four performance measures.

    17A material weakness is a condition that precludes the entity's internal
    control from providing reasonable assurance that misstatements, losses, or
    noncompliance material in relation to the financial statements or to
    stewardship information would be prevented or detected on a timely basis.

               Individual Agencies Continue to Struggle with Data Reliability
    			  Issues

               While agencies have made significant progress in collecting the
               data elements from their real property inventory databases for the
               FRPP, data reliability is still a problem at some of the major
               real property-holding agencies and agencies lack a standard
               framework for assessing the validity of data used to populate the
               FRPP. Quality governmentwide and agency-specific data are critical
               for addressing the wide range of problems facing the government in
               the real property area, including excess and unneeded property,
               deterioration, and security concerns. Despite the progress made by
               the administration and individual agencies in recent years,
               decision makers historically have not had access to complete,
               accurate, and timely data on what real property assets the
               government owns; their value; whether the assets are being used
               efficiently; and what overall costs are involved in preserving,
               protecting, and investing in them. Also, real property-holding
               agencies have not been able to easily identify excess or unneeded
               properties at other agencies that may suit their needs. For
               example, in April 2006, the DOD Inspector General (IG) reported
               weaknesses in the control environment and control activities that
               led to deficiencies in the areas of human capital assets,
               knowledge management, and compliance with policies and procedures
               related to real property management. As a result, the military
               departments' real property databases were inaccurate, jeopardizing
               internal control over transactions reported in the financial
               statements.19

               Compounding these issues is the difficulty each agency has in
               validating its real property inventory data that are submitted to
               FRPP. Validation of individual agencies' data is important because
               the data are used to populate the FRPP. Because a reliable FRPP is
               needed to advance the administration's real property initiative,
               ensuring the validity of data that agencies provide is critical.
               In general, we found that agencies' efforts to validate the data
               for the FRPP are at the very early stages of development. For
               example, according to Interior officials, the department had
               designed and was to begin implementing a program of validating,
               monitoring, and improving the quality of data reported into FRPP
               in the last quarter of fiscal year 2006.

    18GAO, Fiscal Year 2006 U.S. Government Financial Statements: Sustained
    Improvement in Federal Financial Management Is Crucial to Addressing Our
    Nation's Accountability and Fiscal Stewardship Challenges, [37]GAO-07-607T
    (Washington, D.C.: Mar. 20, 2007).

    19DOD, Office of Inspector General, Internal Controls Related to
    Department of Defense Real Property, D2006-072 (Arlington, VA: Apr. 6,
    2006).

               Furthermore, according to OMB staff, there is no comprehensive
               review or validation of data once agencies submit their real
               property profile data to OMB. OMB staff reported that both OMB and
               GSA review agency data submissions for variances from the prior
               reporting period. However, agencies are required to validate their
               data prior to submission to the GSA-managed database. OMB staff
               reported that some agencies, as part of the PMA initiative, have
               provided OMB with plans for ensuring the quality of their
               inventory and performance data. OMB staff reported that OMB has
               not, to date, requested these plans of all agencies. OMB staff
               reported that agencies provide OMB with information that includes
               the frequency of data updates and any methods used for data
               validation. In addition, according to OMB staff, OMB relies on the
               quality assurance and quality control processes performed by
               individual agencies. Also, OMB staff noted that they rely on
               agency IGs, agency financial statements, and our reviews to
               establish the validity of the data. Furthermore, OMB staff
               indicated that a one-size-fits-all approach to data validation
               would be difficult to implement. Nonetheless, a general framework
               for data validation that could guide agencies in this area would
               be helpful, as agencies continue their efforts to populate the
               FRPP with data from their existing data systems. A framework for
               FRPP data validation approaches could be used in conjunction with
               the more ad hoc validation efforts OMB mentioned to, at a minimum,
               suggest standards for frequency of validation, validation methods,
               error tolerance, and reporting on reliability. Such a framework
               would promote a more comprehensive approach to FRPP data
               validation. In our recent report, we recommended that OMB, in
               conjunction with the FRPC, develop a framework that agencies can
               use to better ensure the validity and usefulness of key real
               property data in the FRPP.

               Physical Security Is Still a Problem for Major Real Property-
    			  Holding Agencies

               The threat of terrorism has increased the emphasis on physical
               security for federal real property assets. All of the nine
               agencies reported using risk-based approaches to some degree to
               prioritize facility security needs, as we have suggested;20 but
               some agencies cited challenges, including a lack of resources for
               security enhancements and issues associated with securing leased
               space. For example, DHS officials reported that the department is
               working to further develop a risk management approach that
               balances security requirements and the acquisition of real
               property and leverages limited resources for all its components.
               In many instances, available real property requires security
               enhancements before government agencies can occupy the space.
               Officials reported that these security upgrades require funding
               that is beyond the cost of acquiring the property, and, therefore,
               their acquisition is largely dependent on the availability of
               sufficient resources.

               While some agencies have indicated that they have made progress in
               using risk-based approaches, some officials told us that they
               still face considerable challenges in balancing their security
               needs and other real property management needs with their limited
               resources. According to GSA officials, obtaining funding for
               security countermeasures, both security fixtures and equipment, is
               a challenge, not only within GSA, but for GSA's tenant agencies as
               well. In addition, Interior and NASA officials reported that their
               agencies face budget and resource constraints in securing real
               property. Interior officials further noted that despite these
               limitations, incremental progress is made each year in security.

               Given their competing priorities and limited security resources,
               some of the major real property-holding agencies face considerable
               challenges in balancing their security and real property
               management needs. We have reported that agencies could benefit
               from specific performance measurement guidance and standards for
               facility protection to help them address the challenges they face
               and help ensure that their physical security efforts are achieving
               the desired results.21 Without a means of comparing the
               effectiveness of security measures across facilities, particularly
               program outcomes, the U.S. government is open to the risk of
               either spending more money for less effective physical security
               measures or investing in the wrong areas. Furthermore, performance
               measurement helps ensure accountability, since it enables decision
               makers to isolate certain activities that are hindering an
               agency's ability to achieve its strategic goals. Performance
               measurement can also be used to prioritize security needs and
               justify investment decisions so that an agency can maximize
               available resources.

    20In GAO, Homeland Security: Further Action Needed to Coordinate Agencies'
    Facility Protection Efforts and Promote Key Practices, [38]GAO-05-49
    (Washington, D.C.: Nov. 30, 2004) we identified several key practices in
    facility protection, which included using risk management to allocate
    resources; leveraging security technology; coordinating protection efforts
    and sharing information; realigning real property assets to an agency's
    mission, thereby reducing vulnerabilities; strategically managing human
    capital; and measuring program performance and testing security
    initiatives.

               Despite the magnitude of the security problem, we noted that this
               area is largely unaddressed in the real property initiative.
               Without formally addressing security, there is a risk that this
               challenge could continue to impede progress in other areas. The
               security problem has an impact on the other problems that have
               been discussed. For example, to the extent that funding will be
               needed for a sustained investment in security, the funding
               available for repair and restoration, preparing excess property
               for disposal, and improving real property data systems may be
               further constrained. Furthermore, security requires significant
               staff time and other human capital resources and thus real
               property managers may have less time to manage other problems.

    			  Underlying Obstacles Hamper Agency Real Property Reform Efforts
    			  Governmentwide

               In past high-risk reports, we called for a transformation strategy
               to address long-standing real property problems. While the
               administration's current approach is generally consistent with
               what we envisioned and the administration's central focus on real
               property management is a positive step, certain areas warrant
               further attention. Specifically, problems are exacerbated by
               underlying obstacles that include competing stakeholder interests
               and legal and budgetary limitations. For example, some agencies
               cited local interests as barriers to disposing of excess property.
               In addition, agencies' limited ability to pursue ownership often
               leads them to lease property that they could more cost-effectively
               own over time. Another obstacle--the need for improved long-term
               capital planning--remains despite OMB efforts to enhance related
               guidance.

    21GAO, Homeland Security: Guidance and Standards Are Needed for Measuring
    Effectiveness of Agencies' Facility Protection Efforts, [39]GAO-06-612
    (Washington, D.C.: May 31, 2006).

                 Several Agencies Cited Competing Stakeholder Interests as
    				 Impeding Real Property Management Decision Making

    	        Some major real property-holding agencies reported that competing
               local, state, and political interests often impede their ability
               to make real property management decisions, such as decisions
               about disposing of unneeded property and acquiring real property.
               For example, VA officials reported that disposal is often not an
               option for most properties because of political stakeholders and
               constituencies, including historic building advocates or local
               communities that want to maintain their relationship with VA. In
               addition, VA officials said that attaining the funding to follow
               through on Capital Asset Realignment for Enhanced Services (CARES)
               decisions is a challenge because of competing priorities. Also,
               Interior officials reported that the department faces significant
               challenges in balancing the needs and concerns of local and state
               governments, historical preservation offices, political interests,
               and others, particularly when coupled with budget constraints.
               Other agencies cited similar challenges related to competing
               stakeholder interests. If the interests of competing stakeholders
               are not appropriately addressed early in the planning stage, they
               can adversely affect the cost, schedule and scope of a project.

               Despite its significance, the obstacle of competing stakeholder
               interests has gone unaddressed in the real property initiative. It
               is important to note that there is precedent for lessening the
               impact of competing stakeholder interests. BRAC decisions, by
               design, are intended to be removed from the political process, and
               Congress approves BRAC decisions as a whole. OMB staff said they
               recognize the significance of the obstacle and told us that FRPC
               would begin to address the issue after the inventory is
               established and other reforms are initiated. Without addressing
               this issue, however, less than optimal decisions that are not
               based on what is best for the government as a whole may continue.

    			    Legal and Budgetary Limitations Continue to Hamper Agencies'
    				 Disposal Efforts

               As discussed earlier, budgetary limitations that hinder agencies'
               ability to fund ownership leads agencies to rely on costly leased
               space to meet new space needs. Furthermore, the administrative
               complexity and costs of disposing of federal property continue to
               hamper some agencies' efforts to address their excess and
               underutilized real property problems. Federal agencies are
               required by law to assess and pay for any environmental cleanup
               that may be needed before disposing of a property--a process that
               may require years of study and result in significant costs. As
               valuable as these legal requirements are, their administrative
               complexity and the associated costs of complying with them create
               disincentives to the disposal of excess property. For example, we
               reported that VA, like all federal agencies, must comply with
               federal laws and regulations governing property disposal that are
               intended, for example, to protect subsequent users of the property
               from environmental hazards and to preserve historically
               significant sites.22 We have reported that some VA managers have
               retained excess property because the administrative complexity and
               costs of complying with these requirements were disincentives to
               disposal.23 Additionally, some agencies reported that the costs of
               cleanup and demolition sometimes exceed the costs of continuing to
               maintain a property that has been shut down. In such cases, in the
               short run, it can be more beneficial economically to retain the
               asset in a shut-down status.

               Given that agencies are required to fund the costs of preparing
               property for disposal, the inability to retain any of the proceeds
               acts as an additional disincentive. It seems reasonable to allow
               agencies to retain enough of the proceeds to recoup the costs of
               disposal, and it may make sense to permit agencies to retain
               additional proceeds for reinvestment in real property where a need
               exists.24 However, in considering whether to allow federal
               agencies to retain proceeds from real property transactions, it is
               important for Congress to ensure that it maintains appropriate
               control and oversight over these funds, including the ability to
               redistribute the funds to accommodate changing needs. In our
               recent report, we recommended that OMB, in conjunction with the
               FRPC, develop an action plan for how the FRPC will address key
               problems, including the continued reliance on costly leasing in
               cases where ownership is more cost effective over the long term,
               the challenges of securing real property assets, and reducing the
               effect of competing stakeholder interests on businesslike outcomes
               in real property decisions.

    			    Need for Improved Capital Planning Still Exists

               Over the years, we have reported that prudent capital planning can
               help agencies to make the most of limited resources, and failure
               to make timely and effective capital acquisitions can result in
               acquisitions that cost more than anticipated, fall behind
               schedule, and fail to meet mission needs and goals. In addition,
               Congress and OMB have acknowledged the need to improve federal
               decision making regarding capital investment. A number of laws
               enacted in the 1990s placed increased emphasis on improving
               capital decision-making practices and OMB's Capital Programming
               Guide and its revisions to Circular A-11 have attempted to address
               the government's shortcomings in this area.

    22GAO, VA Health Care: Key Challenges to Aligning Capital Assets and
    Enhancing Veterans' Care, [40]GAO-05-429 (Washington, D.C.: Aug. 5, 2005).

    23 [41]GAO-05-429 .

    24GSA has determined, and OMB has concurred, that GSA was provided
    permanent authority to retain proceeds from the sale or disposition of
    real property in its annual appropriation for fiscal year 2005.

               Our prior work assessing agencies' implementation of the planning
               phase principles in OMB's Capital Programming Guide and our
               Executive Guide25 found that some agencies' practices did not
               fully conform to the OMB principles, and agencies' implementation
               of capital planning principles was mixed.26 Specifically, while
               agencies' capital planning processes generally linked to their
               strategic goals and objectives and most of the agencies we
               reviewed had formal processes for ranking and selecting proposed
               capital investments, the agencies have had limited success with
               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. The agency capital investment
               plan is intended to explain the background for capital decisions
               and should include a baseline assessment of agency needs that
               examines existing assets and identifies gaps and help define an
               agency's long-term investment decisions. In January 2004, we
               recommended that OMB begin to require that agencies submit
               long-term capital plans to OMB. Since that report was issued,
               VA--which was one of our initial case study agencies--issued its
               first 5-year capital plan. However, the results of follow-up work
               in this area showed that although OMB now encourages such plans,
               it does not collect them, and the agencies that were included in
               our follow-up review do not have agency wide long-term capital
               investment plans.27 OMB agreed that there are benefits from OMB
               review of agency long-term capital plans, but that these plans
               should be shared with OMB on an as-needed basis depending on the
               specific issue being addressed and the need to view supporting
               materials.

    25GAO, Executive Guide: Leading Practices in Capital Decision-Making,
    [42]GAO/AIMD-99-32 (Washington, D.C.: December 1998).

    26GAO, Agency Implementation of Capital Planning Principles Is Mixed,
    [43]GAO-04-138 (Washington, D.C.: Jan. 16, 2004).

    27GAO, Three Agencies' Implementation of Capital Planning Principles Is
    Mixed, [44]GAO-07-274 (Washington, D.C.: Feb. 23, 2007). This review
    covers the Offices of Science and Environmental Management within Energy
    and U.S. Customs and Border Protection within DHS.

               Shortcomings in the capital planning and decision-making area have
               clear implications for the administration's real property
               initiative. 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. OMB staff said that agency asset management plans are
               supposed to align with the capital plans but that OMB does not
               assess whether the plans are in alignment. We found that guidance
               for the asset management plans does not discuss how these plans
               should be linked with agencies' broader capital planning efforts
               outlined in the Capital Programming Guide. In fact, OMB's asset
               management plan sample, referred to as the "shelf document," which
               agencies use to develop the asset management plans, makes no
               reference to the guide. Without a clear linkage or crosswalk
               between the guidance for the two documents, there is less
               assurance that agencies will link them. Furthermore, there could
               be uncertainty with regard to how real property goals specified in
               the asset management plans relate to longer term capital plans.

    			  Federal Real Property Reform Efforts Still in Early Stages

               The executive order on real property management and the addition
               of real property to the PMA have provided a good foundation for
               strategically managing federal real property and addressing
               long-standing problems. These efforts directly address the
               concerns we raised in past high-risk reports about the lack of a
               governmentwide focus on real property management problems and
               generally constitute what we envisioned as a transformation
               strategy for this area. However, these efforts are in the early
               stages of implementation, and the problems that led to the
               high-risk designation--excess property, repair backlogs, data
               issues, reliance on costly leasing, and security challenges--still
               exist. As a result, this area remains high risk until agencies
               show significant results in eliminating the problems by, for
               example, reducing inventories of excess facilities and making
               headway in addressing the repair backlog. Furthermore, the current
               efforts lack an overall framework for helping agencies ensure the
               validity of real property data in FRPP and do not adequately
               address the costliness of long-term leases and security
               challenges. While the administration has taken several steps to
               overcome some obstacles in the real property area, the obstacle
               posed by competing stakeholder interests has gone largely
               unaddressed, and the linkage between the real property initiative
               and broader agency capital planning efforts is not clear. Focusing
               on these additional areas could help ensure that the problems and
               obstacles are addressed.

               We made three recommendations to OMB's Deputy Director for
               Management in our April 2007 report on real property high risk
               issues.28 OMB agreed with the report and concurred with its
               recommendations.29 We recommended that the Deputy Director, in
               conjunction with FRPC, develop a framework that agencies can use
               to better ensure the validity and usefulness of key real property
               data in the FRPP. At a minimum, the framework would suggest
               standards for frequency of validation methods, error tolerance,
               and reporting on reliability. OMB agreed with our recommendation
               and reported that it will work with the FRPC to take steps to
               establish and implement a framework. For our second recommendation
               to develop an action plan for how the FRPC will address key
               problems, OMB said that the FRPC is currently drafting a strategic
               plan for addressing long-standing issues such as the continued
               reliance on costly leasing in cases where ownership is more cost
               effective over the long-term, the challenge of securing real
               property assets, and reducing the effect of competing stakeholder
               interests on businesslike outcomes in real property decisions. OMB
               agreed that it is important to build upon the substantial progress
               that has been realized by both the FRPC and the federal real
               property community in addressing the identified areas for
               improvement. OMB said that it will share the strategic plan with
               us once it is in place and will discuss strategies for ensuring
               successful implementation. For our third recommendation to
               establish a clearer link or crosswalk between agencies' efforts
               under the real property initiative and broader capital planning
               guidance, OMB stated that as agencies update their asset
               management plans and incorporate updated guidance on capital
               planning, progressive improvement in this area will be realized.

               Mr. Chairman, this concludes my prepared statement. I would be
               happy to respond to any questions you or other Members of the
               Committee may have at this time.

    28 [45]GAO-07-349 .

    29VA, Energy, DHS, GSA, and NASA generally agreed with the report. State,
    DOD, Interior, and USPS did not state whether they agreed or disagreed
    with the report and its recommendations.

               Contact and Acknowledgments

               For further information on this testimony, please contact Mark
               Goldstein on (202) 512-2834 or at goldsteinm@gao.gov. Key
               contributions to this testimony were made by Anne Izod, Susan
               Michal-Smith, and David Sausville.

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    Highlights of GAO-07-895T, a testimony before the Subcommittee on Federal
    Financial Management, Government Information, Federal Services, and
    International Security, Committee on Homeland Security and Governmental
    Affairs

    May 24, 2007

    FEDERAL REAL PROPERTY

    An Update on High-Risk Issues

    In January 2003, GAO designated federal real property as a high-risk area
    due to long-standing problems with excess and underutilized property,
    deteriorating facilities, unreliable real property data, and costly space
    challenges. Federal agencies were also facing many challenges protecting
    their facilities due to the threat of terrorism.

    This testimony is based largely on GAO's April 2007 report on real
    property high-risk issues (GAO-07-349). The objectives of that report were
    to determine (1) what progress the administration and major real
    property-holding agencies had made in strategically managing real property
    and addressing long-standing problems and (2) what problems and obstacles,
    if any, remained to be addressed.

    [46]What GAO Recommends

    GAO recommended in April 2007 that OMB, in conjunction with the Federal
    Real Property Council, (1) develop a framework to better ensure the
    validity and usefulness of key agency data; (2) develop an action plan for
    addressing key problems, including reliance on leasing, security
    challenges, and the effect of competing stakeholder interests; and (3)
    create a clearer link between agencies' efforts under the real property
    initiative and broader capital planning requirements. OMB agreed with the
    report and concurred with its recommendations.

    The administration and real property-holding agencies have made progress
    toward strategically managing federal real property and addressing
    long-standing problems. In response to the President's Management Agenda
    real property initiative and a related executive order, agencies have,
    among other things, established asset management plans; standardized data
    reporting; and adopted performance measures. Also, the administration has
    created a Federal Real Property Council (FRPC) and plans to work with
    Congress to provide agencies with tools to better manage real property.

    These are positive steps, but underlying problems still exist. For
    example, the Departments of Energy (Energy) and Homeland Security (DHS)
    and the National Aeronautics and Space Administration (NASA) reported that
    over 10 percent of their facilities are excess or underutilized. Also,
    Energy, NASA, the General Services Administration (GSA), and the
    Departments of the Interior (Interior), State (State), and Veterans
    Affairs (VA) reported repair and maintenance backlogs for buildings and
    structures that total over $16 billion. The Department of Defense (DOD)
    reported a $57 billion restoration and modernization backlog. Also,
    Energy, Interior, GSA, State, and VA reported an increased reliance on
    leasing to meet space needs. While agencies have made progress in
    collecting and reporting standardized real property data, data reliability
    is still a challenge at DOD and other agencies, and agencies lack a
    standard framework for data validation. Finally, agencies reported using
    risk-based approaches to prioritize security needs, which GAO has
    suggested, but some cited obstacles such as a lack of resources for
    security enhancements.

    In past high-risk updates, GAO called for a transformation strategy to
    address the long-standing problems in this area. While the
    administration's approach is generally consistent with what GAO
    envisioned, certain areas warrant further attention. Specifically,
    problems are exacerbated by underlying obstacles that include competing
    stakeholder interests, legal and budgetary limitations, and the need for
    improved capital planning. For example, agencies cited local interests as
    barriers to disposing of excess property, and agencies' limited ability to
    pursue ownership leads them to lease property that may be more
    cost-effective to own over time.

    Examples of Excess Federal Facilities

    References

    Visible links
      24. http://www.gao.gov/cgi-bin/getrpt?GAO-03-122
      25. http://www.gao.gov/cgi-bin/getrpt?GAO-03-119
      26. http://www.gao.gov/cgi-bin/getrpt?GAO-05-207
      27. http://www.gao.gov/cgi-bin/getrpt?GAO-07-310
      28. http://www.gao.gov/cgi-bin/getrpt?GAO-07-349
      29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-349
      30. http://www.gao.gov/cgi-bin/getrpt?GAO-05-352T
      37. http://www.gao.gov/cgi-bin/getrpt?GAO-07-607T
      38. http://www.gao.gov/cgi-bin/getrpt?GAO-05-49
      39. http://www.gao.gov/cgi-bin/getrpt?GAO-06-612
      40. http://www.gao.gov/cgi-bin/getrpt?GAO-05-429
      41. http://www.gao.gov/cgi-bin/getrpt?GAO-05-429
      42. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-99-32
      43. http://www.gao.gov/cgi-bin/getrpt?GAO-04-138
      44. http://www.gao.gov/cgi-bin/getrpt?GAO-07-274
      45. http://www.gao.gov/cgi-bin/getrpt?GAO-07-349
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