Farm Credit System: Costs for Office Space, Equipment, and Furniture
Compared to GSA's Costs (Letter Report, 01/07/94, GAO/GGD-94-57).

The Farm Credit System (FCS) is a nationwide system of borrower-owned
banks and associations established by Congress to provide credit and
other financial services to farmers and their cooperatives.  FCS and its
regulator, the Farm Credit Administration (FCA), could save money if
they had access to and used General Services Administration (GSA) supply
sources for office equipment and furniture purchases.  GSA prices for
these items were often less than the prices that FCS and FCA obtained on
their own in 1992. Even though FCA and FCS banks were allowed to use GSA
supply sources, they did not do so routinely in 1992.  FCS entities
other than banks are not authorized to use GSA sources. Although FCS and
FCA 1992 costs for leasing and operating space were about the same as
GSA's costs, FCS and FCA used more space per employee than either GSA's
space utilization goal or agencies' actual usage rates in GSA space, due
partly to recent staffing cuts.  FCS and FCA are trying to reduce the
amount of office space they use, which should improve their space
utilization rates.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-57
     TITLE:  Farm Credit System: Costs for Office Space, Equipment, and 
             Furniture Compared to GSA's Costs
      DATE:  01/07/94
   SUBJECT:  Federal supply systems
             Federal property management
             Cost control
             Inventory control systems
             Federal procurement
             Office equipment
             Cost analysis
             Procurement procedures
             Comparative analysis
IDENTIFIER:  Farm Credit System
             Albany (NY)
             Aurora (CO)
             Bloomington (MN)
             Irving (TX)
             Marietta (GA)
             Oklahoma City (OK)
             Sacramento (CA)
             St. Louis (MO)
             
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Cover
================================================================ COVER


Report to Congressional Committees

January 1994

FARM CREDIT SYSTEM - COSTS FOR
OFFICE SPACE, EQUIPMENT, AND
FURNITURE COMPARED TO GSA'S COSTS

GAO/GGD-94-57

FCS Purchasing and Leasing Costs


Abbreviations
=============================================================== ABBREV

  GSA - General Services Administration
  FAR - Federal Acquisition Regulation
  FCA - Farm Credit Administration
  FCS - Farm Credit System
  IG - Inspector General
  IRS - Internal Revenue Service
  SSA - Social Security Administration

Letter
=============================================================== LETTER


B-252568

Januany 7, 1994

The Honorable Patrick J.  Leahy, Chairman
The Honorable Richard G.  Lugar
Ranking Minority Member
Committee on Agriculture, Nutrition
 and Forestry
United States Senate

The Honorable Kent Conrad, Chairman
The Honorable Charles E.  Grassley
Ranking Minority Member
Subcommittee on Agricultural Credit
Committee on Agriculture, Nutrition
 and Forestry
United States Senate

The Honorable E (Kika) de la Garza, Chairman
The Honorable Pat Roberts
Ranking Minority Member
Committee on Agriculture
House of Representatives

The Honorable Glenn English, Chairman
The Honorable Larry Combest
Ranking Minority Member
Subcommittee on Environment,
 Credit and Rural Development
Committee on Agriculture
House of Representatives

This report is in response to the requirement in the Farm Credit
Banks and Associations Safety and Soundness Act of 1992, Public Law
102-552, that we determine whether Farm Credit System (FCS) entities
and their regulator, the Farm Credit Administration (FCA), could save
money by following General Services Administration (GSA) standards
for office space, furniture, and equipment.  To address this issue,
we determined (1) how FCS and FCA costs for office equipment and
furniture purchased in calendar year 1992 compared with the costs for
identical items if they were available from GSA supply sources and
(2) how FCS and FCA costs for leasing and operating facilities and
their space utilization rates in 1992 compared with GSA's costs and
utilization rates for comparable space. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

FCS and FCA could save money if all entities had access to and used
GSA supply sources for office equipment and furniture purchases.  GSA
prices for these products were sometimes less than the prices FCA and
FCS obtained on their own in 1992.  Even though FCA and FCS banks
were allowed to use GSA supply sources, they did not do so routinely
in 1992.  FCS entities other than the banks are not authorized by
statute or regulations to use GSA sources. 

FCS and FCA 1992 costs for leasing and operating office space were
about the same as GSA's costs.  However, FCS and FCA used more space
per employee than either GSA's space utilization goal or agencies'
actual usage rates in GSA space, partly due to recent staffing
reductions.  FCS and FCA are taking steps to reduce the amount of
office space they use, which should improve their space utilization
rates. 


   BACKGROUND
------------------------------------------------------------ Letter :2

FCS is a nationwide system of borrower-owned banks and associations
established by Congress to help provide credit and related financial
services to farmers and their cooperatives.  In 1992, FCS consisted
of 244 associations that made loans to farmers, ranchers, and rural
homeowners; 11 Farm Credit banks that supervised and provided support
services to the associations; 3 banks for cooperatives that provided
financial services to agricultural cooperatives and rural utility
systems; a Farm Credit Leasing Services Corporation that provided
leasing services to borrowers; and a Federal Farm Credit Banks
Funding Corporation responsible for managing the sale of FCS
securities.\1 FCS' operating expenses in 1992 totaled about $782
million. 

FCS is not a federal entity and therefore does not obtain office
space from GSA.  In 1992, about 75 percent of FCS offices were in
FCS-owned buildings, and the remaining 25 percent were leased.  Also,
FCS buys its own office equipment and furniture.  It has no
systemwide procurement regulations.  Each bank, association, or
service entity can establish its own procurement rules and methods. 
The voluntary FCS Purchasing Advisory Work Group and the FCS Farm
Credit Council, a national trade organization, negotiate national
contracts for such items as office equipment and telecommunications
services that are available to, but not mandatory for, all FCS
entities. 

FCA is an independent federal agency responsible for regulating and
examining FCS banks, associations, and other FCS entities.  All of
FCA's expenses are paid by FCS.  In 1992, FCA's operating expenses
totaled about $40 million.  Although it does not receive appropriated
funds, congressional appropriations committees annually review FCA's
operations, including its expenditures.  FCS is authorized by law to
provide facilities for FCA.\2 The FCS Building Association was
established by FCS to carry out this function.  The FCA Board governs
the affairs of the FCS Building Association.  FCS owns the FCA
headquarters building in McLean, VA--a suburb of Washington, D.C. 
The FCS Building Association manages the headquarters building and
leases space for FCA's eight field offices.  FCA purchases its office
equipment, such as computers, but the FCS Building Association
purchases furniture for FCA. 

GSA manages three programs--schedules, special order, and stock--to
provide goods and services to federal agencies.  In the schedules
program, organizations authorized to use GSA sources order items
directly from GSA-approved contractors, who deliver the items
directly to the organizations.\3 Information on GSA schedule prices
for microcomputer hardware and software is readily available to any
organization that has automated capabilities that allow computers to
interact over telephone lines.  Such information can be used by
organizations that are not authorized to use GSA sources to negotiate
better prices from vendors.\4

In the special order program, agencies order items from GSA, which
places the agencies' orders with contractors, and the contractors
deliver the items to the agencies.  In the stock program, GSA orders
items from contractors, who deliver the items to GSA's warehouses. 
Agencies order the items from GSA and receive them from the
warehouses.\5 GSA periodically lists the organizations that are
permitted to use these supply sources.\6


--------------------
\1 In this report, "FCS banks" refers to both the 11 banks and the 3
banks for cooperatives. 

\2 Section 5.16 of the Farm Credit Act of 1971, as amended, codified
at 12 U.S.C.  2251. 

\3 Organizations can generally only use GSA supply sources when
authorized by law.  The Federal Acquisition Regulation (FAR)
authorizes certain government contractors to use these sources.  The
Federal Property Management Regulations allow military commissaries
and nonappropriated fund activities to use them.  Also, the president
and the State Department can authorize the use of GSA sources by
certain countries and organizations. 

\4 For more information on GSA multiple award schedules, see Multiple
Award Schedule Contracting:  Changes Needed in Negotiation Objectives
and Data Requirements (GAO/GGD-93-123, Aug.  25, 1993); Multiple
Award Schedule Purchases:  Changes Are Needed to Improve Agencies'
Ordering Practices (GAO/NSIAD-92-123, June 2, 1992); and Multiple
Award Schedule Purchases:  Improvements Needed Regarding Publicizing
Agencies' Orders (GAO/NSIAD-92-88, May 12, 1992). 

\5 For more information on GSA's stock program, see General Services
Administration:  Increased Direct Delivery of Supplies Could Save
Millions (GAO/GGD-93-32, Dec.  28, 1992). 

\6 See 57 Federal Register 41503 (Sept.  10, 1992) for a list of
organizations permitted to use GSA sources. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

Our objectives were to determine (1) how FCS and FCA costs for office
equipment and furniture purchased in 1992 compared with the costs for
identical items if they were available through GSA supply sources and
(2) how FCS and FCA costs for leasing and operating facilities and
their space utilization rates in 1992 compared with GSA's costs and
utilization rates for comparable space.  To accomplish these
objectives, we sent a questionnaire to all FCS banks, associations,
and service entities and obtained information about office space,
equipment, and furniture.  We sent a second questionnaire to all FCS
banks and service entities and a stratified probability sample of
associations and obtained more detailed information on (1) office
equipment and furniture purchased and leased during 1992, (2)
purchasing rules and methods, and (3) space costs and utilization
rates.  The FCS Building Association and FCA headquarters officials
provided similar information for FCA offices.  We determined the GSA
price for items when FCS or FCA purchased them by examining GSA
vendors' and GSA's price lists if the identical items were available
from GSA. 

GSA provided information on its space utilization policy and 1992
actual leasing and operating costs and utilization rates in areas
where there were FCS and FCA installations.  We compared the GSA data
to the FCS and FCA information we obtained.  Appendix I provides a
more detailed description of our objectives, scope, and methodology. 


   POTENTIAL COST SAVINGS FOR FCS
   AND FCA THROUGH GREATER USE OF
   GSA SUPPLY SOURCES
------------------------------------------------------------ Letter :4

FCS and FCA could have realized cost savings for office equipment and
furniture purchases in 1992 through greater use of GSA supply
sources.  GSA suppliers' prices were sometimes less than the prices
FCA and FCS obtained.  While FCS banks had access to GSA sources,
other FCS entities were not authorized to use them.  FCA had access
to GSA sources but did not use them routinely. 


      FCS PURCHASES OF OFFICE
      EQUIPMENT AND FURNITURE
---------------------------------------------------------- Letter :4.1

The sample of FCS entities in our second survey bought or leased
about $19.6 million of office equipment and furniture in 1992.  We
compared the prices FCS paid for office equipment and furniture to
GSA suppliers' prices for identical items that were on available
GSA's price lists.  We were able to identify about $1.45 million of
purchases by FCS entities in our sample.  As table 1 shows, the use
of GSA sources for those items could have saved about $82,380, or 5.7
percent of the $1.45 million. 



                                     Table 1
                     
                      Comparison of FCS Prices to GSA Prices
                        for Office Equipment And Furniture
                             Purchased by FCS in 1992


Product category              Amount    FCS cost   GSA price   Dollars   Percent
--------------------------  --------  ----------  ----------  --------  --------
Personal computers               370    $869,715    $812,562   $57,153       6.6
Computer printers                181     225,411     223,929     1,482       0.7
Computer software                999     120,050     121,723    -1,673      -1.4
Furniture                         67      18,731      11,717     7,014      37.4
Copiers                           27     191,096     174,686    16,410       8.6
Facsimile                         15      24,172      22,518     1,654       6.8
 machines
Typewriters                        3       2,640       2,300       340      12.9
================================================================================
Total                          1,662  $1,451,815  $1,369,435   $82,380       5.7
--------------------------------------------------------------------------------
Sources:  FCS invoices and GSA supply schedules. 

Substantial differences occurred in potential savings by product
category.  For example, software prices FCS obtained were less than
GSA prices, while GSA prices for furniture were less than what FCS
paid.  Price differences also occurred by individual purchases within
the categories.  The open market prices FCS obtained were sometimes
less than GSA prices.  For example, of the 370 FCS microcomputer
prices we compared, GSA's prices were less on 272, FCS' prices were
less on 36, and the prices were the same on 62.  Overall, GSA prices
were 6.6 percent less than prices FCS paid for identical
microcomputers. 

FCS associations and service entities are not authorized to use GSA
supply sources and therefore cannot take advantage of GSA prices. 
The Farm Credit Council has asked GSA since 1989 to allow FCS
associations and service entities to use its supply sources.  GSA has
denied the requests, noting that FCS associations and service
entities have not been authorized by law to use its supply sources. 

Under the Federal Property and Administrative Services Act of 1949,
as amended, GSA may allow certain entities, including mixed ownership
government corporations, to use its supply schedules.\7

According to GSA officials, GSA extended eligibility to the Farm
Credit banks and banks for cooperatives to use GSA sources because
they were successors to entities already using the supply sources as
mixed ownership government corporations and federally chartered
instrumentalities.\8 FCS associations and service entities were not
successors to FCS entities already using GSA sources, and they are
not the type of entities GSA has authority to allow to use the
schedules. 

Some FCS entities eligible to use GSA sources in 1992 did not always
obtain GSA prices when they were less than the open market prices. 
For example, in 1992 a Farm Credit bank authorized to use GSA
schedules purchased 109 computers from a GSA contract vendor at a
cost of $273,000.  GSA's schedule price for the same computers would
have cost $263,000, or $10,000 less.  The bank said it did not know
why the GSA contract vendor did not provide the GSA price to the
bank. 

In addition to not always taking advantage of GSA's discounted
prices, our FCS survey indicated that about 25 percent of FCS
entities used FCS national contracts, which are negotiated by FCS to
provide discounted prices.  According to the Farm Credit Council,
some of the possible reasons most FCS entities did not use the
national contracts included: 

  the belief that they could obtain better prices locally,

  the lack of awareness of the national contracts, or

  a desire to promote the local economy. 

FCS entities also reported in our survey that about 40 percent of the
entities had developed written procedures for competitive
procurement. 


--------------------
\7 Section 201 of the Federal Property and Administrative Services
Act of 1949, as amended, codified at 40 U.S.C.  481. 

\8 Farm Credit banks were created by the merger of Federal Land Banks
and Federal Intermediate Credit Banks.  The National Bank for
Cooperatives CoBank was formed through the merger of 10 banks for
cooperatives and the Central Bank for Cooperatives.  Two banks for
cooperatives did not merge and today have national charters. 


      OFFICE EQUIPMENT AND
      FURNITURE PURCHASES FOR FCA
---------------------------------------------------------- Letter :4.2

FCA bought about $415,000 of computer equipment and software in 1992. 
Of that total, about $290,000 was bought through purchase orders.  We
reviewed in detail the 24 purchase orders for 70 items totaling about
$241,000, which were above the $2,500 minimum threshold for which the
Federal Acquisition Regulation (FAR) requires competitive
procurement.\9 In those purchase orders, 38 items were purchased on
the open market after obtaining competitive price quotations, 23
items were purchased from GSA schedule vendors, and 9 items were
purchased on a sole-source basis with justifications for buying from
sole sources documented in the agency's files. 

According to FCA staff, FCA did not review GSA schedules specifically
for the purpose of buying items from GSA schedule vendors.  Rather,
GSA schedule prices were obtained by coincidence when the vendors
that FCA selected informed FCA that they had contracts with GSA and
offered the schedule prices.  FCA staff said they did not use GSA
schedules because they believed obtaining competitive quotes from
various vendors was sufficient competition.  Of the 38 items bought
through the open market, we were able to find 12 identical items on
the GSA schedules.  The aggregate cost of those items was $10,617. 
If purchased under GSA schedules, the same items would have cost
$10,522, or about 1 percent less. 

As an agency that does not receive appropriated funds, FCA is not
required to follow FAR.  However, in 1993 FCA informed Congress that
it would adhere to FAR contract requirements.  FCA has drafted
modifications to procurement regulations to conform to FAR and said
that it would begin using GSA supply sources more routinely.  As of
December 1993, the revised procurement regulations were still in
draft. 

The FCS Building Association purchased $42,725 of furniture for FCA
headquarters and field offices in 1992.  We reviewed in detail nine
purchase orders (94 items), which were above the $2,500 minimum FAR
threshold for competition.  In those purchase orders, we were able to
determine GSA prices for 21 items with an aggregate cost of $14,683. 
The GSA price for those identical items would have been $12,016--a
savings of $2,667, or 18 percent.\10


--------------------
\9 Section 13.106 of the Federal Acquisition Regulation.  FAR
contains the uniform regulations pertaining to the acquisition of
services and supplies by federal agencies.  We did not compare the
prices on FCA contracts to GSA prices but did review the contracts to
determine whether they followed competitive procedures. 

\10 Also, because it is a nonfederal entity, the FCS Building
Association must pay sales taxes on these furniture purchases for
FCA.  If FCA bought its own furniture, FCA would not pay these taxes. 


   COSTS FOR FCS AND FCA OFFICE
   SPACE WERE COMPARABLE TO GSA
   COSTS, BUT FCS AND FCA PROVIDED
   MORE SPACE PER PERSON
------------------------------------------------------------ Letter :5

Generally, lease costs and operating costs of owned space for FCS and
FCA were about the same as GSA's costs in the same cities in 1992. 
FCS and FCA, however, provided more space per person, resulting
partly from recent staffing reductions. 


      COMPARISON OF FCS AND GSA
      SPACE COSTS
---------------------------------------------------------- Letter :5.1

Overall, GSA's and FCS' 1992 average operating costs in 21 cities
where both owned office space were about the same.  The costs varied
substantially by location.  GSA's operating costs per square foot
ranged from $2.85 to $7.88, while FCS' ranged from $2.15 to $12.47. 
While FCS' costs were higher than GSA's costs in some areas, they
were lower in others. 

Similarly, GSA's and FCS' average costs for leased office space in 16
cities where both leased space were also about the same, with FCS'
costs higher than GSA's in some areas and lower in others.  GSA's
lease costs ranged from $7.26 to $20.16 per square foot, while FCS'
costs ranged from $5.46 to $25.51. 


      COMPARISON OF FCA AND GSA
      SPACE COSTS
---------------------------------------------------------- Letter :5.2

As shown in table 2, the average cost of leased space for FCA's eight
field offices was about the same as GSA's average in the same
cities--$13.26 and $13.74 per square foot respectively. 



                           Table 2
           
           Comparison of 1992 Leased Costs for FCA
           Field Offices with GSA Costs in the Same
                            Areas


                                                         GSA
Location                                   FCA   (average)\a
------------------------------------  --------  ------------
Albany, NY                              $16.23        $15.55
Aurora, CO                               10.38         10.88
Bloomington, MN                          11.70         14.18
Irving, TX                               11.73         15.28
Marietta, GA                             13.77         13.42
Oklahoma City, OK                         9.97          9.68
Sacramento, CA                           19.92         17.17
St. Louis, MO                            12.39         13.78
Average                                 $13.26        $13.74
------------------------------------------------------------
\a We used all GSA leases in effect for personnel office space
(excluding space designated mostly for storage) for the eight cities,
which varied.  The number of GSA leases used to derive the average
GSA rate in each locality varied from 2 in Bloomington and Aurora to
27 in Sacramento. 

Sources:  FCS Building Association and GSA. 

Operating costs in 1992 for FCA's headquarters building in McLean,
VA, ($11.90 per square foot) were higher than GSA's average operating
costs for federally owned buildings in the Washington, D.C.,
metropolitan area ($7.53) per square foot).\11

The operating costs for FCA headquarters were also slightly higher
than GSA's average costs for buildings in the Washington, D.C.,
suburbs ($11.53 per square foot).\12

Some of the difference between GSA's operating costs and the cost to
operate the FCA headquarters building were attributed to FCS Building
Association paying for a cafeteria subsidy ($55,728), a contracted
property manager ($84,413), and real estate taxes ($194,431).  If the
FCS Building Association had not incurred these expenses, its cost to
operate the FCA headquarters building would have been $9.59 per
square foot in 1992, less than the average for the Washington, D.C.,
suburbs. 

In response to congressional concerns about FCA's operating costs,
the FCS Building Association plans to reduce the operating costs of
the FCA headquarters building by $100,000 in 1993.  These plans
include (1) eliminating coffee service, (2) reducing the number of
security guards on certain shifts, and (3) reducing landscaping
work.\13 The FCS Building Association president said further changes
may be made to reduce costs.  For example, real estate taxes for the
FCA headquarters building include taxes on vacant land surrounding
the building.\14 According to the FCS Building Association president,
FCS may consider selling the buildable rights associated with the
vacant land when the commercial real estate market improves. 


--------------------
\11 When 1992 income, which the FCS Building Association derived from
rent received from three other tenants in the building, is included
as an offset to operating costs, the costs for FCA headquarters are
$8.35 per square foot. 

\12 GSA's costs for federally owned buildings in the Washington,
D.C., suburbs were based on four buildings, none of which were in
McLean, VA.  Most GSA space in the Washington, D.C., suburbs is
leased space. 

\13 During our review, the FCS Building Association eliminated coffee
service and reduced the number of guards on certain shifts at the
building. 

\14 When FCS purchased the land for the FCA headquarters building in
1982, it purchased enough land for two equally sized buildings in
anticipation of FCA expanding its staff.  However, FCA has instead
reduced staffing and does not now need the land for expansion. 


      FCS/FCA PROVIDED MORE SPACE
      PER PERSON
---------------------------------------------------------- Letter :5.3

According to GSA policy, federal offices with at least nine employees
should average 153 square feet per person for new assignments.\15
Space for federal offices with eight or fewer employees is to be used
as efficiently as possible, according to the GSA policy.  GSA has
emphasized that 153 square feet per employee is a goal and may not be
met by all agencies in all situations.  In fact, the actual average
space used for all agencies was about 160 square feet per employee in
1992. 

In 1992, FCA headquarters, all eight FCA field offices, and about one
third of FCS facilities, as indicated in our FCS survey, had nine or
more employees.  Both FCS' and FCA's space utilization rates in these
offices were higher than GSA's goal and the actual usage rates by
agencies in GSA space.  FCA's utilization rate averaged 260 square
feet per person, and FCS averaged 349 square feet per person. 

We also compared FCS associations' usage rates to those of the
Internal Revenue Service (IRS) and the Social Security Administration
(SSA) offices that were located in the same cities as FCS
offices--agencies which, like FCS associations, provide office visit
services to the public.  IRS and SSA space utilization rates averaged
147 and 143 square feet per employee, respectively. 

One reason FCA had comparatively higher utilization rates per
employee in 1992 was because of recent FCA staffing reductions. 
Between January and December 1992, FCA eliminated 40 of its 500
positions--29 at headquarters and 11 in the field.  Since the total
amount of office space in FCA remained the same, the staff reduction
increased the average number of square feet of space for each
remaining FCA employee.\16


--------------------
\15 The 153-square-feet new space assignment goal contained in
Federal Property Management Temporary Regulation D-76 includes 125
square feet of space designated as primary office space--the space
the employee occupies--and 28 square feet for support space, such as
reception areas, conference rooms, and processing areas. 

\16 FCS also experienced a staff reduction.  Between January 1988 and
January 1993, the number of FCS employees decreased from 14,289 to
11,429.  However, we could not determine whether this staff reduction
contributed to an increase in utilization rates because data were not
readily available on the amount of office space in all FCS locations
at the beginning of this period. 


      STEPS TAKEN TO REDUCE EXCESS
      OFFICE SPACE
---------------------------------------------------------- Letter :5.4

The FCS Building Association has taken steps to reduce the amount of
office space FCA uses.  On November 26, 1993, the president of the
Association reported that plans to restructure space in the FCA
headquarters building had been completed.  The plans entailed
reducing the square footage of space allocated to FCA from 121,646 to
108,485 square feet and increasing the square footage of available
space for leasing to other tenants from 21,617 to 33,926 square feet. 
In addition, FCA announced that two of its eight field
offices--Albany, NY, and Oklahoma City, OK--will close in 1995. 
Those two offices were among the three FCA offices with the highest
space utilization rates in 1992.  Closing two offices and
transferring employees to existing FCA offices should contribute to
an overall office space reduction. 

According to FCS, about 40 percent of FCS entities leased excess
office space to other tenants in 1992.  Other FCS entities have sold
excess space.  For example, the Farm Credit Bank of Louisville said
that it sold its building in 1992 for about $8 million and leased
back a portion of the office space for its operations.  However, FCS
said that some office space is in economically depressed areas or
areas where there is little demand for commercial space and cannot be
readily sold or leased. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

If FCS associations and service entities had access to GSA supply
sources and FCA and FCS banks, which already have such access, used
GSA sources more routinely, they could realize cost savings on some
of their office equipment and furniture purchases.  GSA prices for
these products were sometimes lower and sometimes higher than the
prices FCA and FCS obtained on their own.  FCS associations and
service entities are not authorized to use GSA sources.  They could
achieve savings if given the option to use the lower of either GSA or
open market prices. 

In 1992, costs for FCS' and FCA's office space were about the same as
GSA's.  However, FCS and FCA provided more space per employee than
either GSA's space utilization goal or agencies' actual usage rates
in GSA space.  Staffing reductions contributed, in part, to their
higher utilization rates.  Both FCA and FCS are taking steps to
reduce excess office space, which should result in lower utilization
rates. 


   RECOMMENDATION
------------------------------------------------------------ Letter :7

To help ensure that FCA is obtaining the lowest possible price for
procurements, we recommend that the Chairman of the Board, FCA,
direct FCA staff to consistently compare GSA prices to open market
prices before purchasing office equipment. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :8

Because of potential cost savings, Congress may wish to consider
amending the Farm Credit Act of 1971 to extend eligibility to all FCS
associations and service entities to use GSA supply sources. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :9

On November 16, 1993, we discussed a draft of this report with the
FCA Chief Operating Officer; the FCA Director, Office of Resources
Management; and the Executive Vice President for Government and
Public Affairs of the FCS Farm Credit Council.  We also discussed a
draft of the report on November 17, 1993, with GSA officials,
including the Acting Director, Real Estate Program Division, and the
Chief, Management Services Branch, Federal Supply Service.  FCA, FCS,
and GSA officials agreed with the report's analysis, conclusions, and
recommendations.  FCA officials said that they thought it was more
advantageous to own the FCA headquarters building rather than sell it
and lease space from GSA.  We did not compare the costs of ownership
to leasing because this was not one of our objectives.  FCA officials
also said that any further efforts to improve space utilization in
the FCA headquarters building would require costly renovation work. 
The FCA, FCS, and GSA officials provided other information to clarify
the report, which we incorporated into the report where appropriate. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Chairman of the Board,
FCA; the Chairman of the Presidents' Planning Committee, FCS; the
Administrator of GSA; and interested congressional committees.  We
will also make copies available to other interested parties upon
request. 

Please contact me on (202) 512-8387 if you have any questions
concerning this report.  Major contributors to this report are listed
in appendix II. 

J.  William Gadsby
Director, Government Business
 Operations Issues


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

The Farm Credit Banks and Associations Safety and Soundness Act of
1992, Public Law 102-552 (October 28, 1992), required that we
determine if the FCS and FCA could reduce costs by following GSA
standards for office space, furniture, and equipment.  To address
this issue, we determined (1) how FCS and FCA office equipment and
furniture purchased in 1992 compared with the costs for identical
items if they were available from GSA supply sources and (2) how FCS
and FCA costs for leasing and operating facilities and their space
utilization rates compared to GSA's costs and utilization rates for
comparable space. 

In March 1993, we surveyed all 244 FCS associations, 11 Farm Credit
banks, the 3 banks for cooperatives, the Farm Credit Leasing Services
Corporation, and the Federal Farm Credit Banks Funding Corporation to
obtain general information about FCS office space, equipment, and
furniture.  We sent only one questionnaire to jointly managed FCS
entities.  The response rate to this questionnaire was 100 percent. 

We obtained more detailed information from a second survey to a
sample of FCS entities in June of 1993.  This survey was developed in
pretests with FCS associations and banks.  The 50 questionnaires in
this survey were sent to all FCS banks, the leasing corporation, the
funding corporation, and a stratified probability sample of 35 of the
244 FCS associations.\1 This probability sample was drawn at variable
rates from four strata based on the size of the associations.  A
total of 47 of the 50 questionnaires were returned, a response rate
of 94 percent. 

Through the more detailed questionnaire, we obtained (1) copies of a
probability sample of FCS invoices for office equipment and furniture
purchased or leased during calendar year 1992, (2) detailed
information on FCS' purchasing procedures and rules, and (3)
information about FCS space costs and utilization rates.  We obtained
similar information from the FCS Building Association and FCA
headquarters officials regarding FCA. 

To determine how GSA prices for office equipment and furniture
compared to the prices paid by FCS and FCA, we compared the cost of
office equipment and furniture bought by FCA and a sample of FCS
entities in 1992 to GSA costs if the identical items were available
from GSA sources.  We determined the GSA price for the item at the
time of the FCS or FCA purchase by examining GSA vendors' and GSA's
price lists.  We were limited to specific vendors and schedules
because some 1992 schedules were no longer available from GSA or from
the vendor.  While many items on invoices were identical to those
offered under GSA schedules, we could not always compare their prices
because some items were purchased outside of the dates of available
GSA price lists.  Also, we were limited to invoices that had
sufficient data, such as specific model numbers, for comparison to
GSA schedules. 

To determine how FCS and FCA facilities' leasing and operating costs
and utilization rates compared to GSA's, we reviewed GSA's policy
regarding space utilization, actual GSA utilization rates, and data
on actual costs in locations where FCS and FCA had office space in
1992.  We also interviewed officials in GSA's Central Office Real
Estate Policy and Real Estate Program Divisions.  We compared GSA's
data to data that we obtained from our survey of FCS entities, FCA
officials, and the FCS Building Association.  In comparing FCS' and
GSA's cost per square foot for space, we were limited to 37 cities
where both had office space. 

We also verified federal agencies' utilization rates listed in GSA's
building reports by calling 20 federal offices--derived from a simple
random sample of 8 agencies in government-owned buildings and 12 in
GSA-leased office space.  In each case, agency staff provided their
square footage of office space and the peak number of employees who
were assigned to the space as of a specified date.  The GSA and
agency data on square footage were identical for 90 percent of the
buildings.  GSA and agency counts of employees were identical in 7 of
the 20 space assignments and different in 13 assignments, resulting
in an additional estimated 16 square feet per employee per GSA
assignment.  The 95-percent confidence interval for this estimate
included the possibility that the GSA rate undercounts the number of
employees by as many as 15 employees per office space assignment or
overcounts the number of employees by as many as 45 employees per
office space assignment.  According to GSA, this difference occurred
because GSA changed from using the number of workstations to using
the number of personnel when calculating space utilization rates and
because the 1992 building reports included space assignments on the
basis of both workstations and personnel data. 

The Building Association owns and manages FCA's nationwide telephone
system and leases the telephone equipment to FCA.  FCA's telephone
system costs in 1992 were about $600,000 for about 500 employees. 
GSA officials we interviewed, as well as an FCA official, said this
amount seemed to be excessive.  We did not review these costs because
the FCA Board had approved funding in the 1994 FCS Building
Association budget for an independent study of FCA's telephone
system. 

We did our review from February to November 1993 in accordance with
generally accepted government auditing standards.  We did most of our
on-site work at FCA headquarters in McLean, VA, and GSA headquarters
in Washington, D.C.  We also visited a Farm Credit bank and two FCS
associations.  We discussed the report's findings with officials from
FCA, FCS, and GSA, and included their comments in this report where
appropriate. 


--------------------
\1 We sent one questionnaire to the cooperative bank and Farm Credit
bank that were jointly managed. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

John S.  Baldwin, Sr., Assistant Director
Curtis W.  Copeland, Assistant Director
Lucy M.  Hall, Evaluator-in-Charge
Charles T.  Angelo, Senior Evaluator
Anna M.  Craig, Evaluator
James M.  Fields, Social Science Analyst
Kenneth E.  John, Social Science Analyst


   OFFICE OF THE GENERAL COUNSEL,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:2

Jeffrey S.  Forman, Senior Attorney
Kathleen A.  Gilhooly, Senior Attorney

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