Federal Buildings: Billions Are Needed for Repairs and Alterations
(Testimony, 04/11/2000, GAO/T-GGD-00-73).

Billions of dollars are needed for repairs and alterations at federal
buildings. This situation is not new. Nearly a decade ago, GAO reported
that federal buildings had suffered from years of neglect and, as a
result, about $4 billion was needed to bring these structures up to
standard. (See GAO/GGD-91-57, May 1991.) GAO recommended that the
General Services Administration (GSA) adopt a more strategic approach to
managing repairs and alternations, improve program data, and explore
financing opportunities for repair and alteration needs. GSA has yet to
fully implement those suggestions. GSA officials recognize that more
needs to be done to effectively respond to growing demands for repairs
and alterations. GSA has several initiatives under way that, if fully
developed and effectively implemented, could satisfy GAO's earlier
recommendations, lead to better program oversight, and promote a more
strategic approach to meeting repair and alterations needs. This
testimony summarized the March 2000 report, GAO/GGD-00-98.

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

 REPORTNUM:  T-GGD-00-73
     TITLE:  Federal Buildings: Billions Are Needed for Repairs and
	     Alterations
      DATE:  04/11/2000
   SUBJECT:  Federal property management
	     Building inspection
	     Safety standards
	     Federal office buildings
	     Property depreciation
	     Facility repairs
	     Occupational safety
	     Strategic planning
	     Facility maintenance
	     Obsolete facilities
IDENTIFIER:  GSA Inventory Reporting Information System
	     Federal Buildings Fund
	     GSA Repair and Alteration Program

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GAO/T-GGD-00-73

United States General Accounting Office
GAO

Testimony

Before the Subcommittee on Economic Development,
Public Buildings, Hazardous Materials, and
Pipeline Transportation, Committee on
Transportation and Infrastructure, House of
Representatives

For Release on Delivery
Expected at
3:00 p.m. EDT
Tuesday
April 11, 2000
GAO/T-GGD-00-73

FEDERAL BUILDINGS
Billions Are Needed for Repairs and Alterations

Statement of Bernard L. Ungar
Director, Government Business Operations Issues
General Government Division

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Federal Buildings: Billions Are Needed for Repairs
and Alterations
Page 2                            GAO/T-GGD-00-73
The General Services Administration (GSA) has
struggled to meet the repair and alteration
requirements at government-owned buildings that it
manages. GAO recently reported that billions of
dollars are needed to satisfy the repair and
alteration needs at federal buildings, the Federal
Buildings Fund (FBF) has not produced the revenues
needed to meet all repair and alteration needs,
repair and alteration program data are
problematic, and GSA has not yet fully
institutionalized its thinking and planning about
how best to strategically respond to its
multibillion-dollar repair and alteration needs.
This situation is not new. Almost a decade ago
-in May 1991-GAO reported that federal buildings
had suffered from years of neglect and that about
$4 billion was needed to bring some of these
buildings up to acceptable quality, health, and
safety standards. GAO's 1991 report pointed out
that FBF historically had not produced sufficient
revenues to finance all needed repairs and
alterations at federal buildings. GAO also
identified inadequate program data and the lack of
a strategic approach to meeting repair and
alteration requirements as other factors that
impeded GSA's ability to satisfy repair and
alteration needs. In fact, GAO's 1991 report made
recommendations, which GSA has yet to fully
implement, aimed at having GSA adopt a more
strategic approach, improving program data, and
exploring financing opportunities for repairs and
alterations.

GSA officials recognize that more needs to be done
to effectively respond to increasing demands for
repairs and alterations.  GSA has several
initiatives under way that, if fully developed and
effectively implemented, could satisfy GAO's
previous recommendations, lead to better program
oversight, and promote a more strategic approach
to meeting repair and alteration requirements.
GSA's ongoing initiative to standardize and
improve each building's asset business plan-a
document that provides a wide array of physical
characteristics and financial information-should
provide GSA's program managers with consistent and
up-to-date information about the repairs and
alterations, the critical nature of each work
item, how long a work item has been delayed, and
the adverse consequences of delaying repair and
alteration work. GSA's initiative to develop a
comprehensive plan that will identify, in priority
order, the repair and alteration work that needs
to be funded within a 5-year period should go a
long way toward providing key decisionmakers the
needed context to fully understand what needs to
be done and how best to do it. To help promote the
chances for these initiatives to succeed, GAO has
recommended that GSA develop an action plan with
specific time frames that will guide the
development and implementation of the initiatives
and serve as a baseline for gauging progress and
performance.

Statement
Federal Buildings: Billions Are Needed for Repairs
and Alterations
Page 7                            GAO/T-GGD-00-73
Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today to
discuss the results of our work on the General
Services Administration's (GSA) Repairs and
Alterations Program. We undertook this work at the
request of this Subcommittee; and, as agreed, we
focused our work primarily on three issues: (1)
the extent of repairs and alterations that have
been identified at government-owned buildings
managed by GSA, (2) factors that impede GSA's
ability to satisfy its repair and alteration
requirements, and (3) GSA's efforts to improve its
management of repairs and alterations. The
Subcommittee requested this work because of
concerns that federal buildings may need costly
repairs and alterations to restore them to
acceptable quality and safety standards. My
statement is based on our March 30, 2000, report
to this Subcommittee entitled Federal Buildings:
Billions Are Needed for Repairs and Alterations
(GAO/GGD-00-98).

As the federal government's real property manager,
GSA provides office space for most federal
agencies. In this capacity, GSA is responsible for
keeping government-owned buildings it manages in
good repair to ensure that the value of these
assets is preserved and that tenants occupy safe
and modern space. Repairs and alterations are
primarily identified through building inspections
and evaluations done by GSA staff or contract
architect-engineering firms. Identified repair and
alteration requirements are supposed to be entered
into a computerized database called the Inventory
Reporting Information System (IRIS). Repairs and
alterations and other capital and operating
expenditures are financed by the Federal Buildings
Fund (FBF).

As you know, FBF, which is administered by GSA, is
a revolving fund authorized and established by the
Public Buildings Amendments of 1972. Beginning in
1975, FBF replaced direct appropriations to GSA as
the primary means of financing the operating and
capital costs associated with federal space. GSA
charges federal agencies rent, and the receipts
from the rent are deposited in FBF. In addition,
Congress may appropriate additional amounts to
FBF. Congress exercises control over FBF through
the appropriations process that sets annual
limits-called obligational authority-on how much
of the fund can be expended for various
activities. In fiscal year 2000, Congress
appropriated about $599 million in new
obligational authority from FBF for repair and
alteration work.

Let me begin by saying that GSA has struggled over
the years to meet the repair and alteration
requirements identified at its buildings. Our
recent work showed that billions of dollars are
needed to satisfy the repair and alteration needs
at federal buildings, FBF is not producing the
revenues needed to meet all repair and alteration
needs, repairs and alterations program data are
problematic, and GSA has not yet fully
institutionalized its thinking and planning about
how best to strategically respond to its
multibillion-dollar repair and alteration needs.
This situation is not new.

Almost a decade ago-in May 1991-we reported that
federal buildings had suffered from years of
neglect; and as a result, about $4 billion was
needed to bring some of these buildings up to
acceptable quality, health, and safety standards.1
Our report pointed out that FBF historically had
not produced sufficient revenues to finance all
needed repairs and alterations at federal
buildings. It also identified incomplete and
unreliable program data and the lack of a
strategic approach to meeting repair and
alteration requirements as other factors that
impeded GSA's ability to satisfy its repair and
alteration needs. In fact, the report made
recommendations, which GSA has yet to fully
implement, aimed at adopting a more strategic
approach for managing repairs and alterations,
improving program data, and exploring financing
opportunities for repair and alteration needs.

I would like to point out that GSA officials
recognize that more needs to be done to
effectively respond to increasing demands for
repairs and alterations. In fact, GSA has several
initiatives under way that, if fully developed and
effectively implemented, could satisfy our
previous recommendations. These initiatives could
also lead to better program oversight and promote
a more strategic approach for meeting repair and
alteration requirements. I will have more to say
about these initiatives later, but first I would
like to briefly discuss the results reported in
our March 2000 report.

Repair and Alteration Needs
     As of October 1, 1999, GSA's data on the
repair and alteration work that needed to be
completed at federal buildings included 5,585
items that collectively were estimated to cost
about $4 billion.2 GSA's data showed that repairs
and alterations were needed at 903 buildings, or
54 percent of the 1,682 federal buildings it
managed. Furthermore, this inventory is not
static. New work items are constantly being
identified and added to IRIS, and completed items
are deleted.

     It should be noted that the amount and types
of repairs and alterations needed varied from
building to building. In fact, GSA data showed
that 779 of its buildings did not have repair and
alteration work items in inventory-that is, no
work items were identified as needing funding. In
addition, the repair and alteration work
identified at almost one-half of the 903 buildings
was estimated to cost less than $500,000 per
building. Our analysis showed that many of these
446 buildings and the 779 without needs were
relatively small office buildings and border
stations. On the other hand, 44 buildings needed
repairs and alterations that were estimated to
cost more than $20 million per building.
Furthermore, these buildings collectively
accounted for almost 60 percent of the nearly $4
billion estimated as needed to fund all identified
repairs and alterations. Also, the buildings with
the highest dollar repair and alteration needs
were typically large office buildings or
courthouses.

     Our analysis of the detailed information
obtained on the conditions of these 44 buildings
showed that their average age was 49 years.
Although the buildings are located throughout the
country, 16 of them are in the Washington, D.C.,
area. Also, 7 of the 44 are included on the
National Historic Register. The amount of repair
and alteration work needed on these 44 buildings
totaled about $2.4 billion, ranging from
approximately $187 million at the Dwight D.
Eisenhower Building in Washington, D.C., to over
$21 million at a federal building and courthouse
located in San Diego, CA. The types of repairs and
alterations needed varied. However, they typically
involved repairs to major building components,
such as electrical, plumbing, heating, ventilation
and air conditioning systems; fire alarm and/or
sprinkler systems; or other fire and life safety
items

     We also found that some of the repair and
alteration work needed on the 44 buildings was
apparently identified years ago, but for various
reasons this work had not yet been performed.
Although GSA does not have a goal of how long it
should take to do repairs, and its database did
not routinely track how long repairs and
alterations have been delayed or held in
inventory, our analysis of the available data
suggests that some of this work was identified
more than 5 years ago. Our analysis of the
detailed records for the 44 buildings showed that
a total of 674 work items were in inventory. Of
these 674 items, GSA's database did not contain a
date indicating when the work was identified on
156 items. Of the remaining 518 work items, we
found that 218 of them were identified more than 5
years ago, and 49 of these more than 10 years ago.
We discussed this situation with GSA officials,
who told us that some repair and alteration work
remains in inventory or unaccomplished for years
because it is not deemed important enough to
compete for scarce funding.

     The issue of delayed repair and alteration
work is not new. In fact, a backlog of this work
existed when we last reviewed GSA's repair and
alteration program in 1991. At that time, we found
that more than one-third of the 25 buildings
included in our analysis had major repair and
alteration needs that had been delayed for 3 to 15
years. We cited the Pentagon as a classic example
of disinvestment in federal facilities because
repairs and alterations at this building had been
delayed for 10 years. As a result, GSA estimated
that a billion-dollar renovation was needed to
prevent further deterioration. We also reported
that other buildings had been neglected, although
not as badly as the Pentagon; and that at least $3
billion in identified repairs and alterations were
needed to bring these buildings up to acceptable
quality, health, and safety standards.

     GSA officials said they recognize that the
physical condition of many federal buildings is
far from ideal, that a significant inventory of
repair and alteration work exists, and that some
buildings cannot support 21st century operations.
These officials stress, however, that federal
buildings have not been and are not being
neglected and that examples of serious
deterioration of these buildings are few and far
between. GSA officials also said that given the
age of their inventory and the limited resources
available to fund repairs and alterations, they
take pride in knowing that the agency has kept
many buildings operational far beyond their normal
life expectancy.

Factors That Impede GSA's Ability to Satisfy
Repair and Alteration Needs
     Funding limitations, inadequate program data,
and the lack of a strategic approach for meeting
repair and alteration requirements are three
factors that impede GSA's ability to satisfy the
multibillion-dollar repair and alteration needs at
its buildings. Despite a lengthy discussion of
these factors in our 1991 report, they continue to
exist. In that report, we made several
recommendations aimed at promoting more informed
congressional decisionmaking and preventing
federal buildings from becoming deteriorated and
functionally obsolete. Our analysis of GSA's
efforts to respond to these recommendations showed
that GSA's initiatives fell short, and more can be
done.

     GSA officials continue to cite funding
limitations as the major reason why all repairs
and alterations are not getting done. Over the
years, FBF has not produced sufficient resources
to fund all identified repairs and alterations and
at the same time cover the day-to-day operating
costs of federal buildings and provide all of the
funding needed for the construction of new
buildings. According to GSA, the funding
deficiency is exacerbated by the increased demand
for repairs and alterations associated with aging
buildings. For example, demands on buildings'
electrical systems have risen due to new office
technology, and there is a greater demand for more
stringent health and safety protection.

     Our analysis of the funding situation showed
that during the 6-year period from fiscal year
1994 through 1999, GSA received, on average, about
$580 million out of FBF each year to complete
repairs and alterations at its buildings. During
these years, many repairs and alterations were
made. However, at the same time, new requirements
were identified and added to GSA's inventory of
repair and alteration work. Despite averaging
about $580 million a year for making repairs and
alterations, GSA data showed that at the end of
fiscal year 1999, there was still about $4 billion
in identified work.

     In fiscal year 2000, Congress appropriated
about $599 million in new obligational authority
from FBF for repairs and alterations. GSA
officials said they intended to request $900
million annually in new obligational authority for
this program for fiscal year 2001 through fiscal
year 2005.3 GSA officials told us that this
significant increase in funding might be possible
because of savings obtained from improved
operations at federal buildings and additional
revenues resulting from leasing previously
unoccupied space. But, even if GSA gets this
increased funding, our analysis indicates GSA
would face billions in repair and alteration needs
during each of the next 6 years. Further, we
estimated these needs at about $2.6 billion at the
end of fiscal year 2005.

     We recognize that funding limitations could
be a major reason why needed repairs and
alterations are not getting done. However, our
work shows that GSA has not done all it could to
address the building disinvestment problem. For
example, GSA's repair and alteration program data
are problematic, as they were when we reported on
this issue in 1991. GSA's current computerized
database of repair and alteration work
items-IRIS-contains inaccurate and incomplete
information. Although we did not systematically
test IRIS, we found instances where (1) certain
GSA regions did not include all repair and
alteration requirements in the database; (2) major
repairs and alterations were identified as still
being in inventory when, in fact, they had already
moved into design, construction, or had been
completed; (3) work items were included in the
inventory when they should have been deleted
because, for example, they were no longer needed,
had become part of another project, or were
duplicates of other work items; and (4)
construction cost estimates were not always
current.

     We also found that data currently available
on repairs and alterations do not allow program
managers to easily determine the length of time
that work has been in inventory, the criticality
of each work item, or the possible adverse
consequences associated with delaying repair and
alteration work. Furthermore, in most of the cases
we examined, the explanation contained in the
database on why the repair and alteration work was
needed was vague, did not reference the
criticality of the work, and did not contain
information on the possible adverse consequences
associated with delaying repairs and alterations.

     We believe that reliable and complete
information about identified repairs and
alterations is essential for effective management
and oversight of program activities. Without such
information, it is difficult for the program
managers to (1) quantify the total amount of
repair and alteration needs, (2) effectively
target the most critical needs and set priorities
within and among the 11 GSA regions, and (3)
justify to the Office of Management and Budget
(OMB) and Congress the need for additional repair
and alteration funding. Simply stated, inadequate
program information does not permit informed
decisionmaking.

     We also noted that GSA has not made much
progress in developing a strategic approach to
meet its repair and alteration requirements. This
was a major issue in our 1991 report, which
discussed, in some detail, the shortcomings
associated with managing repair and alteration
requirements on a project-by-project basis and
GSA's need for a comprehensive, long-term strategy
for effectively meeting its building repairs and
alteration needs. However, GSA continues with a
project-by-project mind set and has not yet
developed a comprehensive plan that (1) identifies
its total repair and alteration needs and
corresponding funding requirements, (2)
establishes the relative benefits or priorities of
all competing projects, and (3) proposes a
strategy and the funding needed to repair or
modernize its most seriously deteriorated
buildings. With such a plan, Congress and OMB
would be in a better position to fully understand
GSA's total repair and alteration needs and
associated funding requirements, as well as the
cost-benefit implications of making or not making
needed repairs and alterations. The information in
the plan would provide the needed context for
Congress and OMB to better understand the
magnitude of the problem and permit decisionmakers
to make (1) more informed decisions about annual
funding levels and which particular projects to
fund and (2) more knowledgeable trade-offs when
allocating scarce resources among competing
projects. Finally, GSA would be in a better
position to target limited resources to buildings
with the greatest needs.

GSA Plans Improvements
Although GSA has yet to fully implement the
recommendations in our 1991 report, it is moving
in the right direction. GSA officials recognize
that more should be done to improve the management
and oversight of building repairs and alterations.
To this end, GSA has several initiatives under way
that, if fully developed and implemented, could
satisfy our previous recommendations. These
initiatives could also lead to better program
oversight and a more strategic approach to
managing repair and alteration needs.

     GSA's primary initiatives involve
standardizing and improving the asset business
plan4 that is prepared for each building in its
portfolio and developing a comprehensive plan that
identifies, in priority order, all prospectus-
level repair and alteration work that needs to be
funded during a 5-year period. In addition, GSA
has a strategy aimed at increasing revenues in
FBF, which could make more funds available for
repairs and alterations. GSA has also included
specific repair and alteration goals in its annual
performance plan.

     For a number of years, GSA has required that
an asset business plan be prepared for all
buildings included in its portfolio. But only
recently has it taken steps to help ensure that
these plans are consistently prepared, accessible
to all program managers, and used to develop
standardized management reports about the repair
and alteration requirements at all of GSA's
buildings. During the fall of 1999, GSA
established a standardized format and standard
data elements that must be included in all asset
business plans. Prior to this date, each of the 11
regional offices had significant discretion in
determining the format of its asset business
plans, the detailed information contained in its
plans, and how these plans would be used in
determining which repairs and alterations would be
funded. Therefore, the asset business plan of the
past did not lend itself to collection and
comparison of information about the building
repairs and alterations within a region, let alone
among the 11 regions.

     According to GSA officials, when the new
asset business plans are fully implemented, they
are to identify all repair and alteration needs
over the entire life cycle of a building. With
this information, GSA managers should be in a
better position to determine the critical nature
of each work item, how long each work item has
been delayed, and the adverse consequences of
delaying repair and alteration work. The plans are
to be on an automated nationwide network and
therefore, readily available for all program
mangers to use. The asset business plans are also
to directly feed into and provide key data for
GSA's 5-year repair and alteration plan.

     In conjunction with the asset business plan,
GSA also has an ongoing effort aimed at developing
a 5-year repair and alteration plan that is to
include all prospectus-level work in priority
order and the estimated funding needed to complete
this work. According to GSA Portfolio Management
officials, this plan will be updated on an annual
basis, and it may also include an estimate of the
nonprospectus-level funding that will be allocated
each year to GSA's regions. The officials told us
that the exact format and content of the 5-year
plan are still evolving and are somewhat dependent
on the development of the asset business plans.
The asset business plans will ultimately provide
much of the information that will become part of
the 5-year plan.

     According to GSA officials, the 5-year plan
is to be used as an internal document to
communicate and share total repair and alteration
requirements among program managers in
headquarters and the regions. GSA program
officials said they envision that the plan will
identify and prioritize the most critically needed
repair and alteration projects throughout GSA's
building inventory. With this information, program
officials should be able to more easily target the
buildings with the greatest needs, be in a better
position to allocate scarce resources, and monitor
progress in reducing the inventory of major repair
and alteration work. These officials told us that
they prefer to call the 5-year plan a 3- to 5-year
investment outlook. They told us that the plan
will be more than a listing of projects and is
intended to be an overall strategy document that
will change annually so that it will best address
current and future repair and alteration needs.
GSA officials also said that they would be willing
to share the 5-year plan with OMB officials and
congressional oversight committees because the
plan could be a useful oversight tool. They
realize that the plan would provide OMB and
congressional officials a broader context on the
magnitude of GSA's repair and alteration needs and
a better understanding of the trade-offs involved
in funding or not funding requested projects.

     To successfully implement the initiatives
discussed above, GSA officials realize that they
need consistent, accurate, and complete
information on all repair and alteration
requirements. They said that the current computer
system-IRIS-is capable of providing reliable data.
However, they recognize that the quality and
consistency of IRIS data need improvement. They
also recognize that other tools are needed to
provide more consistent cost estimates and updates
and comparable priorities among regions. According
to these officials, the IRIS system was changed in
July 1999 to record when new work requirements
were entered into the inventory. They also said
that they have other actions under way and planned
that will establish standards for and measures of
data accuracy in IRIS and other Public Building
Service systems. They went on to say that GSA is
also testing software packages that are supposed
to (1) consistently record and track the status of
each identified repair and alteration work item,
(2) develop more accurate cost estimates for work
items, and (3) assist in establishing priorities
for identified repairs and alterations.

GSA officials estimate that the asset business
plan and 5-year repair and alteration plan
initiatives should be completed within the next 2
years. However, they do not have an action plan
with specific time frames that could guide their
development and implementation and better promote
their chances of success. Such a plan could, among
other things, clearly lay out expectations, serve
as a baseline to gauge progress and performance,
and be used to hold project managers accountable
for results. To help promote the chances for its
initiatives to succeed, we recommended that the
Administrator of GSA develop an action plan, with
time frames, that will (1) guide the development
and implementation of its initiatives and (2)
serve as a baseline for gauging progress and
performance. GSA program officials, in providing
oral comments on a draft of this testimony, agreed
with the recommendation.

     In addition to these ongoing initiatives, GSA
has developed a strategy that is aimed at
producing more revenues for FBF to help respond to
its multibillion-dollar repair and alteration
needs. Specifically, GSA program officials give
priority to those repair and alteration projects
that have the greatest potential to increase the
inventory, desirability, and value of rentable
space. When previously vacant space is rented,
additional revenues are generated for FBF, making
more funds available for new obligational
authority to be provided by Congress for repairs
and alterations. GSA officials also said they are
exploring other ways to increase funds in FBF.
They said that one way is to try to get approval
to retain revenues from sales of assets no longer
needed by the government. They said they are also
considering exploring whether Congress would be
receptive to directly appropriating funds for the
repairs and alterations program and have GSA repay
these appropriations from additional rent revenues
generated from completed projects.

     Finally, GSA has made its repairs and
alterations program a part of its annual
performance plan. Specifically, GSA's fiscal year
1999/2000 plan included three performance goals:
(1) complete all repairs and alterations on time,
(2) minimize cost escalation on repairs and
alterations, and (3) meet client agency space
needs at the best value to the client and
taxpayer. Although these goals do not specifically
address the issues discussed in this testimony,
they recognize the importance of effective repair
and alteration program management and the need to
be accountable for producing measurable results.
Given this, GSA's annual performance plan process
could be a vehicle for discussing the merits of
developing specific goals related to these issues.

Mr. Chairman, this concludes my prepared
statement. I will be pleased to answer any
questions you or other Members of the Subcommittee
may have at this time.

Contact and Acknowledgement
For future contacts regarding this testimony,
please contact Bernard L. Ungar, Director of
Government Business Operations, on 202-512-8387.
Individuals making key contributions to this
testimony include Gerald Stankosky, James G.
Cooksey, William Dowdal, Martin DeAlteriis, Joshua
Bartzen, and Thomas Baril.

_______________________________
1Federal Buildings: Actions Needed to Prevent
Further Deterioration and Obsolescence (GAO/GGD-91-
57, May 13, 1991).
2The estimated amount was calculated using GSA's
automated database of repair and alteration work,
referred to as IRIS. We found that IRIS contained
the best data that were available for estimating
total needs; however, we adjusted these data in
cases where limited testing showed inaccuracies
and incompleteness. These data problems are
discussed later in the text.
3Although GSA's goal was $900 million in new
obligational authority for funding repairs and
alterations for each year, the President's fiscal
year 2001 budget request included only $721
million for repair and alteration work.
4An asset business plan provides a wide array of
information related to a building's physical
characteristics, the rent revenues and expenses
associated with operating the building, and the
repair and alteration requirements that have been
identified.
*** End of document ***