GENERAL SERVICES ADMINISTRATION

**\[Bulletin FMR 2008-B5\]**

Real Property Asset Management Guiding Principles

**AGENCY:** General Services Administration

**ACTION:** Notice

**SUMMARY:** This bulletin cancels GSA Bulletin FMR Bulletin 2006-B5,
Real Property Asset Management Principles, published in the Federal
Register on June 16, 2006, that introduced new Guiding Principles case
studies to help federal agencies manage and improve real property
performance effectively in support of Executive Order 13327, "Federal
Real Property Asset Management." This bulletin updates the case studies
to provide current asset management examples and best practices.

**EFFECTIVE DATE:** \[Insert date of publication in Federal Register\]

**FOR FURTHER INFORMATION CONTACT:** For further clarification of
content, contact Stanley C. Langfeld, Director, Regulations Management
Division (MPR), General Services Administration, Washington, DC 20405;
or stanley.langfeld@gsa.gov.

Dated: July 28, 2008

Kevin Messner

Acting Associate Administrator

Office of Governmentwide Policy

**General Services Administration**

**Washington, DC 20405**

GSA BULLETIN FMR 2008-B5\
Real Property Asset Management Guiding Principles

TO: Heads of Federal Agencies

SUBJECT: Real Property Asset Management Guiding Principles

1\. [Purpose]{.underline}. This Bulletin introduces new Guiding
Principles case studies to help federal agencies manage and improve real
property performance effectively in support of Executive Order (EO)
13327, "Federal Real Property Asset Management." This Bulletin rescinds
and supersedes GSA Bulletin FMR 2006-B5, Real Property Asset Management
Guiding Principles, dated June 16, 2006. The Guiding Principles are
strategic objectives and goals designed for federal agencies to adopt
into their asset management programs. Agencies are encouraged to
implement these principles to enhance real property performance. The
case studies to support these principles are updated on a regular basis
to provide current asset management examples and best practices. The
Guiding Principles are as follows:

> 1\. Support agency missions and strategic goals;
>
> 2\. Use public and commercial benchmarks and best practices;
>
> 3\. Employ life-cycle cost-benefit analyses;
>
> 4\. Promote full and appropriate utilization;
>
> 5\. Dispose of unneeded assets;
>
> 6\. Provide appropriate levels of investment;
>
> 7\. Accurately inventory and describe all assets;
>
> 8\. Employ balanced performance measures;
>
> 9\. Advance customer satisfaction; and
>
> 10\. Provide for safe, secure and healthy workplaces.

2\. [Effective Date]{.underline}. This Bulletin is effective upon
publication in the Federal Register.

3\. [Expiration Date]{.underline}. This Bulletin will remain in effect
indefinitely until specifically cancelled.

4\. [Background]{.underline}.

a\. Over the past decade, the Federal Government increasingly has become
aware of the significant challenges it faces in managing its real
property portfolio. These challenges include deteriorating facilities,
an increasing number of excess and underperforming assets, limited
capital investment funds, a reliance on costly leasing, and unreliable
governmentwide data for strategic asset management. Since 2000, Congress
and each Administration have attempted to improve federal real property
asset management through legislative reform, including:

-   H.R. 3285 - \"Federal Property Asset Management Improvement Act of
    1999,\" 106^th^ Congress

-   S. 2805 - \"Federal Property Asset Management Reform Act of 2000,\"
    106^th^ Congress

-   H.R. 2710 - \"Federal Asset Management Improvement Act of 2001,\"
    107^th^ Congress

-   H.R. 3947 - \" Federal Property Asset Management Reform Act of
    2002,\" 107^th^ Congress

-   S. 1612 - \"Managerial Flexibility Act of 2001,\" 107^th^ Congress

-   H.R. 2548 - \"Federal Property Asset Management Reform Act of
    2003,\" 108th Congress

-   H.R. 2573 - \"Public - Private Partnership Act of 2003,\" 108^th^
    Congress

-   H.R. 3134 - \"Federal Real Property Disposal Pilot Program and
    Management Improvement Act of 2005,\" 109^th^ Congress

-   H.R 3049 - \"Federal Real Property Disposal Pilot Program,\" 110^th^
    Congress

-   S. 1667 - \"Federal Real Property Disposal Pilot Program," 110^th^
    Congress

-   H.R. 5787 - \"Federal Real Property Disposal Enhancement Act of
    2008,\" 110^th^ Congress

The proposed legislation would have amended title 40, United States
Code, to authorize landholding agencies to use enhanced real property
asset management tools, including the ability to enter into
public/private partnerships, to manage their real property more
effectively. To date, none of these legislative initiatives have been
enacted.

b\. **In January 2003,** the Government Accountability Office (GAO)
issued two reports discussing federal real property asset management.

-   The first, \"High Risk Series: Federal Real Property\" (GAO-03-122),
    identified federal real property as a high-risk area. The report
    stated that \"\... long-standing problems in the federal real
    property area include excess and underutilized property,
    deteriorating facilities, unreliable real property data, and costly
    space.\"

-   The second, \"Strategic Human Capital Management\" (GAO-03-120),
    identified the challenges of a declining federal workforce and the
    need to provide cost-effective and flexible work environments. The
    report discussed the connection between cost-effective,
    high-performance workplaces and a dynamic, results-oriented
    workforce.

c\. **In October 2003,** GAO issued \"Federal Real Property: Actions
Needed to Address Long-standing and Complex Problems\" (GAO-04-119T),
which concluded that Federal real property was in an alarming state of
deterioration, with a significant repair, restoration, and maintenance
backlog. Among their findings, GAO identified that key decision makers
lack the data required for strategic real property asset management.

d\. **On February 4, 2004**, the President signed EO 13327, \"Federal
Real Property Asset Management,\" and subsequently added federal real
property to the President\'s Management Agenda. Designed to promote the
efficient and economical use of the Federal Government\'s real property
assets and rightsize the inventory of federal real property, EO 13327
established the role of Senior Real Property Officer in every executive
branch agency (cited in sections 901(b)(1) and (b)(2) of title 31,
United States Code, and the Department of Homeland Security) to manage
and oversee asset management activities. The EO also established a
Federal Real Property Council (FRPC), chaired by the Office of
Management and Budget (OMB), to develop guidance, collect best
practices, and help Senior Real Property Officers improve the management
of real property assets.

e\. **In December 2004,** FRPC issued \"Guidance for Improved Asset
Management,\" which established ten governmentwide standards - or
**Guiding Principles -** for improving agency asset management. This
information may be accessed at:
[http:/www.whitehouse.gov/omb/financial/fia_asset.html](http://www.whitehouse.gov/omb/financial/fia_asset.html)

5\. [Action]{.underline}. Federal agencies should use the Guiding
Principles and the supporting case studies to manage and optimize their
real property portfolios. When implemented effectively, the Guiding
Principles are designed to promote:

-   Sound real property asset management decisions;

-   Healthy and productive workplaces;

-   Reduced costs associated with real property asset management;

-   Disposal of unneeded Federal real property;

-   Repair and maintenance for deteriorating facilities;

-   Incentives to improve real property asset management;

-   Assemblage and maintenance of reliable real property data;

-   Increased efficiency and maximized performance of federal real
    property assets; and

-   Strategic use of limited budgetary resources to maximize asset
    management.

Federal real property asset managers should apply these principles
throughout the life-cycle of a real property asset.

6\. [Further Information]{.underline}. For further information, contact
Stanley C. Langfeld, Director, Regulations Management Division, Office
of Real Property Management (MP), at (202) 501-1737, or
*[[stanley.langfeld@gsa.gov]{.underline}](mailto:stanley.langfeld@gsa.gov).*

**REAL PROPERTY ASSET MANAGEMENT**

**GUIDING PRINCIPLES**

**[EXECUTIVE SUMMARY]{.underline}**

Asset management defines the relationship between a property holding
agency (*i.e.*, the "owner") and its property assets. This relationship
includes, but is not limited to: financial asset management, day-to-day
property management, and occupant satisfaction. The asset management
relationship lasts for the entire property life-cycle -- from
acquisition and utilization to disposal.

Real property asset management presents a variety of challenges that are
global in nature and affect both the public and private sectors. Asset
management succeeds when organizations implement and use an effective
strategic planning framework to make real property decisions. The
Guiding Principles that comprise this framework are summarized below.
The principles are later defined and illustrated with case study
examples.

1.  **Support Agency Missions and Strategic Goals** by aligning real
    property decisions with the agency's strategic mission.

> *Case Study:* The Capital Asset Realignment for Enhanced Services
> (CARES) Program at the Department of Veterans Affairs Analyzes its
> Healthcare Infrastructure

2.  **Use Public and Commercial Benchmarks and Best Practices** to
    assess federal agency asset management performance.

> *Case Study:* General Services Administration's Public Buildings
> Service Benchmarks Lease Costs to Private Sector

3.  **Employ Life-Cycle Cost-Benefit Analyses** to justify asset
    management and acquisition decisions.

> *Case Study:* Office of the Architect of the Capitol Integrates
> Facility Condition Assessments, Master Plans, and Capital Improvements
> Programming

4.  **Promote Full and Appropriate Utilization** by operating the
    property asset to its maximum capacity during its useful economic
    life (determined by using the Federal Government's financial
    accounting standards[^1]) while satisfying the occupying agency's
    mission requirements.

> *Case Study:* Department of the Army Creatively---and
> Effectively---Utilizes a Mission-Critical Asset

5.  **Dispose of Unneeded Assets** by redeploying, demolishing, or
    replacing the asset when it fails to support the agency's mission.

> *Case Study:* Real Property Asset Listing Portal Transforming the Way
> Federal Agencies Dispose of Surplus Federal Assets

6.  **Provide Appropriate Levels of Investment** by making and
    prioritizing capital investment decisions, such as whether to
    construct, alter, repair, or acquire space, or any combination
    thereof, to meet changing agency needs.

> *Case Study:* Lawrence Berkeley National Laboratory Prioritizes
> Capital Investment Decisions through Integrated Facilities Assessment
> System

7.  **Accurately Inventory and Describe All Assets** by submitting real
    property data at the constructed asset level (*e.g.*, each building
    or structure within a complex) as defined by the Federal Real
    Property Council.

> *Case Study:* U.S. Department of Agriculture's Corporate Property
> Automated Information System (CPAIS) Program Improves Inventory
> Accuracy

8.  **Employ Balanced Performance Measures** to track progress toward
    achieving real property management objectives and enable
    benchmarking against public and private sector organizations.

> *Case Study:* General Services Administration\'s Public Buildings
> Service's Linking Budget to Performance (LB2P) Program Uses Scorecard
> Measures to Reward Good Performance

9.  **Advance Customer Satisfaction** by promoting productive work
    spaces and focusing on the tenant's needs, primarily changing space
    requirements.

> *Case Study:* General Services Administration's Lease Administration
> and Management Program Leads to Improved Customer Satisfaction Scores

10. **Provide for Safe, Secure and Healthy Workplaces** by implementing
    standard policies and procedures, documenting asset conditions, and
    developing action plans and strategies to support a productive
    workforce.

> *Case Study:* Sustainable Features an Integral Component of U.S.
> Environmental Protection Agency Potomac Yard Facility

**PRINCIPLE #1**

**SUPPORT AGENCY MISSIONS AND STRATEGIC GOALS**

Real property is the physical foundation that enables federal agencies
to accomplish their missions. Effective asset management --- including
property acquisition, operation, maintenance, and disposition ---
requires alignment with the agency's core mission and key decisions.
This integration involves having a clear understanding of the agency's
core mission, its strategic plan, and how real property supports that
plan.

Real property managers should collaborate with their customers to
develop workplaces --- including real property products and services ---
that adequately support the occupants' short- and long-term goals.

**Case Study: The Capital Asset Realignment for Enhanced Services
(CARES) Program at the Department of Veterans Affairs Analyzes its
Health Care Infrastructure**

A majority of the Department of Veterans Affairs (VA) facilities were
designed and constructed when medical care was synonymous with hospital
care -- a very different environment than today's medical world of
outpatient care and prescription drug capabilities. Upon entering the
21^st^ century with an outdated infrastructure, the VA realized that its
facilities were out of step with changes in the practice of medicine,
the needs of the veterans the VA serves, and the changes in the VA
health care benefits package.

As a result, in 2002, the VA initiated the 20-year comprehensive Capital
Asset Realignment for Enhanced Services (CARES) program -- the most
comprehensive analysis of VA's health care infrastructure ever
conducted. Through the program, the VA evaluates the health care
services it provides, identifies the best ways to meet veterans' future
health care needs, and realigns its medical facilities and services to
meet those needs more efficiently and effectively. CARES prepares the VA
for meeting the current and future health care needs of veterans in
modern health care facilities.

Through CARES, the VA is able to identify the appropriate function,
size, and location for VA facilities --- which total more than 4,900
buildings on more than 15,000 acres of land --- as well as for more than
100 major construction projects in 37 states, the District of Columbia,
and Puerto Rico. CARES encourages the VA to manage the reuse of vacant
and underutilized VA properties effectively by considering the:

-   Appropriate clinical role of small facilities;

-   Amount of vacant space;

-   Potential for enhanced use leases; and

-   Consolidation of services and campuses.

To maximize its return on investment, the VA will seek real property
flexibilities by exploring the following possibilities:

-   Implement enhanced use leases;

-   Leverage the investment value of unneeded assets;

-   Institute a more flexible disposal authority;

-   Develop strategies for managing historic properties; and

-   Consider all options for disposal of underused property.

VA is projecting that CARES will ultimately decrease vacant space in the
Veterans Health Administration from 8.57 million square feet to 4.93
million square feet -- a reduction of 42.5 percent. In addition, VA
predicts that from 2006 to 2022, CARES will help reduce the cost of
maintaining vacant space from an estimated \$3.4 billion to \$750
million, allowing VA to redirect those funds to patient care. Annual
updates with new forecasts of future facility demands have also been
incorporated into the VA strategic planning process.

CARES is an important vehicle for fulfilling the agency mission, first
uttered by President Lincoln in 1864, "to care for him who shall have
borne the battle and for his widow, and his orphan." While Lincoln's
pledge still remains VA's steadfast mission to this day, medical care is
constantly changing and evolving -- and by evaluating and upgrading its
facilities, VA is recognizing its past, maximizing its present, and
planning for its future.

**Source: VA CARES website, www.va.gov/cares/**

**PRINCIPLE #2**

**USE PUBLIC AND COMMERCIAL BENCHMARKS AND BEST PRACTICES**

Federal agencies should leverage leading public and private sector
benchmarks to evaluate asset performance and help plan for future
investments. Given the diversity of the Federal Government's real
property portfolio, federal agencies may find it useful to benchmark
against other agencies. Benchmarking property performance and sharing
best practices have proven to be effective tools for optimizing asset
management.

To be defined as a best practice, the initiative must:

-   Produce superior results;

-   Lead to exceptional performance;

-   Be recognized by an industry expert;

-   Be deemed a best practice by an agency's customers; and

-   Be a new or innovative use of human capital, resources, or
    technology.

By routinely benchmarking performance and sharing best practices,
federal agencies can better manage their portfolios, thereby developing
high performance workplaces, improving citizen services, and protecting
the environment.

**Case Study: General Services Administration's Public Buildings Service
Benchmarks Lease Costs to Private Sector**

The General Services Administration (GSA) Public Buildings Service (PBS)
manages more than 8,500 private sector leases at an annual cost of over
\$4 billion. Due to their extensive leasing volume, PBS continually
verifies that its rental obligations they pay are competitive with those
paid by the private sector. PBS partners with the Logistics Management
Institute to measure and analyze PBS leasing performance relative to
industry. PBS has established a long-term national goal of 9.5% below
the industry mid-point, to be reached by Fiscal Year (FY) 2010.

The key benchmark used in the private sector to gauge leasing costs is
the measure of lease rates per rentable square foot by building location
and condition (to account for building age and quality). PBS focuses
exclusively on full-service rents for office space and uses an
interactive website tool to assess leasing performance. The tool
compares and analyzes PBS lease actions to market-specific benchmarks as
reported by the Society of Industrial and Office Realtors (SIOR), a
primary source of accurate, up-to-date data about private sector lease
rates. SIOR obtains data from brokers, lenders, and other specialists in
the local markets. SIOR's report contains lease rates per rentable
square foot by location and by building classification, defined by SIOR
as follows: Within Central Business District (CBD), Outside CBD, Class
A, and Class B.

To calculate the measure for each building class and location breakout,
PBS compares the average costs of PBS leased space to the midpoint of
the high and low of published industry rates, weighing each lease by
square footage. Based on these results, a cost above or below industry
is determined. This analysis allows PBS to understand the impact of each
transaction in terms of square footage and its dollar value.

**FY 2007 Statistics**

PBS's benchmark data is used by real estate employees within PBS to
achieve the best value for its customers. External stakeholders,
including Congress and the Office of Management and Budget (OMB), also
use this information to confirm that PBS rates stay competitive with the
market. By regularly benchmarking its asset performance to the private
sector, PBS develops a high performance workplace that continually
strives to improve the management of its portfolio.

**Source: PBS Office of Real Estate Acquisition**

**PRINCIPLE #3**

**EMPLOY LIFE-CYCLE COST-BENEFIT ANALYSES**

OMB Circular No. A-94 requires federal agencies to justify asset
management and acquisition decisions using life-cycle cost-benefit
analyses. Life-cycle cost analysis (LCCA) is a method of assessing the
overall costs of project alternatives. It is used to select the design
that will provide the lowest overall cost of a facility's ownership
consistent with its quality and function.

LCCA accounts for initial (capital) and recurring costs (maintenance,
refurbishment, and operations) and residual asset value upon
decommissioning or disposal. LCCA is well suited for evaluating design
alternatives that satisfy a required level of building performance, but
may have different initial investment, operation, maintenance, or repair
costs, or all of the foregoing, and possibly different useful lives.

LCCA is especially useful when project alternatives that fulfill the
same performance requirements --- but differ with respect to initial and
operating costs --- have to be compared to select the one that maximizes
net savings. For example, LCCA will help determine whether the
incorporation of a high-performance heating, ventilating and air
conditioning or glazing system, which may increase the initial cost but
result in reduced operating and maintenance costs, is cost-effective or
not. These analyses help agencies make improved real property investment
decisions.

LCCA should be applied within a life-cycle assessment framework that
accounts for both the costs over the asset life and the environmental
consequences of investment decisions on upstream (*e.g.*, extraction,
production, transportation, and construction), ongoing (*e.g.*, health
impacts on tenants and the community), and downstream (*e.g.*,
decommissioning and disposal) costs.

**Case Study: Office of the Architect of the Capitol Integrates Facility
Condition Assessments, Master Plans, and Capital Improvements
Programming**

The Office of the Architect of the Capitol (AOC) is responsible for
maintaining nearly 15 million square feet of space on 400 acres of land.
Until 2003, data on AOC facilities was classified by inconsistent
definitions and inadequate cataloguing, and did not reflect current AOC
facility condition information. The AOC's last comprehensive master plan
for the Capitol Complex had been completed in 1981; therefore, the plan
was outdated and could not be used as a reliable source when making
contemporary facility or budgeting decisions. As a result of AOC's
inadequate and outdated facility data, Congress did not have a clear
vision of the AOC's long-range capital requirements and priorities.

In 2003, AOC initiated a transformation of the Capitol Complex
facilities management approach from an anecdotal to an updated
data-driven system. The updated system, aimed to link the budgeting
process to the Capitol Complex Master Plan (CCMP), includes an updated
Master Plan, a modern Capital Improvements Program, and extensive
Facilities Condition Assessments (FCAs).

As the foundation of the CCMP, FCAs establish an ongoing process for
monitoring facility conditions and enable AOC to develop a comprehensive
plan for facility maintenance and building renewal. Under the CCMP, AOC
will assess annually its facilities, resulting in the establishment of a
complete asset inventory. AOC also will create and track facility
condition benchmarks for internal jurisdictional comparisons and
external comparisons with similar institutions.

The integration of data-driven sources into an updated system has led to
AOC's increased confidence in its capital project information as it
moves through the Congressional appropriations process. AOC's use of its
updated system has produced objective, defensible budget requests that
help facilitate continuity, anticipate life-cycle facilities
requirements, and provide adequate lead time for financial planning.
During the development of its Fiscal Year 2008 budget, AOC relied on
data taken from FCAs to prioritize and rank its capital program request.

**Source: 2007 GSA Achievement Award for Real Property Innovation Entry
"Integration of Facility Condition Assessments, Master Plans, and
Capital Improvements Programming"**

**PRINCIPLE #4**

**PROMOTE FULL AND APPROPRIATE UTILIZATION**

The Federal Government is responsible for fully and effectively using
its real property assets to their maximum capacity during their useful
economic life (determined by using the Federal Government's financial
accounting standards).[^2] Moreover, federal agencies should use space
for the purpose for which it was intended (*e.g.*, office space should
not be used for storage/warehouse purposes).

When planning and continually evaluating space needs, agencies should
explore alternatives that meet the goals of Executive Order (EO) 13327
and other federal laws and EOs concerning agency location.[^3] Such
alternatives include adapting, supplementing, or consolidating into
existing historic facilities that can be upgraded and operated
cost-effectively, including underutilized properties available from
other Federal Government agencies. Converting and upgrading existing
assets are viable alternatives to constructing new buildings, especially
given the limited availability of new construction funding.

OMB Circular No. A-11 requires agencies to determine the usefulness of
an asset and identify assets suitable for disposal. Real property
holding agencies must analyze their space needs continuously. If a
property is no longer needed, the agency should take steps toward
removing that asset from the agency's inventory, rather than retaining
the asset for an undetermined future need.[^4]

**Case Study: Department of the Army Creatively --- and Effectively ---
Utilizes a Mission-Critical Asset**

Founded in 1952 as the Army's Desert/Hot Weather climatic test site, the
Yuma Proving Grounds (YPG) in Arizona has evolved into the Department of
Defense (DOD) Reliance Lead for the hot weather testing of vehicles. The
YPG area has the longest, hottest summer test season in the U.S., with
more than 100 days in temperatures in excess of 100 degrees farenheit.

YPG has become even more mission-critical in recent years, as increased
over-the-road speeds have become a key defense in current and potential
military operation environments worldwide. However, YPG as an asset has
not been able to fulfill evolving, more sophisticated testing needs --
its only paved test course is a single straightaway constructed in the
1950s, appropriate only for low-speed testing.

Seeking to upgrade the asset and subsequently meet mission-critical
needs, the Army decided to apply its Enhanced Use Leasing (EUL)
authority in the effort to utilize the asset to its fullest. The EUL
program provides an opportunity for the Army to capitalize on non-excess
real property assets by leasing these assets to private entities. As a
result, the Army avoids infrastructure costs, accepts a variety of
facilities and services as in-kind considerations, and collects cash
rent to fund other Army real property requirements.

The Army released a competitive Notice of Opportunity to Lease to
collaborate with a private sector organization for the creation of a
world-class hot weather test complex at YPG. The General Motors
Corporation (GM) was selected, and signed an EUL for a 50-year lease
term with two renewable options of 25 years each. Prior to signing the
EUL, GM had already maintained a hot weather test complex outside of
Phoenix for its vehicles since 1953, but decided to relocate due to
rapid urbanization, encroachment, and high property values. Both the
Army and GM will benefit greatly from the EUL at YPG -- both GM and the
Army will be able to test their vehicles on the new site and upon
conclusion of the lease, the facilities built within the EUL will revert
to the Army.

Construction of a new world-class hot weather testing facility would
have cost the Army millions of dollars, but through the EUL, the YPG
project is funded by private dollars and costs taxpayers nothing. When
finalized, the YPG site will include new facilities valued at over \$100
million, including a new high speed oval track, two parallel paved
straightaway tracks to simulate freeway driving, a ride and hauling
course that consists of various road surfaces and terrain conditions, a
large skid pad for braking, and both administrative and vehicle
maintenance buildings. GM also is providing additional funds to
construct separate automotive test facilities for Army-unique needs.

The EUL at YPG is a prime example of efficient and economical use of a
federal real property asset through the careful consideration of an
agency's utilization of its resources and creative joint use. Through
the EUL, federal land, infrastructure, and facilities will be more fully
utilized and needed facilities will be constructed that benefit the
Army, the taxpayer, and the national economy.

**Source: 2007 GSA Achievement Award for Real Property Innovation Entry
"Department of Army Enhanced Use Leasing Program and Case Study -- Yuma
Proving Grounds, AZ"**

**PRINCIPLE #5**

**DISPOSE OF UNNEEDED ASSETS**

An asset should be designated as surplus property --- and redeployed,
demolished, or replaced --- when it no longer meets a federal need. The
decision to dispose of an asset is best made when it is based on an
in-depth strategic portfolio review. This approach includes assessing
market availability, supply and demand, property performance, physical
conditions, future mission needs, and prospective housing profiles.

Retaining ownership of underutilized or unneeded properties results in:

-   Lost equity value, while not contributing to the Federal
    Government's mission or strategic goals;

-   Negative impact on local economies, tax revenues, and employment;

-   Increased operating costs;

-   Drain on limited agency resources; and

-   Ineffective property stewardship for the federal real property
    portfolio.

The most common options for asset disposition, depending on agency
specific authorities, include:

-   Transferring the asset to another federal agency;

-   Exchanging it for another mission-related property;

-   Outleasing to non-federal organizations;

-   Making property available for public benefit conveyances; and

-   Selling or leasing the property to generate revenue for the Federal
    Government.

Selection of the disposition option should be based on an economic
analysis of the alternatives. If the transaction is handled properly, it
will result in a smooth transition of ownership and produce a return to
the Federal Government that is in the best interest of the taxpayers.

**Case Study: Real Property Asset Listing Portal is Transforming the Way
Federal Agencies Dispose of Surplus Federal Assets**

In 2001, the President's Management Council adopted 24 electronic
government (E-Gov) initiatives to improve the quality of service for
citizens and businesses. Among them, the Federal Asset Sales (FAS)
initiative was introduced as a way to improve the way federal agencies
dispose of surplus federal assets. The scope of the FAS initiative was
expanded in 2006 to include Real Property. In response, a team comprised
of members from the General Services Administration\'s Public Buildings
Service, the Department of Agriculture and the Department of Housing and
Urban Development worked to develop the Real Property Asset Listing
Portal, a web-based portal that allows any federal agency to advertise
--- in one place --- all of its surplus, forfeited, and foreclosed
property available for sale. The portal is a component of the
FedAssetSales E-Gov Initiative, an overarching program designed to
improve and optimize the way the Federal Government disposes of its
assets.

Information that was once spread out over 100 federal web sites is now
located in the one-stop shop of the Real Property Asset Listing Portal,
which ultimately links all agencies with real property disposal
authority. Implementing a single location where the vast majority of
surplus government real property is advertised for sale leads to a more
effective advertisement, more bidders, and more competition -- not to
mention higher auction prices for the thousands of foreclosed and
forfeited houses and farms, and surplus government land and buildings,
which are sold each year.

The portal has changed the way the entire government sells real
property. Before the portal was launched, each agency with real property
disposal authority was responsible for advertising its surplus,
foreclosed, and forfeited property that was available for sale. Each
agency had its own staff, its own process, and its own performance
measures for meeting this task. As a result, the process variance
between agencies was staggering and the cost to taxpayers significant.
With the Real Property Asset Listing Portal, there is now one simplified
process, as well as consistent performance measures, for all real
property disposal agencies -- which lead to greater awareness of
sales/sales attendance, higher bids and sales prices, and more efficient
use of taxpayer dollars.

Approximately 90,000 houses, 200 farms, and \$1 billion in buildings and
land are advertised annually on the portal. Currently, all 26 scorecard
agencies participate in the portal, and there have been discussions on
including state and local governments. The portal simplifies and
streamlines how citizens learn about and buy surplus government
property. The more exposure citizens have to surplus real property, the
greater the likelihood of increased sales of unneeded federal assets.
The portal may be accessed at <http://www.govsales.gov/html/index.htm>

**Source: 2007 GSA Achievement Award for Real Property Innovation Entry
"Real Property Asset Listing Portal"**

**PRINCIPLE #6**

**PROVIDE APPROPRIATE LEVELS OF INVESTMENT**

The Federal Government is accountable for providing appropriate asset
investment, which includes determining the costs and benefits of the
investment and how the assets are designed, constructed, maintained,
managed, protected, and disposed. Ultimately, the Federal Government
must manage effectively its global property portfolio -- consisting of
approximately \$1.5 trillion (total replacement value) in assets to
obtain optimal use and efficiency.

Effective portfolio management requires agencies to analyze investment
decisions, such as whether to construct, alter, repair, or acquire
workspace, or any combination of the foregoing, to meet changing mission
needs, continuously. Decisions for major investments should be based on
an investment framework consisting of financial analyses, valuation
criteria, and other required information to determine the proper level
of investment. The Capital Programming Guide, Supplement to Part 3 of
OMB Circular No. A-11, provides guidance for employing a disciplined
capital programming process and focuses on key principles, such as
thorough planning, risk management, full funding, portfolio analysis,
performance-based acquisition management, accountability for meeting
goals, and cost-effective life-cycle management.[^5]

Agencies are encouraged to modernize and maintain real property, so that
it continues to support the Federal Government's mission. Appropriate
reinvestment:

-   Provides healthy and safe workplaces;

-   Increases the asset's desirability and fair market value;

-   Supports advancing business practices and technologies; and

-   Enhances hiring, retention, morale, and productivity of employees.

An agency also can reinvest in existing high-value assets by
supplementing them with new construction instead of completely replacing
them. This type of investment increases the Federal Government's equity
in high-value assets.

**Case Study: Lawrence Berkeley National Laboratory Prioritizes Capital
Investment Decisions Through Integrated Facilities Assessment System**

Managed by the University of California and overseen/funded by the U.S.
Department of Energy (DOE), the Lawrence Berkeley National Laboratory is
one of the leading government-sponsored research centers in the country.
The laboratory complex consists of 107 buildings on 203 acres.

DOE requires all national laboratories under its custody to meet its
standards for the programming, budgeting, operation, maintenance, and
disposal of real property. Each national laboratory also must report on
facility condition and value, which is then included in DOE's Facility
Information Management System that supports the department's facility
planning, budgeting, and execution decisions.

Prior to 2006, Berkeley used several systems, including spreadsheets and
databases, to maintain facility and infrastructure condition
information, which was used to generate reports for DOE. While the use
of separate systems allowed Berkeley to meet DOE's basic reporting
requirements, it did not allow Berkeley to run cost modeling, nor
successfully integrate with the software system Berkeley used to manage
the execution of facilities projects.

Seeking a more integrated, sophisticated approach to maintaining
facility information, Berkeley implemented a comprehensive facilities
assessment, analysis, planning, work execution, and reporting system.
The new system not only incorporates consistent facility condition
assessments with DOE reporting requirements, but also allows Berkeley to
develop cost models, view life-cycle information, and prioritize
projects. In addition, the system automatically updates condition
information upon the completion of maintenance and renewal projects,
including updates on actual costs and indices.

DOE also requires that each national laboratory allocate 2% of its
replacement value to ongoing maintenance costs. The new system allows
Berkeley to generate more accurate replacement values, replacing its
previous method of estimating replacement value based on insurance
policy values.

Berkeley's comprehensive facilities assessment system not only supports
its DOE reporting compliance, but has also facilitated Berkeley's
five-year sustainment plan and life-cycle renewal forecasting for its
ten-year site plan. Berkeley's system has been recognized by DOE as a
best practice integrated facilities management solution. Berkeley's data
collection leads to the ability to make informed investment decisions in
the allocation and prioritization of dollars, and demonstrates effective
portfolio management as a whole.

**Source: Berkeley Web site ([www.lbl.gov](http://www.lbl.gov/)) and
2006 VFA Case Study, "Integrated Facilities Condition Management at
Lawrence Berkeley National Laboratory"**

**PRINCIPLE #7**

**ACCURATELY INVENTORY AND DESCRIBE ALL ASSETS**

Real property holding agencies must develop and maintain
inventory-tracking systems to assist in managing their asset portfolios.
The collection of reliable, uniform data enables agency decision makers
to:

-   Improve asset management;

-   Provide data to aid in timely and informed portfolio management
    decisions; and

-   Respond to inquiries from Congress, the Administration,
    stakeholders, and the private sector.

**Case Study:** **U.S. Department of Agriculture's Corporate Property
Automated Information System (CPAIS) Program Improves Inventory
Accuracy**

The U.S. Department of Agriculture's (USDA) focus on improving asset
management accountability illustrates a real property transformation
that benefits not only USDA, but the federal real property community as
a whole. To improve its inventory accountability, USDA implemented a
departmentwide real property automated information system, called the
Corporate Property Automated Information System (CPAIS). CPAIS is a
fundamental and critical corporate system that allows USDA to manage its
entire portfolio for the first time in USDA history.

As one of the largest federal landholders, an accurate inventory and
description of its real property assets is vital to USDA's real property
management. As of March 2008, USDA's inventory consisted of
approximately 193 million acres of land, as well as approximately 22,600
owned buildings and 31,000 owned structures.

CPAIS provides an integrated solution to inventory management by
standardizing USDA real property accounting, real property business
process, and management of the entire real property portfolio, including
real property, commercial leases, and General Services Administration
(GSA) assignments. USDA also uses CPAIS as the primary tool in tracking
capital and operating leases, as well as reviewing the status of current
leases and renewal dates. As a single and descriptive database of USDA's
real property assets, CPAIS gives USDA the capability to manage assets
at both an agency and bureau level and collects all data required by
Federal Real Property Council (FRPC) directives.

As USDA's primary inventory reporting and portfolio management tool for
its entire real property portfolio, CPAIS both meets and exceeds FRPC
requirements, including:

-   Tracking specific data elements, including all 24 FRPC data
    elements, necessary to meet external mandatory requirements and ad
    hoc query requirements;

-   Maintaining data elements required to calculate Total Capitalization
    Value and Total Accumulated Depreciation of property under USDA\'s
    jurisdiction, custody or control;

-   Collecting and managing data related to purchase cost and Work in
    Progress (WIP) accounting;

-   Tracking condition ratings;

-   Generating depreciation expense transactions; and

-   Tracking the breakdown of total costs distributed by service
    agencies in collocated locations.

USDA is just one of the 29 federal agencies that successfully reported
inventory and performance data on more than 1.2 million assets in Fiscal
Year (FY) 2006. Agency data is collected and reported to a single,
centralized descriptive database of all real property managed by
executive branch agencies -- this database is known as the Federal Real
Property Profile (FRPP). GSA has been collecting governmentwide real
property inventory data and producing a summary report for Congress
since 1955 -- but after the signing of Executive Order (EO) 13327 in
2004, the FRPP was enhanced to satisfy EO requirements.

USDA implemented CPAIS to improve its inventory accountability. In the
same way, the improved asset level reporting in the FRPP from FY 2005 to
FY 2007 is the direct result of agency efforts to capture and report
accurate inventory and performance data for each constructed asset.

**Source: USDA FY 2007 Asset Management Plan/USDA Web site**

**PRINCIPLE #8**

**EMPLOY BALANCED PERFORMANCE MEASURES**

The Federal Real Property Council (FRPC) promotes the use of balanced
performance measures and management techniques to monitor and evaluate
asset efficiency regularly. FRPC identifies and defines performance
measures that federal agencies are required to collect and report to the
governmentwide inventory system maintained by the General Services
Administration (GSA). The results of these performance measures assist
federal agencies in determining the effectiveness of their asset
management decisions. FRPC has defined four "First Tier" performance
measures:[^6]

1.  Utilization;

2.  Condition Index;

3.  Mission Dependency; and

4.  Annual Operating Costs.

FRPC continues to evaluate additional performance measures that may be
included in the inventory reporting system in the future.

In addition to these governmentwide performance measures, many agencies
currently maintain and track their own agency-specific performance
measures.

**Case Study: GSA PBS's Linking Budget to Performance (LB2P) Program
Uses Scorecard Measures to Reward Good Performance**

Since its 1998 rollout, GSA\'s Public Buildings Service (PBS) Linking
Budget to Performance (LB2P) program has linked its budget to
performance measurement goals successfully. PBS sets annual targets for
each of the nine performance measures for each of its 11 regional
offices to achieve. Annual targets are based on PBS national goals and
the regional baseline measurement from historical data. Each regional
office then works to achieve the performance measure targets and
receives its budgetary allocation in each of the categories based on its
ability to meet or exceed the targets. Regional offices that exceed the
national performance goal for each of the measures receive a bonus pool
of money.

Referred to as the "Big Nine," the LB2P performance measures include:

-   Funds from operations;

-   Customer satisfaction;

-   Impact of non-revenue producing space;

-   Lease costs;

-   Maintenance costs;

-   Cleaning costs;

-   Construction costs within budget;

-   Construction costs within schedule; and

-   Indirect costs as a percent of revenue.

LB2P encourages creative and innovative thinking, while improving PBS
performance and customer service. Each PBS region has demonstrated
improved results, since the implementation of the program. In 2000, PBS
received a Global Innovators Award from CoreNet Global which recognizes
the successful application of new ideas to corporate real estate and
workplace management.

Instituted as a way for PBS to focus on providing the best service for
its customers while achieving the maximum return on investment, LB2P has
led to significant revenue increases, cost savings, and cost avoidance.

**Source: PBS Web site**

**PRINCIPLE #9**

**ADVANCE CUSTOMER SATISFACTION**

To advance customer satisfaction, agencies need to assess their customer
relationships holistically by:

-   Focusing on an occupant's mission;

-   Proactively monitoring changing space; and

-   Providing a productive workplace.

Customer satisfaction is increased when agencies work collaboratively
with their occupants to define specific requirements, integrate these
requirements into asset management decisions, and transform decisions
into innovative and responsive workplaces. Agencies continually should
strive to improve occupant relations and advance customer satisfaction.

As part of these efforts, agencies are encouraged to develop
high-performance workplaces and alternative workplace strategies
tailored to the user's needs.

**Case Study: GSA's Lease Administration and Management Program Leads to
Improved Customer Satisfaction Scores**

The General Services Administration (GSA) Northeast and Caribbean Region
developed the web-based Lease Administration and Management system as a
way to document its lease inspections and track tenant concerns and
lessor performance efficiently. Currently including more than 700
tracked leases and 8,000 documented lease inspections, the tool has
enabled GSA to focus its efforts in addressing tenant concerns by
tracking lessor performance and identifying patterns in tenant issues --
ultimately resulting in improved customer satisfaction scores.

The Lease Administration and Management system is designed to be both a
repository of critical information and a tool for tracking lease
deficiencies. GSA's ultimate goal in using the system is to improve
customer satisfaction scores in leased locations. Using the tool, GSA
employees can input any customer complaints by location in chronological
order, as well as the specific actions taken to rectify any problems.

Prior to the tool's implementation, vital lease data was not centrally
maintained; lease inspections were either not being documented or being
recorded on paper. Without the lease data, GSA was at a disadvantage in
working to remedy customer problems and issues. With the Lease
Administration and Management program, any GSA regional employee easily
can document and access lease inspection data. Each inspection is
time-stamped and remains open until a GSA employee enters a resolution
date for any outstanding issues. Employees can track reports with
outstanding issues by building, agency, office, or service district.

The program also features a unique capability in which any employee can
run reports showing all leases with customer satisfaction scores below a
given level. Account managers can use the program data to negotiate
lease extensions and renewals. When a tenant has a question about an
asset or location, any employee can respond. In addition, each employee
can run his or her own lease reports, which has eliminated the need for
each office to compile data individually and then have the entire GSA
region assimilate the data into one report.

Within one year of the program's implementation, the Northeast and
Caribbean Region's customer satisfaction scores increased from the mid
50s to the low 90s. Customer satisfaction scores in lease locations have
also increased, which is reflected in standard customer surveys and
ordering official surveys. GSA is currently planning a national rollout
of the program, which is scheduled for a Fiscal Year 2008 completion.

**Source: 2007 GSA Achievement Award for Real Property Innovation Entry
"Lease Administration/Overtime Utility"**

**PRINCIPLE #10**

**PROVIDE FOR SAFE, SECURE, AND HEALTHY WORKPLACES**

Effective management of federal facilities requires that buildings
provide safe, secure, and healthy working environments that support a
productive workforce. Implementing standard policies and procedures and
developing action plans to monitor and maintain workplaces complement
the development of, and are basic requirements for, robust asset
management strategies. These policies include:

-   Minimizing environmental problems and liabilities;

-   Complying with building security, fire, and life-safety codes and
    standards; and

-   Meeting historic building and applicable accessibility requirements.

The highest priority for real property holding agencies is to protect
their most important assets -- their employees.

In today's world, agencies are developing concepts to promote safe,
secure, and healthy workplaces that go beyond simple compliance.
Referring to principles established by President John F. Kennedy in 1962
in the *Guiding Principles for Federal Architecture*, agencies are
designing Federal Government facilities that are not only "efficient and
economical," but also contemporary architectural expressions of the
"dignity, enterprise, vigor, and stability of the American Government."
As this ideal has matured, the goal has been to establish a definition
of excellence that makes safe, secure, and healthy workplaces integral
aspects of federal building projects.

**Case Study: Sustainable Features an Integral Component of U.S.
Environmental Protection Agency Potomac Yard Facility**

The U.S. Environmental Protection Agency (EPA), working in partnership
with the General Services Administration (GSA), is leasing a speculative
facility in Arlington, Virginia. The complex, known as One Potomac Yard
and Two Potomac Yard, comprises a total of 654,000 square feet of office
and retail space, located on a formerly abandoned railroad yard. EPA
included environmental provisions as part of its competitive
Solicitation for Offers for the space, citing energy and water
efficiency, as well as environmentally preferable materials and design,
as mandatory elements of the facility's design and construction.

After construction was completed in July 2006, the facility achieved the
U.S. Green Building Council's Leadership in Environment and Energy
Design (LEED) Gold-level certification for sustainability. One and Two
Potomac Yard's sustainability features include:

-   Energy and water conservation;

-   Site selection to minimize impacts on surrounding environment;

-   Proximity to alternative transportation;

-   Responsible stormwater management;

-   Water reduction;

-   Recycling;

-   Use of green building materials;

-   Improved indoor air quality through the use of low volatile organic
    compound products and careful ventilation practices during
    construction and renovation; and

-   Green roof to reduce urban heat island effect.

EPA worked closely with a team of experienced professionals to develop
the building designs. The team included an environmental building
consultant and commissioning authority to educate the design team about
sustainable design. EPA's developer created a quality control program,
including frequent field inspections and regular meetings with various
stakeholders, to enforce the implementation of sustainable requirements.

By working as a team and keeping each stakeholder informed, the Potomac
Yard facility was able to achieve LEED Gold-level certification and
maintain reasonable costs and schedules. As a result, One and Two
Potomac Yard exemplify a balance of function, cost, security, and
sustainability -- enabling EPA employees to occupy a facility that
features environmental attributes, saves money, and contributes to a
safer, healthier, and more productive work environment.

**Source: EPA Web site, 2006 GSA Achievement Award for Real Property
Innovation Entry "Property Innovation at EPA's New Arlington, Virginia
Offices: Reaching for \'Green,\' Achieving Gold in a Speculative
Building"**

[^1]: For additional information, contact the agency's Chief Financial
    Officer (CFO) staff.

[^2]: The useful life of an asset is primarily related to its economic
    value and not its physical life. Elements affecting an asset's
    useful life include: 1) physical deterioration; 2) functional
    obsolescence;

    3\) technological obsolescence; and 4) economic obsolescence. For
    additional information, agencies should consult with the agency's
    Chief Financial Officer.

[^3]: Other federal laws and EOs include the Rural Development Act of
    1972, as amended, EO 13006 "Locating Federal Facilities on Historic
    Properties in our Nation's Central Cities," and EO 12072 "Federal
    Space Management."

[^4]: For additional information on assessing utilization, contact your
    agency's Senior Real Property Officer.

[^5]: To view the Capital Programming Guide, go to
    [www.whitehouse.gov/omb/circulars/a11/cpgtoc.html](http://www.whitehouse.gov/omb/circulars/a11/cpgtoc.html).

[^6]: For additional information on the "First Tier" performance
    measures, contact your agency's Senior Real Property Officer.