prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The federal government owns and leases hundreds of thousands of buildings across the country that cost billions of dollars annually to operate and maintain  In recent years, the federal government has taken steps to improve the management of federal real property and address long-standing issues by undertaking several government-wide initiatives and issuing memorandums to the CFO Act agencies  Within the executive branch, OMB and GSA provide leadership in managing federal real property  As the chief management office for the executive branch, OMB oversees how federal agencies devise, implement, manage, and evaluate programs and policies  OMB provides direction to federal agencies by, among other things, issuing policies and memorandums on real property management  In 2012, OMB issued a memorandum that required agencies to move aggressively to dispose of excess properties held by the federal government and more efficiently use real estate assets  This memorandum initially laid out the requirement to “freeze the footprint ” In 2013, OMB issued a memorandum clarifying the Freeze the Footprint policy  This memorandum required agencies going forward to maintain no more than their fiscal year 2012 total square footage of domestic office and warehouse space  The policy required agencies to specifically identify existing properties to be disposed of to offset any new property acquisitions  In March 2015, OMB transitioned from freezing the federal government’s real property footprint to reducing it  Specifically, OMB issued the National Strategy for the Efficient Use of Real Property (National Strategy) to provide a framework to guide agencies’ real property management, increase efficient real property use, control costs, and reduce federal real property  The National Strategy outlined three key steps to improve real property management: (1) freeze growth in the inventory; (2) measure performance and use data to identify opportunities to improve the efficiency of the real property portfolio; and (3) reduce the size of the inventory by consolidating, co-locating, and disposing of properties  OMB also issued the RTF policy which clarified existing policy to dispose of excess properties and promote more efficient use of real property assets  The RTF policy requires agencies to: (1) submit annual Real Property Efficiency Plans (Plan) to GSA and OMB; (2) issue a policy that specifies a design standard for maximum useable square feet by workstation for use in domestic office space; (3) set and specify in their Plans annual reduction targets for their domestic office and warehouse space for a 5-year period; (4) set and specify in their Plans annual reduction targets for domestic owned building properties reported in the Federal Real Property Profile; and (5) continue to not increase the square footage of their domestic inventory of office and warehouse space  Additionally, agencies must identify in their Plans potential projects related to office and warehouse consolidation, co-location, disposal, as well as construction and acquisition efforts  OMB is responsible for reporting the progress of agencies’ efforts in reducing the amount of federal real property space under the RTF policy  GSA has two key leadership responsibilities related to real property management  First, GSA’s Public Buildings Service functions as the federal government’s principal landlord  In this role, GSA acquires, manages, and disposes of federally owned real property for which it has custody and control on behalf of federal agencies that occupy the space  Additionally, GSA leases commercial buildings on behalf of agencies and manages the lease agreements  In these situations, GSA executes an occupancy agreement with a customer agency for each space assignment that is similar to a sublease between GSA and the agency  The occupancy agreement outlines both the financial specifics of the agreement and the responsibilities of GSA and the customer agency  There are certain unique advantages for customer agencies when GSA leases on their behalf  For example, GSA is able to enter into longer-term leases, and agencies can release space back to GSA with 4 months’ written notice if certain conditions are met, relieving the agencies of the cost for the returned space  Second, GSA’s Office of Government-wide Policy is responsible for, among other things, identifying, evaluating, and promoting best practices to improve the efficiency of management processes  In this policy role, GSA provides guidance for federal agencies and publishes performance measures  It also maintains the Federal Real Property Profile, a real property inventory database that contains information on federal real property government-wide  Based on our review of agencies’ 2016 and 2017 Plans, we found that all 24 CFO Act agencies described strategies for reducing office and warehouse space  As previously mentioned, these annual Plans must include all potential projects related to office and warehouse consolidation, co-location, disposal, as well as construction and acquisition efforts  The agencies’ Plans cited consolidation, co-location, and disposal as the primary means to reduce their office and warehouse space, activities mentioned in the National Strategy  Agencies also cited other methods, such as utilizing telework and decreasing the space they allocate per person to achieve space reductions  The space reduction strategies included most often in the Plans we reviewed include the following  Consolidation: All 24 agencies reported planned or ongoing efforts to reduce their space by consolidating their offices or operations  For example, we spoke with officials at HUD, which is in the process of consolidating staff from four offices in the National Capital Region into its 1 12-million square foot headquarters building in Washington, D C  HUD started by remodeling one floor to create a more open floor plan and intends to apply this design throughout the building  As part of the consolidation project, HUD has reduced the size of some office cubicles from 64 square feet to 56 square feet  (See fig  1 ) HUD leases its space through GSA and estimates that it will be able to return about 175,000 square feet of unneeded space back to GSA once all four offices are closed  At that point, GSA would then bear the cost of the space and work to lease it to another agency or otherwise dispose of it  Once the project is completed, HUD estimated that its headquarters building will accommodate about 500 more personnel (for a total of 3,200) and reduce its annual lease payments by about $11 million  Fifteen of the 24 agencies identified consolidation opportunities outside of their headquarters buildings  For example, the Department of Agriculture (USDA) discussed a consolidation project involving five component agencies in Albuquerque, New Mexico, in its fiscal year 2017 Plan  According to USDA officials, four component agencies occupying nearly 44,500 square feet in one building were to be consolidated into about 34,000 square feet of space in another building already occupied by a different USDA agency  In the prior location, the multiple components spaces’ square footage per person averaged 327, but the proposed consolidation would bring the utilization rate down to 255 square feet per person  USDA estimated that the consolidation project would result in about $238,000 in annual rent cost savings for the four components  Additionally, to enable this consolidation project, the component agency already occupying the building consolidated and vacated about 20,000 square feet, a move that resulted in an annual rental savings of about $500,000  In its fiscal year 2017 Plan, Interior’s Bureau of Reclamation anticipated eliminating 87,000 square feet of office space by consolidating operations from two buildings in Denver, Colorado  Interior estimated that the consolidation will result in a 40 percent reduction in its overall utilization rate to 165 square feet per person and an annual cost savings of about $2 1 million  Co-location: Thirteen of the 24 agencies’ Plans stated that they are exploring or implementing co-location projects to reduce space by merging staff from different components or agencies into another agency’s space  For example, the Social Security Administration (SSA) recently initiated a co-location pilot program with the Internal Revenue Service (IRS) within Treasury to combine SSA field offices with IRS Taxpayer Assistance Centers  Co-location of operations can reduce the overall space required by allowing agencies to share common space such as waiting rooms, an action that can reduce rent and operating costs for the co-located agencies  Since the inception of the 1-year program in January 2017, four IRS offices are participating and have moved into SSA field offices  According to SSA, IRS and SSA staff have adjusted to sharing space and the IRS presence in SSA space has not affected SSA wait times or created security or parking issues  According to an IRS official, IRS employees continue all normal operations from their co-located offices with SSA, including meeting with taxpayers in-person  The official also noted that IRS has extended the terms of its agreement with SSA for an additional year  However, SSA noted that the agencies are still working through customer access issues that could determine whether it would be possible to expand the pilot program and pursue additional co-location opportunities  In another example, according to Interior officials, the U S  Geological Survey is co-locating staff from Menlo Park, California, to a National Aeronautics and Space Administration facility in the nearby city of Mountain View, California  About 40 percent of the staff will move early in fiscal year 2019, and the U S  Geological Survey expects the remaining staff to be co- located by the end of 2021  Interior officials estimate that the co- location will result in an overall reduction of 165,000 square feet (about 50 percent of its space) and expects to save about $12 to $14 million in annual rent costs  To help agencies identify potential co-location opportunities and work with other agencies to meet their space requirements, GSA developed and provided agencies access to its Asset Consolidation Tool in fiscal year 2015  This database tool provides agencies with information about federal spaces in their area, including the buildings’ vacancy and utilization rates  Disposal of unneeded space: Thirteen of the 24 agencies reported that they plan to reduce their real property footprint by disposing of unneeded space, including selling or demolishing federal buildings or terminating leases, among other actions  For example, IRS has five tax submission-processing centers that receive all mailed income-tax returns and have warehouses that store the physical tax records  Each of these five processing centers, which include both office and warehouse spaces in multiple buildings, is approximately 500,000 square feet  According to IRS officials, 87 percent of all 2016 individual income-tax returns were filed electronically  As a result, the IRS plans to dispose of three of the five centers by 2024 to align with its reduced need for income-tax return processing and storage space  GSA has the statutory authority to dispose of property for all federal agencies and generally does so on their behalf  In addition, some federal agencies, such as Energy, or departmental components have statutory authority to dispose of buildings and other types of property and are not required to notify or use the services of GSA to complete the disposal  Better utilization of existing space: In their Plans, agencies also reported using tactical tools, such as incorporating space utilization rates into their capital-planning process, to identify opportunities to reduce space  For example, 22 of the 24 agencies reported incorporating office space design standards and agency utilization rates into their processes to identify space reduction opportunities  Agencies set their own space design standards and space utilization rates, which may vary based on agency mission requirements across their components  The RTF policy requires agencies to establish a design standard for the maximum workstation size, which should, at a minimum, be applied to all space renovations and new acquisitions  In addition, GSA has a recommended office space-utilization rate range of 150 to 200 square feet per person  Officials from our case study agencies noted several practices they said were helpful to identify opportunities to better utilize and ultimately reduce their space  For example, Commerce officials described developing a process for identifying and prioritizing space reduction opportunities using a two-factor matrix  Through this process, Commerce plans to target office space with a large number of employees and poor utilization rates (compared to its 170 square foot utilization rate)  According to Commerce officials, these situations may offer the most opportunity for space reductions and achieving significant rent and operating cost savings, particularly in high-cost real estate markets  Using this process, Commerce identified the potential for reducing as much as 1 6-million square feet (16 percent) of its total office space within 52 high priority facilities  According to IRS, retirements, hiring freezes, budget reductions, and increased telework have resulted in excess space throughout its portfolio  In fiscal year 2016, IRS started using a Strategic Facility Plan model to help identify space reduction projects  IRS’s objectives include consolidating multiple offices within a metropolitan area, closing outlying buildings, and leveraging telework, mobility, and its attrition rates  This model utilizes a template form to provide a consistent decision-making framework for assessing various options, articulating the rationale for selecting the preferred option, and documenting decisions and concurrence  According to IRS officials, this model has helped IRS to reduce a lot of its space  In 2014, GSA developed and provided agencies with access to the Real Property Management Tool, which can aid agencies that want to more effectively utilize their space  The database tool provides agencies with the capability to comprehensively view their real property portfolio by consolidating data from the assets that agencies directly manage with the assets that GSA manages on their behalf  As such, regardless of whether an agency initiated the action or GSA did so on its behalf, the tool gives an agency the ability to see all of its data, such as on expiring leases, in one place  The tool enables agencies to create individualized analytic reports allowing them to analyze the data in various ways  Teleworking and hoteling: Fifteen of the 24 agencies also described alternate workplace arrangements enabled by information technology, such as telework and hoteling, to help reduce office space  Telework is a work flexibility arrangement under which an employee performs their work responsibilities at an approved alternative worksite (e g , home)  Executive agencies are required to establish policies that authorize eligible employees to telework, determine the eligibility of all employees to participate in telework, and notify all employees of their eligibility  Federal law also requires that agencies consider whether space needs can be met using alternative workspace arrangements when deciding whether to acquire new space  As such, some agencies are eliminating designated offices for staff who primarily telework, a step that can improve space utilization  In a hoteling arrangement, employees use non-dedicated, non-permanent workspaces assigned for use by reservation and on an as needed basis  For example, the Office of Personnel Management implemented a workspace sharing initiative at one of its program offices  Staff who are not physically present in the office 4 or more days per week are required to share cubicles and offices  The Office of Personnel Management estimated that the initiative resulted in a 47 percent office space reduction for the program office  As part of their fiscal year 2016 and 2017 Plans, the 24 CFO Act agencies also described the major challenges they anticipated facing in their efforts to meet their space reduction targets  The agencies most frequently cited the following challenges: Space reduction costs: Twenty of 24 agencies stated that the costs of space reduction projects pose a challenge  Agencies are generally responsible for the up-front costs associated with relocations and tenant improvements, such as acquiring new furniture and renovating existing areas to reduce space or to accommodate more personnel in a smaller area  For example, the Department of Labor (Labor) reported in its fiscal year 2017 Plan that it did not have sufficient funding to implement a space reduction project that would have reduced commercially leased office space by 4,000 square feet  Similarly, the Department of Veterans Affairs’ fiscal year 2017 Plan noted that assuming a limited budget, large scale consolidations would be difficult to achieve  Some agencies have used or report that they intend to use funding from GSA’s Consolidation Activities program to help fund their space reduction projects  According to GSA, from fiscal years 2014 to 2017, GSA’s Consolidation Activities program funded projects that will eliminate 1 4-million rentable square feet from the GSA inventory and reduce agencies’ annual rent payments by $54 million  According to the IRS, GSA’s Consolidation funds have helped the agency reduce about 500,000 square feet of space  IRS officials noted that these funds helped the agency implement larger and more expensive space reduction projects than it would have been able to do otherwise  However, according to officials from several agencies, to use this program, agencies must also contribute funds to the projects  HUD officials stated that they considered applying for project funding through GSA but did not do so because HUD did not have sufficient funds for the agency’s share of project costs  Three of the 24 agencies specifically noted that the cost to clean up environmentally contaminated buildings is a challenge to disposing of excess office and warehouse space  Agencies are required to consider the environmental impact of property disposals  We have previously found that assessments and remediation of contaminated properties can be expensive and complicate the disposal process  Also, agencies are responsible for supervising decontamination of excess and surplus real property that has been contaminated with hazardous materials of any sort  In its fiscal year 2017 Plan, Energy estimated that over 60 percent of its excess buildings require extensive decontamination prior to disposal  Overall, Energy projected that its total liability for environmental clean-up could cost more than $280 billion  Mission delivery: Thirteen of the 24 agencies reported that mission delivery requirements can also affect their ability to reduce space  Agency missions may require office locations in certain areas or require additional space to accommodate activities such as customer interactions  These requirements may preclude disposals or limit opportunities to reduce space  For example, in its fiscal year 2017 Plan, SSA stated that its efforts to reduce space are affected by its mission, which requires offices widely dispersed throughout the country to administer and support its benefit programs, among other things  SSA has about 1,500 office spaces nationwide, most of which require space to accommodate the public  SSA had an overall office space utilization rate of 301 square feet per person, which exceeded GSA’s recommended office space utilization rate range of 150 to 200 square feet per person  USDA’s fiscal year 2017 Plan stated that its missions require office space in rural areas to, among other things, provide program assistance and leadership on food, agriculture, natural resources, rural development, nutrition, and related issues  In its fiscal year 2017 Plan, USDA also observed that the real estate market in rural areas is less competitive than in urban areas because there are fewer rental options, a situation that can also drive up rent costs  As such, USDA noted that these factors may contribute to difficulties identifying disposal opportunities and finding alternate spaces that could allow for more effective space utilization  Employee organization concerns: Ten of the 24 agencies reported that considering employee organizations’ concerns and addressing collective bargaining requirements when reconfiguring space can add time and affect the extent of their space reductions  For example, in its fiscal year 2017 Plan, SSA noted that the agency must meet with three employee unions when revising office space policies or design standards and collaborating with these organizations adds to the project’s implementation timeline  In July 2017, we reported that SSA officials met with employee union groups about the impact of potential changes to its space configuration or usage  Officials said that while the interactions with the union groups were positive—including gaining input on issues such as ergonomics, the security of field offices, and overall implementation—at times, these negotiations caused delays to individual projects and complicated reduction efforts by requiring union buy-in  In addition, Labor reported in its fiscal year 2017 Plan that its collective bargaining agreement and agency mission requirements for offices and work stations do not always enable it to take advantage of the previously discussed GSA Consolidation Funding program as well as GSA’s Total Workplace Furniture & Information Technology program  For example, the Total Workplace Furniture & Information Technology program requires that cubicles and offices must not exceed a specified square footage  However, according to Labor officials, Labor’s Departmental Space Management Regulation requires a certain utilization rate per person which may make it challenging to also stay within the program’s square footage requirements  Workload growth: Eight of the 24 agencies noted that increases in their workload limited their ability to achieve overall agency space reductions  For example, according to the Department of Justice’s fiscal year 2017 Plan, the agency anticipated having to provide additional court rooms to support an increased volume of immigration cases and accommodate the additional immigration judges needed to handle that volume  The Department of Justice estimated that the space needed to accommodate the new judges and additional public areas could add about 155,000 square feet to its portfolio  Also, according to the Department of Health and Human Services’ fiscal years 2016 and 2017 Plans, the Office of Medicare Hearings and Appeals experienced a 30 percent growth in cases and expected 1 2- million new cases annually after 2017  The Department of Health and Human Services projected that the growth in cases and additional staff needed to process the cases required additional field offices, which would increase its total office space square footage  As previously mentioned, agencies are required to set annual square foot reduction targets for domestic office and warehouse space in their annual Plans  According to an OMB official, to help ensure the targets are realistic, agencies are also required to identify the specific projects that will help them to achieve their space reduction targets  According to GSA and OMB officials, agencies submit their Plans, including their reduction targets, and their Plans are reviewed by both GSA and OMB  But each individual agency ultimately establishes its targets based on what it determines to be cost-effective and feasible  Through its Real Property Efficiency Plan template, GSA provides guidance to agencies on what is expected in their annual submissions  Each agency is required to document its internal controls, such as the process for identifying and prioritizing reductions to office and warehouse space and disposal of properties based on return on investment and mission requirements  The identified internal controls should help ensure that an agency’s proposed space reduction projects reflect an efficient use of space and are cost effective  A review of our five case study agencies illustrated some of the different approaches agencies used to determine their reduction targets  For example, several agencies’ targets were based on the total estimated feasible reductions identified by each agency component  In contrast, one agency centrally established a reduction target percentage and then asked its components to develop projects to meet that target  According to case-study agency officials, the agencies considered many factors, including their missions, priorities, component needs, and available budgets, when determining their targets  We found that the number and magnitude of the space reduction projects agencies identified in their fiscal year 2017 Plans varied greatly and were generally proportional to the size of the agency’s real property portfolio  The number of projects identified in agency Plans ranged from as few as 3 projects (the minimum required in the Plans) to nearly 400 projects  The estimated space reductions per project across agencies ranged from about 1,400 to over 94,000 square feet  For example, the Department of Veterans Affairs has a relatively large office and warehouse portfolio of over 28-million square feet  As part of its fiscal year 2017 Plan, the agency reported 320 planned or ongoing projects with an average space reduction of about 1,800 square feet per project  Conversely, the Office of Personnel Management has a relatively small office space portfolio of about 1-million square feet; its fiscal year 2017 Plan identified 4 ongoing or potential projects with an average space reduction of about 6,000 square feet  In fiscal year 2016—the first and only year RTF data were available at the time of our review—the majority (71 percent or 17 of the 24 agencies) reported they achieved reductions in their office and warehouse space even though the agencies had varying success in achieving the individual targets they set for themselves  For example, as shown in figure 2, of the 17 agencies that reduced space, 9 exceeded their targets (i e , reduced more space than planned); 7 reduced space but missed their target (by anywhere between 2 8 and 96 7 percent); and 1 agency expected to increase in square footage, but reduced space  Whether an agency met its target is not the only indicator of an agency’s success in reducing space  For example, although some agencies missed their targets, they reduced their office and warehouse space by a larger percentage than some agencies that exceeded their targets  Also, the fact that some agencies missed their targets can in part be attributed to setting more aggressive targets than other agencies  Agencies’ fiscal year 2016 targets ranged from a 0 8 percent increase to an 8 4 percent decrease in office and warehouse space  Of the 9 agencies that exceeded their reduction targets, 4 more than tripled their target  As mentioned, agency targets are set by the agency and are a reflection of their unique situation including mission needs and priorities and therefore cannot be generalized across agencies  For example, Energy exceeded its fiscal year 2016 reduction target and reduced 292,140 square feet of space (0 8 percent of its total square footage)  However, the Environmental Protection Agency missed its target, which was the second most aggressive target across all the agencies at 7 2 percent of its total square footage; but the agency reduced 174,003 square feet (3 24 percent of its total square footage)  Of the three agencies with the most aggressive target reductions—those that ranged between 6 7 and 8 4 percent of their total square footage—only one met its target  Figure 3 shows the extent to which each of the CFO Act agencies met its fiscal year 2016 targets  See appendix II for more detailed information on each agencies’ square footage of space, reduction targets and fiscal year 2016 reductions  Officials from our case study agencies cited a number of factors that influenced whether or not they met their fiscal year 2016 targets, and may also affect their target achievement in subsequent years  Of our five case study agencies, three exceeded their fiscal year 2016 reduction target and two missed their target  Timing and funding: Officials from two case study agencies cited timing as a factor, noting that there is fluidity to the project’s planning, implementation, and disposal process that may not always be within an agency’s control  As a result, space reductions anticipated in one fiscal year may not be realized until a subsequent fiscal year; conversely, some space reduction opportunities may present themselves unexpectedly  For example, according to officials at HUD, which missed its fiscal year 2016 reduction target, some projects take longer than anticipated to start or complete  HUD officials said that their fiscal year 2016 target may have been too ambitious and planned projects were delayed because they were unable to secure sufficient funding  As such, the officials said the agency must carefully select which projects to move forward with in a given fiscal year, but expected to move forward with their delayed, planned projects in the next fiscal year  Energy on the other hand, exceeded its fiscal year 2016 reduction target  Energy officials said that they tend to be conservative in listing potential RTF projects in their Plans  They noted that it takes a long time to dispose of a building and the timing was dependent on the building’s level of contamination, location, size, agency budget, and other factors  As a result, even though the agency may have planned to dispose of a building in a given fiscal year, there were numerous reasons why the project may get delayed  Further, RTF is a long-term effort and should not be judged based on agencies’ progress in their first year  According to an OMB official, it is understood that there may be circumstances in a given year that may hinder agencies from reaching their RTF targets, such as budget constraints or the timing of leases; however, the expectation is that agencies will continue to work toward accomplishing their target in the next year  Accordingly, under RTF, agencies set annual space reduction targets for a 5-year period  Officials from our case study agencies emphasized that the 5-year targets are not static, but rather are subject to annual updates  The RTF policy also acknowledged that changes to mission requirements and the availability of budgetary resources may require modifications to an agency’s targets, particularly in each of the subsequent years  Lastly, given that the RTF policy is still relatively recent, an OMB official noted that agencies are still in the process of learning how to set appropriate targets  Previous space reductions: Officials from three of our case study agencies noted that prior space reductions made during the Freeze the Footprint policy limited their ability to reduce space more aggressively  Though the thrust of Freeze the Footprint was to maintain the fiscal year 2012 size of an agency’s portfolio, agencies started to look more strategically for opportunities to dispose of excess space in their portfolios  The majority of agencies (18 of 24) have been decreasing the square footage of their domestic office and warehouse space since the Freeze the Footprint policy was implemented in 2013  OMB reported that under Freeze the Footprint, agencies achieved a 24 7-million square foot reduction between fiscal years 2012 and 2015  Officials from the IRS, which accounts for 70 percent of Treasury’s real property inventory, noted it has released 2 7-million square feet (approximately 10 percent) in the past 5 years, bringing its total square footage down to 25 3 million  According to officials from three of our case study agencies, a certain amount of space is required to effectively fulfill their missions  As such, the closer agencies get to attaining their optimum footprint, their ability to achieve further space reductions may be limited  In November 2016, GSA put into effect a new standard operating procedure to, among other things, standardize and streamline the process of receiving, reviewing, and documenting agencies’ space release actions  As previously mentioned, GSA’s occupancy agreements for space it leases on behalf of its customer agencies generally allow the agencies to release space back to GSA with as little as 4 months’ notice, if certain conditions are met  This can enable agencies to reduce their space and related rent costs relatively quickly without penalty  As a result of this new process, GSA established a centralized e-mail for agencies to submit their space release requests  The e-mail is maintained at GSA headquarters before it is forwarded to the respective GSA region  GSA also developed a centralized space release tracking spreadsheet to help ensure that all GSA regions were (1) notifying the customer agency of GSA’s determination on whether the space release request was within GSA’s policy, and (2) processing the space release and ceasing rent billings in a timely manner  According to GSA headquarters officials, this new process was implemented to rectify past concerns that space release requests were not centrally tracked, GSA regions may not have been making consistent determinations, and some requests either were missed or were not processed within the appropriate time frames  GSA officials noted that GSA similarly manages all vacant space in federally owned property under its custody and control and in commercial space it leases, and the agency seeks to utilize the space as quickly as possible  GSA has 11 regional offices throughout the country that generally conduct the day-to-day real property management activities for its customer agencies  These responsibilities include acquiring, managing, and disposing of real property, as well as executing, renewing, and terminating leases on behalf of its customer agencies in exchange for a monthly fee for GSA’s services  GSA headquarters officials told us that GSA regional offices track all the occupancy agreements and proactively work with customer agencies to help manage their space needs well before the agreements expire to understand ongoing space requirements  For example, according to GSA headquarters officials, this process includes working with agencies at a strategic level and helping them think about how they can accomplish their space needs and meet their targets 4 to 5 years in advance  GSA headquarters and regional officials noted that the advance planning helps the GSA regional officials integrate agencies’ potential space needs into the work they are already doing in the region as GSA manages the regional inventory as a whole, including managing the amount of vacant space  GSA regional officials told us that they work closely with the agencies in their space consolidation and reduction efforts to minimize the likelihood that GSA would be caught off guard by a release of space  This work enables GSA to develop options for either filling vacant space based on the known needs in the region or developing an alternative plan to effectively utilize the unneeded space  One of GSA’s strategic objectives is to improve the federal utilization of space in order to lower the government’s operational costs  To assess progress, GSA has an agency-wide vacant space performance goal of 3 2 percent for its federally-owned and leased inventory (with a 5 percent goal for federally owned and 1 5 percent goal for leased space)  Based on GSA data, the agency has steadily lowered its percentage of vacant space under its custody and control from 3 8 percent in fiscal year 2013 to 3 percent in fiscal year 2016, exceeding its performance goal of 3 2 percent for the first time in 4 years  The vacant space performance goal’s data help GSA evaluate its real property assets and plan for and make investment decisions while meeting its customer’s needs  According to GSA officials, the lower vacant space percentage is a reflection of the agency’s continued focus on working with its customer agencies to: (1) move into federally owned space, when possible; (2) decrease the size of commercially leased space to reduce agency rental costs and overall government reliance on leased space; and (3) dispose of unneeded federally owned assets  However, GSA officials noted that a certain level of vacant space is necessary to meet the space needs of new customers and customers with changing space requirements  According to GSA officials, GSA also tracks and reports annual cost avoidance data for all office and warehouse space reductions  These data include space covered under RTF in federally owned buildings under GSA’s custody and control and commercial space that GSA leases  Cost avoidance is defined as the results of an action taken in the immediate timeframe that will decrease future costs  The government-wide cost avoidance for fiscal year 2016 was $104 million based upon a net 10 7 million square foot reduction to all office and warehouse space  Of the government-wide figure, according to GSA, the total cost avoidance associated with office and warehouse space reductions in federally- owned space under GSA’s custody and control and commercial space GSA leased in fiscal year 2016 was over $75 8 million and 3 1 million square feet  In its cost avoidance calculation, GSA accounts for space returned to it by customer agencies only if there is a net square footage reduction in GSA’s total square footage across all the space that it manages  Similarly, the space returned to GSA does not reduce the federal government’s overall office and warehouse square footage unless GSA disposes of it  However, space that is returned to GSA is reflected as a square footage reduction for the customer agency and contributes toward that agency’s RTF target reduction  According to GSA regional officials, agencies’ requests to return space prior to the end of their occupancy agreements appear to have increased since the implementation of the RTF policy  Thus far, GSA has processes to manage agencies’ space release requests and keep its vacant space to a minimum  However, it is too early to determine how the recent increase in space release requests, in combination with agencies’ continued focus on occupying a smaller footprint and reducing their square footage, will affect: (1) the size of GSA’s inventory of vacant space in the long term, (2) GSA’s regional office workload to manage the requests, and (3) the cost savings for the federal government  We provided a draft of this report to GSA, OMB, Commerce, Energy, HUD, Interior, and Treasury for review and comment  We received technical comments from Energy, which we incorporated, where appropriate  GSA, OMB, Commerce, HUD, Interior, and Treasury did not have comments on our draft report  We are sending copies of this report to the appropriate congressional committees; the Administrator of GSA; the Director of the OMB; the Secretaries of the Departments of Commerce, Energy, HUD, the Interior, and the Treasury; and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions concerning this report, please contact me at (202) 512-2834 or rectanusl@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  Our objectives were to determine: (1) the approaches and any challenges the 24 Chief Financial Officers (CFO) Act agencies identified to achieving their Reduce the Footprint (RTF) reduction targets for all their domestic office and warehouse space; (2) the extent to which these agencies reduced space and met their fiscal year 2016 RTF targets; and (3) how the General Services Administration (GSA) manages vacated space that it had leased to these agencies  To obtain background information for all three objectives, we reviewed relevant literature, including laws governing federal real-property management and agencies’ efforts to reduce their real property portfolios and Office of Management and Budget’s (OMB) and GSA’s memorandums and guidance governing the RTF policy  We also reviewed prior GAO and GSA inspector general reports describing agencies’ real-property management and efforts to more efficiently manage their real property portfolios  To determine the approaches used and any challenges faced by the CFO Act agencies in achieving their RTF reduction targets for all their domestic office and warehouse space, we conducted a content analysis of the agencies’ 5-year Real Property Efficiency Plans (Plans) for fiscal years 2016 and 2017  These Plans were obtained directly from each of the agencies  Each Plan describes an agency’s overall strategic and tactical approach in managing its real property, provides a rationale for and justifies its optimum portfolio, and directs the identification and execution of real property disposals, efficiency improvements, general usage, and cost-savings measures  The content analysis of the Plans helped us to understand the approaches agencies used to reduce space, how space- reduction targets were set, and any challenges they experienced in reducing their space  To identify agencies’ approaches to achieving their RTF targets, we reviewed all agencies’ Plans to determine the most frequently mentioned approaches agencies reported using or planned to use to reduce their real-property footprints  As part of their plans, each agency is required to include a section detailing approaches it plans to use to reduce space  While these sections were the primary focus of the analysis, we analyzed the Plans as a whole for any additional mention of agencies’ approaches to reduce space  Based on the frequently identified approaches, codes were developed  An analyst reviewed all the agencies’ Plans and coded the approaches and another analyst reviewed the coding  If there was a disagreement, the two analysts reviewed and discussed until they reached an agreement  As a result of the analysis, five approaches were identified that agencies most frequently reported using or were planning to use to achieve their RTF targets  These five approaches are described in more detail in the report: (1) consolidation; (2) co-location; (3) disposition of unneeded space; (4) better utilization of existing space; and (5) teleworking and hoteling  For the purposes of our report, telework and hoteling were combined because these approaches are often used in combination  For example, agencies can use telework strategically to reduce space needs and increase efficiency by making hoteling (i e , desk sharing) possible  To identify any challenges agencies faced in achieving their RTF targets, we similarly conducted a content analysis of agencies’ fiscal year 2016 and 2017 Plans  As part of their Plans, each agency included a section describing challenges it faced to reducing space  While these sections were the primary focus of the analysis, we analyzed the Plans as a whole for any additional mention of agencies’ challenges  Based on the frequently identified challenges, codes were developed  An analyst went through all the agencies’ Plans to code the challenges and another analyst reviewed the coding  If there was a disagreement, the two analysts reviewed and discussed until they reached an agreement  As a result of the analysis, we identified the four challenges that agencies most frequently described in their Plans: (1) space reduction costs; (2) mission delivery; (3) employee organization concerns; and (4) workload growth  In our report, we relied specifically on agencies’ fiscal year 2016 and 2017 Plans to provide examples and context for our description of the approaches agencies use and challenges they experience in achieving their RTF targets  However, after these Plans were submitted, agencies reported that the specific details as described in their Plans may in some instances, have changed due to a variety of factors  For our case study agencies, to the extent possible, we have provided updated information from agency officials as of December 2017  We selected five agencies as case studies to inform our first two objectives  We selected the agencies using a variety of considerations such as the diversity in the size of the agency’s domestic office and warehouse portfolio, the extent to which the agency met its fiscal year 2016 RTF targets, the types of real property authorities the agency has, as well as suggestions from GSA and OMB related to agencies’ experiences  Based on these factors, we selected the: (1) Department of Commerce (Commerce); (2) Department of Energy (Energy); (3) Department of Housing and Urban Development (HUD); (4) Department of the Interior (Interior); and (5) Department of the Treasury (Treasury)  While our case-study agencies and their experiences reducing their space are not generalizable to all CFO Act agencies, they provide a range of examples of how agencies are implementing the RTF policy  We interviewed officials at the selected agencies as well as GSA and OMB, and reviewed relevant agency real-property management and RTF guidance, to obtain more detailed information about agencies’ RTF approaches, challenges, specific RTF projects, RTF project funding and prioritization, and experiences in meeting their RTF targets  In addition, we visited three office buildings of our case study agencies in Washington, D C , with ongoing or recently completed RTF projects that illustrated approaches the agencies used to reduce space and met with officials to discuss the projects in more detail  The spaces we visited were the headquarters buildings for Commerce, HUD, and Interior  We selected the buildings based on recommendations from officials at our case study agencies  To determine to what extent agencies reduced their space and met their fiscal year 2016 RTF targets, we analyzed the 24 CFO Act agencies’ data as submitted to GSA on their RTF targets and reported reductions for fiscal year 2016  The office and warehouse square footage reductions are calculated annually using GSA occupancy agreement data and agencies’ self-reported data in GSA’s Federal Real Property Profile  For example, for fiscal year 2016, the space reduction calculations based on these data sources at the end of the fiscal year was compared to the square footage reported in fiscal year 2015  At the time of our review, this was the first and only year of RTF data available as the policy was implemented in March 2015  We conducted a data reliability assessment of the RTF data GSA provided by interviewing GSA officials and reviewing documentation, and concluded the data were reliable for our purposes  We also interviewed officials at GSA and OMB and reviewed relevant documentation to learn more about each agency’s role and the requirements of the RTF policy  We interviewed officials from our selected case-study agencies to obtain supporting documentation and to improve our understanding of how agencies set their RTF targets, agencies’ progress toward those targets, and the approaches used and challenges faced in meeting those targets  We also asked the agency officials for examples of successful practices used to reduce their office and warehouse space  To determine how GSA manages vacated federally owned and commercially leased space that it leases to agencies, we reviewed federal requirements and GSA policies and vacancy data  We conducted a data reliability assessment of GSA’s vacancy and cost avoidance data by interviewing GSA officials and reviewing documentation, and concluded the data were reliable for our purposes  We also interviewed GSA headquarters and regional officials and obtained documentation on how GSA manages space returned by agencies  We conducted this performance audit from April 2017 to March 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  FY 2016- FY 2020 target reduction (118,127) Social Security Administration Missed target and increased in space Department of Health and Human Services (170,147) (520,987) (15,466) (47,946) (56,062) In addition to the individual named above, Maria Edelstein (Assistant Director); Lacey Coppage; Edgar Garcia; Delwen Jones; Catherine Kim (Analyst-in-Charge); Michael Mgebroff; Malika Rice; Kelly Rubin; and David Wise made key contributions to this report 
Report 2:  In addition, some military departments are also making improvements to their cost estimating processes, but these improvements have not been fully implemented yet  For example, the Air Force Civil Engineer Center is implementing a cost estimate improvement plan to include the training of nearly 700 airmen and has conducted a study that directly ties the 12 steps in the Cost Guide to the associated tasks to be completed by the Air Force cost estimator to meet each individual step  However, the actions contained in the cost improvement plan have not been fully implemented and still remain in the concept phase  Similarly, although the Army Corps of Engineers is investigating expanding the use the of cost and schedule risk analysis—which could align with the best practices in the Cost Guide—that the Army currently conducts for selected civil work construction projects to its high-cost military construction projects, the Army has not formally required the use of these tools  In appendix IV, we describe the guidance the military departments have developed beyond the Unified Facilities Criteria  The Cost Guide is designed to establish a consistent methodology that is based on best practices and that can be used across the federal government for developing, managing, and evaluating capital program cost estimates  Air Force and Army Corps of Engineers officials noted that there may be instances in which following all the 12 steps of the Cost Guide for every MILCON project would not be appropriate to the risk level of the project  For example, it may not be realistic or to the military departments’ benefit for the military departments to conduct a sensitivity and uncertainty analysis or develop an independent cost estimate for all the construction projects they initiate every year, especially for low-cost projects  We agree that it may not be suitable to fully apply all 12 of the cost estimating steps in the Cost Guide to all MILCON projects  However, incorporating the 12 steps into the Unified Facilities Criteria would establish consistency across DOD in the cost estimating process by ensuring that, for each MILCON project, each step in the Cost Guide would at least be considered  Furthermore, DOD could choose to establish thresholds—based on, for example, the dollar values of the projects—to guide the services in implementing the 12 steps for the most valuable projects  Skipping or not considering any step of the 12-step cost estimating process, especially for high-value projects such as those in our case studies, increases the risk that cost estimates may use improper assumptions, lack appropriate definition, or be otherwise unreliable  Without improving the Unified Facilities Criteria with respect to cost estimating processes, DOD and the services will not be positioned well to provide reliable cost estimates to DOD and congressional decision- makers  Each year DOD receives billions of dollars in MILCON appropriations to use for projects in the United States and overseas  The quality of project cost estimates are of great importance since those estimates are the basis for DOD’s requests for appropriations  While DOD’s policy is that MILCON cost estimates be prepared as accurately as possible in order to reflect the full cost of constructing DOD facilities, DOD’s Unified Facilities Criteria—the department’s primary construction criteria for developing cost estimates—does not fully incorporate all of the steps needed for producing reliable cost estimates  Until DOD incorporates the 12 steps of high-quality, reliable cost estimating into this department-wide construction criteria, DOD and congressional decision-makers may not have reliable estimates to inform their decisions regarding appropriations and the oversight of projects  We are making one recommendation to DOD: The Secretary of Defense should ensure that the Assistant Secretary of Defense for Energy, Installations, and the Environment work with DOD’s construction agents, military departments, and other offices to improve DOD’s MILCON cost estimating guidance (i e , DOD’s Unified Facilities Criteria) by fully incorporating all the steps needed for developing high- quality reliable cost estimates  (Recommendation 1) We provided a draft of this report to DOD  In written comments, which are reprinted in their entirety in appendix VI, DOD partially concurred with our recommendation  DOD also provided technical comments that have been incorporated into the report as appropriate  DOD partially concurred with our recommendation to improve its cost estimating guidance by fully incorporating all 12 steps needed for developing high-quality, reliable estimates  DOD stated that it did not believe that it is suitable to fully apply all 12 steps to any construction project due to characteristics of the military construction program that DOD believes differ from those of major system or weapon acquisition programs  However, DOD also stated that it concurred with the intent and general applicability of the twelve steps to military construction and that DOD cost estimating guidance lacks specificity in several of these areas  DOD acknowledged that expanding its cost guidance to more fully incorporate these steps would benefit the military construction program, and that it is planning to address this by revising its cost guidance during Fiscal Year 2019  In our report, we recognize that it may not be appropriate to fully apply all 12 steps to each construction project  For example, it may not be realistic or to the military departments’ benefit to conduct a sensitivity and uncertainty analysis or develop an independent cost estimate for all the construction projects they initiate every year, especially for low-cost projects  Accordingly, we did not recommend that DOD fully apply all 12 steps to each construction project, but rather that it fully incorporate the 12 steps into the Unified Facilities Criteria so that, at least, each step is considered for each project  DOD could then choose to establish thresholds—based on, for example, the dollar values of the projects—to determine for which the 12 steps should be fully applied or other circumstances in which some steps might not be applicable  We believe DOD’s planned revisions will meet the general intent of our recommendation  We are sending copies of this report to the appropriate congressional committees; the Secretary of Defense, the Secretaries of the Army, Navy, and Air Force  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff has any questions about this report, please contact me at (202) 512-4523 or leporeb@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix VI  To examine the active component’s military construction (MILCON) obligations and expended balances, we reviewed MILCON appropriations found in appropriations acts, including accompanying explanatory statements and conference committee reports from fiscal year 2005 through 2016  Further, we analyzed the obligation and disbursement data of the active component‘s MILCON accounts, appropriation status reports, bid savings reports, as well as annual reports from the U S  Department of the Treasury  We also collected and compared project data from each of the active component on projects that had been initiated and completed during fiscal year 2010 through fiscal year 2016  Specifically, we compared the initial estimate as shown on the Form 1391—the form DOD uses to submit requirements and justifications in support of its funding requests to Congress—with the contract award amount and analyzed any differences between the two  To examine the amount of MILCON reprogramming during fiscal years 2010 and 2016 by the active component, we reviewed DOD’s requests to Congress to reprogram MILCON funds from one project to another  We calculated the total number of times such requests were made and the dollar amounts for fiscal year 2010 through fiscal year 2016  We selected this time frame because the reprogramming requests were readily available from DOD  In addition, we judgmentally selected three projects from this same time frame and reviewed accompanying Forms 1391 and the reprogramming requests associated with the projects to illustrate instances in which savings from one MILCON project funded another project  We collected and analyzed data for fiscal years 2005 through 2016 on the active component MILCON appropriations, obligations, and disbursements and we collected reprogramming data for fiscal years 2010 through 2016  We assessed the reliability of the data by interviewing knowledgeable officials about the data and the steps that they had taken to verify the data’s accuracy  We determined that the data were sufficiently reliable for our objectives  To determine the extent to which DOD’s MILCON cost estimates are reliable and DOD’s guidance for producing estimates fully incorporates all of the steps needed for developing reliable estimates, we compared the process for developing three selected projects with the characteristics and best practices for developing a reliable estimate identified in GAO’s Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs (the Cost Guide)  This guide is a compilation of cost estimating best practices drawn from across industry and federal government  We selected our projects from the universe of projects that we reasonably expected could have begun execution (i e , projects initiated during fiscal years 2012-2014); projects that were underway, but not substantially completed (i e , between 10- and 75- percent complete); and projects that constituted a significant financial investment (i e , projects with appropriations of $75 million or greater)  Ultimately, of 690 total projects we identified DOD-wide, 13 met these criteria and, from this sample, we selected the 3 projects included in this report: (1) the construction of a replacement elementary school at Camp Foster, Japan; (2) the construction of a Strategic Command operations building at Offutt Air Force Base, Nebraska; and (3) the construction of a Marine Corps command headquarters and cyberspace operations building in Fort Meade, Maryland  In conducting the assessments for these three selected projects, we examined the processes used to develop both the Form 1391 estimate (i e the form DOD uses to submit project-level requirements and justifications in support of its MILCON funding requests to Congress ) and the independent government estimate (i e , the estimate used to award the contract) to determine whether the project cost estimates had the characteristics of a high-quality and reliable cost estimate, as defined in the Cost Guide  These projects are not intended to be a projectable sample, but to illustrate how cost estimates are assessed against best practices  Although the Camp Foster project is not owned by any of the active component, the construction and planning of the project is being led by the Army Corps of Engineers in its capacity as a DOD construction agent and, as such, we decided to include it in our review  Additionally, we reviewed DOD’s Unified Facilities Criteria and the active component’s respective guidance related to MILCON cost estimating and compared them with the steps needed for developing reliable estimates identified in the Cost Guide  We also interviewed military project cost estimators and active component construction agents to discuss the requirements and guidance they follow in preparing, documenting, and reviewing project cost estimates  Table 9 details the documents we reviewed for our cost estimating assessments  We conducted this performance audit from January 2016 to March 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In this appendix we provide the supporting details on the active component’s unobligated and unexpended balances of military construction (MILCON) appropriations for fiscal years 2005 through 2016  We include details on unobligated and unexpended balances by appropriation year and include individual tables for each military department of the active component  Overall, the active component had high obligation and expenditure rates associated with MILCON appropriations that have expired or been canceled  The Army, the Air Force, and the Navy consistently expended over 90 percent of amounts appropriated in fiscal years 2005 through 2011  This appendix also provides supporting details on the active component’s execution of MILCON appropriations for fiscal years 2010 through 2016  Using Department of Defense (DOD) data, we identified two groups of MILCON projects: congressionally directed and other  “Congressionally directed” projects are those MILCON projects specifically identified in an appropriation act, explanatory statement, and/or committee reports accompanying the appropriation act for a specific fiscal year  “Other” projects refer to congressionally directed MILCON projects identified in an appropriation act, explanatory statement, and/or conference committee reports in a previous fiscal year  Overall, the active component obligated about 89 percent of its fiscal years 2010 through 2012 appropriations for congressionally directed projects whose appropriations expired on September 30, 2017  Tables 10 through 12 present detailed information on unexpended and unobligated balances for each military department of the active component’s MILCON appropriation for fiscal years 2005 through 2016, as reported by DOD as of September 30, 2016  Table 10 shows that for fiscal years 2005 through 2012, the Army expended almost all of its MILCON appropriations  Specifically, with the exception of fiscal year 2012, the Army expended at least 90 percent of its appropriations received each fiscal year for 2005 through 2011  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Table 11 shows that, for fiscal years 2005 through 2013, the Air Force expended almost all of its MILCON appropriations  Specifically, the Air Force expended at least 95 percent of its appropriations received each year for fiscal years 2005 through 2011 and also in fiscal year 2013  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Table 12 shows that for fiscal years 2005 through 2012, the Navy expended almost all of its MILCON appropriations  Specifically, the Navy expended at least 90 percent of its appropriations received each fiscal year for 2005 through 2011  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Tables 13 through 15 provide detailed information on budget execution for each active duty military department’s MILCON appropriation for “congressionally directed” and “other” MILCON projects for fiscal years 2010 through 2016, as reported by DOD as of September 30, 2016  Table13 shows the obligations made by the Army for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using data in the table, we found that about 97 2 percent of obligations were for congressionally directed projects and 2 8 percent were for other projects, as discussed above  In fiscal year 2011, about 94 percent of obligations were for congressionally directed projects and 4 2 percent were for other projects; and in fiscal year 2012, about 86 5 percent of obligations were for congressionally directed projects and 7 2 percent were for other projects  Table 14 shows the obligations made by the Air Force for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using the data listed in the table, we found that 90 5 percent of obligations were for congressionally directed projects and 7 3 percent were for other projects, as discussed above  In fiscal year 2011, about 84 3 percent of obligations were for congressionally directed projects and 12 9 percent were for other projects; and in fiscal year 2012, about 87 5 percent of obligations were for congressionally directed projects and 9 0 percent were for other projects  Table 15 shows the obligations made by the Navy for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using data in the table, we found that 84 7 percent of obligations were for congressionally directed projects and 15 0 percent were for other projects, as discussed above  In fiscal year 2011, about 87 7 percent of obligations were for congressionally directed projects and 11 8 percent were for other projects; and in fiscal year 2012, about 85 5 percent of obligations were for congressionally directed projects and 13 4 percent for other projects  This appendix provides information on our analysis of DOD’s estimated initial costs and contract award amounts of projects that had been initiated and completed during fiscal year 2010 through fiscal year 2016 by the active component  An official from the Office of the Assistant Secretary of Defense for Energy, Installations, and Environment told us that, to determine whether initial cost estimates were over- or underestimated, a comparison between initial Form 1391 estimates and contract award amounts would be a valid approach since contract award amounts are, in general, estimates of the same requirements identified on a Form 1391  The official also noted that supervision, inspection, overhead, and contingency costs included on a Form 1391 are not included in contract award amounts, which could create differences between the Form 1391 cost estimates and contract award prices  Because of this, we excluded the supervision, inspection, overhead, and contingency costs from the Form 1391 estimates in the table below to eliminate those differences  Form 1391 cost estimates may also vary from contract award amounts for reasons such as changes in project size or scope, changes in project characteristics, unexpectedly high or low contractor bids, or differences in expected building material costs, among other things  A negative percent change from the Form 1391 estimate to the contract award amount indicates the estimated project cost was overestimated and a positive percent change indicates the project was underestimated  We did not determine the precise reasons for any differences between estimated costs and contract award amounts  Table 16 lists information on 414 completed projects funded with military construction (MILCON) appropriations during fiscal year 2010 through fiscal year 2016 sorted by largest percentage overestimated to largest percentage underestimated  The military departments of the active component have gone beyond the Unified Facilities Criteria and developed their own guidance for military construction (MILCON) that more closely aligns with the 12 steps needed for developing high-quality, reliable estimates  Table 17 describes the guidance developed by the military departments to align with those steps  In addition to the contact named above, Maria Storts, Assistant Director; Bonita Anderson; Shawn Arbogast; Ronald Bergman; Brian Bothwell; Robert Brown; Farrah Graham; Mae Jones; Jennifer Leotta; Amie Lesser; Felicia Lopez; Carol Petersen; Vikki Porter; Steve Pruitt; and Karen Richey made key contributions to this report 

ground_truth: Congress has broad authority to impose requirements upon the federal procurement process, that is, the process whereby agencies obtain goods and services from the private sector. One way in which Congress has exercised this authority is by adopting measures to promote contracting and subcontracting between "small businesses" and federal agencies. These measures, among other things, declare a congressional policy of ensuring that a "fair proportion" of federal contract and subcontract dollars is awarded to small businesses; establish government-wide and agency-specific goals for the percentage of federal contract and subcontract dollars awarded to small businesses; establish an annual Small Business Goaling Report to measure progress in meeting these goals; generally require federal agencies, under specified circumstances, to reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses; authorize federal agencies, under specified circumstances, to set aside contracts that have an anticipated value greater than the simplified acquisition threshold exclusively for small businesses; authorize federal agencies to make sole source awards to small businesses when the award could not otherwise be made (e.g., only a single source is available, under urgent and compelling circumstances); authorize federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e.g., 8(a) small businesses, HUBZone small businesses, women-owned small businesses (WOSBs) and service-disabled veteran-owned small businesses (SDVOSBs)); and task the Small Business Administration (SBA) and other federal procurement officers with reviewing and restructuring proposed procurements to maximize opportunities for small business participation. Small business contracting programs generally have strong bipartisan support. However, that does not mean that these programs face no opposition, or that issues have not been raised concerning the impact and operations of specific programs. For example, small business advocates note that implementing regulations in the Federal Acquisition Regulation (FAR) narrow the reach (and impact) of some small business contracting preferences by excluding specific types of contracts, such as those listed in the Federal Supply Schedules, from FAR requirements pertaining to small business contracting. Advocates want the federal government to enact policies that reduce or eliminate such exclusions. Critics have questioned some of these programs' effectiveness, in terms of both promoting small business opportunities to win federal contracts and promoting a more diversified, robust economy. Many observers judge the relative success or failure of federal efforts to enhance small business contracting opportunities by whether federal government and individual federal agencies meet the predetermined procurement goals in the annual Small Business Goaling Report. In recent years, the federal government has generally succeeded in meeting the government-wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small businesses, 5% to small disadvantaged businesses (SDBs), and 3% to SDVOSBs. It has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone small businesses. The Small Business Goaling Report is the most convenient measure available to compare federal small business contracting performance over time, but it has limitations. For example, the SBA excludes some contracts from the report in its determination of what is "small business eligible" and some federal procurement activities are not included because they are not recorded in the Federal Procurement Data System—Next Generation. It also does not evaluate the effect these contracts have on small businesses, industry competitiveness, or the overall economy.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: During World War II and then again after the outbreak of fighting in Korea, Congress found that the existence of thousands of small business concerns was being threatened by war-induced shortages of materials coupled with an inability to obtain defense contracts or financial assistance  Concerned that many small businesses might fail without government assistance, in 1953, Congress passed and President Dwight Eisenhower signed into law the Small Business Act (P L  83-163), which authorized the Small Business Administration (SBA)  The act specifies that it is the declared policy of Congress to promote the interests of small businesses to "preserve free competitive enterprise " Congress specified that one of the ways to preserve free competitive enterprise was to insure that small businesses received a "fair proportion" of federal contracts and subcontracts: It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation  Congress indicated that its intent in supporting small businesses was not to "favor small business at the expense of its larger competitors  Our only purpose in supporting the creation and effective operation of the SBA is to equalize the scales when necessary to guarantee the continued vigor of our competitive free enterprise system " More recently, a House committee report indicated that the primary rationale for small business contracting programs is the positive economic benefits they provide, as well as assisting small businesses overcome the complexities of the system  The economic benefits of these programs can be seen in two primary areas—market competition and local economic development  First, [these] programs … are designed to increase and diversify small contractors with the intent of expanding the federal supplier base  This leads to increased competition, which results in higher quality, greater product variety, and lower prices  Second, these contracting initiatives lower barriers to entry in a wide range of markets for small businesses  This provides greater market access for small firms' goods and services  From an economic perspective, such access is critical to generating positive macroeconomic benefits, including higher job creation, wage growth, and greater income distribution  Over the years, Congress has approved legislation to support small business in various ways  For example, the SBA administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion  In recent years, congressional interest in these programs has increased, primarily because assisting small businesses is viewed as a means to stimulate economic activity and create jobs  This report describes the various federal programs, requirements, procurement officers, and procurement offices involved in promoting federal contracting and subcontracting with small businesses, small disadvantaged businesses (SDBs), SDBs participating the SBA's "8(a) Program," Historically Underutilized Business Zone (HUBZone) small businesses, women-owned small businesses (WOSBs), and service-disabled veteran-owned small businesses (SDVOSBs)  The SBA administers many, but not all, of these programs  It examines the following federal requirements and authorities in promoting contracting and subcontracting with small businesses: 1  The requirement that federal agencies generally reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000) but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses unless the contracting officer is unable to obtain offers from two or more small businesses that are competitive with market prices and the quality and delivery of the goods or services being purchased  2  The establishment of small business procurement goals, both government-wide and agency specific, to promote the awarding of contracts to small businesses  3  The requirement that federal agencies generally set aside contracts that have an anticipated value exceeding the simplified acquisition threshold exclusively for small businesses when there is a reasonable expectation that offers will be obtained from at least two responsible small businesses offering the products of different small businesses (Rule of Two) and the award will be made at a fair market price  4  The authority provided federal agencies to make sole source awards to small businesses when the award could not otherwise be made (e g , only a single source is available, under urgent and compelling circumstances)  5  The authority provided federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e g , 8(a) small businesses, HUBZone small businesses, WOSBs, and SDVOSBs)  It discusses the SBA's oversight and responsibilities concerning the small business goaling program, small business mentor-protégé programs, the 7(j) management and training program, and the surety bond guaranty program  It also discusses the role of the Office of Small and Disadvantaged Business Utilization (OSDBU), located in each federal agency, in promoting contracting with small businesses, and examines the role and responsibilities of various federal procurement officers, including procurement center representatives, commercial market representatives, and business opportunity specialists, in promoting small business contracting opportunities  This report concludes with a brief discussion of the strong bipartisan support for small business contracting programs  However, that does not mean that these programs face no opposition, or that issues have not been raised concerning the impact and operations of specific programs  For example, small business advocates note that implementing regulations in the Federal Acquisition Regulation (FAR) narrow the reach (and impact) of some small business contracting preferences by excluding specific types of contracts, such as those listed in the Federal Supply Schedules, from FAR requirements pertaining to small business contracting  Advocates want the federal government to enact policies that reduce or eliminate exclusions that narrow the reach of small business contracting preferences  Critics have questioned some of these programs' effectiveness, in terms of promoting both small business opportunities to win federal contracts and a more diversified, robust economy  With a few exceptions, businesses interested in bidding on a federal contract must obtain a Dun & Bradstreet Data Universal Numbering System (DUNS) number (i e , a unique nine-digit identification number) for each of the business's physical locations, and register with the federal government's System for Award Management (SAM)  SAM is used by government agencies for several purposes, including to find contractors  Businesses also must match their products and services to a North American Industry Classification System (NAICS) code  Businesses generally have a primary NAICS code, and may have multiple NAICS codes if they sell multiple products and services  Businesses that identify themselves as a small business in SAM must (1) meet the Small Business Act's definition of a small business and (2) not exceed size standards established, and updated periodically, by the SBA  The Small Business Act defines a small business as one that is organized for profit; has a place of business in the United States; operates primarily within the United States or makes a significant contribution to the U S  economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; and is not dominant in its field on a national basis  The business may be a sole proprietorship, partnership, corporation, or any other legal form  The Small Business Act authorizes the SBA to establish size standards to ensure that only small businesses are provided SBA assistance  The SBA currently uses two types of size standards to determine SBA program eligibility: industry-specific size standards and alternative size standards , for some lending and venture capital investment programs based on the applicant's maximum tangible net worth and average net income after federal taxes  The SBA's industry-specific size standards are used to determine eligibility for federal small business contracting purposes  The SBA determines if a business is small by comparing that business's economic characteristics (typically number of employees or average annual receipts) to size standards listed in the SBA's Table of Small Business Size Standards   The table has size standards for 1,036 industrial classifications in the North American Industrial Classification System  Businesses that exceed the applicable size standard for their primary industry do not meet the requirement of being small  The SBA's size standards are designed to (1) encourage competition within each industry and (2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a national basis  The size standards are derived through an assessment of four economic factors: (1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers, (3) the four-firm concentration ratio (the cumulative share of total industry receipts of that industry's four biggest firms) as a measure of industry competition, and (4) the size distribution of firms  The SBA also considers the ability of small businesses to compete for federal contracting opportunities and, when necessary, several secondary factors "as they are relevant to the industries and the interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of size standard revisions on small businesses " Historically, the SBA has used the number of employees to determine if manufacturing and mining companies are small (ranging from fewer than 50 employees for some industries to fewer than 1,500 employees for others) and average annual receipts for most other industries (ranging from no more than $1 million for some industries to no more than $40 million for others)  To make it easier to determine if an offeror meets the SBA's definition of a small business, prior to soliciting bids, federal agencies are required to classify a product or service being acquired in only one (NAICS code) industry, "whose definition best describes the principal nature of the product or service being acquired even though for other purposes it could be classified in more than one " When acquiring a product or service that could be classified in two or more industries with different size standards, contracting officers must "apply the size standard for the industry accounting for the greatest percentage of the contract price " If a solicitation calls for more than one item and allows offers to be submitted on any or all of the items, "an offeror must meet the size standard for each item it offers to furnish " If a solicitation calling for more than one item requires offers on all or none of the items, "an offeror may qualify as a small business by meeting the size standard for the item accounting for the greatest percentage of the total contract price " With several notable exceptions (e g , HUBZone small businesses, SBA 8(a) program participants, and veteran-owned small businesses [VOSBs] and SDVOSBs seeking contracts with the Department of Veterans Affairs), businesses generally self-certify their status as small when they register their business in the SAM database  The contracting officer is required to accept an offeror's representation in a specific bid or proposal that it is a small business unless "(1) another offeror or interested party challenges the concern's small business representation or (2) the contracting officer has a reason to question the representation " If an offeror's small business status is challenged, the contracting officer is generally not allowed to award the contract until the SBA has made a size determination or 15 business days after the SBA receives the protest, whichever occurs first  The SBA's Office of Government Contracting Area Office (Area Office) serving the area in which the headquarters of the offeror is located initially reviews the protest  The Area Office is required, by regulation, to determine the offeror's size status within 15 business days after receipt of the protest, or "within any extension of time granted by the contracting officer " If the SBA does not make a determination within the required time, the contracting officer "may award the contract after determining in writing that there is an immediate need to award the contract and that waiting until SBA makes its determination will be disadvantageous to the government " An appeal of the Area Office's decision may be filed with the SBA's Office of Hearings and Appeals (OHA)   If the OHA accepts the appeal for consideration and finds the protested concern to be ineligible for award, the contracting officer must "terminate the contract unless termination is not in the best interests of the government, in keeping with the circumstances described in the [aforementioned] written determination  However, the contracting officer shall not exercise any options or award further task or delivery orders " Furthermore, a concern cannot become eligible for a specific award after the SBA has determined that it is not a small business, even if the concern takes action to meet the definition of a small business  The SBA or the federal agency may suspend or debar a firm from future government contracts for misrepresenting its size status  In addition, individuals that knowingly misrepresent a business's size to secure a federal contract can be subject to civil and criminal penalties  15 U S C  §644(e)(1) states, "To the maximum extent practicable, procurement strategies used by a Federal department or agency having contracting authority shall facilitate the maximum participation of small business concerns as prime contractors, subcontractors, and suppliers " To accomplish this goal, FAR regulations (FAR §19 202-1) require contracting officers, when applicable, to take the following actions prior to awarding a federal contract: 1  "Divide proposed acquisitions of supplies and services (except construction) into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement " 2  "Plan acquisitions such that, if practicable, more than one small business concern may perform the work, if the work exceeds the amount for which a surety may be guaranteed by the SBA against loss under 15 U S C  §694b [generally $6 5 million, or $10 million if the contracting officer certifies that the higher amount is necessary] " 3  "Ensure that delivery schedules are established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the Government " 4  "Encourage prime contractors to subcontract with small business concerns [primarily through the agency's role in negotiating an acceptable small business subcontracting plan with prime contractors on contracts anticipated to exceed $700,000 or $1 5 million for construction contracts] " 5  "Provide a copy of the proposed acquisition package to the SBA procurement center representative [PCR, duties are described later]" for his or her review, comment and recommendation, or, if a PCR is not assigned, to the SBA Area Office serving the area in which the procuring activity is located "at least 30 days prior to the issuance of the solicitation if (i) The proposed acquisition is for supplies or services currently being provided by a small business and the proposed acquisition is of a quantity or estimated dollar value, the magnitude of which makes it unlikely that small businesses can compete for the prime contract; (ii) The proposed acquisition is for construction and seeks to package or consolidate discrete construction projects and the magnitude of this consolidation makes it unlikely that small businesses can compete for the prime contract; or (iii) The proposed acquisition is for a consolidated or bundled requirement … The contracting officer shall provide all information relative to the justification for the consolidation or bundling, including the acquisition plan or strategy and if the acquisition involves substantial bundling, the information identified in [FAR] 7 107-4  The contracting officer shall also provide the same information to the agency Office of Small and Disadvantaged Business Utilization [duties are described later] " 6  "Provide a statement explaining why the (i) Proposed acquisition cannot be divided into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement; (ii) Delivery schedules cannot be established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the government; (iii) Proposed acquisition cannot be structured so as to make it likely that small businesses can compete for the prime contract; (iv) Consolidated construction project cannot be acquired as separate discrete projects; or (v) Consolidation or bundling is necessary and justified " 7  "Process the 30-day notification concurrently with other processing steps required prior to the issuance of the solicitation " 8  "If the contracting officer rejects the SBA procurement center representative's recommendation … document the basis for the rejection and notify the SBA procurement center representative [who (as described later) may appeal the rejection to the chief of the contracting office and, ultimately, to the agency head] " The SBA may assign one or more procurement center representatives (PCRs) to any contracting activity or contract administration office to implement the SBA's policies and programs  The SBA currently has 49 PCRs located in the SBA's six Area Offices  PCRs are required to comply with the contracting agency's directives governing the conduct of contracting personnel and the release of contract information  PCR duties include the following: Review proposed acquisitions to recommend "the setting aside of selected acquisitions not unilaterally set aside by the contracting officer;" new qualified small business sources; and the feasibility of breaking out components of the contract for competitive acquisitions  Review proposed acquisition packages  If the PCR (or, if a PCR is not assigned, the SBA Area Office serving the area in which the procuring activity is located) "believes that the acquisition, as proposed, makes it unlikely that small businesses can compete for the prime contract," the PCR can recommend any alternate contracting method that he or she "reasonably believes will increase small business prime contracting opportunities " The recommendation must be made to the contracting officer within 15 days after the package's receipt  Recommend small businesses "for inclusion on a list of concerns to be solicited in a specific acquisition " Appeal to the contracting office's chief "any contracting officer's determination not to solicit a concern recommended by the SBA for a particular acquisition, when not doing so results in no small business being solicited " This appeal may be further appealed to the agency head  Conduct periodic reviews of the agency's contracting activity, including the agency's assessment of any required small business subcontracting plan, "to ascertain whether the agency is complying with the small business policies in this regulation " Sponsor and participate in conferences and training "designed to increase small business participation in the contracting activities of the office " Every federal agency (except the SBA) that has procurement powers is required to have an OSDBU, whose director, by statute, reports directly to the head of the agency and has supervisory authority over agency staff performing certain procurement functions  The OSDBU's primary responsibility is to ensure that small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone small businesses are treated fairly and that they have an opportunity to compete and be selected for a fair amount of the agency's contract dollars  Among its statutory responsibilities are the following: "Identify proposed solicitations that involve significant bundling of contract requirements, and work with the agency acquisition officials and the Administration to revise the procurement strategies for such proposed solicitations where appropriate to increase the probability of participation by small businesses as prime contractors, or to facilitate small business participation as subcontractors and suppliers, if a solicitation for a bundled contract is to be issued " Assist small businesses "to obtain payments, required late payment interest penalties, or information regarding payments due to the concern from an executive agency or a contractor " Assign "a small business technical adviser to each office to which the SBA has assigned" a PCR  The small business technical advisor "shall be a full-time employee of the procuring activity, well qualified, technically trained and familiar with the supplies or services purchased at the activity; and whose principal duty shall be to assist" the PCR  Provide the agency's "Chief Acquisition Officer and senior procurement executive … with advice and comments on acquisition strategies, market research, and justifications [related to limitations on the consolidation of contracts as a means to provide small businesses appropriate opportunities to participate as prime contractors and subcontractors] " Provide training to small businesses and contract specialists, provided that the training does not interfere with the director carrying out his or her other responsibilities  Ensure that a small business that notifies the PCR prior to a contract's award that "a solicitation, request for proposal, or request for quotation unduly restricts [its] ability … to compete for the award … is aware of other resources and processes available to address unduly restrictive provisions … even if such resources and processes are provided by such agency, the Administration, the Comptroller General, or a Department of Defense (DOD) procurement technical assistance program [described below] " Review all subcontracting plans "to ensure that the plan provides maximum practicable opportunity for small business concerns to participate in the performance of the contract to which the plan applies " In accordance with P L  109-163 , the National Defense Authorization Act of 2006, the DOD renamed its OSDBU the Office of Small Business Programs (OSBP)  The act also redesignated the Army, Navy, and Air Force's OSDBUs to OSBPs of the Department of the Army, Navy, and Air Force, respectively  At the agency level, procurement department heads (sometimes titled senior procurement executive ) are responsible for implementing small business programs at their agencies, including achieving program goals  In general, procurement department staff who work on small business issues (often titled small business specialists ) coordinate with OSDBU directors on their agencies' small business programs  Chief acquisition officers provide a focal point for acquisition in agency operations  Their key functions include "monitoring and evaluating agency acquisition activities, increasing the use of full and open competition, increasing performance-based contracting, making acquisition decisions, managing agency acquisition policy, acquisition career management, acquisition resources planning, and conducting acquisition assessments " The SBA must assign a breakout procurement center representative (breakout PCR) to each major procurement center  A major procurement center is, in the opinion of the SBA Administrator, a procurement center that purchases substantial dollar amounts of other than commercial items, and has the potential to incur significant savings as a result of the placement of a breakout PCR  The breakout PCR advocates for (1) the appropriate use of full and open competition, and (2) the breakout of items, "when appropriate and while maintaining the integrity of the system in which such items are used " The breakout PCR is in addition to the PCR  When a breakout PCR is assigned, the SBA must assign at least two co-located small business technical advisors  SBA breakout PCRs and technical advisors must comply with the contracting agency's directives governing the conduct of contracting personnel and the release of contract information  The SBA must obtain security clearances for its breakout PCRs and technical advisors as required by the contracting agency  The SBA has four commercial market r epresentatives who, among other duties, help prime contractors find small businesses that are capable of performing subcontracts; provide counseling on the contractor's responsibility to maximize subcontracting opportunities for small businesses; and conduct periodic reviews of contractors awarded contracts requiring an acceptable subcontracting plan that provides small businesses "the maximum practicable opportunity to participate in contract performance consistent with its efficient performance" (generally any solicitation to perform a contract that is expected to exceed $700,000 ($1 5 million for construction) and that has subcontracting possibilities)  The SBA's business opportunity s pecialists provide, among other duties, guidance, counseling, and referrals for assistance with technical, management, financial, or other matters intended to improve the competitive viability of SBA 8(a) program participants  They provide 8(a) program participants comprehensive assessments of the firm's strengths and weaknesses; monitor and document their compliance with 8(a) program requirements; advise them on compliance with contracting regulations after the award of a 8(a) program contract or subcontract; review and monitor their compliance with mentor-protégé agreements; represent the interests of the SBA Administrator and small businesses in the award, modification, and administration of 8(a) program contracts and subcontracts; and report fraud or abuse involving the 8(a) program  The Small Business Procurement Advisory Council (SBPAC), whose members are composed of the SBA Administrator (or his or her designee), the director of the Minority Business Development Agency, and the head of each OSDBU in each federal agency having procurement powers, has the following statutory duties: 1  Develop positions on proposed procurement regulations affecting the small business community  2  Submit comments reflecting such positions to appropriate regulatory authorities  3  Conduct reviews of each OSDBU to determine the office's compliance with its statutory requirements  4  Identify best practices for maximizing small business utilization in federal contracting that may be implemented by federal agencies having procurement powers  5  Submit annually, to the House Committee on Small Business and Senate Committee on Small Business and Entrepreneurship, a report describing (1) the comments submitted to appropriate regulatory authorities, including any outcomes related to the comments; (2) the results of its review of each OSDBU ; and (3) best practices identified for maximizing small business contracting   The Defense Logistic Agency's Procurement Technical Assistance Program (PTAC) helps "businesses pursue and perform under contracts with the Department of Defense, other federal agencies, state and local governments and with government prime contractors  Most of the assistance the PTACs provide is free  PTAC support to businesses includes registration in systems such as the System for Award Management (SAM), identification of contract opportunities, and help in understanding requirements and in preparing and submitting bids " The Competition in Contracting Act of 1984 generally requires "full and open competition" for government procurement contracts  However, various provisions of the Small Business Act authorize or, in some cases, require federal agencies to provide for other than "full and open competition through the use of competitive procedures" when contracting with small businesses  For example, as mentioned previously, federal agencies are generally required to reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses unless the contracting officer is unable to obtain offers from two or more small businesses that are competitive with market prices and the quality and delivery of the goods or services being purchased  In addition, federal agencies are generally required to set aside contracts that have an anticipated value exceeding the simplified acquisition threshold exclusively for small businesses when there is a reasonable expectation by the contracting officer that offers will be obtained by at least two responsible small businesses offering the products of different small businesses (Rule of Two) and the award will be made at a fair market price; may similarly set aside contracts exceeding the simplified acquisition threshold for competition reserved for specific types of small businesses (e g , 8(a) small businesses, HUBZone small businesses, WOSBs and SDVOSBs); may enter into negotiations directly with particular types of small businesses (e g , a sole source award) when the award could not otherwise be made (e g , only a single source is available or under urgent and compelling circumstances); and are required to grant HUBZone small businesses a price evaluation preference of not more than 10% in open and unrestricted competitions  Several SBA programs assist small businesses in obtaining and performing federal contracts and subcontracts  These include various prime contracting programs; subcontracting programs; and other assistance (e g , contracting technical training assistance and oversight of the federal small business goaling program and the Surety Bond Guarantee program)  Several contracting programs allow small businesses to compete only with similar firms for government contracts or receive sole source awards in circumstances in which such awards could not be made to other firms  These programs provide small businesses an opportunity to win government contracts without having to compete against larger and more experienced companies  The 8(a) Minority Small Business and Capital Ownership Development Program (named for the section of the Small Business Act from which it derives its authority) provides business development assistance to businesses owned and controlled by persons who are socially and economically disadvantaged  African Americans, Hispanics, Native Americans (including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans, and Subcontinent Asian Americans are presumed to be socially and economically disadvantaged  Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis  To be considered economically disadvantaged, an individual's net worth, excluding ownership interest in the 8(a) firm and equity in his or her primary personal residence, must be less than $250,000 at the time of application to the 8(a) Program, and less than $750,000 thereafter  Federal agencies are authorized to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to 8(a) firms  The SBA is authorized to delegate the function of executing contracts to the procuring agencies and often does so  Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded through either a set-aside or on a sole source basis, with the contract amount generally determining the acquisition method used  When the contract's anticipated total value, including any options, is less than $4 million ($7 million for manufacturing contracts), the contract is normally awarded without competition (as a sole source award)  In contrast, when the contract's anticipated value exceeds these thresholds, the contract generally must be awarded via a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price  The SBA also provides technical assistance and training to 8(a) firms  Firms may participate in the 8(a) Program for no more than nine years  In FY2017, the federal government awarded $27 2 billion to 8(a) firms  $16 4 billion was awarded with an 8(a) preference ($8 billion through an 8(a) set-aside and $8 4 billion through an 8(a) sole source award); $4 8 billion was awarded to an 8(a) firm in open competition with other firms; and $6 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, women-owned small businesses, and service-disabled veteran-owned small businesses)  This program assists small businesses located in Historically Underutilized Business Zones (HUBZones) through set-asides, sole source awards (so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million, or $7 million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full and open competitions  The HUBZone program targets assistance to small businesses located in areas with low income, high poverty, or high unemployment  To be certified as a HUBZone small business, at least 35% of the small business's employees must generally reside in a HUBZone  In FY2017, the federal government awarded $7 53 billion to HUBZone-certified small businesses  $1 90 billion was awarded with a HUBZone preference ($1 49 billion through a HUBZone set-aside, $65 3 million through a HUBZone sole source award, and $346 9 million through a HUBZone price-evaluation preference); $1 53 billion was awarded to HUBZone-certified small businesses in open competition with other firms; and $4 10 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for 8(a), women-owned, and service-disabled veteran-owned small businesses)  This program allows agencies to set aside contracts for SDVOSBs  Also, federal agencies may award sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6 5 million for manufacturing contracts)  For purposes of this program, veterans and service-related disabilities are defined as they are under the statutes governing veterans affairs  In FY2017, the federal government awarded $18 2 billion to SDVOSBs  $6 8 billion was awarded through a SDVOSB set-aside award; $4 3 billion was awarded to a SDVOSB in open competition with other firms; and $7 1 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, 8(a) firms, and WOSBs)  Under this program, contracts may be set aside for economically disadvantaged WOSBs in industries in which women are underrepresented and substantially underrepresented  Federal agencies may award sole source contracts to WOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6 5 million for manufacturing contracts)  In FY2017, the federal government awarded $21 3 billion to WOSBs  $648 9 million was awarded with a WOSB preference ($580 5 million through a WOSB set-aside and $68 4 million through a WOSB sole source award); $7 0 billion was awarded to a WOSB in open competition with other firms; and $13 7 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, 8(a) firms, and SDVOSBs)  Federal contracting officers are required to provide the SBA's PCR (or, if a PCR is not assigned, the SBA Area Office serving the procuring activity area) a "reasonable period of time" to review any solicitation requiring submission of a small business subcontracting plan and to submit advisory findings before the solicitation is issued  The PCR's advisory comments regarding the small business subcontracting plan's acceptability must be submitted, in writing, to the appropriate contracting officer within five working days after the plan's receipt  As mentioned previously, the SBA's commercial market representatives help prime contractors find small businesses to perform subcontracts; counsel contractors on their responsibility to maximize subcontracting opportunities for small businesses; and conduct periodic reviews, often in concert with a SBA PCR, of contractors awarded contracts that require an acceptable small business subcontracting plan  Federal agencies may also set aside contracts or make sole source awards to small businesses not participating in any other program under certain conditions  The Department of Transportation's (DOT's) Disadvantaged Business Enterprise (DBE) Program originally began in 1980 as a minority/women's business enterprise program "established by regulation under the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination statutes that apply to DOT financial assistance programs " Congress has reauthorized the DBE program several times since its inception; most recently in P L  114-94 , the Fixing America's Surface Transportation Act (FAST-Act)  The FAST-Act provides, that, except to the extent the Secretary of Transportation determines otherwise, not less than 10% of the amounts made available for any program under Titles I (federal-aid highways), II (innovative project finance), III (public transportation) and VI (innovation) of the act and 23 U S  Code 403 (highway safety research and development), shall be expended with DBEs  DOT also has a separate DBE program for airport concessions  A DBE is a for-profit small business owned and controlled by socially and economically disadvantaged individuals  Eligibility for the DBE program differs somewhat from the 8(a) program  For example, under the DBE program, women are presumed to be socially and economically disadvantaged individuals  Also, to be regarded as economically disadvantaged, an individual must have a personal net worth (excluding ownership interest in the firm and equity in his or her primary personal residence) that does not exceed $1 32 million  The DBE must also meet SBA size criteria and have average annual gross receipts not exceeding $23 98 million  Size limits for the airport concessions DBE program are higher  The DBE program's eight objectives are to 1  ensure nondiscrimination in the award and administration of DOT-assisted contracts in the department's highway, transit, and airport financial assistance programs; 2  create a level playing field on which DBEs can compete fairly for DOT-assisted contracts; 3  ensure that the department's DBE program is narrowly tailored in accordance with applicable law; 4  ensure that only firms that fully meet the program's eligibility standards are permitted to participate as DBEs; 5  help remove DBE-participation barriers in DOT-assisted contracts; 6  promote the use of DBEs in all types of federally-assisted contracts and procurement activities conducted by recipients; 7  assist the development of firms that can compete successfully in the marketplace outside the DBE program; and 8  provide appropriate flexibility to recipients of federal financial assistance in establishing and providing opportunities for DBEs  Other federal programs promote subcontracting with small disadvantaged businesses (SDBs)  SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally owned and controlled by socially or economically disadvantaged individuals or groups  Individuals owning and controlling non-8(a) SDBs may have net worth of up to $750,000 (excluding ownership interests in the SDB firm and equity in their primary personal residence)  Otherwise, however, SDBs must generally satisfy the same eligibility requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the same way that 8(a) firms do  Federal agencies must negotiate "subcontracting plans" with the apparently successful bidder or offeror on eligible prime contracts prior to awarding the contract  Subcontracting plans set goals for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe efforts that will be made to ensure that SDBs "have an equitable opportunity to compete for subcontracts " Federal agencies may also consider the extent of subcontracting with SDBs in determining to whom to award a contract or give contractors "monetary incentives" to subcontract with SDBs  As of February 11, 2019, the SBA's Dynamic Small Business Search database included 2,538 SBA-certified SDBs and 100,595 self-certified SDBs  The SBA's 7(j) Management and Technical Assistance program provides "a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including: (a) counseling and training in the areas of financing, management, accounting, bookkeeping, marketing, and operation of small business concerns; and (b) the identification and development of new business opportunities " Eligible individuals and businesses include "8(a) certified firms, SDBs, businesses operating in areas of high unemployment, or low income or firms owned by low income individuals " In FY2017, the 7(j) Management and Technical Assistance program assisted 4,100 small businesses  The SBA's Surety Bond Guarantee program aims to increase small businesses' access to federal, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels  The program guarantees individual contracts of up to $6 5 million and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  The SBA's guarantee ranges from not to exceed 80% to not to exceed 90% of the surety's loss if a default occurs  In FY2017, the SBA guaranteed 10,397 bid and final surety bonds with a total contract value of more than $6 3 billion  A surety bond is a three-party instrument between a surety (someone who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner  The agreement binds the contractor to comply with the terms and conditions of a contract  If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed  The surety bond reduces the risk associated with contracting  Surety bonds are meant to encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and may be at greater risk of failing to comply with the contract's terms and conditions  Surety bonds are important to small businesses interested in competing for federal contracts because the federal government requires prime contractors—prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States—to furnish a performance bond issued by a surety satisfactory to the contracting officer in an amount that the officer considers adequate to protect the government  Small business mentor-protégé programs typically seek to pair new businesses with more experienced businesses in mutually beneficial relationships  Protégés may receive financial, technical, or management assistance from mentors in obtaining and performing federal contracts or subcontracts, or serving as suppliers under such contracts or subcontracts  Mentors may receive credit toward subcontracting goals, reimbursement of certain expenses, or other incentives  The federal government currently has several mentor-protégé programs to assist small businesses in various ways  The 8(a) Mentor-Protégé Program is a government-wide program designed to assist small businesses "owned and controlled by socially and economically disadvantaged individuals" participating in the SBA's Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) program) in obtaining and performing federal contracts  For that purpose, mentors may (1) form joint ventures with protégés that are eligible to perform federal contracts set aside for small businesses; (2) make certain equity investments in protégé firms; (3) lend or subcontract to protégé firms; and (4) provide technical or management assistance to their protégés  The SBA's A ll S mall B usiness Mentor-Protégé Program is a government-wide mentor-protégé program for all small business concerns, consistent with the SBA's mentor-protégé program for participants in the SBA's 8(a) Business Development program  The Department of Defense (DOD) Mentor-Protégé Program , in contrast, is agency-specific  It assists various types of small businesses and other entities in obtaining and performing DOD subcontracts and serving as suppliers on DOD contracts  Mentors may (1) make advance or progress payments to their protégés that DOD reimburses; (2) award subcontracts to their protégés on a noncompetitive basis when they would not otherwise be able to do so; (3) lend money to or make investments in protégé firms; and (4) provide or arrange for other assistance  Other agencies also have agency-specific mentor-protégé programs to assist various types of small businesses or other entities in obtaining and performing subcontracts under agency prime contracts  The Department of Homeland Security (DHS), for example, has a mentor-protégé program wherein mentors may provide protégés with rent-free use of facilities or equipment, temporary personnel for training, property, loans, or other assistance  Because these programs are not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting authorities (e g , authorizing use of evaluation factors) or publicity to incentivize mentor participation  Currently, more than 1,200 mentor-protégé agreements are in place, even though there are issues with the accuracy and thoroughness of some federal agency records  Since 1978, federal agency heads have been required to establish federal procurement goals, in consultation with the SBA, "that realistically reflect the potential of small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals" to participate in federal procurement  Each agency is required, at the conclusion of each fiscal year, to report its progress in meeting the goals to the SBA  In 1988, Congress authorized the President annually to establish government-wide minimum participation goals for procurement contracts awarded to small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals  Congress required the government-wide minimum participation goal for small businesses to be "not less than 20% of the total value of all prime contract awards for each fiscal year" and "not less than 5% of the total value of all prime contract and subcontract awards for each fiscal year" for small businesses owned and controlled by socially and economically disadvantaged individuals  Each federal agency was also directed to "have an annual goal that presents, for that agency, the maximum practicable opportunity for small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals to participate in the performance of contracts let by such agency " The SBA was also required to report to the President annually on the attainment of the goals and to include the information in an annual report to Congress  The SBA negotiates the goals with each federal agency and establishes a small business eligible baseline for evaluating the agency's performance  The agency head is required to "make consistent efforts to annually expand participation by small business concerns from each industry category " If the SBA and the agency cannot agree on the goals, the agency may submit the case to the Office of Management and Budget (OMB) Office of Federal Procurement Policy (OFPP) for resolution  The small business eligible baseline excludes certain contracts that the SBA has determined do not realistically reflect the potential for small business participation in federal procurement (such as those awarded to mandatory and directed sources), contracts funded predominately from agency-generated sources (i e , non-appropriated funds), contracts not covered by the FAR, acquisitions on behalf of foreign governments, and contracts not reported in the Federal Procurement Data System – Next Generation, or FPDS-NG (such as government procurement card purchases and contracts valued less than $10,000)  These exclusions typically account for 18% to 20% of all federal prime contracts each year  The SBA then evaluates the agencies' performance against their negotiated goals annually, using FPDS-NG data, managed by the U S  General Services Administration (GSA), to generate the small business eligible baseline  This information is compiled into the official Small Business Goaling Report, which the SBA releases annually  Each agency that fails to achieve any proposed prime or subcontract goal is required to submit a justification to the SBA on why it failed to achieve a proposed or negotiated goal with a proposed plan of corrective action  Agencies can take credit in every category that is applicable to the recipient of the contract  For example, "when counting goaling achievements, a contract awarded to a service-disabled Veteran-Owned Woman-Owned Small Business would be counted toward the Small Business (SB) goal, the Service-Disabled Veteran-Owned Small Business (SDVOSB) goal and the Women-Owned Small Business (WOSB) goal  However, these category counts are not summed to triple the total count  The Sum of Parts Does Not Equal the Whole (italics in original) " Over the years, federal government-wide procurement goals have been established for small businesses generally ( P L  100-656 , the Business Opportunity Development Reform Act of 1988, and P L  105-135 , the HUBZone Act of 1997—Title VI of the Small Business Reauthorization Act of 1997); small businesses owned and controlled by socially and economically disadvantaged individuals ( P L  100-656 ); women ( P L  103-355 , the Federal Acquisition Streamlining Act of 1994); small businesses located within a HUBZone ( P L  105-135 ); and small businesses owned and controlled by a service-disabled veteran ( P L  106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999)  The current federal small business procurement goals are at least 23 0% of the total value of all small business eligible prime contract awards to small businesses for each fiscal year; 5 0% of the total value of all small business eligible prime contract awards and subcontract awards to small disadvantaged businesses (including participants in the SBA's 8(a) Program) for each fiscal year; 5 0% of the total value of all small business eligible prime contract awards and subcontract awards to women-owned small businesses; 3 0% of the total value of all small business eligible prime contract awards and subcontract awards to HUBZone small businesses; and 3 0% of the total value of all small business eligible prime contract awards and subcontract awards to service-disabled veteran-owned small businesses  There are no punitive consequences for not meeting these goals  However, the SBA's Small Business Goaling Report is distributed widely, receives media attention, and serves to heighten public awareness of the issue of small business contracting  For example, agency performance as reported in the SBA's Small Business Goaling Report is often cited by Members during their questioning of federal agency witnesses during congressional hearings  As shown in Table 1 , the FY2017 Small Business Goaling Report , using FPDS-NG data, indicates that federal agencies met the federal procurement goal for small businesses generally, small disadvantaged businesses, and service-disabled veteran-owned small businesses in FY2017  Table 1 also provides, for comparative purposes, the percentage of total reported federal contracts (without exclusions) awarded to those small businesses in FY2017  Before awarding a federal contract, the contracting officer must affirmatively determine that the business is responsible to perform the contract  If the contracting officer determines that an apparent successful small business offeror lacks certain elements of responsibility (e g , is unable to fulfill the requirements of a specific government procurement because it lacks capability, competency, capacity, credit, integrity, perseverance, tenacity, or limitations on subcontracting), the officer is required to refer the matter in writing to the SBA for review and a possible Certificate of Competency (COC), even if the next acceptable offer is also from a small business  The COC certifies in writing that the small business meets all required elements of responsibility for the purpose of receiving and performing a specific government contract  The "COC program empowers the SBA to certify to contracting officers as to all elements of responsibility of any small business concern to receive and perform a specific government contract  The COC program does not extend to questions concerning regulatory requirements imposed and enforced by other federal agencies " As mentioned previously, the SBA's commercial market representatives conduct periodic compliance reviews of contractors awarded contracts that require an acceptable small business subcontracting plan  In addition, once the contract is completed, federal agencies are required to pay the contractor on a timely basis and pay interest penalties for late payments  Under specified circumstances, federal agencies may also pay contractors before the contract's payment's due date  The periodic compliance review can take place on-site, at the contracting agency, or virtual  Materials that may be reviewed include the contractor's contract files, correspondence that is directly or indirectly related to the contract, IT systems, subcontracting methods, and procedures  Contractors are selected randomly for audit  The SBA may enter into agreements with other federal agencies to conduct these assessments  The compliance report includes compliant and non-compliant items found during the assessment of the contractor's subcontracting activities and a rating indicating the contractor's level of compliance or non-compliance, ranging from unsatisfactory to outstanding  If any deficiencies are found, the contractor is required to submit, within 30 days of the compliance review rating letter date, a corrective action plan (CAP)  The CAP is submitted to the SBA Area Office via email, or any method designated by the SBA  The commercial market representative conducts a follow-up compliance report within six months to a year of the date the SBA acknowledges receipt of the contractor's CAP to ensure that corrective actions have been taken to eliminate the deficiencies  The SBA keeps the federal agency that awarded the contract informed of the contractor's adherence to correcting the deficiencies  If the contractor refuses to provide or address all deficiencies in the CAP, a delinquent CAP letter is sent advising the contractor that it has 15 days from the letter's date to comply with federal regulations  If an acceptable CAP is not received in the allotted time frame the case is escalated to the SBA's subcontracting program manager who informs the SBA's Office of Government Contracting director and works with the SBA's Office of General Counsel and the federal agency that awarded the contract for resolution or to begin accessing liquidated damages  Once a contract is awarded, federal agencies are generally required to pay interest to prime contractors on any invoice payments the agency fails to make by the date(s) specified in the contract, or within 30 days of receipt of a proper invoice for the amount due if no date is specified in the contract  Similar requirements exist for prime contractors in paying subcontractors on construction contracts  These requirements are especially important for small businesses in the construction industry  Specifically, every construction contract awarded by a federal agency must contain clauses obligating the prime contractor to (1) pay the subcontractor for "satisfactory performance" under the subcontract within seven days of receiving payment from the agency and (2) pay interest on any amounts that are not paid within the proper time frame  The contract must also obligate the prime contractor to include similar payment and interest penalty terms in its subcontracts, as well as require its subcontractors to impose these terms on their subcontractors  This latter provision ensures that the payment and interest penalty requirements flow down to all tiers of construction subcontractors  In addition, required subcontracting plans must incorporate terms obligating the prime contractor to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for goods supplied or services completed under the contract, or if payment is made to the subcontractor more than 90 days past due  The prime contractor must include the reason for the reduction in payment or failure to pay a subcontractor within 90 days  If the contracting officer for a covered contract (a contract that requires an acceptable subcontracting plan) determines that a prime contractor has a history of unjustified, untimely payments to contractors, the contracting officer shall record the contractor's identity, describe the circumstances under which the contractor may be determined to have a history of unjustified, untimely payments to subcontractors, and include the contractor's identity in, and make publicly available through, the Federal Awardee Performance and Integrity Information System, or any successor  This information is used by federal agencies to "evaluate the business ethics and quality of prospective contractors competing for Federal contracts and to protect taxpayers from doing business with contractors that are not responsible sources " Federal agencies are permitted to make an accelerated payment up to seven days before the required payment date in a federal contract, or earlier if the agency deems it necessary on a case-by-case basis if, after receiving a proper invoice, it is in the best interest of the government, and any of the following is true: the invoice in under $2,500; the payment is to a small business; or the payment is related to an emergency, disaster, or military deployment  In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to establish an accelerated payment date for its small business prime contractors, with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract  The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an accelerated payment date for its prime contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract and the prime contractor agrees to make payments to the subcontractor "in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor " The small business contracting programs described in this report generally have strong bipartisan support  However, that does not mean that these programs face no opposition or that issues have not been raised concerning the impact or operations of specific programs  For example, small business advocates seek policies that reduce or eliminate exclusions that narrow the reach of small business contracting preferences, want the SBA to use the total value of all prime contract awards in the Small Business Goaling Report, and want the SBA to use a more discerning methodology for awarding performance grades to federal agencies in meeting its small business contracting goals  Critics have questioned some of these programs' effectiveness, in terms of both promoting small business opportunities to win federal contracts and a more diversified, robust economy  Many observers judge the relative success or failure of federal efforts to enhance small business contracting opportunities by whether the federal government and individual federal agencies meet the procurement goals in the annual Small Business Goaling Report  In recent years, the federal government has generally succeeded in meeting the government-wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small businesses generally, 5% to SDBs, and 3% to SDVOSBs  However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone small businesses  The Small Business Goaling Report is the most convenient measure available to compare federal small business contracting performance over time, but it has limitations  For example, the report does not include all federal contracts, because some are not deemed to be small business eligible and others are not recorded in the FPDS-NG  In addition, the report does not evaluate the effect these contracts have on small businesses, industry competitiveness, or the overall economy  As one group of researchers has argued, the entire goal-setting process … is geared to measuring the dollars and contracts awarded to small business, and pays little attention to the effect that access to government contracts has on small business starts, growth, and wealth generation  Results of the program are also hard to isolate, difficult to measure, and generally not judged against the next best or other alternative policies [emphasis in original]  Comprehensive studies examining the effect of small business contracting preferences on small business startups, growth, wealth generation, and industry competitiveness may prove useful for congressional oversight  In the meantime, although the Small Business Goaling Report has its limitations, it can help policymakers identify programs most in need of examination  For example, the SBA has announced that it is focusing additional efforts on promoting the HUBZone program to federal contracting officials, primarily due to the continuing difficulties federal agencies have had in meeting the 3% goal for HUBZone small businesses 


Report 2:  In addition, some military departments are also making improvements to their cost estimating processes, but these improvements have not been fully implemented yet  For example, the Air Force Civil Engineer Center is implementing a cost estimate improvement plan to include the training of nearly 700 airmen and has conducted a study that directly ties the 12 steps in the Cost Guide to the associated tasks to be completed by the Air Force cost estimator to meet each individual step  However, the actions contained in the cost improvement plan have not been fully implemented and still remain in the concept phase  Similarly, although the Army Corps of Engineers is investigating expanding the use the of cost and schedule risk analysis—which could align with the best practices in the Cost Guide—that the Army currently conducts for selected civil work construction projects to its high-cost military construction projects, the Army has not formally required the use of these tools  In appendix IV, we describe the guidance the military departments have developed beyond the Unified Facilities Criteria  The Cost Guide is designed to establish a consistent methodology that is based on best practices and that can be used across the federal government for developing, managing, and evaluating capital program cost estimates  Air Force and Army Corps of Engineers officials noted that there may be instances in which following all the 12 steps of the Cost Guide for every MILCON project would not be appropriate to the risk level of the project  For example, it may not be realistic or to the military departments’ benefit for the military departments to conduct a sensitivity and uncertainty analysis or develop an independent cost estimate for all the construction projects they initiate every year, especially for low-cost projects  We agree that it may not be suitable to fully apply all 12 of the cost estimating steps in the Cost Guide to all MILCON projects  However, incorporating the 12 steps into the Unified Facilities Criteria would establish consistency across DOD in the cost estimating process by ensuring that, for each MILCON project, each step in the Cost Guide would at least be considered  Furthermore, DOD could choose to establish thresholds—based on, for example, the dollar values of the projects—to guide the services in implementing the 12 steps for the most valuable projects  Skipping or not considering any step of the 12-step cost estimating process, especially for high-value projects such as those in our case studies, increases the risk that cost estimates may use improper assumptions, lack appropriate definition, or be otherwise unreliable  Without improving the Unified Facilities Criteria with respect to cost estimating processes, DOD and the services will not be positioned well to provide reliable cost estimates to DOD and congressional decision- makers  Each year DOD receives billions of dollars in MILCON appropriations to use for projects in the United States and overseas  The quality of project cost estimates are of great importance since those estimates are the basis for DOD’s requests for appropriations  While DOD’s policy is that MILCON cost estimates be prepared as accurately as possible in order to reflect the full cost of constructing DOD facilities, DOD’s Unified Facilities Criteria—the department’s primary construction criteria for developing cost estimates—does not fully incorporate all of the steps needed for producing reliable cost estimates  Until DOD incorporates the 12 steps of high-quality, reliable cost estimating into this department-wide construction criteria, DOD and congressional decision-makers may not have reliable estimates to inform their decisions regarding appropriations and the oversight of projects  We are making one recommendation to DOD: The Secretary of Defense should ensure that the Assistant Secretary of Defense for Energy, Installations, and the Environment work with DOD’s construction agents, military departments, and other offices to improve DOD’s MILCON cost estimating guidance (i e , DOD’s Unified Facilities Criteria) by fully incorporating all the steps needed for developing high- quality reliable cost estimates  (Recommendation 1) We provided a draft of this report to DOD  In written comments, which are reprinted in their entirety in appendix VI, DOD partially concurred with our recommendation  DOD also provided technical comments that have been incorporated into the report as appropriate  DOD partially concurred with our recommendation to improve its cost estimating guidance by fully incorporating all 12 steps needed for developing high-quality, reliable estimates  DOD stated that it did not believe that it is suitable to fully apply all 12 steps to any construction project due to characteristics of the military construction program that DOD believes differ from those of major system or weapon acquisition programs  However, DOD also stated that it concurred with the intent and general applicability of the twelve steps to military construction and that DOD cost estimating guidance lacks specificity in several of these areas  DOD acknowledged that expanding its cost guidance to more fully incorporate these steps would benefit the military construction program, and that it is planning to address this by revising its cost guidance during Fiscal Year 2019  In our report, we recognize that it may not be appropriate to fully apply all 12 steps to each construction project  For example, it may not be realistic or to the military departments’ benefit to conduct a sensitivity and uncertainty analysis or develop an independent cost estimate for all the construction projects they initiate every year, especially for low-cost projects  Accordingly, we did not recommend that DOD fully apply all 12 steps to each construction project, but rather that it fully incorporate the 12 steps into the Unified Facilities Criteria so that, at least, each step is considered for each project  DOD could then choose to establish thresholds—based on, for example, the dollar values of the projects—to determine for which the 12 steps should be fully applied or other circumstances in which some steps might not be applicable  We believe DOD’s planned revisions will meet the general intent of our recommendation  We are sending copies of this report to the appropriate congressional committees; the Secretary of Defense, the Secretaries of the Army, Navy, and Air Force  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff has any questions about this report, please contact me at (202) 512-4523 or leporeb@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix VI  To examine the active component’s military construction (MILCON) obligations and expended balances, we reviewed MILCON appropriations found in appropriations acts, including accompanying explanatory statements and conference committee reports from fiscal year 2005 through 2016  Further, we analyzed the obligation and disbursement data of the active component‘s MILCON accounts, appropriation status reports, bid savings reports, as well as annual reports from the U S  Department of the Treasury  We also collected and compared project data from each of the active component on projects that had been initiated and completed during fiscal year 2010 through fiscal year 2016  Specifically, we compared the initial estimate as shown on the Form 1391—the form DOD uses to submit requirements and justifications in support of its funding requests to Congress—with the contract award amount and analyzed any differences between the two  To examine the amount of MILCON reprogramming during fiscal years 2010 and 2016 by the active component, we reviewed DOD’s requests to Congress to reprogram MILCON funds from one project to another  We calculated the total number of times such requests were made and the dollar amounts for fiscal year 2010 through fiscal year 2016  We selected this time frame because the reprogramming requests were readily available from DOD  In addition, we judgmentally selected three projects from this same time frame and reviewed accompanying Forms 1391 and the reprogramming requests associated with the projects to illustrate instances in which savings from one MILCON project funded another project  We collected and analyzed data for fiscal years 2005 through 2016 on the active component MILCON appropriations, obligations, and disbursements and we collected reprogramming data for fiscal years 2010 through 2016  We assessed the reliability of the data by interviewing knowledgeable officials about the data and the steps that they had taken to verify the data’s accuracy  We determined that the data were sufficiently reliable for our objectives  To determine the extent to which DOD’s MILCON cost estimates are reliable and DOD’s guidance for producing estimates fully incorporates all of the steps needed for developing reliable estimates, we compared the process for developing three selected projects with the characteristics and best practices for developing a reliable estimate identified in GAO’s Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs (the Cost Guide)  This guide is a compilation of cost estimating best practices drawn from across industry and federal government  We selected our projects from the universe of projects that we reasonably expected could have begun execution (i e , projects initiated during fiscal years 2012-2014); projects that were underway, but not substantially completed (i e , between 10- and 75- percent complete); and projects that constituted a significant financial investment (i e , projects with appropriations of $75 million or greater)  Ultimately, of 690 total projects we identified DOD-wide, 13 met these criteria and, from this sample, we selected the 3 projects included in this report: (1) the construction of a replacement elementary school at Camp Foster, Japan; (2) the construction of a Strategic Command operations building at Offutt Air Force Base, Nebraska; and (3) the construction of a Marine Corps command headquarters and cyberspace operations building in Fort Meade, Maryland  In conducting the assessments for these three selected projects, we examined the processes used to develop both the Form 1391 estimate (i e the form DOD uses to submit project-level requirements and justifications in support of its MILCON funding requests to Congress ) and the independent government estimate (i e , the estimate used to award the contract) to determine whether the project cost estimates had the characteristics of a high-quality and reliable cost estimate, as defined in the Cost Guide  These projects are not intended to be a projectable sample, but to illustrate how cost estimates are assessed against best practices  Although the Camp Foster project is not owned by any of the active component, the construction and planning of the project is being led by the Army Corps of Engineers in its capacity as a DOD construction agent and, as such, we decided to include it in our review  Additionally, we reviewed DOD’s Unified Facilities Criteria and the active component’s respective guidance related to MILCON cost estimating and compared them with the steps needed for developing reliable estimates identified in the Cost Guide  We also interviewed military project cost estimators and active component construction agents to discuss the requirements and guidance they follow in preparing, documenting, and reviewing project cost estimates  Table 9 details the documents we reviewed for our cost estimating assessments  We conducted this performance audit from January 2016 to March 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In this appendix we provide the supporting details on the active component’s unobligated and unexpended balances of military construction (MILCON) appropriations for fiscal years 2005 through 2016  We include details on unobligated and unexpended balances by appropriation year and include individual tables for each military department of the active component  Overall, the active component had high obligation and expenditure rates associated with MILCON appropriations that have expired or been canceled  The Army, the Air Force, and the Navy consistently expended over 90 percent of amounts appropriated in fiscal years 2005 through 2011  This appendix also provides supporting details on the active component’s execution of MILCON appropriations for fiscal years 2010 through 2016  Using Department of Defense (DOD) data, we identified two groups of MILCON projects: congressionally directed and other  “Congressionally directed” projects are those MILCON projects specifically identified in an appropriation act, explanatory statement, and/or committee reports accompanying the appropriation act for a specific fiscal year  “Other” projects refer to congressionally directed MILCON projects identified in an appropriation act, explanatory statement, and/or conference committee reports in a previous fiscal year  Overall, the active component obligated about 89 percent of its fiscal years 2010 through 2012 appropriations for congressionally directed projects whose appropriations expired on September 30, 2017  Tables 10 through 12 present detailed information on unexpended and unobligated balances for each military department of the active component’s MILCON appropriation for fiscal years 2005 through 2016, as reported by DOD as of September 30, 2016  Table 10 shows that for fiscal years 2005 through 2012, the Army expended almost all of its MILCON appropriations  Specifically, with the exception of fiscal year 2012, the Army expended at least 90 percent of its appropriations received each fiscal year for 2005 through 2011  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Table 11 shows that, for fiscal years 2005 through 2013, the Air Force expended almost all of its MILCON appropriations  Specifically, the Air Force expended at least 95 percent of its appropriations received each year for fiscal years 2005 through 2011 and also in fiscal year 2013  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Table 12 shows that for fiscal years 2005 through 2012, the Navy expended almost all of its MILCON appropriations  Specifically, the Navy expended at least 90 percent of its appropriations received each fiscal year for 2005 through 2011  Unexpended rates for amounts appropriated for fiscal years 2014 through 2016 vary and unobligated amounts for these years remain available for new obligations  Tables 13 through 15 provide detailed information on budget execution for each active duty military department’s MILCON appropriation for “congressionally directed” and “other” MILCON projects for fiscal years 2010 through 2016, as reported by DOD as of September 30, 2016  Table13 shows the obligations made by the Army for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using data in the table, we found that about 97 2 percent of obligations were for congressionally directed projects and 2 8 percent were for other projects, as discussed above  In fiscal year 2011, about 94 percent of obligations were for congressionally directed projects and 4 2 percent were for other projects; and in fiscal year 2012, about 86 5 percent of obligations were for congressionally directed projects and 7 2 percent were for other projects  Table 14 shows the obligations made by the Air Force for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using the data listed in the table, we found that 90 5 percent of obligations were for congressionally directed projects and 7 3 percent were for other projects, as discussed above  In fiscal year 2011, about 84 3 percent of obligations were for congressionally directed projects and 12 9 percent were for other projects; and in fiscal year 2012, about 87 5 percent of obligations were for congressionally directed projects and 9 0 percent were for other projects  Table 15 shows the obligations made by the Navy for MILCON appropriations for fiscal years 2010 through 2016  We analyzed the obligations made during these appropriations’ period of availability for congressionally directed and other MILCON projects  For fiscal year 2010, using data in the table, we found that 84 7 percent of obligations were for congressionally directed projects and 15 0 percent were for other projects, as discussed above  In fiscal year 2011, about 87 7 percent of obligations were for congressionally directed projects and 11 8 percent were for other projects; and in fiscal year 2012, about 85 5 percent of obligations were for congressionally directed projects and 13 4 percent for other projects  This appendix provides information on our analysis of DOD’s estimated initial costs and contract award amounts of projects that had been initiated and completed during fiscal year 2010 through fiscal year 2016 by the active component  An official from the Office of the Assistant Secretary of Defense for Energy, Installations, and Environment told us that, to determine whether initial cost estimates were over- or underestimated, a comparison between initial Form 1391 estimates and contract award amounts would be a valid approach since contract award amounts are, in general, estimates of the same requirements identified on a Form 1391  The official also noted that supervision, inspection, overhead, and contingency costs included on a Form 1391 are not included in contract award amounts, which could create differences between the Form 1391 cost estimates and contract award prices  Because of this, we excluded the supervision, inspection, overhead, and contingency costs from the Form 1391 estimates in the table below to eliminate those differences  Form 1391 cost estimates may also vary from contract award amounts for reasons such as changes in project size or scope, changes in project characteristics, unexpectedly high or low contractor bids, or differences in expected building material costs, among other things  A negative percent change from the Form 1391 estimate to the contract award amount indicates the estimated project cost was overestimated and a positive percent change indicates the project was underestimated  We did not determine the precise reasons for any differences between estimated costs and contract award amounts  Table 16 lists information on 414 completed projects funded with military construction (MILCON) appropriations during fiscal year 2010 through fiscal year 2016 sorted by largest percentage overestimated to largest percentage underestimated  The military departments of the active component have gone beyond the Unified Facilities Criteria and developed their own guidance for military construction (MILCON) that more closely aligns with the 12 steps needed for developing high-quality, reliable estimates  Table 17 describes the guidance developed by the military departments to align with those steps  In addition to the contact named above, Maria Storts, Assistant Director; Bonita Anderson; Shawn Arbogast; Ronald Bergman; Brian Bothwell; Robert Brown; Farrah Graham; Mae Jones; Jennifer Leotta; Amie Lesser; Felicia Lopez; Carol Petersen; Vikki Porter; Steve Pruitt; and Karen Richey made key contributions to this report 

ground_truth: The federal government continues to work to reduce its real property inventory and associated costs. GSA provides space for agencies in government-owned and commercially leased buildings. In 2015, the OMB issued a memorandum requiring the 24 agencies with chief financial officers to reduce their domestic office and warehouse space. These agencies are required to set annual reduction targets for a 5-year time period and update their real property plans annually. GAO was asked to review the implementation of this space reduction initiative. This report discusses: (1) the approaches and any challenges the 24 agencies identified to achieving their reduction targets for all their domestic office and warehouse space; (2) the extent these agencies reduced their space and met their fiscal year 2016 targets; and (3) how GSA manages vacated space it had leased to these agencies. GAO conducted a content analysis of the 24 agencies' real property plans for fiscal years 2016 and 2017 and analyzed agencies' data as submitted to GSA on their targets and reductions for fiscal year 2016, the only year for which data were available. GAO selected five agencies as case studies based on several factors, including size of the agencies' office and warehouse portfolio, agency reduction targets, and fiscal year 2016 reported reductions. GAO reviewed relevant documentation and interviewed officials from GSA, OMB, and GAO's case study agencies. GAO provided a draft of this product to GSA, OMB, and our case study agencies for comment. GAO incorporated technical comments, as appropriate. Most of the 24 agencies with chief financial officers reported to the Office of Management and Budget (OMB) and the General Services Administration (GSA) that they planned to consolidate their office and warehouse space and allocate fewer square feet per employee as the key ways to achieve their space reduction targets. For example, the Department of Agriculture reported it will consolidate staff from five component agencies in two office buildings. When complete, the space allocated per employee will average about 250 square feet down from a high of 420 square feet per employee. In taking these actions, the agencies most often identified the cost of space reduction projects as a challenge to achieving their targets. Agencies cited costs such as for space renovations to accommodate more staff and required environmental clean-up before disposing of property as challenges to completing projects. Some agencies required to maintain offices across the country reported that their mission requirements limit their ability to reduce their space. In fiscal year 2016, 17 of the 24 agencies reported they reduced their space, but had varying success achieving their first-year targets. Of the 17 agencies, 9 exceeded their target and reduced more space than planned, 7 missed their target (by anywhere between 2.8 and 96.7 percent), and 1 reduced space, despite a targeted increase. Agency officials said that it is not unusual for projects to shift to different years and that such shifts could lead to missing targets one year and exceeding them the next. GSA has processes to manage the space vacated by agencies that is leased through GSA. For example, starting in November 2016, GSA started tracking agencies' space release requests centrally to help standardize the process and established an e-mail address to which agencies can submit requests. GSA relies on regional offices to manage real property in their regions and to identify tenants for vacant space or to remove unused space from the inventory. GSA's regional officials said regular monitoring and coordinating with agencies minimizes the likelihood GSA is caught off guard by a return of space. These processes also help them to plan ahead. GSA met its 2016 performance goal to have an annual vacant space rate of no more than 3.2 percent in its federally owned and leased buildings. However, given the recent implementation of the space reduction initiative, it is too early to determine the extent to which agencies will return space to GSA prior to the end of their leases and the effect on GSA's inventory.