United States Government Accountability Office

Washington, DC 20548 

March 1, 2007 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Ted Stevens 

Co-Chairman 

Committee on Commerce, Science, and Transportation 

United States Senate 

The Honorable Bart Gordon 

Chairman 

The Honorable Ralph M. Hall 

Ranking Member 

Committee on Science and Technology 

House of Representatives 

Subject: NASA: Enhanced Use Leasing Program Needs Additional Controls

In 2003, the National Aeronautics and Space Administration (NASA) was authorized 

to demonstrate enhanced use leasing (EUL) at two centers, allowing the agency to 

retain the proceeds from leasing out underutilized real property and to accept in-kind 

consideration in lieu of cash for rent. NASA selected Ames Research Center and 

Kennedy Space Center for the demonstration program. The agency had requested 

that Congress extend this authority to additional NASA centers during formulation of 

the NASA Authorization Act of 2005. 

NASA’s request was not granted. Instead, Section 710 of the NASA Authorization Act 

of 2005 (Public Law 109-155) directed GAO to review NASA’s EUL program. We 

examined (1) the financial impact of the EUL authority on NASA and whether EUL 

revenue and other financial benefits would have been realized without the authority, 

(2) NASA’s use of the authority and whether the arrangements made under the 

authority would have been made in the absence of the authority, and (3) what 

controls are in place to ensure accountability and transparency and to protect the 

government. The act also directed GAO to report back to the Congress by December 

30, 2006. 

We presented our preliminary findings to your staff in December 2006. Because of 

your committees’ interest in how NASA is implementing its EUL authority, we are 

enclosing the full briefing that supported that December presentation with this report 

(see encl. II), along with a summary of our findings and conclusions. To ensure that 

NASA’s EUL program is transparent and protects the interests of the government, we 

Page 1 GAO-07-306R NASA Enhanced Use Leasing 
are recommending that before considering further expansion of the program, NASA 

develop an agency wide EUL policy, based upon sound business practices and 

lessons learned from the demonstration centers, that establishes minimum standards 

for controls and processes, such as best economic value criteria, measures of

effectiveness, and specific accounting controls. In written comments, NASA 

concurred with our recommendation and stated that the agency has begun taking the 

steps necessary to develop an agency wide EUL policy and to adopt mechanisms to 

keep the Congress fully informed of its activities under EUL authority (see encl. I). 

Background

Because of long-standing problems with excess and underutilized property, 

deteriorating assets, unreliable real property data, and costly facilities challenges, 

GAO designated federal real property as a high-risk area in January 2003. We have 

reported that many federal real property assets—including facilities and land worth 

hundreds of billions of dollars—are in an alarming state of deterioration, and 

agencies have estimated restoration and repair needs to be in the tens of billions of 

dollars.1

 

Like many federal agencies, NASA faces considerable challenges addressing facilities 

needs with limited funds. As the ninth largest federal government property holder, 

NASA owns more than 100,000 acres of real estate, as well as over 3,000 buildings and 

3,000 other structures totaling over 44 million square feet. However, the agency has 

large and growing capital repair needs. NASA’s property database shows over 

$1.8 billion of deferred maintenance for the agency’s facilities. In addition, over 

10 percent of the agency’s facilities are underutilized or not utilized at all. According 

to NASA’s 2004 Real Property Management Plan, critical attention to maintenance 

and recapitalization is required to ensure NASA’s ability to safely and effectively 

achieve its vision and mission. 

We have reported that in an era of limited resources and growing mission needs, 

many agencies have turned to approaches other than full up-front appropriated 

funding to finance real property acquisitions and improvements.2

 EUL authority—

which allows agencies to accept cash and/or in-kind consideration for real property 

leases and to retain the proceeds—is one of these alternative approaches. 

We have also reported that although third-party financing arrangements, such as EUL, 

can make it easier for agencies to manage within a given amount of budget authority, 

they also increase the need for effective implementation and monitoring by agencies 

to ensure that the government’s interests are protected.3

 We found that many 

 1

Statement of David M. Walker, before the Senate Committee on Governmental Affairs, Federal Real Property:

Actions Needed to Address Long-standing and Complex Problems, GAO-04-119T (Washington, D.C.: Oct. 1, 2003). 2

GAO, Budget Issues: Alternative Approaches to Finance Federal Capital, GAO-03-1011 (Washington, D.C.: Aug. 

21, 2003). 

3

GAO, Capital Financing: Partnerships and Energy Savings Performance Contracts Raise Budgeting and 

Monitoring Concerns, GAO-05-55 (Washington, D.C.: Dec. 16, 2004). 

 Page 2 GAO-07-306R NASA Enhanced Use Leasing 
partnership arrangements, such as EUL, included specific attributes that did not 

require agencies to reflect the full, up-front costs in the budget. For example, in one 

case, under its EUL authority, the Veterans Administration (VA) leased out land to a 

developer with a 35-year no-cost enhanced use lease. The developer built a facility on 

the property to provide housing for single homeless individuals. The developer 

agreed to give veterans referred by VA priority placement for at least 50 percent 

occupancy of the property. Although the improvements may be surrendered to VA at 

the end of the lease term, the transaction was completely invisible in VA’s budget 

because it did not involve cash consideration. 

The Comptroller General has also testified that public-private partnerships can be a 

viable option for redeveloping obsolete federal property if they provide the best 

economic value for the government, compared with other options, such as federal 

financing through appropriations or sale of the property.4

 He also testified that full 

transparency with regard to the government’s real property activities and an effective 

system to measure results are needed. 

Results in Brief

Since beginning the EUL demonstration, NASA has realized about $1.3 million in 

EUL-related financial benefits—$972,546 of lease revenue and over $350,000 of inkind consideration—most of which would not have been realized by NASA without 

EUL authority.5

 Under its existing authorities, the agency would have been required 

to remit lease revenue in excess of costs to the U.S. Treasury and would not have 

been allowed to accept in-kind consideration exceeding costs for rent, except to a 

limited extent for historic property. Of the lease revenue collected, NASA spent about 

$480,000—all at Ames Research Center—on maintenance and improvement of real 

property assets. 

NASA is using EUL authority to develop underutilized real property at Ames and 

Kennedy for use by others. Ames and Kennedy have entered into EUL agreements for 

underutilized office space, unique research and development facilities, and land. In 

addition, both centers plan to use EUL authority to incorporate research parks (for 

Kennedy, an “exploration park”) into their plans for expansion of their capabilities to 

support the NASA mission. According to agency officials, while NASA would have 

leased some of its underutilized property under existing authorities, the ability to 

collect rent as well as in-kind consideration under NASA’s EUL authority provided 

the agency with increased incentive and flexibility to develop underutilized real 

property. 

While each demonstration center has mechanisms to ensure that EUL agreements 

provide benefit, beyond rent, to NASA and fair market consideration is received for 

 4

GAO-04-119T. 5

In addition to the $1.3 million, NASA collected $1.2 million—that could have been collected without EUL 

authority—that agency officials told us offset, to some extent, the agency’s costs for common services such as 

security. 

Page 3 GAO-07-306R NASA Enhanced Use Leasing 
all property, we found that the agency does not have adequate controls in place to 

ensure accountability and transparency and to protect the government. For example, 

the agency has not established measures of effectiveness or criteria for determining 

whether EUL represents the best economic value to the government. Further, the 

agency has no accounting system for tracking and reporting the value of in-kind 

consideration, and in some instances, we could not trace financial data to source 

documents and other financial data was not readily available. Finally, NASA’s 

implementation of EUL could lessen budget transparency. For example, NASA’s EUL 

authority allows the agency to accept in-kind consideration in the form of services or 

construction that is not recognized in the agency’s budget. In addition, EUL cash 

revenue is not readily apparent within the agency’s reimbursable budget line. And 

even though this cash revenue is reported to the Congress in NASA’s annual EUL 

report, the budget does not fully inform the Congress regarding NASA’s use of its 

EUL authority. 

Conclusion 

Although EUL authority provides NASA with increased flexibility in managing its real 

property, it also increases the need for effective controls and monitoring to ensure 

that the government’s interests are protected. Without measures of effectiveness, 

criteria for determining best economic value, and adequate accounting controls and 

processes, it will be difficult for NASA to ensure that EUL is the best option for each 

instance in which EUL is used and that the purpose of the law providing NASA with 

EUL authority is met. In addition, when EUL funds and their use are not transparent 

within the agency’s budget, congressional decision makers face a knowledge gap 

relative to monitoring NASA’s EUL activities. Improved transparency would provide 

the Congress with a more complete basis for assessing NASA’s wants and needs. If 

the EUL program is to be expanded, NASA needs to develop an agency wide policy 

that ensures accountability, protects the government, and provides transparency 

regarding the agency’s EUL activities. 

Recommendation for Executive Action

Before NASA considers requesting that the Congress extend EUL authority to 

additional centers, we recommend that the NASA Administrator develop an agency 

wide EUL policy, based upon sound business practices and lessons learned from the 

demonstration centers, that establishes controls and processes to ensure 

accountability and protect the government’s interests, including 

• criteria for determining that EUL represents the best economic value for the 

government, compared with other options, such as federal financing through 

appropriations or sale of the property; 

• measures of effectiveness for the EUL program, such as reductions in the 

square footage of underutilized property and in the dollar amount of deferred 

maintenance; and 

 Page 4 GAO-07-306R NASA Enhanced Use Leasing 
• accounting controls and processes to ensure accountability, such as an 

o accounting system for tracking the value of in-kind consideration and an 

o audit trail and documentation to readily support financial transactions. 

In addition, if NASA receives expanded EUL authority, the agency also needs to adopt 

mechanisms to keep the Congress fully informed of the agency’s activity under EUL 

authority, including 

• identifying and quantifying the value of in-kind consideration arrangements 

and expenditures of EUL revenue in its annual EUL reports to the Congress, 

and 

• reporting the availability and use of EUL funds in the agency’s operating plans.

Agency Comments and Our Evaluation

In written comments on a draft of this report (see encl. I), NASA concurred with our 

recommendation. 

Scope and Methodology

To determine the financial impact of EUL authority on NASA, we obtained and 

analyzed pertinent EUL records and quantified financial impact in terms of cash and 

in-kind consideration. To ascertain whether these benefits would have been realized 

in the absence of the authority, we obtained and analyzed copies of all of NASA’s preexisting real property authorities, and determined whether they could have provided 

NASA with the revenue and financial benefits realized with EUL authority. To clarify 

our understanding, we conducted interviews with cognizant and responsible NASA 

officials at NASA Headquarters, Ames Research Center, and Kennedy Space Center. 

 

To evaluate the use of the program, we reviewed leasing agreements and visually 

inspected selected leased properties at both demonstration centers. We reviewed the 

centers’ future plans for the program and discussed NASA’s use and plans for the 

program with cognizant and responsible NASA officials at both centers and NASA 

Headquarters. To ascertain whether existing arrangements would have been made in 

the absence of the program, we examined the existing EUL agreements in light of 

NASA’s pre-existing real property authorities, discussed NASA’s pre-EUL authority 

development plans, and identified instances when NASA originally planned to 

develop property, currently being developed under EUL authority, with other real 

property authorities. We also interviewed responsible NASA officials to determine 

whether NASA would have made the current arrangements and plans without the 

EUL authority. 

To assess the controls NASA has in place to ensure accountability and transparency 

and to protect the government, we judgmentally sampled EUL leasing agreements 

and discussed the selected lease arrangements with cognizant and responsible NASA 

Page 5 GAO-07-306R NASA Enhanced Use Leasing 
officials. We obtained each center’s records of the financial transactions associated 

with the selected leasing agreements, and we attempted to reconcile these records 

with the leases and support agreements. We also had extensive discussions with 

cognizant and responsible NASA officials regarding in-kind consideration 

transactions, fair market value, value beyond rent to NASA, criteria for determining 

the best economic value to the government, accounting for EUL in NASA’s budget, 

and measures of effectiveness.

To accomplish our work, we visited NASA Headquarters, Washington, D.C.; Ames 

Research Center, California; and Kennedy Space Center, Florida. We conducted our 

work from July 2006 through December 2006 in accordance with generally accepted 

government auditing standards. 

We will send copies of the report to NASA’s Administrator and interested 

congressional committees. We will also make copies available to others upon request. 

In addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

Should you or your staff have any questions on matters discussed in this report, 

please contact me at (202) 512-4841 or lia@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

report. Principal contributors to this report were Jim Morrison, Assistant Director; 

Sylvia Schatz; Erin Schoening; Robert Swierczek; and John Warren. 

Allen Li 

Director 

Acquisition and Sourcing Management 

Enclosures 

 Page 6 GAO-07-306R NASA Enhanced Use Leasing 
120620 Enclosure I: Comments from the National Aeronautics and Space Administration 

Page 7 GAO-07-306R NASA Enhanced Use Leasing 
 Page 8 GAO-07-306R NASA Enhanced Use Leasing 
Enclosure II 

Briefing for Congressional Staff December 2006

In 2003, the National

Aeronautics and Space

Administration (NASA) was 

authorized to employ enhanced 

use leasing (EUL) at two 

demonstration centers, allowing

the agency to retain the 

proceeds from leasing out 

underutilized real property and 

to accept in-kind consideration 

in lieu of cash for rent. NASA 

selected Ames Research Center 

and Kennedy Space Center for 

the demonstration program. The 

agency has requested that the 

Congress extend this authority 

to at least six NASA centers.

Section 710 of the NASA 

Authorization Act of 2005 

(Public Law 109-155) directed

GAO to review NASA’s EUL 

program. We examined (1) the 

financial impact of the EUL

authority on NASA and whether 

EUL revenue and other financial 

benefits would have been 

realized without the authority,

(2) NASA’s use of the authority

and whether the arrangements

made under the authority would

have been made in the absence

of the authority, and (3) what

controls are in place to ensure

accountability and transparency

and to protect the government.

The act also directed GAO to 

report back to the Congress by 

December 30, 2006.

Why GAO Did This Study 

Briefing

NASA’s Enhanced Use Leasing 

Demonstration Program

Summary

Since beginning the EUL demonstration, NASA has realized about $1.3 

million in EUL-related financial benefits—$972,546 of lease revenue and over

$350,000 of in-kind consideration—most of which would not have been 

realized by NASA without EUL authority. Under its existing authorities, the 

agency would have been required to remit lease revenue in excess of costs to

the U.S. Treasury and would not have been allowed to accept in-kind

consideration exceeding costs for rent, except to a limited extent for historic 

property. Of the lease revenue collected, NASA spent about $480,000—all at 

Ames Research Center—on maintenance and improvement of real property 

assets. In addition to the $1.3 million, NASA collected $1.2 million—that

could have been collected without EUL authority—that agency officials told 

us offset, to some extent, the agency’s costs for common services such as 

security.

NASA is using EUL authority to develop underutilized real property at Ames 

and Kennedy for use by others. Ames and Kennedy have entered into EUL 

agreements for underutilized office space, unique research and development 

facilities, and land, and both centers plan to use EUL agreements to develop 

research parks. According to agency officials, while NASA would have 

conducted some development under existing authorities, EUL authority 

provided the agency with increased incentive and flexibility to develop 

underutilized real property. 

While each demonstration center has mechanisms to ensure that EUL 

agreements provide benefit, beyond rent, to NASA and fair market 

consideration is received for all property, we found that the agency does not 

have adequate controls in place to ensure accountability and transparency

and to protect the government. For example, the agency has not established

measures of effectiveness or criteria for determining whether EUL

represents the best economic value to the government. In terms of financial 

accountability, we found weaknesses that hamper accountability and 

transparency. For example, the agency has no accounting system for 

tracking and reporting the value of in-kind consideration, and in some

instances, we could not trace financial data to source documents and 

financial data were not readily available. Finally, NASA’s implementation of 

EUL could lessen budget transparency. For example, NASA’s EUL authority 

allows the agency to accept in-kind consideration in the form of services or 

construction that is not recognized in the budget. In addition, EUL cash 

revenue is not readily apparent within the agency’s reimbursable budget line.

Briefing Structure

Background page 2

Findings

NASA Has Realized about $1.3 Million in EUL Benefits page 3

NASA Uses EUL to Develop Underutilized Property page 4

NASA’s EUL Program Needs Additional Controls page 6

Appendix

Scope, Methodology, and Contributors page 7
Enclosure II 

Briefing for Congressional Staff Page 2

Because of long-standing problems with excess and underutilized property, 

deteriorating facilities, unreliable real property data, and costly space 

challenges, GAO designated federal real property as a high-risk area in 

January 2003. We have reported that many federal real property assets—

including facilities and land worth hundreds of billions of dollars—are in an 

alarming state of deterioration, and agencies have estimated restoration and 

repair needs to be in the tens of billions of dollars. 

Like many federal agencies, NASA faces considerable challenges addressing

facilities needs with limited funds. As the ninth largest federal government 

property holder, NASA owns more than 100,000 acres of real estate, as well 

as over 3,000 buildings and 3,000 other structures totaling over 44 million 

square feet. However, the agency has large and growing capital repair needs.

NASA’s property database shows over $1.8 billion of deferred maintenance 

for the agency’s facilities. In addition, over 10 percent of the agency’s 

facilities are underutilized or not utilized at all. According to NASA’s 2004 

Real Property Management Plan, critical attention to maintenance and 

recapitalization is required to ensure NASA’s ability to safely and effectively 

achieve its vision and mission. 

We have reported that in an era of limited resources and growing mission 

needs, many agencies have turned to approaches other than full up-front 

appropriated funding to finance capital. EUL authority—which allows 

agencies to accept cash and/or in-kind consideration for real property leases 

and to retain the proceeds—is one of these alternative approaches. 

In December 2004, we reported that although third-party financing 

arrangements, such as EUL, can make it easier for agencies to manage

within a given amount of budget authority, they also increase the need for 

effective implementation and monitoring by agencies to ensure that the 

government’s interests are protected. We reported that many partnership 

arrangements, such as EUL, were structured to include specific attributes 

that did not require agencies to reflect the full, up-front costs in the budget. 

For example, in one case, the Veterans Administration (VA) outleased land 

to a developer with a 35-year no-cost enhanced use lease. The developer 

built a facility on the property to provide housing for single homeless 

individuals. The developer agreed to give veterans referred by VA priority 

placement for at least 50 percent occupancy of the property. Although the 

improvements may be surrendered to VA at the end of the lease term, the 

transaction was completely invisible in VA’s budget because it did not 

involve cash consideration. 

Background 

Related GAO Reports 

GAO, Defense Infrastructure: 

Greater Management Emphasis 

Needed to Increase the Services’ 

Use of Expanded Leasing 

Authority, GAO-02-475 

(Washington, D.C.: June 6, 2002). 

Statement of David M. Walker, 

before the Senate Committee on 

Governmental Affairs, Federal 

Real Property: Actions Needed 

to Address Long-standing and 

Complex Problems, GAO-04-

119T (Washington, D.C.: Oct. 1, 

2003). 

GAO, Budget Issues: Alternative 

Approaches to Finance Federal 

Capital, GAO-03-1011

(Washington, D.C.: Aug. 21, 

2003). 

GAO, Capital Financing: 

Partnerships and Energy 

Savings Performance Contracts 

Raise Budgeting and 

Monitoring Concerns, GAO-05-

55 (Washington, D.C.: Dec. 16, 

2004). 

Statement of David M. Walker, 

before the Senate Committee on 

Homeland Security and 

Governmental Affairs, 

Subcommittee on Federal 

Financial Management, 

Government Information, and 

International Security, Budget 

Process: Better Transparency, 

Controls, Triggers, and Default 

Mechanisms Would Help to 

Address Our Large and 

Growing Long-term Fiscal 

Challenge, GAO-06-761T 

(Washington, D.C.: May 25, 

2006). 

Real Property is a High-Risk Area

Alternative Financing Has Been Used by Other Agencies
Enclosure II 

Briefing for Congressional Staff Page 3

Findings 

NASA’s EUL authority—granted 

by the Congress in 2003—

affords the agency the 

opportunity to lease out 

underutilized real property in 

exchange for cash and/or in-kind 

consideration, such as

improvement of NASA’s 

facilities or the provision of 

services to NASA. Further, 

NASA can deposit funds not 

used to cover lease costs in a noyear capital account to be 

available for maintenance, 

capital revitalization, and 

improvement of the real

property, albeit only at the 

demonstration centers. Unlike 

other agencies with EUL 

authority, however, NASA is not 

authorized to lease back the 

property during the term of the 

lease. 

NASA is required by the 

enabling law to submit an 

annual report by January 31 of 

each year regarding the status of 

the EUL demonstration. Thus 

far, these annual reports have 

included descriptions of the 

status of the demonstration and 

planned activities, as well as

tables listing enhanced use lease 

agreements and showing annual 

rent and common service 

charges for each lease. 

NASA’s EUL Authority NASA Has Realized about $1.3 Million in EUL Benefits 

NASA has realized about $1.3 million in EUL-related financial benefits since 

beginning the EUL demonstration—most of which would not have been realized 

by NASA without EUL authority. However, without EUL authority, some of these 

financial benefits could have accrued to the federal government. 

 

• Under its existing real property authorities, NASA would have been required 

to return lease proceeds in excess of costs to the general fund of the U.S. 

Treasury and could not have accepted in-kind consideration exceeding costs 

for rent, except to a limited extent for historic property under the National 

Historic Preservation Act (NHPA).

• The agency collected $972,546 of gross lease revenue. Of this amount, 

$58,792 for general and administrative expenses would have been retained 

by NASA, leaving $913,754 net rent that NASA would have been required to 

return to the U.S. Treasury, without specific authority allowing the agency to 

retain the funds. For example, under NHPA, NASA could have retained 

$416,029 net rent for 2 years, but the funds had to be used in conjunction 

with preserving historic property. With EUL authority, NASA can retain the 

entire $913,754 net rent indefinitely and can expend the funds on any 

properties at the demonstration centers.

• Ames realized in-kind consideration worth over $350,000 for tenant 

improvements and animal husbandry services, according to agency officials,

that could not have been accepted without EUL authority. 

Of the amount collected, NASA spent about $480,000—all at Ames—on 

maintenance and improvement of real property assets. 

In addition to the $1.3 million, NASA collected $1.2 million—that could have 

been collected without EUL—that agency officials told us offset, to some extent, 

the agency’s costs for common services such as security and fire protection.

EUL Financial Benefits by Fiscal Year 

 

FY 2004 FY2005 FY 2006 Totals 

Ames 

Cash $59,866 $318,190 $531,356 $909,412

In-kind 94,967 108,000 149,029 351,996

Kennedy 

Cash 3,000 29,512 30,622 63,134

In-kind 0 0 0 0

Total $157,833 $455,702 $711,007 $1,324,542

Source: NASA data, GAO analysis. 

Note: Because of financial management weaknesses identified during our limited review of 

NASA’s data, we were unable to confirm the accuracy of the amounts presented in this table. 

Also, amounts for fiscal year 2006 include estimates for September 2006. 
Enclosure II 

Briefing for Congressional Staff Page 4

Findings 

cont’d

Key Elements of 

Other NASA Real 

Property Authorities 

NASA Uses EUL to Develop Underutilized Property

NASA is currently using EUL authority to maintain and develop 

underutilized real property at Ames and Kennedy. 

• Ames has entered into over 50 EUL agreements, leasing out 

underutilized office space and unique research and development 

facilities. Much of the space is located in the historic portion of the old 

Moffett Field Naval Base. 

 

• Kennedy has entered into 8 EUL agreements for ground leases for press 

sites and telecommunication equipment. 

• Both centers plan to use EUL agreements, in conjunction with private 

financing, to develop research parks. 

NASA would have developed some of the properties leased out under EUL 

using other authorities. 

 

• Ames’ research park, according to Ames officials, was first approved for 

development with existing authorities during the Clinton administration.

• Ames’ renovation of historic property could have been done using 

NHPA. For example, Ames used NHPA to lease a historic building to a 

university. 

• Kennedy, before receiving EUL authority, leased out press sites and 

worked with the Spaceport Florida Authority to build a laboratory 

facility as the “magnet facility” for the Kennedy research park under the 

Space Act. 

• Kennedy, according to agency officials, may use EUL authority to 

develop improved visitor centers. The agency, however, has used

concessions agreements to build and maintain visitor centers, including 

the new Saturn V concession. 

 SATURN V Concession at Kennedy Space Center 

Concession Authority 

This authorizes agreements for 

outreach and visitor centers. 

The concessionaire is allowed to 

charg admission fees and to 

make 

with the capital invested and the 

obligations assumed. 

e

a profit commensurate 

Space Act—Lease Authority

These leases cannot exceed 5 

years and require Treasury to 

receiv ir value in money. But 

all amounts exceeding cost must 

be returned to the Treasury. 

These leases must include a 

termination-for-convenience 

clause. 

e fa

Space Act—Other 

Transactions 

There is no term limit on other 

transaction leases. NASA can 

obtain either monetary or inkind consideration. However, 

unlike with EUL authority, the 

agency cannot retain 

consideration exceeding costs. 

National Historic 

Preservation Act 

NASA can lease historic 

property to ensure its 

preservation. Historic property 

can be leased for less than fair 

market value if the tenant 

assumes responsibility for 

maintaining and preserving the 

property. Cash consideration 

may be retained by NASA for up 

to 2 fiscal years to defray costs 

associated with the property. 

 

Source: GAO 

 
Enclosure II 

Briefing for Congressional Staff Page 5

Centers’ Implementation 

Models Differ 

Findings 

cont’d

Ames Research Center 

• Ames is acting as its own 

master developer. 

• Ames property is in a fully

developed, desirable highrent area—Silicon Valley. 

• Ames is required by an 

environmental impact study 

to include on-site housing to 

mitigate traffic. 

• Ames’ planned development 

is a campus-like addition, 

with common areas and 

recreation facilities, to the 

existing historic district of 

Moffett Field. 

Kennedy Space Center 

• Kennedy property is lowvalue, unimproved swampy 

land. 

• Kennedy is using an 

acquisition-like approach,

including a request for 

proposal, to select a 

research park developer.

• According to agency

officials, Kennedy plans to

use a similar approach for 

future developments, such

as the visitor center. 

NASA Uses EUL to Develop Underutilized Property (cont’d)

EUL authority provided NASA with increased incentive and flexibility to 

develop underutilized real property. 

• Retaining revenue exceeding costs and maintaining no-year capital 

accounts motivate the agency to invest the time necessary to establish 

the arrangement. 

o NASA implemented an aggressive plan at Ames to vacate NASA 

employees from one historic building to lease the space to EUL 

tenants and increase the EUL revenue stream. According to agency 

officials, a second objective of vacating the employees was to 

consolidate them within Ames’ fenced area to improve security and 

efficiency. 

o NASA used EUL funds to improve the historic building, making it

more attractive to potential EUL tenants. 

• Accepting in-kind consideration in lieu of cash for payment provides 

flexibility in negotiating agreements. For example, 

o Accepting building improvements in lieu of cash rent allowed NASA 

to negotiate some agreements. In these instances, NASA gets an

improved building and the tenant gets tailored space at the same

cost. 

o Accepting services in lieu of cash rent allowed NASA to receive 

needed services and to retain ownership of a unique asset—the 

Animal Care Facility—with no cash outlay. 
Enclosure II 

Briefing for Congressional Staff Page 6

Findings 

cont’d

NASA’s financial management 

requirements stipulate that

recorded transactions be

adequately documented so they 

may be traced from original 

documents to financial 

statements, that a clear audit 

trail be established, and that 

accounting and financial 

management data be recorded 

and reported in the same 

manner throughout NASA, using 

uniform definitions. These 

internal controls protect the 

agency against fraud, waste, and 

abuse; ensure the accuracy and 

reliability of accounting and 

operational data; and ensure 

compliance with federal laws 

and regulations. 

In October 2003, the 

Comptroller General testified 

that public-private partnerships 

can be a viable option for 

redeveloping obsolete federal

property if they provide the best 

economic value for the 

government, compared with 

other options, such as federal 

financing through 

appropriations or sale of the 

property. He also testified that 

full transparency with regard to 

the government’s real property 

activities and an effective 

system to measure results are 

needed. 

Elements of 

Accountability and 

Transparency

NASA’s EUL Program Needs Additional Controls

Each center has mechanisms to ensure that EUL agreements provide 

benefit, beyond rent, to NASA and fair market value consideration is 

received for all property. For example,

• Ames and Kennedy review potential EUL agreements to ensure that 

they support NASA’s mission. 

• The demonstration centers use a combination of property 

appraisals and rent surveys to determine fair market value. 

However, NASA has not established adequate controls to ensure

accountability and protect the government. For example, 

• NASA has not adopted measures of effectiveness or criteria for 

determining best economic value to the government, according to

agency officials. 

• We found financial management weaknesses that hamper 

accountability. 

o The agency has no accounting system for tracking and reporting 

the value of in-kind consideration. 

o In some instances, we could not trace financial data to source 

documents and financial data were not readily available.

NASA’s implementation of EUL could lessen budget transparency. For 

example, 

• In-kind consideration agreements are not recognized in the budget. 

• The collection and use of EUL revenue are not readily apparent 

within the agency’s reimbursable budget line. 

• NASA has previously proposed controls that could mitigate budget 

transparency concerns, including a $25 million annual limitation on 

EUL income and prohibitions on the use of EUL for the purpose of 

construction of NASA-owned facilities.
Enclosure II 

Briefing for Congr Briefing for Congression essional al SStaff taffers Page Page 75

Appendi We will x

If you have any questions 

concerning this briefing, please 

call Allen Li at (202) 512-4841.

Other key contributors to this 

report were Jim Morrison, 

Assistant Director; Sylvia

Schatz; Erin Schoening; Robert 

Swierczek; and John Warren.

Contributors Answer Scope and Methodology

To determine the financial impact of EUL authority on NASA, we obtained

and analyzed pertinent EUL records and quantified financial impact in terms

of cash and in-kind consideration. To ascertain whether these benefits would 

have been realized in the absence of the authority, we obtained and analyzed 

copies of all of NASA’s pre-existing real property authorities, and determined

whether they could have provided NASA with the revenue and financial 

benefits realized with EUL authority. To clarify our understanding, we 

conducted interviews with cognizant and responsible NASA officials at 

NASA Headquarters, Ames Research Center, and Kennedy Space Center. 

 

To evaluate the use of the program, we reviewed leasing agreements and 

visually inspected selected leased properties at both demonstration centers. 

We reviewed the centers’ future plans for the program and discussed NASA’s 

use and plans for the program with cognizant and responsible NASA officials 

at both centers and NASA Headquarters. To ascertain whether existing 

arrangements would have been made in the absence of the program, we

examined the existing EUL agreements in light of NASA’s pre-existing real

property authorities, discussed NASA’s pre-EUL authority development 

plans, and identified instances when NASA originally planned to develop 

property, currently being developed under EUL authority, with other real 

property authorities. We also interviewed responsible NASA officials to 

determine whether NASA would have made the current arrangements and 

plans without the EUL authority. 

To assess the controls NASA has in place to ensure accountability and 

transparency and to protect the government, we judgmentally sampled EUL 

leasing agreements and discussed the selected lease arrangements with 

cognizant and responsible NASA officials. We obtained each center’s records 

of the financial transactions associated with the selected leasing agreements, 

and we attempted to reconcile these records with the leases and support 

agreements. We also had extensive discussions with cognizant and 

responsible NASA officials regarding in-kind consideration transactions, fair 

market value, value beyond rent to NASA, criteria for determining the best 

economic value to the government, accounting for EUL in NASA’s budget, 

and measures of effectiveness. 

To accomplish our work, we visited NASA Headquarters, Washington, D.C.; 

Ames Research Center, Moffett Field, California; and Kennedy Space Center, 

Florida. 
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