Testimony 

Before the Subcommittee on Economic 

Development, Public Buildings and Emergency 

Management, Committee on Transportation 

and Infrastructure, House of Representatives

United States Government Accountability Office

GAO 

For Release on Delivery 

Expected at 1:00 p.m. EDT 

June 21, 2005 COURTHOUSE 

CONSTRUCTION 

Overview of Previous and 

Ongoing Work 

Statement of Mark L. Goldstein, Director 

Physical Infrastructure Issues 

GAO-05-838T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-838T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark L. 

Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov. 

Highlights of GAO-05-838T, a testimony 

before the Subcommittee on Economic 

Development, Public Buildings and 

Emergency Management, Committee on 

Transportation and Infrastructure, House 

of Representatives 

June 21, 2005

COURTHOUSE CONSTRUCTION

Overview of Previous and Ongoing Work 

GAO’s courthouse construction work to date has focused primarily on 

courthouse costs, planning, and courtroom sharing. In the 1990s, GAO 

reported that wide latitude among judiciary and GSA decision makers in 

choices about location, design, construction, and finishes often resulted in 

expensive features in some courthouse projects. The judiciary has since 

placed greater emphasis on cost consciousness in the guidelines for 

courthouse construction that it provides to GSA. Related to planning, GAO 

also found in the 1990s that long-range space projections by the judiciary 

were not sufficiently reliable, and that the judiciary’s 5-year plan did not 

reflect all of the its most urgently needed projects. The judiciary has made 

changes to improve its planning and data reliability. During previous work, 

GAO also found that the judiciary did not track sufficient courtroom use 

data to gauge the feasibility of courtroom sharing. 

GSA has been unable to generate sufficient revenue through FBF over the 

years and thus has struggled to meet the requirements for repairs and 

alterations identified in its inventory of owned buildings. By 2002, the 

estimated backlog of repairs had reached $5.7 billion, and consequences 

included poor health and safety conditions, higher operating costs, restricted 

capacity for modern information technology, and continued structural 

deterioration. GSA’s inability to generate sufficient revenue in the past has 

been compounded by restrictions imposed on the rent GSA could charge 

federal agencies. Consequently, GAO recommended in 1989 that Congress 

remove all rent restrictions and not mandate any further restrictions, and the 

most restrictions have been lifted. Some narrowly focused rent exemptions, 

many of limited duration, still exist today, but together they represent 

roughly a third of the $483 million permanent exemption the judiciary is 

currently requesting from GSA. The judiciary has requested the exemption, 

equaling about half of its annual rent payment, because of budget problems 

it believes that its growing rent payments have caused. GSA data show that 

GSA-owned space, occupied by the judiciary, has increased significantly. 

GAO is currently studying the potential impact of such an exemption on 

FBF, but past GAO work shows rent exemptions have been a principal 

reason why FBF has accumulated insufficient money for capital 

investment. 

Over the last 20 years, GAO has 

compiled a large body of work on 

courthouse construction and 

federal real property. The General 

Services Administration (GSA) 

owns federal courthouses and 

funds related expenses from its 

Federal Buildings Fund (FBF)–a 

revolving fund used to finance GSA 

real property services, including 

the construction and maintenance 

of federal facilities under GSA 

control. The judiciary pays rent to 

GSA for the use of these 

courthouses, and the proportion of 

the judiciary’s budget that goes to 

rent has increased as its space 

requirements have grown. In 

December 2004, the judiciary 

requested a $483 million 

permanent, annual exemption from 

rent payments to GSA to address 

budget shortfalls. 

In this testimony, GAO (1) 

summarizes its previous work on 

courthouse construction and (2) 

provides information on FBF and 

GAO’s ongoing work on the federal 

judiciary’s request for a permanent, 

annual rent exemption of $483 

million from rent to GSA. 
Page 1 GAO-05-838T 

Mr. Chairman, Ranking Minority Member, and Members of the 

Subcommittee: 

Thank you for the opportunity to testify before you today on our work 

related to federal courthouse construction. As you know, we have done 

considerable work on federal courthouse construction and other related 

federal real property issues over the past 20 years. My testimony today will 

(1) summarize our previous work on this topic and (2) provide information 

on the Federal Buildings Fund (FBF) and our ongoing congressionally 

requested work related to the federal judiciary’s request for a permanent, 

annual exemption of $483 million from rent that the General Services 

Administration (GSA) charges the judiciary to occupy space in 

courthouses. GSA owns federal courthouses and funds courthouse-related 

expenses from FBF—a revolving fund used to fund GSA real property 

services, including space acquisition and asset management for federal 

facilities that are under GSA control. The exemption the judiciary is 

seeking would represent about half of the judiciary’s 2004 rent payment of 

$909 million, and the judiciary represents one of GSA’s largest tenants. My 

testimony today will highlight the following points: 

• GAO’s courthouse construction work to date has focused primarily on 

courthouse costs, planning, and courtroom sharing. In the 1990s, we found 

that wide latitude in choices made by GSA and the judiciary about 

location, design, construction, and finishes often resulted in expensive 

features in some courthouse projects. Since then, the judiciary has placed 

greater emphasis on cost consciousness in its courthouse construction 

guidance for GSA. In the 1990s, we also found that the judiciary’s longterm space projections were not sufficiently reliable, and that the 

judiciary’s 5-year plan did not reflect all of the judiciary’s most urgently 

needed projects. Since then, the judiciary has made the changes we 

recommended. With regard to courtroom sharing that could help reduce 

costs, we found that the judiciary did not collect sufficient data to 

determine how much sharing could occur. The judiciary disagreed with 

this finding and the related recommendation. 

• GSA has historically been unable to generate sufficient revenue through 

FBF and has thus struggled to meet the requirements for repairs and 

alterations identified in its inventory of owned buildings. By 2002, the 

estimated backlog of repairs had reached $5.7 billion, and consequences 

included poor health and safety conditions, higher operating costs, 

restricted capacity for modern information technology, and continued 

structural deterioration. GSA charges agencies rent for the space they 

occupy, and the receipts from the rent are deposited in FBF and are then 

available for the purposes of the fund. Restrictions imposed on the rent 
Page 2 GAO-05-838T 

GSA could charge federal agencies have compounded the agency’s 

inability to address its backlog in the past. Consequently, we 

recommended in 1989 that Congress remove all rent restrictions and not 

mandate any further restrictions, and most rent restrictions have been 

lifted. The GSA Administrator has the authority to grant rent exemptions, 

and all of the current exemptions are limited to single buildings or were 

granted for a limited duration. Together, these current exemptions 

represent about a third of the $483 million permanent exemption the 

judiciary is requesting from GSA. The judiciary has requested the 

exemption, equal to about half of its annual rent payment, because of 

budget problems that it believes its growing rent payments have caused. 

GSA data show that one reason the judiciary’s rent is increasing is that the 

space it occupies is also increasing. We are currently studying the 

potential impact of such an exemption on FBF, but our past work shows 

that rent exemptions were a principal reason why FBF has accumulated 

insufficient money for capital investment. 

Since the early 1990s, GSA and the federal judiciary have been carrying out 

a multibillion-dollar courthouse construction initiative to address the 

judiciary’s growing needs. In 1993, the judiciary identified 160 court 

facilities that required either the construction of a new building or a major 

annex to an existing building. From fiscal year 1993 through fiscal year 

2005, Congress appropriated approximately $4.5 billion for 78 courthouse 

construction projects. Since fiscal year 1996, the judiciary has used a 5-

year plan to prioritize new courthouse construction projects, taking into 

account a court’s need for space, security concerns, growth in judicial 

appointments, and any existing operational inefficiencies. The judiciary’s 

most recent 5-year plan (covering fiscal years 2005 through 2009) identifies 

57 needed projects that are expected to cost $3.8 billion. GSA and the 

judiciary are responsible for managing the multibillion-dollar federal 

courthouse construction program, which is designed to address the 

judiciary’s long-term facility needs. The Administrative Office of the 

United States Courts (AOUSC), the judiciary’s administrative agency, 

works with the nation’s 94 judicial districts to identify and prioritize needs 

for new and expanded courthouses. The U.S. Courts Design Guide 

(Design Guide) specifies the judiciary’s criteria for designing new court 

facilities and sets the space and design standards that GSA uses for 

courthouse construction. First published in 1991, the Design Guide has 

been revised several times to address budgetary considerations, 

technological advancements, and other issues, and the guide is currently 

undergoing another revision. 

Background 
Page 3 GAO-05-838T 

GSA provides a range of real property services including maintenance, 

repairs, alterations, and leasing to numerous federal agencies and the 

federal judiciary. The Public Buildings Amendments of 1972 made several 

important revisions to the Federal Property and Administrative Services 

Act. First, the 1972 law created a new revolving fund, later named FBF. 

Next, it required agencies that occupy GSA-controlled buildings to pay 

rent to GSA, which is to be deposited in the revolving fund to be used for 

GSA real property services.1

 GSA charges rent based on appraisals for 

facilities it owns and the actual lease amount for facilities it leases on the 

tenants’ behalf.2 The legislation also authorized any executive agency other 

than GSA that provides space and services to charge for the space and 

services. The rent requirement is intended to reduce costs and encourage 

more efficient space utilization by making agencies accountable for the 

space they use. GSA proposes spending from FBF for courthouses as part 

of the President’s annual budget request to Congress. 

GSA has been using the judiciary’s 5-year plan for new courthouse projects 

since fiscal year 1996 to develop requests for both new courthouses and 

expanded court facilities. GSA also prepares feasibility studies to assess 

various courthouse construction alternatives and serves as the central 

point of contact with the judiciary and other stakeholders throughout the 

construction process. For courthouses that are to be selected for 

construction, GSA prepares detailed project descriptions called 

prospectuses that include the justification, location, size, and estimated 

cost of the new or annexed facility. GSA typically submits two 

prospectuses to Congress. The first prospectus generally requests 

authorization and funding to purchase the site and design the building, and 

the second prospectus generally requests authorization and funding for 

construction, as well as any additional funding needed for site and design 

work. Once Congress authorizes and appropriates funds for a project, GSA 

refines the project budget and selects private-sector firms for the design 

and construction work. Figure 1 illustrates the process for planning, 

approving, and constructing a courthouse project. 

 1

Previously, Congress appropriated money to GSA, and GSA paid for agency space 

requirements. 

2

Rent is based on approximate commercial charges for comparable space and services. 

This method was chosen over a cost-recovery basis in order to produce more income so 

that the revolving fund could finance construction and major repairs. 
Page 4 GAO-05-838T 

Figure 1: Development and Approval Process for Funding a Typical Courthousea 

a

This figure shows the typical process for a project that is procured through the design bid-build 

method. Projects may also be procured using the design-build method. Such projects require site, 

design, and construction funding at the same time and therefore may be submitted to OMB and 

Congress only once, rather than twice as shown in this figure. 

Source: GSA.

External Stakeholders General Services Administration

Judiciary

Long-Range 

District Court Plan

Judiciary 

5-year plan

Office of Management 

and Budget

President's budget

Office of Management 

and Budget

President's budget

Congressb

Congressb

Planning 

and

Prospectus

Development

Site and 

Design

Funding 

Request

Construction

Funding 

Request

Construction

Preliminary Planning Documents

Feasibility Studies

Assess/Select Alternatives

Site & Design Prospectus

Site Acquisition and Design Cost 

Estimates

Site & Design Funded

Select Architect/Engineer Contractor

Acquire Site and Design Building

Construction Prospectus

Construction Cost Estimates

Construction Funded

Select Construction Contractor

Begin Construction 

Construction Completed

2-3 years

2 years

3-5 years
Page 5 GAO-05-838T 

b

Courthouse projects are financed through the Federal Buildings Fund (FBF), a revolving fund that is 

used to fund GSA real property activities with rent from tenant agencies. The President’s annual 

budget request to Congress proposes spending from FBF. GSA submits detailed project descriptions 

called prospectuses to Congress as part of its Capital Investment Program. Prospectuses request 

authorization for new construction and for repair and alteration projects, including courthouses. 

Courthouse projects continue to be costly, and increasing rents and 

budgetary constraints have given the judiciary further incentive to control 

its costs. The judiciary pays rent to GSA for the use of the courthouses, 

which GSA owns, and the proportion of the judiciary’s budget that goes to 

rent has increased as the judiciary’s space requirements have grown. 

According to the judiciary, rent currently accounts for just over 20 percent 

of its operating budget and is expected to increase to over 25 percent of its 

operating budget in fiscal year 2009, when the rental costs of new court 

buildings are included. Additionally, in fiscal year 2004, the judiciary faced 

a budgetary shortfall and, according to the judiciary, reduced its staff by 6 

percent. 

In September 2004, the judiciary announced a 2-year moratorium on new 

courthouse construction projects as part of an effort to address its 

increasing operating costs and budgetary constraints. During this 

moratorium, AOUSC officials said that they plan to reevaluate the 

courthouse construction program, including reassessing the size and 

scope of projects in the current 5-year plan, reviewing the Design Guide’s 

standards, and reviewing the criteria and methodology used to prioritize 

projects. Judiciary officials also said that they plan to reevaluate their 

space standards in light of technological advancements and opportunities 

to share space and administrative services. 

Our work in the 1990s showed that decision makers within GSA and the 

judiciary had wide latitude in making choices that significantly affected 

costs. The judiciary’s 5-year plan did not reflect all of the judiciary’s most 

urgently needed projects. However, the judiciary has since made some of 

our recommended changes. We also found that the judiciary did not 

compile data that would allow it to determine how many and what types of 

courtrooms it needs. The judiciary concluded that additional data and 

analysis were not necessary. 

GAO’s Courthouse 

Construction Work 

Has Focused on 

Costs, Planning, and 

Courtroom Sharing 
Page 6 GAO-05-838T 

In 1995, we testified that a primary reason for differences in the 

construction costs of courthouses was that GSA and the judiciary had 

wide latitude in making choices about the location, design, construction, 

and finishes of courthouse projects.3

 These choices were made under 

circumstances in which budgets or designs were often committed to 

before requirements were established. In addition, design guidance was 

flexible, and systematic oversight was limited. As a result, some 

courthouses had more expensive features than others.4

 While recognizing 

that some flexibility was needed and that some costly features may be 

justifiable, we found that the flexibility in the process should have been 

better managed. We recommended that GSA and AOUSC 

• clearly define the scope of construction projects and refine construction 

cost estimates before requesting project approval and final funding levels; 

• establish and implement a systematic and ongoing project oversight and 

evaluation process to compare courthouse projects, identify opportunities 

for reducing costs, and apply lessons learned to future projects; and 

• establish a mechanism to monitor and assess the use of flexibility within 

design guidance to better balance choices made about courthouse design, 

features, and finishes. 

GSA and the judiciary said that since 1996, they have also taken several 

actions to improve the courthouse construction program, including 

developing priority lists of locations needing additional space (the 5-year 

plan), revising the Design Guide, and placing greater emphasis on cost 

consciousness in its courthouse construction guidance for GSA. 

In a 2004 congressional briefing, we reported that GSA had attributed 

some cost growth in courthouse construction projects to a number of 

factors, including changes in the scope of the projects. In Buffalo, New 

York, for example, GSA had to change the scope of the courthouse project 

and acquire an entirely new site in order to achieve the necessary securitybased setbacks from the street. The judiciary said that funding delays have 

slowed the progress of the program by creating a backlog of projects, and 

 3

GAO, Federal Courthouse Construction: More Disciplined Approach Would Reduce Costs 

and Provide for Better Decisionmaking, GAO/T-GGD-96-19 (Washington, D.C.: Nov. 8, 

1995).

4

GAO/T-GGD-96-19. 

Courthouse Construction 

Costs 
Page 7 GAO-05-838T 

increased costs by 3 to 4 percent per year because of inflation. The 

judiciary also indicated that limiting the size of courthouses to stay within 

budget has resulted in space shortages sooner than expected at some 

courthouses. In a 2004 report related specifically to a new federal 

courthouse proposed for Los Angeles, we found that the government will 

likely incur additional construction and operational costs beyond the $400 

million estimated as needed for the new courthouse.5

 Some of these 

additional costs are attributable to operational inefficiencies. Specifically, 

the court is split between a new building and an existing courthouse in Los 

Angeles, both of which will, according to the judiciary, require additional 

courtrooms to meet the district court’s projected space requirements in 

2031. 

In 1993, we reviewed the long-term planning process used by the judiciary 

to estimate its space requirements.6

 We found that AOUSC’s process for 

projecting long-term space requirements did not produce results that were 

sufficiently reliable to form the basis for congressional authorization and 

funding approval of new construction and renovation projects for court 

space. Specifically, three key problems impaired the accuracy and 

reliability of the judiciary’s projections. First, AOUSC did not treat all 

districts consistently. For example, the procedure used to convert 

caseload estimates to staffing requirements did not reflect differences 

among districts that affect space requirements. Second, according to 

AOUSC’s assumptions about the relationship between caseloads and staff 

needs, many district baseline estimates did not reflect the districts’ current 

space requirements. For example, when a district occupied more space 

than the caseload warranted, future estimates of needs were overstated. 

Third, AOUSC’s process did not provide reliable estimates of future space 

requirements because the methodology used to project caseloads did not 

use standard acceptable statistical methods. 

We recommended that AOUSC revise the long-term planning process to 

increase consistency across regions, establish accurate caseload baselines 

for each district, and increase the reliability of the projected caseloads by 

 5

GAO, L.A. Federal Courthouse Project: Current Proposal Addresses Space Needs, but 

Some Security and Operational Concerns Would Remain, GAO-05-158 (Washington, D.C.: 

Dec. 20, 2004). 

6

GAO, Federal Judiciary Space: Long-Range Planning Process Needs Revision, 

GAO/GGD-93-132 (Washington, D.C.: Sept. 28, 1993). 

Judiciary Long- and ShortTerm Space Planning 
Page 8 GAO-05-838T 

applying an accepted statistical methodology and reducing subjectivity in 

the process. In May 1994, we testified that the judiciary had implemented 

some of these recommendations.7

 For example, on the basis of our 

recommendation, whenever a decision was made to proceed on a 

particular building project, AOUSC provided GSA with detailed 10-year 

space requirements for prospectus development and an overall summary 

of its projected 30-year space requirements for purposes of site planning. 

In 2001, we reported that since 1994, AOUSC had continued its efforts to 

improve its long-term planning process in implementing our previous 

recommendations.8

 Specifically, the judiciary began (1) using an 

automated computer program that applied Design Guide standards to 

estimate space requirements, (2) employing a standard statistical 

forecasting technique to improve caseload projections, and (3) providing 

GSA with data on its 10-year projected space requirements to support the 

judiciary’s request for congressional approval of funds to build new 

facilities. 

In 1996 we reported that the judiciary had developed a methodology for 

assessing project urgency and a short-term (5-year) construction plan to 

communicate its urgent courthouse construction needs.9

 Our analysis 

suggested that its 5-year plan did not reflect all of the judiciary’s most 

urgent construction needs. We found that the judiciary, in preparing the 5-

year plan, developed urgency scores for 45 projects, but did not develop 

urgency scores for other locations that, according to AOUSC, also needed 

new courthouses. Our analysis of available data on conditions at the 80 

other locations showed that 30 of them likely would have had an urgency 

score higher than some projects in the plan. We recommended that the 

Director of AOUSC work with the Judicial Conference Committee on 

Security, Space, and Facilities to make improvements to the 5-year plan, 

including fully disclosing the relative urgency of all competing projects 

and articulating the rationale or justification for project priorities, 

including information on the conditions that are driving urgency—such as 

specific security concerns or operational inefficiencies. In commenting on 

 7

GAO, Federal Judiciary Space: Progress Is Being Made to Improve the Long-Range 

Planning Process, GAO/T-GGD-94-146 (Washington, D.C.: May 4, 1994). 

8

GAO, Federal Judiciary Space: Update on Improvement of the Long-Range Planning 

Process, GAO-01-308R (Washington, D.C.: Jan. 25, 2001). 

9

GAO, Courthouse Construction: Improved 5-Year Plan Could Promote More Informed 

Decisionmaking, GAO/GGD-97-27 (Washington, D.C.: Dec. 31, 1996) and 

GAO/T-GGD-96-19. 
Page 9 GAO-05-838T 

the report, AOUSC generally agreed with our recommendations and 

indicated that many of the improvements we recommended were already 

under consideration. It also recognized that some courthouse projects, 

which were currently underway, may have had lower priority scores 

because the funding had already been provided by the time the priority 

scores were developed. 

In 1997, we reported that the judiciary maintains a general practice of, 

whenever possible, assigning a trial courtroom to each district judge.10

However, we also noted that the judiciary did not compile data on how 

often and for what purposes courtrooms are actually used and it did not 

have analytically based criteria for determining how many and what types 

of courtrooms are needed. We concluded that the judiciary did not have 

sufficient data to support its practice of providing a trial courtroom for 

every district judge. We recommended that the judiciary 

• establish criteria for determining effective courtroom utilization and a 

mechanism for collecting and analyzing data at a representative number of 

locations so that trends can be identified over time and better insights 

obtained on court activity and courtroom usage; 

• design and implement a methodology for capturing and analyzing data on 

usage, courtroom scheduling, and other factors that may substantially 

affect the relationship between the availability of courtrooms and judges’ 

ability to effectively administer justice; 

• use the data and criteria to explore whether the one-judge, one-courtroom 

practice is needed to promote efficient courtroom management or 

whether other courtroom assignment alternatives exist; and 

• establish an action plan with time frames for implementing and overseeing 

these efforts. 

In 1999, AOUSC contracted for a study of the judiciary’s facilities program 

to address, among other things, the courtroom-sharing issue and identify 

ways to improve its space and facility efforts. As part of this study, the 

contractor analyzed how courtrooms are used, assigned, and shared by 

judges. We reviewed the courtroom use and sharing portion of this study 

 10GAO, Courthouse Construction: Better Courtroom Use Data Could Enhance Facility 

Planning and Decisionmaking, GAO/GGD-97-39 (Washington, D.C.: May 19, 1997). 

Courtroom Sharing 
Page 10 GAO-05-838T 

and concluded, along with others, that the study was not sufficient to 

resolve the courtroom sharing issue.11 We recommended that the Director, 

AOUSC, in conjunction with the Judicial Conference’s Committee on 

Court Administration and Case Management and Committee on Security 

and Facilities, design and implement cost-effective research more in line 

with the recommendations in our 1997 report. We also recommended that 

AOUSC establish an advisory group made up of interested stakeholders 

and experts to assist in identifying study objectives, potential 

methodologies, and reasonable approaches for doing this work. In 

responding to the report, AOUSC disagreed with our recommendations 

because it believed the contractor study was sufficient and additional 

statistical studies would not be productive. 

In a 2002 report, we found that the judiciary’s policies recognized that 

senior district judges with reduced caseloads were the most likely 

candidates to share courtrooms and some active and senior judges were 

sharing courtrooms in some locations primarily when there were not 

enough courtrooms for all judges to have their own courtroom.12 However, 

because of the judiciary’s belief in the strong relationship between 

ensured courtroom availability and the administration of justice and the 

wide discretion given to circuits and districts in determining how and 

when courtroom sharing may be implemented, we concluded that there 

would not be a significant amount of courtroom sharing in the foreseeable 

future, even among senior judges. 

We have reported over the years that GSA has struggled to address its 

repair and alteration needs identified in its inventory of owned buildings. 

In 1989, we found that FBF’s inability to generate sufficient revenue in the 

past was due, in large part, to restrictions imposed on the amount of rent 

GSA could charge federal agencies, and we recommended in 1989 that 

Congress remove all rent restrictions and not mandate any further 

restrictions. It is also important to note that not all federal property is 

subject to FBF rent payments because GSA does not control all federal 

properties. We are currently conducting a review for this committee 

 11GAO, Courthouse Construction: Sufficient Data and Analysis Would Help Resolve the 

Courtroom-Sharing Issue, GAO-01-70 (Washington, D.C.: Dec. 14, 2000). 

12GAO, Courthouse Construction: Information on Courtroom Sharing, GAO-02-341

(Washington, D.C.: Apr. 12, 2002). 

Issues Related to FBF 
Page 11 GAO-05-838T 

regarding the issues associated with the judiciary’s request of a $483 

million permanent, annual exemption from rent payments to GSA. 

As part of our series on high-risk issues facing the federal government, we 

have reported that GSA has struggled over the years to meet the 

requirements for repairs and alterations identified in its inventory of 

owned buildings.13 By 2002, its estimated backlog of repairs had reached 

$5.7 billion. We have reported that adverse consequences of the backlog 

included poor health and safety conditions, higher operating costs 

associated with inefficient building heating and cooling systems, restricted 

capacity to modernize information technology, and continued structural 

deterioration resulting from such things as water leaks.14 We reported that 

FBF has not historically generated sufficient revenue to address the 

backlog. 

On the basis of the work we did in the late 1980s and early 1990s, we 

concluded that federal agencies’ rent payments provided a relatively 

stable, predictable source of revenue for FBF, but that this revenue has 

not been sufficient to finance both growing capital investment needs and 

the cost of leased space. We found that FBF’s inability to generate 

sufficient revenue during that time was compounded by restrictions 

imposed on the amount of rent GSA could charge federal agencies. 

Congress and OMB had instituted across-the-board rent restrictions that 

reduced FBF by billions of dollars over several years, and later continued 

to restrict what GSA could charge some agencies, such as the Departments 

of Agriculture and Transportation. Because these rent restrictions were a 

principal reason why FBF has accumulated insufficient money for capital 

investment, we recommended that Congress remove all rent restrictions 

and not mandate any further restrictions.15

According to GSA, most of the restrictions initiated by Congress and OMB 

have been lifted. However, the GSA Administrator has the authority to 

grant rent exemptions to agencies. GSA data show that several rent 

exemptions are currently in place. In general, these exemptions are 

narrowly focused on a single building or even part of a single building or 

 13GAO, High-Risk Series: Federal Real Property, GAO-03-122 (Washington, D.C.: Jan. 

2003). 

14GAO-03-122. 

15GAO, Federal Office Space: Increased Ownership Would Result in Significant Savings, 

GAO/GGD-90-11 (Washington, D.C.: Dec. 22, 1989). 

Rent Restrictions Have 

Historically Contributed to 

Large Repair Backlogs 
Page 12 GAO-05-838T 

are granted for a limited duration. Table 2 summarizes the current rent 

exemptions that exist in GSA buildings, according to data GSA provided. 

Table 2: Current Rent Exemptions in GSA Buildings 

Agency, address Justification 

Estimated forgone 

annual rent 

Smithsonian Institution, National 

Museum of the American Indian, New 

York, NY 

Legislatively mandated exemption. $4,566,632

U.S. Postal Service, 271 Cadman 

Plaza, New York, NY 

GSA granted an exemption to the Postal Service as part of a 99-year 

rent-free agreement with GSA as a condition of the negotiated sale of 

the building in lieu of a transfer of funds from GSA. 

$1,820,000

National Building Museum, 5th & F 

Sts., Washington, DC 

Legislatively mandated exemption. $1,300,000

Woodrow Wilson Center, 1300 

Pennsylvania Ave., Washington, DC 

GSA granted an exemption based on funding limitations imposed by 

Congress and the compelling purpose of memorializing the nation’s 

28th President. 

$5,400,000

Department of Commerce, 14th St. & 

Constitution Ave., Washington, DC 

GSA granted an exemption covering the area of the building that is 

maintained at the expense of the tenant agency. 

$400,000

National Imaging and Mapping Agency, 

M Street, SE, Washington, DC 

GSA granted a rent exemption of 50 percent because the tenant 

agreed to pay all maintenance, capital improvements, and security 

expenses due. 

$7,038,552

Department of Agriculture, multiple 

locations, Washington, DC 

GSA granted a 100-percent rent exemption for the tenant’s three 

headquarters buildings for fiscal years 1996 through 2006 to allow the 

tenant to accumulate funds needed for major repairs on these 

buildings. The tenant will then pay for the repairs. 

$52,406,234

Railroad Retirement Board, nationwide 

locations 

GSA granted a partial rent exemption so that the tenant would only pay 

for the actual costs on these buildings through fiscal year 2013. 

$3,655,063

Centers for Medicare & Medicaid 

Services, nationwide locations 

GSA granted a partial rent exemption so that the tenant would only pay 

for the actual costs on these buildings through fiscal year 2013. 

$15,717,264

Social Security Administration, 

Washington, DC 

GSA granted a partial rent exemption so that the tenant would only pay 

for the actual costs on these buildings through fiscal year 2013. 

$72,417,477

Department of State, 1801 

Pennsylvania Ave., Washington, DC 

GSA granted an exemption for space used by the President’s G-8 

Economic Summit staff from August 2004 to November 2004 because 

neither the Department of State nor the G-8 Economic Summit has 

received appropriated funding for rent payments to GSA. 

$1,330,740

International Broadcasting Board of 

Governors, Washington, DC 

GSA granted an exemption in 2004 based on the tenant’s certification 

that it did not have funds available to meet the obligation. A new longterm occupancy agreement is being negotiated. 

$1,016,195

Presidential and Armed Forces 

Inaugural Committees, Mary E. Switzer 

Building, Washington, DC 

GSA granted an exemption in 2004 because it found that it was not 

practical or feasible for the tenant to pay the rent. 

$2,415,440

U.S. Election Assistance Commission, 

Washington, DC 

GSA granted an exemption for fiscal year 2004 because the tenant 

was appropriated only 12 percent of its authorized budget and did not 

have sufficient money to pay its rent. 

$100,060

 Total $169,583,657
Page 13 GAO-05-838T 

Source: GAO analysis of GSA data. 

Note: According to GSA, the U.S. Senate does not pay market rates for its GSA facilities (district 

offices) because of an October 1996 signed memorandum of agreement between the U.S. Senate 

and GSA regarding tenant-requested improvements, but the U.S. Senate has not been granted a 

formal exemption 

In fiscal year 2006, according to data from GSA, $7.7 billion in expected 

FBF revenue is projected to come from rent paid by over 60 different 

federal tenant agencies, such as the Departments of Justice and Homeland 

Security. Congress sets annual limits on how much FBF revenue can be 

spent for various activities through the appropriations process. In 

addition, Congress may appropriate additional amounts for FBF and 

between fiscal year 1990 and fiscal year 2005, Congress made direct 

appropriations into FBF for all but 3 fiscal years.16 This additional funding 

was not tied directly to any specific projects or types of projects. The 

statutory language relating to the direct appropriations states that 

additional amounts are being deposited into FBF for the purposes of the 

fund. 

It is also important to note that not all federal property is subject to FBF 

rent payments. While GSA owns and leases property and provides real 

estate services for numerous federal agencies, we reported in 2003 that 

GSA owns only about 6 percent of federal facility space in terms of 

building floor area. Other agencies, including the Department of Defense 

(DOD), the U.S. Postal Service, and the Department of Energy have 

significant amounts of space that they own and control without GSA 

involvement. In all, over 30 agencies control real property assets. Propertyowning agencies do not pay rent into FBF or receive services from GSA 

for the space they occupy in the buildings that they own. For example, the 

Pentagon and military bases are owned by DOD, and national parks 

facilities are owned by Interior. As a result, these facilities are maintained 

by DOD and Interior, respectively. 

In December 2004, the judiciary requested that the GSA Administrator 

grant a $483 million permanent, annual exemption from rent payments—

an amount equal to about 3 times the amount of all other rent exclusions 

combined. This exemption would equal about half of the judiciary’s $900 

million annual rent payment to GSA for occupying space in federal 

 16Congress did not make direct appropriations into FBF in fiscal years 1998, 2000, and 2005. 

Direct Appropriations to 

FBF Generally Benefit the 

Fund 

Our Ongoing Work on the 

Judiciary’s Request for an 

Exemption from Rent 

Payments to FBF 
Page 14 GAO-05-838T 

courthouses. The judiciary has expressed concern that the growing 

proportion of its budget allocated to GSA rent payments is having a 

negative effect on court operations. According to GSA data, the judiciary 

increased the owned space it occupies by 15 percent from 2000 to 2004. In 

February 2005, the GSA Administrator declined the request because GSA 

considered it unlikely that the agency could replace the lost income with 

direct appropriations to FBF. In April 2005, this subcommittee requested 

that we look into issues associated with the judiciary’s request for a 

permanent, annual exemption from rent payments to GSA. Our objectives 

for this work are to determine the following: 

1. How are rent payments calculated by GSA and planned and accounted 

for by the judiciary? 

2. What changes, if any, has the judiciary experienced in rent payments in 

recent years? 

3. What impact would a permanent rent exemption have on FBF? 

Our work is still underway, but our past work on related issues shows that 

rent exemptions have been a principal reason why FBF has accumulated 

insufficient money for capital investment. 

We conducted our work for this testimony in June 2005 in accordance 

with generally accepted government auditing standards. During our work, 

we reviewed past GAO work on federal real property and courthouse 

construction issues, analyzed AOUSC and GSA documents, and 

interviewed AOUSC and GSA officials. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 

to respond to any questions that you or the other Members of the 

Subcommittee may have. 

For further information about this testimony, please contact me at (202) 

512-2834 or goldsteinm@gao.gov. Keith Cunningham, Randy De Leon, 

Maria Edelstein, Bess Eisenstadt, Joe Fradella, Susan Michal-Smith, David 

Sausville, and Gary Stofko also made key contributions to this statement. 

Scope and 

Methodology 

GAO Contacts and 

Staff 

Acknowledgments 

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