United States Government Accountability Office

GAO Report to Congressional Requesters

INTERIOR’S LAND 

APPRAISAL 

SERVICES 

Actions Needed to 

Improve Compliance 

with Appraisal 

Standards, Increase 

Efficiency, and 

Broaden Oversight 

September 2006 

 

GAO-06-1050 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2006

INTERIOR’S LAND APPRAISAL SERVICES

Actions Needed to Improve Compliance 

with Appraisal Standards, Increase 

Efficiency, and Broaden Oversight 

Highlights of GAO-06-1050, a report to the 

Subcommittee on Interior, Environment, 

and Related Agencies, Committee on 

Appropriations, House of Representatives

To remedy decades of problems 

with its land appraisals, the

Department of the Interior 

(Interior) in 2003 removed the land 

appraisal function from its land

management agencies and 

consolidated them into the 

Appraisal Services Directorate 

(ASD). However, Congress and 

ASD’s clients have expressed 

concern that ASD’s appraisal

services have become less efficient 

and effective than what previously 

existed. GAO was asked to assess 

(1) ASD’s policies and procedures

in ensuring compliance with 

appraisal standards, (2) ASD’s 

ability to meet its customers’ 

needs, and (3) the extent to which 

there are land appraisals under

Interior for which ASD does not 

have oversight responsibility. To 

answer these objectives, we

reviewed agency guidance, 

analyzed appraisal data, and used 

independent expert appraisers to

assess compliance with standards. 

What GAO Recommends

We are making a number of

recommendations to strengthen 

ASD appraisal services, such as

establishing a compliance

inspection program, taking steps to 

increase timeliness, and clarifying

ASD’s oversight of grant-in-aid

appraisals. 

In commenting on the draft report, 

Interior generally agreed with our 

findings and recommendations.

Although the quality of appraisals has improved since ASD’s inception, 

Interior’s appraisal policies and procedures do not fully ensure compliance 

with recognized appraisal standards. ASD appraisers perform appraisals 

and/or review appraisals performed by co-workers or contractors. Of 324 

appraisals we evaluated—representing 50 percent (nearly $3.2 billion) of the 

total value of the land appraised since ASD’s inception—192 appraisals

appeared to be in compliance with recognized appraisal standards. The 

remaining 132, however, did not meet standards primarily because (1) ASD 

appraisers appeared to not apply specialized skills needed to perform or 

review the appraisals of lands involving minerals, timber, and water rights; 

and (2) ASD review appraisers performed cursory reviews of appraisals and 

approved them without considering property characteristics that can 

increase the lands’ value, such as the presence of roads. ASD also lacked 

standardized appraisal review procedures, which can provide greater 

assurance in the consistency of appraisal reviews, as well as assurance that 

appraisals meet recognized appraisal standards. Furthermore, ASD has not 

developed a mechanism, such as a compliance inspection program, for 

ensuring that its appraisals meet standards. Other federal agencies doing 

appraisals have developed compliance systems and used them successfully. 

ASD’s relationships with its client agencies are hampered by inefficient 

operations. ASD does not have a system for ensuring that it meets realistic

time frames for appraisal delivery. This often occurs because ASD has no 

process for (1) establishing realistic, agreed-upon deadlines for completing 

appraisals; (2) balancing appraisal requests with other appraisal priorities; 

and (3) clarifying roles for obtaining information needed to complete 

appraisals. In addition, some ASD business practices impede efficient 

appraisal delivery, add costs, and result in organizational inefficiencies. For 

instance, ASD performs appraisals for lands that yield little revenue to the 

government when compared to the cost of doing the appraisal. Also, ASD 

has not found enough contract appraisers with federal experience to assist 

their workload and have, on occasion, had to use appraisers that were not in 

close proximity to the land being appraised, which increased appraisal costs.

When ASD was formed, it was not assigned responsibility for appraisals of 

land acquired under Interior’s grant-in-aid programs, even though the grantin-aid land acquisition budget in fiscal year 2005 represented 60 percent of 

Interior’s $240 million total for land acquisition. Under Interior’s grant-in-aid 

programs, many nonfederal entities receiving federal grant-in-aid funds from

Interior’s Fish and Wildlife Service and National Park Service are not 

required to obtain ASD review of appraisals for land acquisitions. Instead, 

appraisal and review responsibilities typically remain with the grant 

recipient, such as a state agency. However, there are indications that 

appraisal mistakes are occurring, and some Interior grant expenditures for 

land acquisitions may be based on appraisals that do not meet standards. 

www.gao.gov/cgi-bin/getrpt?GAO-06-1050.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robin M. 

Nazzaro at (202) 512-3841 or 

nazzaror@gao.gov. 
Contents 

Letter 1

Results in Brief 5

Background 8

Interior’s Appraisal Policies and Procedures Do Not Fully Ensure 

Compliance with Recognized Appraisal Standards 13 

ASD’s Client Relationships Are Hampered by Inefficient Operations 22 

Interior Lacks Oversight of Appraisals under Some of Its Grant-inAid Programs 38 

Conclusions 42

Recommendations 44

Agency Comments and Our Evaluation 45 

Appendix I Scope and Methodology 49 

Appendix II Comments from the Department of the Interior 51 

Appendix III GAO Contact and Staff Acknowledgments 59

Tables 

Table 1: Land Appraisals (November 2003 through February 21, 

2006) That Did Not Appear to Meet Standards, Compared 

with Total Appraisals Reviewed 15 

Table 2: Independent Federal Review Requirements for Interior’s 

Grant-in-Aid Programs 39 

Figures 

Figure 1: Examples of Past Reports Issued between 1987 and 2003, 

and Problems Found with Interior Agencies’ Land 

Acquisition, Exchange, and Appraisal Programs 10 

Figure 2: Appraisal Checklist from the Uniform Appraisal 

Standards for Federal Land Acquisitions 19 

Page i GAO-06-1050 Interior's Land Appraisal Process
Abbreviations 

ARRTS Appraisal Request and Review Tracking System 

ASD Appraisal Services Directorate 

BLM Bureau of Land Management 

FWS Fish and Wildlife Service 

NPS National Park Service 

USDA U.S. Department of Agriculture 

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Page ii GAO-06-1050 Interior's Land Appraisal Process
United States Government Accountability Office

Washington, DC 20548 

September 28, 2006 

The Honorable Charles H. Taylor 

Chairman 

The Honorable Norman D. Dicks 

Ranking Member 

Subcommittee on Interior, Environment, and Related Agencies 

Committee on Appropriations 

House of Representatives 

The Department of the Interior (Interior) has appraised more than 6.5 

million acres of land typically for purchase, sale, or exchange from 

November 2003 through May 2006, totaling more than $7 billion, for such 

purposes as providing recreational opportunities for the public, conserving

critical wildlife habitat, and opening land to the development of energy 

and mineral resources. Before entering into these land transactions, 

Interior generally determines the market value of land using an appraisal.1

Prior to November 2003, appraisals for land transactions in Interior’s 

Bureau of Land Management (BLM), the Bureau of Reclamation 

(Reclamation), the Fish and Wildlife Service (FWS), and the National Park

Service (NPS) were conducted by staffs reporting to realty managers in 

each of these management agencies. However, since 1987, our reports, in 

addition to others issued by Interior’s Inspector General and the Appraisal 

Foundation,2

 found that procedures used by BLM, FWS, and NPS did not 

comply with recognized appraisal standards.3

 In one case, Interior’s 

 1

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which

in all probability the property would have sold on the effective date of the appraisal, after a

reasonable exposure time on the open competitive market, from a willing and reasonably 

knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting 

under any compulsion to buy or sell, giving due consideration to all available economic 

uses of the property at the time of the appraisal. 

2

The Appraisal Foundation, a nonprofit educational organization dedicated to the 

advancement of professional valuation, was established in 1987 and authorized by

Congress as the source of appraisal standards and appraiser qualifications. 

3

In general, two sets of standards apply to appraisals of federal land: (1) the Uniform

Standards of Professional Appraisal Practice, developed in 1986–1987 and annually updated 

by the Appraisal Standards Board of The Appraisal Foundation; and (2) the Uniform 

Appraisal Standards for Federal Land Acquisitions, revised in 2000 by the Interagency Land

Acquisition Conference, a voluntary organization composed of representatives of federal 

agencies that acquire land. Established in 1968, this organization is chaired through the 

Department of Justice. 

Page 1 GAO-06-1050 Interior's Land Appraisal Process
Inspector General reported that for a BLM land exchange, department 

officials negotiated away a substantial interest in potentially valuable 

resources and improperly valued other federal and state lands. According 

to the U.S. Office of Special Counsel, the BLM’s own internal estimates 

showed that the federal government stood to lose between $97 and $117 

million on this exchange. In a different report on this exchange,4

 the 

Appraisal Foundation concluded that appraisers at BLM lacked the 

institutional independence necessary to conduct objective appraisals and 

faced heavy pressure from their realty managers to conduct appraisals that 

would expedite land transactions. Interior’s Inspector General’s reports 

have reached similar conclusions about appraiser independence, and GAO 

reports have highlighted multiple cases of land transactions using 

misvalued land. 

These findings brought considerable change in the way many Interior 

appraisals are carried out. After the Appraisal Foundation report on BLM’s 

appraisal procedures was issued, officials in Interior formed a working 

group to determine whether problems similar to those found in BLM 

existed in the other land management agencies. The group concluded that 

a lack of appraiser independence and inconsistent application of appraisal 

standards were problematic within all four land management agencies. 

The group also concluded that past efforts to remedy appraisal problems, 

which typically included refining or augmenting program guidance, had 

proven ineffective because revised guidance did not address issues of 

appraiser independence. As a result, in November 2003, Interior removed 

appraisers from the realty offices in each of the agencies and consolidated

them in a new office, the Appraisal Services Directorate (ASD), reporting 

to the National Business Center. Interior primarily took this action to 

insulate appraisers from institutional pressure, having them report to, and 

receive performance evaluations from, other appraisers, rather than realty

specialists responsible for completing land transactions within their 

respective land management agencies. ASD’s appraisers have a dual 

responsibility: performing appraisals as well as reviewing appraisals 

performed by co-workers and contractors. In implementing the 

consolidation, Interior directed that the efficiency of appraisal delivery, 

including timeliness and costs, was not to be negatively affected. 

 4

The Appraisal Foundation: Evaluation of the Appraisal Organization of the Department 

of Interior Bureau of Land Management, Washington, D.C., October 9, 2002. 

Page 2 GAO-06-1050 Interior's Land Appraisal Process
In addition to consolidating most appraisal services, Interior also shifted 

administrative functions associated with appraisals—previously 

conducted by each of the land management agencies realty offices—to 

other units within Interior. Contracting for land appraisals was one such 

function. Since ASD’s inception, it has performed about 500 appraisals inhouse per year and contracted more than 1,200 appraisals per year. Upon 

receipt of a contractor’s completed appraisal, ASD reviews it for 

compliance with recognized appraisal standards. In this regard, choosing 

qualified contract appraisers is critical if ASD is to help ensure that 

appraisals meet federal standards, and that the federal government makes 

sound financial management decisions for land transactions. Given the 

significant reliance on contractors to conduct the appraisals, Interior 

officials decided to consolidate the functions for (1) awarding appraisal 

contracts, (2) paying the contract appraisers, and (3) billing the land 

management agency clients for the completed appraisals. These functions 

were placed within Interior’s National Business Center—a fee-for-service 

organization—which has experience in financial management, acquisition 

services, procurement, and human resource operations. 

Land management agencies also conduct land transactions through 

various grant-in-aid programs that are administered by offices other than 

their realty offices. Appraisals of these transactions are usually arranged

by the nonfederal grant recipient, such as state or local governments. 

Interior’s Inspector General has identified long-standing problems with 

appraisals conducted by non-federal partners, although not specifically 

with the grant-in-aid programs, including pressure on review appraisers to 

approve substandard appraisals. For example, between 1992 and 2001, 

eight Interior Inspector General’s reports documented significant 

problems with appraisals conducted by non-federal partners, including 

incorrect valuations based on questionable property dimensions, flawed 

assumptions about the highest and best use5

 of the land, and inaccurate

comparable sales analyses. Specifically, in a 1992 report,6

 Interior’s 

Inspector General found that there was little assurance that fair market 

values were accurately estimated because the bureaus did not follow 

established standards regarding the appraisal process. More recently, a 

 5

“Highest and best use” is defined as the land’s use that is physically possible, legally 

permissible, financially feasible, and maximally profitable. 

6

Interior’s Office of Inspector General, Land Acquisitions Conducted with the Assistance 

of Nonprofit Organizations, Report No. 92-I-833, Washington, D.C., May 1992. 

Page 3 GAO-06-1050 Interior's Land Appraisal Process
September 2005 Inspector General report7

 found that these problems still 

remain with appraisals conducted by Interior’s non-federal partners. 

Since ASD’s inception, new problems have emerged. With the 

consolidation of appraisers from BLM, Reclamation, FWS, and NPS, each

of which had unique appraisal procedures, realty managers have 

expressed concern about the possible inconsistency of appraisal quality.

In addition, one realty specialist from NPS asserted that appraisal time 

frames have doubled from pre-ASD days. ASD officials, in response, 

claimed that realty specialists have unrealistic expectations regarding time

frames, in part because the time frames they were used to under the 

previous system—when realty specialists had undue influence over the 

process—were inappropriately short. ASD officials also explained that

time frames have been affected by new business practices—resulting from 

the consolidation of appraisal services—over which they have no control.

These disagreements have continued since ASD’s inception. 

In this context, you requested that we determine (1) the extent to which 

Interior’s appraisal policies and procedures ensure compliance with 

recognized appraisal standards for appraisals conducted within ASD; (2) 

what, if anything, affects ASD’s working relationships with its client 

agencies and its overall efficiency in providing appraisal services; and (3) 

the extent to which there are land appraisals under Interior for which ASD 

does not have responsibility. 

To determine if Interior’s appraisal policies and procedures are sufficient 

to ensure compliance with recognized appraisal standards, we retained

appraisal experts to evaluate 324 of the 2,905 appraisals completed from 

ASD’s inception through February 21, 2006, consisting of appraisals for 

land transactions involving land exchanges; land valued over $10 million; 

National Wildlife Refuge revenue-sharing; NPS acquisitions; and lands 

having minerals, timber, or water rights. These appraisals collectively 

represented 50 percent (nearly $3.2 billion) of the total value of the land 

appraised from ASD’s inception through February 21, 2006. To determine 

what, if anything, affects the working relationships between ASD and its 

client agencies (and what affects ASD’s overall efficiency in providing 

appraisal services), we assessed agreements between ASD and its client 

 7

Interior’s Office of Inspector General, Managing Land Acquisitions Involving NonFederal Partnerships, Department of the Interior, Report No. W-IN-MOA-0085-2004, 

Washington, D.C., September 2005. 

Page 4 GAO-06-1050 Interior's Land Appraisal Process
agencies that dictate the terms of ASD’s service. We also analyzed 

timeliness data from Interior’s Appraisal Request and Review Tracking 

System (ARRTS) and cost data from Interior’s National Business Center. 

We also conducted structured interviews with ASD officials and 

interviewed realty specialists in the agencies ASD serves. To determine the

extent to which there are land appraisals under Interior that ASD does not 

have the responsibility for overseeing, we identified Interior’s grant-in-aid

programs and appraisal requirements for each. 

We assessed the reliability of the data provided by Interior and determined 

that these data were sufficiently reliable for the purposes of this report. A 

more detailed description of our scope and methodology is presented in 

appendix I. Our work was conducted in accordance with generally 

accepted government auditing standards, including an assessment of 

internal controls, from December 2005 through August 2006. 

Interior’s appraisal policies and procedures do not fully ensure ASD’s 

compliance with recognized appraisal standards, although consolidation 

has greatly improved the independence and objectivity of appraisals. ASD 

appraisers have the responsibility of either performing appraisals or 

reviewing those performed by co-workers or contractors. Of the 324 

appraisals our appraisal experts reviewed, 192, or about 60 percent of 

these, appeared to be in compliance with recognized appraisal standards. 

For the remaining 132, or 40 percent, however, ASD performed and/or 

approved appraisals that did not meet standards. For these appraisals, the 

federal government has limited assurance that the land it appraised for 

purchase, sale, or exchange, reflected market value. In 42 of these 132 

appraisals, the property being appraised had unique characteristics, such 

as minerals, timber, or water rights, which require specialty appraisal 

skills. However, appraisers and reviewers either lacked or did not apply 

specialty skills needed to estimate the value for the unique 

characteristics—despite Interior’s requirement that appraisers and 

reviewers have the knowledge necessary to perform and review 

appraisals, and apply proper skills in accordance with appraisal standards. 

In addition, in 90 of the 132 cases which did not require specialty skills, 

ASD review appraisers conducted cursory reviews of appraisals 

performed by co-workers or contractors. As a result, they approved 

appraised values that did not reflect key property characteristics, such as 

the presence of roads allowing access to properties, which can 

substantially increase a property’s value. Information pertaining to these 

characteristics was included in the appraisal reports reviewed by ASD 

review appraisers. Appraisal review oversights were commonplace, 

Results in Brief 

Page 5 GAO-06-1050 Interior's Land Appraisal Process
however, because ASD has not developed standardized appraisal review 

procedures, which can provide greater assurance that appraisal reviews 

are consistent and that appraisals meet recognized standards. 

Consequently, review appraisers have discretion in deciding which 

appraisals should receive thorough or cursory reviews. Furthermore, ASD 

has not developed a mechanism, such as a compliance inspection 

program, for ensuring that the appraisals it approves meet recognized 

appraisal standards. Such a mechanism is used by other federal appraisal

agencies, such as the Forest Service; this mechanism, among other things,

helps to prevent (1) appraisals being performed by staff without proper 

skills and (2) cursory appraisal reviews. 

ASD’s working relationships with its client agencies and its efficiency in 

conducting appraisal services are hampered by inefficient operations. 

Specific examples include the following: 

• ASD does not have a system to ensure that it meets realistic time frames 

for appraisal delivery. Timely appraisal delivery is critical to the success of

the agencies’ land acquisition and management goals—agreements on land 

transactions between agencies and private landowners can fall apart if 

appraisals are not completed on a timely basis. Although customer-service 

agreements between ASD and its client agencies call for timely appraisal 

delivery, ASD does not have a process for establishing realistic or helpful 

deadlines for completing appraisals. Our analysis found that 2,520 (or 71 

percent) of the 3,500 completed appraisals in ASD’s database missed their 

client-agency-set deadlines, with an average delay of about 4 months. In 

addition, because ASD has not developed a system of prioritizing each 

agency’s respective appraisal requests or of responding to changing 

priorities to address emergency appraisal needs, ASD does not coordinate

appraisal requests with client agencies’ other appraisal priorities, which 

adds to appraisal delays. Finally, unclear roles and responsibilities for 

obtaining information needed to complete appraisals—such as property 

descriptions, land deeds, title information, and sales histories—negatively

impacts timely appraisal delivery. Without clearly defined roles and 

responsibilities for obtaining information, appraisals are often delayed—

sometimes several months before being initiated.

• Likewise, several ASD business practices impede service delivery, add 

costs, and result in organizational inefficiencies. First, the contracting and 

billing functions add costs and time to appraisal delivery. Since Interior 

centralized contracting for appraisals in the National Business Center, 

contracts that, in the past, had been awarded within a few business days 

under each of the land management agencies’ processes, now take on 

average about 10 days to be awarded, with many taking significantly more

Page 6 GAO-06-1050 Interior's Land Appraisal Process
time. Second, ASD has not found enough contract appraisers with 

government experience to assist them in their substantial workload. 

Relying on contract appraisers without this experience can end up being

costly and time consuming; therefore, ASD relies on a handful of reliable 

contractors who often are not located in close proximity to the land being 

appraised and, therefore, charge high fees to cover travel expenses. 

Finally, ASD appraises lands that yield little revenues in comparison to the

costs of performing the appraisals. With the inception of ASD, land 

management agencies required some of these appraisals to be performed 

by ASD appraisers, which can cost the federal government several 

thousand dollars per appraisal, according to an ASD regional appraiser, 

because ASD requires appraisers to visit the remotely located sites. Many 

of these private rights-of-way, however, yield less than $500 per year. 

When ASD was formed, it was not assigned responsibility for appraisals of 

land acquired under Interior’s grant-in-aid programs. The total land 

acquisition budget for these programs was nearly $140 million in fiscal 

year 2005, or 60 percent of Interior’s $240 million appropriated land 

acquisition budget. While ASD was formed as an independent organization 

to ensure that appraisals meet federal standards, in eight of the nine FWSand NPS-administered grant-in-aid programs we reviewed, nonfederal 

entities receiving grant-in-aid funds are not required to submit appraisals 

for ASD review. Instead, appraisal review responsibilities within grant-inaid programs are largely the responsibility of the state and local grant 

recipients. However, the grant manager for the only grant program we 

reviewed that requires ASD review told us that he recognizes the value of

obtaining an independent “check” to ensure that they do not offer more or 

less than market value. Despite inconsistent requirements for ASD review 

of grant-in-aid appraisals, Interior has no clear policy on why some grantin-aid programs require federal review of land appraisals while others do 

not. Secretarial Order 3258, issued in December 2004, outlines ASD’s role 

in reviewing appraisals for nonfederal parties. However, several ASD 

regional appraisers told us that the order does not define “nonfederal 

parties” and, therefore, it is not clear whether the order applies to grant 

recipients under the grant-in-aid programs. Further, two ASD regional 

appraisers stated that official clarification on whether Secretarial Order 

3258 applies to grant recipients would be helpful.

We are making a number of recommendations designed to help resolve the 

compliance problems that persist, such as ensuring that ASD has (1) 

appraisers with specialized skills needed for some appraisals, (2) 

consistent appraisal review procedures, and (3) a periodic monitoring 

system for appraisals with a higher likelihood of noncompliance. We are 

also making recommendations to improve the accountability and 

Page 7 GAO-06-1050 Interior's Land Appraisal Process
efficiency issues that need to be addressed in order to build on the 

progress that ASD has made to date, including criteria for ensuring timely 

delivery of appraisals and the removal of some business practices that 

have added time and costs to appraisal delivery. Finally, we are also 

recommending that Interior clarify the terms of ASD’s appraisal oversight 

in the review of grant-in-aid appraisals. 

In commenting on a draft of this report, Interior generally agreed with our 

findings and recommendations. It said that it welcomed the report’s intent

to improve the overall departmental appraisal process and services 

provided through ASD, and that ASD will continue to strive to provide high 

quality valuation services. It also said that the recommendations, once 

implemented, will further strengthen how Interior performs real property 

appraisals and that it is dedicated to addressing the recommendations 

promptly. Interior also offered several suggestions for updating 

information in the report and for technical clarifications; we have 

incorporated these suggestions, as appropriate. 

Interior’s four land management agencies—BLM, FWS, NPS, and 

Reclamation—collectively manage nearly 450 million acres of parks, 

wilderness, forests, range, and other land. These land holdings comprise 

nearly one-fifth of the total area of the United States. Buying, exchanging, 

or leasing land is an integral part of these agencies’ land management 

functions to, for example, better consolidate existing holdings or acquire 

land deemed important for public purposes. For several decades, these 

land transactions have generated considerable debate over how to 

balance, on federally managed lands, resource utilization (such as timber 

sales and minerals extraction) with resource protection and recreational 

use. Regardless of the decisions made about which lands to acquire or 

divest and for what purposes, however, Interior generally requires 

acquisitions to be based on market value. 

Objective land appraisals are at the heart of establishing market value. 

Without objective appraisals, estimates of land values can be subjected to

the machinations of buyers and sellers, each of whom may have a vested 

interest in deviating from market value in order to obtain a more favorable 

“price” or complete a transaction more quickly. In creating ASD, the 

Secretary of the Interior required all of Interior’s real estate appraisals to 

conform to the Uniform Appraisal Standards for Federal Land Acquisitions 

or the Uniform Standards of Professional Appraisal Practice—the two 

nationally recognized appraisal standards—which, when followed, help an 

appraiser to develop an objective and credible market-value estimate. 

Background 

Page 8 GAO-06-1050 Interior's Land Appraisal Process
These appraisal standards require appraisers to identify a property’s 

highest and best use. A property’s highest and best use can be influenced 

by the presence of resources, such as minerals or timber (which typically 

indicates income-generating potential), as well as functioning structures, 

such as grain silos. It can also be influenced by legal restrictions, such as 

limitations to water rights, lack of property access, or easements that 

restrict types of development and could impact the property’s value. 

Taking these characteristics into consideration, one approach appraisers 

use is to compare, to the subject property, other properties with similar 

characteristics that have recently been sold in the same (or similar) 

markets within a reasonable time period. Appraisers use these comparable 

sales to estimate the subject property’s market value. Before appraisals 

are approved for agency use, however, they are reviewed by a review 

appraiser. Upon obtaining an opinion of market value from an appraiser, 

Interior staff generally cannot deviate from it when completing a land

purchase, sale, or exchange with a nonfederal entity. 

Since 1987, numerous audits and reviews have noted problems with 

Interior’s ability to conduct appraisals that adhere to standards. For 

example, a 1998 Interior Inspector General’s report on Nevada land 

exchanges involving BLM concluded that the federal government lost 

$18.2 million in three land exchanges because appraisers ignored relevant 

information and incorrectly identified the highest and best use of the 

property. The Inspector General concluded that these losses also occurred 

because the federal review of the appraisals—which is the final 

compliance check—were cursory and failed to comply with recognized 

appraisal standards, despite the fact that all relevant information was 

included in the appraisal reports to reach a correct conclusion of value.

8

The October 2002 Appraisal Foundation report we cited earlier found the 

problems at BLM to be even more systemic: that appraisers lacked 

institutional independence, which manifested itself in inconsistent 

application of appraisal standards and resulted in a failure to assure 

objective and independent market-value opinions. Figure 1 provides 

examples of past reports issued between 1987 and 2003, and problems 

found with Interior agencies’ land acquisition, exchange, and appraisal 

programs. 

 8

Interior, Office of Inspector General. Audit Report: Follow up of Nevada Land Exchange

Activities, Bureau of Land Management, Report No. 98-I-689, Washington, D.C., 

September 1998. 

Page 9 GAO-06-1050 Interior's Land Appraisal Process
Figure 1: Examples of Past Reports Issued between 1987 and 2003, and Problems Found with Interior Agencies’ Land 

Acquisition, Exchange, and Appraisal Programs 

1987 1988 1989 1990 1994 1991 1995 1992 1993

BLM Land Exchange Activities: 

Interior’s Inspector General found that 

BLM appraisers did not comply with 

requirements to fully review appraisals

for adherence to federal appraisal 

standards.

Federal Land Acquisition: 

Land Exchanges Working But 

Can Be Improved: GAO found 

that Interior and Forest Service 

did not comply with the law 

governing land exchanges by 

allowing the adjustment of 

appraised values.

Federal Land Management: 

Consideration of Proposed Alaska 

Land Exchanges Should Be 

Discontinued: GAO found that 

Interior appraised the value of the 

proposed exchanges at $90 million, 

but negotiated a price of $539 million 

and assigned values based on limited 

geographical information and 

uncertain economic data.

Federal Land Management: Chandler 

Lake Land Exchange Not in the 

Government’s Best Interest: GAO 

found that, as a result of the exchange, 

the federal government was at a

disadvantage in estimating the oil and 

gas values, which impacts its ability to 

set sale terms for possible future leases.

Interior Land Acquisitions Conducted 

with the Assistance of Nonprofit 

Organizations: Interior’s Inspector 

General found that FWS paid more than 

fair market value for certain land 

acquisitions and did not follow established 

appraisal standards.

1996

Nevada Land Exchange 

Activities, Bureau of Land 

Management: Interior’s Inspector 

General found that the Bureau of 

Land Management did not 

consistently follow prescribed 

land exchange regulations or 

procedures and ensure that fair 

and equal value was received.

Page 10 GAO-06-1050 Interior's Land Appraisal Process
Source: GAO.

BLM and the Forest Service: Federal Taxpayers

Could Benefit More From Land Sales: GAO found that 

BLM sometimes sold land for less than its fair market 

value, despite having no authority to do so.

Evaluation of the Appraisal Organization of the Department 

of Interior Bureau of Land Management: The Appraisal 

Foundation found that BLM’s ability to apply appraisal 

standards was seriously eroded because of operation and 

management of the appraisal function by non-appraisers and 

interference with or failure to procure objective and independent 

market value opinions from authorized qualified appraisers.

National Park Service: Federal Taxpayers Could Have 

Benefited More From Potomac Yard Land Exchange: 

GAO found that NPS land appraisal did not conform to 

federal appraisal standards due to flawed assumptions

and an inadequate assessment.

1997 1998 1999 2000 2001 2002 2003

Land Acquisition Activities, U.S. Fish 

and Wildlife Service: Interior’s

Inspector General found that FWS did 

not sufficiently ensure that just 

compensation was properly established 

before it acquired land through purchase 

or easement. 

Land Exchanges and Acquisitions

Bureau of Land Management, Utah State 

Office: Interior’s Inspector General found 

that BLM did not sufficiently emphasize the 

independence and objectivity of the 

appraisal process or ensure that appraisal 

reviews complied with appraisal standards.

Followup Nevada Land Exchange 

Activities, Bureau of Land 

Management: Interior’s Inspector 

General identified BLM land exchange 

program as a material weakness because 

it continued to experience significant 

monetary losses in its Nevada land 

exchanges.

Land Acquisition Activities, 

National Park Service: Interior’s

Inspector General found that for 

certain land acquisitions, NPS did 

not ensure that just compensation 

was properly established before it 

purchased land and conservation 

easements.

San Rafael Land Exchange: An Interior 

Inspector General’s investigation found that 

department officials negotiated away valuable 

mineral interests without informing Congress and 

improperly valued state and federal lands to be 

exchanged. It also inappropriately used a

consultant report to support the conclusion that 

the properties to be exchanged were of 

approximately equal value.

BLM and the Forest Service: Land 

Exchanges Need to Reflect Appropriate 

Value and Serve the Public Interest: GAO 

found that the agencies did not ensure that 

the land being exchanged was appropriately 

valued or the exchanges served the public 

interest or met other exchange requirements.

Page 11 GAO-06-1050 Interior's Land Appraisal Process
Upon establishing ASD, Interior officials created a formal appraisalrequest process that relies exclusively on the ARRTS web-based 

application and automated database. ARRTS allows land-management 

agency realty specialists to electronically request an appraisal, specify its 

priority (low, routine, high, or emergency), and set a requested completion 

date. In addition, realty specialists can include, with the appraisal request, 

pertinent information necessary for the appraisal, including aerial maps, 

land title information, and legal descriptions. Upon receipt of a request, 

the relevant ASD regional appraiser assigns the appraisal project to an

ASD appraiser, who will either undertake the appraisal or give it to a 

contractor, depending on the ASD appraiser’s workload, the appraisal 

complexity, and other factors. When appraisals are contracted, ASD 

appraisers prepare statements of work and solicit bids from at least three 

certified appraisers. ASD appraisers send the bids they receive to the 

National Business Center’s contracting office at Fort Huachuca, Arizona, 

(referred to hereafter as the “Southwest Branch”) for the contract award 

phase. Upon completion of the appraisal, whether conducted in-house or 

by contract, an ASD review appraiser reviews the appraisal for compliance 

with applicable appraisal standards. Once the appraisal is deemed to meet 

the appraisal standards by the ASD review appraiser, the appraisal is then 

approved for agency use and sent to the requesting realty office. 

At the time ASD was formed, officials in Interior’s Office of Policy Analysis 

decided that associated administrative aspects of the appraisal function 

should be located, along with ASD, in the National Business Center. Thus, 

the appraisal contract management function was removed from the land 

management agencies and centralized at Interior’s National Business 

Center’s Southwest Branch. In addition, the National Business Center’s 

Office of Budget and Finance inherited the responsibility for processing 

payment for contract appraisers. This office receives contractor invoices 

from the Southwest Branch and pays contractors out of the National 

Business Center’s Working Capital Fund and, subsequently, seeks 

reimbursement from the land management agencies that requested the 

appraisals. According to officials in this office, to ensure that the land 

management agencies have the funds to reimburse the Office of Budget 

and Finance, the agencies must obligate funds for the appraisal work prior 

to award of the contract.

In creating ASD, Interior concluded that a new independent function was 

needed; past efforts to remedy appraisal problems, which typically 

included refining or augmenting program guidance, did not address the 

independence issue and had therefore proved ineffective. However, 

Interior officials focused exclusively on appraisal problems within the 

Page 12 GAO-06-1050 Interior's Land Appraisal Process
realty divisions of the land management agencies, so appraisals for some 

land transactions remained with the land management agencies. For 

example, responsibility for appraisals of grant-in-aid acquisitions, which 

include giving federal funds to nonfederal agencies for acquiring critical

wildlife habitat, remained within the land management agencies. Unless 

requested by the land management agencies, appraisals for acquisitions 

under the grant-in-aid programs are not reviewed by ASD. 

Interior’s appraisal policies and procedures do not fully ensure that 

appraisals performed and reviewed by ASD appraisers comply with 

requirements set forth in the Uniform Standards of Professional Appraisal 

Practice or the Uniform Appraisal Standards for Federal Land

Acquisitions, the two nationally recognized appraisal standards. While 

consolidating appraisal services into ASD has vastly improved the 

independence of appraisers and the objectivity of their products, some 

other problems identified in prior audits still remain, particularly with 

high-value appraisals and other complex appraisals completed by ASD. 

ASD’s appraisers have a dual responsibility: both to perform appraisals, 

and to review appraisals performed by co-workers and contractors. We 

evaluated, with the use of appraisal experts, 324 of the 2,905 appraisals 

completed under ASD from its inception in November 2003 through 

February 21, 2006. We selected these 324 appraisals because they have 

characteristics similar to appraisals that did not meet the appraisal 

standards of previous audits. In addition, many of these appraisals are for 

complex properties and, in many instances, more difficult to appraise. In 

evaluating these appraisals, our appraisal experts found that 192 of the 324 

appraisals, or about 60 percent, appeared to be in compliance with 

recognized appraisal standards. In addition, our appraisal experts—who 

were familiar with appraisals produced by the Interior agencies prior to 

ASD’s inception—stated that ASD’s appraisals are a vast improvement 

over past appraisals. Our experts also believed that ASD’s management 

has made improvements in normalizing appraisal practices for appraisers 

from four different agencies with four different land management 

objectives and land acquisition goals. Accordingly, these improvements 

appear to have prevented some appraisals with compliance problems from 

being used, such as in the following examples: 

Interior’s Appraisal 

Policies and 

Procedures Do Not 

Fully Ensure 

Compliance with 

Recognized Appraisal 

Standards 

• ASD reviewed an appraisal requested by FWS for 101 acres, including five

mining claims, near St. George, Utah. The property was originally 

appraised for about $2 million by a contract appraiser. Upon review, ASD 

rejected the appraisal because the contract appraiser did not show that the 

Page 13 GAO-06-1050 Interior's Land Appraisal Process
buyers would have sufficient water rights to use the property for mining. 

ASD’s review found that there were not sufficient water rights to support 

mineral production. Instead, ASD found that the highest and best use 

should be residential development, which resulted in an appraised value of 

$910,000—or over $1 million less than what the original appraisal 

identified. The property owner agreed to ASD’s revised appraisal, 

according to the ASD Regional Appraiser. 

• ASD reviewed an appraisal requested by BLM in Natrona County, 

Wyoming, which involved placing a conservation easement and a public

fishing easement on 335 acres. The easements were originally valued by a 

contract appraiser at about $1.7 million, but ASD found that the appraiser

included mineral interests that were not owned by the private landowner, 

such as sand and gravel, in the estimated value. As a result of ASD’s 

findings, the contract appraiser changed her opinion of value to $1.16

million, which was over $500,000 less than what the original appraisal had 

identified. 

For the remaining 132 appraisals, or 40 percent of those our appraisal 

experts evaluated, however, ASD appraisers performed and/or reviewed 

and approved appraisals that did not meet recognized appraisal standards. 

According to ASD, a 40 percent noncompliance rate is well within industry 

norms for appraisal audits. Further, noncompliance with recognized 

appraisal standards does not necessarily mean that appraised value is 

incorrect, but it limits assurance that land the federal government 

appraised for purchase, exchange, or sale, reflected market value. 

Appraisals not meeting standards included 60 land exchanges and sales, 29

easements, 8 NPS acquisitions, and 28 revenue-sharing appraisals, which 

total slightly more than $1 billion in appraised value. Table 1 shows, by 

appraisal type, the total number of appraisals our appraisal experts 

reviewed (for the period November 2003 through February 21, 2006) and 

the number, percentage, and total-dollar land value determined by the 

appraisals that did not appear to meet standards. 

Page 14 GAO-06-1050 Interior's Land Appraisal Process
Table 1: Land Appraisals (November 2003 through February 21, 2006) That Did Not 

Appear to Meet Standards, Compared with Total Appraisals Reviewed

Number and percentage of appraisals not meeting

standards, and value of land covered by these 

appraisals 

Appraisal type Total Number Percentage

Land value (in

dollars) 

Land exchanges 

and sales 

147 60 41% $943.6 million 

Easements 63 29 46 22.3 million 

NPS acquisitions 47 8 17 13.3 million 

Revenue-sharing 44 28 64 7.2 million 

Othera23 7 30 62.3 million 

Total 324 132 41% $1.05 billionb

Source: GAO analysis of ARRTS appraisal data. 

a

Other appraisals include acquisitions for BLM and Reclamation, as well as NPS permits. 

b

Not all of the $1.05 billion was necessarily at risk. To determine what portion of this amount was at 

risk of being incorrectly valued would necessitate that the land be re-appraised. 

The Uniform Standards of Professional Appraisal Practices require an

appraiser to have sufficient knowledge and experience to complete an 

appraisal assignment competently. For 42 of the 132 appraisals that did not 

appear to meet standards (a total of nearly $119 million in appraised 

value), appraisers who performed appraisals and reviewed the appraisals 

did not have or apply specialized skills, such as those needed to assess the 

value of minerals, timber, or water rights present on the property—all 

factors that typically impact land values. As a result, while performing or 

reviewing the appraisals, the appraisers did not consider how the presence 

of these key characteristics affected the properties’ values: 

• In February 2004, ASD appraised a BLM parcel of land, as well as a parcel 

of private land, for potential exchange; the land exchange totaled 841 

acres. Because the land contained substantial amounts of timber, its value

should have been considered by the appraiser in performing or reviewing 

the appraisal. However, we found that proper timber valuations were not 

used in the appraisal. Therefore, ASD’s conclusion that the properties 

being exchanged totaled about $2.3 million is not supported by the 

appraiser’s analysis and is potentially incorrect. 

• Between March 2005 and May 2005, ASD appraised two privately owned 

land parcels, totaling 154 acres, for potential exchange with BLM. The ASD 

appraiser assumed that water was available on each parcel, which can 

Page 15 GAO-06-1050 Interior's Land Appraisal Process
significantly increase the lands’ value. However, the appraisal report did 

not resolve whether water was available on the property. Consequently, 

ASD’s conclusion that the parcels’ combined appraised value of nearly $1 

million may not be supported. The private landowner did not accept the 

terms of the exchange because he believed the appraisal value was too 

low, especially in an appreciating real estate market, according to the ASD 

review appraiser for this land transaction. 

If the appraisal assignment cannot be performed competently, the Uniform 

Standards of Professional Appraisal Practice also requires the appraiser to 

add to the appraisal report a description of his/her lack of knowledge 

and/or experience, as well as the steps taken to correctly complete the 

assignment. In reviewing these appraisal reports, our experts also found 

that the reports did not disclose the appraisers’ lack of specialized 

experience or the steps to address the needs of the assignment, as 

required by the standards. 

When ASD was formed, officials within Interior’s Office of Policy Analysis 

decided to transfer into ASD all appraisers whose primary role was to 

perform appraisals consistent with recognized appraisal standards. In so 

doing, the officials decided that it was not necessary to transfer appraisers 

with some specialized skills, such as staff with minerals assessment 

expertise, into ASD. As a result, most ASD appraisers have only general 

appraisal skills. Interior officials believe that this offered a greater degree 

of flexibility in assigning appraisers to a wide variety of cases. However, 

the Uniform Appraisal Standards for Federal Land Acquisitions states that 

appraisers must have specialized training and experience to properly 

understand and apply the proper methodologies for estimating the market

value of properties with minerals. A BLM geologist, who is licensed to 

perform minerals assessments, told us that without certified minerals 

appraisers, ASD cannot conduct adequate appraisals or reviews of 

minerals reports. He emphasized that mineral properties are complex, and

that a specialist is needed to ensure proper valuations of those properties.

He also said that an appraiser unfamiliar with minerals and their 

properties may have difficulty understanding some of the technical data 

used in determining their values. 

In addition to requirements that appraisers have the proper training for 

appraisals needing specialized skills, the Uniform Appraisal Standards for 

Federal Land Acquisitions also require that, when reviewing appraisals, a

review appraiser must determine whether the appraiser’s opinions of value 

are adequately supported. Despite this requirement, our appraisal experts

found that for 90 of the 132 appraisals that did not meet standards—

Page 16 GAO-06-1050 Interior's Land Appraisal Process
totaling about $930 million in appraised value—the review appraisers 

approved appraisals without using adequate analyses to support the 

conclusion of value. For example, ASD review appraisers conducted 

cursory reviews of these appraisals and, as a result, approved appraised 

values that did not reflect key property characteristics, such as the 

presence of roads allowing access to properties, which can substantially 

increase a land’s value. According to the experts we employed to review 

these appraisals, sufficient information pertaining to these characteristics 

were, in most cases, included in the appraisal reports that ASD appraisers 

reviewed. This information should have triggered concerns about the 

adequacy of the appraisers’ estimates of land values: 

• In September 2004, ASD appraised about 10,100 acres outside Dillon, 

Montana, for placement of two conservation easements by FWS. Our 

appraisal experts found that the ASD reviewer accepted insufficient 

analysis of comparable sales in the appraisal report. For example, the 

easements on the sales chosen by the appraiser appeared not to be 

comparable to the subject property, according to the appraisal experts we 

retained, but the ASD reviewer overlooked these shortcomings and 

approved the appraised value of $6.8 million for both easements. FWS 

acquired one easement for $2.9 million, and is close to acquiring the 

second, for $3.9 million, which will likely happen later in 2006. 

• Between December 2005 and January 2006, ASD appraised multiple 

parcels totaling 64 acres near Roosevelt, Utah, for placement of an 

easement by Reclamation to install a pipeline. Our appraisal experts found 

that the ASD reviewer accepted the appraisal despite the fact that the 

appraiser overlooked the presence of utility and access easements—which 

may impact the land’s value. Although this information was available in 

the appraisal report, the ASD reviewer did not require corrections to the 

appraisal and approved the appraised easement value of $41,700 to be

used by Reclamation to purchase the easement. Reclamation acquired the

easement in June 2006. 

• In June 2005, ASD appraised 100 acres for sale by BLM in Douglas County,

Nevada. Our appraisal experts found that the appraiser’s analysis of 

market conditions did not comply with standards, but the ASD reviewer 

accepted the appraisal report anyway. For example, information in the 

appraisal report showed that lands with similar characteristics 

(comparables) had increased in value about 5 percent per month, over the 

previous year. However, the appraiser did not account for appreciation 

between the date of appraisal and the dates that the comparables sold—a 

period of about 1 year. Also, the ASD reviewer approved the appraisal 

without requiring this information to be reconciled. The appraiser 

Page 17 GAO-06-1050 Interior's Land Appraisal Process
estimated the parcel’s value to be $10 million, but it sold for $16.1 million 

several months later. 

ASD does not have a system for ensuring that its appraisal reviews are 

performed consistently. As a result, ASD review appraisers exercise 

significant discretion in how they perform appraisal reviews—sometimes 

producing results that deviate from recognized appraisal standards. ASD’s 

review appraisers are primarily those that performed appraisal reviews 

under each of their respective land management agencies within Interior. 

Several ASD regional appraisers, who were previously appraisers in the 

Interior agencies, told us that the quality of appraisal reviews differs 

dramatically between review appraisers from each of the different 

agencies. Several Regional Appraisers also said that the review appraisers 

seem to follow the procedures that they had when they were within their 

individual agency. However, each of the agencies had its own appraisal 

review procedures. 

One procedure that would aid the review process and add consistency, 

would be to require that reviewers use checklists, when appropriate, in 

conducting their appraisal reviews. The use of checklists are 

recommended by the Uniform Appraisal Standards for Federal Land 

Acquisitions because they typically remind appraisers to consider, among 

other things, key physical and legal characteristics that can affect a 

property’s use and value. For instance, our appraisal experts found that 

checklists not only remind reviewers that the appraisers considered key 

appraisal characteristics, but they can also help improve the quality and 

completeness of appraisals. For example, appraisers had used checklists 

for 97 of the 324 appraisals our appraisal experts reviewed. For the 

appraisals that had checklists, nearly 80 percent met standards. Figure 2 

shows an appraisal checklist recommended by the Uniform Appraisal 

Standards for Federal Land Acquisitions. 

Page 18 GAO-06-1050 Interior's Land Appraisal Process
Figure 2: Appraisal Checklist from the Uniform Appraisal Standards for Federal 

Land Acquisitions

APPRAISAL REVIEW CHECKLIST

1. Title Page

2. Letter of Transmittal

3. Table of Contents

4. Appraiser(s)’ Certification

5. Summary of Salient Facts and Conclusions

6. Photographs of Subject Property or in Sec.II)

7. Assumptions and Limiting Conditions

8. Scope of Appraisal 

9. Summary of Appraisal Problems

10. Legal Description

11. Purpose of Appraisal (and definition of terms)

12. Area and Neighborhood Data

13. PROPERTY DATA:

a. Site (Timber, use, access, frontage, soils, topo, area, utilities, 

easements, flood hazard, MINERAL STATEMENT)

b. Improvement(s) Description, condition and use history

c. Fixtures and /or Equipment

d. Conveyance History-10 yr. Sales and 3 yr. Rent

e. Assessed Value and Annual Tax Load

f. Zoning and other land use regulations

a. Partial Take

b. Less than Fee (Scenic Ease, Dev. Rts, e.g.)

14. Analysis of Highest and Best Use

15. Land Value

16. Cost Approach (or why not used)

17. Whole Prop. Sales Comparison (or why not used)

18. Income Approach (or why not used)

19. Correlation and Final Value Estimate

20. Before & After Analysis, if applicable

21. Location Map

22. Comparable Sales/Rentals Location Map(s)

23. Individual Sale/Rental data details w/photos

24. Plot Plan (Site Sketch) w/bldg. location(s)

25. Floor Plans (if applicable)

26. Title Report (if available)

27. Other Pertinent Exhibits (References, Leases, zoning excerpts, land 

use/environmental health regs)

28. Appraiser(s) Qualifications

29. Certification of Landowner Contact/Accompaniment

PART IV- EXHIBITS AND ADDENDA

PART III - ANALYSIS AND CONCLUSIONS

PART II - FACTUAL DATA

PART I - INTRODUCTION

Page No. (s)

Source: ASD.

Page 19 GAO-06-1050 Interior's Land Appraisal Process
Overall, as evidenced by the information presented in this section of our 

report, ASD lacks a management control program to ensure that 

appraisers conduct appraisals and reviews in accordance with applicable 

standards. Internal control standards for the federal government indicate 

that management should ensure that skill needs are continually assessed, 

and that the organization is able to obtain a workforce that has the 

required skills that match those necessary to achieve organizational goals. 

In addition, internal controls should generally be designed to assure that 

ongoing monitoring occurs in the course of normal operations, including 

regular management and supervisory activities, comparisons, 

reconciliations, and other actions taken in the performance of duties. 

The Forest Service’s appraisal office faced similar management control 

challenges several years ago, but in response to a 2002 U.S. Department of 

Agriculture (USDA) Inspector General’s report—which found that the 

Forest Service’s appraisers often relied on inaccurate information when 

estimating lands’ values—it established a compliance inspection program. 

In this program, the Chief Appraiser of the Forest Service annually 

assesses appraisals for compliance with the Uniform Standards of 

Professional Appraisal Practice, the Uniform Appraisal Standards for 

Federal Land Acquisitions, and the Forest Service’s appraisal procedures. 

To do this, the Chief Appraiser, a regional appraiser, and two senior 

review appraisers, visit each region at least once every 3 years and review

a sample of appraisal reports that have a higher probability of not meeting 

appraisal standards. As part of the inspection, the team determines 

whether appraisal staff and contract appraisers have the proper 

knowledge, experience, and training for the appraisals they perform. 

Since 2002, the Forest Service’s compliance inspection program has 

successfully identified appraisals that did not meet standards, rescinded 

them, and taken steps to ensure that such problems do not occur in the 

future, according to the Forest Service’s Chief Appraiser. For example, in

July 2005, a Forest Service review appraiser approved an appraisal for an 

access easement near the Cibola National Forest in New Mexico, but did 

not require the contract appraiser to produce a complete appraisal. In 

valuing easements, appraisers are to use a method known as a “before and 

after appraisal,” which is an appraisal of a property’s value before and 

after the easement—thus setting the price of the easement equal to the 

difference. However, the contract appraiser did not complete the “after” 

appraisal; instead, he simply deducted 90 percent of the property’s value

where the access road was to be placed. According to the evaluation 

performed by the compliance inspection team in September 2005, the 90-

percent figure was not supported by market data. As a result, the 

Page 20 GAO-06-1050 Interior's Land Appraisal Process
compliance inspection team rescinded the appraisal and determined that it 

could not be used as the basis for making an offer of compensation to the 

landowner. 

The Forest Service’s compliance inspection program has also served as a 

valuable tool in identifying appraisal-staff training needs and ensuring that

staff have the proper skills to perform appraisals of complicated land 

transactions. Specifically, while performing a compliance inspection at the

Forest Service’s Pacific Northwest Region, the Chief Appraiser and team 

found that two senior review appraisers approved appraisals with 

technical deficiencies. As a result, the Chief Appraiser required these two 

senior review appraisers to take appraisal review courses offered by one 

of the Appraisal Foundation’s sponsoring organizations. 

Finally, we found problems with ASD’s Pacific Region’s appraisal 

document retention practices. Appraisal documents must be retained to

verify—if challenged—that appraisers and review appraisers are 

independent and, thus, qualified to approve an appraised value for 

Interior’s use in land transactions. Specifically, the Uniform Standards of 

Professional Appraisal Practice requires an appraiser to retain appraisals 

and related documents for at least 5 years after preparation or at least 2 

years after the final disposition of any judicial proceeding, whichever 

period expires last. Moreover, ASD’s Appraisal Policy Manual requires 

ASD to maintain their appraisal documents for at least 7 years after 

preparation. However, in addition to the 324 appraisals our appraisal 

experts evaluated, appraisers in ASD’s Pacific Region could not locate 

nearly two-thirds, or 96 of the 150 appraisal reports, we requested for 

evaluation of compliance with recognized appraisal standards—each of 

which was well within the document retention time frames set by ASD and 

the Uniform Standards of Professional Appraisal Practice. The Regional 

Appraiser stated that the 96 appraisal reports were lost when appraisers 

were moved from the land management agency workspaces into ASD 

workspaces. Because our appraisal experts were unable to evaluate these 

96 appraisals, we could not verify whether they met recognized appraisal 

standards. 

Page 21 GAO-06-1050 Interior's Land Appraisal Process
Although ASD is a service organization, its service delivery and client 

relationships are hampered by operational inefficiencies. For instance, 

ASD does not have a system for establishing realistic time frames for client 

appraisal requests for which it can be held accountable. Specifically, it

lacks (1) a process for ensuring that appraisal services are delivered 

within negotiated time frames, (2) a system for prioritizing on-going 

projects and incorporating new appraisal requests, and (3) clearly defined 

roles delineating information-collection responsibilities between it and its 

client agencies. In addition, ASD’s operations are hampered by delays in 

appraisal contracting and billing practices, difficulty in finding qualified 

contract appraisers, and costly appraisals for low-value land. Collectively,

these conditions contribute to delays in meeting client needs, which 

negatively affects ASD’s clients’ ability to complete land transactions, as 

well as adding unnecessary costs to the appraisal process. 

ASD does not have a system for ensuring that it meets realistic time 

frames for client appraisal needs. Specifically, ASD’s accountability to its

clients for providing timely appraisal service is impaired by the lack of (1) 

negotiated time frames for appraisal delivery, (2) a system for prioritizing 

on-going projects and incorporating new appraisal requests, and (3) clear 

responsibilities for ASD appraisers and land management realty specialists

in obtaining critical appraisal information. Timely delivery of appraisals, 

by ASD to its client agencies, is critical to the success of Interior’s land 

management agencies in carrying out their land acquisition objectives. 

Lengthy delays in appraisal delivery can cause land management agencies 

to lose land deals and associated funding; they also have a marked effect 

on landowners’ trust in the land management agency and the land 

transaction process. This trust, according to agency realty specialists, is 

critical for the successful purchase of privately held land. If landowners 

perceive that trust has been violated, they may turn to the private sector to

sell their land. Furthermore, the efficiency of the appraisal delivery 

process was an important consideration when Interior decided to 

consolidate appraisal services into ASD in 2003—in a September 2003 

letter defending the consolidation effort, Interior’s Assistant Secretary for 

Policy, Management, and Budget assured the House Committee on 

Appropriations’ Subcommittee on Interior, Environment, and Related 

Agencies that, over time, the efficiency of appraisal services would be 

improved as a result of consolidation. 

In setting up ASD and forging its working relationships with the land 

management agencies it serves, Interior required both ASD and its client 

agencies to sign agreements—called Service Level Agreements—which 

ASD’s Client 

Relationships Are 

Hampered by 

Inefficient Operations 

ASD Does Not Have a 

System to Ensure that 

Realistic Time Frames for 

Appraisals Are Met 

ASD Does Not Negotiate 

Appraisal Delivery Time 

Frames with Clients 

Page 22 GAO-06-1050 Interior's Land Appraisal Process
define parameters for appraisal (i.e., service) delivery, including time 

frames for the completion of appraisals and appraisal reviews. However, 

these agreements are limited in their effectiveness because time frames—

specifically, appraisal delivery dates—are arbitrarily set by the clients, and 

ASD is not held accountable for meeting them. For instance, although the 

agreements call for appraisal delivery on the basis of agreed-upon time 

frames, which are meant to reflect both the needs of the client agencies 

and the appraisal workload of ASD, we found that ASD and the client

agencies do not have a method for negotiating and agreeing on such time 

frames. Instead, client realty specialists enter a requested completion date 

for an appraisal into ARRTS. ASD appraisers, upon receipt of a request,

estimate a projected completion date for the appraisal, which they enter 

into ARRTS. However, the dates entered by the client realty specialist and 

the ASD appraiser often differ and are not reconciled. Realty specialists 

from all four land management agencies that ASD serves told us that ASD 

appraisers regularly set appraisal completion dates that are weeks or 

months later than the original requested date, often without notifying the 

requesting realty specialist. 

Furthermore, realty specialists do not routinely access ARRTS to identify

project completion dates entered by ASD appraisers so as to take followup actions to reconcile any differences. Of the 728 appraisal products that 

clients requested from October 2005 through May 2006, more than 40

percent had a projected completion date later than the requested 

completion date,9

 with an average difference of more than 60 days. On the 

other hand, ASD appraisers told us that realty specialists often request 

unreasonably short time frames, so they have to set projected completion 

dates later than the original request. According to these appraisers, 

appraisals take at least 60 to 90 days to be completed, and many complex 

appraisals take much longer. However, since October 2004, realty 

specialists have set requested delivery dates of less than 60 days for 515

appraisals. For example, according to ASD, between August 18, 2006 and 

August 31, 2006, ASD received six ARRTS appraisal requests with 

requested due dates that were within six days of the request. One of these 

was for a relatively complex appraisal and another was received with a 

requested delivery date for the day after the request. ASD acknowledges 

that it along with its client bureaus need to develop mutually realistic 

expectations for appraisal delivery time frames. 

 9

Similar data for fiscal year 2005 is not available due to a limitation in the ARRTS data 

system at that time. 

Page 23 GAO-06-1050 Interior's Land Appraisal Process
ASD policy requires ASD appraisers to keep realty specialists updated 

when unforeseen problems might affect timely delivery of an appraisal. 

Realty specialists with each of the land management agencies, however,

told us that ASD appraisers are not keeping them informed of appraisal 

progress—particularly when unforeseen impediments to appraisal delivery 

occur, such as delays in obtaining contract appraisers. These officials 

described many specific cases where delays during the appraisal process 

went unreported until they requested that ASD provide a progress update. 

The delays often affected project completion by weeks or months and, 

according to land management agency realty officials, may have 

contributed to the loss of some land acquisitions and exchanges, as in the 

following examples: 

• A FWS realty specialist submitted an appraisal request in August 2003 for 

the potential acquisition of 893 acres in Tallahatchie National Wildlife 

Refuge in north-central Mississippi. ASD received an initial contract 

appraisal in November 2003, but did not begin the review until February 

2004. When that appraisal was rejected, ASD ordered another appraisal, 

which was delivered in October of 2004, and subsequently rejected. An 

ASD appraiser then completed the appraisal in-house in April 2005—20 

months after the appraisal request and 12 months after the requested 

completion date. The landowner rejected the appraised amount offered 

and informed FWS that she thought it had lost interest in acquiring the 

land, since so much time had elapsed since the appraisal was requested. 

• An NPS realty specialist submitted an appraisal request in November 2004

for the purpose of acquiring 8 acres in the Indiana Dunes National 

Lakeshore in northern Indiana. NPS requested ASD to provide a status 

update on January 31, 2005, on the appraisal request after not having 

received an update since December 15, 2004. ASD did not respond to NPS 

until March 2, 2005, after being informed by the realty official that the land

owner (1) was unhappy, (2) believed that ASD had been “stonewalling and

lying” to him all along, and (3) was threatening to call his congressman. In 

response to NPS, ASD officials said that the appraisal request “fell through 

the cracks” and that the appraiser would start the work on it immediately. 

At that time, the contract appraiser had not begun the appraisal. An 

appraisal contract was awarded in April 2005 and completed on October 

20, 2005, almost a full year after the initial appraisal request. According to

the NPS realty specialist assigned to the case, the landowner was angered

by the lengthy delay in getting him the offer and thus declined to sell the 

property to NPS. 

• In May 2004, a FWS realty specialist requested the appraisal of a 40-acre 

parcel in Upper Ouachita National Wildlife Refuge in Louisiana. ASD later 

Page 24 GAO-06-1050 Interior's Land Appraisal Process
informed FWS that it did not immediately act upon the request because the 

request was overlooked and, as a result, it was scheduled to be awarded in

February 2005. The realty specialist requested a status update in June 

2005; however, at that time, ASD informed FWS that it was unsure if the 

contract had yet been awarded. In September 2005, a contractor appraisal 

was rejected for agency use. In January 2006, an ASD appraiser took over

the project as an in-house appraisal assignment. The completed in-house 

appraisal was finally approved on February 16, 2006—21 months after the 

initial request. Because of the substantial delay, the landowner rejected 

the offer to purchase his land. 

According to realty specialists in the land management agencies and 

officials at nonprofit partners, they need reliable estimates of appraisal 

delivery time frames to plan the use of land acquisition funds. The officials 

said that without knowledge of when appraisals will be obtained, and 

without a say in setting delivery dates, agencies’ ability to request and use 

acquisition funds is compromised. For instance, NPS-Midwest realty 

specialists told us they were unable to use more than $800,000 from their 

land acquisition budget for fiscal year 2005 because of land deals that were 

not finalized. These officials stated that, had certain appraisals been 

completed by the requested completion date, it is likely that at least a 

portion of this money would have been spent on the acquisitions. In 

addition, without accurate knowledge of the expected date for appraisal 

completion, realty specialists told us they cannot keep willing buyers or 

sellers up-to-date on project status; also, they may unintentionally provide 

these parties with inaccurate estimates of appraisal completion, thus 

harming the relationship between the government and the willing buyers 

and sellers. 

According to realty specialists in the land management agencies and 

officials at nonprofit partners, appraisal delays also strain Interior’s 

relationship with nonprofit conservation partners. These partners play a 

critical role in initiating and facilitating many land transactions between 

landholders and Interior’s land management agencies. Nonprofit 

conservation partners leverage resources to purchase land from private 

sources, later to be sold to the government when funds are available. 

However, some partners have been negatively affected by unpredictable 

and oft-delayed appraisals. According to officials at two nonprofit partners 

with whom we spoke, their ability to secure land deals—much like the 

land management agencies—depends on landowners trusting their 

operations. They said that when an appraisal is significantly delayed, the 

nonprofit’s funds are locked up in deals that are on hold while awaiting the 

completion of the appraisal. The officials said that if the appraisal results 

Page 25 GAO-06-1050 Interior's Land Appraisal Process
were delivered in a timelier fashion, they would know sooner whether the 

land owner will accept it and, if not, they could free up their funds sooner 

to assist land management agencies with other conservation projects. 

ASD also does not have a system for prioritizing on-going projects and 

incorporating new appraisal requests from its clients so as to adjust its 

workload when client needs change. As a result, ASD has no assurance 

that the most immediate appraisal needs of its client land management 

agencies are being met. The ARRTS database allows the requesting realty

specialist to assign a priority label to each appraisal request (e.g., 

emergency, high priority, routine, or low priority). However, ARRTS does 

not allow ASD managers to determine the relative priority of new 

appraisal requests compared to those already in the system, nor does it 

provide a mechanism for reestablishing priorities. Further, ASD has no 

procedures for weighing each of its client agencies’ respective appraisal 

request priorities. Realty specialists and ASD appraisers told us that, as a 

result, routine appraisals often get labeled as high priority—a practice that 

one ASD appraiser dubbed “priority inflation.” For appraisal products 

requested in fiscal year 2005, for example, over 40 percent were labeled as

“emergency” or “high” priority. Consequently, there is little meaning to 

current priorities labeled in ARRTS for the appraisal requests, and there is 

a risk that some high-priority appraisal projects are not performed as 

rapidly as necessary. 

On April 20, 2005, a FWS realty specialist asked ASD to perform a “high 

priority” appraisal for a 2.4-acre parcel of land in Washington County, 

Nebraska; the requested completion date was June 6, 2005. In late June, 

the realty specialist requested that ASD provide a status update, and was 

told that the appraisal contract had not yet been awarded. Furthermore, 

the reality specialist was told that ASD had placed a completion date of 

January 20, 2006, into ARRTS. The FWS Regional Realty Chief expressed 

concern in an October 5, 2005, e-mail to the ASD official concerning (1) 

the arbitrariness of the completion date set by ASD, (2) ASD’s delay in 

requesting additional information from the realty specialists prior to 

beginning the appraisal project, and (3) ASD’s lack of communication with 

FWS on the revised delivery date and need for additional information. In 

response to these concerns, the ASD-Midwest Regional Appraiser said that 

a backlog of appraisal requests contributed to the delay in initiating the 

project. ASD completed this appraisal on December 20, 2005—1 month 

ahead of its estimated completion date but nearly 7 months later than the 

date that it was initially requested. According to the FWS realty specialist,

the landowner turned down the offer and accepted a 24-percent higher 

offer from a private buyer. 

ASD Does Not Have a System 

for Prioritizing On-Going 

Projects and Incorporating 

New Appraisal Requests 

Page 26 GAO-06-1050 Interior's Land Appraisal Process
ASD and the land management realty staffs generally do not collaborate in

prioritizing appraisal needs. Instead, the prioritization of each appraisal 

request is determined on an ad hoc basis by ASD’s appraisers. According 

to land management agency realty specialists, ASD officials seem to ignore 

the priorities and dates placed on the appraisal request by the realty 

specialists and, instead, revise the priority and completion dates 

arbitrarily. Some realty specialists said that they have resorted to calling 

their ASD regional appraiser to request that an appraisal is given high 

priority, but this approach has had little success. ASD regional appraisers 

acknowledged that their appraisal staff cannot always address these highpriority requests because they already have a heavy workload of such 

requests. 

Since the use of the ARRTS system has not been effective in establishing 

appraisal priorities, some officials have taken other measures to address 

this issue. For example, since the formation of ASD, the Midwest Region’s 

Regional Appraiser meets with FWS realty managers within the region on

a monthly basis to discuss pending appraisals, as well as upcoming 

appraisal requests. These discussions direct changes in appraisal project

priority and facilitate status updates of ongoing appraisal projects. 

According to one FWS regional realty official, these meetings are 

extremely helpful for planning purposes. For example, when appraisals 

need to be done quickly, these meetings provide a venue to discuss how 

the timelines of other projects might be affected by the higher-priority 

project. The ASD-Midwest Regional Appraiser told us that she meets 

similarly with NPS realty officials on a monthly basis. 

Similarly, the ASD Southwest Region’s lead appraiser in Nevada told us 

that he provides a status update on outstanding appraisal projects to his 

client realty specialists on a monthly basis. According to him, this status 

update is a great help for successfully prioritizing appraisal projects 

between the land management agencies and encourages communication 

between ASD and the realty specialists it serves. The appraiser also told us 

that rearranging appraisal priorities through this process is quite common. 

For instance, at the Stillwater National Wildlife Refuge in northern 

Nevada, the FWS is actively interested in purchasing water rights. 

Therefore, when land with water rights becomes available, appraisals of 

these lands are moved to a higher-priority status over other appraisals. 

Although the consolidation of appraisal services into ASD only applied to 

Interior agencies, we discussed appraisal services with USDA’s Forest 

Service to ascertain whether the Forest Service had implemented 

processes that would assist ASD in implementing its program. With regard 

Page 27 GAO-06-1050 Interior's Land Appraisal Process
to prioritization of appraisal requests, the appraisal services staff of the 

Forest Service has had success using quarterly meetings and 

teleconferences to: coordinate time frames for appraisal requests and 

completion dates, prioritize new requests, and update the status of 

appraisals in progress. In addition, the Forest Service appraisal services 

staff supplies monthly or quarterly status updates to its clients, line 

officers, and realty specialists. The Forest Service’s Chief Appraiser said 

that this system works well, and there are few problems or complaints 

about appraisal prioritization or the timeliness of appraisal delivery. While 

this may be successful for the Forest Service, ASD faces additional 

challenges because it has four equally important clients with potentially 

conflicting priorities. 

ASD has not defined the responsibilities for ASD appraisers and realty 

specialists involved in the appraisal process, particularly with respect to 

specifying who has responsibility to gather the information needed to 

complete an appraisal. Significant “up-front” information, including such 

data as maps, property descriptions, aerial photographs, land deeds, title 

information, and sales histories are needed before conducting an 

appraisal. The Service Level Agreements between ASD and the client

agencies state that the client agency is responsible for providing “clear, 

specific information on project needs for appraisal services,” primarily 

through ARRTS, but also by other means (as necessary). However, there is 

no definition of what this “specific information” should entail. Further, 

these agreements do not specify how much should be provided and by

whom. According to FWS realty officials, this creates considerable 

confusion because information needs can vary quite significantly, 

depending on the complexity of the appraisal. Additionally, FWS stated 

that ASD requires the best information available, but does not define what

this entails. 

Realty specialists and ASD appraisers with whom we spoke disagreed over 

who should have responsibility for obtaining and providing appraisal 

information. Part of this disagreement stems from the different

responsibilities that existed among the agencies’ realty specialists and 

appraisers prior to the formation of ASD. For instance, one FWS realty 

specialist stated that, prior to the formation of ASD, appraisers were 

responsible for much of the information-gathering; the information 

obtained and provided by realty specialists was minimal. On the other 

hand, appraisers formerly with BLM told us that, before the formation of 

ASD, realty specialists routinely acquired most of the information before 

giving it to appraisers. The lack of clarity in the Service Level Agreements 

ASD Lacks Clearly Defined 

Roles Delineating InformationCollection Responsibilities 

between It and Its Client 

Agencies 

Page 28 GAO-06-1050 Interior's Land Appraisal Process
with regard to who is to gather the needed information for the appraisal 

has led to delays in starting and completing appraisals. For example: 

• A FWS realty specialist submitted a request to ASD on November 22, 2005,

for an appraisal of an approximately 1,000-acre tract in the Trinity River 

National Wildlife Refuge near Liberty, Texas. However, the FWS official 

did not provide sufficient information for the ASD appraiser to prepare the 

scope of work needed to request a cost estimate from contract appraisers. 

The ASD appraiser notified the requesting FWS realty specialist on 

December 9, 2005, that, to do the request for a cost estimate, he needed a 

map of the property boundary, a legal description of the land to be 

appraised, land title information, aerial photographs, and topographic 

maps for use in assessing the land’s timber inventory. The FWS realty 

specialist provided the ASD appraiser the title information, information on 

an easement on the property, and an aerial photo, on March 8, 2006. The 

ASD appraiser replied to the FWS realty specialist on March 21, 2006, 

outlining what information remained outstanding. The realty specialist did 

not reply to ASD’s request and, as a result, ASD cancelled the appraisal 

request. 

• A FWS realty specialist submitted a high-priority request to ASD on May 

19, 2006, for the preparation of a statement of work. The statement of 

work would be used by a nonprofit partner to solicit contractor bids for 

the appraisal of a 405-acre tract in Balcones Canyonlands National Wildlife 

Refuge near Austin, Texas. However, the FWS realty specialist did not 

provide sufficient information for the ASD appraiser to prepare a 

statement of work for the contractor bidding. The ASD appraiser notified 

the requesting realty specialist on June 6, 2006, that he needed land title 

information, details of an access easement on the property, a legal 

description of the land to be appraised, and information on improvements 

to the land. As of the issuance of this report, the ASD appraiser had not 

received the requested information. 

Realty specialists from the land management agencies informed us that 

ASD appraisers often require the “perfect package” of material before they

will begin work on a project and that, in some cases, the correspondence 

requesting and providing information can go back-and-forth for weeks. 

ASD appraisers, on the other hand, told us that, depending on the specific 

circumstances involved, certain information is absolutely necessary before 

appraisers can begin an appraisal. For instance, in the case where an 

appraisal will be contracted out, ASD appraisers said they require a full 

package of information—including maps, property descriptions, aerial 

photographs, land deeds, title information, and sales histories—before a 

statement of work can be correctly developed for bid solicitations. Some 

Page 29 GAO-06-1050 Interior's Land Appraisal Process
ASD appraisers commented that realty specialists should receive training

on the appraisal process and information requirements, so that they can 

better understand the challenges faced by the appraisers. 

Certain business practices affect the efficiency of ASD’s appraisal delivery. 

Specifically, ASD is hampered by delays in appraisal contracting and 

billing practices, difficulty in finding contract appraisers with government 

experience, and costly appraisals for low-value land. As a result, ASD’s 

operations are more time-consuming and costly than necessary. 

Both the contract and the billing functions result in additional costs and 

contribute to appraisal delays. ASD currently contracts out approximately 

70 percent of its appraisal requests, which requires the services of the 

National Business Center’s Southwest Branch (for awarding contracts) 

and the Office of Budget and Finance (for paying contractors). In fiscal 

year 2006, data provided by National Business Center budget officials 

showed that the contracting and billing functions incurred approximately 

$350,000 in expenses, or about 3 percent of ASD’s budget. While the costs 

of these services were borne by the land management agencies prior to 

ASD’s inception, the agencies did not have data identifying these costs. 

Further, ASD appraisers believe the contract and billing functions would 

be more efficient if they were handled within the land management 

agencies. They also said that implementing the responsibility for receiving 

bids and awarding contracts at the Southwest Branch, as well as paying

contractors through the Office of Budget and Finance, has resulted in 

considerable delays in the appraisal process and significant frustration 

from both the client-agency realty specialists and ASD appraisers. 

Specifically, we found the following:

Certain Business Practices 

Impede the Efficiency of 

ASD’s Appraisal Delivery,

Resulting in Delays and 

Costs 

Contract and Billing Functions 

Add Inefficiencies to ASD 

Operations 

• Longer turn-around time for contract award: According to officials at the 

Southwest Branch, awarding contracts after the proposals have been 

received should take, on average, about 3 to 5 business days. On the basis 

of data provided by ASD Regional Appraisers, however, we determined 

that it has taken an average of about 10 business days to award 

contracts—and fewer than one-third of the contracts have been awarded 

in 5 days or less since the Southwest Branch assumed this responsibility.10

According to officials at the Southwest Branch, these delays largely 

 10Officials at the Southwest Branch did not supply comprehensive data in this regard,

despite our request. 

Page 30 GAO-06-1050 Interior's Land Appraisal Process
resulted from significant turnover of staff with contracting experience and 

the inexperience of remaining staff.

• Cancellation of expedited contracting practices: Prior to the formation of 

ASD, agency contracting officers regularly employed “indefinite

delivery/indefinite quantity” contracts and “blanket-purchase agreements,” 

which are designed to expedite the contracting process by establishing 

multi-year agreements with private appraisers who become pre-approved

for appraisal work conducted within the time frame of their agreements. 

These contracting practices expedite the process and can save time and 

resources. Southwest Branch officials, however, canceled more than 100 

pre-existing indefinite delivery/indefinite quantity contracts and blanketpurchase agreements when they assumed the contracting function. 

National Business Center officials at the Southwest Branch told us that 

they cancelled these contracts and agreements because the procurement 

systems of each of the agencies were not compatible with the Southwest 

Branch’s procurement system, and it became easier to cancel them as 

opposed to redoing them to make them compatible. The National Business 

Center told us that these contracts were canceled because of a lack of 

justification to continue their use. 

• Appraisal contracts awarded based on “lowest bid” rather than “best 

value”: ASD appraisers recommend contract appraisers based on “best 

value to the government” considerations, but Southwest Branch officials 

routinely award contracts using “lowest bid” criteria. Under the “best 

value” consideration, bids are evaluated on a range of criteria in addition 

to price—including past performance, quality of appraisals, familiarity 

with the area the land is located in, and the type of land to be appraised. 

According to ASD regional appraisers, National Business Center officials

informed them in 2004 that the Southwest Branch would evaluate contract 

proposals based on “best value” considerations.11 Officials at the 

Southwest Branch told us that they do not usually do this because ASD 

appraisers do not correctly solicit proposals for “best value” 

consideration. ASD officials, on the other hand, said they have not 

received any information from Southwest Branch officials on how to 

 11The Uniform Appraisal Standards for Federal Land Acquisitions states that it is 

“important to obtain the contract services of the best qualified appraisers available within 

the agencies’ rules governing the contracting process. While price is certainly a 

consideration, more important factors are general appraisal experience, education, 

professional reputation, experience in conducting appraisals for federal land acquisitions 

under these standards...and demonstrated competency.” 

Page 31 GAO-06-1050 Interior's Land Appraisal Process
“correctly” solicit.12 As a result, according to officials at the Southwest 

Branch, in the first year of operation, all contracts were awarded based on

lowest price because the solicitation from ASD—when sent out to the 

contractors—did not properly specify that the contract would be awarded 

based on “best value” considerations. This decision can have major 

ramifications for the timeliness and cost of an appraisal. For instance, in

one case the lowest bid was $200 less than the second lowest bid, and the 

ASD appraiser recommended the contractor with the slightly higher bid—

based on past experience with ASD and familiarity with the land and 

property type. However, officials at the Southwest Branch awarded the 

contract to the low-bid contractor. The delivered appraisal was deemed 

unacceptable for agency use due to insufficient comparable sales data.

After a 7 month delay, the appraisal was successfully completed. 

• Inefficient contractor billing and reimbursement functions: The process 

currently used to bill client agencies for contract appraisal services has 

caused confusion and frustration within the land management agencies. 

According to ASD officials and realty officials with each of the land 

management agencies, problems included (1) being billed in one lump sum 

at the end of the fiscal year, (2) the inability to track reimbursement 

requests back to contractor invoices, and (3) double-billing for some 

contracts. These officials complained about the burdensome and arduous 

process of reconciling the reimbursement billing with the contractor 

invoices—a necessity to ensure that funds were not inappropriately spent.

In addition, there have been problems with the land management agencies 

obligating sufficient funds to allow for reimbursement payments to go to

the National Business Center in a timely manner. Realty officials with 

BLM, FWS, and NPS also stated that it would be more efficient if their 

agencies handled the billing directly. For example, if billing for contract 

appraisals came directly from the land management agencies, there would 

be no need to obligate funds for reimbursement or tracking of appraisal 

costs, and linking such costs to specific appraisals would be done within 

internal systems. 

Over the past 6 months, in response to concerns over the contracting and

billing functions outlined above, ASD and the National Business Center 

undertook a comprehensive reengineering of the contract appraisal and 

billing processes. Under this reengineered plan, the contracting function 

 12Under “best value” considerations, agencies take into account other factors in addition to 

price in awarding a contract, including the quality of the services offered and the bidder’s 

prior performance 

Page 32 GAO-06-1050 Interior's Land Appraisal Process
would be moved to GovWorks in its Herndon, Virginia office.13 The 

invoicing and billing function would be transferred to GovWorks’ 

electronic invoicing system. The reengineered plan is intended to address 

all relevant issues that have been brought to the attention of ASD and the

National Business Center over the period in which the National Business 

Center has been supporting ASD’s operations, including the use of 

“indefinite delivery/indefinite quantity” contracts, the use of “best value” 

contract award criteria, and the series of issues surrounding contractor 

payment and agency reimbursement. According to officials with the 

National Business Center, a July 2006 meeting with ASD officials resulted 

in an agreement to move the contracting function to GovWorks beginning

October 1, 2006. Under the reengineered plan, each contract service 

provided by GovWorks will be assessed up to a 4-percent fee depending on 

the cost of the contract. Although these officials offered assurances that 

moving the contracting function to GovWorks will address concerns about 

the timeliness of awarding appraisal contracts, contractor payments, and 

agency reimbursements, we cannot assess the effectiveness of a future 

change. 

Regardless of whether the change in the contracting function will be 

successful, however, ASD appraisers generally believe that this function 

would be more efficient if it were handled within the land management 

agencies. Many of the ASD Regional Appraisers, along with realty 

specialists within the land management agencies, told us that placing the 

contracting function within the land management agencies, as it was 

previously done, would not threaten the integrity of the appraisal process. 

These officials also believe that having the contracting function in each of

the agencies would facilitate closer contact and better communication 

between ASD appraisers and the contracting officers, likely resulting in 

less confusion and easier status updates. ASD officials also said that, 

currently, staff at the Southwest Branch contracting office have little 

incentive to provide services in a timely manner because ASD has no 

choice but to use its services. Of note, this would not change under the 

current plan to relocate the appraisal contracting function to Virginia. 

According to agency realty specialists, contracting officers within the 

agencies regularly awarded contracts in a much timelier manner than the 

Southwest Branch. These officials said that this was due, in part, to the 

ease by which they could communicate the need for expedited awards and 

 13GovWorks is a fee-for-service organization that delivers regulation-compliant contract 

administration and support. It joined Interior’s National Business Center in October 2005. 

Page 33 GAO-06-1050 Interior's Land Appraisal Process
changing priorities with the contracting function located in-house. Also, 

because they were part of the same organization and had a stake in its land

acquisition goals, the contracting officers had an incentive to be 

responsive to realty specialists’ appraisal contract needs. 

ASD faces difficulty obtaining contract appraisers with federal government 

appraisal experience, which contributes to delayed and costly appraisals.

According to ASD’s Deputy Chief Appraiser and ASD Regional Appraisers, 

each of ASD’s regions have experienced problems, to varying degrees, in 

obtaining contract appraisers with federal experience. ASD has a 

workforce of 68 appraisers nationwide and it receives about 1,800 

appraisal requests for appraisal products per year from its clients. To 

address its workload demands, which include both conducting and 

reviewing appraisals, ASD uses private contractors for many of its 

appraisals. During fiscal year 2005, ASD contracted out about 70 percent 

of the appraisal requests to private contract appraisers. However, ASD 

headquarters and regional officials told us that many private contract 

appraisers are unwilling to do business with the federal government 

because their appraisals must meet standards that are higher than what 

they are accustomed to. Additionally, they face unique circumstances that 

make it more challenging to conduct the appraisals. For example, most 

private appraisers are most familiar with appraising commercial or 

residential properties, but the locations of lands to be appraised for 

Interior agencies are often in remote, rural areas—making it more difficult 

to access, as well as identify, comparable land sales. One ASD regional 

appraiser stated that her office has attempted to find contract appraisers 

with federal experience, but it has had extreme difficulty finding 

contractors who can perform appraisals in accordance with government 

standards. This regional appraiser also stated that her office must 

sometimes use appraisers who do not have prior work experience with the 

government and with whom ASD has no previous working relationship. As 

one ASD Regional appraiser stated, each land transaction is important, 

and if a contractor fails to deliver an acceptable appraisal, ASD will 

experience significant delays in completing the appraisal. 

ASD takes substantial risks when it has to use contract appraisers without 

prior experience doing appraisals for Interior. We found the following 

examples: 

ASD Faces Challenges Finding 

Contract Appraisers with 

Federal Government Appraisal 

Experience 

• A BLM realty specialist submitted a request for a high-priority appraisal on

July 12, 2005, for nearly 3,800 acres near Kremmling, Colorado. The 

Southwest Branch awarded the appraisal contract on August 12, 2005, in

the amount of $13,500 to an appraiser who, according to ASD officials, had 

Page 34 GAO-06-1050 Interior's Land Appraisal Process
little experience working with ASD or the land management agencies. The

contract had an appraisal completion date on or before October 14, 2005. 

After granting the contractor two extensions, ASD received the draft 

appraisal from the contractor on January 13, 2006, but, upon review, ASD 

found it to have a number of serious flaws, including problems with the 

appraiser’s highest and best use determination and property rights 

analysis. As a result, the ASD reviewer determined that the appraisal 

needed substantial revision, and on March 14, 2006, sought clarification 

and corrections from the contract appraiser. Three days later, on March 

17, the contractor notified ASD that he would be withdrawing from the 

project. ASD decided to complete the appraisal in-house and, on March 24, 

2006, assigned one of its appraisers to perform the remaining work. As of 

July 5, 2006, the staff appraiser was still working to complete the 

appraisal. 

• An NPS realty specialist submitted a high-priority appraisal request on 

June 10, 2005, for 119 acres in Chickamauga and Chattanooga National 

Military Park near Chattanooga, Tennessee. The Southwest Branch 

awarded the appraisal contract to an appraiser with no prior federal land

appraisal experience on October 25, 2005. ASD received a draft appraisal

on November 5, 2005. ASD rejected this appraisal on the basis that it was a

“nonsupported appraisal report of technical incompetence.” ASD 

subsequently assigned the appraisal to an in-house appraiser on April 14, 

2006. As of July 5, 2006, the appraisal has yet to be completed—more than 

13 months after it was initially requested. 

• A FWS realty specialist submitted an appraisal request in August 2003 for 

33 acres in Panther Swamp National Wildlife Refuge in west-central 

Mississippi. After receiving the contract appraisal in November 2003, the 

ASD reviewer worked with the contract appraiser to try to clear up 

problems with the appraisal, but the appraisal was ultimately rejected in 

August 2004. A second contract appraisal was ordered, received in 

February 2005, and subsequently rejected in May 2005. A third appraisal 

was then ordered, received, and ultimately approved in April 2006, 32

months after the initial appraisal request. 

Complicating contractor selection, many contract appraisers are not 

located in close proximity to the lands needing appraisal. As a result, 

realty officials and ASD regional appraisers said that contractors (many of 

which are not located in the same state where the property is located) 

include the cost of traveling to work locations in their estimate. According

to an experienced realty specialist familiar with these types of contracts, 

appraisals performed by out-of-state contractors often cost more than 

$10,000, compared to less than $1,000 per appraisal when local appraisers

Page 35 GAO-06-1050 Interior's Land Appraisal Process
might sometimes be used. ASD officials, in response, said that the more 

costly appraisals may be due to the fact that the appraisals did not meet 

standards, which necessitated additional work—though they did concede 

that travel costs are higher when local appraisers are not used. ASD also 

commented that appraiser fees are also based on business requirements 

including such things as direct and indirect costs, the complexity of the 

appraisal problem, the time required to develop and report a credible 

value opinion, and other issues. ASD’s Chief Appraiser and Deputy Chief 

Appraiser are aware of the difficulties in finding contract appraisers and 

has taken steps to help remedy the problem. These steps include meeting

with appraisal organizations, such as the American Society of Farm 

Managers and Rural Appraisers,14 to see how ASD can work with the 

organization to increase the number of contract appraisers willing to 

contract with the government. In addition, one ASD Regional Appraiser 

hosted an open house and training/information sessions with local 

appraisers who expressed interest in doing business with the government, 

in hopes that his region can find a wider range of private appraisers 

capable of meeting federal appraisal standards. The ASD Deputy Chief 

Appraiser told us that he hopes to expand the use of these types of 

interactions with private appraisal contractors. He believes that if private

contract appraisers better understand the policies and requirements of 

ASD, and about how ASD functions, they will be more willing to offer their 

services. 

ASD performs appraisals for lands that yield little revenue to the 

government when compared to the costs of doing the appraisal. For 

example, ASD appraisers routinely perform appraisals to calculate rent 

payments for private uses of public lands. These include short-term uses 

requiring a permit, and leases for oil and gas production infrastructure, 

water wells, and storage tanks, among other things. Appraisals for these 

uses are expensive to conduct and, for the most part, bring in very low 

rental revenues to ASD. From June 2005 through May 2006, appraisers 

completed 270 of these appraisals. More than half of these appraisals 

estimated land rents to be less than $1,000 per year. In some cases, when 

ASD performed an appraisal, the appraisal cost more than the revenue

received by the agency for the land—especially when the appraiser visited 

the site. For example, an appraisal completed in May 2006 for the use of 

four access roads to a reservoir and water pumping station cost 

ASD Appraises Lands That 

Yield Little Revenues in 

Comparison to the Costs of 

Performing the Appraisals 

 14The American Society of Farm Managers and Rural Appraisers is dedicated to maintaining 

a professional group of farm managers, rural appraisers, and review appraisers. 

Page 36 GAO-06-1050 Interior's Land Appraisal Process
approximately $17,000 for the appraiser’s time and travel. The appraised 

value was $13,777 for a 10-year lease of these rights. In other cases, less 

costly alternatives exist. ASD appraisers can, in some instances, undertake 

less time-consuming and less costly appraisals by appraising multiple 

parcels at once. These appraisals are less time-consuming and less costly 

than a full appraisal—often, they do not require the appraiser to visit the 

site—but each appraisal must still go through the ARRTS process and 

associated paperwork. 

Land management agencies’ policies for some rights-of-way require 

appraisals for some of these transactions to be performed by ASD, while in 

other cases the agencies can use an administrative formula—in lieu of an

appraisal—developed and designed for the purpose of simplifying the 

calculation.15 The formula uses market analysis of real estate transactions 

and helps determine rental payments for non-communications land uses, 

such as water wells and reservoirs, and oil well pads. BLM had 

implemented guidance allowing its offices to use similar rental schedules 

for communications uses (e.g., cell phone towers) and linear rights-of-way 

(e.g., power lines) that are formula-based for determining land values in 

lieu of a full land appraisal. BLM’s Idaho State office recently developed a 

formula, to be used in lieu of appraisals, for land valuations expected to be 

under $10,000. According to BLM officials, the formulas yield quicker 

valuation results at less cost compared to the results and costs of 

performing a full appraisal. The formulas are used by BLM, so ASD 

appraisers do not have to be involved. According to ASD officials, the 

expanded use of formulas for low-value land transactions would avoid the 

cost and time associated with using ASD appraisers to conduct appraisals

for these transactions.16

 15The Uniform Appraisal Standards for Federal Land Acquisitions allows for low land 

valuations to be completed through an alternative method of valuation, such as an

administrative formula. 

16FWS and NPS do not use similar schedules because they have so few cases of such land

use by private entities, according to officials with these agencies. Instead, they rely solely

on appraisals conducted by ASD. Reclamation’s land management policies currently call 

for full land appraisals to be used to calculate lease payments. 

Page 37 GAO-06-1050 Interior's Land Appraisal Process
Interior lacks independent oversight of appraisals for land acquisitions 

under some of its grant-in-aid programs—specifically, those administered 

by FWS and NPS—because when ASD was formed, it was not assigned 

responsibility for appraisals of land acquired under these programs. 

Interior’s grant-in-aid programs, for example, provide nonfederal agencies, 

such as state and local governments, with federal funds to acquire land—

typically for the purposes of conserving critical wildlife habitat. As ASD 

was being formed, Interior officials did not place appraisals for these 

transactions under ASD’s purview because grant-in-aid programs were 

separate from agencies’ realty functions. Instead, this authority remained 

with the land management agencies, where the nonfederal grant recipient

is responsible for obtaining an appraisal, which may or may not be 

reviewed by the grantor agency. In fiscal year 2005, Interior expended over 

$240 million in appropriated funds for land acquisitions by nonfederal 

agencies, of which nearly $140 million (or about 60 percent) was under 

nine FWS and NPS grant-in-aid programs. However, eight of the nine grantin-aid programs, representing nearly $135 million of the approximately 

$140 million, do not require independent federal review of grant recipients’ 

appraisals.17 As we reported earlier, it was the lack of required

independent review for land management agencies’ appraisals that led to 

the creation of ASD. Table 2 shows the nine grant-in-aid programs we 

reviewed and, of these, which programs require independent federal 

appraisal review. 

Interior Lacks 

Oversight of 

Appraisals under 

Some of Its Grant-inAid Programs 

 17While federal regulations generally require a person acquiring land with federal assistance 

to have an appraisal review process, many acquisitions under grant-in-aid programs qualify 

for exceptions to the regulations. 

Page 38 GAO-06-1050 Interior's Land Appraisal Process
Table 2: Independent Federal Review Requirements for Interior’s Grant-in-Aid

Programs 

Grant-in-aid program 

Requirement for 

federal review

FWS Cooperative Endangered Species Conservation Fund

Grants – Habitat Conservation Plan Land Acquisition 

No 

FWS Cooperative Endangered Species Conservation Fund

Grants – Recovery Land Acquisition Grants

No 

FWS Landowner Incentive Program No 

FWS North American Wetlands Conservation Act – Standard 

Grants 

No 

FWS North American Wetlands Conservation Act – Small Grants No 

FWS State Wildlife Grants Program No 

NPS American Battlefield Protection Program Yes 

NPS Land and Water Conservation Fund State Assistance 

Program 

No 

NPS Shenandoah Valley Battlefields Foundation No 

Source: GAO analysis of FWS and NPS grant-in-aid policies. 

The requirement for federal review for the NPS American Battlefield 

Protection program identified in table 2 is found in the guidance provided 

by NPS to the grant applicant. This guidance requires grant recipients to 

have land appraisals reviewed by the federal government. The grant 

manager responsible for administering this program said that he requires 

federal review because he recognizes the value of obtaining an

independent “check” to ensure that they do not offer more or less than 

market value. 

While there is no requirement for federal review for the other eight 

programs, grant managers for some of these programs occasionally seek

ASD’s assistance on an ad hoc basis. For example, at three of seven FWS 

regions, federal assistance officials, who administer several FWS grant-inaid programs listed above, seek ASD appraisal reviews for some or all of 

their appraisals. In FWS’ Northeast Region, for instance, the Division of 

Federal Assistance uses ASD’s appraisal review service for all of their 

acquisitions. The FWS federal assistance officials in the Great Lakes–Big 

Rivers Region seek ASD assistance for appraisal reviews of lands valued 

over $1 million. Additionally, federal assistance officials in FWS’ Pacific 

Region state that they request that ASD review appraisals on a case-bycase basis, typically when a state-agency-grant recipient does not have an 

in-house review appraiser, or if the appraisal is complex or of a high dollar 

Page 39 GAO-06-1050 Interior's Land Appraisal Process
value. In the other four FWS regions, however, ASD is not involved in the 

review of appraisals for grant-in-aid acquisitions.

Grant officials for some of these programs told us that ASD’s inconsistent 

involvement is due to the working relationships, between grant and realty

divisions, that existed prior to ASD’s formation. According to FWS 

officials in the Great Lakes–Big Rivers and Pacific regions, prior to the 

formation of ASD, grant office and realty offices shared the costs of review 

appraisers. Following the transition to ASD, the Division of Federal 

Assistance grants offices in both regions continued to request assistance 

for some appraisal reviews. Furthermore, the NPS official who administers 

the Shenandoah Valley Battlefields Foundation grant program said that he 

asked NPS realty-division review appraisers to review appraisals for his 

program prior to ASD’s formation, and he continued that policy after those 

review appraisers transferred to ASD. On the other hand, in FWS’ 

Southwest Region, a grant official said there was no such relationship in 

the past between the realty office and the Federal Assistance Grants 

Office. 

Federal review of appraisals provides some assurance that appraisals meet 

recognized standards to include independence, and that federal funds are 

being spent appropriately. The following examples illustrate the 

importance of federal review: 

• In 2004, Travis County, Texas, received nearly $6.5 million in FWS grant

funds from the Endangered Species Conservation-Habitat Conservation 

Plan Land Acquisition program to purchase about 320 acres, which 

included habitat for the golden-cheeked warbler—an endangered bird. 

Under Texas state law, land designated as habitat preserve or endangered 

species habitat is to be appraised as if these designations were not in 

place, although some land uses—such as building roads or structures—

may be prohibited on lands bearing these designations.18 Recognized 

appraisal standards require appraisers to consider the impact of land-use 

regulations on the utility and value of the land being appraised. The FWS 

Regional Director stated that he would accept the appraisal for Travis 

County if it followed state law. An ASD regional appraiser familiar with 

this case told us that he would not have approved this appraisal (if he was 

asked to review it) because it ignored a key legal characteristic, which 

would have substantially reduced the appraised value of the property. 

 18UASFLA D-6, see also USPAP Standard Rule 1-3(a). 

Page 40 GAO-06-1050 Interior's Land Appraisal Process
• In 2005, the Minnesota Department of Natural Resources received federal 

funds through the Federal Assistance State Wildlife grant program to 

acquire a 441-acre property in Minnesota—valued at about $1.3 million. 

ASD was asked by the FWS grant office to review the appraisal, and upon 

its review found numerous technical errors. The ASD review appraiser 

concluded that the contract appraiser significantly overvalued the land 

because the appraiser, along with committing other technical errors, used 

five comparable sales with a different highest and best use as a basis for 

his value conclusions. Specifically, ASD found that all five comparables 

sales were maximally profitable as farmland; however, the property being 

appraised could not be used as farmland and, as a result, its highest and 

best use is recreation—primarily waterfowl hunting. In that region of 

Minnesota, since farmlands averaged over $2,000 per acre and recreational

land generally averaged half that amount, the appraiser’s estimate was too 

high. According to a federal assistance grant program official, the 

Minnesota Department of Natural Resources is having the property reappraised. 

ASD review could also help ensure that appraisals conducted by grant-inaid recipients accurately estimate lands’ values. For example, under the 

Land and Water Conservation Fund State Assistance Program, NPS 

performs periodic program reviews of the state’s Land and Water 

Conservation Fund programs, which includes appraisals for land 

acquisitions funded, in part, by Land and Water Conservation Fund State 

Assistance grants. In 2005, as part of its periodic review, NPS asked ASD’s 

northwest office to help review a sample of appraisals prepared for the 

Oregon Parks and Recreation Department under NPS’s Land and Water 

Conservation Fund partnership program. ASD found deficiencies in each 

of the six appraisals it reviewed, including failures to (1) accurately 

identify the subject property, (2) explain the valuation approach, and (3) 

provide adequate sales histories. These deficiencies should have prompted 

the Oregon Parks and Recreation Department’s review appraiser to ask the 

contract appraiser for additional information to support the value 

conclusions. An ASD senior appraiser familiar with these appraisals told 

us that the appraisal review in each case was clearly inadequate. 

In addition, the official who administers grants under NPS’s Shenandoah 

Valley Battlefields Foundation grant program uses ASD for independent 

federal review of all appraisals to ensure compliance with recognized 

standards. An ASD regional appraiser stated that his reviews of 

Shenandoah Valley Battlefields Foundation’s appraisals, like reviews of 

other appraisals, have uncovered minor technical and factual flaws that 

Page 41 GAO-06-1050 Interior's Land Appraisal Process
were easily corrected, as well as major report weaknesses that resulted in 

ASD’s rejection of appraisals. 

Some grant officials believe that a federal review is not necessary to 

ensure independence and that their policies, which require grant 

recipients to use a state-licensed appraiser and review appraiser, are 

sufficient for assuring that market value is attained for the land 

transactions. However, an ASD regional appraiser told us that state 

certifications are not high enough and provide little assurance of adequate

appraisal knowledge. One ASD regional appraiser said that, because the 

appraisal community is small in some regions, contract appraisers and 

reviewers hired by grant recipients often find themselves reviewing each

others’ work. He believes this is a potential threat to appraisal objectivity 

because, in order to continue receiving requests for appraisal assistance, 

appraisers have an incentive to approve each others’ appraisals. 

Interior has no clear policy on why some grant-in-aid programs require 

federal review of land appraisals while others do not. Secretarial Order 

3258, issued in December 2004, outlines, among other things, ASD’s role in 

reviewing appraisals prepared for nonfederal parties. This order directs 

ASD to review appraisals if, among other things, the nonfederal party 

consults with ASD on the scope of work and selection of contract 

appraiser prior to initiation of the appraisal. According to senior ASD 

officials, this requirement helps ensure that appraisals will meet appraisal 

standards. A Regional Appraiser told us, however, that the order does not 

define nonfederal parties and, therefore, it is not clear whether the order 

applies to grant recipients under the grant-in-aid programs. Furthermore, 

the order does not apply unless a nonfederal party consults with ASD. Two 

ASD Regional Appraisers with whom we spoke stated that official 

clarification on whether the order applies to grant recipients would be 

helpful. Moreover, since ASD is reviewing some appraisals under the grant 

programs, the officials are unsure whether doing so is consistent with the 

order. 

Consolidating, into ASD, the appraisal functions that had previously been 

under the agencies’ realty offices, appears to have been effective in 

remedying prior concerns about appraiser independence. With ASD now 

having these responsibilities, it needs to ensure that it is capable of 

upholding the public trust, assigned to it by law, in representing the 

federal taxpayer when appraising land for purchase, sale, and exchange. 

While ASD has made great strides in ensuring this, there is wide variation

in appraisal quality for billions of dollars of potential land transactions. 

Conclusions 

Page 42 GAO-06-1050 Interior's Land Appraisal Process
Although many appraisals did not meet standards, it is uncertain whether 

the market value determinations would have changed as a result of redoing the appraisals. However, given the reasons for the appraisals not 

meeting standards, many of the examples show that the outcome may 

have changed—which could have affected the amount that the federal

government paid for a particular land transaction. A critical factor 

contributing to these appraisal quality differences is that existing federal

representation in critical land transactions is often delegated to individuals 

who may not have (or may not apply) the necessary specialized appraisal 

skills; these delegations are approved by individuals who have 

considerable discretion in deciding how thoroughly appraisals should be 

reviewed. Without a standard set of appraisal characteristics and 

considerations evaluated in each appraisal review—such as detailed 

descriptions of comparable sales, justification for valuation procedures, 

and documentation of legal and physical characteristics—appraisals that 

did not meet standards have been approved for government use. 

Moreover, based on the compliance problems we found with high value 

and complex appraisals, caused in large part by these concerns, ASD lacks 

an oversight mechanism to guarantee that the federal government is 

represented as fervently as the private parties that have a vested interest in

transacting land at a more favorable price than that dictated by market 

value. 

ASD must also make sure that, in the process of devoting attention to 

improving the quality of appraisals, it does not stymie its clients’ abilities 

to complete critical land acquisitions or divestitures. Delays in delivery of 

appraisals can have substantial negative consequences on the ability of the 

land management agencies to carry out agency land acquisition objecitves, 

and some land deals have been scuttled as a result. In addition, realty 

specialists with whom we spoke consistently warned of the potential for 

greater problems in the future if frustration with dealing with what is seen, 

by landowners, as inefficient government bureaucracy, worsens. While 

trying to fix the systemic and egregious problems that threatened appraisal 

integrity in the past, the centralization of the appraisal function has 

unintentionally caused inefficiencies in other processes that aid appraisal 

services. First, accountability for predictable and timely appraisal delivery 

has not been given proper attention. For instance, without a requirement 

for ASD to deliver appraisals in a timely or predictable manner, appraisers 

rarely negotiate appraisal time frames with client realty specialists, seek 

critical information from clients, or prioritize appraisal requests, which 

have led to lengthy delays in appraisal delivery. Lengthy delays can cause

land management agencies to lose land acquisition opportunities and lose

funding for these opportunities. Second, some highly visible ASD business 

Page 43 GAO-06-1050 Interior's Land Appraisal Process
practices have unintentionally impacted appraisal delivery. The 

contracting function, for example, represents an additional cost to ASD, 

and adds substantial time to appraisal delivery compared to when the 

function was within the client agencies. While Interior has recognized the 

inefficiencies caused by having the contracting function in the National 

Business Center’s Southwest Branch location, it hopes to remedy this by 

relocating the function to GovWorks in its Virginia office. It is too soon to 

tell whether this change will make the processes more efficient. If such 

efficiencies do not result from this change, Interior may wish to consider 

other alternatives, which could include relocating these functions back 

into the land management agencies. 

While Interior gave much attention to ensuring independence and 

objectivity of appraisals, it kept appraisals for a majority of its land 

acquisition dollars outside of ASD’s purview—thus allowing these 

appraisals to be subject to the same pressures that affected Interior’s 

appraisers prior to the formation of ASD. Despite significant efforts to 

reform Interior’s appraisal services, the majority of Interior’s land 

acquisition dollars are tied to programs not requiring any federal review of 

appraisals. Consequently, the government has limited assurance that land

valuations are accurate in real estate transactions with private parties 

valued at hundreds of millions of dollars each year. 

To ensure that land transactions are based on appraised values that adhere 

to recognized appraisal standards, the Secretary of the Interior should take 

the following steps: 

Recommendations 

• Ensure that ASD assigns appraisals requiring specialized skills—such as 

minerals, timber, and water competencies—to appraisers and review 

appraisers with these skills. 

• Establish and implement standardized review procedures for ASD’s review 

appraisers, such as the use of appraisal checklists from the Uniform 

Appraisal Standards for Federal Land Acquisitions. 

• Establish and implement a compliance inspection program, focusing 

particularly on appraisals with a higher likelihood of noncompliance. 

To establish a better accountability framework for ASD to help meet 

clients’ appraisal needs, we recommend that the Secretary of the 

Interior—in collaboration with ASD and the land management agencies it 

serves—take the following actions: 

Page 44 GAO-06-1050 Interior's Land Appraisal Process
• Require ASD appraisers and land management agency realty specialists 

requesting work to negotiate and reach agreement on completion dates for 

appraisal requests, and hold ASD accountable for meeting these dates. 

• Develop a system to prioritize appraisal requests that allows higher 

priority and more time-sensitive land transactions to be appraised in a 

timely fashion. 

• Clarify, in the Service Level Agreements, who has responsibility for 

obtaining and providing appraisal information needed in order to complete 

an appraisal and review.

To help ensure greater efficiency of operations, we recommend that the

Secretary of the Interior direct ASD to develop formulas reflecting market

value for partial acquisitions that yield little revenue to the federal 

government—which are allowed by recognized appraisal standards. 

To ensure that Interior’s grant-in-aid land transactions currently 

conducted outside ASD’s purview conform to recognized standards, we 

recommend that the Secretary of the Interior direct the head of ASD, in 

collaboration with grant-in-aid program officials, to clarify the terms of 

ASD’s involvement in the review of grant recipients’ appraisals. 

We provided Interior with a draft of this report for review and comment. 

Its written comments are provided in appendix II. Interior generally agreed 

with our findings and recommendations and welcomes the report’s intent

to improve the overall appraisal process and services provided through 

ASD. Interior also said that ASD will continue to strive to provide high 

quality valuations services, that the recommendations further strengthen 

how it performs real property appraisals, and that it is dedicated to 

addressing the recommendations promptly. With regard to our 

recommendations to ensure that ASD assigns appraisal workload requiring 

specialized skills to appraisers with such skills, establish and implement 

standardized review procedures, and establish and implement a 

compliance inspection program, Interior said that it was taking or planning 

several actions. On the issue of assigning appraisers with specialized 

appraiser skills, it said that ASD, in cooperation with DOI University, is 

developing appraisal-specific training that will be first offered in January 

and February 2007 and will be training sessions in appraisal review, which 

are required by the American Society Farm Managers and Rural 

Appraisers for their appraisal-review designations. It said that ASD has 

also established the Office of Minerals Evaluation in Denver, headed by a 

Agency Comments 

and Our Evaluation 

Page 45 GAO-06-1050 Interior's Land Appraisal Process
minerals expert, which is being staffed to meet the minerals valuation 

needs of ASD. Also, it said that it has begun better lines of communication 

with the client bureaus for expertise in such things as water rights. In 

addition, it said that as staff retire, it is replacing them with individuals 

who have greater levels of expertise. With respect to standardizing review 

procedures and implementing a compliance inspection program, it said 

that ASD has drafted and circulated an outline of such a program with the

charge of finalizing a review process to be implemented during fiscal year 

2007. It said that its intent is to use the compliance review process as a 

management tool to identify appropriate staffing levels and allocations, 

identify and target training needs, and assign accountability at the 

appraiser and reviewer levels. 

Interior provided the following in response to our recommendations to (1) 

establish a better accountability framework for ASD to help meet client’s

appraisal needs by requiring ASD appraisers and land management agency

realty specialists to reach agreement on appraisal completion dates, (2) 

develop a system to prioritize appraisal requests, and (3) clarify 

responsibility for obtaining and providing appraisal information. It said 

that ASD will be reinforcing the need for timely response to requests and 

that adherence will be monitored through the compliance review process. 

Also, accountability will be reinforced. It said that while ARRTS has an 

automatic notification feature if the requested completion date and 

projected completion date differ, the notification does not get generated if

information in not entered in a timely manner into ARRTS. It also said that 

ASD recognizes that prioritization is a requisite to timely service to its 

clients. In this regard, it said that ASD has recognized the process used by 

the Midwest Region’s Regional Appraiser’s meetings with FWS realty 

managers as a best practice and has instituted this concept with all its 

client bureaus. Furthermore, Interior has established the National 

Appraisal Coordination Team, comprised of ASD management and client 

bureau management, which meets quarterly to discuss prioritization 

issues. Interior also said that ASD will work with the bureaus to clarify the 

instructions found in ARRTS and in the Service Level Agreements for 

gathering and providing appraisal information. 

We are encouraged by the actions Interior has outlined above for 

addressing the deficiencies noted in the report. With regard to the issue of 

assigning appraisers with specialized skills to perform appraisals requiring 

such skills, the training programs and staffing initiatives are steps in the 

right direction. However, some of these initiatives will take time before the 

staff have developed the skills needed to ensure that these specific 

appraisals in question meet appraisal standards. Providing the training, in 

Page 46 GAO-06-1050 Interior's Land Appraisal Process
and of itself, is no guarantee that the proper skills are used. Accordingly, 

we are also encouraged that the compliance inspection program being 

developed will involve processes to assess these efforts. However, as with

any compliance program, the assessments occur after the fact with the 

intent of identifying actions to prevent future occurrences. Thus, until 

such time as the compliance program is in place, Interior should closely 

monitor the appraisals currently underway to assess compliance with 

appraisal standards, giving specific attention to the types of appraisals 

identified in our report. The steps outlined to address the timeliness of 

appraisal delivery are also positive. The key to their successes, particularly

with regard to prioritizing appraisals, appear to be centered on the 

frequency with which meetings occur between ASD and the clients. 

Interior said that ASD has instituted the concept of meetings with all of its 

clients. It is not clear from these comments, however, the frequency with 

which these meetings will take place and what processes ASD and the 

clients will employ—such as negotiating time frames for each appraisal 

request—to ensure that the correct priorities are placed on the lands 

needing appraisals and the appraisals already underway. 

On our recommendation to develop formulas reflecting market value for 

partial acquisitions that yield little revenue to the federal government, 

Interior agreed that a more efficient process for these low-value products 

must be developed. It identified several possible solutions, such as mass 

appraisal techniques, computer-assisted mass appraisals, or automated 

valuation models, that it will research and subsequently implement if 

deemed appropriate—which should result in both efficiency and cost 

savings in the long term. It said that, as this effort progresses, regulatory 

changes may be required to eliminate firm requirements that bureaus 

charge fair market value for these minor land uses. These, too, are positive 

steps. However, in its comments, Interior does not outline the time frames 

in which these actions will occur. As the report points out, the costs of 

doing these appraisals are greater than the revenues generated. Thus, 

valuable resources for performing these appraisals could be used 

elsewhere on higher-priority needs. Accordingly, it is our view that Interior 

should identify a specific time frame for taking the actions it plans. 

Lastly, Interior agreed with our recommendation to clarify the terms of 

ASD’s involvement in the review of grant recipients’ appraisals. It said that 

it will evaluate procedural and resource implications of ASD’s involvement 

in the many grant-in-aid programs and clarify the terms of ASD’s 

involvement. These actions are also positive, but as mentioned above,

Interior did not outline the time frame for initiating and completing these 

actions. 

Page 47 GAO-06-1050 Interior's Land Appraisal Process
Interior provided other comments for updating information in the report 

or for providing technical clarifications that we have incorporated, as 

appropriate.

Copies of this report will be sent to the Secretary of the Interior and other

interested parties. We will also make copies available to others upon 

request. In addition, this report will be available at no charge on the GAO 

Web site at www.gao.gov. 

If you have any questions about this report or need additional information, 

please contact me at (202) 512-3841 or nazzaror@gao.gov. Contact points 

for our Office of Congressional Relations and Public Affairs can be found 

on the last page of this report. Key contributors to this report can be found 

in appendix III. 

Robin M. Nazzaro 

Director, Natural Resources 

 and Environment 

Page 48 GAO-06-1050 Interior's Land Appraisal Process
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To determine the extent to which the Department of the Interior’s 

(Interior) appraisal policies and procedures ensure compliance with 

recognized standards for appraisals, we examined current federal laws, 

regulations, and guidance regarding land appraisal requirements for 

Interior, as well as guidance for the Appraisal Services Directorate (ASD), 

the Bureau of Land Management (BLM), the Bureau of Reclamation 

(Reclamation), the Fish and Wildlife Service (FWS), and the National Park

Service (NPS). We also evaluated 324 of the 2,905 appraisals completed 

from November 2003 through February 21, 2006 that, based on past audit 

reports and our experts’ opinions, have a higher probability of 

noncompliance. These consisted of appraisals for land transactions 

involving land exchanges; land valued over $10 million; National Wildlife 

Refuge revenue-sharing; NPS acquisitions; and easements. These 

appraisals collectively represented 50 percent (nearly $3.2 billion) of the 

total value of the land appraised since ASD’s inception through February 

21, 2006. We identified these appraisals using ASD’s appraisal database, 

the Appraisal Request and Review Tracking System (ARRTS). We 

identified 563 appraisals that met the criteria listed above. Ninety-six could 

not be obtained because appraisers in the Pacific Region could not locate 

them. Additionally, 143 appraisals from the 563 were not evaluated by our 

experts because the appraised dollar value was low and, after further 

consideration, the type of appraisals was not one identified in prior audits 

as having a higher probability of noncompliance. After testing the data for 

reasonableness and interviewing the administrator of ARRTS, we 

determined that the data from ARRTS was sufficiently reliable for our 

purposes. To evaluate these appraisals, we contacted the Appraisal 

Foundation—an independent, nonprofit educational organization 

dedicated to the advancement of professional valuation and authorized by 

Congress to establish, improve, and promote professional appraisal 

standards—to retain appraisal experts to assist in our evaluation. 

We retained four nationally recognized appraisal experts recommended by 

the Appraisal Foundation: Don Dorchester, Ron Hendricks, Henri 

LeMoyne, and John Widdoss. These appraisal experts evaluated the 324 

appraisals, which included the associated ASD appraisal review, for 

compliance with appraisal requirements outlined in the two nationally 

recognized appraisal standards: Uniform Standards of Professional 

Appraisal Practices or Uniform Appraisal Standards for Federal Land 

Acquisitions. While we aimed to evaluate the entire population of 

appraisals having a higher likelihood of noncompliance, appraisers in 

ASD’s Pacific Region could not locate nearly two-thirds of the 150 

appraisal reports we requested. The Regional Appraiser stated that the 96

appraisal reports were lost when appraisers were moved from the land 

Page 49 GAO-06-1050 Interior's Land Appraisal Process
Appendix I: Scope and Methodology 

management agency workspaces into ASD workspaces. Because we were 

unable to evaluate 96 appraisals we requested from ASD’s Pacific Region, 

we could not evaluate whether they met recognized appraisal standards. 

To determine what, if anything, affects ASD’s working relationships with 

its client agencies and its overall efficiency in providing appraisal services,

we examined the guidance governing relationships between ASD and the

National Business Center, and the client agencies in Interior: BLM, FWS, 

NPS, and Reclamation. This guidance includes federal laws and 

regulations, Interior regulations, agency and bureau policy manuals, and 

interagency agreements. We used ARRTS to analyze ASD’s timeliness with 

completing appraisals and appraisal reviews. To assess ASD’s working 

relationships with its client agencies, we conducted structured interviews

with ASD’s seven regional appraisers, who served as points-of-contact for

communication between ASD and its client agencies. We also interviewed 

officials from ASD’s client agencies regarding current appraisal 

procedures and the effect of these on the timeliness of appraisal delivery.

To evaluate the overall efficiency of appraisal services, we identified 

ASD’s billing and contracting procedures. In so doing, we talked to 

National Business Center officials in Washington, D.C.; Denver, Colorado; 

and the National Business Center’s Southwest Branch in Fort Huachuca, 

Arizona, to identify the services they provide ASD, the cost of these 

services, and the effect of these services, if any, on the timeliness of the 

appraisal process. We also spoke with officials from non-government 

agencies involved in Interior land acquisitions in California, Colorado, and

New Mexico. 

To determine the extent to which there are land appraisals under Interior 

that ASD does not have the responsibility of overseeing, we interviewed 

ASD officials and grant officials from FWS and NPS. Through these 

interviews, and through ARRTS, we identified nine grant programs that we 

found to have land acquisition activities. For these nine grant programs, 

we obtained appraisal requirements through documents such as policy 

manuals, agency regulations, and the guidance provided to grant 

recipients. We also interviewed officials that manage these grant 

programs. To obtain funding levels for land acquisitions conducted by the 

grant programs in fiscal year 2005, we reviewed budget documents and/or 

received budget information from grant officials.

Our work was conducted in accordance with generally accepted 

government auditing standards, including an assessment of internal 

controls, between December 2005 and August 2006. 

Page 50 GAO-06-1050 Interior's Land Appraisal Process
Appendix II: Comments from the Department Appendix II: Comments from the Department of the Interior 

of the Interior 

Page 51 GAO-06-1050 Interior's Land Appraisal Process
Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

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Appendix II: Comments from the Department 

of the Interior 

Page 58 GAO-06-1050 Interior's Land Appraisal Process
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 59 GAO-06-1050

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact Robin Nazzaro (202) 512-3841 or nazzaror@gao.gov 

In addition to the individual named above, Roy Judy, Assistant Director; 

Nathan Anderson; Phillip Farah; Richard Johnson; Paul Kinney; Michael

Krafve; Jay Smale; Bill Woods; and Arvin Wu made key contributions to 

this report. 

 Interior's Land Appraisal Process

Staff 

Acknowledgments 

(360637) 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

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