United States Government Accountability Office

GAO Report to the Ranking Member, 

Committee on Veterans’ Affairs, House 

of Representatives 

FEDERAL REAL 

PROPERTY 

Progress Made in 

Reducing Unneeded 

Property, but VA 

Needs Better 

Information to Make 

Further Reductions 

September 2008 

 

GAO-08-939 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2008

FEDERAL REAL PROPERTY 

Progress Made in Reducing Unneeded Property, but 

VA Needs Better Information to Make Further 

Highlights of GAO-08-939, a report to the Reductions Ranking Member, Committee on Veterans' 

Affairs, House of Representatives 

The Department of Veterans Affairs 

(VA) operates one of the largest 

healthcare-related real estate 

portfolios in the nation. However, 

many VA facilities are older and no 

longer well suited to providing 

care, leaving VA with millions of 

square feet of property it does not 

use to capacity (underutilized) or 

at all (vacant). VA has various legal 

authorities that allow it to dispose 

of such property. GAO was asked 

to identify (1) VA’s progress in 

reducing underutilized or vacant 

property and how much VA spends 

operating the underutilized or 

vacant property it retains; (2) VA’s 

use of its various legal authorities 

to reduce underutilized and vacant 

property and the extent to which 

VA tracks how these authorities 

contribute to reductions; and (3) 

the challenges VA faces in 

minimizing underutilized and 

vacant space and the strategies VA 

is using to address these 

challenges. To accomplish these 

objectives, GAO reviewed VA 

property data, and visited eight VA 

locations based on space 

utilization, use of authorities, and 

other factors. GAO also 

interviewed officials from various 

VA offices and stakeholders. 

What GAO Recommends

GAO’s recommendations to VA 

include (1) developing an annual 

cost estimate of spending on 

underutilized and vacant property 

and (2) collecting and maintaining 

building-level data by fiscal year. 

VA concurred with the first 

recommendation but not the 

second, believing its current 

analysis is adequate, which GAO 

continues to question. 

VA has made significant progress in cutting underutilized space in its 

buildings from 15.4 million square feet in fiscal year 2005 to 5.6 million square 

feet in fiscal year 2007, and although the number of vacant buildings 

decreased, the amount of vacant space remained relatively unchanged at 

approximately 7.5 million square feet. GAO estimated VA spent $175 million in 

fiscal year 2007 operating underutilized and vacant space at its medical 

facilities, where 98 percent of such space exists. GAO developed this estimate 

because VA does not track the cost of operating underutilized and vacant 

building space at the building level and has not developed a reliable method 

for doing so. 

VA’s use of various legal authorities such as enhanced-use leases and sharing 

agreements likely contributed to the overall reduction of underutilized space, 

but VA does not track the effect of these authorities. Their use provides VA 

with revenue and services. Revenue comes from such diverse sources as rent 

for space and money paid for using buildings as film sets, among other things. 

For example, at Fort Howard, Maryland, in 2006, VA entered into a new 

enhanced-use lease with a developer to build a retirement community where 

veterans are given priority for occupancy. However, the lack of building-level 

information about the extent to which these authorities reduce underutilized 

or vacant space or provide benefits such as revenue or services means that VA 

cannot track, monitor, or evaluate their impact or determine which authorities 

have the greatest effect from year to year. 

VA faces several challenges to minimizing underutilized and vacant space and 

is using strategies at some facilities to mitigate them. One challenge is 

location: VA officials reported difficulty finding entities interested in using 

underutilized or vacant property in areas with low property values. Another 

challenge is cost: many of VA’s underutilized or vacant buildings are in poor 

condition and require an estimated $3 billion in repairs before they can be 

fully utilized. Finally, competing stakeholder interests and legal and budgetary 

limitations can further impede VA’s efforts. To mitigate these challenges, 

individual VA locations have used strategies such as improving 

communication with veterans groups and other external stakeholders, 

obtaining support from internal stakeholders, and entering into public-private 

partnerships. 

Examples of Vacant Buildings at VA Medical Facilities in Marion, Indiana and Dayton, Ohio 

Source: GAO.

To view the full product, including the scope 

and methodology, click on GAO-08-939. 

For more information, contact Mark Goldstein 

at (202) 512-2834 or goldsteinm@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 7 

VA Reduced Underutilized Space by Nearly Two-thirds, but Vacant 

Space Remained Relatively Unchanged, and the Cost of 

Operating and Maintaining These Types of Space Is Substantial 11 

VA Does Not Track the Extent to Which Various Authorities 

Contribute to the Overall Reduction in Underutilized Property 20 

Ongoing Challenges Impede VA’s Efforts to Minimize and Reduce 

Underutilized and Vacant Property, but Some Locations Have 

Taken Steps to Address These Challenges 27 

Conclusions 42 

Recommendations for Executive Action 43 

Agency Comments and Our Evaluation 43 

Appendix I Objectives, Scope, and Methodology 48 

Appendix II Independent Cost Estimate Methodology 51 

Appendix III Comments from the Department of Veterans Affairs 65 

Appendix IV GAO Contact and Staff Acknowledgments 71 

Tables 

Table 1: Major Types of Authorities Available to VA 10 

Table 2: VA’s Underutilized Square Feet and Number of Buildings 

with Underutilized Square Feet, Fiscal Years 2005–2007 12 

Table 3: VA’s Vacant Square Feet and Number of Vacant Buildings, 

Fiscal Years 2005–2007 14 

Table 4: Comparison of Cost Estimating Best Practices and VA’s 

Current Approach 18 

Table 5: Number of VA Buildings Disposed, by Method and Fiscal 

Year23 

Page i GAO-08-939 Federal Real Property 
Table 6: Summary of VA’s Implementation of Best Practices for 

Cost Estimating in Its Pricing Guide 53 

Table 7: 2007 Operations Cost per Square Foot 58 

Table 8: 2007 Operations Cost State-level Locality Indices 59 

Table 9: 2007 VA Facilities Square Feet of Underutilized and Vacant 

Space 61 

Table 10: Percentile Rankings for 2007 Total Costs 64 

Figures 

Figure 1: Map of VA’s Healthcare Networks 8 

Figure 2: Underutilized and Vacant Square Feet by Usage Type, 

Fiscal Year 2007 13 

Figure 3: Age of VA’s Buildings with Utilized, Underutilized, and 

Vacant Space, Fiscal Year 2007 16 

Figure 4: Old Quarters Now Used to Provide Homeless Housing at 

Milwaukee Medical Center 22 

Figure 5: Filming Sites at the Greater Los Angeles Healthcare 

System 24 

Figure 6: Energy Center Located at North Chicago Medical Center 25 

Figure 7: Vacant Building in Marion, Indiana, Where Location Is a 

Challenge 29 

Figure 8: Vacant Buildings Difficult to Convert to Other Uses 30 

Figure 9: Deteriorating Vacant Buildings That Are Not Being Used 

by VA 32 

Figure 10: Vacant Buildings on the National Register of Historic 

Places 34 

Figure 11: Cumulative Probability Distribution of Total 2007 Costs 63 

Page ii GAO-08-939 Federal Real Property 
Abbreviations 

EUL enhanced-use lease 

GSA General Services Administration 

McKinney-Vento Act Stewart B. McKinney Homeless Assistance 

Act 

NCA National Cemetery Administration 

OMB Office of Management and Budget 

VA Department of Veterans Affairs 

VBA Veterans Benefits Administration 

VHA Veterans Health Administration 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page iii GAO-08-939 Federal Real Property 
United States Government Accountability Office

Washington, DC 20548 

September 10, 2008 

The Honorable Steve Buyer 

Ranking Member 

Committee on Veterans’ Affairs 

House of Representatives 

Dear Mr. Buyer: 

With more than 32,000 acres of land and over 6,200 buildings on 

approximately 300 sites, the Department of Veterans Affairs (VA) is among 

the largest federal property-holding agencies and the operator of one of 

the largest healthcare-related real estate portfolios in the nation. However, 

many of VA’s facilities were built more than 50 years ago and are no longer 

well suited to providing care in the current VA system. As a result, VA has 

millions of square feet of property that it does not use to capacity 

(underutilized) or at all (vacant) because of age, condition, location, or 

other factors. Operating and maintaining unneeded property requires VA 

to spend appropriations that could otherwise be used to provide direct 

medical care or other services. For all federal agencies, including VA, we 

have identified real property management as a high-risk area due to longstanding problems, including underutilized and vacant building space and 

unneeded land.1

Since 1999, VA has placed increased emphasis on reducing underutilized 

and vacant property, including buildings and land. For example, the 

agency initiated a process known as the Capital Asset Realignment for 

Enhanced Services, a comprehensive, long-range assessment of its 

healthcare system’s capital asset requirements, to address its obsolete 

infrastructure. VA also has various legal authorities that provide options to 

help reduce its underutilized and vacant property. For instance, VA has 

authority to enter into a particular type of lease, called an enhanced-use 

 

1

We have reported that more than 30 federal agencies, including VA, control a valuable 

portfolio of facilities and land that is at high risk due to vulnerabilities to waste, fraud, 

abuse, and mismanagement or major challenges associated with managing it in an efficient 

or effective manner. See GAO, Federal Real Property: Progress Made Toward Addressing 

Problems, but Underlying Obstacles Continue to Hamper Reform, GAO-07-349 

(Washington, D.C.: Apr. 13, 2007); Federal Real Property: Excess and Underutilized 

Property Is an Ongoing Problem, GAO-06-248T (Washington, D.C.: Feb. 6, 2006); and HighRisk Series: Federal Real Property, GAO-03-122 (Washington, D.C.: January 2003). 

Page 1 GAO-08-939 Federal Real Property 
lease (EUL), which allows the agency to enter into long-term agreements 

with public and private entities for the use of VA property, resulting in 

cash or in-kind consideration for VA. Additionally, the Veterans Health 

Administration (VHA) has authority to enter into sharing agreements with 

entities to provide the use of VHA space for the benefit of veterans or 

nonveterans in exchange for payment or services. 

To provide you with information on VA’s progress in reducing 

underutilized and vacant property and challenges to VA’s efforts, this 

report addresses the following questions: (1) To what extent has VA 

reduced underutilized or vacant property, and how much does it spend 

maintaining the underutilized or vacant property it retains? (2) How has 

VA used its authorities to reduce underutilized and vacant property and to 

what extent does it track how these authorities contribute to reductions? 

(3) What, if any, challenges does VA face in minimizing underutilized and 

vacant property, using EULs and other agreements, and what steps is VA 

taking to address these challenges? 

To identify changes in the amount of underutilized and vacant property, 

we analyzed property data from two VA databases: the Capital Asset 

Inventory database for building-level data from fiscal years 2006 and 2007, 

and the Capital Asset Management System for station-level2 data from 

fiscal years 2005 through 2007.3

 The earliest year for which VA property 

data were available was fiscal year 2005 for station-level data and fiscal 

year 2006 for building-level data. We took steps to assess the reliability of 

the data used in this report by interviewing agency officials knowledgeable 

about the data, reviewing systems documentation, performing electronic 

testing to identify obvious errors in accuracy and completeness, and 

corroborating data we received with other sources. We determined that 

the data we used were sufficiently reliable for our purposes. To estimate 

the cost of operating and maintaining VA’s underutilized and vacant 

property, we conducted an independent cost estimate because VA did not 

provide its own estimate for such operating costs at the time of our work 

(further information is contained in app. II). To determine the extent to 

which VA enters into agreements to reduce underutilized and vacant 

 

2

For the purposes of this report, the term “station” refers to a VA medical center, Veterans 

Benefit Administration office, national cemetery, or staff office. Stations can be composed 

of multiple buildings. 

3

Fiscal year 2005 represented the first year all data elements were fully collected in the 

Capital Asset Management System.

Page 2 GAO-08-939 Federal Real Property 
property, we collected and analyzed data from the Capital Asset 

Management System on the number of agreements VA entered into—such 

as EULs, sharing agreements, and outleases—for fiscal years 2005 through 

2007. In addition, we visited and conducted interviews at locations where 

these agreements were entered into to understand the benefits VA has 

received from them and their impact on property management. Finally, to 

identify the challenges VA faces when minimizing its underutilized and 

vacant property, we spoke to VA headquarters officials to obtain their 

views on these challenges and any improvements that could help VA better 

utilize its property. We visited locations where VA encountered challenges 

minimizing underutilized and vacant property at its facilities and identified 

strategies for mitigating these challenges. We also spoke with 

stakeholders, such as veterans service organizations and lessees, 

interested in VA’s decisions about property. We conducted site visits at 

eight VA medical facilities including Dayton, Ohio; Fort Howard, Maryland; 

Los Angeles, California; Marion, Indiana; Milwaukee, Wisconsin; North 

Chicago, Illinois; Perry Point, Maryland; and North Hills (Sepulveda), 

California. We selected this nonprobability sample of sites to obtain a 

range of examples of VA’s experiences with various real property 

authorities; the amount of, or changes in, underutilized and vacant 

property; and geographic dispersion. We also toured a Veterans Benefits 

Administration (VBA) facility in Milwaukee, Wisconsin, and a national 

cemetery in Alexandria, Virginia. While we attempted to select varied 

locations, our sample cannot be statistically projected to VA as a whole. 

We conducted this performance audit from July 2007 through September 

2008 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. Appendix I provides more 

detail on our objectives, scope, and methodology. 

From fiscal year 2005 through 2007, VA made significant progress in 

reducing underutilized space (space not used to full capacity) in its 

buildings from 15.4 million square feet to 5.6 million square feet. Although 

the number of vacant buildings decreased during this period, the amount 

of vacant space remained relatively unchanged, and the total cost of 

maintaining underutilized and vacant space is substantial. The 5.6 million 

square feet of underutilized space accounted for less than 4 percent of 

VA’s total square feet in fiscal year 2007. Vacant space, which totaled 

Results in Brief 

Page 3 GAO-08-939 Federal Real Property 
approximately 7.3 million square feet in fiscal year 2007, accounted for 5 

percent of VA’s total square feet in all 3 fiscal years. We estimate that VA 

spent $175 million operating and maintaining underutilized and vacant 

space at its medical facilities in fiscal year 2007; 98 percent of 

underutilized and vacant space were at these facilities. We developed this 

estimate because VA does not track the cost of operating and maintaining 

underutilized and vacant VA space at the building level and has not 

developed a reliable method for estimating these costs. Without a reliable 

cost estimate on operating and maintaining vacant and underutilized 

property, VA cannot account for the amount it spends each year on space 

that provides little or no benefit to veterans and taxpayers, some of which 

could be used to provide healthcare or other services. We are 

recommending that VA develop an annual cost estimate for how much it 

spends on underutilized and vacant property and that such estimates be 

factored into its portfolio property practices. 

While VA’s use of various legal authorities, such as EULs and sharing 

agreements, likely contributed to VA’s overall reduction of underutilized 

space since fiscal year 2005, VA does not track the overall effect of the 

uses of these authorities on space reductions. VA has used its authorities 

to enter into various types of agreements to reduce underutilized space, 

but it does not uniformly track information, such as the amount of square 

footage reduced, that would help gauge the impact of such authorities at 

the building level. VA officials we spoke with during the course of the 

audit acknowledge that the ability to track this type of information at the 

building level is desirable. The lack of such information precludes VA from 

knowing what effect these authorities are having on reducing 

underutilized or vacant space or knowing which types of authorities have 

the greatest effect. The use of these authorities, which have remained 

relatively constant in number at around 475 since fiscal year 2005, 

generates revenue and provides services for veterans, such as homeless 

housing, drug rehabilitation, and childcare. In Chicago, for example, VA 

leased vacant land in 2005 to a local hospital in exchange for $28 million; 

VA then used the funds to augment healthcare services for veterans at 

other locations in the Chicago area. As with information on reducing 

underutilized and vacant property, VA does not formally track and 

evaluate information related to such benefits at the building level, again 

leaving itself unable to determine what effect the authorities are having. 

We are recommending that VA track, monitor, and evaluate square footage 

reductions and financial and nonfinancial benefits resulting from new 

agreements at the building level by fiscal year in order to provide itself a 

better understanding of the utility of these authorities and the overall 

Page 4 GAO-08-939 Federal Real Property 
effect they are having on underutilized and vacant property from year to 

year. 

VA faces several ongoing challenges—some of which include building 

location, high building repair costs, and competing stakeholder interests—

to reducing underutilized and vacant property, but is using several 

strategies in some locations to mitigate these challenges. Officials reported 

difficulty finding entities interested in using their underutilized or vacant 

property located in areas with low property values. In addition, many of 

VA’s vacant or underutilized buildings are in poor condition and require 

costly repairs and renovations before they can be utilized fully by VA or 

others. Fifty-six percent of the buildings that VA determined were in 

“poor” or “critical” condition at the end of fiscal year 2007 were 

underutilized or vacant properties; VA estimated the repair costs for these 

properties to be approximately $3 billion. Moreover, 66 percent of VA’s 

underutilized and vacant buildings are historic properties or eligible for 

historic designation, therefore requiring more effort for disposal. Disposal 

options, such as demolition, can be an expensive alternative, often 

because of required remediation for asbestos and other environmental 

problems. VA also cited competing stakeholder interests, such as 

communities or veteran groups that want to limit development in their 

community, as barriers to disposing of underutilized or vacant property. 

For example, in some locations such as West Los Angeles and Milwaukee, 

veterans’ groups have opposed arrangements that did not result in building 

uses that provide benefits exclusively for veterans. Finally, legal 

restrictions—such as statutory limits on the length of certain authorities—

and administrative and budgetary disincentives associated with some of 

VA’s available authorities can further affect VA’s ability to enter into 

agreements. To address such challenges, individual VA locations have 

used various strategies, including communicating with external 

stakeholders, obtaining support from internal stakeholders, and entering 

into public-private partnerships. Federal agencies have other tools 

available for the disposal of unneeded federal properties, including the 

public benefits conveyance program administered by the General Services 

Administration (GSA). This program allows agencies to convey surplus 

properties to state governments, local governments, or nonprofit 

organizations for public uses, such as homeless centers, educational 

facilities, and public parks. 

We provided a draft of this report to VA for review and comment. In 

written comments, VA concurred with two of our three recommendations. 

Specifically, it concurred with our two recommendations that VA develop 

an annual cost estimate of spending on VA’s underutilized and vacant 

Page 5 GAO-08-939 Federal Real Property 
property and track, monitor, and evaluate square footage reductions and 

financial and nonfinancial benefits when recording new agreements. 

However, VA did not concur with our recommendation that the agency 

collect and maintain building-level data by fiscal year in order to correlate 

characteristics associated with underutilized and vacant buildings, which 

may help to identify unneeded assets. VA stated that it collects and 

analyzes a significant amount of data at the station and building level, that 

it is in compliance with reporting requirements established at the Federal 

Real Property Council, and that it uses performance measures to identify 

unneeded assets that may be candidates for disposal. Although we agree 

that VA collects a significant amount of data at the station and building 

level, we do not agree that this information is sufficient to correlate 

characteristics with VA’s underutilized and vacant buildings and therefore 

believe our recommendation remains valid. In addition, VA’s written 

comments highlighted five areas of disagreement with our report, which 

we address on p. 43 of this report. First, VA said that our report doublecounted vacant space. In response to this comment, we subtracted the 

double-counted space and we now report that VA had 5.6 million square 

feet of underutilized building space in fiscal year 2007. Second, VA said 

that we overstated unit costs for operations and maintenance of 

underutilized space. We revised this estimate after learning that our 

original estimate had double-counted the costs for vacant space. Third, VA 

said it does have valid cost information from which to make sound and 

prudent decisions and provided examples to support its position. We 

acknowledge that VA maintains certain information important for such 

decision making but believe it needs to maintain more comprehensive 

building-level information by fiscal year in order to determine the 

operations and maintenance costs of underutilized space. Fourth, VA 

stated that our report did not acknowledge VA’s efforts to designate 

properties for disposal based on mission dependency, utilization, and cost. 

While we acknowledge VA has taken several steps such as using 

performance measures to identify assets that may be candidates for 

disposal, VA has not estimated the costs of many of the disposals on its 

list, the disposals have not been funded, and the agency’s disposal plans 

are not prioritized. Finally, VA said that it does track revenue generated, 

square footage reductions, and services received through agreements; 

however, this is not accomplished systematically. While our report 

generally reflects these facts, we added some additional information to the 

report to clarify that VA does track some information on agreements, and 

VA concurred with our related recommendation to track, monitor, and 

evaluate square footage reductions and financial and nonfinancial benefits 

when recording new agreements, as of fiscal year 2008, as noted earlier. 

Page 6 GAO-08-939 Federal Real Property 
VA also provided technical comments, which we incorporated, where 

appropriate. 

VA is comprised of three administrations: VHA, VBA, and the National 

Cemetery Administration (NCA). Additionally, seven staff offices and 12 

staff organizations4

 provide specific assistance to the Secretary of VA. 

Each administration has a network5

 of regional facilities, which provides 

diverse program services to veterans and their families including, among 

others, healthcare-related services. 

Background 

VHA operates the majority of VA’s capital assets, and is primarily 

responsible for VA’s healthcare delivery to the veterans enrolled for VA 

healthcare services. In 2007, VA served 5.6 million patients. In addition, 

VHA operates the nation’s largest integrated healthcare system which 

includes 155 hospitals, 881 outpatient clinics, 135 nursing homes, 46 

residential rehabilitation treatment programs, and 207 readjustment 

counseling centers totaling a combined 144.6 million square feet. Within 

VHA, the management of facilities is decentralized to 21 networks (see 

fig. 1). 

 

4

VA’s staff offices include the Office of Public and Intergovernmental Affairs; Office of 

Management; Office of Information and Technology; Office of Human Resources and 

Administration; Office of Operations, Security and Preparedness; Office of Policy and 

Planning; and the Office of Congressional and Legislative Affairs. VA’s staff organizations 

include the Board of Veterans’ Appeals, Office of General Counsel, Inspector General, 

Veterans Service Organizations Liaison, Center for Minority Veterans, Center for Women 

Veterans, Employment Discrimination Complaint Adjudication, Office of Regulation Policy 

and Management, Small and Disadvantaged Business Utilization, Center for Veterans 

Enterprise, Center for Faith-Based and Community Initiatives, and Office of Construction 

and Facilities Management. 

5

A network is a group of facilities located in the same geographic area of the country. 

Page 7 GAO-08-939 Federal Real Property 
Figure 1: Map of VA’s Healthcare Networks 

Hawaii

Sources: U.S. Department of Veterans Affairs; MapArt (map); and GAO.

Pa.

Ore.

Nev.

Nev.

Idaho

Mont.

Wyo.

Utah

Ariz. N.Mex.

Colo.

N.Dak.

S.Dak.

Nebr.

Tex.

Tex.

Tex.

Kans.

Okla.

Minn.

Iowa

Mo.

Mo.

Ark.

La.

Ill.

Miss.

Ind.

Ky.

Tenn.

Ala.

Fla.

Ga.

S.C.

N.C.

Va.

Ohio

N.H.

Mich. Mass.

Mich.

Calif.

Calif.

Wash.

Wis. N.Y.

Maine

Vt.

W.Va.

W.Va.

R.I.

Conn.

N.J.

Del.

Md.

D.C.

Alaska

1

2

3 4

5

6

7

8

9

10

11

12

15

16

17

18

19

22

23

21

Capitol

New England

Upstate New York

New York and New Jersey

Stars and Stripes

1

2

3

4

5 Ohio

Midsouth 

Sunshine 

Atlanta

6 Mid-Atlantic 

7

8

9

10

Great Lakes

Heart of Texas

South Central 

Heartland 

11 Partnership 

12

15

16

17

Rocky Mountain 

Southwest 

Northwest 

Sierra Pacific

Desert Pacific 

Midwest

18

20

19

22

23

21

20

VA Healthcare Networks

Note: In 2002, networks 13 and 14 were merged to create network 23. 

VBA is responsible for administering the VA’s programs that provide 

financial and other forms of assistance to veterans, their dependents, and 

survivors. These programs include veterans’ compensation, veterans’ 

pension, survivors’ benefits, rehabilitation and employment assistance, 

and education assistance. VBA has 57 regional offices and operates and 

manages 4.3 million square feet of property. 

Page 8 GAO-08-939 Federal Real Property 
NCA is responsible for providing burial space for veterans and their 

eligible family members, maintaining national cemeteries, and 

administering grants for establishing or expanding state veterans’ 

cemeteries. NCA operates and manages 972,000 square feet of building 

space and 17,000 acres at 125 national cemeteries and 33 soldiers’ lots in 

the United States and its territories. 

Since the mid 1990s, VA’s healthcare system has undergone a substantial 

transformation, shifting from predominately hospital-based inpatient care 

to primary reliance on outpatient care, which has changed its 

requirements for facilities to treat veterans. VA has taken steps to manage 

its underutilized and vacant property as a result of this transformation. For 

example, in 2007 we reported that VA had established 3-year timelines for 

meeting strategic goals identified in its asset management plans and had 

provided evidence that it was (1) implementing these plans; (2) using real 

property inventory information and performance measures in decision 

making; and (3) managing its real property in accordance with its strategic 

plan, asset management plan, and performance measures.6 To monitor 

progress in meeting its strategic goals, VA’s portfolio goals include 

decreasing underutilized space as a key performance measure. We also 

previously reported that VA had expanded its sharing agreements to 

include joint ventures with the Department of Defense to construct or 

share medical facilities. Congress and the administration have encouraged 

VA to look for more opportunities for joint ventures as a means of 

avoiding costs by maximizing available resources to build a new facility or 

to jointly use a facility.7

VA has a variety of legal authorities available, such as EULs and sharing 

agreements, and others, to help it manage real property (see table 1 for 

types of available authorities). 

 

6

GA0-07-349. 

7

GAO, VA Health Care: Additional Efforts to Better Assess Joint Ventures Needed, 

GAO-08-399 (Washington, D.C.: Mar. 28, 2008). 

Page 9 GAO-08-939 Federal Real Property 
Table 1: Major Types of Authorities Available to VA 

Authority Definition Proceeds 

Enhanced-use leasing 

(EUL) 

38 U.S.C. §§ 8161-

8169 

VA leases underutilized or vacant property to a public or private 

entity for up to 75 years if the agreement enhances the use of 

the property or results in an improvement of services to 

veterans in the network in which the property is located. The 

EUL shall be for fair consideration, and lease payments may be 

monetary or be made for in-kind consideration, such as 

construction, repair, or remodeling of department facilities; 

providing office, storage, or other usable space; or for services, 

programs, or facilities that enhance services to veterans. 

Proceeds generated from the EUL are used 

to pay for expenses incurred by VA in 

connection with the EUL and can be used 

for any expense incurred in the 

development of future EULs. Any remaining 

funds are to be deposited in the VA Medical 

Care Collections Fund. At the discretion of 

the VA Secretary, proceeds also may be 

deposited into construction major project 

and construction minor project accounts to 

be used for construction, alterations, and 

improvements of any medical facility. 

Sharing agreements 

38 U.S.C. §§ 8151-

8153 

VA may enter into sharing agreements to provide the use of 

VHA space (including parking, recreational facilities, and 

vacant land) for the benefit of veterans or nonveterans in 

exchange for payment or services if VA’s resources would not 

be used to their maximum effective capacity and would not 

adversely affect the care of veterans. Sharing agreements do 

not convey an interest in real property and can be entered into 

for up to 20 years, with the initial term not to exceed 5 years. 

Proceeds generated from sharing 

agreements are to be credited to the 

applicable department medical 

appropriation of the facility that furnished 

the space. 

Outlease 

38 U.S.C. § 8122 

38 U.S.C. § 2412 

VA’s outlease-related authorities include the following: 

Outlease: VA may lease real property to public or private 

interests outside of VA for up to 3 years (10 years for NCA 

property). Lease payments may be made for maintenance, 

protection, or restoration of the property as part of the 

consideration of the lease. 

License: Gives a nonfederal party permission to enter upon and 

do a specific act or series of acts upon the land without 

possessing or acquiring any estate therein. A license can be 

revoked at any time. 

Permit: Gives another federal agency permission to enter upon 

and do a specific act or series of acts upon the land without 

possessing or acquiring any estate therein. The permit can be 

revoked at any time. 

Proceeds generated from outleases of VHA 

space, minus expenses for maintenance, 

operation, and repair of buildings leased for 

building quarters, are deposited into the 

Department of the Treasury as 

miscellaneous receipts. Proceeds 

generated from outleases of NCA property 

are to be deposited into the NCA Facilities 

Operation Fund and are available for costs 

incurred by NCA for operations and 

maintenance of NCA property. Proceeds 

generated from licenses and permits are 

deposited into the Department of the 

Treasury. 

Source: GAO. 

When disposing of unneeded property, VA must comply with numerous 

laws and regulations. For example, the Stewart B. McKinney Homeless 

Assistance Act (McKinney-Vento Act), as amended, provides that property 

identified by agencies as unnecessary for mission requirements must first 

be made available to assist the homeless.8

 In addition, the National 

 

8

42 U.S.C. § 11411. VA properties that are leased to another party under an EUL are not 

considered to be unutilized or underutilized for purposes of the McKinney-Vento Act.

Page 10 GAO-08-939 Federal Real Property 
Historic Preservation Act, as amended, requires agencies to manage 

historic properties under their control and jurisdiction and to consider the 

effects of their actions on historic preservation.9

VA has made significant progress reducing underutilized space in its 

buildings by nearly two-thirds from fiscal year 2005 through 2007. 

However, vacant space remained relatively unchanged, although the 

number of vacant buildings decreased. The total cost of operating and 

maintaining underutilized and vacant space is substantial. Nearly all 

underutilized space and vacant space was at VHA facilities. VA does not 

track operations and maintenance costs on a building-by-building basis 

and therefore does not have a reliable cost estimate for what it spends on 

underutilized and vacant space. We estimate that VA spent $175 million in 

fiscal year 2007 operating and maintaining underutilized and vacant space 

at VHA facilities. Furthermore, because VA does not maintain buildinglevel data, we were unable to determine trends related to the reductions in 

underutilized space at the building level during fiscal years 2005 through 

2007. The absence of building-level data prior to fiscal year 2006 prevented 

VA from running certain trend analyses, including the correlations, if any, 

between utilization and building location, condition, and age—information 

that can be beneficial in identifying assets for disposal. 

VA reduced underutilized space in its buildings by approximately 64 

percent from 15.4 million square feet in fiscal year 2005 to 5.6 million 

square feet in fiscal year 2007.10 Further demonstrating VA’s progress, 

underutilized space accounted for approximately 10 percent of VA’s total 

gross square feet in fiscal year 2005; by fiscal year 2007 it accounted for 

less than 4 percent. Ninety-eight percent of VA’s underutilized space is at 

facilities operated by VHA.11

VA Reduced 

Underutilized Space 

by Nearly Two-thirds, 

but Vacant Space 

Remained Relatively 

Unchanged, and the 

Cost of Operating and 

Maintaining These 

Types of Space Is 

Substantial 

VA Reduced Its 

Underutilized Space by 

Nearly Two-thirds since 

Fiscal Year 2005 

 

9

16 U.S.C. § 470 et seq. 

10The underutilized square footage numbers we are reporting are different from the 

utilization numbers that VA reports. Our analysis only included underutilized square feet, 

whereas when VA measures its rate of utilization, it adds together underutilized square feet 

and overutilized square feet (additional square feet needed at a facility). 

11VHA’s underutilized space made up 98 percent of VA’s total underutilized space in fiscal 

years 2006 and 2007, and made up 99 percent in fiscal year 2005. 

Page 11 GAO-08-939 Federal Real Property 
Table 2: VA’s Underutilized Square Feet and Number of Buildings with 

Underutilized Square Feet, Fiscal Years 2005–2007 

Fiscal year Underutilized square feet Underutilized buildings

2005 15,374,292 Not available

2006 9,795,006 2,513

2007 5,591,257 2,381

Source: GAO analysis of data provided by VA. 

While we were able to identify changes in underutilized space at the 

station level,12 we were unable to determine trends relating to the 

reductions in underutilized space at the building level during fiscal years 

2005 through 2007.13 The absence of building-level data prior to fiscal year 

2006 prevented VA from running certain trend analyses, including the 

correlations, if any, between utilization and building location, condition, 

and age. VA does not analyze such correlations, according to a VA official, 

because it does not have the staff or time. However, such analyses at the 

building level can be very beneficial when identifying assets for disposal. 

According to the Office of Management and Budget (OMB), prioritizing 

assets based on their importance to mission is one of the most significant 

criteria used in both focusing reinvestment funds and finding candidates 

for disposition. As OMB noted in its Capital Programming Guide,

14

correlating an asset’s importance to an agency’s mission and another 

characteristic, such as an asset’s condition, can help agencies identify 

which assets are acceptable and unacceptable. Because VA uses utilization 

to determine an asset’s importance to its mission, it is critical to know how 

this information corresponds to other characteristics that may help 

identify unneeded assets. 

 

12Station” refers to a VA medical center, VBA office, national cemetery, or staff office. 

Stations can be composed of multiple buildings. 

13According to the VA official responsible for data management, building-level data for 

fiscal years prior to 2006 were unavailable because VA overwrote the data in its Capital 

Asset Inventory database. VA began archiving the data in fiscal year 2006 by taking 

snapshots of the data, but because these were taken at different points in time, data from 

fiscal years 2006 and 2007 are not comparable for purposes of our analysis. 

14OMB, Capital Programming Guide: Supplement to Circular A-11, Part 7, Planning, 

Budgeting, and Acquisition of Capital Assets (Washington, D.C., Executive Office of the 

President, June 2006). 

Page 12 GAO-08-939 Federal Real Property 
Our analysis of VA’s fiscal year 2007 data indicated that the greatest 

number of buildings with underutilized space were in the categories of 

“service,” “office,” and “warehouse.” Together these three categories 

accounted for 50 percent of the buildings with underutilized space. These 

same three categories also had the greatest percentage of underutilized 

buildings. Figure 2 depicts the amount of underutilized square feet by 

building usage type. 

Figure 2: Underutilized and Vacant Square Feet by Usage Type, Fiscal Year 2007 

Usage type Utilization

Vacant

Underutilized

Fully utilized

6%

19%

75%

Vacant

Underutilized

Fully utilized

2%

26%

73%

Vacant

Underutilized

Fully utilized

22%

18%

59%

Vacant

Underutilized

Fully utilized

1%

16%

83%

Vacant

Underutilized

Fully utilized

6%

16%

78%

Vacant

Underutilized

Fully utilized

2%

11%

87%

Vacant

Underutilized

Fully utilized

1%

8%

91%

Total square

footage Usage type Total square Utilization

footage

90,356,019

20,113,459

12,260,419

7,790,018

6,334,876

5,316,358

3,985,763

Vacant

Underutilized

Fully utilized

20%

7%

74%

3,899,666

Vacant

Underutilized

Fully utilized

<1%

14%

86%

1,779,052

Vacant

Underutilized

Fully utilized

0%

28%

72%

15,055

Vacant

Underutilized

Fully utilized

21%

5%

74%

877,677

Vacant

Underutilized

Fully utilized

22%

8%

70%

440,934

Vacant

Underutilized

Fully utilized

0%

14%

86%

2,700

Source: GAO analysis of VA data. 

Note: Percentages may not add to 100 percent due to rounding. 

VA’s underutilized buildings generally are older than the other buildings in 

its portfolio, in poor condition, and no longer useful in fulfilling VA’s 

mission. For example, in fiscal year 2007, 68 percent of VA’s underutilized 

buildings were aged 51 years or older compared to 57 percent of utilized 

Page 13 GAO-08-939 Federal Real Property 
buildings.15 As of fiscal year 2007, 97 percent of underutilized buildings 

assessed had a component deemed to be in “poor” or “critical” condition.16

Vacant Space Has 

Remained Relatively 

Unchanged since Fiscal 

Year 2005 

Our analysis showed that the number of VA’s vacant buildings decreased 

from fiscal year 2006 to 2007; however, the amount of vacant square feet 

changed little from fiscal years 2005 through 2007. During this time period, 

VA retained approximately 7.5 million square feet of vacant space, which 

accounted for about 5 percent of its total gross square feet.17 According to 

VA’s station-level data, all vacant square feet were at VHA-operated 

facilities.18

Table 3: VA’s Vacant Square Feet and Number of Vacant Buildings, Fiscal Years 

2005–2007 

Fiscal year Vacant square feet Vacant buildings

2005 7,367,340 Not Available

2006 7,635,489 684

2007 7,297,407 482

Source: GAO analysis of data provided by VA. 

As with underutilized space, trends relating to changes in vacant space at 

the building level could not be determined because of the absence of data 

prior to fiscal year 2006. Additionally, snapshots from fiscal years 2006 and 

 

15This analysis is based on 5,061 buildings that had age data available. VA does not know 

the age of 1,151 of its buildings. According to VA officials, VA does not maintain detailed 

information for small miscellaneous buildings, such as sheds, which could account for the 

lack of age data. 

16VA assesses the condition of its buildings’ structure and systems (for example, structural, 

mechanical, and plumbing) to estimate remaining useful life and identify buildings that 

need immediate attention. Each facility is rated on an A to F grade scale. Buildings rated 

“D” are considered to be in “poor” condition, and buildings receiving a rating of “F” are in 

“critical” condition. The buildings are assessed in a 3-year cycle; approximately one-third 

are assessed each year. 

17There was a small increase in vacant space from fiscal year 2005 through 2006 as a result 

of consolidating services at medical centers in Biloxi/Gulfport, Mississippi; Lexington, 

Kentucky; and Murfreesboro, Tennessee. 

18During the course of our work we learned NCA had vacant space at its cemetery lodges, 

but did not report it to VA’s central office. According to our analysis, NCA had 9 vacant 

buildings totaling 10,459 square feet in fiscal year 2007 as compared to VHA’s 473 vacant 

buildings totaling 7,297,407 square feet. NCA is now entering vacant space information in 

VA’s database, according to VA officials. 

Page 14 GAO-08-939 Federal Real Property 
2007 were not comparable. Our analysis of VA’s fiscal year 2007 data 

indicated that the greatest number of buildings with vacant space were in 

the categories of “housing” and “all other.”19 Together, these two categories 

accounted for 63 percent of VA’s vacant buildings that year. 

Similar to underutilized buildings, vacant buildings were generally older 

and in poor condition. Eighty-nine percent of VA’s vacant buildings were 

aged 51 years or older and just over half were over 75 years old20 (see fig. 

3). As of fiscal year 2007, 99 percent of VA’s vacant buildings had a 

component deemed to be in “poor” or “critical” condition. 

 

19Although VA’s database did not contain information on the number of vacant square feet 

at the building level, we identified this information based on our own analysis of the data. 

20This analysis is based on 5,061 buildings that had age data available. As previously noted, 

VA does not know the age of 1,151 of its buildings. 

Page 15 GAO-08-939 Federal Real Property 
Figure 3: Age of VA’s Buildings with Utilized, Underutilized, and Vacant Space, 

Fiscal Year 2007 

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Vacant

Underutilized

Utilized

Source: GAO analysis of VA data.

10 or less 11 to 25 26 to 50 51 to 75 76 or older

Number of buildings

Age in years

In addition to identifying vacant and underutilized space in its buildings, 

VA identifies the amount of land it has available for reuse by another 

entity. As with vacant building space, most available acres are located at 

VHA facilities. In fiscal year 2007, VHA had 2,716 available acres, an 

increase from 2,356 acres in fiscal year 2005.21 Over 90 percent of VA’s 

stations had less than 25 available acres, while 11 of VA’s 392 stations had 

more than 51 available acres. 

 

21In 2007, VA identified 20 NCA sites with more than 100 undeveloped acres. However, NCA 

intends to use these sites for future burials, with the exception of 54 acres in the Dallas/Ft. 

Worth, Texas, area. 

Page 16 GAO-08-939 Federal Real Property 
VA does not track operations and maintenance costs, including building 

repair and utilities, on a building-by-building basis and therefore does not 

calculate what it is spending to operate and maintain underutilized and 

vacant properties.22 VA’s cost estimating service, within the Office of 

Construction and Facilities Management, developed a pricing guide that 

contains estimates of operating costs per square foot for various levels of 

occupancy (including vacant space). Specifically, the VA pricing guide 

includes costs associated with electricity, water, gas, sewage, major 

systems maintenance, building shell maintenance,23 janitorial services, and 

security. However, the estimates did not meet the best practices we 

identified in our July 2007 report as the basis of effective program cost 

estimating.24 Additionally, there is no formal policy across VA on how to 

develop cost estimates for operating and maintaining underutilized and 

vacant property at the building level. For example, the medical facilities 

we visited either had their own process to develop annual cost estimates 

for underutilized and vacant space or did not know what they were 

spending to operate this type of space. 

VA Does Not Estimate the 

Annual Cost to Operate 

and Maintain Underutilized 

and Vacant VHA Space 

A reliable cost estimate is critical for informed investment decision 

making, realistic budget formulation and program resourcing, meaningful 

progress measurement, proactive course correction when warranted, and 

accountability for results. Our past research on this issue, which we 

summarized in our July 2007 report, identified best practices for effective 

program cost estimating, which can be grouped into four main 

characteristics—comprehensive, well-documented, accurate, and credible 

(see table 4). VA’s current approach does not meet best practices for any 

of the four characteristics. For example, the VA pricing guide cannot be 

used to produce a fully comprehensive cost estimate because it does not 

include such pertinent costs as property management and grounds 

maintenance. Appendix II discusses our comparison of the VA pricing 

guide and industry best practices in more detail. 

 

22VA does track operations and maintenance costs at the station level. VA is implementing a 

pilot program to meter its buildings so that it can track utility usage at the building level. 

According to VA officials, there are no criteria for operating and maintaining vacant 

buildings; each medical center relies on its own judgment to determine requirements. 

Locations we visited reported making judgments on utility use and maintenance based on 

the perceived future use of the building. 

23Shell maintenance includes tuck pointing (i.e., the replacement of mortar), roof repair, 

and window replacement. 

24GAO, Cost Assessment Guide: Best Practices for Estimating and Managing Program 

Costs—Exposure Draft, GAO-07-1134SP (Washington, D.C.: July 2007). 

Page 17 GAO-08-939 Federal Real Property 
Table 4: Comparison of Cost Estimating Best Practices and VA’s Current Approach 

Best practice 

area Examples of standards Examples of our findings on VA’s current approach 

Comprehensive Include both government and contractor costs 

over program’s full life cycle 

VA pricing guide does not include all potential operations and 

support costs or disclose some key assumptions, such as labor 

rates or inflation indexes 

Well-documented Estimates should be supported by documented 

descriptions and captured in such a way that 

the data used can be traced back to and 

verified against sources 

Calculations and methodologies for deriving cost estimates in 

VA pricing guide are not documented 

Cost estimates in VA pricing guide are not traced back to 

source data 

Accurate Estimates should provide unbiased results and 

be grounded in documented assumptions and a 

historical record of cost estimating and actual 

experiences on other comparable programs 

VA pricing guide omits pertinent costs associated with general 

property management and grounds maintenance, and contains 

inconsistencies in how other costs were calculated 

Credible Limitations in the analysis should be disclosed, 

and estimates should be cross-checked using 

other methods and comparisons with 

independent cost estimates 

Cost estimates in VA pricing guide are not subject to sensitivity 

or risk analysis 

Cost estimates are not cross-checked using independent 

estimates 

Source: GAO. 

We Estimate VA Spent 

$175 Million in Fiscal Year 

2007 to Operate and 

Maintain Underutilized and 

Vacant VHA Space 

Because VA does not have a reliable cost estimate for what it is spending 

to operate and maintain underutilized and vacant space, we conducted an 

independent analysis that yielded a cost estimate of $175 million to 

operate and maintain underutilized and vacant VHA facilities in fiscal year 

2007. We developed this estimate using cost model data provided by the 

Whitestone Building Operations Cost Reference—a published document 

reflecting industry standards. We also were able to model the cost 

uncertainty (statistical bounds) of our estimate, which enabled us to 

understand the potential variability of our cost estimate should the facts, 

circumstances, and assumptions change. Our sensitivity and risk analyses 

indicated that this estimate could vary from $175 million to $185 million at 

the 50 percent and 70 percent confidence levels, respectively.25 Performing 

 

25An uncertainty analysis provides decision makers with a perspective on the potential 

variability of the estimate should the facts, circumstances, and assumptions change. By 

examining the effects of varying the estimate elements, a degree of uncertainty about the 

estimate can be expressed, possibly as an estimated range or qualified by some factor of 

confidence. The 50 percent confidence level, $175 million in the case of our estimate, is the 

median and therefore the most likely outcome. The 70 percent confidence level is provided 

to offset the risk of underestimating. The $175 million estimate represents an assumption 

that VA’s data on underutilized square footage are correct; however, we have some 

concerns about the accuracy of those numbers. VA is conducting an audit of its data 

systems, the outcome of which could affect our estimate. See app. II for more information. 

Page 18 GAO-08-939 Federal Real Property 
an uncertainty analysis enabled us to quantify the risk and uncertainty 

associated with our cost estimate and allowed us to provide a level of 

confidence for our cost estimate by providing us with a statistical 

perspective on the potential variability within it. Appendix II explains in 

more detail our estimating approach and results. 

By not following practices associated with developing reliable cost 

estimates, VA does not have valid cost information from which to make 

sound and prudent decisions. Furthermore, the lack of a reliable cost 

estimate results in VA not knowing how much it spends each year on 

space that provides little or no benefit to veterans or taxpayers. As we 

have previously reported,26 unneeded assets present significant potential 

risks to federal agencies not only for lost dollars because such properties 

are costly to maintain, but also for lost opportunities because the 

properties could be put to more cost-beneficial uses, exchanged for other 

needed property, or sold to generate revenue for the government. In 

addition, continuing to hold real property that no longer may be needed 

does not present a positive image of the federal government in local 

communities. Instead, it can present an image of waste and inefficiency 

that erodes taxpayers’ confidence and can negatively impact local 

economies if the property is occupying a valuable location and is not used 

for other purposes, sold, or used in a public-private partnership if such a 

partnership provides the best economic value for the government. 

According to VA, the agency is developing requirements for a real property 

cost accounting system that will track costs at the building level. 

 

26See GAO, Federal Real Property: Vacant and Underutilized Properties at GSA, VA, and 

USPS, GAO-03-747 (Washington, D.C.: Aug. 19, 2003). 

Page 19 GAO-08-939 Federal Real Property 
VA’s use of various legal authorities, such as EULs and sharing 

agreements, likely contributed to VA’s overall reduction of underutilized 

space since fiscal year 2005, but VA does not track the overall effect of 

these authorities on space reductions and therefore does not know what 

effect they are having.27 VA does not systematically track information, such 

as the amount of square footage involved in each agreement, and therefore 

does not know the cumulative effect of its authorities on underutilized and 

vacant property square footage. VA’s use of these authorities, which have 

remained relatively constant in number at around 475 since fiscal year 

2005, generates revenue and provides services for veterans, including 

homeless housing, substance abuse treatment, and childcare. Although VA 

derives benefits from using its authorities, it does not formally track and 

evaluate information related to their overall effect on veterans’ care or 

operations. VA continues to explore possibilities for using EULs and has 

efforts underway to further reduce underutilized and vacant property. 

VA has used its legal authorities, such as EULs, sharing agreements, and 

outleases,28 to reduce underutilized and vacant property but is not aware 

of the full extent of their effect.29 In fiscal year 2007, VA reported having 

approximately 46 EULs, 185 sharing agreements, and 250 outleases. VA 

reported similar numbers for its authorities in the 2 previous fiscal years. 

According to VA officials, using these authorities often contributes to 

reductions in VA’s underutilized and vacant property. For example: 

VA Does Not Track 

the Extent to Which 

Various Authorities 

Contribute to the 

Overall Reduction in 

Underutilized 

Property 

VA Uses Various 

Authorities to Reduce 

Underutilized and Vacant 

Property but Does Not 

Know the Full Extent of 

Their Effect 

• In 2005, in Lakeside (Chicago), Illinois, VA reduced its underutilized 

property at the medical center by nearly 600,000 square feet by using its 

 

27At some of the locations we visited, VA officials identified other factors that may have 

contributed to changes in its underutilized and vacant space, including consolidation of 

services, reconfiguring space, increased workloads, and reclassification of certain space 

types. For example, VA’s efforts to consolidate healthcare services could result in 

reductions in underutilized space but increases in vacant space. Because these factors 

were outside of the scope of our work, we did not evaluate the extent to which they 

contributed to reductions in underutilized and vacant property. 

28VA includes permits and licenses within its outlease category in the Capital Asset 

Management System. 

29VA has other authorities available but uses them to a far lesser extent, if at all. For 

example, VA has the authority to: transfer property and deposit the proceeds in a Capital 

Asset Fund until 2011 (38 U.S.C. § 8118); transfer any interest in real property to a state for 

use as a state nursing home or domiciliary (38 U.S.C. § 8122); or transfer the real property 

to GSA for disposal (38 U.S.C. § 8122). 

Page 20 GAO-08-939 Federal Real Property 
EUL authority with Northwestern Memorial Hospital. This EUL involved a 

consolidation of existing services where VA relocated inpatient beds and 

support services to other campus sites and leased the property to 

Northwestern, therefore reducing VA’s underutilized property at the 

medical center. 

• In 2006, at Fort Howard, Maryland, VA entered into an EUL that will use 

approximately 297,613 square feet of vacant space to develop a retirement 

community, with priority placement for veterans. While VA has retained a 

portion of space on its medical campus for an outpatient clinic, it has 

largely reduced the vast majority of its total space at Fort Howard through 

the EUL. 

• The medical center in Milwaukee, Wisconsin, has several sharing 

agreements in place, including one with the Milwaukee Housing Authority, 

which is using a formerly vacant 10,635 square foot VA building to provide 

housing for the homeless where veterans are given priority (see fig. 4). 

Page 21 GAO-08-939 Federal Real Property 
Figure 4: Old Quarters Now Used to Provide Homeless Housing at Milwaukee 

Medical Center 

Source: GAO.

• In 2005, in Leavenworth, Kansas, VA entered into an EUL that leased 38 

vacant historic buildings located on 50 acres of land. According to VA, it 

will save approximately $227,000 annually as a result of the EUL. 

While VA has taken strides to reduce underutilized and vacant property 

through its various authorities, the cumulative effect of these authorities 

on reductions is largely unknown.30 According to VA officials, the EUL 

authority is the primary contributing factor to reductions in vacant and 

underutilized property over the long term. VA has established capital asset 

portfolio goals to support its capital asset management initiative, which 

include decreasing underutilized capacity in its assets. However, VA does 

not track the overall impact of all agreements on reducing such space at 

 

30Our past work has shown that whether agreements are beneficial governmentwide is 

largely dependent on individual circumstances. We did not formally evaluate, verify, or 

validate the impact of these agreements or measure their overall effect. 

Page 22 GAO-08-939 Federal Real Property 
the building level. VA’s existing data systems limit the ability to compare 

new agreements, including EULs, in a way that identifies and distinguishes 

resulting reductions in underutilized and vacant property. Therefore, 

comprehensive information on square footage reductions that have 

occurred as a result of the implementation of certain agreements is not 

recorded at the building level. 

VA also uses its EUL authority as a method to dispose of unneeded real 

property.31 During the term of an EUL, if VA determines that the underlying 

land and buildings are no longer needed, VA is authorized to dispose of the 

property.32 VA data show that in fiscal years 2005 through 2007, VA 

disposed of 91 buildings through EULs.33 VA also can demolish, sell, 

donate, or dispose of property through GSA (see table 5). 

Table 5: Number of VA Buildings Disposed, by Method and Fiscal Year 

Number of buildings

Fiscal year 

Disposed as

 part of EUL Demolished 

Sold or 

donated

Disposed 

through GSA

2005 38 35 1 3

2006 52 19 4 2

2007 1 44 0 1

Total 91 98 5 6

Source: GAO analysis of VA data. 

Besides reducing underutilized or vacant property, VA benefits from using 

its various authorities in other ways. Generating revenue is one such 

benefit. For example: 

• In January 2005, VA executed a 75-year EUL with Northwestern Memorial 

Hospital in Chicago, Illinois, for two parcels of land and, in turn, received 

$28 million upon execution of the lease, as well as the right to lease back 

space for 3 years to house its existing outpatient clinic. In October 2005, 

Use of Authorities 

Provides VA with Financial 

and Nonfinancial Benefits 

but Information on These 

Benefits Is Not Tracked 

 

31According to VA officials, VA only disposes of property if it is a “win-win” situation, 

meaning that the disposal provides both a benefit to the veterans and is acceptable to the 

local community. 

3238 U.S.C. § 8164. 

33According to VA officials, VA plans to dispose of 436 buildings from fiscal year 2008 

through fiscal year 2012; however, VA has not estimated the costs of these disposals and 

they have not yet been funded. 

Page 23 GAO-08-939 Federal Real Property 
VA determined that it did not need to retain this property over the long 

term and sold it outright to the lessee for an additional $22 million, 

bringing the total amount received to $50 million. VA officials reported 

that the transaction resulted in a demonstrable improvement of services to 

eligible veterans by permitting VA to use the proceeds of the lease and sale 

to help with implementation of VA’s Capital Asset Realignment for 

Enhanced Services in Chicago and other locations, and avoid the future 

costs of operating aging healthcare facilities. 

• The VA Greater Los Angeles Healthcare System enters into a number of 

sharing agreements with the film industry. According to VA officials, these 

agreements are typically temporary arrangements—sometimes lasting a 

few days—during which film production companies use VA facilities to 

shoot television or movie scenes. Figure 5 shows two examples of sites 

used. The second of these examples is a barrack built in the 1930s that 

otherwise sits vacant. According to VA officials, these agreements 

generate roughly $1 million to $2 million a year. 

Figure 5: Filming Sites at the Greater Los Angeles Healthcare System 

Outpatient clinic in Sepulveda, Calif. Barrack in West Los Angeles, Calif.

Source: GAO.

Page 24 GAO-08-939 Federal Real Property 
• VA’s medical center in North Chicago shares space on one of its buildings 

for cell phone tower usage.34 Sprint, VoiceStream, and AT&T are part of 

the sharing agreement, which provides VA with revenues of about $40,000 

annually. According to one senior VHA official, more than half of VHA’s 

sharing agreements involve the use of cell phone towers. 

• In 2002, the North Chicago medical center entered into a 35-year EUL with 

a contractor to develop an energy center on 1.3 acres of what had been 

vacant land (see fig. 6).35 The contractor produces and sells energy to the 

medical center. The medical center had been purchasing steam from the 

Navy at above-market rates. The energy center also saves VA $4 million 

per year by selling energy to the Navy to heat its new barracks. 

Figure 6: Energy Center Located at North Chicago Medical Center 

 

Source: GAO.

34VHA allows a company to place a cell phone tower on VA property in exchange for 

financial compensation. 

35For more information on this EUL, see GAO, Capital Financing: Partnerships and 

Energy Savings Performance Contracts Raise Budgeting and Monitoring Concerns, 

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

Page 25 GAO-08-939 Federal Real Property 
In addition to revenue, such agreements can provide VA or veterans with a 

variety of services. For example: 

• In Dayton, Ohio, the medical center entered into an EUL with Catholic 

Social Services to operate a childcare facility in VA space. Under the 

agreement, VA employees’ children receive preferred placement in this 

facility. Catholic Social Services located the childcare center on VHA 

property because it was looking for a long-term lease that would allow 

Catholic Social Services to obtain a loan for building renovations. 

• At the Greater Los Angeles Healthcare System, VA entered into a 50-year 

lease with New Directions, Inc., an organization that provides supportive 

housing and long-term substance abuse treatment to veterans. According 

to a New Directions official, the leased building New Directions now 

occupies had been vacant for 20 years. Benefits to VA, according to a New 

Directions official, include not having to pay maintenance costs for the 

leased building and land. Also, New Directions is able to provide service to 

veterans that VA had been unable to fulfill, such as job training and 

placement, as well as legal and financial assistance. 

Although VA receives financial and nonfinancial benefits from certain 

agreements, and has a data system to record the revenue received, the 

information is not complete and therefore VA cannot systematically track 

and monitor related information to determine the authorities’ effect. 

According to VA’s data system, VA generated roughly $8 million for all of 

its agreements in fiscal year 2007, mostly from sharing agreements and 

outleases; however, we found instances of missing agreement data that 

indicate that this dollar figure may actually be higher. For example, VA 

officials in West Los Angeles had not recorded in VA’s data systems 

revenue the West Los Angeles and Sepulveda medical centers received as 

a result of several sharing agreements with the filming industry. According 

to those officials, the total amount of revenue VA received was between $1 

million and $2 million per year. VA produces a comprehensive annual 

report for Congress that describes the financial and nonfinancial impacts 

of its EULs. For example, the report includes estimates of the amount of 

money VA saves on purchasing energy and parking and the value of new 

services available to veterans or VA employees as a result of EULs. 

However, the agency does not conduct a similar analysis for other types of 

agreements, which greatly outnumber the EULs, and VA’s data systems do 

not provide information on the nonfinancial benefits it receives from those 

agreements. This lack of information means that VA cannot make year-toyear comparisons or determine which types of agreements provide the 

most benefits. This information would be helpful in measuring the utility 

Page 26 GAO-08-939 Federal Real Property 
of each of the agreements and ultimately the benefits VA receives in 

return. For example, VA could measure the impact of each of the 

authorities and the benefits each provides, including financial and 

nonfinancial benefits. VA officials we spoke with during the course of this 

audit acknowledge that the ability to track this type of information at the 

building level is desirable. 

VA continues to explore possibilities for using EULs and has efforts 

underway to further reduce underutilized and vacant property. For 

example, the Dayton medical center is proposing an EUL with Volunteers 

of America for a 50-bed transitional housing unit for the area’s homeless 

male and female veterans. This building was constructed in 1937 for 

female veterans. According to VA officials, formulation of the lease is 

currently underway. In addition, in Albany, New York, VA has proposed an 

EUL for approximately 3 acres of land for a new 1,220-space parking 

garage with the Albany medical center. According to VA officials, as 

consideration for the lease, VA will receive free use of approximately 610 

parking spaces in the garage and perhaps other negotiated considerations. 

VA also is considering EULs for many of its stations with underutilized and 

vacant property. In 2007, VA’s Office of Asset and Enterprise Management 

performed a site review initiative of each of its real property assets that 

included vacant land. The purpose of these reviews was to provide the 

Secretary with a list of the facilities VA believes are prime candidates for 

EULs. Recently, VA identified 15 sites for inclusion on the Secretary’s EUL 

priority list for further action. 

VA faces several ongoing challenges to reducing underutilized and vacant 

property, including building location, high building repair costs, and 

competing stakeholder interests; however, VA is using several strategies in 

some locations to mitigate these challenges. VA officials reported 

challenges with finding organizations interested in using underutilized or 

vacant property located in areas with low property values. In addition, 

many of VA’s vacant and underutilized buildings are in poor condition and 

require an estimated $3 billion in repairs before they could be fully utilized 

by VA or others. Another complicating factor is that most VA buildings are 

eligible for historic designation. Challenges to reducing vacant and 

underutilized properties are further exacerbated by competing stakeholder 

interests. Moreover, legal restrictions and budgetary and administrative 

limitations can impede VA’s ability to enter into agreements. Some VA 

locations have used strategies to address some of these challenges. In 

VA Continues to Explore 

New EULs to Further 

Reduce Underutilized and 

Vacant Property 

Ongoing Challenges 

Impede VA’s Efforts to 

Minimize and Reduce 

Underutilized and 

Vacant Property, but 

Some Locations Have 

Taken Steps to 

Address These 

Challenges 

Page 27 GAO-08-939 Federal Real Property 
addition, federal agencies have other tools available for the disposal of 

federal properties, such as the public benefits conveyance program 

administered by GSA, which allows agencies to convey surplus properties 

to state governments, local governments, or nonprofit organizations for 

approved public benefit uses such as homeless centers, educational 

facilities, and public parks, at a discount of up to 100 percent fair market 

value. 

Although some vacant and underutilized properties have potential for 

alternate uses, factors such as building location, condition, and associated 

repair costs limit VA’s ability to reuse or dispose of them. Specifically, VA 

officials we interviewed at some of the sites we visited reported 

difficulties finding partners interested in using underutilized or vacant 

properties that are either considered not desirable or are located in areas 

with low property values or in markets with little or no demand for new 

space. 

Building Location, 

Condition, and Repair 

Costs Limit VA’s Ability to 

Minimize Underutilized 

and Vacant Properties 

• According to VA officials we interviewed at the medical facility in Marion, 

Indiana, a combination of low property values, a weak market demand for 

property, and low financial development potential made it difficult for VA 

to find partners interested in leasing space. These conditions contributed 

to Marion retaining the greatest amount of both vacant and underutilized 

space in fiscal years 2005 through 2007. Additionally, VA did not have any 

outleases or sharing agreements in place for vacant or underutilized 

properties in Marion (see fig. 7). 

Page 28 GAO-08-939 Federal Real Property 
Figure 7: Vacant Building in Marion, Indiana, Where Location Is a Challenge 

VA officials also cited difficulty finding alternate reuse options for 

properties that are not centrally located within a medical facility, or that 

lacked direct access to roads, making the properties difficult to use by VA 

and other entities. In fiscal year 2008, VA conducted a sample review of 15 

stations that had been identified as having the most vacant space within 

VA and found that 37 percent of the vacant space lacked direct access to a 

public road.36

In addition, officials explained that some vacant and underutilized 

buildings, such as old medical in-patient facilities, cannot easily be 

Source: GAO.

 

36Stations reviewed included Northern Indiana Healthcare System (Marion Campus), 

Indiana; West Los Angeles, California; Tuskegee, Alabama; Milwaukee, Wisconsin; 

Montrose, New York; Sepulveda (North Hills), California; Hines, Illinois; Knoxville, Iowa; 

Waco, Texas; Dayton, Ohio; Augusta (Lenwood), Georgia; Lexington/Leestown, Kentucky; 

Marlin, Texas; Northport, New York; and Lyons, New Jersey; with a total of 4,101,038 

vacant square feet, representing 57 percent of all VA vacant space. 

Page 29 GAO-08-939 Federal Real Property 
converted to other uses, which contributed to VA’s inability to reuse some 

of its properties. Some of the sites we visited illustrated these challenges. 

For example, in Milwaukee, Wisconsin, VA has a 139-year-old building, 

previously used as a domiciliary, which would require extensive upgrades 

to the electrical system to accommodate a modern computer network. 

Similarly, in Dayton, Ohio, VA has a building previously used as a monkey 

exhibit; the building currently is vacant and cannot easily be converted to 

other uses (see fig. 8). 

Figure 8: Vacant Buildings Difficult to Convert to Other Uses 

Former monkey exhibit, Dayton, Ohio Old hospital, Milwaukee, Wisc.

Source: GAO.

Many of VA’s vacant or underutilized buildings are aging or in poor 

condition, requiring an estimated $3 billion in repairs before they can be 

fully utilized by VA or others, an issue which has led to our designation of 

federal real property as high risk.37 VA officials reported that VA faces 

challenges addressing the needs of aging and deteriorating buildings as a 

result of the high costs associated with repairs. VA conducts facility 

condition assessments at its facilities every 3 years on a rotating basis and 

identifies buildings in “poor” or “critical” condition, and subsequently 

estimates the useful and remaining life of those systems. Of the buildings 

 

37GAO-03-122. 

Page 30 GAO-08-939 Federal Real Property 
that VA determined were in “poor” or “critical” condition at the end of 

fiscal year 2007, 56 percent were underutilized or vacant properties; VA 

estimated the repair costs for these properties to be approximately $3 

billion.38 Twenty-nine percent of VA’s underutilized and vacant properties 

require repairs that cost a minimum of $1 million per building; 7 percent 

required repairs costing more than $5 million per building (see fig. 9). 

 

38This estimate is just for underutilized and vacant buildings. VA’s estimated repair cost for 

all buildings in “poor” or “critical” condition was $6.5 billion. 

Page 31 GAO-08-939 Federal Real Property 
Figure 9: Deteriorating Vacant Buildings That Are Not Being Used by VA 

Deteriorating ceiling and wall, Dayton, Ohio

Source: GAO.

Yellowed windows, asbestos on the wall, peeling paint, and

floor panels breaking off, West Los Angeles, Calif.

Greenhouse roof is deteriorating and has several broken

windows, Marion, Ind. 

Signs of mold and asbestos on the wall of a

vacant building, Marion, Ind.

Page 32 GAO-08-939 Federal Real Property 
Other factors that contribute to high repair costs, according to VA 

officials, include the cost of environmental cleanup associated with 

removing lead paint and asbestos contamination from some buildings. 

Federal agencies are required to assess and pay for needed environmental 

cleanup before renovating or disposing of property—a process that can 

require years of study and result in significant costs. High clean-up costs 

can impede VA’s ability to dispose of some of its properties. For example, 

Dayton medical center officials said many of the older buildings at the 

facility have lead paint and asbestos, and the associated abatement costs 

are very high. The buildings have remained vacant because the needed 

repairs are costly and other VA projects—mainly those that provide a 

service to veterans—are considered a higher priority. 

Another complicating factor is that most VA buildings are eligible for 

historic designation. In fiscal year 2007, 54 percent of VA’s buildings were 

designated as historic properties or eligible for designation; of these, 56 

percent were underutilized and vacant.39 Under the National Historic 

Preservation Act,40 VA, like other federal agencies, is required to manage 

historic properties under its control and to take into account the effects of 

its action on historic preservation. VA consults with the State Historic 

Preservation Office41 before taking any action, including demolition or 

construction, on a property that has been designated as historic. The 

Secretary of the Interior is responsible for establishing standards for all 

national preservation programs and advising federal agencies on the 

preservation of historic properties listed or eligible for listing on the 

National Register of Historic Places. According to VA officials, although 

demolition is not prohibited, it is generally not an option for historic 

buildings because of stakeholder interest in preserving the historic 

properties. Figure 10 shows some of VA’s vacant buildings that are on the 

National Register of Historic Places. 

 

39For the purposes of this report, historic properties include properties that have been 

designated as National Historic Landmarks, have been listed or are eligible to be listed in 

the National Register, or have a contributing element in a National Historic Landmark or 

National Register Listed district. 

4016 U.S.C. 470 §et seq. The Act establishes roles and responsibilities of the federal 

government to preserve and protect historic properties. 

41The State Historic Preservation Office is a state government agency that has legal 

responsibilities under the National Historic Preservation Act to, among other things, 

consult federally funded undertakings that affect historic properties. 

Page 33 GAO-08-939 Federal Real Property 
Figure 10: Vacant Buildings on the National Register of Historic Places 

Former Residence, Dayton, Ohio Grist Mill, Perry Point, Md.

Chapel, West Los Angeles, Calif. Trolley depot, West Los Angeles, Calif.

Source: GAO.

Moreover, according to VA officials, preserving historic buildings in 

accordance with historic standards is very costly and obtaining funding to 

restore historic sites can be difficult. VA can seek private funding with 

public-private partners for restoring historic properties. However, 

according to VA officials, the cost of restoring historic properties can 

make it prohibitive for some nonprofit organizations to use the buildings. 

Page 34 GAO-08-939 Federal Real Property 
As summarized below, experiences at medical facilities in West Los 

Angeles and Dayton (shown in fig. 10) illustrate some of the challenges 

associated with a property’s historical status: 

• Two vacant properties at the West Los Angeles medical facility are listed 

on the National Register of Historic Places—the chapel and trolley depot. 

Any renovations to these buildings must preserve the features of the 

property that are significant to its historic, architectural, and cultural 

values. According to VA officials at West Los Angeles, it will cost 

approximately $12 million to restore the chapel in accordance with 

historic standards and $1 million to restore the trolley depot, which is 600 

square feet. 

• The Dayton medical center, originally established as a home for Civil War 

veterans, is the third-oldest site within VA, with several buildings listed on 

the National Register of Historic Places. According to officials, some of the 

historic properties could be converted into museums if funding were 

available, but other properties are not in any condition to be occupied or 

used without prohibitively costly renovations. VA officials would have to 

consult with the Ohio State Historic Preservation Office before making any 

alterations to any of these buildings in Dayton. 

Officials reported that some underutilized and vacant buildings are unsafe 

and should be demolished, but obtaining the necessary funds to demolish 

these buildings is a challenge. As we previously reported, demolition can 

be a cost-effective alternative for federal property when the associated 

costs can be recovered within a reasonable period, primarily through the 

avoidance of maintenance costs.42

However, some VA officials we spoke with stated that demolishing a 

building also can be costly, particularly when asbestos or other hazardous 

material abatement is required. For example, in fiscal year 2007, VA spent 

$3,449,568 demolishing 44 buildings totaling 216,952 square feet. 

Facility managers can use facility funding to keep up with minimal 

maintenance on vacant buildings and to fund the cost of demolishing a 

building. However, according to VA officials, facility funds are generally 

used for healthcare-related construction projects, which they consider a 

higher priority than demolition projects. Because funds for renovations, 

 

42GAO, Improved Planning Needed for Management of Excess Real Property, GAO-03-326 

(Washington D.C.: Jan. 29, 2003). 

Page 35 GAO-08-939 Federal Real Property 
maintenance, and demolition are limited, necessary repairs and 

maintenance for vacant properties often are deferred because of lack of 

funding. As repairs are delayed, building deterioration can worsen and 

repair costs can escalate. For example, VA officials in Marion, Indiana, 

reported that a lack of funding to demolish unsafe deteriorating buildings 

is the primary challenge at that site. They estimated the cost of 

demolishing four buildings on their site to be $5 million, much of it 

resulting from required lead paint and asbestos abatement. 

Challenges to reducing vacant and underutilized properties are 

exacerbated by competing stakeholder interests in real property decisions. 

Several key stakeholders, including veterans groups, community members, 

state and local governments, historic preservation organizations, advocacy 

groups, and the public in general, have an interest in how VA utilizes its 

properties. 

VA officials reported that disposal often is not an option for some 

properties, in particular historic properties, because of political 

stakeholders and constituencies, including historic building advocates or 

local communities that want VA to maintain these properties. In addition, 

some veterans groups that we met with during our site visits were opposed 

to any reuse of VA property that does not benefit veterans directly or 

provide benefits for veterans exclusively. This was illustrated primarily 

through site visits we conducted in West Los Angeles and Milwaukee. 

Competing Stakeholder 

Priorities Affect VA’s 

Ability to Reduce 

Underutilized and Vacant 

Property 

• In West Los Angeles, community stakeholders and veteran stakeholders 

have opposed several land use agreements that VA has negotiated with 

other entities; several of these agreements generate revenue for VA. 

According to VA officials, many residents of West Los Angeles are opposed 

to any kind of development on the West Los Angeles campus that will 

make traffic in the surrounding area worse than it already is. For example, 

according to VA, community stakeholders were opposed to a mail 

outpatient pharmacy that was previously located on the West Los Angeles 

campus. As a result of the opposition, VA moved the service offsite. 

Similarly, VA had a revenue-generating sharing agreement with the Fox 

Entertainment Group for use of property on the West Los Angeles campus. 

However, VA terminated the agreement because of community 

stakeholder opposition. 

• In Milwaukee, VA negotiated a preliminary EUL concept proposal with the 

City of Milwaukee for approximately 35 acres of vacant land and buildings. 

Under the terms of the proposal, the City planned to build a biomedical 

Page 36 GAO-08-939 Federal Real Property 
research park, assisted living apartments, and a columbarium—a place for 

cremation urns—on the property. Additionally, VA would have received 

revenue under the terms of the agreement. The City of Milwaukee 

eventually dropped negotiations for this EUL proposal because of 

opposition from veterans. According to VA officials, veterans were 

opposed to the proposal because it would not benefit veterans exclusively. 

At the request of several members of Congress, a moratorium on EULs, 

except for an EUL of the campus chapel, was put in effect in Milwaukee 

until September 2008. A veterans group that was formed to advocate for 

preserving the Milwaukee VA facility for the exclusive benefit of veterans 

told us that the group was opposed to lease agreements that may result in 

the commercialization of property that the group believed should be used 

instead for healthcare-related uses. Veterans said VA land is a symbol of 

the nation’s commitment to healthcare for veterans and should be 

preserved for use by veterans. 

Legal restrictions and administrative- and budget-related disincentives 

associated with implementing some authorities affect VA’s ability to 

dispose and reuse property in some locations. For example, legal 

restrictions limit VA’s ability to dispose and reuse property in West Los 

Angeles and Sepulveda. The Cranston Act of 198843 precluded VA from 

taking any action to dispose of 109 of 388 acres in the West Los Angeles 

medical center and 46 acres of the Sepulveda ambulatory care center. In 

1991, when EUL authority was provided to VA, VA was prohibited from 

entering into any EUL relating to the 109 acres at West Los Angeles unless 

the lease is specifically authorized by law or for a childcare center.44 The 

Consolidated Appropriations Act of 200845 expanded the EUL restrictions 

to include the entire West Los Angeles medical center. The Consolidated 

Appropriations Act of 2008 also prohibits VA from declaring as excess or 

otherwise taking action to exchange, trade, auction, transfer, or otherwise 

dispose of any portion of the 388 acres comprising the VA West Los 

Angeles medical center. In addition, until September 2008, there is a 

temporary moratorium on implementing EULs—except for an EUL 

pertaining to the campus chapel—at the Milwaukee medical center. 

Legal Restrictions and 

Administrative and 

Budgetary Disincentives 

also Affect VA’s Ability to 

Reduce Underutilized and 

Vacant Property 

 

43P.L. No. 100-322, Section 421(b)(2), 102 Stat. 487, 553 (1988). 

4438 U.S.C. § 8162(c). 

45P.L. No. 110-161, Section 224(a), 121 Stat. 1844, 2272 (2007). 

Page 37 GAO-08-939 Federal Real Property 
Finally, budgetary and administrative disincentives associated with some 

of VA’s available authorities may in some instances limit VA’s ability to 

utilize these authorities to reduce underutilized and vacant property.46 For 

example: 

• VA cannot retain revenue that it obtains from outleases, revocable 

licenses, or permits; such receipts must be deposited in the Department of 

the Treasury.47 VA has said that, except for EUL disposals, restrictions on 

retaining proceeds from disposal of properties are a disincentive for VA to 

dispose of property. 48

• In 2004, VA was authorized until 2011 to transfer real property under its 

jurisdiction or control and to retain the proceeds from the transfer in a 

capital asset fund for property transfer costs, including demolition, 

environmental remediation, and maintenance and repair costs. In our 

previous work, we reported several administrative and oversight 

challenges with using capital asset funds.49 Moreover, VA officials told us 

that this authority has significant limitations on the use of any funds 

generated by disposal. For example, VA officials we spoke with reported 

that the capital asset fund is too cumbersome to be utilized, and VA does 

not have immediate access to the funds because they have to be 

reappropriated before VA can use them. 

• The maximum term for an outlease, according to VHA law, is 3 years; 

according to VA officials, this can discourage potential lessees from 

investing in the property. 

• Implementing an EUL agreement can be a lengthy process. According to 

VA officials, EULs are a relatively new tool, and every EUL is unique and 

involves a learning process. In addition, VA officials commented that the 

EUL process can be complicated. According to VA officials, the average 

time it takes to implement an EUL can range generally from 9 months to 2 

 

46In GAO-07-349, we discuss the administration’s focus on real property management as a 

positive step but note that certain areas warrant further action. Specifically, problems are 

exacerbated by underlying obstacles, such as legal and budgetary limitations that, in some 

cases, may be barriers to agencies disposing of excess property. 

4738 U.S.C. § 8122. 

4838 U.S.C. § 8164. 

49GAO, Capital Financing: Potential Benefits of Capital Acquisition Funds Can Be 

Achieved through Simpler Means, GAO-05-249 (Washington, D.C.: Apr. 8, 2005). 

Page 38 GAO-08-939 Federal Real Property 
years. The officials noted that land due diligence requirements (such as 

environmental and historic reviews), public hearings, congressional 

notification, lease drafting, negotiation, and other phases contribute to the 

length of the overall process. VA has taken actions to reduce the length of 

time it takes to implement an EUL agreement, but despite changes to 

streamline the EUL process, some officials stated that the process is still 

time consuming and cumbersome. 

• VA can dispose of underutilized and vacant property under the McKinneyVento Act to other federal agencies and programs for the homeless.50

However, VA officials stated that disposing of property under the 

McKinney-Vento Act also can be a lengthy, cumbersome process.51

According to VA officials the process can average 2 years. Under this law, 

all properties deemed suitable for homeless use by the Department of 

Housing and Urban Development go through a 60-day holding period, 

during which the property is ineligible for disposal for any purpose other 

than for homeless use. Interested homeless representatives submit to the 

Department of Health and Human Services a written notice of intent to 

apply for a property for homeless use during the 60-day holding period. 

After applicants have given notice of intent to apply, they are provided up 

to 90 days to submit their application to the Department, and the 

Department has the discretion to extend the time frame if necessary. Once 

the Department has received an application, it has 25 days to review, 

accept, or decline the application. Furthermore, according to VA officials, 

VA may not receive compensation from agreements entered into under the 

McKinney-Vento Act. 

 

50As noted earlier, VA properties that are leased to another party under an EUL are not 

considered to be unutilized or underutilized for purposes of the McKinney-Vento Act (see 

38 U.S.C. § 8162). 

51We have reported elsewhere on this process. See GAO, Federal Real Property: Most 

Public Benefit Conveyances Used as Intended, but Opportunities Exist to Enhance 

Federal Oversight, GAO-06-511 (Washington, D.C.: June 21, 2006). 

Page 39 GAO-08-939 Federal Real Property 
At some sites we visited, VA has used several strategies to mitigate 

challenges associated with addressing competing stakeholder interests 

and preserving older and historic properties. The mitigation strategies we 

identified included the following: 

• Communication with external stakeholders. Experiences in three 

locations we visited illustrated how communicating with external 

stakeholders helped VA mitigate stakeholder concerns. At Fort Howard, 

Maryland, VA officials said it was very important to get community 

stakeholders involved when trying to implement an EUL. VA held several 

public forums to explain the terms of the proposed EUL. VA advertised 

these meetings to the local community and according to VA officials, more 

than 200 community members attended each of these meetings. In Dayton, 

Ohio, the medical center also held hearings and public forums, which were 

advertised in local papers, and Dayton officials made special efforts to 

notify veterans groups about proposed EUL plans. Similarly, at the North 

Chicago, Illinois, medical center, VA officials reported that although 

veterans groups in the community expressed initial concern about a 

proposed EUL at that location, VA conducted outreach efforts to the 

community to explain the project. As a result of these efforts, VA officials 

said that these groups voiced little opposition to the proposed EUL. VA 

officials reported that communicating often with external stakeholders 

helped VA obtain community buy-in and support for the EUL proposal. 

Strategies Used at Some 

VA Sites and by Other 

Agencies to Mitigate 

Stakeholder Challenges 

and Identify PublicPrivate Partners Could 

Be Useful in Other 

Locations 

• Obtaining buy-in and support from internal stakeholders, particularly 

from high-level senior management. Strategies in this area also have 

helped VA address challenges to reducing vacant and underutilized 

properties, as demonstrated by experiences in some locations. For 

example, at Fort Howard and Dayton, medical center directors were 

supportive and active in outreach efforts to minimize vacant and 

underutilized properties. Directors at these medical centers sought out 

entities to enter into EULs and other agreements. In addition, directors at 

these facilities maintained regular communication with potential lessees 

when negotiating lease agreements. For example, VA entered into an EUL 

with a private developer for a property in Fort Howard. VA communicated 

regularly with the developer. According to the developer, VA did a good 

job informing the public of the plans for Fort Howard and took a very 

open approach, which according to the director, made the transition 

easier. 

• Use of partnerships. VA also has entered into various public-private 

partnerships to help improve the use of some of its vacant and 

underutilized property. We previously reported that public-private 

partnership authority could be an important management tool to address 

Page 40 GAO-08-939 Federal Real Property 
problems in deteriorating federal buildings, and we stated that further 

study of how the tool would work and its benefits compared to other 

options is needed. In addition, we recommended that Congress consider 

providing the Administrator of GSA with the authority to proceed with a 

pilot program to demonstrate the actual benefits that may be achieved.52

We also have reported that although public-private partnership 

arrangements can be beneficial, they also increase the need for effective 

implementation and monitoring by agencies to ensure that the 

government’s interests are protected.53 Examples cited earlier in this 

report include several in which VA entered into partnerships with service 

providers and received such services as childcare for VA employees and 

substance abuse treatment for veterans. In addition, under VA’s disposal 

policy, VA may enter into partnerships or agreements with public or 

private entities dedicated to historic preservation to facilitate transfer of 

properties listed on the National Register of Historic Places. VA has 

entered into public-private partnerships with organizations to renovate 

and preserve historic properties. In West Los Angeles, for example, VA has 

sought out private partners to fund and undertake the restoration of the 

chapel on the campus. The Getty Foundation funded an architectural 

study that included renovation plans for the chapel. In Dayton, VA 

partnered with the local American Veterans Heritage Center for historic 

facility preservation and development of the historic district. The Veterans 

of Foreign Wars received a Veteran National Heritage Award of $1 million 

to restore and stabilize the floor of the Protestant Chapel. In addition, GSA 

has other practices for reducing unused property. GSA administers the 

public benefits conveyance program, which is a means of disposing of 

federal real property.54 Under the program, state or local governments and 

certain tax-exempt nonprofit organizations can obtain real property for 

approved public benefit uses, including homeless centers, educational 

facilities, and public parks, at a discount of up to 100 percent of fair 

market value.55

 

52GAO, Public-Private Partnerships: Pilot Program Needed to Demonstrate the Actual 

Benefits of Using Partnerships, GAO-01-906 (Washington, D.C.: July 25, 2001). 

53GAO-05-55. 

54 VA is authorized to provide real property to GSA for disposal after the VA secretary 

determines the property is no longer needed by the department in carrying out its functions 

and is not suitable to be used to provide services to homeless veterans under an EUL (see 

38 U.S.C. § 8122). 

55GAO-06-511. 

Page 41 GAO-08-939 Federal Real Property 
VA has made progress in managing many aspects of its real property 

portfolio—specifically, in reducing underutilized space in its buildings in 

fiscal years 2005 through 2007. The agency also has efforts underway to 

make further reductions. However, VA continues to face challenges with 

the vacant building space in its portfolio, which has remained relatively 

unchanged during this period. Stakeholders can have competing interests 

as to how vacant and underutilized properties should be reused or 

disposed of. In addition, VA faces challenges reducing underutilized or 

vacant properties that have been designated historic, and that require 

prohibitively high repair costs. Nevertheless, the managers of several VA 

facilities have overcome some of these challenges through effective 

stakeholder outreach efforts, by obtaining buy-in support from internal 

stakeholders, and by entering into various public-private partnerships. 

Underutilized and vacant properties detract from mission effectiveness by 

utilizing resources that could be used more effectively to support other 

mission priorities. Without complete building-level data that are 

comparable from year to year, it is difficult for VA to analyze correlations 

between building utilization and location, condition, and age—information 

that can be beneficial in identifying assets for disposal. Furthermore, we 

estimated that VA spent about $481,000 each day on underutilized and 

vacant VHA property in fiscal year 2007. However, VA has not developed 

its own estimate and therefore does not know how much it is spending 

maintaining underutilized and vacant property, money that could be better 

spent providing healthcare services to veterans. Without a reliable cost 

estimate to serve as a benchmark from which to measure progress in 

decreasing these costs over time, VA has no means to assess progress in 

reducing annual costs on underutilized and vacant property. 

VA’s reduction of underutilized space by nearly two-thirds over the last 2 

fiscal years represents significant progress. However, VA’s inability to 

clearly identify the extent to which its use of authorities contributed to 

reductions in underutilized space is a matter of concern. While VA’s use of 

various legal authorities has been a likely contributor to these reductions, 

the extent of this contribution is unknown because VA does not track how 

the use of these authorities has helped reduce underutilized or vacant 

space or resulted in monetary and other benefits that can improve services 

for veterans. While VA’s portfolio management goals include decreasing 

underutilized space in its assets, further progress in reducing underutilized 

and vacant space will largely depend on VA developing a better 

understanding for why changes occurred and the impact of these 

agreements. Although VA data systems limit their ability to analyze the 

effect of agreements on underutilized and vacant property, archiving and 

Conclusions 

Page 42 GAO-08-939 Federal Real Property 
analyzing this data by fiscal year would allow VA to make year-to-year 

comparisons. This type of information can better aid VA in decision 

making and managing its underutilized and vacant property. 

We recommend that the Secretary of Veterans Affairs take the following 

three actions: 

To provide VA with an accurate picture of what it spends annually on 

maintaining underutilized and vacant property and a benchmark from 

which to work in decreasing these costs, develop an annual cost estimate 

for how much it spends on underutilized and vacant property, so that the 

estimate is comprehensive, accurate, well-documented, and credible. 

To provide VA with a better understanding of the overall effect of various 

efforts on its underutilized and vacant property and to identify properties 

for disposal: (1) collect and maintain building-level data by fiscal year in 

order to correlate characteristics associated with underutilized and vacant 

buildings, which may help to identify unneeded assets; and (2) track, 

monitor, and evaluate square footage reductions and financial and 

nonfinancial benefits when recording new agreements as of fiscal year 

2008. 

We provided a draft of this report to VA for review and comment. VA 

provided written comments, which are reprinted in appendix III. VA 

concurred in principle with two of our three recommendations. 

Specifically, VA concurred with our two recommendations that VA 

develop an annual cost estimate of spending on VA’s underutilized and 

vacant property and track, monitor, and evaluate square footage 

reductions and financial and nonfinancial benefits when recording new 

agreements. However, VA did not concur with our recommendation that 

the agency collect and maintain building-level data by fiscal year in order 

to correlate characteristics associated with underutilized and vacant 

buildings, which may help to identify unneeded assets. In addition, VA’s 

written comments highlighted five areas of disagreement with our report. 

VA also provided technical clarifications, which we incorporated, where 

appropriate. VA’s comments are discussed in more detail below. 

VA did not concur with our recommendation regarding collecting and 

maintaining building-level data because the agency maintains that it 

collects and analyzes a significant amount of data at the station and 

building-level. Furthermore, VA stated that it is in compliance with 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 43 GAO-08-939 Federal Real Property 
reporting requirements established by the Federal Real Property Council 

and that it uses performance measures to identify unneeded assets that 

may be candidates for disposal. 

Although we agree that VA collects a significant amount of data at the 

station and building level, we do not agree that that this information is 

sufficient to correlate characteristics with VA’s underutilized and vacant 

buildings. Because VA does not maintain and analyze building-level data 

by fiscal year, VA was unable to determine trends relating to reductions in 

underutilized space at the building level during fiscal years 2005 through 

2007. The absence of data prior to fiscal year 2006 prevented VA from 

running certain trend analyses, including the correlations, if any, between 

utilization and building location, condition, and age—information that can 

be beneficial in identifying assets for disposal. Furthermore, while VA 

does use performance measures to identify assets that may be candidates 

for disposal, the agency does not estimate the costs of these disposals, and 

they have not been funded. In addition, the agency’s disposal plans are not 

prioritized. Because of the need to better correlate characteristics 

associated with underutilized and vacant property, which may help to 

identify unneeded assets, we believe this recommendation remains valid. 

VA’s first disagreement with our report was that we had double-counted 

vacant space; this issue, however, was resolved prior to our receiving VA’s 

written response. After we sent our draft report to VA for official agency 

comment, VA officials told us, for the first time, that their data on 

underutilized square footage include vacant square footage, and that these 

categories of space are not mutually exclusive as we had previously 

identified. We subsequently provided VA officials with revisions to our 

draft report and analysis on August 1, 2008, reflecting VA’s vacant square 

footage as a subset of underutilized square footage. We are now reporting 

that VA had 5.6 million square feet of underutilized building space in fiscal 

year 2007. VA officials did not consider this revised information and the 

resulting changes we made to the draft report in their subsequent agency 

comments. 

VA’s second and related disagreement was that we had overstated the unit 

costs for operations and maintenance of underutilized space. Two factors 

contributed to this comment. First, as noted previously, VA said that we 

had double-counted vacant space. Therefore, we revised our cost estimate 

after learning that our original estimate had double-counted vacant 

space—from $307 million to $175 million—to reflect that vacant square 

footage is a subset of its underutilized space (see above). We provided VA 

officials with updated report language on August 1, 2008, including a newly 

Page 44 GAO-08-939 Federal Real Property 
revised cost estimate of $176 million (later revised to $175 million) for 

VA’s underutilized and vacant square footage for fiscal year 2007. VA 

officials did not provide comments on our revised cost estimates in their 

subsequent written agency comments. Second, VA commented that VA 

and GAO differ in the approaches and methodologies used to estimate unit 

costs for operating and maintaining underutilized space. Because of these 

different methodologies, our revised cost estimate of $175 million is higher 

than the estimate that VA provided in its comments of $85.2 million.56 We 

did not evaluate VA’s $85.2 million estimate because the agency did not 

provide this estimate during the course of our review, and its written 

comments did not include the underlying cost elements or methodology 

for comparison. Furthermore, VA concurred with our recommendation to 

develop an annual cost estimate for how much it spends on underutilized 

and vacant property, so that the estimate is comprehensive, accurate, welldocumented, and credible. 

Regarding VA’s third area of disagreement—that it does have valid cost 

information from which to make sound and prudent decisions—we 

acknowledge that VA maintains some information important for such 

decision making, but believe it needs to retain more comprehensive 

building-level data by fiscal year. As discussed earlier, VA’s prorated 

approach to cost estimating does not lend itself to determining the 

maintenance cost associated with underutilized or vacant property. While 

we recognize that VA does collect current year building-level data, such as 

square footage and type, VA does not archive this data in its Capital Asset 

Inventory database and prior to 2006, overwrote building-level data 

collected each year. VA maintains historical inventory and financial data at 

the station level. However, VA has not used its building- or station-level 

data to develop a reliable method for estimating operating and 

maintenance costs for underutilized and vacant properties. VA’s written 

comments also note that it is developing requirements for a real property 

 

56The Federal Real Property Council requires federal agencies to report annual operation 

and maintenance costs at the constructed asset (i.e., building) level. Because VA does not 

meter its buildings, the agency uses a prorated distribution of actual operations and 

maintenance costs at the station level to estimate operational costs at the building level. 

However, VA officials told us that this approach does not lend itself to determining the 

operations and maintenance costs associated with underutilized or vacant property. We 

therefore developed an independent cost estimate for what VA is spending on underutilized 

and vacant property using cost model data provided by the Whitestone Building Operations 

Cost Reference—a document published and updated annually, which reflects industry 

standards and surveys building operations costs.

Page 45 GAO-08-939 Federal Real Property 
cost accounting system to replace VA’s existing financial management 

system, and this new system may allow VA to better track operations and 

maintenance for underutilized and vacant properties. While this could be a 

significant step in improving its ability to make decisions regarding vacant 

and underutilized property, reviewing VA’s plans for this cost accounting 

system was outside the scope of this engagement. 

VA’s fourth area of disagreement was that our report did not acknowledge 

VA’s efforts to designate properties for disposal based on mission 

dependency, utilization, condition, and cost; however, we believe that 

more needs to be done in this area. We commend VA for using 

performance measures to identify assets that may be candidates for 

disposal, and we note in our report that VA has a plan that includes a list 

of such assets. We also recognize VA’s significant reduction in its 

underutilized property since fiscal year 2005 and provide examples 

throughout our report of ongoing VA efforts to make further reductions. 

For instance, VA continues to identify potential opportunities for EUL 

agreements. As previously noted, VA has not estimated the costs of many 

of the disposals on its list, the disposals have not been funded, and the 

agency’s disposal plans are not prioritized. For these reasons, we 

recommended that the VA collect and maintain building-level data by 

fiscal year in order to correlate characteristics associated with 

underutilized and vacant buildings, which may help further identify 

unneeded assets. 

VA’s fifth area of disagreement was that VA does track revenue generated, 

square footage reductions, and services received through agreements, 

although this is not accomplished systematically. While we believe that 

our report generally reflected these facts, in response to VA’s comments 

and new information provided, we added language to the report stating 

that VA prepares a comprehensive annual report for Congress that 

describes financial and nonfinancial impacts of its EULs. VA officials 

brought this report to our attention after we had submitted our draft for 

their comment. However, we note that VA does not conduct a similar 

analysis for other agreements, which greatly outnumber EULs. Our report 

also notes that VA receives financial and nonfinancial benefits from 

certain agreements, and now also states that VA has a data system to 

record the revenue received. However, we also note that the information is 

not complete and therefore VA cannot systematically track and monitor 

related information to determine the effect the authorities are having, as 

VA acknowledged. VA concurred with our related recommendation to 

track, monitor, and evaluate square footage reductions and financial and 

Page 46 GAO-08-939 Federal Real Property 
nonfinancial benefits when recording new agreements, as of fiscal year 

2008. 

We are sending copies of this report to the Secretary of Veterans Affairs 

and other interested parties. We also will make copies available to others 

on request. In addition, the report will be available at no charge on the 

GAO Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 512-

2834 or goldsteinm@gao.gov. Contact points for our Offices of 

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

of this report. GAO staff who made major contributions to this report are 

listed in appendix IV. 

Sincerely yours, 

Mark L. Goldstein, 

Director, Physical Infrastructure Issues 

Page 47 GAO-08-939 Federal Real Property 
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

Our objectives were to identify (1) to what extent the Department of 

Veterans Affairs (VA) has reduced underutilized or vacant property, and 

how much it spends maintaining the underutilized or vacant property it 

retains; (2) how VA has used its authorities to reduce underutilized and 

vacant property and to what extent it tracks how these authorities 

contribute to reductions; (3) what, if any, challenges VA faces in 

minimizing underutilized and vacant property, using enhanced-use leases 

(EUL) and other agreements, and what steps VA is taking to address these 

challenges. 

To better understand the actions taken by VA to reduce its underutilized 

and vacant property, we reviewed relevant documents, including asset 

management plans, policy handbooks and directives, and the most recent 

strategic plan. We reviewed VA’s performance goals and measures related 

to reducing underutilized and vacant property. For instance, we reviewed 

VA’s 5-Year Capital Plan, a key document that identifies how VA manages 

its real property and outlines its capital portfolio goals. To identify 

changes in the amount of underutilized and vacant property, we analyzed 

property data from two VA databases: the Capital Asset Inventory 

database for building-level data from fiscal years 2006 and 2007 and the 

Capital Asset Management System for station-level data from fiscal years 

2005 through 2007.1

 Since building-level data were snapshots taken at 

different points in time, the data were not comparable. As a result, we only 

reported correlations relating to a building’s utilization and characteristics, 

including age and condition, in fiscal year 2007. To estimate the cost of 

operating and maintaining VA’s underutilized and vacant property, we 

used space utilization information from the Capital Asset Inventory and 

industry data on maintaining space to develop our own independent cost 

estimate, which included conducting an uncertainity and sensitivity 

analysis. Further information on the methodology used to conduct our 

independent cost estimate is provided in appendix II. 

To determine the extent to which VA tracks the impact of its authorities 

on reducing underutilized and vacant property, we collected and analyzed 

data from the Capital Asset Management System on the number of assetrelated agreements (including EULs, sharing agreements, and outleases). 

Specifically, we reviewed VA’s use of various real property authorities 

 

1

The earliest year in which VA property data were available was fiscal year 2005 for stationlevel data and fiscal year 2006 for building-level data. Fiscal year 2005 represented the first 

year all data elements were fully collected in the Capital Asset Management System. 

Page 48 GAO-08-939 Federal Real Property 
Appendix I: Objectives, Scope, and 

Methodology 

from fiscal years 2005 through 2007. We attempted to measure the impact 

these authorities had on underutilized and vacant property, including 

whether they may have resulted in square footage reductions, generated 

revenue, or provided various services to VA. We attempted to quantify this 

information where possible. In addition, we visited and conducted 

interviews at locations where these agreements were entered into to 

understand the benefits VA has received from them and their impact on 

property management. 

Finally, to identify the challenges VA faces when minimizing its 

underutilized and vacant property, we spoke to VA headquarters officials 

to obtain their views on these challenges and any improvements that could 

be made to allow VA to better utilize its property. We visited selected 

locations where VA encountered challenges minimizing underutilized and 

vacant property and identified strategies for mitigating these challenges. 

We also spoke with stakeholders, including veterans service organizations 

and lessees, interested in VA’s real property decisions. We conducted our 

site visits at eight VA medical facilities including Dayton, Ohio; Fort 

Howard, Maryland; Los Angeles, California; Marion, Indiana; Milwaukee, 

Wisconsin; North Chicago, Illinois; Perry Point, Maryland; and North Hills 

(Sepulveda), California. We selected this nonprobability sample of sites to 

obtain a range of examples of VA’s experiences with various real property 

authorities; the amount of, or changes in, underutilized and vacant 

property; and geographic dispersion. We also toured a Veterans Benefits 

Administration (VBA) facility in Milwaukee and a national cemetery in 

Alexandria, Virginia. While we attempted to select varied locations, our 

sample cannot be statistically projected to VA as a whole. We also 

analyzed condition data from VA’s Facility Condition Assessment database 

for fiscal years 2006 and 2007 to identify estimated repair costs for 

buildings that received a D or F rating. 

To assess the reliability of the data from each of the VA databases used in 

our work, we (1) obtained information from the system owner or manager 

on their data reliability procedures, (2) reviewed systems documentation, 

(3) performed electronic testing to identify obvious errors in accuracy and 

completeness, (4) compared the data with information we obtained from 

each of the site visits, and (5) compared the building- and station-level 

data with various national data reports that VA provided. When we found 

obvious discrepancies, such as abrupt changes in the amount of a station’s 

underutilized property or data that did not match what we observed during 

site visits, we brought them to the attention of agency management for 

corrective action. After reviewing possible limitations of all the data 

Page 49 GAO-08-939 Federal Real Property 
Appendix I: Objectives, Scope, and 

Methodology 

sources, we determined that the data provided were sufficiently reliable 

for the purposes for which we have used them in this report. 

We conducted this performance audit from July 2007 to September 2008 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

Page 50 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate Appendix II: Independent Cost Estimate Methodology 

Methodology 

Using a methodology based on best practices, we estimate that VA spent 

$175 million in fiscal year 2007 operating and maintaining underutilized 

and vacant Veterans Health Administration (VHA) property. We developed 

our own independent cost estimate for what VA is spending on 

underutilized and vacant property using cost model data provided by the 

Whitestone Building Operations Cost Reference—a document published 

and updated annually that reflects industry standards and surveys building 

operations costs. Our analysis used average cost per square foot for each 

operations cost element, such as security and maintenance and repair, and 

adjusted for variations in cost by locality. 

A reliable cost estimate is critical for informed investment decision 

making, realistic budget formulation and program resourcing, meaningful 

progress measurement, proactive course correction when warranted, and 

accountability for results. According to the Office of Management and 

Budget (OMB),1

 programs must maintain current and well-documented 

estimates of program costs, and these estimates must encompass the full 

life cycle of the program. Among other things, OMB states that generating 

reliable program cost estimates is a critical function to supporting OMB’s 

capital programming process. Without this capability, agencies are at risk 

of experiencing program cost overruns, missed deadlines, and 

performance shortfalls. 

Our research has identified a number of best practices that are the basis of 

effective program cost estimating. We have grouped these practices into 

four characteristics of a high-quality and reliable cost estimate:2

• Comprehensive. The cost estimates should include both government and 

contractor costs of the program over its full life cycle, from inception of 

the program through design, development, deployment, and operation and 

maintenance to retirement of the program. They also should provide a 

level of detail appropriate to ensure that cost elements are neither omitted 

 

1

OMB, Circular No. A-11, Preparation, Submission, and Execution of the Budget 

(Washington, D.C., Executive Office of the President, June 2006); Circular No. A-130 

Revised, Management of Federal Information Resources (Washington, D.C., Executive 

Office of the President, Nov. 28, 2000); and Capital Programming Guide: Supplement to 

Circular A-11, Part 7, Preparation, Submission, and Execution of the Budget 

(Washington, D.C., Executive Office of the President, June 2006). 

2

GAO, Cost Assessment Guide: Best Practices for Estimating and Managing Program 

Costs—Exposure Draft, GAO-07-1134SP. (Washington, D.C.: July 2007). 

Page 51 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

nor double counted, and they should document all cost-influencing ground 

rules and assumptions. 

• Well-documented. The cost estimates should have purposes that are 

clearly defined, and be supported by documented descriptions of key 

program or system characteristics (e.g., relationship to other systems, 

performance parameters, etc.). Additionally, it should capture in writing 

such things as the source data used and their significance, the calculations 

performed and their results, and the rationale for choosing a particular 

estimating method or reference. Moreover, this information should be 

captured in such a way that the data used to derive the estimate can be 

traced back to, and verified against their sources. The final cost estimate 

should be reviewed and accepted by management to ensure that there is a 

high level of confidence in the estimating process and the estimate itself. 

• Accurate. The cost estimates should provide for results that are unbiased, 

and they should not be overly conservative or optimistic (i.e., should 

represent most likely costs). In addition, the estimates should be updated 

regularly to reflect material changes in the program, and steps should be 

taken to minimize mathematical mistakes and their significance. Among 

other things, the estimate should be grounded in documented assumptions 

and a historical record of cost estimating and actual experiences on other 

comparable programs. 

• Credible. The cost estimates should discuss any limitations in the analysis 

performed due to uncertainty or biases surrounding data or assumptions, 

and their derivation should provide for varying major assumptions and 

recalculating outcomes based on sensitivity analyses, and the associated 

risk and uncertainty inherent in estimates should be disclosed. Further, 

the estimates should be verified based on cross-checks using other 

methods and by comparing the results with independent cost estimates. 

We found that VA does not have a reliable cost estimate for operating and 

maintaining underutilized and vacant VHA property because it does not 

have a system for tracking operations and maintenance costs on a 

building-by-building basis. In recognizing this shortcoming, VA’s office 

responsible for cost estimating calculated operating costs for VA medical 

facilities with various levels of occupancy, including fully utilized, 

Page 52 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

mothballed adjacent, and mothballed standalone.3 Using the data VA 

provided to us on the number of underutilized and vacant square feet it 

has retained in 2007, we multiplied these figures with cost estimates from 

the VA pricing guide to determine the amount VA spends to operate 

buildings at VHA facilities. Our estimate using the VA pricing guide 

showed that VA may be spending $148 million a year on operating and 

maintaining underutilized and vacant property. To test the reliability of 

this cost estimate, we assessed the VA pricing guide against our four 

characteristics of a high-quality and reliable cost estimate and found it did 

not fully reflect best practices associated with a reliable cost estimate, 

including being comprehensive, well-documented, accurate, and credible 

(see table 6). 

Table 6: Summary of VA’s Implementation of Best Practices for Cost Estimating in 

Its Pricing Guide 

Cost estimation best practice characteristic Addressed in cost estimate? 

Comprehensive Partial 

Well-documented No 

Accurate No 

Credible No 

Source: GAO analysis of VA pricing guide.

The annual cost estimate of $148 million is not fully comprehensive 

because it does not include all potential operations and maintenance 

costs. Specifically, the VA pricing guide includes costs associated with 

electricity, water, gas, sewage, major systems maintenance, building shell 

maintenance,4

 janitorial services, and security. However, it does not 

include other pertinent costs such as property management, grounds 

maintenance, and pavement clearance. The VA official responsible for the 

development of the pricing guide said that these costs were omitted 

because the estimates he included were those directly related to the 

buildings and not the surrounding area. Our site visits to VHA medical 

 

3

Mothballed-adjacent properties are sections of a building that are vacant (e.g., a wing that 

has been shut down), but are attached to a building that is still in operation. Mothballedadjacent properties incur more maintenance costs due to leakage from ventilation systems, 

the possibility of a pipe bursting and flooding the vacant area, etc. Mothball-standalone 

properties are vacant properties. 

4

Shell maintenance includes tuck pointing (i.e., the replacement of mortar), roof repair, and 

window replacement. 

Page 53 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

facilities revealed that costs associated with engineering project 

management, which we consider to be similar to real property 

management, and grounds maintenance are annual costs that should be 

considered. Moreover, the Federal Real Property Council requires 

agencies to report annually the following operating costs: recurring 

maintenance and repair costs, utilities (includes plant operation and 

purchase of energy), cleaning and janitorial costs (includes pest control, 

refuse collection, and disposal to include recycling operations), and roads 

and grounds expenses (includes grounds maintenance, landscaping, and 

snow and ice removal from roads, piers, and airfields). Therefore, we 

determined that because some costs were omitted, the cost estimate is not 

comprehensive and is likely underestimated. Moreover, although the VA 

official who developed the pricing guide identified some key assumptions, 

such as the cost elements included in the estimate, other key assumptions, 

such as labor rates and inflation indexes, were not known. 

The cost estimate does not meet best practices for being well-documented. 

For example, VA has neither documented the calculations and results used 

to derive the cost estimate, including the methodologies used, nor has it 

traced the cost estimate back to source data (e.g., vendor invoices, salary 

data, etc.). The VA official responsible for developing the pricing guide 

described the estimating approach used, such as contacting the Defense 

Health Program, Marshall Erdman, McFaul & Lyons, Marshall & Swift, and 

the Building Owners and Managers Association to collect data on utility 

(i.e., gas, electric, and sewer), janitorial, security and maintenance costs in 

the Washington, D.C., area, but could not provide detailed documentation 

of the estimate that showed the methodology used to arrive at the total 

costs of each of these elements and how they were summed to arrive at 

the overall cost estimate. Therefore, the lack of documentation to support 

the program’s cost estimate raises questions about its accuracy. 

The cost estimate does not meet best practices for accuracy in that it does 

not reflect an assessment of the costs most likely to be incurred. 

Specifically, the cost estimate omits pertinent costs associated with 

general property management and grounds maintenance, which results in 

underestimating the total annual costs. In addition, the data used to 

develop the cost estimate are not accurate as some judgment calls had to 

be made because the agencies VA contacted did not calculate operations 

and maintenance costs consistently. For example, McFaul & Lyons 

calculated heating and cooling costs but not maintenance costs. Marshall 

Erdman did not include water and sewer costs. Moreover, the Building 

Owners and Managers Association’s costs were based on 10 hours of 

operation per day whereas VA is a 24 hour / 7 days a week operation. 

Page 54 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

Finally, VA warns users of the VA pricing guide that the data should be 

used for strategic planning purposes only and not for budgeting because 

the costs shown are averages to be used for establishing an order of 

magnitude. It further cautions that actual costs will vary depending on the 

complexity and unique conditions of each project. 

The cost estimate does not meet best practices for being credible in that 

cross-checks were not performed on the cost estimate for key cost drivers, 

and sensitivity analysis and risk analysis were not conducted on the cost 

estimate. While VA claimed that other organizations reviewed the validity 

of the cost estimates in the VA pricing guide, it provided no documentation 

for us to verify. A sensitivity analysis reveals how the cost estimate is 

affected by a change in a single assumption or cost driver, such as rising 

energy costs, while holding all other parameters constant. By contrast, a 

risk analysis assesses the aggregate variability of the cost estimate to 

determine a confidence range around the estimate.5

 Conducting a 

sensitivity analysis could have enabled VA to estimate the potential cost 

impacts due to rising energy costs and to capture the differences in costs 

from one location to another. Conducting a sensitivity analysis also could 

have enabled VA to estimate potential cost impacts due to differences in 

costs from one location to another. In performing a risk analysis, an 

organization varies the effects of multiple factors on costs and, as a result, 

can express a level of confidence in the cost estimate. Because VA has not 

conducted any analysis of uncertainty, it has not produced a credible cost 

estimate. Absent this analysis, VA’s ability to identify and focus on major 

cost drivers, better understand the potential for cost growth, quantify the 

risk and uncertainty associated with the cost estimate, and provide a level 

of confidence for the cost estimate is impeded. Further, VA did not have 

an independent cost estimate prepared to try to validate its annual cost 

estimate. 

The senior VA official responsible for cost estimating stated that VA does 

not have the resources it needs to develop cost estimates in accordance 

with the best practices identified in our Cost Assessment Guide. 

Additionally, there is no formal policy within VA on how to develop cost 

estimates for operating and maintaining underutilized and vacant space. 

For example, the medical facilities we visited either had their own 

processes to develop annual cost estimates or did not know what they 

 

5

A risk analysis can be accomplished by the use of Monte Carlo simulation, which involves 

the use of random numbers and probability distributions to examine random outcomes. 

Page 55 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

were spending. By not following practices associated with developing 

reliable cost estimates, VA does not have valid cost information from 

which to make sound and prudent decisions. Furthermore, the lack of a 

reliable cost estimate results in VA not knowing how much it spends each 

year on space that provides no benefit to veterans or taxpayers. Without a 

full accounting of the cost to operate underutilized and vacant space, VA 

will continue to spend millions of dollars each year on property it does not 

utilize. 

The results of a high-quality, reliable cost estimate should be crosschecked using an independent cost estimate to determine whether other 

estimating methods produce similar results. An independent cost estimate 

is considered to be one of the most reliable validation methods. An 

independent cost estimate typically is performed by organizations higher 

in the decision-making process than the office performing the baseline 

cost estimate, using different estimating techniques and, where possible, 

different data sources from those used to develop the baseline cost 

estimate. 

Given the VA pricing guide did not meet best practices, we felt it was 

imperative to test the reasonableness of the $148 million estimate we 

derived from using the VA pricing guide. In response, we developed our 

own independent cost estimate for what VA is spending on underutilized 

and vacant property using cost model data provided by the Whitestone 

Building Operations Cost Reference—a document published and updated 

annually, which reflects industry standards and surveys building 

operations costs.6

 This source provided an independent set of raw data for 

operation cost elements. 

• Energy includes all expenses related to the purchase, generation, 

distribution, and conservation of energy and source fuels necessary to 

operate a building; utilities maintenance and supervision are not included. 

• Maintenance and repair include all activities to keep a building in good 

working order. Preventative maintenance, unscheduled maintenance, and 

component repair and replacement costs are considered maintenance and 

repair activities, while restoration and modernization are not. 

 

6

Our independent cost estimate was developed only for VHA facilities since those were the 

facilities VA developed cost estimates for in its pricing guide, and we wanted the estimates 

to be comparable. Furthermore, the majority of underutilized and vacant space is at VHA 

facilities. 

Page 56 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

• Property management includes services common to a large commercial 

facility: public works, business services, contracts, material procurement, 

facility data, furnishings, real estate, and engineering services. 

• Water and sewer include potable water, irrigation water, and sewage 

service. 

• Custodial includes services for cleaning offices, work areas, restrooms, 

and common areas. Trash removal is not included in this cost element. 

• Grounds maintenance includes maintenance of exterior areas, such as 

landscaping, sidewalks, and external parking lots. 

• Telecom includes voice and data equipment and service subscriptions. 

• Pest control includes both indoor and outdoor pest control programs. 

• Refuse is trash collection and disposal, pick-up services, fees, recycling 

operations and administration, composting, and more. Handling and 

disposal of hazardous materials are not included. 

• Security ensures the physical security of buildings and occupants, 

including monitoring equipment, guards, and patrol services. 

• Pavement clearance includes sweeping sand and debris and removing 

snow and ice from paved areas, including sidewalks, walkways, and 

parking lots. 

From the Whitestone Building Operations Cost Reference, operations data 

were presented for many different structure types, but a small subset of 

VHA analogous facilities were selected for our analysis, including 

hospitals and medical clinics. Based on a sample set of structures, we 

calculated an average cost per square foot for each operations cost 

element. In addition, costs were normalized for location using locality 

indices. Since cities were not a one-for-one match with VHA cities, we 

rolled the data up to the state level. Our analysis using average cost per 

square foot for each operation’s cost element and normalized for statelevel locality indices yielded a most likely cost estimate of $175 million for 

2007. In addition, the Whitestone publication provided nominal upper 

bounds and lower bounds for each cost element. We modeled the data 

dispersion using triangular probability distributions defined by the lower 

bound and upper bound extended to two standard deviations, and most 

Page 57 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

likely values.7 Table 7 displays the 2007 cost per square foot data range 

used in our cost uncertainty modeling. 

Table 7: 2007 Operations Cost per Square Foot 

Cost element Lower bound Most likely Upper bound

Energy $4.18 $8.63 $10.36

Maintenance and repair $2.16 $4.13 $7.74

Real property management $0.00 $3.90 $7.63

Custodial services $0.64 $3.82 $7.20

Water/waste water $0.00 $1.71 $10.18

Telecom $0.16 $0.42 $0.64

Security $0.19 $0.35 $2.91

Grounds maintenance $0.05 $0.21 $0.39

Refuse collection $0.00 $0.10 $0.34

Pest control $0.02 $0.07 $0.10

Pavement clearance $0.00 $0.02 $0.04

Subtotal operations costs $23.36

Subtotal mothball costs $8.70

Source: GAO. 

Mothball costs for vacant property were based on a subset of operations 

costs; some cost elements were modeled at a reduced service level. 

• Cost estimates for grounds maintenance, pest control, and pavement 

clearance were based on 100 percent service. 

• Energy costs were modeled with factor of full service, using a triangular 

probability distribution ranging from 25 percent to 50 percent. 

• Maintenance and repair costs were modeled with factor of full service, 

using a triangular probability distribution ranging from 25 percent to 75 

percent. 

 

7

The data printed in the Whitestone publication represent nominal bounds. We extended 

both tails of the distribution from one standard deviation to two standard deviations to 

reflect 95 percent of all possible outcomes based on discussion with the publication lead 

author. 

Page 58 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

• Property management costs were modeled with factor of full service, 

using a triangular probability distribution ranging from 50 percent to 100 

percent. 

• Security costs were modeled with factor of full service, using a triangular 

probability distribution ranging from 25 percent to 50 percent. 

• No custodial or telecom costs were included for vacant property. 

Costs were normalized for location using locality indices. Since the cities 

used in the Whitestone publication were not a one-for-one match with VA 

cities, data were rolled up to the state level. For each state, city-level 

locality indices were grouped. The grouped data were used to calculate an 

average and a standard deviation. Our analysis used these calculated 

average state-level locality indices to adjust for differences in costs across 

the country. Table 8 displays the locality indices and standard deviations 

associated with each state. 

Table 8: 2007 Operations Cost State-level Locality Indices 

State Mean Standard deviation

AK 1.045 0.015

AL 0.862 0.017

AR 0.808 NA

AZ 0.878 0.017

CA 1.026 0.044

CO 0.890 0.021

CT 1.062 0.030

DC 1.000 NA

DE 0.973 NA

FL 0.879 0.023

GA 0.861 0.043

HI 1.287 0.031

IA 0.882 0.023

ID 0.812 0.015

IL 0.933 0.028

IN 0.883 0.016

KS 0.866 0.021

KY 0.863 0.011

LA 0.874 0.016

Page 59 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

State Mean Standard deviation

MA 1.057 0.035

MD 0.960 NA

ME 0.929 NA

MI 0.905 0.044

MN 0.921 0.029

MO 0.889 0.053

MS 0.844 0.018

MT 0.837 0.011

NC 0.822 0.014

ND 0.815 0.006

NE 0.848 NA

NH 0.999 NA

NJ 1.080 0.027

NM 0.853 0.023

NV 0.924 0.001

NY 1.084 0.084

OH 0.926 0.012

OK 0.836 0.013

OR 0.893 0.011

PA 0.951 0.042

RI 1.021 NA

SC 0.818 0.006

SD 0.792 0.022

TN 0.851 0.023

TX 0.879 0.025

UT 0.822 0.005

VA 0.823 0.019

VT 0.926 0.001

WA 0.892 0.024

WI 0.911 0.022

WV 0.866 0.001

WY 0.788 NA

Source: GAO. 

Square footage across sites was sorted and summed to the state level. 

Table 9 presents space claims for underutilized and vacant facilities. 

Page 60 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

Table 9: 2007 VA Facilities Square Feet of Underutilized and Vacant Space 

Summarized Summarized 

State 

Underutilized 

 2007 (sq ft) 

Vacant 

2007 (sq ft) State 

Underutilized 

2007 (sq ft)

Vacant 

2007 (sq ft)

Alaska - - Mississippi - 7,367 

Alabama 434,641 382,873 Montana - 107,457 

Arkansas 136,243 58,824 North Carolina - 54,456 

Arizona - 13,618 North Dakota - - 

California 411,243 803,820 Nebraska - 65,552 

Colorado - 12,799 New Hampshire - - 

Connecticut 41,635 59,175 New Jersey 160,728 186,621 

District of Columbia - - New Mexico - - 

Delaware - 15,184 Nevada - - 

Florida - 23,104 New York 865,651 868,299 

Georgia 136,834 251,728 Ohio 226,486 352,457 

Hawaii - - Oklahoma 54,596 8,733 

Iowa 69,686 275,140 Oregon 22,672 62,257 

Idaho - 4,276 Pennsylvania 407,547 173,098 

Illinois 260,319 558,152 Puerto Rico - - 

Indiana 289,985 473,365 Rhode Island - 100 

Kansas - 25,833 South Carolina - 67,369 

Kentucky 136,940 302,567 South Dakota 44,773 60,145 

Louisiana 261,843 9,604 Tennessee 290,566 102,406 

Massachusetts 148,210 260,730 Texas 121,707 277,042 

Maryland 72,652 93,779 Utah 68,940 - 

Maine - 25,594 Virginia 239,458 161,154 

Michigan 312,247 235,761 Vermont - - 

Minnesota 18,372 27,322 Washington 10,217 37,788 

Missouri - 140,718 Wisconsin - 396,053 

West Virginia - 19,139 

Wyoming 6,734 29,886 

Total 5,250,925 7,091,345 

Source: GAO. 

For each cost element, the operations cost per square foot was multiplied 

by the underutilized and vacant square footage, and the result was 

adjusted for locality using a state-index. 

Page 61 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

Given the importance of sensitivity and uncertainty analyses8 for 

producing a high-quality cost estimate, we conducted these analyses for 

our independent cost estimate. Using the Whitestone data, we were able to 

model the cost uncertainty (statistical bounds) of our independent cost 

estimate, which enabled us to understand the potential variability of our 

cost estimate should the facts, circumstances, and assumptions change. 

Performing an uncertainty analysis enabled us to quantify the risk and 

uncertainty associated with our cost estimate and allowed us to provide a 

level of confidence for our cost estimate by providing us with a statistical 

perspective on the potential variability within it. 

Based on this analysis we estimate that the annual cost of operating and 

maintaining underutilized and vacant VHA space could vary from $175 

million to $185 million at the 50 percent and 70 percent confidence levels, 

respectively (see fig. 11). 

 

8

An uncertainty analysis is a technique used to quantitatively assess the extent to which the 

variability of an outcome variable is caused by uncertainty in the input parameters. Inputs 

to the model are assigned probability distributions, and values from these distributions are 

selected randomly and inserted into the cost model. The model then yields a point estimate 

according to these randomly selected inputs. Using Monte Carlo simulation, this process is 

repeated thousands of times to construct a distribution of all possible final output costs. 

Percentiles of this final output distribution may then be compared to the percentile 

represented by the model’s original point estimate to measure the risk associated with the 

point estimate. Using Crystal Ball software, we ran the calculations through a Monte Carlo 

simulation of 5,000 trials in which costs (and indices) are pulled from the defined 

probability distributions as previously described. This process yielded a cost estimate of 

$175 million for fiscal year 2007. 

Page 62 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

Figure 11: Cumulative Probability Distribution of Total 2007 Costs 

0

20

40

60

80

100

120

116 134 152 $170 187 205 223 240

Percentage

Source: GAO.

Dollars in millions

$185 million at 70th percentile

$175 million at 50th percentile

When compared to the $148 million cost estimate we produced using the 

VA pricing guide, there is less than a 10 percent probability that the 

estimate will be $148 million or lower based on the amount of variation 

that exists within the operating cost elements and locality indices (see 

table 10). The analysis also revealed that energy, maintenance, and 

property management are the cost drivers and contribute the most 

variability within the independent cost estimate. 

Page 63 GAO-08-939 Federal Real Property 
Appendix II: Independent Cost Estimate 

Methodology 

Table 10: Percentile Rankings for 2007 Total Costs 

Percentile Value

0% $116,486,663 

10% $153,184,555 

20% $160,645,545 

30% $166,572,771 

40% $171,012,617 

50% $175,463,250 

60% $180,112,142 

70% $185,090,415

80% $190,506,295 

90% $199,187,043 

100% $240,229,959 

Source: GAO. 

The estimate at this confidence level represents an assumption that the 

inputs—i.e., VA’s data on underutilized and vacant square footage—are 

accurate. According to VA officials, the data on vacant square feet are 

inputted directly into the Capital Asset Inventory. Underutilized square 

footage, on the other hand, is calculated by subtracting ideal square 

footage from the total square footage available at each station. Ideal 

square footage, in turn, is imputed using a VA program—SpaceDriver—

from many inputs, including patient workloads and medical service 

standards. Moreover, according to VA officials, underutilized square 

footage includes vacant square footage. To calculate underutilized square 

footage for this report, we subtracted the vacant square footage from VA’s 

reported underutilized square footage. There were several VHA stations 

for which vacant square footage exceeded the reported underutilized 

square footage, however, resulting in a negative number. A VA official said 

that these were due to reporting deficiencies, where common space and 

other incidental space were not properly recorded in the Capital Asset 

Inventory. In addition, we identified some other data errors during the 

course of our audit that VA is working to correct. We do not know the 

extent to which such reporting deficiencies or errors are prevalent in the 

system. VA is in the process of completing an audit of the Capital Asset 

Inventory database to determine if the data at the station level reflect the 

actual utilization of VA’s assets. The outcome of this audit could affect our 

cost estimate. 

Page 64 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department Appendix III: Comments from the of Veterans Affairs 

Department of Veterans Affairs 

Page 65 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department 

of Veterans Affairs 

Page 66 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department 

of Veterans Affairs 

Page 67 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department 

of Veterans Affairs 

Page 68 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department 

of Veterans Affairs 

Page 69 GAO-08-939 Federal Real Property 
Appendix III: Comments from the Department 

of Veterans Affairs 

Page 70 GAO-08-939 Federal Real Property 
Appendix IV: 

A

GAO Contact and Staff 

cknowledgments 

Page 71 GAO-08-939 

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Mark Goldstein, Director, Physical Infrastructure, (202) 512-2834 or 

GoldsteinM@gao.gov

Individuals making key contributions to this report include Lisa Canini, 

Jeff Cherwonik, Cindy Gilbert, Ed Laughlin, Jessica Lucas-Judy, Maria 

Mercado, Susan Michal-Smith, John Mingus, Karen Richey, Stan Stenersen, 

and Gary Stofko. 

 Federal Real Property 

GAO Contact 

Staff 

Acknowledgments 

(543193) 
GAO’s Mission The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “E-mail Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, DC 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, DC 20548 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER