FEDERAL REAL 

PROPERTY

Opportunities Exist to 

Enhance Information on 

and Coordination among 

Federal Entities with 

Leasing Authority 

Statement of David Wise, Director

Physical Infrastructure Issues

Testimony 

Before the Subcommittee on Economic 

Development, Public Buildings, and Emergency 

Management, Committee on Transportation and 

Infrastructure, House of Representatives

For Release on Delivery 

Expected at 10:00 a.m. ET

Wednesday, July 6, 2016

GAO-16-763T

United States Government Accountability Office
Letter

Page 1 GAO-16-763T 

Chairmen Barletta, Ranking Member Carson, and Members of the 

Subcommittee:

I am pleased to be here today to discuss our work on federal entities’ use 

of independent leasing authority for real property. As the federal 

government’s principal civilian landlord, the General Services 

Administration (GSA) leases real property on behalf of many federal 

tenants. However, independent leasing authority can be provided to 

federal entities either through their enabling legislation or through an 

appropriations act.1 While GSA tracks and reports on its tenants’ real 

property holdings, less is known about the holdings of federal entities that 

independently lease real property. To promote the efficient and 

economical use of federal government real property, in 2004 the 

President issued Executive Order 13327 establishing the Federal Real 

Property Council (FRPC) composed of executive branch departments and 

agencies covered by the Chief Financial Officers Act of 1990 (CFO Act), 

including GSA, and chaired by the Office of Management and Budget 

(OMB).2 The executive order established FRPC with the goals of 

developing guidance, facilitating the implementation of agencies’ asset 

management plans, and serving as a clearinghouse for leading practices. 

The executive order also directed GSA, in consultation with the FRPC, to 

establish and maintain a single, comprehensive database describing the 

nature, use, and extent of all real property under the custody and control 

of executive branch agencies. To meet this directive, GSA established the 

Federal Real Property Profile (FRPP).

 1

A provision in an annual appropriations act is presumed to be effective only for the 

covered fiscal year unless language in the act or the nature of the provision makes it clear 

that Congress intended for the provision to be permanent. 

2

Federal Real Property Asset Management, Exec. Order No. 13327, 69 Fed. Reg. 5897 

(Feb. 6, 2004). Certain provisions of the executive order apply to executive branch 

departments and agencies listed in section 901 of title 31, United States Code: the 

Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human 

Services, Homeland Security, Housing and Urban Development, the Interior, Justice, 

Labor, State, Transportation, the Treasury, and Veterans Affairs; the Environmental 

Protection Agency; GSA; the National Aeronautics and Space Administration; the National 

Science Foundation; the Nuclear Regulatory Commission; the Office of Personnel 

Management; the Small Business Administration; the Social Security Administration; and 

the U.S. Agency for International Development. For the purposes of our report, we will be 

referring to this group of executive branch departments (including federal entities within 

the departments) and agencies included in the FRPC as “FRPC member agencies.” 

Letter
Page 2 GAO-16-763T 

My statement is based on our report that was issued today on federal 

entities’ use of independent leasing authority.3 My statement, like the 

report, examines: (1) which federal entities have independent leasing 

authority and their use of this authority to lease office and warehouse 

space; (2) how selected independent leases compare to GSA leases in 

terms of cost; and (3) to what extent selected federal entities with 

independent leasing authority have leasing policies and practices that 

align with leading government leasing practices.

To conduct the work that is the basis for this statement, we administered 

a survey to 103 civilian federal entities.4 We contracted with a real-estate 

consulting firm to perform analyses of the costs for a non-generalizable 

sample of independently leased offices and warehouses from eight 

selected federal entities and compared the selected leases against similar 

GSA leases in four different U.S. metropolitan areas. We reviewed lease 

documentation from federal entities to evaluate whether leading practices 

were used. We also evaluated these entities’ space-use per employee 

against GSA’s recommended space utilization target for the selected 

leases we reviewed. Lastly, we interviewed relevant officials from our 

selected federal entities, GSA, OMB, and the Small Agency Council. 

More detailed information on our objectives, scope, and methodology can 

be found in the issued report. We conducted the work on which this 

statement is based 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.

 3

GAO, Federal Real Property: Actions Needed to Enhance Information on and 

Coordination among Federal Entities with Leasing Authority, GAO-16-648 (Washington, 

D.C.: July 6, 2016). 

4

GAO, Federally Created Entities: An Overview of Key Attributes, GAO-10-97 

(Washington, D.C.: Oct. 29, 2009). Our survey universe included all federal entities 

identified in a prior GAO report on federally created entities such as executive 

departments, other executive branch entities, government corporations, and other 

federally established organizations in the executive branch that received an average of 

over $20 million in annual appropriations from fiscal years 2005 through 2008.
Page 3 GAO-16-763T 

According to GSA officials and OMB staff, neither GSA nor OMB 

maintains a comprehensive list of federal government entities with 

independent leasing authority, and neither is required to do so. FRPP 

offers a possible way for determining which agencies have independent 

leasing authority since the FRPP has a data field that indicates if a federal 

entity uses its own authority to lease real property. However, this 

information is incomplete as only agencies in the FRPC are required to 

annually submit their real property information to the FRPP.

To obtain more complete and reliable information on federal entities with 

leasing authority, we surveyed 103 civilian executive branch agencies 

and other federal entities that met our selection criteria. Of the 103 

surveyed entities, 52 reported having the authority to lease domestic 

office and warehouse space, and 25 of those entities are not members of 

the FRPC. The 25 entities that are not members of FRPC reported that 

they leased 243 offices and warehouses covering approximately 8.3-

million rentable square feet of space and costing $303.4 million in annual 

rent as of October 1, 2015. (See table 1.)

Table 1: Selected Data about Federal Entities That Reported Having Independent Statutory Leasing Authority for Domestic 

Offices and Warehouses and Are Not Part of the Federal Real Property Council 

Offices and warehouses

Federal entity Number

Rentable square 

feet Annual rent ($)

Federal Deposit Insurance Corporation 91 1,912,379 $47,161,467

Smithsonian Institution 50 1,487,394 $52,009,858

United States Postal Service 35a 701,613 $11,888,432

Tennessee Valley Authority 21 223,500 $2,973,000

Pension Benefit Guaranty Corporation 9 564,703 $28,222,074

Securities and Exchange Commission 8 1,882,484 $90,854,696

National Credit Union Administration 7 73,741 $1,456,317

United States Commodity Futures Trading Commission 4 434,679 $20,066,000

United States Holocaust Memorial Museum 4 10,528 $403,376

Federal Reserve Board 3 545,170 $21,689,150

Millennium Challenge Corporation 2 129,206 $8,300,000

National Transportation Safety Board 2 84,681 $2,715,075

Appalachian Regional Commission 1 21,626 $858,629

Farm Credit Insurance System Corporation 1 4,325 $155,813

Federal Retirement Thrift Investment Board 1 92,179 $5,236,601

Inter-American Foundation 1 14,332 $713,000

Twenty-five Federal 

Entities That 

Reported Having 

Independent Leasing 

Authority Are Not 

Consistently Tracked 

in FRPP
Page 4 GAO-16-763T 

Offices and warehouses

Federal entity Number

Rentable square 

feet Annual rent ($)

Overseas Private Investment Corporation 1 116,487 $7,504,813

Peace Corps 1 6,500 $348,281

United States African Development Foundation 1 15,705 $803,502

American Battle Monuments Commission — — —

Farm Credit Administration — — —

National Endowment for the Arts — — —

National Endowment for the Humanities — — —

Railroad Retirement Board — — —

United States Tax Court — — —

Total 243 8,321,232 $303,360,084

Source: Information reported by the respective federal entities in a GAO survey. | GAO-16-763T

Note: This list of selected civilian federal entities with independent leasing authority was compiled 

from responses to a survey. These federal entities are those with independent leasing authority that 

are not part of the Federal Real Property Council. All reported figures were as of October 1, 2015.

a

According to a United States Postal Service (USPS) official, USPS does not categorize its buildings 

as “offices.” For the purposes of our review, we are using as a proxy, USPS’s independently leased 

spaces where over 50 percent of the total square footage was used for administrative functions. 

These spaces may include office buildings, as well as small offices or administrative space located in 

non-office buildings. USPS does not lease warehouse space.

The FRPP’s effectiveness as an oversight and accountability mechanism 

for entities with independent leasing authority is limited because only 

FRPC member agencies are required to report their real property data to 

the FRPP. Two non-FRPC-member entities voluntarily reported data on 

their independently leased offices and warehouses to FRPP in fiscal year 

2014—the Smithsonian Institution and the Tennessee Valley Authority. 

The remaining entities’ data were not included in the FRPP.

In our review, most of the federal entities that reported having 

independent leasing authority, outside the entities that are covered under 

the CFO Act, are members of the Small Agency Council. The Small 

Agency Council is a voluntary association of about 80 independent 

federal entities with generally fewer than 6,000 employees that represents 

the entities’ collective management interests. The Small Agency Council 

provides these smaller federal entities a line of communication with key 

decision makers, including OMB. GSA officials who manage the FRPP 

said that the Small Agency Council may be able to help coordinate its 

members’ involvement in the FRPP. For example, the Council could 

provide technical assistance to help its members collect and submit their 
Page 5 GAO-16-763T 

real-property data to the FRPP and facilitate the process on behalf of 

GSA and OMB.

We analyzed 37 selected independent leases5 across seven federal 

entities.6 Table 2 shows that of these 37 leases, 14 (38 percent) had rates 

that were less costly than matched GSA leases and 11 (30 percent) had 

comparable rates. The remaining 12 leases (32 percent) had rates that 

cost more than matched GSA leases.

Table 2: Selected Independent Real Property Lease Rates Compared to Matched 

General Service Administration (GSA) Real Property Lease Rates, National Capital 

Region versus Other Metropolitan Areas

Source: GAO analysis of federal lease data. | GAO-16-763T

Note: All comparisons were made using the annual net present values per rentable square foot of the 

full terms of all leases.

a

Due to variation caused by the specific circumstances and unique features of each lease transaction, 

we considered independent leases’ rates that were within plus or minus (±) 10 percent of the matched 

GSA rates as comparable.

 5

Our analyses matched a non-generalizable set of independent leases with at least one 

similar GSA lease to assess differences in matched leases’ rental rates. Factors assessed 

in the determination of similarity for matched leases included the leases’ square footage, 

location, starting year, duration, among other factors. For the matched analysis of 

independent leases with GSA leases, we performed the analysis with the annual netpresent value for the full terms of the leases’ rates per rentable square foot. Net present 

value is the sum of costs over a period of time, in this case a lease’s term, adjusted using 

a discount rate. 

6

The seven federal entities included in our lease rate analysis were the Federal Aviation 

Administration (FAA), the Federal Deposit Insurance Corporation (FDIC), the National 

Aeronautics and Space Administration (NASA), the National Credit Union Association 

(NCUA), the Pension Benefit Guaranty Corporation (PBGC), the U.S. Coast Guard 

(USCG), and the U.S. Patent and Trademark Office (USPTO). One of our selected federal 

entities—National Oceanic and Atmospheric Administration (NOAA)—was not included in 

this analysis because its only selected lease did not require rent payments. As such, this 

unique aspect of the lease did not allow for us to find a comparable GSA lease.

Most of the 37 

Selected Independent 

Lease Rates Were 

Comparable to or 

Lower than Matched 

GSA Rates

Metropolitan area

Number of 

leases

Leases 

Below GSA 

Rate

Leases 

Comparable to

GSA Ratea

Leases 

Above GSA 

Rate

National Capital 

Regionb 19 7 (37%) 5 (26%) 7 (37%)

Other areasc 18 7 (38%) 6 (33%) 5 (28%)

Total 37 14 (38%) 11 (30%) 12 (32%) 
Page 6 GAO-16-763T 

b

The National Capital Region includes Washington, D.C., and local jurisdictions in Maryland and 

Virginia.

c

Includes Atlanta, Georgia; Los Angeles, California; and Miami, Florida, metropolitan areas.

Based on our analysis and interviews, we identified several possible 

factors that could be influencing why some of the independent leases we 

analyzed were less expensive than matched GSA leases.

• GSA officials said that GSA uses standardized lease documents that 

include clauses that can be more rigorous than the leases provided by 

private sector landlords. For example, GSA leases could include 

clauses with higher—and thus possibly more expensive—energy 

conservation, security, and seismic safety requirements.

• Tenant improvement allowances directly increased lease costs in 

about 64 percent of the matched GSA leases but only in about 43 

percent of our analyzed independent leases.7

• The independent leases we analyzed had periods of free rent built 

into the leases more frequently than the matched GSA leases.

• Officials from a federal entity with independent leasing authority said 

that the use of private sector real estate brokers may have contributed 

to lower leasing rates because the brokers use the lowest offer as 

leverage to negotiate lower rates with other potential landlords.

 7

A tenant improvement allowance includes the costs of changes to leased spaces. These 

costs are associated with additions or alterations of the structure and base building 

systems that adapt the workspace to the specific uses of the tenant. The tenant typically 

bears these costs.
Page 7 GAO-16-763T 

We reviewed the Federal Management Regulation, GSA policies and 

procedures, and other applicable documents to develop a list of leading 

practices that all federal entities should incorporate into their real property 

leasing functions to help ensure that mission needs are met in a costeffective and transparent manner. In addition to leading practices, federal 

entities must follow all applicable laws related to real property 

management. (See fig. 1.) For example, the recording statute requires 

that federal entities record the full amount of their contractual liabilities, 

including for leases, against funds available at the time the contract is 

executed.8 Previously, we found that two federal entities with independent 

leasing authority—the Commodity Futures Trading Commission and the 

Securities and Exchange Commission—did not fully comply with the 

recording statute in the way they recorded the lease obligations against 

funds available at the time the leases were executed.9 Violations of the 

recording statute such as these can also result in Antideficiency Act 

violations if lease obligations exceed available budget authority at the 

time the lease is executed.

We reviewed the extent to which our eight selected federal entities had 

policies that aligned with leading government leasing practices and found 

that six had policies that generally aligned with these practices; two 

entities did not have any documented leasing policies.10 Although most of 

the selected entities had established policies consistent with leading 

government practices, we found numerous instances where the lease 

files lacked evidence to support that the leading practices were actually 

used. We analyzed 30 selected lease files from 6 selected entities.

11 We 

 8

31 U.S.C. §1501(a)(1). GSA, however, has the authority to record obligations for 

multiple-year leases on a year-to year basis. 40 § U.S.C. 585(a)(2).

9

GAO, Commodity Futures Trading Commission—Recording of Obligations for MultipleYear Leases, B-327242 (Washington, D.C.: Feb.4, 2016); GAO, Securities and Exchange 

Commission—Recording of Obligation for Multiple-Year Contract, B-322160 (Washington, 

D.C.: Oct. 3, 2011).

10To gain understanding about the extent to which federal entities with independent 

leasing authority have policies that align with leading practices, we reviewed our eight 

selected entities: FAA, FDIC, NASA, NCUA, NOAA, PBGC, USCG, and USPTO.

11For the analysis on leading practices we did not include leases that fell below GSA’s 

Simplified Lease Acquisition Threshold of $150,000 net annual rent as some leading 

practices are not applicable for low value leases. All NOAA and USCG leases were 

omitted for this reason, as well as several other leases from other entities. More detailed 

information on our scope and methodology can be found in the full version of the report.

Most Selected 

Entities’ Leasing 

Policies Generally 

Align with Leading 

Practices, But Lack 

Documentation
Page 8 GAO-16-763T 

looked for documentation of 10 sub-practices within the four leading 

government leasing practices as shown in figure 1. The extent to which 

lease files documented alignment with the leading practices varied by 

entity, but no lease files contained evidence of full alignment with all the

leading practices. Without documented evidence in the lease files that all 

of the leading practices and sub-practices were used in the acquisition of 

leased space, it is difficult to determine whether the federal entities 

performed the leading practices that would help them achieve the best 

lease rate in a competitive and transparent manner.

Figure 1: Percentage of Six Selected Entities’ Lease Files That Documented the Use 

of Leading Government Practices for Leasing Federal Real Property
Page 9 GAO-16-763T 

As shown in figure 2, all selected entities we reviewed leased more office 

space per employee on average than GSA’s recommended target. 

According to GSA officials, GSA recommends that federal entities 

allocate approximately 150 rentable square feet per employee for office 

space. Twenty-eight of the 30 selected office leases analyzed for space 

allocation exceeded GSA’s recommended target.12 The 30 selected 

leases we reviewed averaged more than double the GSA recommended 

target per employee. Many of these leased offices had vacant spaces, 

which can inflate the per-employee space allocation.

 12For the analysis on federal entities’ space utilization we did not include warehouses 

since GSA’s recommended target for office space is not applicable to that building type. 

Additionally, we did not include leases that had large non-office related spaces attached 

(such as server rooms), which can skew the amount of space allocated per employee. 

More detailed information on our scope and methodology can be found in the full version 

of the report.

All Selected Entities’ 

Space Allocations 

Exceed GSA’s 

Recommended Target
Page 10 GAO-16-763T 

Figure 2: Selected Federal Entities’ Per-Employee Office Space Allocation Averages 

and GSA’s Recommended Target

Note: This analysis is based on information gathered from 30 lease files and interviews with entity 

officials. It excludes two office properties with significant non-office spaces attached and five 

warehouse properties.

FRPC members coordinate efforts and share leading practices, and OMB 

staff said that the FRPC has been critical to improving real property 

management since its creation through executive order in 2004. For 

example, OMB staff said that FRPC has created an effective forum for 

promoting more efficient space-use standards that are key to the success 

of the administration’s real-property management reform efforts. 

However, FRPC’s membership has remained limited to agencies covered 

by the CFO Act. We found that 25 federal entities that reported having 

independent leasing authority are non-CFO Act agencies. We also found 

that for the selected entities we reviewed, those that were FRPC member 

entities were more likely to have leasing policies that aligned with leading 

Many Entities with 

Independent Leasing 

Authority Are Not 

Included in FPRC’s 

Coordination and 

Information Sharing
Page 11 GAO-16-763T 

practices than the entities that were not FRPC members. In addition, the 

two federal entities with the highest per-employee space allocation rates 

are not members of the FRPC. Increasing FRPC participation would allow 

all federal entities to benefit from the collaboration and sharing of leading 

practices. The Small Agency Council already coordinates with OMB on 

other policy matters and may offer a potential way to increase 

involvement in FRPC and FRPP as many of the non-FRPC federal 

entities with leasing authority are already members of the Small Agency 

Council.

In our issued report we recommended that the Deputy Director of the 

OMB—as chair of the FRPC—establish efficient methods for including 

data from non-FRPC member entities in the FRPP and increasing 

collaboration between FRPC member and non-member entities, including 

sharing leading real-property management practices. OMB concurred 

with both recommendations.

Chairmen Barletta, Ranking Member Carson, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions that you may have at this time.

If you or your staff have any questions concerning this testimony, please 

contact David Wise, Director, Physical Infrastructure Issues, at (202) 512-

2834, or at wised@gao.gov. Contact points for our Offices of 

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

of this statement. GAO staff who made key contributions to this testimony 

include Keith Cunningham, Assistant Director; Catherine Kim; Hannah 

Laufe; Steve Rabinowitz; Malika Rice; Kelly Rubin; Janani Shankaran; 

Sean Standley; Michelle Weathers; and Crystal Wesco.

GAO Contact and 

Staff 

Acknowledgments

(100854)
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