FEDERAL 

BUILDINGS FUND

Improved 

Transparency and 

Long-term Plan 

Needed to Clarify 

Capital Funding 

Priorities

Report to the Chairman, Subcommittee on 

Federal Financial Management, Government 

Information, Federal Service, and International 

Security, Committee on Homeland Security and 

Governmental Affairs, U.S. Senate

July 2012

GAO-12-646

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-646, a report to the 

Chairman, Subcommittee on Federal Financial 

Management, Government Information, 

Federal Service, and International Security, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate

July 2012

FEDERAL BUILDINGS FUND 

Improved Transparency and Long-term Plan Needed 

to Clarify Capital Funding Priorities

Why GAO Did This Study

GSA serves as the primary steward of 

the federal government’s civilian real 

property portfolio of nearly 10,000 

assets. Since 1972, GSA has funded 

its real property acquisition, operation, 

maintenance, and disposal through the 

rent it collects from tenant agencies 

that is deposited into the FBF. GAO 

has previously reported, however, that 

the FBF has faced difficulty providing 

sufficient resources to support GSA’s 

mission. 

GAO was asked to examine (1) the 

factors affecting the resources in the 

FBF, (2) GSA’s potential repair liability

and the implications for the FBF, and 

(3) the information GSA considers 

when evaluating capital investments 

and how these practices compare to 

leading practices for prioritizing capital 

investments. GAO reviewed legislation 

and GSA documents and compared

leading practices on making capital 

investment decisions from OMB and 

GAO capital planning guidance to GSA 

practices. GAO also analyzed budget

and financial data from fiscal years 

2006 through 2012, facility condition 

data from fiscal year 2011, and 

interviewed GSA officials and OMB

staff. 

What GAO Recommends

GAO recommends that GSA (1) 

document in its budget submission 

how it prioritizes capital investments 

and (2) develop and annually submit a 

5-year long-term capital plan to OMB 

and Congress. GSA agreed with our 

recommendations. Technical 

comments from GSA and OMB were 

incorporated as appropriate. 

What GAO Found

The Federal Buildings Fund’s (FBF) balance has increased from $56 million in 

fiscal year 2007 to $2.2 billion in fiscal year 2012 primarily due to the growing 

difference between the resources provided to the FBF and the General Services 

Administration’s (GSA) use of these funds as determined through the budgeting 

and appropriations process. In the last 2 years, Congress has provided fewer

resources than requested by the executive branch and generated by the FBF. 

Office of Management and Budget (OMB) staff and GSA officials stated that if 

GSA were able to spend all of the funds collected by the FBF each year, these 

funds would generally be sufficient to fund GSA’s needs. However, GSA, through 

the annual President’s Budget Request, has sought less obligational authority 

than the balance available in the fund. While the FBF’s balance has increased, 

various factors have limited the fund’s income. Funds from operations—revenue 

less costs excluding depreciation—that contribute to FBF income have declined 

from 2006 to 2011 when adjusted for inflation. Revenues have declined while 

costs have outstripped inflation over this time period. In addition, portions of 

GSA’s inventory operate at a loss. For example, about 30 percent of GSA’s 

owned assets lost money in 2011, while GSA’s total leased portfolio lost about 

$75 million. Despite the losses in its leased portfolio, GSA continues to rely 

extensively on leasing. GSA is taking steps to reduce the size of its overall real 

estate portfolio.

GSA has identified $4.6 billion in maintenance and repairs expected from 2012 to 

2021 and anticipates that nearly a quarter of this amount is needed immediately.

However, funding for maintenance and repairs has declined since 2006. GSA 

officials noted that reduced funding for capital reinvestments could result in 

deferred maintenance and repairs, and increase the cost and extent of such work

in the future. These concerns are consistent with the National Research 

Council’s findings that each $1 in deferred maintenance and repair work results 

in a long-term capital liability of $4 to $5. 

GSA’s use of information to make capital investment decisions conforms to some 

leading practices from GAO and OMB guidance, but GSA lacks a transparent 

process for prioritizing projects and a comprehensive long-term capital plan that

fully aligns with leading practices. GSA keeps a baseline of information on its 

assets and needs—as leading practices suggest—through various tools and 

databases. GSA’s process and guidance for evaluating capital investment 

alternatives substantially meet leading practices as its project planning process 

explores alternatives to meeting investment needs. GSA’s process for prioritizing 

capital investments partially meets leading practices, but its project prioritization 

transparency could be improved by laying out in its annual budget submission 

how it uses its criteria to determine which projects get selected for funding over 

others. In addition, an improved comprehensive long-term capital plan could 

further GSA’s ability to make informed choices about long-term investment 

decisions. Both OMB and GAO guidance emphasize the importance of 

developing a long-term capital plan to guide the implementation of organizational 

goals. Having such a plan would enable GSA and Congress to better evaluate a

range of priorities over the next 5 years. In short, more transparency through a 

comprehensive long-term capital plan would allow for more informed decision 

making by GSA and Congress among competing priorities.

View GAO-12-646. For more information, 

contact Dave Wise at (202) 512-2834 or 

wised@gao.gov.
Page i GAO-12-646 Federal Buildings Fund

Letter 1 

Background 3

Growing FBF Balance Belies Revenue and Cost Challenges 5

GSA Has Identified Billions in Repair Liability, but Decreased 

Funding May Increase Future Resource Demand from the FBF 16

GSA Could Better Conform Some of Its Capital Planning to Leading 

Practices 20

Conclusions 32

Recommendations for Executive Action 33

Agency Comments 33

Appendix I Objectives, Scope, and Methodology 35

Appendix II Comments from the U.S. General Services Administration 40

Appendix III GAO Contact and Staff Acknowledgments 43

Tables

Table 1: Changes to the Federal Buildings Fund, Fiscal Years 2006–

2012 (Dollars in millions) 6

Table 2: Maintenance and Repair Liability of GSA’s Owned Assets, 

Fiscal Year 2011 17

Table 3: Leading Capital Planning Practices for Using Information 

to Make Capital Investment Decisions 21

Table 4: GAO’s Assessment of GSA’s Conformance to Leading 

Practices for Using Information to Make Capital 

Investment Decisions 22

Figures

Figure 1: Funds from Operations Generated by GSA-Owned Assets, 

Fiscal Years 2006 – 2011 9

Figure 2: GSA-leased Asset Income, Fiscal Years 2006-2011 13

Figure 3: Change in Owned and Leased Rentable Square Feet, 2006-

2011 15

Contents
Page ii GAO-12-646 Federal Buildings Fund

Figure 4: Repairs and Alterations and New Construction 

Obligational Authority, Fiscal Years 2005-2012 19

Abbreviations

ABP Asset Business Plan

BER Building Evaluation Report

CRS Congressional Research Service

DHS Department of Homeland Security

ePCS Enhanced Physical Condition Survey

FBF Federal Buildings Fund

GSA General Services Administration

IRIS Inventory Reporting Information System

OMB Office of Management and Budget

PCS Physical Condition Survey

REXUS Real Estate across the United States

SSA Social Security Administration

TAPS The Automated Prospectus System

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Page 1 GAO-12-646 Federal Buildings Fund

United States Government Accountability Office

Washington, DC 20548

July 12, 2012

The Honorable Thomas R. Carper

Chairman,

Subcommittee on Federal Financial Management,

 Government Information, Federal Service, and International Security

Committee on Homeland Security and Governmental Affairs

United States Senate

Dear Mr. Chairman:

Capital assets, such as real estate, can require significant resources to 

construct, operate, and maintain over the course of their life cycle. To 

provide a predictable source of revenue for the General Services 

Administration (GSA) to manage its real estate portfolio, the Public 

Buildings Act Amendments of 1972 established the Federal Buildings 

Fund (FBF).1 Since that time, GSA has collected rent from tenant 

agencies, deposited it into the FBF, and used that money to fund its real 

property acquisition, operation, maintenance, and disposal. Currently, 

funds from the FBF support nearly 10,000 assets—including about 1,500 

GSA-owned buildings and 8,100 GSA-leased buildings—which provide 

an inventory of more than 370 million square feet of workspace for 1.1 

million federal employees.2

Historically, however, the fund has not generated sufficient revenues to 

meet all needs. We reported in 1981 that the then 9-year-old fund faced 

difficulty funding GSA’s real property expenses because it did not 

generate sufficient revenue from the rental of its assets.3

 

1 Pub. L. No. 92-312, § 3, 86 Stat. 216, 218 (June 14, 1972), codified as amended at 40 

U.S.C. § 592.

We reported in 

2000 that GSA had struggled to fund the capital repairs identified at its 

2 In this report, we refer to buildings and structures that are owned by the federal 

government and under the custody and control of GSA as GSA-owned assets or 

buildings. While the definition of real property includes land, our review focused on 

buildings and structures and excluded land because future maintenance costs are 

generally associated with buildings (such as offices and courthouses) or structures (such 

as airfields or ports).

3 GAO, GSA’s Federal Building Fund Fails to Meet Primary Objectives, PLRD-82-18 

(Washington, D.C.: Dec. 11, 1981).

 
 

Page 2 GAO-12-646 Federal Buildings Fund

buildings and that GSA faced a potential repair liability of billions of 

dollars.4 These conditions contributed to our initial characterization of 

federal real property management as a high-risk area in 2003.5

This report focuses on (1) the factors that have affected the resources 

available in the FBF, (2) GSA’s potential maintenance and repair liability 

for its owned assets and the implications for the fund, and (3) the 

information GSA considers when evaluating capital investment proposals 

and how its practices compare to leading practices for prioritizing capital 

investments. Our overall approach to addressing these topics was to (1) 

review laws, studies, and GAO, GSA Inspector General, and 

Congressional Research Service reports on federal real property and the 

FBF; (2) analyze data and documents pertaining to the fund’s balance, 

including budget requests and appropriations acts from fiscal years 2006 

to 2012; (3) evaluate the financial performance of GSA’s real property 

portfolio of approximately 10,000 assets based on data from fiscal years 

2006 through 2011; (4) analyze data maintained by GSA on the identified 

repairs needed in its owned assets; (5) compare GSA capital investment 

practices to leading practices for making capital investment decisions 

identified in the Office of Management and Budget’s (OMB) Capital 

Programming Guide

Furthermore, the high cost of capital assets creates challenges for 

budgeting in an era of resource constraints. In this context, you asked us 

to review the viability of the fund.

6 and GAO’s Executive Guide;7

 

4 GAO, Federal Buildings: Billions are Needed for Repairs and Alterations, 

(6) interview GSA 

officials and OMB staff on the state of GSA’s real property portfolio; and 

(7) review the four highest cost repairs and alterations projects of GSA’s 

fiscal year 2012 budget submission to assess data used to determine 

project requirements and how GSA evaluated project alternatives. We 

also interviewed GSA system administrators, analysts, and managers 

about the quality of data obtained from GSA’s real property and financial 

databases and tested the data for missing variables and abnormal trends.

GAO/GGD-00-98 (Washington, D.C.: Mar. 30, 2000).

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

January 2003).

6 OMB, Capital Programming Guide, Supplement to Office of Management and Budget 

Circular A-11, Part 7: Planning, Budgeting, and Acquisition of Capital Assets, June 2006.

7 GAO, Executive Guide: Leading Practices in Capital Decision-Making, GAO/AIMD-99-32

(Washington, D.C.: December 1998).
 

Page 3 GAO-12-646 Federal Buildings Fund

We found that they were generally reliable for our purposes, which was to 

provide a summary level description of the physical and financial 

condition of GSA’s portfolio.

We conducted this performance audit from August 2011 to July 2012 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. Further details on our scope 

and methodology can be found in appendix I.

The FBF, administered by GSA, is a quasi-revolving fund financed by 

rents received from other agencies and authorized and established by the 

Public Buildings Act Amendments of 1972.8 Instead of GSA receiving 

direct appropriations, the FBF operates as the primary means of financing 

the operating and capital costs associated with federal space, but GSA 

sometimes receives supplemental appropriations to meet repair or new 

construction needs. The FBF is financed by income from rental charges 

assessed to tenant agencies occupying GSA-owned and -leased space 

that approximate commercial rates for comparable space and services.

GSA appraises its inventory on a 5-year cycle—approximately 20 percent 

of its owned inventory annually— and charges rent based on rates for 

comparable assets in the private sector.9 GSA charges its tenants in 

space leased from the private sector rates equal to the cost of the lease 

plus either a 7 percent (for cancelable assignments) or 5 percent (for 

noncancelable assignments) administrative fee to cover its management 

costs.10

 

8 Pub. L. No. 92-312. A revolving fund is a fund established by Congress to finance a 

cycle of business like operations through amounts received by the fund. GAO, A Glossary 

of Terms Used in the Federal Budget Process, 

During fiscal year 2011, GSA deposited about $9 billion into the 

GAO-05-734SP (Washington, D.C.: Sept. 

2005) at 88. Because congressional action is needed for the funds to be available for 

obligation, it is not a true revolving fund.

9 GSA performs fair annual rent appraisals to determine commercially equivalent rental 

rates in a given location and bases rental rates charged to its tenants on these appraisals. 

10 The actual administrative fee percentage is dependent upon whether the Occupancy 

Agreement allows the tenant agency the right to release space during the lease term. This 

is termed a cancelable lease. 

Background 
 

Page 4 GAO-12-646 Federal Buildings Fund

fund. GSA’s lease payments have increased over the last decade as 

leased space has grown to comprise more than half of GSA’s current total 

portfolio. Starting in 2008, GSA has leased more space than it owns; at 

the end of fiscal year 2011, leased square footage exceeded owned, 193 

million to 182 million (51 percent).

Congress exercises control over the FBF through the appropriations 

process that sets annual limits—called obligational authority—on how 

much of the fund can be obligated for various activities. GSA, as an 

executive branch agency, requests obligational authority from Congress 

as part of the annual President’s Budget Request. In annual 

appropriations legislation, Congress provides obligational authority to 

GSA to incur obligations and make expenditures from the FBF in five 

categories of activities:

1. Rental of Space – funds leases of privately owned space or buildings 

for federal agencies.

2. Repairs and Alterations – funds repairs and alterations of existing 

buildings as well as associated design and construction services.

3. Construction and Acquisition of Facilities – funds the construction or 

purchase of facilities and major extensions to existing buildings.

4. Building Operations and Maintenance – funds services for 

government-owned and -leased facilities, including cleaning, utilities 

and fuel, maintenance, miscellaneous services (such as moving), 

evaluation of new materials and equipment, and field and general 

management and administration.

5. Installment Acquisition Payments – funds debt incurred as the result 

of building acquisition and lease purchase arrangements.

Revenue from GSA’s owned facility inventory is the main source of the 

FBF’s operating income used to fund repair and alteration, new 

construction activities, and operations and maintenance. GSA’s portfolio 

of properties leased from the private sector is designed to be revenue 

neutral in disbursing all the funds it collects from federal agencies 

occupying the space to pay the cost of the underlying leases.

Building repairs and alterations as well as construction and acquisition 

projects that are expected to cost more than the prospectus-level 

threshold must be submitted to certain congressional committees for 
 

Page 5 GAO-12-646 Federal Buildings Fund

authorization and funding.

11 GSA in its annual budget submission, with 

OMB approval, provides Congress with a prospectus for each repair and 

alteration project estimated to exceed the prospectus-level threshold. The 

prospectus includes information on the size, cost, location, and other 

features of the proposed work; a justification for proceeding with the work; 

and an economic analysis of the alternatives to the requested repairs and 

alterations.

The FBF’s balance has increased significantly in recent years, growing 

from $56 million at the beginning of fiscal year 2007 to $2.2 billion by the 

beginning of fiscal year 2012. The increased balance has primarily 

resulted from the growing difference between the resources deposited 

into the FBF and use of these funds as determined through the budgeting 

and appropriations process. Specifically, the total available balance is a 

function of the resources deposited into the fund, the amount of 

obligational authority requested by GSA as part of the President’s Budget 

Request, and the actual obligational authority provided by Congress.12

Beginning in fiscal year 2007, the total resources deposited into the FBF 

have exceeded the obligational authority provided by Congress. (See 

table 1.) According to OMB staff, a portion of the growth in the FBF’s 

balance is attributable to inaccuracy in GSA’s estimation of its rental 

revenues. The result of these budgetary and appropriations actions has 

been the near quadrupling of the fund balance in the last 2 years.

 

1140 U.S.C. § 3307. Prospectus-level projects involve major work or acquisitions that are 

estimated to cost more than a statutorily prescribed amount ($2.79 million for fiscal year 

2013 projects), which GSA’s Administrator is authorized to adjust annually.

12 In this report, we refer to requests made through the President’s Budget Request for 

obligational authority as requests for obligational authority from GSA, though the request 

is made as part of request for budget authority for executive branch programs. 

Growing FBF Balance 

Belies Revenue and 

Cost Challenges

FBF Balance
 

Page 6 GAO-12-646 Federal Buildings Fund

Table 1: Changes to the Federal Buildings Fund, Fiscal Years 2006–2012 (Dollars in millions)

Fiscal 

year

Beginning 

fund 

balancea Fund deposits

Total

available 

resources b

President’s 

Budget 

Request

Appropriated 

obligational 

authority

Change from 

the beginning 

fund balance c

2006 521 7,495 8,016 7,769 7,961 (465)

2007 56 7,583 7,639 8,047 7,498 85

2008 141 8,280 8,420 8,091 8,133 147

2009 288 8,765 9,053 8,378 8,450 316

2010 604 8,956 9,560 8,531 8,527 428

2011 1,032 8,841 9,873 9,154 7,659 1,156

2012 2,239 9,223 11,462 d 9,509 8,018 1,205

Source: GAO analysis of GSA information. 

Note: Analysis excludes revenue and obligational authority resulting from GSA’s use of its various 

indefinite authorities (e.g., Historical Properties, 16 U.S.C. § 470h-3(b); Energy and Recycling 

Rebates, 40 U.S.C. § 592; and Rental of Space, 40 U.S.C. § 586(d)).

a

The total balance of the FBF as of the beginning of the fiscal year.

b

Fund deposits include revenue and rent from operations, appropriations, reprogrammings, 

redemption of debt, transfers, prior year recoveries, transfers, and rescissions.

c

Appropriated obligational authority includes approved reprogrammings.

d

In using authority to direct the expenditure of public funds and establish 

priorities among federal programs, Congress decides whether to fund a 

particular program or activity, and if so, sets the level of that funding. In 

the case of the FBF, Congress has provided in the last 2 fiscal years less 

obligational authority to GSA than was requested in the President’s 

Budget Request. For example, in fiscal year 2012 Congress provided 

about 16 percent less than the President’s Budget Request. In addition, in 

both 2011 and 2012 Congress provided less obligational authority than 

funds deposited into the FBF. According to OMB staff and GSA officials, 

Congress provided less obligational authority than requested to balance 

competing priorities among government programs and meet spending 

caps.

GSA estimates the FBF will receive $9.2 billion from revenue and other fund deposits in 2012.

OMB staff and GSA officials stated that the funds collected by the FBF 

might sufficiently support GSA’s projects for its assets. For example, 

OMB staff stated that if GSA were able to spend all of the funds collected 

by the FBF each year, these funds would generally be sufficient to fund 

GSA’s identified repairs and alterations projects and a modest new 

construction program. GSA officials noted that when Congress provides 

less obligational authority than requested, repairs and alterations and new 

construction projects are the most affected because available funds must 
 

Page 7 GAO-12-646 Federal Buildings Fund

first be used to pay leasing, operations and maintenance, and debt costs.

GSA officials also stated that the authorization to obligate and spend the 

balance of funds in the FBF, which it anticipates will double to $4.5 billion 

by the end of fiscal year 2013, would enhance the agency’s ability to 

manage its real property portfolio by ensuring that operations and 

maintenance are sufficiently funded and that capital investments, such as 

repairs and alterations and new construction projects, can continue to be 

made. However, OMB staff stressed that the current FBF balance is not 

available for obligation and that in order to make additional obligations 

from the fund, congressional action would be needed. 

While the appropriations process has resulted in less obligational 

authority for GSA than was sought in the President’s Budget Request, the 

agency has not always communicated through its annual budget request 

to Congress its interest in reducing the fund’s balance by increasing 

spending. Rather, since 2008, GSA has consistently requested 

obligational authority less than the total resources available in the fund.

Also since 2008, GSA has only twice requested an amount of obligational 

authority that would reduce the existing fund balance, meaning that it 

requested more obligational authority than funds deposited for that year.

Specifically, GSA requested to reduce the existing FBF balance by about 

30 percent in 2011 and 13 percent in 2012. GSA officials stated that in 

preparing their budget requests they work with OMB to discuss their 

needs in relation to competing priorities from other executive branch 

agencies. According to GSA officials, budget requests for FBF 

obligational authority reflect efforts to balance GSA’s needs with those of 

other federal agencies within the overall budget framework.

While budgeting and appropriations decisions have contributed to a 

significant increase in the FBF balance the last 2 years, various factors 

have limited the fund’s income from GSA’s real property operations.

These factors include an imbalance between revenue and costs, 

decreased revenue from underperforming assets, and a reliance on 

leasing.

GSA’s owned assets generate most of the resources used for capital 

improvements. From 2006 through 2011, the financial performance of 

these assets has stagnated despite GSA’s increasing the amount of 

rentable square feet in its owned portfolio from 174 million to 182 million 

Factors Affecting FBF

Imbalance between Revenue 

and Costs
 

Page 8 GAO-12-646 Federal Buildings Fund

square feet.13 As measured by funds from operations—meaning revenue 

less costs excluding depreciation—GSA generated approximately $1.6 

billion from its owned assets in 2006 and a nearly identical amount in 

2011, though the annual amount varied during this time period.14 When 

taking the effects of inflation into account, we found that the real value of 

the funds from operations generated by GSA’s owned assets and 

measured in 2006 dollars has decreased by 9 percent over this time.15

 

13 Over the same time, the amount of leased space has grown from 172 million to 193 

million square feet.

(See fig. 1.)

14 Funds from operations (FFO) is a metric used by GSA to measure the financial 

performance of its assets. 

15 In this report, where indicated, we adjusted values for inflation using a chain-weighted 

gross domestic product (GDP) index based on the averages of quarterly indexes from 

U.S. Department of Commerce, Bureau of Economic Analysis, National Income and 

Product Accounts, table 1.1.4 last revised Jan. 21, 2012. 
 

Page 9 GAO-12-646 Federal Buildings Fund

Figure 1: Funds from Operations Generated by GSA-Owned Assets, Fiscal Years 

2006 – 2011

Funds from operations generated by GSA’s owned assets have been 

affected by declining revenue and rising costs.

• Revenue. Since 2006, revenue growth has not kept pace with 

inflation. Specifically, the revenue from GSA’s owned portfolio 

adjusted for inflation has decreased by 2 percent. GSA officials said 

that revenue generated by its owned assets is highly dependent upon 

the fair annual rent appraisal of the asset which, in turn, is based on 

the value of rental charges at comparable private sector properties.

GSA officials noted that from 2006 to 2011, increased commercial 

office vacancies contributed to soft rental markets and minimal growth 

in rental rates. According to these officials, changes in revenue 

primarily reflect the downward pressure on GSA’s rental rates caused 

by market conditions.

• Costs. Since 2006, costs associated with operating, maintaining, and 

repairing GSA’s owned facilities have risen faster than inflation. GSA’s 

annual operating costs, representing the direct costs of operating its 

facilities (including utilities, janitorial services, and routine 
 

Page 10 GAO-12-646 Federal Buildings Fund

maintenance) have risen by about 6 percent total in constant dollars 

from 2006 to 2011, though year to year these costs are volatile and 

can vary significantly.16 GSA officials stated that reasons for the 

increase in operating costs include general inflation in utilities, 

maintenance, and administrative costs. Furthermore, GSA estimates 

that construction costs have increased since 2005. We found that 

from October 2005 to September 2011, for example, construction 

costs rose by nearly 20 percent, or by nearly twice the general rate of 

inflation, eroding the value of FBF resources generated to fund capital 

repairs and construction.17

GSA officials also noted that, with decreased obligational authority, the 

growing amount and cost of leased space in its portfolio have reduced the 

proportion of obligational authority available to fund repairs and 

alterations that could potentially reduce operating costs in its owned 

portfolio. From 2006 through 2011, obligational authority for the 

acquisition of leased space increased from $3.9 billion (49 percent of 

obligational authority) to $4.8 billion (62 percent) as the amount of leased 

space increased from 172 million to 193 million square feet. At the same 

time, obligational authority for repairs and alterations has decreased from 

$1.1 billion (14 percent of obligational authority) in 2006 to $341 million (4 

percent) in 2011.

While the FBF as a whole has generated positive funds from operations, 

portions of GSA’s inventory operate at a loss. For example, within its 

owned portfolio, about 30 percent of GSA’s assets lose money in a given 

year. In fiscal year 2011, the loss from these assets was $170 million, and 

GSA has incurred a similar loss on that portion of its portfolio each year 

from 2006 to 2010. These assets tended to be older and smaller than 

 

16 For example, from 2006 to 2010, GSA’s operating costs from its owned assets rose 

from $847 million to $1,124 million, an increase of 33 percent or 23 percent when adjusted 

for inflation. However, in 2011, these operating costs fell to $990 million. GSA officials 

attribute this decrease to lower costs in its janitorial and maintenance contracts, including 

a 34 percent reduction in its elevator maintenance contract.

17 We used the Engineering News Record’s Construction Cost Index to calculate the 

increase in construction costs from October 2005 to September 2011. The index 

measures how much it costs to purchase a mix of construction, labor, and materials 

compared to what it cost in the base year. 

Underperforming Assets
 

Page 11 GAO-12-646 Federal Buildings Fund

other assets in the owned portfolio.18

In addition to these types of losses, GSA has formally agreed with its 

tenants to provide below-market rent on about 240 assets, which has 

modestly reduced revenue deposited in the FBF. In fiscal year 2011, GSA 

estimated that rent restrictions reduced the revenue generated for the 

FBF by about $175 million. These reduced rental rates have resulted from 

a combination of GSA and congressional exemptions that have been in 

We determined that most of these 

losses are attributable to about 200 assets, each of which lost more than 

$100,000 in 2011. GSA officials noted that in some cases, operating an 

asset at a loss can be more cost effective in the short term than the cost 

of acquiring new space, moving an agency, and disposing of the asset.

GSA officials further explained that there are various reasons they retain 

facilities that generate losses, for example because an asset is mission 

critical, has symbolic importance, or establishes a necessary federal 

presence in a sparsely populated area. For example, the Prince H. 

Preston Building and Courthouse, located in Statesboro, Georgia, 

provides space for the U.S. District and Bankruptcy Courts and other 

agencies’ facilities on an as-needed basis. However, the building has 

consistently generated negative funds from operations because the 

amount of space required for the federal presence in Statesboro has 

decreased since the building was constructed in 1963. Specifically, while 

the building was originally constructed to provide space to the Social 

Security Administration and the Department of Agriculture in addition to 

the Courts, both executive branch agencies have since vacated the 

space. Despite the vacant space and financial losses resulting from 

departure of two of its original tenants, GSA intends to retain this facility 

until the Judiciary determines its long-term plan for maintaining a 

presence in Southeast Georgia. GSA officials also noted that when their 

managed facilities undergo major renovations, the space in those facilities 

is often temporarily vacated and does not generate revenue during that 

time. For example, space in the Eisenhower Executive Office Building in 

Washington D.C., which is currently undergoing a multiphase renovation, 

was unavailable for tenant occupancy in 2011, contributing to a $15 

million operating loss for the building.

 

18 Specifically, the median asset in GSA’s owned portfolio is 45 years old and occupies 

about 20,000 square feet, while the median asset among those generating negative 

income is 55 years old and occupies about 11,000 square feet. 
 

Page 12 GAO-12-646 Federal Buildings Fund

place for a number of years.19

From 2006 through 2011, as the amount of space that GSA leased from 

the private sector grew from 172 million to 193 million square feet, GSA’s 

losses (as measured by funds from operations) on its leased assets have 

increased. (See fig. 2.) Over the past 4 years, cumulative losses on its 

leases have exceeded $200 million; approximately $75 million in losses 

occurred in fiscal year 2011. Most of the losses in 2011 were 

concentrated in about 300 leases, each of which lost more than 

$100,000. Relative to the total revenue generated by its leased portfolio in 

2011 ($5.6 billion), the net losses from its leased assets (about $75 

million) in 2011 are comparatively small. Nevertheless, such losses 

require GSA to use funds generated from other revenue sources to offset 

them, which in turn decreases the funds available for investing in GSA’s 

owned assets. 

These exemptions were provided for a 

number of reasons, including lack of funds from the tenant agencies, 

agreements resulting from the sale of property from an agency to GSA, 

and security concerns. For example, in 1996, GSA granted an exemption 

to the Woodrow Wilson Center for the organization’s use of approximately 

100,000 square feet of office space in the Ronald Reagan Building and 

International Trade Center in Washington, D.C. through 2026. GSA 

estimates this rent exemption reduced FBF revenue by $5 million in fiscal 

year 2011.

20

 

19Of the 13 exemptions currently in place, 11 were authorized by the GSA Administrator 

and the Office of Management and Budget, and the remaining 2 were authorized by 

Congress.

20 According to GSA officials, the $75 million loss from GSA’s leased assets in fiscal year 

2011 was absorbed by both the FBF and funds from the American Reinvestment and 

Recovery Act of 2009 (Recovery Act). Specifically, the FBF absorbed $35 million in losses 

from GSA’s leased assets. The remaining loss of $40 million, resulting from the need to 

acquire temporary leased space during Recovery Act improvements, was absorbed by 

Recovery Act funds in accordance with GSA pricing policy.

Reliance on Leasing 
 

Page 13 GAO-12-646 Federal Buildings Fund

Figure 2: GSA-leased Asset Income, Fiscal Years 2006-2011

GSA officials noted that leasing losses have primarily resulted from 

several factors, including reductions in its administrative fee, accounting 

adjustments, billing and payment errors, lease buyouts and formulation 

costs, and vacant space.21

• According to GSA officials, the agency reduced the administrative fee 

that it charges to agencies for managing leases from the private 

sector from 8 percent to 7 percent for many leases in 2008, resulting 

in an estimated annual $50 million (1 percent) reduction in revenue.

According to GSA officials, because the leasing portfolio was 

producing a modest surplus in 2007, GSA lowered its administrative 

fee to reduce the cost of leasing for its tenant agencies. These 

officials noted that, in 2011, for instances where a lease lost less than 

$100,000, many of these losses are attributable to overhead 

expenses that exceed revenue from administrative fees. GSA officials 

Specifically:

 

21 We did not evaluate the extent to which these or other factors have contributed to 

losses in GSA’s leased portfolio, and have planned future work to explore these topics. 
 

Page 14 GAO-12-646 Federal Buildings Fund

explained they are currently reevaluating whether its administrative 

fee is sufficient to cover the cost of the leasing program.

• According to GSA officials, their use of accrual-based accounting—

where revenues are recorded when earned and expenses are 

recorded when incurred, irrespective of whether any cash has flowed 

in or out during the accounting period—results in adjustments that 

essentially level the lease payment stream throughout the life of a 

lease. This adjustment can result in expenses being recorded in a 

single accounting period that are greater or less than the actual lease 

payment during that period. GSA estimates that, after eliminating the 

impact of accounting adjustments and transactions related to the 

Recovery Act, the agency lost approximately $18.5 million in the 

leased portfolio during fiscal year 2011.

• Billing and other administrative errors have also contributed to losses 

in its leased portfolio, according to GSA officials. For example, GSA 

officials noted that the agency may begin to pay a lessor for space 

before GSA has finalized the occupancy agreement with the tenant 

agency and entered it into GSA’s financial management system.

While GSA officials acknowledged that these funds can be recouped 

from the tenant agencies after the occupancy agreement is finalized, 

they estimated that these actions reduced funds from operations from 

the leased portfolio by nearly $17 million in 2011.

• GSA officials also noted that lease formulation costs, lease buyouts, 

and vacant space within its leased portfolio result in costs and lost 

income that have contributed to losses. GSA officials explained that 

when tenant agencies move out of leased space, GSA attempts to 

place another tenant agency in that same space. However, between 

the occupancy periods of the two tenants, GSA is responsible for 

paying the cost of the space, unless GSA terminates the lease and 

pays a buyout to the private sector lessor. GSA officials noted that 

while the cost of a lease buyout may contribute to losses in the year of 

the buyout, over the long-term, pursuing a lease buyout may reduce 

the amount of vacant space in its portfolio. GSA officials noted that, as 

of the end of fiscal year 2011, 2.3 percent of the space in the leased 

portfolio was vacant.

Even with these losses in its leased portfolio, GSA continues to rely 

extensively on leasing to meet its tenants’ increasing demand for office 

space. In 2008, the amount of rentable space leased by GSA exceeded 

the amount of its owned space for the first time. (See fig. 3.) GSA officials 
 

Page 15 GAO-12-646 Federal Buildings Fund

noted that, as a result of the funding constraints in recent years discussed 

earlier in this report, the agency has primarily used leasing to meet new 

office space requirements of its tenant agencies. Nevertheless, our 

previous work has shown that leasing often costs more than federal 

building ownership, particularly if operating leases are used to meet longterm space needs.22

Figure 3: Change in Owned and Leased Rentable Square Feet, 2006-2011

 

GSA is taking steps to manage its financial resources more effectively by 

reducing the size of its overall real estate portfolio, both in terms of the 

number of assets and the amount of square feet it manages. In a June 

2010 memorandum, the administration directed GSA, along with other 

agencies, to accelerate efforts to identify and eliminate excess properties 

and to make better use of remaining real property assets. As part of these 

efforts, GSA is reducing its owned assets through the sale of excess and 

 

22 GAO, Federal Real Property: Overreliance on Leasing Contributed to High-Risk 

Designation, GAO-11-879T (Washington D.C.: Aug. 4, 2011.)
 

Page 16 GAO-12-646 Federal Buildings Fund

underutilized property and consolidation actions. For example, according 

to GSA, in 2011, it disposed of 52 assets, resulting in a reduction of 3.3 

million rentable square feet of space. In addition, GSA is encouraging its 

tenant agencies to use alternative working arrangements, such as 

teleworking and hoteling (where personnel use unassigned seating when 

they are in the office) to reduce space needs. Further, GSA officials noted 

that budget constraints across the executive branch have forced its tenant 

agencies to reexamine their space needs and that GSA expects demand 

will continue to shrink.

GSA measures its investment needs for maintaining and improving the 

condition of its owned facilities through its maintenance and repair 

liability, which identifies the estimated aggregated cost of future 

maintenance and repairs across its portfolio.23 At the end of fiscal year 

2011, GSA identified a $4.6 billion liability for the next 10 years.24

 

23 GSA assesses the basic structure and systems of each asset on a biannual basis to 

estimate the cost of needed maintenance and repairs which contribute to the overall 

maintenance liability.

Of this 

total, $1.3 billion is for immediate maintenance and repair needs, and 

24 Within its 10-year maintenance and repair estimate GSA categorizes maintenance and 

repair cost into subcategories that reflect repairs needed immediately (1 year), within 1-2 

years, within 3-5 years, and more than 5 years from now.

GSA Has Identified 

Billions in Repair 

Liability, but 

Decreased Funding 

May Increase Future 

Resource Demand 

from the FBF

Condition of GSA’s Assets
 

Page 17 GAO-12-646 Federal Buildings Fund

$3.3 billion is for maintenance and repairs that will be needed in future 

years.25

The estimated cost of maintenance and repairs to GSA’s owned assets 

varies across the portfolio. GSA’s data show that 40 percent of its assets 

have maintenance and repair liabilities of $500,000 or less and about 22 

percent have a liability exceeding $2 million. (See table 2.) GSA’s data 

also indicate that approximately 23 percent of the assets in the portfolio 

have no recorded maintenance and repair liability. GSA officials explained 

that a facility having no maintenance and repair liability may mean that (1) 

there is no maintenance liability for that asset, (2) a condition assessment 

has not been conducted, or (3) its maintenance liability was recorded as 

part of the maintenance liability for a larger facility.

Table 2: Maintenance and Repair Liability of GSA’s Owned Assets, Fiscal Year 2011

Liability of maintenance and repair

(over the next 10 years)

Number of

assets

Percent of owned 

portfolio

Median gross 

square feet a

$1 to $500,000 681 39.5% 7,169

$500,001 to $1,000,000 133 7.7% 52,254

$1,000,001 to $2,000,000 147 8.5% 64,421

$2,000,001 to $5,000,000 184 10.7% 134,846

$5,000,001 to $10,000,000 85 4.9% 233,987

$10,000,001 to $20,000,000 45 2.6% 414,691

$20,000,001 or more 58 3.4% 781,429

Source: GAO analysis of GSA information. 

a

This analysis does not include the 392 assets (or approximately 23 percent of GSA’s owned assets) 

with a repair and maintenance liability of zero.

GSA’s data also suggest that a facility’s age is related to its maintenance 

and repair liability. According to the fiscal year 2011 data GSA provided, 

its owned assets average 48 years in age, and those over 61 years old 

are responsible for about 40 percent of its total maintenance liability. In 

addition, according to GSA, more than one-fourth of its owned buildings 

 

25 According to GSA officials, the maintenance liability has decreased from fiscal year 

2009 by approximately $1 billion due in large part to use of Recovery Act funds. As part of 

the Recovery Act GSA received approximately $5.5 billion dollars to convert federal 

facilities to high-performance green buildings, as well as renovate and construct federal 

buildings, courthouses, and land ports of entry. 
 

Page 18 GAO-12-646 Federal Buildings Fund

are listed in or eligible for the National Register of Historic Places, the 

nation’s listing of historic properties. According to GSA officials, these 

historic buildings require comparatively more maintenance and repair 

work. GSA officials also noted that they hold assets longer than assets 

maintained in the private sector in part because of GSA’s stewardship 

responsibility to preserve historic buildings.

As previously discussed, GSA’s overall obligational authority has trended 

downward in recent years, and much of this reduction has been absorbed 

by the repairs and alterations and new construction accounts within the 

FBF, meaning that GSA has reduced its spending on repairs and 

alterations and construction work. Specifically, GSA’s obligational 

authority for repairs and alteration projects, decreased from $855 million 

in 2005 to $280 million in 2012.26

 

26 Obligational authority includes adjustments due to reprogrammings and rescissions.

Obligational authority for construction,

decreased from $760 million in 2005 to $50 million in 2012. (See fig. 4.)

Funding for Repair and 

Alteration Projects
 

Page 19 GAO-12-646 Federal Buildings Fund

Figure 4: Repairs and Alterations and New Construction Obligational Authority, 

Fiscal Years 2005-2012

Note: This figure does not include funding provided to the FBF in 2009 as part of the Recovery Act.

GSA received approximately $5.5 billion through the Act for green-building initiatives as well as to 

renovate and construct federal buildings, courthouses, and land ports of entry. According to GSA 

officials, these funds reduced the agency’s maintenance liability since 2009 by approximately $1 

billion.

GSA officials and OMB staff suggested that absent sufficient funding, the 

cost of operating GSA facilities could increase and the condition of GSA’s 

portfolio could decline. These officials noted that repairs identified now 

have the potential to be more expensive if they are delayed, thereby 

increasing the amount of funding needed from the FBF, possibly resulting 

in an array of undesirable outcomes. For example, delayed repairs can 

increase the frequency of unplanned interruptions and downtime of facility 

systems and components, and can decrease the useful life of real 

property. GSA officials noted some instances in which funding restrictions 

delayed repair and maintenance activities, increasing the cost to operate 

its existing assets. For example, they explained that GSA’s Heating 

Operation and Transmission District system, which provides steam and 

chilled water for heating and cooling operations at approximately 80 

facilities in Washington, D.C., requires substantial repair work. The delay 
 

Page 20 GAO-12-646 Federal Buildings Fund

in modernizing key components of the system has increased the risk of 

service failure during the winter months. In order to ensure the reliability 

of the system, GSA has required additional staff hours from its 

maintenance and engineering personnel to maintain the system, 

increasing the overall plant operating costs and resulting in higher steam 

charges to GSA’s customer agencies. Delayed repairs could also affect 

the funding generated for the FBF. Specifically, if an asset’s appraisal 

decreases due to its deteriorated condition, the rent charged to the tenant 

agency could also decrease, resulting in less revenue for the FBF.

The concerns of GSA officials and OMB staff are consistent with those of 

the National Research Council of the National Academies which has 

stated that public sector organizations facing limited resources often first 

defer or cut facilities investments, particularly investments in maintenance 

and repairs. The National Research Council estimates that each $1 in 

deferred maintenance results in a long-term capital liability of $4 to $5, 

and that “an accumulation of deferred investments over the long term 

may be significantly greater than the short-term savings that public-sector 

decision makers were initially seeking.”27

Making informed capital investment decisions requires full information 

about an agency’s current and long-term needs, alternative courses of 

action, and how potential projects compare amongst each other. We 

identified leading practices for using information to make capital 

investment decisions primarily from GAO’s Executive Guide and OMB’s 

Capital Programming Guide. We also drew from leading capital 

investment practices identified by the National Research Council.28

 

27 National Research Council of the National Academies, Investments in Federal 

Facilities: Asset Management Strategies for the 21st Century (Washington, D.C.: 2004). 

We 

assessed GSA’s performance in using information to make capital 

investment decisions against the criteria established in these guides. 

(See table 3.)

28 National Research Council of the National Academies, Predicting Outcomes from 

Investments in Maintenance and Repair for Federal Facilities (Washington, D.C.: 2011).

GSA Could Better 

Conform Some of Its 

Capital Planning to 

Leading Practices
 

Page 21 GAO-12-646 Federal Buildings Fund

Table 3: Leading Capital Planning Practices for Using Information to Make Capital Investment Decisions

GSA’s practices for using information to evaluate capital investment 

proposals substantially conforms to leading practices in the area of needs 

assessment and alternatives evaluation. GSA’s project prioritization 

process partially conforms to leading capital planning practices. GSA’s 

long-term capital plan minimally conforms to leading capital planning 

practices. (See table 4.)
 

Page 22 GAO-12-646 Federal Buildings Fund

Table 4: GAO’s Assessment of GSA’s Conformance to Leading Practices for Using 

Information to Make Capital Investment Decisions

Note: For each capital investment planning criterion assessed, a rating of fully conforming met over 

90 percent of criteria, a rating of substantially conforming met about 75 percent of criteria, a rating of 

partially conforming met about 50 percent of criteria, a rating of minimally conforming met about 25 

percent of criteria, and a rating of does not conform met less than 10 percent of criteria.

GSA’s process for assessing its assets’ condition and needs substantially 

meets leading practices. Leading practices suggest that to establish a 

baseline of condition and needs, organizations should maintain systems 

that track the use and performance of existing assets. GSA uses many 

documents, tools, and databases to track a baseline of information on its 

assets’ condition and needs. For its part, GSA primarily conducts two 

types of assessments to gather information on the condition of its 

buildings: physical condition surveys (PCSs) and web-based building 

evaluation reports (BERs).

• Physical Condition Surveys. The PCS is a walk-through assessment 

that determines the relative condition of building and infrastructure 

systems. GSA gathers information on its individual assets through 

PCSs to obtain a general assessment of the condition of all active or 

excess buildings in its portfolio.29 PCSs, typically conducted by GSA’s 

building management personnel and asset business teams,30

 

29 GSA conducts PCSs for property that meets the following criteria: (1) GSA has repairs 

and alterations responsibility, (2) the asset maintains a status of “active” or “excess”, and 

(3) the asset has a real property type of “building” or “structure”. 

30 Asset business teams, which include representatives from the major GSA disciplines, 

play a key role in an asset’s capital development process by assisting with the scope of 

work and execution of the project.

Needs Assessment
 

Page 23 GAO-12-646 Federal Buildings Fund

document the long-term needs of a building’s basic structure and 

systems and represent the inventory of items in need of repair or 

replacement. The results from the PCS survey are entered into GSA’s 

PCS database to provide a total dollar value of needs that can be 

used to forecast the building’s reinvestment requirements and 

determine asset strategy.

• Building Evaluation Reports. The BER functions as a source 

document for the development of a comprehensive reinvestment 

strategy to meet a building’s short-term (up to 5 years) and long-term 

(up to 20 years) needs. GSA uses web-based BERs to provide a 

more detailed assessment of those buildings targeted for major 

repairs. BERs are typically performed by contracted architectural and 

engineering firms. A BER is not required for each asset but is required 

for all prospectus-level projects.

GSA has other key documents that help track a range of individual asset 

information including not only the condition and needs of a building, but 

also the financial performance of and specific work items planned for 

individual buildings within its owned portfolio or information on its entire 

real property portfolio.

• Asset Business Plans. Asset Business Plans (ABPs) help GSA make 

asset-specific project decisions with respect to each asset’s overall 

needs and GSA’s long-term plans for the asset. ABPs house key 

information such as an asset’s revenues, vacancy rates, cost of 

needed repairs, and planned work items. For example, the ABP for 

the State Department’s headquarters at the Truman Building in 

Washington, D.C. estimates revenues for fiscal year 2011 of $45 

million, a vacancy rate of 5.8 percent, and that planned repairs and 

alterations in 2013 will cost about $61.3 million.

• State of the Portfolio report. At a macro level, GSA’s annual State of 

the Portfolio report tracks trends affecting the portfolio including 

revenue generation, vacancy rates, inventory changes such as new 

construction and disposals, and the cost of major repairs and 

alterations.

GSA uses multiple databases to track key asset information including a 

building’s condition, revenue generation, and repair needs to inform 

capital investment decisions. These databases are the enhanced 

Physical Condition Survey (ePCS) system, the Real Estate across the 

United States (REXUS), the Inventory Reporting Information System 

(IRIS), and Pegasys—GSA’s financial management information system.
 

Page 24 GAO-12-646 Federal Buildings Fund

• Enhanced Physical Condition Survey. GSA’s ePCS database

maintains data on building needs and deficiencies collected by the 

walk-through assessment. A key metric from the ePCS database is 

the maintenance and repair liability that tracks estimates of GSA’s 

needs in four categories, those that are needed immediately, in 1-2 

years, 3-5 years, and more than 5 years.

• Real Estate across the United States. GSA tracks general inventory 

information such as building type, square footage, and location 

through its REXUS database. GSA transitioned from its old inventory 

system to REXUS in July 2011 to incorporate more tools to check the 

data and provide more accurate information.

• Inventory Reporting Information System. IRIS is a web-enabled 

application that supports GSA in developing, planning, and 

authorizing work for its buildings. IRIS is used to plan and schedule all 

repairs and alterations projects for its buildings and track execution of 

construction projects. Through its direct link to the ABP, projects in 

IRIS are vetted and prioritized by the asset business teams.

• Pegasys. GSA’s financial management information system, Pegasys, 

tracks information such as revenue generation and operating costs for 

each building in GSA’s owned portfolio.

GSA also tracks customer satisfaction with its building services through 

an annual survey, a leading needs assessment practice, which allows 

GSA to use customer feedback to improve its property management 

processes to provide a base level of information about what conditions 

might need priority attention. GSA has tracked the satisfaction of its 

tenants since 1993. It does so for both its owned and leased portfolios at 

the national level and for each of its 11 regions. Since fiscal year 2008, 

satisfaction rates at the national level for its owned and leased portfolios 

have ranged from 74 percent to 84 percent.31

While GSA’s needs assessment efforts substantially meet leading 

practices, GSA’s portrayal of facilities with no recorded maintenance and 

repair liability could be misleading. In particular, 392 assets—about onefourth of total assets—are listed as having a maintenance and repair 

liability of zero, but this may not accurately reflect the condition of each 

asset. As discussed earlier, having no recorded maintenance and repair 

liability may indicate that there are no maintenance needs for that asset; 

 

31 A satisfied tenant is one that gave a 4 or 5 on a 5-point satisfaction scale.
 

Page 25 GAO-12-646 Federal Buildings Fund

however, it may also indicate that a physical condition assessment was 

not conducted or that its maintenance needs are recorded under a larger 

facility. In addition, in our report on excess and underutilized property, we 

found that GSA gave higher condition ratings to some properties in very 

poor condition than properties elsewhere in their portfolio in good 

condition.32

In addition, our review of documentation and data for GSA’s four highest 

cost repair and alteration projects in fiscal year 2012 found that the ABPs 

for three of the four projects had data from a condition survey conducted 

within the last 2 years.33 Only the State Department Headquarters 

(Truman Building) renovation project did not have an ABP with data from 

a condition survey completed within the last 2 years. We also conducted 

spot checks of 11 real property data fields supplied by the ePCS, REXUS, 

and Pegasys databases for the ABPs of these four projects and found 

that the data generally seemed to match.

GSA’s process for evaluating capital investment alternatives substantially 

conforms to leading practices. As outlined in its Project Planning Guide, 

GSA is supposed to evaluate a range of project alternatives during 

feasibility and program development study phases. Information from 

these studies helps decision makers evaluate project alternatives.

Alternatives typically include a repair and alteration project, a leasing 

option, and a new construction option to meet an agency’s space needs.

GSA’s feasibility study considers alternatives and sets a course of action 

for the project. GSA’s program development study refines the project 

created in the feasibility study phase, further considers alternatives, and 

 

32 GAO, Federal Real Property: National Strategy and Better Data Needed to Improve 

Management of Excess and Underutilized Property, GAO-12-645 (Washington D.C.: June 

20, 2012.) 

33 To assess whether key GSA documents associated with project development showed 

alignment of GSA practices to leading needs assessment and alternative evaluation 

practices, we reviewed documentation from the four highest cost repairs and alterations 

projects of GSA’s fiscal year 2012 budget submission. We examined the physical 

condition surveys, asset business plans, and feasibility studies, among other 

documentation, associated with each project to the extent that they were available. The 

four repairs and alterations projects that we examined were for the Burton Federal 

Building in San Francisco, the Prince Jonah Kuhio Kalanianaole Federal Building in 

Honolulu, and the Department of State (Truman Building) and Interior headquarters 

buildings in Washington, D.C. Our findings are not generalizable across GSA’s real 

property portfolio.

Alternatives Evaluation
 

Page 26 GAO-12-646 Federal Buildings Fund

develops a sound foundation to pursue construction funding. During both 

the feasibility study and program development study phases, GSA 

conducts a financial analysis through its Automated Prospectus System 

(TAPS) that examines net present value.

Our review of GSA’s documentation for the four highest cost repair and 

alteration projects from GSA’s fiscal year 2012 budget submission found 

that GSA generally conducted alternative analyses as leading practices 

suggest prior to initiating a project.34 For example, in evaluating 

alternatives for the Prince Jonah Kuhio Kalanianaole Federal Building and 

Courthouse in Honolulu, we found that GSA considered four alternatives 

including a repairs and alterations alternative, two new construction 

options, and a lease option. For the Burton Federal Building in San 

Francisco, GSA officials explained that after initially considering leasing, 

new construction, and renovation alternatives through its TAPS analysis, 

they determined that renovation of existing federal space was the clear 

best alternative and that a typical feasibility study that fully explored these 

alternatives was not necessary.35

Leading practices for alternatives evaluation also suggest that an agency 

consider project risk, level of control, and time horizons to ensure that 

projects are on time and within budget and that the agency considers the 

length of time it will need space. According to GSA planning 

documentation and senior officials, GSA considers these factors. GSA 

must evaluate project risk to determine the impact of not receiving 

requested funding and whether it can complete projects on time and 

within projected costs. Considering level of control is important to help 

GSA’s use of existing federal space to 

meet federal space needs is a leading practice. GSA officials explained 

that GSA did not consider alternatives to the renovations of the Truman 

and Main Interior Buildings in Washington D.C. because these projects 

are ongoing modernizations of historic buildings that began decades ago 

requiring upgrades to meet fire and life safety or historic preservation 

requirements, and there are no feasible alternatives. In addition, 

according to GSA officials, Truman and Main Interior Building repairs and 

alterations projects began prior to development of GSA’s 2004 Project 

Planning Guide.

 

34 Our project review is not generalizable across GSA’s entire real property portfolio.

35 GSA did conduct a realignment and expansion study of the proposed move of the 

Federal Bureau of Investigation into the Burton Federal Building.
 

Page 27 GAO-12-646 Federal Buildings Fund

GSA understand aspects such as the security requirements of a particular 

agency, for example, when assessing its space needs and determining 

whether leasing or ownership would afford the agency a desired level of 

control. Time horizons are an important consideration because GSA must 

know how long an agency will likely need a building when deciding

whether to own or lease space. For long-term, mission-critical functions, 

agencies may wish to have maximum control through ownership provided 

that funding is available; for the short term, leasing may be the most costeffective option. Following are examples of GSA’s use of these leading 

practices in evaluating capital investment alternatives:

• Project risk. GSA mitigates risks to completing phased construction or 

repairs and alterations projects from non-availability of funds by 

designing each phase to stand alone. For example, GSA designed the 

renovation of its Washington, D.C., headquarters to be completed in 

independent phases. When a later phase of the project did not receive 

funding, GSA was still able to use all of the partially renovated 

building.

• Level of control. A key consideration in GSA’s selection of the St. 

Elizabeth’s campus for the consolidation of the Department of 

Homeland Security’s (DHS) headquarters in Washington, D.C., was 

the level of control that the site affords the agency. In particular, the 

site allows for the use of certain security features that will help DHS 

improve its security posture. For example, the St. Elizabeth’s site 

provides some natural buffer zones based on its terrain, whereas 

costly alteration of buildings for security purposes would be required if 

DHS were to remain in locations downtown.

• Time horizon. As we have previously reported, shifting demographics 

are a key consideration in GSA’s choice of space to meet the Social 

Security Administration’s (SSA) needs. Because SSA needs to be in 

facilities that are close to its customers, it requires the flexibility to 

relocate as population centers move and may not have a long-term 

need for some of its facilities. As a result, GSA often relies on leasing 

rather than ownership to give SSA the ability to relocate its smaller 

field offices closer to its customers, as necessary.36

GSA’s process for prioritizing capital investment projects partially meets 

leading practices, but its transparency can be improved. Leading capital 

 

36 GAO, Federal Real Property: Strategy Needed to Address Agencies’ Long-standing

Reliance on Costly Leasing, GAO-08-197 (Washington, D.C., January 2008). 

Project Prioritization
 

Page 28 GAO-12-646 Federal Buildings Fund

planning practices suggest that an agency’s project prioritization process 

(1) have weighted criteria for ranking and selecting projects, (2) have core 

information to help decision makers evaluate a project, (3) consider all 

capital projects as a portfolio, (4) prioritize projects using an 

organization’s goals as a criterion, (5) prioritize projects using a full set of 

economic factors as criteria, (6) prioritize projects using project risk as a 

criterion, (7) consider an organization’s long-term capital plan when 

prioritizing projects, and (8) be transparent about how project rankings 

were determined.

GSA’s project prioritization process meets some elements of leading 

practices including using criteria for ranking and selecting projects, having 

core information to help decision makers, considering organizational 

goals as a prioritization criterion, and considering economic factors as 

prioritization criteria.

• Established criteria. GSA has established criteria to rank and prioritize 

major proposed capital investments. According to GSA, these criteria 

include customer urgency and mission dependency, urgency based 

on physical condition, economic justification, asset utilization, project 

timing and execution, historical significance, alignment with mandated 

building performance criteria, and improvement of energy efficiency 

and sustainability.

• Core information for decision makers. We found that in the four 

projects we examined, documentation generally included a core set of 

information for decision makers. For example, GSA’s repairs and 

alterations project for the Prince Jonah Kuhio Kalanianaole Federal 

Building and Courthouse in Honolulu included a physical condition 

survey, prospectus, building evaluation report, feasibility study, 

program development study, asset business plan, and TAPS analysis 

for use by GSA decision makers when considering this project in 

relation to others. GSA completed most core documents for the other 

three projects we examined, but GSA did not complete building 

evaluation reports and TAPS analyses for the Truman and Interior 

buildings because these were multi-phased, multiyear projects begun 

decades ago that did not have feasible alternatives other than 

continued modernization.

• Organizational goals. GSA considers links to an organization’s goals 

when prioritizing projects. For example, according to GSA senior 

officials, GSA considers customer need and mission dependency as 

top criteria for prioritizing projects.

• Economic factors. GSA considers a full set of economic factors as 

part of its economic considerations. For example, GSA considers 
 

Page 29 GAO-12-646 Federal Buildings Fund

projects’ net present value37

However, GSA’s project prioritization process does not fully incorporate 

other elements of leading practices such as promoting transparency in 

ranking projects, evaluating projects as a single portfolio, considering a 

long-term capital plan when ranking projects, and considering risk.

in its analyses to help make decisions 

about which projects are least costly over the long term. GSA also 

considers project affordability to determine whether a project is likely 

to be funded given budget constraints. 

• Promotion of Transparency. We found GSA’s project prioritization 

process lacked transparency in that we were unable to determine how 

GSA used its criteria to prioritize major projects amongst each other, 

how or whether criteria are weighted in any way, and why certain 

projects are ultimately selected over others. In particular, we asked 

GSA officials for the rationale used in developing annual budget 

requests since 2008 and its fiscal year 2011 5-year prioritized project 

list. In response, these officials said they used their project 

prioritization criteria to develop these lists; however, they did not 

provide documentation of how the criteria were applied.

• Evaluation of projects as a portfolio. We found that GSA does not 

consider all projects as part of a single portfolio as leading practices 

suggest. In addition to its own project list, GSA provides separate lists 

for courthouse (Judiciary) and land port of entry (Department of 

Homeland Security) new construction projects in its annual budget 

requests. Because these projects are listed separately, it is difficult to 

ensure that the most deserving projects meeting the established 

criteria are selected for funding. GSA explained that these projects 

are listed separately because both agencies prepare and submit their 

own plans to OMB and Congress.

• Consideration of long-term capital plan priorities. GSA’s long-term 

capital plan, discussed further in the next section of this report, does 

not meet most leading practices so it is difficult for GSA to fully 

consider long-term priorities. A comprehensive long-term capital plan 

 

37 When comparing two or more competing projects, analyzing the net present value of 

each is important for determining the more valuable project choice. This is done by using 

a rate—known as a discount rate—to convert the value of benefits and costs that will 

occur in future years to a value today, taking into account that the further into the future a 

cost is incurred or a benefit is received, the smaller that value is today. Applying a 

discount rate establishes a consistent basis for comparing alternative investments that 

have differing patterns of costs and benefits over many years. 
 

Page 30 GAO-12-646 Federal Buildings Fund

would include, for example, alternatives to meeting project goals given 

budget projections and constraints to aid in annual project 

prioritization.

• Consideration of risk. GSA’s project prioritization criteria lack explicit 

consideration of risk. A senior GSA official told us that risk is 

considered throughout the project development process, if not the 

prioritization process, but we found that GSA does not document how 

risk is considered, if at all, during prioritization. Without having risk as 

an explicit criterion in its prioritization criteria, GSA cannot ensure that 

projects that are inherently risky are ranked to reflect this.

According to GSA officials, the agency is currently working with its 

regional offices to refine weighted project prioritization criteria for use in 

new software that would allow them to more systematically prioritize 

projects in the future. GSA expects to have this software available for use 

this summer during the development of the fiscal year 2014 budget, which 

will in turn better position GSA to fully meet leading practices for project 

prioritization.

GSA’s long-term capital plan minimally conforms to leading practices, 

which could limit GSA’s ability to make fully informed choices about longterm investment decisions. Both GAO and OMB guidance emphasize the 

importance of developing a long-term capital investment plan to guide the 

implementation of organizational goals and objectives and to help 

decision makers establish priorities over time. GAO guidance explains 

that requiring agencies to develop capital plans encourages them to think 

about the long term and reduces the number of surprise projects. It also 

encourages agencies to weigh and balance the need to maintain existing 

capital assets against the demand for new assets. According to GAO’s 

Executive Guide, the long-term capital plan, covering 5 years or more and 

completed annually or biennially, should identify the proper mix of existing 

assets and new investments needed to fulfill an organization’s mission, 

goals, and objectives, and should reflect decision makers’ priorities for the 

future. In particular, according to OMB, elements of a capital plan should 

include:

• a linkage of projects to agency missions, goals, and objectives;

• a baseline needs assessment and agency objectives that cannot be 

met with existing assets;

• a ranking of approved capital projects;

• an explanation of why projects selected are the best alternative;

• alternatives to meeting project goals;

Long-term Capital Plan
 

Page 31 GAO-12-646 Federal Buildings Fund

• budget projections and financial forecasts and their implications;

• a summary of a risk management plan; and

• a discussion of timing issues, if part of a multiagency acquisition.

We found that GSA has developed limited information similar to what 

might be found in a comprehensive long-term capital plan. For example, 

GSA has developed a 5-year prioritized list of projects that it included with 

its fiscal year 2011 budget submission. However, this 5-year list is only 

one of several elements that leading practices suggest a comprehensive 

long-term capital plan include. It is not apparent, for example, how GSA 

used its criteria to prioritize projects, why some projects are ranked higher 

than others, and how higher-priority projects better contribute to meeting 

agency goals. GSA’s 5-year plan also does not lay out GSA’s baseline of 

needs and where there might be gaps in what GSA’s real property 

portfolio provides. In addition, the 5-year plan does not consider 

alternative courses of action, the implications of varying budget levels and 

revenue forecasts, or include a risk management summary that includes 

an analysis of alternative ways of meeting program objectives should 

disruptions occur. As a result, GSA lacks a comprehensive analysis of 

options over a 5-year period given funding variability and how long-term 

investment decisions affect them. This situation is similar to what we 

found 12 years ago when we cited GSA’s lack of a comprehensive plan 

that (1) identified the total repair and alteration needs and corresponding 

funding requirements, (2) established the benefits and priorities of all 

competing projects, and (3) proposed a strategy and the funding needed 

to repair or modernize its most seriously deteriorated buildings. 38

In discussing challenges related to long-term capital planning, senior GSA 

officials and OMB staff explained that determining future requirements 

can be difficult because GSA’s customers may not know their needs, and 

therefore cannot articulate requirements to GSA. In addition, GSA officials 

said that fluctuating levels of annual obligational authority creates 

uncertainty that affects their ability to implement long-term plans, 

requiring adjustments to both the long-term plan and annual budget 

requests. While GSA does face uncertainty regarding the needs of its 

customers and its annual level of obligational authority, leading long-term 

capital planning practices suggest that there is still value to establishing 

 

38 GAO, Federal Buildings: Billions are Needed for Repairs and Alterations, 

GAO/GGD-00-98 (Washington, D.C.: Mar. 30, 2000).
 

Page 32 GAO-12-646 Federal Buildings Fund

organizational priorities over time and considering alternatives to meeting 

organizational goals given funding constraints and uncertainties about 

agency needs. By thinking strategically long term rather than simply from 

year to year, GSA would better ensure that it makes fully informed 

choices about long-term investment needs and maximizes its use of 

available funding over time. GSA could better address budget uncertainty 

by analyzing what projects to pursue given various levels of funding in its 

long-term capital plan.

Since its inception, the FBF has been challenged to provide sufficient 

revenue to support GSA’s real property portfolio. In recent years, 

budgeting and appropriations decisions made by the executive branch 

and Congress, respectively, have limited the amount of resources made 

available to GSA to fund its real property operations. The FBF is further 

constrained by other factors including the declining value of revenue, 

growing operating costs, and an increased reliance on leasing, among 

other things. These conditions make it increasingly difficult for GSA to 

maintain its real property portfolio in an acceptable state of repair. As 

GSA works to address the maintenance and repair needs of its assets 

and improve the overall condition of its portfolio, it is important that the 

agency base its actions on a well-conceived investment strategy. GSA 

follows many leading practices to gather and evaluate information from its 

assets to inform its investment decisions, but it is not clear how it 

prioritizes and selects projects for funding consideration. In addition, the 

agency’s lack of a comprehensive long-term capital plan could limit its 

ability to provide perspective on how funding for requested projects aligns 

with its long-term investment strategy. Having such a plan would enable 

GSA and Congress to better evaluate the full range of real property 

priorities for using funds in the FBF both over the next 5 years and 

annually and, should fiscal constraints so dictate, identify which might 

take precedence over others. In short, more transparency would allow for 

more informed decision making among competing priorities. Without more 

insight into how GSA prioritizes repair and replacement of its assets, GSA 

cannot ensure that decision makers within the executive branch and 

Congress understand why the projects proposed by GSA merit selection 

when measured against competing priorities, both within and outside of 

GSA’s portfolio.

Conclusions 
 

Page 33 GAO-12-646 Federal Buildings Fund

To enhance transparency, allow for more informed decision making 

related to GSA’s real property priorities, and make a stronger case for 

using funds in the FBF to meet capital investment needs, we recommend 

that the Administrator of GSA take the following two actions:

• Document in its annual budget request to OMB how GSA uses its 

prioritization criteria to generate its annual and 5-year lists of 

prioritized projects to ensure that Congress understands the rationale 

behind prioritized project lists and that GSA is maximizing return on 

FBF investments.

• Develop and publish a comprehensive 5-year capital plan and include 

a summary of it annually in its budget request to OMB and Congress 

to help ensure that long-term goals are fully considered when making 

decisions and to document how GSA would spend needed FBF funds.

We provided a draft of this report to GSA and OMB for review and 

comment. GSA’s comments are reproduced in appendix II.

GSA agreed with our findings and recommendations. GSA commented 

that it is taking steps to refine weighted prioritization criteria for use in a 

decision-making software tool that will help the agency to more 

systematically and transparently prioritize projects. GSA expects to use 

this software tool in development of its fiscal year 2014 budget request.

With respect to our second recommendation, GSA indicated that it will 

work with stakeholders, OMB, and Congress in developing and providing 

a 5-year capital plan to include in its budget request. GSA and OMB also 

provided technical suggestions and clarifications, which have been 

incorporated in the report as appropriate.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 21 days from the 

report date. At that time, we will send copies of this report to 

congressional committees with responsibilities for federal real property 

issues, the Director of OMB, and the Administrator of GSA. In addition, 

this report will be available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or wised@gao.gov. Contact points for our Offices 

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

Recommendations for 

Executive Action

Agency Comments
 

Page 34 GAO-12-646 Federal Buildings Fund

page of this report. GAO staff who made key contributions to this report 

are listed in appendix III.

Sincerely yours,

David J. Wise

Director, Physical Infrastructure Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-12-646 Federal Buildings Fund

This report focuses on (1) the factors that have affected the resources 

available in the Federal Buildings Fund (FBF); (2) the General Services 

Administration’s (GSA) potential maintenance and repair liability for its 

owned assets and the implications for the fund; and (3) the information 

GSA considers when evaluating capital investment proposals and how its 

practices compare to leading practices for making capital investment 

decisions. 

To determine what factors have affected the resources available in the 

FBF, we analyzed legislation, including the Public Buildings Act 

Amendments of 1972 and congressional appropriations acts to 

understand congressional direction and priorities for the FBF. We 

reviewed GAO, Congressional Research Service (CRS), and GSA Office 

of Inspector General reports on historical issues affecting the ability of the 

fund to generate revenue. We also analyzed GSA information on rent 

restrictions and exemptions granted to its tenant agencies to understand 

how these agreements have affected the resources in the FBF. In 

addition, we reviewed GSA’s congressional budget requests to obtain 

information on the amounts of obligational authority requested by GSA 

compared to the amounts provided by Congress and the amount 

available in the fund from fiscal year 2006 through fiscal year 2012.

To understand how the financial performance of GSA’s portfolio has 

changed over time, we analyzed data on GSA’s approximately 10,000 

assets from 2006 through 2011 from the agency’s real property and 

financial management database systems. Specifically, we analyzed data 

on each of GSA’s assets from GSA’s Real Estate across the United 

States (REXUS) system as well as its System for Tracking and 

Administering Real Property to describe how the number of assets, the 

average age of the assets, and the amount of owned and leased space 

managed by GSA has changed. We also analyzed information from 

Pegasys, GSA’s financial management system. In particular, we obtained 

and analyzed information on the revenues, costs and various metrics, 

including funds from operations, used by GSA to describe the financial 

condition for each asset to provide a summary description of GSA’s 

financial performance.

We also analyzed financial data from the FBF using indices to account for 

inflation. To understand how the value of the revenue generated and cost 

incurred by the FBF had changed since 2006, we used a chain-weighted 

Gross Domestic Product index based on data from the averages of 

quarterly indexes from U.S. Department of Commerce Bureau of 

Appendix I: Objectives, Scope, and 

Methodology 

Factors Affecting the FBF
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-12-646 Federal Buildings Fund

Economic Analysis, National Income and Product Accounts, table 1.1.4 

(last revised Jan. 21, 2012). To measure how construction costs had 

changed since 2006, we used the Engineering News-Record’s 

Construction Cost Index to calculate the increase in construction costs 

from October 2005 to September 2011. The index measures how much it 

costs to purchase a mix of construction labor and materials of goods 

compared to what it was in the base year.

As part of our review of GSA’s data, we tested the data for missing 

variables and abnormal trends from 2006 through 2011. We found no 

abnormal patterns or significant number of missing values for the rentable 

square footage, the leased or owned facility, age of building, or real 

property type data elements. We also interviewed GSA system 

administrators, analysts, and managers about their views of the quality of 

the data. We compared the results of our analyses to information 

published in other GSA documents, including GSA’s budget submissions, 

financial statement audits, and GSA’s State of the Portfolio report. While 

we did not independently verify the information for each asset, we believe 

these data are generally reliable for our purposes, which was to describe, 

at a summary level, the overall financial performance of GSA’s assets 

from 2006 through 2011.

To assess the condition of GSA’s owned assets and the implications for 

the FBF, we reviewed literature from the National Research Council, and 

prior CRS and GAO reports to determine the types of obstacles 

previously faced by GSA and discuss the known and possible 

consequences associated with delaying or not performing needed repairs 

and alterations. We reviewed GSA’s State of the Portfolio reports to 

understand how GSA manages and categorizes its assets. We also 

reviewed GSA’s budget requests to compare funding requested by GSA 

for repairs and alterations from fiscal year 2006 to fiscal year 2012 to the 

amount of new obligation authority granted by Congress.

We analyzed data from GSA’s real property and maintenance databases 

to understand what data GSA maintains about the condition of its owned 

assets. Specifically, we analyzed data from REXUS databases to 

describe demographic characteristics of the portfolio. We analyzed data 

from GSA’s enhanced Physical Condition Survey (ePCS), which GSA 

uses to track the results of its biannual condition inspections, to describe 

the total identified maintenance and repair liability of its owned assets 

over the next 10 years.

Condition of GSA’s Owned 

Assets 
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-12-646 Federal Buildings Fund

We excluded assets where GSA reported zero maintenance liability 

because GSA stated that the condition of these assets may have been 

incorporated as part of an assessment of a larger asset. In order to verify 

this information, we matched the address of assets with zero 

maintenance and repair liability with addresses of assets with a reported 

value of maintenance and repair liability greater than zero. We found that, 

of the 392 assets with zero reported maintenance and repair liability, 151 

were located at the same address of an asset with a maintenance and 

repair liability greater than zero.

To assess the overall quality of the data, we interviewed GSA system 

administrators, analysts, and managers about the quality of the data and 

tested the data for missing variables and abnormal trends. During the 

course of our discussions with GSA, we were informed that GSA’s 

approach for calculating metrics to measure has recently undergone a 

variety of changes. Specifically, GSA officials informed us that the 

calculation of functional replacement values had changed in fiscal year 

2011 in order to improve the precision of these values. As a result, 

because the data were not comparable across years, we limited our 

analysis to the maintenance and repair liability of GSA’s assets as of 

September 2011. In addition, we conducted a variety of data tests and 

found no abnormal patterns or significant numbers of missing values in 

the “age of building” or “real property type” data elements for GSA’s 

owned portfolio. However, during discussions with GSA officials about the 

“gross square footage” category, we observed that a number of assets, 

particularly those identified as structures, had values of “1” or similarly 

small numbers. GSA officials told us that the gross square feet for 

structures are measured in units that vary widely. Thus we did not 

aggregate or average the total square footage in a given year. To reduce 

the effect of these outliers, we used the median square feet in our report 

to describe the size of GSA assets. While we did not independently verify 

the information for each asset, we believe these data are generally 

reliable for our purposes, which was to describe, at a summary level, the 

overall condition of GSA’s assets as of the end of September 2011.

We interviewed GSA program managers to gain an understanding of how 

GSA conducts condition assessments and assesses the general 

condition of its owned assets. In addition we held discussions with GSA’s 

portfolio managers who oversee the buildings in the owned portfolio to 

discuss the overall condition of the assets, and understand the 

consequences associated with not completing needed repairs and 

alterations. We also spoke to senior leadership from Office of 

Management and Budget (OMB) to discuss their impressions of the 
Appendix I: Objectives, Scope, and 

Methodology 

Page 38 GAO-12-646 Federal Buildings Fund

condition of GSA’s assets and perspectives on the amount of obligational 

authority available for repairs and alterations within GSA’s portfolio.

To assess how GSA’s use of Information to make capital investment 

decisions conforms with leading practices, we identified leading practices 

for using information to make capital investment decisions from GAO’s 

Executive Guide1 and OMB’s Capital Programming Guide.

2

GAO-07-274

We also drew 

from the National Research Council’s research in this area. We assessed 

whether GSA’s guidance and performance conformed to the criteria 

established in these guides rating their performance in the areas of needs 

assessment, alternatives evaluation, project prioritization, and long-term 

capital planning as fully conforming, substantially conforming, partially 

conforming, minimally conforming, or not conforming. For each capital 

investment planning criterion assessed, a rating of fully conforming met 

over 90 percent of criteria, a rating of substantially conforming met about 

75 percent of criteria, a rating of partially conforming met about 50 

percent of criteria, a rating of minimally conforming met about 25 percent 

of criteria, and a rating of does not conform met less than 10 percent of 

criteria. To conduct these analyses, one GAO analyst made the initial 

assessment which a second analyst reviewed and then provided either 

concurrence or suggested changes. We also reviewed past GAO reports 

including and GAO-11-197 to determine how these reports 

used these criteria to evaluate an agency’s capital planning process.

We conducted document analyses and interviews with GSA Public 

Buildings Service budget, planning, and program officials to assess how 

GSA is doing in each of these capital planning areas. Our document 

analysis included an examination of GSA’s Project Planning Guide and 

FY2013 Program Call to assess how GSA’s process for using information 

to make capital decisions conformed to leading practices. To conduct 

these analyses, one GAO analyst made the initial assessment which a 

second analyst reviewed and then provided either concurrence or 

suggested changes. To assess how GSA identifies its needs, we 

examined information in GSA’s ePCS, REXUS, and financial 

 

1 GAO, Executive Guide: Leading Practices in Capital Decision-Making, GAO/AIMD-99-32

(Washington, D.C.: December 1998).

2 OMB, Capital Programming Guide, Supplement to Office of Management and Budget 

Circular A-11, Part 7: Planning, Budgeting, and Acquisition of Capital Assets (June 2006).

Comparison to Leading 

Capital Practices
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-12-646 Federal Buildings Fund

management information system databases as well as how these data 

were used to update GSA’s Asset Business Plans. To evaluate needs 

assessment data and how GSA evaluates project alternatives, we 

reviewed documentation from the four highest cost repairs and alterations 

projects of GSA’s fiscal year 2012 budget submission to assess the 

justification and analysis for undertaking these projects. We examined the 

physical condition surveys, asset business plans, feasibility studies,

program development studies, prospectuses, and Automated Prospectus 

System (TAPS) analyses, among other documentation, associated with 

each project to the extent that they were available. The four repairs and 

alterations projects that we examined were for the Burton Federal 

Building in San Francisco, the Prince Jonah Kuhio Kalanianaole Federal 

Building and Courthouse in Honolulu, and the Harry S. Truman and Main 

Interior buildings in Washington, D.C. Our findings are not generalizable 

across GSA’s real property portfolio. To assess GSA’s project 

prioritization and long-term capital planning, we interviewed GSA program 

and budget officials and documentation that GSA provided in these areas 

such as its 5-year prioritized project list from fiscal year 2011 to fiscal year 

2015.

We conducted this performance audit from August 2011 to July 2012 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 II: Comments from the U.S. General 

Services Administration

Page 40 GAO-12-646 Federal Buildings Fund

Appendix II: Comments from the U.S. 

General Services Administration 
Appendix II: Comments from the U.S. General 

Services Administration

Page 41 GAO-12-646 Federal Buildings Fund
Appendix II: Comments from the U.S. General 

Services Administration

Page 42 GAO-12-646 Federal Buildings Fund
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 43 GAO-12-646 Federal Buildings Fund

David J. Wise, (202) 512-2834 or wised@gao.gov

In addition to the contact named above, Mike Armes (Assistant Director), 

Amy Abramowitz, Colin Fallon, Imoni Hampton, Carol Henn, Paul Kinney, 

Kieran McCarthy, Ruben Montes de Oca, Matt Voit, Crystal Wesco, and 

Elizabeth Wood made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(542193)
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