FEDERAL REAL 

PROPERTY

High-Risk Designation 

Remains due to Persistent 

Management Challenges

Statement of David Wise, Director 

Physical Infrastructure

Testimony 

Before the Subcommittee on 

Government Operations, Committee on 

Oversight and Government Reform, 

House of Representatives

For Release on Delivery 

Expected at 2:00 p.m., EST

Wednesday, February 27, 2013

GAO-13-422T

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-422T, a testimony

before the Subcommittee on Government 

Operations, Committee on Oversight and 

Government Reform, U.S. House of 

Representatives 

February 27, 2013

FEDERAL REAL PROPERTY 

High-Risk Designation Remains due to Persistent 

Management Challenges 

Why GAO Did This Study

The federal government has given 

high-level attention to the issue of 

real property management and has 

made some progress. This includes 

establishing FRPC—chaired by the 

Office of Management and Budget 

(OMB)—which created the FRPP 

database managed by GSA. 

However, federal real property 

management remains a high-risk 

area, in part, because of the longstanding problems the federal 

government has faced managing its 

excess and underutilized properties.

This statement summarizes GAO’s

2013 High Risk update as it pertains 

to real property management and 

elaborates on problems associated 

with excess and underutilized 

property, drawing on a June 2012

GAO report (GAO-12-645). In that 

report, GAO recommended that

GSA, in consultation with FRPC, 

develop a plan to improve the FRPP 

and that OMB develop a national 

strategy for managing federal excess 

and underutilized real property. GSA 

agreed with the recommendation and 

described actions its officials are 

taking to implement it. OMB did not 

directly state whether it agreed or 

disagreed with the recommendation. 

A full discussion of these 

recommendations and GAO’s 

evaluation of them can be found in 

the June 2012 report.

This statement is based on previous 

GAO work where GAO analyzed 

agency data and visited 26 sites 

containing excess and underutilized 

buildings from five civilian federal 

real-property-holding agencies with 

significant portfolios. 

What GAO Found

The federal government faces long-standing problems in managing real property, 

including an overreliance on leasing, and excess and underutilized property. 

Related to leasing, the government owns and leases about 400,000 buildings 

located throughout the country and often leases private space in the same areas 

where it owns underutilized property. This practice is inefficient, resulting in 

millions of dollars of additional costs to federal agencies. Further, agencies often

do not have a strong understanding of the real property held by other agencies 

and may lack the authority or expertise to lease their own underutilized property 

to other federal agencies. 

The federal government continues to face persistent challenges related to its real 

property data. GAO examined Federal Real Property Profile (FRPP) data, which 

is managed by the General Services Administration (GSA), and identified 

inconsistencies and inaccuracies, at 23 of the 26 locations visited in 2011 and 

2012, related to the reported utilization, condition, annual operating costs, and 

value of buildings. These findings raised concern that the FRPP is not a useful 

tool for describing the nature, use, and extent of excess and underutilized federal 

real property. These inconsistencies may arise in part because the Federal Real 

Property Council (FRPC) has not followed sound data collection practices. For 

example, the FRPC has not ensured that the data elements used by federal 

agencies are consistently defined and reported. As a result, the FRPC cannot 

ensure that FRPP data are sufficiently consistent and accurate to use as a 

decision-making tool for managing federal real property. 

The previous and current administrations have sought to generate cost savings 

associated with improving management of excess and underutilized property. 

However, some of these efforts have been discontinued and potential savings for 

others are unclear. It is important to note that the five federal agencies that GAO

reviewed have taken some actions to dispose of and better manage these 

properties, including using excess and underutilized property to meet space 

needs, consolidating offices to use space efficiently, and reducing employee 

workspace to use space more efficiently. However, the agencies still face 

challenges managing these properties. For example, property disposal costs can 

outweigh the financial benefits of property disposal. Additionally, legal 

requirements—such as those related to preserving historical properties and the 

environment—can make the property disposal process lengthy, according to 

agency officials. Finally, the interests of multiple—and often competing—

stakeholder interests may not align with the most efficient use of government 

resources and complicate real property decisions. For example, GSA officials

reported that local stakeholder interests have delayed conveyance of a federal 

building in Portland, Oregon. A comprehensive, long-term national strategy would 

support better management of excess and underutilized property by, among 

other things, defining the scope of the problem; clearly addressing achievement 

goals; addressing costs, resources, and investments needed; and clearly 

outlining roles and coordination mechanisms across agencies.

View GAO-13-422T. For more information, 

contact David Wise at (202) 512-2834 or 

wised@gao.gov.
Page 1 GAO-13-422T 

United States Government Accountability Office

Washington, DC 20548

Chairman Mica, Ranking Member Connolly, and Members of the 

Subcommittee:

I am pleased to be here today to discuss federal real property 

management, with an emphasis on challenges associated with managing 

excess and underutilized real property. The federal government’s real 

property portfolio includes about 400,000 buildings located throughout the 

country that are owned and leased by federal agencies. In 2004, the 

President issued an executive order establishing the Federal Real 

Property Council (FRPC).1 The executive order required the FRPC to 

work with the General Services Administration (GSA) to establish and 

maintain a single, comprehensive database describing the nature, use, 

and extent of all real property under the custody and control of executive 

branch agencies.2 The FRPC created the Federal Real Property Profile 

(FRPP) to meet this requirement and began data collection in 2005. As 

we have reported, despite the implementation of the executive order, 

nationwide data collection efforts, and various reform efforts and 

proposals, data problems have continued and agencies continue to face 

persistent challenges with managing real property.

In 1990, we began reporting on government operations that we identified 

as “High Risk.” Since then, generally coinciding with the start of each new 

Congress, we have reported on these high-risk areas and updated the 

High Risk List. My statement today summarizes our recent High Risk 

update3 as it pertains to federal real property management. As part of this 

objective, my statement also elaborates on challenges associated with 

excess and underutilized property, drawing on our June 2012 report on 

this subject.4 For our June 2012 report on federal excess and 

underutilized property, we analyzed Office of Management and Budget 

(OMB) and GSA documents, and interviewed OMB, GSA, and other 

agency officials. We focused our review on five federal real-property-

 

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

(Feb. 6, 2004).

2 Except when otherwise required for reasons of national security.

3 GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013). 

4 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). 

 
 

Page 2 GAO-13-422T 

holding agencies: GSA and, the departments of Energy (Energy), the 

Interior (Interior), Veterans Affairs (VA), and Agriculture (USDA). We 

selected these agencies because, on the basis of the available data at 

the time, these five agencies reported approximately two-thirds of the 

building square footage reported by civilian agencies. We obtained and 

analyzed the fiscal years 2008, 2009, and 2010 FRPP submissions from 

these agencies and visited a nonprobability sample5 of approximately 180 

buildings at 26 sites where excess or underutilized owned buildings had 

been reported by the five civilian agencies.6 Our representations of the 

condition and circumstances of individual properties in this statement are 

based on information in our June 2012 report; it is possible that conditions 

or circumstances may have changed since then. We conducted this work 

in accordance with generally accepted government auditing standards. 

More detailed information about the scope and methodology used for our 

June 2012 work can be found in that report.

The federal government continues to face long-standing problems in 

managing its real property, including an overreliance on costly leasing 

and persistent issues with excess and underutilized property, and we 

have made a number of recommendations in this area.7 The previous and 

current administrations have given high level attention to the issue of 

federal real property management. For example, in May 2011, the 

administration proposed legislation, referred to as the Civilian Property 

Realignment Act (CPRA). CPRA, among other things, would have 

established a legislative framework for consolidating and disposing of 

civilian real property. However, this and other real property reform 

legislation introduced in Congress have not been enacted.

 

5 Because this is a nonprobability sample, observations made at these site visits do not 

support generalizations about other properties described in the FRPP database or about 

the characteristics or limitations of other agencies’ real property data. Rather, the 

observations made during the site visits provided specific, detailed examples of issues 

that were described in general terms by agency officials regarding the way FRPP data are 

collected and reported and served to complement our analysis of data collection practices 

across these agencies. 

6 In the case of VA, which did not categorize any of its building as “excess,” we visited 

sites where buildings had been reported as “not utilized” or “underutilized.” 

7 The High Risk Update also highlights challenges in securing real property that federal 

agencies continue to face. For example, management and funding challenges have 

hampered the Federal Protective Service’s ability to protect about 9,000 federal facilities 

managed by GSA.

Federal Real Property 

Management 

Continues to be High 

Risk
 

Page 3 GAO-13-422T 

The federal government’s continued reliance on costly leasing has been 

an ongoing problem. The government often leases space from private 

landlords in the same real estate market where it owns underutilized real 

property.8 This practice is inefficient, resulting in millions of dollars of 

additional costs to federal agencies. From 2006 to 2011, the amount of 

space that GSA—the leasing agent for many federal agencies— leased 

from the private sector grew more than 12 percent. At the same time, 

GSA lost millions of dollars on these leased assets, even though 

agencies pay GSA rent and fees that are designed to cover costs. GSA 

has lost $200 million on leases since 2005, including $75 million in 2011 

alone. As a result, GSA has used funds generated from its owned 

inventory to offset the losses, which decreases the funds available to 

invest in GSA’s owned assets. In some cases, federal agencies in the 

same market could consolidate into other government-owned properties. 

However, agencies do not have a strong understanding of real property 

held by other agencies and may lack the authority or expertise to lease 

their own underutilized property to other federal agencies. We have 

ongoing work assessing GSA’s high cost leases that we plan to report 

later this year.

I would like to elaborate on federal excess and underutilized property, 

which we highlighted in the 2013 High Risk update. In our June 2012 

review, we found that FRPP data did not accurately describe the 

properties at 23 of 26 sites that we visited, often overstating the condition 

and annual operating costs. Our work focused on reviewing agencyreported FRPP data elements including utilization, condition index, annual 

operating cost, and value.

Utilization: We found that agencies did not report building utilization 

consistently.9 For example, FRPC guidance states that for offices, 

hospitals, and warehouses, utilization is the ratio of occupancy to current 

design capacity.10 USDA stated that FRPC has not established 

 

8 See, GAO, Federal Real Property: Strategic Partnerships and Local Coordination Could 

Help Agencies Better Utilize Space, GAO-12-779 (Washington, D.C.: July 25, 2012).

9 The FRPC defines utilization as “the state of having been made use of, i.e., the rate of 

utilization.” 

10 For laboratories, utilization is the ratio of active units to current design capacity. For 

housing, utilization is the percentage of individual units that are occupied. 

Costly Leasing

Excess and Underutilized 

Property 
 

Page 4 GAO-13-422T 

government-wide definitions for occupancy or current design capacity. As 

a result, each agency within USDA has its own internal procedures for 

determining a building’s utilization level. Among the 26 federal sites we 

visited, we found utilization data inconsistencies or inaccuracies for 

properties at 19 of these sites. For example, at one USDA site we visited, 

we found two houses that have been empty since 2009; however, they 

were both reported to the FRPP as utilized for 2009 and 2010. See figure 

1 to view images of these two USDA buildings. 

Figure 1: Example of Inaccurate Reporting of Utilization Data at a USDA Site

a

According to FRPC guidance, housing units must be 85 percent to100 percent occupied to warrant a 

utilization score of “utilized.”

Condition Index: According to FRPC guidance, the condition index11

should consider a building’s repair needs.12 However, we found that 

agencies do not always follow this guidance. We found condition-indexreporting inconsistencies and inaccuracies at 21 of 26 sites visited. For 

 

11 The FRPC defines condition index as “the general measure of the constructed asset’s 

condition at a specific point in time,” and it is calculated as 1 minus the ratio of repair 

needs to plant replacement value (PRV) multiplied by 100. 

12 Needed repairs are determined by the amount of repairs necessary to ensure that a 

constructed asset is restored to a condition substantially equivalent to the originally 

intended and designed capacity, efficiency, or capability. GSA, Federal Real Property 

Council: 2010 Guidance for Real Property Inventory Reporting (Washington, D.C.: Oct. 

25, 2010).
 

Page 5 GAO-13-422T 

example, when agencies have determined that a property is not needed 

and will ultimately be disposed of, they may not repair that property, even 

though it may be in a state of significant disrepair. This allows agencies to 

use their limited funds to maintain properties that they regularly use. In 

some cases, however, agencies gave such properties high conditionindex scores despite their relatively poor conditions, resulting in condition 

index data that did not accurately reflect each property’s condition as set 

forth in FRPC guidance. Figure 2 illustrates several separate buildings 

that received high condition index scores, even though they are in poor 

condition. On the basis of our work, we found problems with these 

buildings including: asbestos, mold, collapsed walls/roofs, health 

concerns, radioactivity, deterioration, and flooding.
 

Page 6 GAO-13-422T 

Figure 2: Examples of Federal Property Reported as Being in Excellent Condition in the FRPP Database
 

Page 7 GAO-13-422T 

Annual Operating Costs: We found data inconsistencies and 

inaccuracies for annual operating costs at 19 of 26 sites that we visited.13

For example, we found that multiple agencies were unable to measure 

operating costs at the building level. Instead, officials apportioned costs to 

the individual buildings according to square footage. Furthermore, 

because of the difficulty in measuring operating costs, only one of 

USDA’s component agencies even attempted to measure the actual 

operating costs of each individual building. We also identified instances of 

buildings with reported high annual operating costs even though all 

utilities were turned off and no maintenance was being conducted.

Value: FRPC guidance defines value as the cost of replacing an existing 

constructed asset at today’s standards, and this factor is known as the 

Plant Replacement Value (PRV). However, GSA officials cautioned us not 

to think of PRV as an asset’s actual worth, because it is not an appraisal 

of the property or any kind of measure of the asset’s market value. We 

found that the PRV is typically much higher than the actual worth of the 

building because the PRV does not take into account market conditions 

or the condition of the asset. Additionally, according to agency officials, 

many excess properties do not have the potential for generating revenue 

for the federal government. Indeed, we saw more than 80 buildings on 

our site visits that agencies plan to demolish when they have the 

resources to execute the demolitions. Figure 3 shows properties that 

have high reported values and high condition indexes even though they 

are in poor condition and have remained unused for many years.

 

13 The FRPC defines annual operating costs as “the expenses for recurring maintenance 

and repair costs, utilities, cleaning and/or janitorial costs, and roads/grounds expenses.” 
 

Page 8 GAO-13-422T 

Figure 3: Empty Buildings in Poor Condition with High Plant Replacement Values (PRVs)

These examples of inconsistencies and inaccuracies in the key areas 

described above suggest that the FRPP database is not a useful 

decision-making tool for managing federal real property. In addition to our 

work at these sites, we found that FRPC had not followed sound data 

collection practices when collecting FRPP data. Specifically, we found, 

among other problems, issues with data consistency, collaboration, and 

reporting. For example, the FRPC has not ensured that data elements are 

consistently defined and reported, even though the 2004 Executive Order 

seeks reporting on a uniform basis. In addition, OMB, as the Chair of the 

FRPC, has not collaborated effectively with the agencies that submit 

FRPP data and may be requiring agencies to spend resources on data 

collection that is not useful. The agencies we reviewed expressed 

concerns about the data collection process, including the amount of data 
 

Page 9 GAO-13-422T 

collection required, the time they are given to implement new data 

requirements, and their ability to collect data as required accurately.

In addition to the problems we found with real property data, we also 

found that the federal government continues to face other challenges 

managing excess and underutilized properties. The previous and current 

administrations have sought ways to generate cost savings associated 

with improving management of excess and underutilized properties. 

However, some of these efforts were discontinued, and others have not 

led to proven cost savings associated with the management of these 

properties. It is important to note that the five federal agencies we 

reviewed have taken some actions to dispose of and better manage these 

properties, including using excess and underutilized property, 

consolidating offices, and reducing employee work space to use space 

more efficiently. However, the agencies still face long-standing challenges 

to managing these properties. For example, agency disposal costs can 

outweigh the financial benefits of property disposal. Legal requirements—

such as those related to preserving historical properties14 and conducting 

environmental remediation—can make the property disposal process 

lengthy according to agency officials. Finally, stakeholder interests can 

conflict with property disposal or reuse plans, and the locations of some 

federal properties can make property disposal and reuse difficult. For 

example, GSA officials reported that local stakeholder interests have 

delayed conveyance of a federal building in Portland, Oregon. At the time 

of our review, the Department of Education planned to use the building for 

educational activities beneficial to the community. However, the officials 

received a request from the City of Portland that certain offices that were 

already located in the building remain in downtown Portland. GSA was 

attempting to find suitable space for these offices in downtown Portland 

so that it could convey the building to the Department of Education.

Given the complexities of issues related to excess and underutilized 

federal real property management, unsuccessful implementation of cost 

savings efforts across administrations, and the issues that still remain 

with data reporting, we believe that a national strategy could provide a 

clear path forward to help federal agencies manage excess and 

 

14 See, GAO, Federal Real Property: Improved Data Needed to Strategically Manage 

Historic Buildings, Address Multiple Challenges, GAO-13-35 (Washington, D.C.: 

December 11, 2012).

Underlying Management 

Challenges
 

Page 10 GAO-13-422T 

underutilized property in the long term. A national strategy can guide 

federal agencies and other stakeholders to systematically identify risks, 

resources needed to address those risks, and investment priorities, when 

managing federal portfolios. Without a national strategy, the federal 

government may be ill-equipped to sustain efforts to better manage 

excess and underutilized property.

Sustained progress is needed to address the conditions and persistent 

challenges that make the area of federal real property management High 

Risk. Multiple administrations have committed to a more strategic 

approach toward managing real property. However, their efforts have not 

yet fully addressed the underlying challenges that we have identified.

In our June 2012 report, we recommended that OMB, in consultation with 

FRPC, develop a national strategy for managing federal excess and 

underutilized real property. OMB did not directly state whether it agreed 

or disagreed with our recommendation. Additionally, FRPP is not yet a 

useful tool for describing the nature, use, and extent of excess and 

underutilized federal real property. Accordingly, in the same report, we 

recommended that GSA and FRPC take action to improve the FRPP to 

increase federal capacity to implement and monitor corrective measures. 

GSA has taken action to begin implementing our recommendation related 

to FRPP. GSA’s actions are intended to address each part of the 

recommendation, including:

• enhancements to clearly define data collection requirements,

• data quality tests and assessments to ensure data reliability,

• development of new performance measures to support governmentwide goals, and

• efforts to improve collaboration with agencies.

We will continue to monitor these agencies’ efforts to implement our 

recommendations, which we believe are critical to addressing the 

challenges that have led us to keep federal real property management on 

our High-Risk List.

Chairman Mica, Ranking Member Connolly, and Members of the 

Subcommittee, this concludes my prepared statement. I would be happy 

to answer any questions that you may have at this time.

Agency Corrective Actions
 

Page 11 GAO-13-422T 

For further information regarding this testimony, please contact David 

Wise at (202) 512-2834 or wised@gao.gov. In addition, contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this statement. Individuals who made key contributions 

to this testimony are Keith Cunningham (Assistant Director), David 

Sausville (Assistant Director), Raymond Griffith, Amy Higgins, Joshua 

Ormond, and Jade Winfree.

GAO Contacts and 

Staff 

Acknowledgements 

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