a

GAO

United States Government Accountability Office

Report to Congressional Requesters

January 2007 GSA LEASING

Initial Implementation 

of the National Broker 

Services Contracts 

Demonstrates Need 

for Improvements

GAO-07-17
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2007

GSA LEASING

Initial Implementation of the National 

Broker Services Contracts Demonstrates 

Need for Improvements 

Highlights of GAO-07-17, a report to 

congressional requesters 

The General Services 

Administration (GSA) provides 

leased space to over 55 percent of

federal employees at an annual 

cost of $3.6 billion. In 2004, GSA 

awarded four contracts for national

broker services (NBS).

Performance of the contracts 

began on April 1, 2005. This report 

focuses on GSA’s administration of 

the leasing contracts for the first 

contract year, ending March 31,

2006, and addresses, among other 

matters, (1) how GSA is attempting 

to prevent conflicts of interest in 

the NBS leasing program and to 

safeguard its information; (2) what,

if any, savings have accrued to the

government; and (3) how GSA is

distributing its leasing workload

among the brokers. To address 

these matters, GAO, among other

actions, analyzed the contracts;

GSA’s contract administration 

guide; and GSA’s policies,

procedures, and controls related to 

these matters.

What GAO Recommends

GAO is making numerous

recommendations. For example,

GAO recommends that GSA 

perform a risk assessment of the 

NBS program; modify the contracts

to include additional controls; test, 

as needed, the adequacy of the 

brokers’ controls; improve controls 

over broker commissions; develop 

procedures for quantifying savings;

and define the factors needed to

establish a record of the brokers’ 

performance. GSA agreed to

implement the recommendations. 

GSA has developed controls to help prevent conflicts of interest in the NBS 

leasing program, but has not fully mitigated potential conflicts of interest or 

federal information security concerns related to safeguarding information 

and systems used by the brokers on GSA’s behalf. For example, while GSA 

appears to have resolved the 20 conflicts identified by the brokers during the 

first contract year, it has not modified the contracts to ensure that each 

contains all of the requirements applicable to the brokers’ disclosure of 

potential or actual conflicts of interest. Further, GSA has not assessed the 

risk and magnitude of harm that could arise from the brokers’ unauthorized 

access to, or disclosure of, GSA’s proprietary information. Until GSA 

conducts a risk assessment, it cannot (1) modify the brokers’ contracts to 

include additional controls, as appropriate, or (2) test, as needed, the 

brokers’ controls to ensure that they are adequate to safeguard GSA’s 

information. GSA also has not adequately mitigated, as required, the inherent 

conflict created by allowing the brokers to represent the government while 

negotiating their commission payment with building owners. Commissions 

are factored into the cost of the government’s rental payments. Absent 

additional controls, GSA has insufficient assurance that the brokers will not 

accept excessive commissions; thereby increasing the government’s costs. 

At the end of GAO’s review, GSA had not taken action on these issues. 

GSA expected the contracts to result in various savings. It anticipated 

reductions in (1) rent from the brokers’ expert knowledge of the commercial 

real estate market and (2) administrative expenses from reductions in its 

costs for previous contract fees, administration, and personnel. However, 

more than 2 years after the contract awards, GSA does not know what, if 

any, savings have resulted, largely because it has not developed procedures 

for quantifying most of its expected savings. 

GSA distributed its initial leasing workload fairly equally among the brokers 

during the first year, as required, but program delays, insufficient data, and a 

lack of procedures have slowed the transition to performance-based 

distributions. Once a record of performance is available, GSA is to distribute 

work among the brokers on the basis of their performance. GSA planned to 

begin performance-based distributions after the first contract year, 

anticipating that the brokers would have completed a sufficient number and 

variety of task orders to establish a record of their performance. However, 

as of March 31, 2006, the brokers had completed only 11 of the 479 task 

orders issued to them and eligible for a commission payment. GSA now 

expects to begin performance-based distributions by April 1, 2007—the start 

of the third contract year—but has not defined how many and what types of

task orders are needed to establish a record of performance. Without this 

information, GSA cannot demonstrate that it has established a record of 

performance and is ready to move to performance-based distributions. GSA 

also has not developed needed guidance and procedures, but plans to do so 

before moving to performance-based distributions. 

www.gao.gov/cgi-bin/getrpt?GAO-07-17.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark Goldstein 

at (202) 512-6670 or goldsteinm@gao.gov. 
Page i GAO-07-17 National Broker Contracts

Contents

Letter 1

Results in Brief 4

Background 12

Controls Have Not Fully Mitigated Potential Conflicts of Interest or 

Federal Information Security Concerns 17

Brokers Will Be Compensated through Commissions Paid by 

Building Owners, but Controls for Minimizing the Government’s 

Rental Costs Are Insufficient 31

GSA Does Not Know What, If Any, Savings Have Resulted Largely 

Because It Has Not Developed Processes for Quantifying Most of 

the Anticipated Savings 41

GSA Distributed Its Initial Workload Fairly Equally, but Several 

Factors Have Slowed Its Transition to Performance-Based 

Allocations 50

GSA Implemented a New Organizational Structure and Numerous 

Management Tools to Help Ensure Consistent Oversight of the 

NBS Brokers 63

GSA Has Numerous Measures for Evaluating the Brokers’ 

Performance, but Issues Could Result in Inconsistent and 

Inefficient Evaluations 72

Conclusions 81

Recommendations for Executive Action 84

Agency Comments 86

Appendixes

Appendix I: Objectives, Scope, and Methodology 88

Scope and Methodology for Assessing Our Reporting Objectives 89

Methodology for Selecting Other Entities for Interviews 93

Appendix II: Potential Conflicts Identified and GSA’s Resolution of the 

Potential Conflicts, as of March 31, 2006 98

Appendix III: Applicable Performance Evaluation Criteria by Stage of 

Evaluation, as Specified by Various Sources 100

Appendix IV: Comments from the General Services Administration 102

Appendix V: GAO Contact and Staff Acknowledgments 103
Contents

Page ii GAO-07-17 National Broker Contracts

Tables Table 1: Number of Task Orders Issued and Completed, Including 

Those Eligible for a Commission Payment, as of March 31, 

2006 37

Table 2: Total Commission Payments Accrued by Each NBS Broker, 

as of March 31, 2006 37

Table 3: Payment Approach Used by the 10 Public- and 

Private-Sector Entities That Contracted for Leasing 

Services 40

Table 4: Percentage of Commission Credit, by NBS Broker and 

Contract Period 43

Table 5: Example of How Commissions and Commission Credits 

Are Calculated 45

Table 6: Number of Task Orders Issued and Completed, Including 

Those Eligible for a Commission Credit, as of March 31, 

2006 47

Table 7: Distribution of Commission-Eligible Task Orders 

Agencywide, by NBS Broker, as of March 31, 2006 57

Table 8: Distribution of Square Footage, by Region and Broker, as 

of March 31, 2006 59

Table 9: Distribution of Task Orders for Market Data, by NBS 

Broker, as of March 31, 2006 60

Table 10: Distribution of Expedited Task Orders, by NBS Broker, as 

of March 31, 2006 61

Table 11: Responsibilities of Key National and Regional 

Management Positions 64

Table 12: Staff Allocated Full Time and Part Time to Oversee and 

Administer the NBS Contracts, as of December 31, 2005 67

Table 13: GSA’s Staffing for the NBS Contracts, as of December 31, 

2005, and for the Prior Contracts, as of December 31, 

2003 68

Table 14: Frequency of Evaluations, by Type of Task Order 

Performed 73

Table 15: Long-term Performance Goals Applicable to the NBS 

Brokers’ Performance, by Fiscal Year, as of July 31, 

2006 75

Figure Figure 1: GSA’s 11 Regional Offices and the States They Serve 15
Contents

Page iii GAO-07-17 National Broker Contracts

Abbreviations

COTR contracting officer’s technical representatives

FAR Federal Acquisition Regulations

FDIC Federal Deposit Insurance Corporation 

FISMA Federal Information Security Management Act

GSA General Services Administration

NBS national broker services 

NIH National Institutes of Health

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Page 1 GAO-07-17 National Broker Contracts

United States Government Accountability Office

Washington, D.C. 20548

A

January 31, 2007 Letr

The Honorable James Oberstar

Chairman

Committee on Transportation and Infrastructure

House of Representatives

The Honorable Eleanor Holmes Norton

Chair

Subcommittee on Economic Development, 

Public Buildings, and Emergency Management

Committee on Transportation and Infrastructure

House of Representatives 

More than half of all federal employees work in space leased from the 

private sector. The General Services Administration (GSA), as the federal 

government’s principal landlord, is responsible for acquiring much of this 

leased space. In 2004, GSA leased approximately 155 million square feet in 

over 7,200 buildings nationwide at an annual cost of about $3.6 billion, 

making it the largest U.S. entity leasing space from the private sector. 

Formerly, GSA performed lease acquisition, management, and 

administration functions in-house, relying primarily on its realty specialists. 

Downsizing initiatives in the 1990s reduced GSA’s in-house capacity, and, in 

1997, GSA started entering into contracts for real estate services to carry 

out a portion of its leasing program. By 2003, GSA was accomplishing about 

20 percent of its leasing program through these contracts, most of which 

were regional in scope.1

 However, according to GSA, the contracts were 

problematic because they were inconsistent across GSA’s regions and did 

not produce the operating efficiencies GSA expected to leverage from its 

position as the nation’s largest leasing entity. To address these issues, GSA 

awarded four contracts for national broker services (NBS)2

 in October

1

Twenty-five of these contracts were regional, while 4 covered larger geographic areas 

(zones). Figure 1 displays GSA’s 11 regions. 

2

GSA refers to the four nationwide broker contracts and its program for administering the 

contracts as the “National Broker Contracts” and the “National Broker Contract Program,” 

respectively. Since the contracts specify that they are for “national broker services,” we use 

the acronym “NBS” throughout this report to refer to both the contracts and GSA’s program 

for administering them.
Page 2 GAO-07-17 National Broker Contracts

2004, and contract performance began on April 1, 2005.3 GSA planned to 

shift at least 50 percent of its leasing workload to the four awardees 

(commercial real estate brokerage firms (i.e., brokers)) in the first year of 

the contracts and to increase their share of GSA’s overall leasing program 

to approximately 90 percent by 2010—the fifth and final year of the 

contracts. GSA estimated the potential value of each of the four NBS 

contracts at $33 million over a 5-year period, for a total of $132 million. 

Under the NBS contracts, the four brokers are eligible to receive 

commissions for lease acquisition, expansion, and extension services, as 

well as for expedited transactions for these services, but not for task orders 

involving a request for market data, which brokers normally perform free 

of charge. If additional commission-eligible work results from a request for 

market data, the broker who performed the market data task order is 

expected to receive the follow-on work. Performing a commission-eligible 

task order does not necessarily mean that the broker will be paid. For 

example, while GSA expects building owners (which is the term we use 

throughout this report for landlords, property owners, and developers) to 

offer a commission to GSA’s broker if they are paying a commission to their 

own broker, owners may decide not to offer any commissions if, for 

example, the task order involved minimal work. Furthermore, as discussed 

in more detail in the body of this report, each broker agreed to forgo a 

percentage of its commission—in the form of a commission credit—for use 

in reducing the government’s initial rental costs. Commission credits are 

applicable for most commission-eligible task orders, but not for expedited 

leasing transactions. Also, commission credits do not apply to task orders 

for market data, since these tasks are not eligible for a commission. 

In entering into the NBS contracts, GSA departed from its prior leasing 

practices in two important respects. First, GSA provided for compensating 

the NBS brokers through the commissions paid by building owners, as is 

typical in the commercial real estate industry. Formerly, GSA paid its 

brokers through appropriations.4

 Second, GSA awarded two of the four 

contracts to dual-agency brokerage firms—firms that represent both 

building owners and tenants (in this case, GSA acting on behalf of a tenant 

3

The starting date was delayed by bid protests.

4

In a legal opinion that we provided at the GSA Administrator’s request, we concluded that 

the proposed NBS contracts would not result in an improper augmentation of GSA’s 

appropriations. See General Services Administration: Real Estate Brokers’ Commissions,

B-291947 (Aug. 15, 2003).
Page 3 GAO-07-17 National Broker Contracts

agency). The other two awardees were tenant-only brokerage firms—firms 

that represent only the tenant in real estate transactions. Potential conflicts 

of interest would arise if the government allowed itself to be represented 

by a dual-agency broker under circumstances where that broker also 

represented a building owner whose building was offered for lease to the 

government. An employee of a dual-agency broker, for example, might be 

tempted to manipulate the transaction or misuse privileged government 

information to gain an unfair advantage over others, attempting to ensure 

that the client’s building was leased by the government. Even if the dualagency employee did not seek an advantage, the potential for a conflict of 

interest exists. To avoid such conflicts, federal contracting requirements 

ordinarily would prohibit federal agencies from using dual-agency brokers, 

but GSA waived the requirements, as allowed, to increase competition for 

the NBS contracts.

Under the NBS contracts, all of the brokers representing GSA work with 

proprietary and procurement-sensitive information and information 

systems and have, or soon will have, access to e-Lease (an electronic 

information system GSA uses to manage its leasing transactions). Improper 

disclosure of confidential information is prohibited and could create an 

unfair competitive advantage for a broker. Furthermore, unauthorized 

access to GSA’s information or information systems used by the brokers on 

behalf of GSA would raise security concerns addressed by the Federal 

Information Security Management Act of 2002 (FISMA).5

 

This report follows up on a legal opinion that we provided at your request 

in July 2004, in which we addressed several questions you raised about the 

nature of the services that GSA was intending to procure through the NBS 

contracts.6

 Specifically, this report addresses (1) how GSA is attempting to 

prevent conflicts of interest in the NBS program and to safeguard 

information and information systems used by the brokers on GSA’s behalf; 

(2) how the brokers will be compensated for their services and what, if any, 

controls exist to minimize the government’s rental costs; (3) what, if any, 

5

Federal Information Security Management Act of 2002, Title III, E-Government Act of 2002, 

Pub. L. No. 107-347 (Dec. 17, 2002).

6

In this opinion, we found, among other things, that (1) the services that GSA proposed to 

acquire under the contracts are among those commonly offered by brokers in commercial 

leasing transactions and (2) brokers are commonly paid for their services through 

commissions paid by building owners. See General Services Administration and Real Estate 

Brokers’ Commissions, B-302811 (July 12, 2004).
Page 4 GAO-07-17 National Broker Contracts

savings have accrued to the government; (4) how GSA is distributing its 

leasing workload among the brokers; (5) how GSA is overseeing the 

brokers; and (6) how GSA is measuring the brokers’ performance. 

To address these questions, we analyzed GSA's policies, procedures, and 

controls related to our six reporting objectives and interviewed cognizant 

GSA officials, including those responsible for managing the NBS program 

and for ensuring compliance with FISMA. We also interviewed officials 

from 10 public- and private-sector entities—3 large, private companies; 4 

state agencies; and 3 other federal agencies—that contract for leasing 

services to determine, among other things, how these parties address 

conflict-of-interest issues and compensate their brokers. To gain the views 

and understand the experiences of real estate brokers related to our 

objectives, we interviewed representatives from 9 large nationwide 

brokerage firms, including the 4 NBS brokers, and 6 commercial real estate 

trade associations. Furthermore, to obtain information about how localities 

regulate conflicts of interest and broker compensation issues, we 

interviewed regulatory personnel in 4 states and the District of Columbia. 

We performed our work between November 2004 and December 2006 in 

accordance with generally accepted government auditing standards. 

Additional information about our objectives, scope, and methodology, 

including a detailed discussion of the various methods we used to select 

entities for interviews, appear in appendix I of this report. 

Results in Brief GSA has developed controls to help prevent conflicts of interest in the NBS 

program, but has not fully mitigated potential conflicts of interest or 

federal information security concerns related to safeguarding information 

and information systems used on GSA’s behalf. Some of GSA’s controls 

apply to both tenant-only and dual-agency firms, but additional and more 

stringent controls apply to the two dual-agency firms. For example, 

requirements for disclosing any actual or potential conflicts of interest 

within 3 days of receiving a task order and for keeping GSA’s information 

confidential apply to both types of firms, but requirements for establishing 

a “conflict wall”—that is, physical and electronic controls that isolate and 

limit access to GSA’s procurement-sensitive information—apply only to the 

dual-agency firms. In addition, GSA prohibited the same employee within a 

dual-agency firm from representing both parties in a leasing transaction. 

According to our analysis, three of the contract requirements that GSA 

applied only to dual-agency firms, including the requirement for dualagency firms to disclose conflicts that arise during the performance of 

work, are also applicable to the two tenant-only firms. GSA agreed with our 
Page 5 GAO-07-17 National Broker Contracts

analysis in March 2006 and said it would include the requirements in its 

contracts with the tenant-only firms; however, as of October 31, 2006, it had 

not done so. As of March 31, 2006—the end of the first contract year—the 

four NBS brokers had disclosed 20 potential conflicts of interest. These 

potential conflicts represent about 4 percent of the 479 commission-eligible 

transactions—known as “task orders”—issued to the brokers in the first 

contract year.7

 GSA determined that 9 of the 20 disclosures represented 

actual conflicts, and GSA took steps, such as reassigning task orders, to 

resolve the conflicts. GSA also confirmed that the brokers have electronic 

and physical controls (i.e., a conflict wall) to help prevent information 

sharing among broker employees. However, more than 1-1/2 years after 

beginning work under the contracts, GSA had not assessed whether the 

controls are adequate to preclude unauthorized information sharing. In 

addition, although GSA had recommended that the two dual-agency 

brokers implement additional conflict wall controls, it had not taken action 

to require the brokers to implement the recommended controls. 

Furthermore, GSA had not assessed whether NBS program controls satisfy 

federal requirements for safeguarding information and information systems 

used on GSA’s behalf. More specifically, GSA had not (1) conducted an 

assessment of the risk and magnitude of harm that could arise from, among 

other things, the broker’s unauthorized access to, or disclosure of, GSA’s 

leasing information; (2) modified its contracts with the brokers, as 

appropriate, to impose additional controls for protecting the information 

and information systems; or (3) tested, as needed, the adequacy of the four 

brokers’ controls for safeguarding the information and information 

systems. GSA was aware that FISMA’s requirements would be applicable 

when the brokers gained access to e-Lease, but it was not aware that these 

requirements had been applicable to the information and information 

systems the brokers have used on GSA’s behalf since April 1, 2005—the 

start of the first contract year. Additionally, three conflict-of-interest 

requirements imposed on the two dual-agency firms—but also applicable 

to the tenant-only firms—had not been included in GSA’s contracts with its 

tenant-only brokers. To help ensure that controls are adequate to prevent 

conflicts of interest, we are recommending, among other actions, that GSA 

extend the applicable conflict-of-interest requirements to tenant-only 

brokers; assess the adequacy of the dual-agency brokers’ conflict walls; 

and, as needed, test the four brokers’ controls over information and 

information systems to determine whether the controls are sufficient for 

7

In total, GSA issued 544 task orders during the first contract year, but 65 of these task 

orders were for market data. Task orders for market data are not eligible for commissions. 
Page 6 GAO-07-17 National Broker Contracts

protecting GSA’s information from unauthorized access to, or use, 

disclosure, disruption, modification, or destruction.

Under the terms of their contracts with GSA, the four NBS brokers will be 

compensated for the majority of their services through commissions paid 

by building owners, as is typical in the commercial real estate industry. 

However, at least one important control to help ensure that the brokers do 

not improperly increase the government’s rental costs is lacking. The 

contracts allow the brokers to collect commissions for lease acquisition, 

expansion, and extension services as well as for expedited transactions for 

these services. GSA expects that building owners will pay commissions for 

these services and, to help ensure that commissions are paid, GSA requires 

owners to offer a commission to GSA’s broker if they are paying a 

commission to their own listing agent or broker. However, GSA has no 

obligation to pay its brokers, even if a building owner does not offer a 

commission to the brokers. Offers that include a payment to the building 

owner’s broker, but not to GSA’s broker, must be rejected. In contracting 

with GSA, the brokers accepted the risk that they would not always receive 

commissions because they anticipated, first, that nonpayment would be 

rare and, second, that the volume of government business would more than 

compensate them for any isolated losses. As of March 31, 2006, the end of 

the first contract year, too few task orders had been completed to 

determine whether or to what extent commissions will not be paid, but the 

financial risk to the brokers appears to be limited, in part, because of the 

requirement that building owners pay GSA’s broker if they intend to pay 

their own. Specifically, the NBS brokers had completed 11 of the 479 

commission-eligible task orders issued by GSA during the first contract 

year. One of these task orders did not result in a commission payment. The 

remaining 10 (involving about 460,000 square feet of leased space) resulted 

in about $1.2 million in commission payments, of which the brokers are 

entitled to receive about $960,000 and the government is entitled to the 

remainder.8

 Commission payments are factored into the cost of an agency’s 

rent. GSA oversees the NBS brokers throughout the leasing process and 

ultimately signs the leases negotiated by the brokers, but GSA does not 

prohibit the brokers from negotiating commission rates in excess of those 

specified in its commission agreements because,9

 according to GSA, it does 

8

Under the contracts, the remaining $216,000 represents commission credits that are used to 

offset the initial rental costs of GSA’s tenant agencies. We discuss commission credits in the 

next section of this report.

9

A commission agreement is included in each solicitation for offers.
Page 7 GAO-07-17 National Broker Contracts

not want to influence the commercial real estate market. Allowing the NBS 

brokers to represent the government while negotiating their commissions, 

creates, by design, an inherent conflict between the brokers’ interest in 

promoting and negotiating higher commissions and their responsibility to 

effectively represent GSA’s interest in selecting properties that best meet 

the government’s needs, including cost.10 As a result, the brokers could 

potentially favor building owners who pay excessive commissions; thereby 

increasing the rental rates that the government will eventually pay.11 We are 

recommending that GSA establish additional controls to mitigate the 

brokers’ inherent conflict of interest. 

In 2003, before entering into the NBS contracts, GSA expected savings from 

reductions in rent and agency costs. However—more than 2 years after the 

October 2004 contract awards—GSA does not know what, if any, savings 

have resulted largely because, with the exception of savings resulting from 

commission credits, it has not developed processes for quantifying most of 

its anticipated savings. GSA expected reductions in rent costs primarily 

from commission credits—a type of savings commonly realized by entities 

that contract for commercial leasing services. A commission credit is the 

percentage of the commission that a broker agrees to forgo in anticipation 

of the opportunity to do a large volume of business with an entity such as 

GSA.12 Commission credits are applicable to most, but not all, of the 

services that the brokers perform for GSA. GSA uses commission credits to 

reduce the initial rental payment or payments for its tenant agencies and 

has processes for quantifying the credits. Specifically, GSA reviews and 

approves each broker’s calculations, enters the credits in GSA’s electronic 

e-Lease system, and conducts periodic peer reviews to help ensure that the 

proper credit accrues to its tenant agencies. GSA has little information on 

the amount of savings resulting from commission credits because the vast

10For another example of an inherent conflict created by design, see, for example, Goldstein 

v. Johnson & Johnson, 251 F.3d 433, 442 (3rd Cir., 2001), where the court dealt with the 

fiduciary duty of a retirement plan administrator, which depended, in part, on whether “the 

plan, by its very design, create[d] a special danger of a conflict of interest.”

11While the potential exists for brokers to favor building owners who pay excessive 

commissions, we have no evidence that this has occurred.

12Essentially a volume discount, a commission credit is applicable to some, but not all, of the 

services that the NBS brokers perform for GSA. The commission credits on GSA’s NBS 

contracts ranged from 26.0 percent to 51.5 percent for applicable services in the first year.
Page 8 GAO-07-17 National Broker Contracts

majority of the task orders completed in the first contract year (65 of 76) 

were not eligible for commissions.13 Of the 11 completed task orders for 

commission-eligible services, 10 resulted in a commission, and, of these, 7 

were for services that also can result in a credit to the government. These 

completed task orders are expected to result in about $216,000 in 

commission credits, which GSA will use to reduce the initial rental 

payments for approximately 418,000 square feet of leased government 

space. GSA anticipated further reductions in rent costs from what it 

believed to be the brokers’ greater knowledge of the commercial real estate 

market. Finally, GSA anticipated savings to accrue from reductions in its 

costs for (1) contract fees, (2) administration expenses, and (3) personnel. 

As the tasks associated with GSA’s previous contracts are completed, GSA 

will no longer have to pay the fees and administration costs associated with 

those contracts. Whether GSA will avoid personnel costs is unclear. By 

shifting its leasing workload to the NBS brokers, GSA initially believed it 

could avoid hiring additional realty specialists. GSA subsequently identified 

additional tasks for this position, however, and now believes that it must 

maintain an adequate (but unspecified) number of realty specialists to 

oversee the NBS brokers. It is unclear how this change in view will affect 

future personnel levels and long-term costs. According to GSA, it plans to 

quantify savings from most of these sources. However, as of October 2006, 

GSA had not developed procedures or time frames for doing so. We are 

recommending that GSA develop processes for quantifying the savings, if 

any, resulting from its use of the NBS contracts. 

GSA distributed its initial leasing workload fairly equally among the 

brokers agencywide, as the contracts require, but program delays, 

insufficient data, and a lack of program procedures have slowed the 

transition to performance-based distributions. According to the contracts, 

GSA is required (1) initially to distribute task orders to the four NBS 

brokers “as equally as possible,” unless their performance is unsatisfactory, 

and (2) once a record of their performance is available, to base its 

distributions on the brokers’ performance. The contracts further define the 

initial equitable distribution as “similar size projects in similar geographic 

areas (e.g., urban or rural) to the maximum extent possible within the 

existing workload available.” In addition, GSA’s contract administration 

13Sixty-five of the 76 task orders were for market data, which are not eligible for a 

commission credit. A commission credit does not accrue to the government when brokers 

do not receive a commission. In addition, the government does not receive a credit for 

expedited leasing transactions, if these transactions are completed on time. 
Page 9 GAO-07-17 National Broker Contracts

guide specifies that its initial distributions are to be based on square 

footage “with each firm [broker] receiving equal distribution in all eleven 

GSA regions and in all markets.” GSA originally planned to start 

performance-based distributions after the first contract year, anticipating 

that by then the brokers would have completed a sufficient number and 

variety of commission-eligible task orders to establish a record of their 

performance. However, delays in starting up the program—attributable, in 

part, to bid protests—limited the number of commission-eligible task 

orders completed by the end of the first contract year to 11, which is a 

number that GSA considered insufficient to establish a record of 

performance. GSA now expects to begin performance-based distributions 

at the start of the third contract year, but has not yet defined how many and 

what types of task orders are needed to establish a record of performance. 

Without this information, GSA cannot demonstrate that it has established a 

record of performance and is ready to move to performance-based 

distributions. In addition, GSA has not yet developed guidance and 

procedures for making performance-based distributions, but plans to do so 

before altering its current distribution approach. We are recommending 

that in developing these procedures, which GSA describes as a top priority, 

GSA clarify the number and types of completed task orders needed to 

establish a record of the brokers’ performance. 

According to our analysis of GSA’s data, GSA’s initial distribution among the 

brokers was fairly equal agencywide, but varied from region to region. In 

total, for example, each broker received between about 2.3 million and 

about 3 million square feet of leased space. However, in GSA region 3, 

broker C received about 11 times more square footage than broker B,14 and 

in GSA region 11, which distributed nearly half of the square footage issued 

in the first contract year, broker A received about 40 percent of the region’s 

total, while broker C received about 16 percent. According to GSA, such 

variation reflects, among other factors, differences in the sizes of the task 

orders available for distribution, changes in its client agencies’ space 

requirements, and decisions to keep certain projects in-house. GSA views 

regional variations as unavoidable and—on the basis of our analysis—plans 

to modify the language of its administration guide to conform to the 

contracts, specifying that its initial distributions of task orders will be 

allocated “as equally as possible,” rather than “equal,” across the regions. 

Our analysis of GSA’s data also found that GSA’s distributions of task orders 

14We identify the four NBS brokers as brokers A through D, as needed, throughout this 

report to protect their proprietary information.
Page 10 GAO-07-17 National Broker Contracts

for market data and expedited leasing transactions varied. Although task 

orders for market data are not eligible for commissions, they often lead to 

commission-eligible follow-on work, and disparities in their distribution 

could create future workload imbalances. Disparities in the distribution of 

expedited leasing transactions have an immediate impact because the 

broker retains the entirety of any commission offered by the building 

owner. On the basis of our analyses, GSA agreed to provide greater 

management attention of its distribution of task orders for market data and 

expedited leasing transactions. Finally, GSA had not tracked information 

on the geographic location (e.g., rural or urban) of task orders and, 

therefore, did not have data to assess the equitability of its distributions by 

similar geographic areas, as specified in its contracts with the NBS brokers. 

We are recommending that GSA begin tracking this information. 

To oversee the NBS brokers, GSA has put a new organizational structure in 

place and implemented numerous management tools designed to help 

ensure consistent oversight. These actions are intended to address 

weaknesses in GSA’s administration of its earlier contracts for leasing 

services and to provide consistent direction for its 11 regions. In December 

2002, GSA’s Office of the Inspector General reported that GSA’s 

administration of the earlier broker contracts was inadequate and 

inconsistent, thereby hampering GSA’s oversight of the contracts. GSA 

acknowledged these weaknesses and developed a new—and substantially 

different—organizational structure to help ensure consistent oversight of 

the NBS brokers. More specifically, GSA established key national and 

regional management positions, defined the roles and responsibilities of 

these positions, designated many of its realty specialists as project 

managers, and redefined the realty specialists’ responsibilities to reflect 

their new roles. In addition, GSA implemented numerous management 

tools to improve its management and oversight of the NBS program. Two of 

these tools are used for GSA’s entire leasing program—the Transaction 

Management Playbook (a handbook with standardized templates that 

provide consistent criteria for GSA’s client agencies to determine their 

space requirements) and the e-Lease system (GSA’s electronic system for 

managing its leasing transactions, including transactions completed by 

NBS brokers). The other tools are unique to the NBS contracts. 

Specifically, GSA (1) developed national guidance for administering the 

contracts, (2) created a performance evaluation board that meets quarterly 

to assess both the regions’ and the brokers’ performance, (3) established 

peer reviews to help ensure that its regions implement the NBS contracts 

consistently, (4) created a program for certifying personnel with 
Page 11 GAO-07-17 National Broker Contracts

responsibilities for overseeing the NBS brokers, and (5) required the 

brokers to attend quarterly performance review meetings. 

GSA has numerous measures for evaluating the NBS brokers’ performance, 

but several issues, if left unresolved, could lead to inconsistent evaluations 

and inefficiencies in the evaluation process. GSA’s performance measures 

address the quality, timeliness, and responsiveness of the brokers’ work 

and the brokers’ contribution to GSA’s meeting long-term performance 

goals, such as satisfying its client agencies and reducing the government’s 

costs. GSA uses its evaluations of the brokers’ performance to, for 

example, hold performance discussions with the brokers and determine 

whether to renew its contracts with them. GSA evaluates the brokers’ 

performance of task orders for lease acquisitions, expansions, and 

extensions, but not for market data. The evaluations occur at the 

completion of certain task order activities, at the completion of an entire 

task order, and annually, and the performance measures vary depending on 

the evaluation stage. GSA records the scores for completed task orders in 

e-Lease. In addition, at the end of each contract year, the National 

Contracting Officer is required to prepare and enter an annual evaluation of 

each broker’s performance into a nationwide, government database on 

contractor performance. The annual evaluation considers, among other 

factors, the broker’s performance on completed task orders and the 

broker’s contribution to GSA’s progress in meeting its long-term 

performance goals for its leasing program. According to GSA’s first annual 

evaluations of the NBS brokers, each met its contract’s requirements. 

However, the evaluations are limited to the brokers’ performance of the 11 

task orders that were subject to evaluation and completed as of March 31, 

2006. Throughout the course of our review, we identified and discussed 

with GSA officials numerous issues related to GSA’s contracts, guidance, 

and processes for evaluating the NBS brokers’ performance, including 

inapplicable criteria such as GSA’s measure for evaluating the brokers’ help 

in reducing the amount of vacant space in GSA’s inventory. According to 

NBS program managers, the brokers cannot influence GSA’s progress in 

this area and, thus—while specified in the contract—GSA does not 

evaluate them on this measure. NBS program officials acknowledged 

inaccuracies and inconsistencies, within and between the contracts, the 

administration guide, and e-Lease, as well as omissions in the guide. 

However, according to the officials, these issues have not adversely 

affected GSA’s administration of the contracts or GSA’s evaluation of the 

brokers’ performance. GSA officials also acknowledged that e-Lease needs 

to be revised to eliminate factors that GSA’s Contracting Officer’s Technical 

Representatives cannot adequately address when they are performing their 
Page 12 GAO-07-17 National Broker Contracts

assessments. At the completion of our review, GSA had corrected e-Lease, 

but it had not addressed any of the other issues that we identified. We are 

recommending that GSA conform its contracts and administration 

guidance to help ensure that its regions consistently evaluate the brokers’ 

performance. 

We requested comments on a draft of this report from GSA. In its written 

comments, GSA stated that it is pleased with the results of the first year of 

the NBS program. However, GSA noted that the agency had experienced 

challenges in implementation due to the magnitude and impact of the 

program. GSA stated that it had already initiated a number of actions to 

address issues identified in this report and agreed to “work on the 

implementation” of our recommendations. GSA’s comments are reprinted 

in appendix IV. GSA also provided technical comments that we have 

incorporated in this report, as appropriate. 

Background GSA provides workspace for more than 1.1 million federal workers through 

the Public Buildings Service, the landlord for much of the federal 

government. When GSA began planning for the NBS contracts in late 2003, 

the National Office of Realty Services, within GSA’s Public Buildings 

Service, was responsible for the acquisition and administration of GSA’s 

leases.15 About half of the federal employees are housed in about 1,600 

federally owned buildings, while the remainder is located in leased space 

within over 7,200 privately owned buildings at an annual cost of about $3.6 

billion, according to GSA. Whenever possible, GSA satisfies its tenant 

agency needs within space that GSA already owns or leases. When suitable 

space is not available, however, GSA acquires additional space in privately 

owned buildings. More than 80 percent of GSA’s leases are for 20,000 square 

feet or less. GSA leases a wide variety of space for federal agencies, 

including office space, laboratories, clinics, border stations, and 

courthouses, in both urban and rural areas throughout the United States, 

the District of Columbia, and the U.S. territories. GSA signs leases on 

behalf of its tenant agencies and collects rent from them. The rental 

15GSA’s National Office of Realty Services has been replaced by the Solutions Development 

Division. This division develops national policy on solutions development processes, 

protocols, standards, and measures of performance. The division falls under GSA’s Office of 

National Customer Services Management, which is responsible for coordinating the Public 

Buildings Service’s customer relationships and creating and implementing services to GSA’s 

customers.
Page 13 GAO-07-17 National Broker Contracts

payments are deposited into the Federal Buildings Fund—which is the 

principal funding mechanism for GSA’s Public Buildings Service to 

construct and maintain facilities for federal agencies.

Before initiating the NBS contracts, GSA compared the cost of doing 

business using various contract vehicles,16 including

• no-cost contracts—under which brokers collect commissions paid by 

building owners as payment for their services, with no additional 

payment made by the government;

• fixed price contracts—under which the government guarantees 

payment of a fixed fee for broker services, to be paid from appropriated 

funds; and 

• the continued use of GSA’s previous contracts.

GSA concluded that awarding “no-cost,” nationwide contracts was the best 

option available because, according to GSA’s analysis, such contracts 

addressed GSA’s capacity issues, resulted in the lowest cost, and best 

addressed GSA’s previous contract administration issues. In addition, 

according to GSA, entering into the contracts would (1) allow its realty 

specialists—the individuals responsible for carrying out GSA’s leasing 

transactions—more time to manage projects and customer relationships; 

(2) enable GSA to leverage its national position in the market and take 

advantage of the best financial terms being offered; and (3) provide 

consistent services from region to region, leading to better overall service 

to its customers (tenant agencies).We did not evaluate GSA’s 2003 analysis 

for entering into the NBS contracts. 

GSA issued its request for broker proposals for nationwide leasing services 

in March 2004. GSA received 18 offers in response to its request and, on 

October 4, 2004, awarded four nationwide contracts to the real estate 

companies of Jones Lang LaSalle; Julien J. Studley, Inc.; The Staubach 

Company-Northeast; and Trammell Crow Services, Inc. The contracts were 

expected to begin on December 6, 2004, but were delayed by bid protests 

related to the awards. Three of the bid protests were withdrawn, and, on

16GSA, Business Analysis and Case for National Contracts for Brokerage Services in GSA

(Aug. 25, 2003). 
Page 14 GAO-07-17 National Broker Contracts

January 31, 2005, GAO issued a decision denying the final protest.17 GSA 

held its orientation for the four NBS brokers in March 2005 and initiated the 

contracts on April 1, 2005. Each of the contracts has a 1-year base period—

which expired on March 31, 2006—and four option periods that allow the 

government, at its sole discretion, to extend the contracts, in annual 

increments, through March 31, 2010. GSA exercised the first option, 

extending each of the contracts through March 31, 2007. During the 

contract period, each broker is expected to provide lease acquisition 

services for GSA’s 11 regions. See figure 1 for the locations of GSA regional 

offices.

17In addition to its other responsibilities, GAO resolves disputes (bid protests) concerning 

the award of federal contracts. 
Page 15 GAO-07-17 National Broker Contracts

Figure 1: GSA’s 11 Regional Offices and the States They Serve

In 2004, GSA anticipated that the four NBS brokers would perform at least 

50 percent of its expiring lease workload in the first year of the contracts, 

with yearly increases of 10 percent, culminating in the brokers’ 

performance of 90 percent of GSA’s workload by 2010—the fifth and final 

year of the contracts. GSA estimated the value of each NBS contract at $33 

million, over a 5-year period.

Sources: GAO and Map Resources (map).

The Heartland region

Greater Southwest region

Rocky Mountain region

Pacific Rim region

Northwest Arctic region

New England region

Northeast and

Caribbean region

Mid-Atlantic region

Southeast region

Great Lakes region

National Capital region

10

11

1

2

3

5

6

4 7

9

8

NY

ME

VT

NH

MA

CT

RI

KY

TN NC

SC

FL

GA AL

OH

MI

IN

IL

WI

MN

MS

NJ PR

PA

VA

DE MD

WVA

IA

MO KS

TX

NM OK

AZ

HI

American Samoa

NV

CA

AR

LA

NE

CO

WY

SD

ND MT

WA

AK

OR ID

UT

11

GSA regions
Page 16 GAO-07-17 National Broker Contracts

GSA and the brokers who represent GSA use a “solicitation for offers” to 

obtain offers from building owners (offerors) with available space that may 

meet GSA’s leasing needs. The solicitation, among other things, describes 

the government’s space and location requirements and the criteria that will 

be used to assess the building owners’ offers. 

GSA issues work to the NBS brokers through task orders. Under the terms 

of their contracts, the NBS brokers are required to perform the following 

types of task orders and activities on behalf of GSA: 

• lease acquisitions (i.e., assist tenant agencies with the development of 

their space requirements, develop project schedules, prepare market 

surveys, develop and issue GSA’s solicitations for offers to building 

owners who may have space available for leasing, evaluate the offers, 

and negotiate the offers with building owners);

• lease expansions (i.e., review the tenant agency’s existing occupancy 

agreement, conduct an orientation to inform parties about the 

government’s requirements and criteria for evaluating offers from 

building owners, and develop the requirements necessary to perform 

requested alterations related to the expansions);18

• lease extensions (i.e., determine the appropriate term of the required 

extension through discussions with GSA and tenant agency personnel 

and submit a request for the lease extension to the building owner);19

and

• market data (i.e., provide summary market information, including 

comparable rental rates, by building type, in the relevant market). 

The Federal Acquisition Regulation (FAR) is the principal regulation 

applicable to the acquisition of supplies and services by federal agencies, 

including brokerage services. The FAR prescribes, among other matters, 

requirements related to identifying and avoiding conflicts of interest. The 

FAR allows the head of an agency, or a designee, to waive FAR subchapter 

9.5 requirements, which deal with organizational conflicts of interest, when 

18A lease expansion requires a change or modification to an existing lease.

19A lease extension is a continuation of the original lease, usually for a short term, with 

substantially the same terms and conditions.
Page 17 GAO-07-17 National Broker Contracts

doing so would allow the government to test new techniques and methods 

of acquisition and when it is determined that applying a particular FAR 

requirement would not be in the government’s best interest. 

The NBS brokers are expressly precluded from performing inherently 

governmental functions and activities. Inherently governmental functions 

and activities, including the execution of a lease obligating the government 

to pay the building owner, must be performed by GSA employees. 

Controls Have Not 

Fully Mitigated 

Potential Conflicts of 

Interest or Federal 

Information Security 

Concerns 

To increase competition for its NBS contracts, GSA took steps to allow 

dual-agency brokerage firms—that is, firms that simultaneously represent 

both building owners and tenants, such as GSA (acting on behalf of a 

federal agency), to be considered for the contract awards. GSA recognized 

that allowing such firms to offer properties to GSA that other employees of 

their firms were simultaneously marketing could violate federal conflict-ofinterest requirements. Therefore, GSA waived the requirements—as 

permitted by the FAR—and developed controls to detect and mitigate 

conflicts of interest. Conflicts of interest arise when a contractor is 

required to assume conflicting roles that might bias its judgment. This can 

result in the contractor gaining an unfair or improper advantage over its 

competitors. Some of the controls, such as requirements for disclosing 

potential conflicts of interest, apply to both dual-agency firms and tenantonly firms—that is, firms that represent tenants exclusively. Two of the four 

NBS brokers are dual-agency firms and two are tenant-only firms. Other 

GSA controls, such as a prohibition against the same broker employee 

representing both itself and the building owner on the same leasing 

transaction and requirements for a “conflict wall” to isolate procurementsensitive information, apply only to dual-agency firms because of concerns 

that an employee of a dual-agency firm could, among other things, 

manipulate a transaction to maximize the firm’s commission or misuse 

government information to gain an unfair competitive advantage over other 

firms. As of March 31, 2006, 20 potential conflicts of interest had been 

disclosed, 13 of which were determined to be actual conflicts. GSA 

resolved these 13 conflicts by, among other actions, reassigning them to 

other brokers. The 20 potential conflicts represent about 4 percent of the 

479 commission-eligible task orders issued to the brokers in the contracts’ 

first year. GSA also confirmed that the brokers have electronic and physical 

controls (i.e., a conflict wall) to help prevent unauthorized information 

sharing between dual-agency broker employees. However, more than 1-1/2 

years after beginning work under the contracts, GSA had not assessed 

whether the controls are adequate. In addition, GSA had not assessed 
Page 18 GAO-07-17 National Broker Contracts

whether NBS program controls satisfy federal requirements for 

safeguarding information and information systems used on GSA’s behalf. 

More specifically, GSA had not (1) conducted an assessment of the risk and 

magnitude of harm that could arise from, among other things, the broker’s 

unauthorized access to, or disclosure of, GSA’s leasing information;

(2) modified its contracts with the brokers, as appropriate, to impose 

additional controls for protecting the information and information systems; 

or (3) tested, as needed, the adequacy of the four brokers’ controls for 

safeguarding the information and information systems. In addition, three 

conflict-of-interest requirements imposed on the two dual-agency firms—

but also applicable to the tenant-only firms—had not been included in 

GSA’s contracts with its tenant-only brokers.

Dual-Agency Practices 

Create Potential Conflicts of 

Interest 

Allowing the government to be represented by dual-agency firms creates 

the potential for organizational conflicts of interest. Concerns about a 

conflict of interest would arise if the government allowed itself to be 

represented by a dual-agency firm that was also representing a building 

owner whose building was being offered for lease to the government. An 

employee of a dual-agency firm, for example, might be tempted to 

manipulate the transaction or misuse privileged government information to 

gain an unfair advantage over other firms, attempting to ensure that the 

client’s building was leased by the government. Even if the employee did 

not take any such improper action, the potential for impropriety exists. 

Recognizing this, the FAR requires a federal agency to identify potential 

organizational conflicts of interest as early as possible during the 

procurement planning process and to avoid, neutralize, or mitigate any 

significant conflict before awarding a contract—that is, in this context, 

before selecting a dual-agency firm as its contractor.

GSA Waived the FAR’s 

Conflict-of-Interest 

Requirements to Increase 

Competition

GSA recognized that allowing dual-agency firms to compete for the NBS 

contracts would create a significant potential for conflicts of interest. GSA 

could have avoided the threat of potential conflicts by refusing to allow 

dual-agency firms to compete for the NBS contracts. GSA also could have 

required firms to disqualify themselves from offering property to GSA that 

the firms were concurrently attempting to lease. Nevertheless, GSA 

believed that the government would benefit from including these firms in 

the competition, in part, because dual-agency firms are common in the 

commercial real estate market. For this reason, GSA chose to seek a waiver 

of the FAR’s conflict-of-interest requirements and to focus, instead, on 

conflict mitigation on a transaction-by-transaction basis.
Page 19 GAO-07-17 National Broker Contracts

The waiver request—submitted by GSA’s former National Office of Realty 

Services—cited concerns about limiting competition for the contracts and 

noted that dual-agency firms are regulated in most states by an ethics 

board, which monitors brokers for violations and may impose penalties 

ranging from large monetary fines to license terminations.20 Nevertheless, 

the request recognized a need to, among other matters, (1) prohibit the 

same individual from representing both the government and the building 

owner in the same leasing transaction and (2) establish additional controls 

over dual-agency firms.21 GSA’s Deputy Associate Administrator for 

Acquisition Policy granted the waiver on November 11, 2003, subject to the 

implementation of the controls specified in the waiver request. 

GSA Developed Numerous 

Controls to Help Ensure the 

Impartiality of Brokers 

When Handling Its Leasing 

Transactions

To mitigate the potential for conflicts of interest stemming, in part, from 

GSA’s decision to allow dual-agency firms to compete for the NBS 

contracts, GSA developed a number of specific controls for both types of 

NBS brokerage firms. Two of the four NBS brokers are dual-agency firms, 

and two are tenant-only firms, representing tenants like GSA (acting on 

behalf of a federal agency), exclusively. For example, GSA applied one 

control—a requirement to inform GSA of any potential conflicts of 

interest—to all four NBS brokers, but applied additional controls only to 

the dual-agency firms, including a requirement that the firms establish 

20Each of the five local real estate regulators (four states and the District of Columbia) that 

we contacted oversee broker conflict-of-interest issues through their licensing process, and 

each had an enforcement process for responding to complaints. Regulatory penalties 

included fines and suspension or revocation of a broker’s real estate license. In addition, 

each of the regulatory entities required brokers to adhere to a code of ethics or standards of 

conduct, including a requirement for brokers to act as a fiduciary agent for their clients, 

meaning that each broker is required to act in the best interest of each of its clients. 

Penalties for violations include fines and loss, or suspension, of a broker’s real estate 

license.

21All of the local regulatory entities we contacted told us they allowed brokers to operate as 

“full-service” real estate firms within their jurisdictions, meaning that the firms may 

represent both tenants and building owners, although not necessarily on the same leasing 

transaction. Three of the five regulatory entities—California, the District of Columbia, and 

Virginia—allowed the same broker employee in a firm to represent both sides of a 

commercial leasing transaction, if the employee disclosed that he or she was doing so. 

These entities also required the brokers to maintain the confidentiality of their clients’ 

information. Texas allowed commercial dual-agency brokerage firms to serve as 

intermediaries. However, it did not allow the same employee in a firm to represent both 

sides of a commercial transaction and restricted firms from providing advice that may favor 

one party over the other. Finally, while Maryland regulated brokers who perform residential 

transactions, its regulations did not apply to commercial transactions.
Page 20 GAO-07-17 National Broker Contracts

“conflict walls” to help prevent electronic and physical sharing of 

information between brokers who represent GSA and other employees 

within the same brokerage firm who represent building owners. GSA also 

imposed other dual-agency controls, three of which are also applicable to 

the tenant-only firms.

GSA Required All of the NBS 

Brokers to Inform GSA of 

Potential Conflicts

Recognizing that, with knowledge of potential conflicts, GSA could 

minimize their impact on a task-order-by-task-order basis, GSA required 

each of the four NBS brokers, including the brokers’ subcontractors, to 

inform GSA in writing, and within 3 working days after receiving a task 

order, whether it would have any organizational conflicts of interest in 

performing work related to an assigned task order.22 The four firms are 

expected to disclose the following two types of potential conflicts: (1) dualagency situations—when a brokerage firm represents a building owner 

with available space that might meet GSA’s needs—and (2) property 

management responsibilities—when the brokerage firm is the property 

manager for a building owner who has space that may be suitable for the 

government. While such conflicts generally would not apply to tenant-only 

firms, all of the firms are subject to the disclosure requirement. In addition, 

all broker and subcontractor employees—regardless of the type of 

brokerage firm—who will be working on a GSA task order must submit, 

within 3 days of receiving a task order, an individual conflict-of-interest and 

nondisclosure statement acknowledging that they (1) have read and agreed 

to follow their contract’s conflict-of-interest requirements; (2) understand 

that the performance of work related to a GSA task order involves 

restricted procurement information that—if disclosed—may subject both 

the discloser and the recipient of the information to contractual, civil, and 

criminal penalties; and (3) understand that the disclosure of proprietary 

information submitted by a building owner in response to a solicitation for 

offers is strictly prohibited and subject to a variety of penalties, including 

fines or jail time, or termination of the contract.

22Related to the disclosure of potential conflicts of interest, under the terms of their 

contracts with GSA, both types of firms also must ensure that (1) none of their personnel 

(including employees, consultants, and subcontractors) performing work under an NBS 

contract will participate, in any capacity, in providing any advice or representation to a 

building owner, representative, lessor, or other third party in connection with any 

government leasing transaction during the term of the contract and for another 6 months 

after the conclusion of the broker’s work under the contract and (2) all personnel 

performing services under a NBS contract will treat any and all information generated and 

received in connection with their work as proprietary and confidential, continue to do so in 

perpetuity, and disclose and use such information only in connection with their work under 

the contract.
Page 21 GAO-07-17 National Broker Contracts

As of March 31, 2006—the end of the first contract year—the four brokers 

had disclosed 20 potential conflicts of interest.23 The 20 potential conflicts 

occurred in about 4 percent of the 479 commission-eligible task orders GSA 

issued for lease acquisitions, expansions, and extensions, as well as 

expedited leasing transactions for these services during the first contract 

year.24 Seventeen of the 20 disclosures involved task orders issued to the 

two dual-agency firms, and the remaining 3 involved task orders issued to 

the two tenant-only firms. The National Contracting Officer and legal 

counsel in GSA headquarters are responsible for reviewing the 

circumstances of each potential conflict of interest to determine whether 

the circumstances involve an actual conflict.25 If a conflict is determined to 

exist, GSA has three possible options for accomplishing the work. 

Specifically, under the terms of GSA’s contracts with the brokers, GSA can

• select another broker that does not have a conflict; 

• elect to perform the work in-house; or 

• issue the task order to the original broker if GSA determines, after 

considering such factors as the broker’s expertise and GSA’s capacity to 

perform the work in-house, that doing so is in the government’s best 

interest. 

23GSA uses a log to record identified conflicts of interest. As of March 31, 2006, the log 

contained 22 entries. Two of the 22 entries provided information on general advice sought 

from regional personnel related to GSA’s conflict-of-interest requirements. Since the 2 

entries did not relate to a potential or actual conflict on a specific leasing transaction, we 

omitted these entries for our reporting purposes. NBS program officials agreed that the 

entries should not be construed as relating to potential or actual conflicts of interest. 

24GSA also issued 65 task orders for market data during the first year of the contracts. We 

excluded these task orders from the universe of those with the potential for a conflict of 

interest because, as discussed in more detail later in this report, they involve limited work 

and the brokers are not paid for market data. 

25Beginning in June 2005, responsibility for dealing with potential or actual conflicts of 

interest shifted from regional personnel to the National Contracting Officer and legal 

counsel in GSA headquarters. As shown in appendix II, one potential conflict was identified 

before June 2005. The circumstances of this potential conflict were investigated and 

resolved by the Regional Contracting Officer in conjunction with legal counsel in the 

applicable region. 
Page 22 GAO-07-17 National Broker Contracts

After reviewing the circumstances of the 20 potential conflicts of interest,26

GSA officials determined that for 7, the circumstances did not involve a 

potential or actual conflict of interest, and the work proceeded as planned 

under the original task orders. For the other 13 broker disclosures, 

however, the circumstances were determined to involve actual conflicts of 

interest.27 The majority of these conflicts involved disclosures that the 

brokers represented or managed property for one or more building owners 

with space that might meet GSA’s requirements. One of the 13 conflicts 

required no alternative action on GSA’s part, since the task order was 

canceled after the agency’s space requirements changed. To resolve the 

remaining 12 conflicts, GSA reassigned 9 of the task orders to brokers 

without conflicts, and, for the 3 other task orders, required subcontractors 

of the originally assigned brokers to comply with various conflict-ofinterest restrictions. See appendix II for more details on the 20 potential 

conflicts identified as of March 31, 2006.

GSA Imposed Additional 

Controls for Dual-Agency Firms

To prevent conflicts of interest when it could not reassign work to another 

broker or perform the work in-house, GSA prohibited the same employee 

within a dual-agency firm from representing both GSA and the building 

owner in the same leasing transaction and required dual-agency firms to 

establish a “conflict wall” to help prevent electronic and physical sharing of 

information between broker employees, who represent GSA, and other 

employees within the same brokerage firm who represent building owners. 

GSA specified numerous controls related to the dual-agency firms’ conflict 

wall, including the following: 

• Establish separate electronic file servers and other electronic 

safeguards to prevent non-GSA broker employees within the brokerage 

firm from obtaining access to GSA-related documents, files, and 

information.

• Ensure that paper files and documents are kept, safeguarded, and 

maintained in separate, secure locations that preclude access by anyone 

not working on GSA’s contracts.

26We reviewed information about the circumstances associated with each of the 20 potential 

conflicts of interest and GSA’s resolution of the disclosures. However, we did not test the 

universe of commission-eligible task orders issued to the brokers during the first contract 

year to determine whether other potential conflicts of interest may have existed. 

27The 13 actual conflicts represented about 3 percent of the 479 commission-eligible task 

orders distributed among the brokers in the first year. 
Page 23 GAO-07-17 National Broker Contracts

• Inform all members of the brokerage firm of the existence of the conflict 

wall.

• Maintain the conflict wall throughout the term of the contract.

• Execute, when directed by the National Contracting Officer, 

certifications confirming the continued existence of the conflict wall 

and related processes and procedures.28

• Allow GSA’s periodic inspection and verification of the conflict wall 

during the term of the contract.

The conflict wall and associated controls that GSA established for its dualagency brokers are in addition to those typically required in the 

commercial real estate industry. None of the five local real estate regulators 

(four states and the District of Columbia) that we contacted imposed such 

requirements. Furthermore, officials from nearly all of the 10 public- and 

private-sector entities we interviewed that contract for leasing services 

said they do not require their brokerage firms to establish a conflict wall to 

safeguard their procurement-sensitive information. In their view, they have 

adequate recourse, ranging from fines to license revocations, to identify 

and manage conflicts of interest. The one exception was the Department of 

Veterans Affairs, which modeled its contracts, including the requirement 

for a conflict wall, after GSA’s contracts. GSA’s two dual-agency brokers 

incurred additional expenses to address GSA’s conflict wall requirements. 

Nevertheless, officials from these firms indicated that they are comfortable 

with the additional requirements, given the need to ensure the integrity of 

the government’s procurement processes. 

GSA Established Other DualAgency Controls, Three of Which 

Are Also Applicable to the 

Tenant-Only Brokers

GSA established other controls to deal with the potential for dual-agency 

conflicts. First, before a dual-agency firm can solicit offers from any 

building owner (offeror), the firm must inform the owner that the firm 

represents both tenants and other prospective offerors and obtain a signed 

statement (dual-agency notification statement) indicating that the building 

owner is aware of the broker’s affiliations before making an offer. Second, 

under the terms of their contract, personnel from a dual-agency firm are 

28GSA’s organizational conflict-of-interest disclosure statement, requires the brokers to, 

among other things, certify that a conflict wall is in place, and that personnel involved in 

carrying out a GSA task order have been advised of all of the conflict-of-interest restrictions 

contained in their contracts. 
Page 24 GAO-07-17 National Broker Contracts

not permitted to share in any fees or commissions received by, or payable 

to, the broker for the broker’s representation of a building owner, 

representative, lessor, or other third party in a GSA leasing transaction. 

Finally, GSA implemented three additional controls exclusively for its dualagency firms. These three controls are as follows: 

• First, all dual-agency personnel performing work in connection with an 

issued task order must execute—if directed by the National Contracting 

Officer—additional confidentiality agreements, nondisclosure 

agreements, or other documentation deemed necessary to protect the 

proprietary nature or confidentiality of information related to the task 

order.

• Second, a dual-agency firm must immediately notify the National 

Contracting Officer of any conflicts of interest discovered during the 

performance of work. 

• Third, a dual-agency firm must include a conflict-of-interest clause in all 

of its subcontracts.

While GSA imposed these controls exclusively on the dual-agency firms, 

none of the controls address situations uniquely faced by these firms. For 

example, individuals within a tenant-only firm could also discover a 

conflict of interest after completing their conflict-of-interest and 

nondisclosure statements, which are required within 3 working days of 

receiving a task order from GSA. In addition, because a tenant-only firm 

could also subcontract with a dual-agency firm or be a subcontractor for a 

dual-agency firm, the need for a special confidentiality agreement or a 

nondisclosure agreement is also applicable to both types of firms. In March 

2006, GSA’s legal counsel agreed that the controls are applicable to GSA’s 

tenant-only firms, but noted that the omission of the additional 

requirements in the contracts is of “low risk to the overall successful 

implementation of the [NBS] program” because there are numerous 

contractual and noncontractual remedies if a firm fails to report a potential 

or actual conflict of interest. The contractual remedies include the right to 

terminate a task order, or the contract as a whole, and to have the work 

redone by another broker at the original broker’s expense. The 

noncontractual remedies include debarment or even criminal sanctions if,29

29Debarment places a potential offeror on a list of firms that are ineligible for government 

contracts. See 48 C.F.R. § 2.101 and subpart 9.4. 
Page 25 GAO-07-17 National Broker Contracts

for example, a broker’s actions violate the False Claims Act.30 GSA officials 

further noted that brokerage firms have other reasons to properly disclose 

potential conflicts. They explained that, in their view, it is difficult for firms 

to hide potential conflicts because the existence of a conflict will 

eventually surface during the procurement process.31 NBS program 

officials also noted that as long as GSA’s task orders are distributed as 

equally as possible among the brokers—as is initially required under the 

contracts—the brokers do not have an incentive to avoid disclosing 

potential conflicts.32 Nevertheless, GSA agreed to include all of the dualagency conflict-of-interest requirements in its contracts with the tenantonly firms.33 The contracts allow GSA to issue change orders, which 

unilaterally modify the contracts, and GSA indicated that it planned to do 

so “as quickly as possible and in concert with other priority issues requiring 

its attention.” As of October 31, 2006, the contracts had not been modified.

30See 31 U.S.C. § 3729, et seq., and their criminal counterparts, including 18 U.S.C. §§ 286 and 

287, concerning the submission of false claims or conspiracy to obtain payment of any false, 

fictitious, or fraudulent claims against the United States.

31The identity of the parties involved in a leasing transaction would be disclosed in 

documentation related to the transaction. Thus, as long as individuals are not overtly 

disguising their involvement in the transaction, their identify would be apparent before 

completion of the transaction. 

32Representatives from GSA, commercial brokerage firms, and others we interviewed 

indicated that brokers have a fiduciary responsibility to their clients and, as such, are 

subject to substantial fines and the revocation or loss of their licenses for ethical 

violations—penalties that they believe are strong incentives to properly disclose conflicts of 

interest. While we did not specifically inquire, five of the nine nationwide commercial 

brokerage firms we interviewed volunteered that they would not put their reputations at 

stake, lose their business, or risk being reported for ethical violations by their competitors.

33Other variations exist between GSA’s dual-agency and tenant-only conflict-of-interest 

requirements. For example, GSA’s contracts with the dual-agency firms identified several 

remedies, including the right to terminate work, that GSA could apply if a dual-agency firm 

failed to identify a conflict of interest. While not specifically applied to the tenant-only firms, 

these remedies exist elsewhere in the contracts. As a consequence, we are not emphasizing 

these contractual variations. Nevertheless, NBS program officials agreed to conform all of 

GSA’s conflict-of-interest contractual requirements for both types of brokerage firms. 
Page 26 GAO-07-17 National Broker Contracts

GSA Confirmed the 

Existence of the DualAgencies’ Conflict Walls, but 

Had Not Assessed Their 

Adequacy

In October 2005, GSA preliminarily inspected the conflict walls at its two 

dual-agency brokerage firms, as the NBS contracts allow. A team of four 

GSA staff, including GSA’s Public Buildings Service Information System 

Security Manager, conducted the inspections, which GSA called “site 

compliance visits.” According to GSA officials, these visits were the “first 

step” toward a full evaluation of the firms’ compliance with GSA’s conflict 

wall requirements. Site compliance visits are intended to validate and 

ensure that security controls are in place for properly safeguarding federal 

information managed by contractors. However, because of time 

constraints, the scope of GSA’s review was limited to visual observations 

and interviews with on-site broker personnel. GSA recorded its 

observations, indicating that the brokers had physical controls, such as 

electronic access badges and cabinets with locks and keys, to restrict 

access to GSA’s procurement-sensitive information and had electronic 

controls to help prevent unauthorized access to files and folders contained 

on the brokers’ file servers.34

While GSA confirmed that the brokers have electronic and physical 

controls (i.e., a conflict wall) to help prevent the sharing of information 

among broker employees, it had not assessed whether the controls were 

adequate to preclude unauthorized information sharing.35 Nevertheless, 

GSA recommended, among other actions, that the brokers consider 

implementing the following four additional electronic controls: 

• Apply “applicable” federal standards to ensure that (1) the brokers’ 

servers are more secure and (2) applicable security controls are in 

place.36 

34Procurement-sensitive information includes information about the identity of offerors and 

the details of their offers.

35We also visited the two dual-agency firms and observed their physical and electronic 

access controls; however, like GSA, we also did not test the adequacy of these controls. We 

observed that both firms have physical access controls, including separate office space, 

locks on file cabinets, and access badges, which help ensure control of the firms’ physical 

space. In addition, both firms have electronic controls to limit access to the shared drives 

they use to store and access GSA information. According to the brokers’ information 

technology personnel, only those staff members who are dedicated to the GSA contract 

have access to the shared computer drives. 

36GSA did not identify which federal standards it viewed as applicable.
Page 27 GAO-07-17 National Broker Contracts

• Implement controls such as folder-level or file-level encryption to limit 

access to GSA’s procurement-sensitive information. 

• Evaluate and modify access controls in accordance with the defined 

roles and responsibilities of each user to help ensure that users have 

access only to the information they need to conduct GSA’s business.

• Avoid the use of shared accounts, and enforce accountability of 

activities performed by users.37

According to NBS program officials, they discussed issues related to GSA’s 

preliminary inspections with GSA’s Information Security Manager on 

various occasions, including whether the recommendations “were 

appropriate to apply to NBS because some of those requirements were not 

specifically required” by the contracts. At the completion of our review, 

GSA had neither resolved this issue nor taken action to help ensure that it 

could require the two dual-agency NBS firms to implement its inspection 

recommendations. In addition, although GSA performed follow-up visits 

with the two dual-agency firms in early August 2006, these visits also did 

not assess the adequacy of the brokers’ conflict wall controls.38 

37For example, if an e-mail must be shared among users, GSA recommended that the brokers 

establish controls to ensure that a user cannot perform an e-mail function without fully 

accounting for his or her identify.

38In a discussion of GSA’s technical comments on a draft of this report, GSA officials told us 

that the agency’s inspections were performed to assess the brokers’ adherence to conflict 

wall requirements. The officials explained that GSA performed the site visits to verify that 

the brokers had created the required conflict walls and that the physical and electronic 

controls were being maintained, as required by the contracts. While GSA has confirmed that 

conflict walls exist, it had not assessed whether the physical and electronic controls 

established by the brokers are adequate.
Page 28 GAO-07-17 National Broker Contracts

GSA Had Not Assessed 

Whether NBS Program 

Controls Satisfy Federal 

Requirements for 

Safeguarding Information 

and Information Systems

GSA also had not assessed whether NBS program controls satisfy federal 

requirements for safeguarding information and information systems. 

FISMA requires each federal agency to develop, document, and implement 

an agencywide information security program to protect information and 

information systems used or operated by contractors on behalf of an 

agency. This security program is intended to provide assurance that 

contractors and others are protecting the information and information 

systems in a manner commensurate with the risk level assigned to the 

information and systems by the agency. To comply with FISMA, GSA and 

other federal agencies must periodically assess the risk and magnitude of 

harm that could result from unauthorized access to, or use, disclosure, 

disruption, modification, or destruction of, (1) information collected or 

maintained by, or for, the agency and (2) information systems used or 

operated by the agency or by another entity, such as a contractor, for the 

agency. Agencies also must develop risk-based policies and procedures for 

reducing its security risks to an acceptable level. Such policies and 

procedures must identify and prescribe appropriate controls for 

safeguarding information—of varying sensitivity—as well as information 

systems, such as those containing procurement-sensitive information. 

Furthermore, after establishing the risk level of various types of 

information and the controls applicable to each, an agency must 

periodically test the effectiveness of its information security policies, 

procedures, and practices to ensure that its employees and other users, 

such as contractors, are safeguarding its information appropriately.39

39Federal agencies are required to test the management, operational, and technical controls 

for their applicable information systems. Management controls, such as those related to the 

assessment of risk, are normally addressed by an agency’s information security program 

management. Operational controls include controls that are executed by people (as 

opposed to systems). Technical controls include security controls that electronic 

information systems execute.
Page 29 GAO-07-17 National Broker Contracts

FISMA’s requirements are similar to GSA’s conflict wall requirements in that 

they call for establishing physical and electronic controls to safeguard 

agency information. However, FISMA’s requirements differ from GSA’s in 

that they are risk-based, can apply to information systems as well as 

information supplied by GSA or collected for GSA, and are applicable to 

contractors who act on GSA’s behalf—not just the two NBS dual-agency 

brokers. In addition, GSA’s contracts with the NBS brokers allow GSA to 

inspect the dual-agency brokers’ conflict wall controls to assess whether 

they comply with contract requirements; whereas, FISMA requires 

agencies to periodically test—at least annually—their information security 

controls.40 Depending on the outcome of the agency’s annual risk 

assessment, the requirement for testing may also apply to the NBS brokers.

In February 2006, NBS program officials, including the National 

Contracting Officer, acknowledged that FISMA is applicable to the NBS 

program, but noted that GSA’s contracts with the brokers do not include 

language requiring the brokers to comply with FISMA. At that time, the 

National Contracting Officer noted that he can unilaterally modify the 

contracts to add the appropriate requirements. However, before he 

proceeded, he said, GSA would need to determine, among other actions, 

how the contractors are using information and information systems on its 

behalf as well as what risk levels are appropriate to the information and 

systems involved. As of October 31, 2006, GSA had not completed these 

actions and had not incorporated the appropriate controls into its contracts 

to help ensure the brokers’ compliance with FISMA, including those related 

to periodic testing. Moreover, GSA had not budgeted for or scheduled any 

type of FISMA assessment of the NBS program. 

40The frequency of the testing depends on the risk level assigned, but must be performed at 

least annually.
Page 30 GAO-07-17 National Broker Contracts

GSA officials also provided two other reasons why GSA had not assessed 

the four brokers. First, in February 2006, GSA officials, including GSA’s 

Information System Security Manager, told us that they were unaware that 

FISMA requirements apply to information that is either supplied by GSA or 

collected by the four brokers for use on GSA’s behalf. Consequently, GSA 

had not assessed the risk and magnitude of harm that could arise from 

unauthorized access to, or use, disclosure, disruption, modification, or 

destruction of, the information, including GSA’s procurement-sensitive 

information.41 According to the Security Manager, GSA inspected the two 

dual-agency firms to get a basic understanding of their conflict walls and, 

therefore, did not assess the adequacy of the brokers’ controls for 

safeguarding GSA’s information under FISMA. Furthermore, GSA had not 

inspected any aspect of the controls employed by the two tenant-only firms 

to safeguard GSA’s information. 

Second, regarding FISMA’s requirements to test, as appropriate, 

information systems used or operated by the brokers on behalf of GSA, 

GSA’s Security Manager told us that GSA intends to assess the adequacy of 

the brokers’ controls after the brokers gain access to e-Lease. As of 

February 2006, the assessments were not yet contemplated, because the 

brokers still did not have access to GSA’s electronic interface. NBS officials 

explained that while GSA had anticipated that the brokers would have 

access to e-Lease by March 31, 2006, delays had occurred, in part, because 

of a governmentwide backlog in completing a federal security verification 

process required for contractors who have access to federal facilities and 

information systems. Now that the brokers are obtaining access to e-Lease, 

they said they plan to use e-Lease as a “catalyst” for incorporating FISMArelated controls into each of the NBS contracts prior to the next contract 

year.42 Although FISMA’s testing requirements for electronic interfaces with 

agency information systems did not apply until the brokers had access to

e-Lease, it is important to note that FISMA’s requirements for ensuring the 

41GSA officials further acknowledged that they did not know how the four firms are using 

GSA-supplied information. Such information, the officials said, may be provided as either an 

attachment to an e-mail or in hard-copy form. For example, the officials said they did not 

know whether the brokers electronically scan GSA’s hard-copy information to create 

electronic files.

42As of July 31, 2006, 9 NBS broker employees had gained access to e-Lease and the sensitive 

information it contains, while 3 others—who had also completed the security verification 

process—were in the process of obtaining access. Another 42 NBS broker employees were 

still completing the security verification process and, thus, also did not yet have access to

e-Lease. 
Page 31 GAO-07-17 National Broker Contracts

adequacy of controls for safeguarding (1) GSA’s information and

(2) information systems, including broker controls—as appropriate to the 

agency’s assessment of the risk—have been applicable since April 2005, 

when performance began under the contracts. 

Brokers Will Be 

Compensated through 

Commissions Paid by 

Building Owners, but 

Controls for 

Minimizing the 

Government’s Rental 

Costs Are Insufficient

GSA is using commissions paid by building owners to compensate its 

brokers, as is typical in the commercial real estate industry. GSA’s 

compensation approach has evolved over time and, according to GSA, is 

the most sensible and cost-effective option for acquiring needed real estate 

services. Under the NBS contracts, GSA expects building owners to pay 

commissions and requires them to do so if they are offering a commission 

to their listing agent or broker. The cost of commissions is factored into the 

rent paid by tenant agencies. GSA has no obligation to pay its brokers—

even if a building owner does not offer a commission to the brokers. 

Because the vast majority of GSA’s leasing transactions issued through 

March 31, 2006—the end of the first year of the contracts—had not been 

completed, GSA has little information about the number of transactions 

that may not result in commission payments. NBS program officials are 

aware of the potential for conflict between the brokers’ interest in 

receiving higher commission rates and the government's interest in 

acquiring the most suitable leased space, including its interest in cost 

matters. As a result, GSA has developed controls to help prevent such a 

conflict; however, the controls do not adequately mitigate the inherent 

conflict of interest created by allowing the brokers to represent the 

government while also negotiating their commissions. Absent additional 

controls, GSA has insufficient assurance that the brokers will not increase 

the government’s rental costs by favoring building owners who offer them 

higher commissions. 
Page 32 GAO-07-17 National Broker Contracts

GSA’s Compensation 

Approach Is Typical in the 

Commercial Real Estate 

Industry

Under the terms of their contracts with GSA, the four NBS brokers have an 

opportunity to obtain substantial payments for their services by collecting 

real estate commissions that building owners typically pay to tenant 

representatives (brokers).43 The brokers are expected to negotiate a 

market-based commission with a building owner on the basis of the firm 

term of each lease, generally 5 years.44 The brokers cannot earn 

commissions for market research (market data task orders)—a service 

associated with acquiring leases—but are allowed to earn commissions for

• other lease acquisition services,

• lease expansions,

• and lease extensions.

Like GSA, representatives of the vast majority of the large, private 

companies; state agencies; and other federal agencies we interviewed that 

contract for leasing services said they typically use building owner 

commissions to compensate their brokers. The only exception was the 

United States Postal Service, which paid fees directly to its brokers for 

leasing services. Although the Postal Service did not use building owner 

commissions to pay its brokers, it was considering doing so in the future. 

Similarly, representatives from the nine nationwide brokers we interviewed 

told us that they are generally compensated through commissions paid by 

building owners. Brokers are not normally paid for their market data but, 

according to representatives from the majority of the 10 public- and 

private-sector entities we interviewed that contract for leasing services, the 

payment of building owner commissions for other leasing services is a 

common and long-standing industry practice.45 

43Building owners typically factor the cost of the commission into the rent charged to a 

tenant. Tenants indirectly pay the commission through their rental payments. 

44The “firm term” of a government lease is the noncancelable portion (term) of the lease—

the portion of the lease that the government guarantees to pay, regardless of whether the 

space is occupied. Commissions cannot be earned for any “option” periods associated with 

a lease. Options allow the government to extend the duration of a lease at its discretion.

45None of the five local real estate regulators that we interviewed (four states and the 

District of Columbia) oversee the method of compensating brokers or the amount of broker 

commissions. However, representatives from one regulatory entity (Virginia) volunteered 

that brokers are typically paid through commissions paid by building owners.
Page 33 GAO-07-17 National Broker Contracts

GSA’s Compensation 

Approach Evolved over 

Time

GSA modified its method of compensating brokers from a public-sector to 

a private-sector approach in 2004 when it switched its source of 

compensation from appropriated funds to building owner commissions. 

According to GSA’s 2003 analysis for entering into the NBS contracts, the 

revised compensation approach is the “most sensible and cost effective 

option” for securing additional realty resources in view of GSA’s expanding 

workload and diminishing in-house capacity.46 The revised approach differs 

from the approach GSA used under its previous contracts for leasing 

services. Under its prior contracts, GSA (1) paid real estate brokers a fee 

from appropriated funds in exchange for a variety of lease acquisition and 

other services and (2) prohibited brokers from receiving compensation 

related to GSA’s leasing transactions from any other sources.47 To minimize 

the legal issues involved if, for example, the government tried to collect 

commissions itself, GSA instructed the brokers to ensure that building 

owners reduced their rental rates by the value of the uncollected 

commissions. However, this approach was not considered effective 

because of the perception that some building owners were continuing to 

factor the cost of unpaid commissions into the rent charged to GSA’s 

tenants. This concern led GSA to ask its General Counsel how it could 

recover and retain commissions paid by building owners. In a May 1999 

opinion, GSA’s General Counsel concluded that “GSA may modify the 

contract[s] to provide that any commission offered to the broker should be 

accepted and rebated to GSA. GSA should then credit the appropriation 

used to pay the broker[s] under the contract[s].” GSA implemented the 

advice in 2000 when it modified the contracts and instructed the brokers to 

recapture commission fees on behalf of GSA. 

46As previously discussed, we did not evaluate GSA’s analysis to determine if awarding the 

NBS contracts represented the best option available to the government. 

47GSA began awarding contracts for leasing services in 1997. Initially, GSA awarded 8 

contracts—2 contracts for each of four broad U.S. geographic areas. By August 2003, when 

GSA developed its analysis for entering into the NBS contracts, the number of contracts had 

increased from 8 to 29. 
Page 34 GAO-07-17 National Broker Contracts

GSA’s payment approach evolved further in 2003 when the agency 

contemplated using “no-cost” contracts for the NBS contracts.48 Under the 

proposed contracts (and as awarded), brokers would represent GSA’s 

interests in lease acquisition and related services and receive commissions 

from building owners, in accordance with industry practices, instead of 

direct payments from GSA. To ensure that such a compensation approach 

would not improperly augment GSA’s appropriation,49 GSA asked the 

Comptroller General of the United States for a formal legal opinion on this 

matter.50 The General Counsel of GAO, who responded for the Comptroller 

General, concluded that GSA could enter into the proposed contracts with 

real estate brokers without augmenting its appropriations, since the 

proposed contracts did not contemplate the government receiving funds 

from the brokers.51

GSA Requires Commissions 

Payments in Certain 

Circumstances

In signing their contracts with GSA, the four brokers agreed to provide real 

estate services and to represent GSA in specific task orders issued by GSA. 

The brokers further agreed to be compensated by collecting commissions 

typically paid by building owners in the private sector. To assist its brokers 

in collecting commissions, on July 3, 2006, GSA issued a policy directive 

requiring building owners to pay a commission to GSA’s broker if the

48The term “no cost” is somewhat of a misnomer, since there would be no valid contract 

without mutual consideration by each party. In this case, the consideration benefiting the 

broker stems from its right to collect a share of the lease brokerage fees (commission 

payments) paid by prospective building owners.

49Government agencies are prohibited from augmenting their appropriations from outside 

sources without specific statutory authority. 

50The Comptroller General is head of the U.S. Government Accountability Office (GAO).

51The opinion further concluded that the services rendered under a formal contract at no 

cost to the United States would not constitute an acceptance of voluntary services under 31 

U.S.C. § 1342. That statute prohibits federal officers and employees from accepting 

voluntary services except in certain emergencies, and is intended to prevent agencies from 

forcing the Congress to appropriate funds to pay volunteers who later submit claims for 

payment. The opinion held that the services that GSA anticipated obtaining under the NBS 

contracts were not voluntary “since the brokers’ services would be rendered under a formal 

contract that would presumably specify the no-cost nature of the contract and contain 

mutually binding rights and obligations on the parties including the exact services to be 

delivered thereunder in return for the right to represent GSA in their respective markets.” 

See B-291947 (Aug. 15, 2003). 
Page 35 GAO-07-17 National Broker Contracts

owners were paying a commission to their listing agent or broker.52

According to the directive, if a building owner intends to pay its broker a 

commission or fee and submits its final offer without offering a 

commission to GSA’s broker, the offer must be rejected as technically 

unacceptable. However, if a building owner does not include a commission 

to the broker on either side of the transaction, the offer would be 

acceptable, unless other issues preclude GSA from accepting the offer. GSA 

will not pay its brokers under any circumstance, even if a building owner 

does not offer a commission to either broker. For its part, GSA has agreed 

not to issue task orders to brokers when GSA knows that they will not 

result in a commission. Consequently, GSA performs leasing transactions 

involving Indian tribes; airport authorities; and government entities (state, 

city, or local municipalities) in-house because these entities do not pay 

broker commissions. Furthermore, because building owners in rural 

markets are considered less likely to pay commissions, according to GSA’s 

November 2005 guide for administering the contracts, GSA may elect not to 

issue task orders for particular rural markets if, through experience, it 

establishes a history of unpaid commission in those markets.

52GSA’s guidance on commission payments has evolved over time. GSA’s initial solicitation 

for offers advised potential building owners that “[t]he contractor [broker] will pursue any 

commission in connection with this lease transaction that it normally would be entitled to 

pursuant to local business practices....” The NBS brokers believed the language in the 

solicitation did not adequately protect their interests because it did not clearly express the 

government’s expectation that they would be paid. Responding to the brokers’ concerns, in 

August 2005, GSA revised the solicitation for offers to state that “[t]he Government expects 

that its contractors [brokers] will be paid a fair market commission on any specific 

transaction on the same basis as any local business brokerage custom and practice....” 

According to NBS program officials, the solicitation was revised because they realized that 

for the contracts to be successful, the brokers must be successful as well. The brokers were 

not, however, completely satisfied and pursued additional revisions. In considering the 

additional revisions, GSA reviewed program data indicating, according to the National 

Program Manager, that lower-than-market commissions were being offered on some task 

orders. As a result, in July 2006, GSA further revised its solicitation for offers to state that 

“[b]y submitting an offer, the building owner agrees that if they are paying a commission to a 

listing agent/broker, then it will pay a commission to the [GSA’s] broker that it normally 

would be entitled to pursuant to local business practices.” 
Page 36 GAO-07-17 National Broker Contracts

Too Few Task Orders Have 

Been Completed to 

Determine the Extent of 

Unpaid Commissions, but 

the Risk Appears to Be 

Limited

According to the four NBS brokers, they were aware that commissions 

might not always be paid when they competed for their contracts. Such 

risk, they said, is a common feature of their large corporate accounts. The 

brokers explained that they accepted the risk of unpaid commissions 

because they anticipated that (1) these situations would be rare and (2) the 

volume of government business would compensate them for any isolated 

losses. Furthermore, while the brokers knew that building owners would 

not always offer a commission—particularly for leased space in rural 

markets—their past payment experience indicated that they usually 

collected commissions regardless of the market involved. The brokers’ 

experience together with GSA’s July 2006 requirement that building owners 

pay GSA’s brokers if they intend to pay their own, suggests that the brokers’ 

risk of financial loss is limited. 

Because the vast majority of the task orders issued through March 31, 2006, 

had not been completed, GSA and the four brokers had little actual 

experience for estimating how many task orders would not result in 

commission payments. Typically, it takes at least 1 year from the initiation 

of a task order to the final agreement on the terms of a lease, including 

agreement on the final amount of any commission that will be paid.53 As of 

March 31, 2006, 11 of the 479 task orders issued by GSA and eligible for a 

commission had been completed. According to the National Contracting 

Officer, the building owner did not offer a commission on 1 of the 11 task 

orders—an expedited lease extension—because it required minimal effort 

to complete. The remaining 10 completed tasks, involving about 460,000 

square feet of leased space, resulted in about $1.2 million in commission 

payments from building owners. However, as discussed in more detail later 

in this report, the brokers are entitled to only a portion of this amount—

about $960,000, while the government is to receive the remainder in the 

form of commission credits. Table 1 provides a breakdown of issued task 

orders, including the number that resulted in a commission as of March 31, 

2006. Table 2 provides data on the total amount of commissions accrued by 

the NBS brokers as of that date.54

53According to GSA officials, task orders often take from 1 to 4 years to complete, depending 

on the complexity of the task order. 

54The brokers receive 50 percent of their commission when the lease is signed. The 

remaining commission is paid when the tenant occupies the space or by the commencement 

date of the lease, whichever occurs first.
Page 37 GAO-07-17 National Broker Contracts

Table 1: Number of Task Orders Issued and Completed, Including Those Eligible for 

a Commission Payment, as of March 31, 2006

Source: GAO analysis of GSA data.

a

Represents all task orders issued, regardless of type. 

b

Excludes 65 task orders for market data, all of which had been completed as of March 31, 2006. 

However, as previously discussed, brokers do not earn commissions for these services. 

Table 2: Total Commission Payments Accrued by Each NBS Broker, as of March 31, 

2006

Source: GAO analysis of GSA data.

a

The commission data provided by GSA officials were taken from the brokers’ monthly reports of 

commissions accrued, but not necessarily paid, as of March 31, 2006. 

GSA Has Controls That May 

Help, but Are Not Sufficient, 

to Prevent Brokers from 

Favoring Building Owners 

Who Offer Excessive 

Commissions

NBS program officials recognize that the brokers’ interest in receiving 

higher commission rates conflict with the government's interest in 

acquiring the most suitable leased space. As a result, GSA has developed 

controls to help prevent the brokers from favoring building owners who 

offer higher commissions. These controls include oversight by GSA’s 

contracting officer’s technical representatives (COTR), the establishment 

of a commission review board, and a contracted study on commission rates 

in major markets. Although these controls may help to prevent the brokers 

Description

Number of 

task orders

Number of task orders issueda 544

Commission-eligible task orders issuedb 479

Completed task orders 76

Completed commission-eligible task ordersb 11

Completed commission-eligible task orders that resulted in a 

commission payment 10

Broker

Commissions 

accrueda

Broker A $0.00

Broker B (2 task orders) 575,111.62

Broker C (4 task orders) 374,038.91

Broker D (4 task orders) 11,113.60

Total $960,264.13
Page 38 GAO-07-17 National Broker Contracts

from promoting and negotiating offers that include excessive commission 

payments, they do not altogether preclude improper actions. 

GSA requires its COTRs to oversee all of the activities the brokers perform 

on behalf of GSA, from developing the solicitation for lease offers to 

negotiating a lease. One important activity is determining the commission 

rate appropriate to each leasing transaction. Early in each task order, the 

broker provides the COTR with a set of negotiating objectives, including 

the broker’s assessment of the typical commission rate appropriate to the 

particular task and market. Using market knowledge and commercial data 

sources on applicable market commissions, the COTR approves or 

disapproves the commission rate (and the other negotiation objectives) 

proposed by the broker. Each broker must include the approved 

commission rate in its commission agreement, which is included in GSA’s 

solicitation for offers. The broker then provides the solicitation to building 

owners who may be able to meet the government’s needs and negotiates a 

lease agreement with the building owner. According to NBS program 

officials, offers with excessive commission rates may be rejected. 

Ultimately, GSA signs the lease, and both the broker and the building owner 

are required to report to GSA all commissions paid. 

At the conclusion of our review, GSA was establishing a board of GSA 

subject matter experts to function as a resource to, among other things, 

help ensure that the brokers’ commission rates are reasonable. According 

to NBS program officials, this resource is currently available to GSA’s 

COTRs through the National Program Manager who, upon request, consults 

with senior GSA regional real estate experts on the appropriate 

commission rate for a particular market. In addition, GSA contracted for a 

study of applicable commission rates in major markets to provide 

additional information for assessing the reasonableness of its brokers’ 

commissions. 

These three controls may help to prevent the NBS brokers from improperly 

favoring building owners who are willing to pay higher commissions; 

however, in our view, these controls are not sufficient. Specifically, 

although excessive commissions are subject to negotiation, according to 

NBS program officials, including the Assistant Commissioner of GSA’s 

Office of National Customer Services Management, the NBS brokers are 

allowed to negotiate commissions in excess of those specified in GSA’s 

solicitations for offers. According to these officials, GSA does not want to 

influence commercial real estate markets by specifying a maximum 

commission rate in its solicitations to building owners. 
Page 39 GAO-07-17 National Broker Contracts

Although GSA does not want to influence commercial real estate markets, 

as previously discussed, the FAR requires each agency to avoid or mitigate 

any conflict of interest, or even the potential of a conflict, in its business 

relationships. Allowing the NBS brokers to represent the government while 

negotiating their commissions, creates, by design, an inherent conflict 

between the brokers’ interest in promoting and negotiating higher 

commissions and their responsibility to effectively represent GSA’s interest 

in selecting properties that best meet the government’s needs, including its 

cost needs.55 Although GSA describes the NBS contracts as “no-cost” 

contracts because the brokers are not paid directly by the government, the 

brokers’ commissions are factored into the rent the government will 

eventually pay. Thus, by leaving the brokers free to negotiate their 

commissions with building owners, GSA empowers them to favor owners 

who will pay the highest commissions, thereby potentially increasing the 

government’s cost. If GSA chooses not to specify maximum commission 

rates on the basis of local market conditions in its solicitations for offers, 

GSA must find an alternative approach to mitigate this inherent conflict of 

interest. One possible approach would be to prohibit the brokers from 

accepting a commission in excess of the rate approved by the applicable 

COTR and included in GSA’s solicitation for offers. Such an approach 

would remove the NBS brokers from the negotiation process and, thus, 

mitigate the existing conflict. 

Other Entities Generally Did 

Not Require or Pay 

Commissions and Had 

Controls on Commission 

Rates, but Some Variation 

Existed

The majority of the 10 public- and private-sector entities we interviewed 

that contract for leasing services did not require building owners to pay 

commissions. The Postal Service negotiated and paid fees directly to its 

brokers, regardless of whether a building owner would have paid. Two of 

the remaining 9 entities—New York and Michigan—required building 

owners to pay commissions to their brokers; the remaining 7 did not. Four 

of the 7 entities that neither paid their brokers directly nor required 

building owners to pay—the Department of Veterans Affairs; California; 

Florida; and 1 large, private company (company #1)—also did not

55For another example of an inherent conflict created by design, see, for example, Goldstein 

v. Johnson & Johnson, 251 F. 3 d 433, 442 (3rd Cir., 2001), where the court dealt with the 

fiduciary duty of a retirement plan administrator that depended, in part, on whether “the 

plan, by its very design, create[d] a special danger of a conflict of interest.”
Page 40 GAO-07-17 National Broker Contracts

compensate their broker if the building owner did not pay a commission.56

Officials from the 3 remaining entities—the Federal Deposit Insurance 

Corporation (FDIC) and 2 large, private companies (companies #2 and 

#3)—noted that building owners generally paid commissions, but that if 

they did not, their entities would be willing to pay or had paid their 

brokers.57 Table 3 identifies each entity’s payment approach. 

Table 3: Payment Approach Used by the 10 Public- and Private-Sector Entities That Contracted for Leasing Services

56Officials from 3 of the 4 entities told us that they expect their brokers to absorb the 

financial loss because of the large volume of business they do with their brokers. Florida, 

however, allowed its broker to excuse itself from a deal if, before starting any work, it found 

that a building owner was unwilling to pay a commission.

57FDIC officials said the agency has paid its broker because of the time, effort, and resources 

its broker invested to complete a leasing transaction and because the FDIC wanted to 

maintain a good, long-term relationship with the broker. An official of 1 large, private 

company told us that his company routinely pays its broker a reduced fee because it does 

not expect a broker to work for free; while officials from another large company told us that 

their company generally compensates a broker because it is unfair and unprofitable for the 

broker not to be paid.

Entity that 

contracted for 

leasing services

Paid fees 

directly to its 

broker

Paid brokers 

through 

commissions from 

building owners

Required building 

owners to pay 

commissions

Did not pay their 

broker if the 

building owner 

did not provide a 

commission

Would be willing to pay or had 

paid their broker if the building 

owner did not provide a 

commission

Federal entity

United States Postal 

Service

x

Department of 

Veterans Affairs

x x

Federal Deposit 

Insurance 

Corporation

x x

State entity

California x x

Florida x x

Michigan x x

New York x x

Private company

Private company #1 x x
Page 41 GAO-07-17 National Broker Contracts

Source: GAO.

Finally, excluding the Postal Service, which negotiated and paid fees 

directly to its brokers,58 7 of the remaining 9 entities had controls to 

prevent their brokers from favoring building owners that offer higher 

commissions. Four of the 7 entities—California, Florida, Michigan, and 

New York—specified commission rates or maximum commission rates in 

their contracts with their brokers, while officials from the FDIC said that 

they were directly involved in negotiations between their brokers and 

building owners to protect their financial interests. Officials from 1 entity—

the Department of Veterans Affairs—said that the department is directly 

involved in negotiations, and that it specifies a maximum commission rate 

in its contracts with its brokers. One large, private company required its 

broker to obtain approval of the commission rate before starting work on a 

transaction. By contrast, officials from the remaining 2 entities—both 

large, private companies—did not identify any specific controls in this area.

GSA Does Not Know 

What, If Any, Savings 

Have Resulted Largely 

Because It Has Not 

Developed Processes 

for Quantifying Most of 

the Anticipated Savings

In 2003, GSA developed its business analysis for entering into the NBS 

contracts and concluded that the contracts represented the best option 

available to GSA, in part, because of the variety of savings that it expected 

to accrue from the contracts.59 In particular, GSA expected reductions in 

rent from commission credits, which apply to most, but not all of the 

services rendered by the brokers, and from the brokers’ greater knowledge 

of the commercial real estate market. In addition, GSA expected to reduce 

its payments for contract fees and administration costs associated with its 

previous contracts for leasing services and to avoid personnel costs by 

shifting its leasing workload to the NBS brokers instead of hiring additional 

Private company #2 x x

Private company #3 x x

(Continued From Previous Page)

Entity that 

contracted for 

leasing services

Paid fees 

directly to its 

broker

Paid brokers 

through 

commissions from 

building owners

Required building 

owners to pay 

commissions

Did not pay their 

broker if the 

building owner 

did not provide a 

commission

Would be willing to pay or had 

paid their broker if the building 

owner did not provide a 

commission

58The need for controls to prevent a broker from favoring building owners who pay higher 

commissions diminishes when an entity pays directly for the services it receives. 

59Business Analysis and Case for National Contracts. As previously discussed, we did not 

evaluate GSA’s analysis. 
Page 42 GAO-07-17 National Broker Contracts

staff (realty specialists) to perform these leasing tasks in-house. GSA 

subsequently identified further tasks for its realty specialists, however, and 

now believes that it must maintain an adequate (but unspecified) number 

of these personnel to oversee the NBS brokers. It is unclear how GSA’s 

change in view will affect its future personnel levels and long-term costs. 

As of October 31, 2006—except for savings related to commission credits—

GSA had not developed processes for quantifying the savings. Until such 

time as it does, GSA will not know whether, or to what extent, savings have 

resulted.

GSA Expected Reductions 

in Rent from Commission 

Credits

In responding to GSA’s solicitation, each broker was required to specify the 

percentage of its commissions from building owners that it would forgo to 

do business with the government. Such credits apply to most, but not all, of 

the services rendered by the brokers. For example, the government does 

not receive commission credits for tasks related to market data, since the 

brokers are not paid for these services. In addition, the brokers do not 

provide commission credits for expedited lease transactions if the 

transactions are completed within specified time frames.60 Finally, 

commission credits are not applicable if a building owner does not pay 

broker commissions. 

GSA required the NBS brokers to specify the percentage of their 

commission that they would credit to the government for each year of the 

contract. For the first year of the contract—the base year—the four 

brokers agreed to forgo between 26.0 percent and 51.5 percent of any 

commissions offered by building owners for applicable leasing 

transactions. Two of the brokers specified constant rates, while the other 

two offered to increase the percentage of their commission credit over time 

if GSA elected to extend its contracts with them. Table 4 identifies the 

percentage of commission credit offered by each of the four NBS brokers, 

by contract period. 

60Expedited transactions for lease acquisitions, expansions, and extensions have an 

occupancy date of 120 days or less. If a broker completes these transactions within this time 

frame, the broker is allowed to retain the entire amount of any commission paid. 
Page 43 GAO-07-17 National Broker Contracts

Table 4: Percentage of Commission Credit, by NBS Broker and Contract Period

Source: GAO analysis of GSA data.

a

The base year (year 1) of the contract ran from April 1, 2005, to March 31, 2006.

b

Year 2 represents an option period for the contract year between April 1, 2006, and March 31, 2007. 

Options allow the government to extend the duration of a contract at its discretion. GSA elected to 

extend all of the NBS contracts for this period.

c

Year 3 represents an option to extend the contracts between April 1, 2007, and March 31, 2008. 

d

Year 4 represents an option to extend the contracts between April 1, 2008, and March 31, 2009. 

e

Year 5 represents an option to extend the contracts between April 1, 2009, and March 31, 2010. 

Percentage of commission credit, by contract period

NBS broker 

Base year of 

contract—

Year 1a Year 2b Year 3c Year 4d Year 5e

Jones Lang 

Lasalle 26.0% 28.0% 30.0% 32.0% 34.0%

The Staubach 

CompanyNortheast 31.0 31.0 31.0 31.0 31.0

Julien J. Studley, 

Inc. 51.5 51.5 51.5 51.5 51.5

Trammell Crow 

Services, Inc. 37.0 37.0 38.0 39.0 40.0
Page 44 GAO-07-17 National Broker Contracts

The amount of any applicable commission credit is calculated and 

evaluated when a broker, with oversight from GSA, evaluates the lease 

offers received from building owners in response to GSA’s solicitation for 

offers. In these offers, building owners are required to specify the broker’s 

commission, if any, as well as other information that the broker and GSA 

need for the evaluation, such as the lease term, square footage, parking 

availability, rent, and any allowance for requested tenant improvements. 

Using a worksheet provided by GSA, the broker enters information from all 

of the technically acceptable offers received and converts all of the cost 

information to their present value to ensure consistent cost comparisons.61

The broker then compares the offers, discusses them with the applicable 

COTR, and negotiates each offer with the appropriate building owner. If a 

building owner changes his or her offer, the broker must edit the 

information in the worksheet and recalculate the offer’s present value. The 

broker compares the building owners’ final offers and recommends what 

he or she considers to be the most-suitable leased space to GSA. If GSA 

accepts an offer that specifies a commission payment to GSA’s broker,62 the 

tenant agency’s rent is reduced by the amount of the commission credit—

the percentage of the commission that each broker agreed to forgo. The 

commission credit is applied in the first month of the lease, or if the credit 

exceeds the tenant’s monthly rent, it is applied in the early stages of the 

tenant’s rental payments. 

Table 5 illustrates how commissions and commission credits are 

calculated. This example relates to the acquisition of about 378,000 square 

feet of leased space during the first year of the NBS contracts. The basic 

rent for this transaction totaled about $49 million over the firm term of the 

lease and the commission rate negotiated between the broker and the 

building owner was 1.5 percent of the total basic rent.63 Thus, the building 

owner is required to pay about $730,400 in commissions. In entering into its 

contract with GSA; however, the broker who completed this task order 

61The “present value” is the value of a future cash stream in terms of money paid 

immediately (or at some designated date).

62As previously discussed, a commission credit is not due if a building owner does not pay

broker commissions. 

63The firm term of a government lease is the noncancelable portion (term) of the lease—the 

portion of the lease that the government guarantees to pay, regardless of whether the space 

is occupied. The firm term of a lease is generally 5 years. Commissions are not earned for 

any “option” periods associated with a lease. Options allow the government to extend the 

duration of a lease at its discretion.
Page 45 GAO-07-17 National Broker Contracts

agreed to return 26 percent of its commission on each applicable task order 

(during the first year of its contract) in the form of a commission credit to 

the government, which, in this case, equals about $189,900. As previously 

discussed, commission credits are applied in the early stage of the tenant 

agency’s monthly rent. Thus, approximately $189,900 is to be used to offset 

the tenant’s first month’s rent of about $811,600. After deducting the 

commission credit from the total commission payable by the building 

owner, this broker accrued a commission of about $540,500. 

Table 5: Example of How Commissions and Commission Credits Are Calculated 

Source: GAO analysis of GSA data.

a

Calculations are rounded to the nearest dollar.

On the basis of information we obtained from representatives of the 9 

nationwide brokers and 10 public- and private-sector entities we 

interviewed that contract for real estate services, commission credits are 

common in the commercial real estate industry. For example, 2 of the 10 

public- and private-sector entities—California and New York—either 

required or had required their brokers to forgo a portion of their 

commissions for use as commission credits. Two other entities—both 

large, private companies—required commission credits after their broker 

had completed a specified volume of leasing transactions. In addition, 

although the FDIC, the Department of Veterans Affairs, and Michigan did 

not require credits, they had accepted them in the past. The only 

exceptions to these practices involved a large, private company; Florida; 

and the Postal Service, which did not accept commission credits and had 

not accepted them in the past. 

A B C D E F G

Basic rent for

the firm term Monthly rent

Commission

rate

Total commission 

payable by the 

building owner 

(A x C)

Percentage of 

commission that the 

broker agreed to 

credit to the 

government

Commission 

credit payment

(D x E)

Commission 

payable to the 

broker

(D – F)

$48,696,180 $811,603 1.5% $730,443a 26.0% $189,915a $540,528a
Page 46 GAO-07-17 National Broker Contracts

GSA Has Processes in Place 

to Quantify and Verify 

Savings from Commission 

Credits, but Data on These 

Savings Are Limited

GSA has processes in place to quantify savings from commission credits 

and to verify that the credits are properly calculated and applied. First, as 

previously discussed, GSA requires the NBS brokers, using a worksheet 

supplied by GSA, to calculate the (1) present value of all technically 

acceptable offers received (all initial and subsequent offers) as well as

(2) any associated commission credit applicable to the offers. Each of 

these calculations must be verified and approved by two GSA employees, 

including the COTR. Once GSA accepts an offer, the broker includes the 

amount of any approved commission credit in GSA’s leasing agreements 

with the successful building owner. Such agreements specify, among other 

things, the amount of any applicable commission payable; the terms of 

payment by the building owner; including the amount of the rent reduction 

resulting from the credit, and any other applicable terms and conditions. 

Second, a regional contracting official enters the commission and the 

amount of the approved commission credit into GSA’s e-Lease system for 

tracking. Third, the brokers are required to submit monthly reports to 

GSA’s National Contracting Officer that, among other things, specify the 

percentage and dollar amount of the commission credited to the 

government in the form of a rental reduction. According to the National 

Contracting Officer, the brokers’ reports are used to cross-check the 

accuracy of GSA’s information. Finally, GSA has begun conducting random 

file checks as part of its peer reviews to, among other things, further ensure 

that the commission credit calculations are accurate and that tenant rents 

are reduced by the proper amounts. 

Although GSA quantifies savings from commission credits, little 

information is available on the amount of these savings because work on 

the vast number of task orders issued in the first year of the contracts had 

not progressed far enough for the commissions to be paid. As discussed, 

the multistep leasing process can take between 1 and 4 years to complete, 

and it is not until the end of the process that the broker finalizes the 

amount of any applicable commission and commission credit in GSA’s lease 

agreement with a building owner. As previously discussed, the brokers had 

completed 11 task orders with the potential for a commission payment as 

of March 31, 2006. However, only 7 of these 11 task orders were for services 

that are also eligible for a commission credit. The 7 completed task orders 

resulted in about $216,000 in reduced rental payments for approximately 

417,000 square feet of leased space. The remaining 4 task orders involved 

expedited lease transactions that, if completed on time, do not result in a
Page 47 GAO-07-17 National Broker Contracts

commission credit to the government.64 Table 6 provides a breakdown of 

issued task orders, including the number that resulted in a commission 

credit, as of March 31, 2006.

Table 6: Number of Task Orders Issued and Completed, Including Those Eligible for 

a Commission Credit, as of March 31, 2006

Source: GAO analysis of GSA data.

a

Represents all task orders issued, regardless of type. 

b

Excludes 65 task orders issued for market data, which are performed free of charge, and 16 task 

orders for expedited leasing transactions. The government does not earn a commission credit for 

expedited leasing transactions, if the transactions are completed within specified time frames. 

c

Includes 65 completed task orders for market data.

d

Excludes 65 completed task orders for market data and 4 completed expedited leasing transactions.

GSA Also Anticipated Rent 

Reductions from the 

Brokers’ Greater Knowledge 

of Commercial Real Estate 

Markets, but Has Not 

Developed Processes for 

Quantifying These Savings 

According to NBS program officials, GSA anticipated further rent 

reductions from the brokers’ increased knowledge of the commercial real 

estate market, which the officials indicated was greater than that of its own 

realty specialists because the brokers are “in the market” more often. NBS 

program officials explained that commercial brokers have greater 

exposure to real estate markets than that of its realty specialists. More 

specifically, they said that GSA’s realty specialists see only those offers that 

are provided in response to its solicitations for space offers, whereas 

commercial brokers seek out potential spaces and rates offered by all 

building owners—not just those offered to GSA. NBS program officials 

expect that the NBS brokers will use their greater knowledge and market 

64The brokers received commissions for 3 of the 4 completed expedited leasing transactions. 

The building owner did not pay a commission on the other task order—which was also 

eligible for a commission—because, according to the National Contracting Officer, the lease 

extension, required only minimal effort to complete. 

Description

Number of 

task orders

Task orders issueda 544

Task orders issued and eligible for a commission creditb 463

Completed task ordersc 76

Completed task orders that were eligible for a commission creditd 7

Completed commission-eligible task orders that resulted in a commission 

credit 7
Page 48 GAO-07-17 National Broker Contracts

exposure to expand the list of potential offerors and to negotiate more 

favorable rental rates for the government. According to NBS program 

officials, GSA plans to compare the brokers’ negotiated rental rates with 

information available from industry data sources to assess the 

reasonableness of the brokers’ rates on each NBS task order for lease 

acquisitions. In addition, GSA intends to compare the brokers’ negotiated 

rates with those negotiated by its realty specialists to determine whether 

the NBS brokers are achieving lower rental rates. Although GSA has plans 

to quantify expected savings associated with the brokers’ greater market 

knowledge and exposure, as of October 31, 2006, it had not developed 

processes for doing so. 

GSA Anticipated Further 

Savings from Reductions in 

Agency Costs, but Also Has 

Not Developed Processes 

for Quantifying the 

Expected Savings 

Besides savings from lower rents, GSA’s 2003 business analysis for entering 

into the NBS contracts indicated that its costs for (1) fees,

(2) administration expenses, and (3) personnel would decline because its 

former contracts for leasing services had expired and its leasing workload 

would increasingly be shifting to the NBS contracts. First, GSA anticipated 

reductions in fees associated with the prior contracts. According to GSA’s 

analysis, in 2003, it had 29 fixed price contracts in place, under which GSA 

compensated the brokers through fees. According to GSA, 20 of these 29 

contracts had fees ranging from 1.98 percent to 5.0 percent of the total 

lease value.65 According to NBS program officials, GSA budgeted $5.0 

million in broker fees for its contracts in fiscal year 2005 and $5.1 million 

for fees in fiscal year 2006. All of the prior contracts have expired and will 

not be renewed, according to NBS program officials. However, as of July 

31, 2006, an unspecified number of task orders issued before the expiration 

of these contracts were still incomplete due to the lengthy duration of some 

task order projects.66 As of July 31, 2006, according to NBS program 

officials, fees paid totaled about $32.6 million. When all of the remaining 

task orders under the previous contracts are completed—expected by 

about March 31, 2007, NBS program officials told us that they intend to 

assess the amount of expected savings resulting from the elimination of 

these fees. As of October 31, 2006, however, GSA had not developed 

procedures for quantifying these savings. 

65GSA was unable to provide the fees for the remaining 9 contracts.

66NBS program officials were unable to provide the number of open task orders under the 

prior contracts.
Page 49 GAO-07-17 National Broker Contracts

Second, GSA expected that using the NBS contracts would significantly 

reduce its administrative expenses. According to GSA, the previous 

contracts had differing terms, conditions, and pricing structures, which led 

to contract administration problems, inconsistencies among its regional 

offices, and customer-relations problems with its tenant agencies. GSA also 

noted that the prior contracts did not provide for efficient monitoring and 

tracking of management and funding data. In December 2002, GSA’s 

Inspector General reported that these contracts generated a significant 

administrative burden that was disproportionate to the value derived from 

them. By contrast, according to GSA, the four NBS contracts have, among 

other things, the same terms and conditions.67 GSA considers this 

uniformity a significant improvement that will simplify its oversight and 

administration of the contracts. In GSA’s 2003 business analysis for 

entering into the NBS contracts, GSA estimated that the improvements 

gained by moving to the NBS contracts would reduce its administrative 

costs by approximately 75 percent. The National Program Manager told us 

that GSA is developing processes to quantify these savings, but as of 

October 31, 2006, it had not yet done so. 

Finally, GSA expected to achieve further savings by hiring fewer realty 

specialists over time.68 Had the agency decided to perform all of its lease 

acquisition, management, and administration duties in-house, rather than 

move to the NBS contracts, GSA’s 2003 business analysis indicated that it 

would have to (1) increase its staff of 450 realty specialists by 300 as well as 

(2) replace those specialists who retired or left the agency for other 

reasons.69 According to GSA’s 2003 analysis, entering into the NBS 

contracts would enable GSA to acquire needed resources, while avoiding 

the need to hire additional realty specialists. By July 2006, however, NBS 

program officials, including the Assistant Commissioner of GSA’s Office of 

National Customer Services Management, no longer held this view. 

Specifically, these officials emphasized that, while the NBS contracts 

represent a “powerful tool to hand off much of their task-oriented 

transactional work to the brokers,” GSA will need to maintain an adequate 

67While the contracts are substantially the same, as previously discussed, some 

requirements vary.

68As previously discussed, GSA planned to have the NBS brokers perform at least 50 percent 

of its expiring leases in the first contract year—with increases of 10 percent annually, 

culminating in 90 percent utilization by 2010.

69According to NBS program officials, in April 2006, GSA had 509 realty specialists, with 54 

of these employees eligible to retire by December 2006.
Page 50 GAO-07-17 National Broker Contracts

(but unspecified) number of realty specialists to oversee the NBS brokers. 

In addition, NBS program officials told us that, subsequent to GSA’s 

development of its 2003 analysis, it had identified other, more strategic 

tasks for its realty specialists to perform, such as those related to 

improving its tenant agencies’ satisfaction with the leasing process. 

According to these officials, having realty specialists perform more 

strategic tasks will result in agencywide operational efficiencies. 

Furthermore, NBS program officials told us that GSA is developing a new 

workload capacity model to assist senior managers in projecting GSA’s 

future staffing requirements for realty specialists. Consequently, as of 

October 31, 2006, it was unclear (1) whether, or to what extent, previously 

expected savings from hiring fewer realty specialists would be realized or 

(2) whether, or when, GSA would be able to quantify savings from 

operational efficiencies associated with its use of the NBS contracts.

GSA Distributed Its 

Initial Workload Fairly 

Equally, but Several 

Factors Have Slowed 

Its Transition to 

Performance-Based 

Allocations

According to the contracts, GSA is to distribute its initial leasing workload 

as equally as possible, unless a broker is performing unsatisfactorily. GSA’s 

program guidance further indicates that the brokers are initially to receive 

equitable square footage distributions in each of GSA’s 11 regions. Once a 

record of performance is available, the distributions are to be based on the 

brokers’ performance. GSA originally expected to have a record of 

performance available by the end of the first contract year, but because of 

program delays and insufficient data, it postponed the transition to 

performance-based distributions. GSA now expects to begin performancebased distributions on April 1, 2007, the start of the third contract year, but 

it has not yet defined what constitutes a record of performance or 

developed procedures for performance-based distributions. According to 

our analysis of GSA’s year-end data (which was delayed 5 months by 

problems with data reliability that we believe GSA has since addressed 

sufficiently for our reporting purposes), GSA initially distributed its task 

orders fairly equally among the brokers agencywide, but at the regional 

level, its distributions varied. Such variability is inconsistent with GSA’s 

contract administration guide, but GSA considers the variability inevitable 

and, on the basis of our analysis, plans to modify the guide. We also found 

that GSA’s distributions of task orders for market data and expedited 

leasing transactions varied among the brokers, potentially disadvantaging 

one or more brokers, and that GSA was not tracking information on its 

distribution of task orders by similar geographic location (e.g., rural or 

urban), as it would need to do to determine the equitability of its 

distributions by location. 
Page 51 GAO-07-17 National Broker Contracts

Workload Is to Be 

Distributed as Equally as 

Possible until a Record of 

the Brokers’ Performance Is 

Available

Initially, the NBS contracts obligate GSA to distribute task orders to the 

four NBS brokers “as equally as possible,” unless their performance is 

unsatisfactory. As specified in the contracts, until a record of performance 

is available, the brokers must be issued “similar size projects in similar 

geographic areas to the maximum extent possible within the [GSA’s] 

existing workload available.” The contracts further indicate that the 

brokers “should assume that the Government intends to have each awardee 

performing projects on a nationwide basis in both rural and urban areas,” 

as long as performance is acceptable. In addition, GSA’s November 2005 

contract administration guide indicates that, until a performance record is 

established, distribution is to be based on square footage “with each firm 

receiving equal distribution in all eleven GSA regions and in all markets.” 

Equal distribution of square footage is important because task orders for 

large projects are generally more profitable for the brokers than task 

orders for small projects. The requirement for equitable distribution 

applies to all task orders, including those for expedited leasing transactions 

and market data. For example, according to GSA’s November 2005 

administration guide, task orders for market data “should be evenly 

distributed” among the brokers. Finally, once a record of performance is 

available, the contracts specify that GSA will distribute work among the 

brokers in accordance with their performance. 

Other contractual requirements also apply to GSA’s distribution decisions, 

both initially and after the transition to performance-based distributions. 

First, the contracts allow GSA, when assigning work to the brokers, to 

consider the existence of a conflict of interest and a broker’s specialized 

experience or knowledge. Second, under the terms of the contracts, GSA 

may consider the timeliness and quality of the brokers’ work and can stop 

issuing task orders to a broker if the quality or timeliness of the broker’s 

work “is endangering performance of any task order.” Third, as discussed, 

the contracts specify that GSA will not assign a task order to a broker if it 

knows that a commission will not be paid. Fourth, the contracts allow the 

NBS brokers to initiate a complaint if they have concerns about GSA’s 

distribution of task orders among the brokers.70 Finally, while not 

discussed in the contracts, the amount of the commission credit offered by 

a broker is not considered when GSA distributes work among the brokers, 

according to NBS program officials. 

70The brokers did not exercise this right during the first contract year. 
Page 52 GAO-07-17 National Broker Contracts

GSA Plans to Develop 

Guidance and Procedures 

for Performance-Based 

Distributions before 

Altering Its Current 

Distribution Approach

GSA initially expected to start performance-based task order distributions 

after the first contract year, which ended on March 31, 2006, anticipating 

that the brokers would have completed a sufficient number and variety of 

commission-eligible task orders to establish a record of their performance. 

However, apart from task orders for market data, which are not eligible for 

a commission payment, the brokers had completed 11 task orders by the 

end of the first year. Lacking what it considered a sufficient record of their 

performance, GSA elected to continue allocating work among the brokers 

as equally as possible during the second contract year. 

As of October 31, 2006, NBS program officials expected to begin 

performance-based task order distributions by April 1, 2007—the start of 

the third contract year. Before GSA can move to performance-based 

distributions, however, it must, according to the National Program 

Manager, (1) ensure that it has sufficient data on each broker’s 

performance and (2) develop clearly defined guidance and processes—

which GSA describes as a top priority—for allocating additional future 

work to those brokers who excel relative to the others. GSA has not 

determined how many or what types of completed task orders are needed 

to provide sufficient data on a broker’s performance. Without this 

information, GSA cannot demonstrate that it has established a record of 

performance and is ready to move to performance-based distributions. 

NBS program officials indicated that they might need 50 to 100 completed 

task orders and that, in reviewing task order evaluations, they would look 

for clearly discernible patterns of performance, including those related to a 

broker’s customer service and the rental rates negotiated by the brokers. 

Clearly defined guidance and processes will be particularly important for 

allocating future work if differences between the brokers’ performance are 

marginal or if GSA’s ratings of the brokers vary by region. According to NBS 

program officials, if regional variations exist, GSA will need to develop a 

process for evaluating the accuracy of the ratings by, among other actions, 

assessing whether the preparers of the regional ratings are exhibiting 

“rating bias.” 
Page 53 GAO-07-17 National Broker Contracts

GSA’s Process for 

Distributing Its Leasing 

Workload

GSA embarked on the NBS contracts without establishing how it intended 

to meet its goal of distributing 50 percent of its workload to the NBS 

brokers during the first contract year, including the number and size 

(square footage) of task orders.71 However, in October 2005—6 months 

later—GSA established two programwide goals for the first contract year—

to issue 630 commission-eligible task orders to the four brokers covering 

6.8 million square feet of leased space by March 31, 2006.72 According to 

NBS program officials, these goals—which are not contractual 

obligations—represented about 50 percent of the total expiring leasing 

workload that GSA expected to accomplish (using in-house and contractor 

personnel) during the first contract year.73 NBS program officials then used 

the overall goals to develop and allocate first-year goals for each of its 

regions.74 After receiving their goals, according to NBS program officials, 

personnel from each region prepared a list of leases expected to expire 

during the first contract year and preliminarily identified a broker for each 

of the expected task orders. The regional personnel then sent the list of 

potential task orders to the National Program Manager, who reviewed and 

revised them, in coordination with the GSA regional program managers, to

71As discussed, in 2004, GSA expected that the NBS brokers would need to perform at least 

50 percent of its expiring lease workload in the first year of the contract, with 10 percent 

increases annually, culminating in the performance of 90 percent of GSA’s workload by 

2010—the fifth and final contract year. These goals are not contractual obligations but, 

rather, internal goals set by senior GSA management to address GSA’s capacity issues.

72In October 2005, GSA expected to accomplish 1,259 leasing transactions covering about 

13.6 million square feet—with either in-house or contractor resources—during the first 

contract year. GSA divided these totals in half to arrive at its first-year goals for the NBS 

contracts (i.e., 630 task orders involving 6.8 million square feet of leased space). 

73We attempted to ascertain the total number of leasing transactions completed by GSA and 

GSA’s brokers as of March 31, 2006. However, according to the National Program Manager, 

such information was not available. The National Program Manager explained that while 

GSA had been aware of the need for such an analysis, it did not have adequate resources to 

prepare it. According to the manager, GSA recently hired one analyst to assist the NBS team 

and another analyst was recently provided to the team on a “shared basis” to, among other 

things, prepare such an analysis.

74GSA used the same process to develop and allocate goals for the second contract year. For 

year 2, GSA hopes to award 658 task orders involving about 8,476,000 square feet of leased 

space. These goals represent about 60 percent of the leasing workload that GSA anticipates 

will expire through March 31, 2007—the end of the second contract year.
Page 54 GAO-07-17 National Broker Contracts

help ensure that each contractor would be assigned an equitable portion of 

the expected work.75

To monitor GSA’s actual distributions, the National Contracting Officer 

compares information received from the regional contracting officers with 

monthly information from the brokers and, in coordination with other NBS 

national program officials, redistributes task orders to correct workload 

imbalances. The brokers’ monthly reports summarize, among other things, 

the status of their activities under the contracts, including the number and 

size of the task orders issued to them during the month. 

While GSA strives to distribute its work equitably, according to the National 

Program Manager, perfectly equal distribution is nearly impossible to 

achieve because of, among other factors, the uncertain timing and nature of 

the space requests submitted by GSA’s customer agencies. According to 

NBS program officials, such factors can create temporary workload 

imbalances among the brokers at any point in time and for a variety of 

reasons. For example, because 80 percent of GSA’s task orders involve less 

than 20,000 square feet of leased space, the issuance of a very large task 

order, such as one involving about 1 million square feet, can create an 

imbalance among the brokers and, according to the National Program 

Manager, increase the “challenge” of equalizing work among the brokers 

during the remainder of the contract year.76 Task order reassignments 

resulting from broker conflicts of interest also create temporary workload 

imbalances.77 Other factors that did not influence task order distributions 

during the first contract year, such as a broker’s specialized knowledge or 

poor performance warranting the discontinuation of a broker’s work on a 

task order, could also affect future distributions. 

75GSA’s process for distributing its workload differs from that of most of the private- and 

public-sector organizations we contacted that contract for leasing services. Most of these 

organizations either acquired leased space through (1) a single broker or (2) multiple 

brokers who each performed all of the organization’s leasing in a given geographic area. 

Thus, the organizations had no need to allocate work among multiple brokers. The 

Department of Veterans Affairs, which modeled its contracts after GSA’s contracts, also 

requires equitable distribution until a history of performance is available. 

76In the first contract year, 8 of the task orders GSA distributed were for more than 200,000 

square feet of leased space. 

77As previously discussed, GSA reassigned 9 task orders involving about 900,000 square feet 

of leased space to address conflict-of-interest issues. The vast majority of the 

reassignments, particularly with respect to square footage, affected one of the two dualagency firms. 
Page 55 GAO-07-17 National Broker Contracts

Data Reliability Issues 

Delayed Issuance of GSA’s 

First Year-end Report for the 

NBS Program 

At several points in our review, we identified errors, inconsistencies, and 

missing data in GSA’s monthly and year-end reports for the first contract 

year as well as in other sources of NBS program-related data. For example, 

over the 2-month period between late April and late June 2006, we 

identified errors in six of GSA’s evolving “year-end” reports, including the 

omission in an April report of a task order involving nearly 1 million square 

feet of leased space—about 10 percent of the total square footage of task 

orders issued to the brokers during the first contract year. The omission 

was caused by a computer programming error and incorrectly indicated a 

significant imbalance in the workload allocated to the brokers. Unaware 

that the report was inaccurate, on April 28, 2006, the National Program 

Manager issued a memorandum to various NBS program officials, citing 

concerns about the disproportionately low square footage issued to one 

broker relative to the others and alerting the officials to the possible need 

to stop issuing task orders to two of the three remaining NBS brokers with 

much larger square footage allocations until the affected broker was 

brought into “parity” with the others. 

We discussed GSA’s various data reports, including issues related to data 

reliability, with NBS program officials. The officials acknowledged the 

errors, inconsistencies, and missing data, indicating that these problems 

had occurred for a variety of reasons. For example, because the regions 

were not specifically prohibited from creating a new task order for a 

modification to an existing task order—rather than revising the existing 

task order—GSA’s reports frequently overstated the number of task orders 

actually issued to the NBS brokers. In addition, information on the 

“useable” square footage related to the lease was sometimes incorrectly 

recorded in terms of the “rentable” square footage, which overstated the 

amount of GSA’s square footage distributions.78 Finally, inaccuracies 

occurred because, among other reasons, (1) inaccurate codes were used to 

record the type of task order issued (miscoding errors) and (2) the regions 

were late in submitting documentation needed by the National Contracting 

Officer to record task orders in the NBS database “as of” March 31, 2006. 

According to GSA, while it learned many lessons in the first contract year, 

78The “useable” square footage of a lease relates to the amount of space actually occupied by 

a tenant agency. However, tenant agencies’ rent payments are based on the “rentable” 

square footage within a building. The rentable square footage includes the space the agency

occupies (useable) as well as the agency’s portion of a building’s common space (i.e., its 

access to elevator lobbies; building corridors; restrooms; and support areas, such as 

telephone and electrical closets). 
Page 56 GAO-07-17 National Broker Contracts

the hardest lesson learned was that its data collection processes, as 

specified in the contracts and administration guide, were unclear and 

incomplete. 

GSA took a variety of actions to address these and other issues related to 

the reliability of its data, including the computer programming error that 

resulted in the omission of nearly 1 million square feet of leased space. In 

particular, between April 1, 2006, and July 31, 2006, GSA implemented new 

processes for accounting for the NBS task orders. The new processes 

include the establishment of both electronic and physical systems for 

recording and filing documentation of GSA’s task orders in headquarters—

rather than solely in the National Contracting Officer’s office in Vancouver, 

Washington. According to the National Program Manager, all of the source 

documentation for the first contract year has been scanned and filed—both 

physically and electronically. In addition, documentation related to the 

second contract year is being scanned and filed in headquarters as the task 

orders are signed.79 A variety of data validation procedures have also been 

instituted. For example, a program analyst in headquarters now receives 

documentation related to the regions’ task orders and audits the data to 

help ensure that the required data elements have been accurately reported 

in GSA’s database. Moreover, a senior program manager must now 

randomly review and test the data and, at the end of each month, validate 

the accuracy of the data against information supplied by the brokers and 

GSA’s regions. GSA also has (1) assigned additional personnel to the NBS 

program, including a program analyst in headquarters, to help implement 

its new processes and (2) provided guidance to its regions clarifying, 

among other matters, the appropriate use of task order modifications, the 

need to report useable—not rentable—square footage related to a 

particular task order, and the need for timely submissions of 

documentation related to the regions’ task orders. More specifically, with 

respect to the last action, the National Contracting Officer recently 

directed all of the regions to immediately send electronic documentation of 

each leasing transaction to him and other NBS program staff when the 

regions sign a task order.

After completing these and other remedial actions, on September 1, 2006—

about 5 months after the completion of the first contract year—GSA 

provided us with its “final and correct” year-end report for the NBS 

program. According to the National Program Manager, the revised report 

79Regional personnel sign the task order just prior to its issuance to a broker.
Page 57 GAO-07-17 National Broker Contracts

“accurately reflects exactly what GSA accomplished” through the NBS 

program in the first contract year. Accurate and timely data are essential 

because, under the terms of its contracts, GSA is initially obligated to 

distribute its workload as equally as possible among the brokers. While 

GSA’s corrected year-end data were untimely, given GSA’s efforts to correct 

problems in its reports, we now believe these data are sufficiently reliable 

for use in reporting aggregate programwide and regional information on 

the number and size of task orders distributed to the brokers.

GSA’s Agencywide 

Distributions among the 

Brokers Were Fairly Equal 

for the First Contract Year

GSA’s agencywide distributions of task orders among the brokers during 

the first year of the NBS contracts were fairly equal. According to GSA’s 

“final and correct” year-end report, GSA distributed between 114 and 123 

commission-eligible task orders to each broker, with each broker receiving 

from about 2.3 million to about 3.0 million square feet. In total, GSA 

distributed 479 commission-eligible task orders, or about 24 percent fewer 

than its goal of 630 for the contract year. However, GSA far exceeded its 

goal for square footage, distributing about 10.4 million square feet to the 

brokers compared with its goal of 6.8 million square feet. Table 7 provides 

GSA’s aggregate program data for the first contract year.

Table 7: Distribution of Commission-Eligible Task Orders Agencywide, by NBS 

Broker, as of March 31, 2006 

Source: GAO analysis of GSA data. 

a

Percentages and square footage totals do not sum because of rounding. 

b

The total includes 16 task orders for expedited services and excludes 65 task orders for market data 

as of March 31, 2006. Task orders for market data are not eligible for a commission payment. 

Our knowledge of the program suggests several possible reasons why GSA 

did not meet its internal goal for the number of task order distributions. For 

example, in the early stages of the contracts, GSA experienced difficulties 

Broker

Number and percentage

of commission-eligible 

task ordersa

Size (square footage)

and percentage of

square footagea

Broker A 123 (26%) 2,967,000 (28%)

Broker B 114 (24) 2,339,000 (22) 

Broker C 123 (26) 2,805,000 (27)

Broker D 119 (25) 2,308,000 (22)

Total 479b 10,418,000
Page 58 GAO-07-17 National Broker Contracts

getting its task orders “out the door.” The slow pace of GSA’s initial 

distributions was partially attributable to bid protests, which created 

uncertainty about when contract performance would begin and delayed 

GSA’s early identification of task orders that could be distributed to the 

brokers. In addition, according to the National Program Manager, GSA’s 

4-month delay in setting and allocating numeric goals for its regions 

created confusion among regional personnel attempting to implement the 

contracts. Furthermore, at the outset of the contracts, GSA revised its work 

processes, requiring GSA personnel to do more initial work to establish 

client agencies’ needs. According to NBS program officials, the revised 

processes were unfamiliar and, thus, slowed the initial pace of its task 

order distributions. 

Regions’ Workload 

Distributions for the First 

Contract Year Varied

GSA’s workload data show variations in both the number and square 

footage of the regions’ distributions. For example, according to our 

analysis of the data shown in table 8, region 6 distributed about 57 percent 

of all of its square footage to broker A, while region 10 allocated 53 percent 

of its square footage to broker C. Thus, in both regions, a single broker 

received more square footage than the other three brokers combined. 

Likewise, while brokers C and D each received about 25 percent of region 

8’s square footage, broker B received about 40 percent of the region’s total 

and over three times the amount allocated to broker A (about 11 percent). 

Similarly, in region 2, brokers B and C received about 72 percent of the 

region’s square footage, while the remaining two brokers, combined, 

received about 28 percent. Data for region 11, which distributed about 48 

percent of all the square footage issued by GSA in the first contract year, 

also showed variability in its square footage distributions.80 For example, 

broker A received task orders involving about 1,889,000 square feet, while 

broker C received about 805,000 square feet (about 38 percent and 16 

percent of the region’s total, respectively). Table 8 provides aggregate data 

on the number of task orders issued to the brokers, by region, as of

March 31, 2006. 

80Region 11 is the National Capital Region.
Page 59 GAO-07-17 National Broker Contracts

Table 8: Distribution of Square Footage, by Region and Broker, as of March 31, 2006

Source: GSA data provided to GAO.

a

Totals do not always sum because of rounding.

Such variation in the regions’ workload distributions, particularly with 

respect to square footage, is inconsistent with GSA’s administrative 

guidance. As previously discussed, GSA’s November 2005 contract 

administration guide indicates that, until a record of performance is 

established, distributions are to be based on square footage “with each firm 

receiving equal distribution in all eleven GSA regions. . . .” However, the 

variation in distributions occurred for reasons that, at least in the short 

term, GSA may not be able to address. For example, during the first year, a 

few very large task orders caused imbalances, according to the National 

Program Manager. In region 3, for instance, broker C received a task order 

for about 900,000 square feet that, by itself, accounted for about 76 percent 

of the square footage the region distributed to the four brokers during the 

year. Similarly, in region 8, broker B received a task order for 148,000 

square feet, representing about 40 percent of the region’s workload for the 

year. Imbalances also occurred when task orders had to be reassigned to 

address conflict-of-interest issues. Other reasons for imbalances cited by 

the National Program Manager were changes in customer agency 

requirements, which resulted in the cancellation of task orders, and 

decisions to keep certain projects in-house. Given the variations in the size 

and number of available task orders and the uncertainties associated with 

customer agencies’ requirements, NBS program officials have concluded 

that the administration guide’s requirement for “equal” distribution by 

Region Broker A Broker B Broker C Broker D Totala

1 33,000 33,000 75,000 41,000 181,000

2 51,000 131,000 118,000 48,000 348,000

3 113,000 82,000 911,000 80,000 1,187,000

4 179,000 211,000 168,000 195,000 753,000

5 196,000 193,000 211,000 201,000 802,000

6 97,000 23,000 27,000 23,000 169,000

7 131,000 135,000 128,000 177,000 572,000

8 41,000 148,000 90,000 93,000 372,000

9 205,000 316,000 194,000 173,000 889,000

10 31,000 11,000 79,000 27,000 149,000

11 1,889,000 1,054,000 805,000 1,249,000 4,997,000

Totala 2,967,000 2,339,000 2,805,000 2,308,000 10,418,000
Page 60 GAO-07-17 National Broker Contracts

region is impracticable and have said that GSA plans to revise the guide to 

require distribution to be done “as equally as possible.” This revision will 

have the additional benefit of conforming the language in the guide to the 

language in the contracts.

Several Distribution-Related 

Matters Warrant Additional 

Management Attention

Several matters related to the distributions of GSA’s task orders warrant 

additional attention by GSA program managers. For example, like GSA’s 

regional distributions of task orders to the brokers, GSA’s distributions for 

market data and expedited leasing transactions during the first contract 

year resulted in variations among the brokers. NBS program officials 

confirmed that, during the initial period of the contracts, all of GSA’s task 

orders are initially expected to be distributed as equally as possible among 

the brokers. However, with respect to task orders for market data and 

expedited leasing transactions, this expectation did not materialize. 

Specifically, according to GSA’s final and correct year-end report as of 

September 1, 2006, GSA distributed 65 task orders for market data to the 

NBS brokers during the first contract year. The distributions ranged 

between 12 and 23 task orders. Broker A received about 35 percent (23) of 

the task orders, while, collectively, brokers C and D received 38 percent 

(25) of the task orders—2 more than the total number of task orders for 

market data distributed to broker A. Table 9 provides GSA’s year-end 

information for distributions of task orders for market data, by NBS broker.

Table 9: Distribution of Task Orders for Market Data, by NBS Broker, as of March 31, 

2006

Source: GAO analysis of GSA data.

a

Percentages do not sum because of rounding.

GSA’s data for the first contract year also demonstrate variation in the 

number of task orders for expedited leases that GSA distributed among the 

brokers. According to GSA’s data, 16 task orders for expedited leasing 

Broker

Distribution of task orders 

for market data 

Percentage that each 

broker receiveda

Broker A 23 35%

Broker B 17 26 

Broker C 12 18 

Broker D 13 20 

Total 65 - 
Page 61 GAO-07-17 National Broker Contracts

transactions were issued to the four NBS brokers. The distributions ranged 

from 3 task orders (to two brokers) to 6 task orders (to one broker). Broker 

C received 6 of the 16 task orders for expedited leasing transactions, or 

about 38 percent of the total. Furthermore, the 6 task orders represented 

about 64 percent of the total square footage allocated to the four brokers. 

Table 10 provides GSA’s year-end data on distributions of expedited leasing 

transactions, by NBS broker. 

Table 10: Distribution of Expedited Task Orders, by NBS Broker, as of March 31, 2006

Source: GAO analysis of GSA data.

a

Percentage totals do not sum because of rounding.

According to GSA, the differences in its distributions of task orders for 

market data and expedited leases represented about 15 percent (81) of the 

task orders (544) it issued in the first contract year.81 While these 

distributions were relatively small compared with GSA’s overall task order 

distributions, at a minimum, they suggest disparities among the brokers 

that could—without additional oversight—disadvantage a particular 

broker or brokers relative to the others. Such disparities could also cause a 

broker or brokers to initiate a complaint about GSA’s task order 

distributions. Equitable distributions of GSA’s market data task orders are 

important because the brokers are expected to receive the follow-on work 

associated with these task orders. Thus, disparities in these allocations can 

create imbalances among the brokers—a scenario that has already 

transpired, according to the National Program Manager. Equitable 

distributions of task orders for expedited leasing transactions are equally 

Broker

Number and percentage

of expedited task

orders issueda

Square footage and percentage 

of expedited task orders issueda

Broker A 3 (19%) 22,830 (18%)

Broker B 4 (25) 11,657 (9)

Broker C 6 (38) 82,705 (64)

Broker D 3 (19) 12,635 (10)

Total 16 129,827 

81This information includes 65 task orders for market data as well as the 479 commissioneligible task orders GSA distributed to the brokers in the first contract year. Sixteen of the 

479 task orders were expedited. 
Page 62 GAO-07-17 National Broker Contracts

important because the brokers do not provide a commission credit for 

these services and receive the entirety of any commission offered by the 

building owner. During the first contract year, broker C received about 

$371,645 for the four expedited leasing transactions it completed.82 This 

sum represented about 39 percent of the total compensation received by 

the four brokers in the first contract year. 

GSA did not specifically track data on its expedited leasing transactions; 

however, in response to our inquiries, it has decided to do so for the second 

contract year. According to the National Program Manager, these data will 

help GSA measure the amount of the commission sharing GSA receives. In 

addition, she indicated that these data will serve as a useful management 

tool to help ensure that the regions are not overusing expedited task orders 

as a means to overcome inadequate planning. Regarding task orders for 

market data, NBS program officials noted that these task orders represent 

an optional step in GSA’s planning for leases and, thus, that there is no 

guarantee that they will result in a follow-on, commission-eligible task 

order. Nevertheless, in response to our inquiries, GSA has expanded its 

monthly program reports to track these task orders. According to GSA, the 

expanded reports should help ensure that follow-on, commission-eligible 

task orders are issued whenever possible for the ensuing years of the 

contracts.

Finally, our analysis of GSA’s year-end data showed that although GSA 

collects data on the number and size of the task orders distributed to the 

four NBS brokers, both agencywide and by region, it does not collect data 

on the geographic area (e.g., rural or urban) covered by the task orders. As 

specified in the contracts, until a record of performance is available, the 

brokers must be issued “similar size projects in similar geographic areas to 

the maximum extent possible within the [GSA’s] existing workload 

available.” The contracts further indicate that the brokers “should assume 

that the Government intends to have each awardee performing projects on 

a nationwide basis in both rural and urban areas,” as long as performance is 

acceptable. According to NBS program officials, GSA assumes that task 

orders involving large amounts of space are in urban areas. However, 

according to GSA, more than 80 percent of its task orders involve less than 

20,000 square feet and, therefore, information on square footage appears to 

be of limited value in assessing the equitability of GSA’s task order 

82None of the other NBS brokers completed task orders for expedited leasing transactions 

during the first contract year. 
Page 63 GAO-07-17 National Broker Contracts

distributions by similar geographic area. NBS program officials 

acknowledged that GSA does not collect information on the geographic 

location of its task order distributions. At the conclusion of our review, the 

officials said GSA could collect such information but did not agree to do so.

GSA Implemented a 

New Organizational 

Structure and 

Numerous 

Management Tools to 

Help Ensure 

Consistent Oversight of 

the NBS Brokers

To oversee the NBS brokers, GSA put a new organizational structure in 

place and implemented new management tools. These actions are intended 

to address weaknesses in GSA’s administration of its earlier contracts for 

leasing services, including the need to improve its oversight of its real 

estate brokers, and to provide consistent direction to its regions. 

Inspector General Identified 

and GSA Acknowledged 

Problems with GSA’s 

Administration of Prior 

Contracts 

GSA’s administration of the 29 contracts that preceded the 4 NBS contracts 

was inadequate and inconsistent, according to a December 2002 report by 

GSA’s Inspector General. For example, the Inspector General found that, 

GSA had not clearly defined the (1) authorities, roles, and responsibilities 

of key contracting personnel or (2) requirements for administering specific 

task orders. The Inspector General recommended, among other things, that 

GSA establish nationwide contract administration requirements, specify 

procurement roles and responsibilities, and use standardized templates as 

guides for administering future task orders to brokers. GSA has 

acknowledged problems with its administration of the previous contracts.83

In its March 2003 plan for implementing the NBS contracts, for example, 

GSA acknowledged that the 29 contracts in place at that time had become 

burdensome and costly to administer because of variations in the 

contracts’ terms, conditions, and pricing structures. In addition, the 

contracts did not provide for efficient monitoring and tracking of necessary 

management and funding data. Furthermore, according to GSA, variations 

in the contracts had resulted in inconsistent contract administration 

83GSA began awarding contracts for leasing services in 1997, when it no longer had the 

resources to carry out all of its leasing responsibilities in-house.
Page 64 GAO-07-17 National Broker Contracts

between its regions and from contract to contract, leading to confusion and 

dissatisfaction among customers.

GSA Implemented a New 

Organizational Structure to 

Help Ensure Consistent 

Oversight of the NBS 

Brokers

GSA’s new organizational structure for overseeing the NBS brokers 

includes key national and regional management positions with 

responsibilities for overseeing and administering the contracts. According 

to NBS program officials, the new positions are held by personnel with 

expertise in procurement and in real estate and lease acquisitions—two 

areas of expertise that are critical to properly overseeing and administering 

the NBS contracts. Additionally, since its regions are largely autonomous, 

GSA created national management positions to help ensure consistency in 

its oversight of the NBS contracts. Table 11 describes the responsibilities of 

the key national and regional management positions that oversee the NBS 

brokers.

Table 11: Responsibilities of Key National and Regional Management Positions

Key position Responsibilities

National 

National Program Manager • Provide overall oversight of the NBS contracts, including oversight of the 11 GSA regions that 

manage the contracts. 

• Serve as the National Contracting Officer’s representative for all technical matters related to 

federal lease acquisition policies and procedures. 

• Serve as the headquarters contact for customers, GSA senior management, and the private 

sector.

• Develop and maintain NBS contract administration guidance and training. 

• Monitor the regions’ use of the NBS contracts, budgets, and workload data through 

coordination with the Regional Program Managers. 

• Serve as Chairman of the Performance Evaluation Board.

• Participate in peer reviews, as needed.
Page 65 GAO-07-17 National Broker Contracts

Source: GAO analysis of GSA data.

Recognizing the need for redundancy in key positions, GSA also designated 

alternates for its National Program Manager and National Contracting 

Officer positions to help ensure consistent implementation—at the national 

level—when, for example, the principal personnel are absent. Some of 

GSA’s regions have also followed suit, designating part-time alternates for 

key regional positions. As of December 31, 2005, 6 of GSA’s 11 regions had 

part-time alternates for their regional program managers, while 7 had parttime alternates for their regional contracting officers. 

National Contracting Officer • Serve as GSA’s representative with full authority to award and administer the NBS contracts. 

• Take actions on behalf of GSA to amend, modify, or allow deviation from, among other things, 

the contracts’ terms, conditions, requirements, specifications, details and delivery schedules.

• Make final decisions on disputed deductions from contract payments for unsatisfactory 

performance. 

• Terminate the contracts for convenience or default.

• Issue final decisions on contract questions or matters under dispute. 

• Monitor the contractors’ subcontracting submissions and reports for compliance with the 

contracts’ subcontracting goals. 

• Coordinate the brokers’ annual evaluations with other NBS personnel and record the ratings in 

a governmentwide database on contractor performance maintained by the National Institutes of 

Health.

• Serve as a member of the Performance Evaluation Board. 

• Oversee the Regional Contracting Officers to ensure that they are using the NBS contracts 

effectively.

• Participate in peer reviews, as needed.

Regional

Regional Program Manager • Oversee the region’s NBS contracts and interface with the National Program Manager.

• Disseminate guidance and reinforce direction and training from the National Program Manager 

to help enhance consistency in contract usage within the region.

• Serve as the region’s overall coordinator for budget and workload projections and workload 

distribution.

• Serve on quarterly evaluation panels and monitor broker performance data.

• Serve as the region’s point of contact for the brokers, customers, GSA senior management, 

and the private sector.

• Take timely action to alert the National Program Manager to potential broker performance 

problems within the region.

• Serve as a member of the Performance Evaluation Board.

• Participate in peer reviews, as needed.

Regional Contracting Officer • Serve as the region’s point of contact for coordinating contract issues with the National 

Contracting Officer. 

• Issue and administer the region’s task orders and monitor the task orders issued by other 

officials within their region. 

• Maintain a log of all activity on the region’s task orders and approve task order issuance.

• Provide guidance and direction from the National Contracting Officer to regional personnel.

• Serve as a member of the Performance Evaluation Board.

• Participate in peer reviews, as needed.

(Continued From Previous Page)

Key position Responsibilities
Page 66 GAO-07-17 National Broker Contracts

As of December 31, 2005, GSA also had designated 158 of its realty 

specialists as COTRs and redefined their responsibilities, making them 

project managers for task orders issued to the NBS brokers. According to 

NBS program officials, these personnel are among the agency’s mostqualified realty specialists. To qualify as a COTR, a realty specialist must 

have at least 4 years’ experience in this position. The COTRs are 

responsible for, among other things, monitoring the NBS brokers’ day-today performance and ensuring that the brokers comply with the terms and 

conditions of their contracts and adhere to their project schedules. When a 

broker’s performance is not adequate, the COTR has the authority to 

request that specific tasks be redone or improved. The COTRs also have 

other responsibilities, including reviewing and inspecting deliverables to 

ensure compliance with contract requirements, ensuring that defects or 

omissions are corrected, resolving problems encountered in the 

performance of the brokers’ work, reporting performance problems, 

preparing performance assessments, and discussing their assessments with 

the brokers. 

At the end of 2005, GSA had allocated 323 staff to oversee and administer 

the NBS contracts. Table 12 provides a breakdown of GSA’s full-time and 

part-time positions as of December 31, 2005. 
Page 67 GAO-07-17 National Broker Contracts

Table 12: Staff Allocated Full Time and Part Time to Oversee and Administer the 

NBS Contracts, as of December 31, 2005

Source: GAO analysis of data supplied by the National Program Manager.

a

This position has since become full time. 

b

According to GSA’s November 2005 administrative guide, regional ordering officials have full authority 

to issue and administer task orders in accordance with normal contracting procedures. Among their 

other responsibilities, regional ordering officials coordinate with the applicable Regional Contracting 

Officer to help ensure consistency in a region’s issuance and administration of task orders. According 

to the NBS program officials, GSA allowed regional ordering officials in certain regions to 

accommodate variations in its regions’ organizational structures. 

GSA’s current organizational structure differs substantially from its prior 

organizational structure and is intended to result in enhanced and 

consistent oversight of the NBS brokers and GSA’s 11 regions. First, as 

table 13 shows, the current structure is more hierarchical, with both fulltime and part-time national and regional management positions, whereas 

the former structure had no management positions. Second, the current 

structure includes full-time staff positions, whereas the former structure 

consisted only of part-time positions. Finally, of the total staff positions, 

more than half (174 of 323) have at least part-time oversight

Position Full time Part time

National Program Manager 1 -

Alternate National Program Manager - 1a

National Contracting Officer 1 -

Alternate National Contracting Officer - 1

Regional Program Manager 4 7

Alternate Regional Program Manager - 6

Regional Contracting Officer 3 8

Alternate Regional Contracting Officer - 7

Regional Ordering Officialb - 3

Contracting Officer’s Technical Representative 13 145

Realty Specialist 1 112

Additional support - 10

Total 23 300
Page 68 GAO-07-17 National Broker Contracts

responsibilities.84 Formerly, the vast majority of the staff assigned to GSA’s 

contracts (the realty specialists) lacked any oversight authority.85 

Table 13: GSA’s Staffing for the NBS Contracts, as of December 31, 2005, and for the 

Prior Contracts, as of December 31, 2003

Source: GAO analysis of data supplied by the National Program Manager.

Management Tools Are 

Designed to Address 

Problems with Prior 

Contracts and Result in 

More Consistent Contract 

Administration 

GSA implemented numerous management tools to improve its 

management and oversight of its leasing program and to avoid the 

problems that its Inspector General identified in its administration of its 29 

prior contracts. Two of these tools apply to GSA’s agencywide leasing 

program, while five are uniquely applicable to GSA’s administration of the 

NBS contracts. 

Agencywide Management Tools GSA has developed two new tools for managing its leasing program 

agencywide. The first of these tools is GSA’s Transaction Management 

Playbook, which is essentially a handbook, or guide, for helping GSA’s 

tenant agency customers determine their space requirements and 

accomplish their leasing goals. The handbook provides standardized 

templates for handling typical interactions between GSA and its customers, 

84The positions with part-time oversight responsibility as of December 31, 2005, were as 

follows: the Alternate National Program Manager, 28 regional contracting officials, and 145 

COTRs. 

85We did not determine whether the NBS staffing levels were adequate.

NBS contracts Prior contracts

Staffing Full time Part time Full time Part time

National management 2 2 0 0

Regional management 7 31 0 0

Contracting Officer’s 

Technical Representative 13 145 - -

Contracting Officer 0 0 - 13

Realty Specialist 1 112 - 378

Additional support - 10 - -

Total 23 300 0 391
Page 69 GAO-07-17 National Broker Contracts

such as those related to identifying and confirming the customers’ space 

requirements and discussing alternative leasing (space) options. 

The second agencywide tool is the electronic e-Lease system, which GSA 

introduced to manage all its real estate leasing transactions. E-Lease 

addresses contract administration issues identified by GSA’s Inspector 

General and enables personnel throughout the agency to electronically 

manage their lease acquisitions. In addition, the COTRs use e-Lease to 

electronically oversee the tasks performed by the NBS brokers. According 

to GSA, e-Lease automates various GSA business-oriented processes, 

allows seamless data exchange, contains standardized business templates, 

and enforces process efficiencies. One of the goals for e-Lease is to guide 

the COTRs as they make the transition from their former responsibilities as 

realty specialists to their new responsibilities as project managers. E-Lease 

identifies the tasks the brokers must perform and submit to the 

government for approval. Upon receiving access to e-Lease,86 the NBS 

brokers are expected to submit their completed tasks through this 

electronic interface. The COTRs are required to examine certain tasks and 

can accept the tasks or reject them until they meet their approval.87 In 

addition, as we discuss later in this report, the COTRs are responsible for 

evaluating certain activities and task orders completed by the brokers and 

for recording their evaluations in e-Lease. E-Lease also allows GSA to 

generate a variety of summary reports to support national and regional 

oversight of the contracts, including reports summarizing the brokers’ 

performance. Finally, e-Lease contains links to relevant guidance and to 

GSA’s leasing forms and templates that the brokers are required to use—

consistent with the Inspector General’s recommendation for standardized 

templates. 

Management Tools Uniquely 

Applicable to the NBS Contracts

GSA developed and implemented five tools that are uniquely applicable to 

GSA’s management and oversight of the NBS brokers. The first tool is GSA’s 

National Broker Contract Administration Guide, which—as of October 

86As previously discussed, as of July 31, 2006, 12 NBS broker employees had completed the 

federal security verification process required for contractors that have access to federal 

facilities and information systems. Nine of the 12 brokers had access to e-Lease, while 3 

were in the process of obtaining access. Another 42 broker employees, according to NBS 

program officials, were still completing the verification process. NBS program officials were 

unsure when the remaining brokers’ would complete the process and gain access to e-Lease. 

87An e-mail message will be automatically sent to the broker once a task is accepted or 

rejected.
Page 70 GAO-07-17 National Broker Contracts

31, 2006—had been last updated in November 2005. The guide is designed 

to provide specific procedures and formats to GSA staff for consistently 

administering task orders to the NBS brokers across GSA’s 11 regions. As 

the Inspector General recommended, the guide also (1) specifies the roles 

and responsibilities of key national and regional personnel responsible for 

overseeing and managing the NBS contracts and (2) provides procedures 

and standardized templates, including checklists, for issuing and managing 

task orders issued to the NBS brokers. 

Second, GSA created a Performance Evaluation Board, which meets 

quarterly, to coordinate information from the regions about the NBS 

brokers’ performance. Members of the board include the National and 

Regional Program Managers and the National and Regional Contracting 

Officers. In addition, GSA’s small business technical advisor may attend if 

the brokers’ performance related to subcontracting issues is being 

evaluated. According to GSA’s November 2005 administrative guide, the 

board provides regional input on the contractors’ quarterly and annual 

performance and provides its analysis to the National Contracting Officer. 

As of July 31, 2006, the board had held five quarterly meetings, during 

which it discussed, among other topics, the brokers’ performance, by 

region; broker conflict-of-interest issues; and estimates of the upcoming 

volume of work expected to be issued to the brokers. The results of these 

meetings are used to provide feedback to the NBS brokers and support 

workload assignments, as well as to identify weaknesses and recommend 

improvements in the regions’ use and administration of the contracts. 

The third tool—regional peer reviews—is intended to make the lease 

acquisition process more consistent and to strengthen GSA’s contract 

administration among GSA’s regions. The reviewers include one official 

from the national program office and a regional contracting officer and a 

regional program manager from a region other than the region being 

reviewed. Generally, according to NBS program officials, the reviews, 

which are based on a checklist to help ensure consistency, involve verifying 

whether a region’s work satisfies the specifications of the contract in such 

areas as training, task order issuance, file management and documentation, 

quality control, and the reporting of commission credits. Peer review 

personnel also identify regional deviations from the approved leasing 

process and make recommendations for improvement. For example, the 

peer reviewers have recommended, among other things, the need for

(1) additional regional staff to carry out the NBS program, (2) better 

documentation of regional contracting officers’ project schedule approvals, 

and (3) improvement of the accuracy of regional workload projections. As 
Page 71 GAO-07-17 National Broker Contracts

of July 31, 2006, GSA had either completed or initiated peer reviews at 8 of 

its 11 regions and expected to complete reviews at each of the remaining 3 

regions by the end of October 2006. 

Fourth, GSA has implemented a voluntary certification program to help 

ensure that its regional personnel have the requisite experience and skills 

for overseeing the NBS brokers. The certification program establishes 

training requirements for regional program managers, regional contracting 

officers, the regional COTRs, and the National Program Manager. These 

requirements are in addition to the general qualifications for each of the 

positions and include the completion of one or more contract management 

courses.

Finally, under their contracts, GSA required the NBS brokers to attend 

quarterly meetings with the National Contracting Officer and other GSA 

representatives. GSA uses the quarterly meetings to provide feedback on 

the brokers’ performance as well as to solicit feedback from the brokers 

regarding GSA’s implementation of the contracts. At two quarterly meetings 

that we attended, GSA’s feedback emphasized the importance of achieving 

consistent and adequate performance across all of GSA’s 11 regions to 

ensure the brokers’ future participation in the contracts. NBS program 

officials also provided feedback to each of the brokers on their 

performance as of December 31, 2005, while the brokers relayed their 

thoughts and concerns about GSA’s oversight and their working 

relationships with GSA’s regions and NBS program officials, as of that date. 

For example, one broker’s representative said that her firm had established 

an excellent working relationship with one GSA region but had difficulty 

with other regions where, according to the representative, task orders were 

issued without documentation that brokers needed to perform the work. 

Brokers’ representatives were asked to document their problems in their 

required monthly reports to the National Contracting Officer.88 

88The monthly reports summarize, among other things, the status of the brokers’ activities 

under the contracts.
Page 72 GAO-07-17 National Broker Contracts

GSA Has Numerous 

Measures for 

Evaluating the Brokers’ 

Performance, but 

Issues Could Result in 

Inconsistent and 

Inefficient Evaluations 

GSA has numerous measures for evaluating the NBS brokers’ performance, 

including criteria related to quality, timeliness, responsiveness, and longterm performance goals for, among other things, satisfying its client 

agencies and reducing the government’s costs. GSA evaluates a broker’s 

performance at the completion of certain task order activities, at the 

completion of an entire task order, and annually, using evaluation criteria 

that vary depending on the evaluation stage. GSA’s first annual evaluations 

of the NBS brokers indicate that each of the brokers met contract 

requirements. However, the evaluations are somewhat limited since, as of 

March 31, 2006, the brokers had completed 11 task orders subject to 

evaluation. During the course of our evaluation, we identified numerous 

issues related to GSA’s contracts, guidance, and processes for evaluating 

the NBS brokers’ performance, including the use of inapplicable evaluation 

criteria, with NBS program officials, which, in our view, could lead to 

inconsistent and inefficient evaluations of the brokers’ performance and 

inconsistent contract administration across GSA’s 11 regions. NBS officials 

acknowledged inaccuracies and inconsistencies within and among the 

contracts, the administrative guide, and GSA’s e-Lease system as well as 

omissions in the guide. However, according to the officials, these issues 

have not adversely affected either GSA’s evaluations of the brokers or its 

administration of the contracts. As of October 31, 2006, only the issue 

related to e-Lease had been corrected. 

GSA Has Numerous 

Measures for Evaluating the 

NBS Brokers’ Performance

GSA has numerous measures for evaluating the NBS brokers’ performance, 

including criteria related to quality, timeliness, responsiveness, and longterm performance goals for, among other things, satisfying its client 

agencies and reducing the government’s costs. GSA uses its evaluations to, 

for example, hold performance discussions with the brokers. According to 

NBS program officials, these discussions are intended to help maximize the 

brokers’ performance on future task orders. Once a history of the brokers’ 

performance is established, GSA intends to use the evaluations to allocate 

work among the brokers. Finally, GSA plans to use the evaluations to 

determine whether to renew its contracts with the brokers (i.e., exercise 

contract options) and to document problems that endanger successful 

performance under the contracts.
Page 73 GAO-07-17 National Broker Contracts

Applicability of the 

Performance Evaluation 

Criteria Depends on the 

Stage at Which the 

Evaluation Occurs

The performance evaluation criteria that GSA uses, as well as the 

individuals that perform the evaluations, vary depending on the stage at 

which an evaluation occurs. GSA evaluates the brokers on lease 

acquisitions, expansions, and extensions at three stages—at the 

completion of selected activities associated with a task order, at the 

completion of the entire task order, and annually. GSA does not evaluate 

the brokers on their performance of task orders for market data. The first 

stage of an evaluation occurs when a broker completes selected activities 

within a task order. At this stage, the applicable COTR rates the broker on 

five factors—technical quality, document quality, timeliness, 

responsiveness, and quality of assigned personnel—using a scale of 0 (for 

“unsatisfactory” performance) to 5, (for “outstanding” performance).89 The 

COTR records the rating scores for each activity sequentially in GSA’s 

electronic e-Lease system as the activities are completed. The number of 

activities that are evaluated for a task order depends on the type of task 

order performed. Lease acquisitions require the most work from a broker 

and, therefore, are evaluated most frequently, at six milestones; lease 

expansions require less work and are evaluated at three milestones; and 

lease extensions require the least work and are not rated until completion 

of the entire task order. Table 14 shows the frequency of GSA’s evaluation, 

by type of task order performed. 

Table 14: Frequency of Evaluations, by Type of Task Order Performed

89The qualitative descriptors for scores 0 to 5 are as follows: unsatisfactory, poor, fair, good, 

excellent, and outstanding, respectively.

Activity/Milestone

Lease 

acquisition 

services

Lease expansion 

(alteration) 

services

Lease 

extension

services

Broker holds an orientation and 

develops a schedule for the 

project

X X

Broker prepares advertisement, 

market analysis, and survey

X

Broker develops and issues 

GSA’s solicitation for offers and 

amendments, if required

X

Broker evaluates offers X
Page 74 GAO-07-17 National Broker Contracts

X = Task order includes this activity/milestone.

Bold X = Activity is evaluated.

Sources: GAO discussions with NBS program officials and information in GSA’s November 2005 administrative guide.

Note: GSA also issues task orders for market data; however, these tasks are not evaluated.

The second stage of evaluation occurs at the completion of each task order 

for lease acquisitions, expansions, and extensions. The timing of these 

evaluations is not addressed in either GSA’s contracts with the brokers or 

its November 2005 guide for administering the contracts. However, 

according to GSA’s e-Lease training manual, the evaluations are required 

within 30 days after a broker submits all task order deliverables for GSA’s 

final review. At this point—as specified in e-Lease’s final task order 

evaluation screen as of July 31, 2006—the applicable COTR is required to 

rate each broker on nine criteria, using the same 0 to 5 rating scale. Five of 

the nine evaluation criteria—technical quality, document quality, 

timeliness, responsiveness, and quality of assigned personnel—are the 

same as those used to rate task order activities. The remaining four 

evaluation criteria, however, assess the extent to which the broker has 

helped GSA meet certain long-term performance goals for its leasing

Broker prepares lease 

documents

X

Broker manages postaward 

services

X

Broker develops a scope of work 

for build out (alteration work)

X

Broker evaluates offers for 

building alterations

X

Broker requests lease extension X

Broker evaluates lease 

extension offers

X

Broker prepares negotiation 

objectives for the lease extension

X

Broker prepares supplemental 

lease agreement for the 

extension

X

GSA evaluates completed task 

order

X X X

(Continued From Previous Page)

Activity/Milestone

Lease 

acquisition 

services

Lease expansion 

(alteration) 

services

Lease 

extension

services
Page 75 GAO-07-17 National Broker Contracts

program.90 Table 15 identifies the four long-term goals applicable to the 

NBS brokers’ performance, by fiscal year, as of July 31, 2006.

Table 15: Long-term Performance Goals Applicable to the NBS Brokers’ Performance, by Fiscal Year, as of July 31, 2006

Source: GAO analysis of GSA data. 

Note: The federal fiscal year begins on October 1st each year and ends on September 30th of the 

following year. Thus, fiscal year 2006 began on October 1, 2005, and ended on September 30, 2006. 

a

Input for this measurement comes from GSA’s realty transaction survey. We discuss this survey in 

more detail later in this report.

b

Input for this measurement comes from GSA’s tenant satisfaction survey. We discuss this survey in 

more detail later in this report.

Specifically, at the completion of each task order, the COTR was required—

through at least July 31, 2006—to rate each broker on four additional 

factors related to the achievement of three of GSA’s long-term goals in

90Federal agencies are required to develop long-term goals for, among other things, reducing 

costs and increasing satisfaction with their programs. The Office of Management and 

Budget oversees executive branch agencies, such as GSA, and evaluates the agencies on 

their progress in achieving their long-term goals. GSA has numerous long-term goals for its 

leasing program, but only four of these goals can be affected by the brokers’ performance 

under the NBS contracts. 

Fiscal year

Long-term performance goals applicable

to the brokers’ performance 2005 2006 2007 2008 2009 2010 2011

Goal #1: Award leases at average rental rates of not 

less than “x” percent (see target percentages at right) 

below industry averages for comparable office space. -8.25% -8.5% -8.75% -9.0% -9.35% -9.5% -9.5%

Goal #2: Deliver leased space when the customer 

needs it—as measured by the percentage of tenant 

agency contacts involved in the leasing transaction 

who, when surveyed, said that their lease space was 

available when needed.a 75 82 84 86 88 90 90

Goal #3: Satisfy GSA customers with the leasing 

transaction—as measured by the percentage of tenant 

agency contacts who, when surveyed, rated the overall 

leasing process as satisfactory.a 85 85 85 85 85 85 85

Goal #4: Satisfy GSA’s customers with their space—as 

measured by the percentage of tenants surveyed who 

were satisfied with their leased space.b 70 72 74 76 78 80 80
Page 76 GAO-07-17 National Broker Contracts

GSA’s electronic e-Lease system.91 The four additional evaluation factors, as 

specified in GSA’s e-Lease’s final evaluation screen were as follows: 

• Average lease rate meets GSA’s fiscal year target (goal #1). 

• Space delivered within customer time frame (goal #2).

• Leasing transaction meets GSA’s customer satisfaction target (goal #3).

• Is lease rate above market value (goal #1)?

The third and final stage of evaluation occurs annually and is prepared by 

the National Contracting Officer, with input from others. According to the 

National Contracting Officer, the annual evaluation takes into 

consideration a broker’s evaluations on all task orders completed during 

the year; the broker’s help in achieving GSA’s applicable long-term leasing 

goals; and other factors, such as the broker’s compliance with 

subcontracting requirements. Input for GSA’s annual ratings comes from a 

variety of sources. For example, GSA analyzes (1) market data to compare 

its lease costs with those for comparable properties in applicable markets 

(long-term leasing goal #1) and (2) the results of its realty transaction 

surveys, which measure the extent to which its tenant agency contacts 

were satisfied with completed leasing transactions (long-term leasing goals 

#2 and #3). Input for the fourth long-term goal—the percentage of 

customers (tenants) satisfied with their space—comes from GSA’s tenant 

satisfaction survey, which is distributed to employees at one third of GSA’s 

leased and owned properties every year.92

As specified in both the brokers’ contracts and GSA’s November 2005 guide 

for administering the contracts, at the end of each contract year, GSA must 

enter the results of the brokers’ annual performance evaluations into the 

National Institutes of Health’s (NIH) Contractor Performance System—a 

nationwide government database used to collect, maintain, and 

disseminate contractor performance evaluation data to government

91The fourth long-term goal applicable to the brokers’ performance—the percentage of 

tenants satisfied with their leased space—is evaluated annually, not at the completion of a 

task order. 

92According to GSA officials, employees of all tenant agencies are surveyed once every 3 

years.
Page 77 GAO-07-17 National Broker Contracts

agencies.93 The NIH system records annual contractor performance 

information related to eight evaluation factors. For four of the eight NIH 

evaluation factors—quality, cost control, timeliness, and business 

relations—the contractor’s performance is rated using a scale of 0 (for 

“unsatisfactory” performance) to 5 (for “outstanding” performance).94 To 

address the remaining four evaluation factors, the NIH system asks each 

agency to record yes or no answers to a series of questions related to small 

business subcontracting plans, small disadvantaged business goals, and 

customer satisfaction. The specific questions include:

• Did the contractor make a good faith effort to comply with its 

subcontracting plan consistent with the goals and objectives, reporting, 

and other aspects of the plan? 

• If this is a bundled contract,95 did the contractor meet the goals and 

objectives for small business participation?

• Did the contractor make a good faith effort to comply with its 

subcontracting plan consistent with the goals and objectives, for small 

disadvantaged business participation, monetary targets for small 

disadvantaged business, and required notifications? 

• Would you recommend the selection of this firm again?

The National Contracting Officer entered the brokers’ annual evaluations 

into the NIH system on July 19, 2006. According to NBS program officials, 

each of the brokers met requirements for the first year of their contract. 

However, the ratings are limited, since as of March 31, 2006, the four 

brokers had completed 11 task orders subject to evaluation.96 

93Data from this system are transmitted to NIH’s Past Performance Information Retrieval 

System. This system is accessible to federal contracting officers and can be used to review a

contractor’s past performance before awarding a new contract. 

94This is the same rating scale used in GSA’s electronic e-Lease system. As a result, the 

qualitative descriptors for scores 0 to 5 are also unsatisfactory, poor, fair, good, excellent, 

and outstanding, respectively. 

95A bundled contract consolidates requirements for goods or services. See, for example, 48 

C.F.R. § 2.101.

96As previously discussed, the brokers also completed 65 task orders for market data as of 

March 31, 2006. However, these task orders were not evaluated because they involved 

minimal work and the brokers are not compensated for these services.
Page 78 GAO-07-17 National Broker Contracts

Issues with GSA’s Contracts, 

Guidance, and e-Lease 

Related to the Brokers’ 

Performance Could Hamper 

Consistent Contract 

Administration

We identified numerous inaccuracies, inconsistencies, and omissions 

among and within GSA’s contracts, guidance, and e-Lease system for 

evaluating the NBS brokers’ performance, which could hamper 

achievement of one overall NBS program goal—consistent contract 

administration across GSA’s 11 regions. Without clear, written, and 

unambiguous direction, including criteria and procedures for evaluating 

the brokers, it is unclear how GSA will ensure consistency in its regions’ 

evaluations of the brokers’ performance. The following are some of the 

issues we identified. 

First, GSA’s contracts with the brokers and GSA’s November 2005 

administrative guide for the program both include one long-term goal that 

is not applicable to the brokers’ performance—regardless of the stage of 

GSA’s evaluation. Specifically, both the contracts and the guide indicate 

that the brokers will be evaluated on the extent to which they assist GSA in 

reducing the amount of vacant space in GSA’s inventory. According to the 

National Program Manager, GSA included the long-term measures in its 

contracts at the suggestion of the Office of Management and Budget, which 

wanted to ensure that the brokers would be held accountable for helping 

GSA meet its long-term leasing goals. However, because the brokers cannot 

influence GSA’s progress in achieving this goal; GSA does not evaluate 

them on this measure. 

Second, during the course of our review, GSA’s e-Lease system and its 

November 2005 administrative guide each specified one or more 

inapplicable measures for evaluating the brokers’ completed task orders. 

As discussed, through at least July 31, 2006, the COTRs were required to 

rate the brokers’ assistance in achieving three of GSA’s long-term 

performance measures in e-Lease’s final evaluation screen.97 Measuring a 

broker’s assistance in these areas, however, relies on data that generally are 

not available when the COTRs complete their final task order evaluation. 

For example, while GSA uses market data to compare its lease costs with 

those for comparable properties in applicable markets,98 these data are 

retrieved semiannually and, thus, the results—even if provided to the 

97GSA revised the final e-Lease evaluation screen on July 31, 2006. However, the revisions 

had not been implemented (i.e., “rolled-out” to GSA staff) as of that date. 

98GSA retrieves market data from commercial real estate associations, such as the Society 

for Industrial and Office Realtors. This society is one of several commercial real estate 

associations with a retrievable database on market data. 
Page 79 GAO-07-17 National Broker Contracts

COTRs—generally would not be available when a COTR evaluates a 

completed task order. Likewise, the results of GSA’s realty transaction 

surveys—which are used to determine whether the tenant agency

(1) received its leased space when it was needed and (2) is satisfied with 

the overall leasing transaction—are not available until about 60 days after 

the COTR prepares the required final evaluation in e-Lease.99 GSA’s 

November 2005 administrative guide also identifies an inapplicable 

measure—“the negotiated rate”—for assessing a broker’s performance at 

the completion of each task order. According to NBS program officials, this 

measure refers to GSA’s long-term goal of achieving rental rates below 

industry averages for commercial office space. While GSA analyzes these 

data semiannually for all its completed leasing actions agencywide, 

according to NBS program managers, such data (1) are always available 

and (2) are supposed to be used by the COTR to determine that the rental 

rate is reasonable for a particular market before signing a lease with a 

building owner. 

Third, as shown in appendix III, the evaluation criteria specified in GSA’s 

relevant program sources, including the NBS contracts and GSA’s 

administrative guide varies and, in our view, could create confusion among 

those responsible for overseeing and evaluating the brokers’ performance. 

For example, while GSA’s November 2005 administrative guide for the NBS 

contracts notes that the brokers’ performance criteria and requirements 

are contained in section C.9 of the contracts, the guide specifically 

indicates that the brokers’ performance on completed task orders will be 

evaluated for technical quality, documentation quality, timeliness, 

responsiveness, quality of assigned personnel, and the negotiated rental 

rate. As shown in appendix III, this represents only a portion of the 

numerous evaluation factors specified in the contracts for completed task 

orders and includes a measure—the negotiated rate—that cannot, in our 

view, be adequately assessed at the completion of a task order due to the 

unavailability of complete data. Similarly, referring to the NIH evaluations, 

GSA’s guide for administering the contracts indicates that GSA will enter 

99According to GSA officials, the realty transaction survey is typically conducted 90 days 

after the lease is signed and is distributed to GSA’s point of contact at tenant agencies—

which is the individual most familiar with the particular leasing transaction. This survey 

uses a 1- to 5-point rating scale. A score of 1 means that the individual surveyed was “very 

dissatisfied,” while 5 means that the individual was “very satisfied.” The survey instrument 

does not provide survey recipients with any qualitative descriptors for scores 2 through 4. 

However, GSA views scores of 4 and 5 as indicative of a customer’s satisfaction with the 

overall leasing transaction.
Page 80 GAO-07-17 National Broker Contracts

annual ratings related to three measures—the brokers’ (1) technical 

performance, (2) compliance on subcontracting plans, and (3) help in 

achieving GSA’s long-term leasing goals—but is silent about the other five 

measures for which GSA’s contracts indicate ratings will be entered into 

NIH’s system. 

Finally, although GSA’s contracts with the brokers specify the applicable 

NIH criteria, including those related to “customer satisfaction” and 

“business relations,” the performance-related terminology used elsewhere 

in the contracts does not conform to the terminology used for the NIH 

evaluations. This makes it difficult to determine how the various terms 

align and, consequently, how GSA will collect required information for the 

annual NIH evaluations. The lack of conformity in evaluation terminology 

is further exacerbated by the fact that neither the contracts nor GSA’s 

administrative guide discuss how any of the performance measures 

specified in the contracts will be used as input for the NIH annual 

evaluations. Consequently, it is unclear how GSA intends to collect 

information needed to assess, among other things, NIH’s measures. 

Throughout the course of our evaluation, we discussed these and other 

issues within and among GSA’s (1) NBS contracts, (2) administration 

guidance, and (3) e-Lease evaluation screen for completed task orders with 

NBS program officials. The officials acknowledged the inaccuracies, 

inconsistencies, and omissions; however, according to the officials, these 

matters have not adversely affected GSA’s administration of the contracts. 

The officials noted that any conflict between the contracts and the 

administrative guide is unintentional, and that the requirements in the 

contracts take precedence over GSA’s program guidance. NBS program 

officials acknowledged that GSA will need to conform the contracts and 

the guide before proceeding with GSA’s performance-based work 

allocations. However, as of October 31, 2006, neither the contracts nor 

GSA’s guidance had been revised in any of the areas previously identified. 

Regarding e-Lease, NBS program managers explained that when they 

requested that e-Lease be modified for the NBS program, their vision was 

to construct it as a reflection of the NIH Contractor Performance System, 

including the NIH annual evaluation criteria. However, over time, they said 

that e-Lease had lost the “reporting intent originally envisioned,” and that it 

had not evolved sufficiently to be fully used by NBS managers for assessing 

the brokers’ performance. Thus, while e-Lease can be used by regional 

personnel to aggregate each region’s rating information, the National 

Contracting Officer, with input from others, must then consider 
Page 81 GAO-07-17 National Broker Contracts

performance related to a variety of other evaluation criteria to develop an 

annual rating of each broker’s performance. While additional actions would 

be needed to reflect GSA’s original vision for e-Lease, GSA recently revised 

e-Lease to eliminate factors that the COTRs cannot assess when they 

complete their evaluations of completed task orders. 

Conclusions GSA has implemented controls to prevent conflicts of interest in its NBS 

leasing program and appears to have resolved the conflicts that have been 

disclosed thus far. However, GSA has not (1) assessed the effectiveness of 

its controls; (2) modified the NBS contracts to require additional 

recommended controls; or (3) as applicable, ensured compliance with 

FISMA’s requirements. GSA’s lack of action in these areas raises questions 

about the adequacy of its efforts to address potential conflict-of-interest 

issues and to protect its procurement-sensitive information. More 

specifically:

• Because GSA’s initial (October 2005) and follow-up (August 2006) visits 

to the two dual-agency brokers were limited in scope, GSA does not 

know, more than 1-1/2 years after beginning work under the NBS 

contracts, whether the brokers’ internal controls are adequate to 

preclude unauthorized disclosures. GSA’s October 2005 

recommendations for additional controls, which GSA based on visual 

inspections and interviews alone, suggest that, in GSA’s view, the 

controls were not sufficient to protect GSA’s proprietary information. 

Until GSA performs a complete evaluation of the dual-agency brokers’ 

controls, it cannot be sure that it has identified, and made 

recommendations to address, any remaining weaknesses. 

• Because GSA has not revised its contracts with the tenant-only firms to 

include, at a minimum, the three controls that currently apply only to 

dual-agency firms but address situations also faced by tenant-only 

firms,100 these firms may not be aware of all requirements applicable to 

their disclosure of potential or actual conflicts of interest. 

100These three controls require brokers to (1) execute additional agreements to safeguard 

proprietary information, (2) notify GSA of any conflicts of interest discovered during the 

performance of work, and (3) include a conflict-of-interest clause in all of their 

subcontracts. 
Page 82 GAO-07-17 National Broker Contracts

• GSA has not complied with FISMA’s requirements for safeguarding 

information and information systems used on behalf of GSA—

requirements that have been applicable since April 2005, when work 

began on the NBS contracts. Until GSA complies with these 

requirements—including (1) fully assessing the risk and magnitude of 

harm that could result from the misuse of information and information 

systems used on behalf of GSA; (2) requiring the establishment of 

controls appropriate to the assessed risk for each of the four brokers 

and their subcontractors; and (3) as needed, testing the effectiveness of 

the controls—it cannot ensure that the information and information 

systems used by the brokers on its behalf are being safeguarded 

appropriately. Moreover, until GSA conducts the required FISMA risk 

assessments, it cannot modify the NBS contracts to establish 

appropriate, risk-based controls. 

Because so few commission-eligible task orders have been completed, GSA 

has little information on the extent to which broker commissions will not 

be paid. However, the risk of nonpayment appears to be limited, in part, 

because of the requirement that building owners pay GSA’s broker if they 

intend to pay their own. As the program continues, it will be important for 

GSA to monitor commission payments to ensure that the brokers are being 

compensated for their services, where required. Such monitoring will be 

even more important to test the efficacy of GSA’s controls for preventing 

the brokers from favoring building owners who offer them excessive 

commissions. Actions such as the board of subject matter experts that GSA 

is establishing and its contract to determine applicable commission rates in 

major markets should be useful in assessing the reasonableness of the 

brokers’ negotiated commission rates. However, in our view, additional 

controls still will be needed to ensure that the brokers do not improperly 

increase the government’s rental costs. Specifically, until such time as GSA 

establishes effective controls to mitigate the brokers’ inherent conflict of 

interest by, among other possible actions, precluding them from accepting 

commissions in excess of the rate approved by the COTR and included in 

GSA’s solicitation for offers, there will remain at least the perception that 

the brokers might favor—at the government’s expense—building owners 

who pay higher commissions. 

Although GSA expected savings to accrue to the government from the use 

of the NBS contracts, both from reductions in (1) rent attributable to 

commission credits and the brokers’ greater knowledge of the commercial 

real estate market and (2) agency costs (for fees, administrative expenses, 

and personnel), as of October 31, 2006, GSA had not developed processes 
Page 83 GAO-07-17 National Broker Contracts

to quantify most of the expected savings. Until such time as it does, GSA 

will not know whether, or to what extent, using the NBS contracts has 

resulted in savings and will not be able to set targets for future savings, 

including those related to improvements in agencywide operational 

efficiencies that GSA now expects will result from the use of the NBS 

contracts. 

GSA has taken numerous actions to improve the reliability of its data for 

the NBS program. These actions should assist GSA in its efforts to 

distribute its initial workload as equally as possible among the brokers. 

Furthermore, recognizing that variations in its regional distributions among 

the brokers are unavoidable, GSA has agreed to modify the language of its 

administration guide to conform to the contracts, specifying that its initial 

distributions of task orders will be done “as equally as possible,” rather 

than “equal,” across its regions. GSA also has agreed to provide greater 

management attention of its distributions of task orders for market data 

and expedited leasing transactions, which should help ensure that its 

distribution of these task orders do not disproportionately advantage one 

or more of the brokers. However, as of October 31, 2006, GSA had not 

agreed to collect data needed to assess the extent to which its distributions 

to the brokers were for similar geographic areas (e.g., rural or urban)—a 

distribution criterion specified for the initial period of the contracts. 

Finally, while GSA intends to develop guidance and procedures for 

implementing performance-based distributions before altering its current 

distribution approach, as of October 31, 2006, it had not committed to 

clarify the number and types of task orders needed to establish a record of 

the brokers’ performance before embarking on performance-based 

distributions. 

With just over 1 year of experience under the NBS contracts, it is too early 

to assess the effectiveness of GSA’s new organizational structure and 

management tools for overseeing the NBS program. Such an assessment, 

however, will be essential for a variety of reasons. For example, given 

diminishing in-house resources, the NBS contracts are critical to the 

success of GSA’s overall leasing program. GSA expects to use the NBS 

contracts to accomplish 90 percent of its workload by 2010. Furthermore, 

over 55 percent of federal employees rely on GSA to provide workspace at 

a cost of about $3.6 billion annually. Thus, as acknowledged in GSA’s 2003 

analysis for entering into the NBS contracts, “no part of day-to-day 

operations has a greater financial consequence than the acquisition of real 

estate by lease.” While both the new organizational structure and the 

management tools hold promise of stronger, more consistent contract 
Page 84 GAO-07-17 National Broker Contracts

management and oversight than GSA formerly provided, no program 

evaluations or audits have yet demonstrated their effectiveness. Given the 

magnitude of the program and its importance to GSA’s entire leasing 

program, it will be critical to continually assess whether the changes GSA 

has implemented have improved its oversight of its brokers and its regions, 

as intended. 

Finally, inaccuracies, inconsistencies, and omissions among and within its 

contracts, the administrative guidance, and the e-Lease system, raise 

questions about how GSA will ensure consistency in its regions’ 

evaluations of the brokers’ performance. Various problems—such as 

inapplicable evaluation criteria; variability in the criteria identified for use 

at different evaluation stages by the contracts, GSA’s administrative guide, 

and e-Lease; inconsistencies between GSA’s and NIH’s performance-related 

terminology; and omissions in GSA’s administrative guide—make it difficult 

for GSA to clearly demonstrate to the brokers and others what it is 

evaluating at the various rating stages and how its evaluations align with 

NIH’s annual governmentwide evaluations. Moreover, despite GSA’s 

position that these issues have not adversely affected its management of 

the contracts, at a minimum, they create unnecessary obstacles for 

personnel conducting the evaluations. Avoiding unnecessary obstacles is 

particularly important because GSA is relying on realty specialists, many of 

whom have little previous experience in contract administration, including 

evaluating the quality of services provided by the brokers. Moreover, the 

administrative guide prescribes procedures and formats for them to follow 

to promote consistent task order administration among GSA’s 11 regional 

offices. Thus, it is essential that the NBS contracts, administrative guide, 

and e-Lease system conform, and that each provides an accurate and a 

consistent and clear approach to performance evaluation. While issues 

involving the implementation of an evaluation approach for a program of 

this size are not surprising, as of October 31, 2006, with one exception 

involving the final e-Lease evaluation screen, GSA had not taken action on 

the issues we identified. 

Recommendations for 

Executive Action

To improve GSA’s overall management of the NBS program, we recommend 

that the Administrator of GSA take the following 11 actions:

1. Assess the adequacy of the two dual-agencies’ conflict wall controls 

and recommend actions, if applicable, to correct any identified 

weaknesses. 
Page 85 GAO-07-17 National Broker Contracts

2. Modify the two dual-agency contracts to ensure that GSA can enforce 

recommendations resulting from its conflict wall inspections. 

3. Establish consistent dual-agency and tenant-only conflict-of-interest 

contract requirements, including, at a minimum, the three conflict-ofinterest requirements that address situations also faced by the two 

tenant-only firms. 

4. Assess the risk and magnitude of harm that could result from 

unauthorized access to, or use, disclosure, disruption, modification, or 

destruction of, GSA information collected or maintained by the four 

brokers (and their subcontractors) and the information systems used 

by the brokers on behalf of GSA.

5. Modify the four NBS brokers’ contracts to include controls appropriate 

to the assessed risk to ensure that the brokers and their subcontractors 

safeguard information and information systems in accordance with 

FISMA. 

6. Test the effectiveness of federal information security policies, 

procedures, and practices related to the NBS program, including, as 

appropriate, broker controls for safeguarding GSA’s information. 

7. Establish additional controls to mitigate the inherent conflict of 

interest created by allowing the brokers to represent the government, 

while also negotiating their commissions with building owners. 

8. Develop processes for quantifying expected savings from (1) rent 

reductions attributable to the brokers’ greater knowledge of the 

commercial real estate market and (2) agency savings associated with 

reduced fees, administration expenses, personnel costs, and 

operational efficiencies associated with using the NBS contracts.

9. As part of GSA’s effort to prepare for performance-based distribution 

decisions, clarify the number and types of completed task orders 

needed to establish a record of the brokers’ performance.

10. Begin collecting data on GSA’s distributions of task orders for rural and 

urban areas (i.e., similar geographic areas) during the initial period of 

the contracts. 
Page 86 GAO-07-17 National Broker Contracts

11. Clarify the NBS contracts and the administrative guide to ensure that 

the evaluation measures used are applicable to the brokers’ 

performance at each stage of evaluation. Regarding the brokers’ 

required annual performance evaluations, revise the terminology in 

GSA’s contracts and administrative guide, as appropriate, to conform to 

NIH’s required evaluation factors. In addition, ensure that the various 

evaluation stages and processes are properly and adequately described 

in GSA’s administrative guide. 

Agency Comments We provided a draft of this report to GSA for its review and comment. In its 

written comments, GSA stated that it is pleased with the results of the first 

year of the NBS program. However, GSA noted that the agency had 

experienced challenges in implementation due to the magnitude and 

impact of the program. GSA stated that it had already initiated a number of 

actions to address issues identified in this report and agreed to “work on 

the implementation” of our recommendations. GSA’s comments are 

reprinted in appendix IV. GSA also provided technical comments, which we 

incorporated as appropriate. 

As arranged with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from the 

report date. At that time, we will send copies to interested congressional 

committees, the Administrator of GSA, the four NBS brokers, and each of 

the other entities that we interviewed. Copies will also be made available to 

other interested parties on request. In addition, the report will be available 

at no charge on GAO’s Web site at http://www.gao.gov. 
Page 87 GAO-07-17 National Broker Contracts

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

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

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

last page of this report. GAO staff who made major contributions to this 

report are listed in appendix V.

Mark L. Goldstein

Director, Physical Infrastructure Issues
Page 88 GAO-07-17 National Broker Contracts

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Our objectives were to determine (1) how the General Services 

Administration (GSA) is attempting to prevent conflicts of interest in its 

national broker services (NBS) program and to safeguard information and 

information systems used by the brokers on GSA’s behalf; (2) how the 

brokers will be compensated for their services and what, if any, controls 

exist to minimize the government’s rental costs; (3) what, if any, savings 

have accrued to the government; (4) how GSA is distributing its leasing 

workload among the brokers; (5) how GSA is overseeing the brokers; and 

(6) how GSA is measuring the brokers’ performance.

To address our overall reporting objectives, we obtained, among other 

materials, information on (1) GSA’s leasing practices, including data on the 

volume and cost of GSA’s annual leasing; (2) time frames for completing 

GSA’s leasing transactions (task orders); (3) the number and identity of the 

NBS contract bidders; (4) the bid protests resulting from GSA’s contract 

awards, including information about the protests’ resolution; and (5) GSA’s 

organizational structure and programmatic responsibilities. Specific to 

each of our objectives, we also reviewed and analyzed, among other things, 

GSA’s NBS contracts; contract amendments through March 31, 2006—the 

end of the first contract year; GSA’s September 2005 guide for 

administering the contracts, as well as its updated November 2005 guide;1

and previous reports by GSA’s Office of the Inspector General and our 

Office of General Counsel related to GSA’s contracting for leasing services. 

In addition, we identified and analyzed GSA's policies, procedures, and 

controls related to our six reporting objectives and discussed the policies, 

procedures, and controls with cognizant GSA officials, particularly those 

responsible for managing the NBS program and for ensuring compliance 

with requirements in the Federal Information Security Management Act of 

2002 (FISMA). We also interviewed officials from 10 public- and privatesector entities—3 large, private companies; 4 state agencies; and 3 other 

federal agencies—that contract for leasing services to determine, among 

other things, how these parties address conflict-of-interest issues and 

compensate their brokers. To gain the views and understand the 

experiences of industry representatives related to our objectives, we 

interviewed representatives from nine large nationwide brokerage firms, 

including the four NBS brokers, and from six commercial real estate trade 

associations. Furthermore, to obtain information about how localities 

regulate conflict-of-interest and broker compensation issues, we 

1

As of October 31, 2006, GSA’s most recent version of the National Broker Contract 

Administration Guide was issued in November 2005.
Appendix I

Objectives, Scope, and Methodology

Page 89 GAO-07-17 National Broker Contracts

interviewed regulatory officials from four states and the District of 

Columbia. We performed our work between November 2004 and December 

2006 in accordance with generally accepted government auditing 

standards. A detailed description of our scope and methodology for 

assessing each of our reporting objectives and for selecting other entities 

for interviews follows. 

Scope and 

Methodology for 

Assessing Our 

Reporting Objectives

First, to determine how GSA is attempting to prevent conflicts of interest in 

its NBS program and to safeguard information and information systems 

used by the brokers on GSA’s behalf, we reviewed and analyzed, among 

other things, federal conflict-of-interest requirements contained in the 

Federal Acquisition Regulation; GSA’s internal request to deviate from 

these requirements, as well as GSA’s November 11, 2003, approval of the 

waiver request; GSA’s NBS program guidance; GSA’s contracts with the 

NBS brokers; and GSA’s contract amendments through March 31, 2006. Our 

analysis focused on the policies, procedures, and controls GSA established 

for both the two dual-agency NBS firms and the two tenant-only NBS firms. 

We interviewed NBS program officials about GSA’s policies, procedures, 

controls, and contractual remedies in the event that the NBS brokers do 

not disclose actual or potential conflicts and queried the officials about the 

number, nature, and disposition of conflicts of interest identified through 

March 31, 2006. In addition, we interviewed representatives from 10 publicand private-sector entities (3 large, private companies; 4 state agencies; and 

3 other federal agencies) that also contract for leasing services and 

regulators in 4 states and the District of Columbia to compare their 

conflict-of-interest controls with those used by GSA. We also interviewed 

the four NBS brokers to obtain their perspectives on GSA’s conflict wall 

requirements. We included information obtained from these entities, where 

relevant and applicable, in the body of this report. Through discussions 

with GSA’s Public Buildings Services Information Security Manager, we 

also obtained and reviewed the results of GSA’s October 2005 site 

compliance (inspection) reports of the two dual-agency brokers’ conflict 

walls and discussed, among other matters, (1) information related to the 

scope of the inspections, (2) GSA’s recommendations for broker 

improvements, (3) the status of GSA’s efforts to ensure that the brokers 

adopt its recommendations, and (4) the timing of GSA’s future conflict wall 

inspections. With NBS program officials, we also discussed information 

related to GSA’s August 2006 follow-up site visits to the two dual-agency 

brokers. In addition, we visited the dual-agency firms and observed their 

physical and electronic access controls; however, we did not test the 

adequacy of these controls. To assess GSA’s compliance with requirements 
Appendix I

Objectives, Scope, and Methodology

Page 90 GAO-07-17 National Broker Contracts

for protecting information and information systems used by the brokers on 

GSA’s behalf, we reviewed and analyzed FISMA and discussed, among 

other matters, the status of broker interfaces with GSA’s electronic e-Lease 

system; recommendations resulting from GSA’s October 2005 conflict wall 

inspections; the results of GSA’s annual FISMA review, dated October 11, 

2005; and the status of action to incorporate appropriate FISMA controls

into GSA contracts with the brokers. 

Second, to ascertain how the four NBS brokers will be compensated for 

their services and what, if any, controls exist to minimize the government’s 

rental costs, we reviewed and analyzed, among other materials, the NBS 

contracts; contract amendments through March 31, 2006; GSA’s 

administration guidance; a December 2002 GSA Inspector General report 

on GSA’s prior use of 29 contracts for leasing services;2

 a May 1999 opinion 

from GSA’s General Counsel concerning the process for rebating broker 

commissions under GSA’s prior contracts; and two GAO legal opinions 

related to GSA’s proposal to enter into the NBS contracts.3

 We also 

reviewed GSA’s 2003 business analysis for entering into the NBS contracts,4

including GSA’s description of private sector compensation practices. 

However, we did not evaluate GSA’s analysis. In addition, we assessed 

GSA’s policies, procedures, and controls related to the terms of payment for 

broker services and, through discussions with NBS program officials, 

obtained data on the number and amount of commissions accrued by the 

NBS brokers as of March 31, 2006, as well as the reason why a commission 

was not paid. Through discussions with NBS program officials, we also 

ascertained how GSA intends to ensure that its (1) leasing rates under the 

NBS program are reasonable and (2) brokers do not improperly increase 

the government’s rental costs by favoring building owners who may offer 

them higher commissions. To obtain broker views on the risk of unpaid 

commissions, we interviewed representatives from nine nationwide 

brokerage firms, including the four NBS brokers. In addition, to compare, 

among other matters, the compensation method used under the NBS 

2

GSA, Review of PBS’ [Public Buildings Services’] Use of Brokerage Contracts for Lease 

Acquisition Services, Report Number A020135/P/W/R03003 (Dec. 11, 2002). 

3

See General Services Administration and Real Estate Broker’s Commissions, B-302811 (July 

12, 2004). See also B-291947 (Aug. 15, 2003). As discussed in the body of this report, GAO did 

not render an opinion about the contracts’ terms or the advisability of entering into the NBS 

contracts. 

4

GSA, Business Analysis and Case for National Contracts for Brokerage Services in GSA 

(Aug. 25, 2003).
Appendix I

Objectives, Scope, and Methodology

Page 91 GAO-07-17 National Broker Contracts

contracts with those used by other entities as well as the controls others 

use to help ensure that their brokers do not favor building owners who 

offer higher commissions, we interviewed representatives from 10 other 

public- and private-sector entities that contract for real estate services. 

Finally, to obtain information on the views and experiences of others 

related to commercial real estate compensation practices, we interviewed 

representatives from nine nationwide commercial real estate brokerage 

companies, including the four NBS brokers; six national commercial real 

estate associations; and regulators from four states and the District of 

Columbia. We included information obtained from these entities, where 

relevant and applicable, in the body of this report. 

Third, to determine what, if any, savings have accrued to the government 

from GSA’s use of the NBS contracts, we reviewed and analyzed, among 

other materials, GSA’s 2003 business analysis for entering into the NBS 

contracts, including its description of various expected savings; the 

brokers’ response to GSA’s request for contract proposals, particularly the 

brokers’ offers related to the amount (percentage) of their commission 

they agreed to forgo and, instead, credit to the government—in the form of 

a commission credit—for commission-eligible task orders; and GSA’s 

policies, administration guidance, procedures, and controls related to 

commission credits. We discussed GSA’s policies, procedures, and controls 

for, among other things, tracking savings from commission credits as well 

as the status of GSA’s efforts to quantify savings from other sources with 

NBS program officials. In addition, we obtained data on commission 

credits as of March 31, 2006, and—through discussions with NBS program 

officials—attempted to obtain similar information on GSA’s other expected 

savings. However, as discussed in the body of this report, such information 

was not available. To ascertain whether other entities require commission 

credits and experience savings from using contracts for leasing services, 

we interviewed, among other parties, representatives from 10 public- and 

private-sector entities that contract for real estate services. In addition, 

through interviews with officials from nine nationwide brokers, including 

the four NBS brokers, we ascertained their views on the extent to which 

commission credits are used in the commercial real estate industry. We 

included information obtained from these entities, where relevant and 

applicable, in the body of this report. 

Fourth, to ascertain how GSA is distributing its leasing workload among 

the NBS brokers, we reviewed and analyzed, among other materials, the 

contracts and amendments through March 31, 2006; GSA’s November 2005 

guide for administering the NBS program; and GSA’s monthly and year-end 
Appendix I

Objectives, Scope, and Methodology

Page 92 GAO-07-17 National Broker Contracts

data reports on its distribution of task orders among brokers. With NBS 

program officials, we discussed among other matters, GSA’s policies, 

procedures, controls, processes, and first-year goals for distributing its 

workload; GSA’s plans to transition to performance-based workload 

allocations; and the results of GSA’s year-end distributions, including the 

challenges associated with attempting equal distributions and the possible 

reasons for the variability in GSA’s regional distributions among the 

brokers as of March 31, 2006. At several points throughout our review, we 

identified errors, inconsistencies, and missing data in GSA’s monthly and 

various year-end data reports for the first year of the contracts as well as 

other sources of NBS program-related data. We discussed GSA’s various 

data reports, including issues related to data reliability, with NBS program 

officials. We also discussed why these problems had occurred and the 

scope and status of GSA’s actions to correct them. On the basis of GSA’s 

efforts to correct its data, we believe the data provided to us on September 

1, 2006, are sufficiently reliable for use in reporting aggregate programwide 

and regional information on the number and size of task orders distributed 

to the brokers. Finally, through interviews with representatives from 10 

public- and private-sector entities that contract for leasing services, we 

determined how others distribute their leasing workload among brokers. 

We included information obtained from these entities, where relevant and 

applicable, in the body of this report. 

Fifth, to determine how GSA is overseeing the four NBS brokers, we 

reviewed and analyzed, among other materials, the NBS contracts and 

amendments through March 31, 2006; GSA’s November 2005 guide for 

administering the NBS program, including its descriptions of the 

authorities, roles, and responsibilities of key national and regional NBS 

program officials; relevant training material, such as briefing slides related 

to GSA’s NBS certification program and e-Lease system; GSA’s March 2003 

plan for implementing the NBS contracts; GSA’s December 2002 Inspector 

General’s report on GSA’s administration of its 29 prior contracts for leasing 

services; information about the evolving role of GSA’s realty specialists; and 

GSA’s policies, procedures, and controls for overseeing the NBS brokers. 

We discussed with NBS program officials, among other matters, GSA’s 

actions to address issues identified in the December 2002 Inspector 

General report, including GSA’s implementation of new management tools 

intended to enhance its oversight of the brokers; the evolving role of GSA’s 

realty specialists; and GSA’s new organizational structure for overseeing 

the NBS brokers. To identify changes in GSA’s contract oversight, we 

obtained, among other documentation, information on the number of GSA 

staff assigned, by position, to oversee its brokers over time. 
Appendix I

Objectives, Scope, and Methodology

Page 93 GAO-07-17 National Broker Contracts

Finally, to ascertain how GSA is measuring the brokers’ performance, we 

reviewed and analyzed GSA’s contracts with the NBS brokers; the 

contracts’ amendments as of March 31, 2006; printouts of GSA’s e-Lease 

evaluation screens as of July 31, 2006; GSA’s administrative guide for the 

NBS program; relevant training material, such as manuals and briefing 

slides related to GSA’s e-Lease evaluation screens; the long-term 

performance goals established for GSA by the Office of Management and 

Budget, including information on the surveys that GSA uses to measure its 

progress in meeting these goals; information about the National Institutes 

of Health’s Contractor Performance System—the nationwide government 

database used to collect, maintain, and disseminate contractor 

performance evaluation data to government agencies; and the four brokers’ 

first annual ratings for the period ending March 31, 2006. During the course 

of our review, we identified and discussed inconsistencies among and 

within (1) the NBS contracts, (2) GSA’s administrative guide, and (3) GSA’s 

e-Lease evaluation screens related to the applicability of various evaluation 

criteria with NBS program officials and, through discussions with them, 

ascertained the status of GSA’s actions to correct the inconsistencies. We 

also discussed, among other matters, GSA’s evaluation processes and 

information about the brokers’ performance for the first year of the NBS 

contracts. In addition, to obtain, among other things, information on the 

extent of feedback provided to the brokers by GSA we attended two 

quarterly meetings held between GSA and each of its brokers to discuss, 

among other matters, each broker’s interim performance, as of December 

31, 2005. We also interviewed representatives from 9 nationwide brokerage 

firms, including the 4 NBS brokers, and representatives from 10 other 

public- and private-sector entities that contract for leasing services to 

obtain their views about GSA’s performance measures. We included 

information obtained from these entities, where relevant and applicable, in 

the body of this report. 

Methodology for 

Selecting Other 

Entities for Interviews

To obtain the views of other entities that contract for leasing services, 

including information on how they (1) compensate their brokers and

(2) identify and manage their brokers’ actual or potential conflicts of 

interest, we interviewed officials from 10 public- and private-sector 

entities—3 large, private companies; 4 state agencies; and 3 other federal 

agencies. While each of these entities contracts for leasing services, none 

of them are directly comparable to the volume of GSA’s annual leasing 

transactions. In addition, we interviewed industry representatives at 9 

nationwide brokerage firms and 6 real estate associations and contacted 

officials from 5 local real estate regulators. We included information 
Appendix I

Objectives, Scope, and Methodology

Page 94 GAO-07-17 National Broker Contracts

obtained from these parties, as relevant and appropriate, in the body of the 

report. We attempted to interview officials from other large, private 

companies and nationwide brokerage firms; however, our requests for 

interviews were unsuccessful. While additional interviews may have 

provided more information, it is unclear whether that information would 

have been materially different from information obtained during our 

interviews of the officials previously described. Therefore, given our scope 

and reporting objectives and the number and range of relevant parties we 

successfully interviewed, we concluded that the absence of information 

from these additional sources did not materially affect our findings, 

conclusions, and recommendations. Our method for selecting entities for 

interviews follows.

Selection of Entities That 

Contract for Leasing 

Services

To obtain the views of other entities that also contract for leasing services, 

we interviewed officials from 10 private- and public-sector entities. First, to 

identify large, private companies that contract for real estate services, we 

reviewed the client lists of the 16 nationwide brokerage firms that bid on 

GSA’s NBS contracts and identified 83 private sector clients.5

 We then 

sorted the brokers’ corporate clients on the basis of the volume (square 

footage) of lease transactions reported to GSA. From the volume, we 

developed a list of the brokers’ top 10 corporate clients and attempted to 

interview 3 to 5 of them—starting with those with the greatest volume. In 

total, we contacted 7 of the 10 large, private companies, but only 3—Ford 

Motor Land, Tyco International, and SBC Telecom—granted us interviews. 

The 3 large, private companies ranked third, fourth, and sixth, respectively, 

on our list of 10 large, private companies with the greatest volume of 

leasing transaction, with transactions ranging from 48 million to 189 million 

square feet in the preceding 3-year period. 

Second, to obtain the perspectives of state agencies that contract for 

leasing services, we—once again—reviewed the client lists of the 16 

nationwide brokerage firms that bid on GSA’s NBS contracts and, on the 

basis of these lists, identified 13 states that contract for leasing services. 

5

GSA required bidders to supply information on their clients as part of its solicitation for the 

contracts, including the volume of their business in the 3 years preceding the solicitation. 

Eighteen brokerage firms bid on the NBS contracts; however, 2 of the 18 did not meet GSA’s 

requirement for being national in scope. To meet this criterion, each broker was required to 

demonstrate that it had provided leasing services, over the prior 3-year period, on behalf of 

at least two tenants with nationwide geographic and volume requirements similar to those 

required by GSA. 
Appendix I

Objectives, Scope, and Methodology

Page 95 GAO-07-17 National Broker Contracts

However, these lists did not contain complete information on the volume 

(size, number of transactions, or dollar value) of the states’ contracted 

leasing services. Since we could not rank the states on the basis of the 

volume of their transactions, we selected 4 states on the basis of their 

geographic location and interviewed the appropriate officials from each of 

these states—California (West), Florida (South), Michigan (North), and 

New York (East). 

Finally, absent a single source of information for identifying and selecting 

other federal agencies that also contract for leasing services, we used 

multiple methods. For example, we reviewed and analyzed (1) GSA’s 

Federal Real Property Profile, Overview of the United States 

Government’s Owned and Leased Real Property, as of September 30, 

2004, report; (2) GSA’s database on federal procurements;6

 (3) the client 

lists of the 16 nationwide brokerage firms that bid on the NBS contracts; 

and (4) discussions with GAO colleagues and agency contacts familiar with 

federal real property, including the director of the Federal Facilities 

Council,7

 a member of the Federal Real Property Council Committee,8 and 

GSA’s previous NBS National Program Manager. However, each of these 

sources had limitations, particularly with regard to whether the federal 

agency actually contracted for its leasing services and, if so, the volume of 

its leasing transactions. Consequently, based on our discussions and 

analyses of available sources, we developed a list of federal agencies that 

may contract for a portion of their leasing services and contacted officials 

from 3 agencies—the Department of Veterans Affairs, the United States 

Postal Service, and the Federal Deposit Insurance Corporation—that we 

could confirm had contracts for leasing services. 

Selection of Industry 

Representatives

To gain the views and understand the experiences of industry 

representatives related to our objectives, we interviewed representatives 

from 9 nationwide brokerage firms and 6 national commercial real estate 

6

GSA’s Federal Procurement Data System tracks information about federal contracts.

7

The Federal Facilities Council is an association of 25 federal agencies with responsibilities 

related to, among other things, the acquisition, maintenance, operation, management, and 

disposition of federal real property.

8

Pursuant to Executive Order 13327, the Administrator of General Services, in consultation 

with the Federal Real Property Council, is responsible for maintaining a database on real 

property owned and leased by federal agencies.
Appendix I

Objectives, Scope, and Methodology

Page 96 GAO-07-17 National Broker Contracts

associations. Four of the 9 nationwide brokerage firms were awarded NBS 

contracts,9

 while the remaining 5 were unsuccessful bidders.10 To identify 

the 5 unsuccessful nationwide brokers, we reviewed GSA’s list of 16 

nationwide brokers that submitted proposals for the NBS contracts and 

eliminated the 4 successful NBS bidders that we otherwise intended to 

interview. To prevent any bias in our selection method, we randomized the 

remaining list of 12 nationwide brokers and categorized them—in the same 

random order—according to whether, as a result of our research, they 

appeared to be dual-agency or tenant-only firms. Starting at the top of each 

randomized list, we contacted each broker in turn. Our goal was to hold 

between three to five interviews with the 12 unsuccessful nationwide 

bidders. In total, we were granted interviews with representatives of 5 of 

these 12 firms—4 dual-agency firms and 1 tenant-only firm. To gain a fuller 

understanding of the possible differences between dual-agency and tenantonly broker views, we attempted to interview at least one more tenant-only 

broker from the randomized list of unsuccessful, nationwide bidders, but 

our multiple requests for an interview were not successful. Similarly, while 

we attempted to obtain the views of representatives from 3 nationwide 

brokerage firms that did not bid on the NBS contracts, our requests for 

interviews were also unsuccessful. Finally, to obtain the views of 

representatives of national associations that promote the real estate 

industry, we identified relevant real estate associations, using the Internet, 

and identified 12 possible real estate associations.11 From discussions with 

GAO colleagues familiar with the real estate industry, we narrowed the list 

from 12 to 6 associations that, in our collective view, were most likely to 

have relevant information for our reporting objectives. We interviewed 

officials from each of these six associations—(1) Building Owners and 

Managers Association International, (2) CoreNet Global, (3) the Institute of 

Real Estate Management, (4) the National Association of Industrial and 

Office Properties, (5) the Society of Industrial and Office REALTORS®, and 

(6) the Real Estate Roundtable. However, with the exception of the 

Institute of Real Estate Management, the associations’ representatives 

9

Jones Lang LaSalle; Julien J. Studley, Inc.; The Staubach Company–Northeast; and 

Trammell Crow Services, Inc. As discussed in the body of this report, two of these firms are 

dual-agency brokers, while the remaining two represent only tenants. 

10These five unsuccessful bidders were CB Richard Ellis, the Equis Corporation, Grubb and 

Ellis, NAI Global, and Spaulding and Slye Colliers. The Equis Corporation is a tenant-only 

firm, while the four others are dual-agency firms.

11The 12 associations serve as a resource to a variety of parties, including real estate 

brokers, managers, and building owners.
Appendix I

Objectives, Scope, and Methodology

Page 97 GAO-07-17 National Broker Contracts

were unable to supply relevant information related to our reporting 

objectives. 

Selection of Local Real 

Estate Regulators

To obtain the perspectives on how localities regulate broker conflict-ofinterest and compensation issues, we reviewed and analyzed GSA’s 2004 

federal real property profile and identified the top five jurisdictions—

California, the District of Columbia, Maryland, Texas, and Virginia—with 

the most square footage of federally leased space and interviewed 

representatives from these jurisdictions.12 According to GSA’s 2004 federal 

real property profile, about 35 percent of all federally leased space is 

located within these five local jurisdictions. 

12Specifically, we spoke to the Assistant Chief Counsel for the California Department of Real 

Estate; the Program Liaison for the District of Columbia’s Board of Real Estate; the 

Assistant Attorney General, Counsel to the Maryland Real Estate Commission; the Chief 

Executive Officer of the Texas Real Estate Commission; and the Executive Director of the 

Virginia Real Estate Board. 
Page 98 GAO-07-17 National Broker Contracts

Appendix II

Potential Conflicts Identified and GSA’s 

Resolution of the Potential Conflicts, as of 

March 31, 2006 ApendxiI

Date potential 

conflict 

identified

Broker and square 

footage involved Description of potential conflict

GSA’s resolution of potential 

conflict

1 5/25/05 Broker A

5,000 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA canceled the task order because 

the customer agency changed its 

space requirements.

2 7/13/05 Broker A

2,800 square feet

The broker disclosed that it managed at 

least one building with space that might 

meet GSA’s needs.

GSA determined that there was no 

conflict.

3 7/25/05 Broker A

200,000 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

4 7/29/05 Broker B

4,700 square feet

The broker disclosed that it managed at 

least one building with space that might 

meet GSA’s needs.

GSA determined that there was no 

conflict.

5 8/1/05 Broker A

10,000 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA determined that there was no 

conflict.

6 8/8/05 Broker A

400,000 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

7 8/10/05 Broker B

14,566 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA determined that there was no 

conflict.

8 8/17/05 Broker C

N/Aa

The broker requested advice on whether 

its work on another type of contract for 

another agency represented a conflict of 

interest. 

GSA determined that there was no 

conflict.

9 9/9/05 Broker A

8,598 square feet

The broker disclosed that its 

subcontractor represented at least one 

building owner with space that might 

meet GSA’s needs.

GSA required the subcontractor to sign 

a nondisclosure agreement and agree 

not to negotiate on behalf of a property 

owner on a GSA transaction in the 

same market for the term of the 

contract and subcontract.

10 10/20/05 Broker A

80,000 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

11 10/26/05 Broker B

26,851 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA determined that there was no 

conflict.

12 11/14/05 Broker B

6,500 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.
Appendix II

Potential Conflicts Identified and GSA’s 

Resolution of the Potential Conflicts, as of 

March 31, 2006

Page 99 GAO-07-17 National Broker Contracts

Source: GAO analysis of GSA data.

Note: As of March 31, 2006, GSA’s conflict log listed 22 potential conflicts of interest. However, 2 of 

the entries involved GSA regional inquiries requesting general advice from the National Contracting 

Officer. NBS officials agreed that the 2 entries should be omitted as potential conflicts of interest.

a

According to the National Contracting Officer, the potential conflict did not relate to a specific task 

order; therefore, the amount of square footage is not applicable.

13 12/08/05 Broker C

12,000 square feet

The broker disclosed that it could not find 

a subcontractor who could meet the 

conflict wall requirements and wanted to 

decline the task order.

GSA advised the broker that it could 

not decline the task order. The broker 

subsequently identified a subcontractor 

without a conflict.

14 12/14/05 Broker A

2,664 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

15 12/15/05 Broker C

1,999 square feet

The broker disclosed that it wanted to 

use a subcontractor that represented at 

least one building owner with space that 

might meet GSA’s needs, although not 

as an exclusive agent.

GSA determined that this was not a 

conflict, but required the subcontractor 

to confirm that it had a conflict wall in 

place.

16 12/20/05 Broker B

80,000 square feet

After initiation of the task order, the 

broker disclosed that it might have a 

future conflict due to a possible merger.

GSA determined that there currently 

was no conflict; but advised the broker 

to report a potential conflict, if one 

materialized.

17 1/11/06 Broker B

6,500 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

18 1/12/06 Broker B

5,115 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

19 2/16/06 Broker A

192,050 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

20 3/01/06 Broker A

10,699 square feet

The broker disclosed that it represented 

at least one building owner with space 

that might meet GSA’s needs.

GSA reassigned the task order to 

another broker without a conflict.

(Continued From Previous Page)

Date potential 

conflict 

identified

Broker and square 

footage involved Description of potential conflict

GSA’s resolution of potential 

conflict
Page 100 GAO-07-17 National Broker Contracts

Appendix III

Applicable Performance Evaluation Criteria 

by Stage of Evaluation, as Specified by Various 

Sources ApendxiI

Evaluation stage/criterion 

specified for evaluation

GSA’s contracts with 

the NBS brokers

GSA’s November 2005 

administration guide

GSA’s e-Lease 

electronic evaluation 

screens as of 

July 31, 2006

National Institutes 

of Health’s 

Contractor 

Performance 

System

Completion of activities within each task order 

Technical quality X X X

Document quality—quality of 

documentation submitted to the 

Contracting Officer’s Technical 

Representative

XXX

Timeliness X X X

Responsiveness on activity—

keeping appropriate parties 

informed of project status

XXX

Quality of personnel assigned X X

The negotiated rate X

Completion of each task order

All criteria specified above for 

completed task order activities

XXX

Extent to which the brokers helped 

GSA meet its long-term 

performance goals (specifically, as 

follows A-D)

A: Average lease rate meets 

GSA’s fiscal year target 

X Xa

B: Leasing transaction meets 

GSA’s tenant satisfaction target

X Xa

C: Space delivered within client 

time frame

X Xa

D: Percentage of nonrevenue 

producing (vacant) space in 

GSA’s leasing inventory

X

Is lease rate above market value? Xa

Overall responsiveness on task 

order—coordination with GSA, 

tenant agencies, city and state 

officials, offerors, and others

X

Quality of personnel assigned X

Quality of documents submitted to 

the Contracting Officer and others

X

Compliance with subcontracting 

plans

X
Appendix III

Applicable Performance Evaluation Criteria 

by Stage of Evaluation, as Specified by 

Various Sources 

Page 101 GAO-07-17 National Broker Contracts

Source: GAO analysis of GSA contracts and guidance and GSA and National Institutes of Health information systems.

a

This measure relates to one or more of GSA’s long-term goals for its leasing program.

Annual evaluation

All criteria specified above for 

completed task orders

X

Extent to which broker has helped 

GSA meet its long-term 

performance goals

X

Compliance with subcontracting 

plans

X

Technical performance of services X

Quality of product or service X

Cost control Xa

Timeliness of performance Xa

Business relations Xa

Did the contractor make a good 

faith effort to comply with its 

subcontracting plan? 

X

Did the contractor meet the goals 

and objectives for small business 

participation?

X

Did the contractor make a good 

faith effort to comply with its 

subcontracting plan consistent with 

the goals and objectives, for small 

disadvantaged business 

participation?

X

Is/Was the contractor committed to 

customer satisfaction?

Xa

Would you recommend the 

selection of this firm again?

Xa

(Continued From Previous Page)

Evaluation stage/criterion 

specified for evaluation

GSA’s contracts with 

the NBS brokers

GSA’s November 2005 

administration guide

GSA’s e-Lease 

electronic evaluation 

screens as of 

July 31, 2006

National Institutes 

of Health’s 

Contractor 

Performance 

System
Page 102 GAO-07-17 National Broker Contracts

Appendix IV

Comments from the General Services 

Administration ApendxiIV
Page 103 GAO-07-17 National Broker Contracts

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Mark L. Goldstein (202) 512-2834 or at goldsteinm@gao.gov

Staff 

Acknowledgments

In addition to the contact named above, Kathleen Turner, Assistant 

Director; Nancy Boardman; Derrick Collins; Dwayne Curry; Elizabeth 

Eisenstadt; Brandon Haller; Bert Japikse; Anjalique Lawrence; and Edith 

Sohna made key contributions to this report.

(543117)
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