Federal Real Property: Efforts Made, but Challenges Remain in Reducing Unneeded Facilities
Published: 2016-09-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2003, GAO added “Federal Real Property” to GAO's biennial High-Risk list, in part, due to long-standing challenges federal agencies face in managing federally owned real property, including disposal of excess and underutilized property. Continuing to maintain these unneeded facilities puts the government at risk for wasting resources due to ongoing maintenance costs as well as lost revenue from failing to sell excess property. Despite implementing policies and systems that may help federal agencies manage real property, the federal government continues to maintain excess and underutilized property. In fiscal year 2015, federal agencies reported over 7,000 excess or underutilized real property assets.
This testimony addresses (1) efforts by the federal government to address excess and underutilized properties since 2012, (2) long-standing challenges to managing and disposing of federal real property and (3) potential solutions to address these long-standing challenges.
This statement summarizes the results of a number of previous GAO reports on real property utilization and management that were issued from 2011 through 2016. GAO also included some updates based on follow-up, conducted on the status of GAO's recommendations in 2015 and 2016.
section_title: What GAO Found
paragraphs: Since 2012, the administration has taken steps to reform real property management and address the long-standing challenge of reducing excess and underutilized property. For example, in 2015, the Office of Management and Budget (OMB) issued government-wide guidance—the National Strategy for the Efficient Use of Real Property—which GAO found in 2016 could help agencies strategically manage real property.
However, GAO's work has found that significant challenges persist in managing real property in general and excess and underutilized property in particular. They include:
a lack of reliable data with which to measure the extent of the problem,
a complex disposal process,
costly environmental requirements,
competing stakeholder interests, and
limited accessibility of some federal properties.
Properties in the Washington, D.C., area such as the Cotton Annex building, vacant General Services Administration (GSA) warehouses, and buildings on the St. Elizabeths campus (pictured below) illustrate the challenges for disposal and re-utilization of vacant federal buildings. For example, GAO found in 2014 that real property data indicated some GSA warehouses were utilized when they had been vacant for as long as 10 years.
In addition to the steps already taken by the administration, further action by federal agencies to implement GAO's previous recommendations could help to address some of these challenges. For example, GAO has made recommendations to GSA and other federal agencies that, if implemented, would increase the federal government's capacity to manage its portfolio and document the progress of reform efforts. GAO highlighted its highest priority open recommendations to GSA in an August 2016 letter to GSA. Among those are three recommendations related to excess and underutilized property, including a recommendation to assess the reliability of data collected and entered into GSA's Federal Real Property Profile database by individual federal agencies. Additionally, real property reform bills that could address the long-standing problem of federal excess and underutilized property have been introduced in Congress. Specifically, two bills have been passed by the House of Representatives in 2016, but neither has been enacted yet.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our work on the management of  excess and underutilized federal real property. In 2003, we added  “Federal Real Property” to our biennial high-risk list, in part, due to long- standing challenges federal agencies face in managing federally owned  real property, including disposal of excess and underutilized property.  Despite implementing policies and systems that may help federal  agencies manage real property, the federal government continues to  maintain too much excess and underutilized property. According to the  General Services Administration’s (GSA) Federal Real Property Profile  (FRPP) database, in fiscal year 2015, 23 federal agencies reported over  7,000 excess or underutilized real property assets. These properties  represent wasted resources as they are costly to maintain and, in some  cases, could be exchanged for other needed properties or sold to  generate revenue for the federal government.
Despite recent progress in implementing policies and systems to help  GSA and federal agencies more effectively manage real property, the  federal government continues to face substantial challenges to reducing  underutilized space and disposing of excess property. For this hearing,  you asked us to discuss the current state of excess, surplus, and  underutilized properties in the federal government. My testimony will  address (1) efforts by the federal government to address excess and  underutilized properties since 2012, (2) long-standing challenges to  managing and disposing of federal real property and (3) potential  solutions to address these long-standing challenges. My testimony  summarizes the results of a number of our previous reports on real  property utilization and management issued from 2011 through 2016.  These reports, cited throughout this statement, include more detailed  information on the scope and methodology for our reviews. This  testimony also includes some updates based on follow-up, conducted in  2015 and 2016, on recommendations contained in some of these prior  reports. To conduct the updates, we reviewed documents and interviewed  officials from the Department of Homeland Security (DHS) and GSA. The  work on which this statement is based was conducted in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform audits to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provided a reasonable basis for our findings and conclusions based on  our audit objectives.
subsections: section_title: The Administration Has Taken Steps to Reform Real Property Management
paragraphs: Since 2012, the government has made efforts to improve real property  management. As we reported in 2016, the Office of Management and  Budget (OMB) issued government-wide guidance—the National Strategy  for the Efficient Use of Real Property— in 2015, which aligns with many of  the desirable characteristics of effective national strategies that GAO has  identified, including describing the purpose, defining the problem, and  outlining goals and objectives. We concluded that the strategy is a major  step forward that could help agencies strategically manage real property  by establishing a government-wide framework for addressing real  property challenges. Prior to issuing the National Strategy, OMB issued  a 2012 Freeze the Footprint policy and subsequently issued its 2015  Reduce the Footprint policy, which directs agencies to, respectively,  restrict growth and take action to reduce square footage in their real  estate inventory. As part of the implementation of these policies, agencies  were required to submit a plan to OMB detailing how the agency intended  to maintain or reduce the square footage of its real property inventory.  We found that the agencies we reviewed in 2016 had outlined  approaches to manage any growth in their portfolio, better utilize existing  space, and identify and dispose of space no longer needed to support the  agency’s mission.
section_title: Agencies Face Long- standing Challenges in Disposing of Excess and Underutilized Real Property
paragraphs: Despite this progress, significant challenges to managing real property in  general and excess property in particular, remain.
Lack of Reliable Data: A lack of reliable data makes it difficult to  accurately measure the amount of excess property. As we reported in  2015, this undermines efforts to effectively reform real property  management and to judge progress in addressing the associated  challenges. The data used to manage the government’s real  property, the Federal Real Property Profile (FRPP), are unreliable due  to challenges with the accuracy and consistency of data reported by  federal agencies. For instance, in 2014, we reported that GSA’s  interpretation of utilization definitions (interpreting the terms unutilized  and underutilized to apply only to properties in the disposal process)  leads GSA to identify nearly all of its warehouses as utilized despite,  in some cases we identified, being vacant for as long as 10 years.  Additionally, in 2015, we found that the federal government’s reported  results from the Freeze the Footprint policy for fiscal year 2012 were  overstated. Many reported reductions from the four agencies we  reviewed were the result of actions other than actual space reduction,  such as the re-categorization of space to another use or data errors.  While we found in March 2016 that OMB and GSA have taken  positive steps such as issuing guidance and implementing data  validation procedures to improve the quality of FRPP data, we also  found that GSA had not analyzed agencies’ collection or reporting  practices or the limitations of the data. Certain key FRPP data  elements, such as utilization status, continue to be inconsistently  reported by agencies. As a result, we concluded that FRPP data may  not fully reflect the extent of real property challenges faced by  agencies or the progress they have made in addressing challenges in  these areas. Furthermore, we found that the current lack of  transparency regarding how agencies collect and report FRPP data  increases the risk of using the data to guide decision-making, thereby  limiting the data’s usefulness. We made several recommendations,  which I will discuss later in my testimony, for improving the reliability  of these data.
Complex Disposal Process: Legal requirements can make the  property disposal process lengthy and complicated. As the federal  government’s property disposal agent, GSA follows a prescribed  process for the disposal of federal properties reported as excess by  federal agencies. This process includes requirements that the  property be screened first for potential use by other federal agencies,  then by homeless providers and state and local governments for other  public uses. However, we found in 2011 that this process can be  challenging for federal agencies. For example, the McKinney-Vento  Homeless Assistance Act requires the federal government to go  through a screening process for excess, surplus, underutilized, and  unutilized properties for suitability for homelessness services. We  found that as of March 2014, at least 40,000 properties were  screened under the Act but only 81 of them were being used by  homelessness assistance providers. Requirements associated with  the National Historic Preservation Act can also present a challenge.  For example, VA officials we spoke to for a 2012 report told us that  they were unable to demolish a 15,200-square-foot building at Menlo  Park, California, that has been used as both a residence and a  research building during its 83-year history. The building had been  scheduled for demolition since 2001, but VA could not demolish it  because of an historical designation.
Costly environmental requirements: Agency disposal costs can  outweigh the financial benefits of property disposal. Environmental  requirements provide that necessary environmental remediation be  completed prior to disposing of a property. However, as we found in  2012, the required environmental assessments and remediation can  be expensive and time-consuming. For example, the Department of  Energy (DOE) is responsible for remediation of contaminated nuclear  weapons manufacturing and testing sites that include thousands of  excess buildings contaminated with radiological or chemical waste. In  June 2012, we reported that DOE officials told us that because their  decontamination and disposal funds are limited, they might not be  able to dispose of these buildings for many years. In addition, in  2014 we reported that officials from the Departments of Energy and  Interior told us that in many cases the cost of cleanup of old  warehouses outweighs the potential sale or salvage price.
Competing Stakeholder interests: Stakeholder interests can conflict  with property disposal or reuse plans. We found in 2012 that—in  addition to Congress, OMB, and real property holding agencies— several other stakeholders have an interest in how the federal  government carries out its real property acquisition, management, and  disposal practices. These stakeholders may include state, local, and  tribal governments; business interests in the local communities;  historic preservation groups; and the general public. For example, in  the case of VA, veterans’ organizations have had an interest in being  consulted on plans to reuse or demolish VA’s historic buildings and on  how those plans affect the services provided to veterans. In cases like  these, final decisions about a property may reflect competing interests  and broader stakeholder considerations that may not align with what  an agency views as the most cost effective or efficient alternative for a  property.
Limited Accessibility of Federal Properties: As we found in 2012, the  locations of some federal properties can make property disposal  difficult. For example, because DOE must locate buildings in remote  areas that include acreage that can serve as security and  environmental buffer zones for nuclear-related activities, officials  reported that they demolish most excess buildings rather than resell  or reuse them. Similarly, Interior officials reported that most of their  buildings are located on public domain lands, lands held in trust, or in  remote or inaccessible areas, and VA officials reported that most of  their buildings are located on medical center campuses. Because  these buildings may not be easily accessible, sales or conveyances of  these buildings can be challenging. For example, in 2014 we found  that almost 80 percent of excess properties identified by the  Department of Housing and Urban Development as suitable and  available for public conveyance for homeless assistance were  available for off-site use only—meaning that a homeless assistance  provider would need to physically move the building in order to use it,  which may not be feasible or worth the cost to homeless assistance  providers.
As discussed above, issues with the reliability of FRPP data—particularly  the utilization variable—make it difficult to quantify the overall number of  vacant and underutilized federal buildings. However, we have reported on  some vacant properties in the Washington, D.C., area that illustrate the  challenges associated with disposing of or repurposing vacant property.
The Cotton Annex: This building, controlled by GSA as the federal  government’s property disposal agent and located just a couple  blocks off the National Mall in Washington, D.C., is approximately  118,000 gross square feet and has been vacant since 2007 (see fig.  1). We found in 2016 that GSA’s recent attempt to exchange the  property for construction services failed when GSA was unable to  obtain sufficient value from the exchange, making the fate of this  unneeded building unclear.
St. Elizabeths: The west campus of St. Elizabeths, a National Historic  landmark in Washington, D.C., is comprised of 61 buildings on about  182 acres (see fig. 2). Many buildings have been vacant for extended  periods of time and are in badly deteriorated condition. As we  reported in 2014, GSA developed a plan to establish a consolidated  headquarters for the Department of Homeland Security on the site in  2009. Since then, GSA has completed construction of a new  headquarters building for the Coast Guard, but most of the project has  been delayed. The estimated timeline for completing the project has  been extended multiple times, from an initial estimated completion  date of 2016, to an estimated completion date of 2021 based on a  scaled back plan as of 2015. As discussed below, we made  recommendations for addressing these issues.
GSA Warehouses: In 2014, we found that some GSA warehouses  listed in FRPP as utilized had been vacant for as long as 10 years.  GSA only lists warehouses as unutilized if they are already in the  disposal process. This interpretation of utilization in FRPP caused  GSA to list as utilized some warehouses that had been vacant for  years. For example, see figure 3. We made a recommendation,  discussed below, for improving GSA’s management of its  warehouses.
section_title: Implementing GAO Recommendations Could Address Challenges Related to Excess and Underutilized Property
paragraphs: In recent years, we have made recommendations to GSA and other  federal agencies that, if implemented, would increase the federal  government’s capacity to manage its portfolio and document any  progress of reform efforts. The Comptroller General highlighted our  highest-priority recommendations to GSA in an August 1, 2016, letter to  the GSA Administrator. Of the six open recommendations, the letter  included the following three related to excess and underutilized property  In April 2016, we recommended that, to improve the quality and  transparency of FRPP data, GSA, along with OMB and federal  agencies, (1) assess the reliability of the data by determining how  individual agencies collect and report data for each field, (2) analyze  the differences in collecting and reporting practices used by these  agencies, and (3) identify and make available to users the limitations  of using FRPP data. GSA and OMB partially agreed with our  recommendation, but GSA noted that it is the responsibility of  individual agencies to ensure reliability of the data and compliance  with FRPP definitions. OMB also noted that FRPP data are currently  only being used by the individual agencies entering the data, and that  the data are reliable for (and the limitations known by) the individual  agencies. GSA has taken some action to implement the  recommendation, including collecting information on individual  agencies’ internal guidance and the processes used to collect data. In  June, 2016 GSA staff briefed us on additional steps they are taking to  improve FRPP’s usefulness as an analytical management tool. We  are currently assessing the reliability of the federal government’s fiscal  year 2014 property disposal statistics.
In November 2014, we recommended that GSA articulate a strategy  for its role in promoting effective and efficient warehouse  management practices across the federal government, a process that  could include developing and disseminating warehouse management  guidance and supporting agencies as they assess their warehouse  portfolios. GSA agreed with our recommendation and is taking steps  to implement it. Specifically, GSA has created an online resource  page on Warehouse Asset Management Best Practices and,  according to GSA officials, is in the process of developing a Guide for  Strategic Warehouse Planning, which GSA plans to complete in 2016.
In September 2014, we recommended that GSA and DHS work jointly  with regard to the DHS headquarters project on the St. Elizabeths  campus, to (1) conduct a comprehensive needs assessment and gap  analysis of current and needed capabilities and an alternatives  analysis that identifies the costs and benefits of leasing and  construction alternatives and (2) update cost and schedule estimates  for the remaining portions of the project. According to agency  documents and our interviews with DHS and GSA officials, DHS and  GSA have made progress in developing an enhanced plan for the  project. In March 2015, DHS issued its National Capitol Region Real  Property Strategic Plan: Business Case Analysis, which outlines a  revised construction plan for the St. Elizabeths campus as well as  updated workplace standards for the department. Additionally,  according to GSA officials and agency documents, GSA is leading  efforts to revise the project’s cost and schedule estimates that take  into account GAO’s leading cost-estimation practices. However, this  recommendation remains open until these efforts are completed and  the results assessed.
We continue to monitor the implementation of these and our other real  property recommendations.
Finally, several real property reform bills have been introduced in  Congress that could address the long-standing problem of federal excess  and underutilized property. For example, the Federal Assets Sale and  Transfer Act of 2016 could help address stakeholder influence by  establishing a Public Buildings Reform Board to identify opportunities for  the federal government to significantly reduce its inventory of civilian real  property and reduce its costs. Additionally, the Public Buildings Report  and Savings Act of 2016 would promote consolidations and disposals by  requiring, among other things, that GSA (1) justify to Congress any new  or replacement building space in the prospectus, including reasons that it  cannot be consolidated or collocated into other owned or leased space  and (2) dispose of specific properties in Washington, D.C., including the  Cotton Annex. Although both bills have passed the House of  Representatives, neither one has been enacted yet.
Chairman Mica, Ranking Member Duckworth, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.
section_title: GAO Contacts and Staff Acknowledgements
paragraphs: For further information regarding this testimony, please contact David  Wise at (202) 512-2834 or wised@gao.gov. In addition, contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this statement. Individuals who made key contributions  to this testimony are Keith Cunningham (Assistant Director), Katie Hamer  (Analyst in Charge), Luqman Abdullah, David Lutter, Sara Ann  Moessbauer, Josh Ormond, Michelle Weathers, and Crystal Wesco.
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