Federal Real Property: Better Guidance and More Reliable Data Needed to Improve Management
Published: 2014-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal real property portfolio, comprising approximately 900,000 buildings and structures and worth billions of dollars, presents several key management challenges. GAO has designated federal real property management as a high risk issue since 2003 due to long-standing challenges including unreliable data on this property, excess and underutilized property, over-reliance on leasing, and challenges with security. Since then, the federal government has given high-level attention to reforming real property management and has made some progress. It established the FRPC, chaired by OMB, in 2004. The FRPC created the FRPP, which is intended to be a comprehensive database developed for describing the nature, use, and extent of all real property under the custody and control of executive branch agencies. The FRPP is managed by GSA and began collecting data in 2005. GAO's recent work has found, however, that data problems related to federal real property have continued.
This statement discusses data guidance and reliability issues GAO has found regarding federal civilian agencies' data on: (1) excess and underutilized property, (2) structures, (3) maintenance backlogs, and (4) cost saving estimates. It is based on previous GAO reports on federal real property issued from June 2012 through January 2014 and some updates on the status of recommendations made in those reports. To obtain these updates, GAO monitored agency actions taken and performed follow-up with agency officials.
section_title: What GAO Found
paragraphs: GAO found in 2012 that government-wide real property data were not sufficiently reliable to support sound management and decision making about excess and underutilized property. The Federal Real Property Council (FRPC) had not ensured that key data elements of the Federal Real Property Profile (FRPP) were defined and reported consistently and accurately. For example, FRPP data did not accurately describe the properties at 23 of the 26 locations GAO visited, often overstating the condition and annual operating costs of buildings. GAO recommended that the General Services Administration (GSA), in consultation with FRPC, develop a plan to improve the FRPP. Consequently, GSA developed an action plan and was scheduled to complete these changes by June 2013. GAO is determining whether these actions improve FRPP consistency and reliability and plans to report the results as part of GAO's 2015 high risk update.
In 2014, GAO found that incorrect and inconsistent data on federal structures such as roads, bridges, railroads, and utility systems, limited the value of the government-wide FRPP data. For example, agencies GAO reviewed defined structures differently leading to inconsistencies. GAO recommended that GSA, in coordination with FRPC, clarify the definition of structures and assess the feasibility of limiting the data on structures submitted to the FRPP. GSA provided an action plan in December 2013 to implement GAO's recommendations, but no timeframe was provided for when the proposed actions would be completed.
In a 2014 report, GAO found that civilian agencies followed most leading practices in managing their facility maintenance and repair backlogs, except for transparent reporting about the funding amounts agencies are spending to maintain their assets and manage their backlogs. Different agency financial reporting requirements as well as FRPP reporting guidance did not require a specific process for determining deferred maintenance and repair backlogs, and agencies could use their existing processes. Thus, GAO recommended that OMB, in collaboration with agencies, collect and report information on agencies' costs for annual maintenance and repair performed and funding spent to manage their existing backlogs. OMB and FRPC agencies have taken actions to improve management of deferred maintenance, including working to refine FRPP data, but have not yet fully implemented GAO's recommendation.
In a 2013 review of selected agencies' reporting of real property cost savings data, GAO identified several challenges that reduced the reliability and transparency of the data the government reported. For example, OMB did not require agencies to provide detailed documentation of their reported savings or include specific information about agencies' reported savings on Performance.gov, limiting transparency. Furthermore, guidance issued by OMB was not clear on the types of savings that could be reported, particularly because the term "cost savings" was not clearly defined. GAO recommended that OMB establish clear and specific standards to help ensure reliability and transparency in the reporting of future real-property cost savings. OMB generally agreed with the recommendation. GAO is determining the extent to which OMB has implemented it and GAO plans to report the results as part of GAO's 2015 high risk update.

section_title: Letter
paragraphs: I am pleased to be here today to discuss federal real property  management, including how data guidance and reliability issues  contribute to its high risk designation. The federal government’s real  property portfolio comprises approximately 900,000 buildings and  structures and is worth billions of dollars. Federal real property  management has been on our high-risk list since 2003 due to the  presence of unneeded and underutilized facilities, overreliance on  leasing, security challenges at federal facilities, and unreliable real  property data. In 2004, the President issued an executive order  establishing the Federal Real Property Council (FRPC). The executive  order required the FRPC to work with the General Services  Administration (GSA) to establish and maintain a single, comprehensive  database describing the nature, use, and extent of all real property under  the custody and control of executive branch agencies, except when  otherwise required for reasons of national security. The FRPC created  the Federal Real Property Profile (FRPP) to meet this requirement and  began data collection in 2005. GSA is responsible for managing the  FRPP. As we have reported, despite the implementation of the executive  order, nationwide data collection efforts, and various reform efforts and  proposals, data problems have continued and agencies continue to face  persistent challenges with managing real property.
My statement today summarizes our recent work as it pertains to data  problems affecting federal real property management by civilian agencies.  It highlights our work on data guidance and reliability issues related to the  management of: (1) excess and underutilized property, (2) structures, (3)  maintenance and repair backlogs, and (4) cost saving estimates. For this  statement, we drew primarily from GAO reports on federal real property  issued from June 2012 through January 2014 including some updates on  the status of recommendations made in those reports. To obtain these  updates, we monitored agency actions taken and performed follow-up  with agency officials. See appendix I for a list of these GAO reports. For  those reports, we obtained and analyzed FRPP data submissions and  other real property data from the agencies we selected, reviewed FRPC  and agency guidance documents, and interviewed federal agency  officials. Our reports contain more detailed explanations of the methods  used to conduct our work. 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 the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Unreliable Data Create Challenges for Managing Excess and Underutilized Property
paragraphs: Federal excess and underutilized property is an ongoing challenge facing  the government due in part to unreliable data. In June 2012, we found  that the FRPC did not ensure that key data elements—including buildings’  utilization, condition, annual operating costs, mission dependency, and  value—were defined and reported consistently and accurately. For  example, the FRPP data did not accurately describe the properties at 23  of the 26 locations we visited, often overstating the condition and annual  operating costs of buildings. The types of inconsistencies and  inaccuracies we identified in these five key data elements suggest that  the FRPP database is not a useful decision-making tool for managing  federal real property. Our review focused on five civilian federal real  property-holding agencies—GSA and the departments of Energy (DOE),  the Interior (Interior), Veterans Affairs (VA), and Agriculture (USDA). We  reviewed key agency-reported FRPP data elements including utilization,  condition index, annual operating costs, and value, and we found  inconsistencies and inaccuracies for each of these data elements. For  example, several buildings that received high scores for condition were  actually in poor condition, with problems including: asbestos, mold, health  concerns, radioactivity, and flooding (see fig. 1).
In addition to the various problems we found and documented with real  property data, we have also found that the federal government continues  to face other challenges when managing excess and underutilized  properties. Such challenges include (1) the high cost of property  disposal, (2) legal requirements prior to disposal such as those related to  preserving historical properties and the environment, (3) stakeholder  resistance to property disposal or reuse plans, and (4) remote property  locations that make selling or disposal difficult. Given the complexities of  issues related to excess and underutilized federal real property  management, unsuccessful implementation of cost savings efforts across  administrations, and the issues that remain with data reporting, we  concluded that a national strategy could provide a clear path forward to  help federal agencies manage excess and underutilized property in the  long term. A national strategy can guide federal agencies and other  stakeholders to systematically identify risks, resources needed to address  those risks, and investment priorities when managing federal portfolios.  Without a national strategy, the federal government may be ill-equipped  to sustain efforts to better manage excess and underutilized property.
In our June 2012 report, we recommended that OMB, in consultation with  the FRPC, develop a national strategy for managing federal excess and  underutilized real property. OMB did not directly state whether it agreed  or disagreed with our recommendation. Up to now, no comprehensive  national strategy has been issued. We view such a strategy as a key step  needed to improve the federal government’s management of its real  property portfolio. Additionally, FRPP is not yet a useful tool for describing  the nature, use, and extent of excess and underutilized federal real  property. We concluded in June 2012 that FRPP data must be consistent  and reliable to help decision makers overcome these long-standing  problems. Accordingly, in the same report, we recommended that GSA  and FRPC take action to improve the FRPP. GSA stated that they intend  to improve the agency’s management of FRPP data by: making enhancements to clearly define data collection requirements, performing data quality tests and assessments to ensure data developing new performance measures to support government-wide  goals, and  improving collaboration with agencies.
GSA developed an action plan for implementing GAO’s recommendations  and was scheduled to complete these changes by June 2013. We are in  the process of determining whether these actions improve FRPP  consistency and reliability. We plan to report our results as part of our  2015 high risk update.
section_title: Incorrect and Inconsistent Data Undermines Government-wide Management of Structures
paragraphs: The federal government manages a wide variety of structures that  represent over half of the federal government’s real property assets,  including roads and parking structures, utility systems, monuments, and  radio towers. In January 2014, we found that incorrect and inconsistent  data on structures limit the value of the government-wide FRPP data the  government collects. First, at the most basic level, some of the data  agencies submit on their structures are incorrect, undermining agencies’  ability to manage their structures and the reliability of the data in FRPP.
Second, even if agencies effectively apply the OMB guidance, the  government-wide data will continue to face reliability problems because of  the flexibility built into FRPP guidance on how agencies track key  elements, such as defining and counting structures. For example,  agencies we reviewed—including the Department of Transportation  (DOT), DOE, VA, USDA, and Interior—defined structures differently  leading to inconsistencies in what assets are included in the FRPP.  Figure 2 provides examples of some facilities we visited that were  classified as structures, even though they were similar to buildings  (having features such as walls, roofs, doors, windows, and air- conditioning systems in some cases). We concluded that agencies must  improve their data quality in order to document performance and support  decision making.
Additionally, the agencies we reviewed submitted incorrect information for  key data elements for structures, such as replacement value, annual  operating costs, and condition. GSA officials who manage the FRPP said  that FRPC chose to provide flexibility in the reporting guidance for data on  structures to account for the wide diversity in federal structures, but it also  aggregates the data as if they were comparable. We found that, even if  this data were useful, FRPC reports very little information on structures.  Officials at GSA told us that there is low interest in and demand for this  information, creating few incentives to improve data reliability.
We recommended that OMB, in coordination with the FRPC, develop  guidance to improve agencies’ internal controls to produce consistent,  accurate and reliable information on their structures. We also  recommended that GSA, in coordination with the FRPC, clarify the  definition of structures and assess the feasibility of limiting the data  collected on structures submitted to the FRPP. OMB and GSA agreed  with the recommendations, and GSA provided an action plan in  December 2013 to implement them, but no timeframe was provided for  when the proposed actions would be completed.
section_title: Agencies Do Not Apply Standard Definitions for Deferred Maintenance and Repair Needs
paragraphs: In a 2014 report, we found that civilian agencies followed most leading  practices in managing their facility maintenance and repair backlogs,  except for transparent reporting about the funding amounts agencies are  spending to maintain their assets and manage their backlogs. However,  the deferred maintenance and repair of federal real property contributes  to deteriorating assets in the federal inventory, and we found that the  eventual need to address deferred maintenance and repair could  significantly affect future budget resources. The five federal agencies we  reviewed for our 2014 report— GSA, DOE, VA, Interior, and the  Department of Homeland Security (DHS) — reported fiscal year 2012  deferred maintenance and repair backlog estimates that ranged from  nearly $1 billion to $20 billion. However, agencies do not share a  common definition of deferred maintenance, resulting in dissimilar  backlog estimates. In addition, financial reporting requirements as well as  FRPP reporting guidance do not require a specific process for  determining deferred maintenance and repair backlogs, and agencies can  use their existing processes to do so. For example, Interior excludes,  while DHS includes, costs for some assets scheduled for disposal. As a  result, when agencies report information in their financial reports and to  FRPP, data include dissimilar backlog estimates and makes estimates  across agencies not comparable. As such, an opportunity exists to better  conform to leading practices and increase transparency.
We recommended that OMB, in collaboration with agencies, collect and  report information on agencies’ costs for annual maintenance and repair  performed and funding spent to manage their existing backlogs. OMB  agreed with our recommendation, and along with FRPC, has taken  actions to improve management of deferred maintenance, including  working to refine FRPP data and develop performance measures that  reflect current federal real-property management priorities, but OMB has  not yet fully implemented our recommendation. Thus, as OMB and FRPC  agencies work to improve FRPP data and develop new performance  metrics, the opportunity exists to revise requirements for agencies to  collect and report costs of annual maintenance and repair and to address  deferred maintenance and repair backlogs as we recommended earlier  this year.
section_title: Cost Savings Data is Not Reliable or Transparent
paragraphs: In June 2010, the President issued a memorandum directing federal  agencies to achieve $3 billion in real property cost savings by the end of  fiscal year 2012 through a number of methods, including disposal of  excess property, energy efficiency improvements, and other space  consolidation efforts. Agencies reported real property cost savings of $3.8  billion across the OMB categories of disposal, space management,  sustainability, and innovation in response to the June 2010 presidential  memorandum. Space management savings, defined by OMB as those  savings resulting from, among other things, consolidations or the  elimination of lease arrangements that were not cost effective, accounted  for the largest portion of savings reported by all agencies. In October  2013, we found that space management savings accounted for about 70  percent of the savings reported by the six agencies we reviewed— GSA,  USDA, DOE, DHS, the Department of Justice (DOJ), and the Department  of State (State). The requirements of the memorandum, as well as  agencies’ individual savings targets and the time frame for reporting  savings, led the selected agencies to primarily report savings from  activities that were planned or under way at the time the memorandum  was issued.
GAO’s October 2013 review of the six selected agencies found several  problems that affected the reliability and transparency of the cost savings  data that the government reported in response to the June 2010  memorandum. For example, OMB did not require agencies to provide  detailed documentation of their reported savings or include specific  information about agencies’ reported savings on Performance.gov,  limiting transparency. Furthermore the memorandum and subsequent  guidance issued by OMB were not clear on the types of savings that  could be reported, particularly because the term “cost savings” was not  clearly defined. For instance, officials from several agencies we reviewed  said the guidance was unclear about whether savings from cost  avoidance measures could be reported. In addition some agencies made  different assumptions in reporting disposal savings. Some agencies did  not deduct costs associated with disposals, and some reported savings  outside the time frame of the memorandum. For example, two agencies  reported one year of avoided operations and maintenance savings for the  year in which the disposal occurred, while three agencies reported up to 3  years of savings depending on when disposals occurred during the 3-year  period.
Agency officials stated that the memorandum broadened their  understanding of real property cost-savings opportunities. However, we  concluded that establishing clearer standards for identifying and reporting  savings would improve the reliability and transparency of the reporting of  cost savings and help decision-makers better understand the potential  savings of future initiatives to improve federal real-property management.  As such, we recommended that OMB establish clear and specific  standards to help ensure reliability and transparency in the reporting of  future real-property cost savings. OMB generally agreed with the  recommendation. We are in the process of determining the extent to  which OMB has implemented the recommendation and plan to report our  final results as part of our 2015 high risk update.
Sustained progress is needed to address the conditions and persistent  challenges that make the area of federal real property management high  risk. Multiple administrations have committed to a more strategic  approach toward managing real property. However, problems with data  reliability remain an underlying challenge for agencies to properly manage  the multiple areas of real property reform. We will continue to monitor  these agencies’ efforts to implement our recommendations, which we  believe are critical to addressing the challenges that have led us to keep  federal real property management on our High Risk List.
Chairman Mica, Ranking Member Connolly, and Members of the  Subcommittee, this concludes my prepared statement. I would be happy  to answer any questions that you may have at this time.
section_title: GAO Contacts and Staff Acknowledgments
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), David  Sausville (Assistant Director), Raymond Griffith, Geoffrey Hamilton, Amy  Higgins, Hannah Laufe, and Sara Ann Moessbauer.