Courthouse Construction: Overview of Previous and Ongoing Work
Published: 2005-06-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the last 20 years, GAO has compiled a large body of work on courthouse construction and federal real property. The General Services Administration (GSA) owns federal courthouses and funds related expenses from its Federal Buildings Fund (FBF)--a revolving fund used to finance GSA real property services, including the construction and maintenance of federal facilities under GSA control. The judiciary pays rent to GSA for the use of these courthouses, and the proportion of the judiciary's budget that goes to rent has increased as its space requirements have grown. In December 2004, the judiciary requested a $483 million permanent, annual exemption from rent payments to GSA to address budget shortfalls. In this testimony, GAO (1) summarizes its previous work on courthouse construction and (2) provides information on FBF and GAO's ongoing work on the federal judiciary's request for a permanent, annual rent exemption of $483 million from rent to GSA.
section_title: What GAO Found
paragraphs: GAO's courthouse construction work to date has focused primarily on courthouse costs, planning, and courtroom sharing. In the 1990s, GAO reported that wide latitude among judiciary and GSA decision makers in choices about location, design, construction, and finishes often resulted in expensive features in some courthouse projects. The judiciary has since placed greater emphasis on cost consciousness in the guidelines for courthouse construction that it provides to GSA. Related to planning, GAO also found in the 1990s that long-range space projections by the judiciary were not sufficiently reliable, and that the judiciary's 5-year plan did not reflect all of the its most urgently needed projects. The judiciary has made changes to improve its planning and data reliability. During previous work, GAO also found that the judiciary did not track sufficient courtroom use data to gauge the feasibility of courtroom sharing. GSA has been unable to generate sufficient revenue through FBF over the years and thus has struggled to meet the requirements for repairs and alterations identified in its inventory of owned buildings. By 2002, the estimated backlog of repairs had reached $5.7 billion, and consequences included poor health and safety conditions, higher operating costs, restricted capacity for modern information technology, and continued structural deterioration. GSA's inability to generate sufficient revenue in the past has been compounded by restrictions imposed on the rent GSA could charge federal agencies. Consequently, GAO recommended in 1989 that Congress remove all rent restrictions and not mandate any further restrictions, and the most restrictions have been lifted. Some narrowly focused rent exemptions, many of limited duration, still exist today, but together they represent roughly a third of the $483 million permanent exemption the judiciary is currently requesting from GSA. The judiciary has requested the exemption, equaling about half of its annual rent payment, because of budget problems it believes that its growing rent payments have caused. GSA data show that GSA-owned space, occupied by the judiciary, has increased significantly. GAO is currently studying the potential impact of such an exemption on FBF, but past GAO work shows rent exemptions have been a principal reason why FBF has accumulated insufficient money for capital investment.

section_title: Letter
paragraphs: Thank you for the opportunity to testify before you today on our work  related to federal courthouse construction. As you know, we have done  considerable work on federal courthouse construction and other related  federal real property issues over the past 20 years. My testimony today will  (1) summarize our previous work on this topic and (2) provide information  on the Federal Buildings Fund (FBF) and our ongoing congressionally  requested work related to the federal judiciary’s request for a permanent,  annual exemption of $483 million from rent that the General Services  Administration (GSA) charges the judiciary to occupy space in  courthouses. GSA owns federal courthouses and funds courthouse-related  expenses from FBF—a revolving fund used to fund GSA real property  services, including space acquisition and asset management for federal  facilities that are under GSA control. The exemption the judiciary is  seeking would represent about half of the judiciary’s 2004 rent payment of  $909 million, and the judiciary represents one of GSA’s largest tenants. My  testimony today will highlight the following points:
GAO’s courthouse construction work to date has focused primarily on  courthouse costs, planning, and courtroom sharing. In the 1990s, we found  that wide latitude in choices made by GSA and the judiciary about  location, design, construction, and finishes often resulted in expensive  features in some courthouse projects. Since then, the judiciary has placed  greater emphasis on cost consciousness in its courthouse construction  guidance for GSA. In the 1990s, we also found that the judiciary’s long­ term space projections were not sufficiently reliable, and that the  judiciary’s 5-year plan did not reflect all of the judiciary’s most urgently  needed projects. Since then, the judiciary has made the changes we  recommended. With regard to courtroom sharing that could help reduce  costs, we found that the judiciary did not collect sufficient data to  determine how much sharing could occur. The judiciary disagreed with  this finding and the related recommendation.
GSA has historically been unable to generate sufficient revenue through  FBF and has thus struggled to meet the requirements for repairs and  alterations identified in its inventory of owned buildings. By 2002, the  estimated backlog of repairs had reached $5.7 billion, and consequences  included poor health and safety conditions, higher operating costs,  restricted capacity for modern information technology, and continued  structural deterioration. GSA charges agencies rent for the space they  occupy, and the receipts from the rent are deposited in FBF and are then  available for the purposes of the fund. Restrictions imposed on the rent  GSA could charge federal agencies have compounded the agency’s  inability to address its backlog in the past. Consequently, we  recommended in 1989 that Congress remove all rent restrictions and not  mandate any further restrictions, and most rent restrictions have been  lifted. The GSA Administrator has the authority to grant rent exemptions,  and all of the current exemptions are limited to single buildings or were  granted for a limited duration.  Together, these current exemptions  represent about a third of the $483 million permanent exemption the  judiciary is requesting from GSA. The judiciary has requested the  exemption, equal to about half of its annual rent payment, because of  budget problems that it believes its growing rent payments have caused.  GSA data show that one reason the judiciary’s rent is increasing is that the  space it occupies is also increasing. We are currently studying the  potential impact of such an exemption on FBF, but our past work shows  that rent exemptions were a principal reason why FBF has accumulated  insufficient money for capital investment.
subsections: section_title: Background
paragraphs: Since the early 1990s, GSA and the federal judiciary have been carrying out  a multibillion-dollar courthouse construction initiative to address the  judiciary’s growing needs. In 1993, the judiciary identified 160 court  facilities that required either the construction of a new building or a major  annex to an existing building. From fiscal year 1993 through fiscal year  2005, Congress appropriated approximately $4.5 billion for 78 courthouse  construction projects. Since fiscal year 1996, the judiciary has used a 5­ year plan to prioritize new courthouse construction projects, taking into  account a court’s need for space, security concerns, growth in judicial  appointments, and any existing operational inefficiencies. The judiciary’s  most recent 5-year plan (covering fiscal years 2005 through 2009) identifies  57 needed projects that are expected to cost $3.8 billion. GSA and the  judiciary are responsible for managing the multibillion-dollar federal  courthouse construction program, which is designed to address the  judiciary’s long-term facility needs. The Administrative Office of the  United States Courts (AOUSC), the judiciary’s administrative agency,  works with the nation’s 94 judicial districts to identify and prioritize needs  for new and expanded courthouses. The U.S. Courts Design Guide  (Design Guide) specifies the judiciary’s criteria for designing new court  facilities and sets the space and design standards that GSA uses for  courthouse construction. First published in 1991, the Design Guide has  been revised several times to address budgetary considerations,  technological advancements, and other issues, and the guide is currently  undergoing another revision.
GSA provides a range of real property services including maintenance,  repairs, alterations, and leasing to numerous federal agencies and the  federal judiciary. The Public Buildings Amendments of 1972 made several  important revisions to the Federal Property and Administrative Services  Act. First, the 1972 law created a new revolving fund, later named FBF.  Next, it required agencies that occupy GSA-controlled buildings to pay  rent to GSA, which is to be deposited in the revolving fund to be used for  GSA real property services. GSA charges rent based on appraisals for  facilities it owns and the actual lease amount for facilities it leases on the  tenants’ behalf. The legislation also authorized any executive agency other  than GSA that provides space and services to charge for the space and  services. The rent requirement is intended to reduce costs and encourage  more efficient space utilization by making agencies accountable for the  space they use. GSA proposes spending from FBF for courthouses as part  of the President’s annual budget request to Congress.
GSA has been using the judiciary’s 5-year plan for new courthouse projects  since fiscal year 1996 to develop requests for both new courthouses and  expanded court facilities. GSA also prepares feasibility studies to assess  various courthouse construction alternatives and serves as the central  point of contact with the judiciary and other stakeholders throughout the  construction process. For courthouses that are to be selected for  construction, GSA prepares detailed project descriptions called  prospectuses that include the justification, location, size, and estimated  cost of the new or annexed facility. GSA typically submits two  prospectuses to Congress. The first prospectus generally requests  authorization and funding to purchase the site and design the building, and  the second prospectus generally requests authorization and funding for  construction, as well as any additional funding needed for site and design  work. Once Congress authorizes and appropriates funds for a project, GSA  refines the project budget and selects private-sector firms for the design  and construction work. Figure 1 illustrates the process for planning,  approving, and constructing a courthouse project.
Courthouse projects continue to be costly, and increasing rents and  budgetary constraints have given the judiciary further incentive to control  its costs. The judiciary pays rent to GSA for the use of the courthouses,  which GSA owns, and the proportion of the judiciary’s budget that goes to  rent has increased as the judiciary’s space requirements have grown.  According to the judiciary, rent currently accounts for just over 20 percent  of its operating budget and is expected to increase to over 25 percent of its  operating budget in fiscal year 2009, when the rental costs of new court  buildings are included. Additionally, in fiscal year 2004, the judiciary faced  a budgetary shortfall and, according to the judiciary, reduced its staff by 6  percent.
In September 2004, the judiciary announced a 2-year moratorium on new  courthouse construction projects as part of an effort to address its  increasing operating costs and budgetary constraints. During this  moratorium, AOUSC officials said that they plan to reevaluate the  courthouse construction program, including reassessing the size and  scope of projects in the current 5-year plan, reviewing the Design Guide’s  standards, and reviewing the criteria and methodology used to prioritize  projects. Judiciary officials also said that they plan to reevaluate their  space standards in light of technological advancements and opportunities  to share space and administrative services.
section_title: GAO’s Courthouse Construction Work Has Focused on Costs, Planning, and Courtroom Sharing
paragraphs: Our work in the 1990s showed that decision makers within GSA and the  judiciary had wide latitude in making choices that significantly affected  costs. The judiciary’s 5-year plan did not reflect all of the judiciary’s most  urgently needed projects. However, the judiciary has since made some of  our recommended changes. We also found that the judiciary did not  compile data that would allow it to determine how many and what types of  courtrooms it needs. The judiciary concluded that additional data and  analysis were not necessary.
subsections: section_title: Courthouse Construction Costs
paragraphs: In 1995, we testified that a primary reason for differences in the  construction costs of courthouses was that GSA and the judiciary had  wide latitude in making choices about the location, design, construction,  and finishes of courthouse projects. These choices were made under  circumstances in which budgets or designs were often committed to  before requirements were established. In addition, design guidance was  flexible, and systematic oversight was limited. As a result, some  courthouses had more expensive features than others. While recognizing  that some flexibility was needed and that some costly features may be  justifiable, we found that the flexibility in the process should have been  better managed. We recommended that GSA and AOUSC clearly define the scope of construction projects and refine construction  cost estimates before requesting project approval and final funding levels; establish and implement a systematic and ongoing project oversight and  evaluation process to compare courthouse projects, identify opportunities  for reducing costs, and apply lessons learned to future projects; and establish a mechanism to monitor and assess the use of flexibility within  design guidance to better balance choices made about courthouse design,  features, and finishes.
GSA and the judiciary said that since 1996, they have also taken several  actions to improve the courthouse construction program, including  developing priority lists of locations needing additional space (the 5-year  plan), revising the Design Guide, and placing greater emphasis on cost  consciousness in its courthouse construction guidance for GSA.
In a 2004 congressional briefing, we reported that GSA had attributed  some cost growth in courthouse construction projects to a number of  factors, including changes in the scope of the projects. In Buffalo, New  York, for example, GSA had to change the scope of the courthouse project  and acquire an entirely new site in order to achieve the necessary security­ based setbacks from the street. The judiciary said that funding delays have  slowed the progress of the program by creating a backlog of projects, and  increased costs by 3 to 4 percent per year because of inflation. The  judiciary also indicated that limiting the size of courthouses to stay within  budget has resulted in space shortages sooner than expected at some  courthouses. In a 2004 report related specifically to a new federal  courthouse proposed for Los Angeles, we found that the government will  likely incur additional construction and operational costs beyond the $400  million estimated as needed for the new courthouse. Some of these  additional costs are attributable to operational inefficiencies. Specifically,  the court is split between a new building and an existing courthouse in Los  Angeles, both of which will, according to the judiciary, require additional  courtrooms to meet the district court’s projected space requirements in  2031.
section_title: Judiciary Long- and Short- Term Space Planning
paragraphs: In 1993, we reviewed the long-term planning process used by the judiciary  to estimate its space requirements. We found that AOUSC’s process for  projecting long-term space requirements did not produce results that were  sufficiently reliable to form the basis for congressional authorization and  funding approval of new construction and renovation projects for court  space. Specifically, three key problems impaired the accuracy and  reliability of the judiciary’s projections. First, AOUSC did not treat all  districts consistently. For example, the procedure used to convert  caseload estimates to staffing requirements did not reflect differences  among districts that affect space requirements. Second, according to  AOUSC’s assumptions about the relationship between caseloads and staff  needs, many district baseline estimates did not reflect the districts’ current  space requirements. For example, when a district occupied more space  than the caseload warranted, future estimates of needs were overstated.  Third, AOUSC’s process did not provide reliable estimates of future space  requirements because the methodology used to project caseloads did not  use standard acceptable statistical methods.
We recommended that AOUSC revise the long-term planning process to  increase consistency across regions, establish accurate caseload baselines  for each district, and increase the reliability of the projected caseloads by  applying an accepted statistical methodology and reducing subjectivity in  the process. In May 1994, we testified that the judiciary had implemented  some of these recommendations. For example, on the basis of our  recommendation, whenever a decision was made to proceed on a  particular building project, AOUSC provided GSA with detailed 10-year  space requirements for prospectus development and an overall summary  of its projected 30-year space requirements for purposes of site planning.  In 2001, we reported that since 1994, AOUSC had continued its efforts to  improve its long-term planning process in implementing our previous  recommendations. Specifically, the judiciary began (1) using an  automated computer program that applied Design Guide standards to  estimate space requirements, (2) employing a standard statistical  forecasting technique to improve caseload projections, and (3) providing  GSA with data on its 10-year projected space requirements to support the  judiciary’s request for congressional approval of funds to build new  facilities.
In 1996 we reported that the judiciary had developed a methodology for  assessing project urgency and a short-term (5-year) construction plan to  communicate its urgent courthouse construction needs. Our analysis  suggested that its 5-year plan did not reflect all of the judiciary’s most  urgent construction needs.  We found that the judiciary, in preparing the 5­ year plan, developed urgency scores for 45 projects, but did not develop  urgency scores for other locations that, according to AOUSC, also needed  new courthouses. Our analysis of available data on conditions at the 80  other locations showed that 30 of them likely would have had an urgency  score higher than some projects in the plan. We recommended that the  Director of AOUSC work with the Judicial Conference Committee on  Security, Space, and Facilities to make improvements to the 5-year plan,  including fully disclosing the relative urgency of all competing projects  and articulating the rationale or justification for project priorities,  including information on the conditions that are driving urgency—such as  specific security concerns or operational inefficiencies. In commenting on  the report, AOUSC generally agreed with our recommendations and  indicated that many of the improvements we recommended were already  under consideration.  It also recognized that some courthouse projects,  which were currently underway, may have had lower priority scores  because the funding had already been provided by the time the priority  scores were developed.
section_title: Courtroom Sharing
paragraphs: In 1997, we reported that the judiciary maintains a general practice of,  whenever possible, assigning a trial courtroom to each district judge.However, we also noted that the judiciary did not compile data on how  often and for what purposes courtrooms are actually used and it did not  have analytically based criteria for determining how many and what types  of courtrooms are needed. We concluded that the judiciary did not have  sufficient data to support its practice of providing a trial courtroom for  every district judge. We recommended that the judiciary establish criteria for determining effective courtroom utilization and a  mechanism for collecting and analyzing data at a representative number of  locations so that trends can be identified over time and better insights  obtained on court activity and courtroom usage; design and implement a methodology for capturing and analyzing data on  usage, courtroom scheduling, and other factors that may substantially  affect the relationship between the availability of courtrooms and judges’  ability to effectively administer justice; use the data and criteria to explore whether the one-judge, one-courtroom  practice is needed to promote efficient courtroom management or  whether other courtroom assignment alternatives exist; and establish an action plan with time frames for implementing and overseeing  these efforts.
In 1999, AOUSC contracted for a study of the judiciary’s facilities program  to address, among other things, the courtroom-sharing issue and identify  ways to improve its space and facility efforts. As part of this study, the  contractor analyzed how courtrooms are used, assigned, and shared by  judges. We reviewed the courtroom use and sharing portion of this study  and concluded, along with others, that the study was not sufficient to  resolve the courtroom sharing issue. We recommended that the Director,  AOUSC, in conjunction with the Judicial Conference’s Committee on  Court Administration and Case Management and Committee on Security  and Facilities, design and implement cost-effective research more in line  with the recommendations in our 1997 report. We also recommended that  AOUSC establish an advisory group made up of interested stakeholders  and experts to assist in identifying study objectives, potential  methodologies, and reasonable approaches for doing this work. In  responding to the report, AOUSC disagreed with our recommendations  because it believed the contractor study was sufficient and additional  statistical studies would not be productive.
In a 2002 report, we found that the judiciary’s policies recognized that  senior district judges with reduced caseloads were the most likely  candidates to share courtrooms and some active and senior judges were  sharing courtrooms in some locations primarily when there were not  enough courtrooms for all judges to have their own courtroom. However,  because of the judiciary’s belief in the strong relationship between  ensured courtroom availability and the administration of justice and the  wide discretion given to circuits and districts in determining how and  when courtroom sharing may be implemented, we concluded that there  would not be a significant amount of courtroom sharing in the foreseeable  future, even among senior judges.
section_title: Issues Related to FBF
paragraphs: We have reported over the years that GSA has struggled to address its  repair and alteration needs identified in its inventory of owned buildings.  In 1989, we found that FBF’s inability to generate sufficient revenue in the  past was due, in large part, to restrictions imposed on the amount of rent  GSA could charge federal agencies, and we recommended in 1989 that  Congress remove all rent restrictions and not mandate any further  restrictions. It is also important to note that not all federal property is  subject to FBF rent payments because GSA does not control all federal  properties. We are currently conducting a review for this committee  regarding the issues associated with the judiciary’s request of a $483  million permanent, annual exemption from rent payments to GSA.
subsections: section_title: Rent Restrictions Have Historically Contributed to Large Repair Backlogs
paragraphs: As part of our series on high-risk issues facing the federal government, we  have reported that GSA has struggled over the years to meet the  requirements for repairs and alterations identified in its inventory of  owned buildings. By 2002, its estimated backlog of repairs had reached  $5.7 billion. We have reported that adverse consequences of the backlog  included poor health and safety conditions, higher operating costs  associated with inefficient building heating and cooling systems, restricted  capacity to modernize information technology, and continued structural  deterioration resulting from such things as water leaks. We reported that  FBF has not historically generated sufficient revenue to address the  backlog.
On the basis of the work we did in the late 1980s and early 1990s, we  concluded that federal agencies’ rent payments provided a relatively  stable, predictable source of revenue for FBF, but that this revenue has  not been sufficient to finance both growing capital investment needs and  the cost of leased space. We found that FBF’s inability to generate  sufficient revenue during that time was compounded by restrictions  imposed on the amount of rent GSA could charge federal agencies.  Congress and OMB had instituted across-the-board rent restrictions that  reduced FBF by billions of dollars over several years, and later continued  to restrict what GSA could charge some agencies, such as the Departments  of Agriculture and Transportation. Because these rent restrictions were a  principal reason why FBF has accumulated insufficient money for capital  investment, we recommended that Congress remove all rent restrictions  and not mandate any further restrictions.
According to GSA, most of the restrictions initiated by Congress and OMB  have been lifted. However, the GSA Administrator has the authority to  grant rent exemptions to agencies. GSA data show that several rent  exemptions are currently in place. In general, these exemptions are  narrowly focused on a single building or even part of a single building or  are granted for a limited duration. Table 2 summarizes the current rent  exemptions that exist in GSA buildings, according to data GSA provided.
section_title: Direct Appropriations to FBF Generally Benefit the Fund
paragraphs: In fiscal year 2006, according to data from GSA, $7.7 billion in expected  FBF revenue is projected to come from rent paid by over 60 different  federal tenant agencies, such as the Departments of Justice and Homeland  Security. Congress sets annual limits on how much FBF revenue can be  spent for various activities through the appropriations process. In  addition, Congress may appropriate additional amounts for FBF and  between fiscal year 1990 and fiscal year 2005, Congress made direct  appropriations into FBF for all but 3 fiscal years. This additional funding  was not tied directly to any specific projects or types of projects. The  statutory language relating to the direct appropriations states that  additional amounts are being deposited into FBF for the purposes of the  fund.
It is also important to note that not all federal property is subject to FBF  rent payments. While GSA owns and leases property and provides real  estate services for numerous federal agencies, we reported in 2003 that  GSA owns only about 6 percent of federal facility space in terms of  building floor area. Other agencies, including the Department of Defense  (DOD), the U.S. Postal Service, and the Department of Energy have  significant amounts of space that they own and control without GSA  involvement. In all, over 30 agencies control real property assets. Property­ owning agencies do not pay rent into FBF or receive services from GSA  for the space they occupy in the buildings that they own. For example, the  Pentagon and military bases are owned by DOD, and national parks  facilities are owned by Interior. As a result, these facilities are maintained  by DOD and Interior, respectively.
section_title: Our Ongoing Work on the Judiciary’s Request for an Exemption from Rent Payments to FBF
paragraphs: In December 2004, the judiciary requested that the GSA Administrator  grant a $483 million permanent, annual exemption from rent payments—  an amount equal to about 3 times the amount of all other rent exclusions  combined. This exemption would equal about half of the judiciary’s $900  million annual rent payment to GSA for occupying space in federal  courthouses. The judiciary has expressed concern that the growing  proportion of its budget allocated to GSA rent payments is having a  negative effect on court operations. According to GSA data, the judiciary  increased the owned space it occupies by 15 percent from 2000 to 2004. In  February 2005, the GSA Administrator declined the request because GSA  considered it unlikely that the agency could replace the lost income with  direct appropriations to FBF. In April 2005, this subcommittee requested  that we look into issues associated with the judiciary’s request for a  permanent, annual exemption from rent payments to GSA. Our objectives  for this work are to determine the following:  1. 	 How are rent payments calculated by GSA and planned and accounted  for by the judiciary?  2. 	 What changes, if any, has the judiciary experienced in rent payments in  recent years?  3.  What impact would a permanent rent exemption have on FBF?
Our work is still underway, but our past work on related issues shows that  rent exemptions have been a principal reason why FBF has accumulated  insufficient money for capital investment.
section_title: Scope and Methodology
paragraphs: We conducted our work for this testimony in June 2005 in accordance  with generally accepted government auditing standards. During our work,  we reviewed past GAO work on federal real property and courthouse  construction issues, analyzed AOUSC and GSA documents, and  interviewed AOUSC and GSA officials.
Mr. Chairman, this concludes my prepared statement. I would be pleased  to respond to any questions that you or the other Members of the  Subcommittee may have.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact me at (202)  512-2834 or goldsteinm@gao.gov. Keith Cunningham, Randy De Leon,  Maria Edelstein, Bess Eisenstadt, Joe Fradella, Susan Michal-Smith, David  Sausville, and Gary Stofko also made key contributions to this statement.
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