Federal Real Property: Strategic Focus Needed to Help Manage Vast and Diverse Warehouse Portfolio
Published: 2014-11-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GAO has identified managing the federal government's real property portfolio—which includes warehouses— as a high-risk area, due to long-standing problems such as reliance on long-term leasing. In 2013, federal civilian agencies reported that they occupied approximately 19,000 warehouses consisting of approximately 90-million square feet of space. GAO was asked to examine the management of federal civilian warehouses.
This report examines (1) available information on the characteristics of federal warehouses held or leased by civilian agencies; (2) the challenges selected civilian agencies report in acquiring, managing, and disposing of warehouse space; and (3) the extent to which GSA has fulfilled its federal real property leadership role with respect to warehouses. GAO analyzed fiscal year 2013 FRPP data on warehouses held or leased by federal civilian agencies; visited 30 GSA, Interior, and DOE warehouses—selected to reflect a variety of uses and sizes—and interviewed officials from the three agencies about real property data, the characteristics of warehouses, challenges to warehouse management, and GSA's real-property leadership role.
section_title: What GAO Found
paragraphs: The federal government's vast civilian warehouse inventory supports a wide range of agencies' storage needs; however, some data in the Federal Real Property Portfolio (FRPP) are not transparent for decision makers. According to the fiscal year 2013 FRPP data, three civilian agencies—the General Services Administration (GSA), the Department of the Interior (Interior), and the Department of Energy (DOE)—held or leased the most civilian warehouse space. GSA's warehouse portfolio— the largest covering about 29-million square feet—was divided across multiple agencies. This is because of GSA's landlord role to provide federal agencies with space from its government-owned inventory, as well as through leases with private companies. In the FRPP, GSA classified nearly all of this warehouse space as utilized and active. However, GAO found that among these warehouses were buildings that were vacant for extended periods of time. This discrepancy raises questions about the transparency and usefulness of FRPP warehouse data, which could be misinterpreted by decision makers, including Congress and the Office of Management and Budget.
GSA, Interior, and DOE officials reported a wide range of challenges in acquiring , managing , and disposing of warehouse space, for example:
Storage specifications related to the materials being stored, such as humidity controls for paper documents, can pose challenges acquiring space.
Aging and historical facilities can be difficult to manage because they require costly maintenance or may no longer meet agencies' storage requirements.
Agencies are required to address contamination or environmental concerns when disposing of warehouses—for example through sale or demolition—which can be expensive and time consuming. Disposing of warehouses in remote or secured areas can be particularly challenging.
section_title: What GAO Recommends
paragraphs: GAO recommends that GSA take actions to (1) enhance transparency of the FRPP data, (2) develop and implement a strategy to prioritize and plan for warehouse space, and (3) develop a strategy for its government-wide policy role in relation to warehouses. GSA generally agreed with the recommendations.

section_title: Letter
paragraphs: Warehouses are a part of the federal government’s vast and diverse real  property portfolio, which GAO has identified as a high-risk area due to the  long-standing problems in managing federal real property. Federal real  property management is on GAO’s high risk list due to overreliance on  leasing, the presence of unneeded and underutilized facilities, and  security challenges at federal facilities. In 2013, federal civilian agencies  reported that they occupy approximately 19,000 warehouses consisting of  approximately 90-million square feet of space worldwide.
You asked us to review the management of federal civilian agency  warehouses. This report examines: (1) available information on the  characteristics of federal warehouses held or leased by civilian agencies  in terms of size, location, utilization, and purpose; (2) the challenges  selected civilian agencies report in acquiring, managing, and disposing of  warehouse space; and (3) the extent to which GSA has fulfilled its federal  real property leadership role with respect to warehouses.
To address these objectives, we obtained and analyzed Federal Real  Property Profile (FRPP) summary data submissions from fiscal year  2013, the most recent data available for warehouses owned and leased  by the federal government. We identified three real property-holding  agencies for our review, the General Services Administration (GSA), the  Department of Energy (DOE), and the Department of the Interior  (Interior). We chose GSA, DOE, and Interior because these were the  three largest agencies in terms of total warehouse square footage of all  civilian real property agencies that are required to submit data for the  FRPP, and accounted for over one half of the warehouse square footage  reported by civilian agencies.
To determine what is known about federal warehouses, we obtained and  analyzed real property data from FRPP, DOE’s Facilities Information  Management System (FIMS) and Interior’s Financial and Business  Management System (FBMS) for fiscal year 2013. We also reviewed  Federal Real Property Council (FRPC) guidance and other documents  related to the agencies’ real property data and the FRPP database.  According to our conversations with agency officials and our review of  FRPP, FIMS, and FBMS we believe that the data contained in these  databases are sufficiently reliable for the purposes of this report.
To gather detailed examples of warehouse size, location, utilization and  purpose, we selected a nonprobability sample of owned and leased  buildings for each agency that were listed as active, inactive, utilized, and  unutilized, and visited 30 warehouses clustered around four cities:  Washington, D.C.; Fort Worth, Texas; Denver, Colorado; and Livermore,  California. This strategy afforded both geographic diversity and balance  among our selected agencies while also accommodating time and  resource constraints. Because this is a nonprobability sample,  observations made at these site visits do not support generalizations  about other properties described in the FRPP database or about the  characteristics or limitations of other agencies’ real property data. Rather  the observations made during the site visits provided specific, detailed  examples of issues that were described in general terms by agency  officials regarding the characteristics of warehouses and challenges the  officials face in acquiring, managing, and disposing of warehouse space.
To determine the extent to which GSA fulfilled its federal real property  leadership role with respect to warehouses, we analyzed GSA’s  acquisition, management, and disposition policies and practices and  compared them with (1) Office of Management and Budget’s (OMB)  Capital Programming Guide and (2) GAO’s Executive Guide: Leading  Practices in Capital Decision-Making, and we interviewed headquarters  and regional officials about warehouse acquisition, management, and  disposal.
We conducted this performance audit from November 2013 to November  2014 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: Background
paragraphs: The federal government’s real property portfolio is vast and diverse and  includes about 400,000 buildings that are located throughout the country  and are held or leased by different federal agencies, both civilian and  defense. In addition to warehouses, it includes office buildings,  courthouses, laboratories, land ports-of-entry, and housing, among other  assets. To promote efficient and economical use of federal government  real property, in 2004, the President issued Executive Order 13327  establishing the FRPC, which is composed of senior federal real property  managers and representatives from the Office of Management and  Budget (OMB) and GSA, among others. The executive order required  GSA, in consultation with the FRPC, 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. To meet  this requirement, GSA established the FRPP and provides guidance to  agencies about how to annually report real property data under the  custody and control of executive branch agencies. FRPP data can be  used by government decision makers, including Congress, OMB, and  agencies, to understand the nature, use, and the extent of federal real  property assets.
According to FRPC guidance, warehouses are “buildings used for  storage, such as ammunition storage, covered sheds, and buildings  primarily used for storage of vehicles or materials.” This can include a  wide range of buildings’ types and sizes that are used for both long-term  and temporary storage purposes. For example, the federal government  owns civilian warehouses (later referred to as warehouse space) ranging  from large buildings covering hundreds of thousands of square feet used  to store a wide variety of items, including official government records and  research equipment to shed-like buildings for storage of such things as  grounds-keeping equipment. The government also leases warehouse  space from the private sector. Such space is used to store a variety of  items including, for example, historical artifacts and items left in tribute at  the Vietnam War Memorial and maintenance items for other federal  buildings.
According to the FRPC, real property assets must be categorized based  on the predominant or greatest use of the real property asset. Buildings  used primarily for storage purposes are classified as warehouses even  though large portions of them may be used for an office or research. For  example, the federal government owns a warehouse in Lakewood,  Colorado, which according to FRPP data is almost 700,000 square feet;  however, according to local officials over, 100,000 square feet of the  building is actually office space. In addition there may be fluctuations  across asset classes from year to year when buildings’ space is  reconfigured and reclassified. Further, the FRPP data identifies a single  using agency for a building based on the largest share of occupied space  while other agencies may also occupy space in the same building.
Buildings used predominantly as warehouses are one of the two real  property classes (the other being office space) identified in the Freeze the  Footprint policy issued by OMB. Specifically, in June 2010, the President  directed agencies to achieve $3 billion in total real property cost savings  by the end of fiscal year 2012 through a number of measures, including  disposing of excess real property and reducing leasing through  consolidations and increased space utilization. In May 2012, OMB  issued a memorandum directing agencies to not increase the size of their  civilian real-estate inventory, stating that increases in an agency’s total  square footage of civilian property must be offset through consolidation,  colocation, or disposal of space from the inventory of that agency. In  March 2013, OMB issued a memorandum establishing implementation  procedures for the Freeze the Footprint policy. This memorandum  clarified that agencies were not to increase the total square footage of  their domestic office and warehouse inventory compared to a fiscal year  2012 baseline.
GSA has key leadership responsibilities related to real property  management for the federal government.
First, GSA acquires, manages, and disposes real property on behalf  of agencies, a function that is commonly referred to as the landlord  role. This function is performed by GSA’s Public Buildings Service,  and in doing so, GSA has an inventory of about 9,000 government- owned or -leased facilities. GSA is responsible for managing the life  cycle of federally owned assets, including eventually disposing of  such properties, and entering into, renewing, and terminating  contracts for leased properties.
Second, in a government-wide policy role, GSA sets real property  management policy for the federal government as a whole. The Office  of Government-wide Policy (OGP) is tasked, among other things, to  identify, evaluate, and promote best practices to improve efficiency of  management processes. In this policy role, GSA also supports the  FRPC by providing oversight guidance, publishing performance  measures, and maintaining the FRPP database. Additionally, the  Freeze the Footprint policy assigns GSA leadership responsibilities;  directing GSA to consult with other agencies on promoting full  implementation of the policy, including how to use technology and  space management to consolidate, increase occupancy rates in  facilities, and eliminate lease arrangements that are not cost or space  effective.
We stated in the February 2013 update to the High-Risk Series that  although some progress had been made, the government continued to  lack consistent, accurate, and useful data that could support strategic  decision making about federal real property. Internal control standards  for federal executive-branch agencies require that agencies have  relevant, reliable, and timely information for decision-making and  external-reporting purposes. We have also identified concerns with  GSA’s capital planning, high-value leases, and FRPP data quality.  Specifically, in 2012 we found that GSA’s use of information to make  capital investment decisions conforms to some leading practices  identified in GAO’s Executive Guide on Leading Practices in Capital  Decision Making and OMB’s Capital Programming Guide, but GSA  lacks a transparent process for prioritizing projects and a comprehensive  long-term capital plan that fully aligns with leading practices. These  guides also identify leading practices in capital decision making including:  needs assessment, alternatives evaluation, project prioritization, and  long-term capital planning. In another 2012 report, we raised concerns  that the FRPP is not a useful tool for describing the nature, use, and  extent of excess and underutilized federal real property. For example,  FRPC had not ensured that key data elements—including buildings’  utilization, condition, annual operating costs, mission dependency, and  value—were defined and reported consistently and accurately. Lastly, in  a 2013 report we found that overreliance on costly leasing has been a  concern, and we found that GSA has not systematically prioritized high  value leases that would be most beneficial to move to federally owned  solutions, and it has not incorporated space needs that are the highest  priority for ownership investment into a long-term capital plan. As a  result of these reports, we made several recommendations to address  these issues, which we discuss later in this report.
section_title: Warehouse Inventory Is Vast and Diverse, but Data in the Federal Real Property Database Are Not Consistent or Transparent
subsections: section_title: GSA, Interior, and DOE Hold or Lease Over Half of Civilian Warehouse Space Owned or Leased by the Federal Government
paragraphs: According to FRPP data, in fiscal year 2013, three agencies held or  leased most of the civilian warehouse space either owned or leased by  the federal government: GSA, Interior, and DOE. Of the approximate 90- million square feet of warehouse space occupied by civilian agencies,  GSA accounted for about 29-million square feet, Interior for about 15- million square feet, and DOE for about 11-million square feet. (See table  1.) Cumulatively, these three agencies held or leased about 63 percent of  total civilian warehouse space. Interior had the most warehouses among  civilian agencies by far.
Of about 19,000 warehouses held or leased by all civilian agencies, the  majority—about 18,000 warehouses covering about 68-million square feet  of warehouse space—were government-owned. In addition, civilian  agencies leased about 1,000 warehouses covering about 24-million  square feet of warehouse space.
Civilian warehouses vary in size, ranging from very small—for example, a  16-square foot fire hose shed used by Interior in the Shenandoah  National Park—to very large storage facilities, such as a vast GSA  warehouse of about 1 million square feet in Burlington, New Jersey. This  warehouse serves as a distribution center for GSA’s Federal Acquisition  Service.
section_title: GSA, DOE, and Interior Have Varied Inventories Based on Size and Location of Warehouses GSA-Held or Leased Warehouse Inventory
paragraphs: GSA, Interior, and DOE’s inventories of warehouses are made up of  warehouses of diverse sizes, locations, and purposes.
According to the fiscal year 2013 FRPP data, GSA held or leased 600  warehouses, ranging from 40 to over 1 million square feet. These  warehouses were occupied by GSA or other federal agencies, as GSA  provides other agencies with warehouse space from its government- owned inventory as well as through leases with private lessors. Civilian  agencies used over 29 million square feet of GSA-held or leased  warehouse space, with GSA itself occupying the largest share—7.3  million square feet. (See fig. 1.)
GSA, in its role as the government’s landlord, is responsible not only for  helping federal agencies acquire real property, including warehouses, but  also for helping agencies to dispose of real property in their custody and  control. Thus GSA acts as a disposal agent, not only for its own inventory,  but also for other federal agencies that declare their assets excess. As  such, in fiscal year 2013, a portion of GSA’s warehouse inventory—40  warehouses totaling 3.2-million square feet—was comprised of excess  warehouses that GSA was in the process of disposing. Excess  warehouses and challenges associated with their disposal are discussed  in greater detail later in this report.
Unlike most other agencies, in fiscal year 2013, the GSA-reported  inventory of warehouse space for civilian agencies consisted  predominantly of warehouses leased from private lessors: 434  warehouses covering 15.5-million square feet. The annual rent for these  warehouses totaled about $170 million. Warehouses leased by GSA and  challenges associated with them are discussed later in this report.
According to GSA headquarters officials, the agency does not collect data  on what is being stored in the warehouses used by GSA and other  agencies. GSA is not required to collect storage information; however, in  our discussions with regional officials, they were able to tell us how  warehouses were being used on a case-by-case basis. For example, in  addition to excess warehouses in GSA’s own inventory, GSA warehouses  were used for operations and maintenance purposes by the agency’s field  offices as well as for storing and distributing supplies in support of federal  acquisition functions, among other things. Although FRPP data cannot  provide information on how other agencies use their warehouses, GSA  headquarters officials told us that the installation-name descriptor in  FRPP—indicating warehouses used to store federal records, equipment,  or as garages or hangars—offers some insight.
subsections: section_title: Interior-Held or Leased Warehouse Inventory
paragraphs: In fiscal year 2013, Interior held or leased about 10,000 warehouses,  ranging from under 10 to over 400,000 square feet, scattered across the  country in national parks, wildlife refuges, and urban areas. According to  Interior officials, its warehouse inventory supports and reflects the  agency’s mission to protect and manage the nation’s natural resources  and cultural heritage. Interior warehouses are predominantly government  owned.
According to Interior’s FBMS data, most Interior warehouses are used for  storage of equipment and vehicles as well as shed outbuildings where  seed and other maintenance supplies are stored. (See fig. 2.)
Additionally, Interior-held or leased warehouses include historic buildings,  such as at Fort Vancouver, Washington, which are not currently utilized  for storage purposes, but are categorized as warehouses based on the  historic functional use that is exhibited for the visiting public.
Interior has also added to its portfolio of warehouses through its  occupancy agreements with GSA, and this inventory is reflected in the  FRPP for GSA-held or leased properties. In fiscal year 2013, through  GSA, Interior used 107 warehouses, covering about 1.7-million square  feet. (See fig. 1.) Based on our site visits, these warehouses support a  wide variety of Interior storage needs, including storage requiring special- temperature and air-quality conditions. For example, U.S. Geological  Survey is using portions of a large industrial warehouse in Lakewood,  Colorado, for fossils, rock core, maps, and records storage purposes as  well as to store samples of ice core from Antarctica and Greenland that  require special temperature controls. The ice core samples are located  inside a separate, smaller storage facility within the larger warehouse.  The separate facility includes two temperature-controlled chambers; one  used for ice core storage and the other for a work area to cut ice core into  smaller samples for scientific research. (See fig. 3.)
In fiscal year 2013, DOE held or leased about 2,200 warehouses, ranging  from about 10 to almost 400,000 square feet, located primarily at DOE  sites. DOE’s inventory is predominantly government-owned warehouses  located within the secure perimeters of its sites, such as national  laboratories and other research and storage facilities. In support of DOE’s  energy research and nuclear safety and security mission, a portion of  DOE warehouses is used for storage of nuclear as well as other materials  that require special storage conditions. Specifically, based on DOE’s  FIMS data for fiscal year 2013, out of 11.5-million square feet of  warehouse space, 4.2-million square feet were used for storage of  nuclear, hazardous, combustible, and other materials requiring special  storage conditions. Additionally, 6.9-million square feet of warehouse  space were used for general storage and programmatic general-storage  purposes, which include items such as laboratory equipment and  research testing materials. The remaining approximate 400,000 square  feet were used for other storage purposes. For example, one DOE site  we visited used a warehouse for storage of wind-energy-testing  equipment, including 50-foot blades for testing wind turbines.
section_title: Consistency and Transparency Issues Affect Warehouse Data in the Federal Real Property Profile
paragraphs: In our previous assessment of the FRPP, we found that the FRPP’s data  can be used in a general sense to track assets—such as their location— to provide an overall perspective on agencies’ asset portfolios (as  presented above). However, our previous findings also raised concerns  about the quality of the FRPP data. In our 2012 report, we found that  agencies were allowed to use their own definitions for some FRPP data  elements, a practice that undermined the quality of the data when  amassed in a single database. More specifically, we raised concerns that  the FRPC has not ensured that key data elements—including buildings’  utilization, condition, annual operating costs, mission dependency, and  value—are defined and reported consistently and accurately. The FRPC  has not followed sound data-collection practices, and agencies were able  to submit data that were inconsistent and therefore not useful as a  measure for comparing performance inside and outside the federal  government. We recommended that GSA take specific actions to improve  the FRPP data, including that all data collection requirements are clearly  defined and that data reported to the database are consistent from  agency to agency. GSA developed an action plan for implementing our  recommendations. We are in the process of determining whether the  actions in this plan, if fully implemented, will improve FRPP’s consistency  and reliability. We plan to report our results as part of our 2015 high risk  update.
Similarly, in this review, we found inconsistencies in how GSA interprets  and agencies report certain data elements for its warehouse inventory.
Utilization: We found that agencies inconsistently interpreted FRPP’s  definition of utilization for warehouses making it difficult for decision  makers to compare utilization data across agencies and government- wide. The utilization data element is meant to track the extent that an  asset is used. Prior to fiscal year 2013, utilization was defined as a  percentage of occupied space; thus, a space that was 75 percent  occupied and 25 percent vacant had utilization rate of 75 percent. In fiscal  year 2013, the FRPC changed the definition of utilization from a  percentage value to three options—utilized, underutilized, and  unutilized, consistent with regulatory definitions implementing the  McKinney-Vento Act. FRPC guidance specified the change to the data  element but not how agencies should interpret these definitions or how  the percentage values agencies previously submitted (and may still track  in their internal databases) should be translated into the three new  utilization options. According to GSA headquarters officials, agencies are  expected to interpret utilization options based on regulatory definitions  and in relation to their asset portfolios and data collection systems. DOE  headquarters officials told us that they developed their own policy that  converts percentage utilization scores in FIMS to utilized, underutilized,  and unutilized options in the FRPP. For example, for fiscal year 2013, all  DOE assets with utilization score of 40 percent and above are considered  utilized; scores from 2 to 39 percent reflect underutilized assets; and  assets that scored 1 percent or lower are considered unutilized. Interior’s  FBMS system had the same three utilization options as the FRPC  guidance, but also included additional utilization options, such as  overutilized.
In addition to other agencies’ using this data element inconsistently, GSA  interprets FRPP utilization definitions in a way that leads to GSA’s  identifying nearly all of its warehouses as utilized. GSA does not identify  any of its civilian warehouses as underutilized, only using two of the three  utilization data options—utilized and unutilized. Specifically, in fiscal year  2013, of the 600 civilian GSA-held warehouses, 537 warehouses were  identified as utilized, 40 as unutilized for warehouses in excess status,  and 23 warehouses did not have a utilization code because they were  listed in disposed status.
To gain further insights into GSA’s warehouse space utilization and what  space may potentially be vacant and available for federal tenants, we  examined GSA’s monthly vacancy report, which GSA uses to track  vacant space for lease to agencies. We found that among the  warehouses listed in the FRPP as utilized, some were vacant for long  periods of time. During our site visits, we identified 3 GSA warehouses  totaling almost 200,000 square feet that have been vacant 1, 5, and 10  years and were listed as utilized in the fiscal year 2013 FRPP. We also  found that GSA’s monthly vacancy report does not collect information on  vacancy duration, and therefore there is no way of knowing how many  warehouses listed as utilized have long-term vacancies. Additionally, the  May 2014 vacancy report provided by GSA did not include 2 of the  warehouses included in our site visits, one of which has been vacant  since at least 2004 and the other since 2009. (See fig. 4.) As such, while  GSA’s interpretation of utilization in the FRPP may be explained given its  government landlord role, its warehouse data in the FRPP—for  warehouses GSA uses and those that it provides to tenant agencies— could be misinterpreted by decision makers, including Congress, OMB,  and agencies, to mean that nearly all GSA warehouse space is being  used for storage. This raises questions about the transparency and  usefulness of GSA’s data and creates potential inconsistencies with  government-wide data from other agencies in the FRPP.
Status: Similarly, GSA used the status data element in such a way that  nearly all of its warehouses were identified as active. The FRPP guidance  document for fiscal year 2013 states that the status data element reflects  the predominant physical/operational status of the asset, and active  status refers to an asset that is currently needed to support the agency’s  mission or function. There are several options in the FRPP to describe  status; however, GSA interprets the FRPP status definition in such a  way that the agency is not using the inactive option, which, according to  the FRPP guidance, refers to an asset that is not currently needed to  support the agency’s mission or function but will have a planned need in  the future. In the fiscal year 2013 FRPP, all GSA warehouses, unless  identified as “disposed” or “report of excess accepted,” meaning that the  property is undergoing disposal process, were listed as active or currently  needed. (For example, see fig. 4.)
According to GSA headquarters officials, they interpret the FRPP  definitions to mean that all assets, including warehouses, are active  because they may be needed to provide space to federal agencies in  fulfilling GSA’s mission as the government’s landlord. According to fiscal  year 2013 FRPP data, about 90 percent of warehouses in GSA’s  inventory were listed as active. These same warehouses were also listed  as utilized. However, there is no discernable way to determine from the  FRPP data whether these warehouses are active and utilized beyond  GSA’s interpretation of these data elements, which, in its view, are  particular to its mission. The Government Accountability and  Transparency Board, established in 2011 to provide strategic direction for  enhancing transparency of federal spending data, determined that  consistent data promote more accurate and comparable data for  improved reporting and decision-making. However, GSA has not  clarified its interpretation and practice in the FRPP annual reports or its  guidance documents, thus decision makers reviewing GSA’s FRPP data  would assume that the vast number of warehouses listed as utilized and  active are needed and being used, when in fact, some may be vacant for  extended periods of time or not useful to other agencies. Thus, GSA’s  interpretation of utilization and status data elements for its warehouse  inventory affects the accuracy and clarity of the data, limiting the  transparency of warehouse inventory for the largest civilian holder of  warehouse space and for the government as a whole. As a result of  GSA’s interpretations, Congress and other decision makers lack accurate  and transparent information that may be needed to help the federal  government reduce its unused warehouse inventory.
section_title: Selected Agencies Report a Wide Range of Challenges in Acquiring, Managing, and Disposing of Warehouse Space
subsections: section_title: Challenges Acquiring Warehouse Space: Storage Specifications and Funding Constraints Increase Reliance on Leased Space
paragraphs: GSA, in its landlord role, is responsible for acquiring warehouses on  behalf of federal agencies and works with those agencies to identify their  storage needs. According to GSA regional and headquarters officials, an  agency’s warehouse needs depend largely on what it plans on storing at  a particular location, and a key challenge is to match storage  specifications with the available inventory. As such, one of the first factors  GSA considers as it begins to identify warehouse space, is what the  tenant agency plans on storing and whether special storage conditions  are required. GSA regional officials told us that, for example, paper  products such as official records, require humidity controls to prevent  moisture from destroying the documents. They noted that if these paper  records contain secure information, the warehouse needs to have  security features not required for other warehouses. The length of time  paper records must be retained is determined by the General Records  Schedules (GRS), which are issued by the Archivist of the United States,  and guide disposal of records, common to several or all agencies of the  federal government. GSA regional officials also noted that storage of  artwork in warehouses requires certain climate controls and security  features. GSA regional and headquarters officials noted that acquiring  leased warehouse space begins with an assessment of what the agency  plans on storing since that determines warehouse requirements. The  officials told us that GSA released internal guidance in May 2014, which  is intended, in part, to make sure leasing specialists are collecting the  appropriate information from agencies about their storage needs in order  to acquire warehouse space at the best deal along with supplying the  agencies what they need.
Headquarters officials with GSA, Interior, and DOE told us the agencies  face challenges acquiring warehouse space through construction or  purchasing because of funding constraints, and thus rely on warehouses  already owned by the government or leased from the private sector.  According to fiscal year 2013 FRPP data, the federal government leased  about 24million square feet of warehouse space for civilian use, a  substantial increase from the approximately 19-million square feet of  leased warehouse space for both civilian and defense agencies reported  in a 1999 GSA report on government warehouse, storage, and  distribution functions. We have previously found that overreliance on  costly leasing where ownership would be more economical is one reason  that federal real property has remained on GAO’s high risk list. Managing  federal real property has been designated as high risk since 2003, and in  our 2013 High Risk Series: An Update,  we found that the government  continues to rely heavily on leasing and that the government often leases  space from private landlords in the same real estate market where it also  owns underutilized real property. This practice is inefficient, resulting in  millions of dollars of additional costs to federal agencies.
Additionally, GSA headquarters and regional officials told us that some  agencies have highly specialized requirements for warehouses and thus  generally rely on warehouse space acquired from the private sector. In  some cases, agencies have been leasing warehouse space from the  private sector for extended periods of time. For example, we visited a  warehouse GSA has leased from the private sector for approximately 25  years and currently uses to store operating equipment such as electrical  transformers, fire alarms, and tools. This warehouse, the lease for which  does not expire until 2020, also serves as a continuity-of-operations  center. We also visited another warehouse that has been leased from the  private sector for approximately 14 years where the National Park Service  (NPS) stores a variety of artifacts including statues and film negatives  requiring specialized storage conditions. In these examples, GSA and  NPS regional officials acknowledged that the agencies’ storage needs  were unlikely to change in the future and that they did not know of any  plans to determine whether the government should attempt to purchase  the warehouses or to move to government-owned space.
section_title: Challenges Managing Warehouse Space: Aging and Historic Assets, Location, and Vacancies
paragraphs: Officials at the agencies we reviewed stated that aging infrastructure, and  issues regarding historic preservation and maintenance could result in  additional costs and more time needed for restoration, repair, or disposal.  According to GSA, Interior, and DOE officials, some government-owned  warehouses were built in the 1940’s and 1950’s and the buildings’  conditions have deteriorated, which can make them costly to maintain  and repair. For example, we visited warehouses at one site in Fort Worth,  Texas, which, according to GSA officials, were used as temporary  barracks for German prisoners of war during World War II. The officials  told us that some of these buildings have cracked foundations, holes in  the siding, and leaky roofs, and coupled with the outdated design, this  means that repairing or updating them could be prohibitively expensive.  (See fig. 5.) At the time of our site visit, the officials were in the process of  moving the tenant agencies from one of these warehouses to other  government-owned warehouses nearby. Once the building is vacant,  GSA plans to demolish the building and lease the foundation to the  Federal Emergency Management Agency as an area to preposition  emergency response supplies.
Aging buildings can also mean warehouses no longer meet agencies’  storage requirements, which can result in agencies vacating for newer  space. For example, GSA regional officials showed us a warehouse  previously occupied by the National Archives and Records Administration  (NARA) to store official government records. According to GSA officials,  NARA vacated this approximately 150,000 square foot building in 2013  because the building’s humidity controls and roof quality did not meet  NARA’s requirements for storing government records. NARA moved to a  privately owned warehouse that could meet the agency’s requirements.  The government-owned building is currently vacant, and GSA officials  told us they have a potential tenant. GSA is considering remodeling and  turning the building into office space. Given the cost of this potential  project, officials estimated the building would remain vacant for at least 4  years, while GSA conducts feasibility and financial analyses, even if the  potential tenant agency decides to occupy the space.
In addition to the costs associated with aging warehouses, agencies may  also face additional costs dealing with sites that have historic or cultural  value. The National Historic Preservation Act, as amended, requires  agencies to establish a preservation program to identify, evaluate, and  nominate historic federal buildings to the National Register of Historic  Places, and manage those buildings in a manner that considers their  historic character. Listing on the National Register of Historic Places  provides a process for reviewing federal buildings before federal agencies  can demolish or alter the buildings in ways that affect their historic  character. According to Interior and GSA regional officials, historic  preservation requires specialized materials and trades, and historic  properties are traditionally more expensive to repair and maintain than  modern facilities. Additionally, GSA regional officials told us they have  halted disposals at the Denver Federal Center until a final determination  has been made regarding designating the area a historic site. The  officials said that for the two warehouses pictured in figure 6, given their  deteriorating condition, the most cost-effective option for them would be  to dispose of the buildings through demolition. The brick building pictured  in figure 6 below is approximately 500 square feet used for record  storage; if allowed, officials report they will consolidate it into another  larger warehouse being used at the center. The wood-framed structure  pictured in figure 6 below is approximately 1,600 square feet and is  currently vacant. The officials said that these outdated buildings will  remain in GSA’s portfolio until a final determination has been made about  their historical significance, but in the meantime GSA will continue to pay  for maintenance and building security fees.
With regard to location, Interior headquarters officials told us that to  support the remote location of mission needs, buildings, including  warehouses, may be remotely located, and that this determines whether  consolidation is feasible. The officials noted that most field stations  (where warehouses are located) are in remote and rural areas, and are  geographically dispersed, which makes colocation and sharing of facilities  with other federal agencies difficult. The remote location of these  buildings also leads to increased costs for construction, maintenance,  repair, and demolition since it costs more to transport materials and  people to these locations.
With regard to vacancies, when an agency vacates space because it is  changing locations or no longer needs the space, GSA becomes  responsible for the overall cost and maintenance of a vacated space until  another tenant is identified or, if the warehouse is not government owned,  the lease is terminated or the lease’s term expires. As mentioned  previously, NARA moved to a privately owned warehouse, and now GSA  holds a 150,000 square-foot empty warehouse and will be responsible for  it until it finds a new tenant. The space has been vacant for approximately  1 year (see fig. 7). At another warehouse we visited, a U.S. Geological  Survey (USGS) official told us USGS had vacated approximately 55,000  square feet of warehouse space in 2013. While this vacancy reduces the  overall square footage of space held by USGS, GSA now holds an  additional 55,000 square feet of space that it is financially responsible for  until it finds a new tenant agency. According to GSA regional officials,  when a tenant agency vacates privately leased space, GSA is also  responsible for continuing to pay for the space and must decide whether  to continue to do so for the remainder of the lease or to try and buy out  the lease from the landlord.
GSA produces monthly vacancy reports comprised of all owned and  leased active buildings, including warehouses where GSA can assign  space. According to GSA headquarters officials, GSA uses these reports  for several purposes, including monitoring vacancy, researching the  causes of vacancies, identifying assets for potential consolidation, and  prioritizing backfill opportunities. This report includes information on  whether the building is owned by the federal government or leased from  the private sector, the rentable square footage of the building that is not  undergoing construction or renovation, and the total percentage of the  building that is both vacant and available for a federal tenant, among  other items. Officials told us that there are both regional and national  vacancy targets. The national combined target is around 3 percent, 5  percent for government-owned space, and 1.5 percent for leased space.  Based on the May 2014 vacancy report, GSA’s combined vacancy rate  for warehouses was 7 percent. GSA headquarters officials stated that  they monitor monthly vacancy rates, and when they see increasing  vacancy trends, they work with regional officials to identify and address  the cause.
section_title: Challenges Disposing of Warehouse Space: Contamination and Environmental Remediation, Location, and Stakeholder Interests
paragraphs: Environmental requirements can result in additional costs and more time  needed for warehouse disposal. Under the National Environmental Policy  Act, as amended, agencies are required to consider the environmental  impact of their proposed actions, including the disposal of property, and  consider alternatives less damaging to the environment. Landholding  agencies are responsible for supervising decontamination of excess and  surplus real property that has been contaminated with hazardous  materials of any sort. However, required environmental assessments  and remediation of excess or surplus property can be expensive and time  consuming. For example, GSA headquarters officials told us that 40  government-owned warehouses remain in excess status because the  sites are undergoing environmental remediation and are contaminated.  These warehouses have been listed as excess for at least 7 years and as  long as 11 years. According to the GSA headquarters officials, these  warehouses had all been previously held by either the U.S. Army or the  Defense Logistics Agency (DLA) and had been used to store materials for  weapons development. The officials said that the Army and DLA vacated  these properties because the warehouses were obsolete and that in the  areas where the warehouses are located, there was no demand from  other federal agencies for the space. When GSA was unable to find new  tenants for the facilities, GSA began the disposal process.
Until the cleanup is completed, GSA is responsible for the warehouses,  and they remain part of GSA’s inventory. In such cases, GSA relies on  original property-holding agencies to complete environmental  remediation, if necessary, prior to disposal. For example, the Curtis Bay  Depot consists of 11 primary structures and numerous abandoned  warehouses (along with other structures and buildings) on approximately  435 acres of land and was previously used by DLA as a strategic  stockpile and munitions storage. (See fig. 8.) GSA headquarters officials  said many of the buildings at the complex are in an extremely  deteriorated condition and that environmental and military munitions  contamination is expected to be fully remediated sometime in fiscal year  2016.
Agencies efforts to dispose of potentially contaminated sites add time and  costs. According to DOE headquarters officials, contamination issues  affect DOE warehouses since they are often located on or adjacent to  parcels with a history of contamination. Additionally, about 500  warehouses, or 25 percent of the total number of warehouses held by the  agency, store hazardous materials including radioactive or nuclear  substances. These officials told us that warehouses used to store  hazardous materials or located near contaminated sites are unlikely to  receive their full market value through a sale, and  DOE typically disposes  of them through demolition. Interior headquarters and regional officials  also told us that environmental remediation was a major challenge with  disposing of warehouse space since the majority of the portfolio was  constructed when lead and asbestos were commonly used during  construction. Due to funding constraints, remediation and disposal of old  and underutilized assets may be delayed. Both DOE regional and Interior  headquarters officials told us that in many cases the cost of cleanup of  old warehouses outweighs the potential sale or salvage price. Interior  headquarters officials noted that in addition to the challenges related to  managing historic warehouses, Interior faces additional challenges  disposing of historic warehouses. According to the officials, section 106 of  the National Historic Preservation Act, requires agencies to consider the  effects of their undertakings on historic properties, including historic  warehouses which are included in or eligible for inclusion in the National  Register of Historic Places. This process, which involves consultation with  stakeholders, an assessment of the effects of the disposal on the historic  property, and possible mitigation, may also result in more time needed for  warehouse disposal and additional costs.
Locations of some federal properties can make property disposal and  reuse costly or undesirable. DOE headquarters officials reported that the  vast majority of DOE’s warehouses are either 1) located within a secured  perimeter, often on or adjacent to property with a history of contamination,  or 2) have stored hazardous materials or, in some cases both. Officials  said there is “rarely if ever” an opportunity to dispose of unneeded  warehouse space through sale or some other conveyance. Instead, DOE  typically demolishes unneeded warehouses following remediation as  funding becomes available. For example, officials at Lawrence Livermore  National Laboratory told us that one warehouse located within the  secured perimeter has been listed for disposal for 7 years; however, the  building is very low on the site’s priority list for disposal and will likely not  be demolished for another 20 years because it is considered low risk with  no current hazards. Given the warehouse’s location within the secured  perimeter, officials said the only disposal option for this site is demolition.  Likewise, Interior headquarters officials noted that the majority of the  assets (including warehouses) are located on public lands that directly  contribute to bureaus’ missions and cannot be easily divested. Because  of this, the officials said there are a limited number of Interior’s assets  eligible for disposal or sale to a private organization or individual, and  those that are, must undergo environmental remediation (as discussed  above), and then be demolished or salvaged for reuse at another  location. The officials also said that due to the remote locations and cost  of remediation, demolition, and salvage, it is rare that the residual value in  the materials is adequate to attract private interests to perform the  removal of the asset, or to obtain any monetary benefit to the federal  government for the assets.
Stakeholder interests can also result in delays to property disposal or  reuse. GSA works with partner federal agencies, state and local  governments, non-profit organizations, business groups, and citizens  when disposing of owned assets such as warehouses. As such,  stakeholders can have differing views of what should be done with the  property. For example, GSA holds a 33,000-square-foot government- owned warehouse in Washington, D.C., near the Nationals baseball park,  a warehouse that has been vacant since 2009. (See fig. 9.) The area  surrounding this warehouse has increased substantially in value as new  residential and commercial buildings are built. Local stakeholders have  expressed an interest in this site, including a Washington, DC, Advisory  Neighborhood Commission, which has proposed using the property for an  “educational-commercial partnership” to create a new institute for culinary  business education. As of May 2014, GSA has not come to a final  determination regarding the future of this warehouse, but could  presumably benefit from the appreciation of land values in this area.
The challenges described above are similar to those we have previously  found in relation to all excess and underutilized real property, not solely  warehouses. GSA could better position itself to address these long- standing challenges by following leading practices in capital decision  making. We have previously found that leading practices in capital  decision making, which are practices that help inform strategic and long- term thinking about capital assets, can help address challenges agencies  face with regard to their capital asset portfolios. These practices, and  their relevance to GSA’s role as a leader in managing federal real  property, are discussed in the next section of this report.
section_title: GSA Has Taken Some Steps to Fulfill Its Leadership Role with Respect to Warehouses, but Its Approach Lacks a Strategic Focus
subsections: section_title: As a Government Landlord, GSA Has Taken Steps to Fulfill Its Leadership Role in Managing Warehouses
paragraphs: As mentioned above, as a landlord, GSA acquires, manages, and  disposes real property on behalf of agencies. Consistent with GSA’s  landlord role, which is performed primarily by GSA’s Public Buildings  Service (PBS), GSA has taken steps to help reduce agencies’ warehouse  real property footprint and has tried to reduce costs by moving tenants  from leased warehouses into government-owned space. GSA has done  so when specific situations and opportunities presented themselves. For  example, in one region where GSA manages a federal center with  government-owned warehouses, GSA has been helping agencies move  to the federal center as their leases with private lessors expire. In one  such case, officials from Interior’s Fish and Wildlife Service relocated their  storage for ecological services field work and realty program from a  leased warehouse to two smaller warehouses: one government-owned at  the federal center and another one elsewhere, anticipating about $30,000  in annual savings. GSA has also reduced the federal government’s  warehouse footprint by helping agencies consolidate their existing space.  For example, GSA officials told us they helped a tenant agency reduce its  warehouse space from 90,000 square feet to 60,000 square feet by  consolidating space for their different divisions rather than each division’s  having its own space.
Further, GSA has taken steps to assist agencies in the acquisition of  warehouse space. For example, in May 2014, GSA’s Office of Leasing  issued internal guidance on leasing warehouses from private lessors  using a lease model that is specifically designed to accommodate the  special characteristics of warehouse space. According to this guidance,  the different characteristics of warehouse space require a distinct  approach to its procurement, including acquisition strategy, evaluation of  offers, pricing, and paying for tenant improvements. The guidance also  provided new flexibility to GSA regional officials to seek space and  evaluate price by volume rather than strictly by square footage area,  which would maximize value to the government when storage height is a  factor. Further, GSA provided guidance on space configurations, loading  docks, and vehicle accommodation as well as calculations for determining  space by volume.
In its role as a landlord and helping agencies to acquire, manage, and  dispose of real property, GSA is expected to follow capital-planning  leading practices. Making informed capital investment decisions requires  full information about an agency’s current and long-term needs,  alternative courses of action, and how potential projects compare  amongst each other. We identified leading practices for using information  to make capital investment decisions primarily based on GAO’s Executive  Guide and OMB’s Capital Programming Guide. Leading practices in  capital decision making include: (1) conducting a needs assessment, (2)  conducting an alternatives evaluation, (3) developing a project  prioritization, and (4) creating a long-term capital plan. (See fig. 10.)
GSA has applied the first two capital planning leading practices—needs  assessment and alternatives evaluation—to help agencies acquire  warehouses.
Needs assessment. As described previously, GSA officials told us they  typically meet agencies’ warehouse space needs by identifying storage  specifications for warehouse contents. GSA regional officials told us that  when looking to provide warehouse space, GSA works with customer  agencies to understand their missions and assess their needs. Guided by  agencies’ specific storage needs, GSA works with each agency to meet  their needs on a case-by-case or asset-by-asset basis.
Alternatives evaluation. Next, GSA evaluates alternatives by seeking out  available government-owned warehouse space first, given its lower cost  to the government and ease of occupancy. If government-owned space is  not available within the tenant-specified area, GSA considers occupying  vacant space currently leased from private lessors, and if such suitable  space is not available, then GSA considers leasing new space from a  private lessor. GSA regional officials told us that they also conduct  feasibility studies—to help decision makers evaluate project  alternatives—when warehouses or other assets are large and costly. For  example, GSA officials told us that they were embarking on a feasibility  study for the previously mentioned 150,000-square foot warehouse in  Lakewood, Colorado, formerly occupied by NARA to determine the  feasibility of converting it into office space.
section_title: GSA’s Approach to Managing Its Warehouses Lacks Priorities and a Long-term Strategy
paragraphs: In its landlord role, GSA has taken steps to apply capital-planning  practices related to needs assessment and alternatives evaluation;  however, GSA has done this on an asset-by-asset basis and has not  prioritized warehouses or developed a long-term plan. GSA has about a  third of all warehouse space among civilian agencies, totaling about 29- million square feet. As such, managing warehouses based on priorities  and identifying steps that benefit tenant agencies and taxpayers would  better position GSA to fulfill its role as a steward of these assets and  partner in helping agencies achieve their missions. It would also help  GSA begin to overcome what are often seen as intractable challenges,  such as a reliance on costly, long-term leasing, or taking action to dispose  of aging and obsolete assets.
Prioritization, for example, could help GSA address obsolete warehouses  in its inventory. As mentioned above, government-owned warehouse  space in the GSA inventory is aging and becoming obsolete. This trend is  likely to push even more warehouses into excess status and in need of  disposal. GSA could prioritize warehouses to determine those in most  critical need of an alternative plan, such as disposal. This would allow  GSA to be proactive in managing its warehouse inventory. Furthermore,  GSA has relied on leasing to support long-term mission needs. We have  previously found that building ownership often costs less than leasing,  especially for long-term space needs. GSA officials acknowledged that  for long-term warehouse needs, it would be more economical for the  government to own an asset, but given current funding constraints, GSA  tries to lease warehouse space in markets with low rental rates rather  than with high rental rates, such as New York City or Washington, D.C.  By analyzing and prioritizing long-term leases for conversion to  ownership, GSA could be better positioned to make the case for funding  that could help reduce costs for the government in the long term. In 2013,  we similarly determined that GSA has not systematically prioritized which  high-value leases would be most beneficial to move to federally owned  solutions and recommended that GSA prioritize its high-value leases for  ownership for its entire real property inventory.recommendation and has taken some steps to address it. As with its high- value lease portfolio, GSA has not conducted such an analysis or  prioritization of its unique and varied warehouse inventory, prioritization  that could help GSA more efficiently address the storage needs of the  federal government.
Long-term capital-planning principles applied to the warehouse portion of  GSA’s portfolio could also help address challenges, as well as help GSA  and the federal agencies better plan for the future. A long-term capital  plan encourages agencies to weigh and balance the need to maintain  existing capital assets against the demand for new assets. By thinking  long term rather than simply from year to year, an agency can make fully  informed choices about long-term investment needs and maximize its use  of available funding over time. Previously, in 2012, we found that GSA  lacked a comprehensive long-term capital plan and recommended that  GSA adapt leading practices in capital decision making by developing a  5-year capital plan. GSA agreed with this recommendation, but has not  yet developed a 5-year capital plan. As part of implementing this  recommendation, assessing the long-term warehouse needs of its  tenants would be beneficial, given the amount of warehouse space GSA  holds and the challenges it faces with this portion of its inventory. A  focused assessment of GSA’s total warehouse portfolio could include an  analysis of GSA and its tenants’ needs for storage space by region;  prioritization of long-term leases for ownership; and a determination of a  desired combination of owned and leased warehouse inventory, its type,  and regional makeup, over the long term.
section_title: GSA’s Government-Wide Policy Efforts Are Not Focused on Warehouses
paragraphs: In addition to capital planning for warehouses as it relates to GSA’s  landlord role, GSA is uniquely positioned to provide leadership on  warehouse issues given its government-wide policy role, in particular, its  role to promote best practices to improve efficiency of management  processes. GSA’s Office of Government-wide Policy (OGP) is the primary  unit that performs such a role. Since the early 1990s, we have  emphasized that GSA’s role was envisioned to be that of a central policy  agency that provides strategic direction to the federal government, not  only a service delivery organization helping agencies fulfill space needs  on an asset-by-asset basis. Additionally, leveraging the experiences  gained in its role as a landlord, GSA is positioned to help federal agencies  that manage their own warehouse space by promoting policy, developing  guidance, and sharing lessons learned. For example, GSA’s internal  leasing guidance issued in May 2014 could potentially have government- wide application. While government-wide warehouse portfolio is vast, only  16 civilian agencies hold warehouses for civilian storage needs. In  particular, agencies that have large warehouse inventories, such as  Interior and DOE, could benefit from GSA’s government landlord  experience in applying capital planning leading practices to address some  of the challenges mentioned above.
To fulfill its government-wide policy role under the Freeze the Footprint  policy, which calls on GSA to consult other agencies on more effective  practices and efficient use of space, GSA has identified a number of  innovative practices for making more efficient use of office space, but has  not provided similar guidance to other federal agencies for efficient use of  warehouse space. The Freeze the Footprint policy applies to both office  and warehouse space. According to GSA headquarters officials, they  have focused mainly on office space, and not warehouses, because real  property cost savings mostly come from office space.
A 1999 GSA report on warehouses in the federal government exemplified  GSA’s government-wide leadership role and discussed opportunities for  greater efficiencies. GSA conducted an extensive review of civilian and  defense warehouses and issued a report titled Strategic Storage Needs  of the Federal Government. In this report, GSA addressed some of the  key issues that are still relevant today, such as warehouse design and  technology, and looked at the issue from a government-wide perspective,  such as highlighting opportunities for space sharing among agencies. The  report included technical aspects, covering infrastructure attributes such  as floor load, roofing, and lighting, as well as policy aspects such as  personal property and supply management. The report also made  recommendations, emphasizing the nexus between real and personal  property as well as the need for efficient space utilization. However, GSA  officials told us that since the report was issued in 1999, they were unable  to determine whether the report’s recommendations had been  implemented or had a specific impact on any developments in the  warehousing area.
In the last 15 years, the government’s practices and business processes  have advanced, for example, incorporating e-government and direct  delivery solutions. Further, the overall federal fiscal environment has  changed, placing resource constraints on federal agencies to purchase  and store items. In this climate, we believe that agencies that hold  warehouse space would benefit from a strategic approach that not only  reflects current fiscal constraints but also takes advantage of recent  developments in the warehouse area outside government. The private  warehousing industry has grown more sophisticated in recent decades,  particularly with the advent of e-commerce, just-in-time delivery, and  supply-chain management. According to literature on warehouse  management, these developments created pressures for more efficient  utilization of warehouse space. To improve warehouse functions, the  industry has identified some principles, such as benchmarking warehouse  performance and automating warehouse functions, as well as leading  practices in such areas as material handling, inventory control, and  warehouse management systems. Industry experience with warehousing  has also identified ways to maximize warehouse space within an existing  footprint through such methods as warehouse redesign, vertical space  utilization, and narrower aisle widths and pallet racks, among others.  While government’s overall storage needs may be distinct from the  private industry, some of these warehousing industry leading practices for  maximizing space may be applicable to the government.
GSA headquarters officials told us that the agency has not provided a  strategy for efficient use of warehouse space because it has been  primarily focused on office space. Recent developments in the private- warehousing industry along with current fiscal constraints of the federal  government create opportunities for GSA to provide a strategy for more  effective and efficient use of warehouse space government-wide. For  example, as discussed earlier in this report, warehouse specifications and  special conditions are based on the contents that are being stored, thus  GSA could identify broad categories of storage types (e.g., documents,  equipment, historical artifacts) and provide guidance on storage  specifications, best practices, and efficiencies associated with them.  Further, a strategy could encourage agencies to rethink their overall  storage needs, and consolidate and colocate (share space), when  possible. Ultimately, such an effort could contribute to a decrease in the  government-wide warehouse footprint and—by leveraging GSA’s landlord  experience and by defining the type of leadership GSA could provide to  agencies as they asses their warehouse portfolios—strategically address  some of the challenges facing federal agencies.
section_title: Conclusions
paragraphs: The federal government’s vast and diverse civilian warehouse portfolio  presents challenges to agencies—including reliance on costly, long-term  leasing and aging and obsolete warehouses—when acquiring, managing,  and disposing of warehouse space. Accurate and transparent information  is critical to addressing these challenges and making informed capital- asset decisions. GSA manages the FRPP, which was created to provide  information for promoting efficient and economical use of the federal  government’s real property assets. However, GSA’s interpretation of its  mission to provide space to federal agencies results in categorizing nearly  all warehouses in its portfolio as active and utilized even when they are  vacant. As the largest civilian holder of government warehouse space,  this lack of transparency reduces the usefulness not only of GSA’s data  but also of all warehouse portfolio data government-wide. Improved  transparency would help GSA and others make better informed decisions  regarding warehouse space.
In GSA’s leadership role as the government’s landlord and as a policy- setting body for real property management, GSA has taken steps to help  agencies consolidate their warehouse space and reduce their footprint.  GSA has also followed some leading practices in capital- decision making  to fulfill agencies’ warehouse space needs; however, GSA has applied  these practices on a case-by-case, asset-by-asset basis. Thus, it lacks a  strategic approach to prioritize warehouses and make long-term, informed  decisions about government warehouse space. Further, in light of GSA’s  aging warehouse inventory and agencies’ modern-day storage needs,  there is potentially a growing gap between what GSA can provide from  the government’s owned portfolio and what the tenant agencies require.  Because the agency lacks a comprehensive 5-year capital plan, as well  as a strategy focused on its warehouse portfolio, GSA may have limited  ability to address this potentially growing gap as well as the above- mentioned challenges facing GSA’s warehouse portfolio. Such a strategy  would enable GSA and tenant agencies to prioritize their needs and take  a long-term view of the warehouse inventory to support better informed  decisions.
Similarly, in its policy role, GSA has developed initiatives and models to  enhance the efficiency of office space; however, it has not done so for  warehouses. As agencies work to reduce their footprint, this could be an  ideal time to develop a strategic approach that would capitalize on  broader trends, economies of scale, leading practices, and private  industry experience in the warehouse area. GSA lacks a government- wide strategy to promote effective and efficient use of government  warehouse space, and therefore each agency must address its storage  needs individually and may miss opportunities for consolidation or  colocation. Developing and implementing a government-wide strategy  could help the federal government reduce its footprint while also  addressing some of the challenges facing federal agencies.
section_title: Recommendations for Executive Action
paragraphs: To enhance the transparency of the FRPP data and help GSA make  more informed decisions regarding the planning, effective and efficient  management, and disposal of civilian warehouse assets, we recommend  that the Administrator of GSA take the following three actions:  In GSA’s FRPP documents, GSA should make transparent how its  mission, which is to provide space to federal agencies, affects the  reporting of its real property portfolio as it relates to utilization and  status data elements.  In GSA’s landlord role, which is performed by the Public Buildings  Service, and as part of its efforts to address our 2012  recommendation to develop and publish a comprehensive 5-year  capital plan, GSA should develop and implement a strategy specific to  warehouses. This strategy should apply capital-planning leading  practices, involving prioritization and long-term planning, to the  warehouse portion of GSA’s portfolio.  In its government-wide policy role, which is performed by Office of  Government-wide Policy, GSA should develop a strategy for its role in  promoting effective and efficient practices in warehouse management  across the federal government, including, but not limited to:  warehouse management guidance that GSA could develop, lessons  learned that GSA could promote, and the type of leadership that GSA  could provide to agencies as they assess their warehouse portfolios.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Administrator of GSA and to the  Secretaries of Energy and the Interior for review and comment. The  Departments of Energy and the Interior did not have comments.
GSA provided written comments on the draft, which are reprinted in  appendix II. GSA agreed with our recommendation that it should make  transparent in its FRPP documents how its mission affects the reporting  of its real property portfolio. GSA stated that it appreciates that the  complexity of the FRPP data may lead to misinterpretation, and that it  plans to reassess the use of the status data-element categories to better  address the status of completely vacant assets that lack a viable asset  strategy or defined customer need.
Regarding our recommendation that GSA should develop and implement  a strategy specific to warehouses as it develops a comprehensive 5-year  capital plan, GSA noted several efforts in place to reduce the federal  footprint. GSA said that it has a portfolio management program that takes  into consideration the asset, market, and customer components for all  assets in its inventory and that it also includes a financial diagnostic of  assets and segmentation of the portfolio into holding periods. GSA stated  that in order to address the recommendation, GSA will continue to  analyze and develop strategies for maximizing its inventory to increase  value. As part of these efforts, a strategy specific to warehouses, as  described in our recommendation, would help GSA make long-term,  informed decisions about government warehouse space. In addition, such  a strategy would enable GSA and tenant agencies to prioritize their needs  and take a long-term view of the warehouse inventory in the support of  better informed decisions.
GSA agreed with our recommendation that it should develop a  government-wide strategy to promote effective and efficient practices in  warehouse management. GSA said it would address the recommendation  by developing personal property guidance, researching best practices in  warehouse and inventory management, and publishing lessons learned  and guidance. GSA also provided technical clarifications that we  incorporated as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Director of the Office of Management and Budget, the  Administrator of General Services, and the Secretaries of Energy and the  Interior. In addition, the report will be available at no charge on GAO’s  website at http://www.gao.gov.
If you or your staff have any questions, please contact me at (202) 512- 2834 or wised@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 key contributions to this report are listed in appendix  III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine (1) available information on federal  warehouses held or leased by civilian agencies in terms of size, location,  utilization, and purpose; (2) challenges selected civilian agencies report in  acquiring, managing, and disposing of warehouse space; and (3) the  extent to which GSA has fulfilled its federal real property leadership role  with respect to warehouses. We identified three real property-holding  agencies for our review: the General Services Administration (GSA), the  Department of the Interior (Interior), and the Department of Energy  (DOE). We chose GSA, Interior, and DOE because these were the three  largest agencies in terms of total warehouse square footage of all civilian  real property agencies that are required to submit data for the Federal  Real Property Profile. On the basis of the data available, these three  agencies accounted for over one-half of the warehouse square footage  reported by civilian agencies.
To determine what is known about federal warehouses, we obtained and  analyzed FRPP data submissions, and real property data from DOE’s  Facilities Information Management System (FIMS) and Interior’s Financial  and Business Management System (FBMS); visited sites where the  agencies had reported warehouses; reviewed Federal Real Property  Council guidance and other documents related to the agencies’ real  property data and the FRPP database; and interviewed officials at these  agencies. We obtained the agencies’ real property data submissions,  which support the FRPP annual reports. To analyze FRPP data on  warehouses held or leased by civilian agencies, we removed defense  agencies from government-wide FRPP warehouse data and from GSA  FRPP data identified as predominant using agencies. According to our  conversations with agency officials and our review of FRPP, FIMS, and  FBMS, we believe that the data contained in these databases are  sufficiently reliable for the purpose of providing basic information on the  size and location of warehouses. We posed questions to senior real  property officers at the three agencies about the collecting and reporting  of real property data and about characteristics of warehouses. To gather  detailed examples of warehouse size, location, utilization, and purpose,  we identified warehouses from the agencies’ FRPP, FIMS, and FBMS  submissions and visited 30 warehouses at selected sites. We selected a  nonprobability sample for each agency of owned and leased buildings  that were listed as active, inactive, utilized, and unutilized. Because this is  a nonprobablity sample, observations made at these site visits do not  support generalizations about other properties described in the FRPP  database or about the characteristics or limitations of other agencies’ real  property data. Rather the observations made during the site visits  provided specific, detailed examples of issues that were described in  general terms by agency officials regarding the characteristics of  warehouses. We focused on sites clustered around four cities:  Washington, D.C.; Fort Worth, Texas; Denver, Colorado; and Livermore,  California. This strategy afforded both geographic diversity and balance  among our selected agencies while also accommodating time and  resource constraints.
To determine what challenges, if any, selected civilian agencies face in  acquiring, managing, and dispossessing of warehouse space, we  interviewed headquarters and regional officials at GSA, Interior, and  DOE. In addition we conducted the site visits mentioned above in order to  observe warehouses and challenges agencies’ officials had identified in  acquiring, managing, and disposing of warehouse space.
To determine the extent to which GSA has fulfilled its federal real property  leadership role with respect to warehouses, we analyzed GSA’s  acquisition, management, and disposition policies and practices and  compared them with: (1) Office of Management and Budget’s (OMB)  Capital Programming Guide, and (2) GAO’s Executive Guide: Leading  Practices in Capital Decision-Making (GAO/AIMD-99-32). We interviewed  headquarters and regional officials about warehouse acquisition,  management, and disposal.
We conducted this performance audit from November 2013 to November  2014 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.
section_title: Appendix II: Comments from the General Services Administration
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, David Sausville, Assistant  Director; Irina Carnevale, Aaron Kaminsky, SaraAnn Moessbauer, Joshua  Ormond, Amy Rosewarne, and Crystal Wesco made key contributions to  this report.