Federal Real Property: An Update on High Risk Issues
Published: 2009-07-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In January 2003, GAO designated federal real property as a high-risk area because of long-standing problems with excess and underutilized property, deteriorating facilities, unreliable real property data, over-reliance on costly leasing, and security challenges. In January 2009, GAO found that agencies have taken some positive steps to address real property issues but that some of the core problems that led to the designation of this area as high risk persist. This testimony focuses on (1) progress made by major real property-holding agencies to strategically manage real property, (2) ongoing problems GAO has identified in recent work regarding agencies' efforts to address real property issues, and (3) underlying obstacles GAO has identified through prior work as hampering agencies' real property reform efforts governmentwide.
section_title: What GAO Found
paragraphs: OMB and real property-holding agencies have made progress in strategically managing real property. In response to an administration reform initiative and related executive order, agencies have, among other things, established asset management plans, standardized data, and adopted performance measures. According to OMB, the federal government disposed of excess real property valued at $1 billion in fiscal year 2008, bringing the total to over $8 billion since fiscal year 2004. OMB also reported success in developing a comprehensive database of federal real property assets and implemented a GAO recommendation to improve the reliability of the data in this database by developing a framework to validate these data. GAO also found that the Veterans Administration has made significant progress in reducing underutilized space. In another report, GAO found that six agencies reviewed have processes in place to prioritize maintenance and repair items. While these actions represent positive steps, some of the long-standing problems that led GAO to designate this area as high risk persist. Although GAO's work over the years has shown that building ownership often costs less than operating leases, especially for long term space needs, in 2008, the General Services Administration (GSA), which acts as the government's leasing agent, leased more property than it owned for the first time. Given GSA's ongoing reliance on leasing, it is critical that GSA manage its leasing activities effectively. However, in January 2007, GAO identified numerous areas that warranted improvement in GSA's implementation of four contracts for national broker services for its leasing program. GSA has implemented 7 of GAO's 11 recommendations to improve these contracting efforts. Although GAO is encouraged by GSA's actions on these recommendations, GAO has not evaluated their impact. Moreover, in more recent work, GAO has continued to find that the government's real property data are not always reliable and agencies continue to retain excess property and face challenges from repair and maintenance backlogs. Regarding security, GAO testified on July 8, 2009, that preliminary results show that the ability of the Federal Protective Service (FPS), which provides security services for about 9,000 GSA facilities, to protect federal facilities is hampered by weaknesses in its contract security guard program. Among other things, GAO investigators carrying the components for an improvised explosive device successfully passed undetected through security checkpoints monitored by FPS's guards at each of the 10 federal facilities where GAO conducted covert testing. As GAO has reported in the past, real property management problems have been exacerbated by deep-rooted obstacles that include competing stakeholder interests, various budgetary and legal limitations, and weaknesses in agencies' capital planning. While reforms to date are positive, the new administration and Congress will be challenged to sustain reform momentum and reach consensus on how such obstacles should be addressed.

section_title: Letter
paragraphs: We welcome the opportunity to provide this update on our recent work on  issues that led us to designate federal real property as a high-risk area. As  you know, in January 2003, we designated federal real property a high-risk  area because of long-standing problems with excess and underutilized  property, deteriorating facilities, unreliable real property data, over- reliance on costly leasing, and building security challenges. As we have  reported as part of the high-risk series, the federal real property portfolio  largely reflects a business model and the technological and transportation  environment of the 1950s. Many federal real property assets are no longer  needed; others are not effectively aligned with, or responsive to, agencies’  changing missions. We issued our latest update on this area in January  2009, finding that agencies have taken some positive steps to address real  property issues but that some of the core problems that led to our  designation of this area as high risk persist. My testimony today is based  on our extensive body of work related to these issues. We also spoke with  officials at the Office of Management and Budget (OMB) and the General  Services Administration (GSA) to update our information on agencies’  efforts to address our prior recommendations, and we reviewed recently- introduced initiatives related to agencies’ real property disposal  authorities. My testimony focuses on (1) progress made by major real  property-holding agencies to strategically manage real property, (2)  ongoing problems we have identified in recent work regarding agencies’  efforts to address real property issues, and (3) underlying obstacles we  have identified through prior work as hampering agencies’ real property  reform efforts governmentwide. We conducted our work in Washington,  D.C., in June and July 2009 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: Under Real Property Initiative, Agencies Have Taken Actions to Strategically Manage Real Property and Address Some Long-standing Problems
paragraphs: Major real property-holding agencies and OMB have made progress  toward strategically managing federal real property. In April 2007, we  found that in response to the President’s Management Agenda (PMA) real  property initiative and a related executive order, agencies covered under  the executive order had, among other things, designated senior real  property officers, established asset management plans, standardized real  property data reporting, and adopted various performance measures to  track progress. The administration had also established a Federal Real  Property Council (FRPC) that guides reform efforts.
Under the real property initiative, OMB has been evaluating the status and  progress of agencies’ real property management improvement efforts since  the third quarter of fiscal year 2004 using a quarterly scorecard that color  codes agencies’ progress—green for success, yellow for mixed results, and  red for unsatisfactory. As Figure 1 shows, according to OMB’s analysis,  many of these agencies have made progress in accurately accounting for,  maintaining, and managing their real property assets so as to efficiently  meet their goals and objectives. As of the first quarter of 2009, 10 of the 15  agencies evaluated had achieved green status. According to OMB, the  agencies achieving green status have established 3-year timelines for  meeting the goals identified in their asset management plans; provided  evidence that they are implementing their asset management plans; used  real property inventory information and performance measures in decision  making; and managed their real property in accordance with their strategic  plan, asset management plan, and performance measures. (For more  information on the criteria OMB uses to evaluate agencies’ efforts, see  app. I.)
OMB has also taken some additional steps to improve real property  management governmentwide. According to OMB, the federal government  disposed of excess real property valued at $1 billion in fiscal year 2008,  bringing the total to over $8 billion since fiscal year 2004. OMB also  reported success in developing a comprehensive database of federal real  property assets, the Federal Real Property Profile (FRPP). OMB recently  took further action to improve the reliability of FRPP data by  implementing a recommendation we made in April 2007 to develop framework that agencies can use to better ensure the validity and  usefulness of key real property data in the FRPP. According to OMB  officials, OMB now requires agency-specific validation and verification  plans and has developed a FRPP validation protocol to certify agency data.  These actions are positive steps towards eventually developing a database  that can be used to improve real property management governmentwide.  However, it may take some time for these actions to result in consistently  reliable data, and, as described later in this testimony, in recent work we  have continued to find problems with the reliability and usefulness of  FRPP data.
Furthermore, our work over the past year has found some other posi steps that some agencies have taken to address ongoing challenges.  Specifically:  In September 2008, we found that from fiscal year 2005 through 2007, VA  made significant progress in reducing underutilized space (space not used  to full capacity) in its buildings from 15.4 million square feet to 5.6 million  square feet. We also found that VA’s use of various legal authorities, suc h  as its enhanced use lease authority (EUL), which allows it to enter into  long-term agreements with public and private entities for the use of VA  property in exchange for cash or in-kind consideration, likely contrib to its overall reduction of underutilized space since fiscal year 2005.  However, our work also shows that VA does not track  it s use of these authorities or of the space reductions.
section_title: Longstanding Problems in Real Property Management Persist
paragraphs: In spite of some progress made by OMB and agencies in managing their  real property portfolios, our recent work has found that agencies continue  to struggle with the long-standing problems that led us to identify federal  real property as high-risk: an over-reliance on costly leasing—and  challenges GSA faces in its leasing contracting; unreliable data;  underutilized and excess property and repair and maintenance backlogs;  and ongoing security challenges faced by agencies and, in particular, by  the Federal Protective Service (FPS), which is charged with protecting  GSA buildings.
subsections: section_title: Over-Reliance on Costly Leasing Continues, and GSA’s Initial Implementation of Leasing Contracting Faced Problems
subsections: section_title: Over-Reliance on Costly Leasing Continues
paragraphs: One of the major reasons for our designation of federal real property as a  high-risk area in January 2003 was the government’s overreliance on costly  leasing. Under certain conditions, such as fulfilling short-term space  needs, leasing may be a lower-cost option than ownership. However, our  work over the years has shown that building ownership often costs less  than operating leases, especially for long-term space needs.
In January 2008, we reported that federal agencies’ extensive reliance on  leasing has continued, and that federal agencies occupied about 398  million square feet of leased building space domestically in fiscal year  2006, according to FRPP data. GSA, USPS, and USDA leased about 71  percent of this space, mostly for offices, and the military services leased  another 17 percent. For fiscal year 2008, GSA reported that for the first  time, it leased more space than it owned.
In 10 GSA and USPS leases that we examined in the January 2008 report,  decisions to lease space that would be more cost-effective to own were  driven by the limited availability of capital for building ownership and  other considerations, such as operational efficiency and security. For  example, for four of seven GSA leases we analyzed, leasing was more  costly over time than construction—by an estimated $83.3 million over 30  years. Although ownership through construction is often the least  expensive option, federal budget scorekeeping rules require the full cost of  this option to be recorded up front in the budget, whereas only the annual  lease payment and cancellation costs need to be recorded for operating  leases, reducing the up-front commitment even though the leases are  generally more costly over time. USPS is not subject to the scorekeeping  rules and cited operational efficiency and limited capital as its main  reasons for leasing.
While OMB made progress in addressing long-standing real property  problems, efforts to address the leasing challenge have been limited. We  have raised this issue for almost 20 years. Several alternative approaches  have been discussed by various stakeholders, including scoring operating  leases the same as ownership, but none have been implemented. In our  2008 report, we recommended that OMB, in consultation with the Federal  Real Property Council and key stakeholders, develop a strategy to reduce  agencies’ reliance on leased space for long-term needs when ownership  would be less costly. OMB agreed with our recommendation. According to  OMB officials, in response to this recommendation, an OMB working  group conducted an analysis of lease performance. OMB is currently using  this analysis as it works with officials of the new administration to assess  overall real property priorities in order to establish a roadmap for further  action.
section_title: GSA’s Initial Implementation of the National Brokers Services Contracts Demonstrated Need for Numerous Improvements
paragraphs: With GSA’s ongoing reliance on leasing, it is critical that GSA manage its  in-house and contracted leasing activities effectively. However, in January  2007, we identified numerous areas in GSA’s implementation of four  contracts for national broker services that warranted improvement. Our  findings were particularly significant since, over time, GSA expects to  outsource the vast majority of its expiring lease workload.
At one time, GSA performed lease acquisition, management, and  administration functions entirely in-house. In 1997, however, GSA started  entering into contracts for real estate services to carry out a portion of its  leasing program, and in October 2004, GSA awarded four contracts to  perform broker services nationwide (national broker services), with  contract performance beginning on April 1, 2005. GSA awarded two of the  four contracts to dual-agency brokerage firms—firms that represent both  building owners and tenants (in this case, GSA acting on behalf of a tenant  agency). The other two awardees were tenant-only brokerage firms—firms  that represent only the tenant in real estate transactions. Because using a  dual-agency brokerage firm creates an increased potential for conflicts of  interest, federal contracting requirements ordinarily would prohibit  federal agencies from using dual-agency brokers, but GSA waived the  requirements, as allowed, to increase competition for the leasing  contracts. When the contracts were awarded, GSA planned to shift at  least 50 percent of its expiring lease workload to the four awardees in the  first year of the contracts and to increase their share of GSA’s expiring  leases to approximately 90 percent by 2010—the fifth and final year of the  contracts. As of May 30, 2009, GSA estimated that the total value of the  four contracts was $485.6 million.
We reviewed GSA’s administration of the four national broker services  contracts (i.e., the national broker services program) for the first year of  the contracts which ended March 31, 2006. In our January 2007 report, we  identified a wide variety of issues related to GSA’s early implementation of  these contracts. Problems included inadequate controls to (1) prevent  conflicts of interest and (2) ensure compliance with federal requirements  for safeguarding federal information and information systems used on  behalf of GSA by the four national brokers. We also reported, among other  matters, that GSA had not developed a method for quantifying what, if any,  savings had resulted from the contracts or for distributing work to the  brokers on the basis of their performance, as it had planned. We made 11  recommendations designed to improve GSA’s overall management of the  national broker services program. As figure 2 shows, GSA has  implemented 7 of these 11 recommendations; has taken action to  implement another recommendation; and, after consideration, has decided  not to implement the remaining 3. (For more details on the issues we  reported in January 2007 and GSA’s actions to address our  recommendations, see app. II). We are encouraged by GSA’s actions on  our recommendations but have not evaluated their impact.
section_title: Problems with Unreliable Data Persist
paragraphs: Quality governmentwide and agency-specific data are critical for  addressing the wide range of problems facing the government in the real  property area, including excess and unneeded property, deterioration, and  security concerns. In April 2007, we reported that although some agencies  have made progress in collecting and reporting standardized real property  data for FRPP, data reliability is still a challenge at some of the agencies,  and agencies lacked a standard framework for data validation. We are  pleased that OMB has implemented our recommendation to develop a  framework that agencies can use to better ensure the validity and  usefulness of key real property data in the FRPP, as noted earlier.  However, in the past 2 years, we have found the following problems with  FRPP data:  In our January 2008 report on agencies’ leasing, we found that, while FRPP  data were generally reliable for describing the leased inventory, data  quality concerns, such as missing data, would limit the usefulness of FRPP  for other purposes, such as strategic decision making.
In our October 2008 report on federal agencies’ repair and maintenance  backlogs, we found that the way six agencies define and estimate their  repair needs or backlogs varies. We also found that, according to OMB  officials, FRPP’s definition of repair needs was purposefully vague so  agencies could use their existing data collection and reporting process.  Moreover, we found that condition indexes, which agencies report to  FRPP, cannot be compared across agencies because their repair estimates  are not comparable. As a result, these condition indexes cannot be used to  understand the relative condition or management of agencies’ assets.  Thus, they should not be used to inform or prioritize funding decisions  between agencies. In this report, we recommended that OMB, in  consultation with the Federal Accounting Standards Advisory Board,  explore the potential for adding a uniform reporting requirement to FRPP  to capture the government’s fiscal exposure related to real property repair  and maintenance. OMB agreed with our recommendation.
In our February 2009 report on agencies’ authorities to retain proceeds  from the sale of real property, we found that, because of inconsistent and  unreliable reporting, governmentwide data reported to FRPP were not  sufficiently reliable to analyze the extent to which the six agencies with  authority to sell real property and retain the proceeds from such sales  actually sold real property. Such data weaknesses reduce the  effectiveness of the FRPP as a tool to enable governmentwide  comparisons of real property efforts, such as the effort to reduce the  government’s portfolio of unneeded property.
Furthermore, although USPS is not required to submit data to FRPP, in  December 2007, we found reliability issues with USPS data that also  compromised the usefulness of the data for examining USPS’s real  property performance. Specifically, we found that USPS’s Facility  Database—developed in 2003 to capture and maintain facility data—has  numerous reliability problems and is not used as a centralized source for  facility data, in part because of its reliability problems. Moreover, even if  the data in the Facility Database were reliable, the database would not  help USPS measure facility management performance because it does not  track performance indicators nor does it archive data for tracking trends.
section_title: Agencies Face Ongoing Challenges with Underutilized Property and Repair and Maintenance Backlogs
paragraphs: In April 2007, we reported that among the problems with real property  management that agencies continued to face were excess and  underutilized property, deteriorating facilities, and maintenance and repair  backlogs. We reported some federal agencies maintain a significant  amount of excess and underutilized property. For example, we found that  Energy, DHS, and NASA reported that over 10 percent of their facilities  were excess or underutilized. Agencies may also underestimate their  underutilized property if their data are not reliable. For example, in 2007,  we found during limited site visits to USPS facilities that six of the  facilities we visited had vacant space that local employees said could be  leased, but these facilities were not listed as having vacant, leasable space  in USPS’s Facilities Database (see fig. 3). At that time, USPS officials  acknowledged the vacancies we cited and noted that local officials have  few incentives to report facilities’ vacant, leasable space in the database.
Underutilized properties present significant potential risks to federal  agencies because they are costly to maintain and could be put to more  cost-beneficial uses or sold to generate revenue for the government. In  2007, we also reported that addressing the needs of aging and  deteriorating federal facilities remains a problem for major real property- holding agencies, and that according to recent estimates, tens of billions of  dollars will be needed to repair or restore these assets so that they are  fully functional. In October 2008, we reported that agency repair backlog  estimates are not comparable and do not accurately capture the  government’s fiscal exposure. We found that the six agencies we  reviewed had different processes in place to periodically assess the  condition of their assets and that they also generally used these processes  to identify repair and maintenance backlogs for their assets. Five agencies  identified repair needs of between $2.3 billion (NASA) and $12 billion  (DOI). GSA reported $7 billion in repair needs. The sixth agency, DOD, did  not report on its repair needs. Table 1 provides a summary of each  agency’s estimate of repair needs.
section_title: Agencies and Federal Protective Service Face Ongoing Security Challenges
paragraphs: In addition to other ongoing real property management challenges, the  threat of terrorism has increased the emphasis on physical security for  federal real property assets. In 2007, we reported that all nine major real  property-holding agencies reported using risk-based approaches to  prioritize security needs, as we have suggested, but cited a lack of  resources for security enhancements as an ongoing problem. For example,  according to GSA officials, obtaining funding for security  countermeasures, both security fixtures and equipment, is a challenge not  only within GSA but for GSA’s tenant agencies as well.
Moreover, last week we testified before the Senate Committee on  Homeland Security and Governmental Affairs that preliminary results  show that the Federal Protective Service’s (FPS) ability to protect federal  facilities is hampered by weaknesses in its contract security guard  program. We found that FPS does not fully ensure that its contract  security guards have the training and certifications required to be  deployed to a federal facility and has limited assurance that its guards are  complying with post orders. For example, FPS does not have specific  national guidance on when and how guard inspections should be  performed; and FPS’s inspections of guard posts at federal facilities are  inconsistent, and the quality varied in the six regions we visited. Moreover,  we identified substantial security vulnerabilities related to FPS’s guard  program. GAO investigators carrying the components for an improvised  explosive device successfully passed undetected through security  checkpoints monitored by FPS’s guards at each of the 10 level IV federal  facilities where we conducted covert testing. Once GAO investigators  passed the control access points, they assembled the explosive device and  walked freely around several floors of these level IV facilities with the  device in a briefcase. In response to our briefing on these findings, FPS  has recently taken some actions including increasing the frequency of  intrusion testing and guard inspections. However, implementing these  changes may be challenging, according to FPS. We previously testified  before this subcommittee in 2008 that FPS faces operational challenges,  funding challenges, and limitations with performance measures to assess  the effectiveness of its efforts to protect federal facilities. We  recommended, among other things, that the Secretary of DHS direct the  Director of FPS to develop and implement a strategic approach to better  manage its staffing resources, evaluate current and alternative funding  mechanisms, and develop appropriate performance measures. DHS agreed  with the recommendations. According to FPS officials, FPS is working on  implementing these recommendations.
section_title: Underlying Obstacles Hamper Agencies’ Real Property Reform Efforts Governmentwide
paragraphs: As GAO has reported in the past, real property management problems  have been exacerbated by deep-rooted obstacles that include competing  stakeholder interests, various legal and budget-related limitations, and  weaknesses in agencies’ capital planning. While reforms to date are  positive, the new administration and Congress will be challenged to  sustain reform momentum and reach consensus on how the obstacles  should be addressed.
subsections: section_title: Several Agencies Cited Competing Stakeholder Interests as Impeding Real Property Management Decision Making
paragraphs: In 2007, we found that some major real property-holding agencies reported  that competing local, state, and political interests often impede their  ability to make real property management decisions, such as decisions  about disposing of unneeded property and acquiring real property. For  example, we found that USPS was no longer pursuing a 2002 goal of  reducing the number of “redundant, low-value” retail facilities, in part,  because of legal restrictions on and political pressures against closing  them. To close a post office, USPS is required to, among other things,  formally announce its intention to close the facility, analyze the impact of  the closure on the community, and solicit comments from the community.  Similarly, VA officials reported that disposal is often not an option for  most properties because of political stakeholders and constituencies,  including historic building advocates or local communities that want to  maintain their relationship with VA. In addition, Interior officials reported  that the department faces significant challenges in balancing the needs and  concerns of local and state governments, historical preservation offices,  political interests, and others, particularly when coupled with budget  constraints. If the interests of competing stakeholders are not  appropriately addressed early in the planning stage, they can adversely  affect the cost, schedule and scope of a project.
Despite its significance, the obstacle of competing stakeholder interests  has gone unaddressed in the real property initiative. It is important to note  that there is precedent for lessening the impact of competing stakeholder  interests. Base Realignment and Closure Act (BRAC) decisions, by design,  are intended to be removed from the political process, and Congress  approves all BRAC decisions as a whole. OMB staff said they recognize the  significance of the obstacle and told us that FRPC would begin to address  the issue after the inventory is established and other reforms are initiated.  But until this issue is addressed, less than optimal decisions based on  factors other than what is best for the government as a whole may  continue.
section_title: Legal and Budgetary Limitations Continue to Hamper Agencies’ Disposal Efforts
paragraphs: As discussed earlier, budgetary limitations that hinder agencies’ ability to  fund ownership leads agencies to rely on costly leased space to meet new  space needs. Furthermore, the administrative complexity and costs of  disposing of federal property continue to hamper efforts by some agencies  to address their excess and underutilized real property problems. Federal  agencies are required by law to assess and pay for any environmental  cleanup that may be needed before disposing of a property—a process  that may require years of study and result in significant costs. As valuable  as these legal requirements are, their administrative complexity and the  associated costs of complying with them create disincentives to the  disposal of excess property. For example, we reported that VA, like all  federal agencies, must comply with federal laws and regulations governing  property disposal that are intended to protect subsequent users of the  property from environmental hazards and to preserve historically  significant sites, among other purposes. We have reported that some VA  managers have retained excess property because the administrative  complexity and costs of complying with these requirements were  disincentives to disposal. Additionally, some agencies reported that the  costs of cleanup and demolition sometimes exceed the costs of continuing  to maintain a property that has been shut down. In such cases, in the short  run, it can be more beneficial economically to retain the asset in a shut- down status.
Some federal agencies have been granted authorities to enter into EULs or  to retain proceeds from the sale of real property. Recently, in February  2009, we reported that the 10 largest real property-holding agencies have  different authorities for entering into EULs and retaining proceeds from  the sale of real property, including whether the agency can use any  retained proceeds without further congressional action such as an annual  appropriation act, as shown in table 2.
Officials at five of the six agencies with the authority to retain proceeds  from the sale of real property, (the Forest Service, GSA, State, USPS, and  VA) said this authority is a strong incentive to sell real property. Officials  at the five agencies that do not have the authority to retain proceeds from  the sale of real property (DOE; DOI; DOJ; NASA; and USDA except for the  Forest Service) said they would like to have such expanded authorities to  help manage their real property portfolios.  However, officials at two of  those agencies said that, because of challenges such as the security needs  or remote locations of most of their properties, it was unlikely that they  would sell many properties.
We have previously found that, for agencies which are required to fund the  costs of preparing property for disposal, the inability to retain any of the  proceeds acts as an additional disincentive to disposing of real property.  As we have testified previously, it seems reasonable to allow agencies to  retain enough of the proceeds to recoup the costs of disposal, and it may  make sense to permit agencies to retain additional proceeds for  reinvestment in real property where a need exists. However, in  considering whether to allow federal agencies to retain proceeds from real  property transactions, it is important for Congress to ensure that it  maintains appropriate control and oversight over these funds, including  the ability to redistribute the funds to accommodate changing needs.
Two current initiatives relate to these issues.  The administration’s 2010  budget includes a real property legislative proposal that, among other  things, would permit agencies to retain the net proceeds from the transfer  or sale of real property subject to further Congressional action.  On May  19, 2009, H.R. 2495, the Federal Real Property Disposal Enhancement Act  of 2009, was introduced in the House of Representatives, and this bill, like  the administration’s legislative proposal, would authorize federal agencies  to retain net proceeds from the transfer or sale of real property subject to  further congressional action.  Additionally, both the administration’s  legislative proposal and H.R. 2497 would establish a pilot program for the  expedited disposal of federal real property.
section_title: Weaknesses in Capital Planning Still Exists
paragraphs: Over the years, we have reported that prudent capital planning can help  agencies to make the most of limited resources, and failure to make timely  and effective capital acquisitions can result in acquisitions that cost more  than anticipated, fall behind schedule, and fail to meet mission needs and  goals. In addition, Congress and OMB have acknowledged the need to  improve federal decision making in the area of capital investment. A  number of laws enacted in the 1990s placed increased emphasis on  improving capital decision-making practices and OMB’s Capital  Programming Guide and its revisions to Circular A-11 have attempted to  address the government’s shortcomings in this area. However, we have  continued to find limitations in OMB’s efforts to improve capital planning  governmentwide. For example, real property is one of the major types of  capital assets that agencies acquire, and therefore shortcomings in the  capital planning and decision-making area have clear implications for the  administration’s real property initiative. However, while OMB staff said  that agency asset management plans are supposed to align with their  capital plans, OMB does not assess whether the plans are aligned.  Moreover, we found that guidance for the asset management plans does  not discuss how these plans should be linked with agencies’ broader  capital planning efforts outlined in the Capital Programming Guide.  Without a clear linkage or crosswalk between the guidance for the two  documents, agencies may not link them. Furthermore, the relationship  between real property goals specified in the asset management plans and  longer-term capital plans may not be clear. In April 2007, we  recommended that OMB, in conjunction with the FRPC, should establish a  clearer link between agencies’ efforts under the real property initiative and  broader capital planning guidance.  According to OMB officials, OMB is  currently considering options to strengthen agencies’ application of the  capital planning process as part of Circular A-11, with a focus on  preventing cost overruns and schedule delays.
section_title: Federal Real Property Reform Efforts Continue to Face Challenges
paragraphs: In 2007, we concluded that the executive order on real property  management and the addition of real property to PMA provided a good  foundation for strategically managing federal real property and addressing  long-standing problems. These efforts directly addressed the concerns we  had raised in past high-risk reports about the lack of a governmentwide  focus on real property management problems and generally constitute  what we envisioned as a transformation strategy for this area. However,  we found that these efforts were in the early stages of implementation, and  the problems that led to our high-risk designation—excess property, repair  backlogs, data issues, reliance on costly leasing, and security challenges— still existed. As a result, this area remains high risk until agencies show  significant results in eliminating the problems by, for example, reducing  inventories of excess facilities and making headway in addressing the  repair backlog. While the prior administration took several steps to  overcome some obstacles in the real property area, the obstacles posed by  competing local, state, and political interests went largely unaddressed,  and the linkage between the real property initiative and broader agency  capital planning efforts is not clear. In 2007, we recommended that OMB,  in conjunction with the FRPC, develop an action plan for how the FRPC  will address these key problems. According to OMB officials, these key  problems are among those being considered as OMB works with  administration officials to assess overall real property priorities in order to  establish a roadmap for further action. While reforms to date are positive,  the new administration and Congress will be challenged to sustain reform  momentum and reach consensus on how the ongoing obstacles should be  addressed.
Madam Chair, this concludes my prepared statement. I would be happy to  respond to any questions you or other Members of the Subcommittee may  have at this time.
section_title: Contact and Acknowledgments
paragraphs: For further information on this testimony, please contact Mark Goldstein  on (202) 512-2834 or by email at goldsteinm@gao.gov. Key contributions to  this testimony were also made by Keith Cunningham, Dwayne Curry,  Susan Michal-Smith, Steven Rabinowitz, Kathleen Turner, and Alwynne  Wilbur.
section_title: Appendix I: Executive Branch Management Scorecard Standards for the Real Property Initiative
paragraphs: In April 2007, we found that adding real property asset management to the  President’s Management Agenda (PMA) had increased its visibility as a key  management challenge and focused greater attention on real property  issues across the government. As part of this effort, the Office of  Management and Budget (OMB) identified goals for agencies to achieve in  right-sizing their real property portfolios. To achieve these goals and gauge  an agency’s success in accurately accounting for, maintaining, and  managing its real property assets so as to efficiently meet its goals and  objectives, the administration established the real property scorecard in  the third quarter of fiscal year 2004. The scorecard consists of 13  standards that agencies must meet to achieve the highest status—green— as shown in figure 1. These 13 standards include 8 standards needed to  achieve yellow status, plus 5 additional standards. An agency reaches  green or yellow status if it meets all of the standards for success listed in  the corresponding column in figure 1 and red status if it has any of the  shortcomings listed in the column for red standards.