The federal government’s vast real property inventory reflects the diversity of agencies’ missions and includes office buildings, prisons, post offices, courthouses, laboratories, and border stations. The Federal Real Property Profile (FRPP) is a database of owned and leased space held by executive branch agencies. It is maintained by GSA on behalf of the FRPC, although FRPC controls access to the data. In 2010, FRPP data indicated that 24 executive branch agencies held about 3.35-billion square feet of building space. These agencies reported that 79 percent of the total reported building space was federal-government owned; 17 percent was leased, and 4 percent of the space was otherwise managed. The eight agencies we reviewed—USDA, DOD, DOE, DHS, DOI, VA, GSA, and USPS—reported holding over 3.32-billion square feet of building space or about 99 percent of reported square footage. GSA and USPS are the largest civilian holders of federally owned property. They hold the largest amounts of space, by square foot, of the civilian agencies that we examined. As noted previously, we excluded much of DOD’s property from the scope of our review because of the security requirements of traditional military bases, which would make colocation with other agencies unlikely. GSA and USPS together hold more square footage—almost 660-million square feet—than the other agencies we reviewed, excluding DOD, combined—over 454-million square feet. (See fig. 1.) Additionally, both agencies have a wide national presence—GSA-held properties exist in over 750 markets and USPS- held property is in almost 36,000 cities and towns. Federal agencies, particularly GSA in its role as broker and property manager to the civilian portion of the U.S. government, rely on costly leasing, and the number of federal government leases has increased in recent years. The civilian federal agencies we reviewed held leases in close to 41,000 assets covering nearly 324-million square feet of space, with GSA and USPS leasing the most space. Nearly all of GSA’s leases are for other tenant agencies—for example, its four largest customers in the leased inventory are the Department of Justice, DHS, the Social Security Administration (SSA), and Department of Treasury (Treasury)— based upon those agencies’ identified needs. According to GSA’s annual portfolio report, since fiscal year 2008, its leased inventory has experienced faster growth than its owned inventory. We have reported that over time GSA has relied heavily on operating leases to meet new long-term needs because it lacks up-front funding needed to purchase buildings or space. In addition, GSA has reported operational losses related to leasing, once indirect overhead expenses have been allocated, in recent years. GSA is authorized by law to acquire, manage, utilize, and dispose of real property for most federal agencies. GSA is able to enter into lease agreements for up to 20 years that the Administrator of GSA considers to be in the interest of the federal government and necessary to accommodate a federal agency. GSA uses this authority to lease space on behalf of many federal government agencies. In 2004, the administration added managing federal real property to the President’s Management Agenda and the President issued an executive order, applicable to 24 executive departments and agencies 1) establishing FRPC and 2) requiring FRPC to work with GSA to establish and maintain a single, comprehensive database describing the nature, use, and extent of all federal real property held by executive branch agencies, except when otherwise required for reasons of national security. FRPC worked with GSA to create the FRPP to meet this requirement. FRPC is chaired by the Deputy Director for Management of OMB and is composed of Senior Real Property Officers from the 24 executive departments and agencies, the Controller of OMB, the Administrator of GSA, and any other full-time or permanent part-time federal officials or employees as deemed necessary by the Chairman of the Council. The order does not apply to USPS and FRPC does not work directly with USPS on the management of its real property. These efforts notwithstanding, we have previously reported that the federal government continues to face a number of challenges to effectively managing its real property. In particular, we have reported on challenges to disposing of excess properties, making better use of properties that are underutilized, and reducing overreliance on leasing. USPS, which is an independent establishment of the executive branch, is authorized to sell, lease, or dispose of property and is exempt from most federal laws dealing with real property and contracting. Although declining mail volume and changes to its operations have resulted in excess capacity and facility space throughout the postal network, our recent work has shown that USPS faces challenges, such as legal restrictions and local stakeholder influences, that have limited its ability to close postal facilities in order to restructure its retail and processing network. For example, USPS has often faced resistance from affected employees, communities, and elected officials when it has attempted to consolidate its processing operations and networks or close mail- processing facilities because of concerns about possible effects on service, employees, and communities. USPS recently announced that it will maintain existing retail locations, with modified operating hours. As a result of these issues, USPS has more space than it needs. Our recent work has also shown that USPS faces a deteriorating financial condition. For example, at the end of fiscal year 2011, the USPS had incurred a $5.1-billion loss for the year, had $2 billion remaining on its $15-billion borrowing limit, and projects it will be unable to make its $5.5 billion scheduled retiree health benefits payment to the federal government. In addition, USPS was conceived as a financially self-sufficient entity, but its revenues do not cover costs at about 80 percent of its retail facilities. The federal government owns facilities that are underutilized in locations where it also leases space for different purposes. This is particularly true for USPS, as declining mail volume and changes in operations have freed space in many owned facilities. While there are problems with using governmentwide data to identify underutilized space, as will be discussed later in this report, we observed underutilized space held by multiple federal entities in the case study markets we visited for this report. For example, in each case study market, we observed one or more cases of vacant or underutilized space in post offices, including both offices and space on the processing floor, that officials said could be re-configured and physically separated from USPS operations (see fig. 2.) In some cases, spaces within these underutilized owned properties could be used by other government agencies. According to a recent report by the USPS Office of Inspector General (OIG) related to post office utilization, excess floor and retail window space exists nationwide that could be used by other government agencies or used to perform transactions on behalf of other government agencies. The USPS OIG’s office also conducted several regional studies examining excess USPS space and noted a correlation between space leased by GSA and the ability of USPS to significantly accommodate federal space needs. For example, one of those studies estimated that of the USPS districts reviewed, USPS excess space may accommodate 147 of 175 (or 84 percent) of agencies’ current federal leases, and noted that GSA paid considerably more per square foot than the value assigned to USPS space. However, the Inspector General (IG) did not determine whether the excess space identified was usable for sharing with other agencies, in part because USPS systems and policies do not identify usable areas, and noted that more information would be necessary to determine whether USPS’s excess space would be suitable for another government tenant. We observed several attributes that could affect using underutilized space for colocation. These attributes included size, location, and condition, which would likely render some spaces more appropriate for sharing than others. Much of the underutilized space we observed was small—only several hundred to a few thousand square feet. We also observed underutilized space that was not contiguous. Both of these attributes could limit those spaces’ suitability for effective colocation. Furthermore, underutilized space that we observed varied in terms of its location within facilities. For example, GSA and VA officials described having some space that is less desirable to potential tenants. Although we observed generally high occupancy in GSA’s multi-agency federal buildings, GSA officials showed us some space they said is not easily leased because of its location, such as a first floor interior office bordering the building’s maintenance hallways or windowless basement spaces, and noted that these extra spaces can remain in GSA buildings when an agency does not require the entirety of a vacant space. VA officials noted similar issues, in that empty or available space at its campuses is often located in buildings surrounded by other VA buildings, which can make it harder for outside parties to access and use. Additionally, we observed underutilized space in a wide range of conditions, from rundown to newly renovated, which could also affect colocation options. GSA officials said that a variety of physical aspects of the space may factor into the desirability of the space for colocation, including ceiling height, support column size, lighting, and windows. For example, Figure 3 shows interior office space in a GSA-held federal building in downtown Dallas that GSA officials told us has been vacant for years, a vacancy that they attributed to the lack of natural light and the large support columns that make it difficult to place workstations. Federal officials we spoke with indicated that colocation could result in improved government operations through increased efficiencies for service access or delivery to the public in some cases.