In January 2003, we 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, and overreliance on costly leasing. Real property is generally defined as land and anything constructed on, growing on, or attached to land. In updates to our high-risk report, we acknowledged that the administration and real- property-holding agencies had made progress toward strategically managing federal real property and addressing some long-standing problems. Real-property-holding agencies 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 also established a Federal Real Property Council (FRPC) that supports reform efforts. FRPC has created the FRPP to be the inventory system for the federal real property portfolio. FRPP, which is overseen by OMB, includes 25 data elements that agencies are mandated to report annually, including performance measures on asset utilization, condition, mission dependency, and operating cost. Although progress has been made, in 2007, we also reported that the problems that led us to designate real property as a high-risk area still largely persisted, such as repair and maintenance backlogs, and the underlying obstacles remained. We also reported on the condition of facilities at the Smithsonian Institution, where we found that the deterioration of facilities had threatened collections and increased the cost of restoring historic items. We recommended that the Smithsonian make improvements to its cost estimates for facilities projects. According to data reported in the 2007 FRPP, the federal government owns about 1,115,000 real property assets worldwide with a replacement cost of over $1.5 trillion. The six agencies we reviewed reported that they had 568,618 real property assets in the U.S. with a replacement cost of approximately $1.2 trillion. Five of the six agencies estimated that their assets had approximately $30.5 billion in repair needs. DOD did not estimate repair needs for its FRPP reporting. FRPP does not require agencies to report their repair and maintenance backlogs, but requires agencies to determine a condition index for each asset by computing a formula that compares the asset’s repair needs with its plant replacement value (PRV). Specifically a condition index equals (1-repair needs/PRV) * 100. Based on this formula, a condition index is reported as a whole number from 1 to 100, with 100 representing the best possible condition for an asset. FRPP guidance defines repair needs as “the amount necessary to ensure that a constructed asset is restored to a condition substantially equivalent to the originally intended and designed capacity, efficiency, or capability.” Real-property-holding agencies are generally responsible for the cost of maintaining and repairing their assets. We have reported that owning an asset creates an implicit fiscal exposure for the government. This fiscal exposure is created because there is an expectation that the government will incur costs associated with maintaining and operating the assets it owns. As the National Research Council has observed, federal assets must be well maintained to operate adequately and cost effectively; protect their functionality and quality; and provide a safe, healthy, productive environment for the American public, elected officials, federal employees, and foreign visitors who use them every day. Facilities and the systems within the facilities such as electrical, heating, and air conditioning systems and roofs generally have a finite, expected useful life, over which time they should be maintained and after which time they can be reasonably expected to need replacement. The useful lives of facilities can be extended through adequate and timely repairs and maintenance. Conversely, delaying or deferring repairs and maintenance can, in the short term, diminish the quality of building services, and in the long term, shorten building lives and reduce asset values. Deferring needed maintenance indefinitely may ultimately result in significantly higher costs. At the six agencies we reviewed, we found processes in place for the agencies to periodically assess the condition of their assets—processes that the agencies also generally used to identify repair and maintenance backlogs for their assets. However, the agencies differed in how they conducted these condition assessments and how they define and estimate their repair and maintenance backlogs. Thus, the information is not comparable across agencies and cannot be used to understand the government’s potential fiscal exposure associated with its real property repair and maintenance needs. Each agency we reviewed conducted facility condition assessments either itself or through a contractor to identify repair and maintenance deficiencies associated with their assets. The intent of conducting a facility condition assessment is to obtain an overall understanding of the condition and repair and maintenance needs of an asset. Condition assessments can range from staff walking through a facility and visually inspecting its condition and identifying repair and maintenance issues to a more comprehensive assessment in which the individual building systems, such as the plumbing, heating, and electrical systems, are assessed by a professional and deficiencies are identified. Condition assessments may also identify projects for future years, such as a roof replacement expected within the next couple of years. As shown in table 1, each of the six agencies we reviewed periodically conducted condition assessments. How agencies define and estimate their repair needs or backlogs varies. This variation is not unexpected because, according to OMB officials, FRPP was purposefully vague in defining repair needs so agencies could use their existing data collection and reporting processes. In addition, there is no governmentwide definition or reporting requirement for repair and maintenance backlogs. DOE requires its sites to perform condition assessments on all real property assets at least once during any 5-year period (some assets, such as nuclear facilities, are assessed more frequently). The results of the assessments are reported to a DOE-wide database. While individual DOE sites have some flexibility in which assessment surveys they use, inspection methods must be in accordance within general DOE guidelines. For example, one DOE laboratory developed its own assessment tool in the early 1990s and uses in-house inspectors to perform the assessments, while other sites use contractors to conduct their assessments. For all the assessments, each identified deficiency is assigned an optimum year for correction through maintenance. If a maintenance activity is not performed within the optimum period, it is considered deferred maintenance and part of DOE’s backlog. The condition assessments also include cost estimates, developed using nationally-recognized databases of repair costs, for correcting the deficiencies. NASA has used a contractor since 2002 to conduct annual deferred maintenance assessments of all its facilities and their component systems. NASA contractors visually assess nine different systems within each facility (such as the roof and the electrical system), and rate each facility using an overall condition index with a scale from 0 to 5. Based on that rating, the contractor uses an industry cost database and other information to estimate the costs of correcting the identified deficiencies. According to NASA officials, using a contractor and a standard estimating methodology to assess all its facilities provides consistent information across sites. DOI has comprehensively assessed the condition of what it calls its standard assets such as roads, bridges, trails, water structures, and buildings but has not yet conducted contractor-performed comprehensive assessments of the condition of heritage assets such as monuments, fortifications, and archeological sites. In May 2008, DOI issued guidance on how to estimate the condition of and maintenance costs associated with its heritage assets. For assessed assets with a value over $5,000, DOI conducts annual inspections to determine the condition of an asset and to determine the nature of needed repairs. DOI conducts condition assessments of assets with a value over $50,000 at least every 5 years to identify and estimate the cost of correcting repair and maintenance deficiencies. Either contractors or internal bureau staff perform the assessments and industry-standard cost-estimating databases are used, if available, to estimate the costs to correct identified deficiencies. If maintenance is needed, work is scheduled; if the work is not completed on time, it becomes part of DOI’s backlog. VA uses contractors to conduct facility condition assessments to evaluate the condition of its assets at least once every 3 years. The contractor inspects all major systems in each building (e.g., structural, mechanical, plumbing, and others) and gives each a grade of A (for a system in like- new condition) through F (for a system in critical condition that requires immediate attention). As part of this assessment, the contractor uses an industry cost database to estimate the correction costs for each system graded D or F—in poor or critical condition. VA’s reported backlog is the sum of all identified correction costs. In addition, if repair and maintenance is not completed, VA escalates the correction cost each year for inflation. GSA assesses all of its assets and estimates all repair and maintenance needs that may need to be done in the next 10 years. GSA conducts inspections known as physical condition surveys every 2 years on each asset. From these, GSA develops what it refers to as its reinvestment liability, which includes cost estimates for repair and maintenance items that GSA has determined need to be done now and expects will need to be done within the next 10 years. To conduct physical condition surveys, GSA staff walk throughout each facility answering a list of 37 standard questions about the asset and identifying the time frame within which the identified needs should be corrected, ranging from immediately to 6 to 10 years from now. GSA staff also develop cost estimates to repair each identified need. According to agency officials, the use of a standard survey allows some comparison between assets. DOD reported a condition index to FRPP based on what it calls a quality rating (Q-rating), ranging from Q1 (best condition) to Q4 (poorest condition). As shown in table 2, three of the four services determined the Q-rating by comparing an asset’s estimated repair and maintenance costs to the asset’s value. The fourth service assigned Q-ratings by considering the adequacy and age of the asset. DOD reported one of four condition indexes for its assets to FRPP based on the Q-rating of the asset.