GSA’s Public Buildings Service (PBS) manages real property for many federal agencies and has a large portfolio of federally owned and leased properties. This portfolio includes office buildings, courthouses, land ports of entry, warehouses, laboratories, childcare facilities, and parking structures. As of fiscal year 2013, the most recent year for which GSA published portfolio information, GSA had a total of 377.9-million rentable square feet in its inventory, of which 194.9 million—slightly more than half—were leased from the private sector. The Administrator of GSA is authorized by law to enter into lease agreements, not to exceed 20 years, on behalf of federal agencies. The administrator delegates leasing authority to GSA regional commissioners, who further delegate authority by issuing leasing warrants to lease contracting officers. GSA manages its inventory via 11 regional offices and the central office, located in Washington, D.C. (See fig. 1.) In fiscal 2014, PBS had 5,502 full-time equivalent (FTE) employees—who accounted for roughly half of GSA’s total FTEs that fiscal year. According to GSA, agency-wide staffing levels have declined over time, with PBS experiencing a nearly 16 percent reduction in FTEs from fiscal years 2012 through 2014. More specifically, GSA officials noted that the number of lease contracting officers has declined from 811 in 1995 to 301 in 2014. The process for acquiring leased space, as outlined in the PBS Leasing Desk Guide, begins when GSA receives a request for space from a federal agency. GSA then works with an agency to obtain the specific requirements for a lease, such as the amount of space needed and the preferred geographic area. According to GSA, developing and finalizing agency space requirements should take anywhere from 2 to 8 months, depending on the complexity of the tenant agency’s space needs. After this stage, approximately 18–24 months is needed to procure new leased space prior to lease expiration for a typical lease acquisition, according to GSA. During this time, according to the PBS Leasing Desk Guide, GSA typically takes a number of steps to complete a lease acquisition (see fig. 2). In addition, for leases with a net annual rent above a specific threshold—$2.85 million in fiscal year 2014—GSA is required to submit a prospectus, or proposal, to the House and Senate authorizing committees for their review and approval. Given these requirements, the PBS Leasing Desk Guide suggests the lease acquisition process for prospectus-level leases begin 36 to 60 months prior to lease expiration. In cases in which GSA is unable to complete a long-term leasing action prior to a lease’s expiration, lease extensions may be used. A lease extension is a negotiated agreement between the lessor and the government allowing the tenant agency to continue to occupy its current location for a short term. In a lease extension, terms of the original lease remain in effect unless otherwise agreed upon. According to GSA, while extensions can perform an important function in filling a short-term gap or avoiding a holdover, extensions should not be considered standard practice, as they may limit the government’s ability to secure favorable lease terms, rents, or other conditions. In cases in which neither a long- term solution or extension is agreed upon prior to lease expiration, a lease may enter into holdover—where a federal tenant agency continues to occupy space beyond the expiration date of the lease term. In these cases, the government has no contractual right to occupy the premises but is continuing to do so. During a holdover, it is GSA’s policy to continue to make monthly rental payments at the current rental rate stated in the expired lease. According to the PBS Leasing Desk Guide, holdovers should be avoided. REXUS is the primary tool used by PBS to track and manage the government’s real property assets and store inventory data, building data, customer data, and lease information. GSA provides monthly lease inventory snapshots from REXUS on its website, which is available to the public. These snapshots include information such as lease number, location, rent, and lease status—including whether a lease is in holdover or extension when the snapshot is taken. REXUS is a real-time database and data is overwritten as lease information changes from day to day. For details on how we analyzed GSA’s available data, see appendix I. OMB has emphasized in guidance issued over the past several years that agencies should reduce space needs, including for leased space. Specifically, in June 2010, the President directed agencies to achieve $3 billion in real property cost savings by the end of fiscal year 2012 through a number of measures, including reducing leasing through consolidations and increased space utilization. In May 2012, OMB issued a memorandum directing agencies not to increase the size of their civilian real estate inventory, stating that increases in an agency’s total square footage must be offset through consolidation, co-location, or disposal of space from the inventory of that agency. This policy became known as “Freeze the Footprint.” In March 2013, OMB issued a memorandum establishing implementation procedures for its “Freeze the Footprint” policy, which specified that agencies should not increase the total square footage of their domestic office and warehouse inventory compared to a fiscal year 2012 baseline. In March 2015, OMB issued a memorandum further directing agencies to reduce the total square footage of their domestic office and warehouse inventory, similarly referred to as “Reduce the Footprint.” In a 2013 report on GSA’s prospectus-level—also known as high-value— leases, we found that GSA was working to help agencies reduce their space needs and consolidate space as their leases expire. However, as part of our work for this report, GSA officials said the agency has faced challenges in helping tenant agencies to reduce their space needs. For example, officials said that the current environment of reduced funding government-wide, and expectations that agencies will work to reduce space needs without necessarily having the funding to reconfigure their space, has resulted in a challenging situation. Also, in our 2013 report on high-value leases, we found that GSA, in its role as manager of real property for many civilian agencies, had an opportunity to set forth a vision and strategy for federal real property that encompassed the needs of multiple federal agencies and balanced real property priorities across the federal government that could help mitigate challenges over the long term. According to our most recent high-risk update, since federal real property was placed on GAO’s High Risk List in 2003, the federal government has made progress in demonstrating leadership commitment to improving real property management, however significant challenges remain in demonstrating progress and achieving tangible results. From fiscal years 2012 through 2014, lease holdovers and extensions were a relatively common occurrence—3,058 out of 11,457 leases we identified in GSA’s portfolio, or 27 percent of all active leases, went into holdover, extension, or both over the 3-year period. However, in analyzing month-to-month trends, we found that incidences of holdovers declined over time. The percentage of leases in holdover on a monthly basis decreased, from about 3 percent of all leases in GSA’s portfolio at the beginning of fiscal year 2012 to about 1 percent by the end of fiscal year 2014. There was no appreciable change in the rate of extensions over the same time period. The proportion of leases in extension— relative to all leases in GSA’s portfolio on a month-to-month basis— remained relatively steady at about 15 percent of the entire portfolio. However, comparing the number of holdovers and extensions against GSA’s entire lease portfolio reveals only part of the picture. While this analysis compares the number of holdovers and extensions against all leases in GSA’s portfolio at a given time, it does not provide insight into the outcomes of leases that were set to expire during the review period— in other words, those leases that had the opportunity to enter into an extension or holdover. In the next section, we will discuss the proportion of expiring leases that experienced a holdover, extension, or both during our 3-year review period. Of the 2,719 long-term leases set to expire in fiscal years 2012 through 2014, approximately 54 percent experienced a holdover, extension, or both—totaling 1,455 leases. Of these 1,455 leases, more than half experienced an extension and roughly 20 percent experienced a holdover. However, 25 percent of these leases experienced both a holdover and an extension over the review period we examined. (See fig. 3.) In addition to the 1,455 long-term leases set to expire that experienced extensions and holdovers described previously, 1,603 leases were already in holdover or extension at the beginning of fiscal year 2012. Of these, most—1,382 leases (86 percent)—were in extension at the beginning of the time period, with the remaining 221 leases (14 percent) in holdover. Moreover, similar to the long-term lease expirations described previously, many of these leases experienced both holdovers and extensions during the course of the 3-year period. Specifically, of the 1,382 leases that were in extension at the beginning of fiscal year 2012, 309 leases—or approximately 22 percent—also experienced a holdover. Similarly, of the 221 leases that were in holdover at the beginning of fiscal year 2012, 92 leases—or approximately 42 percent— would also experience an extension over the following three years. According to our analysis of GSA’s data, holdovers and extensions in GSA’s portfolio vary in duration. Since GSA’s monthly lease inventory snapshots do not capture the specific date a holdover or extension begins, these data provide limited information about the duration of holdovers and extensions.