Federal agencies, including the judiciary, that operate in facilities under the control and custody of GSA are required to pay rent for the space they occupy. Rent payments, which by law must approximate commercial rates, are deposited into the FBF, which is a revolving fund that GSA uses to provide a range of real property services, including maintenance, repairs, and alterations, to space occupied by federal agencies. GSA, through FBF, encourages federal agencies to be accountable for the space they use by requiring them to budget and pay for their own space requirements. A committee report accompanying the enactment of FBF noted that because each agency would have to budget for its space needs, doing so would promote more efficient and economical use of space by government agencies. The judiciary’s rent payments represent roughly 15 percent of all rent payments made into FBF, making it one of the two largest contributors. On the basis of a rent pricing policy introduced in the late 1990s, the rent GSA charges is composed principally of shell rent, operating expenses, tenant improvements, and security costs. These components account for over 96 percent of the judiciary’s rent bill payments in fiscal year 2005. The shell rent represents the cost of using the structure, base building systems, concrete floor, and basic wall and ceiling finishes and is the largest rent component, representing 60 percent of the judiciary’s annual rent bill payments in fiscal year 2005. For most government-owned properties, shell rent does not represent the actual costs, but is based instead on comparable private sector commercial rents in the local commercial market. Tenant improvements reflect customizing space for that tenant and can include private offices, special type spaces, floor covering, doors, and wood finishes. The tenant is responsible for deciding how to finish the space beyond some basic minimum standards and thus has control over much of the cost. GSA officials have said that the judiciary has the highest costs for tenant improvements in its inventory because of the level of finishes needed in federal courthouses. Unlike the other rent components, tenant improvement costs are removed from the rent bill once the tenant has completely paid for them. Operating costs—which cover cleaning; general maintenance; and heating, air conditioning, and other utilities—are set as part of the market appraisal for the shell rent in owned space. But unlike the shell rent, operating costs are adjusted annually for inflation in between appraisals. Until fiscal year 2005, the judiciary paid Federal Protective Service (FPS) security costs to GSA as part of its rent payment. Starting in fiscal year 2005, however, the judiciary began paying these security costs directly to the Department of Homeland Security (DHS) after FPS was transferred to that department. However, since FPS security costs still exist, and they were an important part of rent for all of the other years we analyzed, we included these costs as if they were still part of annual rent bill payments for fiscal year 2005. Rent is also composed of several other components, including fees for parking, building joint use, antennas, and GSA’s Public Buildings Service. These other components comprised about 4 percent of the judiciary’s entire rent bill in fiscal year 2005. The Judicial Conference of the United States (Judicial Conference) is the judiciary’s principal policy making body. The Judicial Conference works in coordination with AOUSC, which is responsible for administering the federal judiciary’s budget as well as performing other programmatic and administrative functions, such as paying the judiciary’s rent bill from its annual appropriations from Congress. Each circuit has a judicial council, which is composed of federal judges in that circuit, and the council has the authority to determine the need for all space accommodation within its circuit. As such, the district, bankruptcy, and appeals courts occupy space in courthouses or lease space in other federal or private office buildings. The district courts are the trial courts of the federal court system, housing both district and magistrate judges. They occupy the most space within the federal judiciary. The district courts have jurisdiction to hear nearly all categories of federal cases, including both civil and criminal matters. The federal judiciary has exclusive jurisdiction over bankruptcy cases, which are overseen by bankruptcy judges. The court of appeals from each circuit hears appeals from the district courts located within its boundaries, as well as appeals from decisions of federal administrative agencies. Figure 1 illustrates the rentable square feet distribution within the federal judiciary. The federal judiciary’s rental obligations for federally owned and leased space have steadily risen from $780 million to $990 million, or 27 percent from fiscal years 2000 through 2005, after controlling for inflation using the Gross Domestic Product price index. During this period, the judiciary had a net increase in the amount of space it occupies, from 33.6 million to 39.8 million rentable square feet, which is a 19 percent increase nationwide. About two-thirds of the rent increase is attributable to this increase in square footage. Among the components of rent, shell (the building with basic infrastructure) grew proportionately with the amount of net space added—about 19 percent. However, increases in operating costs (driven by increases in energy costs) and security costs grew disproportionately higher than the percentage of net space added, thus contributing to the overall increase in rent (see figure 2). The costs of tenant improvements (finishes such as carpeting) increased at a slower rate than the amount of net space added. AOUSC disagreed with our methods for attributing costs to the judiciary’s net growth in square footage. We continue to believe that our methods are sound. Square footage and total rent growth occurred in all years, circuits, and courts (see figure 3). The judiciary’s rent increases have outpaced those of other agencies located in GSA space, largely because the federal judiciary’s square footage is growing faster than that of other agencies. However, the rate of operating cost growth was similar to that experienced by other agencies. Much of the judiciary’s recent growth in net square footage was caused by the construction of new courthouses. New courthouses represent about 8.8 million rentable square feet of new space that the judiciary has taken occupancy of since fiscal year 1998 (a larger timeframe than our rent trend data). According to judiciary officials, much of the judiciary’s growth and accompanying space-related needs have been the result of elevating workloads, such as increases experienced in civil case filings. The judiciary’s courthouse construction effort may continue. Before it imposed a moratorium in 2005, postponing new courthouse construction projects for two years, the judiciary indicated that it had 35 additional courthouse construction projects planned for fiscal years 2005 through 2009, estimated to cost billions of dollars. According to AOUSC, these projects will be subject to the judiciary’s new asset management planning process that will consider renovation and other ways to limit new construction. As of May 2006, no final decisions had been made. We found that neither the judiciary nor GSA had routinely and comprehensively analyzed the factors influencing the rent increases. This information could help the judiciary better understand the reasons behind its rent increases, make more informed space allocation decisions in the future, and identify errors in GSA’s billing. Furthermore, the lack of a full understanding of the reasons for increases in the judiciary rent, in our view, contributed to growing hostility between the judiciary and GSA. Conversely, GSA’s lack of full understanding of the reasons for the rent increases left it unable to justify them to the judiciary and other stakeholders, such as Congress. The federal judiciary faces several challenges to managing its rent costs including costly new construction requirements, a lack of incentives for efficient space use, and a lack of space allocation criteria for appeals and senior district judges. First, modern courthouses require structural and architectural elements that make them among the most costly types of federal space to construct. Chief among these elements are the three separate circulation patterns for judges, prisoners, and the public that the U.S. Marshals Service requires for security (see figure 4). These construction costs necessitate rental rates under GSA’s pricing policy that are more expensive than the highest-quality office space in some markets, including Denver, Colorado; Phoenix, Arizona; and Seattle, Washington. This necessitates GSA using an approach for calculating rent charges that is based on the costs to construct the building—known as return on investment pricing—instead of an appraisal. The judiciary’s policy of providing one courtroom per district judge sets the number of courtrooms needed in new federal courthouses and adds space requirements, consequently increasing rent payments. The judiciary has initiated a rent validation effort, but it does not address the lack of incentives for efficient space use at the circuit and district levels. Because rent is paid centrally by AOUSC, circuits and districts have few incentives to efficiently manage their space. An example of the inefficiencies that may result is in the Eastern District of Virginia, where the judiciary paid about $272,000 in 2005 to rent 4,600 square feet of office space for an appeals judge in McLean, Virginia, in addition to paying for 4,300 square feet of chamber space originally designated for that judge in the Albert V. Bryan U.S. Courthouse in nearby Alexandria, Virginia. According to AOUSC, the judiciary has subsequently pursued alternative uses for this chamber space. During site visits, we observed multiple instances of unused or unassigned courtrooms, chambers, and support spaces. Although planning and building for future needs may limit alternative uses of space until it is occupied, some of this underutilization is the result of outdated criteria, which stipulated the existence of support areas, such as libraries, that in some cases are now rarely used. In most cases, this was because judicial officers are increasingly turning to electronic sources and research and keeping the limited number of books they need in their chambers. However, since the Design Guide provides space for law libraries, the districts we visited all had them (see figure 5).