Managing Federal Real Property

What We Found | What Needs to Be Done | Key Reports

Why It's High Risk

The federal real property portfolio is vast and diverse, totaling more than 3 billion square feet of space with an estimated gross value in the hundreds of billions of dollars. The Departments of Defense and Veterans Affairs, the U.S. Postal Service, and the General Services Administration (GSA), hold the majority of federally owned and leased space.

GAO designated federal real property as a high-risk area in 2003 because of long-standing problems with excess and underutilized property, deteriorating facilities, unreliable real property data, over-reliance on costly leasing, and ongoing security challenges.
GAO found in 2009 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.

^ Back to topWhat We Found

OMB and real property-holding agencies have made progress in strategically managing real property.

In response to an administration reform initiative and executive order 13277, agencies have, among other things, established asset management plans, standardized data, and adopted performance measures. The executive order was signed by the President in February 2004 and established new federal property guidelines for 24 executive branch departments and agencies, not including USPS.
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 Department of Veterans Affairs 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.
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. GAO investigators carrying the components for an improvised explosive device successfully passed undetected through security checkpoints monitored by FPS's guards at 10 federal facilities.

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.

Competing stakeholder interests—such as local resistance to giving up a federal presence—pose a barrier to disposal of excess property.
Legal and budgetary limitations—such as funding needed to prepare property for disposal and some agencies' inability to retain sale proceeds—are also barriers.
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.
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.

^ Back to topWhat Needs to Be Done

While reforms to date are positive, the administration will be challenged to sustain reform momentum, reach consensus on how the deep-rooted obstacles should be addressed, and show continued progress in eliminating problems, such as excess property and repair backlogs.

Continued progress will require well-thought strategies, and in some cases, changes in law. However, to date, OMB and agencies have not implemented GAO's recommendation that the obstacles be addressed more directly through a re-assessment of options, which would be the first step toward reform. Although progress has been made, it is unlikely that a large-scale transformation in this area will occur unless this is done.

^ Back to topKey Reports

Federal Real Property: An Update on High Risk Issues: GAO-09-801T, July 15, 2009; Summary (HTML) Highlights Page (PDF) Full Report (PDF, 32 pages) Accessible Text

Homeland Security: Preliminary Results Show Federal Protective Service's Ability to Protect Federal Facilities Is Hampered By Weaknesses in Its Contract Security Guard Program: GAO-09-859T, July 8, 2009; Summary (HTML) Highlights Page (PDF) Full Report (PDF, 22 pages) Accessible Text

Federal Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to Hamper Reform: GAO-07-349, April 13, 2007; Summary (HTML) Highlights Page (PDF) Full Report (PDF, 89 pages) Accessible Text Recommendations (HTML)