New Report Underscores Need to Improve Management of Government’s Financially Underperforming Properties

WASHINGTON – Today, a bipartisan group of senators reacted to a new report that found that the federal government needs to improve the management of its most financially underperforming buildings.

In its assessment of the General Services Administration’s (GSA) federal property portfolio, the Government Accountability Office (GAO) found 251 buildings that were consistently underperforming financially. Of those 251 buildings, 33 suffered an average loss of $100,000 or more each for five fiscal years from 2009-2013. Such losses hurt the government’s ability to generate sufficient revenue to fund its buildings’ own operations, repairs, and capital needs.

GAO found that the GSA has taken action to improve the performance of these buildings, including moving federal tenants into owned space, leasing space to non-federal tenants, reducing operating and maintenance costs, renovating assets, and creating public-private partnerships. However, issues such as rent limitations, poor market conditions, characteristics of the buildings, and high operating costs associated with the mission of the agency can create challenges for generating higher revenue. For example, GAO found that consistently poor-performing buildings are, on average, 23 years older than other buildings and are more likely to have a historic designation, which can create challenges when trying to make renovations and attract tenants. GAO also found that GSA’s method for measuring the performance of its real property portfolio, including underperforming properties, needs improvement.

Sens. Tom Carper (D-Del.), Ron Johnson (R-Wis.), and John Barrasso (R-Wyo.) requested the report and released the following statements in reaction to its release:

Sen. Carper, ranking member of the Homeland Security and Governmental Affairs Committee: “Excess and underutilized federal properties cost taxpayers billions of dollars in unnecessary maintenance costs each year. One way we can help mitigate the costs of our real property portfolio and ease the heavy burden it places on taxpayers is to help our existing and underutilized buildings generate more revenue. Today’s report shows that the General Services Administration (GSA) needs to take action to make its federal building inventory, including some consistently underperforming buildings, more sustainable for the long-run. However, the report also shows that some factors, such as poor market conditions and unique characteristics of certain buildings, such as a historic status, can make improving the financial performance of these select buildings very difficult.

“With that in mind, I am encouraged to see that GSA has already taken steps to improve the financial performance of many of these buildings and is working to develop a comprehensive plan to address the recommendations in this report,” Sen. Carper continued. “But it needs to continue to refine the way it measures its property performance so we have the best information and data possible. It’s important that GSA continues to build on the progress the Administration has made in reducing its property footprint. But this is a shared responsibility. That’s why I am working with my colleagues in Congress to partner with the Administration as we consider legislative solutions to this issue.”

Sen. Johnson, chairman of the Homeland Security and Governmental Affairs Committee: “Multiple reports from the Government Accountability Office (GAO) have highlighted the federal government’s mismanagement of its real property holdings. This is another example of why federal real property remains on the GAO High Risk List, which I highlighted at one of my first hearings as chairman of this committee.

“It is important to reform the way the government manages property,” Sen. Johnson continued. “I look forward to working with Ranking Member Carper to save taxpayer dollars and dispose of excess federal buildings. I applaud the GAO for highlighting this issue. Its report details how outdated and inaccurate performance metrics hinder progress. I encourage the General Services Administration to adopt the GAO’s recommendations.”

Sen. Barrasso: “This GAO report confirms significant issues with the way GSA spends Americans’ taxpayer dollars. The fact that 20 percent of GSA buildings were consistently classified as nonperforming or underperforming is unacceptable. GSA must continue to consolidate its property holdings to ensure that taxpayer dollars are not being wasted. This report should serve as a clear wakeup call for why we must increase accountability and improve the way the federal government manages its properties.”

In February, GAO identified federal real property management on its biennial High Risk List. Federal property management has been placed on GAO’s High Risk List since 2003 due in part to the significant level of underutilized and excess property across the federal government’s vast property holdings portfolio, and unreliable or inaccurate inventory data.

In March, the White House launched the National Strategy for the Efficient Use of Real Property and Reduce the Footprint policies, which charges agencies to implement policies to improve property management, consolidate government office space, and dispose of unneeded buildings. These policies emphasize the importance of data-driven decision making, including measuring the performance of property assets in the federal inventory.