Congress Takes Tentative Steps toward Real Property Reform
By Kimberly Price

Despite jurisdictional disputes and ongoing complaints of budgetary shortfalls, political activity surrounding federal real property reform was in the spotlight in March. Advocates on Capitol Hill are expressing hope that some form of legislation will be introduced during the term of the 110th Congress.

On March 1, 2007 the Senate Committee on Homeland Security and Government Affairs’ Federal Financial Management Subcommittee held an oversight hearing titled, “Improving Federal Financial Management: Progress Made and the Challenges Ahead.” The panel consisted of Linda Combs, Comptroller for the Office of Federal Financial Management in the Office of Management and Budget (OMB), and David Walker, Comptroller General of the Unites States, Government Accountability Office (GAO).

Senator Tom Carper (D-DE), the new ranking member of the subcommittee, presided over the hearing. Senator Claire McCaskill (D-MO) was also in attendance, posing tough questions of the panelists.

Senator Carper specifically asked the panelists about how agencies are dealing with real property requirements. OMB’s Combs said that agencies were eager to comply with the Executive Order 13327 on Federal Real Property Asset Management (EO 13327). Referencing the common plant replacement value estimate of $1.2 trillion, Combs stressed the need to continue to push agencies and departments to work toward goals set out in their Asset Management Plans (AMPs).

Pilot legislation discussed

Discussion during the oversight hearing also turned to HR 3134 (the Federal Real Property Disposal Pilot Program), introduced in 2006 through the House Committee on Government Reform.

This real property pilot program legislation reportedly is included in the President’s FY2008 budget proposal. The Federal Financial Management Subcommittee may introduce a streamlined version of the legislation in this current term of Congress. The program would set up incentives for agencies to retain 20 percent of the proceeds from sale of surplus property. Eighty percent would revert back to the general funds of the Treasury. (The original return to agencies proposed in HR 3134 had been set at just five percent, an amount viewed by observers at the time as insufficient to justify the expense of the disposal effort.)

During the hearing GAO’s David Walker acknowledged that real property has been on the GAO high-risk list since 2003. Making reference to the Base Realignment and Closure (BRAC) process, Walker noted that, in the future, agencies might be faced with similar realities.

Walker noted that, to improve real property asset management, Congress must address two primary issues: 1) ensure that appropriations can be directed to the process, and 2) ensure that agencies are allowed to retain a piece of the proceeds. He said agencies must be able to realize savings and reutilize resources, if possible.

Walker also made mention of the Main Post Office in Chicago (depicted in the GAO’s January 2007 High-Risk Series Update), and showed frustration that it sat vacant for so long wasting taxpayer dollars. He also referenced the definition of “waste” as written by the GAO. According to that definition, “Waste involves the taxpayers as a whole not receiving reasonable value for money in connection with any government funded activities due to an inappropriate act or omission by players with control over or access to government resources.”

Elsewhere on March 1, at breakfast meeting sponsored by the Association of Government Accountants, Congressman Tom Davis (R-VA) answered questions regarding real property – specifically, the status of HR 3134. He responded by saying that while both he and Congressman Henry Waxman (R-CA), Chairman of the House Committee on Oversight and Government Reform, think real property is important, the issue is stuck in limbo due to committee jurisdictional disagreements. There does not seem to be any movement by either jurisdiction to resolve the issue, according to Davis.

What must legislators do to help?

Overall, it must be acknowledged that current political activity shines a small ray of light on federal real property. Despite this small amount of attention, however, it must be noted that there is no legislation in place yet to codify EO 13327, or to help fund the inventory and disposal process.

There are a few simple changes that legislators could implement that would make the process work better.

Certainly, the pilot program legislation of HR 3134 (or whatever new version may come from the 110th Congress) is a good move in the right direction. Real property asset management is an unfunded initiative, and many agencies believe they lack the funds required to identify surplus property. Having a portion (20%) of disposal proceeds returned to the affected agencies provides retroactive budgetary support for this initiative.

Allowing agencies to retain a portion of the proceeds is a move in the right direction. However, discussions with executive branch officials have reflected that the twenty percent is likely insufficient to cover the cost associated with disposal. Even if it were sufficient, the residual proceeds do not provide adequate incentive for action by the agencies.

Real property professionals contend that decentralized decision-making hampers Department-wide accounting of real property inventory. Congress may be able to address that obstacle by having real property performance measured on total cost of occupancy by the funding department – that is, total cost to occupy irrespective of any lease, ownership or grants that may exist. Additionally, appropriations for real property could be made by a single line item for occupancy at the department or agency headquarters level. Further, appropriators should only fund the demonstrated requirement for space, not the current inventory.

As the issue of real property reform moves forward, it is essential that we be vocal and visible with our Congressional Representatives if the profession expects to see meaningful change in this area.

Kimberly Price is VISTA’s liaison for legislative affairs. She can be reached at 703-561-4104, or via email at kimberly.price@vistatsi.com