Senate Hearing Tackles Data, Leasing, Backlogs

Bi-partisan legislation is in the works “to streamline property disposal and provide agencies with incentives to dispose of property they no longer need,” according to Senator Tom Carper (D-DE). Carper made the announcement at a May 24 Congressional hearing that also addressed lease arrangements and maintenance backlogs.

“Federal Real Property: Real Waste in Need of Real Reform” was convened under the auspices of the U.S. Senate Committee on Homeland Security and Governmental Affairs, and its Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security. The hearing was called to “examine agencies’ efforts to address the property management problems highlighted in a recent GAO report, ‘Federal Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to Hamper Reform (GAO-07-349).’”

Senator Tom Coburn (R-OK), who attended the hearing, called Federal real property a “sleepy, non-invigorating area of government that is costing the American public billions.”

Data needs improvement

Carper asked Mark Goldstein, Director of Physical Infrastructure for the Government Accountability Office (GAO) where work in real property “falls short.” Goldstein replied that the Office of Management and Budget (OMB) has done an “admirable job so far” in improving real property data reliability, maintenance backlog, excess inventory, leasing and security issues. He noted, however, the need to improve in the area of data validation.

“Collecting real property data has been quite sketchy,” Goldstein said. He noted that there are “holes” in the gathering and reporting of real property data, with a lack of validation at administrative levels.

Goldstein called for “more controls” on the collection and reporting of data. He also stressed that government needs a “better handle” on funds for maintenance backlogs, using the example of the Arts and Industries Building of the Smithsonian Institution. Now closed for repairs costing “hundreds of millions of dollars,” the repairs would have cost much less if the problems had been addressed earlier, Goldstein said.

The discussion then turned to the issue of leasing, which Coburn called “the least practical way to hold property.” Carper agreed, using the example of the Patent and Trademark Office, which he said paid “tens of millions of dollars per year more” to lease its properties than to build “from the ground up.” In response, Clay Johnson, Deputy Director of the OMB, said that agencies have been asked to combine leases, consolidate locations, and find other ways to use fewer lease agreements. He commented that the Department of Labor in particular has been “doing a good job” in this regard.

Maintenance backlog phenomenon

Deferred maintenance was a subject of considerable debate, with Carper noting some $77 billion in maintenance backlogs. Philip Grone, Deputy Under Secretary of Defense, Installations and Environment with the Department of Defense (DoD), commented on the “phenomenon” that decision-makers are “always willing to wait one more year” on maintenance. This reflects that measurable impacts of not adequately funding maintenance and repair requirements are difficult to quantify.

In the case of the DoD, Grone said, his predecessor called for a budget figure of two percent of plant replacement value to be plowed back into maintenance of real property inventory. Grone noted, however, that there was “no way to calibrate what was necessary.” He commented that DoD now has created models to help “understand what the requirements are,” and that DoD’s own maintenance backlog of $56 billion is a “constant reminder of a legacy of poor management practice.”

OMB’s Johnson spoke to the issue of obstacles to disposal of unneeded real property – part of the pilot legislation to be introduced by Carper and Coburn. Asked by Coburn what a goal of the legislation ought to be, Johnson responded that agencies must be given incentive to liquidate surplus assets. In addition, Johnson believes that accounting procedures must be re-evaluated to look more favorably at disposal. Disposal should be “scored as a plus to government, rather than a cost,” as is currently the case, he said.