GAO Unconvinced: Real Property Stays on High-Risk List

The Government Accountability Office (GAO) has kept federal real property on its high-risk list. Citing “long-standing problems with excess and underutilized property, deteriorating facilities, unreliable real property data, and reliance on costly leasing,” GAO expressed concern that insufficient progress has been made to warrant removal of real property from the list.

The determination was just published in GAO’s “High-Risk Series: An Update,” issued January 2007 (Download PDF). Federal real property was first designated a high-risk area in January 2003. In February 2004, Executive Order 13327 (EO 13327) was signed, calling for improvements to the federal real property asset management process.

“Progress has been made,” GAO concedes in its update, “but the problems that led to the designation of federal real property as a high-risk area still exist.

“In addition, deep-rooted obstacles, including competing stakeholder interests and legal and budgetary limitations, could significantly hamper a government-wide transformation,” the report update concludes.

Some progress made

The administration and real property-holding agencies have made progress toward strategically managing federal real property, said the GAO.

The office applauded work to date in complying with EO as well as the President’s Management Agenda initiative on real property. The establishment of a Federal Real Property Council, development of agency asset management plans, standardized data reporting, and new performance measures were among the achievements cited by GAO.

Nonetheless, GAO remained concerned that “the underlying conditions still exist” that prompted real property’s initial high-risk designation. According to GAO, the Departments of Energy (Energy) and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA) report that “over 10 percent of their facilities are excess or underutilized.”

GAO also noted that “Energy, NASA, the General Services Administration (GSA), and the Departments of the Interior (Interior), State (State), and Veterans Affairs (VA) reported repair and maintenance backlogs for buildings and structures that total over $16 billion.” Energy, Interior, GSA, State, and VA also report relying on leasing to meet space needs, GAO said.

Data reliability still a problem

While agencies have made progress in collecting real property data, “data reliability is still a challenge at DOD and other agencies,” GAO reported.

The problems identified in the High-Risk Series update are made worse, GAO said, “by deep-rooted obstacles that include competing stakeholder interests, legal and budgetary limitations, and the need for improved capital planning.” The office cited agencies’ claim that “local interests” pose barriers to disposing of excess property, and “agencies’ limited ability to pursue ownership leads them to lease property that would be more cost-effective to own over time.”

To be removed from the high-risk list, GAO said “agencies will need to show significant progress toward eliminating the problems that led to this area’s designation as high risk, such as reducing inventories of facilities to a minimum and making headway in addressing the repair backlog.”

In addition, GAO recommended, “the Office of Management and Budget (OMB) and agencies, through the Federal Real Property Council, will need to focus on developing strategies to address deep-rooted obstacles to a successful transformation, such as competing stakeholder interests.”