In contrast to GSA, for example, they do not (1) establish prescriptive, detailed technical specifications or (2) require extensive, multilevel reviews of proposed lease contracts. Private Sector Relies on Market Expertise and Flexibility to Lease Space

The 12 private firms we contacted focus on results rather than on the process when leasing space. However, the General Services Administration’s (GSA) highly prescriptive and process-oriented leasing approach—grounded in federal procurement law, uniformity, and numerous well-intended procedural controls added over the years—has become at odds with the dynamic commercial real estate market. It impedes GSA’s ability to get good, timely leasing values and may be causing the government to pay more than is necessary for leased space. In contrast, the more results-oriented approach that private sector firms typically use is much simpler, more flexible, and takes less time. GSA recognizes the need to improve the timeliness and cost effectiveness of its leasing process, has already adopted streamlined procedures for certain small leases, and is exploring other changes in response to the National Performance Review (NPR) and the President’s recent initiative to reduce the size of government and realize long-term cost savings. We believe that a more timely, responsive, and cost-effective GSA leasing process will require fundamental changes in the traditional federal leasing paradigm, GSA’s organizational culture, and its role in meeting agencies’ office space needs. In this regard, GSA should work closely with federal customer agencies and the commercial real estate community to more fully explore their concerns about the existing leasing process, identify alternative ways of carrying out the leasing function, and test and evaluate their use and potential adoption; test the benefits, risks, and potential federal application of the private industry leasing practices discussed in chapter 3 of this report that are within its authority and seek the necessary authority from (1) Congress to test other practices and alternatives that GSA believes would require legislation and (2) the Office of Management and Budget to test any needed changes in federal procedural requirements and controls under the managerial accountability and flexibility provisions of GPRA; and adopt administratively or, if GSA determines that legislation is needed, propose to Congress the necessary legislation to enable it to adopt those private industry practices or other alternatives tested that result in documented improvements in GSA’s leasing performance, make sense, and are cost effective. We agree that the federal laws, procurement regulations, and other national policies that now guide and influence GSA’s leasing process, especially CICA, will need to be reexamined.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) policies, procedures, and practices for leasing office space, focusing on how they compare with private industry leasing practices.

What GAO Found

GAO found that: (1) GSA has a highly prescriptive and process-oriented leasing approach which prevents it from timely securing good values on office space leases and impedes its ability to deliver office space to federal agencies; (2) federal procurement laws and procedural controls enacted to ensure leasing uniformity, compliance, and fairness unduly restrict GSA flexibility; (3) GSA may be paying too much for leased space because of its confusing and time-consuming solicitations and standard contracts; (4) the 12 private-sector firms reviewed use a simpler, more flexible, results-oriented leasing approach that reduces their leasing costs; (5) the private firms do not use detailed specifications and contracts or require multilevel reviews of proposed leases; (6) the firms rely on their staff's expertise, conform to customary commercial practices, and assume more leasing risks; (7) GSA has streamlined its procedures for small leases and is exploring other leasing alternatives in response to initiatives to reduce the government's size and improve performance; (8) GSA could make other administrative changes to improve timeliness and reduce costs, but significant improvements will require fundamental changes in its leasing approach, organizational culture, and role in meeting federal office needs; and (9) federal procurement laws and regulations and other national policies need to be reexamined and possibly changed in order for GSA to adopt a more results-oriented leasing approach.