In updates  to our high-risk report, we acknowledged that the administration and real- property-holding agencies had made progress toward strategically  managing federal real property and addressing some long-standing  problems. This fiscal  exposure is created because there is an expectation that the government  will incur costs associated with maintaining and operating the assets it  owns. Agencies Estimate Their Backlogs through Condition Assessments, Though Estimates Are Not Comparable

At the six agencies we reviewed, we found processes in place for the  agencies to periodically assess the condition of their assets—processes  that the agencies also generally used to identify repair and maintenance  backlogs for their assets. From these, GSA develops what it refers to as its reinvestment  liability, which includes cost estimates for repair and maintenance items  that GSA has determined need to be done now and expects will need to be  done within the next 10 years. VA officials told us that VA’s deferred maintenance estimate is  used only to comply with FASAB’s requirement and does not represent the  cost to repair and maintain VA’s facilities. As a  result, agencies reported backlog estimates associated with assets that are  inactive, that are not critical to their missions, or that have been identified  for demolition in the next few years. Agencies Manage Their Backlogs as Part of Their Overall Mission-Driven Real Property Management Programs

Each agency that we reviewed manages its backlog as part of its overall  real property management. In  spite of these efforts, agency officials generally expect their backlog  estimates to increase as the federal portfolio of real property continues to  age and the cost of making repairs increases. Agencies Manage Repair and Maintenance Work Based on Safety and Potential Impact on Mission

Real property managers at the six agencies told us that it is more  important to prioritize repair and maintenance work on the basis of safety  and the potential impact of not doing the work on the agencies’ missions  rather than on when the work was identified to be done. Impact of Backlogs Has Been Limited at Sites We Visited

At the six agencies we reviewed, officials have managed their facility  repairs and maintenance to minimize the impact of their backlogs on the  agencies. Officials said that their repair and maintenance backlogs have  generally not affected the ability of their agencies to accomplish their  missions, but the backlogs have led to higher operating and maintenance  costs and short-term inconveniences. Also, some officials cautioned that  their backlogs create a real potential for an unanticipated incident to  occur that could adversely affect an agency’s mission. Agency officials at some of the sites told  us that the effect of their repair and maintenance backlog is difficult to  see, because the maintenance staff have prioritized projects that directly  affect the mission and have done an excellent job of keeping the facility  operating while facing increased repair needs. Newer systems, such as  heating and air-conditioning systems, could operate more efficiently,  provide more reliable service to the tenants, and reduce operating costs. In  addition, overall maintenance costs increase when a roof that is due for  replacement is repeatedly patched rather than replaced. Such a reporting requirement should include a  standardized definition of repair and maintenance costs related to all  assets that agencies determine to be important to their mission and  therefore capture the government’s fiscal exposure related to its real  property assets. Appendix I: Scope and Methodology

Our objectives were to (1) describe how agencies estimate their repair and  maintenance backlogs, (2) determine how agencies manage their backlogs  and the expected future changes in maintenance and repair backlogs, and  (3) identify how backlogs have affected some facilities. To accomplish our  objectives, we reviewed the six agencies that each told us in 2007 that they  had over $1 billion in repair and maintenance backlogs associated with  their held assets: the Departments of Defense, Energy, the Interior, and  Veterans Affairs, the General Services Administration, and the National  Aeronautics and Space Administration. For each agency, we interviewed  headquarters officials, reviewed agency documents, obtained data on  repair and maintenance backlogs for the agency’s held assets, and visited  two agency sites to determine how the sites estimate and manage their  backlogs as well as the extent to which the sites’ missions have been  affected by their backlog.
Why GAO Did This Study

In 2003, GAO designated federal real property as a high-risk area. In 2007, GAO reported that real-property-holding agencies and the administration had made progress toward managing their real property, but underlying problems, such as backlogs in repair and maintenance, still existed and six agencies reported having over $1 billion in repair and maintenance backlogs. Owning real property creates a fiscal exposure for the government from the expectation that agencies will incur future maintenance and operations costs. GAO was asked to (1) describe how six agencies estimate their repair and maintenance backlogs, (2) determine how these agencies manage their backlogs and the expected future changes in these backlogs, and (3) identify how backlogs have affected operations at some sites. GAO reviewed agency documents, interviewed officials, and visited two sites at each of the six agencies.

What GAO Found

The six agencies that GAO reviewed all periodically assess the condition of their assets to identify needed repairs and maintenance but then use different methods to define and estimate their repair and maintenance backlogs. As a result, the agencies' estimates are not comparable. Three of the six agencies--the Departments of Energy (DOE), the Interior (DOI), and the National Aeronautics and Space Administration (NASA)--defined their backlogs as work that was identified to correct deficiencies. A fourth agency, the Department of Veterans Affairs (VA), also defined its backlog as work identified to correct deficiencies, but VA's backlog included only work on systems, such as mechanical and plumbing systems, found to be in poor or critical condition. The General Services Administration (GSA) and the Department of Defense (DOD) both did not track a backlog. Instead, GSA calculated its reinvestment liability--the cost of repairs and maintenance needed now and in the next 10 years. DOD assigned a quality rating to each facility which was based on the ratio of repair costs to the asset's value. The backlog estimates do not necessarily reflect the costs the agencies expect to incur to repair and maintain assets essential to their missions or to avert risks to their missions. For example, these estimates could understate an agency's backlog because they are based on industry-standard costs, or could overstate an agency's backlog because they include inactive assets that are not essential to the agency's mission or may be demolished. The six agencies GAO reviewed generally manage their backlogs as part of their overall real property management and expect the size of their future backlogs to increase. Agencies focus on maintaining and repairing real property assets that are critical to their missions and have processes to prioritize maintenance and repair items based on the effects those items may have on their missions, regardless of whether the items are considered part of the backlogs. For example, VA officials told us that their first priority is to perform maintenance and repairs at places that directly affect patient care, such as operating rooms. Agencies are using strategies such as demolishing assets that are no longer needed to reduce their overall backlogs. However, agency officials generally expect their backlogs to increase as the federal portfolio of real property continues to age and construction costs increase. At the six agencies GAO reviewed, officials have managed their facility repairs and maintenance to minimize the impact of their backlogs on their operations. Officials said that postponing repairs and maintenance generally leads to higher operating and maintenance costs and short-term inconveniences, but they have managed the risks so that the agencies can continue to accomplish their missions. For example, maintenance costs increase when a roof that is due for replacement is repeatedly patched rather than replaced. While several officials said their maintenance staffs have been able to limit the impact of backlogs on operations, they cautioned that there is a real potential for an incident to adversely affect an agency's mission. At one site GAO visited, a multimillion-dollar piece of equipment could have been damaged by a leak from an air conditioning system if it had not been covered with a tarp.