	Security, Budget Scorekeeping Requirements, and Other Factors Have Affected Federal Building Costs in Recent Years

In managing the costs of constructing, leasing, and operating federal  buildings, GSA has faced pressures in a number of areas in recent years. Many factors driving costs, such as security requirements, have tended to  increase costs for construction, leasing, and operations. Security Requirements Have Raised Costs of Constructing, Leasing, and Operating Federal Buildings

As a result of the Oklahoma City bombing in 1995, President Clinton  directed the Department of Justice to assess the vulnerability of federal  office buildings to attack, which resulted in a 1995 report entitled  Vulnerability Assessments of Federal Facilities. For example, according  to a GSA official, security costs for courthouses have risen from about $8 a  square foot to about $24 a square foot. To ensure budget recognition of the government’s  commitments when they are made, budget scorekeeping requires GSA to  include the total cost of a building construction project in its budget in the  year that the government commits the resources. This has led GSA to lease rather than construct space for some  new acquisitions needs. The new Patent and Trademark Office complex currently  under construction in Alexandria, Virginia, is one example of an  acquisition that cost taxpayers more because GSA leased the property  rather than constructing it. A GSA present value cost analysis estimated  that the recently leased U.S. Patent and Trademark Office complex cost  taxpayers about $48 million more to lease than construct. This includes federal leased space. Contract modifications after the initial contract is issued also can affect  costs. We Have Designated Federal Real Property as High-Risk

In January 2003, we designated federal real property as a high-risk area. Many assets are no longer  effectively aligned with or responsive to agencies’ changing missions and  are therefore no longer needed. Furthermore, many assets are in an  alarming state of deterioration; agencies have estimated restoration and  repair needs to be in the tens of billions of dollars. Given this situation, we concluded in our high- risk report that there is a need for a comprehensive and integrated  transformation strategy for federal real property, and an independent  commission or governmentwide task force may be needed to develop this  strategy.
Why GAO Did This Study

The General Services Administration (GSA) has responsibility for more than 8,000 owned and leased buildings nationwide, together encompassing about 338 million square feet of space. Understanding construction and operating costs for these buildings is important, as the increased federal budget deficit has led to intensified competition for federal resources and recent events have highlighted security needs. GAO examined (1) factors that have affected GSA's construction, leasing, and operating costs and (2) our designation of federal real property as a high-risk area.

What GAO Found

Several factors have affected GSA's construction, leasing, and operating costs for federal buildings. For example, new security requirements for federal buildings developed after the 1995 bombing of a federal building in Oklahoma City and the September 11, 2001, terrorist attacks have led to increased costs for such measures as strengthening the ability of buildings to sustain a bomb blast and limiting building access. According to a GSA official, security costs for courthouses have increased from about $8 a square foot to about $24 a square foot. Another factor affecting costs is budget scorekeeping requirements meant to ensure full recognition of the government's financial commitments. The scorekeeping requirement that GSA must include in its budget the entire cost of constructing a building in the year the government commits the resources has led GSA to lease space rather than construct it, even though leasing often results in a higher overall cost to the taxpayer. For example, a GSA present value cost analysis estimated that the recently leased U.S. Patent and Trademark Office complex shown below, currently being constructed in Alexandria, Virginia, by a private company, cost taxpayers about $48 million more to lease over the 20-year lease period than it would have cost to purchase it. In January 2003, GAO designated federal real property as a high-risk area, in part because of such cost factors and also because many property assets are no longer effectively aligned with or responsive to agencies' changing missions and are no longer needed. Furthermore, many assets are in an alarming state of deterioration that may cost tens of billions of dollars to address. GAO believes there is a need for a comprehensive and integrated transformation strategy for federal real property.