Next, it required agencies that occupy GSA-controlled buildings to pay  rent to GSA, which is to be deposited in the revolving fund to be used for  GSA real property services. Figure 1 illustrates the process for planning,  approving, and constructing a courthouse project. The judiciary pays rent to GSA for the use of the courthouses,  which GSA owns, and the proportion of the judiciary’s budget that goes to  rent has increased as the judiciary’s space requirements have grown. GAO’s Courthouse Construction Work Has Focused on Costs, Planning, and Courtroom Sharing

Our work in the 1990s showed that decision makers within GSA and the  judiciary had wide latitude in making choices that significantly affected  costs. The judiciary’s 5-year plan did not reflect all of the judiciary’s most  urgently needed projects. However, the judiciary has since made some of  our recommended changes. We also found that the judiciary did not  compile data that would allow it to determine how many and what types of  courtrooms it needs. As a result, some  courthouses had more expensive features than others. GSA and the judiciary said that since 1996, they have also taken several  actions to improve the courthouse construction program, including  developing priority lists of locations needing additional space (the 5-year  plan), revising the Design Guide, and placing greater emphasis on cost  consciousness in its courthouse construction guidance for GSA. In 1989, we found that FBF’s inability to generate sufficient revenue in the  past was due, in large part, to restrictions imposed on the amount of rent  GSA could charge federal agencies, and we recommended in 1989 that  Congress remove all rent restrictions and not mandate any further  restrictions. Rent Restrictions Have Historically Contributed to Large Repair Backlogs

As part of our series on high-risk issues facing the federal government, we  have reported that GSA has struggled over the years to meet the  requirements for repairs and alterations identified in its inventory of  owned buildings. By 2002, its estimated backlog of repairs had reached  $5.7 billion. We have reported that adverse consequences of the backlog  included poor health and safety conditions, higher operating costs  associated with inefficient building heating and cooling systems, restricted  capacity to modernize information technology, and continued structural  deterioration resulting from such things as water leaks. We reported that  FBF has not historically generated sufficient revenue to address the  backlog. Our Ongoing Work on the Judiciary’s Request for an Exemption from Rent Payments to FBF

In December 2004, the judiciary requested that the GSA Administrator  grant a $483 million permanent, annual exemption from rent payments—  an amount equal to about 3 times the amount of all other rent exclusions  combined. This exemption would equal about half of the judiciary’s $900  million annual rent payment to GSA for occupying space in federal  courthouses. According to GSA data, the judiciary  increased the owned space it occupies by 15 percent from 2000 to 2004. 2. What impact would a permanent rent exemption have on FBF? Our work is still underway, but our past work on related issues shows that  rent exemptions have been a principal reason why FBF has accumulated  insufficient money for capital investment. During our work,  we reviewed past GAO work on federal real property and courthouse  construction issues, analyzed AOUSC and GSA documents, and  interviewed AOUSC and GSA officials.
Why GAO Did This Study

Over the last 20 years, GAO has compiled a large body of work on courthouse construction and federal real property. The General Services Administration (GSA) owns federal courthouses and funds related expenses from its Federal Buildings Fund (FBF)--a revolving fund used to finance GSA real property services, including the construction and maintenance of federal facilities under GSA control. The judiciary pays rent to GSA for the use of these courthouses, and the proportion of the judiciary's budget that goes to rent has increased as its space requirements have grown. In December 2004, the judiciary requested a $483 million permanent, annual exemption from rent payments to GSA to address budget shortfalls. In this testimony, GAO (1) summarizes its previous work on courthouse construction and (2) provides information on FBF and GAO's ongoing work on the federal judiciary's request for a permanent, annual rent exemption of $483 million from rent to GSA.

What GAO Found

GAO's courthouse construction work to date has focused primarily on courthouse costs, planning, and courtroom sharing. In the 1990s, GAO reported that wide latitude among judiciary and GSA decision makers in choices about location, design, construction, and finishes often resulted in expensive features in some courthouse projects. The judiciary has since placed greater emphasis on cost consciousness in the guidelines for courthouse construction that it provides to GSA. Related to planning, GAO also found in the 1990s that long-range space projections by the judiciary were not sufficiently reliable, and that the judiciary's 5-year plan did not reflect all of the its most urgently needed projects. The judiciary has made changes to improve its planning and data reliability. During previous work, GAO also found that the judiciary did not track sufficient courtroom use data to gauge the feasibility of courtroom sharing. GSA has been unable to generate sufficient revenue through FBF over the years and thus has struggled to meet the requirements for repairs and alterations identified in its inventory of owned buildings. By 2002, the estimated backlog of repairs had reached $5.7 billion, and consequences included poor health and safety conditions, higher operating costs, restricted capacity for modern information technology, and continued structural deterioration. GSA's inability to generate sufficient revenue in the past has been compounded by restrictions imposed on the rent GSA could charge federal agencies. Consequently, GAO recommended in 1989 that Congress remove all rent restrictions and not mandate any further restrictions, and the most restrictions have been lifted. Some narrowly focused rent exemptions, many of limited duration, still exist today, but together they represent roughly a third of the $483 million permanent exemption the judiciary is currently requesting from GSA. The judiciary has requested the exemption, equaling about half of its annual rent payment, because of budget problems it believes that its growing rent payments have caused. GSA data show that GSA-owned space, occupied by the judiciary, has increased significantly. GAO is currently studying the potential impact of such an exemption on FBF, but past GAO work shows rent exemptions have been a principal reason why FBF has accumulated insufficient money for capital investment.