	Background

The U.S. government is one of the world’s largest property owners, with a real estate portfolio of over 400,000 defense and civilian buildings and over one-half billion acres of land. Multiple potential benefits to the federal government of public-private partnerships were also identified. Partnerships could even provide other financial benefits to the federal government, such as reduced operating expenses and increased income that could be used for renovating other federal buildings. The potential benefits of public-private partnerships do not diminish the need for GSA to pursue and consider other alternatives for addressing problems in deteriorating federal buildings, such as federal financing through appropriations or the sale or exchange of property. However, a determination on how the partnerships would be treated for budget-scoring purposes would have to be made after more details are available on the partnerships. This study only looked at the potential benefits to the federal government and private sector of public-private partnerships as a management tool to address problems in deteriorating federal buildings. Public-Private Partnership

An arrangement by which the federal government contributes real property and a private entity contributes financial capital and borrowing ability to redevelop or renovate real property to serve, in part or in whole, a public need.
Why GAO Did This Study

The U.S. government is one of the world's largest property owners, with a real estate portfolio of more than 400,000 defense and civilian buildings and more than one-half billion acres of land. Each year, the federal government spends billions of dollars to maintain its buildings. Even so, the General Services Administration (GSA) contends that it needs $4 billion, over and above these expenditures, to maintain its existing inventory. This report identifies the potential benefits to the federal government of entering into public-private partnerships on real property--an arrangement in which the federal government contributes real property and a private entity contributes financial capital and borrowing ability to redevelop or renovate the real property.

What GAO Found

GAO found that public-private partnership authority could be an important management tool to address problems in deteriorating federal buildings, but further study of how the tool would actually work and its benefits compared to other options is needed. Potential net benefits to the federal government of entering into these public-private partnerships include better space, lower operating costs, and increased revenue without up-front federal capital expenditures if further analysis shows that they would not be treated as capital leases for budget-scoring purposes. The potential benefits of public-private partnerships do not diminish the need for GSA to pursue other alternatives for addressing problems in deteriorating federal buildings. GAO summarized this report in testimony before Congress; see Public-Private Partnerships: Factors to Consider When Deliberating Governmental Use as a Real Property Management Tool, by Bernard L. Ungar, Director for Physical Infrastructure Issues, before the Subcommittee on Technology and Procurement Policy, House Committee on Government Reform. GAO-02-46T , October 1 (11 pages).