A prospectus was not submitted to GSA’s Senate and House authorizing committees at the time the lease was signed. Section 7(a) of the Public Buildings Act of 1959, as amended, 40 U.S.C. We also contacted regional officials in 9 of GSA’s 10 other regions to determine whether they had guidance in place specifying how to calculate the lease costs to be used to determine if a prospectus is needed for an acquisition, and whether the decision that a lease is not prospectus-level is revalidated when space requirements or market rental rates change. A Prospectus Should Have Been Prepared for the SSUD Lease

NCR reviewed this acquisition after the lease was awarded and questions were raised by a congressional staffer about whether it should have had a prospectus. Also, there is still no requirement to revalidate the prospectus decision when space requirements and/or market rental rates change during the course of the acquisition. Conclusions

The lack of adequate internal controls over the leasing process at NCR resulted in PBS’ signing a prospectus-level lease for the SSUD space on August 5, 1998, without first preparing and submitting a prospectus for the lease to GSA’s authorizing committees. While NCR has instituted a new policy requiring its Portfolio Management Division to verify all leases before they are awarded, written guidance on how to calculate the average annual rental to be used to determine whether a prospectus is needed still does not exist. Event The General Services Administration’s (GSA) National Capital Region (NCR) and SSUD began discussing relocation from 1310 L Street. A prospectus for the SSUD lease at 1111 18th Street was prepared and transmitted to GSA’s authorizing committees.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on new leased space acquired for the Secret Service's Uniformed Division (SSUD) at 1111 18th Street, N.W., Washington, D.C., by the Public Buildings Service (PBS).

What GAO Found

GAO noted that: (1) a lack of adequate internal controls over the leasing process at the General Services Administration's (GSA) National Capital Region (NCR) resulted in PBS' awarding a lease for SSUD on August 5, 1998, above the prospectus dollar threshold without first preparing and submitting a prospectus for the lease to GSA's Senate and House authorizing committees; (2) there was confusion about the costs that were to be considered in determining whether a prospectus was needed; (3) specific written guidance on how to calculate the cost did not exist; (4) although the space requirements increased about 40 percent--from about 50,000 square feet to about 70,000 square feet--during the acquisition process, procedures did not call for the revalidation of the decision that a prospectus was not needed when the space requirements or market rental rates used to make the decision changed during the acquisition process; (5) after a congressional staffer asked questions about the lease on August 31, 1998, NCR officials reviewed the award of the lease and determined that a prospectus should have been prepared and submitted to GSA's Senate and House authorizing committees as provided for in section 7(a) of the Public Buildings Act of 1959, as amended, 40 U.S.C. 606(a), and PBS' policy and procedures; (6) subsequently, NCR has instituted a new policy requiring its Portfolio Management Division to verify all leases before they are awarded; and (7) still, GSA has not developed specific guidance on how to calculate the cost to be used to determine whether a prospectus should be prepared, nor has GSA determined that it needs to revalidate prospectus decisions when space requirements or market rental rates change.