CFTC Did Not Make Cost-effective Decisions Consistent with Leading Government Guidance when Planning for Additional Space

CFTC began planning to substantially expand leased space prior to the  enactment of the Dodd-Frank Act and then entered into leases that did  not make efficient use of limited government resources. CFTC followed some elements of leading  government-leasing practices; however, the agency lacked  comprehensive policies and procedures to guide efficient and cost- effective decisions for lease procurement. As a result, CFTC currently has  lease obligations for unused space that extend to 2021 and beyond. CFTC Did Not Fully Assess the Risk of Not Receiving Requested Funding when Leasing Additional Space

CFTC renewed leases and expanded space in its Washington, D.C.,  headquarters and three regional office locations, prior to receiving the  funding necessary to hire staff to occupy the additional space. Anticipating the increased oversight that would result from regulating and  monitoring the swaps market, CFTC began planning for the expansion of  its leased space in the fiscal year 2009 time frame—more than a year  before the enactment of the Dodd-Frank Act in July 2010. CFTC federal employee staffing increased in absolute terms by about 53  percent from fiscal year 2008 through fiscal year 2015, according to  CFTC data (see table 2 below). The total space utilization for all four CFTC offices combined was about  78 percent at the end of fiscal year 2015. By comparison, CFTC’s  guidance does not include this level of detail. The lack of this type of  specificity in CFTC’s guidance may have contributed to not executing its  lease procurements consistent with standards for internal control and  thereby not making cost-effective decisions. Potential Options for Improving Cost- effectiveness of CFTC’s Leasing Include Relocating, Teleworking, and Consolidating Regional Offices

As noted above, based on an executive branch memo and initiatives, a  GSA study, and our own research, we have identified several options that  CFTC may pursue now and in the future to increase space utilization and  improve the cost-effectiveness of its leasing arrangements: (1) relocating  offices to less costly locations, (2) reducing office space required through  increased telework, and (3) consolidating two regional offices—Kansas  City and Chicago. CFTC officials told us that these options may not be  achievable before their current leases expire. Recommendations for Executive Action

To help ensure that the CFTC makes cost-effective leasing decisions,  and considers options for reducing future lease costs, we recommend  that the Chairman of the CFTC take the following two actions prior to  entering into any new or expanded lease agreements:
Ensure that as CFTC revises its leasing policies and procedures, it  includes comprehensive details on lease procurement that are  consistent with leading government guidance and standards to assure  cost-effective decisions. CFTC generally concurred with the second recommendation, which  states that prior to entering into any new or expanded lease agreements,  CFTC establish a timeline for evaluating and documenting options to  potentially improve space utilization and reduce leasing costs including,  but not restricted to, (1) moving offices to less costly locations, (2)  implementing enhanced telework, and (3) consolidating the Kansas City  and Chicago regional offices. GAO staff who made key contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which CFTC made cost-effective  decisions and followed leading government guidance in planning for  additional space for fiscal years 2008 through 2015; and (2) what  potential options exist to improve the cost-effectiveness of CFTC’s  leasing.
Why GAO Did This Study

The CFTC regulates certain financial markets, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) expanded its regulatory responsibilities. Prior to enactment of the Dodd-Frank Act, in anticipation of these increased responsibilities, the agency began planning for more space to accommodate additional staff in each of four office locations.
GAO was asked to review CFTC's staffing, leasing practices, and costs. This report examines: (1) the extent to which CFTC made cost-effective decisions and used leading government guidance in planning for additional space in fiscal years 2008 through 2015 and (2) potential options to improve the cost-effectiveness of CFTC's future leasing. GAO (1) reviewed applicable federal laws, regulations, and guidance that apply to real property leasing and CFTC's space-planning documents and leases for the fiscal years 2008 through 2015; (2) analyzed data and conducted interviews with key officials from CFTC and GSA; and (3) visited all four CFTC offices.

What GAO Found

The Commodity Futures Trading Commission (CFTC) did not make cost-effective decisions consistent with leading government guidance for lease procurement and internal controls when planning for additional space in fiscal years 2008–2015. CFTC began planning for expansion in the fiscal year 2009 time frame—more than a year before the enactment of the Dodd-Frank Act in July 2010. CFTC renewed leases and expanded space in its Washington, D.C., headquarters and three regional offices in anticipation of receiving funding to hire additional staff but did not receive the amounts requested. As a result, CFTC has lease obligations for currently unused space some of which extends through 2025. Overall, the total occupancy level for all four offices combined was about 78 percent as of the end of fiscal year 2015, and each office has different occupancy levels, as shown in the figure below. CFTC has independent authority to lease real property, including office space. The two documents CFTC uses to guide the lease procurement process provide some high-level guidance on this process, but the documents do not establish specific policies and procedures to help ensure cost-effective decisions. By comparison, leading government guidance, from the General Services Administration (GSA) includes comprehensive details on lease procurement. The lack of this type of detail may have contributed to CFTC's making decisions that were not cost-effective.
GAO identified several potential options that CFTC may pursue now and in the future to increase space utilization and improve the cost-effectiveness of its leasing arrangements: (1) relocating offices to less costly locations, (2) reducing office space requirements through enhanced telework, and (3) consolidating two regional offices—Kansas City and Chicago. CFTC officials told GAO that these options may not be feasible; however, the officials have not fully assessed these options or their potential for improving cost-effectiveness and do not have a timeline for doing so.

What GAO Recommends

To help ensure cost-effective leasing decisions, GAO recommends that CFTC (1) ensure that its revised leasing policies and procedures incorporate leading government guidance and (2) establish a timeline for evaluating and documenting options to potentially improve space utilization and reduce leasing costs. CFTC generally concurred with GAO's recommendations but noted that it would not be able to take actions to reduce lease costs in the near term.