	The Administration and Major Real Property-Holding Agencies Have Taken Actions to Strategically Manage Real Property and Address Some Long- standing Problems

Pursuant to Executive Order 13327, the administration has taken several  key actions to strategically manage real property. Long-standing Problems in Real Property Largely Persist and Obstacles Remain

Although clear progress has been made toward strategically managing  federal real property and addressing some long-standing problems, real  property remains a high–risk area because the problems persist and  obstacles remain. Agencies continue to face long-standing problems in the  federal real property area, including excess and underutilized property,  deteriorating facilities and maintenance and repair backlogs, reliance on  costly leasing, and unreliable real property data. Federal agencies also  continue to face many challenges securing real property. For example, officials with Energy, DHS, and NASA—which are  three of the largest real property-holding agencies—reported that over 10  percent of the facilities in their inventories were excess or underutilized. Energy, NASA, GSA, Interior, State,  and VA reported repair and maintenance backlogs for buildings and  structures that total over $16 billion. In addition, DOD reported a $57  billion restoration and modernization backlog. Five of the nine largest real property-holding agencies—Energy, Interior,  GSA, State, and VA—reported an increased reliance on operating leases to  meet new space needs over the past 5 years. Individual Agencies Continue to Struggle with Data Reliability Issues

While agencies have made significant progress in collecting the data  elements from their real property inventory databases for the FRPP, data  reliability is still a problem at some of the major real property-holding  agencies and agencies lack a standard framework for assessing the validity  of data used to populate the FRPP. All of the nine agencies reported using  risk-based approaches to some degree to prioritize facility security needs,  as we have suggested; but some agencies cited challenges, including a  lack of resources for security enhancements and issues associated with  securing leased space. Underlying Obstacles Hamper Agency Real Property Reform Efforts Governmentwide

In past high-risk reports, we called for a transformation strategy to address  long-standing real property problems. While the administration’s current  approach is generally consistent with what we envisioned and the  administration’s central focus on real property management is a positive  step, certain areas warrant further attention. Specifically, problems are  exacerbated by underlying obstacles that include competing stakeholder  interests and legal and budgetary limitations. For example, some agencies  cited local interests as barriers to disposing of excess property. In  addition, agencies’ limited ability to pursue ownership often leads them to  lease property that they could more cost-effectively own over time. We made three recommendations to OMB’s Deputy Director for  Management in our April 2007 report on real property high risk issues. For our second  recommendation to develop an action plan for how the FRPC will address  key problems, OMB said that the FRPC is currently drafting a strategic  plan for addressing long-standing issues such as the continued reliance on  costly leasing in cases where ownership is more cost effective over the  long-term, the challenge of securing real property assets, and reducing the  effect of competing stakeholder interests on businesslike outcomes in real  property decisions.
Why GAO Did This Study

In January 2003, GAO designated federal real property as a high-risk area due to long-standing problems with excess and underutilized property, deteriorating facilities, unreliable real property data, and costly space challenges. Federal agencies were also facing many challenges protecting their facilities due to the threat of terrorism. This testimony is based largely on GAO's April 2007 report on real property high-risk issues (GAO-07-349). The objectives of that report were to determine (1) what progress the administration and major real property-holding agencies had made in strategically managing real property and addressing long-standing problems and (2) what problems and obstacles, if any, remained to be addressed.

What GAO Found

The administration and real property-holding agencies have made progress toward strategically managing federal real property and addressing long-standing problems. In response to the President's Management Agenda real property initiative and a related executive order, agencies have, among other things, established asset management plans; standardized data reporting; and adopted performance measures. Also, the administration has created a Federal Real Property Council (FRPC) and plans to work with Congress to provide agencies with tools to better manage real property. These are positive steps, but underlying problems still exist. For example, the Departments of Energy (Energy) and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA) reported that over 10 percent of their facilities are excess or underutilized. Also, Energy, NASA, the General Services Administration (GSA), and the Departments of the Interior (Interior), State (State), and Veterans Affairs (VA) reported repair and maintenance backlogs for buildings and structures that total over $16 billion. The Department of Defense (DOD) reported a $57 billion restoration and modernization backlog. Also, Energy, Interior, GSA, State, and VA reported an increased reliance on leasing to meet space needs. While agencies have made progress in collecting and reporting standardized real property data, data reliability is still a challenge at DOD and other agencies, and agencies lack a standard framework for data validation. Finally, agencies reported using risk-based approaches to prioritize security needs, which GAO has suggested, but some cited obstacles such as a lack of resources for security enhancements. In past high-risk updates, GAO called for a transformation strategy to address the long-standing problems in this area. While the administration's approach is generally consistent with what GAO envisioned, certain areas warrant further attention. Specifically, problems are exacerbated by underlying obstacles that include competing stakeholder interests, legal and budgetary limitations, and the need for improved capital planning. For example, agencies cited local interests as barriers to disposing of excess property, and agencies' limited ability to pursue ownership leads them to lease property that may be more cost-effective to own over time.