However, downsizing initiatives in the 1990s reduced GSA’s in-house  capacity to acquire leases, and in 1997 GSA began to sign contracts with  private broker firms to assist with its leasing portfolio. In 2012, GSA officials attempted to determine if brokers  negotiated lower rental rates than in-house staff using data from fiscal  years 2011 and 2012. In April 2013, GSA began requiring regional officials to use different  market rental-rate data, which they expect will allow them to better  compare the rental rates achieved by brokers to market rates in the  future. For all broker projects greater than 10,000 square feet, regional  officials are to obtain an in-house research report at the beginning of the  leasing process referred to as “Bullseye.” A Bullseye report is  specifically tailored for each lease transaction and includes market  information, analysis, and insight regarding the local submarket. According to GSA officials, this new reporting will improve their  comparison of rental rates negotiated by brokers to market rental rates  but will probably still not allow them to definitively determine whether  brokers are negotiating better deals than in-house staff. GSA officials stated that they believe NBC provides  the greatest value with large complex leases in large metropolitan areas,  where brokers have a strong commission incentive. Cost Savings from Using the NBC Program Are Unclear

The two goals GSA uses to evaluate the NBC program are not closely  linked to the anticipated cost savings used to justify the program. However, GSA lacks data on  whether using brokers results in cost savings. Second, under NBC2, GSA awards tasks to brokers based on  price and performance data. Incorporating new approaches and strategies, such as examining  alternatives to the current commission and rent structure and  developing new methods for evaluating broker performance. All Brokers and Several GSA Regions Report That Changes to Performance Evaluation Are Needed

Officials in 7 of the 11 GSA regions expressed dissatisfaction with the  current broker performance-evaluation system. GSA regional officials and brokers also suggested using region-specific  broker performance-evaluation data to award tasks. Most GSA Regions Suggested More Flexibility in Using Brokers

Officials in the majority of regional offices (8 of the 11) suggested that  greater flexibility in applying the NBC program would allow them to make  better use of the brokers. Regional officials described a preferred “menu of services” that would  allow them to use the brokers more selectively for the specific tasks  where GSA wants assistance as opposed to working with the broker  throughout the entire lease procurement. Conclusion

GSA’s goals and metrics for evaluating the NBC program have not been  linked to the cost savings in rental rates GSA anticipated when proposing  the program. As a result, GSA does not have a means of evaluating and  reporting on this aspect of the program and the value of the NBC program  in terms of cost savings continue to be unclear. Clarifying its  goals for the program and linking them to cost savings would also serve  as a way to be transparent to the Congress and other stakeholders about  the purpose of the program and how GSA plans to monitor and achieve  the program’s goals. Such transparency is especially important given that  GSA is planning to seek a third generation of broker contracts in fiscal  year 2015. Recommendation for Executive Action

To promote transparency and fully reflect the expectations GSA used to  justify the NBC program, we recommend that the Administrator of GSA  ensure the program’s goals are linked to cost savings achieved through  the use of NBC brokers and develop and implement a means of  evaluating and reporting results. Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) the General Services Administration’s  (GSA) National Broker Contract (NBC) program goals and the extent to  which they are being realized; and (2) the changes GSA has made to the  program and what challenges and suggestions for improvement, if any,  key stakeholders identified. We interviewed officials from all 11 GSA regions  and representatives from all four broker firms currently on contract about  the use and perceived benefits of the program. We asked officials to  identify challenges and suggestions that could help improve the program.
Why GAO Did This Study

For fiscal year 2013, GSA expected to lease approximately 197 million square feet at a cost of about $5.2 billion. Since 2005, GSA has acquired some leased space using its NBC program to enlist commercial real estate brokerage firms to negotiate with building owners on behalf of the government. In 2012, GSA relied on this contract to replace approximately 33 percent of its expiring leases.
GAO was asked to review GSA's NBC program. This report examines (1) NBC's program goals and the extent to which they are being realized and (2) the changes GSA has made to the program and what challenges and suggestions for improvement, if any, key stakeholders identified. GAO reviewed NBC contract documentation, agency documents, relevant legislation and regulations, and available data on leasing tasks assigned to brokers. GAO interviewed officials from GSA headquarters, all 11 GSA regions, and representatives of all 4 brokers currently participating in the program.

What GAO Found

While the General Services Administration (GSA) has used the National Broker Contract (NBC) program to assist with the agency's lease portfolio, it is unclear whether the program has resulted in the rental rate cost savings that GSA anticipated when proposing the program. GSA officials have stated that brokers should be able to obtain lower rental rates than in-house staff because brokers have greater market expertise and in addition are able to credit a portion of the broker's commission to the rental rate. In 2012, when GSA attempted to compare rental rates negotiated by brokers with those negotiated by in-house staff, the agency not only found little difference between the two, but also stated that the data were insufficient to conduct a meaningful comparison. In April 2013, GSA began requiring the use of a different market rent data report --"Bullseye"-- which includes market information, analysis, and insight regarding the local submarket. Officials said this new data would improve their ability to compare rental rates negotiated by brokers to market rental rates, but will likely not allow officials to determine whether brokers are negotiating better deals than in-house staff. Beginning in fiscal year 2013, GSA also deemphasized previous annual goals for broker use and began identifying and assigning leases to brokers based on where agency officials believe the brokers provide the greatest value.
GSA's goals and metrics for evaluating the NBC program have not been linked to the anticipated cost savings in rental rates. As a result, GSA has no means of evaluating and reporting on this aspect of the program and the value of the NBC program in terms of cost savings continues to be unclear. Clarifying goals and linking them to cost savings would also serve as a way to be transparent with Congress and other stakeholders about the program's purpose and how GSA plans to monitor and achieve its objectives. Clear, linked goals are especially important given that GSA is planning to seek a third generation of broker contracts in 2015.
Officials from all 11 GSA regional offices and representatives from all 4 broker firms identified challenges and made suggestions to improve the program. Two areas frequently cited are: the broker evaluation process and greater flexibility using brokers.
Broker evaluation process : Both GSA regional officials and brokers expressed dissatisfaction with the current broker performance evaluation system and brokers suggested additional guidance and training would help. Both groups also suggested that GSA officials be allowed to use region-specific performance evaluation data to award tasks.
Greater flexibility using brokers : Regional officials suggested that greater flexibility in applying the NBC program would allow them to make better use of brokers. Regional officials described a preferred "menu of services" that would allow them to use the brokers more selectively for the specific tasks where GSA wants assistance as opposed to working with the broker throughout the entire lease procurement.
GSA has begun identifying potential changes to the structure and administration of the NBC program as the agency develops a strategy for the third generation of NBCs. For example, officials told GAO they are examining alternatives to the current commission and rent structure.

What GAO Recommends

GAO recommends that GSA ensure the program's goals are linked to cost savings achieved through the use of NBC brokers, and develop and implement a means of evaluating and reporting results. GSA concurred with the recommendation.