oversight

Federal Statutes and Executive Orders Applicable to the Public Buildings Service's Leasing Program

Published by the Government Accountability Office on 1999-10-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office                                                 General Government Division
Washington, D.C. 20548



                 B-283789



                 October 18, 1999

                 The Honorable Fred Thompson
                 Chairman, Senate Committee on
                  Governmental Affairs
                 United States Senate

                 Subject: Federal Statutes and Executive Orders Applicable to the Public Buildings Service’s
                 Leasing Program

                 Dear Mr. Chairman:

                 The General Services Administration (GSA), through its Public Buildings Service (PBS), is
                 responsible for leasing space for federal agencies. As you requested, this letter identifies the
                 legislative and administrative requirements that apply to PBS’ leasing program and provides
                 information on the mechanisms that PBS has established to implement and comply with
                 these federal statutes and executive orders. The enclosure lists and provides a brief
                 explanation of each of the federal statutes and executive orders that are applicable to PBS’
                 leasing program.

                 Results
                 In our review we identified one statute that established GSA’s basic authority to lease space
                 for federal agencies for periods up to 20 years and another statute that established
                 congressional oversight of large lease projects. We identified another 27 statutes and 7
                 executive orders that currently govern PBS’ leasing process. Some of these statutes and
                 executive orders apply to every lease, and others apply only under certain circumstances.
                 The provisions of these statutes and executive orders deal with issues ranging from health
                 and safety matters, such as fire safety and seismic standards, to the prohibition against
                 kickbacks and payments to influence the award of leases. Some of the statutes address
                 requirements of contractors in relationship to their subcontractors—such as use of small and
                 disadvantaged businesses and payment of fair wages.

                 PBS uses several different mechanisms to implement and comply with various requirements
                 imposed by statutes and executive orders. PBS implements most of the requirements through
                 clauses in its solicitation for offers (SFO) and the general-clauses form, which are part of the
                 official lease. PBS also uses orders, the General Services Administration Regulation (GSAR),




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and certifications and representations by the lessors to implement and comply with
legislative and administrative requirements.

Scope and Methodology
We verified a list of federal statutes and executive orders that are applicable to PBS’s leasing
program that was developed by GSA. In verifying this list we reviewed federal statutes and
executive orders, GSA documents, and our issued reports. We also discussed this list with
GSA officials.

To identify the mechanisms that PBS has established to implement and comply with these
statutes and executive orders, we spoke with cognizant officials in PBS’s National Office. We
also reviewed the mechanisms identified by PBS officials to provide more information on
them and determine if they addressed the requirements of the federal statutes and executive
orders. These mechanisms included GSA’s standard SFO and its general-clauses form,
representations and certifications form that the lessors must sign, regulations, orders, and
desk guides. We did not evaluate the effectiveness of these mechanisms for ensuring
compliance with federal statutes and executive orders.

We did our work between May and October 1999 in accordance with generally accepted
government auditing standards. We requested comments on a draft of this letter from the
Administrator of GSA. GSA’s comments are discussed at the end of this letter.

GSA’s Basic Authority to Lease Space and Congressional
Oversight
GSA’s basic authority to lease space for federal agencies, which is exercised by PBS, is
contained in section 210 (h) of the Federal Property and Administrative Services Act of 1949,
as amended. The Federal Property and Administrative Services Act of 1949 created GSA as an
independent agency in the executive branch. The 1949 Act gave the Administrator of General
Services broad authority in managing real property, including authority to (1) prescribe
regulations governing real property management and leasing, (2) lease real property for
periods up to 5 years, and (3) delegate lease authority to the head of any federal agency. In
1958, the act was amended to give GSA the authority to enter into leases for up to 10 years.
The act, 40 U.S.C. 490 (h), was amended again in 1959 to increase the maximum allowable
term of leases to the current 20-year period. One reason for this change was to provide
greater flexibility in obtaining leased space, which was expected to result in a lesser annual
cost to the government. In 1989, another amendment to the act gave GSA the authority to
lease space in buildings erected on land owned by the United States for periods not to exceed
30 years.

Section 7(a) of the Public Buildings Act of 1959, 40 U.S.C. 606(a), provided for GSA to submit
prospectuses to its Senate and House authorizing committees for projects for the
construction, acquisition, and alteration of public buildings over a certain dollar amount. In
1972, Congress increased congressional control over large lease projects by amending section
7(a) of the Public Buildings Act of 1959 to include leases and lease alteration projects that




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exceeded a certain dollar amount. The dollar threshold for the submission of the prospectus
is adjusted annually by PBS, as authorized by the act, to reflect changes in costs during the
               1
preceding year.

PBS Uses Clauses in Its Leases to Implement Most Legislative
and Administrative Requirements
PBS uses clauses in its SFO and a general-clauses form to address 19 federal statutes and 4
executive orders that relate to the leasing of buildings for the federal government’s use.
According to PBS officials, the SFO and general-clauses form generally contain language
similar to the statutory language and are part of the leasing agreement signed between the
lessor and PBS. The contracting officer has flexibility to modify some of the clauses within
the SFO; however, according to the instructions for the SFO, new clauses should contain
“substantially the same information” as the original clauses. According to a PBS official, the
language in the general-clauses form, which are prescribed by statute or executive order, may
also be changed provided the change does not violate the intent of the underlying statute or
executive order.

PBS’ standard SFO has certain clauses that are mandated by law. These clauses address
issues such as fire safety, seismic standards, accessibility, and overall building safety in
response to specific federal statutes that establish requirements in these areas. Other federal
statutes are not applicable to all leases and are addressed through clauses in the SFO that can
be deleted or modified as appropriate. Many of these federal statutes address issues that
typically arise during the construction of a building; and thus, they pertain to GSA leases
when a building is being specifically built for the government to lease. For example, the
requirement for the payment of fair wages applies to construction contractors and the
requirement for payment of relocation benefits may apply to persons displaced due to lease
construction projects. There is also a clause in the SFO to cover the executive order on
seismic standards for new buildings, including those constructed for lease by the
government.

Several other federal statutes and executive orders are also addressed through specific
clauses in PBS’ SFO and the general-clauses form. The requirements in these statutes include
making the building accessible to the handicapped, giving preference to historic properties,
conserving energy and water, allocating space for vending facilities to be operated by blind
vendors, providing a drug-free workplace, and providing equal employment opportunities.
Other federal statutes concerning contract administration issues, such as payments, disputes,
and the government’s right to examine the contractor’s records, are also addressed through
specific clauses in the general-clauses form.

On June 3, 1999, the President issued Executive Order 13123 reemphasizing the federal
government’s commitment to energy and environmental progress in operating its facilities.
The order includes preferences for energy-efficient buildings that have the “ENERGY STAR

1
    The dollar threshold for leases and lease alteration projects for fiscal year 2000 was $1,930,000 and $965,000, respectively.




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    label” in the selection criteria for acquiring leased buildings. The order also requires the
    Administrator of GSA, in collaboration with the Secretary of Defense, the Secretary of
    Energy, and other agency heads, to develop model lease provisions that incorporate energy
    efficiency and sustainable design within 180 days of the date of the order. This executive
    order revokes Executive Order 12902 of March 9, 1994, on Energy Efficiency and Water
    Conservation.

    Following are the 19 federal statutes and 4 executive orders that PBS currently implements
    through clauses in the SFO and general-clauses form. According to GSA officials, the fifth
    executive order listed, Executive Order 13123, will be implemented in this same manner after
    the model lease provisions have been developed:

• Anti-Kickback Act of 1986;
• Assignment of Claims Act of 1940;
• Contract Disputes Act of 1978;
• Contract Work Hours and Safety Standards Act of 1962;
• Copeland Act of 1934;
• Covenant Against Contingent Fees;
• Davis-Bacon Act of 1931;
• Drug-Free Workplace Act of 1988;
• Earthquake Hazards Reduction Act of 1977;
• Energy Policy Act of 1992;
• Examination of Records;
• Fire Administration Authorization Act of 1992;
• Occupational Safety and Health Act of 1970;
• Prompt Payment Act;
• Public Buildings Cooperative Use Act of 1976;
• Randolph-Sheppard Act;
• Small Business Act;
• The Architectural Barriers Act of 1968;
• Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970;
• Executive Order 11375, Equal Employment Opportunity;
• Executive Order 12699, Seismic Safety of Federally and Federally Assisted or Regulated New
  Building Construction;
• Executive Order 12902, Energy Efficiency and Water Conservation at Federal Facilities;
                                                                                         2


• Executive Order 13006, Locating Federal Facilities on Historic Properties in Our Nations
  Central Cities; and
• Executive Order 13123, Greening the Government Through Efficient Energy Management.
  The enclosure provides a brief explanation of these statutes and executive orders.




    2
     Executive Order 12902 was revoked, as of June 3, 1999, by the issuance of Executive Order 13123, Greening the Government
    Through Efficient Energy Management.




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    Regulations, Orders, and Lessor Certifications are Also Used to
    Implement Requirements
    The remaining eight federal statutes and three executive orders that are applicable to PBS’
    leasing program are addressed through regulations, orders, and lessor certifications. Four of
    these federal statutes and the three executive orders address the priority given to different
    locations when determining where to lease a building. For example, if an agency must be
    located in an urban area, an executive order states that agencies shall give first consideration
    to locating federal facilities within central business areas. If an agency is not required to be
    located in an urban area, the Rural Development Act requires that first priority be given to
    location in a rural area. Also, PBS cannot lease buildings located within floodplains or
    wetlands unless there are no practicable alternatives; and PBS must assess the environmental
    impact associated with major federal actions, including leasing. PBS implements these
    statutes and executive orders through orders setting forth its location policy for leased
    buildings.

    The other four federal statutes relate to the use of full and open competition in acquiring
    leased space, budget scorekeeping requirements, and the prohibition of payments to
    influence the award of leases. PBS implements the requirements of these statutes through
    GSAR, compliance with OMB Circular No. A-11, appendixes A&B, and representations and
    certifications that lessors must sign. The solicitation and award of leases must be done in
    compliance with the GSAR, which establishes the policies and practices for the acquisition of
    leased real property. Also, in the budget process leases must be scored in compliance with
    OMB Circular No. A-11, appendixes A&B. Lessors are also required to sign a list of
    representations and certifications that, among other things, states that no appropriated funds
    have been paid to influence the awarding of the contract.

    Following are the eight statutes and three executive orders that PBS implements through
    regulations, orders, and lessor certifications:

•   Competition in Contracting Act of 1984;
•   Balanced Budget Act of 1997;
•   Intergovernmental Cooperation Act of 1968;
•   Rural Development Act of 1972;
•   National Historic Preservation Act of 1966;
•   Officials Not to Benefit;
•   Prohibition on Use of Appropriated Funds to Influence Federal Contracting;
•   The National Environmental Policy Act of 1969;
•   Executive Order 11988, Floodplain Management;
•   Executive Order 11990, Protection of Wetlands; and
•   Executive Order 12072, Federal Space Management.
    The enclosure provides a brief explanation of the provisions of these statutes and executive
    orders.




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Agency Comments
We requested comments on a draft of this letter from the Administrator of GSA. On October
13 and 15, 1999, we obtained oral comments from PBS’ Assistant Commissioner, Office of
Business Performance and the Deputy Associate General Counsel, Real Property Division,
Office of General Counsel, respectively. They agreed that the draft letter generally presented
the facts accurately; they also provided some technical comments that we have incorporated
as appropriate.




We are sending copies of this report to Senator George V. Voinovich, Chairman, and Senator
Max S. Baucus, Ranking Minority Member, Subcommittee on Transportation and
Infrastructure, Senate Committee on Environment and Public Works; Representative Bob
Franks, Chairman, and Representative Robert Wise, Jr., Ranking Democratic Member,
Subcommittee on Economic Development, Public Buildings, Hazardous Materials and
Pipeline Transportation, Committee on Transportation and Infrastructure; the Honorable
David J. Barram, Administrator, GSA; and to others upon request.

If you have any questions about this letter, please call me or Ron King on (202) 512-8387. Key
contributors to this assignment were Maria Edelstein and Susan Michal-Smith.

Sincerely yours,




Bernard L. Ungar
Director, Government Business
  Operations Issues

Enclosure




Page 6             GAO/GGD-00-27R Federal Statutes and Executive Orders Applicable to PBS' Leasing Program
Enclosure

Federal Statutes and Executive
Orders Applicable to GSA's Leasing
Program
Table 1: Federal Statutes Applicable to the GSA Leasing Program
Statute                                               Description
Anti-Kickback Act of 1986 (41 U.S.C. §§ 51-58)        Prohibits a contractor from soliciting or receiving
                                                      kickbacks from subcontractors in return for subcontract
                                                      awards. The requirements of this act are not applicable
                                                      to contracts below the simplified acquisition threshold for
                                                               a
                                                      leasing.
Assignment of Claims Act of 1940 (31 U.S.C. §3727)    Allows contractors to assign rights to payment, including
                                                      rent, to established financing institutions.
Balanced Budget Act of 1997 (20 U.S.C. § 902 note)    Imposes budget scorekeeping requirements for lease-
                                                      purchases, capital leases, and operating leases. See
                                                      H.R. Conference Report No. 105-217, at 1007-1014,
                                                      1997. See also, H.R. Conference Report No. 101-964,
                                                      accompanying the Omnibus Budget Reconciliation Act
                                                      of 1990, Title XIII, The Budget Enforcement Act of 1990,
                                                      at 1172-1176. The scorekeeping rules can be found in
                                                      OMB Circular No. A-11, appendices A & B.
Competition in Contracting Act of 1984                Requires GSA to acquire leased space through the use
(41 U.S.C. § 251 et seq.)                             of full and open competitive procedures.
Contract Disputes Act of 1978 (41 U.S.C. §§ 601-613) Requires disputes arising from federal contracts to be
                                                      adjudicated by established procedures.
Contract Work Hours and Safety Standards Act of 1962 Imposes 40-hour work week and time and a half
(40 U.S.C. §§ 327-333)                                overtime requirements on certain contracts. This act is
                                                      applicable to lease acquisitions when an offeror
                                                      proposes to construct a building or completely
                                                      reconstruct or rehabilitate an existing building for the
                                                      predominant use of the government. The act does not
                                                      apply to contracts below the simplified acquisition
                                                                 a
                                                      threshold.
Copeland Act of 1934 (18 U.S.C. § 874; 40 U.S.C. §    Makes it unlawful for a contractor to force a kickback
276c)                                                 from any person employed in the construction or repair
                                                      of a public building or public work. The act also requires
                                                      contractors and subcontractors to furnish a compliance
                                                      statement with respect to wages paid to employees.
                                                      This act is potentially applicable to lease acquisitions
                                                      when an offeror proposes to construct a building or
                                                      completely reconstruct or rehabilitate an existing
                                                      building for the predominant use of the government.
Covenant Against Contingent Fees (41 U.S.C. § 254(a)) Requires that no individuals other than bona fide
                                                      employees or established bona fide agents maintained
                                                      by the contractor have been retained to solicit or obtain
                                                      a federal contract for a contingent fee. This requirement
                                                      is not applicable to contracts below the simplified
                                                                                         a
                                                      acquisition threshold for leasing.
Davis-Bacon Act of 1931 (40 U.S.C. §§ 276a-276a-7)    Provides for payment of prevailing wages to laborers on
                                                      federal construction projects. This act is potentially
                                                      applicable to lease acquisitions when an offeror
                                                      proposes to construct a building or completely
                                                      reconstruct or rehabilitate an existing building for the
                                                      predominant use of the government.




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Enclosure
Federal Statutes and Executive Orders Applicable to GSA's Leasing Program




Statute                                                Description
Drug-Free Workplace Act of 1988 (41 U.S.C. §§ 701-     Requires contractors to take actions to reduce the
707)                                                   possibility of drug use at the site of the performance of
                                                       work. The requirements of the act do not apply to
                                                       contracts below the simplified acquisition threshold for
                                                                a
                                                       leasing.
Earthquake Hazards Reduction Act of 1977               Required adoption of standards for assessing the
(42 U.S.C. § 7705b)                                    seismic safety of existing buildings constructed for or
                                                       leased by the government that were designed and
                                                       constructed without adequate seismic design and
                                                       construction standards.
Energy Policy Act of 1992 (42 U.S.C. § 8253)           Requires the federal government to meet 20-percent
                                                       energy reduction targets by the year 2000. This includes
                                                       federally leased space.
Examination of Records (41 U.S.C. § 254d)              Authorizes the head of an agency to inspect records of
                                                       federal contractors and requires a contract clause giving
                                                       similar authority to the Comptroller General. This
                                                       authority is not applicable to contracts below the
                                                                                                      a
                                                       simplified acquisition threshold for leasing.
Federal Property and Administrative Services Act of    Created GSA as an independent agency and gave the
1949 (40 U.S.C. §§ 486, 490(d)(h), 751)                Administrator of GSA authority to (1) prescribe
                                                       regulations governing real property management and
                                                       leasing, (2) lease real property for periods up to 5 years,
                                                       and (3) delegate lease authority back to the head of any
                                                       federal agency. Amended in 1959 to provide GSA with
                                                       20-year leasing authority. Amended again in 1989 to
                                                       provide GSA authority to lease space for periods not to
                                                       exceed 30 years in buildings erected on land owned by
                                                       the United States.
Fire Administration Authorization Act of 1992          Requires that an entire building have sprinklers or
(15 U.S.C. § 2227)                                     provide an equivalent level of life safety when federal
                                                       funds are used to lease 35,000 square feet or more of
                                                       space in a building (under one or more leases) and
                                                       some portion of the leased space is on or above the 6th
                                                       floor. Also requires that all government leases contain a
                                                       provision requiring that all hazardous areas of the
                                                       building have an automatic sprinkler system.
Intergovernmental Cooperation Act of 1968              Requires GSA to consult with planning agencies and
(40 U.S.C. §§ 531-535)                                 local elected officials and to coordinate federal projects
                                                       with development plans and programs of the state,
                                                       region, and locality where the project is to be located.
National Historic Preservation Act of 1966             Requires listed historical properties to be protected from
(16 U.S.C. §§ 470 - 470w-6)                            harm as a result of federal actions, including leasing.
Occupational Safety and Health Act of 1970             Requires GSA to ensure that space leased and
(29 U.S.C. §§ 651-678)                                 assigned to agencies provides safe, healthful working
                                                       conditions, including building features such as lighting,
                                                       guard rails, indoor air quality, fire safety features,
                                                       emergency elevator requirements, etc.
Officials Not to Benefit (41 U.S.C. § 22)              Prohibits any member of Congress from receiving any
                                                       benefit arising from a federal contract.




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Enclosure
Federal Statutes and Executive Orders Applicable to GSA's Leasing Program




Statute                                                Description
Prohibitions on Use of Appropriated Funds to Influence Requires certifications from contractors that
Federal Contracting (31 U.S.C. § 1352)                 appropriated funds have not and will not be paid to any
                                                       person to influence the award of a federal contract.
Prompt Payment Act (31 U.S.C. §§ 3901-3907)            Requires federal payments to contractors to be made in
                                                       an expeditious manner, provides penalties for late
                                                       payment by the government, and requires that the
                                                       government be entitled to discounts for early payment.
Public Buildings Act of 1959 (40 U.S.C. § 606)         Calls for GSA to submit leases with annual rental,
                                                       excluding services and utilities, in excess of $1,930,000
                                                       and lease alteration projects in excess of $965,000 to its
                                                       Senate and House authorizing committees. The
                                                       amounts above were applicable for fiscal year 2000 and
                                                       are to be indexed annually.
Public Buildings Cooperative Use Act of 1976           Requires GSA to afford a preference to historic
(40 U.S.C. 601a)                                       properties in the leasing process.
Randolph-Sheppard Act (20 U.S.C. § 107)                Requires that licensed blind vendors be authorized to
                                                       operate vending facilities on any federal property,
                                                       including leased buildings. The act imposes an
                                                       obligation on GSA to acquire space in buildings that
                                                       have suitable sites for vending facilities.
Rural Development Act of 1972 (42 U.S.C. § 3122)       Requires federal agencies to give first priority to rural
                                                       areas in locating facilities. See also Executive Order
                                                       12072, regarding the location of federal facilities in
                                                       urban areas.
The Architectural Barriers Act of 1968                 Requires that public buildings be made accessible to the
(42 U.S.C. §§ 4151-4152)                               physically handicapped.
The National Environmental Policy Act of 1969          Requires an assessment of the environmental impacts
(42 U.S.C. § 4321 et seq.)                             associated with major federal actions, including
                                                       government leasing.
The Small Business Act (15 U.S.C. §§ 631-647)          Requires a positive effort by federal contractors to place
                                                       subcontracts with small and small disadvantaged
                                                       business concerns. The act also requires publication of
                                                       federal procurement requirements, requires large
                                                       businesses to submit small business subcontracting
                                                       plans, and provides for liquidated damages for failure to
                                                       meet subcontracting plan goals.
Uniform Relocation Assistance and Real Property        Requires the payment of relocation benefits to persons
Acquisition Policies Act of 1970                       displaced as a result of federal actions. This act is
(42 U.S.C. § 4601 et seq.)                             potentially applicable to persons displaced as a result of
                                                       GSA lease-construction projects.
Note: For purposes of this table, we have cited only the original act even though many of the statutes cited have been
subsequently amended.
a
The simplified acquisition threshold is $100,000.
Source: GSA.




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Enclosure
Federal Statutes and Executive Orders Applicable to GSA's Leasing Program




Table 2: Executive Orders Applicable to the GSA Leasing Program
Executive Order                                      Description
11375 – Equal Employment Opportunity                 Prohibits federal contractors from discriminating against
(Oct. 13, 1967, 32 Fed. Reg. 14303 )                 any employee or applicant for employment because of
                                                     race, color, religion, sex, or national origin.
11988 – Floodplain Management (May 24, 1977,         Precludes GSA from leasing space in buildings located
42 Fed. Reg. 26951)                                  within floodplains unless there are no practicable
                                                     alternatives.
11990 - Protection of Wetlands (May 24, 1977,        Precludes GSA from leasing space in wetlands unless
42 Fed. Reg. 26961)                                  there are no practical alternatives.
12072 – Federal Space Management                     Requires that first consideration be given to locating
(Aug. 16,1978, 43 Fed. Reg. 36869)                   federal facilities in urban areas within central business
                                                     areas.
12699 – Seismic Safety of Federal and Federally      Requires that new buildings constructed for lease to the
Assisted or Regulated New Building Construction      government are designed and constructed in accord
(Jan. 5,1990, 55 Fed. Reg. 835)                      with appropriate seismic design and construction
                                                     standards.
12902 – Energy Efficiency and Water Conservation at Requires that appropriate consideration be given to
Federal Facilities (Mar. 8,1994, 59 Fed. Reg. 11463) efficient buildings in the leasing process. Increases
                                                     federal energy reduction goals to 30 percent by the year
                                                     2005. This executive order was revoked June 3, 1999,
                                                     when Executive Order 13123 was issued.
13006 – Locating Federal Facilities on Historic      Subject to the Rural Development Act and Executive
Properties in Our Nation’s Central Cities            Order 12072, directs that executive agencies give first
(May 21,1996, 61 Fed. Reg. 26071)                    consideration to locating federal facilities in historic
                                                     properties within historic districts when operationally
                                                     appropriate and economically prudent.
13123 - Greening the Government Through Efficient    A new executive order that incorporates many
Energy Management (June 3, 1999, 64 Fed. Reg.        provisions of Executive Order 12902, which was
30851)                                               revoked. Establishes a goal to reduce energy
                                                     consumption per gross square foot by 30 percent in
                                                     2005 and 35 percent in 2010, compared with 1985. It
                                                     requires agencies entering into leases, including the
                                                     renegotiation or extension of existing leases, to
                                                     incorporate lease provisions that encourage energy and
                                                     water efficiency wherever life cycle cost-effective. For
                                                     build-to-suit leases, it requires solicitations to contain
                                                     criteria encouraging sustainable design and
                                                     development, energy efficiency, and verification of
                                                     building performance. Agencies are to include a
                                                     preference for buildings having the ENERGY STAR
                                                     Building label in their selection criteria for acquiring
                                                     leased buildings.
Source: GSA.




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