oversight

Executive Agencies Can Do Much More in Using Government-Owned Space as an Alternative to Leasing or New Construction

Published by the Government Accountability Office on 1977-09-27.

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

                         DOCUMENT RESUME
03586 - [A2723942]

Executive Agencies Can Do Much More in Using Government-Owned
Space as an Alternative to Leasing or New Construction.
LCD-77-314; E-95136. September 27, 1977. 34 pp. + 7 Appendices
(16 Fp.).
Report to the Congress; by Elmer B. Staats, Comptrollel General.
Issue Area: Facilities and Material Management: Building,
    Buying, or Leasing Federal Facilities and Equipment (706).
Contact: Logistics and Communications Div.
Budget Function: General Government: Executive Direction and
    Management (802); General Government: General Property and
    Records Management (804).
Organization Concerned: General Services Administration;
     :,epartment of the Army: Corps of Engineers; Department of
    the Navy; National Aeronautics and Space Administration;
    Office of Management and Budget.
Congressional Relevance: House Committee on Public Works and
    Transportation; Senate Committee on Environment and Public
    Works; Congress.
Authority: Public Buildings Amendments Act of 1972 (P.L.
    92-313). General Government Appropriations Bill, 1976.
    Federal Prcperty and Administrative Services Act of 1949.
    Executive Crdpr 11724. Executive Order 11954.
          The amount of space leased by the General Services
Administration (GSA) and the annual cost of leasing increased
from 68 million square feet costing $282 million in fiscal year
1973 to 88 million square feet costing $473 million in 1977.
This rise is expected to continue if action is not taken.
Findings/Conclusicns: Opportunities for substantial savings in
meeting the space needs of the Federal Government are possible
by using Government-owned facilities which are either vacant or
only partly used instead of private leasing or new construction.
Opportunities for cancelling 33 leases valued at $6.2 million
and eliminating Froposed construction of $40.8 million were
possible by using more fully vacant or partially used
Government-owned property in Los Angeles, San Francisco,
Honolulu, and New Orleans. Officials of GSA indicated that
insufficient funds to renovate Federal buildings and reluctance
by agencies to relocate has prevented more use of
Government-cwned property. GSA performed only a limiteil number
of property surveys. Federal prcperty-holding agencies were not
reporting all available space to GSA, and GSA excess property
screening activities were not effective. In July 1977, the
Office of Management and Budget notified Congress that it was
rescinding $75 million of a $125 million supplemental
appropriation specifically for major repair andi alteration by
GSA. Recommendations: The Administrator of GSA should: estima~te
repair and alteration costs for renovating available property,
identify agencies leasing or planning to build space, and
perform a cost-benefit analysis of using the property. The
Administrator should: earmark funds required for a realistic
number of property surveys on an annual basis and plan
implementation of those which seem economically justifiable, and
amend Federal Iroperty Management Regulations to both provide a
more comprehensive property-screening system and to specify
criteria for agencies to determine when available property must
be reported to GSA. Begional offices should be required to
include in their budget submittals documented cost-benefit
analyses regarding opportunities for reducing lease costs
through using available Governtent-owned property. (SW)
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Executive Agencies Can Do
Much More In Using
Government-Owned Space As An
Alternative To Leasing
Or New Construction
Annual costs for ieasilqJ slace f:'r ot'el tirxec:
LItive agencies' use 1y the Get-''iial Servicrs
Administration have incrteascd It)nm S28' rmil
linto in 1973 to S4'/3 miillon ii 1377 ard are
expected to continii rising. (AO estrnate;
tthat several millions of doll its couldIhe ,;svte(J
anl' ial ly if txecLutivte                 et.; iCi(-'S
                                                     OC((:iti)iylitI
leased space wvert ietloit                 itel, G:vl
                                                 toV     nlll
                                                            lt
owned property.

Inr July 1977 the office of Mlitiitftaa                     ll     ie;n(n
Birdget notifiedl this (C
                        ,it.ltess fhltl it 0VVi ,
scinding $75 inillo l) t a S 125 A il!iorn ti,;!t,I
rlerlt al appropi lation specificaily for rli )or
repair and alteration of Covernl;rnit!
                                    i!t                      opl tt.
No       tmen1itiOII    was Ifldi(: i!        .!ri[i        St(eVi:t-s
backlog        of      over SI1 h,liol        ofi ti            tyl)iI ol
work ,

This report dliscLusses how C( etrlet I ervices
cooL'Ih)e more etfft::clvi iri ITIAk[1,: C,(ovi (a
mlent Owrnled           pJloperty   ;iVa!i at!i        .1!!j;     (:ctep!
able to executive a;lgeciUs a,dtl sO lItd(cli,                           y
ieasimng and n[ewvcoristri ctionl cos:.

LCD 77-314
                                                                             SEPTEMBER 27, 1977
               COMPTROLLER GENERAL OF THE UNITED
                                                 SATES
                          WASHINGTON, D.C. 0548




B-95136




To the President of the Senate and the
Speaker of the House of Representatives

     This report describes (1) how General Services
                                                     could
save millions of dollars annually by relocating
                                                 Federal
agencies into existing Government-owned property
                                                  and (2)
how, according to General Services, lack of
                                            funds has
hindered this effort.
     We made our review pursuant to the Budget and
                                                   Accounting
Act, 19zl (31 U.S.C. 53), an- the Accounting
                                             and Audit-
ing Act of 1950 (31 U.S.C. 6/v.

     Copies of the report are being sent to the
                                                Direptor,
Office of Management and Budget, and the Administrator
General Services.                                      of




                                 Comptroller General
                                 cf the United States
 COMPTROLLER GENERAL'S               EXECUTIVE AGENCIES CAN DO MUCH
 REPORT TO THE CONGRESS              MORE IN USING GOVERNMENT-OWNED
                                     SPACE AS AN ALTERNATIVE TO LEASING
                                     OR NEW CONSTRUCTION BY THE GENERAL
                                     SERVICES ADMINISTRATION

             DIGEST
             Notwithstanding the Federal Property and
             Administrative Services Act, Executive
             orders, and congressional emphasis on the
             importance of using Government-owned space
             to reduce leasing costs, the amount of space
             leased by the General Services Administration,
             and the annual cost, increased from 68 mil-
             lion square feet costing $282 million in
             fiscal year 1973 to 88 million square feet
             costing $473 million in 1977. This rise s
             expected to continue if action is not t   :n.
             Two of the causes for this are that:

             -- Vacant or underused Government--owned
                space has not been identified

             -- Sufficient funds have not been budgeted
                to renovate space.

             Therefore, the Administrator of General
             Services should improve procedures for

              -surveying, reporting, and screening
               available Government property and
             -- analyzing potential uses and the costs
                and benefits of renovating vacant space.

            Opportunities for cancelling 33 leases
            valued at $6.2 million and eliminating
            proposed construction of $40.8 million
            were possible by using more fully vacant
            or partially used Government-owned property
            in Los Angeles, San Francisco, Honolulu,
            and New Orleans.  (See pp. 10 through 13.)
            Officials of the General Services Adminis-
            tration--the lead executive branch agency
            for property administration--indicated
            that insufficient funds to renovate Federal
            buildings and reluctance by agencies to


Tear heet. Upon removl. the report
cover date should be noted hereon.
                                        i                  LCD-77-314
relocate has prevented more use of Government-
owned property. (See pp. 13 and 14.)
General Services recognizes that it has au-
thority to direct executive agencies to
relocate to make better use of Government-
owned property, but it has taken a position
that an agency is the better judge of where
it can operate most effectively. General
Services rarely imposes its judgment if an
agency doe3 not agree to relocate.
Moving to another location may svrerimes
adversely affect an agency's ability to
accomplish its mission. (See p. 10.)
But General Services has also assumed that
most agencies would be unwilling to move.
Consequently, it has not actively pursued
alternative uses for available space.

There may be some validity to General
Services view that the agencies would
be unwilling to relocate. However, that
unwillingness may not be as all pervasive
as General Services believes.
Officials from 33 of 54 agencies contacted
i.n the various cities said their agencies
could relocate to specified vacant or under-
used space without affecting their missions
adversely.

The General Services Administration is
authorized to require agencies to move into
space suitable to meet their administrative
requirements. This authority should not be
exercised arbitrarily. Agencies' views
should be given great weight, and General
Services' regulations and practices show
this is done. Bul where the agencies'
parochial interests are clearly outweighing
those of the taxpayers and where the agencies'
missions would not be adversely affected,
General Services should exert stronger leader-
ship and make the decisions.




                      ii
             If the agency disagrees with the decision,
             it should have appeal rights to the Office
             of Management and Budget.
             Regulations require that General Services
             survey Government-owned property to identify
             vacant and underused space, that Federal
             agencies report available space to General
             Services, and that General Services screen
             property among Federal agencies to see if
             it is needed. Only a limited number of
             property surveys were being performed,
             available property was not oeing reported,
             and screening activities were not effective.
             (See pp. 18 to 23.)
             General Services cited a lack of funds as
             the primary reason for not implementing
             identified relocation and consolidation
             opportunities. However, in its fiscal
             year 1977 budget presentation to the
             Congress, it did not request funds needed
             to acquire and renovate excess Government
             property. And in July 1977 the Office
             of Management and Budget notified the
             Congress that it was rescinding $75 mil-
             lion of a $125 million supplemental ap-
             propriation specifically for major repair
             and alteration by General Services. (See p. 32.)

             General Services Administration officials
             acknowledged the need for better budget
             presentation. Beginning in fiscal year
             1978, they plan to present information
             on opportunities to reduce lease costs.
             (See p. 27.) Office of Management and
             Budget officials later stated that for
             the fiscal 1978 budget, General Services
             had adequately supported a request for
             funds for repair and alteration of public
             buildings.  (see p. 34.)
             Along with 28 other Federal agencies,
             General Services has authority to ad.nin-
             ister Government-owned property. The Admin-
             istrator of General Services prescribes



TIar Shiti
policies and methods to promote the maximum
use of this property. General Services
has not followed its own guidelines for
insuring that Government-owned property is
effectively used. Its regional offices,
as well as other agencies, fullow differ-
ent approaches to managing real property
and give only minimal consideration to
using existing Government property instead
of leasing space or new construction.   (See
pp. 1, 2, 14, and 15.)

General Services commented that converting
an ext:. s facility for use by Federal
agencies is a difficult process and that
the potential for using such property is
limited. (See p. 38.) GAO believes there
are difficulties in converting and more
effectively using excess facilities. Even
so, General Services should have a more
positive attitude and take a more aggres-
sive approach to promoting good use of
such facilities. Such facilities should
be identified and the advantages or dis-
advantages of converting them for further
use be determined by a cost-benefit study
and discussions with those agencies which
are the most likely users.




                      iv
                       Contents

                                                      Page
DIGEST

CHAPTER                                                 1
      1   INTRODUCTION                                  1
              Laws on using Government-owned
                property                               1
              Management of Government-controlled
                property                               2
              Scope of review                          6
   2      OPPORTUNITIES FOR SAVINGS THROUG(;
            BETTER USE OF GOVERNMENT-OWNED SPACE       7
              Limited consideraticn given to using
                Government-owned space                 7
              Our review of available space            9
              Examples of alternative uses of
                property                              10
              GSA's views on using available
                Government-owned space                13
              Conclusions                             14
              Recommendations                         15
              Agency comments                         15
  3       IMPROVEMENTS NEEDED IN IDENTIFYING,
            REPORTING, AND SCREENING AVAILABLE
            SPACE                                     1^
              Too few property surveys performed      ]j
              Agencies need to report available
                property                              it
              Ineffective property-screening pro-
                cepures                               23
              ConclusinsF                             23
              Rec'vPmend.ations                       24
              Agency ccinments                        25
  4       NEED TO PalAi:LE BETTER BIUDGETARY DATA
            TO OMB AND THE CONGRESS
                                                      27
              Federal Buildings Fund                  27
              Reduction to the budget--fiscal years
                1976 an- 1977                         29
              Improvr  budget presentation            32
               o ,...L
                    i
                    s ons                             33
              R,:.-!:.mendations                      34
              Agency comments                         34
                                                           Page
APPENDIX

      I    Federal real-property-holding agencies          35
  II       Federal Buildings Fund fiscal year 1977
             obligational authority                        36
 III       Space alteration projects for fiscal
             year 1977 in regions 7 and 9                  37
  IV       Letter dated May 27, 1977, from the
             Deputy Administrator, General Services
             Administration                                38
      V    Letter dated May 2, 1977, from the
             Associate Director, Economics and
             Government, Office of Management and
             Budget                                        48
  VI       General criteria for acquiring space            49
 VII       Principal GSA officials responsible for
             activities discussed in this report           50
                       ABBREVIATIONS
DOD        Department of Defense
GAO        General Accounting Office
GSA        General Services Administration
NASA       National Aeronautics and Space Administration
NAVFAC     Naval Facilities Engineering Command
OMB        Office of Management and Budget
                          CHAPTER 1

                         INTRODUCTION

     At the end of fiscal year 1975, the General Services
Administration (GSA) reported that the Federal Government had
an inventory of real property amounting to 2,429 million
square teet of Government-owned space and about 202 million
square feet of leased space.  Of this amount, GSA managed
about 157 million square feet of Government-owned and 86 mil-
lion of leased space.

     Government-owned and leased space can be categorized as
(1) property under control of an agency which has a current
and continuing need for it, (2) property under control of an
agency which has no current or future need for it--excess
property, and (3) property which is not needed by any Federal
agency--surplus property.

LAWS ON USING GOVERNMENT-OWNED-PROPERTY

     A basic intent of the Federal Property and Administra-
tive Services Act of 1949 was to increase efficiency and
economy of operations of the Federal Government by using
available property.  The act requires the Administrator of
General Services to prescribe policies and methods to pro-
mote the maximum use of excess property by all executive
agencies.

     Guidance for the executive agencies is included in the
Federal Property Management Regulations.  The act authorizes
the Administrator to transfer excess property amor, Federal
agencies and to assign and reassign space of all executive
agencies upon a determination that such action is advantage-
ous to the Government.  The act also requires executive
agencies to continually survey property under their control
and to report property no longer needed to GSA for process-
ing and disposal.

     The act was amended in 1952 to provide that the Adminis-
trator prescribe the extent of reimbursement for transfers of
excess property.  According to Federal Property Management
Regulations, transfers of excess property with a fair market
value of $1 million or more require concurrence by the Office
of Management and Budget (OMB).  The agency receiving excess
property generally must pay an amount equal to 50 percent of
the appraised fair market value, as determined by GSA.  Such
funds generally must be deposited in the Treasury as mis-
cellaneous receipts.  OMB may waive the reimbursement


                              I
requirement if the agency clearly demonstrates that funds are
not available without requesting a supplemental appropriation
and if the property is needed to carry out its mission.

     The act was amended in 1958 to authorize GSA to enter
into leases for up to 10 years (now 20 years). The purpose
of the amendment was to enable GSA to compete with private
interests on an equal footing and to secure space for Federal
agencies at more favorable rental rates. In commenting on
the proposed amendment, the Administrator of GSA stated that
the long-term leasing authority would be used only when
suitable Government-owned facilities were not available.

     The act was again amended in 1959 to extend GSA's au-
thority to pay direct expenses in connection with using
excess real property. These expenses include appraisals
and other costs incurred from the time the property is re-
ported to GSA as being excess, until it is declared surplus
for purposes of disposal. In commenting on the amendment,
the Administrator indicated that its approval would promote
maximum use of excess property by executive agencies by
determining the best use of available property at the earl-
iest possible time.

MANAGEMENT OF GOVERNMENT-CONTROLLED PROPERTY

     Administration of federally owned and leased property,
as well as responsibility for acquiring and excessing pro-
perty, is not vested in any one Government agency. The Fed-
eral Property Manigement Regulations authorize 29 executive
agencies to arrange for their own space requirements. These
agencies (see app. I) are designated as Federal Real Property
Holding Agencies.
     Some property-holding agencies have real estate depart-
ments and are appropriated funds for real estate activities.
For example, the Corps of Engineers manages real property
for the Army and AiL Force, and the Naval Facilities Engineer-
ing Command (NAVFAC) manages real property for the Navy and
Marines. Notwithstanding the authority granted to property-
holding agencies, GSA has overall responsibility for acquir-
ing, managing, and disposing of office space.

     Property can be transferred from one agency to another
when it is no longer required by the holding agency and is
needed by another agency. GSA screens excess property against
the needs of other Federal agencies and if the property is
needed by an agency, transfers it. Surplus property may be
disposed of.

                              2
Executive orders

     By Executive Order 11724, dated June 25, 1973, the
President established the Federal Property Council 1/ to re-
view Federal real property policies and to resolve conflict-
ing claims on Federal real property reported by GSA as not
being efficiently used. The Council is composed of the
Director of OMB, the Chairman of the Council of Economic
Advisers, and the Chairman of the Council on Environmental
Quality.

     The Administrator of GSA is directed by the order to
survey real property holdings of other agencies to identify
property not used, underused, or not put to optimum use. He
is also directed to report to the President, through the
Council, any property not reported excess by a holding agency
which he recommends should be so reported.

     Executive Order 11954, dated January 7, 1977, revised the
prior order in these respects:

     -- It requires all executive agencies to periodically
        survey their real property holdings in accordance with
        GSA standards and procedures.
     -- It requires GSA to oversee the executive agencies'
        surveys, conduct its own surveys, and assure that excess
        property is iden 4 ified and made available for the most
        beneficial use under the laws of the United States.
     -- It provides that the Administrator report to the Director
        of OMB, rather than to the President, any real property
        considered by him to be inefficiently used but not re-
        ported excess by the holding agency. The Administrator
        or the Director of OMB may request the Council to re-
        view reports of conflicting claims of executive agen-
        cies regarding real property, and the Council shall
        report its recommendations to the President.

Use-of-Governmentiowned-Property
     The basic Federal policy for managing real property is
to maximize the use of existing Government-owned permanent
buildings which are adequate or economically adaptable to the


1/A Presidential message to the Congress dated Julv 15, 1977,
  proposed abolishing this Council. OMB stated that it prob-
  ably would perform the function.



                               3
space needs of executive agencies. Federal Property Management
Regulations require that, whenever practical, excess property
transferred to GSA be renovated and altered to meet space
needs. The regulations specifically prohibit leasing privately
owned space when satisfactory Government-owned space is avail-
able. General criteria for obtaining space for executive
agencies and the requirement for using existing suitable fed-
derally owned space are included in the property management
regulations and are summarized in appendix VI.

     Concerning leased space for Federal agencies, a House
of Representatives report on Treasury, Postal Service, and
Ceneral Government Appropriations Bill, 1976, noted that

     "* *   *   The Committee [Appropriations] con-
     tinues to be concerened at the continuing
     increase in rental space--both as to amount
     and cost. Furthermore, General Services
     Administration reports indicated that a
     considerable amount of space, both leased
     and Government-owned, continues vacant and
     not fully utilized. GSA and the Office of
     Management and Budget are requested to ex-
     erc.se every effort to reduce the amount
     of vacant and underutilized space, but more
     particularly to reduce the total amount of
     rental space occupied by the Government."
A Senate Report on the same bill noted that:

     "* * * The Committee [Appropriations]     concurs
     in the concern of the House as to the ever-
     increasing cost and amount of rental space.
     The GSA and the Office of Management and Budget
     are requested to explore methods to reduce the
     amount of vacant and underutilized space leased
     by the Federal Government."

     As a result of congressional concern over increasing
leased space, GSA initiated the Accelerated Space Utilization
Program in November 1974. The major objective of the program
was to achieve economies in space use that would be reflected
in fiscal year 1975 rental savings. Eacn GSA regional office
was required to review pending space actions and to inspect
current assignments to insure proper space use.

     OMB officials said they had not initiated any activi-
ties in regard to congressional concern over the need to
increase use of available Government-owned property. They


                                 4
stated that they expected GSA to insure maximum use of
Government-owned space by carrying out requirements in the
Federal Property Management Regulations.

     The following schedule shows the amount of Government-
owned and leased space during fiscal years 1973-75.

                 ..... Owned-- -.                        Leased.
                ... FiscalYear---                  ....FiscalZYear---
               i973     1974      1975             173    1974   1975
                                 Square fet (millions)
GSA            156.4       153.7          156.6     68.0    77.0    85.8
Department
  of De-
  fense
  (DOD)      1,830.4     1,818.4      1,801.5        9.3     8.4    12.9
Other
  (note a)     463.0       467.6          471.0    112-8   111.5   103.0
             2;449.8     2,439;7      2,429;1      190;1   196;9   201;.7
a/Other property-holding agencies shown in appendix I.
GSA estimates for fiscal years 1976-81 follow.

                  ...   ------    Fiscal-Years------------   -
              19)76      1977      197e    1979    1980-
                                                       i   11

                                 Square feet (millions)

Owned         159       159         159      161   160     160
Leased        -85       -88         -93      -96   102     107
     Total    244       247         252      257   262     267
     As shown above, Government-owned space under GSA control
has remained relatively constant while the amount of leased
space had increased. GSA expects this trend to continue.
We did not examine into the validity of the estimated trend.
Annual expenditures for GSA-leased space are projected to in-
crease from $282 million for fiscal year 1973 to $473 million
by the end of fiscal year 1977.  In January 1976 GSA reported
that about 6.6 million square feet of office space and 12.9
million of storage space was unassigned and vacant.




                                      5
SCOPE'OF REVIEW

     We reviewed the use of Government-owned property in
San Francisco, Los Angeles, Honolulu, and New Orleans.

     During the study we:

     -- Reviewed legislation, regulations, and property man-
        agement guidelines issued by GSA, the Corps of
        Engineers, and NAUFAC.

     -- Examined utilization and excess property reports and
        visited sites at major active installations and
        properties reported as excess since 1970 located
        within a 35-mile radius of selected cities.

     -- Identified agencies in leased space and those with
        ongoing and proposed construction projects within
        a 35-mile radius of selected cities.
     -- Obtained the opinions of selected agencies in leased
        space regarding relocation to underused or excess
        properties.

     -- Obtained the opinions of agencies involved in new
        construction regarding the use of underused or ex-
        cess property instead of the new construction.
     Our examination included, as applicable, a study of the
administration of Government-owned property by GSA headquar-
ters; GSA regional offices in San Francisco, California, and
Fort Worth, Texas; Cozps of Engineers district offices ill the
selected cities; and NAVFAC offices in San Bruno, Califor:nia,
and Charleston, South Carolina. We also evaluated OMB ac-
tivities in formulating GSA's budgets for fiscal years 1976
and 1977.




                              6
                          CHAPTER 2
              OPPORTUNITIES FOR SAVINGS THROUGH
             BETTER USE OF GOVERNMENT-OWNED SPACE
     Opportunities for substantial savings in meeting the
space needs of the Federal Government are not being realized.
Savings are possible by using Government-owned facilities
which are either vacant or only partly used instead of pri-
vate leasing or new construction.
LIMITED CONSIDERATION GIVEN TO
USING GOVERNMENT-OWNED SPACE

     GSA headquarters officials stated that their regional
offices are responsible for identifying and recommending the
use of excess facilities. They stated, however, that the
degree and documentation of consideration given to using
such p operty might vary among regions, since GSA has not
formulated criteria 1/ and does not have followup procedL.es
for insuring that regional offices adequately consider using
available space. Procedures for identifying and using excess
property within DOD also vary among activities.

GSA Region 9 (San Francisco)

     This region covers California, Nevada, Arizona, and
Hawaii. A regional official stated GSA does not determine
if agencies in leased space could be relocated to excess
facilities.

     Notices of excess facilities prepared by the region's
Property Disposal Unit are circulated to the Space Manage-
ment Unit.  Space Management employees are to review the
notices to see if new requests for space could be satisfied
with excess property. Space Management officials stated
that they have had problems in receiving the notices. For
example, the notice that showed the Naval Undersea Center
as an excess facility in Los Angeles was not received by
Space Management until August 1974, about 1 year after the
notice had been prepared.

l/Although GSA had not formulated specific criteria, the Fed-
  eral Property Management Regulations included general cri-
  teria for selecting and acquiring space. These are suni-
  marized in appendix VI.




                               7
     The Regional Director of Space Management agreed that it
may be cost beneficial to rehabilitate and use some of the
Government-owned space. But he did not agree with our sug-
gestion that a formal system be implemented for reviewing
the further use of excess properties as an alternative to
continuing or entering into new leases. He stated that GSA
would be wasting time since (1) most excess properties are
in very poor condition, (2) funds are not available for ren-
ovating and relocating agencies to excess properties, and
(3) agencies cannot be forced to relocated to GSA-selected
locations. The official stated that because of these factors,
GSA is unable to use some vacant federally owned space.
GSA Region 7 (Fort Worth)
     This region covers Texas, New Mexico, Oklahoma, Arkansas,
and Louisiana. Regional officials stated that the use of ex-
cess facilities has been affected by (1) their policy of
honoring an: agency's request for space in the central business
district of a city if the space justification is reasonable
and (2) the unsuitability, generally, of excess property to
meet the physical needs of the agency. As noted below and
on page 9, some unused space was located away from the down-
town area. Also, as discussed elsewhere in this report, some
renovation was required to meet the needs of potential users.
     According to the Executive order regarding lease loca-
tions, Government-owned space should be used before leasing
and if space must be leased, then GSA should require the
agency to stay in the downtown area. Thus, the intent of the
order is not to preclude use of Government-owned space out-
side the downtown area but, when private leasing is necessary,
only to require that the leases should be for space in the
downtown area. GSA headquarters officials said property such
as the available space at the National Aeronautics and Space
Administration (NASA) facility located 15 miles from downtown
New Orleans--discussed on pages 20 to 22--should not have been
eliminated as an alternative to leasing because of its loca-
tion outside the downtown area. Regional officials concurred
with this after restudying the directive.

Naval Facilities Engineering Command
     Navy officials responsibile for the New Orleans area
stated that their policy was to consider excess property es
an alternative to leasing or new construction. Our review
disclosed about 211,000 square feet of vacant space and 468,000
square feet of underused space in three buildings at the Naval
Support Activity that had not been reported as excess. Use of



                              8
this space was not considered as an alternative to the planned
construction of a Navy administrative office complex valued
at $21 million. NAVFAC officials stated that a study in 1974
had not indicated that sufficient space was available.

     The Chief, Planning Systems Branch, NAVFAC Southern
Division, stated that the available space would have been
considered had it been reported. He stated that NAVFAC
able to inspect naval facilities to monitor property use was
only about once every 3 years.

     NAVFAC officials responsible for facilities planning in
Los Angeles, San Francisco, and Hawaii stated that generally
they do not consider using excess property as an alternative
to new construction. Excess property reports are not routinely
forwarded to individuals in Facilities Planning who are
responsible for monitoring facility use and assuring that
available property is considered as art alternative to construc-
tion. Those officials stated that an internal directive and
checkoff sheet would be developed to forward all reports of
excess property to Facilities Planning to assure that alterna-
tives to excessing are considered.

Army Corps-of Engineers

     Corps officials responsible for the cities included in
our review, said that they screen excess property among DOD
agencies, They stated that major DOD commands are responsi-
ble for insuring that Government-owned property is not ex-
cessed when it could be used instead of leasing or new con-
struction.   Our review did not disclose any situations when
the Corps could have used existing property as an alterna-
tive to leasing or new construction. The potential exists,
however, since the Corps relies on major DOD commands, with-
out followup, to insure Chat available space is used instead
of leasing or new construction.

OUR-REVIEW OF AVAILABLE SPACE

     We visited Government-owned facilities within 35 miles
of the downtown areas of the four selected cities to determine
the availability and condition of usused or underused space.
From lists of agencies in leased space, we selected for
further analysis those near available Government-owned space.

     We contacted agencies in leased space and agencies for
which construction was planned to determine whether relocat-
ing to Government space would enable them to accomplish
their missions efficiently. The results of our contacts fol-
low.


                                9
                    Agencies             No            Adverse             Qualified
                    contacted          effect           effect               effect
 New Orleans                20               2                10                8
 Los Angeles                22               8                11                3
 San Francisco              11              11                 -                -
Honolulu                     1               1                 -                -

Some agencies could relocate without mission problems, but
if moved would require special facilities or administrative
costs, such as additional parking, construction of a helicop-
ter pad, or termination of leases.

     Underused or vacant facilities would require renovation
before occupancy by other Federal agencies. Additional costs
for relocating agency personnel and equipment would also be
incurred.

     Within Los Angeles renovation costs were estimated for
us by the Army CorDs Of Enginers. The Corps' estimates were
based upon restoring the property in accordance with agency
needs and with existing fire and safety codes.

     Using the Corps' estimates, we compared the costs of
renovating and using those facilities to the costs of either
leasing space or constructing new facilities. We computed
the payback period for recouping the one-time renovation and
relocation costs. Using this data; we matched those reloca-
tion opportunities which offered -he greatest economic advan-
tages with available facilities.

EXAMPLES OF ALTERNATIVE USES OF PRCPERTY

     The following table summarizes several opportunities for
economically renovating and using available Government-owned
space instead of leasing or new construction.
                                      Lease                           Construction
                 Number of        cancellation                           avoidance
                  excess           opportunities                      opportunities
                facilities       Number      Annual                 Number         Cost
                which could        of       cost of                   of            of
                  be used        leases           leases           projects     projects
                                                 (millions)                    (millions)
Los Angeles          3            11               $2.1                2             $ 5.0
San Francisco        4            11                3.3                3              14.5
New Orleans          2            10                 .7                1            a/21.3
Honolulu             1             1                 .1                -               -
    Total           10            33               $6.2                6             $40.8

a/Project was cancelled by the Navy during our review.


                                       10
     The following examples illustrate the possibilities of
retaining Government-owned property and using it in lieu
of either continuing private leasing or constructing new
buildings.

Naval Undersea Center, Pasadena, California
     Activities at the Center were transferred to other
locations and the Center was declared excess in November
1973. The Center is in Pasadena, about 15 miles from down-
town Los Angeles and consists of a number of buildings con-
taining about 195,000 square feet of office and laboratory
space. One of the buildings, containing 47,000 square feet
of space, was completed in March 1973.

     Regional officials cited funding constraints and the
poor condition of the Center for not pursuing reuse of the
facility instead of leasing. As discussed in chapter 4, GSA
funding constraints were, to some extent, self-imposed. From
our interview with employees of the Center before it closed
and tours of the site, we believe that the buildings would
have provided satisfactory environment for the employees.

     Three agencies (Forest Service, Social Security Admin-
istration, and Defense Contract Administration Services)
within 10 miles of the Center occupied about 57,000 square
feet of leased space at ail annual cost of about $189,000.
According to the Corps of Engineers estimates, an equivalent
amount of space at the Cenv:er could be renovated for office
space 1/ at a cost of about $114,000. The payback period
would Ue about 7 months. Officials of those agencies in
leased facilities said the location of the Center was
acceptable but it had not been offered by GSA as an alterna-
tive to leasing.

     Also, in January 1975, GSA started construction of a
12,000-square-foot office building for the Social Security
Administration estimated to cost about $476,000 within 3 miles
of the Center. We believe that of the five buildings at the
Center, the one constructed in 1973 would have been a suitable
alternative at an alteration cost of about $91,000.

     Social Security Administration officials said they rely
on GSA to arrange for their space, including the funding of


1/We believe that federally owned space should be used for
  the best purpose for which it is suited. The Corps'
  estimates were prepared, at our request, for office space
   as betngCadequate (not necessarily tie best) potential use
   for the center.
any renovation and relocation. They stated that GSA had not
advised them of the availability of the Center.
100 Harrison Street, San-Francisco

     GSA has two vacant adjoining five-story buildings con-
taining about 282,000 square feet of permanent open storage
and office space in San Francisco. Five agencies 1/ occupying
about 248,000 square feet of leased space at an annual cost
of $2.1 million could be relocated to these buildings. Of-
ficials from the five agencies stated that relocation would
not adversely affect the accomplishment of their missions.

     Regional officials initially advised us that these
buildings should not be retained for further Federal use
because of their poor condition and because GSA did not have
a requirement for them. Regional officials later stated,
however, that funds were not available for renovation and
thus they would not consider these buildings as an alterna-
tive to continued leasing. Because the region did not notify
GSA headquarters of the need for funds to renovate the facility
or of the possible leasing savings from agencies relocating
to the facility, GSA headquarters could not make the oppor-
tunity known to OMB or the Congress.

GSA comments-on-renovation-estimates

     As noted above, we obtained estimated renovation costs
for excess properties in the Los Angeles area. In some cases,
the estimates had been prepared by the agency reporting the
excess space. Where such information was not available, we
requested the Corps to help estimate the costs.
    GSA officials stated that the Corps' estimates were low.
According to GSA preliminary engineering estimates, costs of
renovation were thought to be $20 to $25 per square foot,
as opposed to the Corps' estimates of $8 to $10. According
to a GSA engineer, the difference resulted from the fact
that the GSA estimates were preliminary and were based upon
use of the open office excellence concept. The Corps'
estimates did not include carpets, drapes, plants, and music
associated with the concept. We believe the Corps' estimates,
except for the absence of the itemized amenities, provide for
an acceptable, efficient working environment in accordance
with Federal Property Management Regulations, as well as
existing fire and safety codes.


1/ Departments of Agriculture, Justice, the Treasury, and
   Housing and Urban Development, and the Veterans Adminis-
   tration.

                              12
          The following table presents the renovation cost and
   the number of years to recoup this cost based upon GSA's
   preliminary estimates and those we obtained for excess
   facilities in the Los Angeles area.
                                                           Year to
                           Renovation costs (note a)     recoup costs
                 Avail-   Based                         Based
                  able     on                            on
   Excess        square   Corps                 Lease   Corps
  facility        feet   estimate      GSA     savings estimate     GSA
                           -------- (000 omitted)---------
Naval Under-
  Sea Center      57        $ 114      $1,126    $  189       0.59   5.95
Army facility    281         2,692      5,629     1,057       2.55   5.33
Air Force
  facility        101        1,300      2,020        780      1.67   2.59
a/Other costs associated with relocating agencies are considered
  minimal since the relocations are short distances.

        Even at the higher renovation costs estimated by GSA,
   the savings in lease costs would pay for the renovations of
   the above examples in about 2.5 to 6 years. GSA is propos-
   ing similar renovations in two other regions to save leas-
   ing costs for office space. in Region 2 (Headquarters,
   New York) GSA wants to convert and upgrade warehouse and
   office space for about $25 million, or $35 per square foot.
   The saved leasing costs would pay for the renovation in
   about 2.5 years. In Region 6 (Headquarters, Kansas City)
   GSA proposes conversion of two warehouse buildings to office
   space for about $19 million. Time estimated to recoup the
   renovation cost is about 5.3 years.

   GSA's VIEWS ON USING
   AVAILABLE GOVERNMENT-OWNED SPACE

        In response to our inquiry about using vacant and under-
   used property, GSA's Assistant Commissioner for Space Planning
   and Management, in a May 28, 1976, letter, described the
   following problems in the efficient use of Government-owned
   property.
         -- "To have the necessary funds made available, GSA mus
            submit a request to Congress through OMB. In the
            recent past, GSA has been relatively unsuccessful in
            having adequate funds made available for repair and
            modification of all buildings now in the GSA inven-
            tory."




                                      13
     -- "GSA does have such authority [to direct Federal
        agencies to utilize GSA-selected locations] under Ex-
        ecutive Order 11512. However, it would be exercised
        with great reluctance and only when it can be amply
        documented that such a move would be in the overall
        best interest of the Government. In most instances,
        subjective judgment is involved and, if the agency
        will not agree that its mission can be satisfactorily
        accomplished at the proposed location, we would rarely
        superimpose our judgment.* * *"

     As discussed earlier, GSA has not identified and discussed
with agencies in leased space the possibility of relocating to
Government-owned facilities. Our contacts with many agencies
in leased space or in the construction stages of new buildings
disclosed that many had no significaint objections to relocat-
ing to available Government-owned property. Objections, if
any, related primarily to which agency (theirs or GSA) would
pay for modifying the property.

     The Federal Property Management Regulations provide
that when GSA and an agency disagree on a proposed location,
the matter may be appealed to OMB for final resolution. 1/
Although a majority of agencies we contacted indicated that
moving would not affect their missions, some objected for
non-mission-related factors, such as esthetics of the building,
minor increases in employee commuting time, lack of reasonable
hotel accommodations and shopping areas, and the lack of easy
access to main highways.

     We believe that GSA should obtain all information
necessary to make informed decisions on assignments and
reassignments. Complete information will often permit GSA
and the agency to reach agreement without GSA superimposing
its judgment on an agency.

CONCLUSIONS

     GSA should develop formal guidance for its subordinate
offices and other property-holding agencies, in considering


l/The location of available space is sometimes a very con-
  troversial issue, considering its effects on an agency's
  mission, general desirability, convenience of transporta-
  tion, and other factors. A case in point is an office
  building in the area known as Buzzard's Point, Washington,
  D.C., leased by GSA before it had assurance that the in-
  tended agency would move in. The agency appealed to OMB
  and was upheld. A second agency designated by GSA has also
  objected to moving there and has appealed to OMB.

                              14
 the use of available Government-owned space. These agen-
 cies followed different approaches and sometimes relied on
 agenuies requiring space to request the use of available
 space.
     Excess property could be economically renovated, and
   acies are willing to relocate to these facilities. In-
.Leased attention to use of available space could reduce
costs to the Government. Further, improved guidance
will also provide a firm basis for a property disposalby rec-
                                                          GSA
ommendation if that is the best alternative.

      GSA has taken the position that an agency is the best
judge of where it can most effectively operate and rarely
imposes its judgment if an agency does not agree to re-
locate. GSA has also assumed that most agencies would be
unwilling to move from their present locations and has not
actively pursued alternative uses of available space. While
there may be some validity to the GSA view that agencies may
be unwilling to move, we believe GSA should take a more posi-
tive attitude and a more aggressive approach to promoting
t"e use of available Government-owned space. In a typical
situation, with one or more vacant federally owned build-
ings in the area, GSA should discuss the availability of the
space with all potential users and clear all problem areas
with OMB before funds are requrested or spent for renovation.
(The problems of not resolving the use of space before funds
are committed are dramatically demonstrated in the case of
the Buzzard's Point building.)   (See footnote on p. 14.)
RECOMMENDATIONS

     To achieve better use of Government-owned property,
we recommend that the GSA Administrator (1) estimate re-
pair and alteration costs for renovating available property,
(2) identify agencies occupying leased space and those with
proposed construction projects, concentrating first on
those close to the available space, (3) obtain the written
opinions from the agencies GSA considers as possible tenants,
and (4) perform a cost-benefit analysis of the economic
advantages and disadvantages of using the property.

AGENCY COMMENTS
     GSA stated that it keeps detailed space assignment rec-
ords for all agencies and space under its control and that
identifying potential occupants of excess property is not




                            15
the problem. GSA stated that the problem is the practicality
of using these facilities as Federal offices. In our opinion,
GSA has not considered the need to contact Federal offices in
the area occupying space managed by other agencies, such as
the military departments.

     GSA stated that the cost to renovate facilities to make
them suitable for occupancy by Federal activities would be
considerably higher than the $8 to $10 per square foot in-
dicated in our report. This is a possibility, depending on
the nature of the renovation, but the economic feasibility
(cost of renovating and suitability of space versus cost of
leasing or new construction) should be determined by a cost-
benefit study in each case. Applying GSA's own (and higher)
preliminary estimates to the space we surveyed, we estimated
the capital investment would be recovered in 2.5 to 6 years.

     GSA stated that its experience has been that agencies
are reluctant to occupy excess facilities. GSA believes that
most agencies indicating a willingness to move when we asked
them a hypothetical question would respond differently if
GSA presented them a firm proposal to relocate. We believe
GSA should present firm proposals and get agency responses.
If a cost-benefit study shows significant savings in using
vacant Government space, reasonably comfortable and efficient
for mission purposes, we believe GSA should report "intransi-
gent" agencies to the Federal Property Council or to the ex-
ecutive agency responsible for these functions previously
handled by the Council.   (§ee footnote-..3.,- , _
      Concerning the location of excess property, GSA stated
that each agency has responsibility for determining the city or
community in which its offices will be situated and that GSA
determines the general area within the city or community that
would best suit the agency mission. GSA noted, however, that
it q ves priority to locations in the central business dis-
trict when such action is consistent with the agencies' mis-
sions.

     We agree that an agency mission must be considered in
determining the location of that agency. We believe, however,
that many available Government facilities could be used with-
out adversely affecting the agencies' missions. The Federal
Property Regulations require that "suitable private owned
space shall be acquired only when satisfactory government-
owned space is not available." GSA stated that many of the
available exctss facilities, particularly those of DOD, are
.n remote locations and to occupy them could seriously impair




                            16
agency operations.   In our opinion, GSA's general state-
ment about the remoteness of DOD properties generally re-
flects an over&t" negative tone and ignores specifics like
those in New Orie:ns, Pasadena, and San Francisco discussed
in the report.

     GSA also stated that the entire process of identifying
a potential facility, renovating, and getting it ready for
occupancy can take from 2 to 3 years.  It is difficult to co-
ordinate agency needs for space, which is usually based on a
3- to 6-month deadline, with excess property that can be made
available for occupancy in 2 to 3 years.  In our opinion
GSA's comments concerning an agency's need for space within
3 to 6 months normally refers to requirements for additional
space and is not pertinent to those agencies currently in
leased space for which relocating can be planned over a long-
er period.

     Concerning our recommendation that GSA perform cost-
benefit analyses of the advantages and disadvantages of using
available Federal property, GSA stated that it has procedures
for estimating repair and alteration costs and noted that the
selection of major repair and alteration projects ($500,000
and over) is determined on the basis of a cost-benefit analy-
sis.  We recognize that GSA is required to submit to the
Congress a prospectus for major repair and alteration proj-
ects which includes a cost-benefit analysis. Our point is
that such studies should be made for all excess property when
there is a reasonable prospect that--thert&pe, trlndittOrT,- tad'
location of the property and the requirements for Government
space in the area make the property a good candidate for eco-
nomical use.

     Concerning the recommendation that written opinions be
obtained from the agencies considered by GSA as possible
tenants, GSA stated that almost any proposal to relocate an
agency from existing lease quarters would elicit a negative
response. GSA is authorized to require agencies to move in-
to space suitable to meet their administrative requirements.
While this authority should not be exercised arbitrarily, we
believe that GSA should take a mDre aggressive approach to
promoting the use of available federally owned space.




                              17
                           CHAPTER 3

          IMPROVEMENTS NEEDED IN IDENTIFYING, REPORTING,

                 AND SCREENING AVAILABLE SPACE

     More use of available Government-owned property will be
realized by increasing the number of GSA property surveys,
better reporting of available space by Federal property-
holding agencies, and follewup on property-screening notices.

TOO FEW PROPERTY SURVEYS PERFORMED

     By Executive order the GSA Administrator is required to
continually survey real property holdings of executive agen-
cies to identify property not used, underused, or not being
put to optimum use.

     GSA planned and carried out the following numbers of
surveys during fiscal years 1975 and 1976.

            Surveys       FY 1975      FY 1976
           Planned          450          250
           Performed        227          110
     According to a GSA official, the agency could not per-
form the number of surveys planned because it had to use
administrative funds for more critical functions.  The
Director of GSA's Survey Division stated that about 6,000
properties should be surveyed periodically and that the num-
ber being surveyed each year is too few.

     GSA Regions 7 and 9 officials stated that their offices
had curtailed surveys for lack of funds.  Region 7 performed
no property surveys in the New Orleans area in the last 2
years, while Region 9 surveys included only one of the
Government-owned facilities where we identified underused
or vacant space. Although GSA headquarters directed its
regional offices to note opportunities for consolidation or
relocation in the survey reports, it recognized that such
actions would be held in abeyance until more funds were
available. A Region 9 official stated that many opportuni-
ties noted in the surveys had not been realized because of
the funding problem.

AGENCIES NEED TO REPORT AVAILABLE PROPERTY

     Executive agencies are required to continually survey
their property holdings and report available underused or
vacant space to GSA.  But agencies were not doing this.


                             18
Agency officials stated that property had not been reported ei-
ther because its availability was unknown, it was not considered
by the agency to be underused, or it was being held for possible
future requirements.  Federal Property Management Regulations do
not provide specific criteria for agencies to determine what con-
stitutes available space and when such space should be reported.
Following are some examples of the types of space which we be-
lieve should be reported to GSA as available for other agencies.

Warehouse space--Honolulu

     With a shortage of Government warehouse space in the Hono-
lulu area, the Navy had 152,000 square feet of vacant warehouse
space and another 350,000 square feet underused in the vicinity.
Navy officials initially advised us that the space was sched-
uled for future Navy use.  The space was still vacant existed
when we revisited the warehouse 5 months later.   Navy officials
reversed their position and advised us that available space
would be offered to other agencies and that DOD agencies would
have first priority.  Navy officials said the availability of
that space had not been reported because the responsible Navy
command had not made property utilizal.i.c inspections.

Navy Support Activity--New Orleans




                            19
     In New Orleans the Navy owns the three buildings pictured
above, each of which contains about 504,000 square feet of
space. These buildings are part of the Navy Support Activity
and are about 3 miles from the center of New Orleans. Two
of the buildings have a total of 211,400 square feet of
vacant office and open-bay storage space. To make it usable
would probably require some renovation. One of the buildings
(pictured below) has been renovated and at the time of our
visit was fully used.




       L
                     _.                  _,?



                .-        *         _




     According to Navy correspondence, since 1973 the Navy
has actively sought other DOD agencies which could use the
vacant space at the facility. But the space has not been
reported to GSA as being available.

National Aeronautics and Space Administration
(NASA) Michoud Assembly Facility

     This facility, about 15 miles east of the New Orleans
central business district, has 32 buildings with about 3.6
million gross square feet. We identified about 208,000
square feet of unused administrative space in three build-
ings and 416,000 square feet of unused manufacturing space
in another building. Most of the administrative space
(180,763 square feet) is in an office and engineering build-
ing, pictured on the following page, which was constructed
in 1964.


                              20
IL~~




       21   -:
      NASA reported some space to GSA in 1970 as being tempor-
arily -,vailable to other agencies, but according to NASA of-
ficji.s, the space was not reported as excess because of its
arlicipated future use.   GSA officials stated that they had
not surveyed the Michoud facility to determine whether the
space was being put to optimum use because they lacked travel
funds to send personnel from their Fort Worth regional of-
'ice.

     Four of the 20 agencies in leased space in New Orleans
indicated that relocation to the NASA facility would not
adversely affect their missions.

Construction elimination opportunity
     During fiscal year 1976 the Navy was planning to con-
struct a $21.3 million administrative office complex of ap-
proximately 366,000 square feet, about 8 miles from down-
town New Orleans;, to house the Bureau of Naval Personnel
being relocated from Washington, D.C.

     Navy officials said one building at the NASA facility,
containing about 187,000 square feet, had been considered but
had been rejected as too small.  Other space at the NASA
facility was not considered.

     The buildings at the Naval Support Activity were also
considered but rejected because of insufficient vacant space.
In addition to vacant space, we identified 468,200 square
feet of underused space at the Naval .upport Activity, cn-
sisting of space converted for inside parking, open-bay ware-
housing, and some incidental office space. We believe that
agenc4es   storing material at the naval complex could use
available warehouses at other Government facilities in the
New Orleans area.  Ground-level parking in the complex, as
well as onstreet parking, is available as an alternative to
inside parking at the Naval Support Activity.

     Navy officials said they do not consider space used for
storage and parking as underused and for that reason had not
reported it to GSA.  If the stored materials were moved and
the inside parking eliminated, more than enough space would
be freed for the Bureau of Naval Personnel, as well as for
other agencies leasing space in the downtown area.

     In February 1976   we advised Naval Facilities Engineer-
ing Command officials   of the space available at the two
facilities.  in April   1976 the Navy announced that due to
financial reasons and   lack of space, the proposed $21.3




                               22
million construction project had been cancelled. About $1
million had been spent on plan 1 ing and designing the proposed
building.
INEFFECTIVE PROPERTY-SCREENING PROCEDURES

     Federal Property Mcnagement Regulations require that
excess real property reported to GSA be screened for use by
other Federal agencies. GSA's Office of Space Management in-
itiates requests on behalf of GSA for use of excess property.
The Office of Property Disposal transmits property availability
notices to other Federal agencies authorized to hold property.
GSA officials stated that they do not follow up on such no-
tices.  If no agency responds, GSA assumes there is no Govern-
ment requirement for the property. Such property is then
declared surplus.

     We asked local officials of those agencies identified as
potential lease cancellation candidates if they are regularly
notified of excess property. Most of the officials stated
that their agencies do not receive property availability
notices. The following summarizes their awareness of property.

                                        Agencies
                                        formally
                         Agencies       notified
                        contacted      Yes     No
      Los Angeles           22              7   15
      San Francisco         11              8    3
      Honolulu               1            -      1
      New Orleans           20              1   19
              Total         54           16     38

     In one case, a screening notice sent to the agency's
headquarters did not reach the local office. As noted earlier,
the screening notice for the Naval Undersea Center did not get
to the right GSA office until a year after the facility had
been declared excess.

CONCLUSIONS

     GSA is required to survey Government-owned property to
identify underused space, Federal agencies are required to
report available (excess and underused) space to GSA, and
GSA is required to screen the property among Federal agencies
to see if it is needed. These procedures are designed to
complement each other.



                             23
     GSA should earmark sufficient funds for planned surveys
and recommended relocations and consolidations for more ef-
ficient use of Government-owned property.

     Because Federal property-holding agencies are not report-
ing all available space to GSA, Federal Property Management
Regulations should specify criteria for agencies to determine
what constitutes available space and when it should be reported.

     GSA excess-property-screening activities have not been
effective. Thirty-eight of 54 agencies contacted indicated
that they did not receive screening notices from GSA. GSA
officials indicated that they did not follow up on property
availability notices. We believe that the screening process
can be improved, if the agencies receiving notices of excess
property were required to respond on whether they have a need.

RECOMMENDATIONS
     To better    identify available space and potential Govern-
ment users, we    recommend that the Administrator of GSA
strengthen the    three complementary procedures--surveying,
reporting, and    screening of available property--as follows:
     -- Earmark required funds for a realistic number of prop-
        erty surveys on an annual basis, and plan for imple-
        menting those survey recommendations which are
        economically justifiable.

    -- Amend Federal Property Management Regulations to
       specify criteria for agencies in determining when and
       under what circumstances available property must be
       reported to GSA and the importance of agencies comply-
       ing with the provision.
    -- Revise Federal Property Management Regulations to
       provide a more comprehensive property-screening system,
       including provisions for (1) the transmittal of notices
       to the headquarters of Federal property-holding agen-
       cies and to local offices close to the available space,
       (2) the requirement that each agency and local office
       screened respond to the notice stating the agency's
       views on using the space as an alternative to leasing
       or new construction, and (3) requiring GSA regional
       offices to evaluate the responses to determine whether
       the agencies should be directed to use the space.




                               24
AGENCY COMMENTS

     GSA stated that it planned 120 surveys for fiscal 1977
and hoped to significantly increase the number in fiscal
1978 and subsequent years. Further, GSA said 200 surveys are
planned for each of fiscal years 1978 and 1979 and 250 each
for fiscal years 1980 and 1981. The quantity planned for
fiscal 1977 is substantially lower than in the 2 previous
years (see p. 18) because, GSA stated, resources were
diverted to reducing the backlog of property planned for
disposal.

     GSA agreed that in many cases functions could be con-
solidated for better use of real property, but stated that
the agency involved rarely has funds for necessary repairs,
renovations, or improvements. Funding this work is a GSA
responsibility and its budget request for alterations and
major repairs includes an element for work related to altera-
tion of space to promote utilization.
     GSA stated that it is continually developing methods for
better space use and cited these examples:

     1. $11 million of its fiscal 1977 repair and alteration
        budget was earmarked for initial space alternation.
     2. It plans to earmark $17 million of its fiscal 1978
        repair and alteration budget to renovate space for
        Federal agency use.
We recognize that GSA has identified projects (see p. 30)
where Federally-owned property could result in annual lease
savings. We believe, however, that this is only part of
the total savings which could be brought about with an
effective program to survey and identify available Federal
property and to implement those survey recommendations which
are economically ,ustified.

     GSA stated that it is discussing with OMB procedures for
resolving issues resultirg from surveys of the use of real
property and, when agreeJ upon, appropriate revision would
be made to the Federal Property Management Regulations. GSA
stated that the revisions would provide more specific guid-
ance as to the conduct of annual reviews by executive agen-
cies. GSA doubted, however, that revising the regulations
alone would have appreciable effect. GSA believes that to
effectively enforce the act, an effective survey program
must be coupled with a viable Federal Property Council,
which brings the Executive Office of the President to bear.




                             25
We agree with GSA that assistance from the Federal Property
Council would help benefit in seeing that executive agencies
make maximum use of Federal property. However, a July 15,
1977, Presidential message to the Congress proposed abolish-
ing the Council. OMB stated that it would probably perform
the function.
     GSA stated that it favors our recommendation to provide
a more comprehensive screening system, but that the agencies
claim it causes too much paperwork and confusion. We believe
that since GSA is responsible for optimum use of Government-
owned property, a procedure to maximize circulation of no-
tices of available property is a valid technique. GSA regional
offices could still exercise some discretion, because our re-
commendation pertains to local offices close to the available
space. We believe that all agencies in the vicinity, whether
or not they are property-holding agencies, should be made
aware of available Government-owned property to determine
if it is suitable for them. If they are non-property-holding
agencies and can use available Government property in lieu
of leasing or new construction, GSA would be responsible for
managing the property for them.
     GSA strongly opposed our recommendation that agencies
receiving notices be required to respond to them and that
GSA evaluate the responses. GSA stated such requirements
would delay disposals. In our opinion, this is not a
valid objection considering the time it takes GSA to dis-
pose of property anyway. An August 1976 GSA study disclosed
that the average time required to dispose bf surplus property
by sale was 9 months for competitive bidding and 13 months
through negotiations. During a separate study of disposals
in GSA's region 1, we analyzed 235 cases closed over a 12-
year period. Our analysis disclosed that GSA took an aver-
age of over 14 months to dispose of property. Further, it
should be possible through adequate administrative control
to get and evaluate agency responses in a reasonable time.

     GSA stated that it considers the present procedures ef-
fective in generating interest and reuse of excess property
within the Government and that 71 properties costing $87.5
million had been transferred from one Federal agency to
another during fiscal year 1976. We recognize GSA's efforts
but believe that much more needs to be done. For example,
at the end of fiscal 1976, GSA's inventory of excess and
surplus property was 947 cases, with a reported cost of over
$2 billion.




                             26
                          CHAPTER 4
              NEED TO PROVIDE BETTER BUDGETARY

                DATA TO OMB AND THE CONGRESS
     According to GSA officials, budgetary reductions have
adversely affected the use of Government-owned property as
an alternative to leasing or new construction. GAO found
that GSA has not included in its annual budget requests in-
formation regarding opportunities for reducing leased space.

     GSA officials acknowledged the need for better budge-
tary presentations and indicated that beginning in fiscal
year 1978 information regarding opportunities to reduce
lease costs would be presented. To insure the usefulness
of this information, GSA regional offices must identify
and give priority to those projects where renovation of
existing Government-owned property could result in can-
celling leases or avoiding new construction.
FEDERAL BUILDINGS FUND

      The Public Buildings Amendments Act of 1972 (Public
Law 92-313) authorized GSA to charge agencies rent for
space occupied. In establishing the Federal Buildings
Fund, the Congress and GSA anticipated a number of property
gLanagepent imRoveme2;s, .uch as increased space use, better
agency program budgeting, and a landlord-tenant relation-
ship of GSA with other executive agencies. The fund is
used to finance GSA's real property management and related
activities. The Congress annually authorizes maximum ex-
penditures from the fund for each of the following functions.

     1. Construction: Construction of public facilities,
        costs associated with transfer of excess property
        from Federal agencies to GSA's inventory, and other
        miscellaneous activities.
    2. Alterations and major repairs: For both Government-
       owned and leased facilities under the control of
       GSA. Provides monies for enlarging and converting
       existing buildings, including excess facilities
       brought into GSA's property inventory.

    3. Purchase contract payments:  Provides for install-
       ment payments on private contracts made by GSA to
       finance the construction of public buildings.



                             27
     4. Rental of space:   Finances leases made with private
        parties.
     5. Real property operations: Finances the operation of
        all Government-owned buildings under GSA's control
        and building services in space where the lessor does
        not furnish such services as part of the terms of
        the lease.

     6. Program direction:  Finances the overall management,
        planning, and administration of all Public Buildings
        Service program responsibilities.

     GSA cannot transfer money from one element of the fund
to another or to other projects not justified in the budget.

     A GSA official stated that the Buildings Fund budget
presented to the Congress is developed in four phases:

     -- OMB provides Presidential policy guidance (dollar
        limitations) for all GSA functions and responsibili-
        ties, including the Federal Buildings Fund, about
        18 months before the start of the particular fiscal
        year.
     -- GSA prepares a detailed budget for the fund based
        upon expected program requirements.
     -- OMB reviews the detailed budget.

     -- OMB revises the budget to bring it in line with the
        Presidential policy guidelines and Federal agency
        needs.
      In developing the budget, GSA must first plan for
those activities with relatively fixed program requirements.
Those activities with program requirements that can vary
are funded to the extent remaining funds allow. For example,
purchase contract payments and rented space activities have
relatively fixed program requirements because the planned
expenditures are based on existing purchase contracts and
lease agreements. Conversely, the other four elements can
be changed. For example, a proposal for a new building
or renovation of an existing one can be postponed by con-
tinuing a commercial lease. Thus, the nature of the pro-
gram activities requires that budget reductions be absorbed
by one or more of the four variable activities.




                             28
     Two of the variable activities (construction and altera-
tion and major repairs) directly affect the use of Government-
owned property. These two elements fund the transfer of
property from a Federal agency to GSA's inventory and the
repair and alteration of available Government-owned property.

REDUCTION TO THE BUDGET--
FISCAL YEARS 1976 and-T977

     OMB reduced GSA's request by $72 million in fiscal year
1976 and by $167 million in fiscal year 1977. The Congress
further reduced the 1976 authority by $9 millicn. The fol-
lowing schedule shows the funding requested by GSA and the
amounts approved by OMB for fiscal year 1977.  (See app. II
for similar data for fiscal year 1976.)

        Federal Buildings Fund Obligational Authority

                                 Fiscal year 1977
                                            Approve-T6y OMB
                      GSA submission         and submitted
    Activity              to OMB            to the Congress

                                       (000 omitted)
Rental of space        $     482,000                   $   473,200
Real property op-
  erations                   442,000                       414,905
Alterations and
  major repairs              140,500                        60,700
Purchase contract
  payments                   92,000                         92,000
Construction                 69,500                         28,100
Program direction            71,000                         61,550
    Total              $1,297,000                      $1,130,455
Budget reduction                        $166,545
     The following schedule illustrates the impact of the
reduction in fiscal year 1977 to the six elements within
the alterations and major repairs program area.




                                29
                                            Approved by
  Alteration                    GSA'           OMB and
  and major                  submission     submitted to          Percent
repair element                 to OMB       the Congress         reduction

                                      (000 omitted)
Basic work                    $ 38,175          $36,675               4
Improvement of space
  to promote use               57,631            12,321              79
Four other areas               30,925             5,755              81
       Total                  126,731            54,751
Design, management,
  and inspection for
  the above areas              13,769             5,949              57
           Total             $140,500           $60,700
Budget reduction                      $79 300                       57
     Among the projects in its fi:.cal year 1977 Lequest for
$57.6 million to improve space to promote further use, GSA
proposed to alter 1.5 million square feet of space in 5 of
the 10 regions at a cost of $29.6 million. The work was
anticipated to reduce annual lease expenditures by $10.5
million.

                 Space            Square feet               Expected
               alteration            to be                annual lease
Region           costs              altered                  savings

                                 (000 omitted)
   4               $ 1,179                107                $     742
   6                20,409                841                    5,847
 a/7                 1,186                 89                      617
   8                 4,936                272                    1,892
 a/9                 1,940                198                    1,373
    Total          $29,650             1,507                $10,471
a/See appendix III for detailed breakdown on projects iden-
  tified by Regions 7 and 9.




                                 30
     GSA officials stated that many of the projects identi-
fied by the regions would not be funded as a result of the
reduction to the alteration and major repairs activity. Al-
though the information on projects identified by the regions
for saving lease costs was not provided to OMB or the Con-
gress in the fiscal year 1977 budget process, the data was
us3d to allocate alteration funds to the regions after OMB
had approved the budget.
     As noted earlier, agencies generally must pay for ex-
cess property an amount equal to 50 percent of the fair
market value, but OMB can waive that requirement. OMB has
determined that the waiver cannot be granted to GSA. Within
the construction program activity, GSA did not budget for
the transfer of any excess property to its inventory during
fiscal year 1975. GSA requested and was funded for two
properties requiring reimbursements of about $2.7 million
in the fiscal year 1976. GSA requested $2.4 million for
the transfer of six properties in the budget submitted for
fiscal year 1977.

     During the review process, OMB eliminated the $2.4
million that GSA had requested in 1977. An OMB official
stated that reductions in the construction activities budget
would result in an increase in leasing, but that reductions
to the alterations and major repairs budget should not af-
fect opportunities to improve Government-owned space use.

     OMB officials stated that the'- do not consider fundin
the alterations and major repairs activity in lieu of leas-
ing or new construction. According to OMB officials, GSA
has the administrative flexibility to determine what types
of projects, such as building repairs, space improvements,
and building conversions, will be financed through the
alterations and major repair activity. If an opportunity
arises to decrease the amount of leased space through use
of Government-owned space, GSA has the flexibility to fund
that project over another.

     GSA officials stated that administrative flexibility
is limited by the total available alteration and major
repair funds and each project's priority. They said that
the OMB-approved funding level for fiscal year 1977 allows
GSA very little flexibility, because the majority of avail-
able funds will go to the very critical high priority re-
pair work in occupied Government-owned buildings.




                            31
Fiscal year 1977
supplemental appropriation

      In May '^77 the Congress passed a supplemental appro-
priation of $125 million'    '=-W -   I-.llv   for major repair and
alteration work by GSA. The purpose was to stimulate econo-
mic recovery. In July 1977 OMB notified the Congress that
it was rescinding $75 million and would apportion only $50
million to GSA, because the economy was improving satisfac-
torily and the 1978 appropriation request contained about
$200 million for major repairs and alterations. No mention
was made by OMB of GSA's backlog of over $1 billion of that
type work, including unfunded projects to improve use of
Guvernment buildings.

IMPROVED BUDGET PRESENTATION
     GSA's budget submission for fiscal years 1975-77 did
not contain cost-benefit analyses supporting the request
for funds for projects designed to reduce payments for
leased space. Further, no comparable justification was
developed for funds requested to transfer excess property
to GSA from other agencies.

     GSA officials in Washington and in Region 9 stated
that the main reason for not presenting better information
was lack of experience and historical data in estimating
their needs in this area. Before the Federal Buildings
Fund was established in 1972, GSA was not required to
fund agency space alterations brought on by expansions or
relocations.
     Another factor which we believe affected GSA's budget
presentation was the reluctance of GSA regional officials
to request funds for renovating available space as an al-
ternative to continued leasing because they assumed such
funds were not available. As previously discussed, Region 9
officials stated that, as a result of the lack of funds,
they do not actively seek to identify available space which
could be used by Federal agencies in lieu of leasing. A
GSA headquarters official stated that the regions should
identify and give priority to such projects so that head-
quarters has better information on which to decide to al-
locate the funds.

     GSA officials stated that the fiscal year 1978 budget
for alteration and major repairs activities would be sup-
ported t? OMB by a schedule showing the cost of proposed



                               32
Government-owned space alterations and renovations and their
resulting lease savings. Similar information will also be
presented for funds requested for use in transferring excess
property to GSA's inventory, if the property includes build-
ings which will be improved. According to a GSA official,
the decision to modify the budget presentations relates to
increased congressional concern that too much of the Gov-
ernment's need for space is met by leasing.

     In addition to amounts authorized to be spent, unobli-
gated balances remained in the Federal Buildings Fund which
could be used if authorized by the Congress. In fiscal years
1975 and 1976, these funds were $44.5 and $8.8 million re-
spectively. GSA estimates that in fiscal year 1977 an addi-
tional $21.8 million will be available. The Congress might
have authorized the funding of projects designed to reduce
leased space from these unobligated balances if GSA had pro-
vided necessary information justifying such action.

CONCLUSIONS

     The use of available space, both within the GSA inven-
tory and in excess facilities, generally requires renova-
tion to suit potential occupant needs. Required funds must
come from GSA's fiscal year budget.

     OMB and the Congress, in carrying out their budgetary
responsibilities, should have all information regarding op-
portunities for reducing the amount of leased space. GSA
officials acknowledged the need for better budgetary pre-
sentation and stated that beginning in fiscal year 1978 in-
depth information regarding opportunities to reduce lease
costs involving expenditures under the construction and
alterations and major repairs activities of the Federal
Buildings Fund would be presented.

     The effectiveness of the revised budgetary presenta-
tions will depend on the thoroughness with which GSA re-
gional offices identify space which can be used as an
alternative to leasing. GSA officials stated that they
believe current procedures are adequate and, therefore,
will continue to rely on regional input. The extent of
consideration given excess property is left up to each
regional office, and in some cases available facilities
may not be considered since regional officials believe
that required alteration funds would not be available
even if requested. This philosophy is also reflected
in GSA's apparent reluctance to submit supplementary



                            33
budget requests involving unobligated receipts remaining
in the Federal Buildings Fund.
RECOMMENDATIONS

     To insure that opportunities for reducing leased space
are considered, we recommend that the Administrator of C ;A:
     -- Require regional offices to include in their budget
        submittals documented cost-benefit analyses regard-
        ing opportunities for reducing lease costs through
        using available Government-owned property.
     -- Give priority to those projects which are most cost
        effective.
AGENCY COMMENTS

     GSA did not comment on the above recommendations.

     OMB commented that it has recognized the desirability
of increasing new obligational authority for major repairs
and alterations and increased it from $61 million in fiscal
1977 to $205 million in fiscal 1978. At that time, however,
OMB officials did not tell us that they were considering
rescinding all or part of the supplemental appropriation
for repairs and alterations.
     Further discussions with OMB on the reasons for the
substantial increase disclosed that GSA had submitted, and
had adequately supported a request for, $205 million, and
OMB approved it. However, of the $205 million approved,
only $26 million was proposed for work related to alteration
of space to promote use.

     This program includes the cost of space alterations
which are incident to the relocation of agencies affected
by expiration of leases, space consolidations, and realign-
ments.

     In its budget presentation for fiscal year 1977, GSA
identified projects for which over $58 million was needed
to improve space to promote use. But the OMB-approved
budget proposed only $12 million for that purpose. GSA
has also identified over $90 million for such projects
in each of fiscal years 1979 and 1980.
     In view of this large backlog of repair and alteration
projects to promote use of space, the amount proposed for
that purpose in fiscal 1978 does not appear sufficient.


                            34
APPENDIX I                                            APPENDIX I


             FEDERAL REAL-PROPERTY-HOLDING AGENCIES
General Services Administration
Corps of Engineers
Department of the Air Force
Department of the Army
Department of the Navy
National Aeronautics and Space Administration
U.S. Postal Service
American Battle Monuments Commission
Central Intelligence Agency
Department of Agriculture
Department of Commerce
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Energy Research and Development Administration
Environmental Protection Agency
Federal Communications Commission
Government Printing Office
National Capital Housing Authority
National Science Foundation
Office of Economic Opportunity
Tennessee Valley Authority
U.S. Information Agency
Veterans Administration




                              35
APPENDIX       II                                                                                                                                APPENDIX II




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                                                                             3                                 *
APPENDIX III                                              APPENDIX III
                   SPACE ALTERATION PROJECTS FOR

                FISCAL YEAR 1977 IN REGIONS 7 AND 9

                                     Square                  Expected
                                      feet     Altera-        annual
Project                               to be     tion          lease
(note a)          Location           altered    cost          savings

              Region 7                             (000 omitted)

FB-PO-CT     Albuquerque, N. Mex.       7.0    $    100           $ 49
FB-CT        Dallas, Tex.               1.8          30             13
PO-CT        Tyler, Tex.                4.8          70             33
FB-CT        Muskogee, Okla.            6.5          80             45
FB           Little Rock, Ark.         35.0         120            243
FB-CT        Brownsville, Tex.          3.0         200             21
FB-PO        Bryan, Tex.                3.0          50             21
PO-CT        Oklahoma City, Okla.      20.0         100            139
FB-PO        Austin, Tex.               1.2          36              8
FB-CT        San Antonio, Tex.          6.5         400             45
     Total                             88.8    $1,186             $617
Fiscal year 1977 alterations and
  major repairs allowance                          $539
Unfunded alterations                               $647

               Region 9
FB           Sacramento, Calif.        30.0    $    307       $    209
FB           Los Angeles, Calif.        6.2          98             43
FB-CT        San Francisco, Calif.     10.0         100             69
FB           Los Angeles, Calif.       47.0         375            327
FB-CT        San Diego, Calif.         30.0         150            209
FB           Los Angeles, Calif.       24.5         187            170
AB           San Francisco, Calif.     41.0         423            285
Labora-      Hamilton Air Force
   tory        Base, Calif.             8.8         300             61
     Total                            197.5    $1,940         $1,373
Fiscal year 1977 alterations
  and major repairs allowance                       880
Unfunded alterations                           $1,060

a/Project abbreviations:
  FB--Federal Building         PO--Post Office
  CT--Court House              AB--Appraisers Building

                                37
APPENDIX   IV                                                                 APPENDIX IV



                                                     F
                                  UNITED STATES O        AMERICA
                         GENERAL SERVICES ADMINISTRATION
                                      WASHINGTON,   DC   2005




    May 27,      1977




    Honorabl Elmer B. Staats
    Comptroller General of the
    United States
    General Accounting Office
    Washington, DC   20548
    Dear 4r. Staats:
    As requested in Mr. F. J. Shafer's letter of March 23, we have reviewed tM
    draft report entitled "Executive Agencies Can Do Much More in Using
    Government-Owned Space as an Alternative to Leasing or New Construction."
    Our comments are attached.
    As our comments indicate, the conversion of an excess facility for use by
    Federal agencies is a difficult process. The lack of sufficient funds, the
    short timeframe requirements on the part of the agency needing space, and
    the necessity for most agencies to be located in a downtown area eliminates
    most excess properties from consideration.
    This is not to say, however, that all such properties are ignored, but only
    to indicate that the potential for utilizing them is, at best, limited. Our
    internal directives (see attached instructions from GSA Handbook PBS P 7000.2A)
    require that excess property be used whenever practicable, and we have recently
    strengthened the requirement to consider these properties in our long-range
    space planning studies by requiring that each excess property in the geographic
    area under study be individually reviewed. In addition, we hope that by in-
    creasing the number of annual Executive Order 11954 surveys, we will be able
    to identify more unutilized properties capable of meeting our needs.
    We believe that the attached comments place the matter of our using excess
    properties in proper perspective, and recommend that the draft be amended to
    mure accurately reflect the existing situation. If you feel it is necessary,
    we would be happy to meet with you to discuss the matter further.




    Roberelyt T. Griffin
    Deputy Administrator


    Enclosures
                        Keep Freedom in rour Future With U.S. Savings Bonds




                                               38
APPENDIX IV                                                          APPENDIX IV




                            GSA COMFNTS ON GAO
          DRAFT REPORT - 'XECUTI7VE  AGENCiE CAN DO MUCH MORE IN
        USING GOVEPRIENT-OWNED SPACE AS AN ALTERNATIVE TO LEA-SING
                            OR NEW CONSTRUCTION"

Recommendation:
Earmark funds for carrying out a realistic number of property surveys on an
annual basis.
Comment:
We believe that the report fails to adequately distinguish between two levels
of surveys conducted by GSA. The first is space utilization surveys which
involve periodic review of the effectiveness of the use of space strictly
under GSA control. On the other hand, our Office of Real Property is assigned
the responsibility of conducting surveys of the real property holdings of all
executive agencies. These surveys are in accordance with Executive Order 11954.
Our budget for Fiscal Year 1977 provides foi 120 surveys in cormoliance with
Executive Order 11954. During a recent semi-annual review of the program with
Regional Directors of Real Property, it was ascertained that, although a critical
shortage of funds for travel exists, the goal would be met or slightly exceeded.
We were approximately 13 percent below goal at the half-year point. We hope
that in Fiscal Year 1978, and in subsequent years, we will be able to significantly
increase the number of surveys we conduct.
Recommendation:
"Establish a reserve for implementing those survey recommendations which are
economically justifiable...."
Coamnent:
In many cases, through the Executive Order 11954 survey program it has been
found that functions could be consolidated for better utilization of real
property. However, the activity involved rarely has necessary funds to
accomplish necessary building repairs, renovations, or improvements. A re-
serve fund for this purpose, including renovation of buildings to serve
current requirements, could be very cost effective. However, current procedures
for congressional review of GSA's programs and annual budget do not allow for
the creation and use of reserve funds.




                                       39
 APPENDIX IV                                                    APPENDIX IV

2

It should be noted that within GSA, the Public Buildings Service is continually
developing methods of better using space in its inventory. For example, during
Fiscal Year 1977 we have established a goal of modernizing approximately 25
percent of our chronically vacant office space so that it may be backfilled.
We earmarked $11 million of our Fiscal Year 1977 Repair and Alteration budget
for initial space alterations. The major emphasis in the use of these funds is
the renovation of vacant space for backfill purposes. Similarly, we are planning
to earmark $17 million in our Fiscal Year 1978 Repair and Alteration budget to
be expended to renovate vacant space for Federal agency use. This two-year effort
will allow the backfilling of nearly two million square feet of space thereby
avoiding the further increase of our leased inventory by an equal amount.

Recommendation:

Amend the Federal Property Management Regulations to clearly state the criteria
for use by agencies in determining when and under what circumstances available
property must be reported.

Comment:

Existing regulations (41 CFR 101-47.801-802) set forth general standards and
guidelines in identifying unneeded Federal property and require that executive
agencies make an annual review to determine whether property is underutilized
or not put to optimum use, and take appropriate action to release unneeded
property.

GSA is presently discussing with OMB procedures to be used in resolving issues
resulting from Executive Order 11954 surveys. When these procedures have been
agreed upon, appropriate revisions will be made in the Federal Property Management
Regulations. These revisions will provide more specific guidance as to the
conduct of annual reviews by executive agencies. To be effective, these reviews
must be coordinated with program formulation and limit real property holding to
the minimum required for effective execution of program objectives.

Provisions of the Federal Property and Administrative Services Act of 1949,
section 202C(b)(40 U.S.C. 483) require executive agencies to continually survey
property under its control to determine which is excess and to promptly report
such property to the Administrator of General Services. This requirement was
emphasized by Executive Orders 11508, 11724, and currently by Executive Order
11954 issued on January 7, 1977. These Executive Orders clearly indicate
Presidential concern and effort to assure compliance with the 1949 Act, however,
even with this emphasis some executive agencies continue to hold unneeded real
property. In view of the rapidly changing program emphasis, changes in the state
of the art, long-range planning and rapidly increasing cost of real property, the
reluctance of agencies to report unneeded property excess is often understandable
but rarely justifiable. In view of this situation and existence of law, it is
doubted that changes in the FPMR will have appreciable effect. Our experience
indicates that an effective survey program coupled with a viable Federal Property
Council, which brings the Executive Office of the President to bear, is clearly
the most effective method of enforcing provisions of the 1949 Act and to accom-
plish objectives of the subject report.




                                     40
APPENDIX IV                                                     APPENDIX     IV




Recommendation:

Revise the Federal Property Management Regulations to provide a comprehensive
property-screening system including (1) a provision for distributing property-
screening notices to headquarters offices, and the respective local office in
close proximity to the available space, and (2) a requirement that an agency
respond and that GSA evaluate the response.

Comment:

Such a procedure was followed at one time. However, the procedure was abandoned
at the request of some of the holding agencies because they felt that confusion
was created when offices not responsible for space requirements received the
notices and too much paperwork was being generated. As a result, we now follow
the present system whereby our regional offices exercise some discretion send-
ing screening notices to those organizational elements that have cognizance
of the property requirements of the agency. From our point of view, the nroce-
dure recommended in the report would be simpler and require less effort on our
part since we could irdi-::riminantly mail the notices to the Federal agencies
involved. However, we believe that the reasons for abandoning the procedure
still remain valid.

On page 32 the report indicates that 38 of 54 agencies contacted indicated
that they did not receive screening notices from GSA. The statement should be
clarified in light of the fact that there are only 29 holding agencies and the
recommendation speaks in terms of holding agencies. In any case, we believe
that the reconmmendation should be revised so as to except the agency which
report-d the property from the screening requirement.

We strongly oppose the recommendations that each agency and respective local
office be required to rcspond to the notice stating the agency's views on
using the available space as an alternative to leasing or new construction
and require GSA regional offices to evaluate the responses for the purpose of
determining whether or not the agencies should be directed to use the available
space. Such requirements could indefinitely delay our disposals while await-
ing agency responses with accompanying results including: increases in pro-
tection and maintenance costs, loss of the use of revenues generated by our
sales for the periods of such delays, deterioration of the property where pro-
tection and maintenance cannot be maintained at adequate levels and delay in
use of the property for productive purposes. We consider that the present
procedures are effective in generating interest in reuse of excess real property:
witness the fact that in Fiscal Year 1976, 71 properties with an acquisition
cost of $87.5 million were transferred from one Federal agency to another for
further use within the Federal Government and in the TQ and this FY, 34 proper-
ties with an acqu.sition cost of $55 million have been transferred for such
purposes. In short, we believe that the losses through such procedures would
outweigh the benefits.




                                     41
APPENDIX IV                                                           APPENDIX IV



   4

   Recommendation:
   Develop procedures to identify agencies occupying leased space and those with
   proposed construction projects, concentrating first on those in close proximity
   to the available space.
   Comment:
   This agency maintains detailed space assignment records for all agencies and
   space under our control. Our automated system makes it possible to retrieve
   the type of information required by this recommendation almost instantaneously.
   However, identifying potential occupants of excess properties is not the problem;
   rather, it is the practicability of utilizing these facilities as Federal offices.
   In making this decision, the primary determinants are:
      1. The cost of renovating the facilities to make them suitable for occupancy
  by Federal activities. Upgrading of most excess buildings would require the
  inclusion of handicapped facilities, firesafety provisions, and the improvement
  of heating and airconditioning equipment. The cost to alter space to meet
  these requirements would be considerably higher than the $8-$10 per square foot
  figure ;ndicated in the draft. In addition, the design of many of these older
  facilities may preclude incorporation of modern office planning techniques and
  prohibit the efficient layout of space.
       2.


              GAO NOTE:

                     REVISED GSA COMMENTS SHOWN ON PAGE 47.




       3. The location of the excess property. Each agency has responsibility
  for determining the city or community in which its offices will be situated.
  GSA, then, in consultation with the agency, determines the general area within
  the city or community that would best suit the agency's mission. In accordance
  with Executive Order 11512, material consideration is given to the efficient
  performance of the missions and programs of the agencies, with due regard for
  the convenience of the public served, and the maintenance and improvement of
  safe and healthful working conditions for employees. It should be noted, how-
  ever, that it is GSA's operating policy as prescribed in the Federal Property
  Management Regulations (sections 101-17.101-lc and 101-18.100(g)) to give
  priority consideration to locations in the central business district of the
  various communities when such action is consistent with the occupant agency's
  mission responsibilities. Many of the available excess facilities, particularly
  those of the Defense Department, are in relatively remote locations and to
  occupy them could result in serious impairment of agency operations.




                                        42
APPENDIX IV                                                      APPENDIX IV




    4. Coordinating space needs with rehabilitation of the facility. The entire
process from identification of a potential facility until space is renovated
and ready for occupancy can take from two to three years. Given this long
time period, it is very difficult to coordinate agency needs for space, which
are usually based on a three to six ronths' deadline, with excess property that
can be made available for occupancy in two to three years, assuming OMB and
congressional approvals and availability of funds for the project.
Recommendation:
Obtain written opinions from those agencies considered by GSA as possible
tenants.
Comment:
As indicated above, almost any proposal to relocate an agency from its exist-
ing leased quarters will elicit a response, frequently a negative one. Agencies
submit detailed justifications for continued occupancy of the leased space in
reply to such proposals. If the agency's justification is inadequate (i.e.
has no bearing on its mission accomplishment), the agency will be compelled
to move. On the other hand, if the agency can satisfactorily demonstrate
that its mission would be seriously impaired by being moved to an excess facility,
we would not normally try to overrule that judgment.

Recommendat ion:
Develop procedures to estimate repair and alteration cost for renovating
available property.
Comment:
A procedure for estimating repair and alteration costs by professional
engineers now exists and is an integral part of the Repair and Alteration (R&A)
program. Also, the selection of major RGA projects ($500,000 and over) for
inclusion into the annual budget is determined on the basis of a cost/benefit
analysis; this would include proposals to rehabilitate excess property. Our
existing estimating procedures provide us with accurate information upon which
we base all RGA budget and funding action. For example, major projects for
renovation to Federal buildings at 1114 Commerce in Dallas, Texas; the Auditors
Building in Washington, D.C.; 201 Varick Street in New York: the Old Post Office,
Washington, D.C.; aid the Old Customhouse in St. Louis, Missouri, are to be under-
taken during Fiscal Year 1978. All of these buildings are primarily vacant and
underutilized, and completion of these projects will result in the use of
Government-owned space in lieu of leasing.




                                      43
APPENDIX IV                                                     APPENDIX IV




6

Recommendation:

Perform a cost benefit analysis of the economic advantages and disadvantages
of using the property.
Comment:

The alternative of acquiring excess property held by other agencies has always
been a consideration in our long-range facilities' planning studies. We have
recently strengthened the requirement to consider the use of excess property
by requiring that each excess property in the geographic area of the survey be
listed individually with a discussion as to its suitability in meeting space
needs. In cases where acquisition of excess property is a viable alter.ntive,
detailed cost/benefit analyses are required in reaching our decision conctrn-
ing the satisfaction of long-range space needs.
It should be further noted that detailed cost/benefit analyses are an integral
part of our prospectus process wVether it involves new Federal construction,
repair and alteration of an existing facility, or leasing. In addition, cost/
benefit analyses were included in our Fiscal Year 1977 and 1978 budget sub-
missions to the Congress for selected major R&A projects.




    GAO Note:

       Page references in this appendix refer to the draft
       report and do not necessarily agree with the page
       numbers in the final report.




                                      44
 APPENDIX IV                                                              APPENDIX    IV


  I'BS I'700 0.2A
                                                                  Dnfcclber 6, 1976
               (c) 'he Assignment and Utilization
 appropriate sections of the SF:O to the agency for Branch shall forward
                                                     which the space is to
 be acquired for review and concurrence. Thc transidittal
 shall call attention to the area delineated for acquisitionto the a!ency
 any other pertinent aspects of the leasing action.            as well as
                                                       Any differences
 between GSA and the requesting agency in this regard
 before lease award. The letter of transmittal shall shall be resolved
                                                        state that:
                   i. GSA will be responsible for
 space conforming to the requirements assembly whichthe selection of that
 tageous to the Governmnent, price arnl other factors shall be most advan-
                                                      considered; and
                    ii. Prompt response is required to avoid acquisition
 delays.

              (d) No lease shall
 the Acquisition Branch that agencybe concurrence
                                       awarded until the A 4 U Branch informs
                                                  on the requirements asse:bnly
has been received. However, if no corunent or concurrence
within a reasonable time, the requesting ageny will          has been received
A & U Branch that if no response is received within abereasonable
                                                           notified by the
the receipt of the communlication, the Standard Form                time from
will be returned without acquisition action.           81, Request for Space,

 7.   Acquisition by transfer and exr.ss -of GSA real proDerty.
      a. Acquisition by transfer. In addition to the responsibility
utilize vacant GSA-controIlled- pace, each Federal                   to
                                                   agency, so Car as practi
cal, shall utilize excess real property.   lThe
                                              regional Real 'Property
Division periodically distributes lists of excess real
                                                       property.
         (1) The Space Management Division or Buildings ,lanagement
sonnel shall inspect properties that appear t' have                 per-
                                                    potential.
following determinations shall be made on Ct se properties      'Ile
                                                           and included
in case files:

               (a) Cost of acquisition.
               (b) Cost of renovation.
             (c) Suitability -to future, agency      sie and further considlr-
ation at a latvr date.

               (d) Funding availability.
               (e) Lxisting regional requiremert:; w.rlictl nlltglh
                                                                 be satis-
fied in the property.

               (f) Referral to Central O)Ffi-c for possiblh    national
circulation.




                                          45
APPENDIX IV                                                  APPENDIX IV


December 6, 1976                                               PBS P 7000.LA
              (g)   Conformance with (:SA accident and fire prevention
Dolicies.

              (h)   Conformance wit; GSA concession policies; and applicable
laws.

     b. Excess. The A & U Branch identifies GSA-owned properties which
are not utilized, are underutilized, or not being put to their optimum
use. When economically feasible, every effort should be made to utilize
this space for assignment to other agencies. If this cannot be done, and
there is potential for future need or only a portion of a building is not
required, the space should be temporarily excessed for outleasing. If
ther. is doubtful potential for future need, then the property shall be
determined excess to the needs of GSA and a Report of Excess Real Property
(SF-118) shall be prepared and forwarded to the regional Real Property
Division. The property is then removed from the Space Management Division
inventory and space records adjusted accordingly.

8. References.

    a. Title 41, Code of Federal Regulations, (41 CFR), Subtitle C,
Chapter 101, Subchapter D, Public Buildings and Space, Part 101-17, pre-
scribes the responsibilities and procedures applicable to GSA in the
assignment and utilization of space.

    b. 1he handbook Basic Laws and Authorities of the General Services
Administration, (CSL P S000.4C), as amended, contains the text of the
basic laws, executive orders, reorganization plans, and other directives
establishing the authorities and functions of GSA.

    c. The United States Government Manual is the official handbook of
the Federal Government. It describes the purpose and programs of most
Covernunent agencies and lists top personnel.




                                   46
     APPENDIX IV                                                             APPENDIX IV


                             UNITED STATE      OF AMERICA
                     GENERAL SERVICES ADMINISTRATION
                                          Public Building, Service
                                                       Washinton. DC        20405
                                                                                    K
    JUL 8 177
    Mr. Clarence M. Ellingtomi
    Assistant Director
    Logistics and Communications Division
    General Accounting Office
    Washington, DC    20548
    Dear Mr. Ellington:
    As discussed at the meeting of July 7 between you and representatives of
    several PBS offices concerning the GAO audit entitled "Executive Agencies
    Can Do Much More in Using Government-Owzaed Space as an Alternative to
    Leasing or New Construction," item 2 on page 4 of the GSA comments should
    read as follows:
        2. Agency willingness to occupy excess facilities. Contrary to the
    indications    the draft riert, our experience has been that there is a
    general reluctance on the part of agencies to occupy space in such facilities,
    and attempts to secure commitments frm agencies have, for the most part,
    been unsuccessful. Without prior commitment, it would be imprudent to under-
    take an extensive renovation program. We firmly believe that most of the
    agencies that indicated a willingness to move when asked a hypothetical
    question by GAO would respond differently if a firm proposal to relocate were
    presented to them by GSA. The responses we receive when requesting agencies
    to move from leased facilities to rehabilitated Postal Service buildings
    illustrate the problem of agency intransigence. Such proposals frequently
    meet with strong resistance.
    Since



O/*Assistant Commissioner for
   Space Planning and iimageiment

                      Keep Freedom in Your Future With U.S. Savings Bonds


                                             47
APPENDIX V                                               APPENDIX V


             EXECUTIVE OFFICE OF THE PRESIDENT
               OFFICE OF MANAGEMENT AND BUDGET
                      WASHINGTON. D.C. 20503




                                                 MAY 2    197W?
Honorable F.J. Shafer
Director, United States
  General Accounting Office
Washington, D. C. 20548
Dear Mr. Shafer:

Thank you for giving us the opportunity to comment on
the draft report LCD 77-314, "Executive Agencies Can Do
Much More in Using Government-Owned Space As An
Alternative to Leasing or New Construction."
While we defer to the General Services Administration to
coumment on the operational procedures covered in the
report, we do want to comment on the report's funding
recommendations. As you may know, a number of activi-
ties--of which acquiring and renovating excess govern-
ment property is only one--are financed within the
limitations of the Federal Buildinga Fund. OMB
recognized the desirability of increasing new obligational
authority for major repairs and alterations from $61M in
1977 to $205M in 1978. Of the $205M, $29M will be used
to recycle vacant space for occupancy and to improve the
utilization of existing space.
We understand that the General Services Administration
will be sending more detailed comments. We trust that
the report wll be rewritten to reflect those comments
before it is published in final form.

Thank you for the opportunity to comment on this report.

                                  Sincerely,


                                 Dennis 0. Green
                                 Associate Director
                                 Economics and Government


                                  48
APPENDIX VI                                          APPENDIX VI


              GENERAL CRITERIA FOR ACQUIRING SPACE

     The Federal Property Management Regulations include the
following factors to be considered in acquiring space. The
factors apply if space is to be obtained through leasing in
privately owned buildings or through construction and altera-
tion of public buildings.
     1. Material consideration shall be given to the efficient
        performance of the agencies' missions and programs of
        the nature and function of the facilities involved
        with due regard for the convenience of the public
        served.
     2. Maximum use shall be made of existing Government-
        owned buildings which are adequate or economically
        adaptable to the space needs of executive agencies.
     3. Privately owned space shall be acquired only when
        satisfactory Government-owned space is not available.

     4. Space planning and assignments   shall reflect an as-
        sessment of the advantages and   casts of consolidating
        agencies and constituent parts   thereof in common cr
        adjacent space for the purpose   of improving management
        and administration.
     5. Consideration shall be given in the selection of sites
        for Federal facilities to the need for development and
        redevelopment of areas and the development of new
        communities and the impact a selection will have on
        improving social and economic conditions in the area.
     6. Availability of aedquate low- and moderate-income
        housing on a nondiscriminatory basis, nondiscrimina-
        tion in the sale and rental of housing, adequate
        access from other areas of the urban center, and
        adequacy of parking shall be considered.




                               49
APPENDIX VII                                         APPENDIX VII


           PRINCIPAL GSA OFFICIALS RESPONSIBLE FOR
               ACTIVITIES DISCUSSED IN THIS REPORT

                                        Tenure of office
                                        From          To
ADMINISTRATOR OF GENERAL SERVICES:
    Joel W. Solomon                  May    1977     Present
    Robert T. Griffin (acting)       Feb.   1977     May   1977
    Jack Eckerd                      Nov.   1975     Feb. 1977
    Arthur F. Sampson                June   1973     Nov. 1975
    Arthur F. Sampson (acting)       June   1972     June 1973
COMMISSIONER, PUBLIC BUILDINGS SERVICE:
    James B. Shea, Jr.             June     1977     Present
    Tom L. Peyton (acting)         May      1977     June 1977
    Nicholas A. Panuzio            Sept.    1975     May   1977
    Walter Meisen (acting)         Oct.     1974     Sept. 1975
    Larry F. Roush                 Aug.     1973     Oct. 1974
    Larry F. Roush (acting)        Jan.     1973     Aug. 1973
    John F. Galuardi (acting)      July     1972     Jan. 1973
    Arthur F. Sampson              Mar.     1970     June 1972




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