Chairman Carper, Ranking Member Coburn Highlight Report Calling for Increased Transparency in High-Value Leases

WASHINGTON – Today, Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.) and Ranking Member Tom Coburn (R-Okla.) highlighted a new report by the Government Accountability Office (GAO), titled Federal Real Property: Greater Transparency and Strategic Focus Needed for High-Value GSA Leases, that calls on the General Services Administration (GSA) to improve how it operates leasing and capital planning programs by providing greater transparency and better management of high-value leases. In July, Chairman Carper and Ranking Member Coburn introduced the Federal Real Property Asset Management Reform Act of 2013, which will address many of the issues highlighted by GAO’s report.

“Today’s GAO report highlights the fact that there isn’t nearly enough transparency or clear guidance when it comes to GSA’s real property strategy and how leased properties are managed,” said Chairman Carper. “Congress and GSA need to work together to develop a comprehensive strategy to help agencies move out of high-cost leases into more cost-effective alternatives. In July, Dr. Coburn and I introduced the Federal Real Property Asset Management and Reform Act of 2013, which would implement many of the recommendations in GAO’s report and help to make our federal leasing operations more efficient. I will continue to work with my colleagues and the Administration to improve our federal property management practices, including passing this legislation, so we can better save scarce taxpayer dollars.”

“This report shows the GSA—like Congress—fails in planning for the long term,” Dr. Coburn said.  “Chairman Carper and I have introduced bipartisan legislation that would address many of the concerns outlined by GAO.  Congress should put short-term political thinking aside and give the GSA the tools needed to make informed financial decisions by passing this bill.  At the same time, GSA should work independently to protect taxpayers by implementing transparent processes that weigh costs and benefits when procuring property.”

Federal property management has been on GAO’s high-risk list since January 2003. This is, in part, due to the government’s over-reliance on costly leasing, particularly for long-term space needs.  Currently, GSA spends more than $5 billion annually from the Federal Building Fund to lease almost 200 million square feet of space for federal agencies.  High-value leases, those with an annual net rent at or above $2.79 million, make up approximately one-third of GSA’s total leased portfolio in terms of cost and size and have terms that typically exceed ten years. Currently, more than 60 percent of the leases examined by GAO are set to expire within the next five years.

According to GAO, GSA’s lease prospectuses lack transparency on key information that would help decision makers determine the extent to which leasing or building ownership would present the lower-cost option.  In some instances, GSA leases did not go through the lease prospectus process due to the agency’s failure to submit a prospectus to House and Senate authorizing committees for their approval.  The GAO also found that GSA does not have a capital plan for transitioning long-term leasing obligations into federally owned space, which could potentially save the federal government millions of dollars. 

The Federal Real Property Asset Management Reform Act of 2013 would address long-standing challenges in federal real property management.  The legislation assists federal agencies in the disposal of surplus federal buildings and requires agencies to identify property that are suitable for consolidation or co-location of operations, which could ultimately help reduce the government’s leasing portfolio. The bill also establishes an interagency Federal Real Property Council that will be required to develop a strategy to reduce Federal agencies’ reliance on leased space for long-term needs where ownership would be less costly. The Council will also work to provide agencies with guidance on eliminating inefficiencies in the leasing process.