In Effort to Save Taxpayer Dollars, Sens. Carper, Portman Request Information on Federal Property Disposal

Sens. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, and Rob Portman (R-Ohio), former Director of the Office of Management and Budget, sent letters to eight federal agencies requesting information on those agencies’ real property disposal initiatives, as part of the effort to curb waste within the federal government.

The federal government has faced longstanding challenges in managing its real property holdings. In January 2003, the Government Accountability Office (GAO) first placed real property management on its list of “high risk”— which highlights government programs and offices that are at high risk for waste, fraud, abuse, mismanagement or in need of broad reform government activities – in part due to the overwhelming number of unneeded, underutilized and even vacant facilities held by federal agencies.

For nearly a decade, the federal government has taken steps to address some of these challenges and improve its management of federal real estate. Despite efforts by both President George W. Bush and President Barack Obama to improve the management of federal real estate, much work needs to be done. On May 4, the Administration released a list of 12,000 buildings and structures that have been designated as excessive, yet cost taxpayers millions of dollars in annual operating expenses. Moreover, federal auditors have found that agencies lease more property than is cost-effective, resulting in millions of dollars of additional costs to government.

Sen. Carper’s Subcommittee on Federal Financial Management – on which Sen. Portman serves as a member — has continued to oversee the issue of federal asset management, most recently in a hearing last month. As part of that ongoing effort, Sens. Carper and Portman requested that select agencies provide information on their real property management reform efforts, including properties previously identified as excess, underutilized properties, properties previously disposed of and the fair market value of that property at the time of disposition; and any agency strategy for reducing the costs of owned and leased property.

“Looking ahead, it’s critical that agencies come up with innovative property management tools to expeditiously dispose of assets they no longer need and take better care of those that they do need,” said the Senators. “By disposing of unneeded buildings, reducing maintenance costs, and consolidating and re-aligning existing space, we can save taxpayer dollars and make government work better for everyone.”

The Senators sent letters to the U.S. General Services Administration, U.S. Department of Veteran Affairs, U.S. Department of Energy, U.S. Department of the Interior, U.S. Department of Justice, U.S. Department of State, U.S. Department of Agriculture and U.S. Department of Homeland Security.

A copy of the Senators’ letter to the U.S. Department of Agriculture is below:

July 5, 2011

The Honorable Tom Vilsack
Secretary
U.S. Department of Agriculture
1400 Independence Ave., S.W.
Washington, DC 20250

Dear Secretary Vilsack:

We are writing to request information on the United States Department of Agriculture’s (USDA) federal real property asset management program. As you probably know, the federal government has faced longstanding challenges in managing its real property holdings. In January 2003, the Government Accountability Office (GAO) first placed real property management on its list of “high risk” government activities, citing significant amounts of underutilized and excess property and an over-reliance on costly leasing.[1]

For nearly a decade, the federal government has taken steps to address some of these challenges and improve its management of federal real estate. In 2004, President Bush signed an executive order directing executive agencies to develop and use asset management plans to determine whether real property holdings were sufficient for – or in excess of – what is required to satisfactorily fulfill their operational missions.[2]

President Obama has continued these efforts by issuing a June 2010 memorandum directing agencies to accelerate efforts to remove excess and surplus property and to achieve $3 billion in cost savings by the end of fiscal year 2012.[3] The memo directed that these cost savings be derived from increased proceeds from the sale of assets and reduced operating, maintenance, and energy expenses from disposals or other space consolidation efforts, including leases that are terminated.

More recently, at a hearing before the Senate Subcommittee on Federal Financial Management on June 9, OMB Controller Daniel Werfel testified that the government can no longer continue to operate using the costly real property inventory of 60 years ago and suggested reducing costs by consolidating sites across federal agencies and closing field offices where possible.

Even with this progress, however, problems related to unneeded property and leasing persist. For example, in fiscal year 2009, 24 federal agencies reported that they possessed more than 14,000 excess and 45,000 underutilized buildings that cost more than $1.7 billion annually to operate.[4] Holding on to considerable amounts of excess property often translates into significant costs for their operation, maintenance, and security.

In addition, federal agencies reported leasing nearly 635 million square feet of building space with total annual operating costs of $8.1 billion in fiscal year 2009, according to data from the Federal Real Property Profile.[5] While leasing may be economically advantageous in meeting temporary or short-term space needs, building ownership has been proven to be more cost effective in meeting long-term space needs in most instances.

Looking ahead, it is critical that federal agencies begin to adopt creative strategies to address leading edge workplace practices that will not only achieve increased levels of productivity, but also decrease the need for real property assets. By disposing of unneeded buildings, reducing maintenance costs, and consolidating and re-aligning existing space, we can save taxpayer dollars and make government work better for everyone.

Therefore, we respectfully request that you provide information on your agency’s real property management improvement efforts. Specifically, we would like to know:

1. What is the profile of owned and leased property held by the Department? Please include with your response an identification of the asset type, its location, and annual operating expenses for each individualized asset.

2. What assets have been identified by the Department as excess or underutilized in the past five years and what actions is the Department taking to better utilize its remaining property?

3. How many assets have been disposed of by sale, donation, or demolition in the past five years? Please include with your response the fair market value of each asset at the time of disposition.

4. How many leases have been executed by the Department within the past five years? Please include with your response a full explanation of relevant lease terms, current utilization rates, and whether the lease was awarded through a sole source contract award.

5. What progress has you agency made in pursuing other strategies for reducing the costs of real property, including closing field locations, consolidating locations with other federal agencies, and promoting address-free work spaces?

We greatly appreciate your prompt attention to this matter and ask that you and your staff provide the information and briefing we’ve requested on or before July 25, 2011. Should you have any questions, please ask members of your staff to contact Velvet Johnson at (202) 224-7155 or Brian Callanan at (202) 224-3353.

With best personal regards, we are

Sincerely yours,

U.S. Senator Tom Carper
U.S. Senator Rob Portman

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[1] U.S. Government Accountability Office, High Risk Series: Federal Real Property (Jan. 2003) (GAO-03-122).

[2] Exec. Order No. 13327, 69 Fed. Reg. 5897 (Feb. 4, 2004).

[3] White House, Presidential Memorandum—Disposing of Unneeded Federal Real Estate (June 10, 2010)(online at http://www.whitehouse.gov/the-press-office/presidential-memorandum-disposing-unneeded-federal-real-estate).

[4] Federal Real Property Council, FY2009 Federal Real Property Report: An Overview of the U.S. Federal Government’s Real Property Assets (Sept. 2010).

[5] Id.