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GAO-16-536R 1 (2016-06-21)

handle is hein.gao/gaobaajza0001 and id is 1 raw text is: G A O U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 June 21, 2016 The Honorable Bill Shuster Chairman The Honorable Peter A. DeFazio Ranking Member Committee on Transportation and Infrastructure House of Representatives The Honorable Lou Barletta Chairman The Honorable Andr6 Carson Ranking Member Subcommittee on Economic Development, Public Buildings, and Emergency Management Committee on Transportation and Infrastructure House of Representatives Federal Real Property: Leases with Purchase Options Are Infrequently Used but May Provide Benefits Overreliance on costly leasing is one of the major reasons that federal real property management remains on GAO's high risk list.1 Our work over the years has shown that, in general, buying a building often costs less than entering into a long-term lease.2 However, we have also found that the General Services Administration (GSA) typically lacks the budget authority from the Federal Buildings Fund (FBF) needed to purchase buildings outright3 and, according to GSA officials, must resort to leasing to fulfill the federal government's space requirements.4 In leasing buildings, one mechanism for potentially reducing costs is to include a purchase option as part of the lease. Such a mechanism gives the government a future option 1GAO, High-Risk Series: An Update, GAO-1 5-290 (Washington, D.C., February 2015). Other reasons for the designation included unreliable data, excess and deteriorating property, and challenges associated with protecting assets against the threat of terrorism. 2Under certain conditions, such as fulfilling short-term needs for office space, leasing may be a lower cost option than ownership. See GAO, Federal Real Property: Greater Transparency and Strategic Focus Needed for High-Value GSA Leases, GAO-i 3-744 (Washington, D.C.; September 2013). 3The FBF, administered by GSA, is the primary means used to finance the capital and operating costs associated with federal space. The FBF is financed by income from rental charges assessed to tenant agencies occupying federally-owned and -leased space. Congress exercises control over the FBF through the appropriations process that sets annual limits-called obligational authority-on how much of the fund can be obligated for various activities, such as rental of space and construction and acquisition of buildings. 4Within the vast portfolio of government owned and leased assets, GSA is the broker and property manager for many civilian agencies of the U.S. government. GSA is responsible for almost 400-million square feet of rentable federal space-over half of which is leased. GAO-16-536R Federal Real Property Page 1

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