Defense officials hesitant to use expanded lease authority

Pentagon officials are making little use of expanded leasing authorities designed to help the military reduce base operating costs, according to a new General Accounting Office report.

Reductions in military personnel during the last decade left the Defense Department with buildings and land it no longer needed. One way the department has offset the cost of maintaining empty buildings over the years has been to lease space to banks, credit unions and schools. Leases and other partnerships generated more than $32 million for the department from 1999 to 2001, according to GAO's report "Defense Infrastructure: Greater Emphasis Needed to Increase the Services' Use of Expanded Leasing Authority" (GA0-02-475).

The 2001 Defense Authorization Act expanded that leasing authority to include new construction, to generate more leasing dollars and further reduce costs, but Defense officials are not using the new leasing powers, GAO found. Defense officials admitted they are cautious about using the new authority because of base closures scheduled for 2005.

"The services are hesitant to lease property on bases that might be subject to a base realignment or closure," the report said. "The services also want to reserve property in the event that they have to accommodate missions from realigned or closed installations."

Since the legislation took effect, only the Army has used the new authority, completing two projects in 2001, one of which is expected to generate $253 million over the next 50 years.

There are also concerns about how leasing would affect security efforts if the base is open to private tenants and about the difficulty in finding projects that are mission-related. For example, leasing Navy properties is difficult because naval buildings and property generally have very specific uses, the report said.

Another barrier to using the new authority is a fear that the Office of Management and Budget could reduce the Defense budget based on increases in the department's revenue from leases.

To increase use of the leasing authority, GAO recommended that the Defense undersecretary for acquisition, technology and logistics work with other Defense secretaries to craft program goals and measurements in order to monitor cost reductions from the program.

In a written response to GAO's findings, Deputy Defense UnderSecretary for Installation and Environment Raymond DuBois said transforming "old buildings and underutilized land from cost generators to cost savers" was not a simple task, but it remained a key element of the department's facilities plan. However, DuBois noted that success in the program depended on several factors, including the availability of land or property.