Agencies face new rules for managing property

The Federal Real Property Council, made up of agency executives who have experience in property management, has ratified new guidelines to help agencies improve their scores on the newest addition to the President's Management Agenda: real property asset management.

In February, President Bush issued an executive order aimed at improving management of the federal government's billions of dollars worth of real estate. The resulting Real Property Initiative is the lowest scoring category on OMB's management score card, with all agencies except for the General Services Administration scoring a red, the lowest mark. GSA earned a yellow.

The new guidance, issued Oct. 27, should help agencies improve their scores, said F. Joseph Moravec, commissioner of GSA's Public Buildings Service.

Moravec, who chairs the Real Property Council's Asset Management Plan Committee, said the new guidelines amounted to a "ten commandments" of property management. They call for each agency to inventory all of its assets, get rid of unneeded holdings, and implement maintenance plans.

"Every asset must have a little business plan: continuous monitoring, a feedback mechanism, consideration of socioeconomic responsibilities, human capital support … [agencies need to] show how they're recruiting people who know what they're doing-real real-estate people," Moravec said.

"In the 200-year history of the federal government owning property, there has never before been common standards for what constitutes good real property asset management," Moravec said. The executive order, he added, represents a shift towards approaching real estate the way the private sector does: as an asset, not a burden.

In August 2003, the Government Accountability Office reported that GSA, the Veterans Affairs Department and the Postal Service controlled 927 vacant or underutilized properties. The report concluded that the government was wasting money on the continued maintenance of these properties, noting, for example, that the VA spent $348,000 in fiscal 2001 to maintain a building in Milwaukee that had been vacant for 14 years. The GAO designated federal real property as a high-risk category in 2003.

Moravec said GSA has a $6 billion backlog of maintenance needs on its properties.

One problem, he said, is that laws limit the extent to which agencies can manage their property. For example, if a GSA-owned building becomes vacant, laws prevent the agency from leasing it to the private sector, and it can't keep the proceeds from a sale--they go to the Treasury. Such restrictions provide little incentive for agencies to prune their holdings.

"We can't do a lot of things that ordinary asset management organizations can do," Moravec said. One benefit of the executive order, he said, is that now agencies can approach Congress and oversight committees together to explain property management challenges.

The governmentwide asset inventory also will enable agencies to trade properties with each other, said Moravec.

While the new requirements may require upfront investment, Moravec said the net effect will be positive. "We anticipate instead of costing the taxpayers more money, this will quickly yield big savings," he said.

He also said that he expects some agencies, including the Defense, Energy and State departments and NASA, to soon move from red to yellow on their OMB score card rating.