Sen. Ron Johnson, R-Wis., said it will be hard to achieve real reform until the government has better information on its current holdings. Cliff Owen/AP
Which Agencies Are Best At Selling Unneeded Property?
The ability to keep some of the proceeds and disciplined management processes have helped some agencies, controller tells senators.
Asked to name the agencies most effective at unloading excess real property, U.S. Controller David Mader on Tuesday picked the Interior Department, the Agriculture Department’s Forest Service and the Coast Guard.
“Interior started years ago to dedicate a portion of its budget” to property disposal and is one of a dozen or so agencies that “have the ability to retain the proceeds,” Mader told Sen. James Lankford, R-Okla., at a hearing of the Homeland Security and Governmental Affairs Committee. “Other agencies follow the same steps, but these use a more disciplined management process.”
The hearing brought to light reliability gaps in agency and governmentwide databases on the size and condition of federal real property holdings, while revisiting an ongoing debate about whether legislation is needed to jump-start the process of “reducing the federal footprint.”
Committee Chairman Sen. Ron Johnson, R-Wis., citing high maintenance spending and annual government leasing costs topping $7 billion, said, “It is simply impossible to address this problem if the federal government can hardly identify what it owns and what it is spending. It will be impossible to achieve true reform without better facts and figures to measure the value of what we have, what we can do without, and how much we can save by getting rid of superfluous buildings.”
The database limitations were detailed by David Wise, director of physical infrastructure issues at the Government Accountability Office, who, when asked for the main obstacles to faster property disposal, said, “We don’t have a great handle on what have.” And unless managers “get a good handle, it will be difficult to move the chess pieces,” he said.
Despite some recent “strides,” Wise added, the government “continues to retain excess and underutilized property, rely on leasing when ownership would be more cost-effective, and utilize unreliable data for its property-related decision making.”
The sell-off process is complicated, he said, given such considerations as requirements for offering obsolete properties to homelessness groups and market forces that affect private-sector purchasers. “This is an area where Congress can be of assistance,” he said.
Ranking member Sen. Tom Carper, D-Del., praised the Obama administration’s progress and expressed hope that real property could be removed from GAO’s high-risk list of troubled programs in 2017.
Mader, who runs real property planning for the Office of Management and Budget, stressed the executive branch’s successes in implementing a national strategy and at shifting recently from a “Freeze the Footprint” to a “Reduce the Footprint” policy that includes enhanced management and strategic reviews during fiscal 2015.
In fiscal 2014, he reported, governmentwide disposal of domestic facilities totaled 7,300 buildings and 47 million square feet of space, reducing annual operation and maintenance costs by some $17 million. “In two years we eliminated 21 million square feet of office and warehouse space,” he said.
One obstacle to progress is a culture where federal employees “are used to commuting to a particular building,” Mader acknowledged. But managers are now more aware of the need to reduce overhead to save money for the mission, he said. Mader is meeting monthly with agency representatives and said he expects movement this summer on modernized software and annually updated five-year “rolling plans” by agencies that will help improve analysis of property data to more accurately “categorize” properties as to whether they are truly underused and suitable for interested outsiders.
The average time for sale, according to case studies involving the Housing and Urban Development and Health and Human Services departments, is nine months, he said.
The sales “numbers are modest, and we need to be more aggressive,” said Norman Dong, commissioner of the Public Buildings Service at the General Services Administration, which runs the governmentwide property database. He agreed that a key obstacle to faster sales has been the fact that most agencies “get no economic benefit” for a sale for which they do not retain the proceeds. As a cost-saver, he touted the ongoing migration of various components of the Homeland Security Department to the campus of St. St. Elizabeths mental hospital in Southeast Washington, D.C., saying it will allow termination of 45 leases elsewhere expected to save $4 billion over 30 years. (Congress, however, is growing skeptical about funding the move.)
The question of whether agencies retain proceeds from property sales is one of several issues still being debated as Congress considers legislation to create new authorities to streamline property sales. The White House has long favored granting that authority, and the House has backed it in past congresses. Sen. Rob Portman, R-Ohio, said he is eager to revive such legislation soon.