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May 27, 2023

With Feds Working 'Wherever Their Hearts Desire,' Agencies Should Sell Off More Buildings, Lawmakers Say

The board successfully helped the General Services

The board successfully helped the General Services Administration offload 10 properties for nearly $200 million in its first round of suggestions. Caroline Brehman/CQ-Roll Call, Inc via Getty Images

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Eric Katz

The federal government is failing to carry out a law meant to bring in billions of dollars by unloading unnecessary buildings and properties, lawmakers and officials involved in the process said on Thursday, despite the resources devoted to the effort and a newfound opportunity for agencies to absorb consolidation.

A clash between the Biden administration and a new board designed to recommend buildings ripe for disposal, coupled with insufficient resources and red tape, has delayed the process, officials told members of the Senate Homeland Security and Governmental Affairs Committee. The board successfully helped the General Services Administration offload 10 properties for nearly $200 million in its first round of suggestions, but disagreements and disruptions to the process caused officials to scrap the second round altogether. A third round of recommendations is due by the end of 2024, with a goal of $4.75 billion in proceeds.

President Obama signed the Federal Assets Sale Transfer Act (FASTA) into law in 2016 to require GSA and the Office of Management and Budget to better track unneeded federal buildings and streamline the process for disposing of them. The measure created the Public Buildings Reform Board as an independent agency with the sole purpose of reducing the federal government's property inventory.

David Marroni, the Government Accountability Office's acting director for physical infrastructure, told the committee the "experiment" of FASTA did not go as planned. Among the "significant setbacks," he said, was the disagreements between the White House and the board's recommendations, unrealistic timelines and a lack of funding to incentivize agencies to take on the cost-laden property sale process. As a result, he said, GSA has made "limited progress to date" in disposing of buildings.

Former Rep. Nick Rahall, D-W.Va., who sits on the board, said the administration has not provided sufficient data to support its efforts.

"We need data to conduct our recommendations," Rahall said. "Data that we just don't have right now."

He added the board has also been hindered by disagreements with GSA on the mechanisms to facilitate sales.

"The government needs to demonstrate innovation in how the excess properties are managed," Rahall said, "and the board needs more authority in determining the disposal strategy."

Sen. Rand Paul, R-Ky., the committee's ranking member, said agencies’ square footage needs have been reduced thanks to telework policies that allow "employees to work wherever their hearts desire," though the Biden administration is currently calling on employees to report to their offices more frequently. The senator said the administration was placing a "bureaucratic straightjacket" on efficient property management.

"The failure of the General Services Administration to meet these goals shows the administrative resistance to change and efficiency," Paul said. "We should not be surprised that the bureaucrats running these government agencies are not as effective as the private market in managing their real property portfolios."

Marroni agreed that agencies were better positioned to unload properties as more employees work remotely.

"In the aftermath of the COVID 19 pandemic, the federal government has a unique opportunity to reposition its property holdings and better achieve agency missions while potentially saving taxpayers millions of dollars," he said.

Nina Albert, commissioner of GSA's Public Buildings Service, stressed that agencies required upfront funding to pay for the costs of unloading a property. Delays in the initial round of sales—it took two years for agencies to sell the FASTA board's first recommendations—prevented it from utilizing the proceeds for the scheduled subsequent round. The board subsequently lost two members and its quorum, meaning it could not further engage with OMB after the White House rejected its second set of proposals. Albert attributed the initial delays to the normal hurdles involved in standing up a new federal agency.

Marroni suggested Congress consider allowing agencies to keep more of the proceeds from their property sales as an incentive to get involved in the process in the first place. Albert, meanwhile, asked lawmakers to allow GSA to fully tap into the revenue it generates by leasing properties. More funds would lead to a better utilization of buildings, she said, noting GSA has forgone more than $11 billion in potential revenue over the last 12 years.

That process "directly contributes to deteriorating building conditions, which leads to underutilization and forces the government to lease out of necessity, which drives up ultimate cost to the government," Albert said.

She agreed with a suggestion from Sen. James Lankford, R-Okla., that GSA should have more flexibility to dramatically reduce its sale price in exchange for requiring potential buyers to handle issues with federal properties such as environmental cleanups.

Federal agencies have for years contemplated what to do with excess properties. The Obama administration identified 14,000 excess federal buildings and an additional 55,000 that were under- or unutilized. Rahall said his board's next round of recommendations will include properties both leased and owned by the government.

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