According to its fiscal year 2003 financial statements, the Federal Government currently owns hundreds of billions of dollars in real property assets. In addition, the government also owns or manages one in every four acres of land in the United States. While much of the Federally-owned real and personal property assets are used to support agency missions, it is not clear how many of these properties are actually being used in an efficient manner. For instance, much of the government's real property no longer serves the needs for which it was originally intended. As a result, there is a great deal of underused and unneeded real property within the Federal Government.

The Problem

• Lack of accountability within the Federal Government. There currently exists no systematic or standard agency practice for managing Federal real property. Most landholding agencies do not assign a permanent position with the sole responsibility and authority for determining which of its properties are being effectively used, maintained, or disposed. Additionally, most agencies do not develop or implement a plan within the entire agency for improving the management of its real property assets. On a government-wide scale, there also exists no particular group tasked with facilitating agency efforts to more effectively manage their properties or improve accountability within the agencies. As a result, seldom are responsible individuals in place for implementing a coherent plan to manage federal properties at agencies.
• Lack of useful property information within Federal agencies. Government-wide information regarding the type and value of Federal assets is not readily available. While agencies do report some of their excess real property, most agencies do not maintain complete or accurate inventory information on the use and condition of Federal properties. As a result, there exists a lack of useful data regarding the underused and unneeded Federal real property. To rectify this problem, it is important for agencies to employ property inventory and management information systems with regard to the location, size, and other relevant characteristics of real property assets. Active and efficient stewardship of government assets should be an objective for every landholding agency to appropriately maintain those properties that are truly needed. Similarly, it is also important for agencies to accurately determine and classify those properties that are unneeded, and to take subsequent action toward disposing of such properties.
• Abundance of underused or unneeded Federal property. While the exact number is unknown due to the lack of a complete inventory, Federal agencies currently hold significant amounts of underused and unneeded real property. Some landholding agencies have reported examples of properties that are either obsolete or in serious need of repair, although only a minimal amount of these reported assets are sold each year. Increased attention and focus is necessary to determine the amount of unneeded federal properties at all landholding agencies, and to take action toward disposing of those properties.
• Excessive cost to Federal Government. Maintaining underused or unneeded Federal properties is costly to the government. Many of these properties, while not actually used, still have expensive day-to-day operational costs, such as regular maintenance, utilities fees, and security expenses. Each agency that maintains underused or unneeded property unnecessarily incurs an opportunity cost by failing to sell or exchange the property for a more appropriate one. For example, the L. Mendel Rivers Federal Building in Charleston, South Carolina, has languished for years as a vacant, asbestos-contaminated, 100,000 square foot facility. Although the building has strong potential for private sector demand, current Federal laws and regulations have made it difficult to sell or lease the property. While this facility is finally beginning to receive some attention, for years maintenance costs have been incurred while no revenues have been generated.
• Lack of necessary tools and incentives for agency disposal of underused properties. The current Federal property disposal system does not provide agencies with the necessary tools for dealing with underused and unneeded property. The laws governing the disposal of Federal property date back to 1949, and they do not provide authority for agencies to outlease unused land or to sell or exchange obsolete facilities for more suitable ones. Additionally, the current disposal system does not provide motivation to deploy ineffective assets into more productive ones, as any proceeds from sales are deposited into the U.S. Treasury rather than the landholding agency.

The Initiative

• Establish a Senior Real Property Officer at Federal agencies. Established by an Executive Order, a Senior Real Property Officer will be designated among the senior management officials within each agency. This Senior Real Property Officer will serve as the senior manager tasked with developing and implementing an agency asset management plan. Specifically, the Officer will: identify and categorize any real property owned, leased, or otherwise managed by the agency; prioritize actions to be taken to improve the operational and financial management of inventory; make life-cycle cost estimations associated with the prioritized actions; identify legislative authorities that are required to address the priorities; identify and pursue goals and targets with appropriate time frames and deadlines; provide advice on adequate budget amounts for activities; and focus on those activities and efforts allowed under current law.
• Establish a Federal Real Property Council. Established by an Executive Order, a Federal Real Property Council will serve as a working group to facilitate the success of the agency's asset management plans. The Council will be composed of all agency Senior Real Property Officers, the Controller of the Office of Management and Budget, and the Administrator of General Services. The Deputy Director for Management of the Office of Management and Budget will be a member and serve as the chair of the Council. The Council will establish appropriate performance measurements for evaluating the costs and benefits involved with acquiring, repairing, maintaining, operating, managing, and disposing of Federal real properties at particular agencies. The Council will also serve as a clearinghouse for best practices in evaluating actual progress in the implementation of real property enhancements.
• Reform the authorities for managing Federal real property. The Administration supports legislative efforts to reform the asset management and property disposal process. Specifically, the Administration supports "Freedom to Manage" legislation that would provide agencies with the authority to: outlease or sublease underutilized properties; sell or exchange unneeded property and use the proceeds for replacement services; enter into public-private partnerships to construct or renovate need facilities under certain circumstances; and retain the sale proceeds of surplus properties. Agencies should be provided with the appropriate asset management tools and financial incentives to manage their real property more effectively. The Administration will continue to engage Congress in an effort to enact modern and common-sense property management capabilities.

The Expected Near-Term Results

Without Comprehensive Government-wide Legislation

Without the benefit of comprehensive government-wide Federal legislation, the Administration expects that an Executive Order will lead to an increased level of agency accountability and the development and implementation of agency asset management plans.

• Accountability. The Administration expects that these initiatives will lead to an increased level of accountability for real property management within the agencies. For the first time, each landholding agency will have a senior property officer devoted to achieving a complete inventory of its real properties; and with specific real property information, meaningful goals and objectives can be developed and progress against those goals can be measured. Additionally, the agencies will have the benefit of a Federal Real Property Council to assist them in their efforts to improve the management of real property.
• Asset management plans. The Administration expects that the efforts by the Senior Real Property Officers and the Federal Real Property Council will lead to the development and implementation of agency asset management plans. Such plans will help to foster an environment within Federal agencies that will promote better asset management and the disposal of unneeded Federal properties.
• Demonstration authority. In the absence of broad, government-wide federal legislation, the Administration will identify those landholding agencies and/or specific real properties in which it believes asset management flexibilities would be particularly useful. The Administration will then seek demonstration authority through the appropriations process, in order to apply these asset management flexibilities on a limited or temporary basis.

With Comprehensive Government-wide Legislation

With the benefit of comprehensive government-wide Federal legislation, the Administration expects that additional near-term results would be attained, including an improved standard real property disposal process.

• Improved standard disposal process. The Administration expects the legislative efforts will create an improved process for disposing of real properties. By providing the necessary tools and incentives, agencies will be in a better position to manage their properties through an increasing opportunity for outlease or sublease agreements, public-private partnerships, and replacement or sales transactions.

The Expected Long-Term Results

Without Comprehensive Government-wide Legislation

• The Administration expects that these initiatives will lead to a regular and well-organized inventory of Federal asset management practices within all landholding agencies. In the long-term, agencies will possess real-time property data that can be used to determine what Federal properties should be maintained, require cost-effective repairs, or qualify for disposal; this information can then be used to strengthen the argument for the creation of new real estate management authorities.

With Comprehensive Government-wide Legislation

• With the benefit of comprehensive, government-wide Federal legislation, in the long-term, the Administration expects there to be an improved, incentive-driven process for agencies to exchange or dispose of their properties. Agencies would then have the necessary tools and incentives for more proficient management of their federal properties. The Administration expects that, in the years following the passage of comprehensive legislation, these initiatives can ultimately lead to the effective and efficient stewardship of Federal real property assets.

Please click on this link to read the Executive Order: /news/releases/2004/02/20040204-1.html