GSA proposes overhaul of federal property management practices

Federal agencies would be able to use public-private partnerships when developing plans to rehabilitate aging and deteriorating federal buildings under sweeping changes included in a draft legislative proposal being circulated by the General Services Administration. Part of the Bush administration's "Freedom to Manage" initiative, the Federal Property Asset Management Reform bill touted by GSA would amend the Federal Property and Administrative Act of 1949, allowing GSA and other federal agencies to adopt real property management practices used by private industry. Some of those new flexibilities include allowing agencies to:

• Exchange and transfer property among themselves and private sector organizations.
• Sublease assets on portions of government leases that have not yet expired.
• Lease certain underutilized assets to the private sector.
• Explore creative public-private financing mechanisms to help finance a backlog of public maintenance needs.
• Streamline and enhance existing property disposal processes.

"This is the first time since the 1949 Act creating GSA that the whole legislation governing our activities has been looked at in a comprehensive way and revised," said F. Joseph Moravec, commissioner of the Public Buildings Service. "The thrust of it is several-fold, but the ultimate goal is to encourage and enable federal agencies to plan and use their real property assets in a way that makes good business sense." The federal government owns more than 400,000 Defense Department and civilian buildings and more than one-half billion acres of land. GSA manages and maintains approximately 1,700 federal buildings, acting as the government's landlord. According to GSA Administrator Stephen Perry, every agency would designate a "senior realty officer" to become familiar with the asset management principles and to be responsible for incorporating them into agency operations. These "senior realty officers" would do things like "making sure your physical facility utilization matches up with your strategic plan," Perry said. The realty officer would also be responsible for taking an inventory of buildings that their agency owns and uses, and would develop a long-term asset management strategy for those assets, Moravec said. "That person is responsible to the [Bush] administration for achieving certain measurable goals for asset management," Moravec continued. "This is not just to create another level of reporting relationships, but to rationalize the life cycle planning of federal agencies in terms of how they use their property." The draft legislation also would address the estimated $5 billion needed for repairs and upgrades to federal buildings GSA oversees. In May, the General Accounting Office recommended that Congress give GSA the legislative authority to use new means of paying for much-needed fixes to aging federal buildings.

Soon after GAO's assertion, Rep. Pete Sessions, R-Texas, introduced the "Federal Asset Management Improvement Act of 2001" (H.R. 2710), which would authorize public-private partnerships to rehabilitate federal real property. This legislation was folded into GSA's reform bill. "[Federal agencies can enter] into a partnership with a private developer who can then go and get capital and borrow money to rehabilitate a building and the government will come and lease it back," Moravec said. "This will enable us to unlock the equity that we have in our own inventory, with the principal goal of restoring our physically obsolete buildings." Currently, federal real property rules prohibit most agencies from using revenues from the lease or sale of excess properties. "One of the shortcomings of the current procedure is that the proceeds derived from such disposition do not go back to the agencies to any extent, so there is a lack of incentive for agencies to actively manage their costs," Perry said. "What we would propose in this new legislation is that those proceeds would come back to the disposing agency … they would have those monies available to meet their other capital needs." Both Perry and Moravec expect the legislation to be well-received in Congress. "These are all good management approaches…it's one of those things whose time has come, it makes good sense," Perry said. "Years ago we had fewer assets, we weren't as far-flung as we are today, and it might have been less appealing. But today it is very, very appealing and I think it will be strongly supported," he said.