GAO Finds Fault with GSA’s Delegated Leasing

GSA delegated leasing process as provided in GAO’s report.

The federal entity principally charged with leasing property for the use of government agencies is the U.S. General Services Administration. In keeping with decentralization efforts in many areas of government, however, GSA long ago created a real-estate exchange database called G-REX that in turn assists the agencies themselves in arranging for such leases—a program referred to as delegated leasing.

Good intentions can have negative consequences. According to a report released this month by the Government Accountability Office (GAO), Federal Real Property: GSA Needs to Strengthen Oversight of Its Delegated Leasing Program (GAO–19–405), the G-REX database was found to be riddled with errors, while GSA had not reconciled that data with the government-wide Federal Real Property Profile (FRPP) Management System, a database on all federally occupied spaces, as it is required to do annually. Although GSA holds overall responsibility for leasing, the lack of reliable data secured means that the agencies involved are essentially on their own—and, in GAO’s assessment, most are not equipped to manage properties without GSA assistance.

As a result, GSA has no controls on matters such as fair pricing, with the further result that the leasing program has no way of detecting and acting on fraud and waste. In fact, a GAO audit has determined that rental values and rates have been reported at 12 times their actual amount, a discrepancy that leaves open the possibility of widespread abuse in a system that leases workspace for 1.1 million federal workers.

GSA has given delegated leasing powers to 18 agencies and independent offices, with annual total rent of approximately $985 million. To analyze their performance, GAO assessed 17 delegated leases, 10 from G-REX and 7 from the FRPP, that had been authorized by the Department of Agriculture, Department of Commerce, Department of Veterans Affairs, and Department of Interior (specifically the Bureau of Indian Affairs and Bureau of Land Management). GAO discovered, among other things, that the reason the reported rates were 12 times higher than the actual payout was that GSA was multiplying annual lease rates on a monthly basis, so that a lease for a building rented for 48 months at $2.3 million a year was reported as being $110,400,000 rather than the actual $9,200,000 in actual contract value. Two leases were for 25 years, above the statutory limit of 20 years, a discrepancy attributable to a programming error within the G-REX system.

GAO determined that GSA could have avoided these errors by conducting cross-data comparison between G-REX and the FRPP system, which would have highlighted these anomalies. It is not the first time that GAO has found problems with the delegated leasing program. As the report states, in 2007, GAO determined that the GSA had paid excessive rents without sufficient documentation on how those rates were determined. GAO charged GSA with better ensuring that the government was paying fair and reasonable rates for leased property.

Instead, as the GAO report notes, GSA has been monitoring the agencies to which it delegated leasing authority only ad hoc, without designing adequate controls. Some GSA audits should have sent up red flags years ago, the GAO report holds, when they determined that the Bureau of Indian Affairs and Department of Agriculture had leased property even without the delegated authority to do so.

GSA developed a useful set of controls five years ago, GAO notes, but it has not enforced its own procedures. These controls are meant to assure that the government is paying rates at or below those charged to the private sector on at least half of its leases, and that leases should not be allowed to expire while an agency is still occupying the space in question, since short-term extensions are generally more expensive than long-term agreements. In many of the cases GAO audited, the agencies had gone into holdover status, occupying spaces whose leases had expired. In one outlying case there would have been no way of knowing that, since the signed paperwork on the lease could not be located.

The GAO report concludes with four recommendations: that GSA reconcile the G-REX and FRPP databases, regularly assess procedures for managing delegated leasing, track the performance of agencies to which leasing power had been delegated, and develop a process to review post–lease award documents. As with the past reports, GSA agreed with the recommendations.