Background The federal government owns and leases hundreds of thousands of  buildings across the country that cost billions of dollars annually to  operate and maintain. In recent years, the federal government has taken  steps to improve the management of federal real property and address  long-standing issues by undertaking several government-wide initiatives  and issuing memorandums to the CFO Act agencies. Within the executive  branch, OMB and GSA provide leadership in managing federal real  property. As the chief management office for the executive branch, OMB  oversees how federal agencies devise, implement, manage, and evaluate  programs and policies. OMB provides direction to federal agencies by,  among other things, issuing policies and memorandums on real property  management. In 2012, OMB issued a memorandum that required agencies to move  aggressively to dispose of excess properties held by the federal  government and more efficiently use real estate assets. This  memorandum initially laid out the requirement to “freeze the footprint.” In  2013, OMB issued a memorandum clarifying the Freeze the Footprint  policy. This memorandum required agencies going forward to maintain  no more than their fiscal year 2012 total square footage of domestic office  and warehouse space. The policy required agencies to specifically  identify existing properties to be disposed of to offset any new property  acquisitions. In March 2015, OMB transitioned from freezing the federal government’s  real property footprint to reducing it. Specifically, OMB issued the National  Strategy for the Efficient Use of Real Property (National Strategy) to  provide a framework to guide agencies’ real property management,  increase efficient real property use, control costs, and reduce federal real  property. The National Strategy outlined three key steps to improve real  property management: (1) freeze growth in the inventory; (2) measure  performance and use data to identify opportunities to improve the  efficiency of the real property portfolio; and (3) reduce the size of the  inventory by consolidating, co-locating, and disposing of properties. OMB also issued the RTF policy which clarified existing policy to dispose  of excess properties and promote more efficient use of real property  assets. The RTF policy requires agencies to: (1) submit annual Real  Property Efficiency Plans (Plan) to GSA and OMB; (2) issue a policy that  specifies a design standard for maximum useable square feet by  workstation for use in domestic office space; (3) set and specify in their  Plans annual reduction targets for their domestic office and warehouse  space for a 5-year period; (4) set and specify in their Plans annual  reduction targets for domestic owned building properties reported in the  Federal Real Property Profile; and (5) continue to not increase the square  footage of their domestic inventory of office and warehouse space.  Additionally, agencies must identify in their Plans potential projects  related to office and warehouse consolidation, co-location, disposal, as  well as construction and acquisition efforts. OMB is responsible for  reporting the progress of agencies’ efforts in reducing the amount of  federal real property space under the RTF policy. GSA has two key leadership responsibilities related to real property  management. First, GSA’s Public Buildings Service functions as the  federal government’s principal landlord. In this role, GSA acquires,  manages, and disposes of federally owned real property for which it has  custody and control on behalf of federal agencies that occupy the  space. Additionally, GSA leases commercial buildings on behalf of  agencies and manages the lease agreements. In these situations, GSA  executes an occupancy agreement with a customer agency for each  space assignment that is similar to a sublease between GSA and the  agency. The occupancy agreement outlines both the financial specifics of  the agreement and the responsibilities of GSA and the customer agency.  There are certain unique advantages for customer agencies when GSA  leases on their behalf. For example, GSA is able to enter into longer-term  leases, and agencies can release space back to GSA with 4 months’  written notice if certain conditions are met, relieving the agencies of the  cost for the returned space. Second, GSA’s Office of Government-wide  Policy is responsible for, among other things, identifying, evaluating, and  promoting best practices to improve the efficiency of management  processes. In this policy role, GSA provides guidance for federal agencies  and publishes performance measures. It also maintains the Federal Real  Property Profile, a real property inventory database that contains  information on federal real property government-wide. Agency Plans  Identified Similar  Strategies to More  Efficiently Use Space  and Common  Challenges Agencies Identified Space  Consolidation, Co- location, or Property  Disposal as Ways to  Achieve Space  Reductions Based on our review of agencies’ 2016 and 2017 Plans, we found that all  24 CFO Act agencies described strategies for reducing office and  warehouse space. As previously mentioned, these annual Plans must  include all potential projects related to office and warehouse  consolidation, co-location, disposal, as well as construction and  acquisition efforts. The agencies’ Plans cited consolidation, co-location,  and disposal as the primary means to reduce their office and warehouse  space, activities mentioned in the National Strategy. Agencies also cited  other methods, such as utilizing telework and decreasing the space they  allocate per person to achieve space reductions. The space reduction strategies included most often in the Plans we  reviewed include the following. Consolidation: All 24 agencies reported planned or ongoing efforts to  reduce their space by consolidating their offices or operations. For  example, we spoke with officials at HUD, which is in the process of  consolidating staff from four offices in the National Capital Region into  its 1.12-million square foot headquarters building in Washington, D.C.  HUD started by remodeling one floor to create a more open floor plan  and intends to apply this design throughout the building. As part of the  consolidation project, HUD has reduced the size of some office  cubicles from 64 square feet to 56 square feet. (See fig. 1.) HUD  leases its space through GSA and estimates that it will be able to  return about 175,000 square feet of unneeded space back to GSA  once all four offices are closed. At that point, GSA would then bear  the cost of the space and work to lease it to another agency or  otherwise dispose of it. Once the project is completed, HUD estimated  that its headquarters building will accommodate about 500 more  personnel (for a total of 3,200) and reduce its annual lease payments  by about $11 million. Fifteen of the 24 agencies identified consolidation opportunities  outside of their headquarters buildings. For example, the Department  of Agriculture (USDA) discussed a consolidation project involving five  component agencies in Albuquerque, New Mexico, in its fiscal year  2017 Plan. According to USDA officials, four component agencies  occupying nearly 44,500 square feet in one building were to be  consolidated into about 34,000 square feet of space in another  building already occupied by a different USDA agency. In the prior  location, the multiple components spaces’ square footage per person  averaged 327, but the proposed consolidation would bring the  utilization rate down to 255 square feet per person. USDA estimated  that the consolidation project would result in about $238,000 in annual  rent cost savings for the four components. Additionally, to enable this  consolidation project, the component agency already occupying the  building consolidated and vacated about 20,000 square feet, a move  that resulted in an annual rental savings of about $500,000. In its  fiscal year 2017 Plan, Interior’s Bureau of Reclamation anticipated  eliminating 87,000 square feet of office space by consolidating  operations from two buildings in Denver, Colorado. Interior estimated  that the consolidation will result in a 40 percent reduction in its overall  utilization rate to 165 square feet per person and an annual cost  savings of about $2.1 million. Co-location: Thirteen of the 24 agencies’ Plans stated that they are  exploring or implementing co-location projects to reduce space by  merging staff from different components or agencies into another  agency’s space. For example, the Social Security Administration  (SSA) recently initiated a co-location pilot program with the Internal  Revenue Service (IRS) within Treasury to combine SSA field offices  with IRS Taxpayer Assistance Centers. Co-location of operations can  reduce the overall space required by allowing agencies to share  common space such as waiting rooms, an action that can reduce rent  and operating costs for the co-located agencies. Since the inception  of the 1-year program in January 2017, four IRS offices are  participating and have moved into SSA field offices. According to  SSA, IRS and SSA staff have adjusted to sharing space and the IRS  presence in SSA space has not affected SSA wait times or created  security or parking issues. According to an IRS official, IRS  employees continue all normal operations from their co-located offices  with SSA, including meeting with taxpayers in-person. The official also  noted that IRS has extended the terms of its agreement with SSA for  an additional year. However, SSA noted that the agencies are still  working through customer access issues that could determine  whether it would be possible to expand the pilot program and pursue  additional co-location opportunities. In another example, according to  Interior officials, the U.S. Geological Survey is co-locating staff from  Menlo Park, California, to a National Aeronautics and Space  Administration facility in the nearby city of Mountain View, California.  About 40 percent of the staff will move early in fiscal year 2019, and  the U.S. Geological Survey expects the remaining staff to be co- located by the end of 2021. Interior officials estimate that the co- location will result in an overall reduction of 165,000 square feet  (about 50 percent of its space) and expects to save about $12 to $14  million in annual rent costs. To help agencies identify potential co-location opportunities and work  with other agencies to meet their space requirements, GSA developed  and provided agencies access to its Asset Consolidation Tool in fiscal  year 2015. This database tool provides agencies with information  about federal spaces in their area, including the buildings’ vacancy  and utilization rates. Disposal of unneeded space: Thirteen of the 24 agencies reported  that they plan to reduce their real property footprint by disposing of  unneeded space, including selling or demolishing federal buildings or  terminating leases, among other actions. For example, IRS has five  tax submission-processing centers that receive all mailed income-tax  returns and have warehouses that store the physical tax records.  Each of these five processing centers, which include both office and  warehouse spaces in multiple buildings, is approximately 500,000  square feet. According to IRS officials, 87 percent of all 2016  individual income-tax returns were filed electronically. As a result, the  IRS plans to dispose of three of the five centers by 2024 to align with  its reduced need for income-tax return processing and storage space. GSA has the statutory authority to dispose of property for all federal  agencies and generally does so on their behalf. In addition, some  federal agencies, such as Energy, or departmental components have  statutory authority to dispose of buildings and other types of property  and are not required to notify or use the services of GSA to complete  the disposal. Better utilization of existing space: In their Plans, agencies also  reported using tactical tools, such as incorporating space utilization  rates into their capital-planning process, to identify opportunities to  reduce space. For example, 22 of the 24 agencies reported  incorporating office space design standards and agency utilization  rates into their processes to identify space reduction opportunities.  Agencies set their own space design standards and space utilization  rates, which may vary based on agency mission requirements across  their components. The RTF policy requires agencies to establish a  design standard for the maximum workstation size, which should, at a  minimum, be applied to all space renovations and new acquisitions. In  addition, GSA has a recommended office space-utilization rate range  of 150 to 200 square feet per person. Officials from our case study agencies noted several practices they  said were helpful to identify opportunities to better utilize and  ultimately reduce their space. For example, Commerce officials  described developing a process for identifying and prioritizing space  reduction opportunities using a two-factor matrix. Through this  process, Commerce plans to target office space with a large number  of employees and poor utilization rates (compared to its 170 square  foot utilization rate). According to Commerce officials, these situations  may offer the most opportunity for space reductions and achieving  significant rent and operating cost savings, particularly in high-cost  real estate markets. Using this process, Commerce identified the  potential for reducing as much as 1.6-million square feet (16 percent)  of its total office space within 52 high priority facilities. According to  IRS, retirements, hiring freezes, budget reductions, and increased  telework have resulted in excess space throughout its portfolio. In  fiscal year 2016, IRS started using a Strategic Facility Plan model to  help identify space reduction projects. IRS’s objectives include  consolidating multiple offices within a metropolitan area, closing  outlying buildings, and leveraging telework, mobility, and its attrition  rates. This model utilizes a template form to provide a consistent  decision-making framework for assessing various options, articulating  the rationale for selecting the preferred option, and documenting  decisions and concurrence. According to IRS officials, this model has  helped IRS to reduce a lot of its space. In 2014, GSA developed and provided agencies with access to the  Real Property Management Tool, which can aid agencies that want to  more effectively utilize their space. The database tool provides  agencies with the capability to comprehensively view their real  property portfolio by consolidating data from the assets that agencies  directly manage with the assets that GSA manages on their behalf. As  such, regardless of whether an agency initiated the action or GSA did  so on its behalf, the tool gives an agency the ability to see all of its  data, such as on expiring leases, in one place. The tool enables  agencies to create individualized analytic reports allowing them to  analyze the data in various ways. Teleworking and hoteling: Fifteen of the 24 agencies also described  alternate workplace arrangements enabled by information technology,  such as telework and hoteling, to help reduce office space. Telework  is a work flexibility arrangement under which an employee performs  their work responsibilities at an approved alternative worksite (e.g.,  home). Executive agencies are required to establish policies that  authorize eligible employees to telework, determine the eligibility of all  employees to participate in telework, and notify all employees of their  eligibility. Federal law also requires that agencies consider whether  space needs can be met using alternative workspace arrangements  when deciding whether to acquire new space. As such, some  agencies are eliminating designated offices for staff who primarily  telework, a step that can improve space utilization. In a hoteling  arrangement, employees use non-dedicated, non-permanent  workspaces assigned for use by reservation and on an as needed  basis. For example, the Office of Personnel Management  implemented a workspace sharing initiative at one of its program  offices. Staff who are not physically present in the office 4 or more  days per week are required to share cubicles and offices. The Office  of Personnel Management estimated that the initiative resulted in a 47  percent office space reduction for the program office. Cost and Mission  Considerations Were Cited  as Leading Challenges to  Reducing Space As part of their fiscal year 2016 and 2017 Plans, the 24 CFO Act  agencies also described the major challenges they anticipated facing in  their efforts to meet their space reduction targets. The agencies most  frequently cited the following challenges: Space reduction costs: Twenty of 24 agencies stated that the costs of  space reduction projects pose a challenge. Agencies are generally  responsible for the up-front costs associated with relocations and  tenant improvements, such as acquiring new furniture and renovating  existing areas to reduce space or to accommodate more personnel in  a smaller area. For example, the Department of Labor (Labor)  reported in its fiscal year 2017 Plan that it did not have sufficient  funding to implement a space reduction project that would have  reduced commercially leased office space by 4,000 square feet.  Similarly, the Department of Veterans Affairs’ fiscal year 2017 Plan  noted that assuming a limited budget, large scale consolidations  would be difficult to achieve. Some agencies have used or report that they intend to use funding  from GSA’s Consolidation Activities program to help fund their space  reduction projects. According to GSA, from fiscal years 2014 to  2017, GSA’s Consolidation Activities program funded projects that will  eliminate 1.4-million rentable square feet from the GSA inventory and  reduce agencies’ annual rent payments by $54 million. According to  the IRS, GSA’s Consolidation funds have helped the agency reduce  about 500,000 square feet of space. IRS officials noted that these  funds helped the agency implement larger and more expensive space  reduction projects than it would have been able to do otherwise.  However, according to officials from several agencies, to use this  program, agencies must also contribute funds to the projects. HUD  officials stated that they considered applying for project funding  through GSA but did not do so because HUD did not have sufficient  funds for the agency’s share of project costs. Three of the 24 agencies specifically noted that the cost to clean up  environmentally contaminated buildings is a challenge to disposing of  excess office and warehouse space. Agencies are required to  consider the environmental impact of property disposals. We have  previously found that assessments and remediation of contaminated  properties can be expensive and complicate the disposal process.  Also, agencies are responsible for supervising decontamination of  excess and surplus real property that has been contaminated with  hazardous materials of any sort. In its fiscal year 2017 Plan, Energy  estimated that over 60 percent of its excess buildings require  extensive decontamination prior to disposal. Overall, Energy projected  that its total liability for environmental clean-up could cost more than  $280 billion. Mission delivery: Thirteen of the 24 agencies reported that mission  delivery requirements can also affect their ability to reduce space.  Agency missions may require office locations in certain areas or  require additional space to accommodate activities such as customer  interactions. These requirements may preclude disposals or limit  opportunities to reduce space. For example, in its fiscal year 2017  Plan, SSA stated that its efforts to reduce space are affected by its  mission, which requires offices widely dispersed throughout the  country to administer and support its benefit programs, among other  things. SSA has about 1,500 office spaces nationwide, most of which  require space to accommodate the public. SSA had an overall office  space utilization rate of 301 square feet per person, which exceeded  GSA’s recommended office space utilization rate range of 150 to 200  square feet per person. USDA’s fiscal year 2017 Plan stated that its  missions require office space in rural areas to, among other things,  provide program assistance and leadership on food, agriculture,  natural resources, rural development, nutrition, and related issues. In  its fiscal year 2017 Plan, USDA also observed that the real estate  market in rural areas is less competitive than in urban areas because  there are fewer rental options, a situation that can also drive up rent  costs. As such, USDA noted that these factors may contribute to  difficulties identifying disposal opportunities and finding alternate  spaces that could allow for more effective space utilization. Employee organization concerns: Ten of the 24 agencies reported  that considering employee organizations’ concerns and addressing  collective bargaining requirements when reconfiguring space can add  time and affect the extent of their space reductions. For example, in  its fiscal year 2017 Plan, SSA noted that the agency must meet with  three employee unions when revising office space policies or design  standards and collaborating with these organizations adds to the  project’s implementation timeline. In July 2017, we reported that SSA  officials met with employee union groups about the impact of potential  changes to its space configuration or usage. Officials said that while  the interactions with the union groups were positive—including  gaining input on issues such as ergonomics, the security of field  offices, and overall implementation—at times, these negotiations  caused delays to individual projects and complicated reduction efforts  by requiring union buy-in. In addition, Labor reported in its fiscal  year 2017 Plan that its collective bargaining agreement and agency  mission requirements for offices and work stations do not always  enable it to take advantage of the previously discussed GSA  Consolidation Funding program as well as GSA’s Total Workplace  Furniture & Information Technology program. For example, the Total  Workplace Furniture & Information Technology program requires that  cubicles and offices must not exceed a specified square footage.  However, according to Labor officials, Labor’s Departmental Space  Management Regulation requires a certain utilization rate per person  which may make it challenging to also stay within the program’s  square footage requirements. Workload growth: Eight of the 24 agencies noted that increases in  their workload limited their ability to achieve overall agency space  reductions. For example, according to the Department of Justice’s  fiscal year 2017 Plan, the agency anticipated having to provide  additional court rooms to support an increased volume of immigration  cases and accommodate the additional immigration judges needed to  handle that volume. The Department of Justice estimated that the  space needed to accommodate the new judges and additional public  areas could add about 155,000 square feet to its portfolio. Also,  according to the Department of Health and Human Services’ fiscal  years 2016 and 2017 Plans, the Office of Medicare Hearings and  Appeals experienced a 30 percent growth in cases and expected 1.2- million new cases annually after 2017. The Department of Health and  Human Services projected that the growth in cases and additional  staff needed to process the cases required additional field offices,  which would increase its total office space square footage. The Majority of  Agencies Reported  Space Reductions in  Fiscal Year 2016 but  Achieved Varied  Success in Meeting  Their Targets As previously mentioned, agencies are required to set annual square foot  reduction targets for domestic office and warehouse space in their annual  Plans. According to an OMB official, to help ensure the targets are  realistic, agencies are also required to identify the specific projects that  will help them to achieve their space reduction targets. According to GSA  and OMB officials, agencies submit their Plans, including their reduction  targets, and their Plans are reviewed by both GSA and OMB. But each  individual agency ultimately establishes its targets based on what it  determines to be cost-effective and feasible. Through its Real Property  Efficiency Plan template, GSA provides guidance to agencies on what is  expected in their annual submissions. Each agency is required to  document its internal controls, such as the process for identifying and  prioritizing reductions to office and warehouse space and disposal of  properties based on return on investment and mission requirements. The  identified internal controls should help ensure that an agency’s proposed  space reduction projects reflect an efficient use of space and are cost  effective. A review of our five case study agencies illustrated some of the  different approaches agencies used to determine their reduction targets.  For example, several agencies’ targets were based on the total estimated  feasible reductions identified by each agency component. In contrast, one  agency centrally established a reduction target percentage and then  asked its components to develop projects to meet that target. According  to case-study agency officials, the agencies considered many factors,  including their missions, priorities, component needs, and available  budgets, when determining their targets. We found that the number and magnitude of the space reduction projects  agencies identified in their fiscal year 2017 Plans varied greatly and were  generally proportional to the size of the agency’s real property portfolio.  The number of projects identified in agency Plans ranged from as few as  3 projects (the minimum required in the Plans) to nearly 400 projects. The  estimated space reductions per project across agencies ranged from  about 1,400 to over 94,000 square feet. For example, the Department of  Veterans Affairs has a relatively large office and warehouse portfolio of  over 28-million square feet. As part of its fiscal year 2017 Plan, the  agency reported 320 planned or ongoing projects with an average space  reduction of about 1,800 square feet per project. Conversely, the Office of  Personnel Management has a relatively small office space portfolio of  about 1-million square feet; its fiscal year 2017 Plan identified 4 ongoing  or potential projects with an average space reduction of about 6,000  square feet. In fiscal year 2016—the first and only year RTF data were available at the  time of our review—the majority (71 percent or 17 of the 24 agencies)  reported they achieved reductions in their office and warehouse space  even though the agencies had varying success in achieving the individual  targets they set for themselves. For example, as shown in figure 2, of  the 17 agencies that reduced space, 9 exceeded their targets (i.e.,  reduced more space than planned); 7 reduced space but missed their  target (by anywhere between 2.8 and 96.7 percent); and 1 agency  expected to increase in square footage, but reduced space. Whether an agency met its target is not the only indicator of an agency’s  success in reducing space. For example, although some agencies missed  their targets, they reduced their office and warehouse space by a larger  percentage than some agencies that exceeded their targets. Also, the fact  that some agencies missed their targets can in part be attributed to  setting more aggressive targets than other agencies. Agencies’ fiscal year  2016 targets ranged from a 0.8 percent increase to an 8.4 percent  decrease in office and warehouse space. Of the 9 agencies that  exceeded their reduction targets, 4 more than tripled their target. As  mentioned, agency targets are set by the agency and are a reflection of  their unique situation including mission needs and priorities and therefore  cannot be generalized across agencies. For example, Energy exceeded  its fiscal year 2016 reduction target and reduced 292,140 square feet of  space (0.8 percent of its total square footage). However, the  Environmental Protection Agency missed its target, which was the second  most aggressive target across all the agencies at 7.2 percent of its total  square footage; but the agency reduced 174,003 square feet (3.24  percent of its total square footage). Of the three agencies with the most  aggressive target reductions—those that ranged between 6.7 and 8.4  percent of their total square footage—only one met its target. Figure 3  shows the extent to which each of the CFO Act agencies met its fiscal  year 2016 targets. See appendix II for more detailed information on each  agencies’ square footage of space, reduction targets and fiscal year 2016  reductions. Officials from our case study agencies cited a number of factors that  influenced whether or not they met their fiscal year 2016 targets, and may  also affect their target achievement in subsequent years. Of our five case  study agencies, three exceeded their fiscal year 2016 reduction target  and two missed their target. Timing and funding: Officials from two case study agencies cited  timing as a factor, noting that there is fluidity to the project’s planning,  implementation, and disposal process that may not always be within  an agency’s control. As a result, space reductions anticipated in one  fiscal year may not be realized until a subsequent fiscal year;  conversely, some space reduction opportunities may present  themselves unexpectedly. For example, according to officials at HUD,  which missed its fiscal year 2016 reduction target, some projects take  longer than anticipated to start or complete. HUD officials said that  their fiscal year 2016 target may have been too ambitious and  planned projects were delayed because they were unable to secure  sufficient funding. As such, the officials said the agency must carefully  select which projects to move forward with in a given fiscal year, but  expected to move forward with their delayed, planned projects in the  next fiscal year. Energy on the other hand, exceeded its fiscal year  2016 reduction target. Energy officials said that they tend to be  conservative in listing potential RTF projects in their Plans. They  noted that it takes a long time to dispose of a building and the timing  was dependent on the building’s level of contamination, location, size,  agency budget, and other factors. As a result, even though the  agency may have planned to dispose of a building in a given fiscal  year, there were numerous reasons why the project may get delayed. Further, RTF is a long-term effort and should not be judged based on  agencies’ progress in their first year. According to an OMB official, it is  understood that there may be circumstances in a given year that may  hinder agencies from reaching their RTF targets, such as budget  constraints or the timing of leases; however, the expectation is that  agencies will continue to work toward accomplishing their target in the  next year. Accordingly, under RTF, agencies set annual space  reduction targets for a 5-year period. Officials from our case study  agencies emphasized that the 5-year targets are not static, but rather  are subject to annual updates. The RTF policy also acknowledged  that changes to mission requirements and the availability of budgetary  resources may require modifications to an agency’s targets,  particularly in each of the subsequent years. Lastly, given that the  RTF policy is still relatively recent, an OMB official noted that  agencies are still in the process of learning how to set appropriate  targets. Previous space reductions: Officials from three of our case study  agencies noted that prior space reductions made during the Freeze  the Footprint policy limited their ability to reduce space more  aggressively. Though the thrust of Freeze the Footprint was to  maintain the fiscal year 2012 size of an agency’s portfolio, agencies  started to look more strategically for opportunities to dispose of  excess space in their portfolios. The majority of agencies (18 of 24)  have been decreasing the square footage of their domestic office and  warehouse space since the Freeze the Footprint policy was  implemented in 2013. OMB reported that under Freeze the Footprint,  agencies achieved a 24.7-million square foot reduction between fiscal  years 2012 and 2015. Officials from the IRS, which accounts for 70  percent of Treasury’s real property inventory, noted it has released  2.7-million square feet (approximately 10 percent) in the past 5 years,  bringing its total square footage down to 25.3 million. According to  officials from three of our case study agencies, a certain amount of  space is required to effectively fulfill their missions. As such, the  closer agencies get to attaining their optimum footprint, their ability to  achieve further space reductions may be limited. GSA Has Processes  to Track Space  Release Requests  and Manage Vacant  Space In November 2016, GSA put into effect a new standard operating  procedure to, among other things, standardize and streamline the  process of receiving, reviewing, and documenting agencies’ space  release actions. As previously mentioned, GSA’s occupancy agreements  for space it leases on behalf of its customer agencies generally allow the  agencies to release space back to GSA with as little as 4 months’ notice,  if certain conditions are met. This can enable agencies to reduce their  space and related rent costs relatively quickly without penalty. As a  result of this new process, GSA established a centralized e-mail for  agencies to submit their space release requests. The e-mail is maintained  at GSA headquarters before it is forwarded to the respective GSA region. GSA also developed a centralized space release tracking spreadsheet to  help ensure that all GSA regions were (1) notifying the customer agency  of GSA’s determination on whether the space release request was within  GSA’s policy, and (2) processing the space release and ceasing rent  billings in a timely manner. According to GSA headquarters officials, this  new process was implemented to rectify past concerns that space release  requests were not centrally tracked, GSA regions may not have been  making consistent determinations, and some requests either were missed  or were not processed within the appropriate time frames. GSA officials noted that GSA similarly manages all vacant space in  federally owned property under its custody and control and in commercial  space it leases, and the agency seeks to utilize the space as quickly as  possible. GSA has 11 regional offices throughout the country that  generally conduct the day-to-day real property management activities for  its customer agencies. These responsibilities include acquiring,  managing, and disposing of real property, as well as executing, renewing,  and terminating leases on behalf of its customer agencies in exchange for  a monthly fee for GSA’s services. GSA headquarters officials told us that  GSA regional offices track all the occupancy agreements and proactively  work with customer agencies to help manage their space needs well  before the agreements expire to understand ongoing space requirements.  For example, according to GSA headquarters officials, this process  includes working with agencies at a strategic level and helping them think  about how they can accomplish their space needs and meet their targets  4 to 5 years in advance. GSA headquarters and regional officials noted  that the advance planning helps the GSA regional officials integrate  agencies’ potential space needs into the work they are already doing in  the region as GSA manages the regional inventory as a whole, including  managing the amount of vacant space. GSA regional officials told us that  they work closely with the agencies in their space consolidation and  reduction efforts to minimize the likelihood that GSA would be caught off  guard by a release of space. This work enables GSA to develop options  for either filling vacant space based on the known needs in the region or  developing an alternative plan to effectively utilize the unneeded space. One of GSA’s strategic objectives is to improve the federal utilization of  space in order to lower the government’s operational costs. To assess  progress, GSA has an agency-wide vacant space performance goal of  3.2 percent for its federally-owned and leased inventory (with a 5 percent  goal for federally owned and 1.5 percent goal for leased space). Based  on GSA data, the agency has steadily lowered its percentage of vacant  space under its custody and control from 3.8 percent in fiscal year 2013  to 3 percent in fiscal year 2016, exceeding its performance goal of 3.2  percent for the first time in 4 years. The vacant space performance  goal’s data help GSA evaluate its real property assets and plan for and  make investment decisions while meeting its customer’s needs.  According to GSA officials, the lower vacant space percentage is a  reflection of the agency’s continued focus on working with its customer  agencies to: (1) move into federally owned space, when possible; (2)  decrease the size of commercially leased space to reduce agency rental  costs and overall government reliance on leased space; and (3) dispose  of unneeded federally owned assets. However, GSA officials noted that a  certain level of vacant space is necessary to meet the space needs of  new customers and customers with changing space requirements. According to GSA officials, GSA also tracks and reports annual cost  avoidance data for all office and warehouse space reductions. These data  include space covered under RTF in federally owned buildings under  GSA’s custody and control and commercial space that GSA leases. Cost  avoidance is defined as the results of an action taken in the immediate  timeframe that will decrease future costs. The government-wide cost  avoidance for fiscal year 2016 was $104 million based upon a net 10.7  million square foot reduction to all office and warehouse space. Of the  government-wide figure, according to GSA, the total cost avoidance  associated with office and warehouse space reductions in federally- owned space under GSA’s custody and control and commercial space  GSA leased in fiscal year 2016 was over $75.8 million and 3.1 million  square feet. In its cost avoidance calculation, GSA accounts for space  returned to it by customer agencies only if there is a net square footage  reduction in GSA’s total square footage across all the space that it  manages. Similarly, the space returned to GSA does not reduce the federal  government’s overall office and warehouse square footage unless GSA  disposes of it. However, space that is returned to GSA is reflected as a square footage reduction for the customer agency and contributes toward  that agency’s RTF target reduction. According to GSA regional officials,  agencies’ requests to return space prior to the end of their occupancy  agreements appear to have increased since the implementation of the  RTF policy. Thus far, GSA has processes to manage agencies’ space  release requests and keep its vacant space to a minimum. However, it is  too early to determine how the recent increase in space release requests,  in combination with agencies’ continued focus on occupying a smaller  footprint and reducing their square footage, will affect: (1) the size of  GSA’s inventory of vacant space in the long term, (2) GSA’s regional  office workload to manage the requests, and (3) the cost savings for the  federal government. Agency Comments We provided a draft of this report to GSA, OMB, Commerce, Energy,  HUD, Interior, and Treasury for review and comment. We received  technical comments from Energy, which we incorporated, where  appropriate. GSA, OMB, Commerce, HUD, Interior, and Treasury did not  have comments on our draft report. We are sending copies of this report to the appropriate congressional  committees; the Administrator of GSA; the Director of the OMB; the  Secretaries of the Departments of Commerce, Energy, HUD, the Interior,  and the Treasury; and other interested parties. In addition, the report will  be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions concerning this report, please  contact me at (202) 512-2834 or rectanusl@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix III. Appendix I: Objectives, Scope, and  Methodology Our objectives were to determine: (1) the approaches and any challenges  the 24 Chief Financial Officers (CFO) Act agencies identified to  achieving their Reduce the Footprint (RTF) reduction targets for all their  domestic office and warehouse space; (2) the extent to which these  agencies reduced space and met their fiscal year 2016 RTF targets; and  (3) how the General Services Administration (GSA) manages vacated  space that it had leased to these agencies. To obtain background information for all three objectives, we reviewed  relevant literature, including laws governing federal real-property  management and agencies’ efforts to reduce their real property portfolios  and Office of Management and Budget’s (OMB) and GSA’s  memorandums and guidance governing the RTF policy. We also  reviewed prior GAO and GSA inspector general reports describing  agencies’ real-property management and efforts to more efficiently  manage their real property portfolios. To determine the approaches used and any challenges faced by the CFO  Act agencies in achieving their RTF reduction targets for all their domestic  office and warehouse space, we conducted a content analysis of the  agencies’ 5-year Real Property Efficiency Plans (Plans) for fiscal years  2016 and 2017. These Plans were obtained directly from each of the  agencies. Each Plan describes an agency’s overall strategic and tactical  approach in managing its real property, provides a rationale for and  justifies its optimum portfolio, and directs the identification and execution  of real property disposals, efficiency improvements, general usage, and  cost-savings measures. The content analysis of the Plans helped us to  understand the approaches agencies used to reduce space, how space- reduction targets were set, and any challenges they experienced in  reducing their space. To identify agencies’ approaches to achieving their  RTF targets, we reviewed all agencies’ Plans to determine the most  frequently mentioned approaches agencies reported using or planned to  use to reduce their real-property footprints. As part of their plans, each  agency is required to include a section detailing approaches it plans to  use to reduce space. While these sections were the primary focus of the  analysis, we analyzed the Plans as a whole for any additional mention of  agencies’ approaches to reduce space. Based on the frequently identified  approaches, codes were developed. An analyst reviewed all the  agencies’ Plans and coded the approaches and another analyst reviewed  the coding. If there was a disagreement, the two analysts reviewed and  discussed until they reached an agreement. As a result of the analysis,  five approaches were identified that agencies most frequently reported  using or were planning to use to achieve their RTF targets. These five  approaches are described in more detail in the report: (1) consolidation;  (2) co-location; (3) disposition of unneeded space; (4) better utilization of  existing space; and (5) teleworking and hoteling. For the purposes of our  report, telework and hoteling were combined because these approaches  are often used in combination. For example, agencies can use telework  strategically to reduce space needs and increase efficiency by making  hoteling (i.e., desk sharing) possible. To identify any challenges agencies faced in achieving their RTF targets,  we similarly conducted a content analysis of agencies’ fiscal year 2016  and 2017 Plans. As part of their Plans, each agency included a section  describing challenges it faced to reducing space. While these sections  were the primary focus of the analysis, we analyzed the Plans as a whole  for any additional mention of agencies’ challenges. Based on the  frequently identified challenges, codes were developed. An analyst went  through all the agencies’ Plans to code the challenges and another  analyst reviewed the coding. If there was a disagreement, the two  analysts reviewed and discussed until they reached an agreement. As a  result of the analysis, we identified the four challenges that agencies most  frequently described in their Plans: (1) space reduction costs; (2) mission  delivery; (3) employee organization concerns; and (4) workload growth. In  our report, we relied specifically on agencies’ fiscal year 2016 and 2017  Plans to provide examples and context for our description of the  approaches agencies use and challenges they experience in achieving  their RTF targets. However, after these Plans were submitted, agencies  reported that the specific details as described in their Plans may in some  instances, have changed due to a variety of factors. For our case study  agencies, to the extent possible, we have provided updated information  from agency officials as of December 2017. We selected five agencies as case studies to inform our first two  objectives. We selected the agencies using a variety of considerations  such as the diversity in the size of the agency’s domestic office and  warehouse portfolio, the extent to which the agency met its fiscal year  2016 RTF targets, the types of real property authorities the agency has,  as well as suggestions from GSA and OMB related to agencies’  experiences. Based on these factors, we selected the: (1) Department of  Commerce (Commerce); (2) Department of Energy (Energy); (3)  Department of Housing and Urban Development (HUD); (4) Department  of the Interior (Interior); and (5) Department of the Treasury (Treasury).  While our case-study agencies and their experiences reducing their  space are not generalizable to all CFO Act agencies, they provide a  range of examples of how agencies are implementing the RTF policy. We  interviewed officials at the selected agencies as well as GSA and OMB,  and reviewed relevant agency real-property management and RTF  guidance, to obtain more detailed information about agencies’ RTF  approaches, challenges, specific RTF projects, RTF project funding and  prioritization, and experiences in meeting their RTF targets. In addition,  we visited three office buildings of our case study agencies in  Washington, D.C., with ongoing or recently completed RTF projects that  illustrated approaches the agencies used to reduce space and met with  officials to discuss the projects in more detail. The spaces we visited were  the headquarters buildings for Commerce, HUD, and Interior. We  selected the buildings based on recommendations from officials at our  case study agencies. To determine to what extent agencies reduced their space and met their  fiscal year 2016 RTF targets, we analyzed the 24 CFO Act agencies’ data  as submitted to GSA on their RTF targets and reported reductions for  fiscal year 2016. The office and warehouse square footage reductions are  calculated annually using GSA occupancy agreement data and agencies’  self-reported data in GSA’s Federal Real Property Profile. For example,  for fiscal year 2016, the space reduction calculations based on these data  sources at the end of the fiscal year was compared to the square footage  reported in fiscal year 2015. At the time of our review, this was the first  and only year of RTF data available as the policy was implemented in  March 2015. We conducted a data reliability assessment of the RTF data  GSA provided by interviewing GSA officials and reviewing documentation,  and concluded the data were reliable for our purposes. We also  interviewed officials at GSA and OMB and reviewed relevant  documentation to learn more about each agency’s role and the  requirements of the RTF policy. We interviewed officials from our selected  case-study agencies to obtain supporting documentation and to improve  our understanding of how agencies set their RTF targets, agencies’  progress toward those targets, and the approaches used and challenges  faced in meeting those targets. We also asked the agency officials for  examples of successful practices used to reduce their office and  warehouse space. To determine how GSA manages vacated federally owned and  commercially leased space that it leases to agencies, we reviewed  federal requirements and GSA policies and vacancy data. We conducted  a data reliability assessment of GSA’s vacancy and cost avoidance data  by interviewing GSA officials and reviewing documentation, and  concluded the data were reliable for our purposes. We also interviewed  GSA headquarters and regional officials and obtained documentation on  how GSA manages space returned by agencies. We conducted this performance audit from April 2017 to March 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix II: Agencies’ Reported Baselines,  Targets, and Fiscal Year 2016 Reductions FY 2016-  FY 2020 target  reduction  (118,127) Social Security Administration  Missed target and increased in space  Department of Health and Human  Services  (170,147)  (520,987) (15,466) (47,946)  (56,062) CFO Act Agencies Appendix III: GAO Contact and Staff  Acknowledgments GAO Contact Staff  Acknowledgments In addition to the individual named above, Maria Edelstein (Assistant  Director); Lacey Coppage; Edgar Garcia; Delwen Jones; Catherine Kim  (Analyst-in-Charge); Michael Mgebroff; Malika Rice; Kelly Rubin; and  David Wise made key contributions to this report.
The federal government continues to work to reduce its real property inventory and associated costs. GSA provides space for agencies in government-owned and commercially leased buildings. In 2015, the OMB issued a memorandum requiring the 24 agencies with chief financial officers to reduce their domestic office and warehouse space. These agencies are required to set annual reduction targets for a 5-year time period and update their real property plans annually. GAO was asked to review the implementation of this space reduction initiative. This report discusses: (1) the approaches and any challenges the 24 agencies identified to achieving their reduction targets for all their domestic office and warehouse space; (2) the extent these agencies reduced their space and met their fiscal year 2016 targets; and (3) how GSA manages vacated space it had leased to these agencies. GAO conducted a content analysis of the 24 agencies' real property plans for fiscal years 2016 and 2017 and analyzed agencies' data as submitted to GSA on their targets and reductions for fiscal year 2016, the only year for which data were available. GAO selected five agencies as case studies based on several factors, including size of the agencies' office and warehouse portfolio, agency reduction targets, and fiscal year 2016 reported reductions. GAO reviewed relevant documentation and interviewed officials from GSA, OMB, and GAO's case study agencies. GAO provided a draft of this product to GSA, OMB, and our case study agencies for comment. GAO incorporated technical comments, as appropriate. Most of the 24 agencies with chief financial officers reported to the Office of Management and Budget (OMB) and the General Services Administration (GSA) that they planned to consolidate their office and warehouse space and allocate fewer square feet per employee as the key ways to achieve their space reduction targets. For example, the Department of Agriculture reported it will consolidate staff from five component agencies in two office buildings. When complete, the space allocated per employee will average about 250 square feet down from a high of 420 square feet per employee. In taking these actions, the agencies most often identified the cost of space reduction projects as a challenge to achieving their targets. Agencies cited costs such as for space renovations to accommodate more staff and required environmental clean-up before disposing of property as challenges to completing projects. Some agencies required to maintain offices across the country reported that their mission requirements limit their ability to reduce their space. In fiscal year 2016, 17 of the 24 agencies reported they reduced their space, but had varying success achieving their first-year targets. Of the 17 agencies, 9 exceeded their target and reduced more space than planned, 7 missed their target (by anywhere between 2.8 and 96.7 percent), and 1 reduced space, despite a targeted increase. Agency officials said that it is not unusual for projects to shift to different years and that such shifts could lead to missing targets one year and exceeding them the next. GSA has processes to manage the space vacated by agencies that is leased through GSA. For example, starting in November 2016, GSA started tracking agencies' space release requests centrally to help standardize the process and established an e-mail address to which agencies can submit requests. GSA relies on regional offices to manage real property in their regions and to identify tenants for vacant space or to remove unused space from the inventory. GSA's regional officials said regular monitoring and coordinating with agencies minimizes the likelihood GSA is caught off guard by a return of space. These processes also help them to plan ahead. GSA met its 2016 performance goal to have an annual vacant space rate of no more than 3.2 percent in its federally owned and leased buildings. However, given the recent implementation of the space reduction initiative, it is too early to determine the extent to which agencies will return space to GSA prior to the end of their leases and the effect on GSA's inventory.