Federal Real Property
Progress Made in Reducing Unneeded Property, but VA Needs Better Information to Make Further Reductions
GAO-08-939, Sep 10, 2008
Additional Materials:
Contact:
(202) 512-3000
contact@gao.gov
Office of Public Affairs
(202) 512-4800
youngc1@gao.gov
The Department of Veterans Affairs (VA) operates one of the largest healthcare-related real estate portfolios in the nation. However, many VA facilities are older and no longer well suited to providing care, leaving VA with millions of square feet of property it does not use to capacity (underutilized) or at all (vacant). VA has various legal authorities that allow it to dispose of such property. GAO was asked to identify (1) VA's progress in reducing underutilized or vacant property and how much VA spends operating the underutilized or vacant property it retains; (2) VA's use of its various legal authorities to reduce underutilized and vacant property and the extent to which VA tracks how these authorities contribute to reductions; and (3) the challenges VA faces in minimizing underutilized and vacant space and the strategies VA is using to address these challenges. To accomplish these objectives, GAO reviewed VA property data, and visited eight VA locations based on space utilization, use of authorities, and other factors. GAO also interviewed officials from various VA offices and stakeholders.
VA has made significant progress in cutting underutilized space in its buildings from 15.4 million square feet in fiscal year 2005 to 5.6 million square feet in fiscal year 2007, and although the number of vacant buildings decreased, the amount of vacant space remained relatively unchanged at approximately 7.5 million square feet. GAO estimated VA spent $175 million in fiscal year 2007 operating underutilized and vacant space at its medical facilities, where 98 percent of such space exists. GAO developed this estimate because VA does not track the cost of operating underutilized and vacant building space at the building level and has not developed a reliable method for doing so. VA's use of various legal authorities such as enhanced-use leases and sharing agreements likely contributed to the overall reduction of underutilized space, but VA does not track the effect of these authorities. Their use provides VA with revenue and services. Revenue comes from such diverse sources as rent for space and money paid for using buildings as film sets, among other things. For example, at Fort Howard, Maryland, in 2006, VA entered into a new enhanced-use lease with a developer to build a retirement community where veterans are given priority for occupancy. However, the lack of building-level information about the extent to which these authorities reduce underutilized or vacant space or provide benefits such as revenue or services means that VA cannot track, monitor, or evaluate their impact or determine which authorities have the greatest effect from year to year. VA faces several challenges to minimizing underutilized and vacant space and is using strategies at some facilities to mitigate them. One challenge is location: VA officials reported difficulty finding entities interested in using underutilized or vacant property in areas with low property values. Another challenge is cost: many of VA's underutilized or vacant buildings are in poor condition and require an estimated $3 billion in repairs before they can be fully utilized. Finally, competing stakeholder interests and legal and budgetary limitations can further impede VA's efforts. To mitigate these challenges, individual VA locations have used strategies such as improving communication with veterans groups and other external stakeholders, obtaining support from internal stakeholders, and entering into public-private partnerships.
Status Legend:
Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
- In Process
- Open
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: To provide VA with an accurate picture of what it spends annually on maintaining underutilized and vacant property and a benchmark from which to work in decreasing these costs, the Secretary of Veterans Affairs should develop an annual cost estimate for how much it spends on underutilized and vacant property, so that the estimate is comprehensive, accurate, well-documented, and credible.
Agency Affected: Department of Veterans Affairs
Status: Open
Comments: As of fiscal year 2011, VA has not yet developed a comprehensive and credible annual cost estimate for how much it spends on underutilized and vacant property. According to VA officials, VA estimates the operating costs for each underutilized building using a station level prorated approach. In our 2008 review, we found that this approach was not aligned with leading practices for developing cost estimates and that VA's cost estimate was not credible or reliable. However, according to VA officials, VA has recently taken steps to improve its cost estimate. Specifically, VA has developed separate estimates for underutilized and vacant buildings. For underutilized buildings, VA uses its station level prorated approach to estimate costs at the building level and to develop an analytical baseline on what it costs to operate a normal building at full capacity. Further, according to VA officials, because vacant buildings are no longer in use and would not require full operational costs, VA developed a second estimate for costs associated with maintaining vacant buildings. This estimate was developed by reviewing cost data from a sample of 10-15 vacant buildings. According to VA officials, because VA's financial database system does not track costs at the building level, VA must rely on its cost estimate approaches to measure maintenance costs for underutilized and vacant buildings. VA does not have future plans in place to update its financial database system. Although VA's stated actions represents an improvement in accuracy, its cost estimate approach still does not yet meet most of the best practices for program cost estimating identified in our 2008 report.
Recommendation: To provide VA with a better understanding of the overall effect of various efforts on its underutilized and vacant property and to identify properties for disposal, the Secretary of Veterans affairs should collect and maintain building-level data by fiscal year in order to correlate characteristics associated with underutilized and vacant buildings, which may help to identify unneeded assets.
Agency Affected: Department of Veterans Affairs
Status: Closed - Implemented
Comments: In September 2008, we found that the Department of Veterans Affairs (VA) did not collect or maintain comparable building-level data by fiscal year on building characteristics such as utilization, condition, and age, and therefore was unable to determine trends related to the reductions in underutilized and vacant space at the building level. We further reported that this information could help VA conduct analysis to prioritize assets based on their importance to mission and to identify assets for disposal. We therefore recommended that VA collect and maintain building-level data by fiscal year in order to correlate characteristics associated with underutilized and vacant buildings and identify unneeded assets. In response to our recommendation, in Fiscal Year 2009, VA implemented use of the "Business Intelligence Tool" a database that allows VA to collect building-level data by fiscal year for each of its properties. The implementation of this new database allows VA to track comparable building-level data by fiscal year on several building characteristics, including information on a building's condition, historical status, age, and utilization measure. As a result of this action, VA is able to complete detailed trend analysis of its vacant and underutilized properties to identify unneeded assets and to track reductions in underutilized and vacant space at the building level.
Recommendation: To provide VA with a better understanding of the overall effect of various efforts on its underutilized and vacant property and to identify properties for disposal, the Secretary of Veterans affairs should track, monitor, and evaluate square footage reductions and financial and nonfinancial benefits when recording new agreements as of fiscal year 2008.
Agency Affected: Department of Veterans Affairs
Status: Closed - Implemented
Comments: In September 2008, we found that the Department of Veteran Affairs did not track the extent to which its use of legal authorities, such as its authority to enter into Enhanced Use Lease (EUL) agreements, contributed to reductions in underutilized or vacant space. As a result, the cumulative effect of VA's use of these authorities was largely unknown. We therefore recommended that VA track, monitor, and evaluate square footage reductions and financial and non-financial benefits of new agreements as of fiscal year 2008. In fiscal year 2009, VA implemented use of the Business Intelligence Too which is a database that allows VA to collect several building-level data by fiscal year, including data related to existing EUL or other types of agreements. Further, the database also allows VA to track revenue associated with existing agreements, shared square footage, estimated costs to the government, and estimated cost avoidance to the government. According to VA officials, as a result of collecting this additional information, VA is able to measure monetary and other benefits resulting from the use of VA's legal authorities and the overall effect of its efforts to reduce underutilized and vacant property.