Detailed Information on the
Asset Management of General Services Administration-Owned Real Property Assessment

Identifying core real property assts and targeting reinvestment by: 1) Providing regional training on the core asset methodology. 2) Refining core assets analysis based on regional feedback. 3) Using the Core Asset Analysis to target reinvestment needs.

Coordinating Federal Real Property Council Asset Management Committee activities to share best practices among the Federal community and leverage best practices of the private sector by: 1) Engage SRPO community and OMB to ensure Committee agenda meets needs of FRPC. 2) Regularly schedule Asset Management Committee Meetings sharing best practices in asset management

Evaluating Operating Costs for assets identified with high operating costs using the Federal Real Property Council's Performance Assessment Tool by: 1) Identify assets with high operating costs. 2) Research and isolate issues driving high operating costs. 3) Create strategies to decrease operating cost in order to align with market.

Selling underperforming properties as necessary.

Finalizing appropriate regional performance targets.

Measuring major repair and alterations projects to better manage performance.

Measure: Percent of government-owned assets achieving a Return on Equity (ROE) of at least 6%

Explanation:Return on Equity (ROE) is the ratio of annual net operating income to the amount of equity or value in the asset. Fair market value (the price at which the asset could be sold) is generally synonymous with the term equity used in this sense. Assets with an ROE of at least 6% are solid financial performers that fulfill the long-term needs of our customers by generating enough income to fund their own operations, repairs and capital needs. *The acquition of the 52-builidng St. Elizabeth's facility accounts for the decrease from FY 2005 to FY 2006.

Measure: Customer satisfaction with government-owned space

Explanation:This measure assesses customer satisfaction level in owned space related to the building and office environment, building services, building security, and building management staff. It measures how well PBS provides space that meets customers' needs. Tenants in a third of the PBS owned inventory are annually surveyed, i.e., building tenants are surveyed once every three years. This measure was rebaselined in FY 2003 to include only scores of 4's and 5's as "highly satisfied".

Measure: Percent reduction in energy consumption from the FY 2003 baseline

Explanation:PBS is a responsible steward of the environment and is committed to implementing energy-saving solutions that improve the energy efficiency of operations and save taxpayer dollars. This measure complies with Executive Order 13423. Per this E.O. federal agencies are required to reduce energy consumption by 3 percent annually through FY 2015, a 30 percent cumulative reduction by FY 2015, in relation to the FY 2003 baseline. *2005 actual and target were measured against the 1985 baseline.

Measure: Percent of vacant space in the government-owned inventory

Explanation:This measure evaluates PBS' effectiveness at maximizing the use of the government-owned buildings in our inventory. Vacant space includes any space not undergoing an on-schedule prospectus-level renovation for which there currently is no tenant. It includes space that is committed to a customer, but is not yet occupied.

Measure: Percent of government-owned assets achieving a positive Funds from Operations (FFO)

Explanation:FFO is a measure of PBS' rent revenue minus expenses (excluding depreciation). It is the income remaining after all of the day-to-day expenses associated with running PBS' owned and leased buildings, such as salaries, supplies, lease payments, security, cleaning, maintenance, utilities and other costs, are paid. By increasing the percentage of buildings with a positive FFO, PBS continues its efforts to maximize the financial performance of retained assets and creates a self-sustaining inventory that will result in improved quality of space for our customers and superior value for taxpayers.

Measure: Maintain cleaning and maintenance costs in office and similarly serviced space within +/-5% of private sector benchmarks.

Explanation:GSA employs private sector benchmarks to measure performance in all comparable instances to ensure that it is cleaning and maintaining its assets as efficiently as the private sector. This measure compares GSA cleaning and maintenance costs to private sector data. GSA assets are mapped to Building Owners and Managers Association (BOMA) data to determine how efficient our assets are performing.

Measure: Percentage of the minor repairs and alterations budget obligated on planned projects

Explanation:This measure encourages strategic reinvestment and rewards sound financial planning and budgeting. This measure focuses on how well PBS plans and executes the minor repairs and alterations program.

Is the program purpose clear?

Explanation: The Real Property Asset Management Program (RPAM) has a well defined and focused purpose that ties directly to GSA's and PBS' mission. PBS' mission is to provide superior workplaces for federal customer agencies at good economies to the American taxpayer. RPAM's mission is to provide quality workplaces and enhance the asset value of our real estate portfolio for the benefit of the American taxpayer.

Evidence: The GSA and PBS mission statements and the GSA strategic goals can be found in the FY 2006 Annual Performance and Accountability Report on pages 15-16. The FY 2006 Annual Performance and Accountability Report can be accessed through the following website: http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf The Real Property Asset Management Program links to the agency strategic goals of "provide best value for customer agencies and taxpayers", "achieve responsible asset management", "operate efficiently and effectively", and "carry out social, environmental, and other responsibilities as a federal agency".

Does the program address a specific and existing problem, interest, or need?

Explanation: There is a continuing need to provide space for government agencies with long term requirements (20 years or greater) for space in a specific geographical location and/or when specialized space is required that is not readily available in the leasing market. The Real Property Asset Management program meets this specific need with the owned inventory, when owned space is a more cost effective option than leasing. Additionally, asset management needs to be performed for both leased and owned inventory.

Evidence: PBS has worked with client agencies to assess their long-term space needs. For example, PBS has a Court's Five Year Plan outlining the Court's additional space needs over the next 5 years and the Border Station's long term plan outlining the additional need the Department of Homeland Security has for space. Most 30-year present value cost comparisons show that ownership of real property is more cost effective than leasing, when there is a long-term need for the space.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: PBS fills a unique role without unnecessarily competing with other Federal agencies or private industry as asset manager for 54 agencies and 347 million rentable square feet of space. Additionally, because of its scale PBS is able to leverage and benefit marking rental rates to market and benchmarking to private industry standards; PBS is able to deliver quality space at a lower cost.

Evidence: At the end of FY 2006, PBS Operations & Maintenance Costs (using Building Owners and Managers Association (BOMA) data as an industry comparable) for cleaning, maintenance, and utilities were a combined 4.2 percent below private sector costs for similar types of space. Information on the operations and maintenance measure demonstrating our competitiveness with private sector alternatives can be found on pages 62-63 of the FY 2006 Annual Performance and Accountability Report available through the following website: http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The Federal Buildings Fund (FBF) -- the funding mechanism for GSA's real property asset management -- was established to promote responsible asset management by adding accountability to agencies, requiring them to budget for their rent and services, and GSA to operate within the means of revenue collected. Currently, there is no evidence that a more efficient model exists to manage the portfolio. Furthermore, other countries have expressed interest in implementing GSA's user-pay model.

Evidence: The Public Buildings Amendments of 1972 authorized GSA to finance its real property management activities through user charges, set at commercially comparable rates, collected from agencies occupying GSA-controlled space through the Federal Buildings Fund. The Federal Buildings Fund is outlined in Title 40 Subtitle I Chapter 5 Subchapter V Section 592 of the US Code. This information is available at: http://www4.law.cornell.edu/uscode/html/uscode40/usc_sec_40_00000592----000-.html

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: PBS' business model ensures that every dollar authorized goes back into federal buildings and that all resources are used to support a customer's chosen housing solution. To ensure efficient resource allocation, in FY 2002 PBS introduced the Portfolio Strategy for Restructuring and Reinvesting in the owned inventory. Since implementation, the number of performing properties has increased with resources being targeted to performing assets that meet the long term customer need and asset strategy as presented in the Asset Business Plan (ABP).

Evidence: From FY 2002 - FY 2006, the rentable square footage of performing assets increased by over 10%; reinvestment dollars spent in performing assets increased by 7%. PBS also has Asset Business Plans (ABPs) for each government owned asset outlining a strategy and holding period to ensure that reinvestment dollars are appropriately directed to assets that will remain under the custody and control of GSA.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: PBS has two long-term goals which are supported by five long-term performance measures and three annual performance measures, all of which focus on results and accountability. The five long-term performance measures are: the percent of government-owned assets achieving a Return on Equity of at least 6%, customer satisfaction with government-owned space, the percent reduction in energy consumption from the FY 2003 baseline, GSA cleaning costs as compared to the private sector, and GSA maintenance costs as compared to the private sector. These outcome measures were approved by OMB for the FY 2008 Congressional Budget Justification. The measures, targets, and explanations can be viewed in the Measures Section of the PART.

Evidence: The FY 2008 Congressional Budget Justification for PBS outlines two long-term goals which are measured by five long-term performance measures that have been approved by OMB that will help PBS achieve its overall mission of providing superior workplaces for federal customer agencies at good economies to the American taxpayer. The two goals are located on page FBF-57 of the FY 2008 Congressional Budget Justification. The document can be accessed at http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346. These goals are supported by the long-term perfomance measures: percent of government-owned assets achieving a Return on Equity of at least 6%, customer satisfaction with government-owned space, percent reduction in energy consumption from the FY 2003 baseline, GSA cleaning costs as compared to the private sector, and GSA maintenance costs as compared to the private sector. These measures, targets, and explanations can be viewed in the Measures Section of the PART.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: PBS has developed specific quantifiable targets relative to its long-term performance measures with ambitious targets and timeframes to promote continual improvement. OMB approved these targets as part of GSA's FY 2008 Congressional Budget Justification.

Evidence: The Return On Equity measure was vetted through Ernst & Young Kenneth Leventhal Real Estate Group (EYKL) to ensure the appropriateness of the 6% target. This target for this measure was rebaselined this year when all assets, specifically border stations were included in the measure. The tenant customer satisfaction survey was rebaselined to include only satisfaction scores of 4 and 5 instead of 3, 4, and 5. PBS' energy reduction is measured against its FY 2003 baseline. The Operating Cost measure is an example of an instance where PBS wants to ensure that services such as cleaning and critical maintenance are not reduced to the point that they impact the operations of the building or tenant satisfaction. PBS has changed this target to be within a +/- 5% band when compared to the private sector. The FY 2008 Congressional Budget Justification shows PBS's measures and current and future targets on pages FBF 79-82. This document can be accessed at: http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: GSA has annual performance measures targeted to making progress towards achieving its long term goals. In many cases the measures are directly tied to the long-term goals. The Asset Management program's long-term goals are to achieve a viable, self-sustaining inventory with an average return on equity (ROE) of at least 6% by FY 2012 for 78.9% of our government-owned assets and to reduce energy consumption by 21% by FY 2012 over the FY 2003 baseline while maintaining overall operating costs within +/- 5% of private sector costs and maintaining customer satisfaction levels at or above 80%. To achieve these goals, PBS has annual measures with ambitious targets that tie directly to these long-term goals. For example, PBS annually measures the percent of government-owned assets with and ROE of at least 6%, customer satisfaction with government-owned space, percent reduction in energy consumption from the FY 2003 baseline, percent of GSA cleaning costs within a +/- 5% of private sector cleaning costs, and percent of GSA maintenance costs within a +/- 5% of private sector maintenance costs. Additionally, PBS has annual measures that contribute to these goals while not explicitly stated as a long-term goal. For example, measuring the percent of assets achieving a positive funds from operations (FFO) measures the self-sustainability of the portfolio - a long-term goal. In the same way, measuring and controlling the percent of vacant space in the government-owned inventory positively affects the financial performance of an asset which increases its ROE.

Evidence: GSA's annual performance measures can be found in the FY 2008 Congressional Budget Justification. This document, which can be accessed at http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346, provides the program's measures, descriptions of the measures, prior year performance, and future year targets. Annual targets for PBS' measures are listed in the Measures section of the PART.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: GSA has established baselines and specific quantified annual targets for its annual measures. Quarterly, actual results are compared against targets to ensure continued improvement. Targets are set to offer balance between ensuring continued improvement and movement toward long-term outcome goals and motivating the program to stretch and achieve efficiencies. The annual goals were developed to follow standard real estate industry practices and in many cases have been vetted with the private sector to ensure they are stretch goals.

Evidence: These measures, along with their targets and timeframes, are outlined in the FY 2008 Congressional Budget Justification page FBF-65: http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: GSA uses performance-based contracts for cleaning, maintenance, and major repairs. By building in measures and incentives to these contracts PBS makes sure all partners fully support and are committed to the achievement of both the annual and long term goals.

Evidence: GSA's commercial facilities management contract specifies what level of cleaning is required (e.g., glass to be free of dust), and requires evaluations of customer satisfaction of services performed which links to the annual performance goals.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: PBS has engaged in a series of discussions and progressive evaluations of the asset management program with various private and governmental agencies for independent assessments of the Asset Management Program. The program is reviewed quarterly by OMB via the Real Property Asset Management Initiative scorecard of the President's Management Agenda. The Government Accountability Office (GAO) has focused on real property as a high risk area for the past few years. As a result, there have been numerous evaluations of GSA's real property practices. Additionally, the GSA Inspector General (IG) routinely audits the program. In addition to the federal sector, PBS has partnered with various private organizations. These groups include the Counselors of Real Estate, AEW Capital Management, Ernst & Young Kenneth Leventhal Real Estate Group, and Signet. The private sector studies were performed by reputable firms using methodologies firmly entrenched in private sector real estate fundamentals. While several of the studies have been focused on specific elements of the asset management program, together they constitute a comprehensive review of the program. PBS continues to evaluate the asset management program each year.

Evidence: PBS engaged Ernst & Young Kenneth Leventhal Real Estate Group (EYKL) to discuss the benefits of using a portfolio management metric to assist in measuring financial performance of the owned portfolio. EYKL used a group of real estate industry experts to develop a recommendation for a Return On Equity (ROE) metric that would enable PBS to compare the relative amount of annual cash flow from operations that each asset generates in relation to the amount of equity that is deployed in each asset. PBS incorporated EYKL's recommendation. In fact this work documented previous discussions held with EYKL and validated PBS's approach to measure performance against an industry benchmark to identify assets that fall below acceptable performance thresholds. Other evaluations include: reviews of the portfolio strategy for restructuring and reinvesting in the owned inventory by the Counselors of Real Estate, EYKL and Signet; AEW Capital Management performing portfolio integration projects for Region 4, 5, 7 and 11 to evaluate the PBS portfolio management approach; and audits of the asset management program by the Inspector General (IG). PBS continues to evaluate the asset management program each year. The GSA IG is currently auditing the long-term affect of real property disposal under the asset management Portfolio Restructuring Initiative. Additionally, the FY 2007 IG audit plan includes evaluations of how PBS is ensuring compliance with construction contract regulations and if PBS controls are adequate to ensure that Budget Activity 54 funds for minor repairs and alterations are spent as intended.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: GSA's Fiscal Year 2008 Congressional Budget Justification provides an integrated performance budget, aligning resources, both direct and indirect, with long-term performance goals. The budget request was developed through our Performance Management Process for strategic planning, budgeting and program evaluation.

Evidence: The FY 2008 Congressional Budget Justification for PBS outlines the linkage between the budget request and the long-term outcome goals by tying specific dollar amounts to the various measures. For example the long-term goal for maintaining operating costs below the private sector is linked to a $1.0 million FY 2008 request to be used to operate and maintain PBS buildings. The connections between budget requests and performance goals are outlined on pages FBF 83-86 which can be found at http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The PBS Real Property Asset Management program has completed all of the items on it PART improvement plan. Additionally, GSA's robust strategic planning, budgeting, and performance management cycle, the Performance Management Process, ensures that PBS continues to devote resources to improve its strategic planning.

Evidence: All PART information for the program is available on OMB's website, www.ExpectMore.gov.

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule, risk, and performance goals, and used the results to guide the resulting activity?

Explanation: Alternatives - renovation, acquisition, leasing - are compared as part of GSA's cost-benefit analyses for repairs and alterations capital projects. GSA also performs a series of asset diagnostics each year to determine the fair market value, physical condition, and functional replacement value of the inventory. These diagnostics are used to perform additional analysis to determine the Return on Equity (ROE) thus ensuring continued ownership provides the best value for the American taxpayer.

Evidence: As part of PBS' business process, a series of diagnostic tests is applied to all assets in the owned inventory to ensure that each asset is generating sufficient revenues to cover its operating expense, reinvestment needs, and meet a minimum rate of return (6%). By applying these tests, PBS segments its portfolio into categories. Non-performing assets are examined to evaluate alternative housing solutions. Reinvestment dollars are targeted toward performing properties that pass each of the financial tests and for which there is a long-term federal need. PBS also requires Asset Business Plans for each government-owned asset which includes an asset specific strategy. All capital projects are subject to analysis from The Automated Prospectus System (TAPS) and Expert Choice tools that evaluate lease versus build versus renovate alternatives.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: GSA's senior management has ongoing and quarterly meetings to analyze and discuss performance data. Performance data is also used by program managers overseeing GSA's government-owned real property inventory in several ways, such as using customer satisfaction data to set funding priorities for repair and alteration projects and comparing cleaning costs against industry standards.

Evidence: GSA uses premier commercial sources to benchmark its performance. For example, GSA benchmarks vacancy rates to the private sector using CoStar and Torto Wheaton market data; benchmarks cleaning, maintenance, and utility costs to the private sector using Building Owners and Managers Association (BOMA) data; and tabulates customer satisfaction results using Gallup data. These results are used monthly and/or quarterly for senior management reviews to ensure the agency is on track to meet its annual performance goals. All GSA employees have access to performance information via GSA's Performance Measurement Tool.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: PBS' Linking Budget to Performance program provides incentives for regions to meet or exceed performance targets. These metrics hold managers accountable for: customer satisfaction ratings, funds from operation (FFO) for individual assets, obligating Repairs and Alterations budget on planned projects, and completion of Repairs & Alterations projects on time and within budget. PBS has adopted performance-based contract clauses to ensure contractors are also held accountable for cost, schedule, and performance results. GSA's Associate Performance Plan and Appraisal System links every associates' individual job performance elements and expectations to GSA's organizational goals and measures.

Evidence: The PBS Linking Budget to Performance guidance outline the rules for the program. The program also establishes the amount of additional funding each region can receive based upon their performance. For example, in FY 2006 there was a $1.4m reward pool available to be split among any region that achieved its vacant space target. PBS also outlines performance expectations from its vendors by using performance-based service provider contracts. These contracts allow PBS to enforce penalties, such as deductions, for non-performance. Additionally, the Contractor Performance System holds contractors accountable for non-performance by limiting or barring future procurement actions. Finally, the GSA Associate Performance Plan and Appraisal System links individual performance plans to agency and organization goals. These ratings determine the eligibility to receive individual and organization performance awards for all associates.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: PBS obligates its funding in a timely manner and spends it for the purpose as appropriated by Congress. For example, in FY 2006 PBS obligated 99.5% of the Minor Repairs & Alterations funds allocated by Congress; 85% percent were obligated on planned projects. Similarly, Major Repairs & Alterations projects are required to submit a spending plan detailing monthly budgeted obligations.

Evidence: The Repairs and Alterations obligation measures are part of PBS' Linking Budget to Performance Program. Major Repairs & Alterations projects are required to have a spending plan. All projects with significant variance from the spending plan are required to submit an explanation. This data is tracked internally by the Budget Division of the PBS CFO Office.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: PBS has achieved cost savings through comparisons, competitive sourcing and direct conversions over the past two decades. Operationally, GSA has outsourced a substantial number of the functions related to Operations and Maintenance of its assets and benchmarks those costs against market conditions. PBS uses private sector American National Standards Institute (ANSI) / Building Owners and Managers Association (BOMA) benchmarks to ensure operations and maintenance costs are competitive. PBS finished FY 2006 at 4.2 percent below private sector costs. PBS has implemented a Human Capital Strategy to reengineer business processes and improve organizational efficiencies.

Evidence: GSA's Competitive Sourcing Team develops the GSA FAIR Act Inventory annually to determine if government personnel should perform commercial activities. Through competitive sourcing, PBS has outsourced most of the building operations and maintenance functions. PBS competitively bids all contracts for Operations & Maintenance, utilizing a performance-based contract. PBS also bundles Operations & Maintenance contracts from a single service provider for groups of assets in the same locale in order to achieve cost effectiveness and reduce overhead. These expenses are then benchmarked to the private sector using BOMA benchmarks to ensure costs remain competitive. Information on the FY 2005 Fair Act inventory can be obtained at: http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_DOCUMENT&contentId=10179&noc=T Information on operating and maintenance costs can be located on pages 62-63 of the FY 2006 Annual Performance and Accountability Report available through the following website: http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf In addition, PBS has undertaken a new human capital strategy. This effort involves examining each business process and making improvements as needed. It also entails examining the skills of associates and ensuring associates with the best skill matches are in the correct positions. Associates with a skill gap are then given the appropriate training to enhance their skills.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The asset management program collaborates with customer agencies, external programs, and with other GSA programs to ensure the effective management of our inventory throughout the life-cycle of the asset from acquisition through disposal. GSA collaborates with external government entities such as the United States Postal Service (USPS) to exchange properties as its customer base changes, and the Federal Real Property Council (FRPC). GSA is actively involved with the FRPC to share best practices and improve asset management throughout the federal government. Within GSA, by coordinating with the new construction program GSA can ensure that new buildings are constructed in a timely manor to replace or add to existing inventory to meet customers' needs. The asset management program also works closely with the disposal program to quickly redeploy government assets when they are no longer needed by federal tenants. Finally, PBS collaborates with the leasing program to find alternative housing solutions when a government-owned solution is not the most effective way to meet customers' housing needs.

Evidence: Coordinated planning with Judiciary Agencies has allowed PBS to project, deliver, and operate required space for Federal Courts through the development of the "Courts Five-Year Plan." PBS has negotiated several successful transfers of assets with the USPS in order to achieve improved cost effectiveness in asset management and to further the missions of both agencies. For example, the two agencies have exchanged properties to optimize their portfolios. PBS has acquired properties in Statesville, NC and Harrisonburg, VA where GSA tenants have a continuing federal need and the USPS has acquired properties in Enterprise, OR; Johnson City, TX; Fort Worth, TX; and Baudette, MN where the USPS requires facilities.

Does the program use strong financial management practices?

Explanation: GSA and PBS have received an unqualified "clean" audit opinion for FY 2006.

Evidence: GSA received an unqualified "clean" audit opinion for FY 2006 from PricewaterhouseCoopers (PwC). In PwC's opinion, the balance sheets of Federal Buildings Fund as of September 30, 2006 and 2005, and the related statements of net cost, of changes in net position and of financing, and the statements of budgetary resources for the years then ended are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. These findings can be found on page 110 of the FY 2006 Annual Performance and Accountability Report http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The PBS asset management program was the first program to achieve a green rating on the President's Managment Agenda Real Property Asset Management scorecard. This is indicative of its progress in addressing the high risk situation (as defined by the GAO) of federal real property asset management across the entire federal government. PBS continues to achieve a green rating in both status and progress.

Evidence: President's Management Agenda scorecards are available on www.results.gov.

Is the program managed by maintaining clearly defined deliverables, capability/performance characteristics, and appropriate, credible cost and schedule goals?

Explanation: GSA uses performance-based contracting for the cleaning, maintenance, and repair of its facilities to clearly define deliverables and performance expectations. GSA has credible goals to ensure cost and schedule are comparable to similar construction programs. GSA tests project budgets against other similar projects and data sources and has demonstrated that construction durations are within industry norms for similar project types. GSA has developed a construction cost benchmarking system for Repairs and Alterations projects to ensure that costs for specific work items are within reasonable ranges. Each project's detailed cost breakdown is reviewed by the Office of the Chief Architect to verify reasonable conformity with the instituted cost benchmark.

Evidence: GSA's commercial facilities management contract requires the cleaning of glass and adjacent surfaces to be "clean and free of dirt, dust, streaks, watermarks, spots, and grime and shall not be cloudy." GSA has contracted with private sector professionals to develop the benchmarking system for the defined work items that typically comprise GSA repairs and alterations projects based on market based cost analysis. Examples of the cost items being benchmarked for repairs and alterations projects include building enclosure repair and/or replacement, mechanical system upgrades, electrical system upgrades, and premiums for after hours work, among other cost categories.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: PBS has developed, and OMB has approved, a set of clearly defined, long-term goals towards which PBS has made significant progress. PBS is on track to meet all long-term performance goals and met all of its FY 2006 targets. (PBS is now tracking operating costs as two separate goals: Maintain GSA cleaning costs within +/- 5% of private sector cleaning costs; and, Maintain GSA maintenance costs within +/- 5% of private sector maintenance costs. In FY 2006, as a combined measure, PBS met the operating costs goals.)

Evidence: PBS's FY 2008 Congressional Budget Justification demonstrates its progress in achieving its long-term goals. In FY 2006, the Real Property Asset Management Program achieved all annual targets related to its long-term goals.

Does the program (including program partners) achieve its annual performance goals?

Explanation: In FY 2006 PBS achieved 6 of its 9 annual performance goals. This demonstrates that the Real Property Asset Management program is setting ambitious performance targets and making progress towards achieving them.

Evidence: The FY 2008 Congressional Budget Justification demonstrates PBS' FY 2006 performance. This document can be accessed at http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: PBS has demonstrated a track record in improving efficiencies and cost effectiveness by achieving most program goals each year. For example, GSA continues to have operating costs below private sector benchmarks (currently at 4.2 percent below) and met its efficiency measure goal in FY 2006. Beginning in FY 2007, the operating costs will be tracked as two separate measures - cleaning costs and maintenance costs - which will allow GSA to further improve the efficiency and cost effectiveness of the program. Further, GSA has pursued cost savings via comparisons, competitive sourcing, and direct conversions over the past two decades.

Evidence: GSA's Competitive Sourcing Team develops the GSA FAIR Act Inventory annually to determine if government personnel should perform commercial activities. Through competitive sourcing, PBS has outsourced most of the building operations and maintenance functions. PBS competitively bids all contracts for Operations & Maintenance, utilizing a performance-based contract. PBS also bundles Operations & Maintenance contracts from a single service provider for groups of assets in the same locale in order to achieve cost effectiveness and reduce overhead. These expenses are then benchmarked to the private sector using BOMA benchmarks to ensure costs remain competitive. At the end of FY 2006, PBS operating expenses were 4.2 percent below private sector. Information on the FY 2005 Fair Act inventory can be obtained at: http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_DOCUMENT&contentId=10179&noc=T Information on operating and maintenance costs can be located on pages 62-63 of the FY2006 Annual Performance and Accountability Report available through the following website: http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: GSA's Real Property Asset Management program compares favorably to other federal and private programs. GSA was the first agency to achieve a "green" status on the Real Property Asset Management Initiative of the President's Management Agenda. It has consistently retained this green ranking in terms of status and progress. GSA also compared favorably to the private sector in terms of vacancy rates and operating expenses. Marking rental rates to market also allows the program to compare favorably to both governmental and non-governmental real estate programs. Additionally, GSA has processes in place that ensure the most efficient housing solution is met. As required by OMB Circular A-94, The Automated Prospectus System (TAPS) performs a 30-year present value life cycle cost comparison of project alternatives. Furthermore, the Expert Choice models weigh different selection criteria to facilitate efficient decision making.

Evidence: The President's Management Agenda rankings can be found at www.results.gov. The GSA FY 2008 Congressional Budget Justification outlines the results for key performance measures demonstrating our competitiveness with private sector alternatives. At the end of FY 2006, PBS Operations & Maintenance Costs (using the Building Owners and Managers Association (BOMA) data as an industry benchmark) were 4.2 percent below private sector costs for similar types of space. PBS achieved a 7.0% vacancy in government-owned assets in FY 2006. This is well below the private industry range of 10-15 percent vacancy from COSTAR. The FY 2008 Congressional Budget Justification can be accessed at http://www.gsa.gov/Portal/gsa/ep/programView.do?pageTypeId=8199&ooid=10645&programId=9666&channelId=-13346

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Because federal real property was deemed a high risk area by the Government Accountability Office (GAO), in the past few years it has undertaken numerous evaluations of the entire PBS Real Property Asset Management program. In addition to this overall program assessment by GAO, PBS has engaged in a series of discussions and progressive evaluations of the asset management program with various private and governmental agencies for independent assessments of numerous components of the program. These components include asset utilization, portfolio restructuring, pricing, billing, environmental program management, reinvestment, and the program's performance metrics. The overall GAO assessment, along with the numerous component assessments, provides a comprehensive evaluation of the program and demonstrates that the PBS Real Property Asset Management program is effective and is achieving results.

Evidence: GAO has focused on real property has a high risk area for the past few years. As a result, there have been numerous evaluations of GSA's real property practices. The latest report, issued April 2007, concludes that while real property is a high risk activity for the government, GSA and other agencies continue to make progress to mitigate this risk. In its report Vacant and Underutilized Properties at GSA, VA, and USPS the GAO stated that they "applaud GSA's efforts to restructure its real property portfolio and its current progress in reducing vacant assignable space." The GAO reports can be accessed at www.gao.gov. Additionally, the GSA Inspector General routinely audits the program. By evaluating numerous components of the program, these evaluations have demonstrated that the Real Property Asset Management program as a whole is effective and is achieving results. For example, the GSA Office of the Inspector General (IG) audited the PBS portfolio restructuring initiative and concluded "Overall, with refinement, the structured analysis imposed by the initiative will benefit fund performance." PBS has undertaken initiatives to implement several of the IG's recommendations from this report such as performing a structured analysis of the leased inventory and regularly auditing leases that have a negative Net Operating Income. In FY 2005 the IG audited PBS rent pricing to determine if the current pricing methodology is implemented consistently and in accordance with the PBS rent pricing strategy as it relates to the basic pricing structure. It concluded that "tenant shell rent rates are being established in accordance with PBS' rent pricing strategy." Additionally, the IG's Audit of PBS' Use of Occupancy Agreements as a Billing Source, released in December of 2006, assessed whether using the occupancy agreement as a billing source resulted in more accurate, easier to understand rent bills compared to the prior billing process. The audit disclosed that PBS' rent bill customers have noticed an improvement in the accuracy and consistency of the rent bill data but further improvements in meeting customer expectations are needed. PBS is continuing to address this issue through its Rent Bill Management Program. The March 2006 Review of the PBS Environment Program Management by the IG stated that "the Public Buildings Service (PBS) is making progress towards the development of a national environmental management system as a framework to manage environmental issues and concerns." The IG also evaluated the program to determine if GSA has an effective strategy to repair and modernize federally owned buildings. The September 2006 Audit of PBS' Major Repair and Alterations Program found that PBS is making progress in developing a comprehensive plan to address its long-term capital reinvestment requirements. PBS has developed a methodology using multiple information systems to identify building deficiencies and then to inventory and schedule the repair and alterations projects for its buildings and continues to address the issue of long-term capital reinvestment requirements. Finally, the Real Property Asset Management Program has been evaluated by various private sector entities. The Counselors of Real Estate (CRE) Consulting Corps reviewed the program to evaluate how PBS is addressing the under-funding of the maintenance required in the portfolio and "applauds the PBS for the current progress that is being made to address the under funding of the PBS portfolio." A report for Ernst & Young, LLP evaluated PBS' performance metrics and supported the use of an ROE metric to assist in measuring the performance of the portfolio.

Were program goals achieved within budgeted costs and established schedules?

Explanation: GSA achieved most of its goals for projects remaining within budgeted costs and established schedules. GSA also created a measure to track the regional program planning and execution of the non-prospectus reinvestment program. Results show that funds are obligated in a timely manner and that money is being spent on planned projects.

Evidence: The FY 2006 Annual Performance and Accountability Report outlines PBS performance on key measures related to costs and schedule on page 183. This report can be accessed at http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/GSAFY2006PAR_R2F-aAB_0Z5RDZ-i34K-pR.pdf