H
Findings and Recommendations
This appendix provides a consolidated list of chapter findings and report recommendations and should be considered as a supporting document derived from the report simply as a convenience to the reader.
CHAPTER 2 FINDINGS
Finding 2-1: Federal facility asset management should be defined as a fiduciary responsibility implemented as a disciplined approach through policy that promotes asset management system thinking, such as defined in the ISO 55000—Asset Management System standards series.
Finding 2-2: Current OMB policies provide substantial structure defining the operating context for federal facility renewal strategies but fail to support agency development of effective facility asset management systems needed to implement these strategies as defined. This includes the need for immediate attention improving OMB Circular A-11, Section 83—(Object Classifications) to support federal facility asset management.
Finding 2-3: Work advancing a national strategy for federal real property is moving in a positive direction, but policy changes are needed to evolve it into a national strategy for federal facility asset management supportive of implementing federal facility renewal strategies as defined in this report.
Finding 2-4: Work supporting the emergence of real property capital plans is moving in a positive direction, but policy changes are also needed to promote its use for reconciling objectives, strategy, budget, and facility performance to support evidence-based decision making for agency mission achievement.
CHAPTER 3 FINDINGS
Finding 3-1: Development of federal facility renewal strategies requires the use of disciplined facility asset management systems employing “management system thinking.” Management system thinking evaluates resource-and-investment decision making from the perspective of how facilities generate value supporting agency mission achievement. This perspective is different from the way most agencies now evaluate facility resource-and-investment decision making, which is generally biased toward facility life-cycle management value propositions, referred to as “classical facility management thinking.”
Finding 3-2: OMB policy, notably OMB Circulars A-11 and A-123, do not provide sufficient guidance on how to implement and exercise facility asset management systems capable of generating federal facility renewal strategies detailed in this report. To mitigate this, ISO 55000—Asset Management System, standards series is an appropriate, available, and authorized resource able to fulfill this need. Use of this standard also satisfies policy and objectives detailed in OMB Circular A-119.
Finding 3-3: Effective communications of federal facility renewal strategies are advantaged when they conform to clauses pertaining to facility asset management systems in ISO 55000.
Finding 3-4: Facility asset management systems must be principle-based to ensure their alignment with value generation and desired benefits. Principles complement policy requirements. While requirements are used to ensure that things are done right, principles are used to assure that the right things are done.
Finding 3-5: Operational readiness should be used as the pinnacle principle for federal facility renewal strategy communications because it provides perspective by bringing together multiple criteria valued by stakeholders set within a resource-and-investment decision-making context.
Finding 3-6: Federal agencies can make use of the principles detailed in this report to evolve policies and implementation practices for strategic communication.
Finding 3-7: Federal agencies can communicate facility asset management objectives effectively through real property capital plans that define and maintain federal renewal strategies.
CHAPTER 4 FINDINGS
Finding 4-1: At this time, Builder is ill-suited for estimating renewal costs. Its inspections do not collect restoration and modernization data and its cost forecast process has not been properly verified and validated.
Finding 4-2: The extensive component inventory created for use with Builder is, by itself, a valuable resource. After addressing privacy and security concerns, the inventory data could be made available to facility managers and qualified researchers. The data could also be used by other models capable of estimating renewal and other facility costs.
Finding 4-3: Predicting federal investment requirements for facility renewal is difficult because they are noncyclical and consist of largely unrelated restoration and modernization costs. However, the geometric depreciation model addresses the same costs as those for restoration and modernization, making it a reasonable approach to estimating renewal requirements.
Finding 4-4: The DoD recapitalization metric was an estimation approach that was readily understood and easily applied by planners and facility management. The geometric depreciation model has greater technical credibility and can be just as convenient to use if renewal requirements are expressed as simple cost factors by facility category, similar to the DoD sustainment cost model.
Finding 4-5: Capital depreciation rates are primary inputs for estimating restoration and modernization rates using the geometric depreciation model, and more broadly for estimating the net value of national capital assets. The BEA maintains an aging set of deprecation rates, patterns, and service lives for the categories residential and nonresidential structures. If revised, these data would improve renewal cost estimates, particularly for nonresidential structures.
CHAPTER 5 FINDINGS
Finding 5-1: Federal policy is clear, notably OMB Circulars A-11 and A-123: the purpose of federal facility renewal strategies is to systematically manage risk, with a focus on resource-and-investment decision making to ensure and assure that facilities best support achievement of agency mission objectives and priorities efficiently and effectively.
Finding 5-2: The risk management frameworks used must be systematic and documented, must comply with OMB Circular A-11 and A-123 requirements, and must be integral to federal facility renewal strategy development and implementation.
CHAPTER 6 FINDINGS
Finding 6-1: The committee observes that Circular A-11 does not require the federal agencies to use a comprehensive asset management system, or require submittal of a coordinated operating and capital financial plan and explanation of why needed funding is or is not included in the agency’s request for the budget year, as covered in the principles detailed in Chapter 3.
Finding 6-2: The committee observed that few federal agencies aggregate capital investment into consolidated, agency-wide budget accounts, which could help smooth spending and avoid large spikes in funding from year to year.
Finding 6-3: The committee noted that the federal agencies struggle to find funds to meet the most urgent facility renewal needs. A remedy to this is only partially achieved by applying the Mission Dependency and Operational Readiness principles detailed in Chapter 3. More is required. Creating user pays models for collecting the cost of operating, maintaining, renewing, and disposing of facilities could also help agencies collect funds needed for renewal. Furthermore, aggregating these funds into revolving or working capital funds is a proven means to help agencies prioritize needed capital investments and avoid funding spikes.
Finding 6-4: The committee also noted that, for the past decade, all funds collected in GSA’s Federal Buildings Fund have not been made fully available to repair and renew the portfolio of government-owned facilities. These funds could either be provided through appropriations or other measures to ensure they are invested in the portfolio.
Finding 6-5: The committee noted that creating government-wide capital acquisition fund(s) would help agencies finance the cost of major acquisitions or capital investments and spread the cost over time, making it easier to fund facility renewal in constrained annual budgets.
Finding 6-6: The committee observed that while some federal agencies have unique congressional authority to enter into privatization and PPPs, others do not have the authority. Privatization and PPPs may offer more efficient or effective approaches to operating and managing services and facilities for public use.
Finding 6-7: The committee believes that unneeded, underutilized properties exist, and that the non-defense agencies could take advantage of the expedited process provided by FASTA to dispose of these assets.
Finding 6-8: The committee observed that in some cases, using operating leases is an acceptable alternative to ownership when the up-front cost of owning cannot be supported in the near-term budget due to budget scoring rules or constraints.
RECOMMENDATIONS
RECOMMENDATION 1: Implement a Federal Facility Asset Management System
The Office of Management and Budget (OMB), in concert with the Federal Real Property Council, should update OMB Circulars A-11 and A-123 to improve guidance for implementing facility asset management systems by
- Requiring federal agencies to use a comprehensive and principle-based facility asset management system, as defined by International Organization for Standardization 55000—Asset Management System standards, to implement federal facility renewal strategies;
- Clarifying how enterprise risk management and internal controls support implementation of federal facility renewal strategies by improving and clarifying policies contained in OMB Circulars A-11 and A-123;
- Clarifying agency senior real property officer’s fiduciary responsibilities to ensure and assure that the agency is maintaining its facility portfolio efficiently and effectively, and that achievement of this responsibility is reported as part of the agency’s OMB Circular A-136—Financial Reporting Requirements;
- Detailing how whole asset life-cycle costs, whole asset portfolios, and whole benefit analysis support resource-and-investment decision making; and
- Updating OMB Circular A-11, Section 83 (Object Classification) to remove fragmentation and many-to-many relationships that make it exceedingly difficult to generate and audit integrated real property performance–budget and management balance sheets.
(See Findings 2-1, 2-2, 2-3, 2-4, 3-1, 3-3, 3-4, 3-5, 3-6, 3-7, 5-1, 5-2, and 6-1.)
RECOMMENDATION 2: Implement a Real Property Capital Plan
The Office of Management and Budget (OMB) should clarify its requirements for agencies’ annual real property capital plans as detailed in OMB Circular A-11’s Supplement—Capital Programming Guide and OMB Memorandum M-20-03, “Implementation of Agency-wide Real Property Capital Planning.” Specific requirements needing clarification include
- Ensuring the requirement for agencies to develop and publish a single, fully integrated real property capital plan as a component of the agency capital plan, as defined in the Capital Programming Guide;
- Verifying the relationship of real property capital plans in informing annual budget and investment decision making, including the successful inclusion of urgent and compelling facility renewal needs; and
- Publishing the role of the agency’s real property capital plan by documenting and communicating the agency’s strategy for reconciling agency objectives, budgets, and real property programs.
Furthermore, agency senior real property officials should implement guidance in OMB M-20-03 for advancing the central role of their agency’s real property capital plan, establishing a strategy for integrating and reconciling requirements, objectives, budget, and real property program execution.
(See Findings 2-4, 3-1, 3-2, 3-3, 3-4, 3-5, 3-6, 3-7, 6-1, 6-2, 6-3, and 6-8.)
RECOMMENDATION 3: Update the National Strategy for the Efficient Use of Real Property
The Office of Management and Budget (OMB) should clarify how the National Strategy for Efficient Use of Real Property and OMB Memorandum M-20-10 (Issuance of an Addendum to the National Strategy for the Efficient Use of Real Property) are used to guide their agency’s asset management system implemented through real property capital plans. Specific requirements include the following:
- Defining how agencies are to use the National Strategy to establish priorities and objectives for the efficient use of real property, to include addressing the Government Accountability Office’s real property high-risk issues; and
- Establishing requirements that link performance reporting of budget execution for the real property capital plan to National Strategy objectives, as reviewed annually by the agency in the context of agency strategic plan reporting, such as through application of the Operational Readiness Principle.
Furthermore, chief management officers and chief budget officers should ensure they coordinate their agency’s response to OMB M-20-10 (Issuance of an Addendum to the National Strategy for the Efficient Use of Real Property) with their agency’s response to OMB Memorandum M-20-03 (Implementation of Agency-wide Real Property Capital Planning).
(See Findings 2-2, 2-3, 2-4, 3-2, 3-3, 3-5, 3-6, 3-7, 4-4, 4-5, 5-1, 5-2, 6-5, 6-7, and 6-8.)
RECOMMENDATION 4: Improve Federal Facility Models, Data, and Measures
The Office of Management and Budget (OMB) should clarify guidance requiring agency senior real property officials to improve cost estimates of renewal requirements. Currently, there is no broadly accepted approach to estimating renewal costs, which diminishes the credibility of renewal decision making. After considering two of the methods available, the committee recommends the following:
- Senior real property officials should adopt an economic depreciation approach for estimating renewal costs, tailorable to each agency’s facility portfolio. As a starting point, the model could be simplified to a set of cost factors by facility type, analogous to the Department of Defense Facility Sustainment Model.
- Agencies should include existing dated depreciation rates and service lives in the economic depreciation approach review by using a schedule established for the revision of depreciation rate and service life data used in depreciation models, which is currently provided by the Department of Commerce’s Bureau of Economic Analysis.
Furthermore, the General Services Administration (GSA), in coordination with the Federal Real Property Council and under the direction of OMB, should create an independent database of component inventories for federal facilities, beginning with the extensive data collected for the Builder system, and make it available to qualified users and accessible by popular capital planning and facility management systems. The senior real property officials of all agencies would submit information to GSA for compiling, as directed by executive requirement.
RECOMMENDATION 5: Implement Federal Facility Renewal Budgeting Strategies
Through implementation of facility asset management systems detailed in preceding recommendations, the Office of Management and Budget can ensure optimal use of federal facilities by having federal agencies guide budget development of federal facility renewal strategies by
- Creating working capital funds or revolving funds to aggregate funding for capital investment into consolidated, agency-wide budget accounts, which could help smooth multiyear life-cycle spending and avoid large, disruptive year-to-year funding spikes;
- Installing user-pays models for all federal facilities that fund working capital required to sustainably operate, maintain, repair, and renew federal facilities;
- Allowing the General Services Administration to spend all the revenue collected in the Federal Buildings Fund for repairing, renewing, or replacing facilities managed by the Public Buildings Service;
- Encouraging agencies to identify noninherently governmental facilities and related services that are mirrored by a broad-based, active private market to be candidates for privatization, outsourcing, or public–private partnerships;
- Using the expedited disposal authorities created by the Federal Asset Sales and Transfer Act (FASTA), or seeking additional disposal authorities for properties not covered by FASTA, to dispose of unneeded and underutilized properties; and
- Using operating leases as an alternative to ownership when budget scoring rules show that the cost of owning is unlikely in the near-term budget outlook.
(See Findings 3-1, 3-2, 3-4, 3-5, 3-6, 3-7, 4-4, 5-1, 6-1, 6-2, 6-3, 6-4, 6-5, 6-6, 6-7, and 6-8.)
