Investments in Federal Facilities Asset Management Strategies for the 21st Century (2004) / Chapter Skim
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5 Alternative Approaches for Acquiring Federal Facilities
5 Alternative Approaches for Acquiring Federal Facilities
Pages 76-88
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From page 76... ...
In the federal government, significant facilities investments are primarily funded from the annual budget. Individual departments and agencies may not borrow funds or otherwise incur debt to finance facilities.1 They must receive authorization from Congress for funding to cover the full, up-front (design and construction or purchase)
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From page 77... ...
A number of alternative approaches, including public-private partnerships, capital acquisition funds, trust funds, sale-and-leaseback arrangements, outleasing, real property exchanges, and shared facilities, are then described and analyzed in greater detail. The chapter concludes with a summary and a recommendation for the federal government.
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From page 78... ...
Scorekeeping procedures also create incentives for agencies to drive down the first costs of facilities investments -- even if it may increase the life-cycle costs -- in order to lessen their apparent impact on the current year budget. In rewarding such behavior, the scorekeeping procedures can indirectly increase the long-term operation and maintenance costs of facilities -- that is, 90 to 95 percent of their life-cycle costs -- and decrease the staffing efficiencies that might result from additional initial investment.
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From page 79... ...
A third issue relates to the public nature of facilities investments. Because federal facilities are located in all states and most communities, the perspectives of state and local governments and constituencies must be accounted for when alternative funding approaches are considered.
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From page 80... ...
. As an example, in Texas a private developer constructed a regional VA office on the VA's medical campus, and the agency in turn leased land on the campus to the private developer so that it could construct commercial buildings with space rented out to private businesses (FFC, 2001a)
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From page 81... ...
The Park Service's concessions program, for example, has in the past suffered from the fact that agency staff overseeing the contracts are often inadequately trained and have lacked basic business analysis and management skills (GAO, 2000a)
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From page 82... ...
Finally, because operating units would be charged annual "rent" (representing debt service and other asset overhead) , a CAF could lead to more accurate allocation of asset costs to affected parties within agencies, giving asset managers incentives to make more efficient decisions.
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From page 83... ...
The committee supports implementation of pilot programs using CAFs to determine if their promise can be realized in the federal operating environment. Dedicated Funding, Trust Funds, and Earmarked Receipts Dedicated funding refers to any mechanism whereby resources are committed to a specific purpose in advance of any actual spending or activity and which in some way guarantees that those resources will actually be spent according to that initial commitment.
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From page 84... ...
Similar results can accrue to public enterprise funds and other special funds in the federal budget receiving earmarked funds. However, the existence of a trust fund or other mandate does not guarantee that funds or facilities will be well managed.
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From page 85... ...
Issues related to their continued use include whether they should be renamed to avoid confusion on the part of the public with private sector trust funds, whether there should or could be some tightening of terms to make them more like private trust funds, whether information provided on them should be revamped to reveal more about program operations than a mere fund balance, the strength of the link between the source of the funds and their use, and how the use of funds is linked to underlying program management regimes -- that is, the transparency of the funding (GAO, 2001a)
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From page 86... ...
Real Property Exchanges Sometimes land and buildings owned by a federal agency have a greater value to another entity than to the agency itself. On occasion, the GSA, the Air Force, other military services, and possibly other agencies, have been able to exchange real property with a private developer or a state or local government in return for a different piece of property or facilities.
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From page 87... ...
From a government-wide perspective, real property exchanges raise issues about the property valuation procedures used, the fair market value of the property if a competitive bidding process is not used, the sufficiency of congressional oversight, and how to reflect such exchanges in the federal budget. Shared Facilities "Shared facilities" refers to the practice of having independent operating entities with large portfolios of facilities share the use and/or management of those facilities in some way.
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From page 88... ...
SUMMARY AND A RECOMMENDATION Based on a consolidation of research, interviews, briefings, and the committee members' collective and individual experience, the committee found that a range of alternative approaches to acquiring federal facilities are used by individual agencies under special legislation specific to the agency. Capital acquisition funds, not yet implemented in any federal agency, offer the potential for improved capital asset coordination and planning across operating units, more accurate cost allocation of assets, and incentives for asset managers to make more cost-effective decisions.
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