Federal agencies that operate in GSA-leased space are paying the price for the continuing issues with how GSA manages those leases, GAO has said, noting that the problem is one reason that federal real property management has remained on its high-risk list for years.
It said that of the about 2,700 long-term leases that expired in 2012-2014, 54 percent went into either holdover status, extension status, or both. In a holdover, a federal tenant occupies space without a contractual agreement, while in an extension there is a temporary agreement in place.
“Holdovers and extensions occur for a variety of reasons, including challenges finalizing space requirements and the duration of the leasing process. GSA officials noted that extensions can also be used strategically, such as to align varying lease-expiration dates across multiple leases when consolidating space into a single lease,” the report said.
However, “the short-term nature of holdovers and extensions creates uncertainty for GSA, tenant agencies, and lessors, which can make it challenging for GSA and federal tenant agencies to plan and budget for space needs and difficult for lessors to secure financing.” It also “may limit GSA’s ability to obtain favorable contract terms” which in turn means higher costs for the budgets of the tenant agencies.
It said that GSA has undertaken initiatives to improve lease planning, to begin the leasing process earlier, and to improve communication with agencies. But it still “lacks specific, current goals and targets to assess its actual performance in avoiding holdovers and extensions.”
