Federal Manager's Daily Report

GSA has taken steps to control costs when leases for federal agency expire but internal obstacles remain that have “contributed to delays in lease actions and increased the likelihood that PBS will have to enter into costly extensions or holdovers,” an IG has said.

When leases expire, it said, GSA first checks its inventory of government-owned and leased space to determine whether the tenant agency’s need can be satisfied in existing vacant space. But if none is available, it can enter into extensions—agreements allowing the tenant agency to continue to occupy the premises after the original lease expiration date—or holdovers—when the tenant agency continues to occupy the premises beyond the expiration date of the lease term.

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Those steps “provide short-term flexibility, they are costly, time-consuming, and prohibit competition,” it said, and GSA’s Public Buildings Service has taken steps to reduce their use encourage the use of more economical long-term lease agreements such as guidance to increase upfront planning efforts.

That has yielded a slight reduction in extensions and holdovers in recent years to about 1,100 in 2019 but the auditors but “we found that PBS leasing staff face several obstacles in meeting the required milestones . . . As a result, PBS’s efforts to engage the tenant agencies in upfront planning have been ineffective, thereby increasing the likelihood that PBS will need to enter into costly lease extensions and holdovers.”

In particular, it said that key information is not always collected in a timely way from tenant agencies, and that “without understanding the tenant agency’s requirements and receiving the tenant agency’s financial commitment, PBS cannot move forward to advertise for a lease, increasing the likelihood that PBS will be forced to enter into an extension or holdover.”