September 22, 2021

News

News Network

Capital Fund Proposal: Upfront Funding Could Benefit Some Projects, but Other Potential Effects Not Clearly Identified

11 min read
<div>What GAO Found Federal agencies have long struggled to obtain full, upfront funding for capital investments to acquire and maintain federal buildings. GAO's review of three selected federal capital projects suggests that such funding might have benefitted those projects and their agencies. For example, GAO estimated that full, upfront funding for the Department of Transportation's headquarters building might have saved up to $1.2 billion by allowing construction of a new headquarters versus what did occur—the General Services Administration (GSA) leased space for years and eventually purchased the building that it had leased. U. S. Department of Transportation's (DOT) Headquarters Washington D. C. In an effort to improve federal agencies' access to full, upfront funding for capital investments, the Office of Management and Budget (OMB) proposed the $10 billion Federal Capital Revolving Fund Act of 2018 (Capital Fund). The Capital Fund, which would be administered by GSA, could provide upfront funding for certain capital projects of $250 million or more, with agencies repaying the Capital Fund over a 15-year period. While the 2018 Capital Fund proposal has not been enacted, a Capital Fund was referenced in each of the President's budgets since 2019 and in a bill that was introduced in the Senate in May 2021. During the course of GAO's review, officials from GSA and OMB expressed different perspectives on the proposed Capital Fund, and how it might affect the existing Federal Buildings Fund (Buildings Fund) is unclear. GSA officials said that the proposed Capital Fund could divert revenue away from the existing Buildings Fund, which receives rent from GSA tenant agencies and from which GSA pays maintenance and repair costs. OMB officials told us that the Capital Fund could benefit the Buildings Fund by promoting federal ownership over leasing and possibly adding assets to GSA's inventory. GAO identified additional circumstances in which the Capital Fund could affect the Buildings Fund. For example, while the tenant agency would pay operating costs during the first 25-years, the proposal does not directly address what would occur if GSA incurred significant repair costs during this period. As GSA would administer the Capital Fund and manage the Buildings Fund, it is in the best position to analyze when these circumstances might occur and their potential scope as well as how the two funds might interact. Identifying and communicating the possible effects would help OMB and Congress more fully consider legislative proposals. Why GAO Did This Study Since 2003, federal real property management has been on GAO's High-Risk List, in part due to upfront- funding challenges. If enacted, the Capital Fund could provide upfront funding to agencies for certain projects to acquire, construct, or renovate buildings and other federal real property. The existing Buildings Fund funds such projects and the operations and maintenance needs of GSA's portfolio. GAO was asked to review the Capital Fund proposal. This report: (1) describes how federal agencies might have used expanded access to full, upfront funding had it been available, for three selected projects and (2) assesses stakeholder views on the proposed Capital Fund and whether it would affect the Buildings Fund. To assess how agencies might have used full, upfront funding, GAO reviewed three recent capital projects of $250 million or more, selected for the differences in type of project (i.e., acquisition, new construction, and renovation). GAO also analyzed the Capital Fund proposal, GSA's budget, and other documents. Additionally, GAO interviewed GSA and OMB officials.</div>

What GAO Found

Federal agencies have long struggled to obtain full, upfront funding for capital investments to acquire and maintain federal buildings. GAO’s review of three selected federal capital projects suggests that such funding might have benefitted those projects and their agencies. For example, GAO estimated that full, upfront funding for the Department of Transportation’s headquarters building might have saved up to $1.2 billion by allowing construction of a new headquarters versus what did occur—the General Services Administration (GSA) leased space for years and eventually purchased the building that it had leased.

U. S. Department of Transportation’s (DOT) Headquarters Washington D. C.

In an effort to improve federal agencies’ access to full, upfront funding for capital investments, the Office of Management and Budget (OMB) proposed the $10 billion Federal Capital Revolving Fund Act of 2018 (Capital Fund). The Capital Fund, which would be administered by GSA, could provide upfront funding for certain capital projects of $250 million or more, with agencies repaying the Capital Fund over a 15-year period. While the 2018 Capital Fund proposal has not been enacted, a Capital Fund was referenced in each of the President’s budgets since 2019 and in a bill that was introduced in the Senate in May 2021.

During the course of GAO’s review, officials from GSA and OMB expressed different perspectives on the proposed Capital Fund, and how it might affect the existing Federal Buildings Fund (Buildings Fund) is unclear. GSA officials said that the proposed Capital Fund could divert revenue away from the existing Buildings Fund, which receives rent from GSA tenant agencies and from which GSA pays maintenance and repair costs. OMB officials told us that the Capital Fund could benefit the Buildings Fund by promoting federal ownership over leasing and possibly adding assets to GSA’s inventory. GAO identified additional circumstances in which the Capital Fund could affect the Buildings Fund. For example, while the tenant agency would pay operating costs during the first 25-years, the proposal does not directly address what would occur if GSA incurred significant repair costs during this period. As GSA would administer the Capital Fund and manage the Buildings Fund, it is in the best position to analyze when these circumstances might occur and their potential scope as well as how the two funds might interact. Identifying and communicating the possible effects would help OMB and Congress more fully consider legislative proposals.

Why GAO Did This Study

Since 2003, federal real property management has been on GAO’s High-Risk List, in part due to upfront- funding challenges. If enacted, the Capital Fund could provide upfront funding to agencies for certain projects to acquire, construct, or renovate buildings and other federal real property. The existing Buildings Fund funds such projects and the operations and maintenance needs of GSA’s portfolio.

GAO was asked to review the Capital Fund proposal. This report: (1) describes how federal agencies might have used expanded access to full, upfront funding had it been available, for three selected projects and (2) assesses stakeholder views on the proposed Capital Fund and whether it would affect the Buildings Fund.

To assess how agencies might have used full, upfront funding, GAO reviewed three recent capital projects of $250 million or more, selected for the differences in type of project (i.e., acquisition, new construction, and renovation). GAO also analyzed the Capital Fund proposal, GSA’s budget, and other documents. Additionally, GAO interviewed GSA and OMB officials.

More from:

News Network

  • Department of State Offers Reward Increase for Information to Bring Transnational Criminal to Justice
    In Crime Control and Security News
    Ned Price, Department [Read More…]
  • Panama investigation leads to local child pornography plea
    In Justice News
    An 18-year-old [Read More…]
  • Supplement Retailers Plead Guilty in Cases Involving Distribution of Designer Steroids as Dietary Supplements
    In Crime News
    Two men and a California business each pleaded guilty this week to conspiring to distribute consumer products that contained designer anabolic steroids.
    [Read More…]
  • Artificial Intelligence: An Accountability Framework for Federal Agencies and Other Entities
    In U.S GAO News
    What GAO Found To help managers ensure accountability and responsible use of artificial intelligence (AI) in government programs and processes, GAO developed an AI accountability framework. This framework is organized around four complementary principles, which address governance, data, performance, and monitoring. For each principle, the framework describes key practices for federal agencies and other entities that are considering, selecting, and implementing AI systems. Each practice includes a set of questions for entities, auditors, and third-party assessors to consider, as well as procedures for auditors and third- party assessors. Why GAO Developed This Framework AI is a transformative technology with applications in medicine, agriculture, manufacturing, transportation, defense, and many other areas. It also holds substantial promise for improving government operations. Federal guidance has focused on ensuring AI is responsible, equitable, traceable, reliable, and governable. Third-party assessments and audits are important to achieving these goals. However, AI systems pose unique challenges to such oversight because their inputs and operations are not always visible. GAO's objective was to identify key practices to help ensure accountability and responsible AI use by federal agencies and other entities involved in the design, development, deployment, and continuous monitoring of AI systems. To develop this framework, GAO convened a Comptroller General Forum with AI experts from across the federal government, industry, and nonprofit sectors. It also conducted an extensive literature review and obtained independent validation of key practices from program officials and subject matter experts. In addition, GAO interviewed AI subject matter experts representing industry, state audit associations, nonprofit entities, and other organizations, as well as officials from federal agencies and Offices of Inspector General. Artificial Intelligence (AI) Accountability Framework For more information, contact Taka Ariga at (202) 512-6888 or ArigaT@gao.gov.
    [Read More…]
  • Iceland’s National Day
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Release of the U.S. Indo-Pacific Strategy-Republic of Korea New Southern Policy Joint Fact Sheet
    In Crime Control and Security News
    Office of the [Read More…]
  • Information Technology: Key Attributes of Essential Federal Mission-Critical Acquisitions
    In U.S GAO News
    Federal agencies are undertaking information technology (IT) acquisitions that are essential to their missions. GAO identified 16 of these acquisitions as particularly critical to missions ranging from national security, to public health, to the economy (see table). GAO has previously reported on these acquisitions and the programs they support, and has made numerous recommendations to agencies for improvement. The amount agencies expect to spend on the selected acquisitions vary greatly depending on their scope and complexity, as well as the extent of transformation and modernization that agencies envision once the acquisitions are fully deployed. For example, the Department of Defense plans to spend $10.21 billion over 21 years on its health care modernization initiative, while the Department of Homeland Security intends to spend $3.19 billion over 30 years on its system supporting immigration benefits processing. Agencies reported potential cost savings associated with 13 of the 16 mission-critical acquisitions after deployment due to factors such as shutting down legacy systems, eliminating physical paper processing, and improving security, monitoring, and management. Eleven of the 16 selected acquisitions were rebaselined during their development, meaning that the project's cost, schedule, or performance goals were modified to reflect new circumstances. Agencies reported a number of reasons as to why their acquisitions were rebaselined, including delays in defining the cost, schedule, and scope; budget cuts and hiring freezes; technical challenges; and changes in development approach. As shown below, ten of the acquisitions relate to an additional programmatic area that GAO has designated high risk. Federal Agency Mission-Critical Information Technology Acquisitions Department of Agriculture Modernize and Innovate the Delivery of Agricultural Systems Department of Commerce 2020 Decennial Census* Department of Defense Defense Healthcare Management System Modernization* Global Combat Support System-Army* Department of Homeland Security Student and Exchange Visitor Information System Modernization* U.S. Citizenship and Immigration Services Transformation* Department of the Interior Automated Fluid Minerals Support System II* Department of Justice Next Generation Identification System Terrorist Screening System Department of State Consular System Modernization Department of Transportation Automatic Dependent Surveillance-Broadcast Department of the Treasury Customer Account Data Engine 2* Integrated Enterprise Portal* Department of Veterans Affairs Electronic Health Record Modernization* Small Business Administration Application Standard Investment Social Security Administration Disability Case Processing System 2* Legend: *= Acquisition relates to a programmatic area that GAO has previously designated as being high risk. Source: GAO analysis of agency data. | GAO-20-249SP The acquisition of IT systems has presented challenges to federal agencies. Accordingly, in 2015 GAO identified the management of IT acquisitions and operations as a high-risk area, a designation it retains today. GAO was asked to report on federal IT acquisitions. GAO's specific objective was to identify essential mission-critical IT acquisitions across the federal government and determine their key attributes. To identify acquisitions for the review, GAO administered a questionnaire to the 24 agencies covered by the Chief Financial Officers Act of 1990 asking them to identify their five most important mission-critical IT acquisitions. From a total of 101 acquisitions that were identified, GAO selected 16 mission-critical IT acquisitions to profile in this report. The selection was based on various factors, including the acquisition's criticality to providing service to the nation, its total life cycle costs, and its applicability to the President's Management Agenda. For each of the 16 selected acquisitions, GAO obtained and analyzed documents on cost, schedule, risks, governance, and related information; and interviewed cognizant agency officials. GAO requested comments from the 12 agencies with acquisitions profiled in its draft report and the Office of Management and Budget. In response, one agency (the Social Security Administration) provided comments that discussed the planned use of its system. For more information, contact Carol C. Harris at (202) 512-4456 or harriscc@gao.gov.
    [Read More…]
  • Attacks on Civilians in Syria
    In Crime Control and Security News
    Ned Price, Department [Read More…]
  • Nuclear Weapons: NNSA Should Further Develop Cost, Schedule, and Risk Information for the W87-1 Warhead Program
    In U.S GAO News
    The National Nuclear Security Administration (NNSA) did not consider cost estimates in early major design decisions for the W87-1 warhead because it was not required to do so, but NNSA has since changed its guidance to require that cost be considered, according to a May 2019 NNSA review of program documentation. The design decisions that remain for features that would achieve either minimum or enhanced requirements for the W87-1 could affect cost, according to NNSA officials (see table). We found, however, that NNSA did not yet have study plans for assessing the costs and benefits of the remaining decisions consistent with best practices as detailed in NNSA's analysis of alternatives business procedure. NNSA does not require and only recommends that programs such as the W87-1 follow these best practices. By directing the W87-1 program and future weapons programs to follow best practices for design studies, or to justify and document deviations, NNSA would have better assurance that design studies apply consistent, reliable, and objective approaches. NNSA Cost Estimates for W87-1 Warhead Design Variations That Meet Minimum and Enhanced Requirements, as of December 2018 (Dollars in billions) W87-1 design variations Cost estimate rangea Design includes features that meet minimum safety and security requirements 7.7 - 13.3 Design includes enhanced safety and security features 8.6 - 14.8 Difference between the above estimate ranges 0.9 - 1.5 Source: National Nuclear Security Administration (NNSA) documentation | GAO-20-703 aThe cost ranges reflect low and high estimates for a single design variation. The ranges represent technical and production risk and uncertainty. It is not clear that NNSA will be able to produce sufficient numbers of pits—the fissile cores of the primary—to meet the W87-1 warhead's planned production schedule. Recent NNSA and independent studies have cast doubt on NNSA's ability to ready its two planned pit production facilities in time. If one facility is not ready to produce pits in the early 2030s, for example, NNSA would likely produce fewer weapons than planned, according to GAO's analysis of NNSA plans. We were unable to fully assess the extent to which the two pit production facilities will be ready to produce pits for the W87-1 because NNSA's plutonium program—which is managing the facility readiness efforts—has not yet completed an integrated schedule for the overall pit production effort. An integrated schedule is important, according to best practices, because it integrates the planned work, resources, and budget. An NNSA official stated that the program was building a schedule, but could not provide documentation that it would meet best practices. A schedule consistent with best practices would provide NNSA with better assurance that it will have adequate pits to meet planned W87-1 production. This is a public version of a classified report that GAO issued in February 2020. Information that NNSA or DOD deemed classified or sensitive has been omitted. The Department of Defense (DOD) and NNSA restarted a program in fiscal year 2019 to replace the capabilities of the aging W78 nuclear warhead with the W87-1. NNSA made key design decisions for this weapon from 2010 until the program was paused in 2014. NNSA estimated in December 2018 that the W87-1 would cost $8.6 billion to $14.8 billion, which could make it the most expensive warhead modernization program to date. NNSA plans to newly manufacture the entire warhead, including the two major nuclear components, called the primary and secondary, using facilities it is modernizing or repurposing. You asked us to examine plans for the W87-1 warhead. This report examines, among other things, the extent to which NNSA (1) considered cost estimates in prior design decisions for the W87-1 and the potential effects of remaining design decisions on program cost, and (2) will be able to produce sufficient numbers of key nuclear components to meet W87-1 production needs. GAO reviewed NNSA documentation on prior and remaining design decisions and preliminary cost estimates, reviewed warhead and component production schedules, and interviewed NNSA and DOD officials. GAO is making four recommendations, including that NNSA require programs such as the W87-1 to follow analysis of alternatives best practices when studying design options and that the plutonium program build an integrated schedule consistent with schedule best practices. NNSA generally agreed with the recommendations. For more information, contact Allison B. Bawden at (202) 512-3841 or bawdena@gao.gov.
    [Read More…]
  • Timor-Leste Travel Advisory
    In Travel
    Reconsider travel [Read More…]
  • Secretary Blinken’s Meeting with Israeli Alternate Prime Minister and Foreign Minister Yair Lapid 
    In Crime Control and Security News
    Office of the [Read More…]
  • Facial Recognition: CBP and TSA are Taking Steps to Implement Programs, but CBP Should Address Privacy and System Performance Issues
    In U.S GAO News
    U.S. Customs and Border Protection (CBP) has made progress testing and deploying facial recognition technology (FRT) at ports of entry to create entry-exit records for foreign nationals as part of its Biometric Entry-Exit Program. As of May 2020, CBP, in partnership with airlines, had deployed FRT to 27 airports to biometrically confirm travelers' identities as they depart the United States (air exit) and was in the early stages of assessing FRT at sea and land ports of entry. Facial Recognition Technology in Use at an Airport CBP has taken steps to incorporate some privacy principles in its program, such as publishing the legislative authorities used to implement its program, but has not consistently provided complete information in privacy notices or ensured notices were posted and visible to travelers. Ensuring that privacy notices contain complete information and are consistently available would help give travelers the opportunity to decline to participate, if appropriate. Further, CBP requires its commercial partners, such as airlines, to follow CBP's privacy requirements and can audit partners to assess compliance. However, as of May 2020, CBP had audited only one of its more than 20 airline partners and did not have a plan to ensure all partners are audited. Until CBP develops and implements an audit plan, it cannot ensure that traveler information is appropriately safeguarded. CBP has assessed the accuracy and performance of air exit FRT capabilities through operational testing. Testing found that air exit exceeded its accuracy goals—for example, identifying over 90 percent of travelers correctly—but did not meet a performance goal to capture 97 percent of traveler photos because airlines did not consistently photograph all travelers. A plan to improve the photo capture rate would help CBP better fulfill the program's mission of creating biometrically confirmed traveler departure records. Further, while CBP monitors air exit's performance, officials are not alerted when performance falls short of minimum requirements. The Transportation Security Administration (TSA) has conducted pilot tests to assess the feasibility of using FRT but, given the limited nature of these tests, it is too early to fully assess TSA's compliance with privacy protection principles. Within the Department of Homeland Security (DHS), CBP is charged with the dual mission of facilitating legitimate travel and securing U.S. borders, and TSA is responsible for protecting the nation's transportation system. For both CBP and TSA, part of their inspection and screening responsibilities includes reviewing travel identification documents and verifying traveler identities. Beginning in 1996, a series of federal laws were enacted to develop and implement an entry-exit data system, which is to integrate biographic and, since 2004, biometric records for foreign nationals. This report addresses (1) the status of CBP's deployment of FRT, (2) the extent to which CBP has incorporated privacy protection principles, (3) the extent to which CBP has assessed the accuracy and performance of its FRT, and (4) the status of TSA's testing and deployment of FRT and how TSA has incorporated privacy protection principles. GAO conducted site visits to observe CBP's and TSA's use of FRT, which were selected to include all three travel environments—air, land, and sea; reviewed program documents; and interviewed DHS officials. GAO is making five recommendations to CBP to (1) ensure privacy notices are complete, (2) ensure notices are available at locations using FRT, (3) develop and implement a plan to audit its program partners for privacy compliance, (4) develop and implement a plan to capture required traveler photos at air exit, and (5) ensure it is alerted when air exit performance falls below established thresholds. DHS concurred with the recommendations. For more information, contact Rebecca Gambler at (202) 512-8777 or gamblerr@gao.gov.
    [Read More…]
  • Secretary Pompeo’s Meeting with Japanese National Security Secretariat Secretary General Shigeru Kitamura
    In Crime Control and Security News
    Office of the [Read More…]
  • Comoros National Day
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Former Natural Gas Trader Pleads Guilty for Role in Commodities Insider Trading Scheme
    In Crime News
    A former natural gas trader pleaded guilty today to conspiracy to commit commodities fraud and wire fraud for his role in an insider trading scheme.
    [Read More…]
  • Justice Department Settles Claims Against California Supermarket Chain and Affiliated Money Lender for Discriminating Against Asylee Worker
    In Crime News
    The Department of Justice today announced that it signed a settlement agreement with Northgate Gonzalez Markets Inc., a California-based supermarket chain, and Northgate Gonzalez Financial LLC d/b/a Prospera Gonzalez, an affiliated payday loan company (collectively, Northgate).
    [Read More…]
  • Environment and Natural Resources Division Recognizes Employees for Outstanding Service at Annual Awards Ceremony
    In Crime News
    The Environment and Natural Resources Division (ENRD) held its annual awards ceremony to highlight the past year’s achievements.
    [Read More…]
  • Department Press Briefing – February 25, 2021
    In Crime Control and Security News
    Ned Price, Department [Read More…]
  • On the Passing of Former Papua New Guinea Prime Minister Sir Michael Somare
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Former Bank Executive Sentenced to Prison for $15 Million Construction Loan Fraud
    In Crime News
    A former Kansas bank executive was sentenced to 60 months in prison today for his role in carrying out a bank fraud scheme to obtain a $15 million construction loan from 26 Kansas banks.
    [Read More…]
Network News © 2005 Area.Control.Network™ All rights reserved.