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Federal Leasing: Quality Information and Metrics Would Allow GSA to Better Assess the Value of Its Broker Program

GAO-20-361 Published: Mar 31, 2020. Publicly Released: Mar 31, 2020.
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Fast Facts

The General Services Administration is the leasing agent for the federal government, managing over 8,000 leases costing about $5.7 billion annually. To save money and supplement its leasing staff, GSA contracts with commercial real estate brokers to help negotiate leases.

GSA uses market reports to determine whether the contract brokers help it save money. But those reports may have outdated or inaccurate information. In addition, though GSA says that brokers are essential to its leasing work, it doesn’t have a specific way to measure the value of supplementing its workforce with brokers.

Our 2 recommendations address these issues.

General Services Administration building

General Services Administration building

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Highlights

What GAO Found

The General Services Administration (GSA) contracts with commercial real estate brokers to perform a variety of services needed to acquire and complete leases. GSA uses brokers to negotiate leases meeting certain thresholds in urban areas (see figure). GSA has made several changes to its broker program since 2015, including:

changing how brokers can be assigned to leases, i.e., using brokers for specific geographical zones rather than on a nationwide basis;

allowing greater flexibility in when and how brokers can be used during the leasing process; and

changing the name from the National Broker Contract program to the GSA Leasing Support Services program.

Statistics for General Services Administration's (GSA) Leases That Involve Brokers Compared
to Leases without Brokers, October 2005–July 2019

Categories

Brokers

In-house GSA staff

Number of leases

3,227

5,452

Median current annual rent

$259,666

$147,215

Median monthly rent

$21,639

$12,268

Median rentable square footage

9,967

6,275

Source: GAO Analysis of General Services Administration's (GSA) data. | GAO-20-361

For the broker program, GSA's goals include saving money and supplementing its leasing workforce; however, potentially inaccurate data and limited outcome-based metrics could affect GSA's ability to assess whether it is meeting these goals. According to GSA, in the last 3 years, brokers have negotiated 303 leases, 60 percent of which were below the market rate (17.8 percent below the market rate, on average), an outcome that, GSA says helped it avoid $676 million in costs. However, selected GSA regional officials and brokers expressed concerns about the accuracy of the market reports used to calculate these cost savings. Additionally, while GSA has identified various outcome-based metrics related to its leasing program, these metrics do not indicate whether using brokers to supplement its leasing workforce has enabled GSA to complete leasing work it would have otherwise been unable to complete. For example, GSA sets targets for and tracks the number of leases assigned to brokers each year, but this measure is not an indicator of the effectiveness of using brokers. Quality information, along with additional reliable outcome-based measures, is important for GSA to define success for its 2020 broker program which creates new contracts and expands services performed by brokers.

Why GAO Did This Study

As the leasing agent for the federal government, GSA acquires space for federal agencies and currently manages over 8,000 leases. To help negotiate leases, GSA contracts with commercial real-estate brokerage firms. In previous reviews, GAO reported that GSA was unable to demonstrate cost savings and results from its use of brokers, and GAO made related recommendations.

A statute included a provision for GAO to review GSA's broker program. This report examines: (1) how GSA's broker program has changed over time and (2) GSA's goals for the broker program and how GSA measures the program's results. GAO reviewed documentation from GSA's broker program and GSA's available data on leases assigned to brokers from October 2005 to July 2019. GAO interviewed officials from GSA headquarters, selected GSA regional offices that work with brokers, as well as other stakeholders, including representatives from the six brokers currently participating in the program.


Recommendations

GAO is making two recommendations that GSA should: (1) assess and address the reliability of the information used to calculate reported cost savings and (2) develop outcome-based metrics to evaluate the effectiveness of using brokers to supplement the GSA leasing workforce. GSA concurred with the first recommendation but did not concur with the second. GAO continues to believe that GSA needs metrics to assess the brokers' role as a workforce supplement.

Recommendations for Executive Action

Agency Affected Recommendation Status Sort descending
General Services Administration GSA should develop outcome-based metrics to evaluate the effectiveness of using brokers to supplement the GSA's leasing workforce. (Recommendation 2)
Closed – Implemented
As the leasing agent for the federal government, GSA acquires space for federal agencies and currently manages over 8,000 leases. GSA contracts with commercial real estate brokers to perform a variety of services needed to acquire and complete leases. In 2020, GAO reported that for GSA's broker program, the agency's goals include saving money and supplementing its leasing workforce. However, GAO found that the program had limited outcome-based metrics, which could affect GSA's ability to assess whether it is meeting its goals. Specifically, while GSA had identified various outcome-based metrics related to its leasing program, these metrics did not indicate whether using brokers to supplement its leasing workforce had achieved positive results for GSA. Because GSA lacked outcome-based metrics that demonstrate the broker's role in achieving the program's goal for supplementing its workforce, GSA is hindered in its ability to distinguish the role brokers played in its reported program results. Consequently, GAO recommended that GSA develop outcome-based metrics to evaluate the effectiveness of using brokers to supplement the GSA's leasing workforce. In response to this recommendation, GSA modified the broker contract to include outcome-based metrics aligned with broker performance-specifically measures of cost-control and timeliness. GSA also implemented a new data collection and analysis tool to monitor and assess broker performance in line with these metrics. In November 2021, after using the new tool for a year, GSA confirmed with GAO that the new tool was working as intended. These revisions on how GSA measures broker performance should help it better demonstrate how brokers contribute to meeting the agency's goals.
General Services Administration
Priority Rec.
GSA should assess and address the reliability of the information used to calculate reported cost savings for the broker program. (Recommendation 1)
Closed – Implemented
GSA contracts with commercial real estate brokers to perform a variety of services needed to acquire and complete leases, and the agency's goals for the broker program include saving money. A statute contained a provision for GAO to review GSA's broker program, and GAO's review included how GSA measures the program's results. In 2020, GAO reported that potentially inaccurate cost-savings data could affect GSA's ability to assess whether it is meeting its goals. According to GSA, in the 3 years prior to GAO's review, brokers negotiated 303 leases, 60 percent of which were below the market rate, which GSA said helped it avoid $676 million in costs. However, selected GSA regional officials and brokers expressed concerns to GAO about the accuracy of these cost savings. Nonetheless, GSA officials told GAO that they have not assessed the reliability of or made any changes to how they calculate the cost savings. According to Standards for Internal Control in the Federal Government, management should use quality information to achieve the entity's objectives and to inform decision-making. Until GSA assesses the reliability of the information used to calculate reported cost savings for the broker program, it is hindered in its ability to fully assess the effectiveness of the program. Consequently, GAO recommended that GSA assess and address the reliability of the information used to calculate reported cost savings for the broker program. In response to this recommendation, GSA developed a quality control plan for improving the quality of its broker performance data. Following implementation of its plan, GSA noted in an October 2021 memo that it had improved data integrity by removing superfluous data reports, resolving missing data elements, and improving data collection and reporting processes. Further, in November and December 2021, after using a new related data tracking system for a year, GSA provided GAO an update that the new system was functioning as intended in accordance with the agency's quality control plan. As result of these improvements to its broker data and related analysis tools, GSA is better positioned to accurately capture cost savings associated with its use of brokers.

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