Summary: The General Services Administration (GSA) charges Federal agencies for GSA-controlled space that the agencies occupy and services they receive. Funds collected are used for building operations, including acquisition, construction, alterations, and repairs. Space rental rates are determined through building-by-building appraisals conducted every third year. The rates established through the appraisals are not changed for the 3-year period regardless of the effects of inflation. For some buildings, the rates are lower than the amounts GSA pays for rent and operating costs. Overall, however, receipts from leased buildings exceed expenses by an average of 2 percent a year. Because of the increasing demand for office space in the National Capital area, rental rates in that area are rising at a faster rate than in most other areas. Though agencies may review the appraisals, GSA has been reluctant to give them copies of the appraisals. The agencies may request that GSA review its rates without filing a formal appeal. A formal appeal may only be filed when the rates exceed the comparable commercial square foot rates by 25 percent or 50 cents a square foot, whichever is greater, or when the quarterly standard level user charge exceeds the comparable commercial charge for that amount of space by more than $12,500. Up to three appeals may be filed. Both GSA and the tenant agencies fund space alterations in Government owned or leased buildings. When space is upgraded, GSA charges a higher rental rate, regardless of who paid for the alterations. When the tenant pays for the alterations, then is charged the higher rate, he is, in effect, being charged twice for the alterations. GAO has recommended that the Administrator of GSA discontinue the practice of assessing higher rates on buildings unless justified by commercial value increases and after providing adjustments for alterations financed by tenant agencies.
