VA Real Property: Clear Procedures and Improved Data Collection Could Facilitate Property Disposals

VA is one of the largest federal property-holding agencies, and its inventory of vacant buildings has generally increased over the last 6 years. Disposing of its excess properties has been a long-standing challenge.

GAO was asked to review how VA manages its real property disposals. This report addresses: (1) the challenges VA faces in disposing of its vacant properties and how it is addressing those challenges and (2) the extent to which VA is tracking and monitoring the disposal of its vacant properties.

GAO reviewed VA's policies and planning documents regarding property disposals. GAO also selected 31 properties that were either disposed of or planned for disposal in fiscal year 2017, among other selection criteria. GAO interviewed VA officials and stakeholders involved in the disposal of the 31 selected properties and familiar with VA's disposal process, including steps VA is taking to address challenges.

Conducting required environmental and historic reviews in a timely manner is among the challenges the Department of Veterans Affairs (VA) faces in its real property disposal process. These reviews include assessing the potential effects of property disposals on the environment and historic preservation. VA is taking steps to address these ongoing challenges. For example, VA has established a working group consisting of experts in historic preservation, environmental reviews, and real property to assist facilities' managers in expediting disposals. However, other ongoing challenges remain, including the marketability of VA properties and VA's lack of clear procedures for property disposals. While VA has guidance on disposals at the broad portfolio level, GAO determined that this guidance does not contain step-by-step procedures at the project level to assist facilities' managers to plan, implement, and execute disposals for the different disposal options. (See figure.) For example, a number of managers told GAO that they were not familiar with actions to take when transferring properties to a third party or turning over excess property to the General Services Administration for disposal. VA officials commented that facilities' managers do not frequently dispose of properties, so a procedural document outlining the steps and who is responsible for taking those steps may help staff navigate more complex disposal processes and avoid missteps and delays.

VA has enhanced its data collection on vacant properties, but the agency does not collect information needed to track and monitor disposal projects at the headquarters level. For example, VA requires facilities' managers to verify and certify the validity of vacant property data in the database used to manage real property—the Capital Asset Inventory. On disposal projects, however, VA lacks certain information, such as the status of environmental or historical reviews, to monitor progress. According to VA, the Capital Asset Inventory currently does not have enough capacity to collect key information and supporting documentation. VA officials said they plan to increase the capacity, but VA has not yet included some key information in the Capital Asset Inventory that could enable VA to monitor the progress of disposals. Without information on the status of disposal projects, VA cannot readily track and monitor its progress and identify areas where facilities' managers may need additional assistance.

GAO is making three recommendations. These include developing disposal procedures for facilities' managers to help plan, implement, and execute disposal projects and collecting key information on the status of disposal projects, as VA implements its plans to increase the capacity of VA's Capital Asset Inventory. VA concurred with GAO's recommendations.

The U.S. Department of Veterans Affairs (VA) is one of the largest federal  real property-holding agencies, holding almost 6,300 buildings including  medical centers, outpatient clinics, community living centers, and  counseling centers. While most of these buildings are in use, VA has  many buildings that are vacant. These vacant buildings are, on average,  about 91 years old and can be costly to maintain. VA estimated spending  about $4 million in fiscal year 2017 to maintain these vacant buildings.  Further, the number of VA’s vacant buildings has generally increased  over the last 6 years (see fig. 1).

Federal management of real property—including VA real property—has  been on GAO’s High Risk List since 2003 due to long-standing  challenges, including difficulties in effectively disposing of excess and  underutilized property. In June 2017, VA announced an initiative to begin  the process of re-using or disposing of 430 vacant buildings within 2  years to reduce the large number of vacant buildings and the cost to  maintain them. Additionally, the VA Asset and Infrastructure Review Act  of 2018 requires VA, through recommendations of an independent  commission, to realign its real property. As VA makes changes to realign  its real property, these changes may lead to more unneeded buildings  that VA may want to dispose of.

You asked us to examine how VA manages its real property disposals.  This report addresses:  the challenges VA faces disposing of its vacant properties and how it  is addressing those challenges, and  the extent to which VA is tracking and monitoring the disposal of its  properties.

To identify challenges that VA faces when disposing of property and how  VA is addressing them, we selected a non-generalizable sample of 31  properties and conducted semi-structured interviews with VA officials and  external stakeholders who were involved in or knowledgeable about the  disposal of those selected properties and are familiar with VA’s disposal  process. These external stakeholders included officials from the General  Services Administration (GSA), veteran service organizations (e.g.,  Veterans of Foreign Wars and the American Legion), a local community  that purchased VA properties, a major commercial real estate company,  and historic preservation groups (e.g. Advisory Council on Historic  Preservation and the National Conference of State Historic Preservation  Officers). The 31 properties we selected were either disposed of in fiscal  year 2017 or planning was underway for disposal, including disposals  through GSA. Specifically, we selected properties that (1) captured a  range of disposal methods available to VA either planned or completed  and (2) represented a variety of property characteristics, including  historical status, age, and size. To examine the characteristics of VA’s  vacant and disposed of properties and to select the 31 properties, we  obtained and analyzed data from VA’s Capital Asset Inventory (CAI) for  fiscal years 2012 through 2017 and assessed the reliability of the data.  To assess the reliability of VA’s data we:  looked for obvious data errors;  reviewed existing documentation on the data and VA’s processes for  checking and validating the data; and  interviewed knowledgeable officials about the data.

We found the data were generally reliable for the purposes of our  reporting objectives. To help identify disposal challenges VA faces, we  obtained and reviewed documents related to the 31 selected properties  and interviewed facilities’ managers from VA’s Veterans Integrated  Service Networks (VISN) and local facilities who were knowledgeable  about the disposal of these selected properties. The challenges faced by  these selected properties cannot be used to make inferences about all VA  properties. However, they illustrate the range of challenges that VA faces  in disposing of properties. To identify steps VA has taken to address  challenges, we reviewed documents and interviewed officials from VA’s  Office of Asset Enterprise Management and Office of Construction and  Facilities Management, which have some responsibilities for demolishing  or transferring VA properties. We then assessed VA’s efforts to address  these challenges against applicable federal internal-control standards.

To determine the extent to which VA is tracking and monitoring the  disposal of its vacant properties, we reviewed the current data fields in  VA’s CAI, as well as planning and guidance documents, including the  Fiscal Year 2017 Capital Asset Inventory and Disposal Plans Update.  We also interviewed VA officials in headquarters, including officials in  VA’s Office of Asset Enterprise Management and Office of Construction  and Facilities Management, to determine the extent to which VA is  tracking and monitoring the disposal of its vacant properties. We obtained  and reviewed a copy of VA’s data discrepancy report for fiscal year 2016  that it uses to verify data and track and monitor vacant properties and  disposals. We also reviewed VA’s documents, including a tracking  spreadsheet that VA is using to monitor the disposal of vacant properties.  In addition, we interviewed VA officials, including VISNs’ and local  facilities’ managers, to obtain their perspectives on VA’s efforts to track  and monitor disposals, specifically. We then assessed VA’s efforts to  track and monitor these disposals against applicable federal internal  control standards. Additional information on our scope and methodology  can be found in appendix I.

We conducted our work from November 2017 to December 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

VA administers its services and programs through three distinct  administrations—Veterans Health Administration (VHA), Veterans  Benefits Administration, and the National Cemetery Administration. VHA  is the largest property holder within VA and is responsible for overseeing  health care delivery to enrolled veterans and managing all VA medical  facilities. VHA’s VISNs are responsible for overseeing medical facilities,  and VA works with the VISNs and local medical facilities to manage its  real property assets through VA’s capital-planning process.

Responsibilities for Disposing of Properties

Various VA offices share responsibilities for managing and disposing of  real properties. Specifically:

VISNs and local facilities are responsible for identifying, planning,  and managing underutilized and vacant properties, including  executing demolitions of buildings.

Office of Capital Asset Management, Engineering, and Support,  within VHA, is responsible for supporting the property disposal efforts  of VISNs and local facilities, including providing funding for  demolitions (if properties are part of a minor construction project or  non-recurring maintenance project).

Office of Construction and Facilities Management, within VA’s  Office of Acquisition, Logistics and Construction, is responsible for: (1)  developing and updating policies and procedures on disposal actions  (except enhanced-use leases) and executing them; (2) coordinating  the Steward B. McKinney Homeless Assistance Act’s (McKinney- Vento Act) screening process for potential homeless use prior to  disposal; (3) overseeing implementation of required federal  environmental reviews for planning and construction of major projects  and real property actions; and (4) promulgating policy related to  historic preservation, among other things.

Office of Asset Enterprise Management (Asset Enterprise Office),  within the VA’s Office of Management, is responsible for: (1) ensuring  local facility disposal requests align with VA policy; (2) reviewing real- property inventory data, including annual disposal plans; (3)  monitoring completion of disposal projects; (4) executing enhanced- use lease-related disposals; and (5) overseeing the Strategic Capital  Investment Planning process, among other responsibilities.

According to VA’s guidance on managing underutilized properties and  disposals, the process for managing vacant properties usually begins with  VISNs and local medical facilities. Together, they are responsible for  identifying underutilized real properties and updating this information in  the CAI database, which VA uses to manage its real property.

VA has also identified and prioritized disposal options VISNs and local  facilities have for determining what to do with vacant and underutilized  properties they have identified. As shown in figure 2, VA’s first priority is  to re-use vacant and underutilized properties within the department. If  properties cannot be re-used, then VA looks at disposal options that  would remove them from its inventory. If no disposal options are feasible,  then VA may choose to close or “mothball” properties.

Properties in the CAI database with utilization rates that are less than 50  percent—including vacant properties—are candidates for disposal, and  VISNs’ and local facilities’ managers are required to develop a disposal  plan for all vacant buildings or update an existing plan for these facilities  each year.

VA may choose from several options to dispose of vacant and  underutilized properties, including: entering into an enhanced-use lease,  demolition, like-kind exchange, transfer of real properties to the state for  nursing home use, declaring excess property for disposals through GSA,  or mothball, among others. (See fig. 3.) The disposal process differs  depending on the disposal method selected.

As part of the disposal process, VA is required to take certain actions,  including conducting environmental reviews and considering the effects of  its actions on historic properties. Accordingly, VA conducts “due  diligence” reviews on vacant properties, and these reviews include  complying with selected federal requirements described in table 1 below.

From fiscal years 2012 through 2017, VA disposed of 577 properties  (including 471 buildings with about 5-million gross square feet), primarily  through demolition of medical facilities and enhanced-use lease  agreements (see fig. 4). These two methods accounted for the disposal  of 3.6-million gross square feet of building space. VA used other disposal  methods, such as transferring property to states for nursing home care or negotiating a sale, for the remaining 50 properties, as shown in figure 4  below. As of July 2018, VA reported initiating the disposal or re-use of  167 of the 430 vacant buildings the Secretary identified for disposal in  June 2017.

Of the 471 building disposals from fiscal years 2012 through 2017, VA  disposed of 203 buildings in fiscal year 2012 alone in contrast to 61  building disposals in fiscal year 2017, as shown in figure 5. A VA official  attributed the decline in disposals from fiscal year 2012 to fiscal year  2013 to limitations placed on VA’s enhanced-use lease authority in  2012.

The characteristics of the 471 buildings VA disposed of varied from fiscal  years 2012 through 2017. The majority (331 out of 471) was offices,  housing quarters, service buildings, and warehouses; other buildings  included hospitals, laboratories, and outpatient healthcare facilities. VA  reported many of these buildings as historic, as shown in figure 6. More  than a third of the vacant buildings designated as non-historic were  demolished. Almost a third of the buildings—primarily housing quarters— were disposed of using enhanced-use leases.

VA Is Addressing Some of Its Ongoing Disposal Challenges but Lacks Procedures to Manage Property Disposals

VA officials and stakeholders we spoke with said that administering both  environmental and historic reviews are key challenges for disposals. Two  other ongoing challenges—the marketability of VA properties and  prioritizing funding for disposals—were also mentioned as factors  impeding VA’s property disposal efforts. As part of VA’s initiative to begin  the re-use or disposal process for 430 vacant properties within 2 years,  VA has begun addressing its environmental and historic review  challenges. For example, VA established a working group to assist  VISNs’ and local facilities’ managers in conducting these reviews. While  VA is addressing challenges related to these reviews, limited interest in  purchasing or leasing VA properties and competition for funding with  other important VA projects directly related to veterans’ care are ongoing  challenges that continue to hinder disposal efforts.

VA is Taking Steps to Facilitate Environmental and Historic Reviews, but Properties’ Marketability and Competing Priorities Remain Challenging

VA officials and stakeholders we spoke with cited the time it takes to  complete the required environmental and historic reviews as a challenge  in managing the disposal process. Although VA does not maintain data  on how long these reviews can take or how long it takes to dispose of its  properties, in our review of 31 selected properties, we found variation in  the timespan to conduct environmental and historic reviews. The  environmental reviews of these properties took about 2 years on average  to complete, depending on the condition of the property. For example,   an environmental review of temporary storage facilities in Biloxi took  about a year, as no environmental issues were identified. In another case,  it took about 2 years to conduct an environmental review of VA’s  Cincinnati-Fort Thomas property, as asbestos and lead paint were  identified during the course of the review. For those disposals requiring  historic reviews, we found that it took about 5 years on average,  depending on the complexity of the disposal. For example, it took 5  years to complete a historic review of the St. Louis, Jefferson Barracks  property due to the need to collaborate with multiple stakeholders,  including the neighboring Army National Guard base, the state’s historic  preservation office, local community council, community organizations,  and many veteran service organizations; and addressing the adverse  effects on historic properties, according to VA officials. VA officials and  stakeholders we spoke with stated that due to lack of staff expertise and  resources, VISNs’ and local facilities’ managers may choose to contract  out these reviews, but procuring contractors may also add time to the  disposal process, as facility managers need to define the terms of work  and identify contractors.

Further, environmental and historic reviews can affect VA’s decision- making process with regard to choosing a disposal method, potentially  lengthening the time it takes for disposal. For example, VA officials told us  that they began a historic review on the Pittsburgh-Highland Drive  property in 2012 but discontinued the review in 2013, partially due to  disagreements with historic preservation stakeholders about the proposed  demolition of some historic buildings. After 4 years, in 2017, VA decided  to declare the property as excess and turn it over to GSA for disposal.  According to VA officials, this required a different historic review, as it  entailed a different disposal method. GSA is currently administering the  additional historic review of this property.

VA has begun taking actions to reduce the time it takes to conduct  environmental and historic reviews as part of VA’s initiative to begin the  process of re-using or disposing of 430 vacant buildings within 2 years.  For example, VA worked with the Advisory Council on Historic  Preservation to obtain a program comment alternative to reduce time  spent with historic preservation stakeholders when consulting on  “ancillary utilitarian support buildings and structures,” such as a boiler  plant or a sewage plant. VA officials also told us that they established a  headquarters-level working group consisting of experts in historic  preservation and environmental reviews as well as real property  transactions to assist VISNs’ and local facilities’ managers in  administering disposals, including conducting these reviews, and in  moving them forward. VA officials also told us that they awarded four  regional contracts with contractors to complete the environmental and  historic reviews and expedite the disposal process.

VA officials and historic preservation stakeholders we spoke with also  said they can have disagreements on how to meet the historic review  requirements, and such disputes can add time to the review process. The  historic preservation stakeholders commented that VA does not consult  with them early in the disposal’s decision-making process and does not  provide adequate information on the adverse effects of demolishing a  historic property as well as other potential methods through which VA  could dispose of a property. VA officials we spoke with stated that they  have been consulting with historic preservation stakeholders on all  disposal projects as required.

To improve collaboration and communication between VA and external  stakeholders, VA developed a toolkit in June 2017 on how to effectively  communicate with stakeholders. This communications toolkit responded  to our recommendation for VA to develop and distribute guidance for  VISNs’ and local facilities’ managers to use when communicating with  stakeholders on facility alignment changes, and we subsequently closed  this recommendation.

VA officials and stakeholders we spoke with also pointed out that  competing priorities for VA funds is another remaining challenge. VA  officials stated that projects to demolish buildings compete for funding  with other capital projects, such as renovating inpatient units. Since VA’s  mission is to provide health care services, demolishing buildings is not as  high a priority compared to other projects that may lead to providing  better health care services.

VA officials also told us that competing priorities can affect how long it  takes to dispose of vacant properties. If a demolition project is part of a  construction project, then VA may give it a relatively high priority for  funding. For example, at VA’s Dayton campus it took about a year from  when VA requested funding in 2016 to demolish two historic buildings in  2017. A VA official said that due to a $1 million donation to build a Fisher  House on VA’s Dayton campus, funds were prioritized to demolish two  national historic landmark buildings to make space available for  construction of the Fisher House. However, according to other VA  officials, demolition projects in and of themselves do not rank well for  funding; such rankings can affect the time it takes for disposal.

For example, a VA official said that VA had initially planned to demolish a  temporary building on the Cleveland Wade Park campus sometime during  the 2012-to-2013 time frame; however, VA did not demolish the  temporary building until 2017, in part due to the longer than expected time  it took for VA to allocate funds to this project. If funds are not available for  demolition, a building can remain vacant for many years. For example,  VA closed several properties on its Sepulveda Ambulatory Care Center  campus in North Hills, CA, after they sustained major damage from the  1994 Northridge earthquake. According to VA officials, competing funding  priorities, among other factors, contributed to the long wait to demolish  these vacant properties, which had not been disposed of as of October  2018 (see fig. 7). VA officials also noted that waiting for VA to allocate  funds to demolish properties can result in additional potential cost later  on. For instance, VA officials mentioned that since buildings on the  Sepulveda campus have been vacant for many years, they now qualified  for historic status, requiring them to undergo a historic review—a  requirement that could have been avoided if VA had demolished them  more than 20 years ago when they were originally identified for disposal.

VA officials and stakeholders we spoke with identified property  characteristics that affect the marketability of VA properties—historic  status, deficient physical conditions, location, unusable building  configuration, and repair costs—as barriers for disposal. This is a long- standing challenge that limits VA’s ability to re-use or dispose of vacant  and underutilized properties. In our recent analysis of VA’s CAI data, we  found that a majority of VA’s vacant properties (about 78 percent) from  fiscal years 2012 through 2017 have an historic status, and the average  age of those vacant properties is about 91 years old. As discussed  earlier, historic reviews can be lengthy and can make the disposal  process challenging, according to VA officials. Also, older buildings are  likely to have configurations that are difficult to use or are in need of  significant repair.

VA officials and stakeholders said that the location of VA properties limits  disposal options. For example, a VA official told us that demolition is  sometimes the only disposal option available when a deficient building is  located on an existing VA campus and cannot be re-used or disposed of  and removed from VA’s inventory. VA officials also stated that historic  buildings are frequently located in the middle of a campus and sometimes  cannot be easily demolished due to the historic designation (see fig. 8).  In these cases, VA will close and “mothball” the building to minimize  maintenance and operations costs and let the buildings sit vacant as an  interim measure. VA officials commented that there are also safety and  security challenges associated with disposing of or re-using a building  located in the middle of a VA campus. For example, a local facility  manager told us that when two of its buildings on campus were leased  out to an organization on a short-term lease for use as dormitories, young  adults from the dormitories gained access to private inpatient areas,  violating patients’ privacy. This is consistent with our previous findings  that many disposable VA properties located in the middle of medical  campuses draw limited private sector interest making some disposal  options challenging.

VA officials and stakeholders we spoke with—including commercial real  estate experts—also indicated that it can be difficult to attract developers  for several reasons. In one instance, a VA official and a stakeholder we  spoke with told us that it took multiple years to identify developers that  would take on environmental mitigation efforts as part of the negotiated  sale and transfer of VA’s properties to the City of Fort Thomas, Kentucky.  According to a stakeholder, developers were not willing to take on the  cost and risk of environmental mitigation without a title to the property and  no guaranteed income from the property. VA, however, could not transfer  the property title to a third party without first meeting federal standards for  cleaning up the environmental hazards on the properties. While the  issue was ultimately addressed, it took several years to complete the  deal.

VA Lacks Clear Procedures to Manage Property Disposals

Another challenge that VA officials and stakeholders raised was VA’s lack  of clear disposal procedures. Several VA officials and stakeholders we  spoke with stated that it is unclear what specific steps need to be taken for disposals, what are the targeted time frames for completing those steps, and who is responsible for completing them.

VA’s guidance on managing underutilized properties and disposals  provides policies and procedures on a portfolio level, such as VA’s  priorities for disposing of vacant properties and the different disposal  options available. However, VA’s guidance does not specify sequential  steps and actions that need to be taken at the project level to plan,  implement, and execute property disposals for VISNs’ and local facilities’  managers. Further, a VA official in headquarters told us that VA does  not have formal guidance on selecting any particular disposal methods.

While we found that documentation on policies and procedures exists for  some specific disposal methods, such as enhanced-use lease projects,  VA officials told us that policies and procedures for other disposal actions,  such as transferring or declaring property as excess and disposing of it  through GSA, are not documented. A VA official in headquarters told us  that informal guidance may exist in some VISNs, but no standardized  procedures on managing a disposal project is available. VA officials said  there are no step-by-step procedures to refer to when using a disposal  options more complex than demolishing a building. A VISN facilities’  manager we spoke with further pointed out that a decision-tree to help  plan, implement, and execute for the different disposal methods does not  exists to help local facilities navigate through VA’s decentralized and  complex disposal process.

VA officials told us that its disposal process is decentralized, an approach  that can contribute to unclear procedures for disposal projects. According  to VA officials, VISNs’ and local facilities’ managers are responsible for  making disposal decisions, developing a disposal plan, and executing the  disposal. As previously discussed, different VA program offices are  responsible for different disposal actions, depending on the disposal  method that VISNs’ and local facilities’ managers are considering. VA  officials noted that this decentralized approach to managing disposals can  make it difficult for VISNs’ and local facilities’ managers as well as local  stakeholders to know when or how best to coordinate with the appropriate  VA offices. A real property stakeholder we spoke with also noted that  common uncertainties in working with VA, such as its lack of a clear and  timely disposal process, can hinder developers’ interests in VA properties.  Specifically, the stakeholder stated that VA’s decision-making process is  divided among different entities within VA, a situation that may add time  to the disposal process, and stated that having a clear and timely disposal  process may provide a level of certainty for developers.

VA officials and stakeholders also said that in some cases, VISNs’ and  local facilities’ managers may lack the knowledge and experience to  manage disposals. For example, VA officials told us that while facility  managers generally know what actions are needed to demolish  properties, they are not familiar with actions that need to be taken for  transferring or selling properties to a third party or turning excess property  over to GSA for disposal. VA officials also mentioned staff turnover and  the infrequency of disposals as contributing factors to staff’s lack of  knowledge on procedures for disposing of properties. For example, two  facilities’ managers we spoke with said that in their many years of working  for VA they have never reported a property as excess and disposed of it  through GSA, until recently. VA officials and stakeholders further noted  that VISNs’ and local facilities’ managers may lack expertise conducting  historic and environmental reviews as they are usually engineers, who  are not experts on environmental and historic issues. For example, a  VISN facility manager informed us that a local facility manager was not  familiar with administering an environmental review, a lack that led to a  misstep in the review and duplication of work and added time to the  disposal process.

While VA has policies and guidance on historic and environmental  reviews, our review of these documents showed that they do not provide  guidance on how to make decisions, what actions to take, what are the targeted time frames for taking those actions, and who should be completing those actions.

Further, while VA officials with experience in disposals may estimate how  long these reviews can take, VA does not have documented guidance on  estimated time frames (milestones) for taking those actions.

Federal internal controls call for documentation to help management  oversee execution of procedures by establishing and communicating the  “who, what, when, where, and why” to personnel. Documentation also  provides a means to retain organizational knowledge and mitigate the risk  of having that knowledge limited to a few personnel and a means to  communicate that knowledge as needed to external parties, such as  external auditors or interested third parties. Federal internal controls also  call for management to define objectives in specific terms—in this case,  disposal actions—so they are understood at all levels of the entity. This  understanding involves clearly defining what is to be achieved, who is to  achieve it, how it will be achieved, and the estimated time frames for  achievement. Without procedural documentation that describes the  disposal options and the actions needed to carry out the disposal,  including estimated time frames, it is difficult for VISNs’ and local facilities’  managers to plan, implement, and execute the different disposal options  available and efficiently dispose of vacant properties.

A procedural document at the project level may include information on  who is authorized to make decisions and include estimated time frames  around historic and environmental reviews to ensure timely and  appropriate disposal of VA properties. For example, VA officials with  experience in disposals estimated that it should take about 6-to-8 months  for a property disposal, if there are no environmental and historic issues  involved and funding is available. For disposals where environmental and  historic reviews are needed, those officials told us it should take about 2- to-4 years from when VA decided to dispose of a property to complete the  disposal. According to facilities managers we spoke to, additional  procedural documentation at the project level could help VISNs’ and local  facilities’ managers navigate through the complex disposal process and  avoid missteps or delays in the disposal of vacant properties.

VA Enhanced Its Collection of Data on Vacant Properties but Lacks Key Information to Track and Monitor Disposals VA Has Taken Steps to Enhance How It Collects Data on Vacant Properties

To enhance the monitoring of its real property and to meet reporting  requirements, VA officials told us VA has taken steps in the last 6 years to  improve its real property inventory and the data it collects on its vacant  properties, including properties VA has identified for disposal. These  steps include:

Requiring VISNs’ and local facilities’ managers to verify and  certify the accuracy of the information in the CAI. VA’s Asset  Enterprise Office sends out an annual call for facility managers to  verify and certify the validity of vacant property data for each of the  facilities.

Requiring VISNs’ and local facilities’ managers to make ongoing  updates to the CAI database. VA’s annual data-call memo requires  these managers to continuously update the data as they take actions.  Facility managers we spoke to stated they update this information  regularly, including when actively planning disposal projects and  individual projects are complete. One facility manager told us that  VA’s Asset Enterprise Office is “actively pushing” local managers to  update this information, and the data in the CAI have improved as a  result.

Generating “discrepancy reports” to identify problems with  inaccurate or outdated property data in the CAI. VA officials in  headquarters told us that facility managers review these reports and  explain any identified discrepancies regarding vacant properties,  including those identified for disposal. VA officials told us they then  correct any errors. Discrepancy reports include checks on whether  facility managers have specified a disposal method for each disposal,  estimated an associated disposal’s cost, and entered a planned future  year for the disposal.

Refining the database by, for example, adding new “business  rules” to limit user errors. VA officials told us that since 2012 it has  implemented program changes and new business rules to the CAI  database to address inaccuracies in the data, including data that  support disposal information. For example, a VA official in  headquarters told us that to decrease the number of errors caused by  users entering data more than once, the database now limits the  number of times users may enter the same information. This prevents  multiple data entries appearing for, for example, the year a building  was built, according to VA officials. VA officials in headquarters also  told us they developed similar business rules to identify “clearly  wrong” data entries and duplicative data. For instance, users cannot  enter letters in numeric fields which, they told us, has led to fewer  errors.

VA Does Not Collect Key Information to Track and Monitor Property Disposals

Although VA has enhanced its data collection efforts for vacant  properties, we found that VA does not collect all the information  necessary for its headquarters officials to track and monitor the disposal  of VA’s vacant properties. As part of its annual call for validating data, VA  requires facility managers to record certain information about disposals in  the CAI, including: which buildings are identified for disposal, whether a disposal plan is in place, when the disposal is to occur, what type of disposal method is to be used, and what are the costs associated with the disposal.

However, VA does not have the ability in its CAI to collect detailed data  on the status of disposal projects—specifically, data fields for facility  managers to input detailed information on the status of: (1) disposal  actions, (2) due diligence reviews, and (3) approvals, such as  environmental permits that are necessary to complete the disposal.  Since CAI does not have this information, VA’s Asset Enterprise Office,  as part of the Secretary’s initiative to begin the re-use or disposal process  of 430 buildings, developed a standalone spreadsheet to track and  monitor the disposal status of these buildings. Then, according to officials  in VA’s Asset Enterprise Office, they had to ask local facility managers  what was the status of each individual disposal.

Federal internal-control standards state that management should use  quality information to achieve an entity’s objectives and establish and  operate monitoring activities to monitor the internal control system and  evaluate the results. This includes management obtaining data on a  timely basis and using it for effective monitoring, which includes controls  to achieve complete and accurate data. While the Secretary’s initiative  has raised the priority of tracking and monitoring VA’s real property  disposals, the CAI does not contain key information to improve VA’s  routine tracking as called for in internal controls. A key official in VA’s  Asset Enterprise Office told us that officials there usually leave it to local  facilities to track key information and that the CAI currently does not  collect this information. Without incorporating information needed to better  track and monitor disposals through VA’s primary real property tracking  database—CAI—VA may not be able to efficiently track and monitor its  real property disposals going forward after the Secretary’s initiative is  completed. VA officials in headquarters told us that without data on the  actions and status of disposals, including steps taken to complete  environmental and historic reviews, they are unable to track and monitor  the progress of disposal projects—including the length of time these  reviews take—and to identify any areas where management may assist  local facilities in disposing of properties. For instance, as previously  mentioned, VA officials in headquarters told us they used the information  gathered as part of the 430 re-use or disposal initiative to identify and  award contracts to perform environmental and historic reviews and, as a  result, more quickly expedited the disposal process.

In addition, VA officials in headquarters do not collect documentation,  such as environmental and historical review documents, that could allow  headquarters staff to verify the status of disposal projects. As mentioned,  federal internal controls state that management should use quality  information to achieve an entity’s objective, including obtaining data on a  timely basis and using these data for effective monitoring, which includes  controls to achieve complete and accurate data. Further, VA requires  VISNs’ and local facilities’ managers to record a planned or completed  disposal in the CAI, including updating information as changes occur.  However, a key official in VA’s Asset Enterprise Office told us the CAI  database does not currently have enough space for facility managers to  upload supporting documentation, including environmental and historic  review documents. As part of the Secretary’s initiative to begin the re-use  or disposal process for 430 buildings, VA’s Asset Enterprise Office set up  a website to collect and exchange documents, such as environmental and  historic review documents from local facility managers. This process  allowed VA’s Asset Enterprise staff to verify the disposal information of  the properties in the spreadsheet using this collected information. While  VA created a website to exchange documentation as part of the 430 re- use or disposal initiative, this website is separate from CAI and was  created because VA had not previously collected supporting documents  in CAI. However, a VA official told us that when they compared  information they collected from the website, they found the information in  CAI is not always correct and appropriately updated.

As we have previously found, documentation provides a means to retain  organizational knowledge while mitigating the risk of having that  knowledge limited to a few personnel. Documentation can also ensure  that knowledge gets communicated to external parties, such as external  auditors. As previously mentioned, some VA staff lack expertise and  organizational knowledge to properly document a variety of disposal  options. VA also experiences frequent staff turnover. These issues,  together with the inability of facilities’ managers to upload disposal-related  documents directly into CAI, puts VA at risk of losing valuable information  about the disposal process. For example, according to a stakeholder we  spoke with, VA could not readily provide information about consulting  stakeholders on historic properties, as required by historic review  requirements. A VA official told us that after contacting facility managers  for information about specific disposal projects as part of the 430  initiative, they found disposal procedures were not consistently  documented and, in some cases, documents were missing.

VA officials in headquarters provided us with a draft proposal to enhance  the CAI in several ways, including:  to add specific data fields for dates, including completion dates for  reviews and  to increase the capacity of the CAI to allow facility managers to upload  disposal documentation, including environmental and historic review  documentation.

However, the proposed changes do not include some key information,  such as the start dates for compliance reviews, so VA cannot monitor and  track when the reviews began and how disposals are progressing.  Additionally, a VA official we spoke with could not provide a specific time  frame for increasing the capacity of CAI, as VA is currently working on  developing space requirements that are needed to increase capacity and  help estimate a time frame.

Given that the number of VA’s vacant buildings has been generally  increasing in the last 6 years and the implementation of the VA Asset and  Infrastructure Review Act of 2018 could lead to more unneeded buildings,  effectively managing VA’s real property disposal is crucial. Otherwise, VA  may maintain a large inventory of vacant buildings that may be costly to  secure and maintain. While effectively disposing of excess and  underutilized property has been a long-standing challenge for VA, the  agency has taken some positive actions, such as examining ways to  streamline the historic review process, having some documented  procedures, and improving data collection efforts on vacant properties.  However, without documented procedures for all the disposal options to  assist VISNs’ and local facilities’ managers in planning, implementing,  and executing disposals and navigating the complex property-disposal  process, VISNs and local facilities—which are responsible for managing  their real property—may continue to struggle to facilitate property  disposals efficiently. Also, without important information on the status of  disposal projects and supporting documents, it is unclear how VA can  monitor and track disposals, including identifying any areas where  management can assist in the disposal of its vacant properties.

We are making the following three recommendations to the VA:  1.  The Secretary should develop clear procedures for each of VA’s  disposal options to help facilities’ managers plan, implement, and  execute projects to dispose of vacant and unneeded properties.  (Recommendation 1)  2.  As VA implements its plans to enhance the CAI to collect key data on  disposal projects, the Secretary should collect data on disposal status  information and time frames (e.g., environmental and historical  reviews’ starting dates) to ensure VA has the information it needs to  track the length of the disposal process and identify any areas where  management may assist local facilities in implementing property  disposals. (Recommendation 2)  3.  As VA pursues its plans to enhance the CAI, the Secretary should  increase the capacity of the CAI to allow local facilities to upload  disposal-specific documentation, such as environmental- and  historical-review documents, to ensure all documentation related to a  property’s disposal is available to appropriate parties, including VA  officials. (Recommendation 3)

We provided a draft of this report to VA for review and comment. In  written comments, reproduced in appendix II, VA concurred with our  recommendations and stated that it has begun or is planning to take  actions to address them. VA also provided technical comments, which we  incorporated as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of the Veteran’s Administration, and other  interested parties. In addition, the report is available at no charge on the  GAO website at http://www.gao.gov.

If you or your staff members have any questions regarding this report,  please contact Andrew Von Ah at (202) 512-2834 or vonaha@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. Key contributors to  this report are listed in appendix III.

Appendix I: Objective, Scope, and Methodology

This report examines the U.S. Department of Veterans Affairs’ (VA)  efforts to dispose of properties, including the management of its real  property disposals. Specifically, we address: (1) the challenges VA faces  disposing of its vacant property and how it is addressing those challenges  and (2) the extent to which VA is tracking and monitoring the disposal of  its properties.

To address these objectives, we reviewed relevant laws, regulations,  policies, handbooks, and other documents related to VA’s real property  management, including VA’s Handbook and Directive on Managing  Underutilized Real Property Assets, including Options for Reuse and  Disposal and VA’s Capital Asset Inventory User Guide as well as VA’s  annual budget submissions to Congress to fully understand VA’s disposal  process. To examine the full scope and extent of VA’s vacant and  disposed of properties, we obtained and analyzed data from VA’s Capital  Asset Inventory for fiscal years 2012 through 2017 and assessed their  reliability. To assess the reliability of VA’s data we: (1) looked for any  missing data, outliers, or other obvious data errors; (2) reviewed existing  documentation about the data and the system that produced them; (3)  reviewed VA’s processes for checking and validating the data; and (4)  interviewed officials knowledgeable about the data. We found the data to  be reliable for our purposes of identifying the number and type of vacant  and disposed of buildings and the characteristics of those buildings.

To identify challenges that VA faces when disposing of property and how  VA is addressing them, we selected a non-generalizable sample of 31  properties using data from VA’s Capital Asset Inventory as mentioned  above. The 31 properties we selected were either completed in fiscal year  2017 or planning was under way for disposal, including through the  General Services Administration (GSA). Specifically, we selected  properties that:  captured a range of disposal methods available to VA using VA’s  current process for disposal,  included both recently planned and completed disposals to observe  disposals in different phases of planning and were likely documented  by current VA staff, and  represented a variety of building and disposal characteristics,  including associated disposal costs, historic status, age, and size.

The challenges faced by these selected properties cannot be used to  make inferences about all VA properties. However, they illustrate the  range of challenges that VA faces in disposing of properties.

In addition, to help identify disposal challenges VA faces, including those  challenges that were identified as a lengthy time frame for disposal, we  obtained and reviewed documents related to the 31 selected properties,  including environmental review reports and historic review documents.  We used environmental and historic review documents to help estimate  the timespan for disposals, including time frames to conduct these  reviews. We also conducted semi-structured interviews with VA officials  and external stakeholders, who were involved or knowledgeable about  the disposal of these selected properties and are familiar with VA’s  disposal process. These included interviews with facility managers from  VA’s Veterans Integrated Service Networks (VISN) and local facilities who  were knowledgeable about the disposal of the 31 selected properties.  This group represented 7 of VA’s 18 VISNs and 10 local medical facilities,  including two local medical facilities—Perry Point (MD) and Sepulveda  (CA)—with planned disposal projects—we visited. We also interviewed  external stakeholders who included officials from the GSA; veterans  service organizations (e.g., Veterans of Foreign Wars and the American  Legion); a local community that purchased VA properties, a major  commercial real estate company; and historic preservation groups (e.g.  Advisory Council on Historic Preservation and the National Conference of  State Historic Preservation Officers) as well as selected State Historic  Preservation Officers to obtain their perspectives on VA’s disposal  challenges. To identify common challenges, along with illustrative  examples and lengthy time frames, we reviewed and analyzed  documents from the 31 properties we selected as well as interviews with  VA officials and external stakeholders. This analysis included one analyst  reading through all of the documents and interviews, creating a list of  challenges mentioned, and then a subsequent analyst verifying this list.  To identify steps VA has taken to address challenges, we reviewed  documents and interviewed officials from VA’s Office of Asset Enterprise  Management and its Office of Construction & Facilities Management as  well as Veterans Health Administration’s Office of Capital Asset  Management and Engineering Support. We then assessed VA’s efforts to  address these challenges against applicable federal internal control  standards.

To determine the extent to which VA is tracking and monitoring the  disposal of its vacant properties, we reviewed the current data fields in  VA’s Capital Asset Inventory, as well as VA’s planning and guidance  documents, including the Fiscal Year 2017 Capital Asset Inventory and  Disposal Plans Updates (Annual Call Memo). In addition, we interviewed  VA officials in headquarters, including VA’s Office of Asset Enterprise  Management and the Office of Construction and Facilities Management to  determine the extent to which VA is tracking and monitoring the disposal  of its vacant properties. We obtained and reviewed a copy of VA’s data  discrepancy report for fiscal year 2016 that VA uses to verify data and  track and monitor vacant properties and disposals. We also reviewed  VA’s planning documents, including a tracking spreadsheet that VA is  using to monitor the disposal of vacant properties. In addition, we  interviewed VA officials, including facility managers from VISNs and local  facilities, to obtain their perspective on VA’s efforts to track and monitor  disposals, specifically. Subsequently, we assessed VA’s plan to track and  monitor these properties against applicable federal internal controls.

Appendix II Comments from the Department of Veterans Affairs

In addition to the individual named above, Kyle Browning; Cathy Colwell  (Assistant Director); Gina Hoover; Jennifer Kim (Analyst in Charge); Brian  Lepore; Jeff Mayhew; Nitin Rao; Malika Rice; Minette Richardson; Todd  Schartung; Michelle Weathers; and Crystal Wesco made key  contributions to this report.

The Department of Veterans Affairs spent about $4 million last year to maintain hundreds of empty buildings. Federal management of real property (including VA's) has been on our High Risk List since 2003.

We found VA has taken steps to improve how it gets rid of excess property. For example, it sought to streamline the process for reviewing historic buildings before demolishing, selling, or otherwise disposing of them.

However, VA needs to better document its disposal procedures and track projects to help staff navigate complex federal and agency disposal rules. We made 3 recommendations to help address the issue.