Lectern

By Steve Kelman

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Another GSA monopoly issue?

I was at a briefing today at a Defense Department military installation, and one issue that came up in passing was delays in getting some on-base space leased out (which would help the government from a revenue perspective, since the properties are currently unoccupied and in need of renovation) due to the length of time it takes for the General Services Administration’s Public Building Service to complete space leasing transactions.

The briefer mentioned – again in passing, since this wasn’t the theme of the brief, which made mention of the issue actually more interesting – that originally GSA had delegated leasing authority to the Department of Veterans Affairs, that the base had been planning to use the VA to get the lease done, but that GSA had since withdrawn the VA’s delegated leasing authority because they had begun doing third-party transactions for other government agencies. GSA, the briefer complained, often takes two years to complete a lease.

This is not my area, and I don’t know much about this – although I checked my understanding of the facts with somebody in the group who had GSA experience. But the issue sounds a bit like the issuing wracking the procurement community in the context of non-GSA governmentwide acquisition contracts. GSA used to have a monopoly on many of these kinds of services, and this wasn’t a happy era. It sounds like they are trying to preserve a monopoly in the leased space area.

This example raises general issues of principle about many inside-government monopolies, including sometime ones inside an agency (e.g. if customers for procurement services were required to use agency contracting people and not allowed to go to GSA or a governmentwide acquisition contract). I am guessing that GSA would argue that their competitors can lease faster because they don’t follow whatever rules exist in this area – and I am guessing those rules are significant. That is the typical story (excuse?) of the government monopolist, but the problem is that once a monopoly is created, for whatever reason, it tends to produce lazy, non-customer oriented behavior.

It is interesting that, according to the person I spoke with after the brief, GSA delegated leasing authority originally because it couldn’t keep up with leasing demand, but took that authority back when the kinds of third-party entrepreneurial activities the VA undertook started eating too much into GSA’s revenue.
One possibility is that some or even many of the leasing rules are stupid and should be eliminated. If the rules are important, let auditors audit a sample of leasing transactions, by any agency, for compliance. But let’s not preserve a monopoly.

As I said, I hardly regard myself as an expert on leasing policy, but I do smell monopolies pretty well and am skeptical of them. And I write not as an anti-GSA person at all, but as one who believes that it is good for agencies, and good for GSA in the long run, when GSA needs to compete for business.

Any blog readers have any thoughts on this?

Posted on Aug 12, 2010 at 7:26 PM


Reader Comments

Mon, Aug 16, 2010 RH

We've been trying to get into leased space for three years. GSA has been in charge of the acquistion. They are a waste! The first two years we were shuffled from one GSA office to another. When we finally got someone assigned, they are not really on top of the project. We've finally have a building and the lease is signed. However, the contractor has come in with an exhorbitant cost for the build-out. We don't have that kind of money allocated. They are even charging us sales tax. Their subcontractore can't pass the background as they are living out of the country. When we suggested they bid out the project to other contractors, GSA ignored our request. When we asked about the tax issue, GSA said the landlord had called for it. What an inefficient sorry bunch.

Mon, Aug 16, 2010 Interested Party

Steve, I have used GSA and have, with waiver, leased space directly by commercial space. Having done both, I have come to recognize the value GSA brings to this activity. Most agencies do not have people who are experts at leasing and efficiency is lost at this juncture. While you may be able to quickly lease space, you tend to lose protection along the way by signing a lease that is purely commercial. A good deal for a private sector firm is not necessarily good for Uncle Sam, particularly because of government specific regulations. While I don't argue for a monopoly, GSA does bring value even if it doesn't provide speed.

Mon, Aug 16, 2010 Marie DC

But Corps of Engineers takes just as long to find leased commercial space for its customers. Would be interested in knowing why the base didn't ask the Corps of Engineers to find them tenants since military installations are part of GSA's normal portfolio.

Sun, Aug 15, 2010 Steve Kelman

John, I will put them in touch with you! Thanks for posting.

Fri, Aug 13, 2010 john smith

steve,can you put the briefer in touch with me. i work for gsa and would be happy to help the briefer find a solution. thanx.

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