US Government Efficiency Solution: Clarify Senior Real Property Officer Fiduciary Responsibilities

Miniseries on the US Government's Failure to Efficiently Manage its Built Infrastructure Portfolio

Feb 04, 2025

This Asset Management Partnership (AMP) Newsletter continues a miniseries that covers how the US Government is failing to manage its built infrastructure and how this problem can be solved. A complete list of preceding articles in this miniseries is at the end of this article.

This article introduces a solution aimed at resolving a U.S. Government fiduciary failure in managing its built infrastructure through enhancing personal accountability, specifically focusing on the role of Federal Agency Senior Real Property Officers (SRPOs). This solution responds to issues raised in an earlier AMP Newsletter article titled: "U.S. Government Efficiency Failure – Transparency and Accountability."

The discussion begins with insights from the National Academies report "Stewardship of Federal Facilities" published in 1998, which included the following recommendation:

"Recommendation 3. At the executive level, an advisory group of senior-level managers, other public sector managers, and representatives from the non-profit and private sectors should be established to develop policies and strategies to foster accountability for the stewardship of facilities and to strategically allocate resources for their maintenance and repair."

This recommendation directly influenced U.S. President Executive Order (EO) 13327 – Federal Real Property Asset Management, issued in 2004. This order established the position of SRPOs for agencies covered by the Chief Financial Officer (CFO) Act of 1990. EO 13327 directs SRPOs to "develop and implement an agency asset management planning process that meets the form, content, and other requirements established by the Federal Real Property Council (FRPC)", which was also established by EO 13327.

Subsequently, the FRPC was codified through the Federal Property Management Reform Act of 2016, which defines its membership to include designated agency SRPOs. The Federal Property Management Reform Act outlined the purposes of the FRPC as follows:

"(1) to develop guidance and ensure implementation of an efficient and effective real property management strategy,
"(2) to identify opportunities for the Federal Government to better manage property and assets of the Federal Government, and
"(3) to reduce the costs of managing property of the Federal Government, including operations, maintenance, and security associated with Federal property."

Publicly available information about the Federal Real Property Council (FRPC) and the products it generates is sparse. Nevertheless, it maintains and publishes information annually in the Federal Real Property Profile (FRPP) as required. Lack of FRPC transparency is common for deliberations to improve and update OMB guidance, specifically including OMB Circulars and Memoranda. Meaning it is pre-decisional until it is released in OMB policy.

An example of released information is the publication of OMB Memorandum M-20-03 – Implementation of Agency-wide Real Property Capital Planning. In this case, OMB M-20-03 stipulates that agency SRPOs, CFOs, and Budget Officers are:

“…jointly responsible for developing the capital planning process, integrating it into the agency’s annual budget formulation cycle, monitoring its execution, and analyzing cost and performance information.”

It further states:

“The SRPO and CFO are jointly responsible for the development of the capital planning process to maximize cost efficiency and mission effectiveness, and to ensure better real property information informs the annual budget formulation process.”

However, this OMB memorandum falls short by only requiring federal agencies to communicate that they have a real property planning process. This self-reporting action does not necessitate demonstrating or ensuring the effectiveness of the planning process.

This observation was made in the National Academies report "Strategies to Renew Federal Facilities" published in 2023. The report is complimentary of OMB M-20-03 for moving federal policy in the right direction but asserts that more is required. The leading recommendation from this report on how to address this gap is as follows:

“RECOMMENDATION 1: Implement a Federal Facility Asset Management System
The Office of Management and Budget (OMB), in concert with the Federal Real Property Council, should update OMB Circulars A-11 and A-123 to improve guidance for implementing facility asset management systems by:
Requiring federal agencies to use a comprehensive and principle-based facility asset management system, as defined by International Organization for Standardization 55000—Asset Management System standards, to implement federal facility renewal strategies;
Clarifying how enterprise risk management and internal controls support implementation of federal facility renewal strategies by improving and clarifying policies contained in OMB Circulars A-11 and A-123;
Clarifying agency senior real property officer’s fiduciary responsibilities to ensure and assure that the agency is maintaining its facility portfolio efficiently and effectively, and that achievement of this responsibility is reported as part of the agency’s OMB Circular A-136—Financial Reporting Requirements;
Detailing how whole asset life-cycle costs, whole asset portfolios, and whole benefit analysis support resource-and-investment decision making; and
Updating OMB Circular A-11, Section 83 (Object Classification) to remove fragmentation and many-to-many relationships that make it exceedingly difficult to generate and audit integrated real property performance–budget and management balance sheets.”

This report boldly states that OMB, through the FRPC which includes federal agency SRPOs, should clarify SRPOs' "fiduciary responsibilities" and state this clarification in policy. In a broader context, the report acknowledges that the core issue facing OMB, the FRPC, and every SRPO is that they are dealing with a "facility asset management problem that requires a facility asset management solution." This is why the recommendation includes the requirement of adopting ISO 55000 – Asset Management System standards.

The use of ISO 55000 is absolutely necessary because it introduces a management system discipline to ensure and assure that the needed transparency and accountability related to SRPO responsibilities are implemented. Its incorporation into US policy is needed because clarity and disciplined surrounding transparency and accountability is lacking in current statutes, regulations, and policy. Its use for this purpose is further recommended by GAO (see GAO-19-57) and this and other National Academy reports because it is the best available source for the need. ISO 55000 defines a principle-based approach with the following asset management principles and outcomes:

Asset Management Principles:
Value - Asset management focuses on the value assets provide to the organization over time...
Alignment - Asset management aligns financial, technical, and operational decisions with organizational objectives...
Leadership - Leadership and commitment at all levels are crucial for successful asset management...
Asset Management Outcomes:
Assurance - Asset management provides better organizational oversight and accountability...
Adaptability - Asset management enables organizations to adapt more rapidly and effectively...
Sustainability - Asset management promotes long-term thinking...

Utilizing ISO 55000 leads to the implementation of an ISO 55001 conforming Asset Management System (AMS). The exercise of an ISO 55001 conforming AMS is facilitated through an Asset Management (AM) Framework, as detailed in earlier articles titled "US Government Efficiency Solution – Disciplined Asset Management" and "US Government Efficiency Solution – Deployment of an Asset Management Framework".

The National Academies' report "Strategies to Renew Federal Facilities" aligns the guidance from ISO 55000 with U.S. Federal policy as contained in OMB Circulars and Memoranda. A simple representation of how all this integrates is shown below:

ISO 55000 and the AM Framework introduced in "Strategies to Renew Federal Facilities," and detailed further in the AMP Newsletter and the AMF Journal, center decision-making around an organization’s Strategic Asset Management Plan (SAMP). The report equates the agency's real property SAMP with the Federal Real Property Plan (FRPP) that is implied in OMB M-20-03.

In OMB policy, the SAMP is considered synonymous with the Agency Capital Plan as detailed in OMB Circular A-11 Supplement - Capital Programming Guide. This supplement states that the purpose of the Agency Capital Plan is to outline an agency's "long-term capital asset decisions." However, the language in this circular falls short as it only suggests, rather than mandates, that the Agency Capital Plan be used to support budget justification.

Bringing these points together, "Strategies to Renew Federal Facilities" recommends that the responsibility of SRPOs to generate the FRPP should be explicitly required to justify agency budget submissions and be a mandatory element of financial audits and reporting as required by OMB Circular A-136 - Financial Reporting Requirements. This recommendation encompasses several key aspects:

Compliance with OMB Circular A-123 - Management’s Responsibility for Enterprise Risk Management and Internal Control, which emphasizes the need for managing risks associated with capital assets.
Utilization of guidance from GAO-24-106889 - Standards for Internal Control in the Federal Government (also known as "The Green Book"), which provides principles for enhancing internal controls, ensuring that asset management practices are aligned with strategic objectives and are subject to rigorous internal control processes.

This recommendation aims to integrate asset management with budgeting, financial reporting, and risk management, thereby enhancing accountability and strategic planning for federal real property. Application of ISO 55000 principles and management system requirements closes the logic circle. As illustrated in the earlier graphic, the SAMP and its supporting Asset Management Plans (AMPs) is a document, plan, and strategy that balances and reconciles three competing management functions common to all federal agencies:

Policy and Strategy that are conferred through stated objectives,
Management of Budget, Resources, and Capabilities, which is an inherent government function, and
Asset Portfolio Program Management, which involves all activities that care for, operate, and maintain the federal facilities needed to support and achieve the agency's mission.

These activities all involve SRPO engagement. However, current U.S. law, statutes, and OMB guidance do not explicitly require the SRPO to be responsible for integrating and reconciling these activities. Current information states that the SRPO is responsible for ensuring that their agency has processes to perform these functions, but that's about all. There is no requirement making the SRPO accountable or responsible for the performance of the agency’s real property planning process, nor are there mandates to reconcile objectives, budgets, and programs that care for real property assets or to evaluate the results of supporting activities.

This is the fiduciary failure that "Strategies to Renew Federal Facilities" addresses. The recommendation to remedy this failure is contained in the report's first recommendation provided earlier. By making these actions a reporting function covered by OMB Circular A-136 requirements, it would compel agency SRPOs, CFOs, and Budget Officers to produce and document how agency objectives, budget, and programs that care for real property are reconciled.

Application of ISO 55000 fills in gaps in current statutes, regulations, and policy by ensuring and assuring that enterprise risks related to gaps and shortfalls in the resulting plans and strategies are proactively addressed. Implementation of this remedy can be accomplished through amendment of the Federal Property Management Reform Act of 2016 or through executive action by the U.S. President or the Director of OMB. A key element of this remedy and a targeted outcome would be the clarification of Federal Agency SRPO fiduciary responsibilities.

Written to Jack Dempsey | February 4, 2025

AMP Newsletter #108

Preceding articles at:

US Government Efficiency Solution: Clarify Senior Real Property Officer Fiduciary Responsibilities

Miniseries on the US Government's Failure to Efficiently Manage its Built Infrastructure Portfolio

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