US Government Efficiency Solution: US Federal Policy on Real Property Capital Programming

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

Mar 18, 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 Path to Effective Policy Implementation

US federal policy governing real property capital programming provides a solid framework, but its effectiveness hinges on consistent implementation and the mandatory adoption of agency Real Property Capital Plans. While requirements for real property capital planning exist, the specifics of how these plans support investment decision-making remain unclear. Greater clarity can be achieved by implementing the recommendations from the National Academies’ report, Strategies to Renew Federal Facilities.

This report advocates for federal agencies to develop Real Property Capital Plans using an Asset Management System (AMS) aligned with ISO 55000 and ISO 55001 principles and requirements. Such an approach would provide the clarity of purpose and effort needed to align agency mission objectives, budgets, and programs that manage real property assets. This clarity is essential for managing operational and enterprise-level risks effectively. It also establishes value chains, leadership alignment, and decision-making processes that adapt to change, ensuring the sustained performance of assets critical to achieving agency missions.

Understanding Real Property Capital Programming

Real property capital programming encompasses all budget, resource, and investment decisions related to an agency’s built infrastructure, including fund allocation and work prioritization. It is distinct from capital expenditures, with key concepts defined as follows:

Capital Programming: Focuses on the lifecycle management of capital assets—non-disposable assets with lifespans exceeding one year.
Capital Expenditures (CapEx): Funds spent to acquire, improve, or extend the life of long-term assets and have a high dollar threshold; a subset of capital programming.
Operating Expenditures (OpEx): Funds spent to support asset operations or use; another subset of capital programming.
Asset Management: Coordinates CapEx and OpEx activities. While capital programming emphasizes managing capital assets, asset management prioritizes the value generated by those assets. Though related, their objectives differ.

US Federal Policy Framework for Real Property Capital Programming

The foundation of real property capital programming policy lies in OMB Circular A-11, particularly its Capital Programming Guide Supplement. A summary of this guidance includes:

OMB Circular A-11, Part 6 – Federal Performance Framework for Improving Program and Service Delivery: Establishes requirements for linking performance measures to an agency’s strategic plan and budget. Budget development follows the agency’s Planning, Programming, Budgeting, and Execution (PPBE) process, emphasizing activity-based budgeting techniques.
OMB Circular A-11, Supplement – Capital Programming Guide: Provides guidance on planning and managing capital assets, including real property portfolios, across three phases: planning and budgeting, acquisition, and management-in-use. It applies activity-based budgeting to develop budgets for asset lifecycle activities through an Agency Capital Plan, described as follows:
- Agency Capital Plan (ACP): “As part of its strategic plan, each agency is encouraged to have an Agency Capital Plan (ACP) that defines the long-term agency capital asset decisions. The ACP is the ultimate product of the Planning and Budgeting Phase and should be the result of an executive review process that reviews the work done in this Phase. The ACP should include an analysis of the portfolio of assets already owned by the agency and in procurement, the performance gap and capability necessary to bridge it, and justification for new acquisitions proposed for funding.”
- Purpose of the ACP: “The Agency Capital Plan is the principal output of the Planning Phase. It is a dynamic plan that changes to reflect decisions about adding new assets and deleting old or even in-process asset acquisitions that are not meeting goals (i.e., the return on investment does not justify continued funding of the project). It should be the central document, or group of documents, that the agency uses for its capital asset planning. Agencies are encouraged to use a summary of the Agency Capital Plan for budget justifications to OMB, congressional authorizations of projects, and justifications for appropriations to the Congress.”

Additional policy guidance includes:

OMB Circular A-123 – Management’s Responsibility for Enterprise Risk Management and Internal Control: Sets requirements for implementing risk management and internal controls to guide federal budget development and execution, including real property management.
GAO-20-195G, Cost Estimating and Assessment Guide: Recognized as a best practice for developing real property capital plans and programming estimates.
OMB Memorandum M-20-03, Implementation of Agency-wide Real Property Capital Planning: Establishes requirements for an “efficient and effective real property management strategy.”

Applying Federal Policy for Continual Renewal of Real Property

High-level federal policy aims to guide the development of department- and agency-specific guidance. However, this transition often leads to inconsistencies, as highlighted in the National Academies’ Strategies to Renew Federal Facilities report. The report proposes a “basis for federal facility renewal strategies” as follows:

“Federal facility renewal strategies are founded on the need to enable an efficient and effective federal government and are dedicated to making better resource-and-investment decisions regarding federal facilities to optimally enable federal government operations. This invites a new perspective, looking at federal facilities as an enabling asset and not as an overhead expense. Simply, the basis for federal facility renewal strategies is to generate value for the American people.
At the most basic level, creation of federal renewal strategies is an agency fiduciary responsibility carried out through facility asset management activity. In an ISO 55000 context, asset management is a disciplined approach that “does not focus on the asset itself, but on the value the asset can provide to the organization” (ISO 2014a, § 2.4.2a). This report applies this lens to focus on the role of federal facility renewal strategies in supporting federal agency operations today and into the future. The committee views federal facility renewal strategies as a management imperative, and it is, therefore, no surprise that their development and use are required by public laws and statutes.”

Strategies to Renew Federal Facilities bridges the gap between high-level guidance and practical implementation through two key elements:

1. Understanding Capital Programming – the first element is OMB A-11 – Capital Programming Guide directs the management of capital assets and not the management of capital expenditures. This requires that budgets and resource decision making focus on asset life cycle management and balancing long-term and short-term needs.

2. Disciplined Asset Management – the second element is to understand that capital assets are acquired and used to serve a purpose, and an assets contribution to the achievement of this purpose is the ultimate measure of the value organization’s should place on assets or groups of assets. This requires that budgets and resource decision making for assets must focus on the return on investments made from and through assets.

Fixing US Federal Real Property Capital Programming

Improving real property capital programming requires straightforward updates to OMB Circular A-11’s Capital Programming Guide Supplement. These updates should:

Integrate agency Real Property Capital Plans (as defined by OMB M-20-03) into the Agency Capital Plan framework of OMB Circular A-11.
Mandate that Real Property Capital Plans reconcile agency objectives, budgets, and programs managing real property lifecycle activities.
Require submission of Real Property Capital Plans to materially justify agency budgets and manage risks from budget inconsistencies or gaps.
Mandate that Real Property Capital Plans, signed by agency Chief Financial Officers (CFOs), Budget Officers, and Senior Real Property Officers (SRPOs), be incorporated into agency financial statements per OMB Circular A-136 – Financial Reporting Requirements.

To systematize these changes and make them a standard approach, OMB Circular A-11 should direct federal agencies to develop Real Property Capital Plans using an AMS conforming to ISO 55000 and ISO 55001 principles and requirements. This reinforces disciplined behaviors, enhancing agencies’ agility and flexibility to manage performance, risk, and change transparently while sustaining value through asset management.

Written by Jack Dempsey | March 18, 2025

AMP Newsletter #114

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