DGS real property inventory mismanagement - OIG report

Matthew Gilmore's picture


Management of the District's Real Property Assets and Leasing Processes Needs Significant Improvement, Which Could Lead to Substantial Cost Savings

What the OIG Found

DGS neither maintained a complete and accurate inventory of District-owned property, nor submitted annual reports detailing changes in this inventory to the D.C. Council as required by law. DGS lacked effective policies and procedures for maintaining inventory records; collecting and recording required data; and creating the necessary data fields in its database to record and update the inventory of District real property assets. A complete and accurate inventory is necessary to make decisions regarding whether to lease space from a third party or use existing, District-owned space to meet agency needs. With DGS budgeting $177.7 million in FY 2018 to lease space, it is imperative that it has an accurate and complete list to ensure sound decisions are made to either lease or use District-owned space. Furthermore, DGS officials were unaware of the annual reporting requirements and, therefore, did not submit the reports to the Council. As a result, the Council was not fully informed about changes in the District’s real property assets. 

DGS lacked mechanisms to ensure its lease management practices yielded maximum benefits for the District. For example, DGS did not always seek competitive bids for leases and brokerage services, or maintain complete documentation for all lease transactions. DGS also did not establish adequate controls over rent collection or proper administration of the broker's contract. Without effective policies and procedures governing lease management, DGS will not consistently maintain appropriate supporting documentation to demonstrate all lease agreements are in the best interest of the District, and ensure that millions of dollars in rent and rebates due to the District are collected. 

If DGS addresses the findings contained in this report, the District could collect $4.85 million in unpaid rent, and recoup $633 thousand in rebates in the broker's possession.