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Accommodated by the Central Government Real Estate Agency

Report | 10-06-2015

Efficient and effective management of government real estate

The RVB must make significant savings: €142 million on office accommodation and €25 million on its own overheads. There is a risk it will not make the savings on time. The government also wants its real estate to achieve social goals, such as the preservation of jobs. The pursuit of financial and social goals is a source of friction. Transparency is vital. These findings are presented in our first report in a series on real estate in the public sector: Accommodated by the Central Government Real Estate Agency.

Conclusions

We drew the following conclusions from our audit.

Increased efficiency of central government real estate:

  • integrated costing model is needed for the Central Government Real Estate Agency;
  • efficiency gains must be better substantiated;
  • benchmarking would be a useful tool to improve insight into the efficiency of the Central Government Real Estate Agency;
  • an escalation model is necessary for a government-wide analysis of costs and benefits.

Savings on office accommodation:

  • actual savings are not known;
  • efficiency is not known;
  • there is risk of delays.

Contribution of real estate to social goals:

  • the first steps have been taken to sharpen focus on social goals;
  • there is a dilemma between two public goals: financial and social interests.

Recommendations

On the basis of our conclusions, we made the following recommendations.

  • We recommend that the Minister for Housing and the Central Government Sector give priority to the development of an integrated costing model for the Central Government Real Estate Agency. Only then will the actual cost of real estate, and thus government policy, be known.
  • We recommend that the current market value of central government real estate be assessed so that more efficient choices can be made about the real estate portfolio.
  • We recommend that the minister be transparent about how financial and social goals are taken into account when decisions are taken on real estate.
  • We recommend that the minister work out an escalation model for the event that the Central Government Real Estate Agency cannot reach agreement with the ministries.
  • We recommend that the minister turn the real estate portfolio strategy into wider a semi-public real estate strategy per region that includes a real estate strategy for municipalities, care and educational institutions and other executive organisations.
  • Finally we recommend that the same principles and calculation methods be used systematically in progress reports on the master plans and that the minister explain which ones are used. He should also explain what the incidental and structural costs are.

Response of the minister

Response of the Minister for Housing and the Central Government Sector

The Minister for Housing and the Central Government Sector agrees in broad lines with the recommendations we made in our report. He regards them as support for the projects currently being carried out to arrive at a more flexible and efficient government agency.

Increased efficiency of central government accommodation: the minister notes that he has given high priority to working out an integrated costing model for the Central Government Real Estate Agency (RVB) and expects its development to be completed in the second half of 2015. Once it is introduced, the minister will also study and work out ways to benchmark the RVB’s services. The minister will not act on our recommendation to periodically assess the market value of all premises.
Allocation of responsibilities: the minister wrote that the allocation of responsibilities between the RVB and its clients still had to be worked out in the light of the agency’s governance structure when it is established.

Contribution of real estate to social goals: the RVB actively asks the ministries about their policy wishes and policy goals with regard to government real estate. The RVB’s contribution to social goals, however, will be subject to the financial frameworks set by the government budget and relevant legislation. Furthermore, he writes, the RVB must work with competitive prices, otherwise it would disrupt the market. The minister said the presentation of a long-term strategy on maps was a sensitive matter because both the government and market parties often had substantial financial interests in real estate transactions.

Savings on office accommodation: the minister has already started to update the master plans. He undertook to use the same principles and calculations to update them.

Court of Audit’s afterword

We wrote in our afterword that we were aware that periodic evaluations cost money and that it is not easy to assess the current value of all premises. But it might cost even more money if the current market value is not used when it is decided to sell real estate. We therefore advise the minister to study ways to periodically assess the real estate’s market values.

The minister did not refer to our recommendation that he be transparent about how financial and social goals are taken into account when decisions are taken on government real estate. We think it should be clear what factors are taken into account when a decision is taken and who takes the decision. This is also relevant to parliament if a decision prompts a social and political debate.