To know where to go, it is useful to know where we have been. Under the current rules of appropriation scoring used to determine how to budget for an investment, a lease is scored as either an operating lease or a capital lease, using criteria set forth in OMB Circular A-11, Appendix B. Those rules require any lease for which the net present value of its lease payments exceeds 90 percent of the value of the building to be considered a capital lease and the full amount of the lease payments to be funded in the first year of an appropriation.
Clearly then, an agency seeking to lease a facility will work to structure the term and rent so that it does not need to seek a major, upfront appropriation-an extremely difficult request in an age of continuing resolutions, sequestration, and severe budget constraints. The result is a virtual spin cycle of leasing, with the government leasing a building, re-signing the lease, and leasing it again, paying for a building repeatedly over time. A recent Government Accountability Office study found that "in general, buying a building often costs less than entering into a long-term lease." However, the report continued, the General Services Administration (GSA) "typically lacks the budget authority . . . needed to purchase buildings outright and, according to GSA officials, must resort to leasing to fulfill the federal government's space requirements."3
Federal budget scoring concepts are based on the premise that fiscal actions should be fully accounted for at the time the action is taken. This principle provides for (a) accountability for actions, (b) transparency for taxpayers, and (c) flexibility for future decision makers, as they are not locked into long-term agreements made by their predecessors. Those precepts combine to meet the goal to control and measure federal spending.