Testing a project-specific approach that can accelerate the evaluation and decision making around facility consolidation and modernization could also support more precisely tying financial management to investment decisions.
Since the passage of the Chief Financial Officers Act of 1990, federal agencies have been required to prepare audited financial statements. Those statements include information related to capital value and depreciation. However, capital asset values, depreciation, and condition evaluations have little or no bearing on the agencies' annual investment decisions. Little analysis of this information informs the appropriations process, and there is no scoring penalty for underfunding long-term capital replacement or maintenance, even though this type of underinvestment represents a very high-cost wealth transfer from future buying power to the present.
Adopting an alternatives-based scoring regime would include this financial statement information and score the so-called cost of doing nothing. For example, project evaluation should consider offsetting capital investments that meet or exceed depreciation and consider the long-term cost of this capital consumption. The Advisory Group did note, though, that depreciation may not be a sufficient mechanism for scoring actual deferred investment, given that it is a somewhat artificial, tax-driven concept. An alternative would be a condition assessment or deferred maintenance measurement as part of the annual agency audit. This form of alternative scoring would create incentives to close or sell redundant, low-performing, or unused assets.