GAO Report to Find $4.2 Billion in Wasted Federal Lease Payments

Draft Report Identifies $4.2 Billion in Overpayments

The Government Accountability Office will release a report on May 15 concluding that federal agencies overpaid at least $4.2 billion on real estate leases and maintenance contracts between fiscal 2021 and fiscal 2025, according to two congressional appropriators familiar with a draft copy. The report, titled Federal Real Property: Lease and Maintenance Contract Overpayments, 2021-2025, identifies duplicated payments, above-market rent rates, and invoices for work never performed at properties across the country.

A GAO investigator who reviewed the findings said the waste spans at least 340 leases and 1,200 maintenance agreements managed primarily by the General Services Administration. The investigator, who was not authorized to speak publicly before the report's release, said the largest single category of waste involves lease payments on buildings that agencies no longer occupied. The draft counts roughly $1.8 billion in rent paid for vacant or underused space, including $340 million for offices in the Washington metropolitan area alone.

The findings are expected to intensify scrutiny of GSA's public buildings portfolio at a moment when the administration and congressional Republicans are pressing for cuts to federal facility spending. The report will land three days before the House Oversight and Government Reform Committee has scheduled a May 18 hearing on federal real property management, a congressional aide briefed on the plan said.

GSA Leases and Maintenance Contracts Under Scrutiny

The draft report centers on contracts held by three major real estate services firms, according to a budget analyst at the Office of Management and Budget who was briefed on the preliminary conclusions. The analyst said GAO auditors found that GSA approved invoices without verifying that scheduled maintenance had been completed at 89 buildings, resulting in $920 million in questioned costs. The properties include the Ronald Reagan Building and International Trade Center in Washington, the Byron G. Rogers Federal Building in Denver, and the Phillip Burton Federal Building in San Francisco.

Auditors also determined that GSA renewed leases at rates above independent market appraisals, the analyst said. In one instance cited in the draft, the Social Security Administration renewed a 10-year lease at 1500 Woodlawn Drive in Baltimore for $47 million more than an appraiser had estimated the space was worth. The lease was signed in March 2023 and runs through September 2033. The report says GSA's contracting officer waived a requirement to seek competing bids after the landlord threatened to terminate the agency's month-to-month holdover arrangement.

The report also highlights $610 million in security and cleaning contracts awarded through sole-source arrangements, according to the GAO investigator. The investigator said several of those contracts went to firms that had previously employed senior GSA contracting officers, a pattern that the report refers to the GSA Office of Inspector General for further review. One contract, awarded in August 2024 for janitorial services at 23 buildings in the Southeast region, totaled $184 million and was extended three times without competition, the investigator said.

A senior GSA official, speaking on condition of anonymity because the report had not been released, said the agency had begun an internal review of the leases and contracts identified by GAO. The official said GSA expects to issue a corrective action plan within 30 days of the report's release and will seek to recover funds through formal claims against contractors where documentation supports the action.

Capitol Hill Prepares for Hearings and Recovery Push

Members of the House and Senate appropriations committees have received classified briefings on the draft findings, according to two congressional appropriators familiar with the matter. The appropriators said the May 18 House Oversight hearing will include testimony from the GAO Comptroller General, the GSA administrator, and inspectors general from the departments of Homeland Security and Health and Human Services.

Senate aides said a parallel review by the Senate Homeland Security and Governmental Affairs Committee is likely to follow by the end of May. One aide said the committee chairman has requested a May 22 markup on a bill that would require agencies to vacate underused space before renewing leases and would mandate competitive bidding for maintenance contracts worth more than $10 million. The proposed legislation would also require agencies to publish monthly vacancy rates for every leased property over 50,000 square feet.

The report could also shape negotiations over the fiscal 2027 spending bills, which are scheduled to reach the House floor in early June. A House Republican aide briefed on the plan said the majority intends to use the GAO findings to justify a $2.3 billion reduction in GSA's Federal Buildings Fund, with the savings redirected to border security and veterans programs. The aide said the cut would be included in the subcommittee markup expected on June 4.

Democrats on the oversight panel have signaled they will use the hearing to press GSA on whether the waste reflects poor management or deliberate overspending, a Democratic staffer said. The staffer said the ranking member plans to ask GAO whether the overpayments accelerated after the administration's workforce reduction efforts began in February 2026.

What Happens Next

The GAO report is scheduled for public release at 9 a.m. Eastern on May 15, the GAO investigator said. GSA has been given a 48-hour advance copy under standard protocol and is expected to post a response alongside the report. The Office of Management and Budget will also receive the final version on May 13, the budget analyst said.

In the next 48 to 72 hours, watch for three developments. First, the Office of Management and Budget is expected to circulate guidance directing agencies to halt new lease signings above market rates pending a review. Second, the GSA inspector general is likely to open a formal inquiry into the sole-source contracts flagged in the report. Third, contractor firms named in the draft are expected to push back, with at least one preparing a public statement disputing the overpayment calculations.

The findings could have broader implications for how the federal government manages its $50 billion annual real estate budget. If the recovery effort succeeds, it would mark one of the largest clawbacks of misspent federal funds in recent years, budget analysts said. The report may also pressure other agencies to conduct their own lease audits before the new fiscal year begins on October 1.