The General Services Administration is planning to bar landlords who rent office or warehouse space to the government from using the Consumer Price Index in escalator clauses in leases.
GSA has been studying that change for nearly a year, believing that an audit of the actual costs of running a building is a more accurate way of determining cost increases than use of the CPI, which measures the price increases of consumer products.
The change, when it does take place, will alter the way the federal government distributes $700 million to landlords around the country. Abandoning the CPI runs contrary to established practice in the real estate industry.
GSA is moving ahead cautiously, refusing to be hurried by a new General Accounting Office report that criticized GSA for continuing to write leases with CPI escalator clauses. The GAO, an investigative arm of Congress, contends that those clauses may overstate or understate the actual costs, a fact GSA officials admit.
But Richard O. Haase, commissioner of GSA's public buildings, said, "It's not as arbitrary as GAO makes it sound. There are a lot of little ins and outs that we have to worry about. We are trying to get the best deal for a dollar."
Four years ago, GAO first criticized GSA for adopting the CPI escalator on the advice of a blue-ribbon advisory panel made up of businessmen, who wanted GSA to follow normal industry practice. At the time, GSA officials in the Carter administration refused to comply with GAO's wishes.
Last December, the new hierarchy at GSA -- brought in by the Reagan administration -- decided to limit the use of the CPI escalator clauses by making them voluntary rather than mandatory. But Haase said the change to a "pass-through" audit system, under which government rent increases would reflect actual increases in the cost of maintaining the leased structure, has not been put in place because accounting costs associated with it are often prohibitive.
"It's the preferred way to do it, to establish a 'pass-through' audit. If we can put it in place, we will," Haase said. But to make the system work GSA's audit office would have to hire additional auditors.
Those auditors would check the increases landlords want to "pass through" to the federal government for such things as cleaning services, maintenance, trash removal, landscaping, water, sewage charges, heating, electricity and administrative expenses.
Until then, GAO said that if the GSA continues to accept leases with CPI escalator clauses it should at least make certain the original rent is reasonable.
The congressional auditors said GSA's decision to make use of the CPI optional was prudent. Yet, GAO's spot check of two GSA regions showed most leases were still being drawn with annual increases tied to the CPI.
"The new approach has not resulted in offers without the CPI escalation clause in two GSA regions studied ," wrote Donald J. Horan, director of GAO's Procurement, Logistics and Readiness Division. "We believe the lessor has no incentive to eliminate the CPI escalation clause GSA previously institutionalized and will be reluctant to do so when adequate competition does not exist."
Haase said that developing a system of certifying the actual increased costs at the end of the first year of a multiyear lease "is the most equitable way to do things." Nevertheless, even if costs are audited, there is no "discipline" for a building owner to stay within certain parameters, he noted.
GAO disclosed that data compiled in May 1978 found 9 percent of GSA's leases used CPI escalator clauses and the net annual rental value of those leases represented 45 percent of the government's leasing costs. New data, from March 1982, showed 69 percent of GSA leases have CPI escalator clauses (representing 82 percent of the government's rental tab).
According to the GAO, if the CPI goes up 10 percent in a given year, that costs GSA $6 million in additional rent.