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The disposal of real estate, buildings and fixed assets in the Armed Forces - Doc. no. 3:9 (2004-2005)

The Office of the Auditor General has pointed to deficiencies in both the planning process for the disposal of superfluous real estate, buildings and fixed assets and in the discarding of such property in the Norwegian Armed Forces. This is shown in Document no. 3:9 (2004–2005) The Office of the Auditor General’s investigation of the disposal of real estate, buildings and fixed assets in the Armed Forces that was submitted to the Storting on 27 May 2005.
Published 5/27/2005 2:00 PM

The objectives of restructuring the Armed Forces in the period 2002–2005 include reducing operating expenses. One of the most important policy instruments that can be applied in achieving this goal is to dispose of superfluous buildings and fixed assets. In order to reach the goal of reducing the total square meters in use to approximately four million, almost 2.4 million square meters of building mass have to be disposed of by 2007.

The objective of the investigation was to assess whether the identification and disposal of superfluous real estate, buildings, and fixed assets in the Armed Forces, has been carried out in accordance with the decisions and intentions of the Storting. The investigation included an evaluation of the systems that have been established to identify and discard superfluous properties, along with an assessment of how the disposals has been conducted. A total of 556 transactions have been reviewed and assessed.

Identification of superfluous real estate, buildings and fixed assets

The Ministry of Defence’s directive for real estate, buildings and fixed assets requires a unified planning based on the Armed Force’s total activities. The investigation has shown deficiencies in the planning process. Plans that were supposed to draw attention to the military units’ need for property, and proposals for the disposal of property, have not been drawn up as intended. A practice of using two planning systems has been established, which has made it difficult to perceive a connection between the systems and the levels in the planning process. Questions are raised in the investigation as to whether buildings and fixed assets can be discarded without the existence of an authorised decision-making base in the form of approved activity plans.

The disposal of real estate, buildings and other fix assets

The disposal of the Armed Forces’ properties must be carried out in the most profitable manner for the government. However, special factors must also be taken into consideration for properties that are of major importance with regard to cultural history, nature conservation and the general public’s opportunities for outdoor activities, cf. Proposition no. 45 to the Storting (2000-2001). The Office of the Auditor General has noted that the Ministry has recently assessed which properties that might affect the general public’s opportunities for outdoor activities and has submitted the results of this work to the Storting in the revised national budget for 2005.

When disposing of real estate that includes buildings, a valuation price must be acquired unless the property is of little value. One significant reason for requesting a valuation from an independent surveyor is to ensure that the same information is given to buyers and sellers, and to reveal any deficiencies before the sale takes place. The investigation shows that 60 properties were disposed of without a valuation price being obtained. In several of the property sales the valuation presented was of an earlier date, whereas the instruction for disposals requires the valuation to be made close to the date of sale.

Sale of Midtåsen 30

The disposal of Midtåsen 30 in Oslo has been subject to closer investigations. The property was sold by direct sale in December 2001 for NOK 22 million. The investigation shows that the sale was not publicly announced – a fact that may have led to other potential purchasers being deprived of the opportunity to participate in the process on the same terms as the actual buyer. The Office of the Auditor General is of the opinion that there is no documentation showing that the property was sold at market price, and questions whether the sale was conducted in accordance with the Storting’s authorisation.

The response from the Ministry of Defence

The Ministry of Defence is of the view that overriding policy documents have been drawn up and that these have formed an adequate decision-making base for the Armed Forces’ disposal of real estate, buildings and fixed assets. With regard to the planning process, the Ministry agrees with the Office of the Auditor General that the established practice is complicated and difficult to follow.

The Ministry interprets the instructions for disposals to mean that solutions other than a valuation from an authorised surveyor can be chosen if the sale is to be made through an estate agent and the normal procedure in this sector is followed. In its response, the Ministry maintains that the direct sale of Midtåsen 30 was considered a favourable solution for the Government.


The provision concerning delayed public access to documents that are compiled by or sent to the Office of the Auditor General in connection with the Document no. 3:3 series (2005–2006) has been repealed, cf. Section 28, paragraph 2 of the Auditor General Act.

 

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