Saving Taxpayer Dollars: Freezing the Federal Real Estate Footprint
Summary of Subject Matter (updated May 17, 2013)
Chairman Lou Barletta (R-PA)
Subcommittee on Economic Development, Public Buildings, and Emergency Management
Hearing on Saving Taxpayer Dollars: Freezing the Federal Real Estate Footprint
May 22, 2013
(Remarks as Prepared)
The purpose of today’s hearing is to review the Administration’s efforts to “freeze the footprint” of federal office space and to explore how Congress can help save billions of taxpayer dollars on federal real estate.
The President’s efforts began to take shape in 2010. The Administration issued a presidential memorandum to save billions of dollars in real estate activities. In March 2013, OMB issued another directive requiring agencies to “freeze” their real estate footprints and offset any increases with decreases in their inventory.
Over the last several years the Committee has made an aggressive effort to cut GSA’s lease costs as well. The Committee shrunk the size of lease renewals, required more federal workers in less space, and froze rental rates. The Committee’s actions have been bipartisan, and together, we have saved almost a billion taxpayer dollars on prospectus-level leases in the last 2 ½ years.
It has been difficult – and somewhat painful – to achieve these savings for three basic reasons. One, most of the lease requests before the Committee in 2010 were based on workforce projections and utilization standards that predated the financial crisis. In other words, they were not worth the paper they were written on. Two, many agencies don’t want to adopt the President’s new real estate standards. And three, GSA took far too long to provide the Committee with updated information the Committee needed to authorize them. As a result, it took time to negotiate reductions with agencies.
Fortunately the Committee reached agreement with all the agencies except one, the Nuclear Regulatory Commission.
I am pleased a few agencies, such as the Homeland Security Department and the Health and Human Services Department, are proposing to cut their real estate footprint and adopt stricter utilization rates on their own initiative.
As I see it, we have a unique chance to save billions of dollars in federal leasing, and here is why. First, both the President and Congress want to put more people into less space and save taxpayer money. Republicans and Democrats actually agree on spending cuts, and how often does that happen? Second, huge numbers of GSA leases are expiring in the next three years, which creates an easy opportunity to shrink our footprint. In the National Capital Region alone there are 24 million square feet of leases expiring, and most of them have terrible utilization rates. Third, we are still in a buyer’s market. Rental rates are low, and good deals can be made for long term leases. We don’t want to miss this opportunity.
We need GSA to more actively carry out the Committee’s and the President’s goal to shrink our real estate and save taxpayer money. I know most agencies don’t want to give up office space, and it can be hard for GSA to tell them no. The Committee will continue telling agencies they have to cut their office space, but GSA must also deliver that message when agencies come to them with new requests.
The Committee will do its job, and we need GSA to do theirs. The Committee needs prospectuses in a timely fashion. Even though millions of square feet of leases are expiring soon, GSA has submitted zero lease prospectuses. The Committee needs information to authorize projects. For example, none of the 39 government owned project requests the Committee received with the budget include housing plans. How is the Committee supposed to know if a project will result in a good or bad utilization rate if we don’t have a housing plan? We can’t do our job without this kind of information.
Also, GSA’s own building database fails to include the number of people that work in each building. How is GSA ever going to improve building utilization rates if it doesn’t collect actual building utilization data?
If agencies have multiple facilities in a location, GSA needs to show the Committee how a single lease request fits into that agencies’ plan for consolidating its footprint in that region. For example, the current prospectus to renew the NRC’s expiring lease at its Maryland headquarters is very misleading. The housing plan clearly states the same number of people will occupy the building after the lease renewal. Yet we now know that is not true, because the NRC has just taken possession of an even larger leased building across the street. As a result, the NRC is going in exactly the opposite direction that the Administration mandates.
In this budget climate, smart agencies realize they have to choose between employee salaries and rent; so they are cutting office space. However, NRC doesn’t seem to have gotten the memo.
I hope today we can hear from our witnesses on the steps they are taking to improve their space utilization and save taxpayer dollars. And, I hope we can finally get answers to resolve the issues related NRC’s space.
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Dr. Dorothy Robyn, Commissioner, Public Buildings Service, U.S. General Services Administration | Written Testimony
Mr. E.J. Holland, Jr., Assistant Secretary for Administration, U.S. Department of Health and Human Services | Written Testimony
Mr. Jeffery Orner, Chief Readiness Support Officer, U.S. Department of Homeland Security | Written Testimony
Mr. William Borchardt, Executive Director for Operations, U.S. Nuclear Regulatory Commission | Written Testimony