Cutting Spending and Consolidating Federal Office Space: GSA's Capital
Investment and Leasing Program
FY 2011 and FY 2012 Capital Investment and Leasing Program (CILP)
March 10, 2011
Welcome to today's hearing to examine the General Services Administration's (GSA) Capital Investment and Leasing Program fiscal years 2011 and 2012 prospectus requests. We will consider both the leases from the GSA fiscal year 2011 capital program that were submitted late last year and the entire GSA fiscal year 2012 program, as well as the administration's efforts to dispose of excess federal property. Although the subcommittee has not yet received the prospectuses for the fiscal year 2012 program, it is important to conduct oversight of this program in order to act as authorizers in advance of appropriations for fiscal year 2012. I strongly support the chair in his efforts to push GSA to provide information to the subcommittee in a timely fashion and to have our resolutions completed before the appropriations bills are done.
GSA's Capital Investment and Leasing Program enables it to manage the general purpose real estate needs of the federal government, and the program provides an important opportunity to support the ongoing recovery of the American economy. According to GSA, the fiscal year 2011 $1.7 billion capital program request for construction, repair and alteration projects represents as many as 16,000 private-sector construction and related jobs. Particularly in the absence of any jobs legislation, such as a robust effort to rebuild the nation's decrepit infrastructure, this year's GSA request is especially welcome. Yet recently, this account was cut to zero in the House-passed full-year continuing resolution, H.R. 1. The total elimination of the fiscal year 2011 capital program budget would bring to a standstill priority construction projects that are underway throughout the United States, including the U.S. Customs and Border Protection stations at two Land Ports of Entry in Calexico, CA and Calais, ME, and the Food and Drug Administration building in White Oak, MD. Decimation of the fiscal year 2011 capital budget would also delay the federal government's number one high-security construction priority, the consolidation of the 22 agencies of the Department of Homeland Security (DHS), now spread in costly leased space throughout the Washington region. In addition, if these cuts become law, GSA also would have to halt multiple repair and alteration projects, including the renovation of the Major General Emmett i. Bean Federal Building in Indianapolis, IN, which supports the Department of Defense's Base Realignment and Closure (BRAC) process, and the Daniel Patrick Moynihan U.S. Courthouse in New York, NY.
These cuts would be counterproductive and undermine the government's goal to house federal agencies in federally owned space, delaying savings to the taxpayers from removing agencies from leased space. In previous hearings, GSA has indicated that delaying DHS headquarters construction would force GSA to extend leases for short terms, which are the most costly to the government. Another particularly large waste of taxpayer dollars would occur because rents collected from federal tenants occupying space leased from private owners are paid to the lessor, not to the badly depleted Federal Buildings Fund. In contrast, rapid completion of the DHS headquarters increases GSA's capitalized assets, enabling GSA to consolidate DHS from dozens of leased locations into a federally owned facility. The Federal Buildings Fund, not a private lessor, would get the rent revenue of $ 180 million annually if DHS headquarters construction is completed on time. These dollars, in turn, would be reinvested back into the Federal Buildings Fund, providing a handsome return to taxpayers from the revolving loan fund used to maintain the valuable federal inventory.
The fiscal year 2012 $1.6 billion capital program request is evidence that GSA requires significant resources to maintain its inventory of owned properties and to increase the number of federal employees in federally owned space, providing significant savings to taxpayers. The largest project in the fiscal year 2012 program is the continued construction of the DHS headquarters. The co-location of DHS agencies on a federally owned campus creates great value for the taxpayer by avoiding some of the highest commercial leasing costs in the country. The fiscal year 2012 program also includes projects across the nation, including the construction of Land Ports of Entry in North Dakota, New Mexico and Texas and major repair work on a federal building in Hawaii.
Both the fiscal year 2011 and fiscal year 2012 submissions show that GSA is trying to address serious bipartisan concerns the subcommittee has raised about the lack of owned space, recognizing the need to maintain and use its own valuable inventory. Yet the government is certainly not in a position to build or purchase much in the way of new space. Therefore, the subcommittee must be vigilant in ensuring that GSA gets the best possible deal for the federal government when identifying lease space for federal agencies. An important way to accomplish this task is to require appropriately delineated areas in procurements by running procurements by the book, thereby carrying out congressional intent as expressed in our resolutions. The subcommittee and the taxpayers still are not yet convinced that GSA is standing firm against agencies that try to steer their locations to high-cost areas, often preferred by the agencies, at great waste to taxpayers. GSA will not be able to hold down lease costs unless its competitions for space reflect the delineated areas approved by the subcommittee.
The President's recent proposal to create a BRAC-like commission for federal real estate has my strong support. The administration has been out front on an issue of considerable concern to the Congress. It is time for GSA, as the central space management agency of the government, to be a true agent of the administration by stepping up to a strong leadership role in an area requiring great expertise. There is undoubtedly the unrealized potential for real savings in realigning the real estate priorities and holdings of the federal government. The President's goal of reducing the government's real estate footprint and we remain very interested in hearing from GSA on how its annual Capital Investment and Leasing Program lines up with the administration's proposal.
Finally, the subcommittee has long had concern about perhaps the most conspicuous undervalued asset in the federal inventory, the historic Old Post Office Building, which is the antithesis of excess property. By now, this property should have earned the government millions of dollars. If there were any doubt about the level of the subcommittee's concern about the Old Post Office, it surely ended when the subcommittee, exactly one month ago, in the dead of winter, chose to dramatize the point of this wasted asset by submitting itself to a hearing in the frigid, abandoned Old Post Office annex rather than, as I would have preferred, telecasting that hearing with Commissioner Peck, the responsible federal official, testifying from there while the subcommittee, which has been doing the right thing for years, listened in our appropriately heated hearing room. The hearing tortured Commissioner Peck into committing to have a request for proposals out on the street within 30 days of the hearing, or to have a written explanation for why it had not gone out. As the hearing last month revealed, the subcommittee expects commitments to be honored, and we look forward to an update today.
I look forward to hearing from our witnesses, and I welcome them to our hearing.