Space Consolidation as a Scoring Pilot

As part of exploring this idea of uniform treatment, the Advisory Group agreed that the approach should be piloted for projects designed to reduce life-cycle cost through space consolidation. In coordination with the appropriate congressional committees and the CBO, the incoming administration should conduct a pilot project to compare alternative approaches to real property investment. Projects that reduce, consolidate, or eliminate agency space and the overall federal real property obligation over time would be selected. These alternative approaches would be scored on an equal footing using a regime that evaluates relative net present value of costs over the project life cycle.

For example, imagine a hypothetical project to consolidate the Department of Labor (DOL) Washington, D.C.-area space requirements into a single location. Completed in 1975, the Frances Perkins Building (DOL headquarters) has more than 1 million square feet of space. Assuming space use and telework rates equivalent to those of the current GSA headquarters, the footprint of the current DOL headquarters would be sufficient to house all DOL activities in the region. The federal government could evaluate the net present value of the cost of the current approach to housing DOL-the cost of maintaining the current building with its highly inefficient space and antiquated systems, as well as the stream of rent payments to house the additional staff-and then compare it with other approaches. Options could include trading the existing asset for a new consolidated headquarters, renovating the existing asset, or undertaking some combination of the two. The cost of each approach would be estimated and compared. The approach offering the greatest value to the federal taxpayer would be chosen. The full net present value of the selected approach would be appropriated and obligated in the year the approach was approved through the appropriations process.

This strategy would require a substantial increase in the year 1 budget authority for GSA. For this approach not to freeze the ability to choose the best long-term adjustment, a pilot budgetary programmatic cap adjustment would need to be made to support the activity in the appropriation process. The cap adjustment could be supported by demonstrating either level long-term funding (through selection of the status quo option) or savings through an alternative.

An initial pilot with several types of building projects in a variety of markets could be undertaken. Over the course of the first several years of the pilot, audits should be conducted, performance evaluated, and recommendations for continuation, revision, or suspension offered. In the end, the risk to the federal government is low. As for the concern that this strategy would generate copycat proposals in other capital investment classes, it is unlikely. Agencies would be hard-pressed to identify anything with similar characteristics to consolidating real property. The availability of a well-developed, transparent marketplace for real estate asset disposal is, in fact, a key differentiator. GSA's ability to sell or trade real estate assets allows it to leverage equity developed over time into even lower long-term budgetary resource requirements.

Frances Perkins Building in Washington, D.C.