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FY 2000 Capital Investment and Leasing Program

 

STATEMENT OF ROBERT A. PECK
COMMISSIONER

PUBLIC BUILDINGS SERVICE
GENERAL SERVICES ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE

SEPTEMBER 28, 1999

 

Mr. Chairman and Members of the Committee, my name is Robert Peck and I am the Commissioner of GSA's Public Buildings Service. Thank you for inviting me here today to discuss the Fiscal Year 2000 capital program. Before I discuss this program, I would like to give you an overview of our overall responsibilities and to update you oil a number of Public Buildings Service initiatives that are changing the way we do business. PBS is one of the largest owner/operators of commercial -style real estate in the United States, managing more than 330 million square feet of space in office buildings, courthouses. laboratories and border stations. About half of the approximately one million federal employees we house are in 1,800 government-owned buildings; the other half-million are in leased space in 6,500 privately-owned buildings. We have a presence in some 1,600 American communities. More than half of the government-owned buildings are older than fifty years; nearly a quarter are historic. We accordingly have a particularly significant need for funds for maintenance and renovation.

Our funding comes principally-in FY 2000 it will come exclusively-from the rents that we charge to the more than 100 federal agencies, including the Congress, to which we provide workspace. Out of these rent revenues, deposited in the Federal Buildings Fund, we operate the government's buildings, pay our rents on privatelyowned space, provide security and underwrite our administrative costs. More than 90% of our $5 billion-plus annual spending is spent on contracts with private sector contractors. Since the Oklahoma City bombing, we have doubled our expenditures on building security, doubled the size of our uniformed force, and begun a thorough overhaul of our security organization to upgrade its capabilities and focus it on the violent threats we face.

Our vision is to be recognized as the best public real estate organization in the world. We are managing in a more businesslike way, while continuing to carry out the public buildings program in accord with government contracting procedures and socioeconomic initiatives. We link our budgeting process to performance in tangible ways: regional budget allocations and individual bonuses are dependent on meeting certain improved performance targets. We have encouraged friendly competitions across our I I regions to be the fastest, best and most cost-effective on nine key business performance measures that have quickly become known as the "Big Nine." These efforts have resulted in:

o Our operating costs per square foot of office space in federal buildings are eleven percent below comparable private sector operating costs and in recent years our costs have continued to decline while private sector costs have risen.

o The average rents we pay in private sector buildings in nearly every major locality are
at or below what private sector tenants pay.

o Our customer satisfaction scores, measured in hundreds of buildings by the Gallup organization, have increased significantly.

o Our utility costs are already about one-third below private sector comparables; GSA's energy consumption was reduced by 17% from 1985 to 1998, and will be reduced by all additional 3% by fiscal year 2000.

In addition to bottom-line cost effectiveness, the agency's programs also involve broader goals that improve the benefits that federal buildings bring to the communities in which they are located:

?r new buildings, whether courthouses or border stations, are outstanding examples of contemporary American architecture, making the buildings visible, positive government investments in their localities;

?r First Impressions program is beginning to change the entries and lobbies of Federal building so that the public that we serve will feel welcome and safe in a professional environment.

?r Good Neighbor and urban livability programs encourage partnerships with local communities to assure that Federal buildings are lively presences and that, by their siting and operation, support local development plans.

Our Fiscal Year 2000 capital program will occur within the context of these and other overall agency initiatives. As in the past, we will give first priority to using any Federal Buildings Fund revenues not required for operating and fixed-expense obligations to finance our repairs and alterations and new construction programs. We have many old buildings that have never been modernized, many that have obsolete heating, air-conditioning and electrical systems that cannot support 2 1 st century operations, and some that need seismic upgrades if they are to provide optimally safe workplaces for federal employees. If we do not properly maintain and modernize our buildings, the value and functionality of our inventory will decline.

This past March, we submitted to Congress GSA's Fiscal Year 2000 Capital Investment Program and highlights of the program include:

o 7 prospectus-level design and new construction projects estimated at $92.2 million;

o 13 prospectus-level repair and alteration projects budgeted at $201 million;

o 13 prospectus-level repair and alteration designs for future projects at $17.7 million;

o An elevator program to repair existing elevators and escalators in 5 buildings for $24.2 million; and

o Ongoing chlorofluorocarbon reduction and energy-saving programs, each budgeted at $20 million.

Our Capital Investment and Leasing Program plays a key role in providing the necessary resources to maintain current real property assets and acquire new or replacement assets. The capital program supports several portfolio objectives:

?hancing the value of existing Federally-owned space and adapting it to the needs of today's productive workplace;

?nerating the Federal Buildings Fund income necessary, to support a limited construction program and our major renovation program;

?inimizing the drain that unproductive assets place on the FBF; and

?reserving the historical and cultural assets placed in GSA's trust.

We consider three options when evaluating the requirements we receive from our client agencies: (1) repair and alteration of existing facilities, (2) the construction of new facilities, or (3) leasing space from the private sector.

Generally speaking, we consider a number of factors when evaluating and assigning priorities to our capital projects:

Economic justification in terms of financial return and present value cost; Project timing and execution; Physical urgency based on building conditions; Customer urgency, and Historic preservation and community considerations.

With the limited resources of the Federal Buildings Fund and an increasingly aging inventory, we use a ranking process and several tools to help us determine resource allocation. For instance, we consider the following criteria when evaluating repair and alteration projects:

?otecting the safety and health of tenants in owned and leased buildings;

?tering vacant space in owned buildings to relocate client agencies from leased space into Government-owned space when available; and

?mpleting planned phased modernizations (follow-on phases of multi-phased projects).

When evaluating repair and alteration projects, we also closely examine proposed project scopes to ensure that they meet client agency requirements and facility needs. We work to determine if any possible changes in project scope can be made to realize cost savings, without jeopardizing the project's goals. Refining project scopes may free up funding for more projects.

Additional criteria we consider when setting priorities for major repair and alteration needs in the context of our entire national portfolio include: Ability to award projects within the fiscal year;

?gency of a project's execution, such as imminent system failure and health and safety issues;

?minent nature of tenant requirements; and
?surance that the leasing of swing space is appropriately timed with project
execution to avoid duplication of costs.

The FY 2000 Treasury-Postal Service Conference Report recently approved by Congress provides funding for GSA's prospectus-level repair and alteration projects. We request that you authorize all pending prospectuses so that we can execute our program within the repair and alteration funding made available. That conference report also contains construction funding for the FDA consolidation in Montgomery County, MD. and five border stations.

This year marks the 50th anniversary of the Federal Property and Administrative Services Act of 1949 (Property Act) and we have been studying the impact that additional asset management tools would have on the Government's management of real property. We are preparing legislation to amend the Property Act to help the Federal Government to manage its diverse portfolio of assets more effectively and we look for-ward to working with you on this initiative.

Mr. Chairman, this concludes my formal statement. I would be glad to answer any questions you may have about our proposed Fiscal Year 2000 Capital Investment Program.