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Eliminating Waste and Managing Space in Federal Courthouses: GAO Recommendations on Courthouse Construction, Courtroom Sharing and Enforcing Congressional Authorized Limits on Size and Costs

May 25, 2010



Madam Chair and members of the Committee:  I am Robert A. Peck, Commissioner of GSA’s Public Buildings Service.  As the steward of federally owned buildings and the government’s landlord, GSA helps more than one hundred Federal agencies achieve their missions by constructing and renovating facilities that help them carry out their public missions productively and efficiently.  

The Federal Courts play a critical role in the constitutional framework of American democracy.  GSA is proud to build courthouses worthy of that role.  Local, state and Federal courthouses are a traditional landmark, dating back to the founding of the nation.  Federal courthouses must maintain the Judiciary’s mission of ensuring fair and impartial administration of justice for all Americans while providing security for judges, jurors and others engaged in the judicial process.  

GSA has developed a strong partnership with the Federal Judiciary.  Since we began our Design Excellence program and the Congress began funding a nationwide program of courthouse renovation and construction approximately sixteen years ago, we have compiled a solid track record of delivering high quality buildings that support the Courts’ unique needs while enhancing the buildings’ surroundings.  We do so within carefully considered design and budgetary guidelines and pursuant to Congressional authorization and appropriations.

Today’s hearing focuses on a draft GAO report on Federal Courthouse Construction that asserts that GSA has constructed unnecessary courthouse space and exceeded Congressional authorization.  The report is still a draft and this hearing is taking place before the end of the period in which agencies are customarily allowed to present preliminary comments and concerns.

Indeed, GSA has serious concerns with this draft report and takes exception to much of GAO’s methodology and many of the report’s conclusions.  We welcome the opportunity to clarify and correct the information presented in this report, as much of this information is misleading:  

• GAO has used a space measure that assumes upper space in building atriums is included in the gross square footage of an asset;
• GAO compounded this erroneous assumption by mistakenly ascribing normal operating and construction costs to these empty volumes; and
• GAO retroactively applies a methodology of “courtroom sharing” to buildings designed in some cases more than a decade ago predating the inclusion of sharing in the design guide and then claims that the buildings thus previously designed and built somehow violate this retroactive application of the standard.  

Most egregiously, one reading the GAO report might assume that GSA has willfully neglected Congressional direction in the courthouse program.  On the contrary, GSA has sought and followed regular Congressional authorizations and appropriation and has been subject to strict Congressional oversight of the program.

We built only courtrooms requested by the Judiciary and authorized by Congress.  GSA has been forthright and transparent in all of our documents, testimony, and briefings to Congress throughout the history of our courthouse program.  

GAO discusses overestimating judgeship projections in this report.  GSA agrees that this issue warrants further review, since these projections have been overestimated in the past.  However, GSA, the Judiciary, and Congress should discuss a realistic approach, while considering the 
court’s increasing workload and the need for projections recognizing the length of time it takes to acquire funding and design and construct facilities.  

History and Background of the Courthouse Program – The current courthouse construction program began at GSA in the early 1990s.  GSA works closely with the Federal Judiciary to develop requirements to meet their needs.  Since 1996, the Judiciary has used a 5-year plan to prioritize new courthouse construction projects.  This plan takes into account the Court’s projected need for space, projected growth in judgeships, and security concerns.  GSA uses this plan to develop project requirements for the building program, size, and cost estimates.  These requirements result in a request to Congress for authorizations and appropriations.  Since the program’s inception, 67 new courthouses or annexes have been constructed.  Congress in total has appropriated and authorized approximately $7.5 billion for this program.  

GSA has concerns over the draft GAO report.  We dispute most of the significant findings in this draft report and we are in the process of responding to GAO.  One of GSA’s concerns with this report is GAO’s methodology and the manner in which the auditors calculated extra space built and the associated cost to construct, operate, and maintain this space.  GAO’s assessment of these additional costs misleads Congress and the American public.  

Measuring Space - When calculating the amount of extra space constructed in courthouses, GAO counted all of the square feet in the building, including tenant floor cuts and vertical floor penetrations  in multi-story atriums and double height courtrooms that are, in reality, “phantom floors”.  GAO used this phantom square footage to calculate additional costs supposedly incurred to complete the building.  GAO divided the total cost of the facility, including site costs, design fees and other soft costs, by the gross square footage (GSF) of the building.  GAO then used this grossly inflated GSF number and multiplied it by the alleged amount of additional space GSA constructed to determine the cost of the alleged overbuilt space.  These assertions and calculations are inaccurate and grossly misleading.  

GAO assumes the cost to build and maintain tenant floor cuts and multi-story atriums costs the same as other building space, such as hallways, courtrooms, Marshals holding facilities, or general office space.  This is an incorrect assumption and significantly overstates the cost of constructing and maintaining phantom floor space in a building.  Obviously, a square foot of air inside an atrium costs less to build, maintain, and operate than a square foot of floor inside an office, courtroom or holding cell.  

The cost of constructing phantom floors in an atrium or double height courtroom is only a fraction of the cost of constructing occupied space in the building.  These phantom floors do not require slabs of concrete, nor do they have finishes like carpeting or wood paneling.  The cost of maintaining and operating this type of space is less compared to the rest of the facility.  For example, the O’Connor Courthouse in Phoenix, referenced in the report, has an atrium that is not air conditioned, so to assume these operating costs are the same as the space inside the building is inaccurate.  This type of space also requires little cleaning, repair or maintenance which lowers the operating costs.  This additional vertical space is only a small incremental cost increase to the facility’s construction, not the glaring cost exaggeration in the GAO report.  

Alleged Cost Overruns – GAO also suggests that cost overruns were a direct result of constructing this additional 1.7 million square feet of space.  The increases in construction costs were primarily due to unprecedented increases in construction costs during GAO’s audited time period.  This phenomenal cost growth was well documented and was due to an industry worldwide building boom that resulted in acute material and labor shortages.

The Construction Cost Index, as published annually by RS Means, reflects a cumulative escalation of 58 percent from October 1, 2000 to October 1, 2008.  GSA prepares cost information years in advance of actual construction.  The budget inflation factors used to project future costs simply did not keep pace with the real inflation happening across the globe. This was a common occurrence across industry and was not a lack of planning foresight on the part of GSA. This too is well documented.  This industry cost increase, not the design and layout of the courthouses, was the major driver for the increase in construction costs.

In addition to the unprecedented increase in construction costs, during the period covered by the audit, the U.S. was attacked by both domestic and international terrorism.  As a result of those attacks, both our building designs and projects under construction received a tremendous increase in security requirements which had a direct impact on construction costs and the resultant cost increases associated with our projects.

Congressional Authorization of Additional Space – GAO asserts that 27 out of the 33 Federal courthouses built since 2000 are larger than authorized by Congress.  GSA disagrees with GAO’s claim that this additional space contributes considerably to the increase in project costs since approximately 50 percent of the supposedly additional 1.7 million square footage cited in this report is due to vertical floor penetrations associated with atriums, according to GSA’s estimates.  As mentioned previously, this additional void space costs less to construct and maintain.

Reasons for the remaining 50 percent of the alleged 1.7 million square feet above authorized amount can be attributed to:
1) Site limitations and restrictions, such as site configurations and grading, can result in less than optimal building construction, resulting in design responses that provide less than optimal layout for space.  
2) Constructing connections for the annexes.  One third of the audited projects were annexes connected to existing buildings; and  
3) New requirements not included in the space programming due to new design standards, such as LEED and security requirements, as well as expanding customer requirements.  

GAO also suggests that GSA should notify Congressional authorizing and appropriation committees if the size of a courthouse exceeds the Congressional authorized GSF.  GSA will notify the appropriate Congressional committees when the square footage increase exceeds 10 percent above the maximum identified in the prospectus.  It is also worth noting that we always ensure our projects stay within the statutory 10 percent of the appropriated and authorized funding level or notify Congress accordingly.  We have multiple levels of management and system controls to ensure costs do not exceed this threshold, without Congressional approval and will ensure we have the same for square footage increases.

When the original GSF is exceeded, GSA often has pressing and logical reasons for doing so.  For example, during design, architects can develop more energy-efficient methods, such as creating atriums or light wells to bring natural light into interior windowless space within the building that could increase the building’s total square footage.  GSA will ensure that Congress is notified of these increases in the future, along with the rationale for the increase.  

In estimating the cost of this additional space, GAO applies current GSA policy retroactively in its analysis.  Although GSA adopted the American National Standards Institute and the Building Owners and Managers Association (BOMA) measurement standards in 1997, GSA did not establish formal national guidance to include atrium space in the gross area calculation until fiscal year 2005.  The 33 courthouse projects under review by GAO were authorized prior to this policy, so applying this policy retroactively inflates the gross area of the building during the time of the projects.

As discussed in 2009 in the BOMA publication of The Gross Areas of a Building: Methods of Measurement, current industry standards exclude atrium space in the gross square foot calculation.  If GAO were to apply this BOMA standard or analyze the 33 projects in context prior to the issuance of the formal GSA guidance in 2005, the atrium voids would be excluded from the gross square feet, resulting in more than a 50 percent decrease in square footage above authorized prospectus.  Courthouses such as Greeneville, Laredo, Wheeling, Springfield and Richmond would be at or below the square footage allowed under the authorized prospectus by approximately 10,000 – 20,000 square feet.  The drawing below in Exhibit 1 shows an example of a typical courthouse, highlighting the atrium space circled in red.  This diagram shows the significant amount of space atriums typically account for in a courthouse.  

 Exhibit 1 – Diagram of a typical courthouse with atrium voided space.  

Oversight and Controls – GAO asserts that GSA needs additional oversight and controls over the management of our courthouse program.  GSA has previously implemented this additional oversight and control.  Policies are in place that require GSA’s Central Office and the Regions, during the design process, to approve the facilities’ measurements and ensure they are in line with the appropriation and authorization.  Additionally, we have measurement experts, who provide an independent evaluation of the design.  This evaluation is done during the development of design.  Compliance with the prospectus building size is necessary to proceed with the project.  GSA continues to educate our project teams on these policies and ensure our measurement experts are involved throughout the project’s phases to continually review the design and ensure the size remains within the authorized amount.

Courtroom Sharing – GSA works closely with the Judiciary to develop their courthouse requirements.  The Judiciary has developed and implemented policies that require courtrooms to be shared among judges.  We commend the Courts for developing these new courtroom sharing models, which were developed in recent years.  

GAO audited courthouses that were designed and in some cases built before the Judiciary and GSA implemented the sharing models. The current sharing requirement, included initially in the 2007 design guide, requires one courtroom for every two senior judges.  In 2009, it was updated further to require one courtroom for every two magistrate judges.  The Judiciary and GSA also implemented additional sharing policies that were included for the first time under American Recovery and Reinvestment Act projects that there should be no more than one courtroom for every two district judges, who are within 10 years from their senior eligibility date.  Additionally, GSA makes every effort to more fully utilize any vacant space in a courthouse.  It is important to note that GAO’s findings in the draft report were based on projects that were designed years before the sharing models were implemented.  GSA and the Judiciary are committed to the courtrooms sharing policies for new courthouse projects with future planned designs.  
This concludes my testimony.  I appreciate the opportunity to discuss this draft report and clarify the assumptions and misleading statements made in this report.  Thank you for inviting me to appear before you today and I am happy to answer any of your questions.

Peck Statement before H T and I Subcommittee on Economic Development, Public Buildings and Emergency Management