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Commissoner Peck's Statement at the News Briefing on "Can't Beat GSA Leasing"

GSA #9331

June 18, 1996
Contact: Hap Connors
(hap.connors@gsa.gov)


The following statement by Robert A. Peck, commissioner of the U.S. General Services Administration Public Buildings Service, was released today at a news briefing on GSA's reinvention initiatives in federal real estate, including "Can't Beat GSA Leasing," its new program to streamline federal leasing:

In line with the recommendation of Vice President Gores National Performance Review, our own initiatives and congressional directives, the Public Buildings Service is embarking on additional changes in our leasing practices. Our new program called "Can't Beat GSA Leasing" will give our employees the tools to compete successfully for business which is now ours by statutory fiat. We will use this initiative to increase competition and customer choice, both of which, in the final analysis, will serve taxpayers better.

Let me begin by giving you an overview of the Public Buildings Service. Today, PBS provides owned and leased space to over 100 Federal Agencies, and it is the single largest manager of Federal leased office space. During our discussion, it is important to keep in mind that fully 90 percent of the Public Buildings Service budget is already contracted out. This year, we will pay out $4.9 billion to private sector building owners, custodial and maintenance, security, construction and design firms. The remaining 10 percent of the budget goes to personnel, computer and other administrative costs.

In this era of downsizing, we have to find alternative ways to carry out our business, because we simply do not have enough people to handle our leasing workload. Public Buildings Service employment has declined about 20 percent since 1993, from about 10,000 to around 8,000.

Recent Initiatives -- Reinvention, Public/Private Partnerships, Agency Choice

The building blocks of our new business approach are already in place. Our Northwest Arctic Region in Auburn, Washington, was designated by the National Performance Review as a leasing reinvention laboratory in 1993. This and other reinvention laboratories, and many other parts of GSA have reengineered our leasing process with significant improvements in timeliness and flexibility. In addition, we have awarded contracts to private sector commercial brokerage firms in two of our eleven regions, have begun a solicitation process for multi-regional commercial broker services contracts, and have been providing choice and flexibility to agencies by delegating leasing authority.

Our New Can't Beat GSA Leasing Program

Building on our labs and other Business Processing Reengineering initiatives, we are overhauling our in-house procedures nationwide so we can execute leases faster, in a manner more user-friendly to private sector building owners, and with increased savings to the taxpayers. As you have already heard from acting GSA Administrator Dave Barram, we are calling the new program "Can't Beat GSA Leasing." We will also use lease renegotiations, tax appeals and other business improvements that will save taxpayers more than $300 million in payments over the multi-year terms of the leases.

Next month, we will launch "Can't Beat GSA Leasing" when all 700-plus of our leasing managers and specialists will cease business as usual from July 9-11 to receive training on the new, streamlined GSA leasing program. Later this year, our leasing specialists and managers will get new computer software used in a major corporate real estate operation. In the end, we believe that when agencies are given the choice to stay with us or take their leasing business elsewhere, this new program -- coupled with the quality and experience of GSA's people -- will help GSA maintain and even increase its federal real estate market share.


GSA Leasing -- Myths and Reality

Finally, to gain a better understanding of our service, it is important that I address some myths about savings in our leasing program which you and I have heard.

One private firm has told members of Congress that the government could save $1 billion a year by privatizing leasing. We agree that we can achieve more savings, but the billion dollar number is sheer fantasy. The total GSA budget for leasing in fiscal year 1996 is $2.3 billion. Our studies show that we are paying leasing rates approximately the same as those paid in the private sector for comparable space. Our own recent experience in saving more than $300 million over the five to ten year terms that our leases usually run indicates what is likely to be the magnitude of savings we -- or a private sector firm -- can realistically hope to achieve.

I was recently told that some are saying that Arthur Andersens work on the FORM studies, or the National Performance Review, indicated we could save $600 million a year in leasing. Again, that number is plain wrong. The total annual savings from FORM recommendations, on all of the $5.5 billion annual Public Buildings Service budget, not just leasing, were estimated as $65 million. The number identified as savings on the leasing program was $6 million -- NOT $600 million.

Our in-house study estimated we could achieve about $350 million in multi-year savings from the leasing program by switching to a form of lease prevalent in the private sector. GSA as the tenant -- and not the landlord -- would control ancillary leasehold costs such as initial build-out and cleaning. We will go after those additional savings.

As Dave Barram said, GSA is making great strides in contributing to President Clintons promise to make our government work better and cost less. And the Public Buildings Service is playing an important role as we take steps to streamline our leasing business and work both prudently and creatively to serve our client agencies and the taxpayers effectively.