[Senate Hearing 105-408]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-408
 
      STATUS OF DEPARTMENT OF TRANSPORTATION HEADQUARTERS BUILDING

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION


    ON A PROPOSAL BY THE GENERAL SERVICES ADMINISTRATION TO DEVELOP 
   PROPERTY CALLED THE SOUTHEAST FEDERAL CENTER AS THE HEADQUARTERS 
             BUILDING FOR THE DEPARTMENT OF TRANSPORTATION

                               __________

                            NOVEMBER 5, 1997

                               __________

  Printed for the use of the Committee on Environment and Public Works



                      U.S. GOVERNMENT PRINTING OFFICE
47-219 CC                     WASHINGTON : 1998

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402






               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED FIFTH CONGRESS

                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director
                              ----------                              

           Subcommittee on Transportation and Infrastructure

                   JOHN W. WARNER, Virginia, Chairman
ROBERT SMITH, New Hampshire          MAX BAUCUS, Montana
DIRK KEMPTHORNE, Idaho               DANIEL PATRICK MOYNIHAN, New York
CHRISTOPHER S. BOND, Missouri        HARRY REID, Nevada
JAMES M. INHOFE, Oklahoma            BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming                BARBARA BOXER, California

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

                            NOVEMBER 5, 1997

                           OPENING STATEMENTS

Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     1

                               WITNESSES

Basso, Peter J., Acting Assistant Administrator for Budget and 
  Programs, U.S. Department of Transportation....................     2
    Prepared statement...........................................    12
Chistolini, Paul, Deputy Commissioner, Public Buildings Service, 
  General Services Administration................................     1
    Prepared statement...........................................    11

                                 (iii)




      STATUS OF DEPARTMENT OF TRANSPORTATION HEADQUARTERS BUILDING

                              ----------                              


                      WEDNESDAY, NOVEMBER 5, 1997


                                       U.S. Senate,
               Committee on Environment and Public Works,  
         Subcommittee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m. in 
room 406, Senate Dirksen Building, Hon. John Warner (chairman 
of the subcommittee) presiding.
    Present: Senators Warner, Thomas, Baucus, Moynihan, and 
Chafee [ex officio].

OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE 
                     STATE OF RHODE ISLAND

    Senator Chafee. Good morning, everyone.
    This is a subcommittee hearing in which Senator Warner is 
the chairman of the subcommittee. He is detained at a Rules 
Committee gathering of some type and will be along later.
    But the purpose of this hearing is to consider the General 
Service Administration's proposal to construct or otherwise 
acquire a facility to house the headquarters of the Department 
of Transportation. I don't know if there are any comments. Do 
you have any comments, Senator Baucus?
    Senator Baucus. No, except that doing nothing is not an 
option. And we'll look forward to the various options. Thank 
you.
    Senator Chafee. Thank you.
    Senator Thomas?
    Senator Thomas. I'm just interested in hearing the 
information. Thank you.
    Senator Chafee. Good. I'm glad each of you are here. This 
is serious business.
    We'll now call Mr. Paul Chistolini from GSA and Mr. Peter 
Basso from Department of Transportation. Mr. Basso, I 
understand Mr. Fields is also here. Why don't you come to the 
table. All right, Mr. Chistolini, Deputy Commissioner of Public 
Buildings Service, General Services Administration. Please 
proceed.

   STATEMENT OF PAUL CHISTOLINI, DEPUTY COMMISSIONER, PUBLIC 
       BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION

    Mr. Chistolini. Thank you, Mr. Chairman, and members of the 
subcommittee.
    I really do appreciate this opportunity to appear before 
you today regarding the acquisition of new headquarters 
buildings for the Department of Transportation.
    Rather than restate what is in my submitted statement, 
there are a few key points I would like to make and then be 
available to answer any questions you have.
    First, I believe that immediate action is needed to resolve 
the housing situation for this agency, the Department of 
Transportation. They're currently housed in a building that is 
30 years old. They're not able to effectively function in their 
building, because the systems have reached the end of their 
operating life.
    Second, the current lease expires in March of the year 
2000. And under any deeds of acquisition, the current lease 
will expire before the DOT action can be completed.
    So unless we move forward quickly, the Government's ability 
to negotiate an extension with reasonable terms will be 
negatively impacted.
    Finally, the House had passed a resolution that I believe 
permits GSA to move forward with the DOT projects. That 
resolution gives GSA quite a bit of flexibility to acquire 
replacement space in the most cost-effective manner considering 
what resources are available at GSA.
    That's all I have to say at this time, Mr. Chairman. I'll 
be pleased to answer any questions you have.
    Senator Chafee. All right.
    Mr. Basso?

STATEMENT OF PETER J. BASSO, ACTING ASSISTANT ADMINISTRATOR FOR 
    BUDGET AND PROGRAMS, U.S. DEPARTMENT OF TRANSPORTATION; 
    ACCOMPANIED BY: GEORGE FIELDS, DIRECTOR, TRANSPORTATION 
  ADMINISTRATIVE SERVICE CENTER, DEPARTMENT OF TRANSPORTATION

    Mr. Basso. Thank you, Mr. Chairman. I'll be very brief.
    Senator Chafee. You gentlemen don't have to be brief. We're 
not rushing to any fire here. This is serious business, and I 
think we want you to explore the alternatives. For instance, 
Mr. Chistolini has said that we've got to move quickly. Others 
say, look, the crucial opportunity occurred during 1996 and 
that wasn't taken. So why not put this off until when we come 
back in February, or come back in late January.
    So I think these are issues the committee would be 
interested in hearing. We're talking some big dollars here. And 
it's a serious matter.
    So usually we tell you move along, but not today.
    Senator Thomas. Don't discourage brevity, Mr. Chairman.
    [Laughter.]
    Senator Chafee. Well, I have to be careful here. But 
anyway, lay it out as you wish, Mr. Basso.
    Mr. Basso. Thank you, Mr. Chairman. I said ``brief.' Brief, 
to get to your questions so we could lay it out.
    Let me just first mention that Secretary Slater asked me to 
convey to you and the members of the committee his personal 
appreciation for your promptly and quickly scheduling this 
hearing and for your help in this matter.
    Let me just mention three critical points. Mr. Chistolini 
has already mentioned that the DOT building is essentially 30 
years old. While there have been some improvements, they have 
been cosmetic and basic improvements, not substantial 
improvements that helped a great deal.
    Absent a major renovation, the building does not meet the 
Department's current or planned needs. It was designed in the 
1960's, so it lacks energy efficient systems, doesn't take 
advantage of state-of-the-art technology and precludes us in 
part from having the latest communications equipment in the 
building.
    To address the capital expenses involved here, to date, we 
have spent over $440 million in rental payments over this 30-
year period. It's coincidental I've been there that long, Mr. 
Chairman, so I've seen the dollars go, and it's quite 
substantial. If we purchased the building, we could have 
purchased it three times over for that cost. So I think we've 
reached a point where action needs to be taken to preclude this 
problem for the future.
    We are working closely with the General Services 
Administration to try to solve those problems. And one other 
feature I might mention in this whole effort, currently between 
the U.S. Coast Guard and ourselves, in two buildings, we occupy 
a million and a half square feet of space. Our plan, which is 
moving forward to satisfy this headquarters need, would reduce 
about 400,000 square feet by consolidating those two agencies 
in a building where the layouts could accommodate more 
personnel in a more efficient way. So I wanted to make that 
point, sir.
    And the bottom line for all of this is----
    Senator Chafee. That's a 25 percent reduction in square 
footage.
    Mr. Basso. Yes, sir. And let me just make a little further 
explanation of that.
    One of the problems that we face in this building is, 
because of the way it's designed internally, the walls are 
movable but not without considerable construction. Substantial 
amounts of space are consumed in very large corridors. And we 
really do have plans, and Mr. Fields could elaborate later, if 
you'd like, on how we could accomplish that reduction.
    But I thought that was an important point to draw to the 
committee's attention.
    Let me just close by saying, we would appreciate anything 
the committee can do to move this matter forward at this time.
    Senator Chafee. Mr. Fields, do you want to add anything or 
just be available for questions?
    Mr. Fields. Mr. Chairman, I am available to respond to your 
questions.
    Senator Chafee. My first question is, why are you here? 
What are you asking us to do?
    Mr. Chistolini. I guess in the shortest possible manner, 
we're asking that the committee authorize GSA to begin an 
acquisition plan which would lead to the replacement of the 
Department of Transportation headquarters. It would allow us to 
provide replacement space, either through an operating lease or 
new construction, or some combination of both. And that 
competition would also allow the current lessor to compete in 
the process.
    Senator Chafee. So what you're asking us is to authorize 
you to go out and spend $300 million or whatever it is for a 
new building?
    Mr. Chistolini. That is one alternative. As this moves 
forward, the Administration would have to decide if that's the 
way they wanted to do that in terms of the new construction, or 
whether we would do as authorized in the House Resolution, 
enter into a 20 year operating lease, during which we would 
have the opportunity to purchase the building.
    So in effect, we would be entering into a lease for a 
building that would be built to Government specifications, in 
effect, a Government building. And we would have the right to 
buy out the lessor at certain points during that process.
    Senator Chafee. Mr. Basso, what are you asking us to do?
    Mr. Basso. Mr. Chairman, we're asking that you approve a 
prospectus that would allow competition to occur to get an 
adequate Department of Transportation headquarters building. 
And we feel that the time is now, given the fact that our past 
experience has been, with only a 2-year window until this lease 
expires, we will find ourselves in a holdover situation and in 
a very poor position to negotiate from that holdover situation.
    Senator Chafee. But aren't you asking us ``to buy a pig in 
a poke''? Apparently you don't have a recommendation now as to 
whether you should build; or whether you should get somebody 
else to build it, and then you buy it from them. You don't want 
to make that decision now on, what do you call it, the Nassif 
Building?
    Mr. Basso. Yes, sir.
    Senator Chafee. You want to have these options, right?
    Mr. Basso. Yes, Mr. Chairman. We think that having those 
options really is the best way to go, because it creates, what 
we really want to create is the opportunity for full and open 
competition. And let that competition work out what is the most 
cost-effective and logical way to fulfill that need. And Mr. 
Chistolini and I have talked about this.
    Mr. Chistolini. This is a very large procurement, very 
unusual. We feel that by engendering this type of competition 
we can get the most cost-effective solution. And as we get down 
the road, depending on the resources available, we could 
convert it to Federal ownership or continue in an operating 
lease mode.
    Senator Chafee. Well, I don't want my questions to be 
interpreted that I'm not out to be helpful to you. I am.
    Senator Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    As I understand it, DOT's been paying approximately $30 
million a year in rent, is that correct?
    Mr. Basso. Yes, it's approximately that.
    Senator Baucus. So since 1970, that's roughly $440 million?
    Mr. Basso. That's correct, Senator.
    Senator Baucus. And if that is roughly three times the cost 
of the building maybe back then?
    Mr. Basso. Yes, sir, that's correct.
    Senator Baucus. So you feel it is more cost effective for 
the Government to own a building rather than paying such high 
lease payments, is that correct?
    Mr. Basso. What we believe at this point is that ownership 
could certainly have the benefit of being more cost effective. 
But we don't have the answer other than in concept. I think the 
point we made earlier is that we need to go out on the street, 
exercise the options and see what the best solution is.
    Senator Baucus. Is it true that DOT is the only Cabinet 
agency without a Government-owned building?
    Mr. Chistolini. They are the only Cabinet agency in leased 
space, that's correct, sir.
    Senator Baucus. Could you tell us just about what 
competition there is to date for that size of leased space?
    Mr. Chistolini. Back at the end of----
    Senator Baucus. That's a lot of space, what is it, 1.1 
million square feet, something like that?
    Mr. Chistolini. Yes, Senator, it's about 1.1 million square 
feet.
    At the end of 1996, we ran an ad in the newspaper looking 
for expressions of interest. Out of that, we received in double 
digits, in the low teens in terms of what I would call serious 
expressions of interest, of which we did investigation and 
looked at sites or combinations of sites that developers could 
put together.
    So I'm very comfortable in telling you that within the 
central employment area of Washington, DC, there are enough 
sites that would engender a lot of competition for this 
procurement.
    Senator Baucus. So there is a lot of competition for 1.1 
million square feet?
    Mr. Chistolini. I believe so.
    Senator Baucus. For another lease?
    Mr. Chistolini. Yes, sir.
    Senator Baucus. At some other location?
    Mr. Chistolini. Yes, sir.
    Senator Baucus. It's my understanding that there's not a 
lot of competition for that size of lease. Which puts the 
Government in a disadvantageous position when negotiating with 
a lessor. That's not true here, apparently.
    Mr. Chistolini. I think there's enough competition that 
would engender very intense competition between those with new 
solutions as well as the current lessor to modify, upgrade his 
building and also compete with us.
    Senator Baucus. That's right. New solutions, that is, there 
would be more competition with more options.
    Mr. Chistolini. I believe so, sir.
    Senator Baucus. Lease options as well as procurement 
options?
    Mr. Chistolini. Yes, sir.
    Senator Baucus. That's basically what your argument is, 
that's what you want?
    Mr. Chistolini. Yes, sir.
    Senator Baucus. In order to get the best rates to the 
taxpayer?
    Mr. Chistolini. Most cost-effective solution.
    Senator Baucus. Most cost-effective solution. OK.
    Is there some way you could design this request so that if 
you come back to us again to ask for further authorization, if 
I'm addressing the Chairman's reaction, which is a natural 
reaction, we're giving an awful lot of authority here and don't 
want to buy a pig in a poke, and we'd like to have some control 
of what's going on here, some guidance.
    Mr. Chistolini. Well, certainly if we were to move into a 
process where we wound up with Government construction or 
Government ownership of the building, I see no problem in 
coming back and notifying the committee. We would certainly 
have to come back through the Senate Appropriations committees. 
But I see no problem in notifying this committee of how we're 
going to solve this when we get to a certain point.
    Senator Baucus. Mr. Chairman, I would think there would be 
some way to keep us advised in addition to the appropriations 
process, so we have an idea what's happening here.
    Thank you.
    Senator Chafee. Senator Thomas.
    Senator Thomas. You are the Deputy Commissioner of the 
Public Buildings Service?
    Mr. Chistolini. That's correct, sir.
    Senator Thomas. So you deal with this all the time?
    Mr. Chistolini. Yes, but generally not this large a 
project.
    Senator Thomas. It just seems to me that you guys are kind 
of open for doing this all the time. I would think you'd have a 
little more specific idea of how you do this, what the costs 
are, and all those kinds of things, since that's what you do 
every day.
    Mr. Chistolini. This is unusual, and it's such a large 
transaction, well over a million square feet. We usually don't 
do a transaction like that in the Washington, DC area. 
Generally, the headquarters agencies, all except the Department 
of Transportation, are housed in Government-owned building.
    Senator Thomas. Well, don't you have anything to do with 
that?
    Mr. Chistolini. Yes. We're responsible for that. The 
construction of a new building is on the order of $300 million. 
Our proposal, and our acquisition strategy is to get out into 
the marketplace and see what the different alternatives are.
    Senator Thomas. I guess that's what puzzled me. I would 
assume you would know that, since you deal with it all the 
time. That's your business.
    Mr. Chistolini. We have enough information, we have had a 
consultant on board giving us a lot of data, told us a great 
deal about potential sites, potential costs, how this project 
could be done with no scoring implications or minimal scoring 
implications. So we have a great deal of data, and that's gone 
into our acquisition strategy.
    Senator Thomas. I see. You haven't shared much strategy 
with us, I don't think. This thing kind of, here we are, you've 
been dealing with this now for quite a while and now you're 
saying, gosh, we have to do this immediately. Where have you 
been for the last two or 3 years?
    Mr. Chistolini. Several years ago, there were different 
proposals for solving this problem. They just never got this 
far. We now have got this finally to what I call the----
    Senator Thomas. Like the chairman, I don't think there's 
anyone who quarrels with the notion you have to do something 
different. But I think you could quarrel with the idea we're 2 
days away from adjournment. And we're here.
    I also agree, and apparently the House gave authority, 
authorization to do whatever you decide. Is that right?
    Mr. Chistolini. They gave us authority to move along, yes, 
sir.
    Senator Thomas. That's not what I'm saying. Do you have the 
authority, then, to make the decision and come in and ask for 
the dollars, appropriations?
    Mr. Chistolini. Yes, sir.
    Senator Thomas. Then I think maybe we're suggesting we're 
not maybe prepared to do that, that we need to come back and 
get some more authority after you've decided what it is you 
want to do.
    Do you think there's merit in having the private sector 
participate? I mean, you compared the cost of rent, but there's 
also the cost of money to the Government over this period of 
time, which is worth something, there's also taxes, which are 
worth something, I presume. And you say there are no private 
renters in this whole business of headquarters. So apparently 
you don't think the private sector is the right way to go.
    Mr. Chistolini. No, I believe that the private sector will 
actively participate, offer us a great number of----
    Senator Thomas. What other evidence is there of that in 
terms of headquarters buildings?
    Mr. Chistolini. I wouldn't put it in terms of just 
headquarters buildings. I would put it in terms of buildings of 
this size. We know from our studies that there are a number of 
private sector developers out there who have sites and the 
wherewithal to deliver the square footage that we're looking 
for.
    Senator Thomas. But you haven't used any of them?
    Mr. Chistolini. In the past, we have used some of the 
people, some of these developers for different procurement.
    Senator Thomas. I just sense that you're dedicated to the 
idea that the Government ought to own the building.
    Mr. Chistolini. That is certainly the most cost-effective 
solution.
    Senator Thomas. Are you sure?
    Mr. Chistolini. Recognizing the resources it takes to make 
that happen, we're open to other alternatives, too.
    Senator Thomas. See, I don't necessarily agree with the 
observation that that's particularly the cheapest way to go, 
unless you can show me the money. There's a lot of merit in 
having the private sector involved, it seems to me, and I hope 
that you haven't already arranged your prejudices in such a way 
that they don't have a chance.
    Mr. Chistolini. No, I expect that they will actively 
participate.
    Senator Thomas. Thank you.
    Senator Chafee. Senator Moynihan, who's spent a lot of time 
in this area, not only as chairman of this committee, but as 
chairman of the subcommittee that dealt with these matters. I 
guess he authorized more public buildings in this city than 
most anybody else in a long time.
    Senator Moynihan. I'm in good company.
    Senator Chafee. Well, you were the guiding star.
    Senator Moynihan. I'd like to say to my friend, Senator 
Thomas, that when we began this project, Senator Chafee and I, 
21 years ago, the issue was not how to get the private sector 
involved in Government building. The issue was how to get the 
public sector involved. We had this problem, and it's still a 
budgetary fact, that if you want to build a building you have 
to put the entire amount of cost in the 1-year's budget, the 
capital budget.
    We began renting. And all over Washington, we have been 
renting, and people have made fortunes. This particular 
building was done by a very elegant man named Nassif who got 
Edward Durrell Stone to design it. And we have paid them $440 
million, and all we've got to show is the old Irishman's rent 
checks. And we don't have a building.
    What I think they'd like to do, if I understand Mr. 
Chistolini, is just look around and see if there's an 
alternative. The rent-to-own alternative. There's one specific, 
sir, if I can get my bearings, it would be right over there, 
the Thurgood Marshall Building, that was the third building in 
the complex of Union Station, post office and this building, 
that was anticipated in the MacMillan plan of 1901. And we 
built the two, Bernham built them, but we never built the 
third.
    The Judiciary Committee, Judiciary Office of Administration 
and the Federal Court, has a lot of office space. There are a 
lot of administrative things to do. We built that one building, 
a private sector person built it for us. No secret about his 
name, no secret about his name except I can't remember it----
    Mr. Chistolini. Boston Properties, sir.
    Senator Moynihan. ----Boston Properties, the owner of the 
New York Daily News.
    We owned the land, and so we built a beautiful building. We 
were moving tenants in from private owners, private leases, and 
we were paying Mr. Zuckerman less rent than we had been paying 
other owners. And in about 24 years now, we own the building. 
And we've tried to get a balance, Senator Chafee and I have 
talked, in terms of if the Federal Government owned about 55 
percent of its space and rented 45 percent, it would be a fair 
balance.
    But our rental bill is now approaching $2 billion a year, 
is it not, sir?
    Mr. Chistolini. It's $2.4 billion, sir.
    Senator Moynihan. It's now $2.4 billion. And you never see 
it back.
    Senator Thomas. Well, we could go into a great 
philosophical thing about having the private sector involved in 
the public, or having the public own all the facilities. I 
don't want to go into that. I understand what you're saying.
    Senator Moynihan. I think what Mr. Chistolini is asking is 
that they be given the instruction to go out there and look 
around and think hard. But then you must come back to this 
committee with what you propose.
    Senator Chafee. We get a little difference here, Mr. 
Chistolini.
    First of all, I want to say to Senator Thomas, you've been 
the beneficiary of the Moynihan education process.
    Senator Thomas. And I'm grateful for that.
    Senator Chafee. And we're conducting a test on that.
    [Laughter.]
    Senator Thomas. Thank you. I took notes.
    Senator Chafee. The first question in the test, who was the 
architect that designed not only the station, but if you look 
carefully, as Senator Moynihan said, the post office next to 
it?
    I've learned my lesson, have I not done well?
    Senator Moynihan. Pretty well. Certainly.
    Senator Chafee. And it was Mr. Bernham. I believe in, was 
it 1902, thereabouts?
    Senator Moynihan. Yes.
    Senator Thomas. I wasn't here then, sir.
    [Laughter.]
    Senator Chafee. So in any event, I think it is important to 
note, as Senator Moynihan said, we didn't go all the way to 
have us own all the buildings, all the space. It's roughly 55-
45 percent. The idea is to keep the private sector involved 
with some competition.
    But Mr. Chistolini, I think the House resolution goes 
further. I think they just give you carte blanche, as I read 
the thing. And you can go ahead and make commitments. Am I 
correct?
    Mr. Chistolini. That's correct, sir.
    Senator Chafee. And I don't think you're going to find this 
committee that willing to do that, go that far.
    Senator Moynihan. But encourage them.
    Senator Chafee. Oh, sure. We want you to go out. We don't 
want to stifle you at all. We want you to go out and do the 
best you can, even with the present landlords.
    How are you fixed with time? I'm not suggesting we delay 
this at all. Do you have enough time? In other words, suppose 
you say to the current landlord, give us a better deal or we'll 
get out. Can you get out? I guess it's up in March of 2000. 
That's only----
    Mr. Chistolini. Twenty-eight months away, Senator.
    Senator Chafee. Not very far. Although, Senator Moynihan, I 
believe that the Pentagon was built in less than 28 months, 
that entire building.
    Senator Moynihan. Oh, yes, sir.
    Senator Chafee. And one of the great builders, General 
Brenton Somerville was the man from the Corps who built that 
Pentagon. He built it in, I'd say, just before the war, was it 
1938?
    Mr. Chistolini. Started in 1941, it was completed in 1943, 
it took 16 months, and it's quite an accomplishment.
    Senator Chafee. Was Somerville in charge?
    Mr. Chistolini. Yes, sir.
    Senator Baucus. Like the Cooke Stadium.
    Senator Chafee. Lot better job than the Cooke Stadium.
    [Laughter.]
    Mr. Chistolini. Although I don't know if you could build a 
building in this area these days working three shifts, around 
the clock, for that time period. It still stands as a great 
accomplishment.
    Senator Chafee. You said 16 months?
    Mr. Chistolini. Yes, 16 months, sir.
    Senator Chafee. It's incredible, isn't it.
    Well, back to my point here. The House goes further than we 
go, than I believe this committee would be willing to go. 
However, we don't want to restrain you. Is that a restraint on 
you, if you come back here?
    Mr. Chistolini. Well, I guess it would depend on what we 
would have to come back and tell you. I believe that if we had 
to come back and simply tell you what our solution is if we're 
going to go to new construction or how we're going to do that, 
that is not a restraint. We have to have enough authority so 
that the marketplace knows that we're serious about conducting 
this competition, that we have the maximum leverage with the 
current landlord.
    If you look at this in a timeframe, the lease runs out in 
28 months. That's about the time when we, or slightly less than 
that, when we would know what the solution is. We certainly 
want to minimize any holdover time that we're with the current 
lessor if he is not the winner.
    But we also want to conduct a competition that allows him 
to participate to the fullest extent.
    Senator Moynihan. Mr. Chairman, if I could just make a 
point. As I understand it, the building has problems, 
ventilation, etc.
    Senator Baucus. Sick building. It's true.
    Senator Chafee. Well, I notice there's a vote on. And I 
know Senator Warner wants to come over, and he has some 
questions, after everybody gets a chance.
    Mr. Fields, do you have anything you want to add to this?
    Mr. Fields. I would add that we're looking for competition, 
and the the marketplace is going to believe that we're serious 
if we in fact receive the authorization necessary. We have to 
come back to this committee and report back. We are comfortable 
with that.
    But we need to make certain that we are transmitting to the 
marketplace that we're serious in terms of competition, so that 
we don't find ourselves faced solely with one proposer.
    Senator Chafee. Well, I'll guarantee you this. As far as 
I'm concerned, I think I can speak for----well, Senator Baucus 
can speak for himself. But we're not here to delay anything. If 
you come back, we'll act expeditiously. And if you've got a 
reasonable proposal, we'll go for it. We're not here to hold 
you up in any fashion.
    Senator Baucus. With that I would agree.
    Senator Chafee. Does anybody have any questions here? I'm 
just going to recess, because Senator Warner has some 
questions. He'll be right over. Anybody have any questions?
    [No response.]
    Senator Chafee. I might come back myself, likewise. So what 
we'll do, if you gentlemen could please wait, and we'll just 
take a little recess, and Senator Warner will be back over in a 
few minutes.
    Thank you very much.
    [Recess.]
    Senator Warner. The subcommittee will resume its hearing.
    I apologize for my absence this morning, I was chairing 
another hearing. Mr. Chafee filled in for me.
    Mr. Chafee and I have now just met with our witnesses, and 
we have resolved a technical matter. We will take it up 
tomorrow at the business meeting of the full committee. And at 
such time, I think we will be able to go forward in principle 
with what you're doing--building in a check-and-balance whereby 
final action would be reviewed by the chairman and the ranking 
member of this committee.
    And that seems to, in principle, as we work up the papers 
here, meet the requirements. Am I not correct?
    Mr. Basso. Absolutely correct, Mr. Chairman.
    Mr. Chistolini. Yes, Mr. Chairman.
    Senator Warner. So are there further matters to take up?
    [No response.]
    Senator Warner. If not, the committee will stand in recess.
    [Whereupon, at 11:25 a.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
  Statement of Paul Chistolini, Deputy Commissioner, Public Buildings 
                Service, General Services Administration
    Mr. Chairman, and members of the subcommittee, I am Paul 
Chistolini, the Deputy Commissioner of the Public Buildings Service. I 
want to thank you for this opportunity to discuss our efforts to 
provide the Department of Transportation with the best possible working 
environment for their headquarters staff, and our current plans for the 
development of the Southeast Federal Center in southeast Washington, 
DC.
    Plans for the development of the Southeast Federal Center property 
go back at least to the 1970's. The latest version is the 1990 Master 
Plan and we are now re-evaluating it. The 1990 Plan assumed that this 
large site would be developed for the single purpose of housing a 
number of large Federal agencies. In this era of government downsizing, 
that assumption is no longer valid. In addition, the Department of the 
Navy is moving five thousand employees to the adjacent Washington Navy 
Yard which is expected to spur private development in the adjacent 
area. Accordingly, GSA is reassessing the Master Plan, including tenant 
mix, private sector participation, and the potential for mixed uses of 
the site. We are doing this reevaluation in coordination with the Navy.
    At this time, therefore, we do not intend to develop infrastructure 
such as roads, parks, piers, etc., the locations of which would all 
depend on our having more specific and achievable plans for use of the 
Southeast Federal Center than we currently have. However, we do have an 
obligation to perform environmental remediation on this property. We 
will be demolishing contaminated structures, halting the flow of 
contamination into the Anacostia River and similar activities.
    Irrespective of how we develop the Southeast Federal Center, these 
remediation actions and their associated costs are an unavoidable 
obligation of Government ownership of the property. The urgency of some 
form of these actions has been highlighted by a lawsuit filed by the 
Earth Justice Legal Defense Fund of behalf of local residents. We 
anticipate expending approximately $20 million in previously 
appropriated funds on remedial work. In the future, when a proposal for 
occupancy at the SEFC and alternative sites is made for a Federal 
agency, GSA will consider the prorated costs of infrastructure 
investment and additional site-specific environmental cleanup in any 
comparison of site proposals.
    As the plans for developing the SEFC continue to evolve we will 
keep this Committee fully informed.
    The Department of Transportation is currently housed in the Nassif 
Building in Washington, DC. This building is leased from a private 
owner and the current lease expires in March, 2000. The need for 
authorization of a new housing plan for DOT was first brought to the 
attention of Congress in 1991. At that time GSA submitted a prospectus 
to this committee for the authorization of a $780 million construction 
project, financed in part with DOT funds, over the air rights at Union 
Station as a solution to DOT's long-term needs. In 1996 DOT included a 
funding request in its budget for a headquarters facility. These 
proposals were not approved by Congress, and neither was a leasing 
prospectus submitted to the Congress in July 1996. In September 1996, 
the House Public Works and Transportation Committee directed GSA to 
prepare a Report of Building Project Survey on the ``feasibility and 
need to construct or otherwise acquire a facility to house the 
headquarters of the Department of Transportation.'' This report was 
submitted to this Committee and the House Public Works and 
Transportation Committee on May 29, 1997. The House Public Works 
Committee authorized the recommendations of this report by Committee 
resolution on July 23, 1997.
    The essence of the recommendation in our report is that while 
government ownership is the optimal solution, an operating lease may be 
necessary as a bridge to an ownership solution. In other words, our 
report recognized that government ownership of a headquarters building 
is the most cost-effective solution over the long term. However, it 
recognized at the same time that we may not be able to obtain the up 
front funding necessary to acquire a building and so it laid out a 
strategy for obtaining a leased building with options to convert to 
government ownership should funding become available.
    Nonetheless, pursuant to the requirements of the September 1996 
House Public Works Committee resolution, we believe it is premature to 
submit our proposed acquisition strategy for the DOT headquarters since 
various construction and leasing options are being evaluated in the 
preparation of the FY 1999 President's Budget.
    Mr. Chairman, I would be happy to answer any questions which you 
and the members of this subcommittee may have.
                               __________
Statement of Peter J. Basso, Acting Assistant Secretary for Budget and 
              Programs, U.S. Department of Transportation
    Mr. Chairman and members of the committee: We appreciate the 
opportunity to appear before the committee today to advance the process 
that will identify the possibilities for housing the Department of 
Transportation headquarters staff beginning in the year 2000.
    Secretary Slater would like to convey his personal thanks to the 
committee for acting on this matter of real importance to future 
transportation objectives, our customers, and our headquarters staff.
    As you know, the Department headquarters is now located in a 27-
year-old leased structure at Seventh and D Streets, Southwest. While 
this building has proven serviceable since we first occupied it in 
1970, its innate design problems are increasingly obvious. Although it 
has been retrofitted over time for such necessary safety improvements 
as a sprinkler system, the current system of demountable partitions 
limits floorspace options in the building compared.with comparable 
modern structures and presents a real drawback for the efficient 
utilization of space.
    Absent major renovation, the building does not meet the 
Department's current and planned needs. Designed in the 1960's, the 
facility lacks energy efficient heating and cooling systems and, as 
tenants, we are unable to take advantage of the state-of-the-art 
operating controls and advanced insulation materials that would provide 
significant gains in cost control and occupant comfort. Also, new 
communication technology cannot be satisfactorily installed and 
operated using current building systems.
    Quite apart from the structure and its substantial problems, the 
current headquarters is a leased facility. It has cost the U.S. 
Government $440 million in lease payments since 1970. Even factoring in 
the effects of inflation, taxpayers have effectively ``purchased'' this 
building three times over, and yet we have nothing to show for it. If 
we owned the building and determined that it no longer suited our 
purposes, we would at least be able to sell it at this point, recapture 
some of our investment, and move on.
    Facing these issues, we have worked-closely with the General 
Services Administration (GSA), which is spearheading the current effort 
to choose the best option for a future headquarters building. I am 
pleased that the GSA is here today in partnership with us to address 
this issue. We all agree that simply accepting the status quo is 
unacceptable.
    Mr. Chairman, this concludes my statement. I would be pleased to 
respond to any questions you or other Members of the Committee may 
have.