[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
   WASTED SPACE, WASTED DOLLARS: THE NEED FOR FEDERAL REAL PROPERTY 
                           MANAGEMENT REFORM

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

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

                               H.R. 3134

  TO AMEND TITLE 40, UNITED STATES CODE, TO REQUIRE THE FEDERAL REAL 
   PROPERTY COUNCIL TO CARRY OUT A PILOT PROGRAM FOR THE EXPEDITIOUS 
  DISPOSAL OF UNDERUTILIZED FEDERAL REAL PROPERTY, AND TO IMPROVE THE 
            ECONOMY AND EFFICIENCY OF FEDERAL REAL PROPERTY

                               __________

                             JUNE 22, 2005

                               __________

                           Serial No. 109-39

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform

                                 ______

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                            WASHINGTON : 2005
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 22, 2005....................................     1
Text of H.R. 3134................................................     6
Statement of:
    Johnson, Clay, Deputy Director of Management, Office of 
      Management and Budget; and David M. Walker, Comptroller 
      General, U.S. Government Accountability Office.............    30
        Johnson, Clay............................................    30
        Walker, David M..........................................    34
Letters, statements, etc., submitted for the record by:
    Cannon, Hon. Chris, a Representative in Congress from the 
      State of Utah, prepared statement of.......................    63
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............    79
    Davis, Chairman Tom, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     4
    Johnson, Clay, Deputy Director of Management, Office of 
      Management and Budget, prepared statement of...............    32
    Walker, David M., Comptroller General, U.S. Government 
      Accountability Office, prepared statement of...............    36
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California, prepared statement of.................    23


   WASTED SPACE, WASTED DOLLARS: THE NEED FOR FEDERAL REAL PROPERTY 
                           MANAGEMENT REFORM

                              ----------                              


                        WEDNESDAY, JUNE 22, 2005

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis of 
Virginia (chairman of the committee) presiding.
    Present: Davis of Virginia, Shays, Cannon, Duncan, Turner, 
Issa, Brown-Waite, Marchant, Dent, Waxman, Cummings, Kucinich, 
Ruppersberger, and Norton.
    Staff present: Melissa Wojciak, staff director; David 
Marin, deputy staff director/communications director; Keith 
Ausbrook, chief counsel; Ellen Brown, legislative director and 
senior policy counsel; Howie Denis, counsel; Robert Borden, 
counsel/parliamentarian; Rob White, press secretary; Drew 
Crockett, deputy director of communications; Victoria Proctor, 
senior professional staff member; Cynthia Vallina, GAO 
detailee; Teresa Austin, chief clerk; Sarah D'Orsie, deputy 
clerk; Leneal Scott, computer systems manager; Mark Stephenson, 
minority professional staff member; Earley Green, minority 
chief clerk; Jean Gosa, minority assistant clerk; and Stacey 
Warady, minority staff assistant.
    Chairman Tom Davis. The Committee on Government Reform will 
come to order. I want to welcome everybody to our hearing today 
on legislation to address longstanding problems in Federal real 
property management.
    The committee is well aware of the challenges of vacant, 
underutilized, and deteriorating Federal real property. Federal 
Government agencies control over 3.2 billion square feet of 
real property assets to the United States and around the world. 
The Federal Government spends billions of dollars annually to 
maintain those properties; yet many Federal properties are in 
disrepair, lack up-to-date technological infrastructure, and 
pose health and safety threats to workers and visitors.
    Out of 8,000 buildings managed by the General Services 
Administration, more than half are 50 years old and are 
deteriorating. Combined, they require an estimated $5.7 billion 
in repairs. As a result, agencies are often forced to vacate 
properties and lease costly space from the private sector.
    With few exceptions, agencies don't have incentives to 
dispose of these excess surpluses or underutilized properties. 
For many agencies, revenue-generating sales for real property 
aren't returned to the agency capital accounts and therefore 
they reduce the incentives for agencies to invest in properties 
to make them usable. Furthermore, the placement of excess and 
underutilized Federal property and deteriorating facilities on 
the Government Accountability Office high risk series 
underscores the need for this hearing.
    Since the 106th Congress, I have chaired Government Reform 
hearings examining innovative solutions to address the Federal 
property management crisis. The committee has found that 
Federal agencies are subject to several laws that limit their 
authority to acquire, manage, and dispose of real property. 
Agencies need broader management authority to efficiently and 
cost-effectively manage their properties. They must be able to 
implement life-cycle management principles that will improve 
operational management, financial management, and agency 
accountability, encourage cost-savings, and incorporate private 
sector best practices.
    This committee marked up bipartisan legislation in the 
107th and 108th Congresses that included these comprehensive 
management reforms. The most recent version we approved was 
H.R. 2548, the Federal Property Asset Management Reform Act of 
2003, co-sponsored by myself and our ranking member, Henry 
Waxman.
    The bill was delayed because of a debate on its budget 
impact. The Congressional Budget Office attached a high cost 
estimate to H.R. 2548, implying that the Federal Government 
would spend more money by passing the bill than if it did 
nothing. This, of course, makes little sense; this is about 
saving money, not spending more of it. Fiscal responsibility 
requires that we grant agencies alternative property management 
authority to address this growing problem.
    Today we are going to review narrowly tailored draft 
legislation, language authored by myself and Chairman Nussle of 
the Budget Committee, to begin addressing these management 
challenges and combating this inexcusable waste. The draft 
legislation creates a 5-year pilot program to allow for the 
expedited disposal of excess, surplus, or underutilized Federal 
real properties. Under the proposal, 10 eligible properties per 
year are to be sold for at least fair market value, and the 
agency affected by the disposal can retain a portion of the 
proceeds. This creates needed incentives for agencies to deal 
with unneeded properties.
    In addition, the draft legislation codifies provisions from 
Executive Order 13327. The order borrowed several key 
provisions from H.R. 2548, such as: the creation of a Senior 
Real Property Officer; the development of agency asset 
management plans; the creation of an accurate and updated 
inventory of all Federal real property; and an emphasis on 
financial management.
    I want to thank Chairman Nussle of the House Budget 
Committee for ensuring that the Fiscal Year 2006 Budget 
Resolution provided a $50 million reserve fund to the 
Government Reform Committee to pay for the pilot program. This 
fund will allow us to meet CBO's objections under the draft 
legislation and to prove that real property reform actually 
saves money.
    The committee anticipates that at the end of the 5-year 
program the pilot will have resulted in considerable savings to 
the Government, thereby clearing the way for more fundamental 
real property reform. Potential net benefits to the Government 
include improved Federal spaces, lower operating costs, and 
increased revenue without up-front Federal capital 
expenditures.
    Today we are going to hear from Clay Johnson, the Deputy 
Director for Management at the Office of Management and Budget, 
and David Walker, the Comptroller General at the Government 
Accountability Office. GAO has conducted several studies on the 
state of Federal real property. Mr. Walker will discuss GAO's 
evaluation of the underutilization of Federal real property, 
its rationale for placing this issue on the GAO high risk list, 
and potential legislation to improve efficient use and sale of 
excess, surplus or underutilized properties. Mr. Johnson will 
testify about the administration's experience in dealing with 
deteriorating and underutilized property and the potential 
impact of legislation to improve efficient use and sale of 
excess, surplus or underutilized properties.
    We are fortunate to have them both and I look forward to 
hearing from them.
    Also, Mr. Johnson is accompanied by members of the Federal 
Real Property Council. I want to thank them for joining us here 
this morning, and appreciate the work that they are doing.
    [The prepared statement of Chairman Tom Davis and the text 
of H.R. 3134 follow:]
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    Chairman Tom Davis. I now recognize our distinguished 
ranking member, Mr. Waxman, for his opening statement.
    Mr. Waxman. Thank you, Mr. Chairman, for holding this 
important hearing on Federal real property management. Our 
committee has been a leader in focusing the spotlight on the 
deficiencies that exist in real property management and 
attempting to find bipartisan solutions to these difficult 
issues. I am glad you are being persistent in trying to 
overcome some of the bureaucratic hurdles that stand in the way 
of fixing these vexing problems.
    We are here today to examine the very genuine, costly and 
pressing problems the Federal Government has managing its real 
property, its public buildings and lands. As GAO has indicated 
by placing this issue on its ``high risk'' list, problems 
abound. Unneeded and underused buildings are in the Federal 
inventory. Some buildings are literally falling apart. Accurate 
data on Federal real property is hard to obtain from agencies, 
and costly leasing of office space is too often the quick 
answer.
    These are far from trivial problems. In fact, they are 
costing the Federal Government and the American taxpayer 
billions of dollars. We are spending $3 to $4 billion a year on 
buildings we don't need. In addition, the amount of money 
required to bring needed Federal facilities up to minimally 
accepted standards is truly staggering, properly close to $100 
billion.
    Last year the administration issued an Executive order in 
an attempt to address some of these issues. The order 
established the position of Senior Real Property Officer in all 
major executive agencies, created an interagency Federal Real 
Property Council, and directed the Administrator of GSA to 
establish and maintain a single, comprehensive database of all 
Federal real property. These steps should help bring needed 
information and focus to this problem within the executive 
branch.
    Chairman Davis plans to introduce a bill that attempts to 
deal with some of these problems in Federal real property 
management. In addition to codifying last year's Executive 
order, his bill would create a pilot program with the aim of 
encouraging the executive branch agencies to dispose of 
properties which they no longer need to perform their missions. 
While this is a worthy goal, I am troubled by some of the 
methods the bill uses to attain this goal.
    Drafts of that legislation that I have seen contain a 
number of troubling provisions. First, under the pilot, excess 
property at one agency could be sold without an assessment of 
whether another agency might want it. I am not sure that is a 
very good way to manage Federal property.
    Second, the pilot requires at least 10 properties per year 
for 5 years to be sold using expedited processes. There is no 
upper limit, so under this pilot the expedited process could 
become the standard.
    Finally, the pilot waives provisions of the McKinney 
homeless assistance act and the Federal Property Act that give 
homeless providers and State and local governments a first 
crack at surplus properties at a discounted price if the 
properties will be used for certain defined public benefits. I 
question the merits of allowing such a waiver, and I think 
State and local governments and homeless providers should have 
the opportunity to put their positions on the issue on the 
record.
    That being said, the Chair is committed to working with the 
minority to address some of these concerns, and I hope at the 
end of the day we have a bill that everyone can support.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Henry A. Waxman follows:]
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    Chairman Tom Davis. Mr. Waxman, thanks. Let me just say 
this is draft legislation. We are going to be hearing from a 
lot of people, and I welcome your input as we move forward. On 
the issue of the McKinney act and the exemption we have carved 
out, let me just say I look forward to working with you to try 
some satisfactory balance to this.
    For the record, I started the first shelter for the 
homeless out in Fairfax County, at Baileys Crossroads. In fact, 
there are two shelters that we championed out there. I am 
committed to this, but I also recognize that, as we move this 
legislation forward on a trial basis, we want to make sure we 
get input from all the stakeholders, and hopefully we can work 
out something that works for everybody.
    We have to remember that if nothing happens on this, that 
if no property is disposed of, the homeless get nothing. So 
hopefully we can work through and they can have some input into 
this process. I am concerned about the rigidity of the McKinney 
act and a pilot program, and what that would do to it.
    But if we can work together, hopefully we can find some 
satisfactory balance, and I look forward to your concern on 
this issue, and Mr. Shays' concern, Ms. Norton's and others, as 
we more forward to see if we can have a pilot program that 
works, but at the same time make sure that some of these other 
groups are included in the process.
    Any other opening statements on this side?
    Ms. Norton. Mr. Chairman.
    Chairman Tom Davis. Ms. Norton.
    Ms. Norton. Mr. Chairman, I applaud your effort here to 
deal with the tremendous waste of real property lying idle 
throughout the United States. I am not sure how much of it is 
useful, but a lot of it surely must be. And the Executive order 
begins to develop a database so that we at least know what we 
are talking about here.
    I am ranking member of a subcommittee on another committee, 
and appreciate especially your effort because a fair amount of 
this unused land had been in the District, and the Southeast 
Federal Center, 5 minutes from the Capitol, is perhaps the best 
example of the use of Federal property now for the benefit of 
the Federal Government and, as it turns out, for the benefit of 
the local jurisdiction.
    The Federal Government continues to own the land, but the 
land is being privately developed. That is only one approach, 
but it is certainly an approach that everybody can see with 
their own eyes, that the most valuable land perhaps on the East 
coast was lying there on the Anacostia River unused, and now 
there is much construction going up there, to the benefit of 
all concerned.
    Mr. Chairman, there is another novel bill that I have 
introduced, and I have asked your staff for feedback, and I ask 
once again for feedback. This bill combines a bill on which you 
are a co-sponsor with me with the District of Columbia's need 
for completely, totally unused Federal land for 150 years, 
land, again, very close to the Capitol, near RFK Stadium, where 
the General Hospital has been, where the prison has been, a 
very large plot of land, 150 years the District has had 
administrative use of. It can't do what needs to be done on the 
land, highest and best use, because it doesn't own the land, 
and the Federal Government is right not simply to transfer 
ownership of Federal land to whoever wants it.
    That and another parcel of park land, also unused since the 
District was created, where the District wants to make use of 
it, I have put into a bill that would transfer that land to the 
District of Columbia in exchange and partial payment for what 
the GAO says is owed to the District because of a structural 
deficit. And I would like to have some feedback on that, which 
is another way to deal with getting the highest and best use 
for Federal land, which the Federal Government does not need, 
would be paid for in-kind, and yet another approach.
    I am always searching for such approaches, and, therefore, 
I appreciate that you have come forward with this pilot 
program. I would like to raise a few questions, some of which 
have been raised by the ranking member. I have not had an 
opportunity to look at the bill. It says that the land would be 
sold for 90 percent of market value. Why not sell it for market 
value? If the market value is low, then that is what it sells 
for. If the market value is above what we thought it was, that 
is what it sells for. So I didn't understand the 90 percent. If 
that could be clarified.
    I join the ranking member on the concern about jumping over 
the public benefit, wiping out the public benefit sections. He 
has spoken of McKinney, you have spoken of McKinney, but I want 
to say, Mr. Chairman, that one of the most important reasons 
for the public benefit section is that local jurisdictions 
themselves can get this land at a much reduced price or trade 
for use as libraries, hospitals, or other public benefits. They 
can't just flip it and use it for market matters, for ordinary 
commercial matters. And I think that there are many local 
jurisdictions in the United States that would wonder why that 
right would somehow be lost to them in this local matter.
    I think I would like to look at the legislation. I have to 
assume that there would be an auction to the highest bidder. 
When it says that this Council will select the properties, I am 
assuming that they would be sold in the same way that 
everything in the Federal Government has to be done, by 
competitive bidding, although you hadn't mentioned that, and I 
just have to assume that is the case.
    I didn't understand why this Federal Property Council----
    Chairman Tom Davis. Mr. Walker has limited time today to 
appear before us.
    Ms. Norton. Mr. Chairman, I am almost finished.
    Chairman Tom Davis. All right.
    Ms. Norton [continuing]. Was going to select the land. And 
if there is money, I would hope that it would be used to repair 
some of this dilapidated property.
    And I thank you for your indulgence, Mr. Chairman.
    Chairman Tom Davis. All right, thank you.
    Let me just quickly note we are waiting for the GSA to give 
us an inventory of the Federal properties in the District, and 
at that point I think we can have a fruitful discussion over 
what the Government might do and what the D.C. government might 
do with it. I have some strong views on how the city ought to 
have that. I know Ms. Norton does, the Mayor does, and 
hopefully we can move forward and this will be something that 
will be very helpful to the city over the long term.
    Gentleman from Tennessee.
    Mr. Duncan. Mr. Chairman, I will be very quick. First of 
all, in the materials we have been provided, it is upsetting, 
or should be upsetting to everyone, to hear that the Department 
of Defense is paying $3 to $4 billion a year just for the 
maintenance of unneeded facilities. And also that the GSA 
estimates that the Federal Government has thousands of 
buildings that are deteriorating and that it will cost tens of 
billions of dollars to make them fully functional again.
    I know also from my service on another committee that the 
BLM has identified 3.3 million acres of land that they identify 
as surplus that they would like to get rid of, but there are 
some of these groups that just oppose it any time the Federal 
Government wants to dispose of any land. In fact, they want the 
Government to take over more. All politicians want to create 
parks, and that sounds good, but our parks are very underused 
for the most part, and that takes land off the tax rolls and 
makes it harder on the remaining property that is on the tax 
rolls.
    I know also from my service on the Public Building 
Subcommittee the most underused space in the Federal inventory 
is in Federal courthouses. I had a member of the other body, 
the Senate, say to me one time that you could shoot a gun at 3 
p.m., down the hall in almost every Federal courthouse in the 
country and probably not hit anybody. I thought of that 
recently when I read in the Tennessee Bar Journal that the 
average Federal judge tried 40 jury trials a year in 1960, and 
now they try about 12 a year. Yet, you very seldom can get 
judges to share court space.
    Also, I remember when the Secret Service wanted to build a 
new headquarters, they were going to pay $70,723,000 for one-
third of an acre in downtown Washington, when there were nine 
other parcels of property all within the parameters of where 
they needed the building that were between $10 and $30 million. 
We did get them to agree to knock $50 million off the price of 
the building by removing some of the gyms and kitchens and so 
forth, but they agreed to that if we would let them go ahead 
and still buy the $70 million, one-third of an acre property.
    So there are a lot of bad deals here, there is a lot of 
waste and inefficiency, and I am certainly pleased that you are 
looking into this. Thank you very much.
    Chairman Tom Davis. Thank you very much. I appreciate the 
gentleman's comments.
    I think we are ready to move to our first panel.
    Members will have 7 days to submit opening statements for 
the record.
    I will now recognize our distinguished panel, the Honorable 
Clay Johnson, Deputy Director for Management, Office of 
Management and Budget; and David Walker, Comptroller General of 
the Government Accountability Office.
    It is our policy we swear you in before you testify, so if 
you would just rise and raise your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. First, thank you very much for being 
here. You have both given this a lot of thought and we 
appreciate your being here. Give your opening statements and we 
will move to questions. Thank you.
    Mr. Johnson, we will start with you.

  STATEMENTS OF CLAY JOHNSON, DEPUTY DIRECTOR OF MANAGEMENT, 
     OFFICE OF MANAGEMENT AND BUDGET; AND DAVID M. WALKER, 
   COMPTROLLER GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

                   STATEMENT OF CLAY JOHNSON

    Mr. Johnson. Mr. Chairman, members of the committee, thank 
you for having us up here.
    The Federal Government thinks it owns $300 billion or so of 
real property, but we are not sure. We do know for sure that we 
have a lot of property that we don't need, and we have a lot of 
property that we do need, but it also needs to be improved. And 
I think dealing with one of those matters will help us deal 
with the other.
    We had the President issue an Executive order last year to 
deal with this matter, and we are delighted that you are 
attempting to codify this with this legislation. There is more 
interest in the executive branch on this issue of real property 
than just about any other management issue we are tackling.
    The Federal Real Property Officers, the agency leadership, 
the Federal Real Property Council is about as energized a bunch 
of people on this subject as anything else we are working on, 
and obviously there is a lot of interest in this committee and 
in both the House and Senate in general. It is something that 
needs to be taken care of, and with the help of this 
legislation and the work of the Real Property Officers and Real 
Property Council and other legislation, we will take care of 
this. This is not brain surgery; this just requires a lot of 
dedication, a lot of attention to detail, and we are all in the 
process of doing that.
    Our Executive order a year ago attempted to assign agency 
accountability for real property by the assignment of Real 
Property Officers in each agency and the creation of a real 
property initiative with the President's management agenda, so 
we are monitoring and holding agencies accountable for their 
performance in these matters with our well-used score card--
red, yellow, green. We attempted to provide a Government-wide 
perspective on this matter, which we have done by creating the 
Real Property Officers Council.
    We are working hard to develop this inventory which you 
talked about. We have performance measures that we have agreed 
to that we are in the process of developing metrics for each of 
the properties. And then once we have some information about 
all these properties, each agency will be challenged to put 
together a real property plan about what they intend to do to 
bring sensibility and fiscal accountability for the real 
property inventories.
    This legislation is actually probably a little bit ahead of 
us in that this calls for specific corrective opportunities or 
corrective provisions, and we can't really tell you yet--we are 
probably a year or so away--what we would do with these 
flexibilities. But it is a great time for us all to come 
together and start talking about these things because this is a 
big problem, a big opportunity, both.
    So I applaud your efforts, sir, and the committee, and look 
forward to working with you in the future.
    [The prepared statement of Mr. Johnson follows:]
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    Chairman Tom Davis. Thank you very much, Mr. Johnson.
    Comptroller Walker.

                  STATEMENT OF DAVID M. WALKER

    Mr. Walker. Thank you, Mr. Chairman. It is a pleasure to be 
before the House Government Reform Committee. I would 
respectfully request that my entire statement be entered into 
the record.
    Chairman Tom Davis. Without objection.
    Mr. Walker. I will just hit the highlights right now.
    I appreciate being able to visit with you regarding the 
issue of Federal real property. As you know, GAO designated 
this area as a high risk area in January 2003. There are a 
number of reasons that we designate it as a high risk area. It 
is currently estimated that the Federal Government owns over 
$300 billion in real property assets in all 11 Federal regions. 
For example, the DOD alone spends $3 to $4 billion a year in 
maintaining properties that it believes it does not need. Other 
agencies are also spending money as well.
    I think it is important to note, as contained in our recent 
21st Century Challenges document that has been provided to 
every member of this committee, that this is another example of 
how much the Federal Government is based upon conditions that 
existed in the 1950's and the 1960's. Our current Federal real 
property is based upon organizational models of the 1950's. It 
does not give appropriate consideration to the advancements in 
technology and transportation systems since the 1950's, and it 
also does not give due consideration to our needs to safeguard 
and protect Federal properties because of the increased risk of 
terrorism since the 1950's.
    As has been noted, a number of these Federal properties are 
in a state of deterioration; there are large and growing 
deferred maintenance costs. There has been progress made since 
we designated this as a high risk area. As Clay Johnson has 
noted, the President has taken action by issuing an Executive 
order, by creating the Real Property Council, and by asking 
that Council and other responsible parties to take a number of 
steps. And I do note, as Clay did, that your proposed 
legislation would codify the Executive order, as well as 
address a number of other issues.
    In summary, I think enabling legislation is needed. There 
are a number of positive aspects of this draft legislation that 
I would be happy to share with the committee in the question 
and answer period. There are a few areas that I would ask you 
to consider in addition to what you already have, which I can 
cover in the Q&A.
    But the bottom line is this: we need to make progress in 
this area for several reasons. No. 1, to save money. Not only 
not to spend money on things that we don't need, but to obtain 
the economic value of assets that we don't need. Second, to 
enhance the safety and security of Federal properties and those 
that are in those properties and around those properties. And, 
third, to promote economic development.
    There are three major benefits to making progress in this 
area, and it would be a very positive step toward trying to 
realign our Government to recognize 21st century realities if 
progress could be made in this area.
    Thank you, Mr. Chairman and members of the committee.
    [The prepared statement of Mr. Walker follows:]
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    Chairman Tom Davis. Thank you very much.
    Mr. Johnson, let me start. The reason we are on a 5-year 
pilot is because Congressional Budget Office scoring, to me, 
appears very arcane, but doesn't score the savings. Do you know 
does OMB agree with the Congressional Budget Office on the 
scoring or does OMB think that we can save money by disposal of 
the property?
    Mr. Johnson. I can't comment on the specifics of their 
scoring methodology, but we find within OMB, too--not just CBO 
scoring, but within OMB--we find ourselves debating how to 
score different mechanisms, and one of them is some of these 
real property mechanisms; and it needs to be thought through. I 
think the best reference that I heard to scoring issues is 
scoring ought to be done so as to best serve the American 
people. And we need to make sure that we are doing that and 
have good, lively debates about how to score these things, but 
make sure that the winner, no matter how it is scored, is 
always the taxpayer, the citizen.
    Chairman Tom Davis. That is why we prompted it with a 5-
year pilot, so we can get some real-time experience, instead of 
looking at some arcane scoring rules. So in that case you 
support this concept. Not the specifics, necessarily, but the 
concept?
    Mr. Johnson. Yes, we very much support the concept. And we 
also support the concept of a 5-year time period. The Council 
has informally adopted the goal of taking a 4-year or 5-year 
time period to do all the things that the bill calls for, 
codifies what the Executive order did last year, but to 
identify the worst performing 5 percent. We just grabbed a 
number, 5 percent, which might equate to $15 billion worth of 
real property.
    And let us figure out and demonstrate what can be done in 
the super responsible fashion to deal with the worst of our 
property issues, and demonstrate what the potential is and then 
look at how to extend that beyond that worst 5 percent. And the 
thought is that a 5-year or 4-year time period is a reasonable 
period of time to do that with.
    Chairman Tom Davis. The draft legislation will permit the 
Federal Real Property Council to retain a percentage of the 
proceeds of sale for the disposition of property to be 
available and used for further investments to upgrade and 
improve other properties so that they can be available for 
disposition as well. It would also provide proceeds to be 
retained by affected agencies that could be used to implement 
their asset management plans.
    What disincentives do agencies currently face in disposing 
of excess property? And do you think that the proceeds from 
sales will provide a sufficient incentive for agencies to 
dispose of more properties and better manage their properties?
    Mr. Johnson. My personal opinion is I don't think the 
primary reason why more has not been done on this is, one, 
there are statutes that make it difficult to deal with it 
effectively, but, two, agencies have never been held 
accountable. I don't think you need to hang a big carrot in 
front of agencies; you just need to tell them this is what you 
are expected to do and hold them accountable for doing that.
    That is the first thing that has to be done, and I think we 
are a year into making that happen. And the agencies do not 
resist this, they welcome it. And as I mentioned in my opening 
remarks, they are as enthusiastic about this management 
opportunity as anything else we are working on, because they 
realize the huge potential and the opportunity to take proceeds 
from the sale of unused property and use it to improve and make 
more productive the properties that they do need.
    So the general concept here we fully endorse. I don't think 
incentive is the key. I would recommend that we make as big a 
percentage, if not all of the proceeds, of this disposition of 
properties available for use on other real property needs. We 
have huge deferred maintenance challenges that we, for perhaps 
very good fiscal reasons, don't fund, and have not funded for 
many, many years, and this is a potential source of funds for 
that purpose.
    Chairman Tom Davis. Thank you.
    General Walker, the GAO recommends that a comprehensive, 
integrated transformation strategy for real property is still 
needed to buildupon the Executive order. What does this mean? 
How would it help the Government to improve its real property 
management and how will this complement the agency asset 
management plans?
    Mr. Walker. Mr. Chairman, I think, as in many areas, you 
need to have a comprehensive, strategic and integrated plan 
that lays out what you are trying to accomplish, by when, who 
is responsible for what, that crosses the various silos and 
organizational structures in the Federal Government in order to 
maximize the chance of success. I would agree with Clay Johnson 
that one of the real keys here is transparency. We need a lot 
more transparency with regard to what the Government owns, what 
the State of that is, and a variety of other factors. We need 
more accountability to make sure that people are making 
progress. I think this plan could help assure that 
accountability.
    But I do believe that your incentives would be a plus, that 
it would encourage people to be able to take actions, because 
right now the current budgetary rules are such that it costs 
money to save money. And right now they might not have the 
money to be able to engage the disposition, and they don't keep 
any of the proceeds when they do. Therefore, that is a very 
real impediment.
    Chairman Tom Davis. OK, thank you very much.
    Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Johnson, reading your testimony, I want to commend you 
on what looks like a very business-like way of trying to get a 
hold of this really huge problem. You talk about the 
information that the agencies will need or the Council will 
need on operating cost, condition, utilization, mission 
dependency. That is very important. This is not just a piece of 
land. This is not just an asset.
    And, very importantly, you say in your testimony which 
agency property should be maintained. You know, some of these 
properties have been ignored. That doesn't mean they should 
simply be disposed of. And calling attention to the fact that 
you have ignored a valuable asset in your inventory surely 
should be a part of this process, which require cost-effective 
repairs. That is all very business-like. That is how business 
would go at whether or not to--they wouldn't just say choose 
some properties and get rid of them.
    I am concerned here about--I think it was Mr. Walker that 
talked about DOD. You are aware, Mr. Walker--I know Mr. Johnson 
is--that DOD is one of the few agencies that can sell 
properties. Now, maybe this agency with a huge budget needs 
some very small financial incentives. When you are talking 
about incentives to the DOD budget, it is almost laughable.
    But it seems to me the whole notion of accountability is 
what is at work on DOD. They are sitting on top of properties. 
They say, you know, we are in the base business, we are in the 
war-making business, we are not interested in these properties, 
or something like that, when they have the capacity to simply 
do what most agencies don't do, and that is dispose of the 
property right now themselves.
    How do you account for that, that they are not moving on 
the property?
    And maybe Mr. Johnson knows something about why some 
agencies that already have--I notice you say the Veterans 
Administration has this flexibility and is using it. You don't 
mention DOD, for example.
    I would like to hear both of you on that, because that is 
probably where most of the property is.
    Mr. Johnson. Well, my brief comment is that is what BRAC is 
about, I think, and it is a very contentious issue when you 
decide you don't need a whole lot of property with a whole lot 
of employees on it and earning a whole lot of paychecks in 
somebody's district or somebody's State. So there is a process 
for dealing with that, and I think there is a 5-year cycle and 
so forth.
    Ms. Norton. Are these old BRAC properties? You mean old 
BRAC properties that they no longer use and are just sitting 
there?
    Mr. Johnson. No, I believe properties they don't need. They 
might be functional, but they really don't need them. They 
could consolidate. They could work more efficiently if they 
were able to close some bases that they don't need.
    Ms. Norton. No, sir. I am talking about the ones that are 
already excess properties that could sell--Mr. Walker alluded 
to them--and that they are not in fact using their existing 
flexibility to deal with.
    Mr. Johnson. Well, on that, I can't turn the clock back, 
but I think DOD is enthusiastic about identifying what they 
need, what they don't need, what they have, what they wish they 
didn't have, and then coming up with a plan for getting rid of 
that, and then being held accountable for the implementation 
and execution of that plan. So I don't think the key is that 
there haven't been incentives. I think the key is that it has 
not had the focus that it is going to have, that it has now. 
And with focus and attention, and, as David said, transparency 
and accountability, there will be attention.
    Ms. Norton. Yes, Mr. Walker.
    Mr. Walker. Two things. No. 1, you need a plan, you need 
transparency, and you need accountability. They haven't had 
that, but there is the expectation that they will, in part 
because of the Executive order, in part because of, hopefully, 
the codification of that Executive order, which is one 
component of this bill.
    Some of the properties, however, that are excess do have to 
do with proposed actions under BRAC. But you are correct to say 
not all of them do. So, therefore, we need that comprehensive 
and integrated plan that provides the right type of 
transparency and accountability mechanisms.
    Ms. Norton. I am not talking about proposed. If you looked 
at the inventory of the Federal Government, you would find 
right now, for decades, that inventory is largely in the hands 
of DOD, which always could dispose of it. I accept your answer 
that focus in on what the Executive order does, which is say, 
hey, fellows, we are paying attention to this, so you better, 
is certainly the first step.
    I would like to ask both of you, before the chairman--I am 
the only Democrat here--tells me I have to move on to the next 
person, one more question, and that is whether you believe it 
is wise to eliminate the public benefit. I am particularly 
asking about States and localities who would have an 
opportunity to buy at least at a reduced price if the land is 
to be used for a public benefit like a hospital or a school. Is 
that a good thing to still have in the Federal process of 
disposing of land or not?
    Mr. Walker. I would respectfully suggest that is an area 
that needs to be explored further. My understanding of the 
draft bill says that you have to sell the property for at least 
90 percent of the fair market value. The hope would be that you 
would sell it for fair market value. There could be some 
circumstances in which, where there is a public benefit, you 
might sell it for somewhat less than fair market value.
    Ms. Norton. No, sir, I am asking a wholly different 
question. I am saying right now land is offered first to a 
Federal agency--and I think Mr. Johnson's testimony indeed has 
the Federal agencies looking to see whether or not they should 
make use of it--and, second, if the land is of no use, a State 
or locality gets an opportunity that the commercial sector 
would not get. I am asking very specifically if that should be 
maintained.
    Mr. Johnson. Well, my feeling is--and I think the chairman 
talked about this--that there are many issues here to be 
addressed, so many needs. None of these are totally 
contradictory to one another, and they can all be addressed. We 
are all here to serve the American people, and we can figure 
out a way to do that in a balanced, responsible fashion.
    Ms. Norton. Thank you very much.
    Chairman Tom Davis. If I could just add to that. That is 
right, but we don't want to put one group necessarily ahead of 
the other, particularly for this pilot program, when we want to 
save money. And many times if you just dispose of this and give 
it to a locality or something, it is going to show a net loss 
on the books and we defeat the whole purpose. So I think we 
have to handle this a little differently but at the same time 
be sensitive to the issues that were addressed by Mr. Waxman 
and Ms. Norton. We are going to try to find that balance. But 
that is the reason for the waiver.
    Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    I would like to concentrate my questions and comments on 
this bill and what we hope to accomplish with non-DOD Federal 
land versus the history of BRAC. And particularly to Ms. 
Norton, the homeless waiver I think is essential, and let me 
just explain. Bases closed in California have been an amazing 
magnet for people who take free land.
    At March Air Force Base, with no public transportation, 
homeless home units were made available to people who needed 
them. No problem. Except today they are directly across from 
some of the most classified continued uses of March Air Force 
Base. So you have a top-secret war on terrorism facility, and 
when you walk out the door you are looking at a fence--and you 
can't do much more than put in a chain-link fence--and you have 
a completely unregulated area of the base.
    It is that sort of reuse that, because of the mandate, 
occurred. Certainly not the intent of the McKinney act, but it 
happens, and it happens because the act doesn't say give me 5 
percent off the top of revenues and I will go put homeless 
facilities in its best location; it says I can get land and 
buildings for free and go in and house people.
    And I don't blame anyone for taking that, but that is 
certainly not the best way to achieve it. And hopefully, as we 
go through this process, if we have a consideration for the 
homeless, that we look and say it is a dollar equivalent to the 
homeless that does the most value, not necessarily making a 
facility or a part of a facility available just because it 
would be at no cost.
    The other area that I am very concerned about is in the 
BRAC process communities have had special rights and certainly 
rights to redevelop. One of the things that they have done is 
they have effectively zoned out the highest and best use. El 
Toro in Orange County, 50 years an Air Base, intended very much 
to be a world-class airport that would have given Orange County 
the equivalent--well, actually, a better facility than LAX. 
Local objections controlled that out. And I have no problem 
with that, but it also turned it into a park for which we 
received effectively zero.
    Last, but not least, regardless of what has been said, 
Tustin Air Base was essentially sold for a profit by the city. 
In no uncertain terms they flipped it and turned it into 
housing units. The Navy did get some net proceeds from it, but 
the community maneuvered it so that it was a huge direct gain 
to them.
    And I would like you to comment on how we could prevent 
these kinds of loopholes, if you will. I can't call them abuses 
because the law clearly allowed for it. But none of them were 
the intended consequences. Thank you.
    Mr. Walker. First, I think one of the things you were 
talking about, Congressman, is to the extent that you want to 
have a public benefit provision and to the extent that you want 
to consider the issues that Ms. Norton talked about, should it 
be on a discount basis versus a free basis--and that is the 
point that I was trying to make.
    You may decide as a matter of public policy that there 
ought to be rights of first refusal and that there are certain 
types of activities that have a public good, State and local, 
and whatever else. But the way to deal with that is a discount 
from what otherwise would be paid versus a giving it away for 
free.
    Second, I think that it is also important to make sure that 
we keep in mind that most of these properties have little value 
on the books of the financial statements of the U.S. 
Government. Most of them have been fully depreciated. So 
whatever we get is going to be additional proceeds for the 
taxpayers, for the benefit of the taxpayers. It is going to be 
a gain, and we are also going to avoid additional expenses.
    Last thing is I think in addition to having these types of 
safeguards, we ought to look to find out whether or not other 
Federal agencies need these properties. That should be a 
standard part of the process that goes through as well.
    Thank you.
    Mr. Johnson. The concept of what is the standard part of 
the process I think is the key. I think it is all about 
defining what success is, what would be a successful 
disposition or dealing with a piece of property. And we could 
define 17 questions you ask yourself, or 27, or 6, or whatever 
it is; does it do this, does it do that, does it prevent this, 
make this possible, whatever. We could define that based on all 
of the concerns you have.
    And as we are contemplating the best way to deal with this 
property that we don't need, figure out the best way to do 
that. And it won't be a clear black and white issue--you should 
definitely do this--but it will be a balanced approach, because 
there are so many different ways of looking at it, and we just 
need to make sure that we are all in agreement that these are 
the component parts of what the definition of success is.
    Again, what the process should--the process is not this is 
a free piece of property, should it be given to the homeless or 
not, this is a piece of property we don't need, now what are 
all the issues we need to address and what is the best balanced 
way to address that.
    So I don't know the answer to your question, but I am very 
confident that we are all smart enough to figure out the best 
way to do that.
    Mr. Issa. And if I can just clarify my question, chairman, 
for the record. When I was talking about homeless, what I was 
suggesting is that if we are going to have a homeless element, 
rather than saying here is your free land, here is the 
percentage value that is allocated. You can take that from the 
cash proceeds of the sale, you can take it in land exchange 100 
percent, or you can take it at a discount.
    That flexibility, at least in the San Diego and southern 
California area, almost certainly would have caused them to 
take those dollars and move them to either one base out of many 
or even to other land that would have been available that would 
have given them an idyllic location, rather than having to take 
the location where the free land was.
    Mr. Johnson. And, again, it might have been taking the 
McKinney act and say what is the desired purpose of that? It 
might be used for the homeless. Is that really the question 
that is being asked or might the proceeds be used for the 
homeless--which is your point--and figure out what we are 
really defining as success here and figuring out how all these 
things match up.
    Mr. Issa. And I look forward to working with our Members to 
try to achieve that in this act.
    Mr. Walker. And I think land use has to be a consideration. 
It is not just the economic value and who is benefiting, but 
what is the use of the land going to be with regard to 
contiguous properties where the Federal Government still has 
ownership interest and is using that property.
    Mr. Issa. Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    Gentleman from Utah, Mr. Cannon.
    Mr. Cannon. Thank you, Mr. Chairman. Thank you for the 
opportunity to offer my views on the need for Federal real 
property management reform.
    Let me begin by thanking Mr. Johnson and Mr. Walker for 
appearing before the committee today. Your testimony and 
expertise on Federal property ownership is valuable and will 
help shape future management of Federal real property.
    Although the explicit topic today is Federal real property, 
especially referring to buildings, I would like to take a 
moment to point out what I see as a direct corollary between 
the problems associated with Federal buildings and federally 
owned lands. Let me begin by giving you a quick review of the 
current status of Federal land ownership.
    One way to do that is by quoting one of my heroes, Ronald 
Reagan. We have up here on the screen on either side, if you 
would like to take a look at that, a map that he was referring 
to in a 1998 press conference when he said the following: ``I 
have a map. I wish everyone could see it. It is a map of the 
United States. And land owned by the Government is in red and 
the rest of the map is white. West of the Mississippi River, 
your first glance at the map, you think the whole thing is red, 
the Government owns so much property. I don't know any place 
other than the Soviet Union where the Government owns more land 
than ours does.''
    Seventeen years later the Soviet Union is gone and 
President Reagan has passed on, but the land holdings of the 
United States have increased year by year. In fact, today the 
Federal Government oversees an estimated 671 million acres, an 
area more than six times the size of California. Over 90 
percent of this land is located in the western States. 
Additional land is added to the Federal estate every year. Over 
the past 10 years Federal land acquisition funding has averaged 
$347 million annually, and over the last 40 years an area 
larger than the State of Florida has been added to the Federal 
estate, that is, since John Kennedy was President.
    Spending millions of dollars for additional land 
acquisitions makes even less sense when one considers the 
condition of existing Federal lands. Not only are Federal 
facilities deteriorating, a recent Congressional Research 
Service report estimated the maintenance backlog for our 
Federal lands exceeds $15 billion. Roads, campgrounds, and 
other basic facilities in our existing national parks are 
crumbling and not being repaired.
    And it is not just underutilized buildings and facilities. 
GSA has also identified more than 5 million acres of Federal 
land as vacant, with no Federal purpose. Seven years ago the 
BLM surveyed lands identified as surplus or suitable for 
disposal and estimated the value of excess lands at nearly $2 
billion.
    In the same way that it makes little sense for the 
Department of Defense to spend $3 to $4 billion each year to 
maintain unneeded facilities, it makes even less sense to spend 
hundreds of millions of dollars each year acquiring new Federal 
lands when we are not properly caring for the lands that we 
own.
    Making matters even worse, the Federal Government doesn't 
even have a good accounting of its Federal lands. For example, 
in my home State of Utah, the most recent Government statistics 
put the amount of Federal land at 57 percent. In 2003, those 
same statistics stated that 66 percent of the land in Utah was 
owned by the Federal Government. Where did these lands go? Some 
might assume that the 14 percent of the Federal Government 
actually reverted to the State. In fact, the actual amount of 
land didn't change; the only thing that changed was the 
Government's accounting of Federal lands. Indeed, the records 
and accounting for Federal ownership are so poor that nobody 
really knows how much Federal land is in Utah.
    Now, nationally, 48 other States also saw significant 
changes in the Federal ownership between 2003 and 2004, despite 
the fact that relatively little land was bought, sold, or 
exchanged in the course of the year. That is why I introduced 
H.R. 1370, the Federal Land Asset and Inventory Reform Act of 
2005. Although numerous provisions of law require the Federal 
Government to inventory its land, existing inventories are old, 
outdated, and inaccurate.
    The legislation would require the Secretary of the Interior 
to develop a multi-purpose of Federal real property to assist 
with Federal land management, resource conservation, and, 
perhaps most importantly, the identification of surplus and 
unneeded Federal lands. I believe that if we dedicated the same 
amount of time, attention, and money to land disposal that we 
currently do to acquire new Federal lands, both the people and 
the lands would be in much better shape.
    For those reasons, I strongly support the efforts of this 
committee to confront the barriers to making underutilized 
public buildings or properties usable and available for sale. 
At the same time, I would also like to encourage us to consider 
ways to facilitate the disposal of unneeded or surplus Federal 
lands. I also believe it is crucial that the Federal Government 
develop a current, accurate inventory of its land holdings. 
Taxpayers have already invested hundreds of millions of dollars 
over decades to achieve such an inventory, and my bill, H.R. 
1370, is the appropriate congressional directive to get what 
Congress has long sought.
    Let me just add that this comes at a huge cost to people in 
the west. The area that you see in red is largely the area that 
is growing in population in the country. And that area, if you 
overlaid the amount of per capita taxation, would show that we 
tax at a higher rate in the west.
    And if you looked at our student expenditures in schools, 
you would find that we spend significantly fewer dollars all 
over the area in the west, and that is largely due to the fact 
that we don't own the land. We can't tax the land. Our local 
jurisdictions have no income except for PILT, that is, payment 
in lieu of taxes.
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    Mr. Cannon. Mr. Johnson, you have a couple of things that 
relate intimately to this, and I would like to just ask two 
questions and I look forward to your answers. The first is will 
you take an aggressive role in helping us identify and do 
something to be more rational about how we identify, utilize, 
and sell off surplus Federal lands? And, second, given the 
burden of the Federal land ownership on western taxpayers, will 
you assure us that you will help us get full funding of the 
payment in lieu of taxe programs next year?
    Mr. Johnson. The answer to the first question is yes. And I 
don't know enough about the second question to answer one way 
or the other.
    Mr. Cannon. Thank you. I hope that you will look at it. 
This is a relatively minor program. Full funding of PILT would 
be less than what we are spending on the annual acquisition of 
land, which is about $347 million over the last 10 years. Full 
funding of PILT would be in the $320 million range. I think the 
House passed an amended bill that included $242 million for 
PILT.
    We have a higher birth rate, we have many more people 
moving in the west. The burden on our education system is 
really crucial in the west, and especially in these areas where 
people are moving to more and more rural areas. These are 
wonderful areas to live, some of the most beautiful areas in 
the world.
    And, yet, when they move there, they have to make the 
conscious decision that they are going to pay a significantly 
higher tax rate and that their children are going to get a 
significantly lower cost of education. And I just don't think 
it is appropriate. When the Federal Government owns it--you 
know, I love my northeastern friends, Republicans and 
Democrats, who claim that these are America's lands. Fine. Pay 
for them.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    Chairman Tom Davis. Thank you much.
    Ms. Brown-Waite.
    Ms. Brown-Waite. Thank you very much, Mr. Chairman.
    I have a question for both of our panelists, and that is 
has the reluctance of the Federal Government to get rid of some 
of the land been based on the fact that when it is sold, that 
the funding goes into general revenue rather than back to the 
agency holding the land? That would be my first question.
    Mr. Walker. I think there is absolutely no question that 
has served as a disincentive. But I come back to what I said 
before. You have to have transparency, you have to have an 
inventory, you have to have transparency over that and 
accountability mechanisms. But the fact that the agency doesn't 
get to keep any of the proceeds, in most circumstances, and 
sometimes it actually costs money to dispose of the land means 
it is a double negative potentially.
    Mr. Johnson. My answer to that is similar, but I don't 
believe agencies need incentives to do the right thing. I think 
they have never been held accountable for doing this, which is 
the primary issue; and I think we are all taking care of that.
    But I think, as I mentioned in my remarks, there are two 
parts of this issue. One of them is we have property we don't 
need and the other part of it is we have property that we need, 
but it needs to be better maintained. And we have trouble 
finding funding for this, and this is a source of funding over 
here for this. So to deal with the entire problem, I think 
funds from the disposition of properties we don't need can be, 
should be made available for our other real property needs, so 
that means agencies will be retaining use of proceeds.
    Ms. Brown-Waite. Let me ask you a question also about the 
management of properties, particularly in my area we have a lot 
of forest land. Did you, in your testimony, either of you, 
indicate how much is actually spent on management? And if we do 
change the model that we use, where funding actually goes back 
to the agency, what percentage generally would you say should 
be used for management? Because I found that usually there 
isn't enough money spent on management.
    Mr. Johnson. One of the things that the Real Property 
Officers and Real Property Officers Council will do is develop 
standards--what are good standards to use for management, 
environmental, utilities, utilization; all those things. We 
don't have good benchmarks to use, and we are in the process of 
developing that, and we will establish some good operating 
principles and guidelines to use by the entire Government.
    Ms. Brown-Waite. Am I to understand that the Federal 
Government did not have best management practices?
    Mr. Johnson. That is true.
    Ms. Brown-Waite. Thank you for your candor.
    Mr. Johnson. I hope that is true.
    Mr. Walker. It is definitely true. It has not utilized best 
practices. It is still working on trying to develop an 
inventory of all the property that we own, the condition of 
that property, what is excess. You can't manage something until 
you know what it is. And then how you go about managing it, 
once you know what it is, obviously is an important part. So a 
number of positive steps have been taken in that regard within 
the last couple of years, but we have a long way to go.
    Ms. Brown-Waite. You know, as much as people would like to 
beat up on the Federal Government for not knowing precisely 
what it owns in various parts of our great country, I can just 
tell you that from the State of Florida perspective, the State 
of Florida had the same problem; it didn't know what it owned, 
really didn't know what the boundaries were. So I know misery 
sometimes loves company. So the Federal Government is not 
alone, and I think many States find themselves in exactly the 
same situation.
    Thank you. I yield back my time.
    Chairman Tom Davis. Thank you very much.
    Mr. Shays.
    Mr. Shays. Thank you both for coming before this committee. 
I have a tremendous amount of respect for obviously both of 
your agencies and your leadership, both of your leaderships. I 
would like to know where the two of you may disagree.
    Mr. Johnson. Where we disagree?
    Mr. Shays. Yes. Are there any subtle points of disagreement 
or emphasis?
    Mr. Walker. Candidly, Mr. Shays, we haven't had an 
opportunity to compare notes on that. I can tell you, if it 
would help you, very briefly to tell you what I see as the four 
positive things and the four areas I would ask you to think 
about in this legislation, if that would help, and then he 
might be able to comment.
    Mr. Shays. That would help.
    Mr. Walker. The positive things in the draft legislation is 
you are codifying the Executive order--that is a positive--you 
are defining underutilized property, which needs to be defined; 
you are establishing incentives for agencies to dispose of 
property; and you are also using a centralized management 
process, which I think is a positive. The areas that I would 
ask you to think about would be, No. 1----
    Mr. Shays. Think about, in other words, additions to?
    Mr. Walker. Additions, that is correct, or potential 
enhancements or modifications.
    First, whether or not you should require a comprehensive 
transformation plan along the lines of what we recommended for 
the Federal Government; second, whether or not there should be 
more transparency--we believe there should be--over the use of 
the proceeds, the 20 percent that the agency gets to keep.
    Mr. Shays. Stated in the legislation?
    Mr. Walker. Yes, to provide that in the legislation, more 
transparency. And then the other thing I think that ought to be 
thought about--and it may not have to go into the legislation, 
but I would ask Clay to think about--is whether or not, as part 
of the ongoing management process, there ought to be more 
transparency over things like what is the fair market value of 
space that agencies own; what is the average number of square 
feet per person of property that agencies own or lease.
    We need more transparency on that because I think, frankly, 
there may be a lot more underutilized properties than otherwise 
we may know about if we had some decent benchmarking data and 
provided more transparency on that in order to try to make sure 
that we are identifying all the areas of opportunity.
    Mr. Shays. I would like to ask you, Mr. Johnson, to respond 
to what you have heard. Anything that you disagreed with or 
would want to qualify?
    Mr. Johnson. You are asking me?
    Mr. Shays. Yes. Of what Mr. Walker said, anything that you 
would disagree with or want to emphasize in a different way?
    Mr. Johnson. No disagreement. But in terms of emphasize, 
David talks about a transformation plan. We have to have data, 
information with which to base our plan on, and we don't have 
that inventory information now.
    Mr. Shays. OK, let me just ask it and you can define it any 
way you want. But in several GAO reports they recommend the 
development of an integrated transformation strategy for real 
property to buildupon the requirements of the Executive order. 
So explain to us why OMB hasn't initiated this process. Do you 
have concerns about the process? Are you implementing other 
processes that will attain the same result? Would you consider 
establishing a committee of the Federal Real Property Council 
to explore this issue?
    Mr. Johnson. Well, every agency is charged to come up with 
a real property plan for its agency, and that plan will be 
based on the facts about what it owns, what it wants to own, 
what it doesn't want to own, and what it needs to do with the 
property it would like to keep but make better.
    Mr. Shays. But the key is that there be an integrated plan 
for all of the agencies.
    Mr. Johnson. True. But you can't come up with an integrated 
plan until you have information upon which to base it.
    Mr. Shays. So while that information is being prepared, are 
you working on an integrated plan?
    Mr. Johnson. No, sir.
    Mr. Shays. OK. And that is what I am having trouble 
understanding. You don't need all that data in order to begin 
to know certain principles that you want to establish.
    Mr. Johnson. The principles are being developed. We are 
working on principles, and the format and the template and the 
issues that any agency will be developed, yes, sir. And we 
would be glad to come up and brief you specifically on any 
component part of the Federal Real Property Council's work or 
the work of the individual Federal Real Property Officers.
    Mr. Shays. So when you get the data you will be ready to 
just move forward with an integrated plan? When your agencies 
report to you and you have an inventory and so on, can we 
expect that we will see an integrated plan?
    Mr. Johnson. I am not sure what you mean by an integrated 
plan. Agencies are individually challenged to come up with a 
plan for their agencies.
    Mr. Shays. Right. But isn't there a general principle, some 
guidelines to all agencies that they need? I mean, we don't 
want one department----
    Mr. Johnson. The guiding principles, sure, we have that. We 
can share that with you.
    Mr. Shays. OK. Maybe you can respond to my question, Mr. 
Walker, because GAO has made recommendations. Do you feel that 
you are getting a response or do you feel that you are yelling 
into the wind?
    Mr. Walker. I think what I hear Clay saying is that they 
need to develop the comprehensive inventory before they believe 
they are going to be in a position to develop a comprehensive 
and integrated plan. I think there is a need for a 
comprehensive integrated plan, because there are certain issues 
and activities that you need to deal with across the various 
silos of Government that will not be dealt with if you just 
look at the individual agencies.
    Mr. Shays. Does that have to wait until the data is built?
    Mr. Walker. I think there are things that you can do before 
you have the data, and you should do before you have the data.
    Mr. Shays. Give me an example.
    Mr. Walker. For example, one of the things that was 
addressed earlier by Ms. Norton was the fact that we need to 
determine whether or not there is a need in agency B, where we 
have excess property, and agency A. There needs to be a 
coordination mechanism between the two of those to make sure we 
are considering that.
    Second, to the extent that the Congress decides that there 
ought to be a right of first refusal or a preference for State 
and local governments for certain public interests, then we 
need to make sure that there is a mechanism to ensure that 
happens on a Government-wide and integrated basis.
    So those would be a couple of examples.
    Mr. Shays. Thank you.
    Mr. Johnson. Can I make one comment?
    Mr. Shays. Sure.
    Mr. Johnson. David Walker loves me.
    Mr. Shays. Well, we all love you. [Laughter.]
    Mr. Walker. I object.
    Mr. Johnson. GAO loves the management agenda. We are the 
best thing that ever happened to them, and vice versa.
    Mr. Shays. So you love him too.
    Mr. Johnson. Of course.
    Mr. Shays. OK. Thank you. [Laughter.]
    Mr. Walker. Can I revise and extend my remarks for the 
record?
    Chairman Tom Davis. It is when the cameras aren't here you 
hear a lot of funny things in this room. [Laughter.]
    Mr. Shays. Thank you, Mr. Chairman.
    Chairman Tom Davis. Mr. Ruppersberger.
    Mr. Ruppersberger. Well, first, I think it is really 
important that we focus on this issue, and I applaud the 
President for passing the Executive order creating a Senior 
Real Property Officer to deal with these issues.
    But I think the fact that we have created that situation, 
now we have to hold them accountable for doing the job. And 
that is what I really think we need to focus on and we need a 
system. And as far as a system is concerned, we have talked 
about it and I know the chairman has a bill in to attempt how 
we identify these properties and sell them.
    I want to talk a little bit about the issue of the 
maintenance of properties that we might sell or might not sell. 
You know, if we spend $100,000 on maintenance, it might save $1 
million down the road. And the Senior Real Property Officer in 
each major department, where is their focus as it relates to 
maintenance of these buildings?
    Mr. Johnson. Maintenance is one of the metrics that will be 
required to be presented and made transparent for each of these 
properties. So we can start looking at maintenance cost per 
whatever the reference point is--number of employees, square 
foot, whatever--and come up with best practices and guidelines 
and so forth so we can have more responsibly and more 
professionally manage our maintenance expenses.
    Mr. Ruppersberger. But my point is, are we really doing 
this? Where is the accountability factor? If we have a problem 
and we don't fix it, and then it becomes a million dollar 
problem because it is an older building or whatever, does that 
go on the list? Do we have a system that will provide----
    Mr. Johnson. We are not doing that now, no, sir. But we are 
getting to the point where we can hold Real Property Officers 
accountable for managing their maintenance cost to within 
desired limits.
    Mr. Ruppersberger. My suggestion, if you are not doing it 
now, that is a very important aspect of the system in saving 
money. And I think a lot of times we talk about getting rid of 
buildings, but some people that we keep we need to make sure 
that we focus on that. And I would hope that we could get those 
people--what are they called, the Senior Real Property 
Officers--to talk about the maintenance issue.
    Mr. Johnson. We agree that owning what we want to own and 
not owning what we don't want is part of it. But operating and 
maintaining and running the lights and HVACs on the properties 
we own is important, and we need to do a better job of managing 
those properties.
    Mr. Ruppersberger. Well, it is not about the lights, it is 
about fixing things that need to be fixed.
    Mr. Johnson. I realize that, sir. What I am saying is we 
are in the process of setting ourselves up to hold Real 
Property Officers accountable for doing exactly what you are 
calling for.
    Mr. Walker. In addition to what you are talking about, I 
think there could be some circumstances in which we have 
deferred maintenance for properties that we do want to sell, 
and we ought to be making a decision about whether or not we 
want to do some of that deferred maintenance before we sell it 
in order to get more value. As we all know, many times before 
we sell our home we might fix up some things in order to 
enhance the fair market value before we actually dispose of it.
    Mr. Ruppersberger. How about the issue of September 11th 
and the fact that we have new requirements for security in a 
lot of our buildings? Is that part of the process that is used 
to determine whether or not we sell a building, whether or not 
we retrofit a building? And how much more money is that costing 
us generally?
    Mr. Johnson. It has not been taken up formally, but the 
Federal Real Property Council intends to.
    Mr. Ruppersberger. So a lot of the things we are talking 
about haven't been implemented, but we are working on the 
implementation, is that what you are saying?
    Mr. Johnson. Yes, sir.
    Mr. Walker. I think that is a critically important element. 
I mean, I would argue that given the additional security 
threats that we face, all the more reason why we need to 
rationalize and downsize our infrastructure so that we can 
focus our dollars on protecting and securing those facilities 
that we are going to use and that we truly need.
    Mr. Ruppersberger. Now, when we put these buildings up for 
sale, is part of the evaluation process to find out where the 
building is located? I mean, a lot of times the property is 
worth a lot more than the building itself. Is that a part of 
the process? If we are going to get money back and we are going 
to sell these buildings, is the fact that a building is in an 
area where the property is worth a lot, is that an indicator of 
whether we sell it or not?
    Mr. Johnson. Well, the fair market value, use of the----
    Mr. Ruppersberger. You have a building in downtown 
Washington, DC, that is worth a lot more, the property--maybe 
the building isn't--versus somewhere in Virginia.
    Mr. Johnson. Yes, sir.
    Mr. Ruppersberger. Now, is that part of the process, to 
evaluate where these buildings are, that if we are going to 
sell them, that we are going to get more money back?
    Mr. Johnson. Yes, sir.
    Mr. Ruppersberger. OK. And who administers that or who 
evaluates that?
    Mr. Johnson. Well, the standard by which that would be 
looked at have been or will be established. Federal Real 
Property Officers will be held accountable for looking at that. 
That will be addressed. They will be held accountable. All 
assets are not the same, not created equal; they have different 
values, different potential uses, and all those aspects will be 
addressed.
    Mr. Ruppersberger. Have we evaluated what our total 
inventory is and the worth of our total inventory of all 
Federal office buildings throughout the country, just in the 
United States?
    Mr. Johnson. No.
    Mr. Ruppersberger. I see my time is up, so I can't ask 
anymore questions.
    Chairman Tom Davis. But the answer is no.
    Mr. Walker, you have got a couple more minutes. If we can 
just get a couple more questions in from Members I think who 
are chomping at the bits.
    You wanted to ask one more question?
    Mr. Ruppersberger. No, I just wanted to followup on the 
fact of what we are dealing with from a fiscal point of view 
and if we really have a total inventory. It is very difficult, 
it is voluminous, but if we are going to get a hand on it, we 
are going to have to be able to find out what we have and 
evaluate all of that as it relates to security, as it relates 
to the value of where the property is.
    Also, I haven't heard the other questioning here today, but 
I really feel we have to focus on the maintenance side of this, 
too, and how much money do we invest in maintenance. Because if 
you don't invest in maintenance, that can create tremendous 
problems down the road.
    Chairman Tom Davis. Thank you.
    Mr. Johnson. We are addressing the issues that you have 
raised. I think we are doing more now, the Government is doing 
more now to professionally manage its real property than ever 
before. You will be proud, we will all be proud of where we 
will be a year from now, and prouder still a year from then, 
and prouder still a year from then.
    Mr. Ruppersberger. Good. Thank you.
    Chairman Tom Davis. Thank you. You can tell Mr. 
Ruppersberger was a county executive. Of course, at the county 
level--and I was the head of the county government in Fairfax--
it is a lot easier to take your inventory.
    Mr. Johnson. Oh, no question.
    Chairman Tom Davis [continuing]. Than it is nationally.
    They are still trying to get an inventory for the District 
of Columbia, of all of their land and get it to the city where 
we can work together to put maybe some property back on the tax 
rolls and make some other needs as well.
    I just had one other question. This is, Clay, to you. Your 
testimony referred to 23 commonly defined data elements for 
those inventories, such as operating cost, condition, 
utilization. Can you provide the committee--we don't need this 
today, but in your briefing or whatever--a complete list or 
matrix of these data elements and how they will be used to 
assess performance?
    Mr. Johnson. Yes, sir.
    Chairman Tom Davis. And what are the most important 
elements? I think that would be very, very helpful to us.
    And we appreciate very much what GSA is doing in terms of 
getting this inventory of Federal properties in the District. 
It seems to me that one of the long-term needs of the District 
is to establish that independent tax base, and some of these 
properties can be utilized for the city through redevelopment; 
some may need other city needs. But we appreciate the 
administration's willingness to come forward on that. I know 
Ms. Norton is looking forward to having that conversation as we 
move forward.
    Ms. Norton, you had a couple of other questions?
    Ms. Norton. Just a couple questions.
    I would like to ask a question really stimulated by 
Representative Issa's question, because I think I have a point 
of agreement here. We haven't had the experience as much on the 
east coast as you may have had out west. But remember the use 
of free land by the homeless came at the beginning of the whole 
homeless crisis.
    We have had now a lot of experience under that, and I am 
not sure there has ever been a re-evaluation. I understand that 
in the beginning years that whoever represented the homeless, 
that there were some feelers put out about proceeds rather than 
land.
    Let me ask both of you this. It turns out that, so far as 
we know, the homeless are interested in these bases or this 
Federal land most often for the buildings. Now, many of these 
are unimproved, run-down, you're moving the homeless to places 
that no homeless would even want to move in.
    I am wondering whether or not, as you look at these 
properties--and some of these would be old BRAC properties, so 
I am kind of joining these BRAC properties--particularly with 
the new BRAC process underway, whether or not your inventory 
would tell us how many of these properties that have been 
offered to the homeless. Because the law requires it simply 
have not proved useful to them, which, it seems to me, would 
then re-stimulate the notion that when such properties are 
disposed of in some way, some amount of the proceeds might be 
used for the homeless, as opposed to getting stuck on the 
homeless and it never then moves forward.
    Is there any way to break out not only which are the DOD 
properties, but which have had to be, as it were, rejected by 
homeless organizations and therefore suggests, perhaps, that we 
have to look again to see if there is another way to handle the 
homeless problem--we don't want to cut them out by any means--
without holding up a whole property. There we are talking about 
free land.
    Representative Issa, I was talking about land that would 
never have been for free. The local jurisdiction would have to 
buy the property, albeit at a discount, and the only reason 
they got a discount is because they are going to use it for a 
public purpose that is usually regarded as tax-exempt, like 
hospitals or schools.
    But I am asking whether or not we can move this homeless 
issue along in the process, I guess, Mr. Johnson, of dealing 
with you inventory, so that we really know whether or not 
turning over or giving first dibs to the homeless has proved 
what they really want.
    Mr. Johnson. Let me tell you what I think the answer is to 
that. My understanding is that if we know whether a homeless 
organization has accepted or rejected properties because we 
have tried to dispose of it, the vast, vast, vast majority of 
the properties we are inventorying we have never tried to 
dispose of, so we don't know whether there is a potential need 
to address homeless opportunity.
    Ms. Norton. But you will know whether the homeless wanted 
it.
    Mr. Johnson. Only once we begin the process of disposing of 
it, because that is one of the things we have to do early on. 
But in terms of here is a property we are thinking about 
getting rid of, we won't know whether it has potential use by 
the homeless or not. But I think, again, once we define----
    Ms. Norton. See, I thought a BRAC property had to be 
offered to local jurisdictions or to the homeless.
    Mr. Johnson. Once you have decided that you are in fact 
going to begin the process of disposing of it.
    Ms. Norton. So you mean they are just sitting on this 
property and nobody is making the decision as to whether or not 
anybody in the Federal Government might have use of it?
    Mr. Johnson. Right.
    Ms. Norton. Because it is supposed to go does anybody in 
the Federal Government want this? If you don't want it----
    Mr. Johnson. Once we decide that the owning agency doesn't 
need it----
    Ms. Norton. I see.
    Mr. Johnson [continuing]. Then the process begins: is there 
anybody else that needs it; is there a local interest; is there 
a homeless interest; or whatever the sequence.
    Ms. Norton. So there is a question of just getting off the 
dime and making a decision as to whether you want it.
    Mr. Johnson. Right. You have to first decide you don't need 
it and begin that process.
    Ms. Norton. Representative Shays asked if there was any 
disagreement between you. I don't see any disagreement except 
that your use, Mr. Walker, of the word incentives seems to be 
not as broad as the use of Mr. Johnson, because in his 
testimony he does talk about other Federal uses as being 
important for agencies to take into account. I am on another 
committee where agencies come all the time for space.
    One of the things, it seems to me, you ought to say to an 
agency before you go to the Federal Government and say pay for 
some new space for our folks, is to say look at your inventory 
and see if any of that space could be used instead of your 
asking the Federal Government for new space for your employees. 
Would you agree with that? That the use of space for your own 
employees might be an important fresh look at sites and 
buildings that Federal agencies may own?
    Chairman Tom Davis. That will have to be the last question, 
but go ahead and answer.
    Mr. Walker. I think that has to be part of the process. We 
need to have a process that certain things are automatically 
done as an integral part of the process. And I think what I 
heard Clay say was that he believes that transparency and 
accountability are the most important elements. He acknowledges 
that there is a need not just for agency plans, but a 
Government-wide plan at an appropriate point in time. And I 
thought I heard him say that, while he is not opposed to 
incentives, he believes that the other elements are more 
important.
    I believe that you need all three. I believe that 
transparency is critical, you have to have a plan, you have to 
have accountability mechanisms. I think the incentives can 
help, because right now you have a circumstance in which it 
costs money to save money, and if you have to come up with the 
money out of your budget and you don't get to keep any of the 
proceeds, it is a net loss from the standpoint of the agency. 
It is a net gain from the standpoint of the taxpayers and the 
Federal Government. But we have some very perverse incentives 
in our budget system, and I think we have to recognize that 
reality.
    Chairman Tom Davis. Thank you very much.
    Any other questions? Mr. Issa.
    Mr. Issa. Mr. Johnson, particularly for you, because we are 
talking not just about this legislation, but about the 
administration's attempt to change how we deal with Federal 
property, I gather you are very familiar with the PPV program 
that DOD is using?
    Mr. Johnson. No, sir.
    Mr. Issa. Let me be brief, then. The Public-Private 
Ventures that are going on primarily for housing and----
    Mr. Johnson. Oh, yes. I know that, yes.
    Mr. Issa [continuing]. Seeks to deal with a fundamental 
problem in our system--and I won't say it is the most eloquent 
dealing with it, but it works--which is for decades the 
military has always been told here is your money and here is 
your mission, and then when the mission runs out of money, they 
are told to go find it, and they find it by not working on 
sewer systems, painting, and all the other upkeep for our 
soldiers and sailors and Marines.
    So as a result, those homeless shelters that are handed 
out, even if they are military barracks or family housing 
units, to be honest, we are not doing the homeless a favor, 
because these are usually just terribly dilapidated; they 
haven't even gotten rid of the asbestos problems, etc.
    What PPV tries to do is to say, look, there is a cost, let 
us bid it out. So now, instead of a triple net lease and we 
hope you do the maintenance, it is really a gross lease. Is 
there a movement in the administration--and it doesn't have to 
include, of course, a private contractor, but is there a 
movement as part of this reform to get to where we go to the 
gross lease concept so that there is a rationalization of cost, 
but also maintenance in that rationalization, rather than 
breaking the two out separately, knowing that today's manager's 
job is to get today's mission done, he is likely to rob Peter, 
just as his predecessor did and his successor will, to pay 
Paul?
    Mr. Johnson. I don't know the answer to the specific 
question about gross and net leases, but I do know that 
providing quality housing for members of the armed forces is a 
very high priority for this President. And great strides have 
been made by DOD.
    Mr. Issa. Actually, Clay, I was saying that is a success 
story. I am looking at the other part, all the other Federal 
buildings and so on, because you have the same situation.
    Mr. Johnson. Oh, I see, beyond the military.
    Mr. Issa. Right. And I am not saying that you do a 
privatization and lease back the way the PPV worked, 
necessarily. That may or may not be the model, depending upon 
other considerations. But in order to keep from having deferred 
maintenance going forward, so we leave the next administration 
a system in which the buildings we retain do not become 
dilapidated buildings of tomorrow, do we have a plan and can 
this committee help you in making that possible, that change in 
how you do business?
    Mr. Johnson. Yes, this committee can help us in all these 
areas. Our goal is to make sure that maintenance is adequate, 
that it is within desired operating levels, and quality of end 
product levels, and we welcome any and all input from the 
committee.
    Mr. Issa. Thank you, Mr. Chairman. I know my time has 
expired.
    Chairman Tom Davis. Thank you very much, and I know, 
General Walker, that you have to leave.
    Mr. Johnson, thank you very much. And I hope we can move 
this legislation. I look forward to your input as we continue 
to move through the legislative process.
    Hearing is adjourned.
    [Whereupon, at 11:33 a.m., the committee was adjourned.]
    [The prepared statement of Hon. Elijah E. Cummings and 
additional information submitted for the hearing record 
follow:]

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