[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




   MAKING THE GENERAL SERVICES ADMINISTRATION LEASE AND CONSTRUCTION 
           PROCESS EFFICIENT, TRANSPARENT, AND USER-FRIENDLY

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

                               (110-135)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 6, 2008

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure






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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
DORIS O. MATSUI, California          DAVID G. REICHERT, Washington
NICK LAMPSON, Texas                  CONNIE MACK, Florida
ZACHARY T. SPACE, Ohio               JOHN R. `RANDY' KUHL, Jr., New 
MAZIE K. HIRONO, Hawaii              York
BRUCE L. BRALEY, Iowa                LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          CHARLES W. BOUSTANY, Jr., 
TIMOTHY J. WALZ, Minnesota           Louisiana
HEATH SHULER, North Carolina         JEAN SCHMIDT, Ohio
MICHAEL A. ARCURI, New York          CANDICE S. MILLER, Michigan
HARRY E. MITCHELL, Arizona           THELMA D. DRAKE, Virginia
CHRISTOPHER P. CARNEY, Pennsylvania  MARY FALLIN, Oklahoma
JOHN J. HALL, New York               VERN BUCHANAN, Florida
STEVE KAGEN, Wisconsin               ROBERT E. LATTA, Ohio
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey

                                  (ii)






 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

        ELEANOR HOLMES NORTON, District of Columbia, Chairwoman

MICHAEL H. MICHAUD, Maine            SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania          BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York          SHELLEY MOORE CAPITO, West 
CHRISTOPHER P. CARNEY,               Virginia
Pennsylvania, Vice Chair             CHARLES W. DENT, Pennsylvania
TIMOTHY J. WALZ, Minnesota           JOHN R. `RANDY' KUHL, Jr., New 
STEVE COHEN, Tennessee               York
JAMES L. OBERSTAR, Minnesota         JOHN L. MICA, Florida
  (Ex Officio)                         (Ex Officio)

                                 (iii)















                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Grunley, Ken, President of Grunley Construction..................     5
Seekins, Gail, Senior Property Manager, Akridge Company, and 
  Member of the Building Owners and Managers Association (BOMA) 
  International..................................................     5
Turowski, Art, Senior Leasing Official, Jones Lang Lasalle.......     5
Winstead, David, GSA Public Buildings Service Commissioner.......     5

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    52
Graves, Hon. Sam, of Missouri....................................    53
Oberstar, Hon. James L., of Minnesota............................    58

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Grunley, Kenneth M...............................................    59
Seekins, Gail H..................................................    63
Turowski, Arthur.................................................    69
Winstead, David..................................................    75

                       SUBMISSIONS FOR THE RECORD

Winstead, David, GSA Public Buildings Service Commissioner, 
  responses to questions from the Subcommittee...................    90



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 
 MAKING THE GSA LEASE AND CONSTRUCTION PROCESS EFFICIENT, TRANSPARENT, 
                           AND USER-FRIENDLY

                              ----------                              


                          Friday, June 6, 2008

                  House of Representatives,
      Subcommittee on Economic Development, Public 
                Buildings and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:57 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Eleanor Holmes 
Norton [Chair of the Subcommittee] presiding.
    Ms. Norton. Today the Subcommittee will examine the 
processes and costs associated with leasing and construction by 
the General Services Administration. Although leasing and less 
frequently construction are perhaps the most important work of 
the Public Buildings Service Commission, during my years on 
this Subcommittee, there has never been a top to bottom look at 
out how the agency accomplishes this work or whether it needs 
changes. It is long past time for the Federal Government, the 
Nation's major procurer of lease space, with 700,000 Federal 
employees at leased sites and with approximately, 640,000 
employees in government owned space to look more closely at the 
benefits and burdens of its lease and construction practices. 
This is especially the case today when we are about to 
undertake the largest building project in the history of GSA, 
the new headquarters for the Homeland Security Agency.
    The stakes for the taxpayers and for government and private 
sectors alike are incredibly high. Taxpayers want the best deal 
the marketplace can offer. Especially considering the leverage 
that GSA's outside footprint should afford, developers, 
building owners and contractors who incur considerable risk and 
substantial cost simply to compete for Federal leases and 
construction contracts want a cost efficient process that 
yields timely decisions. GSA wants to assure its clients are 
adequately served and that Federal requirements are met.
    The Subcommittee and ultimately the full Transportation and 
Infrastructure Committee authorizes GSA requests for space 
which come to the Committee in the form of an agency 
prospectus. The processes for leasing and construction are 
inherently complicated. But this does not mean that they cannot 
be streamlined or made less costly, more transparent and more 
user friendly. Is the present process the best we can do? Today 
we ask ourselves whether considering Federal requirements and 
professional and technical demands for leasing and 
construction, can the GSA leasing and construction process be 
improved? Before prospectuses even arrive on Capitol Hill, the 
GSA has used its considerable expertise and spent many staff 
hours of work, request for leasing, of course, occur far more 
often than for construction.
    GSA issues a solicitation for offers based on prospectus 
approved by Congress. After submission of offers, GSA evaluates 
the initial submissions for technical compliance with the 
original solicitation. Negotiations ensue on costs for tenant 
improvements, the availability of amenities, the range of 
acceptable rental rates and other tenant agency requirements. 
After GSA requests best and final offers from potential 
lessors, the final evaluation takes place. Even after final 
award is made, GSA must negotiate a final lease with several 
clauses designed to protect the government's interest, although 
some of these same clauses may be at issue at today's hearing.
    Clauses that give the government the right to terminate a 
lease at any point and to buy the building at market rates may 
create an economic risk that although not likely to be 
exercised by GSA, drive up the final price to private industry 
and ultimately to the Federal Government. If, however, 
construction is authorized by Congress, and usually that 
happens in advance, a lengthy set of steps also ensue, 
including consultation to determine client needs, site 
selection, architect and engineer selection, final design and 
procurement strategy. The current release steps GSA also 
develops a prospectus for Committee approval.
    Once the prospectus is approved the procurement phase 
begins and the private sector is engaged and award occurs and 
further refinements are made and negotiations are finalized. 
However during procurement, construction documents, advertising 
the project, preparation submission of bid awards, of contracts 
and final negotiations can stretch on for years. Market 
conditions, market volatility and labor costs, in the meantime, 
complicate the task of contractors in preparing a winning bid. 
In addition, numerous Federal requirements such as the 
provisions of the National Environmental Protection Act, or 
NEPA, Buy America, competition and contracting act, small and 
minority business Act, Fair Labor Standards Act, energy, 
historic and environmental rules and regulations all are 
incorporated into the procurement.
    During my service on this Subcommittee, I have had an 
opportunity to closely observe GSA as it has located agencies 
in particular here creating a virtual microcosm of GSA's 
location policies nationwide. GSA is assigned this 
responsibility because unlike other Federal agencies, it has 
unique professional and technical knowledge. This is only part, 
but as it turns out, often the most visible and an important 
part of GSA's leasing responsibilities. This function is 
assigned to GSA and not to Federal agencies themselves in order 
to ensure adherence to uniform policies to control important 
variables such as cost per square foot and to ensure taxpayers 
receive the best value for available Federal funds.
    Many of GSA's decisions have created the impression that 
some locations are acceptable and some locations are not, 
despite the proximity to public transportation and amenities as 
required by law and even where there has been existing Federal 
investment. To make this point, I held my first hearing as 
chair in NOMA, the part of downtown Washington north of 
Massachusetts Avenue that provided a case study for looking 
closely at GSA's location policy. This area is bounded 
generally by Union Station, North Capitol Street, Florida and 
New York Avenues, you will recognize as main downtown parts of 
the district, as well as second street on the northeast side.
    The area, in addition, is very close to the Capitol, to the 
Senate and the House and is a prime location here, leading to a 
makeover that began almost two decades ago. The private sector 
found NOMA long before the rapid development in progress there 
today. For years, NOMA has been the headquarters for brand name 
private public and nonprofit entities among them, XM Radio, 
CareFirst, BlueCross/BlueShield, SEC and Kaiser Permanente. Yet 
although finally in the midst of a building boom, with 60 
percent office space and 40 percent housing, a supermarket and 
amenities not available on K Street, Federal agencies still 
show reluctance to locate in NOMA. What should the Federal 
Government do about this?
    NOMA is not only close to the New York Avenue metro but to 
Union Station, the cities's major transportation hub where 
rail, light rail, metro bus and taxi service converge. The 
local bid is running a taxi, a free service between New York 
Avenue and Union Station. Nor can it be doubted that the 
Federal Government regards the centrally located NOMA area as 
vital to Federal interests because the NOMA transformation now 
in progress has been significantly influenced by Federal 
policy, the new Bureau of Alcohol, Tobacco and Firearms, their 
headquarters which was just opened last month, signaled that 
NOMA was regarded as an ideal site for Federal facilities. Make 
the point unmistakable.
    The Federal Government also did what it never has done 
before, did a one-time only investment, at least thus far in an 
extra Metro station that had not been planned as part of the 
net metro station that had not been planned as part of the 
Metro system and specifically positioned the station to serve 
the NOMA area and thus fulfilling indeed more than fulfilling 
GSA requirements for Federal facilities and that they are 
arguably located in close proximity to public transportation.
    As a result, NOMA, unlike most areas where Federal 
facilities are located, has a new Metro station on the north 
end in addition to Union Station and the transportation hub on 
the south end. How then could anyone explain to taxpayers that 
there would be any reluctance by the Federal Government to 
locate agencies in 50 city blocks downtown Washington of 
existing space rapidly being developed at below market office 
space rates here. In years of oversight, this Committee has 
found evidence that agency preferences, not statutory mandates, 
often dominate GSA location selections.
    The 57-acre government-owned Southeast Federal Center, 
located on M Street in the neighborhood known as Capitol 
Riverfront, today is 5 minutes from the Capitol and is another 
case in point. GSA was unable ever to convince Federal agencies 
to locate there, even though long ago the Navy Yard Metro 
station at both ends of M Street have been located there. After 
10 years of seeing agencies avoid the area, and I introduced 
the southeast Federal Center legislation, that for the first 
time is allowing the private sector to develop on a Federally-
owned site, a very valuable piece of land located on the River, 
shortly will there after the new Department of Transportation 
headquarters was built there still capital River front near the 
new Navy yard a multi use development which will have parks, to 
be found nowhere else where Federal agencies are located also a 
supermarket, a mall, may be experiencing the same reluctance by 
Federal agencies to locate there in the M Street Yards 
Southeast area.
    I will be holding a forum for agencies along with the local 
businesses improvement district or bid being formed just as 
NOMA has had a very effective bid to inform agencies more about 
the area and its amenities just as I did for NOMA. Several 
years ago, GSA cooperated with me in the form which introduced 
agencies to NOMA. And I am pleased that GSA is again involved 
with this upcoming forum in late June. But I must say that even 
after we had the forum, GSA had difficulty getting agencies to 
locate in NOMA, even as amenities tumbled down and were clearly 
being developed.
    Meanwhile Federal agencies continue to want to lease 
higher-priced space in more traditional areas, near K Street 
Connecticut Avenue and similar downtown locations. Not 
surprisingly, Federal employees often prefer downtown locations 
near their shops and their restaurants and their theaters 
regardless of what shops and restaurants and theaters are being 
built in new areas. Agency preferences are, of course, central 
and very relevant and must always be taken into account. 
However significant questions are raised concerning GSA's 
adherence to statutory requirements when sites compete which 
have amenities and are continually bypassed by GSA.
    As a result of the NOMA hearing, the Subcommittee added 
important language to every GSA prospectus that requires GSA to 
notify our Subcommittee if any changes are to be made to the 
area designated in the prospectus. This language has had some 
effect. It was designed to keep Federal agencies from dictating 
where they will be located regardless of costs once a fair 
competition has occurred and enforces the original intent of 
executive order 12072 that requires GSA to give serious 
consideration to neglected parts of urban areas.
    At bottom, GSA's leasing and construction process requires 
not only more leadership from this Subcommittee but 
particularly from GSA in performing the vital role it has been 
assigned by Congress. Its role requires initiative as well as 
deference to serve its numerous and often inherently 
inconsistent roles to develop as developer, landlord, real 
estate agent and agent for major repairs and rehabilitation.
    The Subcommittee is earnestly looking for ways to help 
especially considering that GSA is a peer of the Federal 
agencies it serves and may need statutory or prospective 
changes from Congress for agencies to fully understand GSA's 
role and what we expect of GSA and of other Federal agencies.
    In today's atmosphere, budget deficits and requirements of 
PAYGO spending, agencies must be directed to convenient sites 
that have the required amenities, that the government of United 
States can afford. NPR employees who will shortly be located in 
downtown NOMA, and CNN who was there before the current NOMA 
building boom began, did not try to veto the site, as some 
Federal agency officials and employees have done.
    Moreover, the most economical site agencies will surely 
find in this atmosphere is best for agency budgets who pay rent 
to the building fund, and I assure you will not get increases 
any longer to relocate wherever they choose.
    It is just as important, however, for GSA to work 
collaboratively with the private sector in reducing their costs 
of leasing and construction not only in these budget crunch 
times but because a costly and cumbersome process for leasing 
and construction by the Federal Government is not in the 
interests of any of the parties involved.
    We welcome the Commissioner of the Public Buildings 
Services this morning and the other witnesses who bring 
professional and personal experience and expertise that can 
help the Subcommittee and the GSA.
    We are going to ask all the witnesses to take the table at 
the same time. I think a good exchange might be beneficial to 
all concerned. So Commissioner David Winstead, Public Buildings 
Service Commission at GSA; Art Turowski, senior leasing 
official at Jones Lang LaSalle and a former official of the 
GSA, leasing official of the GSA; Gail Seekins, senior property 
manager, Akridge Company, and a member of the Building Owners 
and Management Association, or BOMA; and Ken Grunley, president 
of Grunley Construction.

  TESTIMONIES OF DAVID WINSTEAD, GSA PUBLIC BUILDINGS SERVICE 
COMMISSIONER; ART TUROWSKI, SENIOR LEASING OFFICIAL, JONES LANG 
    LASALLE; GAIL SEEKINS, SENIOR PROPERTY MANAGER, AKRIDGE 
    COMPANY, AND MEMBER OF THE BUILDING OWNERS AND MANAGERS 
ASSOCIATION (BOMA) INTERNATIONAL; AND KEN GRUNLEY, PRESIDENT OF 
                      GRUNLEY CONSTRUCTION

    Ms. Norton. I am pleased to hear all of your testimony 
beginning with Mr. Winstead.
    Mr. Winstead. Madam Chairman, thank you again. I am David 
Winstead, Commissioner of the Public Building Service. I am 
pleased to be before the Committee again. I thank you for the 
hearing on April 17 on Greening the NCR, and your continued 
oversight and interest in our business housing Federal 
agencies.
    I am also pleased to submit written testimony for the 
record which covers in detail a lot of the issues you raised 
and some of the concerns you raised, and I hope the Committee 
will take consideration of the written testimony. I am also 
pleased to be on this panel with a lot of our private sector 
partners. Everybody on my left is actually engaged in one way 
or another in delivering lease space or building programs or 
modernization for GSA.
    As you mentioned, Madam Chair, GSA leasing and construction 
is, in fact, governed by many statutory and regulatory 
requirements that do not apply to similar private sector 
transactions and are much more constrictive. GSA must comply 
with a really comprehensive list of laws and executive orders, 
some of which are contradictory. For example, urban policy 
versus rural requirements.
    We also have the Davis-Bacon Wage Act; we have the National 
Environmental Policy Act; we have the Competition and 
Contracting Act; we have the Small Business Act and other 
energy, environmental, historic preservation laws, orders and 
regulations. So this list of important laws and regulations, 
executive orders, OMB circulars, and other mandates has a 
really significant impact, as you noted, on our leasing and 
construction program, in particular, the time it takes to 
secure a lease or construct a building and the time it takes 
for customers to budget for space. I want to talk a little bit 
about some of the challenges and concerns you mentioned and the 
initiatives that we are taking and have taken to make the 
process more effective.
    In our capital program, which is substantial, 3 billion in 
the current year, there are a number of challenges faced by the 
construction industry in general that have had serious impact 
on GSA in recent years. I think, in former testimony to this 
Committee, I have mentioned that we have had over a 20 percent 
increase in construction costs over the last 4 years and this 
has impacted our bidding process. This includes the volatile 
market and the competition for construction, which has been 
very severe in southern California and the southwestern part of 
the country.
    Also, security requirements have presented additional 
challenges and impact construction two ways_obviously the 
background check of contractor workforce that is doing 
renovation in our buildings, and Ken Grunley is here and can 
speak about that in spades, and also the physical security of 
our building. The HSPD-12 requirements are administratively 
complex and delay access to work sites; getting crews for 
multiple crafts cleared through the program is challenging and 
time consuming.
    We have seen that with EEOB, we have seen that with the 
Department of Interior Renovation, and especially when we have 
phased construction such as the Department of Interior where 
crew sizes and composition vary during construction time 
periods, or the security of EEOB in terms of access to it. The 
physical security of buildings includes such items as perimeter 
security, obviously blast resistance glazing, structural 
design, and progressive collapse. All these are quite unique 
and require costly investments by the Federal Government 
through GSA, as well as time in terms of getting bids and being 
able to proceed on those.
    Besides these challenges, I would like to highlight some of 
the following initiatives that we have taken to improve our 
construction program in addition to ones detailed in my written 
statement and these include strengthening collaboration with 
industry. On April 17th, I mentioned to you, Madam Chair and 
the Committee, that I would be reaching out to the DCBIA, ULI, 
NAIOP and the other--BOMA and the others, to try to make sure 
that our requirements for green leasing, which are now on the 
table, are understood by them looking ahead.
    But we are using new technology such BIM technologies in 
design and construction of our building and new approaches to 
project delivery. We now use over four approaches to project 
delivery in addition to our emphasis right now on the CMC 
approach, which I know has caused some issues about staffing 
with some of our contractors. Industry collaboration is key, 
and this panel, I think, reflects that. To find ways to better 
collaborate with industry partners and to build a common 
understanding, last fall we convened a building opportunities 
conference here at the NCR with representatives from the AIA, 
the Building Owners and Management Association as well as the 
Association of General Contractors.
    I would mention we do continue to have a strong commitment 
to design excellence. Our design and construction peer program 
is still very much intact. We develop a robust design and 
construction peer review, which does take time, and as you all 
probably know, this Committee has seen 2-year cycles for design 
excellence to be applied and construction excellence.
    I have taken a lot of action over the last 2-1/2 years in 
response to direct concerns expressed by our biggest clients in 
the construction area, the courts, the FBI, the DHS, and the 
construction board of protection who have pulled me off very 
early in my tenure and said design excellence is great, but it 
is taking too long. We have, in fact, selected a new AC for 
construction excellence who is taking a major new approach to 
shortening the design cycle. In some cases with a new border 
station, like the Adonna border station in Texas, we have cut 
the design time from 2 years to 1 year.
    We used design-build to get it in place earlier, and CBP 
appreciated that. The courts had a similar concern. I heard it 
from the top administrator of the courts. So we have been 
reviewing our projects for design quality, looking at 
shortening design and construction cycles, looking at cost 
realism, because obviously with the market escalating at 8 
percent per year in costs, we have to constantly be looking at 
the prospectus level and make sure our management timeline is 
focused. Now I know you have mentioned concerns in that regard 
and we do have some.
    The private sector has, in fact, and some of these 
panelists might underscore that, expressed concerns about the 
construction charging undue burden on some of their general 
contract needs, and I think we are working with the 
construction management association in BOMA and looking at 
approaches that we can more effectively staff out in terms of 
our management of the construction versus the contractor. We 
are also looking at new approaches in construction estimating. 
We are working closely with the design and construction 
community to help us re-examine our cost estimating and our 
bench marking. We have had major challenges by the courts, for 
example, in the benchmarking that we have applied to the former 
LA courthouse proposal.
    We have minimized the impact of market conditions on the 
construction cycle time. We have performed market surveys. We 
have met several times in San Diego to assess the nature of 
that market and our proposed construction approach for the San 
Diego courthouse, and that has yielded a lot of regard and a 
lot of good suggestions back to us.
    New technologies are part of the solution to get a more 
cost effective approach to construction. One of these, perhaps 
leading that area, uses the building information system 
approach, the BIM approach, which is a new technology of 3-D 
visualization of the building showing not only the structural 
side, but looking at the electrical and HVAC systems and 
looking at buildouts requirements. Earlier this week, I 
actually talked with some Canadian counterparts that are vested 
with us, as well as other countries, on standardizing that BIM 
approach which we think will create more competitiveness in 
bidding for projects. I also met earlier this week with HVAC 
engineers who see value with a BIM because it does lay out 
those specifications early on in the project and visually shows 
how they will fit together.
    Consistency in design and planning is still a major focus. 
We are taking steps to be more consistent nationwide. My deputy 
behind me, Tony Costa, has spent a lot of his time ensuring 
that our policy guidelines from headquarters are consistently 
applied throughout the 11 regions so, again, contractors 
dealing with us have the same protocols in place to respond to 
bids and to build these buildings for us. One major issue, 
which I will say I still think we need to focus more on, is 
project management training and certification.
    If you were to ask me, ``what is our major problem in terms 
of contract and project management?'' it is the lack of 
regional and consistency in approach and experience. We have 
very committed project managers in all 11 regions, but project 
size varies between a courthouse and small border station 
addition, or a buildout, or just a T and I improvement in a 
standard building.
    They vary enormously and, quite frankly, with retirements 
in the Federal Government, we are losing people like Art 
Turowski, who have decades of experience. We have to focus on 
training, and we have to lean on the BOMAs and other industry 
groups for that input.
    I would also mention that there are other initiatives that 
I think will address some of the problems you mentioned in your 
opening remarks, Madam Chairman, and that is that we are 
rewriting the GSA standard clauses. We have a library of scope 
of work templates that we are reviewing right now and we are 
looking at various project types and construction options and 
contracting options. We think these tools will make our project 
solicitations more consistent, both for our needs in 
safeguarding the expenditure of Federal Buildings Fund money as 
well as the ability of our private sector partners, on our 
left, to respond to those.
    We will continue to engage with industry partners in 
reviewing and commenting on these templates to make them as 
effective as possible in promoting team work, in collaboration, 
ultimately saving time and money for the private sector as well 
as the Federal government.
    Just some comments on leasing, because we have some 
continued challenges in that regard. You have mentioned 
several. Nationally now our lease inventory is 51 percent of 
the Federal Building Fund_175 million square feet of space. We 
are now at 49 percent government-owned space. We have now more 
leased space than government-owned. Since 1965, we have seen 
400 percent increase in the amount of leased inventory with GSA 
from 43 million square feet to that 175 million I mentioned.
    As you know, in the fiscal year 2009 Congressional Budget 
Justification, we are increasing 7 percent more and leasing up 
to 187 million square feet. This increase has created stress on 
the program. We have also lost people, such as Art Turowski, 
who have decades of experience, but we have Francesca Ryan and 
her team at NCR, and Bart Bush that are there to pick up the 
reins and continue to address the needs.
    But we do hear from our customers. We do hear from 
contractors that inconsistent organizational structures from 
the past, and quite frankly, 10 or 15 years ago, the 
governmental philosophy of GSA was to really decentralize into 
the regions and decentralize in terms of management or leasing 
in the NCR from centralized to essentially a service center 
orientation. We feel that we need to bring back more 
consistency through the regions by more protocols and direct 
policy from Central Office.
    Specifically, we set up an independent office about 1 year 
ago, the Office of Real Estate Acquisition in Central Office, 
to oversee leasing policy at the national level, and the 
regions. We are completing the trend towards creating new 
leasing divisions at NCR with clear lines of authority and 
accountability. And in fact, we are holding a workshop on June 
17th next week and 18th with PBS senior managers from around 
the country to again review and make sure this implementation 
is done as quickly as possible.
    In order to meet the increasing needs for leased space, and 
to strengthen our capacity and leverage the expertise of the 
private sector, as you well know, and I know this Committee had 
a great deal of debate on this. Three years ago, we awarded the 
National Broker Contract in 2005. That effort is still well 
underway. We have had a GAO report on it. We actually 
implemented the 11 recommendations of that GAO review. Private 
sector lease support now is very, very strong from our 
contracting firms, one of which is on my left, assisting us in 
efforts to standardize our leasing practice nationwide and 
provide more support to our customers and government tenants.
    As of March 31 of this year we have tasked our four 
national broker contractors with 1,500 lease acquisitions 
totalling about 30 million square feet. These leases represent 
a contract value of $2.5 billion. Usage of this contract have 
continued to increase. Our goal for implementation and 
utilization of the national broker contract is 70 percent.
    Madam Chair, I will tell you that usage is not consistent 
between the regions. We have some regions that still only have 
20 percent utilization, only two, but they are being driven to 
increase that utilization. Quite frankly, we have seen benefit 
not only in the rent credit, but also in terms of the market 
rate yields we are getting on our leased inventory. We are 
targeting 9 percent below market, and with the National Broker 
Contract, in some cases, we are getting 11 percent below market 
rates.
    I think it is also significant that our brokers are not 
paid by the GSA Federal Buildings Fund. Instead, they receive 
market-based commissions from successful lessors with GSA 
receiving commission credit, as you know, from the brokers paid 
to offset some of the costs for our rent of our tenants 
agencies. These credits today have generated in the pipeline 
$33 million in direct savings to our clients customers in the 
form of reduced rent.
    In addition, we have had 882 additional lease acquisitions 
in the pipeline, which would increase that recent aggregate 
rent credit to almost $77 million when they get in place. We 
have achieved rent rates, as I mentioned, that continue to be 
below market. In order to succeed, I think, with our leasing 
program, we not only need to leverage this National Broker 
Contract, we also need to grow our inhouse leasing expertise. I 
was talking to Art before this about the attrition we have had 
in our leasing realty specialists. We do not have uniform 
competency through all of our regions. But I will tell you that 
in the last 4 years, even with the National Broker Contract in 
place, we have had the need to add about 10 percent more 
leasing specialists. We are now in the range of about 526 
leasing specialists through our 11 regions nationwide.
    This also continues to be a challenge. We have a retiring 
workforce some 50 percent over next 5 years. We are recruiting, 
training and trying to retain people of quality. I will tell 
you that I am have proud of my 2-1/2 years at PBS in watching 
how the Federal government, particularly the team at PBS, 
trains and brings in new recruits and has a mentoring program 
and ALD training, and it really is a team spirit across the 
country, and I think that does help us to get kids to be 
interested to come into GSA and to become leasing specialists 
or project management specialists. And we have wonderful co-op 
programs with universities. I happen to be on the board of John 
Hopkins real estate program. We have recruited several 
graduates of that program that have MS's in real estate. So 
while I do think that we are losing talent, we are doing our 
best to attract new talent.
    One of your major concerns in your opening statement again 
was solicitations for offers and the issues of how long that is 
taking and some of the concern and burden that puts on the 
private sector offerors in the National Capital Region. We have 
800 million square feet here. We have 53 million square feet 
leased, and the market is difficult. I went to the real estate 
round table about 2 months ago and listened to the top CEOs in 
the industry talking about the credit crunch impact on 
commercial development.
    We are very focused on trying to make that lease, the SFO 
process more transparent and efficient. We have, in fact, 
looked at revisions to the SFO process to make them better 
organized so that an offeror can review the first section to 
determine whether they want to pursue an offer before they are 
spending $100,000 or more to do so. We also reorganized to 
recognize the normal, essentially chronological events in lease 
procurement between offer, award, design, construction and 
administration. We have put a great deal of effort into this.
    The work is not completed. I think Bart Bush and Francesca 
could comment and provide the Committee further about what we 
are doing in NCR. But this is a comprehensive and thorough 
program, and I will tell you that we hope the new SFO will be 
more user friendly, particularly during the bidding process for 
offerors, and as well as in a life cycle of a lease.
    Lastly, I will tell that another major concern is security 
requirements. It is not surprising that we have varied between 
level 1 and level 4 security requirements. There is a need for 
greater building setbacks, glass resistance, building access 
requirements, as well as challenge of co-location of tenants at 
work places where we are leasing space but do not have the 
whole building. I think we can better capture some of these 
security costs in terms of our leases and make them more 
transparent to the private sector, and we are developing_and 
have developed_a security unit price that will allow an offeror 
to review the security requirements more easily in the lease 
and determine and categorize those costs.
    I will tell you that I am concerned about the impact of the 
security requirements. And I am concerned about the ISC 
standards that are reflected in our lease portfolio and offers. 
We are going to continue to try to make sure that that does not 
impact on the competitiveness of offerors in the region.
    Lastly, I will talk a little bit about the concern raised 
about the time it is taking to clear leases and get them in 
place. We do have a unique challenge in terms of those 
requirements that I went through earlier, the sheer size of the 
portfolio in the NCR is huge. We have 10 percent annual 
expiration of leases and resolicitations. But both NCR and this 
new Office Of Real Estate Acquisition are addressing and trying 
to create more efficiencies in lease acquisition. I know that 
Art only left us 6 months ago, so a lot of this was on his 
watch, but we are committed to fixing programs and trying to 
reduce delays and trying to make sure that we are commencing 
rent payments and processing invoices timely. I can't tell you 
that in all regards we have done that in a timely manner.
    Some of the hold over leases and some of the closeouts of 
leases are taking longer than I am comfortable with. And Bart 
knows that, as well as Tony and the rest of the ARAs.
    It is unacceptable really to cause unnecessary delays for 
the contractors bidding on these leases. We do hope that some 
of this improvement will improve the tracking, and some of the 
efforts underway will improve basically the cost effectiveness 
for people to bid.
    I would also mention that we are, on the construction side, 
we are looking at lease construction clauses nationwide and 
trying to make sure that they are more uniform. We have 
recently had a lease construction round table in June, I guess 
it will be next week, and we are also looking at improving our 
ability to get more uniformity in competition.
    I will tell you several of the courthouses in the southwest 
had very few bidders, and I was very concerned about that. And 
part of it obviously was the construction process as well as 
the competition the DOD and other builders in that region were 
creating for us, and we did not have the bidding that I would 
like to see.
    Anyway, I do want to conclude by just saying I hope the 
statement deals with some of the issues you mentioned in the 
beginning. I really do thank our colleagues on the left for 
their partnering in the many ways that they do through the 
leasing construction as well as BOMA industry and their support 
in working with us. And I would be pleased to answer any 
questions that you might have. Thank you.
    Ms. Norton. Thank you very much, Mr. Winstead.
    Why don't we go right on down. Ms. Seekins.
    Ms. Seekins. Good morning Madam Chairman and Members of the 
Subcommittee. Thank you for holding this important hearing. I 
am Gail Seekins, senior property manager of Akridge, a full 
service real estate firm in Washington, D.C. I am here today 
representing the Building Owners and Manager's Association 
International. First and foremost, I would like to say that GSA 
is one of BOMA's largest and most valued members. Our comments 
today are intended to highlight improvement opportunities that 
will help the Federal Government and the private sector 
companies that build and lease to government agencies and 
better streamline the processes to save money for all parties 
involved.
    Our comments are a compilation of feedback we receive from 
a number of our member companies and are not intended to 
highlight any specific project-related concerns of my company 
or any other.
    We would also like to compliment GSA for ongoing 
cooperation with BOMA in seeking mutually beneficial changes to 
construction and leasing practices. Scoring rules are at the 
top of the list when asked to identify problematic aspects of 
doing business with the government. To avoid the harsh 
accounting treatment required for capital leases, GSA writes 
only operating leases. The Office of Management and Budget 
offers the rules for operating leases and OMB's circular A 11.
    OMB's rules are generally more stringent than the 
equivalent private sector. Scoring rules can contort lease 
procurement and increase costs in the following ways. GSA is 
prohibited from leasing government land and leasing back 
improvements even when they own acceptable sites. GSA is 
prohibited from outleasing underutilized buildings which could 
be renovated and leased back. Unique features required by the 
government must be paid outside the rent in a lump sum. Longer 
lease terms that would reduce rental rates are often prohibited 
by A11 rules to avoid capital treatment. Yet leasing for 20 
years yields a lower rate than 10 to 15.
    Lease to ownership options are not allowed ruling out the 
cheapest financing options and lowest rates.
    Let me give you a specific example in FBI build to suit 
leases. Under present scoring rules, the rental rate is based 
on a class A office building with no consideration given to 
specific security and construction requirements for the FBI 
which can increase the cost up to 20 percent.
    The prospectus real estate rate is often not enough to 
complete this job without a lump sum payment, frequently in the 
millions of dollars for security that FBI and similar agencies 
simply do not have in their budgets. Discovering this at the 
time of bid evaluations causes problems and costs for everyone.
    We believe GSA should make solicitations for offers net of 
real estate taxes. When a project is bid, real estate taxes are 
unknown, so local government assessors and project bidders 
guess. Every bidder will guess a little differently, making it 
impossible for GSA to compare apples to apples. Many SFOs 
include square footage requirements for specific rooms and 
offices without providing additional detail of actual 
dimensions required. SFOs should be as specific as possible to 
alleviate the possibility of a building being designed and 
constructed that does not meet the agency's or system's 
furniture requirements although the square feet requirements 
were met.
    Generally, the Federal Government is perceived by the 
office building industry as terrific tenant for all the 
obviously reasons including creditworthiness. The use of 
outside brokerage firms over the past several years has been a 
positive development.
    But I must highlight a few frustrations as well. Prospectus 
rental rates often approved well before lease procurement have 
not kept up with rapid increases in construction materials and 
labor costs. In addition, they may not take into account 
differentiating features such as proximity to mass transit. 
This may preclude commercial landlords from competing for GSA 
leases who might otherwise do so. Government leases do not 
reflect private sector practices and many clauses are not yet 
landlord friendly. Over time one learns which clauses get 
enforced and which don't. However, lenders look at all the 
clauses when assessing risk and assigning interest. Clauses 
that are not used do cost government. For example, there are no 
holdover provisions in a government lease. But the government 
can introduce condemnation, which means a government tenant 
cannot be evicted.
    While this makes sense due to the nature of government 
functions, leases should have a hold over provision with a rent 
escalation to include, encourage GSA to reduce or eliminate 
hold overs. With the pending impact of BRAC relocations and 
associated delays the hold over issue will become more intense 
in the years to come.
    Termination without notice and restoration clauses may not 
be typical but are used in some regions. When used, they should 
be aligned with industry standards to make them understandable 
by the building owner community increasing competition for GSA 
leases. Additionally, some clauses serve no benefit while 
costing the government in the rental rate obtained for their 
use. An example is clause included in builder suit leases 
already alluded to allowing the government to buy a building at 
market rates at any time. Although the government does not 
exercise this clause, lenders see it as a risk and penalize the 
project for it.
    Personnel turnover is inevitable in any entity, public or 
private. However it sometimes appears that GSA reassigns its 
staff to positions where they have limited experience. The idea 
that anyone can do anything is not correct. When building 
owners and managers repeatedly start over with new people, 
investing time and procedures and becoming acclimated, it 
causes frustration, and more important, lack of productivity.
    We recommend that GSA consider modifying its excellent 
intern program to include more technical training in leasing 
and facilities management.
    In addition, the government is unfortunately notorious for 
slow payment processing. Delays in payment for work orders, 
operating expense increases and real estate tax payments are 
not only frustrating but costly to the government due to the 
mandate to pay interest on delayed payments and to the landlord 
in terms of reduced cash flow. Delays in processing leased 
documents are an issue. Commercial landlords still report that 
it may take 3 to 4 months to receive an executed lease from GSA 
after the landlord had signed. Delays associated with lease 
amendments or modifications are even longer. We know that GSA 
is working to address this issue and we are appreciative of 
these efforts.
    In summary, improvements in making GSA leases more in tune 
to industry standards will not only help the private sector but 
also increase competition for government leases. And that is 
good for everyone.
    We thank the Subcommittee for holding this important 
hearing and look forward to working with Congress, GSA and 
other public and private sector partners to achieve our mutual 
goal of improving the construction and leasing process to make 
it more effective for GSA and their private sector partners. 
Madam Chairman, thank you very much.
    Ms. Norton. Thank you, Ms. Seekins.
    Mr. Turowski.
    Mr. Turowski. Thank you, Madam Chairwoman. It is a great 
pleasure to be here today to discuss means of improving the GSA 
leasing and construction process.
    Through a rewarding Federal career, I have had a 37-year 
association with the GSA leasing program. My work with GSA has 
been in several GSA regional offices and at GSA's headquarters. 
During that time on watch, I witnessed and was part of many 
changes and became intimately familiar with the constraints. 
Most recently, since retiring from GSA's national capital 
region and joining the firm of Jones Lang LaSalle in its 
government investment services group, I have acquired the added 
perspective of building owners in the GSA leasing process.
    GSA's leased inventory is large by any measure. Most of the 
leased transactions which comprise it are undertaken with 
efficiency, transparency and user friendliness. However, it has 
been by observation that among GSA which are larger, more 
valuable or merely complex, this is often not the case. Let me 
share with you the reasons why this is and how this is apparent 
in the private sector and what some solutions might be.
    First, the GSA lease process has been expanded in recent 
years. Some examples of added stages in the process are more 
rigorous acquisition planning, better formulated location 
decisions, various compliance checks, and the creation of a new 
set of documents binding Federal agencies to their obligations 
under GSA leases. While these process additions represent 
laudable objectives, GSA has yet to minimize their impact on 
the procurement process, most notably the impact these new 
steps have on procurement duration and project completion 
timelines.
    Second, and some years ago, GSA implemented new ideas in 
its organizational placement of leasing. Their goal was to 
achieve a greater degree of responsiveness to their client 
agencies' lease requirements. An unintended consequence though 
was to lose clear lines of knowledgeable leasing accountability 
up to and through management levels in the leasing program, and 
as importantly as well back down again into the leasing 
organization.
    Third, GSA has been challenged in its ability to accurately 
ascertain their client agencies' requirements early in the 
lease procurement process. By launching procurements without a 
complete picture of their needs, GSA has negatively impacted 
the perceived commercial reasonableness of GSA transactions in 
the marketplace and added to the perception of the government 
as a challenging transactional partner.
    The lengthy budget cycle is clearly one reason for 
disconnect between GSA and their client agencies when it 
happens. But it is clear that greater attention is needed to 
smoothly manage transactions in a manner that will satisfy GSA 
users, provide the best price to the government, and encourage 
the continued participation of private sector partners.
    Fourth, and this has been echoed already, or I will echo 
what has been said already, in staffing its leasing operations, 
GSA faces major resources constraints. In the personnel arena, 
a combination of factors have had significant impact, including 
a long period of essentially no hiring of new personnel, a wave 
of retirements today, and difficulty in dedicating the 
significant time and expertise required to bring new hires up 
to a full level of leasing proficiency.
    Fifth, and we have heard this before, the volume and scope 
of GSA's required lease documents significantly exceeds those 
for lease transactions in the private sector. Again, though 
often well intended, this added documentation adds to the 
perception of the government as a difficult partner in private 
sector transactions.
    Process additions, a lack of sufficiently trained 
personnel, and inadequate communication between GSA and its 
client agencies have all served to complicate the GSA leasing 
process. These weaknesses have become readily apparent to the 
private sector and manifest themselves in many ways, including 
an exceptionally high numbers of lease holdovers and 
extensions, short term extensions, increasingly frequent 
mention by GSA representatives of lease hold condemnations as 
negotiating leverage, and from the nationwide perspective of a 
service provider to the industry, each of GSA's 11 regions 
handles their real estate transactions differently, and 
therefore in practice there are functionally 11 different ways 
GSA performs real estate transactions.
    Also manifest in more project false starts as a result of 
rescoping, prospectus shortfalls and reasonably foreseeable 
site deficiencies as well as significant rent arrearages and 
lease execution delays. There are solutions to these issues. In 
fact, I am sure none of the issues I have raised comes as a 
surprise to GSA. And I was leaving GSA I understood there were 
moves afoot to take corrective actions.
    But most importantly, a rigorous real estate oriented 
training program is needed for GSA leasing personnel. A 
coherent top down leasing management structure is needed to 
strengthen accountability, better manage transactions and 
maintain an action bias. GSA should take steps to simplify its 
process and undo or better adapt well meaning but cumbersome 
procedural steps that increase organizational and transactional 
inefficiency. A thorough review of the submissions, 
certifications and requirements of lease procurements should be 
undertaken by GSA with the goal of streamlining and 
simplification.
    These, Madam Chairman, conclude my remarks and I will be 
pleased to address any questions or comments by you or Members.
    Ms. Norton. Thank you, Mr. Turowski.
    Mr. Grunley.
    Mr. Grunley. Good morning, Madam Chair Norton. I am pleased 
to be here today to share my experiences with GSA with your 
Committee. My name is Ken Grunley, and I am president and owner 
of Grunley Construction Company. We are a general contractor 
located in Rockville, Maryland, and the majority of our work is 
in Washington D.C. or the surrounding areas. We are a family-
owned business employing 280 employees and annual revenues of 
approximately $300 million.
    Sense our inception in 1955, our business is primarily 
focused on serving the public sector. I personally have 35 
years of experience working on GSA projects. Grunley 
Construction is very proud of our long relationship with GSA 
and many projects that we have successfully completed as a 
team. A few of these projects are the National World War II 
Memorial, the Ariel Rios Building, which is EPA headquarters, 
the Eisenhower Executive Office Building that we are presently 
restoring, and my personal favorite was the renovation and 
restoration of the Blair House known as the President's guest 
house that we did in 1986 when I was quite a bit younger and a 
very exciting project for me. I have also been a peer for GSA's 
design and construction excellence program and have traveled 
all over the country being involved in ongoing projects and 
future projects for GSA.
    From our inception in 1955 until 1995, so a period of about 
40 years, the bid process remained relatively simple. You 
picked up a set of drawings, you put a bid together, you turned 
it into a bid room, and the only guarantee that you were going 
to complete this project was a bid bond from a surety. The bids 
were open publicly. And the low bidder was typically awarded 
the project. And it worked fine for years, however, although 
the bid process remained very simple, the construction process 
became more complicated, and it was time for change.
    I want to go through three changes that became evident to 
us in how they impacted us. The first, and other people have 
shared this, reduction in GSA inhouse staffing assigned to the 
projects. The reality began in the 1990s when the size of the 
government workforce was under pressure to shrink and it 
continued for a variety of reasons that has led to the present 
situation where all the projects are under the leadership of 
quality project, GSA project execs and project managers, 
however the majority of the staff involved in the day to day 
oversight of both construction and paperwork are contract 
personnel as I refer to as construction managers as agent.
    GSA has managed this process well by employing qualified 
contracting officers and retaining construction managers as 
agent firms that understand GSA's mission. This approach is 
necessary in order to assure the government that construction 
activities are being performed and documented in accordance 
with the contract requirements.
    However, what seems to have resulted from this approach is 
an increase in general contracting staff necessary to be 
responsive to the CM staff assigned to the project.RPTS 
KESTERSONDCMN HOFSTAD[11:56 a.m.]
    Mr. Grunley. My sense is that we may have taken this 
approach to a point where there may be a loss of efficiency; 
improvements can be made. I was much more concerned with this 
issue 10 years ago in the mid-1990s when I first saw it. And I 
think GSA has done a wonderful job over the past decade in 
making sure they pick the right teams for these projects.
    During the late 1990s, the bid process changed drastically 
to use the best value procurement. In all the years I have been 
working with GSA, this is certainly the most dramatic change 
and probably the best change. And, simply, it went from low bid 
to best value being a combination of price and past 
performance.
    GSA has kept the process extremely simple. The technical 
proposal usually has four parts, which would be past 
performance, key personnel, a project schedule, and then a 
combination of small-business plans and apprenticeship plans. 
They want to hire a construction company; they do not want to 
hire a marketing company. And they have made it very clear that 
they don't want lots of fancy pictures and graphs. They want 
the facts, and they just want you to take the test. So you take 
the test the way it is done, and they have made it very easy 
for the industry to adapt to their process.
    There are some obvious advantages of best value 
procurement. General contractors now compete as a construction 
professional. GSA is not forced to award to companies that have 
a long history of claims and poor performance. General 
contractors are competing against quality firms. A much more 
collegial relationship between the general contractor and the 
architects and the tenants and the GSA. And the quality of the 
projects are certainly better, and there are certainly less 
claims.
    I believe this approach created a much more open and 
transparent environment between GSA, the contractor and the 
design team. And it was really sort of the first step in an 
integrated approach that we are using today in the Government 
sector.
    The third change that we have really seen is the 
application of design-build and construction management at 
risk. CM at risk is still in its infancy within the Federal 
Government, but GSA is actually a frontrunner in using this 
approach. These methods of procuring and delivering building 
design and construction are found on two related precepts: 
integrate the team, and the earlier the better.
    Without getting into all the pros and cons of design-build 
versus design-bid-build versus CM at risk, it is important to 
note that these added methods of delivery significantly alter 
the contractual relationships between the three key 
participants.
    GSA has put all these methods, along with variations, into 
what I call their tool box. GSA makes its decisions to use 
traditional design-bid-build, design-build, and CM at risk on a 
project-by-project basis. In recognizing that the this type, 
location, schedule and other project-specific requirements need 
to be assessed in order to determine the most advantageous 
delivery system, GSA has recognized the best value for the 
Government.
    In conclusion, I need to say that what I believe makes GSA 
special is they have their own culture. And although they are 
operating all across the country in 11 different regions--and I 
have traveled those regions--you get a feeling of fair, honest 
and open communications. They are open to newcomers, for new 
companies. They have fairs. They advertise their projects very 
well. And they give very clear, concise direction on how to 
submit proposals for a GSA.
    They certainly have a business-like atmosphere and always 
looking for new ideas through the business community. They are 
constantly having meetings at the various construction 
organizations are invited to, just to come and talk about 
changes, what they are doing well, what they could improve on.
    The last item for me, as a businessman, every time we bid a 
job I do risk millions of dollars. And in the best value 
procurement, GSA is certainly now knowing who they are buying 
services from. But what is important for me is that GSA is so 
consistent that I really know who I am selling to, which 
impacts our price dramatically. You know, all contractors are 
going to weigh risk and reward, and GSA has truly taken the 
risk away, a large piece of the risk away, from contractors.
    Thank you.
    Ms. Norton. Well, I thank you very much, Mr. Grunley.
    All this testimony has been very, very important. Even as 
you spoke, I have been having conversation about what some of 
you have said because of its implications for what we want to 
do.
    Let me ask first Mr. Winstead a question.
    First I should say that not only in my opening statement 
but I think, Mr. Winstead, you have heard at the table that 
people who deal with GSA, respect its expertise, inside GSA we 
have heard some problems about staffing and about 
decentralization, I will get to. But everybody understands that 
GSA is the center of whatever real estate expertise we are 
going to have, and they can handle so much of it that you have 
learned to do it well.
    The problem here--and that is why we want to get to what it 
is that we can do to improve the processes, because we hear 
about them all the time. I mean, you can give an overall--these 
people seem to know what they are doing, and then you continue 
to hear all kinds of issues that come up. You need to look at 
the entire process.
    For example--and understand this Subcommittee is here to 
help, including changes in statute and prospectus, if 
necessary. Mr. Winstead says it right at the top of his 
testimony, on page 1, and cites the numerous laws and 
regulations and executive orders and OMB and the rest of it.
    Now, this is the Government. We recognize that a great deal 
of that is necessary. Fraud of any kind in Government work gets 
a big Bronx cheer, and it simply has to be avoided. And the way 
you avoid it is layer on layer on layer that reduces risk to 
the Government, a risk that the private sector is willing to 
take. Because in taking that risk, the private sector in fact 
saves money. The Government can't do that.
    At the same time, I have to ask you whether you believe all 
of the regulations, laws, executive orders, OMB circulars and 
et cetera, things which you cannot change, do you believe all 
of them are necessary, Mr. Winstead?
    Mr. Winstead. Madam Chair, you know, a lot of them are 
statutory requirements. So the question----
    Ms. Norton. That wasn't--I know that I am--me, Congress; 
you, agency.
    Mr. Winstead. Right.
    Ms. Norton. But Congress is not going to know what to do 
if--and that is why we have assembled a whole panel here--if we 
never hear from the agency that there is anything that Congress 
can do, that Congress can change.
    And as you are well aware, Mr. Winstead, Congress hasn't 
looked at this process. We don't know diddly-squat about this 
process.
    So I am simply asking you--I am not saying we are going to 
change the laws or that we are going to change the regulations. 
But I am asking you, can you think of any of these that, over 
time, may have become obsolete or may no longer be necessary or 
may be too cumbersome to be useful today?
    Mr. Winstead. Well, I do think that that would be very 
important for us to look at. And I think what we are doing both 
on the national level to look at those requirements and to 
figure out better what can be----
    Ms. Norton. You know what I am going to ask you to do, Mr. 
Winstead? If you have been there 2 years and you have not 
experienced enough frustration to be able to name some when you 
have a Member of Congress here willing to give help, I am going 
to ask you to get me, in 30 days, some that you think I ought 
to look at, even if you are not willing to believe they should 
be changed.
    This should be asked of the rest of the panel, who may not 
feel similarly constrained. Are there specific, I mean, 
specific laws, regulations--understand that the burden will be 
on you and, if I go about trying to change it, on me to show 
why this or that law or regulation or executive order or 
whatever is no longer necessary or is inconsistent.
    Remember how we enact laws, one on top of the other. We 
don't go back and say, "Oh, that law isn't needed because of 
something we did 50 years ago." So I kind of depend on the 
people who use laws, regulations, executive orders and the rest 
to tell me the truth, the whole truth.
    So anybody else have something to say about specific laws 
or regulations you would like to see changed and why you think 
we could change it without increasing the risk or harm to the 
Government?
    Mr. Grunley. Madam Chair?
    Ms. Norton. Any of you?
    Mr. Grunley. The Davis-Bacon wage rates, which I am 
actually in favor of----
    Ms. Norton. You say you are?
    Mr. Grunley. I am in favor of the Davis-Bacon wage rates.
    Ms. Norton. That is good, because that is not about to 
change.
    Mr. Grunley. But the reporting I find to be obsolete.
    You know, we all need to pay minimum wage, but none of us 
report to the Federal Government that we pay minimum wage, or 
we don't certify we pay minimum wage. The Davis-Bacon reporting 
is a paperwork nightmare. Our company has at least eight people 
that full-time do nothing but collect certified payrolls, check 
them to make sure they are correct and turn them into GSA. And 
GSA also has people that are also reviewing what we turn in to 
make sure they are okay.
    And, to me, competent contractors should just be able to 
certify that they are paying the Davis-Bacon wage rate, and we 
will save lots of trees.
    Ms. Norton. Well, I find that is a very useful comment. You 
say they look to see if, in fact, they are paying the rate. 
Now, this is complicated, look at the market rates, et cetera. 
Is it some kind of surveys of others that have to be done? And 
how complicated is the process of looking to see whether you 
are paying those rates?
    Because this is a very useful comment.
    Mr. Grunley. Each specification that we bid on has the most 
current Davis-Bacon wage rate.
    Ms. Norton. Where do you get that from?
    Mr. Grunley. GSA issues it in the request for proposal. So 
the rates exist for each project. And what I am saying is that 
we have to keep track--we collect them from all of our 
subcontractors.
    Ms. Norton. So they tell you what is the rate?
    Mr. Grunley. Yes.
    Ms. Norton. You look to see if the rate is being paid. How 
does that get complicated? They give you a number; you look at 
a number. I am missing something.
    Mr. Grunley. If a typical project has 50 subcontractors, 
they have somebody in their office sending our firm their 
certified payrolls, which lists every employee, how much money 
they were paid, how many hours they worked during the week, 
their gross pay, their net pay. We check them to make sure they 
are correct, and then we send them to GSA, who then checks 
them.
    Ms. Norton. Now, does GSA then go through the same process? 
Now, you have already checked it to your subcontractors. Does 
GSA go through the same process, Mr. Winstead?
    Mr. Winstead. Madam Chair, the Davis-Bacon threshold was 
recently raised from 1 million to 2 million, not 2,000. We want 
it raised--I apologize--we would like it raised. That would 
help. Again, as a suggestion, you asked earlier, but raising 
the threshold would help. It is not 2,000--it is currently 
2,000. We would like it raised to 1 million to 2 million.
    Ms. Norton. Raising the rate based on what?
    Mr. Winstead. Based in terms of the streamlining the Davis-
Bacon effort, trying to get adherence to the wage rate, but to 
raise the threshold from 2,000. And it has never been indexed, 
which would help.
    Ms. Norton. That is interesting. Apparently you have to do 
it up to a certain rate, but GSA's projects are so large that 
you generally go above the rate?
    Mr. Winstead. Yeah. And apparently that 2,000 constraint 
makes it unrealistic, very difficult to deal with.
    Ms. Norton. Mr. Turowski?
    I mean, I don't understand. I mean, is there redundant work 
going on here between the Government and the contractor?
    All I am asking you, Mr. Winstead, is, do you go through 
the very same process he goes through? Do you check him in some 
way? Do you spot-check him in some way?
    Mr. Winstead. Yes, in terms of the compliance with Davis-
Bacon, we do.
    Ms. Norton. You don't go through the same process he has 
just gone through? Do you go back to his subcontractors, do you 
go back to him----
    Mr. Winstead. No, we have our own market-based information, 
labor wage information----
    Ms. Norton. But you have already given it to him.
    Mr. Winstead. Right. So we verify based on their submittal, 
their compliance with the Davis-Bacon rates.
    Ms. Norton. Well, it sounds to me the same thing is going 
on.
    Mr. Grunley. What I am suggesting--I don't believe it needs 
to be done at all if you--again, by law, we all need to pay 
minimum wage if you own a business. But you don't report to 
anybody, you don't list all of your employees and show that you 
are paying minimum wage. So on a Federal construction project 
where you need to pay the Davis-Bacon wage rate, which is in 
the book, what I am saying is for every single employee, so if 
you have a project that has 1,200 employees on it, every week 
you are getting reports on 1,200 employees on what they are 
being paid, that we need to check to make sure it is accurate, 
and then GSA does. And I am suggesting that the general 
contractor just certify that everybody on the job has been paid 
the Davis-Bacon wage rate, and there is no reason----
    Ms. Norton. You do that for minimum wage? You do that for 
minimum wage?
    Mr. Grunley. You don't do that for minimum wage.
    Ms. Norton. I thought you said you don't do every 
employee----
    Mr. Grunley. For minimum wage I am not aware that companies 
turn anything into the Federal Government on every one of their 
employees. But the Davis-Bacon wage rate is clearly higher than 
minimum wage.
    Ms. Norton. Yeah, sure. You recognize that if the 
Government were to allow that, that there would have to be some 
penalties associated with not paying the rate. Nobody would 
say, are you certifying, that is fine. Would you be willing to 
incur such a penalty if----
    Mr. Grunley. Sure. If you certify that you are paying the 
wage and then under an audit you are not, it is whatever the 
penalties would be.
    Ms. Norton. Do you audit, Mr. Winstead? Or do you simply go 
through and cull every----
    Mr. Winstead. We basically look at the rates in order to 
certify that they are in compliance.
    Ms. Norton. He has eight employees that do it; is that 
right?
    Mr. Grunley. Full-time, yes.
    Ms. Norton. How many do you have?
    Mr. Winstead. I would assume in every region we have--at 
NCR, how many? Bart?
    Ms. Norton. How often do we find----
    Mr. Winstead. I can get you that figure.
    Ms. Norton. How often do we find the contractor or 
subcontractor is not paying Davis-Bacon?
    Mr. Winstead. I think it is probably fairly rare. But I 
will have to submit to the Committee, you know, how many in our 
reviews. But I suspect it is pretty rare.
    Ms. Norton. GSA is going to have to--before I decide to 
have the GAO do it, it seems to me a quick audit could tell us 
whether or not this is even a problem. And it may be emblematic 
of the kinds of things you could do. You are not going to 
change Davis-Bacon. You weren't able to change it with 12 years 
of Republicans. You are not going to be able to change it now 
that the Democrats are here.
    So then you go to the next-best thing, and you get to why 
it is so opposed. And it turns out that there are a number of 
reasons. And this is the part of Government I hate. To the 
extent that the reasons on the table have a lot to do with 
paperwork, that, it seems to me, the burden then shifts to 
Government to show why it needs to cost so much to do it.
    So I am going to ask staff to work with GSA to design--I am 
going to have you work with staff to have an IG audit of 
contracts, representative of various kinds and levels of 
contracts, so that we know what we are doing here. This is 
classically what I would like to do.
    If I find there are problems, then I will know the degree 
of problems and whether there can be changes. At least get 
those eight employees doing something that benefits the 
economy, if I may say so, besides their own paperwork. If we 
find there are problems, there may need to be changes that we 
aren't aware of. That is a----
    Mr. Winstead. I would be happy to work with the Committee 
on that.
    Ms. Norton. Thank you. In 30 days, I want the IG to come 
back here, 30 days from today. Because I am not asking for a 
whole, big audit of everything they have ever done. I am trying 
to get a snapshot of whether we have a problem here or not.
    Let me ask Mr. Turowski a question. More than one of you 
has spoken about decentralized leasing, which apparently 
occurred sometime in the 1990s. In essence, I guess it is you, 
Mr. Turowski, that says you have 11 different kinds of leasing 
practices being practiced in your regions.
    Mr. Turowski. GSA's regions.
    Ms. Norton. Excuse me?
    Mr. Turowski. In GSA's regions.
    Ms. Norton. In GSA's regions.
    Mr. Turowski. Right.
    Ms. Norton. I would hate to take a close look at that one, 
because I can't--the first thing I have to ask you, Ms. Seekins 
and Mr. Winstead, on that one is, what is to assure the 
Government that there is uniform adherence in policy, in 
national policy, if, in fact, there are 11 different leasing 
regions and no centralized leasing expertise of the kind there 
was before it was decentralized?
    I mean, in terms of--while all these may differ, the 
notions of a negotiation strategy, time frames that should be 
expected region to region, how does GSA know that national or 
congressional policy and regulations are being adhered to if 
people are going off in 11 different regions of the country as 
their own leasing offices?
    Mr. Winstead. Madam Chair, the point about consistency and 
as well as enforcing the leasing policies in the stages of the 
lease, facing program management, pipeline, workplace 
requirements, development, some of these things are, in fact. I 
will tell you we have centralized that effort in terms of a new 
office, as I said, about a year ago, because of the growth in 
leasing, because of the amount of activity----
    Ms. Norton. Listen. What has been centralized?
    Mr. Winstead. The policy guidance for leasing--we have 
broken out and established a new Office Of Real Estate 
Acquisition--Chip Morris behind me heads it up. For the same 
reasons you are mentioning, we wanted to ensure that all the 
regions who are responsible--we don't procure out of central 
office; the regions do, NCR and the other 10 regions--to make 
sure that they are following guidelines, they are following all 
of the procurement regulations, but that they are doing it 
consistently and there is not variation, so that----
    Ms. Norton. There is not variation because you have moved 
to centralized leasing once again?
    Mr. Winstead. In terms of our lease policy guidance and 
strengthening an office of leasing expertise at our central 
office in D.C. Similarly, the NCR is now regrouping----
    Ms. Norton. The National Capital Region?
    Mr. Winstead. Yes, ma'am--regrouping--previously, and I 
think through most of Art's tenure, the leasing was centralized 
in the service centers. And Bart Bush and Francesca Ryan are 
looking at bringing some of the centralized administrative 
responsibilities back into the regional office to, again, 
address the uniformity issue, management issue and efficiency 
of getting leases done and getting rent start dates in place.
    So that is what we have been doing through this new office 
over the last year or so.
    Ms. Norton. Complaints we have received had to do with the 
different service centers, and one didn't know what the next 
was doing. I wanted to ask Ms. Seekins, what is your comment on 
the decentralized leasing? And have you seen any evidence of 
more centralized management?
    Ms. Seekins. Excuse me. You are getting my Lauren Bacall 
voice, because I have a cold. I apologize.
    Our members contributed a number of these comments, and 
they did not speak specifically to the decentralized leasing 
process. So my familiarity with that is primarily from hearsay. 
I would be happy to go out to our membership and get some 
specific comments and transfer them to Committee.
    Ms. Norton. Well, we would appreciate it.
    But, Mr. Turowski, you have been on both sides with 
centralized leasing now, then decentralized leasing, then 
apparently some moved back to centralized leasing. What have 
you seen?
    Mr. Turowski. Well, the problem typically manifests itself 
when you compare one region to another in the areas where the 
process affords judgment.
    Ms. Norton. So obviously you have to make room for the 
difference between a Washington, D.C., and for that matter New 
York City and a rural area where there is a courthouse?
    Mr. Turowski. Well, in the leasing arena, if I might give 
one example, I mean, we see regions when they are in expiring-
lease mode resorting to a technique available within the 
regulations that permits them to forego the issuance of 
competitive solicitations. It is a long----
    Ms. Norton. By doing what, Mr. Turowski?
    Mr. Turowski. By affording themselves of the process within 
the regulations, a justifying a less than full competition and 
foregoing the issuance of a competitive SFO. When the lease is 
expiring, the occupying agency is predisposed to stay. There is 
no room in there, but there is no availability in their budgets 
for move costs, which we know can run $80, $100 a square foot 
today. Some regions will utilize the piece of the regulations 
which allows them to simply advertise for informational quotes 
and, based on the information they get, decide if they need, in 
consideration of the move and replication costs, decide if they 
need to issue a competitive solicitation.
    Ms. Norton. But you said they couldn't afford to move. So 
it sounds like the agency is just trying to indicate that, 
while they do need space, they can't afford what it would take 
to move, because it does come out of their budget.
    Mr. Turowski. That is right. And what they are doing is 
justifying negotiating with the incumbent owner.
    Other regions, on the other hand, won't avail themselves of 
that wherewithal in the regulations. They will proceed with 
issuance of a competitive solicitation when we in the market 
know that the likelihood of a move eventuating from that 
competitive SFO, solicitation for offers, is probably less than 
5 percent.
    So we go through a process there that probably--well, does 
disserve a lot of people. And that is a difference in regional 
interpretation of the regulations.
    Ms. Norton. Well, that is a huge difference. That is a huge 
difference because of what it takes to go through the 
solicitation process.
    Mr. Turowski. Procedural, in terms of the time it consumes 
and so forth, yes, it is.
    Ms. Norton. That is what I mean, staff time, GSA time, and 
I hate to say--I mean, do people bid? Do people bid under those 
circumstances?
    Mr. Turowski. Some do.
    Ms. Norton. Because then I think that is an outrage. Of 
course everybody wants a Federal lease. And if you think the 
Government is out here in good faith, you may think there is 
more to it than you know.
    Mr. Turowski. You know, Congresswoman, if I might, this 
goes to the question you put earlier about what conceivably 
might be changed in the law or the regulations.
    Only because I was present at the passage of the 
Competition in Contracting Act and was somewhat privy to the 
debates at the time, the policy debates, about whether it 
applied to leasing or not am I sensitive to the idea that 
potentially there might be a carve-out, as it were, a statutory 
carve-out or exception to leasing from the Competition in 
Contracting Act.
    That wouldn't for a moment suggest that GSA dispense with 
competitive solicitations when they are genuinely on the market 
for a real estate transaction. But it would render far more 
easily and consistently not going on the market and justifying 
the price they pay based on information and the cost to move 
were they to move.
    It strikes me that if that were far clearer in the statute, 
that that would be a significant improvement and enhancement of 
the process across GSA's regions.
    Ms. Norton. Mr. Winstead, what--well, I don't think I will 
get a direct answer. But, Mr. Winstead, here is a suggestion. 
That, in essence, GSA has forced agencies to use tactics that 
are in conformity with the regulations, fool the public, fool 
those at least who respond to the solicitations, when in fact 
the agency has no intention or is trying its best not to move 
because of the costs associated with the moving.
    There is a classic example of the transparency within the 
agency that perhaps is needed. And if regulation is clouded, 
the question then becomes, how do you proceed in the absence of 
that regulation?
    But it does sound to me that any regulation that makes 
people take action at odds with what the regulation requires 
and, worse, makes those who deal with the Government spend 
money when everybody knows that there is, in fact, no change 
that a Government can afford to be made, something is wrong 
with that regulation and perhaps not with what is being done.
    But if I don't get some indications, then we can't work 
through the process. Because every time you change a 
regulation, you have to watch that you are not making moves 
that endanger the Government in the first place. After so many 
years, though, under such regulations, you would think that the 
agency would know, particularly from its experience with the 
marketplace, whether or not a regulation is useful. And this 
sounds to me as though it does not have uses on either side.
    So I won't ask you, Mr. Winstead, because I think I will 
get the same kind of answer I have been getting from you, 
unless you have something to say. If you have a direct answer 
to his suggestion, I will take it.
    Mr. Winstead. Well, Madam Chair, I do think that the issue 
that Art mentioned about having more flexibility is certainly 
something that could benefit us. But on the other hand, we are 
trying to deal with the current regulations in advertising. We 
have put in a new lease-tiering process that gives us advance 
notice so we can get to the agency and understand fully, which 
we do track when their leases are expiring, and have enough 
time with requirements to compete in the market to decide 
whether, you know, a succeeding lease----
    Ms. Norton. Mr. Winstead, see, that is what I mean. We are 
not talking about when people don't know. We are talking about 
the agency and having those central abilities to advise the 
agencies that this doesn't make sense and a regulation that 
seems to tell them that either you solicit or not. And they 
seem to be at cross-purposes with one another. And it may go 
back to having some advice from central policy.
    Mr. Winstead. Yes, we will do that.
    Ms. Norton. Mr. Winstead, up here I have been put in the 
arduous position of dealing with two appropriations for very 
important Federal construction. Has it occurred to GSA that the 
agency should be requesting all the funding for Level 4 
construction, including whatever add-ons, like technology add-
ons, security add-ons, so that the project would not have to go 
to two separate appropriators?
    Mr. Winstead. I think that, you know, we put an awful lot 
of thought in the prospectus handling of trying to reduce and 
trying to get authorization up front for a lot of these, you 
know, stages, such as design and construction, and the 
separation of those authorizations. I think there is great 
efficiency to be gained from that.
    Ms. Norton. Why isn't it done in the first place? The major 
appropriation--to give you an example of the things we would 
like to change if we understood why in the world it was being 
done, the Department of Homeland Security construction is where 
you might expect, in the appropriation Committee that handles 
GSA. But security technology, a very small amount was in the 
appropriation for Department of Homeland Security.
    It has been easier to get out of the GSA than the 
Department of Homeland Security for reasons that doesn't have 
much to do with anything except the foibles of the 
appropriation process.
    But if I were sitting at GSA and I had experienced what you 
experienced, the President put money in his budget, not being 
able to get this out even when he controlled the House and the 
Senate, I mean, what kind of reflection is that on GSA? And 
what do you suggest should happen in such cases?
    Mr. Winstead. I think, again, it is a question--in the case 
of St. Elizabeth's, the projections, as you well know, are 
about a billion from DHS in terms of contribution to cost and 
about $2 billion from the Federal Building Fund. I think it is 
all a question of, you know, if we have the resources on our 
side. And, quite frankly, I think that, you know, the 
additional supplemental appropriations on the DHS side helps 
us.
    Ms. Norton. I am sorry. I didn't hear that last----
    Mr. Winstead. I think that the billion that we project 
coming from DHS for security and fit-out and equipment does 
help expand our ability because of the constraints in the 
Federal Buildings Fund to get that project done. So I think the 
concept of having to----
    Ms. Norton. First of all, you see what you are doing? The 
fact is we are talking about one building at this moment. We 
are talking about the Coast Guard building.
    Mr. Winstead. Right. That is correct.
    Ms. Norton. We are not talking about the whole project. We 
are talking about that building. That building we could have 
gotten out of here far more easily if it were all in the GSA. 
Long term, we probably shouldn't be building this way in the 
first place. This is Government-owned land. And we have been 
trying to think of a way to do this far more economically to 
the Government.
    But let's deal with what we have now. If we have to do a 
construction one building at a time, is there any policy reason 
why the prospectus and the submission should not be submitted 
such that it would go to one agency appropriation Committee, 
the appropriation Committee that handles GSA? Is there any 
reason for it to be divided?
    Mr. Winstead. Madam Chair, obviously that would be more 
efficient. The reality is OMB requires customer agencies to pay 
certain----
    Ms. Norton. See, if you not going to help me if you say----
    Mr. Winstead. But you are correct.
    Ms. Norton. Because I know what it requires, and I know OMB 
is part of the problem, and I know that we can't change OMB 
unless I know whether it works or not. And I am not asking you 
who did it. I know who did it.
    I am asking you, would it be better if, in fact--would it 
be more efficient, would it be less costly to the agency and to 
all involved if this were submitted to one appropriation? And 
could it be developed such that that would happen? Could it 
technically be done?
    Mr. Winstead. I do think that it would make things more 
accountable and easier to get authorization for. But the 
Committee----
    Ms. Norton. We have the authorization. I am going to insist 
that my questions be answered. We have the authorization for 
one building, Coast Guard. What we don't have is the 
appropriation, in part because a small part is in one Committee 
and most of it is in GSA. Ask the GSA building service 
commissioner, do you believe that changes should be made that 
would place such appropriations before one appropriator?
    Mr. Winstead. Obviously I think it would be easier to 
manage, and obviously procedurally it will be easier. I guess--
--
    Ms. Norton. We need to look at that, unless the agency--I 
ask you these questions because, if you find a reason why some 
of this is done, then that overcomes what would seem like a 
simple-minded change. Not because, you know, "This is the 
answer. Why don't you give me the answer?" I am looking for a 
reason why perhaps this was done this way in the first place.
    You have given me one reason: In the long term, you would 
like DHS to pay for part of the building. I like that reason. 
But when it comes to this particular building, it doesn't seem 
to me one has to be looking at a project that is going to take, 
what, 15 years to build and that I hope won't be built this 
way.
    Mr. Winstead. Right.
    Ms. Norton. Let me ask all of you about the new security 
requirements. Obviously, they add delay and expense. My concern 
in this Committee is that if you look at those security 
requirements, there is simply not the inventory in the United 
States of America to meet them. So I am trying to find out 
where they come from and whether you have any recommendations 
for streamlining them and particularly whether you think they 
are all necessary.
    Anything any of you would have to say on that would be very 
helpful.
    Mr. Grunley. Madam Chair, for the construction workers 
themselves, HSPD 12 is a real burden for the construction 
workers. And I say that----
    Ms. Norton. And of course to those who lease, because they 
then have to meet certain kinds of requirements as well.
    Go ahead, Mr. Grunley.
    Mr. Grunley. The construction workers now under HSPD 12 now 
fill out a form that I believe is the exact same form you fill 
out if you are trying to get a top-secret security clearance. 
They want to know every time you have been out of the country. 
They want to know three friends from high school and three 
friends from your neighborhood. And if you have a transient 
workforce, it becomes very difficult.
    They ask about your siblings and your parents. And we can 
easily have legal employees that are here with green cards 
whose parents or siblings may be in the country without those, 
and they are unable to fill out those forms without perjuring 
themselves by, you know, saying they don't know where their 
family is.
    So it is hurting us getting construction workers to the job 
site, which is impacting the schedules.
    Ms. Norton. It sounds like overkill, but it does raise 
questions about--you are building a Federal building and what 
you need to know about those who are constructing the building 
where I guess you could do the most damage by the way you 
construct it.
    Who issues those requirements? GSA? Department of Homeland 
Security?
    Mr. Winstead. Department of Homeland Security, in 
coordination with the Federal Protection Service in terms of 
the clearance side in the Federal buildings.
    But the HSPD 12 is, in fact, being implemented now, and it 
does have the issues that Mr. Grunley mentioned. I know 
firsthand that we have had experiences here in Washington about 
the time it is taking and the lack of mobility in terms of 
taking certain workers or craftsmen to other sites. And it is a 
burden. But it----
    Ms. Norton. This raises very fundamental questions.
    Ms. Seekins?
    Ms. Seekins. My perspective is a little bit different in 
that I manage buildings in place. But I am sure my experience 
is similar, and that is that there can be a disconnect between 
GSA and the agencies. And I frequently get the agencies 
advising X, Y and Z with regard to security while my privity of 
contract is with GSA.
    I think that improving----
    Ms. Norton. What do you mean, the agency advising somebody 
with regard to security----
    Ms. Seekins. I have one building where the agency is 
imposing higher security standards than are called for on the 
lease.
    Ms. Norton. How could that be? You have a lease----
    Ms. Seekins. And in this instance, the agency oversees the 
guards in the building. The guards won't let construction 
workers in the building even though I have been to GSA. It 
becomes a problem. There is a considerable amount of confusion.
    I would like to see----
    Ms. Norton. But GSA has authority over the guards.
    Mr. Winstead, the Federal Protective Service?
    Mr. Winstead. Yes, ma'am. Madam Chair, the Federal 
Protective Service is under DHS. We do have an MOU with them in 
the buildings, in terms of the protocols.
    But this issue is really getting--and I was not fully aware 
of that, that there is a different level both in terms of the 
contract clauses versus what is being imposed in the buildings. 
I do know that we are meeting regularly with Federal Protective 
Service to make sure that there are no inconsistencies in the--
--
    Ms. Norton. Well, Ms. Seekins, when an agency violates the 
lease, considering that the lease is with the GSA, do you 
report that to the GSA?
    Ms. Seekins. Yes, I do. And, in this case, GSA gave me 
permission to work around the agency, which I proceeded to do, 
and my construction process is finished. I am a little--I think 
this is probably emblematic of some larger problems where 
agencies forget that GSA has the privity of lease.
    Ms. Norton. I do think that these lapses--it is not the 
first time I have heard of agencies taking charge of security.
    Mr. Winstead, are you aware that apparently for security 
reasons I would daresay anybody in this room who is not a 
Federal employee, who sought admission to the new Department of 
Transportation, not a very high-risk target, on M Street, who 
came through the door, might be asked to offer her 
identification, would still not be able to get into the 
building? This could be a taxpayer with children who needed to 
go to the restroom. It could be along M Street, which is being 
built up and its amenities are not all in place. It could be 
somebody who knows, "Wow, this is a Government building; I know 
I can find a cafeteria."
    Are you aware that you cannot get into that building unless 
you are a Government employee or are accompanied by somebody on 
the stairs to show you have an appointment? Are you aware of 
that?
    Mr. Winstead. I do know that protocols are in place for the 
screening at that building, and Bart might know more, but in 
terms of appointment review and calling up for a specific 
appointment----
    Ms. Norton. No, I just asked, did you know that a taxpayer 
can't get in the building?
    Mr. Winstead. I was not aware.
    Ms. Norton. This is a--they are not exactly a--it is 
obviously built to resist terrorism, but it is not exactly 
considered a target. Who set that policy?
    Mr. Winstead. Well, that would have been done with the 
Building Security Committee and FPS and the requirements 
dealing with DOT, looking at their--you know, they have 
control--tenant agency has control over the building and works 
with the Federal Protective Service in terms----
    Ms. Norton. The tenant agency has what?
    Mr. Winstead. Sorry?
    Ms. Norton. The tenant agency has----
    Mr. Winstead. They have control over their entry of the 
building. They work with DHS and the Federal Protective 
Service. We do negotiate often on behalf----
    Ms. Norton. So you are telling me that there is no uniform 
guidance among agencies even about admission of the public, 
based on whether or not--based on the security needed for the 
building, the mission and function of the building, that 
agencies are free to make that decision on their own, even if 
it means the average taxpayer who paid for the building can't 
get into the building to use the restroom? That is satisfactory 
policy, as far as you are concerned?
    Mr. Winstead. No. I think what we----
    Ms. Norton. I am just giving you a case in point.
    Mr. Winstead. I understand. And it seems illogical and an 
inconvenience to the public and taxpayer. I mean, I totally 
agree with you.
    My understanding is that we are constantly engaging with 
the Federal Protective Service on either lease properties like 
DOT or our own buildings to make sure----
    Ms. Norton. Well, you obviously are not, because you did 
not know about this. This is why in those hearings--those 
answers, Mr. Winstead, will get you nowhere at these hearings.
    Now, what I am going to ask GSA to do is, within 30 days, 
create a questionnaire for agencies on their security and 
admission policies affecting the public. In designing that 
questionnaire within 30 days, I want that questionnaire 
submitted to the Subcommittee.
    Mr. Winstead. I will do so.
    Ms. Norton. There will be very different kinds of things 
needed, but I know who is not qualified to do it, is the agency 
head. And I can't figure out who does it. Indeed, I would like 
to know about your own leadership on security. Apparently there 
is a committee, an interagency security committee.
    Mr. Winstead. Right.
    Ms. Norton. Who decides the security, and what security are 
they deciding? And who puts it before them? And is it factored 
into the cost of the construction and the cost to lessors?
    Mr. Winstead. Basically, it depends on the level of the 
security of the facility. But the ISC essentially is made up of 
the Federal Protective Service, GSA, and the tenant agencies. 
The standards that are suggested for Level 1 to 4 facilities 
are essentially enforced by the Federal Protective Service. But 
we work--that is what we do. We actually help----
    Ms. Norton. No, I am not asking who enforces them. I am 
asking who says what the security is and, in designing that 
security, all the people at the table, including those who can 
tell you whether or not the Government or, for that matter, the 
private sector can or will pay for the kind of security you are 
ordering.
    Mr. Winstead. Well, we do decide that within the security 
elements of either a new construction project or a leased 
facility. We work with the Federal Protective Service and the 
Interagency Security Committee standards. That is how we arrive 
at these standards.
    Ms. Norton. So who has the final say on this? Who has final 
say on what the Interagency----
    Mr. Winstead. Each agency has an official designee for that 
purpose and advisors from both the Federal Protective Service 
and GSA. The cost is an issue, which is what we try to 
arbitrate to make sure that, you know, the requirements are not 
unrealistic given the risk that has been identified and the 
risk levels that have been identified.
    Ms. Norton. The costs are relevant in the recommendation 
made?
    Mr. Winstead. That is correct.
    Ms. Norton. Ms. Seekins, what has been the effect--perhaps 
Mr. Turowski and Mr. Grunley as well--what has been the effect 
of the additional security that the Government has had to 
require following 9/11? And has it been done in a way so that 
the private sector can meet the demands that the Government now 
puts forward?
    Mr. Turowski. Madam Chair, I think from the standpoint of 
security, physical security in leased space, and keeping in 
mind that offset of 50 foot or even 100 foot setbacks are not 
required when GSA is seeking existing product, except for law 
enforcement, it hasn't really been----
    Ms. Norton. Say that again. Only for law enforcement?
    Mr. Turowski. Well, law enforcement, defense and 
intelligence have their own----
    Ms. Norton. Like the ATF?
    Mr. Turowski. Precisely, have their own security.
    Ms. Norton. For example, no great setback had been required 
for the Department of Transportation? They have a setback, but 
it is very different from the ATF setback.
    Mr. Turowski. I think agencies can upgrade their security 
requirements from the standard if they are willing to pay for 
it. But----
    Ms. Norton. Who will pay in the first place?
    Mr. Turowski. Well, the agency. If they are requiring----
    Ms. Norton. The taxpayers of the United States of America.
    Mr. Turowski. Well, out of their budget, as opposed to the 
GSA budget.
    Ms. Norton. All of this is out of their budget. And the 
budgets are just not going to be there.
    Mr. Turowski. But if I might return to the question, in 
terms of physical security, when lease space is sought in 
existing product, we don't see any material impact. The idea of 
magnetometers and X-ray machines in the lobby and at the 
loading docks, the treatment of air intakes and so forth, while 
on occasion problematical, really don't amount to major 
challenges.
    However, as part of GSA's leasing process, they do require 
an inspection, a security inspection, by a physical security 
specialist. Typically, that is from the Federal Protective 
Service. And oftentimes the waiting that it takes to get a 
security specialist to a proposed lease location can be fairly 
extended, and that, in and of itself, can extend the process.
    So just to reiterate a bit, physical security when GSA 
seeks existing product tends not to be a problem. However, the 
security inspectors----
    Ms. Norton. When it comes to leasing?
    Mr. Turowski. When it comes to leasing, yes.
    Ms. Norton. Because GSA is living with the existing 
inventory.
    Mr. Turowski. For the most part, yes. I mean, they do 
specify build-to-suits, and build-to-suits at level 4 we 
understand would kick in a requirement for at least 50 foot 
setback. But in major urban areas where we see most GSA 
activity, it is for existing product and, again, build-to-suits 
generally aren't pursued.
    Ms. Norton. Ms. Seekins and Mr. Grunley, I would like to 
hear what both of you have to say on security to make sure that 
we are being realistic here.
    Ms. Seekins. I think that the physical security standards 
are quantifiable and administered in an even-handed way. So I 
find that quite acceptable.
    I think I join Mr. Grunley in the idea that some of the 
personnel security requirements are quite costly and do not 
seem to be evenly administered.
    Ms. Norton. Do you mean like guards?
    Ms. Seekins. Bringing contract employees into a building, 
do you do a NACI background check? Do you have them go through 
what is called an eQIP form, which is longer? Do you have them 
go through a higher level of security clearance? That----
    Ms. Norton. Is there some guidance so that, for example, 
the building owner knows the difference in which employees are 
required----RPTS JOHNSONDCMN MAYER[12:52 p.m.]
    Ms. Seekins. I would like to say--I would like to get that. 
Because I don't see it.
    Ms. Norton. All right. We would like to see that guidance 
clearer so that the building owner won't be faced with the 
people are ready to come in the building, contract signed to do 
it, and then he has got to figure out which level of forms this 
contractor has to meet then. That's the kind of thing I am 
after.
    Ms. Seekins. Precisely. Thank you very much.
    Ms. Norton. Again, GSA can't know these things unless we 
bring them out at public hearings. We are just trying to get 
rid of these things as soon as possible.
    Mr. Turowski, you have anything to say on that.
    Mr. Turowski. No.
    Ms. Norton. Mr. Grunley, on security, surely you are 
building buildings. I guess if the government wants to pay for 
it, you build whatever they require.
    Mr. Grunley. I think the buildings we are working in that 
is doing some sort of structural hardening seems adequate. You 
know, I don't see it being overkill. I think they are important 
buildings with prominent people that could be targets.
    As far as getting the construction workers in, I think they 
should look at it more practically. If you had a brand-new site 
and the first guy on the job is putting up a construction 
fence, and then he is going to leave, I don't think he should 
need a security clearance.
    And do I believe that the----
    Ms. Norton. The construction worker just putting up a fence 
you mean?
    Mr. Grunley. Right. Under HSPD-12 may very well have to 
fill out the form just to put the fence up for 2 days and 
leave.
    Certainly, the mechanical and electrical trades that are 
working inside, working in telephone closets, I think that is a 
wonderful idea. Maybe the painter who is roaming a building 
like this at night should have the clearance. But I think there 
needs to be a practical approach to it.
    Ms. Norton. Are any of those different--Mr. Winstead, 
requiring necessary--indeed, I am on Homeland Security 
Committee, so I am listening with two kinds of ears here. And 
these requirements of employees, are distinctions made between 
somebody who has been called to put up a fence and somebody on 
the inside putting up cables?
    Mr. Winstead. Obviously, Mr. Grunley mentioned they have 
not been. Perimeter fence security might be if, you know, it 
was related to a high security building. But I think he is 
correct in that there could be more flexibility in people who 
are not in the interior of the building.
    Ms. Norton. These are the kinds of practical suggestions 
we----
    Mr. Winstead. We would be happy to, you know, to take these 
suggestions and others and get them back. And obviously our 
responsibility is to try to make it as easy as possible, 
working with the HSPD-12, this new system of badging, as well 
as the requirements that DHS and FPS have.
    Ms. Norton. Let me ask you about the Prompt Pay Act.
    By the way, Mr. Winstead, it is not the case that Federal 
Protective Service comes entirely under my other Committee, the 
Homeland Security Committee. There is jurisdiction shared 
there. And we have had very, very important hearings on the 
Federal Protective Service, which is in very dire straits since 
its transfer from GSA. If I might say so, it ran very much 
better at GSA.
    One of the ways brought into question the Prompt Pay Act 
when we found that--and this is one example; obviously, if you 
apply it to leasing and construction I would be most 
interested. But this example had to do with security guards.
    It was reported to my office they weren't being paid--that 
kind of scared us, since they guard secure sites and Federal 
buildings--and learned that one of them had fraudulent--you 
know, was a felon, shouldn't have a contract in the first 
place. We passed legislation there.
    But the most pathetic case was one we corrected by working 
very closely with ICE and the GSA, and working hand-in-glove 
with them, which is why I say we want to help. Instead of just 
bringing them up here and exposing them, we have helped ICE 
within a period of--didn't take any more than 2 or 3 months to 
reorganize their relationship to contractors.
    The best case was a former police commander at D.C. and his 
wife, who owned a contracting company, who had habitually and 
chronically not been paid.
    Now, Mr. Grunley is a pretty big guy. This was a--would be 
considered a small business owner. So how did he keep from 
getting in the same position as the felon whom we caught, whom 
we found out had the GSA money, the FPS money, and simply 
hadn't paid his guards? Why had this man not done the same 
thing?
    Well, besides the fact that he was honest, what he was 
doing was essentially depending upon the fact that he had a 
government contract, getting a loan from a trusted bank that 
continued to fund him until his FPS ship came in. Not until he 
came before us did it begin to come in. It was an outrageous 
case of failure to--a violation of the Prompt Pay Act that 
endangered government facilities.
    As a result of this, they centralized their contracting, 
put in an ombudsman, not only brought themselves current, but 
quickly negotiated what amounted to many contractors who, in 
fact, were owed money.
    But there were disputes. So you could set those aside 
forever and just ring up the cash register. Part of the problem 
was that people also thought they weren't getting paid under 
the Prompt Pay Act.
    I have got to ask you both, all three of you, do you know 
of instances where people have failed to be paid promptly? I 
ask you, if GSA pays a penalty for late payments--I can tell 
you this much, you will pay a penalty if it goes the other way. 
I would like to have your experience.
    On this one I feel a little passionate because of the small 
business person. So anything you have to say to me. Remember, 
our answer to ICE and FPS was not to beat them about the head 
and shoulders, but to actually develop a relationship with them 
which changed the system, which didn't turn out to need a lot 
of wholesale makeover.
    So give me, first, the experience. Maybe with construction 
and leasing this is not the same problem.
    Mr. Grunley. First of all, thanks for the comment about 
being large, but--I was thinking I should go on a diet. But 
until 1987, we did operate as a small business, so it was nice 
to graduate from that program.
    We have absolutely zero problems getting paid from GSA. 
They meet the Prompt Pay Act. Occasionally, a check may be a 
day or two late because somebody was on vacation----
    Ms. Norton. Would there be a penalty if they did not meet 
the Prompt Pay in your case?
    Mr. Grunley. Yes. And they automatically send the interest. 
We do not have to ask for it. So occasionally we will see 
$12.82, and we don't know what it is for, and we will call and 
find out it is an interest payment.
    Ms. Norton. Fabulous. Because they know if that added up it 
would ultimately come to the attention of the government 
because the amounts are so large.
    Go ahead.
    Mr. Grunley. I would say 80 to 90 percent of the people 
that are having trouble getting paid, it is because they either 
don't understand the process or they are not doing it 
correctly. And it happens in my company also.
    I will have a young----
    Ms. Norton. What do you mean, they don't understand the 
process?
    Mr. Grunley. They should. You can't just submit a 
requisition; you need to have it approved by somebody. The 
Prompt Pay Act starts with approval.
    Ms. Norton. But people want their money.
    We also found that some contractors, that some of the 
problem at FPS really were the contractors themselves. In this 
case, they were small businesses that didn't understand 
everything. And part of what they did was to train all their 
contracting officers, submit new material to people, the ABCs 
of what you have to do. And they don't have the problem 
anymore.
    I don't understand. In other words, these fools don't 
understand what they have to do to get their own money. Well, 
whose fault is that?
    Is it that the agency has made it perfectly clear, Mr. 
Winstead? And if these people only did what you told them to 
do, they would be paid just like Mr. Grunley has been paid? I 
don't understand what the problem is.
    If there is no problem, we know if they are as big as Mr. 
Grunley--not very big in his chair, but he has grown from a 
small business--apparently you all know what to do, but I know 
what happened to small businesses.
    Well, just let me go on. I don't want to--I am trying to 
find experience.
    Mr. Turowski, you on the inside and the outside, did you 
find this to be a problem or not with leasing and with 
construction? Prompt Payment Act.
    Mr. Turowski. Madam Chair, from both sides of the leasing 
program, I only have anecdotal recollection of Prompt Pay----
    Ms. Norton. I am not asking you to come with a survey. Once 
I find anecdotal evidence, then I look to see whether this is 
endemic or whether this is----
    Mr. Turowski. Has it happened on a couple of occasions? 
Yes, there have been Prompt Pay violations in leasing. But 
honestly, to my--in my memory, the incidences in the leasing 
area are comparatively rare.
    Of course, if we were talking about prompt execution, that 
would be another story. But Prompt Pay is not a----
    Ms. Norton. Prompt execution. What is it essentially you 
are making?
    Mr. Turowski. Prompt execution of the lease. Not so much 
payment on the lease, but execution of the lease once it has 
been agreed to by----
    Ms. Norton. And what keeps that recurring? In other words, 
here is this person raring to go with maybe an empty building 
or at least empty space, but you can't move because of why?
    Mr. Turowski. Well, it is the processes that I alluded to 
in my earlier remarks.
    Ms. Norton. Because some of those processes, and you 
indicated that those processes--you weren't prepared to say 
those processes were simply unnecessary.
    Do you think that there is a streamlining of those 
processes that could be done if we all sat down and worked 
together?
    Mr. Turowski. I think it could be done. And I think 
resources are the key ingredient to getting that done, yes.
    Ms. Norton. Well, you know what kind of strain the 
government is under.
    Mr. Turowski. Yes.
    Ms. Norton. And so the one answer I cannot accept is the 
answer I most want, but know I cannot produce on, which is, why 
not just put some more staff in there. That is why I know Mr. 
Winstead and part of what Mr. Winstead is dealing with, and you 
don't hear me beating up on him on staff. I know what he has to 
go through to get staff.
    I headed a Federal agency. And now that we are into this, 
you know, awesome deficit, I can tell you I don't care who 
becomes President next time, there is not going to be much 
difference. That is why the agencies need to be put on notice. 
I am going to be going to the Appropriations Committee to make 
sure that agencies do not spend well beyond what they are 
spending now. And the reason I am going to do that is because I 
am on Oversight and Government Reform, I am here where 
construction takes place.
    So what the agencies have to do is this: When you have this 
kind of squeeze--and we are in for the squeeze for some time--
you have got to take it from someplace. Are you going to take 
it from personnel? With Federal workers retiring? Are you going 
to take it from the child care center? Or are you going to say, 
I want to be on K Street? So what I am going to submit to the 
Appropriations Committee is the increased rent that K Street 
can afford.
    I am not going to do this. I am not going to sit on the 
authorizing Committee and allow that to happen. You had all 
better put people on notice.
    And I don't think the trade-offs that I have just described 
are fair unless you are overstaffed. Then maybe it is 
personnel. But the appropriators are going to have my help as 
an authorizer--and, indeed, I sit on the Subcommittee that has 
to do with personnel in the Federal Government, and as an 
authorizer here.
    So the squeeze is going to come. It is going to come in the 
right place. And I don't think the right place is to go to the 
most expensive part in downtown D.C. or New York.
    So, Ms. Seekins, is your Prompt Pay Act--excuse me, 
execution. Back to what Mr. Winstead needs more than what Mr. 
Turowski has suggested, more people as smart and experienced as 
he is. Absent that, do you think that execution within the kind 
of resources you can say you know you are going to get out of 
your experience, are there ways to streamline the process so 
that quite unfairly one does not hold somebody who has a lease 
but just can't get it executed to essentially absorb that cost?
    Or is he absorbing that cost? Mr. Turowski, is he absorbing 
that cost?
    Mr. Turowski. Yes.
    Ms. Norton. Is the rent being paid by the government 
anyway?
    Mr. Turowski. No, not at that point. Not at that point, but 
the space is being carried by the owner.
    Ms. Norton. He is absorbing the cost?
    Mr. Turowski. To the extent there is cost, yes, it is being 
absorbed by the owner.
    Ms. Norton. Because until GSA is on the dotted line, it is 
his money, not ours. I am glad of that for the taxpayers, but 
one of the reasons for this hearing is to try to keep from 
unfairly burdening those who do business with the government as 
well. So I am asking whether or not that time period between 
knowledge of exactly who gets the lease and the signing of the 
lease--are we talking about that period, Mr. Turowski, so I 
know what I am talking about?
    Mr. Turowski. We are talking about the period between which 
the owner signs and GSA signs. The owner signed a lease, GSA 
has not yet signed. Okay. It is the end of the process. And we 
have seen in----
    Ms. Norton. I would have thought the GSA would have gone 
through a lot--GSA would have done a lot of work before it 
would even let the owner sign.
    So what has to be done between the time the owner signs and 
GSA signs?
    Mr. Turowski. They do their compliance checks, their 
scoring checks, their conformity with prospectus checks. They 
ensure that the agreement they have with the occupying agency 
fully reflects all the business aspects of the lease. They get 
the using agency's signature on those documents, their internal 
pricing documents.
    It has proven to be fairly time-consuming.
    Ms. Norton. Scoring? That late in the game we are looking 
at scoring?
    By the way, several of you have mentioned scoring. You have 
taken the issue I most hate about the Federal Government and 
have been able to do least about. We had a successful fight on 
scoring. I know what you are going through. But again, I put my 
attack dog on them, and this was the Old Post Office Building, 
where indeed there was an attempt by CBO to score--essentially, 
Mr. Turowski, what we did at the Monaco Hotel.
    So when you put before--which, of course, is now bringing 
revenue to the Federal Government.
    When you put that before them, you realize you are dealing 
in part with people who don't understand real estate or land 
management at all. So all they do is do the general crossword 
puzzle. But I can tell you that that is a very hard--that is 
the first one I think we have ever won. Well, Southeast Federal 
Center, but we haven't been able to duplicate this, the 
Southeast Federal Center.
    See, when I find that kind of wall, then I go, okay, what 
is another way to do this?
    So you have heard some of these things. Scoring I am taking 
off the list. But during this period of prospectuses, occupancy 
and so forth, does that duplicate what has already been done, 
Mr. Winstead?
    Mr. Winstead. The problem that I think Art is talking about 
is the close-out of the lease in terms of a winning bidder and 
how much time it is taking us to basically sign the government 
on the line. And I will tell you that because----
    Ms. Norton. First of all, I want to make sure he is talking 
about what?
    Mr. Winstead. The time it is taking, on average, now in NCR 
between the actual signing of the lease and the final lease----
    Ms. Norton. Is that what you are talking about, Mr. 
Turowski?
    Mr. Turowski. That is precisely it.
    Ms. Norton. So at least we are talking about the same 
thing.
    Go ahead.
    Mr. Winstead. And it has been a concern in terms of that 
time, taking more. It has in some cases taken 3 months. It 
should not take that long.
    Part of the issue is, and I think we have addressed it, we 
are addressing it now, it is a burden on the private sector 
lessor. I mean, they have got a building financed, we have come 
to a meeting of the minds in terms of price, but there are all 
those compliance things that Art talked about_some of which 
cannot be done in advance_that have to be done after an 
arriving of sort of the real price.
    Ms. Norton. Can't that be streamlined at all, Mr. Winstead?
    Mr. Winstead. Sorry?
    Ms. Norton. Can this process be--you see the unfairness.
    How long does it take, Mr. Turowski? Give me an example.
    Mr. Turowski. Oh, it routinely has taken 2 to 3 months, 
that period of time in the leases that were being done at the 
time I left the agency.
    Ms. Norton. How would you like to be left with that for 2 
or 3 months, Mr. Winstead?
    Mr. Winstead. That is unacceptably too long, I must say.
    Part of our problem, Madam Chair, that I don't think 
everybody is aware of is that we have had, through the National 
Broker Contract, through looking at a rent bill management 
effort, which is a new system for managing rent and is 
contracted out, through basically the new e-lease system, where 
all the realty specialists are plugging in the details on 
leases into a new IT tool, that unfortunately--a lot of the 
demands of these new systems create in the long term greater 
efficiency--have been on top of the leasing specialists and the 
COTRs, and have been an additional burden. And unfortunately, I 
am afraid the time in which closing out this lease and getting 
a signed lease back is taking more--longer than we are 
comfortable with.
    And I think that is what Art is talking about, as well as 
Gail.
    Ms. Norton. That comes under the category of not only 
wanting to save money for the Federal Government, but to save 
money for people who are unfairly penalized in the private 
sector.
    I am going to ask the IG to look at that process and to 
make suggestions between lease signing and lease execution. 
Again, we are looking for recommendations. We understand that 
these things have been in place. And we are not looking for 
penalties, we are not looking to criticize the agency, but we 
can't do anything if we don't know anything about these things.
    We have had an instance recently where an unnamed agency 
simply refused to sign for as long as it got ready. Ultimately, 
I think it looked closely at the fact that, given what the 
Subcommittee had already done, it was not going to be able to 
do what agencies have routinely done: get out of the 
competition that had won the lease.
    So they finally figured out what to do. And they did not--
and they did accept the space, albeit not for the unit it had 
initially wished to be in the space. But the agency, how long--
what did it take the agencies? Surely it was almost a year. 
Well, staff says at least 6 months.
    Now, I don't think the agency could have done anything 
else. And I couldn't understand it, because the agreement was 
not with the agency; the agreement was with GSA. The lease is 
not the agency's lease.
    So you are going to have to make me understand why an 
agency can hold up the whole Federal Government, even though 
the agency has no responsibility under the law for leasing 
after a fair competition on price, amenities, and everything 
else has taken place. Understand, this fair competition has 
occurred after the agency has signed on that it must have all 
of these things. So make me now understand what GSA can do 
about the fact that the agency says, well, I am just going to 
hang out here as long as I want to no matter what it costs the 
private sector and no matter what it costs the government.
    Is there anything you want to suggest that the agencies can 
be doing about this? Or, if not, what additional authority do 
you need so that that does not occur?DCMN HERZFELD
    Mr. Winstead. Well, Madam Chair, obviously in the original 
requirements, efforts of looking at agency need and the one in 
question, we are obviously trying to go to the market and 
determine within the delineated area what the competition is. 
And to get to that stage and then have the tenant agency not 
party to the move or delaying the move is not what we are 
supposed----
    Ms. Norton. Are there any time limits on the agency at all? 
Should there be?
    Mr. Winstead. Well, only in terms of any existing lease 
obligation they have in the current housing arrangement or 
Federal----
    Ms. Norton. You would know that by now, or you wouldn't be 
negotiating for a new lease.
    Mr. Winstead. Pardon?
    Ms. Norton. Mr. Winstead, that kind of answer doesn't help. 
Nobody is going to make a move out before their lease is up. 
That is already understood. That is why I lose patience.
    Mr. Winstead. Right.
    Ms. Norton. I am really trying to look for answers. I am 
not trying to criticize GSA. And therefore, my answer is--my 
question is does the agency need authority in order to keep an 
agency from deciding on its own motion when to sign a lease 
which under law it is obligated to sign? It wasn't obligated to 
agree to all of these things before the competition. It agreed, 
sat down with you, and you virtually do everything they say. 
Fair competition has taken place. They hang out there for as 
long as they want to. You, of course, call them; you do the 
right thing. And they say later for you. What I am asking you 
is what should be done. If you can't tell me, then I am asking 
somebody else to tell me what can be done either 
administratively or by law.
    Mr. Winstead. I think it is more--I know that case that you 
presented was a troubling one and makes no sense in terms of 
the amount of work and the determination we have had on the 
Public Building Act in terms of where they should go. In terms 
of strengthening the adherence in a timing sense of that 
decision and the agency's move, I would be happy----
    Ms. Norton. Strengthening what, I am sorry?
    Mr. Winstead. Sorry? Between the commitment in terms of an 
offer and an option and getting the agency to move, there could 
be additional guidelines that could be supportive. But I think 
we do the best we can to get the agency into the best space. We 
have the delegated--we have the authority to do so, and that is 
what OMB and the Congress expects us to do is to make the best 
real estate----
    Ms. Norton. You have the authority to do so. It would have 
been difficult for you to do. Either we need to do something, 
or you need to do something. Do any of you at the table see 
anything that the agency could do on its own?
    See, we can instruct the agency, or we can do it by law. We 
don't think that is fair to just say bide your time, and then 
when you get ready, you sign. You understand that when they 
sign, then there is a whole process GSA has to go through. You 
just heard testimony about that. So the whole works is--one 
agency, what authority or none? Can't sign a lease. Has none of 
the obligations under the lease. GSA does. It is taking a hit 
and saying it is okay, just hit us. Well, you are not going to 
hit this Subcommittee, so I want to know whether you all can 
think of anything administratively that can be done, or whether 
you have any recommendations of any kind.
    Mr. Winstead. Madam Chair, again, we have the authority to 
direct the agency to move. And, you know----
    Ms. Norton. Okay. I get it.
    Mr. Winstead. We have that authority. But I agree that 
there have been some onerous cases, I don't know them in 
detail, where that has not happened.
    Ms. Norton. The Subcommittee will look to see whether it 
needs to instruct the agency to issue guidance, or whether we 
need to issue this guidance by law. We do not intend to sit 
here and try to get the best deal for the government without--
in a one-sided process without trying to help those who must 
contract with the government to also avoid needless 
regulations. That is why I appreciate--I am a strong Davis-
Bacon supporter, but I have no case to be made for paperwork. 
The point is to get some money to workers.
    Why, Mr. Winstead, does the agency delegate the management 
of leases in some cases? Give me examples where you do this. I 
know you do this in some cases.
    Mr. Winstead. There are about 13 agencies that have 
delegated acquisition authority. We passed a new regulation 
guidance last September that limited the ability of those 
agencies to execute lease delegation unless it is under 20,000 
square feet. And it is generally.
    Ms. Norton. Wait a minute. Are you saying it is limited--I 
need to hear this.
    Mr. Winstead. It limited the agencies that have lease 
delegation authority to only apply that delegation authority, 
or we have to grant it to leases that are under 20,000 square 
feet.
    Ms. Norton. You grant it in the first place, or else it 
wouldn't be delegated. Are there going to be any more leases 
delegated?
    Mr. Winstead. They have to submit a delegated lease 
request.
    Ms. Norton. Why are you delegating any leases if you are 
the agency?
    Mr. Winstead. Many of the agencies--USDA, for example, have 
a lot of leases that are in areas----
    Ms. Norton. Who?
    Mr. Winstead. The USDA and Forest Service and agencies like 
that are in areas where we really do not have the national 
broker contractors.
    Ms. Norton. So specialized agencies, you are saying 
specialized agencies. So are all the agencies that have 
delegation and management leases specialized agencies like 
Department of----
    Mr. Winstead. No. The delegation is generally in a small--
only 1 percent of all leases that we manage are delegated.
    Ms. Norton. Would you submit to the agency a list of all of 
the agencies who have the delegated management of leases 
authority and any guidelines for those lease delegations that 
you now have? What is the average number of leases in the lease 
portfolio for what looks like a dwindling number of specialists 
at GSA? Average number of leases.
    Mr. Winstead. Well, we have about--we have an inventory of 
53 million square feet in the National Capital Region. About 10 
percent of that turns over every year. Nationally, as I 
mentioned earlier----
    Ms. Norton. So what is the average number?
    Mr. Winstead. The average number per annum, we have, well, 
125.
    Ms. Norton. I don't enough to know whether that is 
manageable or not. One hundred twenty-five?
    Mr. Winstead. Annual leases in the NCR in terms of an 
average lease load in the National Capital Region.
    Ms. Norton. Handled by a specialist? One--I am asking, I am 
sorry, the average number in the lease portfolio of a GSA lease 
specialist.
    Mr. Winstead. I think we have about 6,000 lease actions per 
year in NCR. Is that correct?
    Ms. Norton. I am just saying----
    Mr. Winstead. One hundred twenty-five lease actions a year.
    Ms. Norton. How many?
    Mr. Winstead. One hundred twenty-five lease actions.
    Ms. Norton. For each specialist?
    Mr. Winstead. I am sorry, we have seven specialists--70 
specialists and 125 annual lease actions in the NCR.
    Ms. Norton. You consider that adequate or not?
    Mr. Winstead. Well, you know, as I mentioned before, I 
think we are--again, we have had attrition, again the issue of 
the National Broker Contract and training people on that, and 
being able to utilize that have, in fact--we have seen it 
diminish. At one point 10 years ago, we had 1,000 realty 
specialists. Now we have got 560 realty specialists. So we have 
seen a long-term decrease in the number of realty specialists.
    But the whole concept behind the National Broker Contract 
was to contract out, and basically under contract, have the 
expertise to determine and to advise us on the best deal in the 
market. And the concept behind that was also that the same 
realty specialists could work upstream with the client agency 
to avoid what Art talked about in terms of the holdover 
situation. And that has essentially been the mechanism we have 
had in place the last 3 years under the National Broker 
Contract.
    Ms. Norton. Is there a private sector benchmark to measure 
this by, or is the government unique in this way? Because I 
don't have any idea whether that number is a good number or 
not. Is there a private sector benchmark if you look at what 
the private sector would regard as what is necessary to manage 
such a portfolio?
    Mr. Turowski. Not off the top of my head, Madam Chair. A 
lot depends on the size of the lease, its complexity. I mean, 
indeed, some major leases could have two lease negotiators 
assigned to them. If a lease is comparatively small, a private 
sector lease negotiator could be working, you know, 10 or 15 or 
20 at one time.
    Ms. Norton. These, of course, would be complicated just by 
the number of rules and regulations and laws of the Federal 
Government.
    Mr. Turowski. Yes.
    Ms. Norton. Mr. Turowski, I am aware that you were working 
on a streamlined lease before you left the government. I am not 
aware that it has been institutionalized. Do you know what I am 
talking about, rewriting some of the parts of the leases that 
might be eliminated so that you could streamline? Is that in 
use?
    Mr. Turowski. Honestly, no. That is catching me a bit cold.
    Ms. Norton. What happened? Mr. Winstead seems to know what 
I am talking about. Streamlined leases.
    Mr. Winstead. Yeah, we have looked at the concept I 
mentioned about trying to centralize more of the policy side in 
the management of leasing. We have looked----
    Ms. Norton. Very important. Go ahead.
    Mr. Winstead. We basically looked at the skill erosion 
issue and procurement expertise, and made sure that realty 
specialists that were burdened with all these other things I 
mentioned, that we do have enough seasoned people to guide 
their actions and to train them. And I will tell you it is a 
challenge.
    Ms. Norton. That is good, because to meet the challenge 
that it looks like the Federal Government isn't about to give 
more personnel to agencies, one would think that the greater 
the centralization, the more done by guidance, the better off 
you would be unless you can expect some influx of qualified 
people. As you know, people leave because you give them the 
kind of training that makes it possible for them to earn 
considerably more in the private sector.
    Mr. Winstead. We do have attrition, and Art is an example. 
Of course, he had 37 years.
    Ms. Norton. Nobody stays these days as long as Art stayed.
    Mr. Winstead. Right. But I do think we have taken the 
management actions for this lease management both from a policy 
standpoint, in Central Office and the regions. I think the real 
weakness is the staffing question, and the real weakness is the 
lack of seasoned expertise that goes back that many years. And 
what we are leaning on is the private sector knowledge of the 
market, but we still do not have sufficient members that have 
had the years of training in lease and action and contract 
officials.
    And I also would like to mention that a lot of our--some of 
our regions are concerned about that to the extent that, you 
know, they are taking some of the more complicated leases and 
trying to ensure that the senior people are using those as 
examples for the newer incoming lease specialists to be trained 
on.
    Ms. Norton. You would think that that would be common 
practice.
    Mr. Winstead. It is common practice. I think what----
    Ms. Norton. But the centralization that you say you are 
doing seems to me would move toward that and toward that kind 
of guidance.
    Mr. Winstead. It is. We are issuing it now.
    Ms. Norton. It is like I am a law associate, to take my own 
profession. You know, the first thing you do is to look for 
somebody who has written the same kind of pleadings and then go 
from there.
    Mr. Winstead. Right. We are regularly scheduling zonal 
trainings in the regions for our realty specialists, and also 
training them in some of these new tools I mentioned, which 
will ultimately lessen the burden and allow them to focus more 
on both, obviously, the client needs and the transaction. That 
is e-lease and the rental management and other initiatives that 
are tied in, which are new tools we put in place in the last 2 
years. And I think part of the problem, what I hear when I go 
to the regions, is that all these are great ideas, but it 
diverts time and attention from getting people trained on those 
new systems. And the result is maybe the leases are not getting 
closed out as quickly. And I guess that is what we heard 
evidence of earlier.
    Ms. Norton. Well, somehow or the other that is the job of 
management, to make sure people get trained, or else they just 
create more of the same problem, or the problem is not a cure.
    I am very interested, though, in your notion about seasoned 
workers, particularly given what I know about this area, and 
your intern program. Would you tell me about this intern 
program and whether it leads to conversion, somehow some of 
these employees to Federal employees?
    Mr. Winstead. We have always had a very----
    Ms. Norton. Where do they come from? Where do these interns 
come from?
    Mr. Winstead. Most of the interns, some of them were 
recruited out of college; some of them actually worked for GSA 
while they were in college through our co-op program.
    Ms. Norton. How many of them have become government 
employees?
    Mr. Winstead. I think of the six that graduated, we went to 
an intern graduation at central office about a month ago, and I 
think all of them have stayed with GSA. And most of them were 
at GSA before they entered the intern program. So we have two 
levels. One are the college-age people that are still involved 
during breaks and summer, that is the Co-Op program; but the 
intern programs are essentially there were seven and----
    Ms. Norton. Is there any requirement--wait a minute. All 
right. These are people who work in the summer?
    Mr. Winstead. No, the interns actually are full time, but 
the co-ops, the college grads, or people that are in college 
rather----
    Ms. Norton. Both would be very valuable. Now, the interns, 
they are being paid by the government?
    Mr. Winstead. Yes. And they are selected by----
    Ms. Norton. Can you be an intern paid by the government and 
then leave and go to the private sector as soon as you finish 
your internship?
    Mr. Winstead. There is no--I don't believe there is any 
signed agreement with the intern program that requires----
    Ms. Norton. Why? The reason you are losing people is 
because they get the training and quickly go to where they can 
earn good money. Is there a quid pro quo for the government 
money being used to train people so they can at least get 
something out of it for the training?
    Mr. Winstead. Madam Chair, I think the distinction is that 
these are selected and prequalified in terms of their potential 
to go up the career chain to become senior executives.
    Ms. Norton. Are they already government employees you are 
saying?
    Mr. Winstead. Yes, yes, those people. The ones I mentioned 
before in the----
    Ms. Norton. The word "intern" applies to--you are using the 
word "intern" because they are interning in GSA?
    Mr. Winstead. That is right.
    Ms. Norton. They are already government employees.
    Mr. Winstead. That is right.
    Ms. Norton. Are they government employees at the GSA?
    Mr. Winstead. Yes.
    Ms. Norton. Where did they come from? What kind of sections 
of the GSA do they come from?
    Mr. Winstead. Well, they are all over. They are in all the 
programs areas, some in the Chief Architect's Office, some in 
Portfolio, some in Financial.
    Ms. Norton. So I am in one of those kind of related 
functions, but I want to become a what, a realty specialist?
    Mr. Winstead. Yes.
    Ms. Norton. Okay. You then are paid the same you were paid 
elsewhere in the agency, except you are learning now the whole 
business of GSA as a realty specialist, right? Or not?
    Mr. Winstead. Yeah, but the GS level could be higher. I 
mean, obviously it is in some instances. Some of those interns 
would go----
    Ms. Norton. Okay. It could be higher. I am trying to find 
out how many of these are there?
    Mr. Winstead. Well, I know that there were six in terms of 
Central Office. I think nationwide there are over 100.
    Ms. Norton. Let me deal with the last six. Did they all 
become realty specialists at----
    Mr. Winstead. No, they didn't, but some of them are in the 
realty----
    Ms. Norton. What happened to the rest of them?
    Mr. Winstead. Some of them went into the Chief Architect, 
some of them went to Portfolio to manage our portfolio. Others 
went----
    Ms. Norton. All of them remained at GSA?
    Mr. Winstead. Yes. At least the ones I am most familiar 
with, the ones that graduated this year.
    Ms. Norton. What I would like you--if you are saying that 
all six at least are with the agency now, first of all, when 
did they graduate?
    Mr. Winstead. The ones I am familiar, which I talked to a 
week ago, graduated--it is a 2-year----
    Ms. Norton. You know for a fact----
    Mr. Winstead. It is a 2-year program, and they participate. 
The group that I am closely aware of, the group that just 
graduated, are all staying with GSA. And I would be happy to 
get the Committee exactly the qualifications of getting into 
this program, how we determine both from their interest and 
need in terms of staffing, where they end up after the program, 
whether it is----
    Ms. Norton. On this, you know, the one thing I don't do, 
because I ran a Federal agency myself, is try to micromanage 
something like this. I am trying now to figure out, given what 
I am sure will be--you have already said is a problem in 
recruiting realty specialists, whether it makes sense for you--
I would like you to try to figure this out--at least for the 
time being you think these people will remain at GSA. Let me 
give you this scenario. I am now an architect someplace else, 
and I want to get more of what GSA does overall as a realty 
specialist. So while I know something about one part of the 
agency, I want to get the others. I can spend 2 years there, I 
will go back for a year or so, and then I am off here to where 
people pay top dollar. Nobody is going to begrudge that 
ultimately, but in terms of the need for realty specialists, 
the difficulty that you are encountering now you will continue 
to encounter.
    I wonder whether or not--I literally ask this as a 
question, I have no idea the answer, and I have no idea where 
to find realty specialists, but I am wondering whether or not 
it would be useful to the agency to say that this program-- 
that those who get first druthers on this program will be those 
who make X commitment. I can't tell you what that should be.
    We do it in the Federal Government all the time. This is 
in-kind training that is very valuable. What we do is very 
different, you know. It may have to do with paying parts of 
loans in order to encourage people to go to some places in 
order to practice one or another profession like nursing or 
something of the kind.
    So I am very roughly analogizing to see, one, whether this 
is necessary, or whether you get the realty specialists from 
someplace else, and whether or not this would be a useful thing 
to do, not excluding others, but trying to retain this 
expertise where it might be particularly valuable.
    Mr. Winstead. I would be happy to get you--for the 560 I 
referred to, I would be happy it to get you a breakdown of 
their tenure, which ones have participated in the intern 
program and returned to the realty function, and I will get 
that information to you. But I think it is going to continue--I 
think the market, obviously the commercial market, is cooling a 
bit. The residential market has fallen out. I think the reality 
is the temptation, hopefully, on the near term might be more 
encouraging to stay than to head to the private sector.
    Ms. Norton. Since I am not dealing with the near term, but 
dealing with what Federal policy should be generally----
    Mr. Winstead. We will be happy to get that down and get to 
you what we have in place in terms of those requirements and 
how many are staying with GSA versus going out. And we can get 
it for the Chief Architect's Office, the engineers and 
architects and designers.
    Ms. Norton. I am going to ask only one more question. I am 
going to submit questions, additional questions to all of you. 
As you will see, my modus operandi is not to ask questions and 
have staff look at the transcript. I don't know anything about 
the things I have been asking you. So I am trying, in my own 
role as Chair of the Subcommittee, to understand what it is you 
do. I am not a very good person for staff simply to put 
something on my desk and say, you sign here, Eleanor. So I got 
to have at least some sense, and I don't know how to get it 
outside of the inside here if I don't learn by asking questions 
of those who come before me in the Subcommittee. Rarely am I 
trying to get the agency on something, because if we knew about 
that, we would call the agency and not simply use a hearing.
    I need to know about contractors supervising contractors. 
This has been an endemic problem in the government, and we see 
it in Oversight and Government Reform and huge and horrid 
abuses. Above all we have been impressed by the fact that the 
government does not--perhaps you do--have the resources to 
supervise the contractors. So they can't supervise the 
contractors in the first place, and then they have contractors 
that don't supervise supervising other contractors. Why should 
I have any confidence in that kind of process?
    Some of the testimony--I forget who mentioned this, or Mr. 
Grunley told us among those who mentioned contractors 
supervising contractors. First of all, I want to know about the 
process, and then I want to know what, if anything, can be done 
about it.
    Mr. Grunley. The process has been where GSA has not had the 
staff to have day-to-day inspection and project management on 
the job sites, they have hired large firms that provide 
manpower. I have found that the manpower is extremely competent 
in most cases. And where it has worked the best is where there 
is still a strong contracting officer or a project exec for GSA 
who has the oversight that will set the rules straight very 
early on what they are looking for, that they are typically 
looking for.
    Ms. Norton. Has there been sufficient contract officers?
    Mr. Grunley. Excuse me?
    Ms. Norton. Has there been such oversight?
    Mr. Grunley. Absolutely. Especially the last few years.
    Ms. Norton. For large projects you have found for 
construction projects there has been a contracting supervisor--
--
    Mr. Grunley. Working for GSA on our job site.
    Ms. Norton. Right. So what about the contractors' 
supervision of other contractors? Are you satisfied with that 
as well?
    Mr. Grunley. Yes, and especially the last few years. When I 
first saw this was in the mid-1990s. We were actually doing a 
job in Baltimore, not for the National Capital Region. And 
there was three employees that worked for the construction 
manager, and there was nobody on site for GSA, and we felt 
these people ran over us and around us and everything they 
could do.
    Ms. Norton. I am asking this question out of your own 
testimony, where you said that--and I don't have the sections--
where you mentioned that it was a problem, although not for 
you. And we understand that you are a big contractor, sir, but 
in your experience it had been a problem of contracting, 
otherwise I wouldn't be raising it. I don't know anything about 
contractors supervising, so I got to have got it from 
somewhere. So would you talk to us about the experience of 
others then?
    Staff brings to me the page, and it is not numbered in your 
testimony so I can at least know what I am asking. What you say 
is the approach is necessary in order to assure the government 
that construction activities are being performed and documented 
in accordance with the contract requirements. However, what 
seems to have resulted from this approach is an increase in 
general contractor staffing necessary to be responsive to CM 
staff assigned to the project. My sense is that we may have 
taken this approach to a point where there is a loss of 
efficiency and improvement can be made.
    Mr. Grunley. This is my personal opinion. The construction 
management firms that are being hired to do that work are very 
large firms. They are doing work for GSA and other government 
agencies all over the country, and it is very important for 
them when they get a contract to do a wonderful job. In doing a 
wonderful job, they look to have larger staffs. They will go 
back to GSA and say, we really think we need a safety officer, 
we need two more inspectors, whatever the issue is. Sometimes 
they are granted those larger staffs, and other times they are 
not. When they increase their staff, we tend to need to have to 
increase our staff because of just additional oversight.
    That is the lesser problem than we have had, and we do not 
have this issue with GSA, we have it with other Federal 
agencies, where they have hired who I consider to be abusive 
construction managers, who I think--and they do not have the 
mission of the Federal Government. They have a mission to beat 
up on the contractor. We do not see that at GSA, though.
    Mr. Winstead. Madam Chair?
    Ms. Norton. Yes, Mr. Winstead.
    Mr. Winstead. The increased use of the CMC, construction 
management contractor, option has since the beginning of the 
1990s increased a lot, but basically they are on site. We have 
a project manager who is a full-time GSA employee to assure 
quality assurance by the contractor and the building. They 
don't actually supervise the contractor.
    I think what Ken is complaining about is that because of 
our increased use of CMC, because we find that we can manage a 
very complicated project, looking at cost implications of a 
major courthouse by the expertise in the private sector, what 
he is concerned about, I think, is the fact that our increased 
use of it means there are more people on the quality assurance 
task than there were before, and then he needs more people to 
respond to their questions and work with them. So I think it 
has increased the burden----
    Ms. Norton. I see the issue, particularly having sat on 
oversight and reform hearings, except that it is hard for me--I 
understand what you are saying. I am going to give you an 
example in a moment that I think either may show this is 
valuable, or that it didn't happen in the example I cite.
    The problem that the Federal Government has faced in recent 
years is essentially that nobody was supervising large 
contracts. Huge, terrible headlines everywhere. Some of this 
came from Iraq. Some of it came here, because the Government 
Oversight and Reform is about that, oversight of every Federal 
agency. We have had before us, you know, DOD, the State 
Department, you know, some of these with the most horrendous 
stories.
    So here I am, and the contractor says, look, GSA, we have 
to hire more to respond to their hiring more of these 
construction managers. But what it says to me is that for these 
large contracts, you are doing what we have found is absent 
very often in very large contracts of the Federal Government; 
that is to say, not putting that money out there and having 
nobody on staff with the expertise who is supervising.
    Yes, more, that means more cost, I guess, passed on to the 
government, but what we have found in these oversight hearings 
is very frankly we would rather incur the costs because of the 
really horrible--I can't even begin--they range from straight 
out stealing and fraud to inefficiency that makes GSA look like 
the picture of efficiency. Left to their own devices, people 
spend money on--wow, on things that the taxpayers have found 
shocking in my oversight hearings. So it may be as long as you 
pass this, and I bet you do, the costs, on to the Federal 
Government, Federal Government Oversight and Reform is asking 
for that rather than to lose, I am telling you, billions of 
dollars for failure to give appropriate oversight.
    Mr. Winstead. Madam Chair?
    Ms. Norton. Go ahead.
    Mr. Winstead. I would mention the Grunley firm has a very 
strong presence in a growth market, as I view it, and that is 
the renovation of these older buildings. I mean, they have done 
the Department of Interior, they are doing the EEOB, and that 
work can be much more complicated than a new field office of 
the FBI or a new branch office under lease-construct for SSA. 
Obviously, the security issues at the EEOB and Interior--
obviously at EEOB are huge. And so that is also----
    Ms. Norton. Historic problems.
    Mr. Winstead. --that is why we on quality assurance and 
contract----
    Ms. Norton. Are you saying you want it there, but not in 
other places?
    Mr. Winstead. I think there are ways that we can--look, 
this is the first time with this testimony this morning, quite 
frankly, I have heard concern by him about this issue of we 
have got more CMCs, and I am having to hire more, so obviously 
that is reflected in his cost. And we ought to look at that and 
see what that pairing is----
    Ms. Norton. Good.
    Mr. Winstead. --and figure if it is effective or not. And 
we will be happy to do that.
    Ms. Norton. Can I give you this example? I don't know if it 
is even relevant to CMC. I am over at DOT on another matter 
altogether. An employee comes out and says, oh, my goodness, 
what are we going through? They moved us all out of a floor or 
so of DOT, and they completely are redoing how it is set up. 
And she said, oh, my Lord, we are in a new building, and now we 
are doing--and this is just a few weeks ago.
    And I had somebody from the agency there, and I said, what 
is she talking about? They said, well, there were, you know, in 
order to--there were some spaces that were too small, there 
were some spaces--they were finding that out now.
    Why is it they are finding that out, Mr. Winstead? I guess 
I should just put it that way. I said, who is paying for it? I 
sure hope the contractor is paying for it.
    Mr. Winstead. In the case of the DOT, they are still 
finishing out some work on several floors there. And I think 
what DOT's requirements were in their housing plan was to us in 
advance. We had a good project manager working with JBG, who 
was the lease construction firm, but there were some issues in 
terms of the tenant agency changing some space configuration 
essentially after the fact. So we have been trying to work with 
that and trying to get it done.
    So I think that is what you saw was the work that is still 
being finished out at DOT. And Bart and I were just over there 
talking to the Federal Highway Administrator about his section 
of that building.
    Ms. Norton. Part of what I was told is that there was--and 
this may be related to what Art said about the time between the 
lease and its execution, that people are wanting to get into 
the building. And so it rings true when you say something 
about, well, you know, some of this stuff wasn't really 
completely done. I suppose--and trade-offs are what we have to 
be ready for. I suppose I would rather take--particularly with 
the agency rapidly wanting to move in, I would rather take that 
kind of trade-off than to have a long lag time between 
execution of the lease and signing of the lease if that was the 
reason.
    What would bother me is after-the-fact changes that you 
just mentioned by the agency. Why should the agency, which, in 
the case of this building and any other I can think of, had an 
enormous amount of time to consider what it needed and has 
built a huge building out there, why should it be allowed to do 
after-the-fact changes?
    Mr. Winstead. Well, number one, you know, we had a--part of 
the balance and part of the enforcement of that contract is 
obviously not to cost either the agency or the government more. 
But the reality was there were some subsets of DOT, some of the 
modal groups within like highway or transit, that took--they 
took longer getting their requirements in. And that is what has 
led to this. I can get for the Committee from NCR exactly what 
those costs have been.
    Ms. Norton. But could they have done that and you sign a 
lease? I mean----
    Mr. Winstead. Yeah. I mean, the reality is, had we gotten 
all the requirements vetted early enough from the tenant 
agency, some of this would not have occurred. That is the 
reality.
    Ms. Norton. Well, Mr. Turowski, is there, in your 
experience, outside and inside, is there a way to somehow have 
called the question at a point in time? Or are these changes 
just inevitable no matter what happens and the Government just 
needs to be prepared to absorb the cost?
    Mr. Turowski. Well, lease changes in a building in excess 
of 1 million square feet are fairly difficult to avoid, 
particularly given the time from the, I believe--and I am going 
on memory here, recollection--particularly in projects of that 
size from the creation of the original program requirements, 
which can be up to 3 years later when the space is being built 
out. So that is a bit of an unusual circumstance, I would say, 
or atypical.
    Ms. Norton. The lesson there is, of course--and here you 
have dealing with more than one agency in the building; is that 
right? Department of Transportation--is Federal Transportation 
Agency in the building?
    Mr. Winstead. It is all occupied. The million three square 
feet are all occupied by the DOT.
    Ms. Norton. Who is paying for the changes?
    Mr. Winstead. Oh, who is paying for the changes? Basically 
it is within--it would be under our contract lease agreement 
with JBG, and we would be responsible and the tenant agency.
    Ms. Norton. So the tenant, namely the Department, is paying 
for it out of its agency budget, right?
    Mr. Winstead. Yes.
    Ms. Norton. So the Government is paying for it.
    Mr. Winstead. That is correct.
    Ms. Norton. It was not a mistake on the part of the 
contractor?
    Mr. Winstead. No.
    Ms. Norton. And I do understand what Mr. Turowski was 
saying. We really don't expect perfection in this process. And 
we all expect some losses on both sides. For example, the 
competition means, you know, it is your risk. If you get the 
contract, you know, you got it. If you didn't, it is the risk 
you take. But I don't want to accept the risk of everybody 
signs on and somebody over here is just not signing, even 
though he doesn't have anything to do with the lease. And I 
don't want to take the risk of the time between the agency 
signing and GSA signing is excessive. So I am trying to measure 
the differences.
    Let me say that there are a lot of things that I would have 
asked about simply to establish that GSA is doing a very good 
job in some respects. Some of them--I mean, Mr. Grunley had 
mentioned best value, which I have looked at for some time. And 
it does seem--you know, having moved from lowest bid to best 
value, looking at how it is done, it is done fairly. I have 
seen GSA oversee the certified apprenticeship program. I have 
some terrific misgivings, but I am going to be working with GSA 
on that. It was very important. The certified apprenticeship 
program is really not simply about getting work. Most of these 
apprentices won't come from--certified apprentices, certainly 
won't come from the people in my district who need it most.
    But if you look at what the best contractors want, they 
really do want the people who have had that kind of training 
and are not working with people who have thrown together 
apprenticeship programs. And then you get somebody who really 
doesn't know how to do the job.
    In working with GSA for--we have heard good things about 
construction manager as opposed to no oversight, know about the 
cost, we understand the tradeoffs. Some tradeoffs we are 
willing to accept.
    We heard about security. And I am on Homeland Security. I 
also represent the District of Columbia. I don't lightly tread 
on that. I am not satisfied that GSA is the leader there. There 
is every indication that who leads the band are the people 
whose only mission is security. And that is very bothersome to 
the Subcommittee. We are going to be looking at what we can do 
about that. It may take some statutory changes; it may take 
other kinds of changes.
    And because of my long experience with GSA, I still regard 
it as the repository of extraordinary expertise available 
nowhere else. I also see it dwindling, going, retiring. I am 
very concerned about it and doing all I can. That is why you 
hear me talking about the intern program. I would like to see 
it expanded. It is in the best interest of the Government.
    I am not going to be able to get that done unless I can 
assure the Government, as the Government has required, on, for 
example, the substitute it gives for doctors, lawyers and 
Indian chiefs to go to certain places in the country. If I can 
assure the Government, I think I can get some kind of trade-off 
there, so you don't have just six, you begin to replenish the 
supply.
    Because today for, let's say, a young person interested in 
real estate work, the question is, shall I go with Mr. 
Turowski's company, Mr. Grunley's company, or the GSA? I will 
tell you what. If they take very bright people that just 
graduated, have some interest, it is no contest; the Government 
isn't going to get them. So one of the things the Government 
has to say is, what is it that could make people want to come 
here? Or with respect to those people who work for GSA and 
could then go off, not simply come here to this division, get 
expertise and then fly off to the Federal sector.
    I want to thank each and every one of you for bearing with 
me so long while essentially I was engaged in a training 
exercise for myself and the Subcommittee. And I promise that 
you will see the results of this hearing.
    Thank you very much. The hearing is adjourned.
    Before it adjourns, excuse me, I do want to submit for the 
record the opening statement of the Ranking Member.
    Ms. Norton. And I do want to say that the Congress went out 
of session yesterday. And so the Ranking Member, like every 
other Member of Congress except me, could be expected to return 
to his own constituents. And I appreciate that Mr. Graves, in 
fact, is just as interested in this matter as I am and has left 
his own opening statement in that regard.
    Now the hearing is adjourned.
    [Whereupon, at 1:56 p.m., the Subcommittee was adjourned.]

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