[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                     CAN A CIVILIAN BRAC COMMISSION
                    CONSOLIDATE FEDERAL OFFICE SPACE
                      AND SAVE TAXPAYERS BILLIONS?

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

                                (112-22)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 6, 2011

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


         Available online at: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=house&committee=transportation



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri                 HEATH SHULER, North Carolina
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
STEPHEN LEE FINCHER, Tennessee       DONNA F. EDWARDS, Maryland
JEFFREY M. LANDRY, Louisiana
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
VACANCY

                                  (ii)

  
?

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                   JEFF DENHAM, California, Chairman

TIMOTHY V. JOHNSON, Illinois         ELEANOR HOLMES NORTON, District of 
ERIC A. ``RICK'' CRAWFORD,           Columbia
Arkansas,                            HEATH SHULER, North Carolina
  Vice Chair                         MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois             RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania           TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      DONNA F. EDWARDS, Maryland
PATRICK MEEHAN, Pennsylvania         BOB FILNER, California
RICHARD L. HANNA, New York           NICK J. RAHALL II, West Virginia
STEPHEN LEE FINCHER, Tennessee         (Ex Officio)
JOHN L. MICA, Florida (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Johnson, Hon. Martha, Administrator, U.S. General Services 
  Administration.................................................     5
Lepore, Brian J., Director, Defense Capabilities and Management 
  Issues, U.S. Government Accountability Office..................    28
Principi, Hon. Anthony J., Former Secretary, U.S. Department of 
  Veterans Affairs, and Former Chairman, 2005 Defense Base 
  Realignment and Closure Commission.............................    28
Werfel, Hon. Daniel I., Controller, Office of Management and 
  Budget.........................................................     5
Wise, David J., Director, Physical Infrastructure Issues, U.S. 
  Government Accountability Office...............................    28

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Norton, Hon. Eleanor Holmes, a Representative in Congress from 
  the District of Columbia.......................................    42

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Johnson, Hon. Martha.............................................    45
Lepore, Brian J., and Wise, David J., joint statement............    52
Principi, Hon. Anthony J.........................................    71
Werfel, Hon. Daniel I............................................    75

[GRAPHIC] [TIFF OMITTED] T5644.001

[GRAPHIC] [TIFF OMITTED] T5644.002

[GRAPHIC] [TIFF OMITTED] T5644.003

[GRAPHIC] [TIFF OMITTED] T5644.004



                     CAN A CIVILIAN BRAC COMMISSION
                    CONSOLIDATE FEDERAL OFFICE SPACE
                      AND SAVE TAXPAYERS BILLIONS?

                              ----------                              


                        WEDNESDAY, APRIL 6, 2011

                  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 10:04 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Jeff Denham 
(Chairman of the subcommittee) presiding.
    Mr. Denham. The subcommittee will come to order.
    First, let me welcome our distinguished witnesses and thank 
them for their testimony today. We carefully selected each of 
you because of your past experience or current responsibilities 
for managing Federal real estate on behalf of the American 
people. Given our trillion-dollar deficit and skyrocketing 
debt, we must examine every area of government and look for 
ways to cut spending.
    I first proposed a civilian BRAC commission at our 
subcommittee's first hearing in February, and the President 
proposed a commission in his 2012 budget. The purpose of 
today's hearing is to find out if a civilian BRAC commission 
can save billions of taxpayer dollars by consolidating and 
realigning Federal real estate property.
    In recent years, the GAO identified billions of dollars of 
waste through mismanagement, overbuilding, and anoverreliance 
on costly leased space to meet long-term housing needs. In 
Chairman Mica's report, ``Sitting on our Assets,'' we learned 
billions of dollars of taxpayer assets sit idle or even lose 
taxpayer money year after year. And on a bipartisan basis, this 
committee has struggled to house Federal employees in the most 
cost-effective manner possible.
    I believe the potential to save billions of dollars is very 
real. The question is: Can a civilian BRAC commission cut 
through the red tape and political turf battles to save 
taxpayers money and do it quickly?
    For example, if all the commission achieves is a fire sale 
of worthless properties in one of the worst real estate markets 
in our lifetime, then we shouldn't expect to save much money at 
all. Fortunately, the administration recognizes this very same 
problem. I am very pleased the President made Federal real 
estate a national priority by including it in his State of the 
Union Address and his budget.
    Given our discussions with OMB and GSA, I am hopeful we can 
agree on the goals for a commission and work together to move a 
bill through Congress. To achieve $15 billion in savings, I 
believe the commission will have to focus on a few goals or 
principles to reform. The commission will need to first 
consolidate the footprint of Federal real estate; second, house 
more Federal employees in less overall space; third, reduce our 
reliance on costly lease space; fourth, sell or redevelop high-
value assets that are underutilized or too valuable for housing 
Federal employees; and fifth, dispose of surplus property more 
quickly.
    I believe a commission that uses these five principles to 
guide its decision can save the $15 billion we all believe is 
there. I would like to elaborate on these principles so we can 
discuss them further during the question and answer period of 
the hearing.
    At the end of the day, the total cost to house the Federal 
Government is directly proportional to how much real estate we 
have hold. To save money, we will have to consolidate that 
footprint. To consolidate, we must house more Federal employees 
in less space. Fortunately, there are tremendous opportunities 
for savings in this area.
    There is just one example of GSA consolidation using three 
different properties that were leased or owned and now 
renovating the GSA headquarters, consolidating and giving us an 
opportunity on two separate buildings.
    The private sector has been increasing its utilization 
rates for over a decade--and a commission can achieve the same 
results in the Federal Government. Reducing expensive leased 
space is another principle necessary for a successful 
commission.
    There is a second example. The Postal Service used a 
private developer to transfer a rundown money pit with a great 
location. This in turn gave $150 million in revenue and a fully 
renovated building without any taxpayer money. While the 
government retained ownership of this property, in other cases 
selling may generate the greatest savings for the taxpayer.
    Finally, we have to dispose our surplus property more 
quickly. I believe these guiding principles should help inform 
the development of any legislative solution, and I look forward 
to discussing them with our witnesses.
    Again, I want to thank each of you for being here today.
    I would now like to recognize Ranking Member Norton from 
the District of Columbia for 5 minutes to make any opening 
statement she may have.
    Ms. Norton. Thank you very much, Mr. Chairman.
    Good morning, and welcome to our witnesses. I want to thank 
you, Chairman Denham, for calling today's hearing on the 
administration's proposal found in section 735 of the fiscal 
year 2012 budget to create an independent Civilian Property 
Realignment Board tasked with making recommendations for the 
realignment and consolidation of Federal real estate, much like 
the Department of Defense Base Realignment and Closure, known 
as BRAC.
    The proposed board has the potential to be a valuable and 
rational tool for providing a source of revenue for the Federal 
Government to maintain existing buildings and to fund real 
estate management, not to mention, of course, what this might 
mean for the Federal deficit. The President's proposed board 
would dispose of unneeded and underutilized real estate and 
would consolidate Federal real estate functions where 
appropriate.
    Last year, President Obama issued a government-wide memo 
that ordered agencies to reduce their real estate footprint. 
This proposal before us today represents the administration's 
sustained priority on addressing the management of Federal real 
estate activities. I applaud the administration's efforts in 
the fiscal year 2012 budget to explicitly address Federal real 
estate in a comprehensive manner.
    In 2003, the Federal Accounting Office placed GAO--placed 
real estate management on its list of high-risk government 
activities, where it remains today. Both this committee and GAO 
repeatedly have registered serious concerns about the way 
Federal real property has been managed. I am especially 
pleased, therefore, that the current administration has 
continued to build on its initial efforts to right-size the 
Federal real estate portfolio by issuing a memorandum requiring 
all Federal agencies to reduce their real estate footprint and 
now by proposing legislation for an independent board.
    Much like BRAC, the administration's proposed board would 
conduct an analysis of the inventory of Federal civilian 
property. The board would obtain recommendations from Federal 
agencies on civilian real estate that could be sold, 
transferred, consolidated, co-located, or reconfigured to 
reduce the civilian real property inventory and operating costs 
of the Federal Government. After performing that analysis, the 
board would conduct public hearings on the recommendations of 
the agency.
    At a minimum, the board would submit a report on its 
findings twice a year to the Director of the Office of 
Management and Budget. Upon receipt of the board's 
recommendations, OMB would conduct a review of the report and 
would take into consideration the views and recommendations of 
the Federal agencies within 25 days of receiving the board's 
report. If the OMB director approves the board's 
recommendation, the director would submit the recommendations 
to Congress.
    Conversely, as with BRAC, if OMB disapproves the board's 
recommendation in whole or in part, the director would then 
transmit to the board and to Congress the reason for its 
disapproval. The board would then be required to transmit to 
OMB a revised list of recommendations. If OMB approved the 
revised recommendations, it would then transmit the 
recommendations to Congress.
    After OMB's transmission of its recommendations to 
Congress, Congress would have 45 days to pass a joint 
resolution disapproving the recommendations. If Congress fails 
to pass a joint resolution, the board's recommendations would 
gain legal force and agencies would commence with recommended 
activities. Proceeds from sale of properties would be split 
between deficit reduction and covering the costs of agencies to 
dispose of the property, consolidate, relocate, and reconfigure 
activities.
    The administration's proposal would offer a new and more 
powerful tool to identify underutilized Federal properties that 
could help move agencies out of leased space and would allow 
the sale of real estate where appropriate. Just as importantly, 
the board would be highly instrumental in reconfiguring, co-
locating, and realigning the Federal real estate portfolio.
    It is impossible to know without a rigorous inventory and 
analysis whether surplus property equals valuable property in 
dollars and cents or if the Federal Government is really 
sitting on billions of dollars of underutilized surplus 
properties for which there is a market. Now is the time to find 
out, however, and to provide the country with at least one 
alternative to the mindless slash-and-burn approach in use in 
the House at the moment to reduce the deficit.
    In contrast, an independent board to assess the real estate 
needs of agencies would thoughtfully and rationally right size 
the real estate portfolios of agencies that often lack the 
expertise to make strategic real estate decisions. 
Astonishingly, although the General Services Administration is 
charged with managing and developing Federal Government 
properties and leases, there are at least 23 holding agencies 
currently controlling Federal real estate. Most of these 
agencies have missions unrelated to property and property 
consolidation.
    However, according to GAO, the GSA alone holds 282 excess 
or otherwise underutilized buildings that cost $93 million 
annually to operate. One of the most prominent of these 
properties, the priceless, historic treasure, the Old Post 
Office, had to be pried loose by a bill I introduced and got 
passed into law with strong bipartisan House and Senate 
support.
    At the same time, this subcommittee must always take the 
broad view of real estate. Although I believe the Civilian 
Property Realignment Board can serve an important missing role 
in disposing of unneeded real estate, the administration's 
proposal does not require the sale of real estate assets in a 
soft market or the sale of properties that hamstring the 
government's ability to house Federal employees in the future.
    Expert and specialized skill is necessary to dispose of 
underutilized real estate assets while avoiding selling 
property the government could need in the future, leading to 
long-term leasing because of haphazard disposal of 
underutilized real estate.
    For example, the Federal Government was wise to maintain 
the St. Elizabeths property in the District of Columbia. The 
government could not have foreseen the need to establish the 
Department of Homeland Security. However, there has never been 
enough space to consolidate agencies in the district, and St. 
Elizabeths was a 176-acre federally owned property in the 
Nation's Capital. Preserving the land on which the Department 
of Homeland Security agencies are now being consolidated from 
leased space will save the government billions upon billions of 
dollars in the future.
    Property that does not fit the long-term real estate needs 
of the local government should be sold. However, this 
subcommittee will want to be just as alert aboutredeveloping 
its property to earn revenue before the government, like the 
Old Post Office Building, whose request for proposals was just 
issued finally last week, and Hotel Monaco, developed from the 
old Tariff Building, which quickly began to provide a return 
annually to the Federal Government.
    The Old Post Office building is a prime example today of 
taking an underutilized property that was operating at a loss 
and converting it into revenue-producing property for Federal 
taxpayers. Ironically, Congress had to force this change by 
statute, over the objection of the Office of Management and 
Budget.
    For years, OMB has held on to GSA real estate because of 
the absence of staff real estate expertise at OMB. If OMB is to 
take on the responsibility envisioned in the administration's 
proposal, I will require that OMB finally bring on its staff 
expert staff with specific real estate and redevelopment and 
development experience, a complete hole at OMB that has been 
there through Democratic and Republican administrations, to the 
great loss of taxpayers, of which the Old Post Office is only 
the most prominent example.
    I support the concepts contained in the administration's 
proposal for a Civilian Property Realignment Board to meet the 
goal of rightsizing the Federal real estate portfolio and 
saving taxpayers billions of dollars. Now it is up to our 
subcommittee to quickly pass bipartisan legislation that puts 
this proposal to work. I look forward to the testimony of 
today's witnesses to help with this task.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you. I would like to welcome our 
witnesses here today. Our first panel will be the Honorable 
Daniel Werfel, Controller of the Office of Management and 
Budget; and the Honorable Martha Johnson, Administrator of the 
General Services Administration.
    Welcome.
    I ask unanimous consent that our witnesses' full statements 
be included in the record.
    Without objection, so ordered.
    Since your written testimony has been part of the record, 
the subcommittee will request that you limit your oral 
testimony to 5 minutes.
    Mr. Werfel, you may proceed.

TESTIMONY OF THE HONORABLE DANIEL I. WERFEL, CONTROLLER, OFFICE 
  OF MANAGEMENT AND BUDGET; AND THE HONORABLE MARTHA JOHNSON, 
      ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION

    Mr. Werfel. Thank you, Chairman Denham, Ranking Member 
Norton, Congressman Crawford, and other members of the 
subcommittee, for the invitation to discuss the President's 
Civilian Property Realignment Act proposal with you today.
    Each year, the Federal Government wastes taxpayer dollars 
on thousands of unneeded or underutilized government 
properties. We need to take immediate steps to take advantage 
of the many opportunities that have already been identified to 
date and simultaneously move forward on additional and more 
transformational possibilities.
    For this reason, the President advanced a bold new approach 
in the fiscal year 2012 budget to right-size the Federal real 
estate inventory. The President's proposal would create an 
independent board to achieve long-term and sustainable 
reductions in real estate-related operating costs and energy 
use, convert unneeded real estate into reductions in the 
Federal deficit, and adapt the government's real property to 
the 21st century.
    As part of the Accountable Government Initiative, President 
Obama has consistently made real property reform a priority. 
Last June, the President issued a memorandum entitled 
``Disposing of Unneeded Federal Real Estate'' and ordered 
agency leaders to take aggressive action to reduce their real 
estate footprints. Agencies have made good progress, 
identifying $1.7 billion toward meeting the $3 billion savings 
goal by the end of fiscal year 2012.
    However, our work with agencies on real estate has made it 
apparent that even larger savings opportunities lie within our 
grasp but cannot be implemented with the traditional tools 
available for managing our real property assets.
    There are three basic barriers that have prevented more 
significant transformations of Federal real estate and thus 
have prevented more significant savings: Red tape, financial 
disincentives, and politics. The President's proposal builds 
off the best practices of a proven approach, the Department of 
Defense's Base Realignment and Closure program, or BRAC, to 
address and overcome each such barrier.
    Specifically, for properties identified by the board as 
candidates for realignment, the board will push through red 
tape by eliminating the one-size-fits-all approach to the 
process that exists in the Federal inventory today; leverage 
proceeds and other savings as a way to incentivize agencies to 
initiate changes to their real estate that have a positive 
return on investment for the taxpayer, while still dedicating a 
substantial amount of savings for deficit reduction; and third, 
find resolutions to competing stakeholder interests that can 
stymie or progress.
    The last point merits further emphasis. Proposals by the 
Federal Government to vacate or sell real estate affect 
numerous stakeholder interests. These competing interests 
create a powerful disincentive against progress. Like BRAC, the 
envisioned board would overcome this challenge by bundling its 
recommendations as a package that succeed or fail together. 
Furthermore, like BRAC, Congress would have 45 days to consider 
the recommendations, with no ability to line-item veto a 
property in the package. Instead, Congress' sole option would 
be either to endorse or reject the whole package.
    The President's budget for 2012 includes the initial 
legislation for standing up this board and this process. 
Shortly, the administration will submit for congressional 
consideration a fuller, more detailed legislative proposal that 
builds on the language in the President's budget.
    The status quo in our real estate inventory is particularly 
unacceptable today when we have a pressing need to rein in our 
spending and reduce our deficits. By using the best practices 
from the BRAC model to address this issue, we can leverage our 
portfolio to improve services to the taxpayer, reduce the 
government's energy footprint, and reduce the deficit.
    It is time for a bold new step. I invite you to support the 
Civilian Property Realignment Act and help bring about a 
transformation of real property management in the government 
today.
    Thank you for inviting me to testify. I look forward to 
answering your questions.
    Mr. Crawford. [presiding.] Thank you, Mr. Werfel.
    Administrator Johnson, you may proceed.
    Ms. Johnson. Thank you. Good morning, Chairman Denham, 
Ranking Member Norton, Congressman Crawford, and members of the 
subcommittee. I am honored to join you today.
    In the President's fiscal year 2012 budget the 
administration announced an effort to accelerate the disposal 
and consolidation of the Federal Government's civilian 
properties. This initiative anticipates working with Congress 
to optimize asset utilization, increase disposals of unneeded 
assets, and streamline the disposal process to help the 
government realize billions of dollars in savings.
    I appreciate the opportunity today to discuss GSA asset 
management and our role in property disposition government 
wide. Through our experiences and expertise with the disposal 
process, we hope to assist in forming a successful civilian 
property initiative that helps the government meet our 
responsibilities to taxpayers to spend every dollar 
effectively.
    GSA has a large real estate portfolio. Yet the broader 
Federal Government portfolio is even more extensive. GSA 
manages the Federal Real Property Profile, which is the 
government's database of owned and leased assets. Of the total 
government 429,000 building assets, GSA controls approximately 
9,000. Less than 3 percent of GSA's portfolio has been 
classified as under or non-utilized.
    Since 2002, GSA has disposed of over 200 GSA properties, 
totalling more than 9.5 million square feet. These properties 
represent 5 percent of our own portfolio and eliminated $484 
million in anticipated repair needs. GSA works diligently to 
identify unneeded assets for disposal, yet it is important to 
note that not all properties labeled as underutilized are 
available for sale. In fact, most of GSA's underutilized 
properties are not candidates for disposition. More than half 
of these properties are either undergoing major modernizations 
or being backfilled with tenants from leased space or are being 
reassigned to agencies with new requirements.
    GSA works aggressively to renovate and renew assets to 
achieve greater utilization. Of the 14,000 assets categorized 
as excess in the FRPP, 138 are GSA excess assets, 114 of which 
are now in the disposal process. In the last 10 years, GSA has 
disposed of over 3,300 government-wide assets valued at $8.5 
billion; 260 of these assets were GSA-owned.
    The disposal process begins when a Federal agency 
determines that it no longer has a mission need for an asset 
and reports the property as excess. A property reported as 
excess, however, may not necessarily be slated for disposal, 
since some may be demolished or have costly or time-consuming 
cleanup requirements. If there is no valid need for the 
property within the Federal Government after 30-day period, it 
is considered surplus and offered to other public organizations 
such as State, county, and city governments and not-for-profit 
organizations. These local entities can acquire the property 
through a negotiated sale at fair market value or through a 
public benefit conveyance for specific uses, including homeless 
assistance, historic monuments, educational purposes, and law 
enforcement needs.
    GSA conducts a public sale if there is no public benefit or 
negotiated sale. Dispositions must also comply with a variety 
of environmental and historic preservation requirements, which 
can require considerable time and funding.
    The disposal process is an iterative and deliberate process 
with a number of statutory requirements that seek to strike a 
balance between social and economic policy objectives. This 
process, I must note, can be time-consuming, as it involves 
many stakeholders, associated political interests, community 
expectations, environmental factors, and regulatory reviews. 
These variables often manifest themselves in competing 
interests, creating inefficiencies and driving increased time 
and cost.
    The administration is interested in legislation that will 
increase the number of assets available for disposal and 
expedite the disposal process. The President's proposed 
Civilian Property Realignment Act will help Federal agencies 
accomplish this goal while the improving the efficiency and 
effectiveness of Federal disposals and saving taxpayer funds.
    I appreciate the leadership of both the chairman and the 
ranking member on this matter and your sincere interest in 
moving this issue forward. Thank you for the opportunity to be 
with you today. I welcome your questions.
    Mr. Denham. [presiding.] Thank you, Administrator Johnson.
    At this time, I would like to yield the first 5 minutes of 
questioning to Vice Chairman Crawford, as he has scheduling 
challenges this morning.
    Mr. Crawford. Thank you, Mr. Chairman.
    I thank you, Administrator Werfel, for being here.
    I have a quick question for you. I understand the 
administration believes there are $15 billion in potential 
savings. I am curious, how did you arrive at that number? Is 
that a realistic number? And what is the timeline on those 
savings?
    Mr. Werfel. Thank you, Congressman.
    The President set out a target last year in a memo in June 
for the government to eliminate $3 billion in real estate or 
essentially save $3 billion by taking critical steps. We 
started working with agencies toward those goals and looking 
for different opportunities to realign real estate.
    It is during that work with each agency that we recognized 
that there were bolder, broader and more aggressive savings 
opportunities that were potentially available but not 
achievable in today's current legal and regulatory and 
political environment. And so we started doing some more 
research into those opportunities to size them up.
    And what we saw were essentially two types of opportunities 
emerging. One was the potential sale of very high-value assets, 
a limited number of high-value assets that the United States 
Government owns across the country that, for a variety of 
different reasons, in particular and probably most pressing, 
the competing stakeholder interests that would be involved in 
surfacing these assets and moving forward to vacate them, that 
if sold, they would generate a very high return on investment. 
Obviously, we would have to take into account real estate 
market realities. But even in today's real estate market it, is 
our belief that some of these assets would generate a very high 
rate of return if pushed through to sale.
    The other opportunity that emerged, in addition to the 
limited number of high-value assets, are consolidations of 
numerous--actually, thousands of field offices around the 
country. We have agencies today that have offices, for example, 
in every county in America, which does not, we believe, reflect 
the way benefits and services are delivered in the post-
Internet or in the 21st century. And so to begin to consolidate 
some of these thousands of properties into a more rational 
approach, even though they are small in each individual case, 
once you start consolidating them more aggressively, you get an 
aggregate savings amount that we think would be substantial.
    So we looked at these two opportunities and started to map 
them out and figure out what we thought was achievable in the 
short term. And we believe that $15 billion in savings is 
achievable within the first 3 years that the board that we 
envision is up and running and be able to make recommendations 
to Congress.
    Mr. Crawford. Thank you.
    The BRAC process started with the Defense Department 
developing criteria and standards and applying them to its 
properties in order to develop recommendations for the 
commission. In the case of a civilian BRAC, who would you 
recommend develop the criteria and standards that would be 
applied to Federal properties across the government?
    Mr. Werfel. I think there can be some broad criteria. One 
of the things mentioned in GAO's testimony is their suggestion 
that as we approach a civilian BRAC, we think about some of the 
criteria. We have taken that point to heart and are looking at 
that as we get ready to submit our more detailed legislative 
proposal on this. The proposal that is in the budget is more of 
a summary version. And we are working on a detailed version.
    Some of those proposals I think are at a very high level. 
Obviously, the importance around making sure that we are 
maximizing the return for the taxpayer in terms of deficit 
reduction; that we are thinking about the impact on the local 
community; that we are thinking about ensuring that as our real 
estate real realigns, we are maximizing how that supports 
agency mission. There are environmental considerations. So I 
think that there are some general frameworks that we can work 
through.
    I think that the board itself, its mission and what it is 
going to be charged with, is to apply and balance those various 
factors as they look at these different realignment 
opportunities. So I think our vision would be to set out 
working together between the President and Congress a high-
level set of parameters that push for the interests that I just 
described, in particular always looking out for the taxpayer 
before anything else. And then the board would apply those on a 
case by case basis and figure out what the optimal outcome is 
in each real estate opportunity.
    Mr. Crawford. Thank you, sir.
    I yield back.
    Mr. Denham. Thank you, Mr. Crawford.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman.
    Before I get to the property questions, I would like to ask 
Administrator Johnson about the current effect or the effect on 
GSA if H.R. 1 were passed. The reason I ask that question is 
that for the entire period of my service in the Congress, GSA 
has had huge understaffing problems, loss of expertise because 
expertise is very valuable in the private sector. What would 
the effect of H.R. 1 be on the GSA appropriation?
    Ms. Johnson. Thank you for the question.
    I can summarize sort of estimates about it. First of all, 
it would basically demolish our capital program this year, so 
we would not be able to pursue the projects that are underway, 
and significantly that would include work on the St. Elizabeths 
headquarters for DHS, and some other projects; putting in 
jeopardy the Coast Guard's ability to move into--finish and 
move into their new headquarters.
    We estimate there would be approximately 16,000 jobs that 
would be lost as a result of this. It all depends upon the 
length of the way it calculates out, but there could be a point 
at which we would also be unable to meet some of the 
obligations in our leases.
    The other piece that particularly concerns me is around our 
open government and our electronic government work, so that we 
wouldn't be able to share the huge amount of data that we are 
currently putting up in the same way because we would not have 
funding to continue much of that.
    Ms. Norton. May I ask you, Administrator Johnson, this 
committee has always pressed GSA to get as many agencies out of 
leased space into owned space. How will the Civilian Property 
Realignment Board--or will it assist the agency in meeting this 
mandate? Has it thus far in the properties you have sold? You 
say that 9.5 million square feet of property has been sold. Has 
it helped at all with this budget-saving issue?
    Ms. Johnson. Frankly, the GSA would be quite delighted if 
our balance of leasing were less. We would welcome the 
rebalancing of our portfolio much more towards owned space, 
simply because that returns revenue into the building fund and 
allows us into the future to be able to fund the portfolio and 
the maintenance and repair and new construction. So the formula 
is such that I can say that I would be delighted if we can 
figure out more ways of moving out of leases and into owned.
    Ms. Norton. You are not into at the moment realigning or 
using space for the purpose of getting people in owned space, 
but you are disposing of property at the moment.
    Ms. Johnson. When we are disposing of property, I think we 
are rightsizing our owned inventory. I don't think that the 
properties that move into disposal are ones that--first of all, 
we assess whether or not there are opportunities across the 
Federal community to use that space. So there is a first 
tranche of work.
    Ms. Norton. So you don't think those properties are useful 
to the Federal Government at all.
    Ms. Johnson. If they are moving through disposal, that is 
already a question that has been answered.
    Ms. Norton. The properties that will be in this process 
will be such properties.
    Ms. Johnson. I would assume so. They fit the criteria and 
that there would be no use for them across the government. Yes.
    Ms. Norton. Let me ask you both; this is a very soft 
market. Suppose the BRAC Commission says, here, Congress, here 
is some property, dispose of them and you will get X amount of 
dollars. Anybody with any real estate expertise will say you 
will get twice that amount if you just wait a little while for 
the market to come back.
    Will this commission be required to dispose of properties 
in a soft market, rendering less benefit to market concerns?
    Mr. Werfel. Congressman, I certainly know the board would 
not be required to sell off any set of assets.
    Ms. Norton. They would do the selling, right? It is they 
who would do the selling?
    Mr. Werfel. Well, here is how we envision it working: First 
of all, there would be an independent entity that would develop 
its own set of recommendations. We wouldn't say to the board, 
you must sell a certain number of assets. The board, I think--
and I think the strength of this proposal and its success 
hinges tremendously on the quality and the talent of people 
that we can place on the board and staff them with--will have 
to make strategic judgments about the best decisions on behalf 
of the taxpayer. And in some cases, I think they will find 
situations in which assets are ready to be sold, are no longer 
needed, and will have a comfort level that even in today's real 
estate market the return price that they are getting is a fair 
one and it is in the best interest of them to move forward.
    In some cases, I think you are right. They will make a 
judgement, a strategic judgment based on their real estate 
expertise that it might not be the right time, given the market 
realities of a certain location, for them to sell.
    Ms. Norton. We probably don't want to sell properties at a 
loss. Or say somebody who didn't know what they were doing 
reaped less for the Federal Government than if they had waited 
a year.
    Mr. Werfel. Absolutely. That is going to be incumbent upon 
the board to make those smart recommendations in terms of where 
and what sequence to approach these realignment opportunities. 
But to answer your question in terms of whether the board does 
the selling, once the board recommendations are through 
Congress, it would return back to GSA and the Federal agencies 
to implement those recommendations. So if there is a building 
within GSA's inventory that the board and through the 
congressional process is now authorized for direct sale to 
market, GSA would take on the responsibility to sell that 
asset.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Denham. Before I start my questions, Mr. Werfel, I just 
wanted to follow up on Mr. Crawford's question on the $15 
billion, is that new revenue, scored new revenue, or does that 
also include lease termination and other consolidation?
    Mr. Werfel. It combines not just proceeds but also 
operating cost savings as well. So if we were to eliminate a 
footprint of buildings and the associated operating costs, we 
would include that in the $15 billion.
    Mr. Denham. I know this is still--we are still dealing with 
rough estimates at this point, but how much of that is broken 
down just into liquidation of properties that are no longer 
needed?
    Mr. Werfel. Very roughly, I would say somewhere between $9 
billion and $12 billion is the proceeds and the remainder are 
other efficiencies.
    Mr. Denham. Thank you.
    Included in the President's budget, there is a sketch of 
the administration's proposal. When do you expect to actually 
have the overall comprehensive language complete?
    Mr. Werfel. I think by the end of this month, and we will 
be able to submit it.
    Mr. Denham. The private sector has been far ahead of the 
Federal Government in the efficient use of space and creating 
value out of failed assets. Do you believe there should be 
experts in private real estate development on a BRAC-like 
commission, and what type of composition do you see making up 
the entire commission?
    Mr. Werfel. I think there are absolutely--I think there are 
probably three primary skill sets that we want to make sure are 
represented on the board. Commercial real estate would be one 
of them. Government management, so that we can understand how 
the changing--so we can have expertise that understands how the 
changing real estatefootprint intersects and impacts government 
mission. And the third I think is community development, so 
that we have expertise and understanding that when the Federal 
Government does leave a space or change its presence in a given 
locality, what the right approach is to make sure that the 
impact on the community is a positive one.
    Mr. Denham. Thank you.
    It is critical to establish key principles. So we have 
chatted about that briefly. But the five areas that I outlined 
in my opening testimony, I would just like to highlight each 
principle that I think is key and see if you agree with each of 
these being as part of the process. Consolidating the footprint 
of Federal real estate. Do you think that is one of the key 
principles?
    Mr. Werfel. Absolutely.
    Mr. Denham. House more Federal employees in less overall 
space.
    Mr. Werfel. Yes.
    Mr. Denham. Reduce our reliance on costly lease space.
    Mr. Werfel. Agree.
    Mr. Denham. Sell or develop or redevelop high-value assets 
that are underutilized or too valuable for housing Federal 
employees.
    Mr. Werfel. Agreed.
    Mr. Denham. And dispose of surplus property much quicker 
than we have done in the past.
    Mr. Werfel. Agreed. Those are very good principles.
    Mr. Denham. Do you have others that you would include in 
this?
    Mr. Werfel. I think an important one--I think you hit most 
of them. I think we really are looking at energy efficiency. I 
think that is embedded in what you are saying. But I think it 
might be worth emphasizing that in particular, the real estate 
transformations that we are looking to achieve have multiple 
benefits, not only housing more people in one location, but a 
benefit of that as implied is energy efficiency, which results 
in both positive environmentaloutcomes and operating cost 
outcomes.
    I don't know, Martha, if you have anything.
    Ms. Johnson. I think that is a very important aspect of 
this, and a growing one and one that has a high value to it.
    Mr. Denham. And in energy efficiency, you are including the 
tenant improvements that would need to be made to any of our 
buildings and use that as part of our criteria of long-term 
planning. It is either going to be so expensive to renovate a 
50- or 100-year-old piece of property or better to sell off.
    Mr. Werfel. That is correct.
    Mr. Denham. I would just add one more, which I include 
embedded into those five principles as well, is a justification 
process; really, understanding what we are doing for the 
taxpayers, justifying each building based on similar principles 
that we have in the real estate market.
    Ms. Johnson. Yes. I would include transparency in that so 
everyone can understand this as much as possible.
    Mr. Denham. Thank you. Oftentimes, we make things way too 
difficult. Thank you.
    Right now, we have space utilization all over the map. 
Space for employees can vary from 200 square feet per person to 
over a thousand, without any consideration of actual need or 
mission. How do we get more people in less space, standardized 
space utilization, and promote things like hoteling?
    Ms. Johnson. One of my favorite subjects. Frankly, it is a 
many-pronged approach. I think we are at a time when work is 
changing, and how we deliver on our missions is changing 
tremendously and it is about capturing that cross hatch.
    There is no question that the old rules about how much 
space you needed to do your job are changing as people pick up 
and move a great deal, need to be face-to-face with their 
customers, or their grantees or whatever, and not necessarily 
be sitting in a cubicle or, in the old industrial model, on an 
assembly line.
    So we are in a whole different world of work. I think that 
there are a number of things, and GSA is eager and delighted to 
be playing a strong role, and we need to promote hoteling, 
telework, virtual work notions, and the performance management 
that is associated with this. These are culture changes as much 
as they are technology and policy changes; how to shift the 
workforce so that it is comfortable with moving around and not 
always reporting to duty in the same old way.
    I think a large effort around consolidating and dealing 
with excess property and so on sends another signal into the 
system that we want to move away from traditionally thinking 
about work places as just space. Space is not the only thing we 
need to secure for people. We need to secure them technology 
and other types of work environments.
    So hoteling specifically, we have terrific software. We are 
practicing with it in our own building. It is the kind of thing 
you come in and you sign up for a cubicle or space for as much 
time as you need and that then is reserved for you.
    We are also doing some things like using our smart cards to 
be sure we know who has come in and out of the building, so we 
know actually how many people are trafficking in a building. 
You might have a private office that is X number of square 
feet, but if you are never there, it is not being utilized; it 
is just showing your status and rank. So we are trying to 
gather that kind of data so we really understand the work 
patterns in agencies. These are dramatically changing. We have 
seen in the private sector just in the last 10 years really 
shift, and I think we are beginning to catch that wind, too.
    Mr. Denham. Is there a specific modeling that you are going 
after. Secondly, a brief response, since we are short on time 
here; how do we incorporate these into the commission's 
decisions or into the commission'sdecisionmaking process?
    Ms. Johnson. I think it is appropriate to challenge 
agencies around virtual work, around building the technology to 
support it and to encourage the changing of personnel policies 
that seem to be sometimes tightening the sense of what the work 
space is.
    Mr. Denham. Thank you.
    At this time, we will start our second round of 
questioning. I will start with Ranking Member Norton.
    Ms. Norton. Thank you, Chairman Denham.
    I mentioned in my opening statement how concerned I was at 
the way in which OMB regards real estate and lack of expertise, 
frankly, in the agency on real estate and development, shown 
time and again to this subcommittee and our full committee. The 
reason, of course, is that OMB views real estate more as a 
liability than an asset with value that can be extracted to the 
benefit of the Federal Government.
    The most poignant--outrageous even--example is the way 
scoring is done. Scoring is done for real estate in the very 
same way it is done for commodities. It makes the private 
sector wonder if the Federal Government knows what it is doing. 
And it puts GSA at a severe disadvantage.
    I have a hard time understanding--and you both have got to 
make me, if you can, understand how OMB, as presently 
configured, with its present staff, could evaluate the 
recommendations of an agency, the civilian board, composed of 
real experts, all of whom have some kind of--will have some 
kind, as you have testified, of important experience related to 
its mission, how could the present OMB be the evaluator, given 
its track record? I don't even want to cite the one I cited in 
my testimony where, instead of looking at the cost benefit the 
way--you don't even have to be in the real estate business to 
do. First, OMB insisted upon keeping the Old Post Office 
because there were a handful of Federal agencies located there 
that could easily be tucked into any number of buildings. Then, 
when it ran out of that excuse, it wanted to sell a historic 
property, against Federal law. Then it just sat on it and 
ignored the mandate of this committee. That is the extent of 
its expertise. It was wasting Federal Government money. We were 
pumping about $6 million into this building just to keep it 
alive and breathing.
    Now you come before us--or maybe you don't; OMB will 
perhaps in the next panel--and say, make us the experts 
evaluating what the civilian board of experts recommended. I 
would like you to justify that proposal, if you can.
    Mr. Werfel. Well, Congresswoman, just to clarify that, I am 
representing the Office of Management and Budget today at this 
hearing. So we are here on the first panel.
    Ms. Norton. Well, by all means, speak up.
    Mr. Werfel. I will. I certainly will. There is a lot in 
your question. Let me start with the question about OMB 
expertise. I think it is important--and let me point out that I 
am a 14-year veteran at OMB, so I have been through a lot.
    Ms. Norton. I certainly hope you are not the one that held 
up the Old Post Office. If so, hold up your hand, so I can 
identify you for the public.
    Mr. Werfel. I did not have any personal involvement in the 
Old Post Office. I would point out that I am not sure that I 
would agree on the record until I could go back and confirm 
with my staff.
    Ms. Norton. Well, I am sure that on a bipartisan--you go 
back on the record and tell the record this, that the 
chairman--the full chairman of this committee at his first 
hearing compelled all of us--it was actually Chairman Denham's 
hearing. But the Old Post Office was of such concern to the 
full chairman that he took all of us to the annex, freezing 
annex, of the Old Post Office building for a hearing, where on 
the record--and I am amazed you don't know about it if you come 
here to testify today. On the record. You have to go back and 
check that up. On the record, the agency, GSA had to come 
before us--they who had nothing to do with holding up the Old 
Post Office--and testify. This I must tell you was a total 
insult to Congress.
    You know why, Mr. Werfel? Because Congress passed a bill 3 
years ago and told them to do it. And you have got to go back 
and check? You ought to go back and check before you come 
before this committee. Take our word for it.
    The chairman was there, and I was there. Those are the 
facts. If those are the facts, that you held up the Old Post 
Office 3 years after we passed the bill, that you score real 
estate in the very same way that you score pencils, why should 
we give OMB the authority to supervise or evaluate what a board 
of experts recommends with respect to real estate owned by the 
Federal Government?
    Mr. Werfel. Congresswoman, if you allow me the opportunity, 
I think I can address each of your points.
    First, I would like to start with OMB's expertise, since 
you raised the issue. I think it is a mistake to assume that 
OMB analyzes issues in a vacuum, with just OMB staff involved. 
The benefit of OMB--and it's our position in government--is we 
partner very closely----
    Ms. Norton. Will you use GSA's expertise? GSA is your real 
estate expert. Does your proposal contemplate using GSA's real 
estate expert, the only expertise in the Federal Government, to 
advise when you are doing the evaluation?
    Mr. Werfel. Absolutely. We have a partnership with GSA that 
is ongoing and that has been involved in certain--in real 
estate policy for decades.
    Ms. Norton. Do you think that it would be advisable for 
staff to be brought on in addition to assist in this way? The 
reason I have to ask that is because you ignored GSA entirely 
when they put the dollars and cents before you about the Old 
Post Office. Frankly, Mr. Werfel, it was a complete outrage 
because there was a complete and total precedent, the Tariff 
Building, which in literally just a few years began to turn a 
profit for the government.
    We had GSA before us time and time again and their answer 
was, well, it is at the OMB; it is at the OMB. Ultimately, we 
are sure you are the culprits because a statute had to be 
passed. And we have heard back some of the OMB's rationale for 
not moving ahead to make the highest and best use of real 
estate; for example, that you had agencies with less than 50 
employees there and therefore you couldn't rehabilitate the Old 
Post Office in order to reap a benefit for the taxpayers.
    I know I am over my time, Mr. Chairman.
    Mr. Denham. I think the time has expired.
    I would ask for a response. I would just remind this 
committee that we plan on being very involved in establishing 
the criteria with the administration in making sure that we see 
eye-to-eye as we move forward on this.
    But the whole reason of setting a new commission up is to 
make sure that the travesty that has happened here over years 
of--over decades of a property sitting vacant and having to 
spend over $6 million a year in costs annually and the fact 
that it took a bill coming out of Congress to get GSA to move, 
we want to take these types of challenges out of the process 
and go to a commission.
    If you could do a quick response.
    Mr. Werfel. I appreciate the opportunity to respond. And 
there are just a couple of points I want to make sure that are 
stated on the record. First of all, it is my firm belief that 
the decisionmaking process and the analytics that are done at 
OMB on a daily basis have extreme integrity. And the notion 
that we would ignore directions from Congress or do anything 
that wasn't in the best interest of the taxpayer is completely 
inconsistent with every experience I have had at the Office of 
Management and Budget.
    From an external view, I am sure there can be frustrations. 
And I understand those frustrations. And you voicing those 
frustrations is an important part of us improving our work on 
behalf of the President and on behalf of citizens.
    But I want to make sure that I state clearly that any 
analysis that has gone on in OMB on any issue, in particular 
real estate or other management issues, is done with a 
tremendous dedication to public service and the right public 
policy outcomes.
    Regarding how we would conduct ourselves with respect to 
the Civilian Property Realignment Board, I think one of the key 
points that I want to reemphasize is that we would closely 
partner with a broad base of expertise we have in the 
government today, that being GSA; it also being dedicated 
professionals throughout the government, other agencies, 
whether they be the Defense Department, the State Department, 
the Department of Homeland Security, and I could go on, to 
evaluate the proposals that the board would set forward in the 
same way that Congress will evaluate them.
    The way the process works is the Director of OMB will 
review those proposals and, just like Congress, will have the 
ability to say yes or no to the entire slate and not line-item 
veto. We will leverage expertise from around government in the 
best way we know how to evaluate whether those proposals will 
go forward. So I just want to be clear that OMB alone will not 
be analyzing the activities of the board. It will be a 
partnership across the Federal Government.
    Mr. Denham. Thank you.
    I wanted to just ask some questions relating back to my 
time in the State Senate dealing with the same issue. The 
critics--most vocal critics of any commission, any BRAC 
commission, have always said, why are you going to have a fire 
sale in a bad real estate market? My goal has never been to 
have a fire sale; it is actually to get the greatest value for 
our properties. How do we ensure we do that?
    Mr. Werfel. I think you are right, Congressman. I think a 
fire sale is certainly something to be avoided. I think the 
tension here is that in the one regard where it is hard to 
speculate what the real estate market is going to look like. It 
may be that in certain situations 5 or 10 years from now, if we 
wait, we are going to get a worse price than if we sell today. 
That is always the possibility.
    Mr. Denham. You do have some properties that, regardless of 
whether we are at the highest market or lowest market, are so 
unique or the location is such that it is always going to be in 
demand.
    Mr. Werfel. That is true. I believe that there are assets 
within the Federal inventory that can be sold in 2011, and it 
is the right decision for the taxpayer, setting aside potential 
speculation that the real estate market may change just because 
there are certain segments of the U.S. economy and the 
geography where the real estate market is still somewhat strong 
and there is still a possibility for positive return on 
investment and significant benefit. One of the key points here 
that the board is going to weigh is that the proceeds from the 
sales not only are important to cut the deficit, but they also 
will be used to position the government to avail ourselves of 
further opportunities. I mentioned earlier that one of the 
barriers to success here is the financial disincentives that 
exist.
    It sometimes costs a little bit of money to open up the 
door to a lot of savings. And that little bit of money, well, 
it is all depending on your perspective, but a modest amount of 
money has been often not within our reach or grasp.
    So we may see the board make a decision that says look, we 
might not be getting top dollar for this asset today but we 
need the proceeds in order to open up the door to a broader set 
and a different set of real estate opportunities that will take 
place over the next 3, 5, 7 years. Again, it is the board's 
determination to make these challenging decisions, and we 
believe that having a board like the BRAC Commission will put 
us in a much better position to move through these issues and 
start making real progress.
    Mr. Denham. Now one of the biggest challenges that I have 
always seen faced when we look at all of our properties or 
liquidation of properties or even a BRAC Commission is actually 
getting the right data, making sure every agency is complying 
with your requests so that there aren't properties that are out 
there hiding or agencies that are hoarding properties.
    How do you expect to make sure that we always have up-to-
date property lists, as well as evaluations from every 
department?
    Mr. Werfel. We have a process that exists today. In fact, I 
was happy to see that GAO commented favorably on the progress 
we have made in their testimony regarding the Federal 
inventory. And we started at a place prior to 2003 where our 
inventory was spotty and incomplete, and now we have a detailed 
tracking of just about every constructed or separate asset that 
the Federal Government owns or leases, and GAO is now--and they 
will testify in the next panel, but in their testimony they 
indicate that they have seen a dramatic--an improvement in the 
reliability of that information such that they now feel they 
can rely on that inventory.
    But more work is needed, and we are looking to refine that 
inventory each and every day. You mentioned utilization before. 
You know, right now our utilization is captured on a very 
binary, is it under utilized or is it fully utilized. And we 
are moving more towards a specific quantifiable metric of how 
much it is utilized and that is going to help us and help the 
board make smarter decisions going forward.
    Mr. Denham. And you have possession of that list today?
    Mr. Werfel. The list is maintained by GSA, yes.
    Mr. Denham. We have asked for that informally several 
times. We would like to make a formal request today as a 
committee that we receive that list. It is my understanding 
this list or a similar list was given to the Senate--2 months 
ago? Quite awhile ago, and this committee continues to wait. So 
we would make that formal request to you today.
    Mr. Werfel. Absolutely. And any real estate information 
from the inventory that has been provided to your colleagues in 
the Senate we absolutely commit we will provide to you in short 
order.
    Mr. Denham. Thank you. And it should be more up to date 
according to your testimony, that we should be able to get the 
new and improved list, whatever that may be?
    Mr. Werfel. That is correct. The asset information that we 
provided to the Senate--and just to clarify, they asked for 
information regarding our excess asset list and we can 
certainly provide that. I think at the time we provided it, it 
was 2009 data. We should be able to provide you the 2010 data.
    Mr. Denham. We are not just looking for excess or surplus, 
we would like to see an inclusive list, the same list that we 
are going to be asking our new commission to look at and 
evaluate, we would like to evaluate that as well.
    Mr. Werfel. And Congressman, on that let me just comment 
that that list has not been provided to the Senate. And the 
reason is, is because there are security issues associated with 
the entire footprint of the Federal assets inventory. Right now 
that information is maintained in a system by GSA that has a 
lot of controls and IT security surrounding it. And the reason 
is, is because our colleagues at the Defense Department and the 
Department of Homeland Security have identified certain 
security risks associated with the public disclosure of the 
entire Federal real estate footprint.
    Mr. Denham. DOD properties or other properties?
    Mr. Werfel. All properties, including energy properties 
that might involve nuclear activities or other things like 
that. So you have got some sensitivity in some portions of our 
inventory. That is not to say that we don't want to work with 
you to make sure that you have the information you need to do 
your job as chair of the subcommittee, it is just an important 
element that we need to work through with you.
    Mr. Denham. I would assume you would be able to segregate 
that list from top secret properties versus properties that 
were open for public review?
    Mr. Werfel. It is something we certainly need to work with 
you on.
    Mr. Denham. And then I would also assume that this 
committee with our top secret clearance would be able to 
evaluate at least in an informal process all the properties as 
well.
    Mr. Werfel. I think that is something we can work towards a 
logistical solution on. I will say that the number of 
properties provided to the Senate so far number 80,000. So we 
will get you that list. It will be a good starting point, but 
certainly we understand your concerns and we want to work with 
you towards a solution.
    Mr. Denham. Thank you.
    Ms. Norton. We are aware of course that when we say 
properties everybody may see dollars and cents dancing in their 
heads. But GSA owns warehouses, it owns of course commercial 
space, it owns laboratories. Of the properties that you have 
sold, would you give us some sense of what kinds of properties 
these are? Are these commercial office space properties that 
somebody is going to perhaps use for that purpose? Are these 
warehouses? When you say ``properties'' that word can hide a 
lot when it comes to funds. Were you able to get the amount of 
money you wanted? Any amount looks good to us, but did you 
evaluate how much you thought the property should bring against 
how much it brought? Those are the kinds of questions I have.
    Ms. Johnson. Certainly by the time we get to the point of 
entering a negotiated public sale we are very clear on what the 
value of that asset is and what would be a reasonable 
negotiation to get to. And there is a whole range of property, 
it is office buildings, warehouses, it is also tracts of land. 
And there is an individual and a localized market for many of 
these things, although, yes, government property at times is 
unique and has some special aspects to it that are also part of 
the valuation. So I can give you a more detailed list of the 
breakdown of what we have disposed of in the last X number of 
years.
    Ms. Norton. That would be very, very helpful. You know, how 
much of this is land, the places where it is located. I 
mentioned St. Elizabeths. You know, there might have been 
people who got up and said why don't we just get rid of that? 
It certainly was a blight on the District of Columbia. That 
would have been the most foolish decision we ever made.
    Ms. Johnson. Right.
    Ms. Norton. As you say, it covers so many different kinds 
of properties that I am afraid Congress just sees examples of 
the office buildings up here and thinks of how good they look 
and just see dollars and cents just flowing in to bring down 
the deficit. I think we ought to get a realistic sense of what 
these properties are and whether you got full dollar for the 
properties based on your own negotiation.
    Ms. Johnson. Certainly, and it goes to my point about 
transparency. I think the more people can see what kind of 
portfolio we have they can really appreciate what we are 
talking about in real terms, whether it is proceeds or whether 
it is operating expenses.
    Ms. Norton. Understanding the locations would be 
interesting as well. Properties in land scarce places like big 
cities might be very different from properties located in a 
rural area that was once very much more populated than it is 
today, for example?
    Ms. Johnson. Yes. You are always threading that needle 
whether or not it is a fire sale and whether or not in that 
local real estate market there is going to be a tipping that 
you will do in that market because of size or the impact.
    Ms. Norton. What would you do in that case?
    Ms. Johnson. Well, I think we have to evaluate each of 
those and be very, very careful to include the community, 
include all the public interest groups that are registering 
questions and concerns, and that is part of where this process 
can get.
    Ms. Norton. So if the Federal Government were to sell a 
piece of property in an area it could affect real estate values 
throughout the area?
    Ms. Johnson. I think often--I think the number is we have 
over 1 million square feet in over 40 cities. So you think 
about the impact and the size of our footprint, yes, we do need 
to be very sensitive to that. And it is about communicating, it 
is about transparencies, holding the open town meetings or 
whatever so people know what is going on and get their 
questions answered.
    Ms. Norton. A final question on the Old Post Office. Ms. 
Johnson, when the GSA released its request for expression of 
interest 3 years ago, this was after the statute had passed, 
then all work stopped. So the people had spent a lot of money 
offering expressions of interest, and GSA simply was silent and 
didn't move.
    In light of that experience, very disappointing experience, 
I am going to have to ask you what assurances you can give this 
committee that once the solicitation period for the RFP on the 
Old Post Office is complete that GSA will be allowed to proceed 
in the development of the Old Post Office and how long you 
think that will take.
    I am also asking Mr. Werfel whether OMB is now out of it 
and hands off of the process that has proceeded at GSA. So 
first I want to ask Ms. Johnson.
    Ms. Johnson. The RFP was issued in the middle of March and 
we are expecting responses, the deadline is in July. So we are 
looking at a couple months where people are putting together 
their proposals. And we will--I am quite committed. I have been 
hearing about the Old Post Office for a long time. I would be 
delighted if we could move forward on this, and I will 
certainly be encouraging our people to be expeditious in 
assessing what those proposals are and working with the various 
partners to keep on moving.
    Ms. Norton. Mr. Werfel, does OMB have anything to say now 
that a process, a statutory process, is under way? Again people 
are being required to spend private capital in order to 
compete. Does OMB have anything further to say about this 
competitive process under way at the GSA?
    Mr. Werfel. Well, I am certainly pleased it has started and 
the fact the RFP started has issued I think is an important 
obvious milestone that we are moving ahead. I think OMB's role 
going forward just to work and partner with GSA to make sure 
that the process unfolds in a way that the best interest of the 
taxpayer is met and whatever outcome happens for the property. 
Those are the types of things that we will work with----
    Ms. Norton. What role would you have, Mr. Werfel? These 
people have to decide under statutory process that even--that 
is kept virtually under lock and key who wins the proposal 
based on competitive criteria. As I have indicated to you and 
you have not been able to demonstrate otherwise, this is not 
OMB's strong suit. So I want to know the exact nature of your 
partnering on an issue where you have not been a very good 
guardian of the taxpayers' money in partnering on properties 
like the Old Post Office.
    Mr. Werfel. We have certainly hit a point in the process 
right now where you are in a competitive procurement and it is 
important at that point to OMB to distance ourselves from the 
specific agency decisionmaking process. But again, I think that 
as a global matter to the extent GSA requests any advice or 
consultation with OMB on the process going forward within 
bounds and making sure we are not involved in a particular 
procurement, we would assist. You know, the specifics of our 
partnership are we each bring different expertise to the table 
and together we hopefully come out with the right public policy 
outcome in each case.
    Ms. Norton. This is the table where the statute does not 
contemplate your attendance. If this committee were to find out 
that you were interfering with statutory competitive processes, 
OMB is who would be in trouble. And I warn you because OMB has 
had a record, has been disgraceful.
    Mr. Chairman, I want to say it has been so disgraceful that 
I will not support any legislation without certain kinds of 
guarantees in it. First of all, Mr. Werfel, I do not, in 
response to your response to me, question the good faith of 
OMB. I don't question your hard work. I question OMB's good 
judgment and I question OMB's expertise in real estate. And 
there is nobody who has served on this committee for any period 
of time who would not have many examples that document that.
    In light of that, I will not support any legislation that 
does not require OMB to have expert staff in real estate, not 
only, Mr. Chairman, because of the new civilian board that is 
contemplated, but because this committee I have seen for 20 
years hindered in carrying out the taxpayers' work because of 
the OMB, who is supposed to be the guardian of the taxpayer. So 
if all the administration is asking me to do is to give to OMB, 
the ranking member will not support that legislation without 
some part of a legislation that requires OMB to bring on board 
staff with expert and development expertise, not only because 
of its intervention in--required intervention in the civilian 
board, but because of the way OMB has handled real estate 
throughout my 20 years of service on this committee.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you. And we share a bipartisan view of 
that and we will make sure there is a guarantee in this bill as 
it moves forward. We certainly want your support on that.
    I do have a few questions regarding the financing of this. 
In your testimony you talk about the net proceeds and how it 
will offset the up front costs. In the 2012 budget I think it 
scored at $8 billion to set the Commission itself up. Can you 
explain in greater detail how that offset would be funded 
directly back to having an overall fund--the administration's 
proposal on the impact of GSA's fund?
    Mr. Werfel. Absolutely, Congressman. I believe the total 
appropriation that we are seeking to get the board up and 
running is $87 million. A great significant portion of that is 
to fund certain capital investment----
    Mr. Denham. 87 or 8.7?
    Mr. Werfel. 87, $87 million. Let me explain that a great 
majority of that again is to finance relocation costs or other 
types of real estate transformations that are needed in the 
short term to trigger that first set of savings opportunities, 
because once you trigger that first set of savings 
opportunities, the fund becomes self-financing going forward 
and that is at least our vision.
    So let's say you were to in the first set of 
recommendations expend 40 million of the dollars in order to 
pay for the associated costs of doing the first set of 
recommendations. Let's say those first set of recommendations 
yield back $3 billion in proceeds. So you have just spent $40 
million to establish a revenue back to the Federal Government 
of billions of dollars. Sixty percent of those go right to 
deficit reduction, 40 percent come back to the board for the 
fund. And now they are moving forward with a fund that is going 
to enable them to do even more broader transformations that 
enable an even larger footprint of savings, and that is the 
vision. So we hope this is a one-time appropriation.
    Mr. Denham. Is there a cap on that fund?
    Mr. Werfel. I am not aware there is a cap on the fund.
    Mr. Denham. But obviously at 40 percent you could see----
    Mr. Werfel. Yes. At 40 percent it is a minimum of 60 
percent back to deficit reduction. The board at their 
discretion could change that. And then Congress moving forward 
of course, as we have experienced with this, could change the 
percentage as well.
    Mr. Denham. And the DOD used an accounting system called 
COBRA to evaluate the cost and savings to assist in developing 
its recommendations to the BRAC Commission. Do you believe 
COBRA is the best system or do you have another system that you 
would be recommending for the accounting aspect of this?
    Mr. Werfel. I think we would look at COBRA as a starting 
point. But we might need to make adjustments to the system 
given the civilian footprint has just different parameters 
associated with it. So we would start there, but we would look 
potentially at modifications.
    Mr. Denham. And on the lease side of things obviously there 
are a number of glaring examples of leases that are at least 
questionable, others that are just an outright waste. One of 
them I would like to highlight is last year the Securities and 
Exchange Council signed a 10-year lease for 900,000 square feet 
of prime office space here in DC that it did not need. 
Unfortunately, our committee has seen similar types of bad 
decisions by other agencies that have managed to get 
independent leasing authority apart from GSA. We could get a 
bill passed and go through this process only to see those 
efforts undermined by future agency decisions.
    How would the administration's proposal affect future 
decisions in Federal agencies and making sure there is not an 
agency out there doing some type of rogue lease that puts 
taxpayers accountable for hundreds of thousands or millions of 
dollars?
    Mr. Werfel. I think you have got to fight the war on two 
fronts. I think first of all working with GSA we need to make 
sure that we are putting up the appropriate roadblocks to 
agencies entering into costly and noneconomically smart leases. 
I also think that the board activities would----
    Mr. Denham. Are you saying redefine GSA's authority so that 
all leasing authority goes under GSA?
    Mr. Werfel. No.
    Mr. Denham. Because that is part of the challenge now is 
you have agencies out there doing their own thing----
    Mr. Werfel. I am not suggesting that as a particular 
proposal. What I am suggesting is that GSA can play--and Martha 
can speak to this--can play an important role. As agencies come 
to them for GSA to serve as their leasing agent, that GSA can 
push back and make sure that we are only moving forward on 
lease arrangements that make economical sense.
    Ms. Johnson. Can I just add, one of the things that I hope 
I can establish during my tenure at GSA is ever increasing 
respect for our capabilities and our expertise so that agencies 
turn to us because they know that we can provide the support 
and the expertise that they need. There is clearly a dispersed 
authority and we would like to be sure that we are playing as 
strong and as competent a role and sending the message that 
they don't need to do it themselves. The agencies really, 
although they could, I think they need to focus on their 
mission and let us take up some of that work. I don't want that 
mandated, but I would like it to be a result of our competence 
and visibility and our expertise.
    Mr. Denham. If it is not mandated, how do you make sure 
that this type of lease doesn't happen again in the future?
    Ms. Johnson. Well, I obviously can't make sure, but I have 
to say in the long run we went down that mandated road for a 
long time. I think GSA is better if we have to fight to show 
that we are good. And I believe that we should be out there 
demonstrating our competence and taking pride in our 
accomplishments. And I need to be out, we all need to be out 
sharing with the rest of the government what we can do for 
them.
    Mr. Denham. Obviously transparency is a very important 
issue, but accountability is just as important. I think this 
committee would be looking in the future to go to one person. 
If there is this type of lease outs there, and we are wasting 
billions of dollars of taxpayers' money, I want to go to one 
person to say how did this happen. And if you do not have the 
authority, and maybe GSA is not the property agency, but I 
would like to see one agency that is held accountable to all of 
these leases. Not creating another level of bureaucracy, just 
the accountability. Maybe it is final signoff, maybe its 
helping to harness our buying power. But if have you an agency 
that is able to go out and secure 900,000 square feet of prime 
office space here in DC on not a 1-year lease or 6-month, but 
on a 10-year lease without having--I would think a lease that 
big would warrant the President knowing or having some type of 
signoff on it. That is a big lease without having any 
justification behind it.
    Ms. Johnson. I understand that our Office of Governmentwide 
Policy has some capability to be a bit of--to be sure that the 
processes are being followed and manage a lot of the reporting. 
So perhaps that could be one way to consider how you get a 
single picture on things. I think it is very complex to think 
about--I believe it is complex to think about agencies--to 
think about it all coming in in a mandated way into GSA. I just 
believe that that would put us into that monopolistic role, and 
I don't think you ultimately get the kind of down the road 
respect and performance that you need to get by having the pull 
and push among the agencies to understand it is the best place 
to go.
    Mr. Denham. Thank you. I think we need a better 
understanding between us, and I look forward to working with 
you on that as we develop the criteria for this commission.
    Ms. Johnson. I would be delighted, thank you.
    Mr. Denham. Mr. Hanna, do you have any questions this 
morning?
    Mr. Hanna. What do you think the fundamental flaw is behind 
a decision process like that? How does it happen that we could 
rent 900,000 square feet for 10 years? What anecdotal ideas, 
information do you have?
    Ms. Johnson. I believe that there is a--that expertise is 
spread rather broadly and not concentrated as it needs to be. 
This goes to the whole acquisition workforce. We have a lot of 
contracting people all over the government, and it needs to be 
a much tighter community and better woven together. I think our 
expertise is dispersed, that we have expertise in GSA and it is 
one of the few concentrations of it and the kind of level that 
we have is I think is a real asset for the government. And I 
think that is something that if I were in management in another 
agency I would say why am I doing this? Why don't I turn to 
them? And I want to be sure that they know that they can.
    Mr. Hanna. Do you have any idea of how widespread something 
like this might be? 900,000 square feet is a glaring example 
but it isn't necessarily a theme. Have you seen it other places 
in your tenure?
    Ms. Johnson. I believe our governmentwide policy people 
could probably give me a little bit of perspective on that, and 
I would be happy to share it with you for the record.
    Mr. Hanna. I would appreciate that. Thank you.
    Ms. Johnson. Certainly.
    Mr. Hanna. I yield back.
    Mr. Denham. Thank you. Ms. Norton. This will be our final 
round of questions.
    Ms. Norton. The chairman has asked a very important 
question essentially when he brought up the SEC bill debacle. 
He was asking whether or not the Federal Government mandate 
that the GSA manage all lease space, whether that mandate, 
which is a matter of Federal law--I am asking staff to find me 
the words, particularly in light of your answer, Ms. Johnson. 
If you have to compete for what the statute says, I would like 
to know how many agencies like SEC have their own authority to 
lease space?
    Ms. Johnson. Not all that many. I understand it is a couple 
of the financial agencies and it is by law. I can get you the 
list.
    Ms. Norton. Yeah, I will tell you why it is by law, 
probably because somebody put it in appropriations, probably 
some Senator that they should go out and do. They probably were 
frankly working for some developer, and that is not in the 
taxpayers' interest.
    Let me say to you, Mr. Werfel, you would have thought that 
the OMB would have been on top of this one and if you want to 
intervene into business of agencies which are in the leasing 
business. I would want to know how in the world SEC over a 
weekend could have on a sole source basis leased almost 1 
million I think--900,000 square feet in the most expensive 
property in the District of Columbia? It is a property, by the 
way, that many of us see as the kind of property that would be 
useful for the increasing need of the Federal Government for 
secured properties. This is a brand new rehabilitated space 
where the developer rehabilitated it specifically because the 
developer saw that the Federal Government increasingly wants 
absolutely secure space for some agencies.
    Now the last time I looked, Mr. Werfel, Arcadia was much 
interested in SEC, but because they have independent authority 
they went out and leased almost 1 million square feet only 
because they have no expertise. And they did it on a sole 
source basis, which is in violation of Federal law. I don't 
know why if OMB wants to do something it isn't putting its 
considerable expertise, whatever it is, and I certainly would 
think it would fall into this category to see to it that 
agencies don't in fact engage in this manner.
    As I understand it, they have gone around the city and 
found 600,000--there are agencies that they believe will be 
able to use 600,000 feet. They don't know anything about this, 
and I want to know if Ms. Johnson is helping. And they still 
have on their hands at least 200,000 square feet.
    So I need to ask both of you what you know about the SEC 
lease, because the taxpayers of the United States of America 
are paying for this lease every moment that you do not find 
some real use for it or find somebody else to use it. What do 
you know about what is happening with this? I guess since you 
are out of it, Ms. Johnson, and would like to compete for it, I 
guess the answer goes to Mr. Werfel.
    Mr. Werfel. Well, I stated in response to your earlier 
question, and before I get to the full answer I just want to 
restate because I think it is important to specify that OMB 
does not get involved in particular procurement activity, it is 
very important that we stay independent from that and allow 
that process to move forward.
    Congresswoman, I share your frustration and one of the 
reasons why the President is proposing a major change to how we 
deal with real estate is because you will be able to find 
throughout government instances of inefficient and poor lease 
decisions that are made.
    Ms. Norton. Mr. Werfel, would you support and, Ms. Johnson, 
would you support the notion that in light of the consolidation 
going on and the President's mandate that one agency should be 
responsible for all leasing in the Federal Government?
    Mr. Werfel. I think I would consider that as an option to 
evaluate against other options to address the problem.
    Ms. Norton. What would be another option? The public 
building statute--GSA was set up in 1949, in 1959 Congress came 
to the conclusion that special expertise was necessary to 
manage the properties of the United States of America. That 
mandate included all civilian properties. As you indicate, the 
only exceptions have been because somebody slipped something 
into an appropriation. Now you are evaluating and realigning 
how you deal with real estate. In light of that mandate of the 
President of the United States, should we not go back to the 
mandate of the public building statute in the first place that 
says unmistakably that one agency shall manage leasing and 
development of Federal properties? Would you at least--can we 
at least get a bottom line agreement on that from you in light 
of the President's mandate for consolidation and realignment?
    Mr. Werfel. Again, I think that there are important policy 
implications to consider before we would----
    Ms. Norton. Name some. I am open.
    Mr. Werfel. I will, I will. If you will indulge me, let me 
just draw an analogy that there has been in debate, for 
example, in another part of government around debt collection, 
whether Treasury should collect all the debt on behalf of all 
the Federal agencies and the agencies shouldn't collect their 
own debt. We don't have that model. We have one in which 
agencies can collect their own debt. And in the nineties and 
the 2000s some agencies got to be better than Treasury at 
collecting debt. And Treasury raised its game as a result and 
now is better for it and may be now positioned to consolidate 
all the debt collection activity.
    Ms. Norton. No, no. Do you know anything about real estate, 
Mr. Werfel?
    Mr. Werfel. I believe I do.
    Mr. Denham. We are out of time here.
    Ms. Norton. Just let me indicate this, perhaps collecting 
money is something that agencies have proved they are adept at. 
I have cited to you the SEC case which is emblematic, it seems 
to me, of what happens when you give an agency that does not 
have specific expertise a very weighty taxpayer function.
    Ms. Johnson, would you at least be willing if this 
committee mandated it to manage all the real estate leasing and 
for that matter development of Federal properties?
    Ms. Johnson. I have no problem with assuming the authority 
for that. I would believe that there would be cases where our 
designating that authority into the hands of an agency would be 
a responsible move. I would take the example of the Forest 
Service where they have minor leases that they need to be 
negotiating all the time and they are right there on top of it. 
And if we deem them to have the appropriate staff, and so on, I 
would like not to preclude the possibility for some of those 
kinds of flexibilities. I just believe that having only one 
agent essentially handling all leasing is not necessarily the--
--
    Ms. Norton. I tell you what, Ms. Johnson, you are 
contradicting the statute itself.
    Mr. Chairman, I believe this is an opportunity, the 
President says he wants to consolidate and he wants to realign. 
We can't just say to the President, OK, we will do what you 
want to do. We have got to put into this bucket the committee's 
own experience. The committee's own experience has been, Ms. 
Johnson, that when an agency whose mandate is something 
unrelated to property management the taxpayers are at risk. 
They are given authority to do something they don't know how to 
do, that the taxpayers are at risk. And again, I am not going 
to support legislation that simply leaves OMB and GSA exactly 
where they were and expect a different result.
    I just want to lay that on the record. I have been thrilled 
to see this proposal come from the President. I can only hope 
that his agents are prepared to carry out the full intent of 
that proposal. If you are not, I think the only way to do it in 
light of the SEC debacle, Mr. Chairman, is to mandate it.
    Mr. Denham. Thank you. Out of the sake of time we would ask 
for written response on that. But this is certainly an area we 
plan to dive much deeper in, whether that is something that is 
included in this bill or within follow-up hearings through this 
committee, but the leasing authority we believe there are a 
number of things that can be done, whether putting a cap on it 
so that--you know, I think the current cap is just under $3 
million for the properties that we do or the agencies we do see 
come through this committee. There is no reason that we 
couldn't have a cap on all properties. What has happened with 
SEC is atrocious, and certainly the sole source contract, as 
Ms. Norton has brought up, but the fact it was done I believe 
over a weekend, it was certainly a very, very quick process. 
You don't ever see government move that quick, especially done 
on a weekend away from this committee.
    So specifically what I would like to see on the SEC portion 
of this is where the current investigation is right now. I want 
to know if anybody has been fired over this.
    And then lastly, what are we doing with the space now? Are 
we stuck in the contract? Are we going to utilize that for 
other areas? Are we getting rid of our leases in the process?
    But I would hope that we would be able to get that 
information without having to do a hearing on it as well. I 
know a number of committee members have an extensive amount of 
questions as it pertains to the SEC, but it certainly relates 
to the overall recommendations of what this committee will have 
on future legislation.
    Ms. Johnson, would you care to comment before I go to my 
final question?
    Ms. Johnson. No, I am fine.
    Mr. Denham. And just finally, we have appreciated your 
willingness to work with us on this, your testimony, but as 
mentioned, we are also looking at drafting legislation, both 
myself as well as the committee. We would like to work with you 
to ensure that the criteria we are combining together and 
working in a bipartisan fashion. Just want to reemphasize again 
are you willing to work with us on that legislation, Mr. 
Werfel?
    Mr. Werfel. Absolutely, yes.
    Mr. Denham. Thank you. We will look forward to hopefully 
getting that--we talked somewhat about a timeline. We would 
like to expedite that timeline and certainly reap the $15 
billion-plus in savings to help us out in this budget process. 
Thank you for your testimony today.
    Ms. Johnson. Thank you.
    Mr. Werfel. Thank you.
    Mr. Denham. We are going to stay strict to the 5-minute 
timeline as we are starting to get very late in the process. We 
certainly have a lot to talk about. We could talk all day on 
doing a better job with our properties and liquidation as well 
as leases. But at this time I would like to invite Mr. David 
Wise, Director of Physical Infrastructure Team, U.S. Government 
Accountability Office, who is here today, along with Mr. Brian 
Lepore, Director of Defense Capabilities and Management Issues 
at GAO, and the Honorable Anthony Principi, former Secretary, 
U.S. Department of Veterans Affairs and former Chairman of the 
2005 Defense Base Realignment and Closure Commission.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Since your testimony has been made part of the record the 
subcommittee would ask you to limit your testimony to 5 
minutes, your oral testimony.
    Mr. Wise.

 TESTIMONY OF DAVID J. WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE 
 ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY 
BRIAN J. LEPORE, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT 
  ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; AND THE HON. 
   ANTHONY J. PRINCIPI, FORMER SECRETARY, U.S. DEPARTMENT OF 
    VETERANS AFFAIRS AND FORMER CHAIRMAN, 2005 DEFENSE BASE 
               REALIGNMENT AND CLOSURE COMMISSION

    Mr. Wise. Chairman Denham, Ranking Member Norton and 
members of the subcommittee, thank you for the opportunity to 
testify today on our work related to excess and underutilized 
Federal real property held by Federal agencies as well as our 
work with the BRAC process. My testimony will focus on the 
civilian sector while my colleague Brian Lepore's testimony 
will focus on the military side.
    My testimony today will discuss, (1), obstacles to 
effectively managing Federal real property and, (2), actions 
the government has taken and a framework proposed in the 
President's 2012 budget to overcome those obstacles.
    As we previously testified before the subcommittee, the 
Federal Government occupies more owned and leased buildings 
than it needs. In fiscal year 2009, 24 landholding agencies, 
including DOD, reported 45,190 underutilized buildings, with a 
total of 341 million square feet, or 1,830 more buildings than 
they reported the previous fiscal year. These underutilized 
buildings cost $1.66 billion annually to operate and are 
potentially valuable.
    We designated the management of Federal real property as a 
high-risk area in January 2003 in part because of excess and 
underutilized property. That year we found that the Federal 
Government faced a number of obstacles to effectively manage 
its real property. These included the lack of strategic focus, 
the lack of reliable real property data, legal limitations such 
as public conveyance, environmental requirements and 
stakeholder influence, such as local governments, advocacy 
groups and the private sector.
    Since that time the government has also made significant 
progress. For example, the land holding agencies have 
established asset management plans, standardized real property 
data reporting and adopted various performance measures to 
track progress. In our 2011 high-risk report we found 
significant improvement in this area. Consequently, we removed 
the data element of real property management from the high-risk 
list.
    In 2007, we recommended that OMB assist agencies by 
developing an action plan to address the key problems 
associated with decisions related to unneeded Federal real 
property, including stakeholder influences. OMB agreed with the 
recommendation but has yet to implement it. However, the 
administration's recently proposed framework, the Civilian 
Property Realignment Act, CPRA, is somewhat responsive to this 
recommendation in that it addresses both legal limitations and 
stakeholder influences in real property decisionmaking.
    According to the proposal, the purpose of CPRA would be in 
part to streamline the current legal framework for disposing of 
unneeded civilian real property. The proposal itself, however, 
does not describe how the streamlining would be accomplished.
    Regarding stakeholder influences, CPRA would create an 
independent board to recommend Federal properties for disposal 
or consolidation after receiving recommendations from civilian 
landholding agencies. Grouping all disposal and consolidation 
decisions into one list that Congress would vote on in its 
entirety could help mitigate local stakeholder influences. In 
addition, CPRA would also help to reduce the government's 
overreliance on leasing by recommending that the government 
consolidate operations from leased space to owned space were 
efficient.
    Mr. Chairman, that concludes my testimony. After Mr. 
Lepore's testimony, we will be happy to answer the 
subcommittee's questions. Thank you.
    Mr. Lepore. Mr. Chairman, Ranking Member Norton, and 
members of the committee, I am delighted to be here today to 
present to you some of our observations on the Base Realignment 
and Closure, or BRAC, process. This may help you as you 
consider the Civilian Property Realignment Board proposal.
    My testimony today is based on the work that we are doing 
monitoring implementation of the BRAC process and reporting on 
the BRAC process.
    Now to the first of my two points, the major elements of 
BRAC. DOD begins the process by developing closure and 
realignment recommendations and submitting them to the 
independent BRAC Commission. The Commission can approve, 
modify, reject or add to the recommendations. The Commission 
held hearings, voted on each recommendation, and reported to 
the President. The President could disapprove the Commission's 
report and send it back to the Commission for revision or 
approve all of the recommendations in whole and send them to 
Congress. He did the latter.
    Next, Congress had 45 days to enact a joint resolution of 
disapproval or all of the recommendations would become binding. 
They are all binding. In authorizing the round, Congress 
required DOD to implement the recommendations within 6 years 
from the date of submission to the Congress. The key similarity 
between BRAC and the Civilian Property Realignment Board 
proposal is the all or nothing approach after the Commission's 
report to the President.
    Now to my second point, DOD's key steps to develop the 
recommendations. DOD established the round's goals promoting 
jointness in transformation, reducing excess infrastructure and 
saving money. DOD proposed and Congress approved the criteria 
that was used to develop those recommendations. DOD used the 
cost of base realignment actions, or COBRA, model to estimate 
cost and savings and provide a common way to compare candidate 
recommendations. And finally, DOD developed a common analytical 
framework and organizational structure to better ensure 
consistent application of the criteria in developing the 
recommendations.
    Mr. Chairman, this concludes my prepared remarks and we 
would be happy to answer any questions that you or the other 
members of the subcommittee may have.
    Mr. Denham. Thank you. Mr. Principi.
    Mr. Principi. Good morning, Chairman Denham, Ranking Member 
Holmes Norton, and members of the committee. I welcome your 
invitation to comment on the question of whether a civilian 
BRAC Commission can consolidate the office space and save 
taxpayers billions of dollars. The simple answer is yes, if 
structured properly.
    The most important underlying question is whether the 
administration and the legislative branches can afford not to 
execute a civilian BRAC to relieve itself of costly and 
unneeded infrastructure in order to achieve badly needed cost 
savings to the Federal budget. I commend the administration for 
their proposal to establish a BRAC-like process for Federal 
civilian infrastructure, and I commend GAO for identifying over 
45,000 Federal buildings that are underutilized and for their 
indispensable support of the 2005 BRAC Commission that I 
chaired.
    As we have all learned, the process does not come without 
pain at the Federal level in deciding what to close or 
consolidate at the congressional level and fielding constituent 
concerns and at the local community level. There will be tough 
choices in tough times.
    My comments today will be addressed from my experience as 
former Chair of the 2005 BRAC Commission and former Secretary 
of Veterans Affairs.
    I think it would be helpful to briefly review why a BRAC 
process was even necessary. Prior to 1988, the Secretary of 
Defense for the most part implemented his own base closure 
program with minimal consultation with the military departments 
or the Congress. In 1988, the DOD budget declined for 3 
straight years and was predicted to decline further. To ensure 
that scarce DOD resources would be devoted to more pressing 
operational missions and investments needed rather than 
maintain its unneeded facilities, Secretary of Defense Frank 
Carlucci chartered the Defense Commission on BRAC that Congress 
enacted into law.
    In 1988, that provided the statutory basis for this one-
time approach. The Secretary of Defense appointed the 
Commission, the Commission reported to him, most hearings and 
votes were closed, and there was little public information 
about how the Commission arrived at its recommendations.
    There were many critics of the 1988 BRAC who decried the 
lack of transparency and independence of the Commission and 
felt the closure list unfairly targeted facilities located in 
congressional districts of Members out of favor with the 
administration.
    It was not until 1990 that Congress passed the Defense Base 
Closure and Realignment Act, when Secretary of Defense Cheney 
unilaterally proposed closing 35 bases and realigning 20 
others. That act brought transparency to the process and 
independence to the Commission. Consequently, there were BRAC 
Commissions in 1991, 1993, 1995, and 2005 that have withstood 
the test of time, effectiveness, and cost savings.
    BRAC is a major undertaking, to be sure, but if done right 
it can be as open, deliberative, inclusive and nonpartisan a 
process as I have seen in my professional career. I strived to 
make it so in 2005. I can assure you that it was not an easy 
process.
    On May 13, 2005, the BRAC Commission received a total of 
190 recommendations from DOD that would in effect close or 
realign 837 military activities nationwide. Not only would the 
recommendations double in number from the previous BRAC round, 
but they were greater than all previous BRACs combined. We had 
4 months to complete our mission. Over the course of those 4 
months, our commissioners and staff made 182 visits to 173 
military installations. We conducted 20 regional hearings and 
another 20 to legislative and deliberative hearings as well as 
hundreds of meetings with community representatives and elected 
officials, and then prepared a 338-page report of our findings 
and recommendations to reach the President and Congress. In my 
view, the lessons learned from this can be applied to other 
Federal agencies with unneeded infrastructure.
    Turning to the current administration's proposal to 
establish a BRAC-like process, I strongly endorse the proposed 
Civilian Property Realignment Act and would suggest several 
changes for your consideration. In reviewing the 
administration's proposed legislation, I find the purpose 
clear. In particular, I find myself in agreement with the 
purpose to enable Federal agencies to retain and reinvest 
savings and sale proceeds. In my view, this will provide an 
incentive to these agencies to identify costly or unneeded 
facilities.
    Secondly, the act would create a seven-person Civilian 
Property Realignment Board to assess the recommendations 
submitted by the Federal agencies. In addition to the need to 
clearly spell out the qualifications for appointment to the 
board, I would strongly recommend that to ensure the board's 
independence the President appoint five members, including its 
chairman, while the majority and minority leaders of both 
Houses of Congress appoint a member. This would raise a total 
board to nine people. I also suggest that a commission be 
established in lieu of a board and that all commissioners be 
confirmed by the Senate to ensure independence and that they 
are nonpartisan.
    Third, the act proposes that all proceedings, information 
and deliberations of the board shall be open upon request to 
the chairman and ranking member of the several Senate and House 
subcommittees. Again, in the interest of transparency, I would 
propose for your consideration that all proceedings, all 
information, as well as board deliberations not classified be 
made concurrently public, as was done by the BRAC Commission. 
The 2005 BRAC Commission also maintained an Internet Web site 
for this purpose.
    Fourth, I give pause to the proposal that the board report 
its findings, conclusions, and recommendations to the Director 
of OMB. The proposed act also proposes authority for the 
Director of OMB to manage the process, including the authority 
to approve or disapprove the Commission's recommendations. 
Accountability and authority, in my view, should rest with the 
President. The Commission should have the qualifications to 
undertake their work, and they should be supported by an 
eminently qualified professional staff.
    Fifth, I notice the absence of any proposed criteria that 
would govern the deliberations of the board. Such criteria are 
critical. They should be promulgated in the Federal Register 
for comment and included in the act enacted by Congress. The 
board would be bound by these criteria in making their 
recommendations to the President and Congress.
    Sixth, one of the real lessons learned from the 2005 BRAC 
was a need for an effective accounting tool to estimate the 
true cost savings and true cost for each recommended closure 
and realignment. The Department of Defense, as you know, 
utilized the COBRA model to project costs and savings and net 
present value. In the case of the 2005 BRAC, transformation, 
and not cost savings, was the key driver in the Secretary's 
recommendations to the Commission.
    I thank you, Mr. Chairman, Ranking Member Holmes Norton, 
for the opportunity to testify today.
    Mr. Denham. Thank you, Mr. Principi.
    Following the last round of questions for the previous 
committee, this subcommittee is very interested in making a 
better and more efficient use of Federal leases. As such, we 
would like to know more about how DOD dealt with leases in the 
last round of BRAC and what do you think should be done under 
this Commission?
    Mr. Principi. Well, the Secretary of Defense had proposed 
in the 2005 BRAC that a significant amount of lease space be 
vacated and those offices consolidated on military bases, and I 
think that is a viable option for Federal civilian buildings as 
well.
    To just give you one example, Mr. Chairman, since 1967, I 
am going now to my days as Secretary of Veterans Affairs. Since 
1967 the VA had a VA benefits regional office in downtown 
Atlanta. It was privately owned space leased by the General 
Services Administration. We, the VA, decided in 1999 to move 
that benefits office to the grounds of the VA Medical Center to 
collocate that benefits office on the grounds, unused vacant 
space adjacent to the VA Medical Center, providing one-stop 
shopping for the veterans who needed health care and needed 
benefits. We were able to save 50 percent of the cost that we 
were paying in leased space in downtown Atlanta, with 
additional parking for veterans and staff, furnishings, IT 
equipment, the entire framework needed to maintain a regional 
office.
    So I think it can be done. It has been done at the VA, and 
I think would work in civilian office space.
    Mr. Denham. Thank you. Mr. Wise, ending a lease, we were 
just talking about the SEC, ending a lease has the same outcome 
as disposing of a government-owned property. Do the same 
obstacles apply?
    Mr. Wise. Mr. Chairman, in a word, no. We have found over 
the years that the Federal Government often leases buildings 
for longer term needs when ownership would have really been 
more cost effective in the long run. One way that it is 
possible to rebalance the ownership-lease mix would be to allow 
the less efficient leases expire and consolidate Federal 
workers onto federally owned facilities. I think some of that 
came out in the earlier testimony on these cases.
    None of the screening, disposal, or environmental 
requirements would apply. So it makes it much, much easier. As 
long as the different Federal elements can be combined within 
this space and local issues are taken into consideration, then 
the impacts would also be minimized and the Federal Government 
should be able to move forward with a more cost effective 
arrangement.
    Mr. Denham. What would you say have been the biggest 
hurdles in selling and disposing of properties themselves?
    Mr. Wise. There are a number of hurdles that go into 
selling a property. Those include the need for considering 
public conveyances, the environmental impact statements which 
can take a very long time, the requirements to offer to 
advocacy groups like the homeless and historical preservation 
and then sometimes private sector considerations come into 
play. Thus, there are quite a few hurdles that go into being 
able to move towards sales of properties under the current 
arrangements.
    Mr. Denham. And does GSA's database capture all the 
potentially unneeded properties in GSA's portfolio?
    Mr. Wise. We don't think so, but quite frankly, we really 
haven't formally evaluated the extent to which property 
utilization is correctly covered in GSA's database. But if you 
recall in our last hearing (where the temperature was a little 
low), the Old Post Office was one of the buildings not covered 
in the utilization field. This can occur with mixed use 
buildings. We have done some previous work with the Postal 
Service and found that there were quite a few facilities not 
fully visible regarding the utilization field. However, we do 
have a request that we are going to be staffing in the next 
couple of months to take a look at the overall utilization and 
leasing arrangements. We will cover that area much more 
thoroughly in the next year.
    Mr. Denham. In your testimony you said the BRAC included 
independent oversight by GAO. Does the civilian board as 
proposed in the President's fiscal year budget include 
opportunities for independent oversight and should that be at 
GAO?
    Mr. Wise. I think it is up to the Congress to decide who it 
should be, but I think in general an independent commission 
lends credibility to the entire process. The current proposal, 
at least the version that we saw in the President's 2012 budget 
proposal, doesn't say anything about independent oversight. Mr. 
Werfel mentioned there is going to be a much longer, more 
detailed proposal coming at the end of the month, so perhaps it 
will be covered there. But from what we saw in the short 
proposal that was in the President's budget, such oversight was 
not discussed.
    Mr. Denham. And GAO's position? Obviously played 
independent oversight. Not your recommendation, but do you 
think GAO could perform the same type of oversight, if asked by 
Congress, that it did under BRAC?
    Mr. Wise. I think Brian can explain what GAO did in its 
role in BRAC oversight.
    Mr. LePore. Mr. Chairman, the 1990 BRAC statute and the 
2001 amendment to that actually specifies several roles for 
GAO. The first one is that the Comptroller General is required 
to provide assistance to the Commission at their request. The 
idea is we develop an agreement and actually detail staff. We 
did that in BRAC 2005. We sent six of our senior analysts and 
analysts to provide assistance to the Commission and the 
Commission staff as they considered the recommendation.
    The statute also required that we review the DOD force 
structure plan and infrastructure inventory. You may know that 
the statute required DOD to develop a projection, if you will, 
of what its force structure would look like over the next 20 
years, and that was in fact part of the criteria that was used 
in developing the recommendations. We were required to comment 
on that, and we did that.
    Thirdly, we were mandated to review the process that DOD 
used in developing its recommendations, and we did that and 
reported on July 1, 2005, that DOD had used a logical, 
reasoned, and well-documented process.
    Subsequent to that, there is one more. The House Committee 
Report accompanying the Armed Services Committee's 2008 Defense 
Authorization Act mandated that we monitor implementation of 
the recommendations and report annually on implementation along 
with a lessons learned report. We have just begun that lessons 
learned report effort right now and we will be reporting that 
later this year.
    So GAO actually has had several roles in assisting with the 
BRAC process.
    Mr. Denham. Thank you.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. I want to 
quote from Mr. Principi. Mr. Principi, I just want to note for 
the record your enormous expertise in this area, not only you 
have been Chairman of BRAC, you have been a Cabinet official 
who had the authority to lease and develop--by the way, that 
authority was given by the Congress of the United States, your 
Veterans Affairs post, and of course you have been on the 
Senate staff. So you have really had a bundle of experience 
that could be useful to us, and therefore I took particular 
notice--perhaps you heard my own concern about OMB's expertise. 
I took particular notice, and I am going to quote from your 
testimony, I give pause, you said, on page 4, to the proposal 
that the board report its findings, conclusions, and 
recommendations to the Director of OMB. The proposed act also 
proposes authority for the Director of OMB to manage the 
process, including the authority to approve or disapprove the 
Commission's recommendations.
    You give pause clearly because you have issues with that 
kind of direct authority by OMB, which is essentially final, 
because OMB, I guess, makes a recommendations to the President. 
And you seem to want the President himself to have final 
authority. I wish you would explain your views on how this new 
BRAC process should work with respect to OMB.
    Mr. Principi. Yes, Madam Ranking Member, again, the 2005 
BRAC round that I chaired made our recommendations directly to 
the President, where I believe certainly the final authority in 
the Executive branch should lie. That is not to say that the 
President cannot look to his Cabinet officials to weigh in on 
the recommendations before he makes a final decision. And 
ultimately it should rest up here with the Congress to make 
that final decision.
    I would also echo that I think GAO played, again, an 
indispensable role in supporting BRAC and I think they would 
play an indispensable role in supporting this process. They are 
independent. They have the expertise. And if they don't have 
the expertise, they would gain that expertise by bringing on 
the right people.
    And, very importantly, Congresswoman Holmes Norton, I think 
you have to take great pains to ensure that you have the right 
makeup on the Commission. I was blessed as Chairman to have 
eight wonderful commissioners around me who had the requisite 
expertise on military matters that could really make decisions, 
supported by a strong executive director who brought on 
expertise in military infrastructure matters. I think that is 
the most important criteria to ensure that the right decisions 
are made with oversight by GAO and go to the President.
    With all due respect to OMB, I just don't think they are 
the right agency to have the final approval authority.
    Ms. Norton. And it should be with the President himself?
    Mr. Principi. Absolutely.
    Ms. Norton. Then he could call upon the expertise or GSA or 
anybody else that he thought might be able to help him.
    Mr. Principi. I absolutely believe that.
    Ms. Norton. Essentially, this gives OMB two bites at the 
apple. It is OMB that you rely on; obviously, the President 
isn't sitting down there by himself. So it is exclusively 
relying on OMB. It seems to be a pretty circular process.
    Mr. Lepore testified about detailees--I believe it was you, 
Mr. Lepore--from GAO to BRAC. Would you recommend--of course, 
at GAO you do have people with infrastructure experience, with 
budgetary experience, with real estate experience. Would you 
recommend such detailees to be used in this process to OMB, to 
the President, or elsewhere?
    Mr. Lepore. Let me try to answer your question this way. I 
think the key contribution that the GAO staff made to the 
Commission was the people we assigned had the right background 
to do analytical work. We are very good at developing 
analytical frameworks for analyzing processes and what we call 
methodologies. We also took great care as we selected the 
individuals--and here is why. We actually knew what the 
recommendations from DOD to the Commission were at the time we 
were making the choices and we were able to select from our 
staff those individuals who had substantive expertise as well 
as a strong analytical framework.
    Let me give you a specific example with respect to some of 
the medical recommendations. We actually assigned someone from 
our health care team as one of the staff members that we sent 
to Mr. Principi and his colleagues on the Commission. The point 
being here that we carefully chose those staff who had a good 
subject matter knowledge to address the specifics of the 
recommendations as well as were strong analytically, which 
really all GAO staff are.
    Ms. Norton. Couldn't be more important here.
    Yes, Mr. Principi.
    Mr. Principi. I would like to add one point, and that is 
the BRAC Commission had the authority--we had the authority to 
add bases to the list that were not recommended by the 
Secretary. I think that is very, very important that the 
civilian BRAC process commission have that same authority. It 
required a super majority vote to add a base to the list that 
the Secretary of Defense did not recommend. But we were able to 
identify bases where there was encroachment around a flight 
line that impacted the training of our young naval aviators. We 
added that base to the list. And I think it had an impact on 
changes that were made.
    Ms. Norton. Mr. Chairman, my time is up, but Mr. Principi 
has said that the Secretary, DOD Secretary, who obviously 
managed larger agencies, but let's say four agencies--here 
there are 23 agencies that would be involved. So if the 
Secretary--if the board could recommend bases beyond the 
Secretary, then it would seem that this board ought to be able 
to recommend properties beyond those that the 23 agencies had 
OKed.
    Thank you.
    Mr. Denham. Thank you. Mr. Principi, diving straight back 
into that same type of question, the Secretary gave the list--
the Secretary drove a lot of the issues. Obviously, the 
Secretary had a vested interest in making sure that the BRAC 
Commission was successful, where you may have had independent 
bases or base commanders that had a difference of opinion. Here 
in this case we don't have a Secretary that would oversee all 
of the agencies, and you can see that it has been difficult for 
us to obtain lists and information.
    Can you describe the process that you went through in not 
only gaining the lists and the information but actually making 
sure that it was accurate?
    Mr. Principi. Well, it was really spelled out in statute. 
We had clear criteria by which to measure whether the 
recommendations were correct, and we did thorough analysis. We 
visited all of the military bases under consideration for 
closures or realignment. We had the support of GAO oversight, 
we had commissioners who had the requisite expertise. And I 
think those combination of things, I believe, allowed us to 
make the appropriate decisions. They may not have been right in 
every case, but I think as long as the Congress spells out the 
criteria by which agencies have to submit recommendations to 
the Commission, clear criteria by which the Commission assesses 
those recommendations, and makes a final decision and reports 
it to the President, gives the President a reasonable but 
limited period of time to either disagree, send it back to the 
Commission, send it on to Congress, I think, for the most part 
you will come out with the right decisions. So that is the 
process I would suggest you follow.
    Mr. Denham. Thank you. How about as far as ensuring that 
the information, the lists, are accurate coming from each 
different agency? Did you have any pushback from any of the 
various bases that you dealt with on not wanting to provide all 
information necessary to accomplish the Commission's criteria?
    Mr. Principi. Well, we did. And in some cases, information 
that was submitted, data that was submitted by military bases, 
the base commander to the Pentagon came to the Commission far 
different than the base commander reported. So we had instances 
where information that went to the Pentagon didn't come out as 
it should have. We were receiving different data from the 
Pentagon. But we were able to assess that by our visits to 
military bases, having those discussions, and trying to 
identify as much as we could about the base.
    Again, we had the analytical work of GAO, we had a very, 
very professional staff who had been on previous BRAC rounds, 
and I might also add that we had a very limited period of time, 
but it held our feet to the fire. This thing did not drag out 
like many commissions do month after month, year after year. We 
have had a finite period of time. Either we had our 
recommendations on the President's desk by a certain date or 
all of our work was terminated. It was all for naught.
    So I have would suggest that you put very different 
timelines on getting this information to the President and 
getting it to the Congress for an up-or-down vote on the 
recommendations or it will go on for year after year and you 
will have accomplished very little, Mr. Chairman.
    Mr. Denham. Was there any repercussions to inaccurate 
information if a base was giving information to the Pentagon 
different from what they were giving you?
    Mr. Principi. Well, certainly did our best to make sure 
that that information was conveyed to the higher levels at the 
Department of Defense, but we also tried to protect the base 
commanders who provided us with that information. It was a very 
delicate balance, Mr. Chairman. But we did our best to make 
sure that the Defense Department knew that they were passing on 
inadequate and different information to us than we had learned 
in the field.
    Mr. Denham. Thank you. Finally, the same question I had for 
the last panel, what type of expertise do you feel is important 
to be on the Commission?
    Mr. Principi. Real estate people who have requisite 
knowledge in real estate-related matters, financing-related 
backgrounds, Federal infrastructure, I think former senior 
executives with the Federal Government in various different 
capacities, but certainly individuals who have a strong 
background in real estate development, financing, and leasing, 
who could bring that expertise to the Commission.
    Mr. Denham. And are you still working with the BRAC 
Commission now?
    Mr. Principi. Other than testifying periodically.
    Mr. Denham. You know what my next question is, don't you? 
Would you be initiated in serving on this new commission?
    Mr. Principi. My problem is----
    Mr. Denham. You are on the record.
    Mr. Principi. The problem is I don't know how to say no to 
public service, so I guess I would. I am sure there are other 
more eminently qualified individuals than myself, Mr. Chairman, 
but thank you very much.
    Mr. Denham. Thank you. Ms. Norton.
    Ms. Norton. I wouldn't be so sure about that, Mr. Principi. 
We really need people who have been around the mulberry bush a 
few times.
    Mr. Denham. The correct response would have been I am going 
to check with my spouse first.
    Ms. Norton. I would like to combine what I am gleaning from 
the testimony of Mr. Wise and Mr. Lepore with what I know about 
the Veterans Affairs Department. I was interested that your 
testimony indicated that the new board could help with one of 
this committee's long-term concerns, the overreliance on 
leasing, by recommending the consolidation of operations. Well, 
the President has set about the consolidation process already, 
and I certainly can see some possibilities there. But I know 
that Mr. Principi in fact had an authority that if GSA has it, 
it rarely uses it--its enhanced lease authority.
    The Veterans Affairs Department is one of those agencies 
that for very good reasons has its own independent authority. 
When you consider the number of buildings and operations that 
are under your jurisdiction--and that is an example where 
Congress just slipped something in and said this is what we 
want for the Veterans Administration. How you have done leasing 
or how you have done property management has saved the 
taxpayers billions upon billions of dollars.
    Let me give you an example and ask our other two panel 
members if they believe that somehow getting better use of such 
authority would help to get more of our agencies into owned 
space.
    The Veterans Administration has, among other things, 
enhanced lease authority. So that means that the Veterans 
Administration can do a ground lease where that means that 
somebody in the private sector can then put that up. Somehow or 
another, you don't run into the scoring problems that the GSA 
runs into. So I am sure you must do a lot less leasing than the 
GSA does now. In fact, it has tipped. It now does more leasing 
than it has owned space.
    And I want to know from Mr. Wise and Mr. Lepore, while we 
are at it, whether we shouldn't see to it that GSA--and, again, 
it may have, it certainly seldom uses; I don't know how to make 
sure it does--but that it uses enhanced lease authority as well 
so that the Federal Government is not leasing for 10-, 15-, 20-
year terms.
    Mr. Lepore. Congresswoman Norton, as you know, the 
Department of Defense does have enhanced use leasing authority. 
What DOD will typically do in these circumstances--and there 
aren't a lot of the enhanced use leases. That typically refers 
to a very large, long-term lease, very complicated negotiated 
deal, if you will, between a developer and the installation. 
But typically what they will do on an installation is they may 
identify land that is not excess to their needs, because the 
statute requires it cannot be excess to their needs if they are 
going to do an enhanced lease, and then will negotiate with a 
developer to develop some facility--an office building, 
hypothetically. The developer gets a 50-year ground lease. The 
developer builds the building, subleases the office space, if 
that is what it is, to a tenant, and the installation gets back 
some agreed-to consideration. It could be cash or it can be in-
kind consideration. And that is all negotiated upfront. But it 
is an opportunity for the installation to effectively get a 
kind of return on investment, if you will, on land that is not 
excess to their needs permanently but is not used for the 
period of time of that lease.
    Ms. Norton. So this board is going to have to decide 
whether or not the Federal Government could reap some benefit 
or revenue from this land or whether it should simply sell it 
off. One of the things they are likely to do is to say, Well, 
look at what it would take for GSA to use the property. If it 
doesn't have enhanced lease authority, what it would take looks 
like it might be a steep mile to climb and you end up selling 
off properties that you could be earning revenue from forever.
    Mr. Principi, what I am asking both of you, as long as we 
are looking at the collocation, this consolidation, whether or 
not we should not also be looking at what it takes to make sure 
that the government is making the highest and best use of its 
land before it decides it has to sell it off so somebody else 
can make the highest and best use, simply because our 
procedures don't afford GSA that opportunity.
    Mr. Principi. I certainly agree with you, Congresswoman 
Norton. That is what I tried to do as Secretary, was to 
leverage the equity that we had in our land. Large VA medical 
center campuses, lots of unused land. Why pay very high lease 
rates in downtown, separated from the VA Medical Center, so 
veterans had to go to both places. And whether it be a local 
development authority in the city or county or private 
developer, come on, build us what we need. We will get reduced 
lease rates because it is our land and then at the end of the 
lease term the building would convey back to the VA. In many 
cases, it worked very, very well for the VA. I assume it could 
work for other agencies of government, but certainly in our 
case it did. I believe in DOD it can as well.
    Ms. Norton. Of course, here we are dealing with essentially 
property that is usually managed by GSA. I just cite to you the 
example of the headquarters building of the Department of 
Transportation, where we build an entirely new, huge building 
for the Department of Transportation. I think they are on a 15-
year lease because GSA has but apparently for some reason 
doesn't use enhanced lease authority, where you could, 
obviously, since you are never going to move your headquarters 
if you just built a new one, could have used it. That is the 
kind of waste that I see. As long as you are dealing with how 
you manage your property, seems to me you have got to use this 
opportunity to deal with the whole thing.
    I want to ask all of you about the differences between DOD 
BRAC and this BRAC. DOD BRAC happens every few years. You know 
what those properties are. You apparently have got a critical 
mass and then you do a BRAC. Now, is that going to be 
sufficient for a civilian BRAC? Would there need to be some 
ongoing process, given the number of properties that may come 
and go when you have such a huge landowner as the United States 
Government itself?
    Mr. Denham. For the sake of time I would ask for a brief 
response.
    Mr. Lepore. Certainly, I will try to be brief. As you know, 
there were four rounds of BRAC prior to the 2005 round. I think 
one of the things we saw after the first round in 1988, there 
were three that occurred in alternating years--1991, 1993, and 
1995. The idea was there was a recognition that there were a 
significant number of installations that DOD felt were excess 
to its needs, its determination. But there was a recommendation 
that to try to swallow them all at once was probably not going 
to be doable or feasible. And so the 1990 statute that 
authorized those next three rounds put them in alternating 
years, and it effectively created a cycle, if you will, that 
allowed for the selection of I will call it a reasonable number 
of installations that could be considered for closure or 
realignment without putting so much before the Commission at 
any one time or any one Commission that it couldn't get it all 
done.
    So it created a manageable process, if you will, to allow 
DOD to convey, dispose of and ultimately convey a large number 
of installations it deemed excess to its needs. But was that 
rolling cycle that helped to make that possible.
    Ms. Norton. I just think that is a very important point to 
make. You can put too much on the Commission.
    I have one last question. I think it is Mr. Principi who 
said in his testimony there are real lessons to be learned from 
the 2005 BRAC on the need for an effective tool to estimate the 
true cost savings and true costs of each recommended closure 
and realignment. And I tell you there are folks here who 
believe that there are gazillions of dollars just waiting out 
there to go to market. I have got to ask you, what lessons are 
you talking about? Do we know what the cost savings were, what 
the cost was, what revenue was brought in from the last BRAC? 
Do any of you know that?
    Mr. Principi. I think it is critically important. You have 
to have a good cost savings model.
    Ms. Norton. When you say that real lessons learned, did you 
learn that some of these properties did not have true savings 
or provided true costs for the government that you were not 
aware of?
    Mr. Principi. Yes, it did. Inflationary costs. There is a 
6-year period from the date the decision is made to close or 
realign a base to the time it has to be implemented--in our 
case, 2011. You have a lot of inflation that goes on. That 
wasn't accurately reflected in the analysis. As well as 
personnel costs. A significant percentage of the proposed 
savings came from reductions in military personnel. Along with 
GAO, we found that that was not the case. Military personnel 
were being transferred to other bases; they weren't being 
reduced from end strength. And that dropped the cost savings 
very dramatically, Congresswoman Norton. So I think those kind 
of refinements have to be made to the model to be effective on 
the civilian side as well.
    Ms. Norton. Mr. Chairman, that was my last question, but I 
certainly hope we recommend the lessons from BRAC--we have had 
three or four BRACs; we have had at least three since I have 
been in Congress--that before any statute is drawn, we have 
some experience from BRAC as to whether or not there is any 
savings or whether or not we have estimated costs so that we 
don't go blindly into this where there is real experience on 
the table for us to learn from.
    Thank you very much, Mr. Chairman.
    Mr. Principi. I am sorry to interrupt. Following up on Mr. 
Lepore's statement about the process and having a civil BRAC 
every 2 years, I urge you to consider maintaining a core group 
of civil BRAC experts so that when a new BRAC round begins, you 
don't have to go out and find that staff. You have a good core 
staff that could then be augmented so that that civil BRAC can 
get going right away without having to ramp up from zero base.
    Mr. Denham. Almost sounded like you were volunteering in 
your final statement.
    I would like to thank this panel as well as the previous 
panel. We will be not only submitting a list of questions but 
looking for your assistance in defining a clear criteria. This 
will be different from the DOD BRAC. And we will have to have 
not only a strong, clear criteria up front, but this committee 
will definitely be looking for a guarantee that we have quick 
and efficient disposal of properties. So we would ask for your 
help as we are finalizing our legislation over the next few 
weeks, and look forward to your accessibility.
    If there are no further questions, I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witnesses have provided answers to any 
questions that may be submitted to them in writing and 
unanimous consent that the record remain open for 15 days for 
any additional comments and information submitted by Members or 
witnesses to be included in the record of today's hearing.
    Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony today.
    If no other Members have anything to add, the subcommittee 
stands adjourned.
    [Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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