[Senate Hearing 112-251]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 112-251
 
                       FEDERAL ASSET MANAGEMENT: 
    ELIMINATING WASTE BY DISPOSING OF UNNEEDED FEDERAL REAL PROPERTY 

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


                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                                 of the

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 9, 2011

                               __________

         Available via the World Wide Web: http://www.fdsys.gov

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee
                                 ------                                

 SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 
              FEDERAL SERVICES, AND INTERNATIONAL SECURITY

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 SCOTT P. BROWN, Massachusetts
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           RON JOHNSON, Wisconsin
MARK BEGICH, Alaska                  ROB PORTMAN, Ohio

                    John Kilvington, Staff Director
                William Wright, Minority Staff Director
                   Deirdre G. Armstrong, Chief Clerk






















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Brown................................................     3
Prepared statements:
    Senator Carper...............................................    47
    Senator Brown................................................    49

                               WITNESSES
                         THURSDAY, JUNE 9, 2011

Hon. Alan Dixon, Former Chairman, 1995 Defense Base Realignment 
  and Closure Commission.........................................     5
David Baxa, Chief Executive Officer, VISTA Technology Services, 
  Inc............................................................     6
Tim Ford, Chief Executive Officer, Association of Defense 
  Communities....................................................     8
Maria Foscarinis, Executive Director, National Law Center on 
  Homelessness and Poverty.......................................     9
Daniel I. Werfel, Controller, Office of Federal Financial 
  Management, U.S. Office of Management and Budget...............    26
Robert Peck, Commissioner, Public Buildings Service, U.S. General 
  Services Administration........................................    27
James Sullivan, Director, Office of Asset Enterprise Management, 
  U.S. Office of Veterans Affairs................................    29
David Wise, Director, Physical Infrastructure Issues, U.S. 
  Government Accountability Office...............................    31
Brian Lepore, Director, Defense Capabilities and Management, U.S. 
  Government Accountability Office...............................    32

                     Alphabetical List of Witnesses

Baxa, David:
    Testimony....................................................     6
    Prepared statement...........................................    54
Dixon, Hon. Alan:
    Testimony....................................................     5
    Prepared statement...........................................    51
Ford, Tim:
    Testimony....................................................     8
    Prepared statement...........................................    62
Foscarinis, Maria:
    Testimony....................................................     9
    Prepared statement...........................................    67
Lepore, Brian:
    Testimony....................................................    32
    Prepared statement...........................................    94
Peck, Robert:
    Testimony....................................................    27
    Prepared statement...........................................    79
Sullivan, James:
    Testimony....................................................    29
    Prepared statement...........................................    86
Werfel, Daniel I.:
    Testimony....................................................    26
    Prepared statement...........................................    74
Wise, David:
    Testimony....................................................    31
    Prepared statement...........................................    94

                                APPENDIX

Questions and responses for the Record from:
    Mr. Dixon....................................................   113
    Mr. Werfel...................................................   114
    Mr. Peck.....................................................   119
    Mr. Sullivan (failed to answer questions submitted for the 
      record)....................................................   120


                       FEDERAL ASSET MANAGEMENT:
    ELIMINATING WASTE BY DISPOSING OF UNNEEDED FEDERAL REAL PROPERTY

                              ----------                              


                         THURSDAY, JUNE 9, 2011

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                              and International Security,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:02 p.m., in 
room 342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper, Begich, Brown, and Coburn.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Well, good afternoon, one and all. Senator 
Brown and I are happy to welcome you to our hearing today. We 
thank you for joining us.
    Today, we will--actually, as it turns out, we have a vote 
starting at 2:15, and I think Senator Brown is going to slip 
out here in a few minutes and run and vote, so he will be at 
the beginning, then come and chair the hearing until I get back 
so we can both vote and we will not waste your time and we will 
get this show on the road. But welcome.
    Today, we will examine the challenges that our Federal 
Government faces in managing our property, really, the property 
of the American people. We will also discuss the President's 
proposal to address at least some of these challenges through 
the creation of what the Administration is calling a Civilian 
Property Realignment Board to assist agencies in right-sizing 
our Federal real estate portfolio.
    There is general consensus that the Federal Government has 
to get smarter about the way we manage our buildings and lands, 
and with concerns over the implications for our deficit and our 
national debt mounting, eliminating waste and achieving cost 
savings in this area must remain a priority.
    Between 2001 and 2009, we ran up as much debt as we did in 
the first 208 years of our Nation's history. Last year, we ran 
up what may be the largest budget deficit in our Nation's 
history. While most of us here in Washington are united in our 
desire to find a solution to our country's fiscal problems, we 
are still facing an ocean of red ink for as far as the eye can 
see.
    A wide variety of ideas have been put forward on how to 
reduce our budget deficits and begin whittling down our debt. 
Last fall, the majority of the bipartisan Deficit Commission 
appointed by President Obama provided us with a road map to 
reduce the cumulative Federal deficits over the next decade by 
roughly $4 trillion. A number of the steps we would need to 
take in order to accomplish this goal will likely be painful.
    Many Americans believe that those of us here in Washington 
are not capable of taking these steps. They do not think we can 
do the hard work that we were hired to do, that is to 
effectively manage the tax dollars--their tax dollars that they 
have entrusted to us. They look at the spending decisions we 
have made in recent years and the poor management across 
government and question whether the culture here is broken and 
question whether we are capable of making the kind of tough 
decisions they and their families have to make every day with 
respect to their own budgets, and I do not blame them for being 
skeptical.
    We need to establish a different kind of culture here in 
Washington when it comes to spending. We need to establish what 
I call a culture of thrift. That involves looking at every nook 
and cranny of Federal spending, domestic, defense, entitlement 
programs, along with tax expenditures, and asking this simple 
question: Is it possible to get better results for less money, 
or at least to get better results for the same amount of money?
    When it comes to Federal property management, it is clear 
to me and to others that we can get better results and save 
money. Federal property management has been on the Government 
Accountability Office's (GAOs) High-Risk List since January 
2003, in part due to the overwhelming number of unneeded, 
underutilized, and even vacant facilities held by Federal 
agencies.
    The most recent comprehensive data available showed that 
Federal agencies apparently possess more than 45,000 
underutilized buildings totaling more than 340 million square 
feet in space. That is about the size of Delaware. I 
exaggerate, but it is a lot of space. [Laughter.]
    These buildings cost nearly $1.7 billion annually to secure 
and to maintain.
    Just last month, the Administration released a list of 
14,000 real property assets that have been identified as 
excess, meaning they no longer meet a Federal need and should 
be disposed of.
    In addition, we are also likely over-leasing. Since 2008, 
the General Services Administration (GSA) has leased more 
property than it owns, even though owning a Federal building is 
often a more cost effective way of meeting an agency's long-
term needs.
    Fortunately, both Congress and the Obama Administration are 
united in their commitment to address this issue. In June 2010, 
President Obama issued a memorandum urging agencies to move 
more swiftly to dispose of unneeded property. He also put into 
place a goal of achieving $3 billion in savings through 
property sales and other disposal actions by the end of Fiscal 
Year (FY) 2012.
    In addition, the President's latest budget includes a 
recommendation to form what the Administration calls a Civilian 
Property Realignment Board, whose purpose would be to review 
the government's property portfolio and dispose of those deemed 
excess in an expedited manner. This is a proposal that my 
colleagues and I on the Homeland Security and Government 
Affairs Committee (HSGAC) still need to spend time examining, 
but I am pleased that the President has put this suggestion, 
something aggressive, on the table.
    Clearly, the momentum is building to address a widely 
recognized problem. Yet, in all of our zeal to save, we must be 
intelligent in our approach. Rome was not built in a day. The 
Federal Government's bloated property portfolio cannot be 
unbuilt in a day. We have an opportunity that is ripe to change 
the way the government manages its hundreds of billions of 
dollars worth of assets.
    The President's proposal may be the right approach. It may 
not be. It does, however, hold some promise, and that said, 
agencies should not be waiting for a civilian Base Realignment 
and Closure (BRAC) to solve their problem in the meanwhile 
managing the properties. In an era of shrinking budgets and 
scarce resources, it is critical that agencies come up with 
innovative property management tools to expeditiously dispose 
of assets that they no longer need and take better care of 
those that they do need.
    In sum, our government has many underutilized and vacant 
properties that cost billions of dollars each year to maintain. 
We pay for their maintenance. We pay for security for those 
properties. We pay for utilities for many of those properties. 
Despite efforts to reduce this inventory, multiple obstacles 
remain that preclude quick and easy solutions, and I really 
look forward to hearing from our witnesses today as you share 
your thoughts with us on the Administration's plan and on 
sitting down with our Subcommittee colleagues who are 
interested in this issue so that we can move forward with the 
more difficult work that lies ahead. Senator Brown.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thank you, Mr. Chairman, for holding this 
hearing. I have enjoyed our time together and really learning 
about where a lot of the waste and inefficiency is. This is 
something I commend the President for putting forth, a plan for 
how to deal with a lot of the underutilized properties, which, 
as you referenced, cost us $1.7 billion a year that we could be 
using in other types of programs or putting back to paying down 
our deficit.
    I will submit my statement for the record, but I just 
wanted to point out those two things and I look forward to the 
witnesses' testimony, as well. Thank you.
    Senator Carper. Thanks so much, Senator Brown.
    Let me just say to our staffs, both Democrat and 
Republican, I thank our staffs for helping us in preparation 
for this hearing.
    I want to begin by just welcoming our first panel of 
witnesses, and the first is a person who needs little 
introduction here. It is someone who has served on this side of 
the dais many times the Honorable Alan Dixon, Senator from 
Illinois from 1981 to 1993. While he served in the Senate for 
at least 10 of those years, I was serving in the House and we 
had a fair amount of overlap. Senator Dixon was a member of the 
Committee on Armed Services, the Committee on Banking, Housing, 
and Urban Affairs, where I used to serve, as well, and the 
Committee on Small Business.
    Since retiring from the Senate, he has continued to 
demonstrate his commitment to public service by serving as the 
Chairman of the Defense Base Closure and Realignment Commission 
during 1994 and 1995. He is currently Senior Counsel at Brian 
Cave, an international law firm. Senator, welcome. It is great 
to see you.
    Mr. David Baxa is President and Chief Executive Officer 
(CEO) of VISTA Technology Services, Incorporated, a management 
and information technology (IT) consulting firm that supports 
large organizations in getting the most from their real 
property asset portfolio. He has more than doubled the size of 
VISTA since 2003. Previously, Mr. Baxa spent more than half of 
his career as general manager (GM) of a team providing support 
for every Defense Base Realignment and Closure round since 
1988, so your paths intersected a lot with Senator Dixon back 
in the mid-1990's. Welcome.
    Tim Ford is Chief Executive Officer of the Association of 
Defense Communities (ADC), which has been accredited with 
helping guide hundreds of its members through BRAC 2005. Mr. 
Ford is a nationally recognized expert on the impacts of base 
closure, base redevelopment, and community-military 
partnership. Previously, Mr. Ford was Executive Director of the 
New York City Employment and Training Coalition, which is the 
city's leading workforce development association. Mr. Ford, 
very nice to see you.
    And finally, our fourth witness is a person whose last name 
has never been correctly pronounced, and I am going to try to 
do it. I ask my staff, whenever we have a tough name to 
pronounce, I ask them to spell it out phonetically and we will 
see how I do and how well they do. Ms. Foscarinis.
    Ms. Foscarinis. Foscarinis, perfect.
    Senator Carper. OK, good. Thank you. Maria Foscarinis is 
the Executive Director of the National Law Center on 
Homelessness and Poverty. She is the founder of the Center, 
which has advocated for solutions for homelessness since 1985. 
Ms. Foscarinis is a primary architect of the Stuart B. McKinney 
Homeless Assistance Act. I served with Stuart McKinney for a 
number of years on the Banking Committee in the House. That was 
the first major act of Federal legislation passed addressing 
homelessness. She has led the successful litigation to secure 
the legal rights of the homeless and is an internationally 
known expert, and we thank you and each of our panelists for 
being here today.
    Why don't we go ahead and begin your testimonies. We will 
ask that you try to limit your testimonies to 5 minutes or so. 
If you go way over that, we will rein you in. If you do not, we 
will be in good shape.
    Senator Brown, you may want to slip out and go vote. Is the 
vote going to start at 2:15?
    Senator Brown. Yes.
    Senator Carper. If it is, you may want to do that, and then 
you can come back and I will run over and vote and we will be 
in good shape. Thank you.
    Senator, please proceed. Your entire statements will be 
made part of the record and feel free to summarize as you wish.

STATEMENT OF HON. ALAN DIXON,\1\ FORMER CHAIRMAN, 1995 DEFENSE 
            BASE REALIGNMENT AND CLOSURE COMMISSION

    Mr. Dixon. Thank you very much, Mr. Chairman and Senator 
Brown. It is delightful to be here with you today. I ask that 
my full statement be included in the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dixon appears in the appendix on 
page 51.
---------------------------------------------------------------------------
    I think you will find it useful in view of my experience as 
Chairman of the 1995 BRAC. In that year, my good friend Senator 
Sam Nunn, the Chairman of the Armed Services Committee, 
recommended me to President Clinton to be the Chairman of BRAC 
and talked me into it. I have come to forgive them both, Mr. 
Chairman, for that experience. But I can testify on the basis 
of that experience that BRAC was an immense success. Billions 
and billions and billions of dollars were saved by what we did.
    I am simply going to close by saying my experience is 
outlined in the record for you, but I want to say that the BRAC 
experience showed that some form of government assistance to 
communities affected by major closures or realignment was 
essential both for losing communities to overcome the economic 
impact, and in some cases for gaining communities to prepare 
local infrastructure to receive new activities.
    Now, Mr. Chairman, I notice that under the Administration's 
proposal, the Civilian Property Realignment Board's meetings 
are not open to the public, and the Chair and the Ranking 
Member of the congressional Oversight Committees can sit in on 
all meetings of the Board. I respectfully suggest, Mr. 
Chairman, that the Subcommittee should take a close look at 
these aspects of the Administration's proposals in light of my 
BRAC experience.
    The value of transparency, the value of openness, the value 
of all opportunities for people to be heard is terribly 
important. The BRAC experience shows that military base 
closures can be done in a fair, open, and compassionate manner 
and the communities affected can recover economically, and I 
believe that will be true of your experience with this 
legislation if you are prepared to protect transparency.
    I thank the Chair.
    Senator Carper. Thanks very much, and to your point, I 
spent a couple of days last week--we were in recess here in the 
Senate, and I spent a couple of days in California, where many 
of the bases, including Motha Field Naval Air Station, where I 
was a Naval Flight Officer, have been closed and have been 
transitioned to other activities, and for the most part, very 
successfully. So I think you are absolutely right.
    Mr. Dixon. May I make this final response to that?
    Senator Carper. Please.
    Mr. Dixon. In my own State of Illinois, Mr. Chairman, they 
closed Chanute Air Force Base near the University of Illinois 
at Rantoul. Everybody thought that would be the ruination of 
this community called Rantoul in Central Illinois. As a matter 
of fact, that has become a tremendous industrial park and has 
contributed a lot of good economically to that community. They 
closed Fort Sheridan in Northern Illinois and that became one 
of the most beautiful residential areas on Lake Michigan that 
you could ask to see. So I definitely believe that the economic 
results of this will be very beneficial to the government and 
the people of the United States.
    Senator Carper. My staff oftentimes hear me quote Albert 
Einstein, who once said, ``In adversity lies opportunity,'' and 
the same is true and you have shown it with the work that you 
have done. Thank you. Thanks for being with us today.
    Mr. Baxa, please.

  STATEMENT OF DAVID BAXA,\1\ CHIEF EXECUTIVE OFFICER, VISTA 
                   TECHNOLOGY SERVICES, INC.

    Mr. Baxa. Thank you, Mr. Chairman. I certainly want to say 
on behalf of the employees of VISTA TSI, we sincerely 
appreciate your invitation to share our views. Our views and my 
personal views are honed by nearly 25 years of experience with 
Defense BRAC through five rounds, starting in 1988.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Baxa appears in the appendix on 
page 54.
---------------------------------------------------------------------------
    Our comprehensive support to the Department of Defense 
(DOD) has included development of tools to determine space 
requirements in concert with workforce demographics and 
organizational missions. We have also helped to determine 
excess properties by specific type and location. These proven 
methodologies continue to result in major savings and cost 
avoidances to DOD.
    For example, we recently helped the Army avoid more than 
half-a-billion dollars in new costs for medical and parking 
facilities. We examined other government agency practices, 
applicable industry standards, and analogous private sector 
benchmarks to help the Army adopt new criteria. The result was 
cost avoidance of $220 million for medical facilities, $310 
million for parking. The resulting elimination of these 500,000 
square feet of medical and 8 million square yards of parking 
allowed the Army to avoid tens of millions of dollars of 
additional costs in future operations and maintenance for those 
facilities. This is the kind of thinking that should take place 
as civilian agencies change the way they view their needs for 
real property.
    I would caution the Congress not to view the current 
initiative as a fire sale of assets for short-term gain. 
Rather, it should be viewed as an opportunity to effect 
permanent changes in Federal real property asset management 
practices. The most substantial benefit to the taxpayer will 
come through reduced year over year sustainment costs for 
facilities we no longer need. We should be ambitious and not 
miss an extraordinary opportunity to help Federal asset 
management professionals drive significant costs out of their 
system.
    My written statement offers several suggestions for the 
Subcommittee's consideration. I would like to highlight six of 
them here.
    First, the Senate-confirmed Commission should operate for 
no less than 8 years, with official recommendations issued 
every 2 years during that period. It will likely take two or 
three rounds to achieve the maximum benefits, where agencies 
truly get in sync with the process prescribed by the 
Commission, improvements in agency asset management business 
practices become institutionalized, and congressional and 
taxpayer expectations are met with regard to asset sale 
proceeds, property management cost avoidances, and other 
savings.
    Second, the Commission's development of standards or best 
practices and criteria for evaluating agency recommendations is 
one of the keys to this process. The Commission should avoid a 
one-size-fits-all criteria, but done right, standard benchmarks 
can lead to the integration of improved business decision 
methodologies across all agencies. This would help ensure that 
realignment is an ongoing activity. Agencies should regularly 
evaluate their real property holdings and configurations as 
their missions evolve, business processes improve, and 
workplace realities change.
    Third, steps should be taken to ensure that departments and 
agencies have essential data to account for what they own or 
lease, where it is, what condition it is in, how it is being 
utilized, and how it compares to what is actually needed to 
support essential missions and programs. Without these 
important data points, decisionmakers will have diminished 
ability to effectively realign or improve management of their 
real property assets.
    Fourth, agencies should be given sufficient time to work 
through the thorny issues associated with making 
recommendations to the Commission. Done right, this process 
will require agencies to rethink their space requirements. 
Based on years of practical experience, including DOD BRAC, 
this undertaking requires sufficient time to promote the best 
choices.
    Fifth, Congress should consider requiring departments and 
agencies to prepare and publish workforce projections and 
planning criteria in the Federal Register. Defense BRAC 
required DOD to publish force structure plans and criteria for 
determining asset closure and realignment candidacy. This 
established consistency in the way recommendations were 
developed and would be helpful to civilian departments and 
agencies, as well.
    Finally, Congress should consider the establishment of a 
Resolution Trust Corporation (RTC)-type entity to take 
possession of all designated properties and dispose of them in 
a way that maximizes returns. This would reduce disposal 
burdens on agencies and promote bundling of assets across 
agencies as part of the process. While GSA is very skilled as a 
customer-focused landlord and does a good job there, its 
experience in bundling assets in creative ways to maximize 
returns is more limited. An RTC-type entity could effectively 
engage private development interests to successfully address 
such disposal innovations.
    To conclude, Mr. Chairman, I genuinely applaud your efforts 
to address this need. Congress should take care to design the 
process so that the taxpayer realizes the greatest benefit 
possible.
    Senator Carper. Thanks, Mr. Baxa.
    Mr. Ford, please proceed. And if we get about 5 minutes 
into your testimony, I am going to have to maybe adjourn, or at 
least recess, but go ahead. I would like to get started. Please 
proceed.

STATEMENT OF TIM FORD,\1\ CHIEF EXECUTIVE OFFICER, ASSOCIATION 
                     OF DEFENSE COMMUNITIES

    Mr. Ford. Chairman Carper, Senator Brown, distinguished 
Members of the Subcommittee, we appreciate the opportunity to 
be here today. For more than 35 years, ADC has been the leading 
nongovernmental organization involved with the BRAC process. We 
represent over 250 communities that have dealt with or are 
dealing with the impacts of BRAC. Through our involvement with 
the past rounds and our current involvement in the property 
disposal process, we bring a vast experience with working with 
local and State Governments, the Federal Government, and the 
private sector on the impacts of Federal property transfer.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ford appears in the appendix on 
page 62.
---------------------------------------------------------------------------
    As this Subcommittee considers legislation to dispose of 
excess Federal property, we hope that the lessons learned in 
the BRAC process, and in particular the impact of the role of 
communities and States should be given consideration. 
Communities and States have been a central part of the BRAC 
process since its inception in the early 1980's. In fact, one 
of the major reasons we ended up with BRAC was to mitigate the 
concerns of communities and States regarding the transparency 
of the overall process.
    While decisions related to BRAC and the impact of 
communities and States have been challenging, the BRAC process 
has remained politically viable because of the independence of 
the process, a commitment to transparency, and procedures for 
engaging communities and States from the beginning through 
implementation of the decisions. As currently written, the 
Administration's proposal risks making similar mistakes that 
were made in the 1988 BRAC round, and I will speak to 
recommendations that I think would improve the overall 
approach.
    First, it is critical to recognize that communities and 
States will be impacted and should be involved in the decisions 
regarding the Federal footprint in their area. Potential 
negative impacts for communities could range from the 
elimination of jobs, the movement of jobs, and then there are 
the implications of property redevelopment.
    At the same time, this process could have positive outcomes 
for communities and States. Working with local government and 
the private sector, there are opportunities to maximize the 
efficiency of the Federal footprint and enhance the local tax 
base. Engaging communities through the entire process may add 
complexity, but we think it is essential to the success of the 
process, and we see three critical elements to really building 
this engagement.
    First, transparency. The Administration's proposal to 
establish a board rather than an independent commission will 
impede the objectivity of the process and could allow politics 
to influence decisions. The independent nature of decisions 
reached through the commission in the BRAC process has been 
critical to maintaining the support and involvement of 
communities.
    Second, institutionalizing community involvement. Given the 
length of the proposed process and its broad national impacts, 
mechanisms for institutionalizing community and State 
involvement need to be part of this legislation. First, to 
facilitate coordination with communities and States, the board 
should be required to establish regional-State liaisons that 
would manage interaction with affected areas.
    Second, in those areas where significant actions are taking 
place, the board should have the option to create a joint 
Federal-local agency chaired by the community or State and 
comprised of Federal-local members in the impacted areas. This 
entity could provide a mechanism for ensuring that local tools, 
such as zoning and land use entitlements, are in place to 
maximize the return to the Federal Government. A similar model 
has been very important in the successful transfer of property 
and military base closure.
    Third, given the ongoing budget discussion, there is strong 
interest in selling unneeded Federal property as a way to 
generate revenue. While it could be an option in some 
situations where market conditions are favorable, our 
experience in disposing of Federal property in BRAC has shown 
that cost avoidance rather than generating revenue through land 
sales is a more realistic goal. Attempts to focus BRAC property 
transfer on attaining fair market value and sales revenue have 
not been successful. In many instances, the value of the 
property decreased because of the extra carrying cost to the 
government while it tried to maximize the value in the 
marketplace.
    Another issue for property disposal involves the transfer 
of parcels to State and local entities for public benefit. 
Communities need to have a strong voice in this process and be 
allowed to petition, and in some cases receive Federal property 
at little or no cost if it meets local needs. Community 
involvement needs to be extended to the screening of property 
for homeless needs. In most instances, community and State 
leaders, not a Federal board, will understand their 
communities' needs and can best accommodate the needs of the 
homeless.
    Finally, while there is value in using existing disposal 
authorities within Federal agencies, most agencies are not set 
up to manage significant property disposal actions. 
Centralizing the disposal authority into one agency with real 
estate and property expertise is essential.
    To conclude, communities and States can play an important 
role in the success of the Federal disposal effort. Creating a 
process that maintains independence and transparency while 
engaging communities will be key for successfully implementing 
this process. After a decision is made, the property disposal 
process must focus on partnering with local entities to 
expedite the process. BRAC, while complex, has taught us this 
process can create mutual benefits for all involved.
    We appreciate the opportunity to testify today. Senator 
Brown.
    [Presiding.] Great. Thank you very much. Ms. Foscarinis.

STATEMENT OF MARIA FOSCARINIS,\1\ EXECUTIVE DIRECTOR, NATIONAL 
             LAW CENTER ON HOMELESSNESS AND POVERTY

    Ms. Foscarinis. Thank you very much. Chairman Carper, 
Senator Brown, Members of the Subcommittee, I appreciate the 
opportunity to testify today. I am the Executive Director of 
the National Law Center on Homelessness and Poverty. Our 
mission is to serve as the legal arm of the nationwide movement 
to end and prevent homelessness in America.
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    \1\ The prepared statement of Ms. Foscarinis appears in the 
appendix on page 67.
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    Each year, more than 3 million Americans experience 
homelessness, including 1.3 million children. These numbers 
have increased as a result of the recession and foreclosure 
crisis. In fact, the U.S. Conference of Mayors estimated a 9-
percent increase in family homelessness in 2010 alone. Over 70 
percent of the officials surveyed for the report expect family 
and child homelessness to increase further during the coming 
year.
    The U.S. Government has committed itself to ending 
homelessness. Just a year ago, the U.S. Interagency Council on 
Homelessness released ``Opening Doors: The Federal Strategic 
Plan to End and Prevent Homelessness.'' The plan's central 
belief is that no one should experience homelessness. No one 
should be without a safe, stable place to call home.
    Recently, our government stated before the world community 
that homelessness in our country implicates our human rights 
commitments and made a pledge to the world community to reduce 
homelessness. And Congress has made similar commitments, most 
recently in the HEARTH Act of 2009, which established a Federal 
goal of ensuring that individuals and families who become 
homeless return to permanent housing within 30 days.
    You might wonder what homelessness has to do with Federal 
surplus property. The answer is simple. In 1987, Title V of the 
McKinney-Vento Act put in place a set of important protections 
for homeless people. Under the law, homeless service providers 
have a right of first refusal to acquire Federal property no 
longer needed by the government to use it for urgent needs, 
such as housing and services for people who are homeless.
    More than 2.4 million Americans benefit each year as a 
result of this provision in the law. Formerly vacant Federal 
properties now provide shelter, transitional and permanent 
housing, case management, food pantries, job training, mental 
health and substance abuse treatment, and child care. Just in 
the States represented by Members of this Subcommittee, 
properties have been transferred in Alaska, Arkansas, Maine, 
and Montana. Massachusetts is also on that list, and I am not 
sure why I did not include it.
    As Congress reviews efforts by Federal agencies to dispose 
of surplus properties, homeless people must be protected, and I 
know the Committee is very concerned with cost reduction and I 
want to note that ending homelessness is not only the right 
thing to do, but also the fiscally responsible thing to do. It 
is more costly to allow homelessness to continue in our country 
than to end it, and Title V is one of the important Federal 
programs that can help us do that.
    I want to make three points that are elaborated on in my 
written testimony. The Title V process is not the cause of 
inefficiencies in the Federal property disposal process and 
thus it should be protected and not eliminated or drastically 
altered as a result of procedural reform. The process takes a 
mere matter of months, and once complete, the Federal 
Government may move forward with any alternative means of 
property disposal. We know that nearly all of the 14,000 
properties on the list of existing--on the list of properties 
that have been screened through Title V, the review has been 
completed and they are now awaiting transfer. Title V is not 
the cause of the hold-up. If there are reasons for the delay, 
they do not lie within Title V and thus Title V should not be 
altered to address the inefficiency.
    Second, while we reject this contention that Title V is 
causing delay, we agree that procedural reforms can be made to 
streamline the process and make it work in a faster and smarter 
way, and we are happy to work with the Committee to do that. We 
also believe that more Federal properties could be made 
available that would be useful in providing housing for 
homeless people and thus saving the Federal Government, 
ultimately, resources.
    Third point, we understand that the Subcommittee is now 
considering a legislative proposal put forth by the Office of 
Management and Budget (OMB) that would eliminate Title V and 
replace it with a BRAC-like process. We want to say that we 
cannot support this proposal in its current form. The 
protections that are in BRAC are not in place in this proposal 
and we cannot support the proposal without those protections. 
Those protections include representation of homeless people on 
the commission that would review property and it would include 
a right to have--by those representatives to refer a property 
to be screened for use on behalf of homeless people.
    This is not the time, as homelessness continues to rise 
across the country, this is not the time to take away an 
important Federal program to help homeless people that has been 
in place for almost 25 years. This is the time for the Federal 
Government to be looking at increasing ways that it can assist 
in addressing the needs of homeless people. And as I said 
before, this is not only the right thing to do, it is also a 
cost effective--the cost effective thing to do, because 
homelessness not only costs lives, it costs resources.
    So with that, I will submit the rest of my testimony for 
the record. I thank you very much for the opportunity to 
testify and I would be glad to respond to questions.
    Senator Brown. Great. Thank you very much.
    Obviously, I have Senator Begich here and Senator Coburn. I 
will start off. We will do 7-minute rounds and then we will 
alternate until the Chairman gets here. He went and voted.
    Mr. Ford, if I could just start with you, I know that in 
your testimony, you emphasize the importance of a commission as 
opposed to a board. How would the creation of a board instead 
of a commission impede the independence of the President's 
proposed process, if at all?
    Mr. Ford. I am not the expert on all the differences 
between the board and a commission. We know the experience in 
BRAC with the commission, which is independent, Presidentially 
appointed----
    Senator Brown. Right.
    Mr. Ford [continuing]. It is not within an agency, so it 
has the independence to make decisions and can establish its 
own transparency requirements. It has been a process that has 
been successful through BRAC.
    Senator Brown. And, Mr. Baxa, during your experience with 
the BRAC process, any mistakes that you encountered that we 
should avoid in administering the civilian property realignment 
proposal?
    Mr. Baxa. Well, I think some of the things that probably I 
would call attention to is that there were instances where 
there could have been more done to help, I think, localities 
deal with these big closures. I am not sure, though, that the 
same thing applies to a civilian BRAC, since we are not looking 
most likely at shutting down small cities like we were in the 
case of many defense installations. So I think there are 
different parameters that come into play that need to be 
recognized.
    Senator Brown. And, Mr. Ford, back to you. There are many 
stakeholder interests involved in the disposal of Federal 
property. We see that all around. There is California, other 
types of States that have parochial interests, obviously, in 
protecting or eliminating or dealing with these types of 
properties. Do you have any suggestions how to ensure that we 
have an efficient process while also considering any 
stakeholder interests? Do you have any thoughts on that?
    Mr. Ford. I think it is establishing a process from the 
beginning so you are engaging the communities and the States 
and the regions in the decisionmaking process. I think some of 
the early attempts at base closure were done sort of from a 
Washington perspective and they started just making decisions 
and the communities and the States kind of fought back, and 
that is why we ended up with BRAC as a more transparent 
process. So I think it is establishing a system to engage the 
communities so that they are working with the commission or 
board, and I think it--again, it adds some complexity to it, 
but it could make the whole process move more smoothly.
    Senator Brown. And, Mr. Baxa, on the 14,000 properties you 
indicated have little market value, what is that? What type of 
properties, just so anyone listening--what type of properties 
are we talking about? Are we talking undevelopable plots of 
land, abandoned buildings----
    Mr. Baxa. If you look at the list that has been put out by 
OMB at this point in time, I think you can see there are a 
number of very small structures that are part of that. There is 
obviously open land. And some of them are scattered around in 
remote areas. And those, I think, would probably have little or 
no value. There are some that are on Federal enclaves that 
could not reasonably be cordoned off----
    Senator Brown. You cannot get access? Access issues?
    Mr. Baxa. Right, to generate any----
    Senator Brown. Yet where we are actually spending money 
maintaining these buildings.
    Mr. Baxa. Exactly. So the real savings are what comes down 
the road.
    Senator Brown. Right. So would the recommendations also be 
to just tear a building down?
    Mr. Baxa. I think, in some cases, that is the logical 
disposal approach.
    Senator Brown. So what has taken so long up to this point? 
I mean, it seems we are spending $1.7 billion keeping some of 
these properties maintained, yet they have no fair market value 
or resale, et cetera.
    Mr. Baxa. There has not been a strong impetus to dispose in 
the past. I think that may have slowed things down. I think 
there are some environmental considerations. I do not have the 
full view of all of those properties, but there certainly are a 
number of different hurdles that have to be overcome in the 
disposal process.
    Senator Brown. I will just wrap up with Ms. Foscarinis. So 
you indicated that you are not in favor of the President's 
proposal and that you have suggestions to help streamline the 
process. What are your suggestions? What type of things do you 
have?
    Ms. Foscarinis. First of all, our first point is do not 
alter Title V, because Title V is not the cause of the problem. 
It is not the reason why those 14,000 properties are 
languishing and costing the Federal Government.
    Senator Brown. What do we do about those 14,000 properties? 
What are your suggestions with that?
    Ms. Foscarinis. Well, I can address only the issue of Title 
V. So I think with regard to Title V, there can be better 
targeting so that the properties that truly could be of use for 
homeless people are targeted and made available, offered for 
that use to service providers.
    Senator Brown. OK.
    Ms. Foscarinis. Right now, there is all kinds of properties 
that go through the Title V process that are not of any 
practicable use. Those include national security properties, 
air strips, all kinds of properties that could not conceivably 
be used to house anybody. So those do not need to go through 
Title V process. There could be better outreach so that service 
providers serving homeless people become better aware and are 
also assisted in the application process. That would also speed 
it up.
    Senator Brown. OK. Well, thank you.
    I am going to turn it back over to the Chairman. I have 
completed my questions, so I started and then we have two new 
Members.
    Senator Carper.
    [Presiding.] How did they do in answering those questions?
    Senator Brown. They did very well, thank you.
    Senator Carper. OK. That is good. All right.
    Senator Begich, why do you not go ahead, and feel free to 
make a statement if you would like.
    Senator Begich. Thank you very much. I will probably 
combine it here.
    I am listening to the testimony and the ideas, and I come 
from a city where for 20-some years we have had surplus 
properties and we put them into what we call the Heritage Land 
Bank, run by an independent board appointed by the mayor under 
both Republican and Democratic mayors. They hold the land in 
trust and then they release the land and sell it off or they 
look for public purpose.
    And so I am listening to your concerns, because we had the 
same concerns. We have a high homeless population. We also 
recognize every property--I am from the real estate industry, 
and I will tell you, every property has value. There is no 
property that has not had value. Someone will figure it out. I 
have seen this time and time again with properties that maybe 
there is no public purpose, but there is a sliver and they take 
it and they develop it in some way, and it is amazing what they 
will do.
    So I am looking at this from a very simplistic purpose, or 
simplistic idea, that taking all this surplus property, I do 
believe it should be an independent board that disposes of 
this, because if you leave it to government, I do not know how 
long that will take. And I do not mean dispose in the sense of 
just selling, either. I think a combination of things here.
    I want to throw out a thought, and then if you could 
respond. Why not--and I am not sure, the BRAC to me, it is day 
and night. BRAC is a whole different process. We had to deal 
with it in Anchorage, so it is about, like you said, towns 
disappearing, commercial centers disappearing. These are 
buildings and facilities that most people drive by and go, 
``What is that?'' ``Who owns that?'' And then they go by and 
then there is a window broken and they go, ``Oh, it must be 
some government property because they are not maintaining it,'' 
and we would get the calls when I was mayor all the time.
    So why not just take all these properties, the 14,000, and 
you can protect Title V. You can say it is going to be a new 
law. We are going to put these 14,000 properties or whatever 
else might occur over the years. The board's purpose is to have 
three goals, or two or three goals. One is, look at these 
properties for public purpose. Put those aside. The properties 
that have no public purpose, those are then to be inventoried, 
valued, or put on the market to sell. And then there is usually 
this third category that they are really not sure yet because 
there may be, there may not be, and there is some more analysis 
that has to be done, and the board continually looks at the 
inventory that occurs, because the inventory of the Federal 
Government does go up and down, depending on what is going on 
in the different industries, or like we are right now 
consolidating Homeland Security properties into one building. I 
do not know if they are all leased. Maybe they are. Maybe there 
are some government buildings that will appear as surplus.
    Why not just keep it that simple and just, that is what we 
do. You keep the concept of Title V in play in the sense of 
this goal, but we also get rid of some of these properties 
that, as you have just identified, I mean, airfields, I will 
guarantee you, someone will buy that airfield. Who knows what 
they will do with it, but they will buy it. Why not do 
something like that?
    OK. I see a lot of nodding heads. I am afraid to ask for 
any verbal comment, then, because if you are nodding your head 
yes--to me, it just seems so logical. To try to replicate the 
BRAC in this situation is not what it is about. It is about 
taking property we just do not utilize for U.S. Federal 
Government purposes anymore, but it may have other purposes. 
Comments?
    Ms. Foscarinis. Senator, if I may respond, I think that 
there is a lot that can be done to reform, as you just 
indicated. Our first goal would be to keep Title V separate 
from this process----
    Senator Begich. I have heard that. Do not worry.
    Ms. Foscarinis. Well, because the hold-up happens after the 
Title V process----
    Senator Begich. I understand that.
    Ms. Foscarinis. And so from our perspective, the safest and 
best thing from the point of view of homeless people, who are 
often not in a position of power at all in this process. Is to 
keep Title V separate and address the reform post-Title V. And 
your suggestions, I think, make a lot of sense.
    Senator Begich. We used to do a lot of partnership with 
Habitat for Humanity, Cook County Housing Authority, for that 
simple purpose. But they just would inventory the property and 
there is stuff that they could use and there is stuff that they 
would look at and say, never possible. And then there is stuff 
that we would have to debate, the board would debate on highest 
and best value, both from a community and the social service 
side.
    Mr. Baxa. Senator, if I may, I think we are calling it a 
BRAC process, but this civilian property realignment process 
with a commission, I think, puts some special impetus on 
getting the job done, and so having that in play, I think, 
provides, if you will, a chance for decisions to be made that 
may be politically difficult to make outside of that construct, 
and so I would suggest that something along the lines of a BRAC 
commission and I do favor a commission because I think it has a 
wider acceptance--would, in fact, help us to get to the end 
game much more rapidly than we would otherwise.
    Senator Begich. Go ahead, Mr. Ford.
    Mr. Ford. And I think that there is--I mean, in discussions 
about this process, there has been some assumptions that a 
commission could look beyond the 15,000 properties on the 
surplus list to really looking at how to create efficiencies 
across the Federal footprint and that agencies probably have 
not listed some of the properties that the commission might 
consider. So this could have a broader impact. I think the 
history of BRAC, especially in this last round, where BRAC used 
to be about closing bases, in our last round, it really became 
about transformation. But again, BRAC is really just a 
decisionmaking process. At least it is a process that has shown 
the ability to deal with local politics and Federal-level 
politics.
    Senator Begich. Yes. I guess--I appreciate it. That is 
great. I agree with you that it is semantics, whatever you call 
it, just a mechanism. I worry, and maybe I am naive about this, 
but I am--the political controversy of getting rid of 
properties that no one uses, at least as a mayor and someone 
who sat as a mayor for 5 years and 10 years on the city 
council, is not really controversial. The controversy occurs 
that you do not do it and it becomes dilapidated, falling apart 
and deteriorating, where the neighborhoods then get upset 
because you have not done anything.
    And that is where--so I hear--BRAC is so much--I mean, I 
understand the politics of BRAC. That is like a nightmare, 
which base should be closed, who should not be closed, all the 
business that would be affected. But when you have surplus 
properties, I just--maybe I am, again, naive about this. I do 
not see the controversy even comparable to BRAC. I understand 
BRAC is a process, but--just some thoughts there. I think there 
is a way to do this very easily and I hope we do not over-think 
this, because I think it is a way to make this happen for the 
benefit of both ends but at the same time meet our goal, which 
is we do not want these properties if they are costing us money 
and there is no public purpose from a Federal Government side. 
There may be community public purpose and/or the faster you get 
this out into the market, if it is not a public purpose 
property, you are going to produce economic development, which 
produces new revenue streams for those local communities and it 
just dominoes.
    So I just--I hope we are not--what I have learned around 
this place is we sometimes over-think these issues to the point 
where it is not that complicated. And I will just say from a 
local government perspective, a mayor, we have done this. 
Mayors have done this a lot around the country and it seems to 
work. So I am just throwing that on the table as a concept.
    I understand when you say realignment, really, what you are 
doing is you are reassessing the assets of the Federal 
Government. It is not realigning anything. You are just 
reassessing. They do not need that anymore, so now we will pull 
that and move it over here. So I think we are all saying the 
same thing. It is just the mechanism. I do not want us to get 
it complicated, that is all.
    That is all, Mr. Chairman. I like this. I mean, I am all 
for this. I know Mr. Coburn and I have talked about it. Mr. 
Chairman, we have talked about it. I think this is the right 
movement to do. It is, just let us not make it too complicated 
or we will never do it, or it never will happen and we will 
have 14,000 properties backed up.
    Senator Carper. All right. Senator Coburn has worked on 
this stuff for many, many years. I think we are going to make 
some progress here at last and I thank you for your work in all 
those vineyards and for being here today.
    Senator Coburn. I appreciate it. Thank you.
    I was just going to reply to Senator Begich that it is not 
simple because you have every roadblock in the world. There are 
over 70,000 properties. We have only got 14,000. We have 
70,000. The $1.2 billion does not come close to the cost of 
maintaining those 70,000. That is just the 14,000. So we have 
billions of dollars.
    The question I would ask Ms. Foscarinis, should we use 
cost-benefit analysis? I mean, we have Title V here and we have 
a building that we could sell for $5 million and yet the 
homeless can use it and they would have to put another million 
in it, and really, it is not the appropriate structure, and for 
$1.5 million, we could get the ideal structure. Why would we 
not do that rather than say, well, we are going to do this 
because we have Title V sitting there blocking an actual good 
sale of a building for a real purpose when we could take some 
of the profits from that and put it into homeless? Why would we 
not want to do that?
    Ms. Foscarinis. Well, we do that sometimes. In fact, there 
are examples of groups that have----
    Senator Coburn. Yes, but most of the time, we do not do 
that----
    Ms. Foscarinis. Well----
    Senator Coburn [continuing]. And most of the time, it 
becomes an inhibitory factor for us to get rid of buildings.
    Ms. Foscarinis. Well----
    Senator Coburn. And it is not just Title V. It is true in 
my State. When we are sitting at $14 trillion worth of debt and 
we are drowning in debt and we are saying, instead of making 
smart moves, the right appropriate economic move, we are going 
to give a building to a State or city or something like that by 
law because we have to, when, in fact, what we should be doing 
is sell it and lowering the debt, and then we have an 
obligation to help take care of the homeless. Your accounts 
say, you cannot touch Title V. Well, we are going to have to 
touch Title V, but that does not mean we cannot touch it in a 
way that makes it better, not less than what it is.
    So I hope you will consider, as we go through this, if we 
have a commitment to the homeless, then we ought to do that in 
the most cost-effective way, and what we have is a bureaucracy 
now lined up that says, basically, you cannot get rid of any 
real property. I mean, that is really what has happened. I have 
been working on this for now 13 years, to try to get some 
movement, and every time we get close to a movement, we get 
blocked. And the No. 1 thing that blocks it is Title V. People 
get afraid. Rather than say, OK, we will make a commitment over 
here to homeless, but what we have heard is you cannot change 
this. And what we need to do is make a commitment to homeless, 
but also do the smart thing economically for the country, and 
that is why I am very supportive of the idea behind this, 
because I think it will do it.
    Let me ask a----
    Ms. Foscarinis. Senator Coburn, may I respond, 
respectfully, please?
    Senator Coburn. Sure.
    Ms. Foscarinis. I know that you have been working on this 
issue for many years, as have we. The issue of Title V is not 
the problem here, if I might just----
    Senator Coburn. I disagree.
    Ms. Foscarinis [continuing]. Respectfully disagree with 
you----
    Senator Coburn. I have looked at it. It is a problem.
    Ms. Foscarinis. Title V is a matter of months in the 
process. The reason that the 14,000 properties are languishing 
is not due to Title V----
    Senator Coburn. No, I am not talking about--Title V is a 
problem because we inappropriately match properties to the 
benefit of Title V, which is not the best, efficient way to 
match what the homeless need. And what we should say is here is 
how much property we have. Here is our commitment to the 
homeless. Forget all this and go sell the property and give 
some of the money to the homeless and let that happen. We are 
making something very, very difficult, and every time we try to 
move anything on this, what we hear--you are very effective. 
You are very effective because you have dead stopped every 
movement at property reform in the Congress in the last 13 
years.
    Ms. Foscarinis. Well----
    Senator Coburn. It has been dead stopped.
    Ms. Foscarinis. I guess I should be flattered.
    Senator Coburn. It is a compliment. You are very effective 
lobbying for the homeless. But the point is, is if we really 
care about our country and the homeless, we will do both. And 
when your adamant statement is you cannot touch Title V----
    Ms. Foscarinis. Well----
    Senator Coburn [continuing]. What you are saying to us is 
there is not another way to care for the homeless in this 
country except the way we are doing it today, and I reject 
that. I want you to know----
    Ms. Foscarinis. Senator Coburn, I do not mean to interrupt, 
but I think you might have missed our statement where I said 
that we are happy to work with the Committee to reform Title V 
to make it better and we are open to reforms that will 
streamline it, that will make it work better----
    Senator Coburn. But you are still stuck on Title V. What 
about just a commitment to the homeless in this country because 
it is the right thing to do outside of Title V and separate it 
from real property?
    Ms. Foscarinis. Well, sure. There are many things that need 
to be done, and it is not just about Title V. You are 
absolutely right. And Title V alone will not solve the problem 
of homeless. But in many communities, the absence of a piece of 
property is the key factor, the key barrier----
    Senator Coburn. You are missing my point completely. Take 
the money. Separate real property from homelessness. Commit a 
portion of the money to homelessness. Create the organization 
where you do the ideal thing for the homeless rather than the 
less than ideal. That is all I am saying.
    Ms. Foscarinis. Right. I understand. I understand. I think 
we need to do both, because there needs to be money and Title V 
can also serve an important role. We are not talking about a 
lot of properties. Each year, there are only a few properties 
that go through Title V and are used for homeless purposes. But 
those properties make a big difference----
    Senator Coburn. But every property in the Federal 
Government's warehouse has to go and encounter Title V to see 
if it is available. Well, that is crazy.
    Ms. Foscarinis. Well, that is why we are saying we do think 
that the process can be reformed, because right now, there are 
many properties that go through the process that are of no 
conceivable use to homeless people.
    Senator Coburn. That is right.
    Ms. Foscarinis. And so we would be happy to work with the 
Committee on a targeted----
    Senator Coburn. So when we tried to change that 4 years 
ago, what we got was feedback, no, you cannot do that.
    Ms. Foscarinis. I believe we proposed, and we have worked 
with this Committee on sensible reforms that would target 
properties.
    Senator Coburn. Well, that was not our response on the 
floor when we had a bill on the floor.
    Let me--I want to followup a little bit with Senator 
Begich, and I think we can really use a lot of his experience. 
I think, first of all, I think he knows real estate, one. It is 
kind of like an old haberdasher told me. You never short-sell 
the suit. You keep it on the rack because there is always 
somebody that is going to come and buy it. You may not get as 
much as you wanted, but you can always sell it.
    I think Senator Carper's idea and this idea of getting our 
hands around real property--what I want to ask you is also we 
have seen because of our budget process that we have to account 
for the cost of a new facility under the budget guidelines in 
the year we take possession. And so, consequently, what we have 
seen is we have gone from buying properties to leasing 
properties, and quite frankly, that costs the Federal 
Government a whole lot more money.
    Do you have any comments on the stupidity--and those are my 
words--of a budget process that forces us into leasing 
properties at a great deal more expense than what we could buy 
them for now? Does anybody have any comments on that?
    Mr. Baxa. I would simply say, if I may, Senator Coburn, 
that it just does not seem to make reasonable sense that you 
cannot count the total cost of a lease in the process of trying 
to decide whether you are going to do it or not. If I were 
leasing on my own for my own personal purposes, I would 
certainly look at that and count that as part of the cost of 
acquiring that particular----
    Senator Coburn. And you would do a cost-benefit analysis on 
what the net cost to you over the life utilization----
    Mr. Baxa. Over the expected life of that----
    Senator Coburn [continuing]. Lease compared to purchasing 
ability.
    Mr. Baxa. Exactly, and I know we have worked with elements 
of the Defense Department to try to help them to figure out 
where they could take things out of lease and put it into 
government-owned facilities, and we have driven a lot of cost 
out of the lease bill for the Army, as an example, by doing 
that.
    Senator Coburn. But some of the smaller agencies really do 
not have that option, because if they buy a property, we charge 
it to them in the year they buy it----
    Mr. Baxa. Exactly.
    Senator Coburn [continuing]. Rather than amortize it over 
the life of the building.
    Mr. Baxa. Yes, sir.
    Senator Coburn. Any comments, Mr. Ford?
    Mr. Ford. No specific comments. I mean, that is--I think 
his expertise is probably more clear in this area.
    Senator Coburn. All right. Thank you, Mr. Chairman. I went 
over. I apologize.
    Senator Carper. That is quite all right.
    I want us to hit rewind and go back about 3 or 4 minutes to 
the exchange between Ms. Foscarinis and Senator Coburn, and I 
am going to ask Mr. Baxa and Mr. Ford to--you have been sitting 
here listening to this back-and-forth, and just to share your 
wisdom with us in how we actually end up with a better outcome 
here but we do not turn our backs on the homeless. What advice 
would you have for us?
    Mr. Ford. Every base closure community, every community 
impacted by BRAC has to go through a process. Now, it is 
different and there have been some changes, and I will not 
speak to all the technical changes that BRAC communities face. 
But what has always been important is maintaining the community 
role in that process, so community leaders are at the table 
trying to figure out what is in the best interest of their 
community.
    So in the case of BRAC, the homeless providers are working 
with the local redevelopment authority to make these decisions, 
so it--and that local redevelopment authority has a plan that 
they are trying to implement. So it becomes not sort of an 
abstract discussion of what is going to be good for the 
homeless, but it is really fitting in with an overall concept 
of how to reuse land, and the biggest focus for a BRAC 
community is to get jobs back to replace the jobs they lost.
    So I think it is a much more comprehensive approach to it, 
and while I cannot say it has not been without challenges, 
because all of our local redevelopment authorities around the 
country would say it can create a lot of headaches, it has been 
a process that at least has allowed them to move forward and 
has not been a huge stumbling block for moving forward.
    Senator Carper. Mr. Baxa.
    Mr. Baxa. I can only say that it is one more step in the 
process. I think what Senator Coburn has outlined certainly 
seems to make sense, that we could accomplish the same ends and 
not hold up the process of getting the most from those assets 
that we no longer need.
    Senator Carper. Ms. Foscarinis, when you referred for 
agencies that one of the obstacles--I am going to go back and 
recover some of this ground, but I think it is important--but 
one of the obstacles to property disposals is the lengthy 
screening process that must be performed before a property can 
be put on the market for sale. Just take a minute. Let us just 
back up. Explain to us, if you will, how does the McKinney 
screening process work, how an agency determines if a property 
is suitable for the homeless? And, on average, how long does it 
take for property to be transferred to a homeless service 
provider? Just----
    Ms. Foscarinis. Sure.
    Senator Carper. I call it, like, 101.
    Ms. Foscarinis. Right. Well, the properties are listed in 
the Federal Register and there is a 60-day period during which 
homeless service providers have first crack at the property. So 
during that 60-day period, they can submit a letter of interest 
if they are interested in the property. If there is no 
interest, the property is free to be sold. So 60 days.
    If there is a letter of interest submitted, there is a 90-
day period for a full application to be submitted, and that is 
either the application is submitted and the process goes 
forward and it is reviewed by the Department of Health and 
Human Services (HHS) and the property may or may not go to the 
homeless service provider, or it does not go forward and then 
it is over and the property is free to be sold.
    So it is a matter of months that the property goes through 
the Title V screening process.
    Senator Carper. Now, what advice could you offer to 
streamline that process?
    Ms. Foscarinis. Well, one way would be to target the 
properties so that--right now, there is a very kind of broad 
brush approach to this. Basically, there are a lot of 
properties that are published as being suitable for use for 
homeless purposes under Title V that really are not. So there 
are these national security properties or properties that are 
contaminated that are not habitable, or the airstrip example, 
or properties that----
    Senator Carper. The what example? Airstrip?
    Ms. Foscarinis. Airstrip, for example, an airstrip that is 
listed that could not conceivably be used by a homeless service 
provider. So there could be a more targeted process that 
happens up front so fewer properties go through the process, 
but better properties, properties that are more likely to be 
usable for this purpose, and we have made that recommendation. 
We have made that proposal.
    There could also be a greater effort to--right now, there 
are often hold-ups in the application process. This is a very 
cumbersome process. These are very often very unsophisticated 
homeless service providers. HHS will often come back to them 
with a request for additional information which further holds 
up the process, so the application process itself could be 
streamlined or more assistance could be offered.
    Senator Carper. Mm-hmm.
    Ms. Foscarinis. So those are some of the ways that I think 
the process could work better serving everybody's interest.
    Senator Carper. All right.
    Ms. Foscarinis. It is not our interest to hold up lots of 
property that is of no possible use to anyone. Our interest is 
simply taking these resources, which are public resources which 
are often very valuable to the providers, because getting a 
piece of real estate is often the biggest barrier. Not having 
access to property is often the biggest barrier to providing 
services or housing for homeless people in a given community.
    Senator Carper. OK. Thanks. In Dover, Delaware, we have a 
huge Air Force Base----
    Ms. Foscarinis. Mm-hmm.
    Senator Carper. And we have on that Air Force Base huge 
airplanes, C-5, one of the largest aircraft in the world, C-17, 
another major airlifter in our armed services. About 5 miles 
away, we have the Dover Federal Building, and every 5 or 6 
years when we go through the BRAC process, there is always 
great concern what is going to happen to the Dover Air Force 
Base, which employs about 5,000 people, the largest employer 
south of the Chesapeake and Delaware Canal in our State.
    I have always said to the folks in Central and Southern 
Delaware, BRAC can be our friend, and as it turns out, BRAC has 
been our friend at the Dover Air Force Base. Activities that 
were previously done in other States, other bases, are now 
being consolidated in Dover. So it has been beneficial to us.
    We have a Federal building about 5 miles away that is 
eventually being emptied out. We moved out of there about a 
year or so ago. Congressman Castle, now Congressman Carney, 
moved out more recently. But the Federal building sits on about 
a piece of property roughly half the size of a football field, 
maybe the size of a football field, but certainly not more than 
that. The base itself is quite large, as you might imagine. And 
the 5,000 people work at one and there are fewer than 100 that 
probably work at the other.
    I have been through the BRAC process as a Governor. I have 
been through it as a Congressman. I have been through it as a 
Senator. And it just seems to me that there are some real 
differences between disposing of Dover Air Force Base and the 
Federal building in Dover, a two-or three-story Federal 
building. Let me just ask of each of you, what are some of the 
key differences between the Administration's proposal for a 
Civilian Property Realignment Board and BRAC? What are the key 
differences? What are the key similarities? And what are our 
lessons to be taken from those similarities and differences?
    Mr. Baxa. If I might, Senator, one of the key differences 
that is right off the top is the board versus a commission, and 
it seems that the commission structure has worked well in BRACs 
in the past and that commissions tend to have inherent in them 
the ability for the legislative branch to recommend appointees. 
They seem to be more bipartisan in terms of their construct. 
And I think, then, as a result of the commission structure, it 
tends to carry more weight, to be more credible than many 
boards have been in the past. And so that is one certainly key 
difference.
    I think the other difference is that we have a little bit 
different scenario in the fact that with the Civilian Property 
Realignment Board or Commission or Act, you are talking about 
multiple independent civilian agencies, and OMB is the most 
likely capstone that would provide some oversight to that. In 
the case of BRAC, you had the Secretary of Defense who depended 
on the services and the defense agencies to make 
recommendations and then there was a certain normalization that 
took place at the OSD level before that was, in turn, submitted 
to the commission, and I think there needs to be a step like 
that included in the civilian side so that--and OMB could 
possibly play that role--so that you have the same opportunity 
to kind of look across the agencies at the recommendations that 
are being made because there may be some opportunities to do 
some colocation, some combinations that cross agencies that 
would be worthwhile for the government to consider, given our 
current budget situation.
    Senator Carper. Thanks. Mr. Ford, same question.
    Mr. Ford. I think that the point that was made is that DOD 
started this process wanting to get rid of property. I mean, 
they have wanted to get rid of bases along the way but Congress 
has stopped them. So the motivation is slightly different in 
starting this, because I do not think a lot of agencies 
necessarily--they will put forward their surplus, but are they 
going to really put forward maybe higher-value pieces of 
property that could be consolidated or taken out of the Federal 
portfolio.
    And again, this whole difference between the commission and 
the board, I think that there is the independence of it and the 
ability to make those decisions, I think is a big difference.
    I think this also has the opportunity, because you are not 
going to necessarily have communities like in BRAC who are 
going to be necessarily defensive, who are going to be 
posturing to try to save something. So there is probably an 
opportunity to work with a community and figure out, maybe they 
have an asset where Federal offices could be consolidated and 
it would be easier to sell a piece of property that the Federal 
Government owns. And it also would be an opportunity to work 
with the private sector. So I think there are a lot more 
opportunities to develop some creative solutions to this at the 
local level. It is a win for the community and a win for the 
Federal Government.
    And I think the other issue that crosses both is this whole 
issue of property disposal. I mean, we still are dealing with 
property disposals from the 1988 and 1990s BRAC rounds. You 
still have land that has not been disposed of. So it is not an 
easy process. Even the smallest pieces of property can be 
challenging.
    So on the BRAC side, we only had to work with three 
services, and that has been a struggle because each of them 
took a law that came down and interpreted it their own way, so 
I cannot imagine working with 16 or 20 different agencies, 
trying to do disposal. So I think, again, consolidating the 
disposal authority into some sort of entity that is able to 
move these properties quickly and has the real estate expertise 
to put these public-private deals together would help everyone.
    Senator Carper. What entity would you suggest that 
authority reside in?
    Mr. Ford. Of course, GSA has those skills. That is one 
option. I think the RTC has always--has actually been discussed 
in BRAC for years. So I think there are a variety of ways to 
look at it. I mean, it is probably something that takes a lot 
more analysis to figure out what makes sense, but the focus on 
expediting the transfer of property as quickly as possible 
should be the goal.
    Senator Carper. All right. Thanks. Senator Brown.
    Senator Brown. Mr. Chairman----
    Senator Carper. I am sorry. Ms. Foscarinis.
    Ms. Foscarinis. Oh, well, if you----
    Senator Carper. No, please. I am sorry.
    Ms. Foscarinis. OK. That is fine, Senator. Well, from our 
perspective, the BRAC process is quite different from the 
process currently being proposed by the Administration because 
it has very explicit provisions to safeguard homeless people 
and their needs as part of the disposal process. So in the BRAC 
process, the needs--it is written into the law that the needs 
of homeless members of a given community must be considered in 
disposing of the base property. Homeless people--
representatives of homeless people must be also part of that 
process and the Department of Housing and Urban Development 
(HUD) must oversee the disposal of a property in order to 
ensure that the needs of homeless people are addressed. So that 
is very different. All of those protections are missing from 
the Administration's current proposal.
    Senator Carper. Senator Brown says he has no more questions 
for this panel. I have just one more and then we will excuse 
you.
    Mr. Baxa, in your testimony, you suggest that we consider a 
Resolution Trust Corporation, something I got to know pretty 
well as a member of the House Banking Committee during the 
savings and loan (S&L) crisis.
    Mr. Baxa. Mm-hmm.
    Senator Carper. You suggest we consider a Resolution Trust 
Corporation-like entity and assist the government in 
liquidating some of the surplus real property assets. Just take 
a minute and let us just drill down on that idea----
    Mr. Baxa. Yes, sir.
    Senator Carper [continuing]. And if you would, describe for 
us how you think that might fit into a civilian BRAC process.
    Mr. Baxa. If you look at what happened on the defense side 
over the many rounds, each of the services and the defense 
agencies, but most of the services had to develop their own 
disposal office that took care of the implementation plans to 
implement what decisions had come from the commission.
    I think we certainly do not want to try to recreate that in 
every landholding agency in the Federal Government. We could 
create a situation where the various agencies might be bidding 
for certain talent against each other in order to be able to 
staff for fairly sizable disposal activities.
    I would also suggest that the Resolution Trust Corporation 
be enabled to bring in real estate development interest and 
other professionals into an arena where they could begin to 
look at combining and bundling. So if you took, for instance, 
you had many properties that might be in different cities 
around the country, it might be possible to bundle those and 
make that very attractive to a particular business that needed 
to be located in all of those various locations. And so having 
the wherewithal and the talent to be able to put together those 
kinds of packages, I think, could facilitate the disposal 
process and perhaps get a higher return for those properties 
than might otherwise be the case.
    Senator Carper. All right. Good. Thanks. Does anybody have 
anything else that you want to add before we excuse you and 
invite the next panel to join us?
    Ms. Foscarinis. Thank you for the opportunity.
    Senator Carper. All right. You bet. Our thanks to each of 
you.
    Our Members have 2 weeks to submit questions. Some of our 
colleagues who were not here and could not ask questions have 
up to 2 weeks to submit their questions, and we just ask when 
you receive those that you respond to them promptly. Again, our 
thanks to you all.
    Ms. Foscarinis. Thank you.
    Mr. Baxa. Thank you.
    Mr. Ford. Thank you. [Pause.]
    Senator Carper. I am going to go ahead and introduce our 
second panel of witnesses while some people make their way to 
the door and some people make their way into the room. But we 
welcome all of you.
    Our first lead-off witness is the Honorable Daniel Werfel. 
It is a good thing we do not have to pay Mr. Werfel on an 
appearance basis, because if we did, it would drive up the 
deficit even more. But Mr. Werfel serves as the Controller of 
the Office of Federal Financial Management within the Office of 
Management and Budget. He is no stranger to our Subcommittee or 
to our Committee. As Controller, he is responsible for 
coordinating OMB's efforts to initiate governmentwide 
improvements in all areas of financial management, including 
real property. Mr. Werfel holds a Master's degree in public 
policy from Duke, a Juris Doctorate from the University of 
North Carolina at Chapel Hill--I do not know how you put those 
together when Duke plays Chapel Hill UNC--and a Bachelor's 
degree in industrial and labor relations from Cornell, three 
pretty good schools.
    Robert Peck serves as Commissioner of Public Buildings for 
the U.S. General Services Administration. As Commissioner, he 
is responsible for managing some 362 million square feet of 
government-owned and leased space. Prior to being the 
Commissioner, he served as Managing Director of Jones Lang 
LaSalle, where he advised corporations, governments, and 
nonprofit institutions on real estate portfolio strategies.
    Mr. James Sullivan is the Director of the Office of Asset 
Enterprise Management at the U.S. Department of Veterans 
Affairs (VA). Nice to see you. He assumed this new leadership 
role in 2009 after serving as the Deputy Director since May 
2002. Mr. Sullivan has over 25 years of experience in capital 
budgeting, in planning, and in asset management. Is that true?
    Mr. Sullivan. Yes.
    Senator Carper. Just checking. He plays a pivotal role in 
managing some of the largest portfolios of property in the 
Federal Government.
    Mr. David Wise is the Director for Physical Infrastructure 
Issues at the U.S. Government Accountability Office, also 
affectionately known as GAO. He specializes there in 
transportation and communications and Federal real property 
issues. His career at GAO dates back to 1951--or 1981. 
[Laughter.]
    Mr. Werfel. Thank you. [Laughter.]
    Senator Carper. Mr. Wise has a Bachelor of Arts (BA) in 
political science from the University of Pittsburgh--he is a 
Panther--and a Master's degree in public Administration from 
Pitt's Graduate School of Public and International Affairs--
twice a Panther. All right. Good to see you.
    Brian Lepore is the Director for Defense Capabilities and 
Management Issues at the U.S. Government Accountability Office, 
GAO. He directs audits and evaluation teams reviewing the 
Department of Defense's support infrastructure programs, 
including base realignment and closure. Mr. Lepore holds a 
Master's degree in public Administration from Suffolk 
University in Boston and a Bachelor's degree in communications 
studies from the University of Massachusetts in Amherst. Let me 
just guess, who do you root for when the Red Sox play the 
Yankees?
    Mr. Lepore. It is an easy call, Senator.
    Senator Carper. All right, thanks. [Laughter.]
    Senator Carper. Thank you and the rest of our panelists for 
being with us here today. Again, we normally ask our witnesses 
to take about 5 minutes to testify, and after that, if you get 
way over that, we will rein you in, but feel free to summarize. 
Your entire statements, believe it or not, will be made a part 
of the record. Mr. Werfel.

 STATEMENT OF DANIEL WERFEL,\1\ CONTROLLER, OFFICE OF FEDERAL 
   FINANCIAL MANAGEMENT, U.S. OFFICE OF MANAGEMENT AND BUDGET

    Mr. Werfel. Thank you, Chairman Carper and Senator Brown, 
for holding this hearing, and given, as you said, that our 
statements are entered into the record, I thought I would use 
my few minutes here to offer some thoughts and clarifications 
after having had the opportunity to listen to the first panel.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Werfel appears in the appendix on 
page 74.
---------------------------------------------------------------------------
    One of the things I want to emphasize about the President's 
proposal is it is not intended to overtake the entire process 
by which Federal real estate is dealt with and disposed in case 
of surplus assets. Instead, what has happened is over the 
course of time, as we have evaluated the real estate within the 
Federal Government, we have identified some more challenging 
and transformational opportunities that exist within our real 
estate portfolio that require a different approach.
    Senator Coburn was discussing the fact that we often hit 
roadblocks. What we see emerging is a certain type of real 
estate opportunity that usually and typically has a much higher 
value proposition for the taxpayer in terms of savings where 
those road blocks are hit.
    Now, for the 14,000 assets that current sit as surplus, we 
have not hit those types of very challenging roadblocks. The 
reality is, is that they have made it through the process. They 
are surplus. We need to get rid of them and we need to do a 
better job in getting rid of them, but we do not necessarily 
think we need a BRAC-like process to get rid of them.
    Instead, as you start peeling back the onion layers of the 
Federal real estate inventory and as we look with Federal 
agencies at the start of the Administration, as President Obama 
directed us to do a better job on real estate, we started to 
see two types of opportunities emerge, more sure short-term 
opportunities that could take place under the current legal and 
regulatory environment that we have today, and we are pursuing 
those and that is the $3 billion goal that you referenced in 
your opening, and we are making good progress on that. Beyond 
that, and at a much higher savings level, are the more 
challenging opportunities that we believe we need a different 
process to go after, and there are really two types of 
opportunities that I will highlight and then I will turn it 
over to the other witnesses.
    The first is throughout our inventory, and there are not, 
we do not think, thousands of these opportunities, but there 
are a number of them, there are very high-value assets that 
exist where we look at the situation and we say a couple of 
things are going on. First, it is most likely not the highest 
and best use for Federal Governments to be sitting in that 
property at this time. It might be utilized, it might be fully 
utilized, but it does not need to be fully utilized by the 
Federal Government in that space, and by transferring them or 
consolidating them to another location and exploring commercial 
opportunities for that asset, the taxpayer could win in a very 
significant way.
    There might be high value assets that are no longer needed, 
but there is such a level of competing stakeholder interest in 
whether the Federal Government stays or goes or what happens to 
that property after the Federal Government leaves that those 
types of competing interests have created an inertia in moving 
those properties forward and we have not yet figured out how to 
overcome those inertia.
    And so those opportunities represent just a few of those 
opportunities, in a single digit on one hand, could easily 
trump all the savings associated with the entire footprint of 
14,000 surplus assets because these assets are so high value, 
and we really want to break through and make progress and the 
President's proposal represents our best foot forward on how to 
do that.
    The other type of opportunity are the thousands of field 
offices that exist throughout the United States for several of 
our agencies. In some cases, agencies have an office in every 
county in America, which we believe right now no longer 
reflects the best way in which we deliver benefits in a post-
Internet era. And as we have delved in and said, how do you 
downsize that footprint, how do you start thinking about no 
longer having an office in every county, in every region, to 
leverage more electronic delivery of benefits, we have seen 
some of those very same competing stakeholder interests emerge, 
a very complex array of challenges in terms of getting from 
point A to point B and downsizing. And again, when we talk to 
agencies about this and we have asked them, we often got 
response, you need a BRAC-like process to really make progress 
here, and that is how the idea was basically borne. And so we 
are looking forward to working with you on this.
    I just wanted to clarify that we would continue to carry on 
in the same way Senator Begich mentioned in terms of those 
14,000 assets, and I think he is right. We do not want to 
overcomplicate things with those assets. But for those higher 
value, more tougher opportunities that really end up being more 
transformational to our inventory and a higher savings amount 
for the taxpayer, that is where we think we need a new 
approach. We are open to ideas. What the President has put 
forward is our best foot forward on how to solve the problem.
    Senator Carper. Thanks very much for those comments.
    Mr. Peck, welcome.

  STATEMENT OF ROBERT PECK,\1\ COMMISSIONER, PUBLIC BUILDINGS 
         SERVICE, U.S. GENERAL SERVICES ADMINISTRATION

    Mr. Peck. Thank you, Senator. I want to thank you and the 
Subcommittee for its interest on this issue and also that of 
members in the House of Representatives, who have also moved 
some proposals. And, of course, we are fully in support of the 
Administration's proposal.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Peck appears in the appendix on 
page 79.
---------------------------------------------------------------------------
    At first, if I could, I would like to brag on GSA just a 
little bit because there is sometimes a sense that no one in 
the government is actually thinking about real property asset 
management, and I can tell you that in the GSA inventory, which 
does consist of----
    Senator Carper. You do not know how pleasant it is to hear 
the Administrator of a major Federal agency say, ``I like to 
brag.'' Good. This is good.
    Mr. Peck. We do have--we do manage 370 million square feet, 
and you noted, by the way----
    Senator Carper. This will not count against your time.
    Mr. Peck. Thank you. That would be great. [Laughter.]
    That more than half of it is leased space, but less than 3 
percent of our portfolio is vacant by almost any measure that 
you use.
    We do take a look at the inventory that GSA controls. We 
modernize buildings where they make sense. We get rid of them 
where it does not make sense. Since 2002, we have disposed of 
more than 200 GSA properties valued at $467 million and 
covering 9.5 million square feet. But just as important, that 
has eliminated almost $484 million in future anticipated repair 
needs. So there is a cost avoidance, as well.
    But one thing, just at the risk of making things a little 
complicated before I will come back and try to make them 
simple, also, some of the properties that in the real property 
inventory are listed as underutilized are actually undergoing 
renovation so they will be more intensively utilized.
    So, for example, the GSA headquarters building, which is 
about 600,000 square feet, currently gets listed in the 
inventory as being underutilized because half of it has been 
emptied out to renovate it. When we are through renovating it, 
however, we will have at least three times as many Federal 
employees in it and we will avoid lease costs of $20 million a 
year. So that is a--it is just a significant thing to note.
    GSA also has a role, aside from managing our own inventory 
on behalf of Federal agencies, we have the job of disposing of 
assets that other agencies do not need. It is important to note 
that while we do believe we have the expertise and the capacity 
to take a lot of properties through the disposal process, it is 
each individual land holding agency that is responsible for 
making their own asset management decision on whether the asset 
is excess to their needs or lot. At least that is the way 
things currently work. Even there, in the last 10 years, 
disposing of assets that other agencies control, we have 
disposed of 3,300 governmentwide assets valued at about $8.5 
billion. So it is pretty good.
    So the process works fairly well. We believe that there are 
still some improvements we could make to the real property 
inventory so we could give you better information about what is 
going on.
    But to tell you, in our case--and I have worked with cities 
so I know what Senator Begich is talking about--in the cases he 
is talking about, it is pretty clear that a building is vacant. 
I just want to emphasize what Danny just talked about. We have 
some assets in which it is almost vacant but not quite, and so 
a couple of things have to happen. We have to take a look at an 
asset that is partially utilized or even mostly utilized, 
decide whether we should keep it in the inventory, and then we 
have to figure out a way to get it out. Sometimes, that 
requires an up-front cost to move things around so we can move 
out the last chunk of people or goods from a warehouse, if it 
is a warehouse, and make the property vacant and then we can 
move it.
    But there is this other issue, and Danny touched on this, 
too, and you have seen it in all the information we have given 
about the Administration's proposal. There are times when we 
are moving a property through the pipeline in which, although 
it looks like we have gone past the point where a building or 
an asset, according to the law, is eligible for a free 
disposal, a discounted conveyance, that politics rears its 
head--it is part of our system--and it holds up the process. 
That is one reason that we believe we need, at that point in 
the process, a BRAC-type proposal to move things alone.
    I would just like to say, there are a couple of things that 
we think are needed to accelerate disposal. The 
Administration's proposal, as you might guess, includes all of 
these.
    One is we need to incentivize disposals in other Federal 
agencies by enabling the agencies to realize the benefits of 
the proceeds. Our experience tells us that makes a big 
difference.
    Second, we need to address the up-front costs, as I 
mentioned, in being able to move properties that we do not need 
to the disposal process.
    And then obviating or eliminating the stakeholder interests 
that sometimes slow us up.
    One other thing I would like to note, and it piggybacks, 
again, on comments in the other panel. With technology these 
days and the way work is done in the workplace, the ability of 
people to work from home, on the road, wherever they are, we 
believe that we can work with a lot of Federal agencies to 
reduce the amount of space they need. The constrained budgets 
these days are encouraging a lot of agencies to come talk to us 
about how that is done. We are moving out aggressively, and I 
would like to say that even with this legislation pending, 
under Danny's and the White House's leadership, we have a 
council of representatives from many Federal agencies already 
taking a look at how we can make some of those decisions that 
need to be made to reduce the overall Federal property 
inventory and move things to disposal. Thank you.
    Senator Carper. Thanks, Mr. Peck.
    Mr. Sullivan, please.

   STATEMENT OF JAMES SULLIVAN,\1\ DIRECTOR, OFFICE OF ASSET 
     ENTERPRISE MANAGEMENT, U.S. OFFICE OF VETERANS AFFAIRS

    Mr. Sullivan. Good afternoon, Mr. Chairman, Members of the 
Subcommittee. Thank you for the opportunity to discuss the 
Department of Veterans Affairs management of its real property, 
in particular, our ongoing efforts to reduce or eliminate 
unneeded and vacant properties across the country.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Sullivan appears in the appendix 
on page 86.
---------------------------------------------------------------------------
    It is a privilege for me to be here today representing the 
more than 300,000 employees of the Department of Veterans 
Affairs, who work tirelessly on behalf of our Nation's veterans 
and their families every day. Today, I would like to highlight 
VA's successes on repurposing and disposal of assets, 
especially when these efforts have resulted in providing 
housing for homeless veterans.
    Before I begin, I must emphasize that our primary mission 
at VA is to care for veterans in everything we do. Every day, 
we must put veterans first.
    I would like to begin with a brief overview of our 
portfolio. VA is the owner of one of the largest health care-
related portfolios in the country at over 160 million square 
feet and 7,100 owned buildings on more than 33,000 acres. VA is 
one of the first agencies, I believe, to develop a highly 
structured, data-driven methodology to assess proposed 
construction needs, most recently reflected in the issuance of 
VA's Strategic Capital Investment Planning Process (SCIP). SCIP 
involves a systematic evaluation of all of our capital 
investments based on how well they address performance gaps. 
One of these gaps is how well these investments address the 
disposal of unneeded assets.
    All of our projects are considered in light of VA's aging 
infrastructure, which is more than 60 years old, on average. 
Through the SCIP process, we directly address the challenges 
posed by this aging infrastructure with a range of solutions, 
including the reuse, repurposing, and disposal of unneeded 
assets to reduce space and save the government costs. 
Similarly, I want to point out that the Civilian Property 
Realignment Act also introduces a very similar strategy to 
reduce space and save costs.
    For the past several years, VA has aggressively pursued 
disposal or reuse opportunities. From 2006 to 2010, we 
completed disposal or reuse of approximately 381 assets. A 
hundred-and-eleven were disposed of or reused in 2010 alone. 
Since 2001, we have reduced our inventory of owned vacant space 
by 34 percent and we have done this despite a growing mission 
and additional pressure and workload on VA's infrastructure.
    So where do we stand today? As of February 2011, VA has 313 
vacant buildings across the country. VA----
    Senator Carper. Say that again. How many?
    Mr. Sullivan. Three-hundred-and-thirteen.
    Senator Carper. Out of----
    Mr. Sullivan. Out of about 6,500.
    Senator Carper. OK. Thanks.
    Mr. Sullivan. VA has plans to dispose or reuse 250, or 80 
percent, of these buildings. The remaining 63 are what we call 
our most challenging disposal actions because they involve many 
environmental and historic hurdles that we must overcome.
    Just recently, VA has initiated what we call the Building 
Utilization Review and Repurposing (BURR) effort, which has 
enabled us to identify properties for housing for homeless 
veterans. This initiative is critical to help achieve Secretary 
Shinseki's goal to end veterans' homelessness by 2015. To this 
end, the Secretary announced yesterday and approved 34 BURR 
sites, which would include over 100 buildings and 600 acres of 
land for the conversion to homeless housing for veterans and 
their families. This will bring the total number of units to 
care for our homeless veterans to more than 5,000 units either 
in process or under development.
    Once identified as candidates for BURR for housing or for 
other purposes, VA uses its Enhanced Use Leasing authority. 
This authority provides a variety of benefits, such as enhanced 
services to veterans, operations and maintenance savings, 
private investment, new long-term revenue for VA, and 
importantly for the local community, job creation and 
additional tax revenues for local and State sectors. Since the 
EU process has started 10 years ago, we have awarded 60 
projects this way, 18 specifically for homeless units but also 
for other facilities. From 2006 to 2010, to give you an idea of 
the consideration that these properties have brought into VA 
and the government, $260 million in consideration was provided 
from these properties and efforts.
    I would like to just cite two quick examples of this, of 
invoking the Enhanced Use Lease process. In Chicago, Illinois, 
and Cleveland, Ohio, we consolidated multi-campus medical 
facilities. As a result of these consolidations, VA was able to 
outlease more than four acres in downtown Chicago, which was 
not too hard, but also 100 acres in the suburban Cleveland 
area. VA received $50 million in payments from the sale 
proceeds of Chicago, and in Cleveland, VA received $12 million 
in consideration and $10 million in cost savings while we 
excessed over 110 acres with 35 buildings on them.
    Currently, VA has 19 enhanced-use lease (EUL) projects 
underway, as I said earlier, to provide 2,200 units for housing 
for homeless. At this point in the process, VA's authority for 
this program expires at the end of the year and we will be 
seeking reauthorization for this authority.
    We welcome the potential additional of a Civilian Property 
Realignment Act because we view this as just one more tool. As 
Danny said earlier, there is not one single thing that is going 
to solve this problem, but it is going to be different tools 
used in different cases and we believe this Act will help VA 
manage its properties in a much more efficient manner.
    I would be happy to answer any questions you may have. 
Thank you.
    Senator Carper. Thanks, Mr. Sullivan. I have a couple 
questions I am looking forward to asking.
    Mr. Wise, please proceed. Thank you.

 STATEMENT OF DAVID WISE,\1\ DIRECTOR, PHYSICAL INFRASTRUCTURE 
         ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Wise. Chairman Carper, Senator Brown, and Members of 
the Subcommittee, thank you for the opportunity to testify 
today on our work related to excess and underutilized Federal 
real property and the BRAC process. My testimony will focus on 
the civilian sector while my colleague, Brian Lepore's 
testimony, will focus on the military side.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wise appears in the appendix on 
page 94.
---------------------------------------------------------------------------
    My testimony today will discuss, (1) the progress the 
government has made toward addressing obstacles to Federal real 
property management, and (2) some of the challenges that remain 
and how the Administration's May 2011 proposed legislation, 
referred to as the Civilian Property Realignment Act, CPRA, may 
be responsive to those challenges.
    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 about $1.66 billion annually 
to operate and are potentially valuable.
    In designating the management of Federal real property as a 
High-Risk Area, we found that there was no governmentwide 
strategic focus on real property issues and that the 
government's data were unreliable and outdated. Since that 
time, the government has made significant progress. For 
example, the Administration and Federal agencies have 
established the Interagency Federal Real Property Council, a 
body designed to enhance real property planning processes, and 
improved data reliability. Based on the government's progress 
in these areas, we removed the data element of real property 
management from this year's High-Risk List. Even with this 
progress, the government has not yet addressed other challenges 
to real property management, including legal and financial 
limitations and stakeholder influences, such as local 
governments, advocacy groups, and the private sector.
    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. OMB agreed with this recommendation but has yet to 
implement it. However, the Administration's recently proposed 
CPRA is somewhat responsive to that recommendation.
    For example, CPRA proposes an independent board that would 
streamline the disposal process by selecting properties 
considered appropriate for public benefit uses. This 
streamlined process could reduce disposal time and costs. CPRA 
would also establish an asset proceeds and space management 
fund that could be used to reimburse agencies for necessary 
disposal costs. The proposed independent board would address 
stakeholder influences by recommending Federal properties for 
disposal or consolidation after receiving recommendations from 
civilian land holding agencies and independently reviewing 
those recommendations. While CPRA does not explicitly address 
the government's over-reliance on leasing, it could help 
through board recommendations for consolidating operations 
where appropriate.
    Mr. Chairman, this concludes my statement. My colleague 
will describe the BRAC process and its potential applicability 
to Federal real property disposal. Following his testimony, we 
will be happy to answer the Subcommittee's questions.
    Senator Carper. Great. OK. Thanks, Mr. Wise. Mr. Lepore.

 STATEMENT OF BRIAN LEPORE,\1\ DIRECTOR, DEFENSE CAPABILITIES 
     AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Lepore. Thank you, Mr. Chairman. Mr. Chairman, Senator 
Brown, and Members of the Subcommittee, I am delighted to be 
here today to have an opportunity to present our observations 
on the Base Realignment and Closure, or BRAC, process. This may 
be helpful to you as you consider the Civilian Property 
Realignment bill. I will address two points today, the 2005 
BRAC process and the Department of Defense's, DOD's, key steps 
for developing its closure and realignment recommendations.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Lepore appears in the appendix on 
page 94.
---------------------------------------------------------------------------
    First, here is how the 2005 BRAC process worked. DOD 
requested the round. Congress authorized it in law. DOD 
proposed the selection criteria to be used to develop the 
candidate closure and realignment recommendations and published 
that in the Federal Register, so it gave everybody an 
opportunity to see this is what DOD thought was the way to do 
it. Congress then codified the criteria in law and required DOD 
to develop a 20-year force structure plan and an infrastructure 
inventory. So Congress essentially tightened it up and said, 
OK, here is the deal. Here is how we are going to do it.
    DOD then developed the closure and realignment 
recommendations and sent them to the independent BRAC 
Commission. The commission could approve, modify, reject, or 
add to the recommendations based on the criteria and the force 
structure plan and DOD's compliance with both of those. 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 for revision or send it in 
total to Congress. Congress then had 45 days to enact a joint 
resolution of disapproval or the recommendations become 
binding.
    Now, to my second point, here are the key steps that DOD 
used to develop its recommendations. First, DOD developed three 
goals for the BRAC round: Promoting jointness and 
transformation, reducing excess infrastructure, and saving 
money. DOD used the Cost of Base Realignment Actions (COBRA) 
model, to estimate the costs and savings from the candidate 
recommendations and to have a consistent way to compare the 
candidate recommendations. DOD also developed a common 
analytical framework and organizational structure to better 
ensure consistent application of the criteria, and DOD involved 
the service audit agencies to help to try ensure data 
reliability so that there was an accurate set of data in which 
to look at.
    This concludes my prepared remarks, Mr. Chairman. I would 
be happy to answer any questions that you or the other Members 
of the Subcommittee may have.
    Senator Carper. Thanks very, very much.
    Sitting here listening to your testimony, there is a Bible 
study group that meets in the Capitol most Thursdays that we 
are in session with our Senate Chaplain, Barry Black, and he 
frequently talks with us about how our faith guides us in our 
work. He talks to us about moral imperatives. And sometimes he 
shares with us Matthew 25. Not many people know what Matthew 25 
is, but maybe you are familiar with the term, the least of 
these. What are our obligations as human beings to people who 
are hungry or thirsty or naked, who are sick or in prison.
    So the question I want to ask you is about moral 
imperatives. One, I think most of us feel a moral imperative to 
the least of these among us and we feel an obligation to reach 
out and to be helpful and responsive to them and their needs. 
We also as legislators and as those of us who serve the 
taxpayers of our country, we have an obligation to run our 
government in a fiscally responsible way. I think it is an 
imperative that goes beyond fiscal stewardship, fiduciary 
responsibility. I think it is almost like a moral imperative, 
as well.
    In this case, what we need to do, I think, in part, is to 
be consistent in addressing--in being faithful to both of those 
moral imperatives, and we need to look to the needs of the 
least of these, but we need to do that in a cost effective way.
    Senator Coburn and I have been working on this. He has been 
working this for longer than I have. I think he was working on 
it when he was a House member for a number of years. I have 
been here in the Senate now for 10 years and focused on this 
with him for about the last half-dozen. I am determined that we 
are going to make real progress and am happy to have an 
Administration that shares that conviction.
    Talk to us about how we meet both moral imperatives, to the 
least of these and to the taxpayers of this country. Please, 
Mr. Werfel.
    Mr. Werfel. That is an excellent question. One of our 
objectives out of creating this board is to drive a decision, 
not necessarily to exclude viewpoints and exclude perspectives 
and stakeholder interests. We are not getting around the 
stakeholder interest problem by saying you shall deploy with 
one stakeholder's interest in mind and that would be savings or 
deficit reduction. I think that is a critically important one, 
and in particular for some of these objectives, I think deficit 
reduction will shine through as a primary objective.
    But I also believe that there are a lot of legitimate 
stakeholder interests, homeless groups being one of them, other 
community interests when we vacate or rethink how we are going 
to use a property. And the goal here is to make sure that 
voices are heard, issues are surfaced and considered by a 
knowledgeable set of individuals, and that, ultimately, then 
make a decision that maybe not everyone is going to walk away 
fully happy with, but there will be a fair and open process and 
a decision will be made and will move forward for good or for 
bad.
    And so in that way, I think our goal is to strike that 
balance that you described but do so in a much better way than 
what we have done today, because right now, the balance is 
being achieved in a way where a lot of voices are being heard, 
but the result in too many cases is inertia as those voices 
continue to tangle. And what we want to do is let those voices 
be heard, but drive to a decision and move forward, which is 
our perception of how the BRAC process has worked and one of 
its success points, is that those voices were heard, decisions 
were made, not everyone walked away from things happy, but 
savings have been realized and efficiencies have been gained.
    Senator Carper. Any thoughts, Mr. Peck?
    Mr. Peck. Yes, sir. The record is that of the public 
benefit conveyances that we have done, which accounts for 
something like 13 to 15 percent of the disposals we have done, 
at least in the last number of years, fewer than something like 
5 percent of those have actually gone to the homeless. So it is 
not a huge number. That is just to put--we should put that fact 
in our mind.
    Second, the Administration's proposal suggests that in the 
course of coming up with a list of properties to be disposed 
of, the board would consider those properties that are likely 
to be useful to the homeless. I suspect it would be done in 
consultation with homeless groups. So I think we have already--
we have, at least, begun thinking about how we balance those 
two important issues that you are talking about.
    Senator Carper. All right. Thanks. Mr. Sullivan, any 
thoughts?
    Mr. Sullivan. Sure. Mr. Chairman, I believe in terms of the 
VA, our moral imperative is to ensure that no matter what real 
property action that we take, that it has a positive direct 
benefit on veterans and their families, No. 1.
    No. 2, that we fulfill our mission in terms of medical, 
cemetery, and benefit services to veterans, and that we are 
compatible with the local community that we live in and operate 
in with our VA medical centers and cemeteries. But throughout 
that process is the secondary factor of trying to do it in the 
most economical way, and I think there are cases where we can 
use current authorities to make sure we hit those three 
criteria and do it in an economical way and save money, which 
is then reinvested either back for veterans or back toward the 
debt.
    And then we have cases where there are hard things to do, 
where I think a tool like a BRAC-like process would be helpful, 
where we cannot get that benefit for veterans because of the 
existing real property configurations we have.
    Senator Carper. OK. Thanks. Mr. Wise.
    Mr. Wise. Senator Carper, at GAO, generally at the request 
of you and the other members of the Senate and the House of 
Representatives, we evaluate various programs. From a public 
policy perspective not necessarily representing GAO in I think 
most everyone, wants to do the right thing, although approaches 
may differ. I am quite confident that as we work through these 
issues and understand the different perspectives this will give 
the Congress the perspective it needs to move forward with an 
appropriate piece of legislation related to making the best use 
of Federal real property.
    Senator Carper. OK. Mr. Lepore.
    Mr. Lepore. Yes, Mr. Chairman. I think the BRAC statute may 
offer the model for you. The property disposal provisions of 
the 1990 BRAC statute are pretty detailed. What it says, 
essentially, is the military service that proposes to close an 
installation offers it within the Department of Defense to 
other installations or, pardon me, other military departments 
or other organizations. If they choose not to take it, it then 
is made available to other Federal agencies.
    Should the other Federal agencies choose not to avail 
themselves of the installation, it then goes through a very 
detailed process where the Secretary of Defense works with 
local redevelopment authorities, to include representatives of 
the homeless, State and local governments participate in that 
process. There are potential for economic development 
conveyances, for public sales, for auctions, for negotiated 
sales.
    So there is a whole laundry list, if you will, of what the 
Secretary of Defense is required to do as he goes through the 
process of disposing of installations closed under BRAC. That 
detail may offer a model for you as you think about the 
Civilian Property Realignment bill.
    Senator Carper. Yes. It occurs to me, though--I am going to 
go back to the example I used in Dover, Delaware, where on the 
one hand you have the Dover Air Force Base where 5,000 people 
work and 5 miles away, you have the Federal building in 
downtown Dover where maybe 100 people work, if that. Do we need 
for the Federal building in Dover a BRAC-like process to be 
able to dispose of, in a reasonable, common sense, practical 
way, humane way, we need the same kind of process? Anybody? 
Please, Mr. Werfel.
    Mr. Werfel. I am not familiar with the exact circumstances 
of Dover, but what I can tell you, Chairman Carper, is we have 
come across different real estate transformation opportunities 
where it is maybe not as complex as downsizing a military base 
because of, as I think it was mentioned in the first panel, it 
is like shutting down a major city or a minor city, but yet it 
is complex enough in terms of the various stakeholder interests 
that, historically, we have been unable to push through under 
the current frame.
    So I do not know that it necessarily, as the BRAC-like 
board that we envisioned gets together and adjudicates and 
thinks about a particular building that fits the example that I 
provide, or going back to my earlier point about downsizing 
thousands of field offices across counties, both urban and 
rural across the United States. They might not have the same 
complex array of issues and immediate community impact, but I 
think they will get a healthy dose of very legitimate interests 
and concerns, whether the local residents are concerned about a 
giant office building being replaced where green space exists 
now, or whether there is concern that the local educational 
institution should get the property versus the mayor versus the 
homeless versus et cetera.
    We see that and we see those types of interests even in a 
building potentially the same size, square footage, and impact 
or imprint of the Dover Federal Building. It is a case-by-case 
basis. And that is why I think the board that we are 
envisioning will be somewhat surgical and will hear back from 
the agencies and say, here is an opportunity that we are seeing 
this type of make-up of competing interests or lack of 
financial incentive. Here is where you might come in and be 
able to help. And we think for a relatively low up-front 
investment in this type of mechanism, the proceeds can be 
enormous.
    Senator Carper. Mr. Peck.
    Mr. Peck. Mr. Chairman, the Dover Federal Building is, in 
fact, a GSA building. It is a multi-tenant building, and it is 
typically the kind of asset you want to hold on to. It is 
government owned. It is almost always in the best interest of 
the taxpayers to hold on to those. What we might want to look 
at Dover is whether there are other facilities that we do not 
need, and sometimes that takes a little bit of work and I will 
tell you why.
    When we ask agencies, well, how about this property out 
there? It looks like you are not using it terribly intensively. 
Often, the answer is, well, but things will change. We might 
need it. And so, in essence, we have some Federal agencies, and 
GSA, I will have to admit, in some cases has done this, too, 
that the agencies are, in essence, land banking the property, 
and to be able to say to them, I do not really think you need 
that and it is time to move on and time to think differently 
about how you do your function and go someplace else, that is 
something that we could use a little bit more clout to do.
    Senator Carper. OK. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. I had to go down to 
the floor and pull an amendment and then deal with an FAA 
issue. I appreciate you----
    Senator Carper. Do you expect we are going to vote again?
    Senator Brown. No. There are no more votes.
    Senator Carper. All right. Thanks.
    Senator Brown. Not until Tuesday. I am shocked.
    So, Mr. Peck, if we could start with you, I guess, GAO 
highlighted the lengthy disposal process as one of the issues 
hampering the GSA's ability to effectively dispose of unneeded 
property, and obviously contributing to a lengthy process is 
the housing use that you heard from the prior testimony. In the 
past 10 years, what percent of excess properties have actually 
become homeless housing, if you know?
    Mr. Peck. I think while you were out, I gave one number. It 
is the best number, I think, that gets at your answer. Of the 
public benefit conveyances that we have done, which are those 
that go to--that we decide, it is not going----
    Senator Brown. Right.
    Mr. Peck [continuing]. It is eligible for a State and local 
purpose, some--that is about 15 percent of the properties, and 
about 5 percent of those have gone to the homeless. So it is 
not a lot----
    Senator Brown. How many months or years, on the average, is 
that process to consider a property to become used for 
homeless?
    Mr. Peck. The immediate screening process, which involves a 
referral to the Department of Housing and Urban Development, 
only takes about 60 days, and so it is not that--that aspect of 
it is not that long a process. However, to be candid, sometimes 
what happens is that the process stretches on after that as 
various entities, public and nonprofit, decide that maybe there 
is another way to get the property or maybe it would be useful. 
So it is hard to put a number on that.
    Senator Brown. And just for all of you, I have been running 
around. It has been one of those days. If you have answered 
something, I do apologize. I appreciate your consideration.
    Mr. Werfel, it is good to see you again. I was very 
impressed by your testimony before us before. I have been kind 
of watching to see how you are doing and appreciate you coming 
back. How does the President's proposed board streamline the 
process if it still includes the time consuming process of 
considering historic property designation and homeless housing 
use?
    Mr. Werfel. Senator, thank you, and thank you for those 
kind remarks. The streamline comes from the ability to drive to 
a quick decision and to run the processes concurrently. So we 
have a lot of legitimate interests that are looking at the 
property and a lot of legitimate process steps that need to 
take place, and what we want to do and what we want the board 
to come in and do is for a given property or a set of 
properties, to take all those issues collectively and drive to 
a particular decision.
    So rather than waiting a certain number of days while the 
local education institution has its take at the process, then 
the homeless, then the local correctional facility, then the 
local airport, then other local government entities, which can 
lengthen the overall process, the board would say, OK, 
everybody come in simultaneously. We will review the process. 
We will drive a decision that balances all and we will try to 
reach something that is optimal, that protects the taxpayer but 
also protects the local community.
    Senator Brown. Thank you. And Mr. Sullivan, is it true that 
there is a 387-acre property owned by the VA in West L.A. which 
is worth about $4 billion and that a Fiscal Year 2008 
appropriations bill prohibits you from disposing or otherwise 
altering its ownership of the property? Is that true?
    Mr. Sullivan. Yes, sir. We have a large medical center in 
West Los Angeles that has had historically significant 
restrictions on the use and disposal of that property dating 
back to the 1960's and 1970's.
    Senator Brown. And the VA has determined that the property 
is excess or underutilized, is that right?
    Mr. Sullivan. At this point in time, since we have not had 
any authority to determine or to excess----
    Senator Brown. Well, prior to the land use restrictions, 
did they make that determination?
    Mr. Sullivan. I would have to look. It goes back to the 
1960's.
    Senator Brown. If they were not in place, would the VA 
submit the L.A. property to be considered through the process 
we are talking about?
    Mr. Sullivan. I think at this point, as I said, I think, 
when you stepped out of the room, Senator, in terms of any 
property realignment, we would first look to see what is the 
direct impact on veterans. Does this have a positive impact on 
veterans to realign or excess any of our property? Does it 
still impact----
    Senator Brown. Well, what is the use now? Is it being--how 
is it being used right now?
    Mr. Sullivan. There are portions of the land that are used 
as a medical center, a State home, a domiciliary nursing home. 
There are portions of the property that agreements are in place 
that are being used by parties outside of VA for purposes to 
raise revenue that comes back to VA at this point, to community 
partners, universities, and so forth.
    Senator Brown. So back to you, Mr. Werfel, would the 
President's proposal help to ensure that there are no so-called 
sacred cows that are exempt from the process?
    Mr. Werfel. That is the exact goal. I mean, the property 
that you are raising has a lot of particular sensitivities 
associated with it. We certainly would want that property to be 
closely looked at by the board to determine whether some or all 
of it could be better utilized, not only to the benefit to the 
taxpayer, but to work through some of the issues that are going 
on in the local community within that property. I think that is 
a good example of a property that an independent process will 
help us to drive to a quicker decision on the optimal use of 
the property, and I would look forward to having VA and the 
Administration work with the board to give them the information 
they needed to reach the right decisions.
    Senator Brown. And it is also, I believe, your intent in 
your--I do not want to say what your intent is. Is it fair to 
say that by going through this process, we can step back from 
our use of leasing properties and utilize our own ownership to 
reduce the amount of money we are spending on leasing? Is that 
one of the objectives?
    Mr. Werfel. It absolutely is. I mean, there are a couple of 
ways to skin that cat of reducing our leasing footprint, which 
absolutely has to be an objective, and one of them is by doing 
some tough, tough realignments. Let me give you a good example, 
is a lot of our county offices across the Nation that I think 
would be important to downsize and are very tough to downsize 
without this type of independent process that can drive through 
some of the competing stakeholder interests, that type of 
downsizing, whether it be 10 percent, 15 percent, 20 percent, 
you are going to see a significant drop in the leasing 
footprint because some of those facilities are leased.
    Elsewhere, I think there are opportunities to downsize, 
realign, and consolidate in ways that can dramatically impact 
our leasing footprint. Mr. Peck mentioned earlier in response 
to a question from the Chairman the Dover building-----
    Senator Brown. Right.
    Mr. Werfel [continuing]. And said maybe we should bring in 
other properties around into that building and build it up, and 
I think he would be referring to leases as well as owned.
    Mr. Peck. I also mentioned that we are renovating the GSA 
headquarters building, which has heretofore housed about 2,600 
people. With technology and other ways that we use space these 
days, we can get about 6,200 people in the building and avoid 
an annual lease cost of about $20 million, reduce about 500,000 
square feet of leased space in the Washington area.
    Senator Brown. Now, back to you, Mr. Werfel, how much in 
savings do you think the taxpayers can expect from the sale of 
these excess properties and where do you think it will be 
coming from, for example, operational and maintenance savings 
versus the portion that could be derived from sale proceeds?
    Mr. Werfel. I think there is----
    Senator Brown. Approximately. I do not expect a hard 
number. I am not going to hold you to it.
    Mr. Werfel. Yes. Our estimate is that in the first 3 years 
that the board is operational and churning through their 
recommendations, that the opportunity is approximately $15 
billion over those 3 years. That $15 billion is made up of two 
different types of savings, as you mentioned. One is the 
proceeds from sale, and we believe that there are numerous 
high-value assets throughout the inventory that we cannot sell 
today under the current legal and competing stakeholder 
interest climate that we can sell under this process. And the 
other is the elimination of operating costs. When you sell the 
building, you eliminate those operating costs and get proceeds. 
When you terminate a lease, you are ending that leasing cost. 
So it is a mixture of those two opportunities.
    Senator Brown. And one final question, Mr. Chairman? Thank 
you. So, Mr. Sullivan, based on everything you have heard so 
far, if the VA uses Enhanced Use Lease agreements as a way to 
maximize returns for the underutilized assets, is the civilian 
BRAC and if this civilian BRAC process that we are talking 
about were implemented, how would Enhanced Use agreements 
affect the process and your ability to dispose of excess 
property?
    Mr. Sullivan. Senator, I think they work in complement of 
each other. Our Enhanced Use Leasing process works quite well 
when we can forge a win-win strategy between the local 
stakeholders, the local community, the veterans, and the 
government. And in cases, as Danny talked about, where we have 
major challenges, where we cannot reach that consensus, that 
decision, I think that process would be very helpful in helping 
us with those properties. So I think both can work together.
    Senator Brown. Great. Thank you, Mr. Chairman.
    Senator Carper. Thank you. I am going to go back just to 
followup on a question that Senator Brown asked, I think of Mr. 
Werfel. When we look at the potential source of savings, one, 
we can save money by getting properties off the books, and if 
we can sell them for a few dollars, so be it.
    Second, we spend--for some of these properties, not all but 
some of them, we spend money for utilities. I do not know if 
you call these operating costs, or maybe you do. We can save 
some money for some of these buildings, money we spend for 
security. I remember Senator Coburn and I visited a large 
postal facility, postal processing facility, I think it was in 
Chicago, about 4, or 5, 6 years ago, and as I recall, they had 
a considerable security cost, as well, costs of maintenance 
that have to be covered. Are there others in terms of operating 
costs that are significant that we need to be mindful of?
    Mr. Peck. There is one other thing. We mentioned in our 
testimony that there is the liability that the government holds 
which GAO has talked about any number of times of deferred 
liability costs. You are either holding the building and it is 
depreciating in value and it, in essence, it is deteriorating, 
or you keep it up, one of those two. So you both reduce 
operating costs, you reduce your liability, the need you have 
to rehab buildings at some point.
    Senator Carper. OK. Savings on lease versus purchase. Let 
us just talk about that a little bit, and we have talked about 
it already in a couple of the exchanges here. But I am going to 
go back to that Dover Federal Building. The Dover Federal 
Building has, I think, been made available--as Federal agencies 
have moved out, it has been made available to other potential 
use of stakeholders in the community. As I believe, I think one 
of our colleges or universities has said that they would like 
to use that facility for offering some of their coursework, and 
I think that is what is going to happen. I think that is what 
is going to happen. Meanwhile, Federal agencies, including our 
congressional delegation, have moved off into rented space, 
space that we are leasing.
    There is an argument that maybe we should have gone off 
someplace else and built another building from scratch and all 
moved into that and we could have saved money, but I do not 
know that was ever seriously considered.
    Mr. Peck. Without knowing the facts in Dover, but it sounds 
like situations we have all over the country, you can say 
pretty much without knowing the specifics that in most 
instances, it makes sense for the Federal Government for long-
term government uses, and Congress is going to be here for a 
long time, to put the offices in federally owned rather than 
leased buildings.
    I suspect what has happened in Dover is that someone took a 
look at the building and decided it is functionally obsolete. 
The cost of bringing it up to current day standards is 
prohibitive. And, then here is a key fact, that taking a look 
at how much capital investment we were likely to convince the 
Administration and the Congress to give us, it is not in the 
cards to build a building there any time soon. That leaves us 
with the option of going to modern private sector space.
    We do not have the option in GSA that the VA has, to some 
extent, with Enhanced Use Leasing, which allows you to use 
private sector capital to build a facility, which at least at 
some point is owned by the Federal Government. There are all 
kinds of legitimate scoring issues that both CBO and OMB 
enforce that keep that from happening.
    But in any event, it is a constraint on capital investment 
that has pushed us into a lot more lease space and less, as a 
percentage, of owned space, and it is not good asset 
management.
    Senator Carper. Mm-hmm. Did you want to say anything, Mr. 
Sullivan.
    Mr. Sullivan. Yes, I think I do. As I talked earlier, one 
of the critical factors when we look at real property is what 
is the direct benefit and impact on veterans. VA is a huge 
believer and user of leasing and for the following reason. Most 
of our leases are medical leases and we need to get those 
services out into the community where the veterans are, and the 
demographics of veterans change as different conflicts happen. 
Veteran demographics will change and services will have to 
meet.
    So for us to make a lot of our leases government-owned, I 
think, would not serve the veteran and in the long term not be 
able to provide benefits. I mean, I think there needs to be a 
balance. I agree, we do not want to substitute leasing for 
building our own, but in the medical field, there is a great 
need to have the flexibility to put leases in different places 
to meet veterans and have those medical clinics have the 
ability, as medical technology changes and demographic changes 
happen, to shift them to different locations or to different 
sizes. I just want to point that out.
    Senator Carper. OK, thanks. Mr. Peck.
    Mr. Peck. That is absolutely right. As I said, when you 
have permanent needs, long-term needs, and corporate real 
estate executives do make the same kind of determination, for 
long-term needs, you want to be in owned space pretty much. For 
the areas where demographics are changing--Social Security 
offices have often been the example of this--you want leased 
space. And with medical facilities, you obviously have to have 
face-to-face consultation.
    On the other hand, with Social Security, and we have been 
talking to Social Security about this, to a large extent, even 
the aging demographic now is computer literate and that is 
going to change where and how many Social Security field 
offices they need and that may allow us to reduce the leases in 
Social Security offices, as well.
    Senator Carper. OK. Mr. Werfel, let me just ask, what other 
approaches, aside from this BRAC-like approach, what other 
approaches did the Administration consider in helping us deal 
with the problem of surplus or underutilized property? What 
other approaches did you consider and why did you settle on 
this BRAC-like approach as opposed to one of the others?
    Mr. Werfel. I think, as I mentioned earlier, as we pulled 
back the onion layer on agency inventories, we started to see 
some transformational opportunities that existed and they 
seemed to orient around areas that were going to be tough to 
address under the current legal and regulatory framework. The 
three basic issues are the process is long and can be tiresome 
and bureaucratic, the financial up-front money is not always in 
place, and then, obviously, the political or competing 
stakeholder interests.
    One option that we have considered is more of a kind of a 
straight to legislation. So we do the work and we show you our 
cards in terms of what we have and you guys react to it. We 
say, here are the 10 best recommendations that we have. What I 
have learned and what I believe is that if you sent me off with 
my colleagues to try to do that, knowing what I know about how 
the government works and the back and forth, we will take a 
bite out of that apple and try to give you something, but it 
will be a smaller bite than if you sent off an independent 
board to do the same work, because I have in my position, and 
we all have, constraints about what we can reach for and how 
bold we can be. And so in many ways, that is an option, but I 
think we are going to come back with a smaller piece.
    And I also believe that if we did submit to you an 
Administration-generated set of recommendations and put it on 
Congress's plate, that small bite would get even smaller by the 
time it got through the process. So it is really, from our 
vantage point, how big and bold do you want to be and 
aggressive, and in this budgetary climate and the more we got 
excited about these transformational opportunities I think the 
Social Security offices is a good example, USDA field offices, 
and then numerous high-value properties throughout the United 
States where the agencies have scratched their heads about how 
to even approach getting rid of it--we said, let us go for the 
larger chunk. The budget environment right now demands that we 
maximize our approach.
    Senator Carper. I think you were quoted, Mr. Werfel, in 
maybe it was before a House Committee, the House Transportation 
and Infrastructure Committee--I think it says you stated that a 
Civilian Property Realignment Board could save the Federal 
Government $15 billion in the first 3 years of its operation, 
is that correct?
    Mr. Werfel. Yes.
    Senator Carper. And when--how long do you think it would 
take to stand up the board and actually begin its operation?
    Mr. Werfel. I think it can be--I mean, I think we----
    Senator Carper. Will it be reasonable?
    Mr. Werfel. I think it can be done relatively quickly if we 
are focused on execution. One thing I learned during the 
Recovery Act is if you give us a deadline, no matter how 
complex, we will figure it out and plow through.
    I would probably look at an 18-month or so lead time, once 
the bill is up and running, for us to get the members together, 
get them positioned, get their staff. One of the things that we 
are doing right now to maybe diminish that 18-month lead time 
is we have reformed this Real Property Advisory Committee. 
Director Jack Lew signed out a memorandum on the same day we 
transmitted the Civilian Property Realignment Act for 
congressional consideration, on May 4, creating a Real Property 
Advisory Committee made up of CFOs and senior real property 
officers, and Mr. Peck and I both sit on the Committee, as 
well.
    And one of the main objectives of that Committee is to 
provide the board with a set of analytics and a set of 
information that allows them to hit the ground running. Now, 
they do not have to take any of it because they are 
independent, but we did not want them showing up to an empty 
office. We wanted them showing up to as many months and as many 
blood, sweat, and tears that we can put into the analytics, if 
you approach it this way, if you approach it that way, and just 
a lot of slicing and dicing. I think that will help accelerate.
    Senator Carper. All right. Mr. Peck.
    Mr. Peck. May I say that is probably right for setting up 
the board. I think that given all the things we are doing now, 
though, that if we knew that we were getting legislation or if 
the legislation were passed, ostensibly, we would be able to 
present that board at almost its first organizational meeting 
with a first cut at the property. So if it is 18 months to get 
them going like that, I think shortly after they meet, they 
would be able to start making the decisions that I think we 
would all like them to make so that we could start moving 
properties through the pipeline.
    Senator Carper. OK. The last question I will probably ask 
will be of Mr. Wise and Mr. Lepore. I am not going to ask it 
just yet, but I am going to telegraph my pitch, all right. And 
the question I ask after asking another one, maybe of Mr. 
Werfel, is if you were in our shoes--you are an independent 
watchdog agency. We have great respect for you and genuine 
affection, and here is my question. It is going to be, if you 
were in our shoes, if you were sitting on this side of this 
dais instead of at the witness table, what would you do? It is 
a pretty simple question. If you were sitting on our side--do 
not answer it yet, but if you were sitting up here, you were 
Senator Brown or Senator Coburn or Senator Begich or me, what 
would you do if you were part of this Committee? Thank you.
    And to Mr. Werfel, my question to you is I understand that 
a month or so ago, the Administration released a list, I think 
it is about 14,000 properties, I think you said, that have been 
reported excess by the Federal agencies. To the average person, 
it sounds like a lot of properties. It sounds like a lot to me. 
And the sale of these proceeds could generate a substantial 
amount of revenue and costs that could be used to pay down the 
deficit. I think you mentioned as much as $15 billion over 3 
years.
    My staff has had the data, sort of drilled down on the data 
a little bit and found that of those 14,000 or so properties on 
the list, there are about, oh, about 1,800 that have maybe 
already been disposed of and that about roughly 5,500 were in 
the disposition process, and I do not know if the disposition 
process takes a month, a year, a decade, or whatever. But in 
other words, about 50 percent or a little bit more of these 
assets appear to be somewhere in the disposition process.
    I would just like to ask today, how many excess properties 
are in the Federal inventory? Any idea how many excess 
properties are in the Federal inventory, I guess, keeping in 
mind those numbers?
    Mr. Werfel. I mean, a couple of thoughts on that. The 
14,000 that we released is a snapshot in time. What we do is we 
collect the data on an annual basis and that provides us an 
annual snapshot. And what we will try to do on the Web site 
where we release the information is update it. So I think what 
that data represents is at the end of Fiscal Year 2009, our 
inventory had approximately 14,000 assets that were designated 
as excess. When we released the information a month or two ago, 
we tried to update and say, well, since that time, 1,800 have 
been disposed of. Our----
    Senator Carper. Is that 1,800 out of the 14,000----
    Mr. Werfel. Out of the 14,000.
    Senator Carper [continuing]. That were listed in--that 
really existed in 2009?
    Mr. Werfel. Yes. Yes.
    Senator Carper. OK.
    Mr. Werfel. Our main emphasis around the release of those 
14,000 assets is a few things. It is, one, it is transparency 
to make sure that the public is holding us accountable to get 
rid of them and the public might be able to identify things 
that are not on that list that they think should be.
    And, really, I would like you to think about it as clearing 
out the underbrush. We have to get a better handle on these 
excess assets and dispose of them more quickly and rapidly and 
we are working hard to do it.
    But in terms of the $15 billion opportunity, it does not 
exist within those 14,000. The $15 billion opportunity exists 
in those tougher to reach places where we have been unable to 
push them into excess because we have been stopped in our 
tracks by a variety of different barriers, and the CPRA board 
is intended in many ways to increase the number of assets that 
are excess so that we can move them more quickly off our books. 
Right now, they are in our inventory and they are going to stay 
in our inventory even though they might not necessarily need to 
be in our inventory unless we come up with a game changing set 
of policies to advance them forward, and that is really what we 
are here to ask for your help to do.
    Senator Carper. OK. Thanks. All right. Mr. Wise, Mr. 
Lepore, two wise men. [Laughter.]
    Mr. Wise. Well, I will do the best I can. We are working 
with the Committee to try to answer these questions. We are 
doing, in fact, two new engagements on excess property and 
leasing issues; we hope we will contribute to helping the 
Congress make these kinds of decisions. We have had experience 
at GAO studying pretty thoroughly the BRAC process and it seems 
to have worked relatively well. I will let Brian explain in 
detail in response to your question.
    Mr. Lepore. Yes, Mr. Chairman. I think in one sense, the 
BRAC process has been a reasonable process for making very 
difficult decisions among competing interests, many 
stakeholders that have a well understood and vested interest in 
these installations, and we can understand how that comes 
about. Those are, as you have heard and as you well know with 
places such as Dover, a very important C-5 base, these really 
are, in some cases, almost major cities or minor, medium-sized 
cities in a community.
    On the other hand, the BRAC process has created a system 
whereby one can review candidate recommendations, hopefully in 
a consistent way using a consistent set of criteria and in a 
transparent way. You heard Senator Dixon, when he was here 
earlier, who chaired the 1995 Commission. He indicated that he 
thought transparency was important. The BRAC process and the 
BRAC Commission process generally has been pretty transparent, 
the exception being when classified information is being 
discussed.
    So I think in some ways, the BRAC law may offer you a 
model. It may not be a perfect model since there clearly are 
significant differences. The Department of Defense is a 
department under a single secretary. In this case, you have 
multiple Federal agencies and departments under various agency 
heads. So it is not a perfect model, but I think there have 
been circumstances where--and are circumstances where you may 
be able to pull from that process.
    The other point I will make is I think you had a lot of 
good ideas here today from the first panel and the second 
panel, and I think the advice we would always give is pick and 
choose the best ideas. I think you have heard a lot of good 
ideas today, some perhaps competing, but I think, nonetheless, 
BRAC, all of these other ideas combined, you may very well be 
able to find a process that is really going to get this done.
    Senator Carper. Does anyone have a closing thought? Yes, 
Mr. Peck.
    Mr. Peck. At the risk of making people's eyes glaze over, 
but it makes an important point that Danny just tried--just was 
making the point, that of the 14,000 assets which are described 
as excess, each asset, each on a property is categorized 
separately as an asset. So everyone says 14,000 assets. There 
may be, if we get rid of a military depot, that may be 300 
assets. So there are fewer discrete properties that can be sold 
on that list. And so taking a look at that list by itself does 
not get you to the $15 billion. We need this authority to get 
at some of the other properties.
    And finally, an authority which you will not see in the 
legislation because we already have it is the authority to make 
use of private sector real estate consultants and brokers to 
help us do this. We do this as a routine in GSA anyway. We have 
the authority and have used the authority to bundle properties, 
as one of the panelists on the previous panel said.
    So I want you to know that there are properties which we 
can use aggressively right now, but there is just a wall which 
we are going to hit unless we get this other side of it, the 
ability to go out to agencies, make sure we really can vacuum 
up all of the excess property in a more direct way and to make 
decisions faster.
    Senator Carper. Any other closing thoughts? I will add one 
last observation. I serve--one of the other Committees I serve 
on is the Finance Committee, and Senator Baucus, our Chairman, 
pulled together a--we have done it--actually, he has pulled 
together a series of hearings this year where we have otherwise 
men and women who come and talk with us and share their ideas 
for deficit reduction, and a month or two ago, among the 
witnesses that we had was Alan Blinder, whom some of you may 
recall was Vice Chairman of the Federal Reserve for a number of 
years not that long ago. And in his comments on deficit 
reduction, among the things that he said in his testimony was 
that the 800-pound gorilla in the room for deficit reduction is 
health care costs, and unless we got our arms around health 
care costs, we are--not exactly, these are not his words--but 
pretty much doomed. And he said everything else is not 
superfluous, but it is smaller change.
    When he finished his testimony, the other witnesses 
testified and then a number of us, we had an opportunity, as we 
have done here today, to ask questions. And it came my turn to 
ask a question and I said, ``Dr. Blinder, you have mentioned 
that unless we address how to get better health care results 
for less money, that we are still going to have a huge problem 
with the deficit.'' And I said, ``What advice would you have 
for us?''
    And he said in his response, he said, ``I am not an expert 
on health care, but let me just say as a layperson, let me just 
offer you this advice. Here is my advice,'' he said. ``Find out 
what works. Do more of that.'' That is all he said. Find out 
what works and do more of that.
    We need to find out what works and do more of that, and 
part of it could be our experience with BRAC and to do more of 
that. Part of it could be to learn from the VA and the work 
that you have done. It is sort of--I am reminded of the fact 
that those two moral imperatives that I talked about, to meet 
the needs of the least of these and also to do it in a fiscally 
responsible way? That is really your charge at VA, and you are 
oftentimes held out as an agency that does a pretty good job in 
these areas.
    Senator Coburn and I and our other colleagues are not going 
away on this issue. This is one I want us to resolve in this 
Congress and am determined to do that. I am grateful to my 
colleagues and I am grateful to our staffs for the work that 
they have done in preparing for this and grateful to you for 
the work that is being done, has been done, and is being done 
on this front. Let us just work together. We are all in this 
together, and we have to figure out how to deal with this, 
realize the savings that Mr. Werfel has spoken of here and 
previously in his House testimony. We need to stop spending 
that kind of money, to save it instead.
    All right. Thank you very much, and with that, this hearing 
is concluded.
    Again, my colleagues will have 2 weeks to submit their 
questions and we would ask that you respond to those in a 
timely manner. Thank you so much.
    We are adjourned.
    [Whereupon, at 4:24 p.m., the Subcommittee was adjourned.]

























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