[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




 
                  GSA TENANT AGENCIES: CHALLENGES AND
                   OPPORTUNITIES IN REDUCING COSTS OF
                              LEASED SPACE

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

                                (113-80)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 30, 2014

                               __________

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             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
                                ------                                

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                  LOU BARLETTA, Pennsylvania, Chairman
THOMAS E. PETRI, Wisconsin           ANDRE CARSON, Indiana
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, District of 
ERIC A. ``RICK'' CRAWFORD, Arkansas      Columbia
BLAKE FARENTHOLD, Texas, Vice Chair  MICHAEL H. MICHAUD, Maine
MARKWAYNE MULLIN, Oklahoma           TIMOTHY J. WALZ, Minnesota
MARK MEADOWS, North Carolina         DONNA F. EDWARDS, Maryland
SCOTT PERRY, Pennsylvania            RICHARD M. NOLAN, Minnesota
MARK SANFORD, South Carolina         DINA TITUS, Nevada
BILL SHUSTER, Pennsylvania (Ex       NICK J. RAHALL, II, West Virginia
    Officio)                           (Ex Officio)
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Norman Dong, Commissioner, Public Buildings Service, U.S. General 
  Services Administration........................................     5
Hon. Joyce A. Barr, Assistant Secretary, Bureau of 
  Administration, U.S. Department of State.......................     5
William E. Brazis, Director, Washington Headquarters Services, 
  U.S. Department of Defense.....................................     5
Michael H. Allen, Deputy Assistant Attorney General for Policy, 
  Management, and Planning, Justice Management Division, U.S. 
  Department of Justice..........................................     5
E.J. Holland, Jr., Assistant Secretary for Administration, U.S. 
  Department of Health and Human Services........................     5
Jeffery Orner, Chief Readiness Support Officer and Agency Senior 
  Real Property Officer, U.S. Department of Homeland Security....     5
Peter D. Spencer, Deputy Commissioner, Office of Budget, Finance, 
  Quality, and Management, Social Security Administration........     5

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Norman Dong......................................................    51
Hon. Joyce A. Barr...............................................    56
William E. Brazis................................................    60
Michael H. Allen.................................................    66
E.J. Holland, Jr.................................................    69
Jeffery Orner....................................................    75
Peter D. Spencer.................................................    79

                       SUBMISSIONS FOR THE RECORD

Hon. John L. Mica, a Representative in Congress from the State of 
  Florida, request to submit a list of vacant properties in the 
  District of Columbia...........................................    20
Hon. Joyce A. Barr, Assistant Secretary, Bureau of 
  Administration, U.S. Department of State, response to request 
  for information from Hon. Andre Carson, a Representative in 
  Congress from the State of Indiana.............................    43
William E. Brazis, Director, Washington Headquarters Services, 
  U.S. Department of Defense, response to request for information 
  from Hon. Lou Barletta, a Representative in Congress from the 
  State of Pennsylvania..........................................    48
Jeffery Orner, Chief Readiness Support Officer and Agency Senior 
  Real Property Officer, U.S. Department of Homeland Security, 
  response to request for information from Hon. Lou Barletta, a 
  Representative in Congress from the State of Pennsylvania......    48
Hon. Lou Barletta, a Representative in Congress from the State of 
  Pennsylvania, slides referenced during his opening remarks.....    89
  
[GRAPHIC] [TIFF OMITTED] 

GSA TENANT AGENCIES: CHALLENGES AND OPPORTUNITIES IN REDUCING COSTS OF 
                              LEASED SPACE

                              ----------                              

                        Wednesday, July 30, 2014

                  House of Representatives,
              Subcommittee on Economic Development,
         Public Buildings and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
Room 2167 Rayburn House Office Building, Hon. Lou Barletta 
(Chairman of the subcommittee) presiding.
    Mr. Barletta. The committee will come to order. First, let 
me thank Commissioner Dong and our agency witnesses for all 
being here today. Together, your agencies occupy over half of 
GSA's expiring leased inventory.
    Today's hearing is the second step in our committee's GSA 
leasing initiative to save taxpayer dollars through right-
sizing Federal real estate. Step 1 was our July 15th roundtable 
where GSA agreed to partner with our committee to improve 
office utilization, lock in low rental rates and help agencies 
protect their employees from shrinking budgets.
    The purpose of today's hearing is threefold: One, to set 
expectations for what it will take to approve agency leases. 
Two, to learn what challenges agencies face to shrink their 
footprint and use long-term leases to get the best prices. And, 
three, to learn how Congress can help GSA and the agencies 
achieve this goal.
    I believe we have a unique opportunity to work together and 
save a tremendous amount of taxpayer money. We have the same 
objective. The President wants to save money through real 
estate and so does Congress. And it is not just me who sees 
this opportunity. Private sector tenants are taking advantage 
of the market and negotiating good, long-term leases that cut 
their costs.
    So what are these conditions? One, inventory turnover. Two, 
low interest rates. And, three, a buyer's market. Let's take a 
closer look at these conditions.
    Inventory turnover. If you look at slide 1, you will see 
almost 100 million square feet of GSA leases expire in 5 years. 
That is half of GSA's leased inventory. It is also the size of 
32 of the new World Trade Center buildings in New York.
    Low interest rates. Financing costs are near historical 
lows. Literally billions of dollars of cheap and abundant 
capital are sitting on the sidelines waiting to help reshape 
the Government's leased inventory.
    A buyer's market. Vacancy rates are high and rental rates 
are low in almost every market GSA has a presence.
    So what is the key to realizing this potential? Long-term 
leases of 10 years or more. Why is the length of the lease so 
important? At the most basic level, a longer lease lowers risk, 
lowers finance costs and provides certainty for the landlord 
who can then offer lower rents.
    If you look at slide 2, you will see GSA pays a 20-percent 
premium for short-term leases of 3 years or less compared to 
longer leases. But long-term leases do much more than just 
lower rental rates. They allow the Government and the building 
owner to spread out the upfront costs of moving or 
reconfiguring space to accommodate more people. You cannot do 
this with a short-term lease. For example, slide 3 shows three 
recent GSA leases. The 3-year lease has a high rent and no 
concessions. The longer leases have lower rents and significant 
concessions.
    Unfortunately, slide 4 shows a significant amount of GSA 
leases are for 3 years or less. And that number is growing 
every year. There is clearly room for improving those numbers 
and saving taxpayer dollars.
    I also believe this is a win/win opportunity for everyone 
involved. Agencies can get new office space that better meets 
their needs, lowers their rent and allows them to protect their 
staff from budget cuts. The taxpayer gets significant savings, 
which the President and the committee wants.
    In order to get these types of good deals, planning must 
start well in advance. In particular, prospectus level leases 
require significant time to develop and execute. Tenant 
agencies need to embrace the President's savings goals and run 
competitive procurements to replace their leases.
    Today, I hope to hear how GSA and its tenant agencies are 
going to replace 100 million square feet of expiring space with 
long-term deals that improve utilization rates and lower costs. 
That is a lot of leases and today's market opportunity is not 
going to last forever.
    What are the challenges or obstacles that prevent agencies 
from moving or reducing their real estate footprint? As 
chairman of the subcommittee, I am open to suggestions to 
simplify and speed up the leasing process so that taxpayers can 
benefit from this opportunity.
    This Congress, we have already saved $1 billion by simply 
reducing the size of prospectus level lease replacements by up 
to 20 percent.
    Given the larger number of expiring leases, the opportunity 
for additional savings is even larger. For example, if the 
agencies before us here today lower their lease replacement 
costs by 10 percent through a combination of space reduction 
and good long-term rates, we can save $3 billion over the next 
10 years. That is a goal worth achieving, and I look forward to 
working with all of you to get it done.
    I now call on the ranking member of the subcommittee, Mr. 
Carson, for a brief opening statement.
    Mr. Carson. Thank you, Chairman Barletta. And good morning 
to you, sir, and to the legendary, the incomparable Madam 
Eleanor Holmes Norton and my good friend, Mr. Walz and my other 
colleagues, Dr. Shultz, over there, my buddy.
    You know, subcommittee members and witnesses, welcome to 
today's hearing. We are following up essentially on last year's 
hearing when we examined the GSA's implementation of the 
administration's freeze on the Federal footprint dealing with 
real estate policy.
    We heard details from several agencies about their work to 
reduce their real estate footprint. The agencies testified 
about their efforts to increase utilization rates, release 
unneeded property and maintain their fiscal year 2012 real 
estate footprint. Today, we hope to get a better understanding 
of how agencies have executed their plans to maintain their 
baseline and how they plan to tackle expiring leases over the 
next 5 years within the ``Freeze the Footprint'' framework.
    According to GSA, over the next 5 years, over 100 million 
square feet of leases will expire. As Chairman Barletta 
mentioned, this is nearly 50 percent of their leases. As the 
Federal Government's landlord, GSA has a responsibility to work 
with other Federal agencies to make good decisions that reflect 
both the will of the administration and Congress. The sheer 
volume of expiring leases over the next 5 years present a great 
opportunity to accelerate current efforts to reduce the Federal 
footprint by cutting existing space requirements.
    In the wake of the great recession, we have watched the 
private industry downsize and become more efficient in 
utilizing space as a result of economic pressure. We expect 
Federal agencies to do the same.
    Although the ``Freeze the Footprint'' policy currently 
applies only to office and warehouse space, we look forward to 
an update on broader efforts by GSA and other agencies beyond 
those two space classifications. If there is unneeded property 
that can be sold or redeveloped, it is very important for the 
committee to know about those properties. We also want to know 
about any assistance that we can offer these agencies in 
disposing of assets in their real estate portfolio. If an 
agency has a unique mission that needs to be impacted by your 
ability to ``Freeze the Footprint'' policy, we need to hear 
about them. We want GSA to help those agencies reduce their 
footprint, but we want them to be very smart about it.
    So thank you, Mr. Chairman. I look forward to hearing from 
our witnesses today.
    Mr. Barletta. Thank you, Mr. Carson. At this time, I would 
like to recognize the chairman of the full committee, Mr. 
Shuster.
    Mr. Shuster. Thank you, Mr. Barletta. And I want to thank 
the subcommittee chairman for holding this hearing today. And 
also to thank Ms. Norton, who has really been a champion for 
utilizing these Government spaces, saving money by doing things 
smarter, utilizing leases. So thanks to Ms. Norton, not just 
for the past couple of years but for over a decade or so, she 
has been really pushing the issue. And I appreciate it greatly.
    I want to thank all of our panelists for being here today, 
especially Mr. Dong. Thank you for coming. And I am very 
encouraged by what I hear from Mr. Dong. He has only been on 
the job about 4 months, so he cannot fix it basically 
overnight. But, again, I have been encouraged in our 
discussions, by what I see him doing at the GSA, at the Public 
Building Service.
    And the time is ripe. I do not want to go all over the 
numbers, which Mr. Barletta put out there so well, but this is 
a great opportunity for us to save a billion dollars. It is a 
great opportunity for us to look at things and do them in a 
different way. And it is not something that we want to do, it 
is something we have to do.
    And just a couple of days ago, I guess last week, the Old 
Post Office Building, groundbreaking with the Trumps coming in 
and redeveloping it. I understand that this is the first in a 
long period of time that we have done that. I guess the Hotel 
Monaco was the last one to my knowledge. And so again we need 
to be looking and learn from this opportunity. Talking with the 
Trumps and their organization, what was good, what was bad.
    I know Mr. Barletta had a hearing in New York City on this 
issue, and Ivanka Trump testified. And she had some positives, 
and she had some negatives. And, again, we really need to learn 
from that as we move forward.
    And, again, this billion-dollar savings I believe is the 
tip of the iceberg. There are many buildings around Washington, 
around the country, that we can have the private sector come in 
and utilize their money to rehabilitate these buildings and put 
them back into use, which I think is something, as former 
Chairman Mica always stresses, being a former developer, on the 
opportunity we have to do this.
    So I am very pleased that everybody is here today. I am 
pleased that Mr. Carson and Mr. Barletta are exploring this and 
have been for many, many months now. So, again, thank you all 
for being here and thank you, Mr. Chairman.
    Mr. Barletta. Thank you, Mr. Chairman. Before we begin, I 
would like to welcome Mr. Webster. Very happy he is 
participating today, he has a big interest in what is going on. 
And I ask unanimous consent that Mr. Webster of Florida, who is 
a member of the Transportation and Infrastructure Committee, be 
permitted to participate in today's subcommittee hearing. 
Without objection, so ordered.
    On our panel today, we have Mr. Norman Dong, Commissioner, 
Public Buildings Service, General Services Administration; the 
Honorable Joyce A. Barr, Assistant Secretary, Bureau of 
Administration, U.S. Department of State; Mr. William Brazis, 
Director, Washington Headquarters Services, U.S. Department of 
Defense; Mr. Michael H. Allen, Deputy Assistant Attorney 
General for Policy, Management and Planning, Justice Management 
Division, U.S. Department of Justice; Mr. E.J. Holland, Jr., 
Assistant Secretary for Administration, U.S. Department of 
Health and Human Services; Mr. Jeffery Orner, Chief Readiness 
Support Officer, U.S. Department of Homeland Security; and Mr. 
Peter Spencer, Deputy Commissioner, Office of Budget, Finance, 
Quality, and Management, Social Security Administration.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Since your written testimony has been made a part of the 
record, the subcommittee would request that you limit your oral 
testimony to 5 minutes.
    Mr. Dong, you may proceed.

   TESTIMONY OF NORMAN DONG, COMMISSIONER, PUBLIC BUILDINGS 
 SERVICE, U.S. GENERAL SERVICES ADMINISTRATION; HON. JOYCE A. 
   BARR, ASSISTANT SECRETARY, BUREAU OF ADMINISTRATION, U.S. 
 DEPARTMENT OF STATE; WILLIAM E. BRAZIS, DIRECTOR, WASHINGTON 
 HEADQUARTERS SERVICES, U.S. DEPARTMENT OF DEFENSE; MICHAEL H. 
     ALLEN, DEPUTY ASSISTANT ATTORNEY GENERAL FOR POLICY, 
  MANAGEMENT, AND PLANNING, JUSTICE MANAGEMENT DIVISION, U.S. 
 DEPARTMENT OF JUSTICE; E.J. HOLLAND, JR., ASSISTANT SECRETARY 
    FOR ADMINISTRATION, U.S. DEPARTMENT OF HEALTH AND HUMAN 
 SERVICES; JEFFERY ORNER, CHIEF READINESS SUPPORT OFFICER AND 
    AGENCY SENIOR REAL PROPERTY OFFICER, U.S. DEPARTMENT OF 
 HOMELAND SECURITY; AND PETER D. SPENCER, DEPUTY COMMISSIONER, 
  OFFICE OF BUDGET, FINANCE, QUALITY, AND MANAGEMENT, SOCIAL 
                    SECURITY ADMINISTRATION

    Mr. Dong. Good morning, Chairman Barletta, Chairman 
Shuster, Ranking Member Carson and members of the subcommittee. 
My name is Norman Dong, and I am the Commissioner of the Public 
Buildings Service at GSA.
    Our mission is to deliver the best value in real estate, 
acquisition and technology services to Government and to the 
American people. And when it comes to leasing, this means 
reducing costs and improving space delivery, which allows our 
partner agencies to focus their resources on core mission 
needs.
    I would like to make three points this morning. First, GSA 
is focused on improving utilization throughout our portfolio, 
including in our lease space. We hold more than 375 million 
square feet of space, half of which is distributed among 9,000 
leases across the country. And we are working with Federal 
agencies to improve utilization throughout our owned and leased 
portfolios. And, as a result, we have saved millions of dollars 
for our Federal partners and for the American taxpayer.
    For example, in our fiscal year 2014 prospectus level 
leases, GSA and our partner agencies proposed a 13-percent 
square footage reduction, going from 4.3 to 3.7 million square 
feet. We are doing this by helping Federal agencies adopt new 
workplace arrangements and develop mobile work strategies so 
more people can work in less space.
    Our client portfolio planning process helps agencies 
identify opportunities to co-locate and consolidate their space 
and right-size their inventories. And our Total Workplace 
Program helps agencies address the cost of furniture, IT and 
other upfront expenses that would otherwise prevent them from 
consolidating their space.
    Second, within our leasing program, our top priority is to 
reduce cost by improving long-range planning and broadening 
competition. As this committee has pointed out, GSA has an 
unprecedented opportunity to reduce the cost of Federal real 
estate needs over the long term. More than 59 percent of GSA's 
leases will expire over the next 5 years. And this year we have 
10.7 million square feet of lease space expiring in the 
National Capital Region alone.
    We still can capitalize on favorable market conditions 
while average rates remain below their peak levels. As I 
mentioned earlier, our strategy for leasing requires better 
workload management and better improved long-range planning. We 
need to start working with agencies to develop requirements at 
least 36 months prior to lease expiration and to issue 
advertisements at least 18 months prior to expiration. And we 
will be managing to these benchmarks to allow more time for 
competitive procurements that prevent costly holdovers and 
extensions.
    And at the same time, we must broaden delineated areas and 
simplify specialized requirements to generate greater 
competition and more favorable rates.
    In addition, GSA is moving away from the days of replacing 
expiring leases at a one for one ratio. Many of our fiscal year 
2014 prospectuses address three or more lease expirations. For 
example, we are seeking a lease for the Department of Justice 
that will replace four different expirations across the 
District of Columbia. And we are improving utilization from 184 
square feet to just 130 square feet of office space per person 
through this process.
    By improving our upfront planning, taking a more flexible 
approach to delineated areas and seeking longer term lease 
arrangements, we are better positioning the Federal Government 
to take advantage of existing market conditions.
    My third point is this: While today's hearing is about our 
shared efforts to reduce leasing costs, GSA's first priority is 
to maximize the use of our federally owned inventory. Our 
fiscal year 2015 capital plan continues our work to consolidate 
agencies out of expensive leases and into federally owned 
space.
    In Detroit, for example, we are exercising an option to 
purchase a lease property on Michigan Avenue. This will allow 
GSA to renovate and backfill the building with agencies housed 
in four other leases. And this project will save the Federal 
Government about $11 million each year.
    GSA will also continue DHS consolidation at St. Elizabeths. 
Last year, we opened a new headquarters building for the Coast 
Guard. And our fiscal year 2015 budget request allows us to 
complete the infrastructure needed to fully occupy the Center 
Building Complex and to move additional DHS components to St. 
Elizabeths.
    And we are also maintaining our emphasis on large-scale 
consolidation projects. Our budget request this year reflects 
another $100 million to support agency efforts to co-locate, 
consolidate and reduce their footprint. As with current 
projects, we are showing how these upfront investments and 
agency consolidation will help reduce the real estate footprint 
and save money on agency leasing costs.
    These investments are absolutely central to GSA's and this 
committee's work to reduce leasing costs and to shrink the 
Government's real estate footprint. We appreciate the fact that 
this committee approved 27 GSA prospectuses earlier this month.
    Thank you for the opportunity to speak with you. Our work 
at GSA continues to benefit from our strong partnership with 
this committee. I look forward to continuing to work with you, 
and I welcome your questions.
    Mr. Barletta. Thank you for your testimony, Mr. Dong. Ms. 
Barr, you may proceed.
    Ms. Barr. Chairman Barletta, Ranking Member Carson and 
members of this subcommittee, my name is Joyce Barr, and I am 
the Assistant Secretary of the Bureau of Administration at the 
State Department. Thank you for inviting me to testify today.
    The State Department is a relatively small part of GSA's 
overall real estate holdings, accounting for approximately 2 
percent of its nationwide portfolio. Approximately half of the 
domestic real estate that the Department occupies is 
Government-owned space and half is leased, primarily in the 
metropolitan areas. State Department personnel are housed in 
about 150 facilities across the country. We are the sole tenant 
in roughly half of these locations. In the remainder, we are 
co-located with other Federal organizations and other entities, 
mostly in Federal space. In addition, under special legislative 
authority, we own nine properties.
    We have a close relationship with the GSA to acquire space 
to meet our operational needs, and we depend on their expertise 
and experience in real property management to meet U.S. mission 
requirements domestically.
    The Bureau of Administration, which I head, is responsible 
for defining and validating the Department's evolving real 
estate requirements, coordinating with GSA in acquiring 
facilities and in managing the costs of those assets 
effectively. Our many missions shape and add complexity to our 
overall domestic real estate strategy.
    As a member of the national intelligence community, the 
Department must meet certain operational security directives, 
which can increase costs under certain circumstances, such as 
when we move operations. Bureaus within the State Department 
are heavily integrated and must continually collaborate to 
effectively support the numerous policy and operational 
requirements of 275 U.S. embassies and consulates abroad. 
Therefore, we strive to co-locate bureaus together to foster 
that collaboration. And depending upon the need, place them as 
close as possible to headquarters in Foggy Bottom.
    At the same time, back office functions, like passport 
production and financial activities, are located in lower cost 
areas, like Portsmouth, New Hampshire or Charleston, South 
Carolina. Mail and shipping operations supporting overseas 
posts, along with the Department's IT support, are also located 
outside of the Washington, DC, metropolitan area.
    These operational factors have guided State's overall 
domestic real estate strategy for 25 years. We wholeheartedly 
endorse the goal of reducing leasing costs to the greatest 
extent possible. We recognize the need to minimize our real 
estate footprint and have been reducing our space allocation 
per person within our properties as opportunities arise. For 
example, GSA recently leased the Old World Bank Building on our 
behalf, enabling us to consolidate our Bureau of Consular 
Affairs from five separate locations. By incorporating space 
utilization benchmarks consistent with Federal and private 
sector trends, we can now accommodate approximately 30 percent 
or 600 more personnel in the same space.
    The Department has also made it a priority to operate 
facilities smartly by integrating energy conservation and 
environmental sustainability principles into our day-to-day 
activities.
    We have a great partnership with the GSA. They have been 
instrumental in helping us to identify the most suitable real 
estate opportunities to meet our long-term office space needs.
    On behalf of the American taxpayer, we practice good 
stewardship of the Department's real estate assets, and we will 
continue our efforts to increase efficiencies in order to 
obtain the best value for each dollar spent.
    Thank you for the opportunity to appear today. And I 
welcome any questions you may have.
    Mr. Barletta. Thank you for your testimony, Ms. Barr. Mr. 
Brazis, you may proceed.
    Mr. Brazis. Good morning, Chairman Barletta, Ranking Member 
Carson and members of the subcommittee. Thank you for the 
invitation to discuss the Department of Defense's lease space 
portfolio, particularly in the National Capital Region, and 
especially to express the Department of Defense's commitment to 
continue to substantially reduce our lease footprint and lease 
costs.
    I am Bill Brazis, Director of the Department of Defense 
Washington Headquarters Services--WHS--and responsible for 
managing key Government-owned facilities, as well DOD's leased 
facilities here in the National Capital Region--NCR. This 
portfolio includes the Pentagon Reservation, the Mark Center, 
and a number of other smaller Government-owned buildings. And 
in addition, the Department of Defense has, at the end of 
fiscal year 2013, nearly 6.5 million square feet of leased 
space, secured by over 100 leases in 82 buildings here in the 
National Capital Region. Together, these facilities house over 
70,000 Defense personnel, supporting the military departments 
and the Defense agency missions.
    The current lease portfolio in the National Capital Region 
reflects substantial recent reductions that have occurred in 
our leased facilities since 2005. Under BRAC 2005, by the end 
of 2012, the Department of Defense has shed over 3 million 
square feet of our leased space inventory in the National 
Capital Region, primarily by relocating to Government 
facilities on military installations, both within the NCR and 
outside of the NCR.
    Today, WHS is engaged heavily with the General Services 
Administration and our plan is to continue to substantially 
reduce DOD's overall NCR leased space portfolio and our cost 
over the next 5 years.
    In the current program budget review, the Secretary of 
Defense has directed another 20-percent reduction from our 2013 
NCR leased space levels, commensurate with reductions in DOD 
headquarters.
    DOD works in direct and strong partnership with the GSA to 
strategically optimize our leased space to satisfy DOD's 
mission requirements. To do so, the Department plans on 
continuing to leverage GSA's expertise to achieve cost-
effective and quality leases while transitioning from expiring 
leases.
    In addition, we are leveraging GSA's leading edge space 
management tools to optimize space usage and improve our 
utilization of all our facility spaces, both Government-owned 
and leased.
    DOD is committed to effectively managing and drawing down 
its lease space inventory while executing its national defense 
mission. Our twin goals of improved utilization of existing 
Government-owned space while minimizing our leased space 
inventory permits shifting of taxpayer resources to support the 
mission and reduce our overhead costs.
    Thank you for the opportunity to appear hear today. I am 
happy to answer any questions.
    Mr. Barletta. Thank you for your testimony, Mr. Brazis. Mr. 
Allen, you may proceed.
    Mr. Allen. Good morning Chairman Barletta, Ranking Member 
Carson, and distinguished members of the subcommittee. I 
appreciate the opportunity to discuss with you today the 
Department of Justice's challenges and opportunities in 
reducing the cost of real property leased through GSA. We 
certainly share your commitment to achieving taxpayer savings 
in today's real estate market.
    Given the Department's size, number of locations and unique 
mission requirements, leasing through GSA is delegated to each 
of the Department's major components and bureaus, including the 
FBI, DEA, BOP, ATF, Executive Office for U.S. Attorneys, U.S. 
Marshals Service, Executive Office of Immigration Review, and 
Office of Justice Programs.
    The Justice Management Division provides departmentwide 
real property guidance, policy and oversight. We also manage 
GSA leasing for the headquarter components in the National 
Capital Region, amounting to approximately 15 percent of DOJ's 
portfolio.
    Under the leadership of Attorney General Eric Holder, DOJ 
has been committed to cost savings by effectively managing our 
real property and improving utilization efficiencies. For 
instance, the Department successfully reduced our overall 
square footage in fiscal year 2013 from the fiscal year 2012 
benchmark level. In addition, we continue to work closely with 
GSA to acquire leases that offer more efficient and cost-
effective space to meet DOJ's varied mission requirements.
    As this subcommittee has emphasized, we too support 
negotiating longer term leases wherever possible to maximize 
savings. In fiscal year 2013, the Department developed a 
revised real property cost savings and innovation plan to 
support OMB's ``Freeze the Footprint'' initiative. The 
Department's plan focuses on office and warehouse space, covers 
new construction and renovation projects, lease consolidations, 
replacement and succeeding leases, as well as disposal of owned 
and leased assets.
    The plan covers fiscal years 2013 through 2015 and 
highlights the benefits of effective real property management 
and initiatives and the substantial savings that can be 
generated through space and operating cost reductions.
    I would also like to take this opportunity to thank the 
subcommittee for its support and approval earlier this year for 
the first in a series of prospectus level projects here in 
Washington, DC. These projects will dramatically reduce our 
space usage by more than 25 percent for our headquarter 
litigating divisions. We also have other projects now in the 
pipeline that will continue our efforts to reduce our square 
footage and provide substantial cost savings in the out years.
    As to the number of GSA leases expiring in the near future, 
we also recognize the challenges and opportunities identified 
by this subcommittee. Between fiscal years 2015 and 2020, the 
Department will have nearly 900 leases expiring nationwide. Our 
components have been working diligently with GSA on renewal and 
replacement strategies that identify opportunities for improved 
efficiencies and take advantage of today's favorable real 
estate market conditions.
    We continue to work with our components as well to manage 
both our owned and leased real property while also pursuing new 
workplace strategies to better utilize our portfolio and save 
money.
    Thank you again for the opportunity to discuss the 
Department of Justice's important work in this area, and I look 
forward to answering any questions you might have.
    Mr. Barletta. Thank you for your testimony, Mr. Allen. Mr. 
Holland, you may proceed.
    Mr. Holland. Good morning, Chairman Barletta, Ranking 
Member Carson, and members of the subcommittee. My name is E.J. 
Holland, Jr. I am the Assistant Secretary for Administration at 
the U.S. Department of Health and Human Services.
    Under the leadership of former Secretary Kathleen Sebelius 
and our new Secretary Sylvia Burwell, the Department has 
continued its commitment to save taxpayer dollars through 
effective management of our real property assets, improve 
utilization through reduced space requirements and pursue 
alternative workplace strategies that increase utilization and 
reduce costs.
    At the end of fiscal year 2013, HHS had over 4,000 real 
property assets. We recognize that moving from GSA-leased space 
to GSA-owned space will save taxpayer dollars and have taken 
steps to consolidate space from leased locations into GSA-owned 
space where it is available.
    A prime example is the ongoing consolidation of the Food 
and Drug Administration on its White Oak Campus. Completion of 
the current master plan and consideration of further 
consolidation under that campus will further reduce our leased 
footprint.
    The Mary E. Switzer Building, a few blocks from here, 
consolidation is another project and an example of moving 
current leases into GSA-owned space. The Switzer Building was 
identified to accommodate not only the headquarters of the 
consolidated Administration for Children and Families but also 
the Administration for Community Living, the Office of the 
National Coordinator for Health Information Technology, the 
Departmental Appeals Board, several components of the Office of 
Assistant Secretary for Health and other components of the 
Office of the Secretary.
    They were scattered in seven leased locations and two 
federally owned buildings across the Southwest Complex area 
just a bit west and south of here. This project will reduce 
HHS's footprint of leased space by over 349,000 rentable square 
feet. And HHS is moving what would have been more than $17 
million in private sector lease payments to the Federal 
Building Fund payments.
    We also have taken advantage of the GSA's fiscal year 2014 
omnibus appropriations for consolidation activities, which 
funds loans to agencies for consolidation projects. We 
submitted funding to consolidate the Office of the Chief 
Information Officer--OCIO--another group which reports to me, 
into an alternative workplace pilot within the Humphrey 
Building, again about two blocks from here, creating a more 
effective and collaborative work environment for the OCIO team.
    As a result, OCIO's usable square feet will be reduced by 
approximately 34,000 square feet or 50 percent. After 
consolidating into the Humphrey Building, the Office of the 
Chief Information Officer's utilization rate will be reduced 
from 207 square feet per person to 103 square feet per person.
    As evidenced by that low rate, this is our first 
opportunity to create a showcase space for employee mobility in 
our headquarters building, a strategic goal for HHS in its 
efforts to reduce its footprint. Additionally, this project 
will save HHS approximately $750,000 in annual rent cost and 
further reduce our footprint of leased space by over 35,000 
square feet for the OCIO portion.
    We submitted our initial ``Freeze the Footprint'' plan for 
fiscal year 2013 through 2015 in September of 2013. An update 
was submitted in May of 2014. As outlined in that plan, we face 
several challenges in adhering to our plan. There were a number 
of large lease acquisitions and construction projects that were 
underway but not included in the baseline. Those projects will 
add 1.8 million square feet of space to our footprint over the 
next 2 years.
    Other challenges for us are the recent legislative mandates 
from this Congress that have asked us to do additional things 
and require increases in staff. This means there will in fact 
be some temporary additions to our real property footprint, but 
we will achieve the reduced footprint effort by 2016.
    We also find that a significant challenge is the upfront 
costs needed to support consolidations and more efficient space 
utilization. We simply do not have a realistic way to do 
capital improvements. As a result, we have taken advantage of 
GSA's Total Workplace Program for a number of our larger 
projects. However, not funding upfront capital investments in 
furniture, fixtures and equipment has a direct impact on the 
immediate return on investment and short term, 3 to 5 years, it 
actually increases our operating costs.
    We are committed to generating savings for the taxpayers 
through better utilization of our real property assets. The 
President's management agenda benchmark recently demonstrated 
we are making progress in improving utilization of our office 
assets, but we also know opportunities remain for even better 
utilization.
    We recognize that our leased inventory is an opportunity to 
reduce costs, and we continue to work closely with GSA to 
identify opportunities for improved efficiencies in our lease 
portfolio.
    Thank you for the opportunity to appear today. And I do 
welcome your questions.
    Mr. Barletta. Mr. Holland, I am very impressed. Your agency 
is a good example of what we are trying to achieve. You are not 
only talking about it, but you are actually doing it.
    Mr. Holland. Thank you, sir.
    Mr. Barletta. Thank you for your testimony. Mr. Orner, you 
may proceed.
    Mr. Orner. Thank you, Chairman Barletta, Ranking Member 
Carson, and members of the subcommittee for the opportunity to 
testify today. I am DHS's Chief Readiness Support Officer and 
Senior Real Property Officer. I am a career civil servant with 
32 years' experience in the Federal Government, including 
positions in the Department of the Navy, Coast Guard and now 
DHS headquarters.
    I manage DHS real estate, mobile assets, environmental 
compliance and logistics with a goal of providing your 
dedicated workforce with the operational tools and support they 
need to keep our Nation safe at a reasonable cost to the 
taxpayers.
    Today, I will discuss how the Department, with General 
Services Administration support, will consolidate our footprint 
and save money while supporting the DHS mission.
    DHS's real property portfolio consists of 38,000 properties 
with 99 million square feet of space. Half of our real property 
is DHS owned and the remainder is leased. Additionally, half of 
our space is operational mission space and personnel housing. 
And the other half is predominately office space. Lease 
payments account for 82 percent of our annual real estate costs 
at $1.7 billion annually.
    In support of our frontline mission, we at DHS continue to 
improve our management of real property with the support we 
receive from GSA. In addition, the administration's ``Freeze 
the Footprint'' initiative has proved to be of immense value to 
the Department of Homeland Security.
    In 2010, DHS and GSA began a partnership to improve our use 
of space by conducting a space use analysis in the National 
Capital Region. That partnership was delivering benefits and 
specifically the workforce recommendations report, which 
validated that an average office utilization rate of under 150 
square feet per person is a reasonable and achievable target, 
and more so when mobility and telework becomes part of the 
equation.
    It also reinforced that real estate decisions are long lead 
time decisions. Additionally, this partnership and report is 
assisting with educating, training and change management 
throughout the Department in our space decisions.
    The key is that our organization has internalized the 
concept of efficient use of space, which is a critical step 
required to understanding and delivering a new way of managing 
space.
    We in DHS view lease expirations as an ideal opportunity 
for consolidation and economy. Over the next 5 years, 15 
million office square feet nationally will be expiring. This is 
27 percent of our total leased building portfolio and 48 
percent of our office leased buildings. We have a 5-year plan, 
and we are monitoring all expirations to ensure that the 
Department's footprint and lease costs are optimally managed to 
deliver footprint reductions.
    We started with my own offices in DC whereas the successful 
proof of concept, we reduced our footprint by 60 percent for 
over $1 million in annual savings.
    Another example of DHS and GSA as partners in delivering 
real estate solutions is the significant efficiencies that we 
will be achieving in the new space at One World Trade Center in 
lower Manhattan. CBP will realize a 45-percent reduction in 
occupied space by implementing more flexible space design and 
incorporating mobile work for place concepts. This occupancy 
will result in space that meets mission needs at a cost 
avoidance of $5 million annually as a result of space 
compression. Despite challenges related to distance, culture, 
changed management and adopting new work practices, DHS 
headquarters, Customs and Border Protection and GSA worked 
together to achieve this.
    A 10-year period of growth in the DHS lease portfolio has 
leveled off. We expect modest declines in the footprint in the 
short term, but the 10-year opportunity created by lease 
expirations will build momentum towards significant future 
reductions as a result of the Department's 150 square foot per 
person requirement. Particularly over the next decade, 70 
percent of our office space leases will expire, and we plan to 
achieve a 20-percent reduction and meet our mission while 
paying for 4.4 million square feet less than we occupy today.
    Real estate reduction strategies for the Department's 
office locations are the focus of our fiscal year 2015 work 
plan. Ten major cities contain in excess of 7 million square 
feet of DHS office space. For those top 10 field locations, we 
have assessed the requirements cost and expiration dates of 
existing leases to develop plans for lease compression, 
consolidation and cost reduction.
    The National Capital Region currently has 10 million square 
feet of DHS office space. Here, DHS continues to work with GSA 
on our headquarters consolidation project. Consolidation will 
allow the strategic realignment of the real property portfolio 
in the National Capital Region to more effectively support our 
mission.
    DHS continues currently to occupy over 50 separate 
locations in the National Capital Region at an average space 
utilization of 200 square feet per person. Consolidation will 
contribute to reducing the number of locations and will bring 
our utilization rate below the 150 square feet standard, lower 
facility costs and provide quality work space for our 
workforce.
    Finally, I am happy to point out that DHS submitted our 
revised real property cost savings and innovation plan to OMB 
in September 2013 and established its 48 million square feet of 
fiscal year 2012 office space as our baseline. And we provided 
an update in May of 2014 that indicates we are meeting the 
``Freeze the Footprint'' guidelines.
    In closing, DHS will continue to aggressively pursue real 
property strategies in partnership with GSA. We will lead 
departmental efforts to exceed the ``Freeze the Footprint'' 
objectives and our ultimate goal remains to perform our mission 
support with effectively designed space for the way we work 
today without sacrificing mission effectiveness for our 
employees on the front line of Homeland Security.
    I very much appreciate the opportunity to testify before 
you today, and I look forward to answering your questions.
    Mr. Barletta. Thank you for your testimony, Mr. Orner. Mr. 
Spencer, you may proceed.
    Mr. Spencer. Chairman Barletta, Ranking Member Carson, 
members of the subcommittee, thank you for inviting Social 
Security to testify today. My name is Pete Spencer. I am the 
Deputy Commissioner for Budget, Finance, Quality and 
Management. I am also the agency's Chief Financial Officer. I 
retired after 44 years of service in 2011 and came back last 
March because I am concerned about the budgets that we face and 
how we can restrict spending to make sure we meet both the 
needs of the American public for Social Security services and 
at the same time protect the investment of the American 
taxpayer.
    We are delighted to be part of this discussion this 
morning. We are looking forward to learning about proven 
practices that you all, as members of this subcommittee, can 
share with us as we move forward here.
    I have three main points that I want to discuss today. 
First, we fully support and appreciate the work of this 
subcommittee. There is no question about the number of issues 
that you have identified for us, and we look forward to 
learning the proven practices from others.
    Number two, we have a strong relationship with GSA, and we 
are working together to reduce our usable square footage and 
our annual rent costs. Unlike other agencies, however, we do 
not own property nor do we have direct leasing authority. GSA 
handles all of that for us.
    Third, I think you all know that we have a unique 
community-based organization that requires a strong national 
network of field facilities in order to serve our public, 
whether that is in Hazleton or whether it is in Indianapolis or 
whether it is in Orlando or whether it is in the District or 
whether it is in Glen Burnie. Our local offices are there to 
serve, and that is part of our real estate footprint.
    Few programs touch as many lives as ours do. To help the 
millions of people we serve, we must maintain this network of 
offices across the country. It is not surprising then that we 
are GSA's fourth largest customer in commercial leases and the 
fifth largest customer in rent costs. We are fully committed to 
maintaining our local field facilities across the country in 
order to serve the public. Our ``Freeze the Footprint'' plan is 
not based on consolidating local offices in our communities.
    I want to underscore the fact that we continue to be an 
efficient organization. Our administrative costs are only 1.4 
percent of the benefit payments we pay each year. We are very 
proud of our efficiency at Social Security.
    Given the unique characteristics of our real estate 
portfolio, we are pleased to report that we have decreased our 
usable square footage by more than 330,000 square feet in 
fiscal year 2013 compared to the 2012 baseline. We will reduce 
our square footage by the end of 2014 by 1 million square feet 
and by the end of 2015 by 2 million square feet.
    GSA has worked with us to achieve our goal of freezing our 
footprint, and they have also worked with us to lower our 
current annual rental costs. For example, we collaborate with 
GSA, as you have suggested Mr. Chairman, to identify 
opportunities to reduce our rent in targeted markets by 
extending the lease terms and negotiating a lower rental rate 
in our existing leases. So, for example, in Salinas, 
California, GSA extended the lease terms and was able to lower 
the rent by $7.50 per square foot. Based on that reduced rent, 
the projected rent savings over the subsequent 5-year period is 
about $3 million. That is a good example of doing what you have 
asked us to do.
    That example, in addition to initiatives I have outlined in 
my written testimony, will help us reduce total usable space. I 
need to quickly add, however, that these savings may not be 
good enough to offset projected increases in rent costs. In 
many cases, cost increases are due to the cost of improvements 
that must be made to many of our local offices in order to 
provide security for the in-person service that we give. But 
the savings mentioned above certainly will help us offset most 
of those costs.
    In conclusion, we are delighted to have the opportunity to 
work with you, Mr. Chairman, and the subcommittee. We look 
forward to your ideas on how we could better manage our lease 
property in an efficient and cost-effective way.
    Thank you, and I will be glad to answer any questions you 
may have.
    Mr. Barletta. Thank you for your testimony, Mr. Spencer. I 
will now begin the first round of questions, limited to 5 
minutes for each Member. If there are additional questions 
following the first round, we will have additional rounds of 
questions as needed.
    To start, this question is for all panelists. Each of your 
agencies have been directed by the President to cut your real 
estate costs. You also have heard there is a limited window of 
opportunity to replace your expiring leases with good long-term 
deals that improve utilization rates and save significant 
dollars. Will you commit to work with our committee to seize 
this opportunity, replace these leases on time and achieve the 
President's savings goal? And I would appreciate a response 
from each agency.
    Ms. Barr?
    Ms. Barr. Of course. We have for the last 25 years been 
guided by a strategy where we are trying to make sure that we 
serve the taxpayer by offering the lowest cost for the longest 
term lease. And we also, in order to facilitate the way we work 
together, provide opportunities for our bureaus to collaborate 
since much of our business is conducted overseas.
    In that vein, we have consistently for a number of years 
tried to get into owned space. And recently we were able to 
acquire property across the street from the State Department, 
Potomac Annex from the Navy. It took us quite a while to 
finally finalize this transfer, but it is 7 acres. It will give 
us an opportunity to look at all of our real estate in the DC 
metro area and move them out of high-cost space into lower cost 
space.
    Mr. Barletta. Thank you. If I could have a brief answer as 
we go through. Thank you for that information. Mr. Brazis?
    Mr. Brazis. Mr. Chairman, yes, the Department of Defense is 
committed. We, in fact, have been working with the GSA very 
closely in looking at the 82 buildings that we are in today to 
come up with a strategic plan with them, looking over the next 
5 years to aggressively achieve that 20-percent drawdown. And 
GSA has really helped lead us in this analysis, looking across 
the portfolio, to commit longer term leases, and use anchor 
buildings that we are trying to move folks into to help get out 
of more leases.
    Mr. Barletta. Thank you. Mr. Allen?
    Mr. Allen. Mr. Chairman, yes, we commit and we believe we 
have already begun that process with our latest prospectus here 
in the Washington, DC, area.
    Mr. Barletta. Thank you. Mr. Holland?
    Mr. Holland. Yes, Mr. Chairman, we commit to that. We will 
continue doing precisely what you have suggested we ought to be 
doing.
    Mr. Barletta. Mr. Orner?
    Mr. Orner. Absolutely, we enthusiastically make that 
commitment, and we appreciate the subcommittee's leadership on 
this issue.
    Mr. Barletta. Thank you. Mr. Spencer?
    Mr. Spencer. Absolutely, Mr. Chairman. Fifty-two percent of 
our leases expire in the next 5 years. I have a list of them 
right here. We are working through the list as we speak.
    Mr. Barletta. Very good, thank you. Short-term leases cost 
your agencies and the taxpayer an extra 20 percent in lease 
costs. Leases over 10 years can save an additional 10 percent 
or more and cover much of your upfront relocation costs. Yet, 
the number of short-term extensions is growing each year. Will 
you commit to replacing your long-term lease requirements with 
leases that are at least 10 years? And I would appreciate a 
brief response from each agency. Ms. Barr?
    Ms. Barr. Yes.
    Mr. Brazis. Yes, to every extent possible.
    Mr. Barletta. OK. Mr. Allen?
    Mr. Allen. Yes.
    Mr. Holland. Yes, sir, that is our objective.
    Mr. Barletta. Mr. Orner?
    Mr. Orner. Yes, we make that commitment.
    Mr. Spencer. Yes, sir.
    Mr. Barletta. Each of your agencies have 50 percent to 70 
percent of your leases expiring in 5 years. Reducing these 
costs by even 10 percent will result in a $300 million saving 
annually. How far in advance does the work need to begin to 
prepare for expiring leases, particularly larger prospectus 
level leases? And are your agencies on track with your expiring 
leases so that we do not see holdovers or costly short-term 
extensions? Ms. Barr?
    Ms. Barr. The first part of your question was how far are 
we on track?
    Mr. Barletta. Yes, how far in advance does the work need to 
begin to prepare for these expiring leases, particularly the 
larger prospectus level leases?
    Ms. Barr. We usually start working with GSA like 3 years in 
advance, like Mr. Dong mentioned before. And we are in constant 
conversations with GSA about these leases and trying to put 
them into more cost-effective----
    Mr. Barletta. And are you on track with your expiring 
leases so that we do not see holdovers?
    Ms. Barr. We are now.
    Mr. Barletta. OK, thank you. Mr. Brazis?
    Mr. Brazis. We need 2 to 5 years in advance, and we are 
working with GSA right now looking down range in the next 3 to 
5 years. There are some leases that we may end up vacating 
entirely that may require some short-term periods so that we 
can get into the longer term strategy. Our goal is to get into 
anchor buildings that have longer term leases. Our more recent 
ones do. To the extent that we need some time to get out of 
situations we are in now to get into longer term leases, they 
require some shorter term leases.
    Mr. Barletta. Mr. Allen?
    Mr. Allen. We agree with the 36 months. And I would say 
that where we are trying to consolidate leases, there may be 
some short-term extensions to marry up the expirations.
    Mr. Barletta. Mr. Holland?
    Mr. Holland. Mr. Chairman, I am not sure there is a date 
that I could say 36 or 48. When I arrived here 5 years ago 
after having been safely ensconced in Kansas for a long time, I 
found that we had a major project that we are still working on 
that started in 2006. So my view is that we should be doing 
what GSA asked us to do 4 years ago, and that is to participate 
in an ongoing portfolio review.
    I received a call out of the blue one morning from somebody 
I did not know, and he said, ``Mr. Holland, will you do this?'' 
I did the wrong thing as a manager. I did not go down the hall 
and talk to my folks. I said, ``Yes.'' And we have been doing 
that ever since.
    And so I view it as an ongoing project. There will be some 
holdovers because as we try to consolidate two, three, four, 
six different divisions into a single space, the lease 
expirations will not be at the same time. So in some cases, we 
will have to have short-term extensions. We have no choice. But 
if the ultimate objective is to get a bunch of different 
functions into a single building, I think it will be worth that 
effort.
    Mr. Barletta. Mr. Orner?
    Mr. Orner. We begin working with GSA on lease expirations 
at least 3 years in advance of the lease expiring. That can be 
up to 5 years if it is a particularly complex project. And we 
are interested in long-term leases to save money for the 
taxpayers. And we would only allow a short-term extension in 
order to synchronize projects so that we can consolidate our 
operations.
    Mr. Barletta. Mr. Spencer?
    Mr. Spencer. Yes, sir, Mr. Chairman. We certainly want to 
start well in advance, and we do that. We have very few short-
term leases. I will just say in defense of GSA that in some 
situations--and this is a place where I think the subcommittee 
can help us--we find that not always are we able to find 
someone who is willing to give us space on the commercial 
market. Believe it or not, some of the areas in which we have 
to locate our offices are lower economic areas--not necessarily 
areas in which somebody wants to build a building or give us 
space that we might be able to use.
    But the bottom line is each situation requires us to look 
well in advance to make sure we do not have short-term leases. 
It is our goal not to have any.
    Mr. Barletta. Thank you. I would like to recognize Ranking 
Member Mr. Carson for questioning.
    Mr. Carson. Thank you, Chairman Barletta. Mr. Dong, can you 
please discuss the selection of the three sites for the new FBI 
headquarters and how that fits into the ``Freeze the 
Footprint'' initiative? And are you building a building or are 
you building a campus? And if you are unable to receive the 
full cost of a replacement facility with the value of the 
current headquarters, how will GSA and the FBI effectively make 
up the difference?
    You might need to use Madam Barr's microphone, sir. Thank 
you.
    Mr. Dong. One more time, OK.
    Mr. Carson. There we are.
    Mr. Dong. There we go.
    Mr. Carson. Alright.
    Mr. Dong. As you mentioned, GSA announced the short list of 
potential sites for the FBI headquarters yesterday. That 
process was the product of a thorough review and evaluation of 
sites submitted by private bidders as well as federally owned 
sites against criteria that were clearly stated in our initial 
advertisement thing such as delineated area and access to 
transportation and minimum acreage. And through that process 
the evaluation committee and the source selection official 
identified what they thought were the three most viable sites 
that would meet the FBI requirements.
    You talked about the swap construction process where we 
would be taking the value of the Hoover Building and trading 
that for construction services towards the development of the 
new FBI headquarters facility. What we want to be able to do is 
to let the market tell us what the value is for that building. 
If there is a potential valuation gap, we want to be able to 
come back to this committee to talk about options for bridging 
that gap.
    Mr. Carson. Thank you. Madam Barr, given the increase in 
cost to real estate in the Foggy Bottom area of DC and Rosslyn, 
Virginia, do you believe it is in the taxpayers' interest to 
reevaluate the State Department policy of consolidating in 
these particular markets?
    Ms. Barr. Well, I would like to take 1 minute to just 
explain how we accomplish our mission. Since we are primarily 
focused on supporting operations overseas, unlike bureaus and 
other agencies, we have to collaborate closely in order to 
fulfill that mission. For example, when we have to reduce 
staffing because of security or a natural disaster, it takes 
more than just the Diplomatic Security Bureau. It also involves 
the regional bureau because sometimes when we pull people out, 
that has an impact on our bilateral relationship with those 
countries. It involves Consular Affairs because we have to make 
sure that we treat private American citizens the same as we 
treat ourselves when it comes to assessing whether there are 
problems there.
    We often have other types of programs, like democracy 
building, that involve other functional bureaus. So when we 
need to make a complicated decision in a short period of time, 
it often is better if we can do it together.
    In addition to that, because we often have security 
requirements and these conversations are easier in those cases 
if they take place in a classified environment, being able to 
bring people quickly together helps us to do that. We recognize 
that it is expensive to have things located in the Foggy Bottom 
or Rosslyn area. So for those routine things, we make a 
concerted effort to push them elsewhere.
    For example, we own a facility in Charleston. We have HR 
and financial services there. We pushed some of our Consular 
Affairs production facilities down there because we do 
recognize that money is important, so we only put our high-
value things close to the Foggy Bottom area.
    Mr. Carson. Thank you, ma'am. Mr. Spencer, with the over 43 
million Americans visiting your offices annually, the SSA is 
somewhat different from other agencies before us today because 
of the level of interaction that the SSA has with the public. 
How does that guide your decision as you look to reduce your 
Federal footprint?
    Mr. Spencer. It is a challenge for us because we do have to 
account for the fact that we do have visitors coming into our 
offices. They bring family members with them. So we need space 
for them. As we set our space standards in a local field 
office, we have a standard for the individual employee but also 
for the individuals who are going to be visiting our offices. 
We have to put both of those factors into place when we decide 
how much space we need in a particular office.
    I will also say that we are looking for alternative means 
of exchanging information with the public, using the Internet 
more and so on. That certainly does guide us as well.
    Mr. Carson. That is great. Thank you all.
    Mr. Barletta. The Chair would like to recognize former 
chairman of the full committee, Mr. Mica.
    Mr. Mica. Thank you, Mr. Barletta and thank you for 
carrying on an important subcommittee role and conducting this 
important hearing today about trying to get the best deal for 
the taxpayers, particularly on leased property.
    Mr. Dong, how long have you been now in your position?
    Mr. Dong. At GSA? I have been at GSA just 4 months.
    Mr. Mica. Four months, OK. Well, you are not aware of some 
of the history of what has taken place with some of the leases 
and all. But actually back with Mr. Oberstar, I was reminding 
staff, the staff came on some years ago, at the bottom of the 
recession, I had been in real estate. So Mr. Oberstar and I got 
in a van, maybe Dan Mathews was with us. And we looked at 
vacant properties around Washington, DC, because there was a 
fire sale going on, prices were down. And we looked at 
different places, leases expiring. Not too much was done, 
unfortunately. There were some new leases cast but now you are 
back up again in price.
    This is a list that I was given of vacant properties in 
just the District. And they start from 374,000 contiguous 
square feet, prices from here is $28.78 a square foot. The 
highest I see up is about $61, but most of them in the $40s.
    What are you paying now on average in the District, do you 
know? Guess?
    Mr. Dong. Do not have the exact figure, but I am happy to 
follow up.
    Mr. Mica. But there is lots of property available. There 
are still some good deals, not like there used to be. We will 
submit that for the record and also if staff will provide Mr. 
Dong with a copy, it would be appreciated.
    Mr. Barletta. Without objection.
    
    [The provided material follows:]

    [GRAPHIC] [TIFF OMITTED] 
    
    Mr. Mica. Thank you. Yesterday, I conducted a hearing, and 
I have been trying to get information that our committee has I 
think back to this subcommittee from OMB on the amount of 
vacant space. Finally, after issuing a subpoena and some 
threats, we did get--I did get a response and got a report just 
recently on the amount of vacant space.
    Now, there are some big offenders here with vacant space. 
DOD is one of the worst. They have a huge inventory of vacant 
space. In fact, this report from OMB identified 7,500 
properties or buildings, 3,292 excess buildings or properties 
and 4,208 underutilized. One of things we found from that 
report is it was incomplete. So it is actually much worst than 
that.
    What are you doing, Mr. Dong, to make certain that we have 
excess Federal properties--here in the District we have excess 
Federal properties vacant that we fill them with some of the 
activities. Is that an agenda item that you are looking at--and 
across the country of course?
    Mr. Dong. Absolutely. We want to be able to look at our 
Federal buildings to identify those assets that are 
underutilized or underperforming and to make sure that at the 
end of the day, we are seeing highest and best use of all of 
our Federal assets.
    Mr. Mica. OK.
    Mr. Dong. So some examples, we talked about the Old Post 
Office Building. That is a situation where we saw that that 
building----
    Mr. Mica. Well, we have held hearings, this subcommittee, 
my first hearing as chairman, we dragged the staff down there 
in the vacant portion of the building, the Old Annex had been 
vacant for 15 years. And nearly half of the 370,000 square feet 
were vacant and losing around $6 million to $8 million a year. 
Very familiar with that one. That is a turnaround.
    But in politics and in GSA, you cannot sit on your laurels 
or your assets, so I am more interested in what we are going to 
do to move forward to fill some of these.
    One of the problems too, you have very limited area. I mean 
you have thousands of buildings and properties but the Federal 
Government, a lot of them outside your jurisdiction, for 
example, DOD, DOD has huge assets. We do not have a good 
inventory.
    Now, I just got an inventory of eight vacant or 
underutilized but a good current inventory too of the leased 
properties, and that is something we need to haul OMB in here, 
Mr. Barletta, and see that each agency reports specifically on 
leased and where they are with their leases, et cetera. So what 
you are doing, we would have some handle on how we can get them 
to move forward.
    And then there are impediments the agencies face. And that 
is something else we need to deal with so they can get rid of 
those things.
    I will give GSA, there is a new--some new kids on the block 
including Mr. Dong. And some of your folks, the last few 
months, are now looking at more creative ways of leasing and 
actually of not circumventing but dealing with the impediments 
that Congress or law has in place by creatively singling out. 
We are very supportive of that because if it makes sense for 
the taxpayers, it is very important.
    DHS, I have done everything. I can close down any further 
new buildings for you. We have done--we made a huge mistake, it 
was a committee across the hall, in creating DHS in its current 
form. It is too big. Anyone who ever thought that combining 22 
agencies and over 200,000 people would be more efficient is not 
dealing with common sense or ability to manage agencies.
    Very concerned. I want to do everything I can to make 
certain you do not build another--a monument to bureaucracy at 
the St. Elizabeths site. We needed to do something with the 
Coast Guard and that has been done and adequate. And we might 
even look at putting some of that property up for sale or 
leased to the private sector.
    Consolidation of some of your leases is a goal, is that 
right?
    Mr. Orner. That is correct.
    Mr. Mica. OK.
    Mr. Orner. We are looking at consolidating our leases 
nationwide.
    Mr. Mica. Some of that may look--makes sense. And maybe we 
will also have the committee provide you with a copy of some of 
the properties that are available at still some pretty 
reasonable rates. But, again, big bureaucracies require big 
spaces. My goal is to get the size of the bureaucracy down, 
consolidate the space and save taxpayers money.
    I yield back.
    Mr. Barletta. Thank you, Mr. Chairman. The Chair recognizes 
Ms. Holmes Norton for 5 minutes.
    Ms. Norton. Thank you, Mr. Chairman, and I appreciate this 
hearing. I would like to find out from Mr. Orner, I suspect 
that is who I should be asking, the Coast Guard building was 
planned before the requirement for space utilization reduction. 
How are you reducing space in the Coast Guard building? And 
will that mean you are able to consolidate more of the Coast 
Guard--into the Coast Guard headquarters?
    Mr. Orner. Congresswoman, you are exactly correct. We did 
plan that before we had our new space standards. It is my 
estimate that we can put up to an additional 1,000 people into 
the Coast Guard headquarters building. Our plan is the Coast 
Guard has various offices and lease space in Arlington. Our 
plan is to move all of those people as those leases expire into 
the new Coast Guard headquarters building.
    Ms. Norton. So you think you could get the entire Coast 
Guard into that one building?
    Mr. Orner. The entire National Capital Region Coast Guard.
    Ms. Norton. Yes, of course.
    Mr. Orner. Yes, and that will save the Coast Guard roughly 
$7 million a year in rent. And we may be able to put a couple 
of other offices on top of that. So we will achieve over the 
next 1\1/2\ to 2 years significantly greater density in that 
building.
    Ms. Norton. Excellent. Mr. Dong, what is the effect of 
reducing the footprint or reducing the utilization for 
employees for these agencies that remain in place or are 
reluctant to move? There is this outstanding requirement, their 
space remains as it is, holdover or whatever, especially if 
they do not move, say they cannot move, do not have the money 
to move? Is there any way to enforce this standard or is the 
only way to enforce it is to have the agency move?
    Mr. Dong. We have seen examples of how agencies are able to 
improve their utilization as they stay in their existing space. 
So if we look, for example, at FEMA where their headquarters is 
at 500 C Street, they have been able--that is their 
headquarters building. They have been able to dramatically 
improve the utilization of that building.
    Ms. Norton. That leased space, that was not lease--that was 
leased space?
    Mr. Dong. That is a leased space, but that is an example 
where they had a number of different facilities across the 
National Capital Region. They were able to reduce the number of 
facilities by putting more of their staff within that 
headquarters building. So I think we are seeing examples across 
the Government of how agencies recognize that excess spending 
on real property comes at the expense of mission-critical 
activities.
    Ms. Norton. So you are requiring the reduction in space 
even for agencies that are remaining in the space and have no 
intention of moving?
    Mr. Dong. We are working with agencies to help them reduce 
their footprint, whether they are in leased space, whether they 
are owned space, we are looking for any and all opportunities 
to help them reduce their spending on real property.
    Ms. Norton. Mr. Dong, as you know, you own buildings--
sorry, you lease buildings where the agency has no intention of 
ever moving. We are virtually buying these buildings. Is there 
a purchase option in every lease or new lease today?
    Mr. Dong. We do not have purchase options in every lease, 
and I would say that the days of bargain purchase options are 
behind us. And we recognize that purchase options are not free. 
But again----
    Ms. Norton. Nor is leasing the space over and over again 
free to the taxpayers.
    Mr. Dong. You are absolutely right.
    Ms. Norton. So I want to know what you are doing with 
purchase options? What are you doing to acquire space so you 
have to lease less space? You say in your testimony that GSA 
hopes to demonstrate the value of investments that reduce the 
real estate of the footprint. Ms. Barr talked about apparently 
owning or buying space across from the State Department. Are 
you looking at public-private partnerships, for example, to 
complete the Department of Homeland Security?
    That first building, the Coast Guard, was finished on time 
and on budget because of annual appropriations. It has been 
slowed, especially with the reduction in appropriations. But 
even if there had been appropriations as planned on an annual 
basis, it is very hard to build a complex asking the Government 
to put the money down each year. Now, you know, that is not the 
cheapest way to build a building but is there a way to 
complete, at least some of the buildings, using a public-
private partnership? And are you investigating that alternative 
as a way to complete some of the Department of Homeland 
Security?
    Mr. Dong. Congresswoman Norton, let me come back to the 
first part of your question. As my colleagues have testified, 
we are seeing some great examples of how agencies are moving 
from leased space into owned space. Assistant Secretary Holland 
talked about the consolidation at the Switzer Building. I 
mentioned earlier about what we are trying to do in Detroit by 
moving four different lease locations into what would be a 
federally owned building. We are seeing some good examples 
across the Federal----
    Ms. Norton. You bought a building in Detroit?
    Mr. Dong. Correct. In terms of St. Elizabeths----
    Ms. Norton. That was a purchase option, wasn't it?
    Mr. Dong. That was a purchase option. In terms of St. 
Elizabeths, we recognize the current constraints that we are 
operating under. We are open to exploring any and all 
innovative approaches that would allow us to support----
    Ms. Norton. Are you exploring a public-private partnership 
to complete the St. Elizabeths complex?
    Mr. Dong. We are open to any and all options for----
    Ms. Norton. You are not exploring, you are just open?
    Mr. Dong. We want to make sure that we are looking at all 
viable options for completing this project. And I know that 
this is an important issue to members of this committee, and we 
look forward to working with you on this.
    Ms. Norton. I think it was Mr. Holland that mentioned the 
upfront capital as an impediment to reducing the space. Are you 
amortizing the cost for any agency that wants to do so and can 
do so in order to take advantage of the need, in order to 
enforce your mandate to reduce the space of each agency?
    Mr. Dong. We want to be able to help----
    Ms. Norton. Because this will be the first excuse given, 
that we cannot pay for the upfront costs.
    Mr. Dong. The upfront costs in the past have been a 
significant obstacle that have prevented agencies from doing 
the right thing in terms of co-locating and consolidating and 
reducing their footprint. We see two things that change that 
dynamic. One is the Total Workplace Program that I mentioned 
before that allows us to amortize the cost of furniture and IT 
and other upfront expenses that had previously been an obstacle 
to be able to make that move.
    Two, is in our fiscal year 2015 budget, we request $100 
million to support agency consolidation efforts. The amount 
that we received in fiscal year 2014, the $70 million, has been 
a force multiplier for us in terms of being able to work with 
agencies to reduce their footprint.
    Ms. Norton. Mr. Chairman, I know my time is out. Mr. 
Holland indicated that he was having difficulties with the 
program and yet the answer here has been that they are able to 
move ahead. So I am not sure that I understand that Mr. 
Holland's needs are being met by what Mr. Dong has just said.
    Mr. Holland. Congresswoman Norton, we in fact are taking 
very aggressive advantage of what Mr. Dong just described, both 
at the Parklawn project in Rockville and at the Switzer project 
here. We could not have done those projects without that help. 
My observation was to the point that this is a problem all the 
time. We have ways to solve the shortfall here, and we have. 
But I will have other opportunities, and even $100 million is 
not unlimited and Mr. Dong will not always be able to meet our 
needs. A more thoughtful private sector type way of handling 
capital investments would be helpful.
    Mr. Barletta. Thank you. Mr. Webster?
    Mr. Webster. Thank you, Mr. Chairman. Thank you for 
allowing me to attend this meeting, and thank you panelists for 
your presentation.
    When we had our last prospectus level project approval, I 
was the only voice vote no because I was somewhat shocked at a 
couple of the examples I saw there of the new leases. One in 
particular was in a metropolitan area. It was in the same 
building as an expiring long-term lease. They were just going 
to re-up the lease. And the cost over the lease period was 
around $1,100 to $1,200 per square foot for the entire lease. 
So I figured, I was just sitting there at my desk, this 
distance here to here would be around $5,000 to $6,000.
    And I was really concerned about that because the lease 
that was being completed, the only option was to either leave 
or re-up. There was no lease purchase or anything. And then the 
new lease, there was also no agreement. So by the end of the 
full term from the start to the finish, there would have been 
paid out about $2,200 per square foot. The building would 
probably be, if it is a normal building, would be about half 
its life cycle had been expired. And yet you could have built, 
you know, five times, four times, three times the building if 
it had been built and owned by the Federal Government. And you 
still at the end of that timeframe would have had only used 
half the life of the building.
    So, Mr. Dong, my question would be what criteria do you use 
to determine whether or not there will be a lease purchase 
agreement? When you start 3 years ahead and you begin planning 
out, are there things that you--is there a checklist that you 
go down to determine what is the best buy life-cycle cost, 
energy cost, lease to own, all of those or just buying it 
outright? Is there a checklist that is a standardized 
checklist?
    Mr. Dong. Our preference is to have federally owned 
buildings as opposed to leased buildings. There are situations, 
as you know, where we have to be in lease arrangements.
    You mentioned earlier purchase options, and we want to be 
able to see those in more of our lease arrangements, but we 
recognize that again those come at a cost. So it really is 
dependent of the specifics of the transaction in terms of when 
a purchase option would be appropriate.
    Mr. Webster. But wouldn't a lease that expires and you re-
up it and it expires again, there is a cost to that too because 
at the end of that timeframe, you have nothing to show for it 
except you have to go out and lease again. Wouldn't there be 
some consideration with that? I assume that is in your 
calculation, is that true?
    Mr. Dong. Absolutely. And, again, we want to be able to 
kind of look more strategically at these transactions, not just 
to get caught up in the cycle of leasing but to really think 
through what is the longer term strategy for this asset and for 
the tenants in this asset.
    Mr. Webster. The last list of projects that we approved, 
most of them were in--those leases were in urban areas. Given 
technology and other advances, can't you be just about anywhere 
you want to be including some less urban area that would be a 
lot less expensive to operate? And is that considered?
    Mr. Dong. Absolutely. There are two things that we 
emphasize. First and foremost, it is about meeting agency 
mission requirements, but we want to make sure that we are 
doing so in a fiscally responsible way. So it really comes back 
to a collaborative dialogue with the agency in terms of what 
their specific requirements are, whether they need to be 
downtown in the central business district or they could be out 
in the suburbs and really understand what the trade-offs are 
given the requirements and look to balance both objectives in 
terms of meeting agency mission requirements but doing so in a 
fiscally responsible way.
    Mr. Webster. OK, Mr. Orner--Orner, sorry, could you--I have 
one question. You said you were about 50 percent owned, 50 
percent leased. And you are the only one that mentioned that, 
so I would ask you is that a static number or is moving? Are 
you moving towards more owned or are you moving towards more 
leases?
    Mr. Orner. It is a relatively static number. The large 
majority of our owned spaces are Coast Guard and CBP. And the 
Coast Guard, we are talking about stations, Coast Guard 
stations, depos. We do not buy and sell a lot of those. So it 
is relatively static.
    Mr. Webster. Thank you, Mr. Chairman.
    Mr. Barletta. Thank you, Mr. Webster. The Chair recognizes 
Ms. Edwards.
    Ms. Edwards. Thank you, Mr. Chairman. And I want to say a 
special thanks to the ranking member because I had 
intentionally not planned to ask a question about the FBI and 
the land slot, but I appreciate the response.
    It does raise a question that I had though and it is about 
process. And so I appreciate that, Mr. Dong, you have explained 
the process because sometimes I know we get confused and 
annoyed by process but in the case of GSA leasing, and I know 
this is true in the Metropolitan Washington area, process is in 
fact very important because it can lead to a better deal for 
the taxpayer if things are fair, if they are transparent and if 
there is a competitive process for leasing. And I think when 
that happens, it can also create an environment in which you do 
not invite protest, appeal and litigation.
    And so I have been really interested in the process. I 
represent a district, as you know, right outside of the 
District of Columbia in Prince George's and Anne Arundel 
County, but I want to focus on Prince George's County because 
that has been a subject of some process.
    The Office of Management and Budget through its approval of 
GSA rent requests is largely responsible for setting the 
prospectus rent caps nationwide. But nowhere is the scrutiny 
more draconian than I think it is here in the National Capital 
Region where OMB sets a one-size-fits-all cap for leasing in 
northern Virginia, the District of Columbia and suburban 
Maryland. And quite ironically, these caps are often well below 
those approved in other parts of the country, whatever the 
economy, despite the Washington region's higher prevailing 
market rents. In the District of Columbia, that cap is at about 
$50, in Maryland $35 and in Virginia $39. I am really hard-
pressed to understand, and I have asked numerous times when GSA 
and our agencies have been in front of us, what explains the 
disparity in one metropolitan region and why is that disparity 
only present in the Washington metropolitan region.
    One of your predecessors, 2 years ago, in 2011 when I 
asked, could not explain that at all when he was in front of 
this committee. And I will tell you what he said to me in 2011. 
And this is a quote from Mr. Robert Peck, who was the GSA's 
Public Building--in charge of the Public Building Service. And 
he said, ``I think that there is the opportunity to make some 
adjustments here or overhaul that system, and I am looking 
forward to doing it.''
    So I want to fast forward from 2011 to 2014, and the cap 
disparity that I described still exists without any other 
explanation. And I know we have talked about this before, but I 
have to get your commitment on the record that GSA will provide 
an answer and a response and something that is acceptable that 
gives relative competitive weight in the region for each of the 
jurisdictions that compete in this region. While one can 
understand the District of Columbia, it is a city, I do not 
understand the disparity among all of the suburbs. And that has 
not been explained sufficiently, and it has to be resolved 
because it creates such a disadvantage to those who want to 
develop and provide a taxpayer-based resource for the Federal 
Government.
    So, Mr. Dong, I will ask you on the record, do I have your 
commitment within a time certain to get back to this committee 
on that question?
    Mr. Dong. Yes, you have my commitment. I want to come back 
to the whole notion of competition and getting the best deal 
for Federal agencies and for the American taxpayer. I am still 
looking into this issue of rent caps. As I mentioned earlier, I 
have only been on this job for about 4 months. There is a lot 
more that I need to learn about rent caps. I know that this is 
a critically important issue to you and to other members of the 
subcommittee. I am looking into it, and I commit to get back to 
you on this.
    Ms. Edwards. I appreciate that because if we look at the 
millions of lease space that is going to be available, this 
element of this rent cap could end up costing the taxpayer 
millions of dollars if we do not resolve the issue. And so I 
would appreciate that.
    And I want to just say lastly if you would indulge, Mr. 
Chairman, to Mr. Holland, you raised an interesting question. 
And I believe that when you referred to the success in 
Rockville, you were referring to Parklawn. And I just have to 
ask whether you think the appropriate role of the agencies, and 
this can be open to other members on the panel, whether the 
appropriate role for the agency is to dictate the details to 
such minutia in the requirements that it could in fact 
constrain decisionmaking? And I would point specifically to the 
Parklawn lease in which HHS was insisting that we identify 
requirements such as location near dry cleaners. Do you think 
that is an appropriate conversation for a Federal Government 
agency to be engaged in to get a good deal for the taxpayers 
when it comes to lease requirements?
    Mr. Holland. First of all, Congresswoman Edwards, that was 
before my time, so I do not know----
    Ms. Edwards. I know, the problem is you work at the agency.
    Mr. Holland. Yes, I inherited it. I inherited that project. 
That is the one I alluded to that had been going on since 2006. 
I will say that the Department, as you know, will have four 
operating divisions going into that facility. The Department 
does need to provide oversight, otherwise we have so many 
different desires and views that we cannot ever achieve 
consensus. And with GSA's help, we have been doing that. I 
would not think that I need to dictate where dry cleaners are, 
and I am pretty confident I would not be able to make that 
stick. But I do think we have to provide standards, and that is 
what I have tried to ensure.
    Ms. Edwards. Thank you. And with that, I am going to yield 
just by saying to the chairman, we have had the experience on 
this committee of looking at potential leases and seeing those 
kinds of things being dictated wherever it is coming from 
within agencies. And it really hampers the ability of the 
taxpayer to get the best deal for the dollar. And I think that 
there should be some way that GSA, whether it is using--needs 
additional oversight authority so that GSA is in the driver's 
seat for the taxpayer. And not that we should not consider the 
concerns of the agencies, but the driver has to be the GSA in 
making determinations about baselines for requirements and 
about standardizing a process so that the taxpayer can have the 
confidence when that lease is let, that we have gotten a good 
deal. And I do not know that that is always the case.
    And I think those are the kind of things that we, this 
subcommittee, should be looking at for the future given the 
amount, the number of leases and the value of the dollar that 
is coming up in this committee.
    Thank you.
    Mr. Barletta. I agree with you. They do it with ceiling 
heights in the District, which also limits competition and a 
good rate. So it is a good point.
    Before we begin our second round, the Chair is going to 
recognize Mr. Mica for an additional 30 seconds. He has another 
hearing to attend to. Mr. Mica?
    Mr. Mica. Well, thank you. And, Mr. Dong, yesterday we did 
a hearing. You sent Mr. Gelber, the Deputy Commissioner of the 
Public Buildings Service, I mentioned to him that this actually 
starting back with the work on this committee, we got Dorothy 
Robyn, she was the former Public Buildings Service 
Commissioner, to consider putting together a panel of experts 
for GSA who have great skills in disposing or best practices 
for utilizing property, vacant and otherwise. You actually have 
that panel in place. They have been selected in May 2013, this 
came out. Mr. Gelber said he not met with this panel. I said, 
``Would you meet?'' He said he would. I said, ``Could you get 
Mr. Dong to also meet?'' Will you meet with the panel because 
they have some great ideas, great experience.
    They have only dealt with a dozen properties or so and a 
couple hundred thousand dollars. But these people have the 
expertise and knowledge that I think would be helpful. Will you 
meet with them?
    Mr. Dong. I will meet with the panel. I want us to be 
aggressive on this question of property disposition.
    Mr. Mica. Great, and I will get you a copy of this and that 
will avoid another subpoena. Thank you.
    Mr. Barletta. We will now begin our second round of 
questioning. Mr. Dong, the upfront cost of an agency move an 
lead an agency to stay in place without any reductions in 
space, improvements to the utilization rates or a competitive 
procurement, re-location and replication costs regularly run 
between $100 and $200 per square foot, yet GSA's internal 
policy only allows $40 per square foot to be amortized into the 
lease. Since these costs are stopping agencies from getting 
good long-term leases that save millions of dollars, will GSA 
consider changing this policy?
    Mr. Dong. I think it comes back to the larger commitment 
that we have to breaking down the barriers that prevent 
agencies from co-locating and consolidating and reducing their 
footprint. And we want to find any and all opportunities to do 
that.
    Mr. Barletta. Again, Mr. Dong, you have a--there is 100 
million square feet of expiring leases in the next 5 years, and 
that is obviously a tremendous amount of work. To take 
advantage of this opportunity, it must be an ``all hands on 
deck'' effort at GSA and at the tenant agencies. You have a no-
cost contract that gives you access to the best commercial real 
estate talent in the country. Your own data shows that they 
negotiate better deals for the taxpayer on leases over 50,000 
square feet. Yet, GSA's use of the brokers has declined every 
year to where they are not being used anywhere close to their 
potential.
    Given your responsibility to replace 100 million square 
feet of leases in the next 5 years, please tell me and the 
committee how you are going to maximize the use of the brokers 
to seize this opportunity and benefit the taxpayers?
    Mr. Dong. If we look at the bow wave of expiring leases, I 
need to utilize every resource at my disposal to make sure that 
we are getting on top of that workload and that we are getting 
out of the cycle of holdovers and extensions. You talked about 
the national broker contracts, I think that is an important 
resource that we need to bring to bear on this problem, 
particularly as we look at the larger markets with more complex 
procurements.
    Mr. Barletta. Anyone can answer this questions, any of the 
panelists. What are some of the other major challenges 
preventing your agency from getting your leases replaced on 
time with good deals? And what can GSA or this committee do to 
overcome those challenges? Anyone who wants to jump in.
    Mr. Holland. Mr. Chairman, I have already suggested to you 
what I think is the biggest problem. As we solve the problem 
with GSA's help, it creates another problem and that is the 
operating expenses of our divisions have to be inflated for 3 
to 5 years, depending upon whether it is technology or 
furniture and equipment. So that is the biggest gap.
    The other is something that again I would give GSA credit 
for helping us is helping employees understand that the changes 
we are going to make are in fact appropriate changes and in the 
end they will think they are good changes. I assume the 
committee members have visited 18th and F and seen where Mr. 
Dong and Mr. Tangherlini have their offices. I have taken 
multiple people from my Department over there.
    We have to educate people. I come from the private sector. 
I spent 41 years in the private sector before I came here 5 
years ago, and what we are doing here is SOP, standard 
operating procedures, in the private sector. We need to educate 
more and more of our employees that that is the right way to do 
things. And in the end, frankly, they like it. And if we do 
more of that, we will have fewer problems doing the 
consolidations.
    I think Congresswoman Norton asked about doing things while 
we are in place. We are doing several things while we are in 
place. It is not ideal, frankly, because we actually disrupt 
operations during the time we are doing reconstruction while 
people are still there. But it can be done, if and only if, the 
employees, their managers and their leaders accept that risk 
and understand what we can do for them.
    Mr. Barletta. Mr. Dong, in recent years, GSA has pulled 
back delegated leasing authorities from tenant agencies. If 
GSA's delegated leasing authority was managed to ensure proper 
oversight, including application of prospectus process, that 
may address problems that have occurred in the past. Has GSA 
examined whether lease delegations could help with the 
workload?
    Mr. Dong. Our view is that we have developed a center of 
excellence and a core competence in the issue of leasing. That 
is GSA's core competence. We want agencies to be able to focus 
on their core mission functions. We believe that leasing is our 
core mission function, and we believe that we do that well. And 
we want to be able to support agencies, whether we do it or 
that they have delegated leasing authority. We still feel that 
we can provide strong support in the process.
    Mr. Barletta. Has any of your agencies used the delegation 
authority in the past? And do you think such authority could 
help get these leases replaced on time?
    Mr. Holland. Well, Mr. Chairman, the Department of Health 
and Human Services does in fact use the delegated authority for 
a variety of things, although 70 percent of our space, 70 
percent of our overall 55 million square feet of real estate is 
owned by the Federal Government. We do it both ways. I am 
frankly not sure there is magic either way. And even in that 
case, we look to GSA to use its expertise to help us.
    Mr. Barletta. Anyone else want to----
    Mr. Orner. Well, speaking for DHS, I agree with Mr. Dong 
that they do have a center of excellence for leases, 
particularly for generic office space. I am perfectly happy 
with the existing arrangement. They are able to meet our needs.
    Mr. Barletta. The Chair will recognize Ranking Member 
Carson.
    Mr. Carson. Thank you, Mr. Chair. Mr. Allen, the DOJ has 
significantly reduced its space standards by 25 percent. What 
was your most effective argument to your employees in getting 
them to accept a new normal with respect to space allocations?
    Mr. Allen. I do not think there is a single argument. I 
think that we all want to work together to accomplish our 
mission in the most effective and efficient means possible. And 
we have had that conversation about how can we do things 
differently today than we have done in the past to make us more 
effective and efficient and use taxpayer resources wisely. So 
those conversations have occurred, and they need to continue to 
occur to make this happen.
    Mr. Carson. Mr. Holland, if HHS were to receive capital 
funding for renovations, furniture and fixtures, do you believe 
you would be able to gain even more savings in your real estate 
program?
    Mr. Holland. Yes, sir, I do.
    Mr. Carson. Yes. Madam Barr, can you please commit to the 
committee, ma'am, to reevaluate the State Department's strategy 
to locate the majority of its leased space in the Foggy Bottom 
and Rosslyn area--I am going back to that again--and report 
back to us respectfully on the cost and benefits of such a 
strategy?
    Ms. Barr. Yes.
    [The Department of State responded to Hon. Carson's 
question with the following information:]

        In response to Representative Carson's request, the Department 
        continues to evaluate its strategy of locating most of its 
        leased space in the Foggy Bottom and Rosslyn area. We 
        appreciate this opportunity to explain the fashion in which our 
        personnel collaborate to perform our country's many foreign 
        policy missions, and how those personnel interactions impact 
        our real estate decisions.

        Virtually all of the activities in the decision-making process 
        of the Department's offices and bureaus require 
        interdependency; as a result, Department of State offices in 
        Foggy Bottom and Rosslyn operate as a centralized hub that 
        supports staff all over the world, at over 275 embassies and 
        consulates, on a 365/7/24 basis. The proximity of the 
        Department's bureaus to leadership in the Harry S. Truman (HST) 
        Building, and to one another, results from the interrelated 
        nature of diplomatic missions and the requirement to 
        effectively represent U.S. government interests overseas. 
        However, we realize that some bureaus and offices can perform 
        effectively outside the Foggy Bottom-Rosslyn hub, and when 
        possible, the Department locates functions in more cost-
        effective locations. In fact, almost half (45 percent) of the 
        Department's commercially leased space is located outside of 
        Foggy Bottom and Rosslyn. For instance, the vast majority of 
        our passport services, financial services, information 
        technology services, and warehousing are located in less 
        expensive space outside of major metropolitan areas.

        Whether it is managing responses to crises such as Ebola, 
        threats to our nation's security, longer term engagements such 
        as coalition building in the fight against the Islamic State of 
        Iraq and the Levant (ISIL), or overseeing grants and 
        policymaking, different bureaus with equities in a particular 
        issue are engaged in developing appropriate solutions; thus the 
        requirement for constant contact and inter-bureau 
        communications, some of which must be carried out expeditiously 
        and in strict confidence as the outcomes of these decisions 
        often have national security implications. Many of our day-to-
        day discussions involve information that cannot be discussed 
        over the phone or other unsecure means.

        Given the breadth of the Department's portfolio and the 
        corresponding structure of its bureaus and offices to support 
        those missions, a longstanding management goal continues to be 
        the alignment of the real estate portfolio with the space and 
        proximities Department staff need to perform their functions 
        effectively. The Department prioritizes the proximity of its 
        various bureaus to HST based on their involvement in diplomatic 
        matters. Regional bureaus (e.g., Western Hemisphere Affairs, 
        African Affairs, Near Eastern Affairs, etc.) are directly and 
        intricately involved in policymaking, coordination with 
        overseas posts, and negotiations with foreign governments. 
        Certain functional bureaus (e.g., Population, Refugees and 
        Migration; Economic and Business Affairs; Democracy, Human 
        Rights and Labor; Counterterrorism; International Narcotics and 
        Law Enforcement) perform their missions in conjunction with the 
        regional bureaus necessitating that their offices be located in 
        the HST Building or within a short walk of HST to allow for 
        direct personal engagement in policymaking. Additionally, the 
        management bureaus (e.g., Diplomatic Security, Consular 
        Affairs, Overseas Buildings Operations, Human Resources 
        Management, Information Resource Management, Medical Affairs, 
        Administration, etc.) support a very wide range of activities, 
        including those of Foreign Service Officers overseas, the 
        security of our overseas facilities, all civil service 
        employees, other agency personnel, foreign nationals, and 
        family members.

        Most of the personnel in the management bureaus are also 
        required to be close to HST and the regional and functional 
        bureaus, but may locate in Foggy Bottom or Rosslyn depending 
        upon their primary collaborators. For example, Overseas 
        Buildings Operations, Diplomatic Security, and key elements of 
        the Bureau of Administration collaborate intensively to provide 
        safe, secure, and functional facilities that represent the U.S. 
        government to the host nation and support our staff overseas as 
        they work to achieve U.S. foreign policy objectives. In these 
        times of increasing security threats overseas, the levels of 
        coordination among these bureaus are constant and significant, 
        and much of the work involves the Department's largest 
        contracts, and/or is of a classified nature. Over time, these 
        bureaus have collocated in several buildings proximate to one 
        another in Rosslyn.

        Likewise, the payroll and financial functions of the Department 
        operate from Charleston, South Carolina, where they work in 
        close proximity with several human resources activities that 
        relocated to that area in recent years. This is a great example 
        of the Department's efforts to relocate complementary personnel 
        and functions, to the extent possible, to more cost-effective 
        areas away from the Foggy Bottom-Rosslyn hub.

        The Department's real estate asset management program is geared 
        towards solutions that best reflect and support the realities 
        of the way in which the Department manages the nation's foreign 
        policy objectives. In making real estate decisions the 
        Department assesses the total cost to government approach, 
        seeking results that yield the lowest long term cost to the 
        taxpayers, while still fulfilling the needs of the mission. 
        Whether expansion, new construction, or a lease replacement; 
        the costs, options, mission needs, the current and proposed 
        tenant mix, location, and housing plans are all taken into 
        consideration, reviewed, and evaluated before final decisions 
        are made.

        For leased spaces, direct costs such as Move and Replication, 
        Information Technology, and Security are accounted for, as are 
        indirect costs such as additional administrative support 
        necessary in ancillary locations, and the productivity and 
        financial costs of commuting between locations. The Department 
        continually seeks to reduce costs by improving utilization 
        rates in existing space, as leases expire, and through other 
        consolidation activities. Thus, in recent years the Department 
        has been meeting and in many cases exceeding evolving 
        government space utilization standards. For example, following 
        the Bureau of Consular Affairs (CA) Foggy Bottom consolidation 
        in 2013 (with an `all in' total square feet/person of less than 
        200 USF/person), its former space in Columbia Plaza is being 
        backfilled by various bureaus consolidating out of expiring 
        leases, and out of HST due to the modernization of this 50+ 
        year old building. Each of these backfill projects are being 
        built to an `all in' total square feet/person of less than 170 
        USF/person, well below the government median of 265 square 
        feet/person, as reported in the President's Management Agenda 
        ``Benchmarks for Mission-Support Functions in September 2014.'' 
        The Department's current portfolio also scores below the median 
        in all three utilization rate metrics in this report.

        As noted, security costs are a strong consideration when 
        evaluating a new facility lease or purchase. The Department's 
        facilities are protected through strong physical security 
        measures as well as a robust security team of the Diplomatic 
        Security Service. The Department has evaluated the possibility 
        of leasing vacant space in Crystal City, but, in addition to 
        increased travel time and lost productivity, any such location 
        would need to have physical security measures installed. We 
        also note that the prime reason for the Department of Defense's 
        move away from Crystal City was the inherent lack of security 
        of their buildings there.

        The Department of State remains committed to taking a careful 
        approach to its real estate activities, and managing its 
        portfolio to best support the many missions entrusted to it by 
        the American public in the most efficient, effective, and 
        economical ways possible. We appreciate the opportunity to 
        provide the committee with this additional information in order 
        to clearly demonstrate the real estate acquisition process used 
        by the Department of State.

        Department of State occupied, prospectus-level leases expiring 
        between 2014 and 2019:

                (1) 1701 North Fort Myer St., Rosslyn, VA, expires 
                December 2014 (Prospectus has been submitted to House 
                Transportation and Infrastructure Committee);
                (2) 2121 Virginia Avenue, NW., Washington, DC, expires 
                October 2017;
                (3) 400 C Street, SW., Washington, DC, expires January 
                2018;
                (4) 2200 C St., NW., Washington, DC, expires June 2019;
                (5) 515 22nd St., NW., Washington, DC, expires 
                September 2019.

        This report was prepared by the U.S. Department of State's 
        Bureau of Administration, Office of Operations, September 2014.

    Mr. Carson. OK. Thank you, Mr. Chairman.
    Mr. Barletta. The Chair recognizes Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman. Mr. Dong, under 
Administrator Tangherlini, we have seen the agency operate more 
like a real estate agency. That has not much been the history 
of GSA. It has been more innovative, for example. I mean the 
FBI trade is an example of that.
    I was troubled therefore that this week I had to introduce 
a bill to ask the GSA to do what it already has the authority 
to do. You will recall that the Old Post Office came out of a 
bill I had to introduce because GSA just would not develop the 
property. I have not had to introduce a bill to develop 
property that the Government owned since the Old Post Office 
Building, but this week I introduced a bill to redevelop the 
entire Department of Energy Forrestal Complex. And I felt I had 
to do that for the very same reason--well, not the very same 
reason, because GSA was not doing its complete job. It has 
indicated that it wants to develop part of, indeed the greater 
part of the nearby property, the Cotton Annex, the GSA regional 
office. But GSA left out some parcels.
    There is not any professional party in real estate who 
would have a great big parcel and say, ``We are going to 
develop this entire parcel.'' Understand, this part of GSA's 
own eco-district plan, which has been approved by the National 
Capital Planning Commission--the NCPC. Why would you leave out 
some parcels? Are we back into GSA doing what the agency wants 
to do instead of doing what your statute says to do and what 
the Congress says do? And you are not developing some small 
parcels. Some of it may be parcels that the Department of 
Energy wants to deal with on its own terms.
    But why in the world would GSA leave out small parcels in a 
total section of land that can bring return to the Federal 
Government? Why are you not developing the entire Department of 
Energy Forrestal Complex? And what is the reason for the 
parcels that have been left out?
    Mr. Dong. Congresswoman Norton, when we look at the parcel 
of property on Federal Triangle South, we want to make sure 
that we are getting the highest and best use for all of the 
parcels, not just the Cotton Annex and the regional office 
building.
    Ms. Norton. Well, you have got the GSA regional office. You 
have got the Cotton Annex. You have got some small parcels that 
are left out. My question is very particular, Mr. Dong. Why are 
those small parcels, which apparently--I cannot say are owned 
by the Department of Energy but in the possession perhaps of 
the Department of Energy, at least one of them, why are they 
left out as a kind of pock mark in the total land that you wish 
to redevelop?
    Mr. Dong. We want to make sure that we have got viable 
housing strategies for the agencies that are on those other 
parcels. When you mentioned the regional office----
    Ms. Norton. We will get housing strategies if you put it in 
there because then everybody will begin to look for the 
appropriate housing. You leave them out, then of course there 
is no incentive for them to find--especially when the parcels 
are so small. And of course we know, and if you want to 
complicate things for the Federal Government, we know as well 
that the railroad is coming in these adjacent parcels, that 
there is value for the Federal Government in those parcels 
because the railroad would obviously be one of those who wish 
to use those parcels. You have even negotiated with interests 
who are involved and yet you have left them out. It just makes 
no economic sense from the Government's point of view.
    And if you want to find housing for the Government, do not 
tell me that again. Because that was the excuse of GSA for not 
developing the Old Post Office. They had agencies in there. So 
you have got an agency. That agency, the Department of Energy 
will get space. It will be able to reduce its footprint. You 
will get land and a return on that land for the Federal 
Government that you do not get now. What possible reason could 
there be for not putting the whole parcel out if you put most 
of it out?
    Mr. Dong. I agree with you. We need to get highest and best 
use for all of the parcels in Federal Triangle South. Based on 
the RFI and the responses to the RFI that we issued last year, 
what the market was telling us is that we needed to move out on 
these two parcels first. But our plan and our commitment is not 
to ignore these other parcels in Federal Triangle South.
    Ms. Norton. You see what you force me to do? And the last 
time you forced me to put in a bill, the Congress passed this 
bill. So I want to just tell you right now I am going to press 
very hard for Congress to pass the bill to develop the entire 
parcel that I introduced this week.
    Thank you, Mr. Chairman.
    Mr. Barletta. Thank you. An important factor the committee 
considers before approving a lease prospectus is the all-in 
utilization rate. That means the total usable square footage of 
a building divided by the number of people working there. While 
we do not have a one-size-fits-all standard, we are looking for 
significant improvements and good utilization rates for how the 
building is used. Barring a few unique exceptions, the 
committee has not approved prospectuses with all-in utilization 
rates of over 200 usable square feet per person.
    Mr. Holland, can you talk about how HHS has instituted the 
170 usable square feet per person standard and is that 
departmentwide and does it include common areas in the 
calculation?
    Mr. Holland. Yes, sir, we adopted that 3 years ago. The 
Office of the Secretary issued instructions to that effect. We 
have had cooperation from several agencies. We operate through 
a federated system of many independent operating divisions. And 
they have been following it.
    Now, I do not want to sit here and tell the committee that 
we always get to 170. Sometimes we will be below it. Sometimes 
we are not quite there. It depends on the shape and the scope 
of the building, for example, or if we are having a little 
trouble--Switzer is an example. It is not a modern contemporary 
building that is easy to lay out. So what we do is use that as 
a target. My project with my OCIO will get well under it. I 
have some others where we are a little over it. But we will 
generally speaking use that as a target. I am reminded of the 
old saying, ``If you do not care where you are going, any road 
will get you there.'' That is why we use that as the target.
    Mr. Barletta. To the other agencies, what are your all-in 
utilization rate targets and how are you applying them as the 
leases expire, Ms. Barr?
    Ms. Barr. 200 usable square feet or less. We are renovating 
our building right now, our headquarters, and in the new space 
we expect to be able to put in 1,500 more employees. And I am 
actually doing this in my own section, which is not always 
easy, as referred to earlier, getting employees to understand. 
But we are full on board with this.
    Mr. Barletta. Mr. Brazis?
    Mr. Brazis. The Department of Defense, 200 also. Our most 
recent prospectus for Suffolk and other buildings, our longer 
term leases we have entered into, have consistently been at 200 
and below. And below is really our target.
    Mr. Barletta. OK, Mr. Allen?
    Mr. Allen. We took a different approach in 2012 and 
mandated per person office size standards of 130 square feet 
for most people. Less than 100 for law enforcement agencies. 
Our latest prospectus that this subcommittee approved was at 
240, reflecting special use needs for attorneys and litigating 
divisions. So we will vary, but we will meet our per person 
office standards across the Department.
    Mr. Barletta. Mr. Orner?
    Mr. Orner. Our number is 150. Every time we--a lease 
expires, our commitment is to get under 150. Now, that is an 
average. In some cases, we have needs for highly specialized 
spaces, skiffs and whatnot, that will skew the numbers for a 
particular organization. But we are committing to an average of 
150.
    Mr. Barletta. Mr. Spencer?
    Mr. Spencer. Mr. Chairman, as was pointed out earlier, we 
have a range of kinds of opportunities in our organization. 
Certainly in our community-based field offices, we have a 
different arrangement there with the public needing to be 
considered. But when it comes to prospectus level leases, which 
we are going to be sending to you in the next 5 years, we have 
a number of those, and we are certainly going to be looking to 
make sure we are within the 200 square feet.
    Mr. Barletta. Thank you. So far this year the committee has 
received three lease prospectuses for the fiscal year 2015 
leasing program, including one for the State Department, one 
for the FBI. Given the amount of potential prospectus level 
leases expiring in the next 5 years, this seems a little low. 
Mr. Dong, will we be receiving more? And, if so, when can we 
expect them?
    Mr. Dong. Mr. Chairman, you have my commitment that you 
will be receiving the balance of the lease prospectuses in the 
coming weeks.
    Mr. Barletta. Great, thank you. The other panelists, each 
of your agencies should have prospective level leases before us 
soon. Where are those prospectuses in the process and which 
ones should we see this year?
    Ms. Barr. Excuse me. We definitely have one with you now. I 
will have to get back to you on how many more we will send to 
you this year.
    Mr. Barletta. Mr. Brazis?
    Mr. Brazis. Mr. Chairman, I will have to get back to you on 
the record on the precise number pending.
    [The information follows:]

        The Department of Defense currently has one prospectus level 
        lease package for this year being processed at the General 
        Services Administration. Within the National Capital Region 
        (NCR), GSA submits prospectus level lease packages on behalf of 
        DOD.

    Mr. Barletta. Mr. Allen?
    Mr. Allen. I will get back to you on the precise number, 
but I know we have two for litigating divisions here in 
Washington coming soon.
    Mr. Holland. Mr. Chairman, the Department of Health and 
Human Services has none coming this year. And, in fact, we 
pulled one recently as part of our consolidation into the 
Switzer Building. There was a prospectus lease pending. And we 
were able to avoid that and not go back out to the lease market 
and instead move into a GSA-owned building. I will have to get 
back to you on whether we have any in the coming year. But, 
frankly, as I look at our lease expirations, a substantial 
number of them have happened or are in the process of 
happening. And I am not sure we have a significant number of 
prospectus leases. And, frankly, I will try to avoid those 
because I will try to work with Mr. Dong and Mr. Tangherlini to 
move into federally owned space wherever we can.
    Mr. Barletta. Mr. Orner?
    Mr. Orner. Mr. Chairman, I will get back to you with a list 
of this year's lease prospectus.
    [The information follows:]

          In the FY14 cycle, DHS had four (4) prospectuses 
        totaling just under 1 million square feet in four (4) 
        locations.
          For the FY15 cycle, DHS has one (1) prospectus in 
        process.
              This prospectus is for USCG within the National 
            Capital Region; and it is currently under review in GSA's 
            Central Office.
              The prospectus is seeking authority for up to 15 
            years and up to 95,000 RSF; however, the Department is also 
            working on options to eliminate this lease and move the 
            personnel into the USCG Building on the St. Elizabeths 
            campus.
          For FY16, only one (1) prospectus level project is 
        planned:
              The space requirement is for ICE Headquarters 
            lease (located at 500 12th St., in Washington, DC), and is 
            expiring in January 2018.
              This occupancy currently contains 500,000 RSF, 
            and going forward will be subject to the Department's new 
            size standard (average 150 sqft per person).
          In FY17 DHS will have a major lease prospectus year 
        due to twelve (12) locations; DC (3), VA (3), MD (2), NJ (2) 
        and NY (2) will be coming due with more than 1.9 million square 
        feet.
              The Department, its components, and in 
            partnership with GSA is examining all office space 
            requirements with the objective of achieving DHS's size 
            standard average of 150 usable square feet or less per 
            person.
          The Department's effort to compress office space 
        requirements is anticipated to result in fewer prospectus level 
        projects.

    Mr. Barletta. Mr. Spencer?
    Mr. Spencer. Mr. Chairman, Social Security does not have 
any this year.
    Mr. Barletta. This is my final question. I think we have a 
tremendous opportunity to save taxpayers a lot of money and 
help your agencies get quality space that meets your needs and 
helps you protect your personnel. However, I am very concerned 
that we are going to miss this opportunity if we continue with 
business as usual. So I am open to considering a pilot program 
for a limited amount of time, which would simplify the leasing 
process and give you greater flexibility to cover your upfront 
costs. The leases would need to have good utilization rates, be 
long term and competitive. But in exchange, you get a fast 
track process. Do you think this could help us get the job 
done?
    Mr. Dong. Mr. Chairman, I think it is important that 
collectively we look at the current process, and we identify 
any and all opportunities to streamline the process. And, as 
you said, take advantage of the current market opportunity.
    Ms. Barr. I agree with Mr. Dong.
    Mr. Brazis. As do I, Mr. Chairman.
    Mr. Allen. And as I do.
    Mr. Holland. The same response, sir. I would say that we 
have two ongoing examples. The Parklawn project is now pushing 
10 years old. And the Switzer project on the other hand is 
about 18 months old and will finish before Parklawn. So where 
we can get help, and GSA has been very helpful on Switzer, we 
can move more quickly. And any pilot project that the committee 
comes up with would be welcome.
    Mr. Orner. DHS would also welcome such a pilot. The 
opportunity to streamline the timeline and find a way of 
covering the upfront costs would be welcomed.
    Mr. Spencer. We absolutely would agree that we would be 
interested in pursuing this. One of the problems we have had, 
Mr. Chairman, is adequate, sustained funding where we know 
where we are going to be able to go in the long run. We had a 
prospectus level project that was approved as a prospectus 
level project, but then funding was not available. And we 
actually had started moving people out of the building. We were 
left with lower utilization and no place to go. So absolutely 
we would be interested in pursuing this.
    Mr. Barletta. Ranking Member Carson, do you have any more 
questions?
    I want to thank you all for your testimony. Your comments 
have been helpful in today's discussion. If there are no 
further questions, I would ask unanimous consent that the 
record of today's hearing remain open until such time as our 
witnesses have provided answers to any questions that may be 
submitted to them in writing. And unanimous consent that the 
record remain open for 15 days for any additional comments and 
information submitted by Members or witnesses to be included in 
the record of today's hearing. Without objection, so ordered.
    I would like to thank again our witnesses again for your 
testimony today. If no other Members have anything to add, this 
subcommittee stands adjourned.

    [Whereupon, at 12 p.m., the subcommittee was adjourned.]
    
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