[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE DHS HEADQUARTERS PROJECT AT ST. ELIZABETHS: IMPACT ON
THE TAXPAYER
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT
AND MANAGEMENT EFFICIENCY
of the
COMMITTEE ON HOMELAND SECURITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 19, 2014
__________
Serial No. 113-87
__________
Printed for the use of the Committee on Homeland Security
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys/
__________
U.S. GOVERNMENT PUBLISHING OFFICE
93-365 PDF WASHINGTON : 2015
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY
Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas Bennie G. Thompson, Mississippi
Peter T. King, New York Loretta Sanchez, California
Mike Rogers, Alabama Sheila Jackson Lee, Texas
Paul C. Broun, Georgia Yvette D. Clarke, New York
Candice S. Miller, Michigan, Vice Brian Higgins, New York
Chair Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania William R. Keating, Massachusetts
Jeff Duncan, South Carolina Ron Barber, Arizona
Tom Marino, Pennsylvania Donald M. Payne, Jr., New Jersey
Jason Chaffetz, Utah Beto O'Rourke, Texas
Steven M. Palazzo, Mississippi Filemon Vela, Texas
Lou Barletta, Pennsylvania Eric Swalwell, California
Richard Hudson, North Carolina Vacancy
Steve Daines, Montana Vacancy
Susan W. Brooks, Indiana
Scott Perry, Pennsylvania
Mark Sanford, South Carolina
Curtis Clawson, Florida
Brendan P. Shields, Staff Director
Joan O'Hara, Acting Chief Counsel
Michael S. Twinchek, Chief Clerk
I. Lanier Avant, Minority Staff Director
------
SUBCOMMITTEE ON OVERSIGHT AND MANAGEMENT EFFICIENCY
Jeff Duncan, South Carolina, Chairman
Paul C. Broun, Georgia Ron Barber, Arizona
Lou Barletta, Pennsylvania Donald M. Payne, Jr., New Jersey
Richard Hudson, North Carolina Beto O'Rourke, Texas
Steve Daines, Montana, Vice Chair Bennie G. Thompson, Mississippi
Michael T. McCaul, Texas (Ex (Ex Officio)
Officio)
Ryan Consaul, Subcommittee Staff Director
Deborah Jordan, Subcommittee Clerk
Tamla Scott, Minority Subcommittee Staff Director
C O N T E N T S
----------
Page
Statements
The Honorable Jeff Duncan, a Representative in Congress From the
State of South Carolina, and Chairman, Subcommittee on
Oversight and Management Efficiency:
Oral Statement................................................. 1
Prepared Statement............................................. 3
The Honorable Ron Barber, a Representative in Congress From the
State of Arizona, and Ranking Member, Subcommittee on Oversight
and Management Efficiency:
Oral Statement................................................. 6
Prepared Statement............................................. 11
The Honorable Bennie G. Thompson, a Representative in Congress
From the State of Mississippi, and Ranking Member, Committee on
Homeland Security:
Prepared Statement............................................. 12
Witnesses
Mr. David C. Maurer, Director, Homeland Security and Justice,
U.S. Government Accountability Office:
Oral Statement................................................. 13
Prepared Statement............................................. 15
Mr. Chris Cummiskey, Acting Under Secretary, Management
Directorate, U.S. Department of Homeland Security:
Oral Statement................................................. 19
Prepared Statement............................................. 21
Mr. Norman Dong, Commissioner, Public Buildings Service, U.S.
General Services Administration:
Oral Statement................................................. 22
Prepared Statement............................................. 24
For the Record
The Honorable Ron Barber, a Representative in Congress From the
State of Arizona, and Ranking Member, Subcommittee on Oversight
and Management Efficiency:
Statement of Paul A. Schneider, Former Deputy Secretary,
Department of Homeland Security.............................. 6
Appendix
Questions From Chairman Jeff Duncan for David C. Maurer.......... 39
Question From Chairman Jeff Duncan for Chris Cummiskey........... 41
Questions From Ranking Member Bennie G. Thompson for Chris
Cummiskey...................................................... 41
Questions From Chairman Jeff Duncan for Norman Dong.............. 42
Question From Ranking Member Bennie G. Thompson for Norman Dong.. 42
OVERSIGHT OF THE DHS HEADQUARTERS PROJECT AT ST. ELIZABETHS: IMPACT ON
THE TAXPAYER
----------
Friday, September 19, 2014
U.S. House of Representatives,
Subcommittee on Oversight and
Management Efficiency,
Committee on Homeland Security,
Washington, DC.
The subcommittee met, pursuant to call, at 9:35 a.m., in
Room 311, Cannon House Office Building, Hon. Jeff Duncan
[Chairman of the subcommittee] presiding.
Present: Representatives Duncan, Barber, and Payne.
Also present: Representative Norton.
Mr. Duncan. The Committee on Homeland Security,
Subcommittee on Oversight and Management Efficiency will come
to order. The purpose of this hearing is to receive testimony
regarding the Department of Homeland Security's consolidation
project at St. Elizabeths. I will now recognize myself for an
opening statement.
Since 2006 the Department of Homeland Security, DHS, and
General Services Administration, GSA, have spent over a billion
taxpayer dollars to build a consolidated DHS Headquarters on
the St. Elizabeths campus in Southeast Washington, DC. St.
Elizabeths is a National historic landmark that was originally
founded in 1852 as the Government Hospital for the Insane.
The purpose of the new headquarters was to consolidate DHS
leadership and operations to improve efficiency. Unfortunately,
as shown by a Government Accountability Office, GAO, report
that was released today, the project has become a monument to
mismanagement.
DHS and GSA spent 3 years planning for the project before 1
ounce of concrete was poured. Finally, in 2009, DHS and GSA
commenced with construction. DHS and GSA received over a
billion dollars with the help of the stimulus act. In classic
big-Government style, the bill, intended to help lift America
out of the great recession, provided funding for cushy new
offices for Washington bureaucrats.
When I say cushy, I am not exaggerating. As our
subcommittee Majority staff report from earlier this year
showed, the Coast Guard's new headquarters features courtyards
built with Brazilian Ipe wood, one of the hardest woods in the
world, eco-friendly green roofing, and rain-water flush
toilets. These examples illustrate the lack of effective
management and oversight of this multibillion-dollar project.
GAO's report lays out in great detail how the St.
Elizabeths project has been devoid of leadership and proper
management for years. In recent years DHS failed to identify
the $4.5 billion project as a major acquisition program within
the Department. Such a designation would have brought with it
more program oversight. DHS simply can't afford to neglect its
oversight responsibilities.
A recent and glaring example of this is a recent inspector
general report that showed CBP wasting millions of dollars on
lavish housing for employees in Ajo, Arizona. If DHS instilled
greater accountability and stricter oversight among its
components, millions of dollars in taxpayer dollars could have
been saved or put to better use.
Does the fact that these are buildings at St. Elizabeths
make a difference and not a Coast Guard ship, a CBP helicopter,
or a TSA body scanner? As a result DHS did not require St.
Elizabeths to receive the same oversight as other acquisition
programs with comparable cost. While doing so may not have
solved the problems for the project, they could have given
Congress and DHS senior leadership greater visibility on where
the program stood.
This mismanagement is exactly why the Senate needs to pass
H.R. 4228, the DHS Acquisition Accountability and Efficiency
Act, which Mr. Barber, the Ranking Member, and I wrote to
increase discipline in DHS acquisitions and ultimately save
taxpayer dollars.
GAO also found that DHS and GSA's cost and schedule
estimates aren't worth the paper they are printed on. GAO's
report shows that the estimates failed to fully comport with
any leading capital decision-making practices. Not a one.
Consequently, GAO found DHS and GSA's cost and schedule
estimates for St. Elizabeths were unreliable and overly
optimistic.
It is not a surprise to discover that there has been a wild
swing in the estimates since the program has moved forward. In
2007 GSA estimated that the project would be fully complete by
2016 at a cost of $3.2 billion and projected a savings of $743
million by moving employees from leased to owned space. The
latest estimates put completion of the project 10 years later,
at 2026, and at a cost of $4.5 billion, and reduced savings to
$532 million. The truth is DHS and GSA don't have any idea how
much St. Elizabeths will cost or when it can be finished.
This is an astounding finding for a program prepared to
spend $4.5 billion in taxpayer funds. This lack of basic
management, knowing when a project will be done and how much it
will cost, is a leadership malpractice. Would any of you
sitting at the witness table be willing to commit to building a
house with your own money without knowing what it would cost or
when it will be done? The answer is no. Yet you expect the
American taxpayer to agree to such an ultimatum with St.
Elizabeths.
Up until recently DHS and GSA have wanted to continue the
course. If you haven't noticed, this Nation is drowning in
debt. It has more than doubled from the $8 trillion to over $17
trillion since planning for St. Elizabeths began. Who knows how
far in the hole we will be when it is scheduled for completion
in 2026. We have serious homeland security priorities that need
our attention, such as threats from ISIS and Syrian foreign
fighters, foreign fighter flow, dealing with the illegal alien
crisis on the Southwest Border, and I could go on and on.
We have had hearings this week in this committee that
pointed to where our emphasis needs to be at this time. I
commend GAO for its report in shining a light on the
mismanagement of St. Elizabeths. Congress should heed GAO's
recommendation that no new funding be appropriated until DHS
and GSA get their act together. I hope to hear DHS and GSA
explain what they plan to do to make this project achievable
and affordable, or if that is even possible at this point.
[The statement of Chairman Duncan follows:]
Statement of Chairman Jeff Duncan
September 19, 2014
Since 2006, the Department of Homeland Security (DHS) and General
Services Administration (GSA) have spent over a billion taxpayer
dollars to build a consolidated DHS Headquarters on the St. Elizabeths
campus in Southeast Washington, DC. St. Elizabeths is a National
historic landmark that was originally founded in 1852 as the Government
Hospital for the Insane. The purpose of the new headquarters was to
consolidate DHS leadership and operations to improve efficiency.
Unfortunately, as shown by a Government Accountability Office (GAO)
report that was released today, the project has become a monument to
mismanagement.
DHS and GSA spent 3 years planning for the project before 1 ounce
of concrete was poured. Finally, in 2009, DHS and GSA commenced with
construction. DHS and GSA received over $1 billion with the help of the
``Stimulus Act.'' In classic big-Government style, the bill intended to
help lift America out of the ``Great Recession'' provided funding for
cushy new offices for Washington bureaucrats. And when I say cushy, I'm
not exaggerating. As our subcommittee Majority staff report from
earlier this year showed, the Coast Guard's new headquarters features
courtyards built with Brazilian Ipe wood--one of the hardest woods in
the world--eco-friendly green roofing and rainwater toilets. These
examples illustrate the lack of effective management and oversight of
this multibillion-dollar project.
GAO's report lays out in great detail how the St. Elizabeths
project has been devoid of leadership and proper management for years.
In recent years, DHS failed to identify the $4.5 billion project as a
major acquisition program within the Department. Such a designation
would have brought with it more program oversight. DHS simply can't
afford to neglect its oversight responsibilities. A recent and glaring
example of this is a recent inspector general report that showed CBP
wasting millions of dollars on lavish housing for employees in Ajo,
Arizona. Had DHS instilled greater accountability and stricter
oversight among its components, millions of taxpayer dollars could have
been saved or put to better use.
Does the fact that these are buildings at St. Elizabeths make a
difference and not a Coast Guard ship, CBP helicopter, or TSA body
scanner? As a result, DHS did not require St. Elizabeths to receive the
same oversight as other acquisition programs with comparable costs.
While doing so may not have solved the problems for the project, it
could have given Congress and DHS senior leadership greater visibility
on where the program stood. This mismanagement is exactly why the
Senate needs to pass H.R. 4228--the DHS Acquisition Accountability and
Efficiency Act, which Mr. Barber and I wrote to increase discipline in
DHS acquisitions and save taxpayer dollars.
GAO also found that DHS and GSA's cost and schedule estimates
aren't worth the paper they're printed on. GAO's report shows that the
estimates failed to fully comport with any leading capital decision-
making practices. Not a one. Consequently, GAO found DHS and GSA's cost
and schedule estimates for St. Elizabeths were unreliable and overly
optimistic. It's not a surprise to discover that there's been a wild
swing in the estimates since the program has moved forward. In 2007,
GSA estimated that the project would be fully complete by 2016 at a
cost of $3.2 billion and projected a savings of $743 million by moving
employees from leased to owned space. The latest estimates put
completion of the project at 2026 at a cost of $4.5 billion and reduced
savings to $532 million. The truth is that DHS and GSA don't have any
idea how much St. Elizabeths will cost or when it could be finished.
This is an astounding finding for a program prepared to spend $4.5
billion in taxpayer funds. This lack of basic management--knowing when
a project will be done and how much it will cost--is leadership
malpractice. Would any of you sitting at the witness table be willing
to commit to building a house with your own money without knowing what
it will cost or when it will be done? The answer is: No. Yet, you
expect the American taxpayer to agree to such an ultimatum at St.
Elizabeths.
Up until recently, DHS and GSA have wanted to continue the course.
If you haven't noticed, this Nation is drowning in debt; it's more than
doubled from $8 trillion to over $17 trillion since planning for St.
Elizabeths began. Who knows how far in the hole we will be when it's
scheduled for completion in 2026? And we have serious homeland security
priorities that need our attention, such as threats from ISIS and
Syrian foreign fighters, the illegal alien crisis on the Southwest
Border, and I could go on. I commend GAO for its report and shining a
light on the mismanagement of St. Elizabeths. Congress should heed
GAO's recommendation that no new funding be appropriated until DHS and
GSA get their act together. I hope to hear DHS and GSA explain what
they plan to do to make this project achievable and affordable or if
that's even possible at this point.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Duncan. I will now recognize the Ranking Member of the
subcommittee, the gentleman from Arizona, Mr. Barber, for any
statement that he may have.
Mr. Barber. Thank you, Mr. Chairman, and thank you to the
witnesses for being with us this morning. Before I give my
remarks, Mr. Chairman, I have some additional business to
conduct with your approval. I ask unanimous consent for the
gentlelady from the District of Columbia to sit in for the
purpose of receiving testimony and questioning.
Mr. Duncan. Without objection, so ordered.
Mr. Barber. Additionally, Mr. Chairman, I ask unanimous
consent for the report, ``Security and Savings: The Importance
of Consolidating the Department of Homeland Security's
Headquarters at St. Elizabeths,'' by Senator Tom Carper, to be
inserted into the record.
Mr. Duncan. Without objection, so ordered.*
---------------------------------------------------------------------------
* The information has been retained in committee files and is
available at http://hsgac.senate.gov/download/carper-report.
---------------------------------------------------------------------------
Mr. Barber. Finally, Mr. Chairman, I also ask unanimous
consent for the testimony from former Under Secretary for
Management Paul A. Schneider to be inserted into the record.
Mr. Duncan. Without objection.
[The information follows:]
Statement of Paul A. Schneider, Former Deputy Secretary, Department of
Homeland Security
September 19, 2014
Thank you Chairman Duncan, Ranking Member Barber, and Members of
the subcommittee. It's a pleasure to submit this testimony on this very
important subject.
It has been approximately 5 years since I have left office as the
deputy secretary of the U.S. Department of Homeland Security (DHS)
having first served as the under secretary for management. Since that
time, I have been consulting for the U.S. Government (except for DHS);
am a principal in The Chertoff Group which is a company that provides
consulting, security, and merger and acquisition (M&A) advisory
services for clients in the security, defense, intelligence, and
Government services industries around the world. I also currently serve
on several boards and advisory groups, including chairman of the Board
of Directors of the Applied Science Foundation for Homeland Security,
chairman of the AFCEA Homeland Security Committee, the Naval Studies
Board of the National Academy of Sciences and Engineering; and a
STRATCOM advisory board for the replacement of the OHIO ballistic
missile submarine.
Since leaving my position at DHS, I have had the opportunity to
observe the changing and challenging environment and assess its impact
on DHS operations and those of the homeland security enterprise. Based
on my observations, former position and years of experience, I am here
today to provide my views about the importance of consolidating DHS
facilities at St. Elizabeths (St. Es).
the environment
The homeland security strategic environment is constantly evolving,
and while we have made significant progress, threats from terrorism
continue to persist. Today's threats are not limited to any one
individual or group, are not defined or contained by international
borders, and are not limited to any single ideology. Terrorist tactics
can be as simple as a home-made bomb and as sophisticated as a
biological threat or a coordinated cyber attack. In addition, broader
strategic trends such as the dramatic spread of internet and mobile
technologies around the world and the growing relevance of non-state
actors on the world stage suggest new opportunities and challenges that
must be accounted for in our current and longer-term homeland security
strategic planning.
Another defining characteristic of our strategic environment is the
tightening fiscal environment. It is increasingly important to define
clear priorities, develop and assess viable alternatives, and make
well-informed decisions involving difficult trade-offs. DHS has made
substantial progress in this regard, particularly with respect to
establishing a strategic foundation for National homeland security
efforts, refining our strategic and policy analysis capabilities and
approaches, and improving strategic alignment through focused
management tools and processes. Together, these improvements have
positioned DHS to effectively address today's security environment
while ensuring that we are sufficiently flexible, agile, and capable in
the face of emerging threats and risks.
quadrennial homeland security review (qhsr)
Implementing the 9/11 Commission Recommendations Act of 2007
directed the Department to begin conducting quadrennial reviews in 2009
and every 4 years thereafter. The QHSR was a critical first step in the
process of examining and addressing fundamental strategic issues that
concern homeland security, and establishing an enduring strategic
foundation.
As the first review of its kind for DHS, the 2010 QHSR clarified
the conceptual underpinnings of homeland security, described the
security environment and the Nation's homeland security interests,
identified the critical homeland security enterprise missions, and
outlined the principal goals and essential objectives necessary for
success in those missions.
The 2014 QHSR provides the updated strategy and planning foundation
that positions DHS to effectively address the emerging strategic
challenges the country faces.
First, the QHSR clarifies the conceptual underpinnings of homeland
security. In defining homeland security as the intersection of evolving
threats and hazards with traditional Governmental and civic
responsibilities for civil defense, emergency response, law
enforcement, customs, border control, and immigration. The QHSR
emphasizes the importance of eliminating traditional stovepipes to
achieving success in homeland security. The QHSR also establishes the
idea of the homeland security enterprise which refers to the collective
efforts and shared responsibilities of Federal, State, local, Tribal,
territorial, non-Governmental, and private-sector partners--as well as
individuals, families, and communities--to maintain critical homeland
security capabilities. Each of these conceptual elements has infused
all aspects strategy and planning.
Second, the QHSR takes a comprehensive approach to threats by
expanding the focus of homeland security to specifically address high-
consequence weapons of mass destruction, global violent extremism, mass
cyber-attacks, intrusions, and disruptions, pandemics and natural
disasters, and illegal trafficking and related transnational crime.
Third, the QHSR adopted a mission structure designed to endure
across inevitable changes in the security environment. The missions are
to prevent terrorism and enhance security, secure and manage our
borders, enforce our immigration laws, safeguard and secure cyber
space, enhance resilience to disasters, and provide critical support to
economic and National security. Because tomorrow's security environment
will not necessarily look like today's security environment, the
missions provide a durable framework to effectively address whatever
risks and threats may emerge over time.
management challenge
The Department faces significant management and programmatic
challenges. When it was created it was the largest Government
reorganization in more than 50 years, involving over 180,000 employees
and a budget of more than $40 billion. This effort required the
integration of 22 different agencies with different missions, value,
cultures, and protocols into a single, unified Department focused on
the critical and pressing mission of securing the Nation. Now there are
approximately 240,000 people.
Since its formation each Secretary has worked to integrate the
various component elements and maximize efficiency, while still keeping
the homeland safe and secure. Successful transformations of this sort--
even ones less formidable--often take a long time to achieve. DHS must
organize around missions, rather than legacy bureaucracies, and it must
find ways to resolve old disconnects in its systems. In short, the
Department must operate as ``One DHS,'' a unified Department.
Secretary Johnson has developed a strong Strategic Plan to face
these challenges and to succeed. His April 2014 memo, ``Strengthening
the Department Unity of Effort'' outlines major management initiatives
that are key to the management component that is essential to
effectively execute the operational initiatives in the QHSR. It
continues along the path to improve operations as ``One DHS''.
The consolidation of DHS activities at St. Es is an essential
element of this transformation and key to the success of several DHS
management initiatives.
consolidated headquarters
DHS's mission demands an integrated approach, yet the Department's
legacy facilities are dispersed in more than 50 locations and 7.1
million Gross Square Feet (GSQF) of office space throughout the
National Capital Region (NCR). This data may be slightly inaccurate
because it is based on my recollection of the situation prior to the
United States Coast Guard move. This dispersal adversely impacts
critical communication, coordination, and cooperation across the
Department. Consolidating executive leadership in a secure setting with
sufficient office space for policy, management, operational
coordination, and command-and-control capabilities at the St.
Elizabeths (St. Es) West Campus is vital to the long-term success of
the Department. The Department also needs to reduce the total number of
locations that house DHS components in the NCR to as few as possible in
order to lower overall costs.
Without Federal construction at St. Es, DHS will continue to be
housed in over 50 NCR locations. The St. Es development will result in
a $1 billion Net Present Value (NPV) savings over a 30-year period by
consolidating private- and public-sector lease agreements. I believe
that these estimates that I worked with at the time should be
reasonably accurate today.
There are several practical aspects of this matter that I have
personally lived through and are as relevant today as they were then.
First, the physical condition of the current DHS Headquarters at
Nebraska Ave (called the NAC) is deplorable. In my previous appearances
before the Congress I have referred to it as ``Dump''. It is. The
decrepit nature of the physical plant was terrible and in need of
constant major maintenance. Maintenance frequently required repeated
tearing up the roads and major disruption at the NAC. It was a death
spiral, constantly spending money to preserve the old and outdated.
Also, several of the operational components were housed in facilities
outside the NAC that were inadequate and the habitability was poor.
Second, the space and conditions for a professional workforce was
terrible. People crammed into spaces one half or less than the minimum
standard by any comparison is unsatisfactory at best. This had an
additional flaw in that there was very little open space, hence no
flexibility. So, when special task force or teams were required to be
formed, the buildings and spaces were not modular and could not be
rapidly reconfigured to accommodate the specific mission teams that
were required to be established.
Third, actions were taken by previous Congresses to prevent DHS
from improving critical operational facilities at the NAC by creating a
temporary consolidated operations center, were not allowed (in effect
by disapproving financial reprogramming) because the Department would
be moving to a consolidated headquarters at St. Es where there would be
an integrated operations center. While I found this action
unconscionable, I understood it. In my time at the Department, the
operations center size was significantly inadequate, the IT technology
practically obsolete, and the environment was operational limiting to
equipment operational requirements and hence its ability for reliable
operations was severely impacted. A major consideration in the design
of the St. Es campus was the establishment of the integrated operations
center; specifically to exercise the required leadership and direction
of the operations. The failure to accomplish this is unacceptable from
a security standpoint.
Fourth, the wide-spread dispersal of the operational component's
key leadership made leadership and command and control very difficult.
Trying to gather the operational leadership in times where joint
operations are required to focus on emergent crises is near impossible
given the current geographic dispersal. In this regard, what is often
overlooked by those outside the Department is that DHS is a huge
operational law enforcement organization. Co-location of the leadership
to exercise direction of operations is an essential aspect of good
command and control. It would be unthinkable for any law enforcement
organization of substantially less size to be forced to operate in a
manner similar to the current DHS layout, yet it is tolerated and
accepted for DHS which was established to provide enhanced and
integrated security operations to protect the homeland. This is not a
mere dollars issue. Failure to enable the consolidation is operational
limiting.
Fifth, in the D.C. area, if there is an emergency homeland security
event, the activity dispersal will essentially preclude assembling the
leadership because the major traffic disruption that will probably
result will make movement across the city impossible.
Sixth, the many leases and rents for DHS organizations outside of
the District of Columbia. While in office I was frequently asked by
Members and staff why can't you consolidate disparate DHS activity
locations across the country. Practically we started to do that where
it made sense and where timing of expired leases could be synchronized
to avoid penalties. In all these discussions I expressed my concern
that while these efforts were important, they were indeed very minor
compared to the challenges and opportunities faced in the District of
Columbia.
Seventh, the consolidation of mission support functions that cannot
be accommodated at St. Es also has the potential to achieve comparable
cost avoidances through co-location of similar functions, elimination
of redundancies, and economize shared services. It was always
recognized that there were efficiencies that could be achieved in
consolidating several of these ``back room'' functions, mostly
administrative that were more site-independent than operationally-
focused and co-location required. Our plan was simple--co-locate the
operational leadership and then look to consolidate the back room
functions. That plan made sense in 2009 and it makes sense today.
This effort will right-size the real estate portfolio resulting in
DHS having 70 percent of its offices in less costly yet more secure
Government-owned space.
Consolidating facilities will increase efficiency, enhance
communication, and foster a ``One DHS'' culture that will optimize
Department-wide prevention and response capability. I strongly request
that the Congress support this effort by authorizing and appropriating
funding for completing the DHS consolidation at St. Elizabeths West
Campus and efficient realignment of off-campus locations.
conclusion
Thank you for your leadership and your continued support of the
Department of Homeland Security and its important programs and your
efforts in shaping the future and success of DHS. I sincerely
appreciate this opportunity to submit this testimony for the record in
support of the consolidation of DHS activities at St. Es.
Mr. Barber. Well, thank you, Mr. Chairman, and thank you
for convening this hearing this morning. You will recall that
you and I went out to St. Elizabeths several months ago to see
what was going on and what was in progress, and at that time
none of the buildings were completed. We were still waiting for
the first one to be opened and occupied. That has now happened
with the Coast Guard moving from the Navy Yard into St.
Elizabeths. I have not been out there since, but I hope when we
return to pay another visit to see what other progress has been
made.
As we know, the Department of Homeland Security is composed
of 22 sometimes called legacy agencies, making it the third-
largest department in the Federal Government. It has, I
believe, one of the most important missions of any Federal
agency, and that is to keep Americans safe and to protect the
homeland. This is an enormous challenge and responsibility from
securing our borders to counterterrorism and cybersecurity.
In 2006, former DHS Secretary Michael Chertoff introduced a
plan to consolidate the Department's senior leadership across
all 22 component agencies into one headquarters, as opposed to
operating out of 50 different locations around the Nation's
Capital Region. In the consolidated headquarters, the
Department would be in one location and could more quickly
coordinate and respond to a crisis. As we know, St. Elizabeths
Hospital in Southeast Washington was chosen as the site for
this consolidation plan.
The original master plan for converting St. Elizabeths into
a DHS Headquarters called for a coordinated construction
schedule that would be divided into three phases, and it was
supposed to cost $3.45 billion with the project being completed
by 2015, next year. Unfortunately, Mr. Chairman, as you pointed
out, the project is now expected to exceed costs of $4.5
billion. It is now expected to be completed in 2026. That is a
$1 billion increase in cost projections and 11 years overdue.
There are several issues, as we know, behind the costs and
the delays that St. Elizabeths is experiencing, and I am
looking forward to an opportunity today to explore further
those issues and those delays.
First, the GAO found that in managing this project the
Department of Homeland Security and the General Services
Administration did not fully conform with leading capital
decision-making practices. The GAO also found that DHS and GSA
have not conducted an assessment of current needs and
capability gaps, nor have they prioritized alternative designs
that would help adapt St. Elizabeths' consolidation plan to
meet the current fiscal environment.
Another issue that has plagued St. Elizabeths is a funding
gap that began in the first year after the first phase of
construction. In fiscal 2006 President Bush requested almost
$38 million to begin the first phase of construction
specifically for consolidating the Coast Guard at St.
Elizabeths and to upgrade St. Elizabeths' West Campus
infrastructure, and Congress fully funded this request.
However, in fiscal year 2007, when President Bush requested
roughly $360 million for St. Elizabeths, Congress only
appropriated about $6 million, creating a significant funding
gap. The funding gap has widened over the years and has
contributed to project delays and to cost inflations.
As Ranking Member of this subcommittee, I am committed to
working with my colleagues on both sides of the aisle to ensure
that the Department spends taxpayer money wisely. We have to be
good fiscal agents. The Department must have the resources it
needs to fulfill its mission, but we will not and should not
write them a blank check. They must accord to best practices
and have plans in place that enable them to adapt to the
current fiscal and legislative climate.
Let me just digress for a moment, Mr. Chairman, to point
out that this is not just an issue at St. Elizabeths. Recently,
there was a report that showed in my State, in the district
next door, another cost overrun in an inexplicable building
project, building houses for Border Patrol Agents and their
families in a small community called Ajo. It used to be a
mining town. It is now essentially a retirement community. The
home values in Ajo are about $88,000 on the average. What did
DHS spend with GSA to build those homes? Almost $700,000 per
home, building homes that were larger than were needed for
agents whose families were living in Tucson and other cities
who were not likely to occupy the larger premises.
Earlier this year we heard another GAO report that pointed
out a $24 million boondoggle, I might say, which was an effort
to upgrade the IT system for DHS. That plan was never
implemented because the implementation or the proposal was not
appropriate to the need.
So today's hearing will obviously focus on St. Elizabeths,
but I think we have to be concerned about a broader problem,
and that is how does this third-largest Federal agency manage
the money that the taxpayers give to us and we to them to fund
the agency's mission? I also look forward to hearing from GSA
and DHS about why the consolidation plan is important to
protecting our homeland and whether or not one location is
financially more practical than the Department's current
leasing system.
Let me, Mr. Chairman, close with this remark. I have been
very impressed, as I think we have on both sides of the aisle
in this committee, with Secretary Johnson's commitment to
transparency and accountability. I understand that he will be
looking at these issues very seriously and I believe he will
take action. I look forward to his action being one that is
good for the taxpayer and gets these projects done on time and
on budget.
Thank you, Mr. Chairman. I yield back.
[The statement of Ranking Member Barber follows:]
Statement of Ranking Member Ron Barber
September 19, 2014
The Department of Homeland Security is made up of 22 legacy
agencies, making it the third-largest department in the Federal
Government. DHS has one of the most important missions of our
Government--to keep Americans safe. This is an enormous challenge and
responsibility, from securing our borders, to counterterrorism and
cybersecurity. In 2006, former DHS Secretary Michael Chertoff
introduced a plan to consolidate the Department's senior leadership--
across all 22 component agencies--into one headquarters.
As opposed to operating out of 50 different locations around the
National Capital Region, in a consolidated headquarters the Department
would be in one location and could quickly coordinate and respond to a
crisis.
As we know, the site selected for this consolidation plan was St.
Elizabeths Hospital in Southeast Washington. The original master plan
for St. Elizabeths called for a coordinated construction schedule to be
divided into three phases and to cost $3.45 billion, with the project
being completed by 2015.
Unfortunately, the project is now expected to cost $4.5 billion and
is not expected to be completed until 2026. There are several issues
behind the costs and delay at St. Elizabeths that I am hoping we can
explore further through today's hearing.
First, the Government Accountability Office found that in managing
this project the Department of Homeland Security and the General
Services Administration did not fully conform with leading capital
decision-making practices. The GAO also found that DHS and GSA have not
conducted an assessment of current needs and capability gaps, nor have
they prioritized alternative designs that would help adapt the St.
Elizabeths consolidation plan to meet the current fiscal environment.
Another issue that has plagued St. Elizabeths is a funding gap that
began in just a year after the first phase of construction. In fiscal
year 2006, President Bush requested almost $38 million to begin the
first phase of construction, specifically for consolidating the Coast
Guard at St. Elizabeths and to upgrade St. Elizabeths West Campus
infrastructure. Congress fully funded this request.
However, in fiscal year 2007, when President Bush requested roughly
$360 million for St. Elizabeths, Congress only appropriated around $6
million. The funding gap has widened over the years and has contributed
to project delays and to cost inflations.
As Ranking Member of this subcommittee, I am committed to working
with my colleagues on both sides of the aisle to ensure that the
Department spends taxpayer dollars wisely. The Department must have the
resources they need to fulfill their mission but we will not write them
a blank check. They must accord to best practices and have plans in
place that enable them to adapt to the current fiscal and legislative
climate.
Today's hearing should provide an opportunity to hear from GAO
regarding its analysis of the St. Elizabeths project and its
recommendations to GSA and DHS. I also look forward to hearing from GSA
and DHS about why the consolidation plan is important to protecting our
homeland and whether or not one location is financially more practical
than the Department's current leasing system.
Mr. Duncan. I thank the gentleman.
Other Members of the subcommittee are reminded that opening
statements may be submitted for the record.
[The statement of Ranking Member Thompson follows:]
Statement of Ranking Member Bennie G. Thompson
September 19, 2014
Since the Department of Homeland Security was created in 2002, its
core components have been dispersed in more than 50 locations
throughout the National Capital Region. This separation adversely
affects the need for cohesive communication, coordination, and
cooperation across the Department component agencies as the Department
seeks to fulfill its mission.
At a time when we face a dynamic threat picture and realize a
natural disaster could occur in any area of the country, it is
inconceivable that the Department of Homeland Security does not have a
consolidated headquarters where the Secretary can meet with the
component heads instantaneously.
Secretary Johnson has indicated his vision to unify the Department,
and Members of this committee have vocally supported him; however, we
must recognize that having the Department spread throughout the
National Capital Region has a negative impact on the Secretary's
vision. Former Secretary Chertoff presented the plan to have a single,
unified headquarters that houses the Secretary, senior Department
leadership, and component heads at the St. Elizabeths West campus in
southeast DC.
I was a vocal supporter of the DHS consolidation plan when it was
first presented. At that time, I expressed my concerns about the
Department and its track record of taking on large-scale procurement
projects. I also asked DHS and GSA to make sure that small and minority
businesses were a part of the fabric of this consolidation. DHS and GSA
completed the first phase of the three-phase consolidation project on
time and on budget.
However, Phase II and III of the consolidation project have been
stalled. According to the Government Accountability Office, St.
Elizabeths lacks reliable cost and schedule estimating practices.
However, we must look at what DHS and GSA have to work with. The DHS
consolidation plan has never been has not received full funding for the
headquarters consolidation since the American Recovery and Reinvestment
Act (ARRA) funding was appropriated in fiscal years 2009 to 2010 which
allowed for the U.S. Coast Guard Headquarters to be completed during
Phase I of the construction.
As we are here to look at GAO and its audit, we must recognize
everyone's responsibility in this matter. GSA serves as the broker,
developer, and property manager for the headquarters consolidation.
However, Congressional appropriation of funding of St. Elizabeths
continues to be uncertain as the House's fiscal year 2015 Financial
Service and General Government Appropriations bill zeroed out funding
for GSA.
How can we expect the Department to have a consolidated
headquarters if we do not give them money to build it? Mr. Chairman, as
we are here to examine waste, fraud, and abuse--let's keep some common-
sense and figures in mind--if the consolidation project was completed,
the Federal Government would own the space. Sixty-nine percent of the
commercial leases for DHS will expire between fiscal years 2016 and
2020.
The headquarters consolidation is $4.5 billion, DHS would spend
upwards of $5.2 billion, or approximately $700 million more over the
next 30 years to continue leasing space in the National Capital Region.
St. Elizabeths will cost the Department more up-front, but over time,
the headquarters consolidation will pay for itself as its tenant costs
will only be competed once. In an era where we daily speak about waste,
fraud, and abuse, we should be vigilant and understand the costs of
this project and take steps to fund it.
Mr. Duncan. We are pleased to have a distinguished panel of
witnesses before us today on this important topic. Let me
remind the witnesses that their entire written statement will
appear in the record. I will introduce each of you first and
then I will recognize you individually for your testimony.
Our first witness is Mr. David Maurer. He became the
director in the Government Accountability Office, GAO, Homeland
Security and Justice team in 2009, where he leads GAO's work
reviewing DHS and DOJ management issues. His work recently
covers DHS management integration, nuclear smuggling, research
and development at DHS, DOJ grant management, crowding in the
Federal prison system, and counterterrorism staffing vacancies
at the FBI.
The second witness is Mr. Chris Cummiskey. He was appointed
acting under secretary for management at DHS earlier this year.
Mr. Cummiskey oversees Management Directorate's programs,
processes, and personnel through the six line business chiefs.
The director is responsible for Department-wide management and
operations. Mr. Cummiskey also serves as the chief acquisition
officer, overseeing $19 billion in acquisition programs and
overseeing the Department's headquarter consolidation project
at St. Elizabeths. Prior to his appointment to this position,
he served as deputy under secretary for management and chief of
staff for the Management Directorate.
Our third witness is Mr. Norman Dong. He serves as the
commissioner of the Public Buildings Service for the USGSA.
Through this position, Mr. Dong leads one of the largest and
most diversified public real estate portfolios in the world,
managing Nation-wide assets, design, construction, leasing,
building management, and disposal of Federal building space.
Prior to joining GSA, Mr. Dong was acting controller at the
Office of Management and Budget.
I want to thank all of you gentlemen for being here today.
I will now recognize Mr. Maurer to testify.
STATEMENT OF DAVID C. MAURER, DIRECTOR, HOMELAND SECURITY AND
JUSTICE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Maurer. Good morning, Chairman Duncan, Ranking Member
Barber, and other Members and staff. I am pleased to be here
today to discuss the findings from our review of DHS
Headquarters consolidation at the St. Elizabeths campus here in
the District of Columbia.
This is not a new issue. Seven years ago we issued a report
expressing concerns about the future of the project. We
recommended, among other things, that GSA and DHS develop a
comprehensive cost analysis and comparison of alternatives.
Both DHS and GSA said a dispersed DHS Headquarters was
unacceptable and did not see the need to further refine
estimates or consider alternatives. That proved to be a missed
opportunity. So here we are today, costs have grown, schedules
have slipped, and we are now, under current plans, 12 years
away from project completion.
Now, it is important to recognize that GAO has no position
on whether DHS should consolidate its headquarters at St.
Elizabeths. That is a policy call. Congress will ultimately
decide what to fund and when to fund it. Our report being
issued today is designed to help inform those decisions.
We do think it is critically important for DHS and GSA to
update plans, adapt to a change in circumstances, and apply
leading practices. Our work found significant problems in the
current plans and cost and schedule estimates.
DHS and GSA issued the current plans in a series of
documents from 2006 through 2009. Unfortunately, these plans
are frozen in time. A lot has changed. Congress has provided
$1.6 billion less in funding than requested. DHS' footprint in
the National Capital Region has grown over 20 percent.
Standards for telework and average space per worker have
changed. DHS and GSA need to update their plans to reflect
these realities.
More fundamentally, it is worth taking an updated look at
alternative approaches to headquarters consolidation to ensure
building out St. Elizabeths is the best, most cost-efficient
option for meeting DHS' needs. That would include reviewing,
among other things, DHS' current National Capital Region
leasing portfolio.
We also reviewed the current cost estimates for the project
and found that they are unreliable because, at best, they only
partially conform to leading practices. For example, DHS and
GSA have not regularly updated their estimates and have
optimistically assumed future cost growth no greater than the
rate of inflation. We also found that the project schedule only
minimally conforms to leading practices. Among other things, it
does not fully account for when labor, material, and equipment
will be needed and has not been fully updated since 2008.
GSA contends their leading practices don't apply to large-
scale construction projects like St. Elizabeths. We think they
do. In fact, GSA was involved in developing our leading
practices. They are recognized and required by OMB and have
been used to assess several construction projects at a wide
variety of Federal agencies. But to be fair, at GSA's request,
we did additional work looking at their compliance with their
own standards for cost and schedule. We found that all too
often GSA did not comply with its own rules.
For example, GSA guidance requires projects to develop a
life-cycle cost estimate that includes the cost to build and
operate the facility. However, the St. Elizabeths cost estimate
only includes the cost to build, not the cost of repair,
operations, and maintenance. GSA guidance calls for developing
an approved baseline schedule to allow comparison between
planned and actual time frames. We found no evidence of a
schedule baseline document to help measure performance of the
project.
We have recommendations in our report to strengthen the
management of this project, and I am pleased that DHS and GSA
agree with them and will be updating their plans, improving
their oversight, and enhancing their cost and schedule
estimates. That is a big improvement over 7 years ago. It will
help enhance the overall management of this large, complex
project and provide Congress better information to inform
future decisions.
In closing, Congress needs a clearer road map for the St.
Elizabeths project. You need to know how long it will take, how
much it will cost, and how it will ultimately benefit the
taxpayers. Our report concludes that Congress should consider
making future funding for St. Elizabeths contingent on DHS and
GSA answering those questions. Implementing our recommendations
will better position both organizations to do just that.
That concludes my opening remarks. Thank you for the
opportunity to testify this morning.
[The prepared statement of Mr. Maurer follows:]
Prepared Statement of David C. Maurer
September 19, 2014
Mr. Chairman and Members of the subcommittee: I am pleased to be
here today to discuss our report, which is being released today, on the
Department of Homeland Security (DHS) Headquarters consolidation
project at St. Elizabeths Campus in Washington, DC.\1\ The $4.5 billion
construction project, managed by DHS and the General Services
Administration (GSA),\2\ is the centerpiece of DHS's larger effort to
manage and consolidate its workforce of over 20,000 in the National
Capital Region (NCR).\3\ As conceived in 2006, the Federally-owned St.
Elizabeths site was designed to consolidate DHS's executive leadership,
operational management, and other personnel at one secure location
rather than at multiple locations throughout the Washington, DC,
metropolitan area.\4\ Specifically, DHS envisioned moving about 14,000
staff to the new headquarters facility and housing its remaining
personnel in other consolidated spaces across the region. With a
current projected completion date of 2026, the St. Elizabeths project
is intended to provide DHS a secure facility to allow for more
efficient incident management response and command-and-control
operations, and also provide long-term cost savings by reducing
reliance on leased space.
---------------------------------------------------------------------------
\1\ GAO, Federal Real Property: DHS and GSA Need to Strengthen the
Management of DHS Headquarters Consolidation, GAO-14-648 (Washington,
DC: Sept. 19, 2014).
\2\ GSA, the landlord for the civilian Federal Government, acquires
space on behalf of the Federal Government through new construction and
leasing, and acts as a caretaker for Federal properties across the
country. As such, GSA had the responsibility to select the specific
site for a new, consolidated DHS Headquarters facility, based on DHS
needs and requirements.
\3\ The National Capital Region is composed of the District of
Columbia and nearby jurisdictions in Maryland and Virginia.
\4\ The St. Elizabeths campus is a National Historic Landmark and a
former Federally-run hospital for the mentally ill.
---------------------------------------------------------------------------
My testimony is based on and summarizes the key findings of our
report issued today, on DHS and GSA efforts to manage the DHS
headquarter consolidation project. My statement will address the extent
to which DHS and GSA have: (1) Developed DHS Headquarters consolidation
plans in accordance with leading capital decision-making practices and
(2) estimated the costs and schedules of the DHS Headquarters
consolidation project at St. Elizabeths in a manner that is consistent
with leading practices. To do our work we compared DHS and GSA capital
planning efforts against applicable leading practices in capital
decision making and interviewed DHS and GSA officials responsible for
the planning and management of the DHS Headquarters consolidation.\5\
We also compared DHS and GSA documents on the estimated cost and
schedule for the St. Elizabeths project with GAO cost- and schedule-
estimating leading practices and relevant GSA guidance.\6\ More
detailed information on the scope and methodology can be found in our
published report.\7\ The work upon which this statement is based was
conducted in accordance with generally accepted Government auditing
standards.
---------------------------------------------------------------------------
\5\ GAO, Executive Guide: Leading Practices in Capital Decision-
Making; GAO/AIMD-99-32 (Washington, DC: Dec. 1, 1998) and Office of
Management and Budget (OMB), Capital Programming Guide, Supplement to
OMB Circular A-11 (Washington, DC: July 2014).
\6\ GAO, GAO Cost Estimating and Assessment Guide: Best Practices
for Developing and Managing Capital Program Costs, GAO-09-3SP
(Washington, DC: Mar. 2, 2009) and GAO Schedule Assessment Guide: Best
Practices for Project Schedules, GAO-12-120G (Washington, DC: May
2012).
\7\ GAO-14-648.
---------------------------------------------------------------------------
background
The Homeland Security Act of 2002 combined 22 Federal agencies
specializing in various missions under DHS.\8\ Numerous Departmental
offices and seven key operating components are headquartered in the
NCR.\9\ When DHS was formed, the headquarters functions of its various
components were not physically consolidated, but instead were dispersed
across the NCR in accordance with their history. As of July 2014, DHS
employees were located in 94 buildings and 50 locations, accounting for
approximately 9 million gross square feet of Government-owned and -
leased office space.
---------------------------------------------------------------------------
\8\ Pub. L. No. 107-296, 116 Stat. 2135.
\9\ Departmental offices encompass core management and policy
functions, among other things. The seven core DHS operating components
headquartered in the NCR are U.S. Citizenship and Immigration Services,
U.S. Coast Guard, U.S. Customs and Border Protection, Federal Emergency
Management Agency, U.S. Immigration and Customs Enforcement, U.S.
Secret Service, and Transportation Security Administration.
---------------------------------------------------------------------------
DHS began planning the consolidation of its headquarters in 2005.
According to DHS, increased colocation and consolidation were critical
to: (1) Improve mission effectiveness, (2) create a unified DHS
organization, (3) increase organizational efficiency, (4) size the real
estate portfolio accurately to fit the mission of DHS, and (5) reduce
real estate occupancy costs. Between 2006 and 2009, DHS and GSA
developed a number of capital planning documents to guide the DHS
Headquarters consolidation process. For example, DHS's National Capital
Region Housing Master Plan identified a requirement for approximately
4.5 million square feet of office space on a secure campus. In
addition, DHS's 2007 Consolidated Headquarters Collocation Plan
summarized component functional requirements and the projected number
of seats needed on- and off-campus for NCR Headquarters personnel.
From fiscal year 2006 through fiscal year 2014, the St. Elizabeths
consolidation project had received $494.8 million through DHS
appropriations and $1.1 billion through GSA appropriations, for a total
of over $1.5 billion. However, from fiscal year 2009--when construction
began--through the time of the fiscal year 2014 appropriation, the gap
between requested and received funding was over $1.6 billion. According
to DHS and GSA officials, this gap created cost escalations of over $1
billion and schedule delays of over 10 years.
dhs and gsa consolidation plans did not fully conform with leading
capital decision-making practices
In our September 2014 report, we found that DHS and GSA planning
for the DHS Headquarters consolidation did not fully conform with
leading capital decision-making practices intended to help agencies
effectively plan and procure assets.\10\ Specifically, we found that
DHS and GSA had not conducted a comprehensive assessment of current
needs, identified capability gaps, or evaluated and prioritized
alternatives that would help officials adapt consolidation plans to
changing conditions and address funding issues as reflected in leading
practices. DHS and GSA officials reported that they had taken some
initial actions that may facilitate consolidation planning in a manner
consistent with leading practices. For example, DHS has an overall goal
of reducing the square footage allotted per employee across the
Department in accordance with current workplace standards, such as
standards for telework and hoteling.\11\ DHS and GSA officials
acknowledged that new workplace standards could create a number of new
development options to consider, as the new standards would allow for
more staff to occupy the current space at St. Elizabeths than
previously anticipated. DHS and GSA officials also reported analyzing
different leasing options that could affect consolidation efforts.
However, we found that the consolidation plans, which were finalized
between 2006 and 2009, had not been updated to reflect these actions.
---------------------------------------------------------------------------
\10\ Congress, OMB, and GAO have all identified the need for
effective capital decision making among Federal agencies. OMB's Capital
Programming Guide, along with GAO's Executive Guide: Leading Practices
in Capital Decision-Making provides detailed guidance to Federal
agencies on leading practices for the four phases of capital
programming--planning, budgeting, acquiring, and managing capital
assets. These practices are, in part, intended to provide a disciplined
approach or process to help Federal agencies effectively plan and
procure assets to achieve the maximum return on investment.
\11\ Telework is a work arrangement in which employees perform all
or a portion of their work at an alternative work site, such as from
home or a telework center. Hoteling allows allow employees to work at
multiple sites and use nondedicated, nonpermanent workspaces assigned
for use by reservation on an as-needed basis.
---------------------------------------------------------------------------
In addition, we found that current funding for the St. Elizabeths
project had not aligned with what DHS and GSA initially planned.
According to DHS and GSA officials, the funding gap between what DHS
and GSA requested and what was received from fiscal years 2009 through
2014, was over $1.6 billion. According to these officials, this gap
created cost escalations of over $1 billion and schedule delays of over
10 years relative to original estimates. These delays have posed
challenges for DHS in terms of its current leasing portfolio.
Specifically, DHS's long-term leasing portfolio was developed based on
the original expected completion date for St. Elizabeths development in
2016. According to DHS leasing data, 52 percent of DHS's current NCR
leases will expire in 2014 and 2015, accounting for almost 39 percent
of its usable square feet. However, we found that DHS and GSA had not
conducted a comprehensive assessment of current needs, identified
capability gaps, or evaluated and prioritized alternatives that would
help officials adapt consolidation plans to changing conditions and
address funding issues, as reflected in leading practices for capital
decision making.\12\ DHS and GSA reported that they have begun to work
together to consider changes to the DHS Headquarters consolidation
plans, but they had not announced when new plans will be issued.
Furthermore, because final documentation of agency deliberations or
analyses had not yet been developed, it was unclear if any new plans
would be informed by an updated comprehensive needs assessment and
capability gap analysis as called for by leading capital decision-
making practices. Therefore, in our September 2014 report, we
recommended that DHS and GSA conduct: (1) A comprehensive needs
assessment and gap analysis of current and needed capabilities that
takes into consideration changing conditions, and (2) an alternatives
analysis that identifies the costs and benefits of leasing and
construction alternatives for the remainder of the project and
prioritizes options to account for funding instability. DHS and GSA
concurred with these recommendations and stated that their forthcoming
draft St. Elizabeths Enhanced Consolidation Plan would contain these
analyses.
---------------------------------------------------------------------------
\12\ GAO/AIMD-99-32 and OMB Capital Programming Guide.
---------------------------------------------------------------------------
Finally, we found that DHS had not consistently applied its major
acquisition guidance for reviewing and approving the headquarters
consolidation project. Specifically, we found that DHS had guidelines
in place to provide senior management the opportunity to review and
approve its major projects, but DHS had not consistently applied these
guidelines to its efforts to work with GSA to plan and implement
headquarters consolidation. DHS had designated the headquarters
consolidation project as a major acquisition in some years but not in
others. In 2010 and 2011, DHS identified the headquarters consolidation
project as a major acquisition and included the project on DHS's Major
Acquisitions Oversight List.\13\ Thus, the project was subject to the
oversight and management policies and procedures established in DHS
major acquisition guidance; however, the project did not comply with
major acquisition requirements as outlined by DHS guidelines. For
example, we found that the project had not produced any of the required
key acquisition documents requiring Department-level approval, such as
life-cycle cost estimates and an acquisition program baseline, among
others. In 2012, the project as a whole was dropped from the list. In
2013 and 2014, DHS included the information technology (IT) acquisition
portion of the project on the list, but not the entire project. DHS
officials explained that they considered the St. Elizabeths project to
be more of a GSA acquisition than a DHS acquisition because GSA owns
the site and the majority of building construction is funded through
GSA appropriations. We recognize that GSA has responsibility for
managing contracts associated with the headquarters consolidation
project. However, a variety of factors, including the overall cost,
scope, and visibility of the project, as well as the overall importance
of the project in the context of DHS's mission, make the consolidation
project a viable candidate for consideration as a major acquisition. By
not consistently applying this review process to headquarters
consolidation, we concluded that DHS management risked losing insight
into the progress of the St. Elizabeths project, as well as how the
project fits in with its overall acquisitions portfolio. Thus, in our
September 2014 report, we recommended that the Secretary of Homeland
Security designate the headquarters consolidation program a major
acquisition, consistent with DHS acquisition policy, and apply DHS
acquisition policy requirements. DHS concurred with the recommendation.
---------------------------------------------------------------------------
\13\ DHS reviews its acquisition portfolio annually and designates
programs as major acquisitions based on DHS investment thresholds.
Generally, programs that incur costs greater than $300 million over the
life cycle of the program are considered major acquisitions. In 2014,
DHS changed the name of the Major Acquisition Oversight List to the
Master Acquisition Oversight List to more accurately distinguish
between the Department's major (Level 1 and 2) and non-major (Level 3)
acquisitions and non-acquisition activities included in the list.
---------------------------------------------------------------------------
dhs and gsa cost and schedule estimates for the st. elizabeths project
did not reflect leading practices
In our September 2014 report, we found that DHS and GSA cost and
schedule estimates for the headquarters consolidation project at St.
Elizabeths did not conform or only minimally or partially conformed
with leading estimating practices, and were therefore unreliable.\14\
Furthermore, we found that in some areas, the cost and schedule
estimates did not fully conform with GSA guidance relevant to
developing estimates.
---------------------------------------------------------------------------
\14\ GAO-09-3SP and GAO-12-120G. For both the cost and schedule
estimates, our analysis focused on how well DHS and GSA met each of the
four characteristics based on our assessment of conformance to the
leading practices associated with that characteristic. We then arrayed
the extent to which DHS and GSA cost and schedule estimates conformed
with the four characteristics of each using five rating categories--
fully meets, substantially meets, partially meets, minimally meets, or
does not meet.
---------------------------------------------------------------------------
Cost Estimates
We found that DHS and GSA cost estimates for the headquarters
consolidation project at St. Elizabeths did not reflect leading
practices, which rendered the estimates unreliable. For example, we
found that the 2013 cost estimate--the most recent available--did not
include: (1) A life-cycle cost analysis of the project, including the
cost of repair, operations, and maintenance; (2) was not regularly
updated to reflect significant changes to the program including actual
costs; and (3) did not include an independent estimate to assist in
tracking the budget. In addition, a sensitivity analysis had not been
performed to assess the reasonableness of the cost estimate. We have
previously reported that a reliable cost estimate is critical to the
success of any program.\15\ Specifically, we have found that such an
estimate provides the basis for informed investment decision making,
realistic budget formulation and program resourcing, meaningful
progress measurement, pro-active course correction when warranted, and
accountability for results. Accordingly, we concluded that DHS and GSA
would benefit from maintaining current and well-documented estimates of
project costs at St. Elizabeths--even if project funding is not fully
secured--and these estimates should encompass the full life-cycle of
the program and be independently assessed.
---------------------------------------------------------------------------
\15\ GAO-09-3SP.
---------------------------------------------------------------------------
Schedule Estimates
In addition, we found that the 2008 and 2013 schedule estimates did
not include all activities for both the Government and its contractors
necessary to accomplish the project's objectives and did not include
schedule baseline documents to help measure performance as reflected in
leading practices and GSA guidance. For the 2008 schedule estimate, we
also found that resources (such as labor, materials, and equipment)
were not accounted for and a risk assessment had not been conducted to
predict a level of confidence in the project's completion date. In
addition, we found the 2013 schedule estimate was unreliable because,
among other things, it was incomplete in that it did not provide
details needed to understand the sequence of events, including work to
be performed in fiscal years 2014 and 2015.
We concluded that developing cost and schedule estimates consistent
with leading practices could promote greater transparency and provide
decision makers needed information about the St. Elizabeths project and
the larger DHS Headquarters consolidation effort. However, in
commenting on our analysis of St. Elizabeths cost and schedule
estimates, DHS and GSA officials said that it would be difficult or
impossible to create reliable estimates that encompass the scope of the
entire St. Elizabeths project. Officials said that given the complex,
multi-phase nature of the overall development effort, specific
estimates are created for smaller individual projects, but not for the
campus project as a whole. Therefore, in their view, leading estimating
practices and GSA guidance cannot reasonably be applied to the high-
level projections developed for the total cost and completion date of
the entire St. Elizabeths project. GSA stated that the higher-level,
milestone schedule currently being used to manage the program is more
flexible than the detailed schedule GAO proposes, and has proven
effective even with the highly-variable funding provided for the
project.
We found in our September 2014 report, however, that this high-
level schedule was not sufficiently defined to effectively manage the
program. For example, our review showed that the schedule did not
contain detailed schedule activities that include current Government,
contractor, and applicable subcontractor effort. Specifically, the
activities shown in the schedule only address high-level agency square
footage segments, security, utilities, landscape, and road
improvements. While we understand the need to keep future effort
contained in high-level planning packages, in accordance with leading
practices, near-term work occurring in fiscal years 2014 and 2015
should have more detailed information. We recognize the challenges of
developing reliable cost and schedule estimates for a large-scale,
multi-phase project like St. Elizabeths, particularly given its
unstable funding history and that incorporating GAO's cost- and
schedule-estimating leading practices may involve additional costs.
However, unless DHS and GSA invest in these practices, Congress risks
making funding decisions and DHS and GSA management risk making
resource allocation decisions without the benefit that a robust
analysis of levels of risk, uncertainty, and confidence provides. As a
result, in our September 2014 report, we recommended that, after
revising the DHS Headquarters consolidation plans, DHS and GSA develop
revised cost and schedule estimates for the remaining portions of the
consolidation project that conform to GSA guidance and leading
practices for cost and schedule estimation, including an independent
evaluation of the estimates. DHS and GSA concurred with the
recommendation.
In our September 2014 report, we also stated that Congress should
consider making future funding for the St. Elizabeths project
contingent upon DHS and GSA developing a revised headquarters
consolidation plan, for the remainder of the project, that conforms
with leading practices and that: (1) Recognizes changes in workplace
standards, (2) identifies which components are to be colocated at St.
Elizabeths and in leased and owned space throughout the NCR, and (3)
develops and provides reliable cost and schedule estimates.
Mr. Chairman and Members of the subcommittee, this concludes my
prepared statement. I look forward to responding to any questions that
you may have.
Mr. Duncan. Thank you, Mr. Maurer.
The Chairman will now recognize Mr. Cummiskey to testify
for 5 minutes.
STATEMENT OF CHRIS CUMMISKEY, ACTING UNDER SECRETARY,
MANAGEMENT DIRECTORATE, U.S. DEPARTMENT OF HOMELAND SECURITY
Mr. Cummiskey. Good morning, Mr. Chairman and Ranking
Member Barber, Members of the committee. Thank you so much for
the opportunity to join you this morning. As was indicated, my
name is Chris Cummiskey. I am the acting under secretary for
management and chief acquisition officer for the Department. It
is an opportunity today to share the dais here with Mr. Dong
and Mr. Maurer, two gentlemen for which I have utmost respect
who have made significant contributions to this project and
others.
I appreciate the Chairman and the Ranking Member's efforts
certainly around 4228 and other efforts to strengthen
acquisition oversight at the Department. We support those
efforts and hope that that will pass shortly. I wanted to draw
your attention to just a couple of points about the track
record of success in the development of St. Elizabeths to date
in Phase I, the Coast Guard Headquarters. I also want to assert
that through the program of record that we have put on the
table taxpayers will save money and will foster greater unity
of efforts at the Department.
I have to be honest with you. When I arrived at the
Department as part as Secretary Napolitano's team in 2009 as a
former State senator and member of the Appropriations Committee
there in that State, I had a fair amount of skepticism as to
what we had inherited from Secretary Chertoff and his team, but
it didn't take long to understand exactly what they were
talking about. I think that is reflected in former Deputy
Secretary Schneider's comments in that the essential value of
this project is the consolidation of the 50 locations across
the Department down to something lower than 10, which I think
is a critical part of this.
To frame the discussion today, I think it is also important
to understand the respective roles and the responsibilities
between DHS as a tenant agency and GSA as a landlord. Our role
at the Department is to establish program requirements while
our partners at GSA manage the property development itself. In
fact, the bulk of the funding does go to GSA, and in fiscal
year 2014 our share of the money that was appropriated by
Congress is $35 million. Our request in fiscal year 2015 is $57
million.
I would just like to make three simple points. The first
thing I want to draw your attention to is the record of success
in what we delivered with the Coast Guard Headquarters at St.
Elizabeths. That project, for the portions that were funded by
Congress, came in on time and on budget for the moneys that
Chairman Duncan articulated. When we receive consistent
funding, we can deliver on time and on budget. We have
accomplished that and we believe that can be accomplished
through the remainder of the phases.
Second, I want to highlight the benefits to the U.S.
taxpayer of continued consolidation of the DHS footprint. In
the 2013 review of GSA high-value leases, GAO noted the timing
is ripe for targeted investments to take the Department out of
long-term, high-value commercial leases and into efficient
Federally-owned space and lower long-term costs. With 69
percent of DHS' Headquarters and component leases in the NCR
expiring between fiscal year 2016 and fiscal year 2020, the
Department will pay for those replacements regardless of the
future of St. Elizabeths funding. By consolidating our
operations at St. Elizabeths, the 30-year present value cost of
Federal construction is nearly $700 million less than
commercial leasing as reported by GSA, in their fiscal year
2015 prospectus submission, indicates.
Third, headquarters consolidation enhances the Unity of
Effort that Secretary Johnson has so articulately depicted at
DHS. A key focus for the Secretary has been to bring together
the disparate components that are spread across the NCR, and
after 6 years at the Department I have seen first-hand what it
means when you are in a crisis situation and your component
heads are scattered across the National Capital Region.
One of the things that this project brings to bear is the
centralization of The National Operations Center, which
Secretary Chertoff and Deputy Secretary Schneider and so many
of my former colleagues have articulated is essential to the
command-and-control structure of the Department.
Finally, I just want to indicate that in the GAO findings,
we concur with those findings. As the chief acquisition
officer, this week I issued an acquisition decision memorandum
which codifies that the portions of the project that are under
our purview, as I indicated in 2014, that is $35 million, and
the request in 2015 is $57 million, will be subject to the
Acquisition Review Board process. We can't take Mr. Dong's
acquisitions and apply them to our process, but we will do it
for the portions that we oversee.
Finally, let me just say that my experience has been there
is no finer project management team than Chris Mills at DHS and
Shapour Ebadi at the GSA. These are individuals that know how
to deliver projects. They have done it with Phase I at the
Coast Guard. They will continue to do it with support from the
Congress. I am just pleased to be here to say, yeah, we have
got programs across the DHS portfolio that are troubled. I do
not view this as one of them. I stand ready to answer questions
for the Members. Thank you.
[The prepared statement of Mr. Cummiskey follows:]
Prepared Statement of Chris Cummiskey
September 19, 2014
Chairman Duncan, Ranking Member Barber, and Members of the
committee, good morning. Thank you for the opportunity to discuss the
DHS Consolidated Headquarters at St. Elizabeths. I am Chris Cummiskey,
acting under secretary for management for the Department of Homeland
Security. My responsibilities include the management of the
Department's facilities and property. I am pleased to appear before
this committee with my colleagues from the General Services
Administration and Government Accountability Office to discuss the
development of St. Elizabeths and the DHS Headquarters Consolidation
plan. Greater consolidation of DHS facilities provides tangible
benefits to taxpayers and the Department.
In the DHS National Capital Region Housing Master Plan, submitted
to the Congress in 2006 in cooperation with GSA, Secretary Chertoff
stated that the program was necessary to secure and strengthen DHS
operations by unifying our core headquarters with those of our
components and to yield more effective management. Today, Secretary
Johnson remains focused on robust cross-component Unity of Effort and a
culture of savings to minimize waste, eliminate duplication, and focus
scarce resources on mission execution. The Department continues to
support consolidation of our headquarters facilities and St. Elizabeths
is part of that program.
The Government Accountability Office (GAO) reported in a 2013
review of GSA High-Value Leases (Report 13-744), that as agencies work
to shrink their footprints through implementation of flexible workplace
strategies and increased efficiencies, there are opportunities to make
targeted investments out of high-value commercial leases and into
efficient Federal space that will result in lower long-term costs to
the taxpayer. The Department agrees with this GAO assessment and notes
that it forms the foundation of the DHS Headquarters Consolidation
Plan. St. Elizabeths is Federal space and was retained by GSA
specifically for agencies with high security requirements. It is an
anchor property already, housing the U.S. Coast Guard's Headquarters.
To frame the discussion of DHS Headquarters consolidation efforts,
it is important to understand the respective roles and responsibilities
between tenant agencies, such as DHS and GSA. In GAO Report 13-744,
GSA's lead role in housing civilian agencies is noted as follows:
. . . Within the vast portfolio of government owned and leased assets,
GSA plays the role of broker and property manager to many civilian
agencies of the U.S. government . . . \1\
---------------------------------------------------------------------------
\1\ GAO 13-744; Federal Real Property: Greater Transparency and
Strategic Focus Needed for High-Value GSA Leases; September 2013, page
4.
As a tenant agency, the Department of Homeland Security's role is
to establish programmatic requirements; to budget for and fund tenant
responsible items; to maintain a close partnership and monitor GSA's
use of DHS funds; to validate that GSA managed design and construction
meets the operational and program requirements for DHS; and to
coordinate with GSA and all stakeholders throughout the process.
Property development activities are managed by GSA in accordance with
GSA policies, under GSA supervision, and under applicable statutes. The
Department fully cooperates with GSA but does not exercise acquisition
oversight nor direct supervisory control over GSA housing or
procurement decisions. DHS is an active participant in tenant
improvement decisions.
The original DHS Headquarters Consolidation plan, as developed by
GSA in coordination with DHS, OMB, and Congress, proposed to complete
the full development of St. Elizabeths in 2016 based on the start of
construction funding in 2009. This plan was developed in conjunction
with a comprehensive 3.5-year Master Plan, environmental impact
statement, and historic preservation review process. Following the
Master Plan approval, GSA completed the U.S. Coast Guard Headquarters
relocation to St. Elizabeths on-time and on-budget for the portions of
the project funded by the Congress. This was a commendable achievement
given that GSA was not fully funded for all planned building and
infrastructure development to support the U.S. Coast Guard relocation.
Unfortunately the original plan has not been appropriated the
requested funding necessary to carry it out. As a result, in 2013 GSA
and DHS developed a revised construction baseline to reflect the
funding reduction in fiscal year 2011 and fiscal year 2012 and reduced
annual development segments to more fiscally manageable levels that
extended construction out to 2026. The schedule extension increased the
estimate of future construction, due to inflation-only adjustments (no
change in requirements) to $4.5 billion. Although inflation increased
the estimate for future work, consolidation into Federal space still
provides the Department long-term financial benefits over leasing
according to GSA's analysis.
With the revised construction baseline in place, GSA and DHS began
updating the Headquarters Consolidation plan in the fall of 2013 to
address the on-going changes in workplace design and flexible workplace
strategies that have gained broad acceptance over the last several
years. In fact, the Management Directorate's Office of the Chief
Readiness Support Officer adopted these strategies within their own
office by implementing a pilot program to reduce office space by 50
percent and save over $1 million in annual rent costs. DHS and GSA are
applying the lessons learned from this pilot program to update the DHS
Headquarters Consolidation plan. The revised plan will result in lower
costs and a shortened time frame if funded by the Congress, while
accommodating greater utilization and more employees assigned to the
campus within the Master Plan seat limitations.
The Department has made a commitment through the Freeze the
Footprint initiative to increase space utilization from the current
figure of about 210 Useable Square Feet (USF) per person of office
space, to 150 USF. These actions will reduce costs and improve space
efficiency in the future and apply to the St. Elizabeths development.
An additional important note is that 69 percent of DHS Headquarters
and component leases in the National Capital Region will expire between
fiscal year 2016 and fiscal year 2020. DHS tenant costs will be
incurred with these lease replacements, regardless of future decisions
on St. Elizabeths funding. As the commercial leases expire, they must
be re-competed. These are not discretionary investments. These are
``must pay'' requirements. Without headquarters consolidation efforts
for the DHS and component headquarters portfolio, we will perpetuate
the status quo of dispersed locations and a long-term increased lease
costs over housing components in fewer locations and at Federal space
on the St. Elizabeths campus.
DHS strives to capitalize Unity of Effort opportunities that allow
us to remain focused on our core mission--to protect the homeland. We
look forward to further engagement with this committee regarding the
DHS Headquarters Consolidation program.
In closing, I would like to assure this committee that DHS is
working hard to remain a good steward of the taxpayers' money by
managing our real estate portfolio, both Government-owned and -leased,
in a cost-effective manner. The men and women who work tirelessly to
protect the homeland deserve and require adequate facilities to support
and execute their mission.
Thank you very much. I would be pleased to answer any questions the
committee may have.
Mr. Duncan. Thank you.
Commissioner Dong.
STATEMENT OF NORMAN DONG, COMMISSIONER, PUBLIC BUILDINGS
SERVICE, U.S. GENERAL SERVICES ADMINISTRATION
Mr. Dong. Good morning, Chairman Duncan, Ranking Member
Barber, and Members of the subcommittee. My name is Norman
Dong, and I am the commissioner of GSA's Public Buildings
Service. Thank you for inviting me to discuss the on-going
consolidation of DHS Headquarters at St. Elizabeths. I would
like to make three points this morning.
First, St. Elizabeths is a critical element in GSA's effort
to consolidate Government real estate and to reduce overhead
costs. By consolidating DHS facilities across the National
Capital Region we can reduce future real estate costs, enhance
mission effectiveness, and redevelop an underutilized asset
already in the Federal portfolio.
This project allows to us shift more than 50 DHS leases
across the National Capital Region to a Federally-owned campus
at St. Elizabeths. As GAO has noted, long-term leasing is often
far more expensive than Government ownership, especially when
it comes to unique requirements like what we see for DHS. In
the case of St. Es, the 30-year present value cost of leasing
would be nearly $700 million more expensive than construction.
This translates into an annual savings of more than $35
million.
With this project we are also able to house more people in
less space. When the entire project is complete, St. Es will
provide 14,000 seats for DHS employees on any given day. By
adopting flexible workplace strategies like telework and desk
sharing, DHS can accommodate even more employees in these
seats. GSA is working with DHS on an updated housing strategy
to maximize space utilization at St. Elizabeths and to achieve
even greater cost savings for the Department.
Second, as GAO has noted, funding uncertainty has created
serious challenges for the St. Elizabeths project. Piecemeal
funding has extended the project's schedule and added cost.
Congress appropriated resources for the project at a level far
below the President's request in fiscal year 2011 and fiscal
year 2012. Without stable funding, we will see more delays and
more cost increases.
When the project began in 2006 we anticipated completion in
2016 at a total cost to the Government of $3.4 billion. Without
funding, however, GSA and DHS had to revise the project
strategy to reflect smaller, more affordable segments over a
longer period of time. This had the effect of pushing the time
line for completion out to 2026. With an extended schedule the
project cost is now estimated at $4.5 billion. These costs
increase due to inflation for construction costs as well as the
cost of demobilization and remobilization of equipment and
labor. Accelerating the remaining project schedule could reduce
these additional costs.
Third, GSA and DHS have developed a strong record of
success in project delivery at St. Elizabeths. We delivered
Phase I of the DHS Headquarters project on time and on budget.
Ultimately the success of this project will be judged by our
actual results. We delivered Phase I, a new headquarters
building for the Coast Guard, on time and on budget. In August
2013 the Coast Guard moved into a headquarters building that
can accommodate 3,700 personnel. We eliminated five leases and
moved nearly 1 million square feet of leased space to Federal
ownership. The successful implementation of the Coast Guard
Headquarters is an important step towards having a unified,
consolidated, and secure headquarters for the Department.
We are now beginning work on the next phase. Congress
provided $155 million in fiscal year 2014 for adaptive reuse of
the historic Center Building, and I am pleased to announce that
we will be awarding the contract for this work by the end of
September. Our budget request for fiscal year 2015 includes
$250 million to complete infrastructure and renovation
necessary to fully occupy the Center Building complex.
Looking beyond our budget request, GSA is identifying other
potential sources of funding to support this project. For
example, with our Federal Triangle South project we are looking
to exchange our Regional Office Building, as well as the vacant
Cotton Annex, for additional construction services at St. Es.
While we are pleased with our project execution, there are also
opportunities to improve project delivery. We are working with
DHS to enhance the master plan for St. Es, which will further
improve space utilization and create even greater savings.
As we have seen from past experience, when Congress
provides resources for a construction project GSA has a strong
record of delivering these projects on-time and on-budget. Our
work with our Coast Guard Headquarters is a perfect example and
we plan to build on this initial momentum. The funding Congress
has provided in fiscal year 2014, along with our fiscal year
2015 budget request, will allow us to continue forward progress
on this essential project.
Thank you for the opportunity to speak with you today, and
I am happy to answer any questions that you may have.
[The prepared statement of Mr. Dong follows:]
Prepared Statement of Norman Dong
September 19, 2014
introduction
Good morning Chairman Duncan, Ranking Member Barber, and Members of
the subcommittee. My name is Norman Dong, and I am the commissioner of
the U.S. General Services Administration's Public Buildings Service.
Thank you for inviting me to discuss the on-going consolidation of the
Department of Homeland Security's Headquarters components at St.
Elizabeths in Washington, DC.
GSA's mission is to deliver the best value in real estate,
acquisition, and technology services to Government and the American
people. To meet this mission, GSA is working with agencies across the
Federal Government to reduce space requirements, improve space
utilization, reduce real estate costs, and deliver better space that
allows our Federal partners to better achieve their missions.
I'd like to make three points today. First, the development of a
consolidated DHS Headquarters at St. Elizabeths is a critical piece of
GSA's broader effort to consolidate Government real estate and reduce
overhead costs across Government. Second, GSA and DHS have developed a
strong record of success in project delivery at St. Elizabeths. GSA and
DHS delivered Phase I of the DHS Headquarters project on-time and on-
budget. Third, as the Government Accountability Office correctly notes,
funding uncertainty has created serious challenges for St. Elizabeths,
increasing costs and forcing GSA and DHS to extend the project delivery
schedule.
opportunities for savings with a consolidated dhs headquarters
As a part of the administration's Freeze the Footprint initiative,
GSA is helping our partner Federal agencies minimize overhead costs and
make more efficient use of the Government's real property assets. We
are working with agencies to reduce space requirements and shrink real
estate footprints, reducing building's operating costs through energy-
efficient retrofits and ``smart building'' technology, and leveraging
partnerships with the private sector to deliver better, more efficient
space to meet agency mission needs.
The St. Elizabeths project represents an opportunity to help
achieve these important goals. By consolidating DHS Headquarters, we
can reduce future real estate costs, enhance mission effectiveness
through co-location, and redevelop an underutilized asset already in
the Federal portfolio.
Consolidating DHS Headquarters operations in one location will
eliminate more than 50 DHS leases, shifting millions of square feet of
leased space to a Federally-owned campus. As GAO has noted, long-term
leasing is typically far more expensive than Government ownership,
especially when it comes to unique Governmental requirements like those
that are required at St. Elizabeths. In the case of St. Elizabeths, the
30-year present value cost of construction is $698 million less than
leasing. This results in an annual savings of more than $35 million.
Additionally, we are generating additional savings by housing more
people in less space. When the entire project is complete, St.
Elizabeths will provide space for 14,000 seats. Through implementation
of flexible workplace strategies, these 14,000 seats can be leveraged
to accommodate many more employees, and GSA is currently working with
DHS on this updated approach.
At the same time, co-location will facilitate an effective response
in case of a National emergency, optimize internal coordination and
communication, and foster a cohesive culture among the many agencies
that now make up the Department.
on-time, on-budget delivery of phase i of st. elizabeths
Ultimately, the success of the St. Elizabeths project will be
judged by its results. Project delivery at St. Elizabeths thus far has
been a success.
GSA and DHS have successfully delivered Phase I of the project,
construction of the new Douglas A. Munro Coast Guard Headquarters
Building. This state-of-the-art facility will use sustainable
technologies to drop energy use to more than 30 percent below industry
standards and cut water usage by nearly 50 percent. Additionally, this
phase included perimeter security, the renovation of several historic
buildings, infrastructure improvements throughout the campus, and a
2,000-car parking garage. We completed Phase I on-time and on-budget,
and in the process, eliminated five leases and moved nearly 1 million
square feet of space to Federal ownership. As a result, the Coast Guard
completed its move to a building on the St. Elizabeths campus that can
accommodate 3,700 personnel in 2013.
We are now beginning work on the next phase of the DHS
Consolidation. Congress provided $155 million in fiscal year 2014 for
adaptive reuse of the historic Center Building. GSA's fiscal year 2015
budget request includes $250 million to complete needed infrastructure
and renovate buildings adjoining the Center Building. This funding will
allow DHS to fully occupy the Center Building Complex.
In addition to GSA's annual budget requests, we are seeking
alternative mechanisms for project delivery. GSA is leveraging the
value of other properties in our portfolio to expedite delivery of the
St. Elizabeths campus. Specifically, as a part of our Federal Triangle
South project, we are engaging the private sector to exchange GSA's
Regional Office Building and the vacant Cotton Annex for construction
services that may include renovations of historic buildings at the St.
Elizabeths campus.
the impacts of cuts in funding on project costs and schedule
Of course, funding constraints have had a considerable impact on
the St. Elizabeths project, much like the rest of the Federal real
estate portfolio. As GAO has noted many times, uncertainty in funding
and limited access to the Federal Buildings Fund create a serious
challenge for the management of real property.\1\
---------------------------------------------------------------------------
\1\ See Capital Financing: Alternative Approaches to Budgeting for
Federal Real Property (GAO-14-239) and Federal Buildings Fund: Improved
Transparency and Long-term Plan Needed to Clarify Capital Funding
Priorities (GAO-12-646).
---------------------------------------------------------------------------
For St. Elizabeths, piecemeal funding of project phases have
resulted in an extended schedule and eliminated additional
opportunities to reduce costs through sharing resources and
infrastructure among phases. Congress appropriated resources for the
project at a level far below the President's budget request in fiscal
years 2011 and 2012. In the absence of stable funding, the schedule for
project completion will face delays, and costs increase with delays.
You can see the effect of funding constraints on the Center
Building. In fiscal year 2011, GSA's budget request included $381
million to continue the project, including for the renovation of the
Center Building. Congress cut GSA's new construction budget request
that year by 92 percent, and we were only able to allocate $30 million
to St. Elizabeths. Since that time, the cost of completing the Center
Building has increased by $17 million.
When we began the St. Elizabeths project in 2006, the project was
scheduled for completion in 2016 at a total Government cost of $3.4
billion. Due to funding cuts, GSA and DHS had to revise the project
strategy resulting in smaller segments over a longer period that are
more manageable in this environment. This has pushed the project time
line for completion out to 2026, and, largely due to inflation over
that period of time, the total estimated project cost is now $4.5
billion. Accelerating the remaining project schedule could reduce these
additional costs.
GSA appreciates GAO's recommendations that Congress consider
alternative budget structures that allow for greater consistency in
funding and project planning. Until GSA has full and consistent access
to the Federal Buildings Fund, we will continue to see cost increases
and schedule delays for long-term, multi-phase Government construction
projects. St. Elizabeths is no exception.
incorporating gao recommendations into on-going project planning and
execution
While we are very pleased with our execution of the St. Elizabeths
project thus far, GSA recognizes and appreciates that there are always
opportunities to improve project delivery. GAO has recommended that we
conduct a comprehensive needs assessment and alternatives analysis to
identify the costs and benefits of construction and leasing project
delivery methods. We have already begun this assessment, and will
develop an alternatives analysis that further improves efficiency and
savings. We are working with DHS to improve processes and reduce costs
by decreasing the footprint, reexamining certain requirements, and
integrating the efficient use of leased space based on a review of DHS
leases throughout the National Capital Region.
We will update cost and schedule estimates as we continue this
work, and appreciate the chance to potentially incorporate practices
recommended by GAO. Not all of GAO's cited procedures and reviews apply
in the context of real estate construction. Some recommended practices
are better suited to weapons systems, spacecraft, aircraft carriers,
and software systems. However, we agree with GAO that quantifying risk
and uncertainty are important considerations in this funding
environment, and we will incorporate these considerations moving
forward. We are working closely with DHS, and together, we are happy to
update this committee as we finalize this plan.
conclusion
Thank you for the opportunity to speak with you today about our on-
going work to consolidate DHS Headquarters components at St.
Elizabeths. I welcome the opportunity to discuss GSA's commitment to
shrinking the Federal Government's real property footprint and
consolidating out of costly leases. I am happy to answer any questions
you may have.
Mr. Duncan. Thank you, Commissioner Dong.
I will now recognize myself for 5 minutes for questioning.
I think as a Nation we can be penny-wise and pound-foolish.
I think this is a project that exemplifies that in a lot of
ways. I heard the term ``on-time and on-budget'' numerous times
from two witnesses in regard to the Coast Guard facility. Well,
on-time and on-budget is really a misstatement because you
don't have an access road that was originally planned. You had
reduced transportation infrastructure within the facility. You
changed the excavation plan there on the hillside, which is
ultimately going to cost more taxpayer dollars down the road.
Originally it was planned to excavate the complete hillside for
future components. You decided only to do part of that. So,
sure, you can reduce the budget going forward to be on-time and
on-budget. So I just think that is misleading the American
taxpayer.
I think it is very clear that we are not seeing leading
capital decision-making practices happen. I think Congress has
a strong responsibility to the taxpayers to make sure that
their money is spent appropriately at a time when we are almost
$18 trillion in debt, and you look back at when this project
was originally put on the drawing board and originally funded
in the stimulus package we weren't $18 trillion in debt. We
need to prioritize where we spend our taxpayer dollars.
Several years ago, then-Secretary Janet Napolitano said
that she would rather have money to complete building a
National security cutter for the Coast Guard, support the
Secret Service in its activities, and sustain our efforts at
the border than have a new building. Given the threat posed by
ISIS, the illegal alien crisis in our Southern Border,
specifically the Rio Grande Valley, but really all across the
Southern Border, the cyber attacks that we heard over and over
this week in the committee hearing, both from the FBI and from
Secretary Johnson, cyber attacks by the Chinese and others,
other threats, isn't the world more dangerous than when this
statement was made? I would say that it is based on the
emerging threats.
We also heard this week from Secretary Johnson that he has
the ability, he has a board room, he has a board table, and he
can bring the leadership team together to communicate and that
he does regularly. We have a morale issue in the Department of
Homeland Security, turf wars and components that were
originally stand-alone components now that are part of the
broader DHS.
My dad ran a textile mill his whole career. He would walk
the plant floor every morning talking with the folks that were
opening the cotton bales, the card room that were breaking up
those fibers, and the spinning room, and the weaving room, and
the napping operation, and the finishing operation, not talking
to his supervisor, talking to the individuals that were running
the machinery of the organization to find out what was really
happening on the ground.
I think it is important that the supervisors within those
various components actually spend time within their agencies.
If we have this facility--and this is just me being rhetorical,
I guess--but if you moved the leadership team away from the
normal operations, are you not going to see even less of a
positive morale in the components?
So I think Americans would love to see us redirect some of
these resources to more border security, more fencing, more
electronic components. I am very concerned that we have an
aging Coast Guard cutter fleet and we need new ships. I could
expand that to the Department of Defense and the reduction of
surface ships, the need to replenish the fuel in a reactor in
an aircraft carrier.
I say all that in the context that we are $18 trillion in
debt and one day the lender is going to come calling. We
continue to have deficit spending in this country. At what
point in time do we drop back and punt? At what point in time
do we make a real resolve to pass an acquisition reform bill
that puts the right accountability practices in place?
Secretary Johnson has been someone that is in favor of
acquisition reform. He wants to do it in-house. I appreciate
his position, he is the Secretary. But I am also accountable to
the taxpayers of the United States of America, and I think an
acquisition reform bill that gives Congress more oversight and
puts some parameters in place for you guys that are spending
those tax dollars is very important.
So taking what I said earlier from Secretary Napolitano,
GAO reported that DHS officials said it would be illogical to
develop anything beyond a generalized milestone schedule.
Generalized milestone schedule, that is what leads to cost
overruns and delays.
The Secretary this week said in the committee hearing that
they look at the number of OTMs that come across the border.
They don't have a good idea of that total number. They look at
it in a broad sense. I don't care whether you look at it in a
broad sense or a narrow sense, Americans realize that we don't
know who is in our country.
I think if you look at a generalized milestone schedule
then Americans realize you don't know how much money you are
spending and you don't know when this project is going to be
completed. I think that, I go back to an opening statement, if
you were going to build a house, you are going to sit down with
the contractor, you are going to have a good idea of what those
costs are. There are going to be some unexpected costs, we may
run into some rock digging the foundation, you may change and
want different kind of shingles. But you are going to have that
understanding and you are going to know it is going to take X
number of months to build that house. You are going to have a
good understanding.
I don't believe the American taxpayer has a good
understanding about the St. Elizabeths project. As much as we
may want it in the District of Columbia, as much as we may
think we might need it as a Nation, I think we have an
obligation to the American taxpayer to tell them how their
money is going to be spent. I think we also have an obligation
to the American taxpayer to sometimes drop back and reevaluate.
I think that is what we are trying to do: Drop back, reevaluate
priorities, look at where we have spent money wisely and
unwisely.
When you look at the hardest wood in America when you could
have brought a different component for the decking. When you
have rain-wash flush toilets, that is a political agenda
driving the spending of taxpayer dollars. We could have saved
money using normal--normal--plumbing.
Mr. Cummiskey, is that your position, that we should
continue to operate under a generalized milestone schedule?
Mr. Cummiskey. Mr. Chairman, thank you. You make a lot of
salient points and I think it makes sense.
I would answer it this way. Your analogy of constructing a
house I think makes a lot of sense as well. But if I am
building a house, and I build the frame, and then I wait 4
years to complete the facility, there is going to be a change
in the cost and in the time frame associated with that. That is
what happening with St. Elizabeths. The Congress, through
appropriate funds as well as ARRA funding, funded the first
phase. The GSA has built the infrastructure on the campus to
support Phases II and III. So you are going to have changes in
that over time.
To answer your question directly, I think that we have gone
through the industry-accepted practices, and I think I would
defer to GSA on this, in terms of planning a facility, and that
is what you are seeing with the Coast Guard facility. That came
in, in a position of the planning assessment that is consistent
with what the industry and the standards accept.
So I would certainly defer to GSA, but I think that in
terms of Phases II and III we have changed away from that
because we have had to move to usable segments. We are not
looking at Phase II the way it was in the master plan. We are
saying, okay, the footprint is in place now, we are going to
change the requirements in terms of square footage from 210
square feet down to 150, we are making the adjustments over
time that GAO has required us to do, and I think that that
planning envelope makes a lot of sense.
Mr. Duncan. Okay. Let me ask you this. Two-thousand-eight
saw a financial downturn in this country. This project was
kicked off with stimulus funds, one-time dollars, with a
continual funding stream. I keep hearing about the lack of
funding from Congress. But we were operating from 2009 to today
with the understanding that we are still in an economic
downturn, that budgets are crimped all across Government
spending.
Do you ever walk out on the Mall behind the Capitol? Have
you ever spent time walking out on the Mall? Washington is a
great city, right? I do it. Have you found that tree, that
money tree, because I hadn't found it yet. It is not out there.
The money that we are talking about is coming from the American
taxpayers and they expect us to be a little more frugal and
wise with the dollars we are spending.
So operating in that environment, understanding that from
2008 to today we are still in an economic downturn, the great
recession that hadn't really improved dramatically, we have got
to make smart decisions. So Congress didn't fund this. Congress
doesn't have the money to fund it. The tree isn't out in the
backyard.
We are trying to make smart decisions with the money
allocated to us. I came to Congress to reduce Government
spending to try to reduce the deficit and live within our means
because that is what moms and dads and businesses have to do
all across this great land. Government shouldn't continue to
operate in deficit spending and run up debt. That is not fair
to the American taxpayers. It is not fair to my little boys,
19, 16, and 13, that are going to be future taxpayers of this
country. Just because we are in the Government doesn't mean we
continue to spend money like it grows on that tree in the
backyard.
I am going to have some additional questions. We are going
to be here for a little while. We don't have a whole lot of
Member participation, so I look forward to a second round of
questioning. But I am over time, so I am going to yield to the
Ranking Member and then come back. Thanks.
Mr. Barber. Well, thank you, Mr. Chairman.
One of the things that the Chairman and I tried to do and
hopefully will happen with the passage of the Acquisition
Accountability and Efficiency Act for DHS was to make sure that
the money that we give on behalf of the people we represent,
the taxpayers of this country, is spent wisely, with full
accountability. It also means that in the end the Department
will spend its money prudently and on the right priorities. Let
me tell you what one of my biggest priorities is and has yet to
be resolved.
Representing, as I do, one of nine border districts, I am
very concerned that we have yet to deal with the border
security issue that plagues the people I represent every single
day. If you know, as you do, Mr. Cummiskey, you know Arizona
well, east of Douglas all the way to the State line with New
Mexico is wide-open territory. The drug cartels basically own
that territory. In the Tucson Sector, which includes my
district and the adjoining district, we account for 47
percent--47 percent--of the drugs seized along the Southwest
Border, and that has been going on for many years. We have to
stop this flow of drugs carried by people who are prone to
violence, heavily armed.
The people I represent want to know from me when I go home,
what is the Department doing to deploy its resources to address
that problem? While I know these are different pockets of
money, it is a really tough question to answer when they say to
me, how is it possible that the consolidation of a headquarters
for DHS has cost so much more than was originally intended or
projected? How is it possible that we are going to be 11 or 12
years late? Tough question. I don't have a good answer for them
because from where they see it, it is all one department's
money. They want answers and they deserve them.
I also am concerned about how it is we treat in every way
possible, by pay and in terms of morale, the men and women who
are on the border, at the border trying to secure the homeland,
the Border Patrol Agents, those who are manning the ports of
entry. The ports of entry need more staff. We are opening a new
port, expanded port in Nogales, Mariposa, don't have enough
staff for that.
Last year we avoided--very narrowly avoided--furloughing
hundreds of Border Patrol Agents. Currently Border Patrol
Agents are wondering, what is the certainty of their pay going
forward? These issues create problems for our security and
create problems for the men and women that we have asked to
protect the homeland. Yes, we understand because we delve into
it here that these are separate sections of an appropriation
process.
But I have to say, it is really hard for people back home
to understand how it is possible that the Department spends
thousands of dollars it shouldn't in Ajo for homes, wastes $24
million on an IT program that doesn't work, and now is over-
budget in consolidation.
So I hope that through the study that has been given and
the recommendations that have been made we can correct, take
this ship, the course of this ship, and bring it back under
control.
I want to ask Mr. Maurer a question or two about the GAO
study. Given the size and complexity of the Department's
headquarters consolidation, how long will it take, do you
believe, for DHS and GSA to implement the best practices,
including cost and schedule estimates, and an evaluation of
alternatives contained in the GAO's report? The second part of
that question is: Once the Department has implemented these
practices how long would it take, do you believe, for the
Department--or should it take for the Department--to complete
the St. Elizabeths consolidation project?
Mr. Maurer. Thank you for the question. I think that DHS
and GSA are well-positioned to take action on our
recommendations and implement them in relatively short order.
They have established plans, although they are outdated. They
have an established track record in doing work at St.
Elizabeths. They have processes in place that should allow them
to implement our recommendations. We are not asking them to do
an awful lot more than they have already done, but they do have
to up their game to better manage the overall project and the
implementation of the St. Elizabeths effort.
In terms of how long it would take to complete the project
after implementing our recommendations, that is really a
function of how much money Congress provides and when those
funds are provided. That, in turn, is going to depend, I think
in large part, on how responsive DHS and GSA are in responding
to our recommendations, implementing leading practices, and
updating our plans.
Mr. Barber. Let me continue, Mr. Maurer, with you on a
different aspect of this issue. The GAO report discusses the
Federal Government's evolution regarding workplace standards
and it states that the Department's, DHS's, demand for office
space would or could decrease by almost 800,000 square feet, or
from 4.5 million to 3.7 million if the new standards were
adopted. Does the GAO report account for DHS' secure space
requirements?
Mr. Maurer. Yeah, our assessment was looking at the
original plan, which called for 4.5 million square feet within
the St. Elizabeths campus. That includes the amount of spaces
necessary for secure work stations and work processes. So our
analysis would also include that as well.
Mr. Barber. Well, let me ask Mr. Cummiskey next, but before
I do, I just want to say it is great to have a fellow Arizonian
in the House. Your reputation in our State was exemplary as a
State legislator, as the chief information officer for the
Governor, and your work was recognized by the National
Governors Association for its creatively and innovation. I am
really happy to have you here today and in this position at
DHS. Your abilities and skills are well-proven and I think you
will apply that talent to this very important undertaking.
My question, Mr. Cummiskey, or Secretary is, GAO has stated
that Congress should consider withholding funds for the St.
Elizabeths project until the Department and GSA develop a
revised headquarters consolidation plan that conforms with GAO
leading practices.
Could you just expand? You said you have agreed with the
recommendation. Could you expand on what the Department will do
to implement that recommendation?
Mr. Cummiskey. Sure. Certainly. Mr. Chairman, Ranking
Member Barber, thank you for the kind words. It is great to be
here.
One of the things we have tried to do, we work closely with
GAO on a regular basis, and so they have telegraphed and we
have entered into both interviews with all of the personnel
associated with the project, as well as with GAO, as they went
through the process of making the recommendations. So we saw
this coming for some months, and so we have worked closely with
GAO to make sure that our planning processes are aligned with
what we thought the recommendations might be.
So what you will see in concert with the fiscal year 2016
submission after the first of the year is an updated or
enhanced project plan which takes into account what Mr. Maurer
has been describing, what GSA has been doing internally to up
its game, as has been indicated, to take account of Freeze the
Footprint and other changes in the environment that have led us
to look at this long-term project in a way that is more
conducive to what the Chairman has indicated, smart, efficient,
and delivering for the taxpayer. So we anticipate that it won't
be much of a lift to comply with what Mr. Maurer is indicating.
Mr. Barber. Thank you for that. Let me ask you a second
question. If it should turn out that the Department's plan for
consolidation at St. Elizabeths is abandoned, what is the
Department's alternative plan, and how much would that cost
compared with consolidation at St. Elizabeths?
Mr. Cummiskey. Thank you, Congressman. Essentially what we
found in the assessment from GSA, as well as our chief
financial officer, is that in the resourcing decisions that the
Chairman was alluding to, we would love to be in a position to
redirect additional funds to National security cutters, ICE
detention beds, all sorts of other prioritizations for both
Secretary Johnson and the administration. The difficulty we
have with the top line is that that is not moving.
So what happens is that in the analysis that we have done
we are going to end up spending about the same amount of money
over the same horizon for lease consolidation, additional
tenant improvements as we would spend as a Department on St.
Elizabeths in the relocation and consolidation.
So I would like to say today that we had money that we
could redirect to other priorities. Certainly, Secretaries
Napolitano and Johnson both were under that pressure to
deliver. But the reality is, even with the consolidation plans
that we would pivot to, it is unlikely that we would spend any
less than what we were spending with the proposed plan.
Mr. Barber. Thank you.
Mr. Chairman, if I might, just one last question--or two
actually--for Mr. Dong, Commissioner Dong.
When will the updated plan for the Department's
headquarters consolidation be released by GSA and DHS? Second,
as the DHS consolidation project is delayed, if it was delayed,
or has it been delayed already, what is the estimated cost to
GSA of having to renegotiate current leases?
Mr. Dong. As we work with DHS on the enhanced master plan
for St. Elizabeths, our expectation is that we will be
submitting that to the Congress at the same time that we submit
the fiscal year 2016 budget request.
In terms of the cost of short-term extensions that would
result from the project being delayed, we are currently working
with DHS right now to quantify that impact, and we will be
happy to share the results with this committee.
Mr. Barber. I actually do have one other question for you,
Mr. Dong, and that is, what would GSA's obligations be at St.
Elizabeths if the project were halted? Would, for example, the
Coast Guard continue to operate there? Could other Federal
entities move into that space? What would happen, in other
words, if we said, no more money, let's stay with the current
plan of leasing buildings across the capital?
Mr. Dong. We estimate that the on-going costs associated
with DHS, if there were no additional consolidation at St.
Elizabeths, would be about $132 million each year.
Mr. Barber. Thank you, Mr. Chairman.
Mr. Duncan. I thank the gentleman.
The Chairman will now recognize a guest to the committee,
Ms. Norton, for 5 minutes.
Ms. Norton. Thank you very much, and I appreciate your
courtesy, Mr. Chairman.
Mr. Maurer, I note as you began your report, and I am
quoting here, you say, ``With a current projected completion
date of 2026, the St. Elizabeths project is intended to provide
DHS a secure facility to allow for more efficient incident
management response and command-and-control operations and also
provide long-term savings by reducing reliance on leased
space.''
As a predicate to this question for you, Mr. Maurer, let me
ask Mr. Cummiskey or Mr. Dong, during the construction of the
Coast Guard, the U.S. Coast Guard, were there any change
requirements that resulted in greater costs over the annual
inflation adjustments while you were putting that building up,
or did it go up as expected without any such additional funds
requested?
Mr. Dong. Once the project was funded we were able to
deliver on time and on budget. There were no change requests or
changes that drove the cost higher.
Ms. Norton. Yeah, well, that is an indication of a certain
amount of efficiency on the part of GAO and DHS when it had the
money. The money was provided, or a great deal of the money was
provided for the Department, for the U.S. Coast Guard.
I want to ask Mr. Maurer, whether using the U.S. Coast
Guard as a marker, that is the building that is up, that was
delivered on time from the outset of construction once the
money was available to the agencies. Isn't that some indication
that had the agencies had the funds for the rest of the
construction they would have been at least as efficient as they
were with respect to the Coast Guard building that went up on-
time and on-budget? If you can use any marker, isn't that the
marker you have to use?
Mr. Maurer. That is certainly an indication of what they
have been able to do in the past. Certainly they also had to
descope some of the work that was originally planned under
Phase I to match the amount of funds that they received from
the Congress.
But going forward, we remain concerned about their current
position or their current lack of compliance with leading
practices for cost estimation and schedule estimation. That
creates additional risk that future build-out at St. Elizabeths
will be at increased risk of going longer than planned and
costing more than planned. So that is why we really think it is
important for them to implement our recommendations on leading
practices, for GSA and DHS to follow their own policies and
guidelines, and to update their plans accordingly.
Ms. Norton. Thank you.
Now, how many times, Mr. Cummiskey or Mr. Dong or both of
you, has the agency received its full budget request at the
beginning of the fiscal year the way you had it for the U.S.
Coast Guard? How many times have you received your full budget
request?
Mr. Dong. There is a significant gap between what GSA had
requested in the President's budget request versus what was
actually----
Ms. Norton. I didn't ask you that. I didn't ask you about
the gap. I asked you how many times have either of you received
your budget request at the beginning of the fiscal year?
Mr. Dong. I don't think ever.
Ms. Norton. How has that affected capital planning for that
project?
Mr. Dong. Without having funding certainty, it is very
difficult to scope out the entire project and to get into the
details that would allow you to have a specific schedule. Once
we do get funding we are able to do a very detailed project
schedule, just as GAO has pointed out.
Ms. Norton. So you have had to engage in short-term leases.
Would you explain what the disadvantage of short-term leases
are when you have to have short-term leases? How many short-
term leases do you have? How many leases do you expect to come
up and have to be renewed across the region?
Mr. Dong. We have far too many short-term extensions on the
leases for DHS components because of the delay in this project,
because funding has not materialized. What we see is----
Ms. Norton. How many leases are going to become due, let us
say, next year that you will have to then either renew or do
short-term leases?
Mr. Dong. We can provide you with the specifics there.
Ms. Norton. I think that is very important to do. Since, of
course, you have this delay, when a lease becomes due, do you
have to do a long-term lease? Do you do a short-term lease? How
much more expensive is a short-term lease than a long-term
lease?
Mr. Dong. If we know that the agency is not going to be in
that space for an extended period of time because of a plan to
move elsewhere, we will do a short-term extension. But what we
have seen and what we discussed with the T&I Committee several
months ago, when we focused on leasing, is that any time you
are in holdover or extension, you are paying, on average, about
20 percent more than you should.
Ms. Norton. Could you clarify this? Is it not the case that
the basic infrastructure for the entire consolidation is in
place and in the ground? What would happen to it if we simply
abandoned the project?
Mr. Dong. We have a lot of the infrastructure in place. As
I mentioned before, the carrying cost of that is about $132
million each year. The fiscal year 2015 budget request actually
goes further in terms of completing the infrastructure work in
terms of the Malcolm X Boulevard and the 295 access road. So
those are important investments that we need to make to ensure
the full viability of the St. Elizabeths program.
Ms. Norton. I realize I am over time. If I could note for
the record, Mr. Chairman, that the original cost was to be $4.5
billion, but the leases, so far as we can tell, for the space
now will cost $5.2 billion over 30 years. So finishing the
project would virtually pay for itself, rather than allowing
these expensive leases to go forward.
Thank you very much, Mr. Chairman.
Mr. Duncan. Thank the gentlelady.
We have got time for a few more questions for another
round. I was on a rant earlier because, I am not mad about this
project, I am not upset, I am sad when I see taxpayer dollars
spent in a way that I may not agree with.
So, anyway, let me just ask a couple of questions. The GAO
reports shows the DHS failed to conduct proper oversight over
St. Elizabeths project. That is the fact. Specifically, DHS
never consistently identified St. Es as a major acquisition
program, even though DHS alone plans to spend almost $2 billion
in taxpayer funds on the headquarters. So $2 billion dollars,
but it is not a major acquisition program.
Mr. Cummiskey, can you explain your rationale to Members of
this committee why DHS failed to take the simple step of
identifying St. Es as a major acquisition program?
Mr. Cummiskey. Certainly, Mr. Chairman. Thank you.
The reason that that was the case, as I indicated in the
opening statement, that the bulk of the funding goes to GSA.
Using 2014 and 2015 as examples, our request in fiscal year
2014 is $35 million. So comparatively it is a smaller amount
than what we would normally see in acquisition oversight. That
is not to say that we haven't been overseeing our portion of
it. But in the same fiscal year, in 2014, the $155 million that
went to GSA for the construction of the next piece of this
isn't in our purview. So we are overseeing the portion that we
have and making sure that there is accountability.
As I indicated, I have issued an acquisition decision
memorandum this week that, based on the GAO recommendation,
going forward we will subject it to the same rigor as the
Acquisition Review Board process does for any major
acquisition, even though the dollar figures tend to be smaller
comparatively to what we usually would consider.
Mr. Duncan. Okay. Thank you.
We toured the facility last year, Members of the committee
did. I looked at it from the eyes of a developer, as I have
renovated and developed property in my private-sector life. So,
Mr. Dong, I understand some of the challenges of taking an
existing building and developing it for a 21st Century business
practice or use. Could you explain the enormity of the
challenge with this historic preservation and why did DHS and
GSA proceed knowing the huge challenge that lay ahead of them
instead of picking a more manageable site?
Mr. Dong. When we were considering the question of site
selection we considered a number of factors that focused on the
ability to support DHS, its mission, and its operational
requirements. We looked at having a site that was large enough
to support the magnitude of employees that would be
consolidated from across the National Capital Region into that
site. We looked at a site that would be able to accommodate
level 5 security. We also wanted a site that had proximity to
the White House and to the Congress. We also wanted a site that
had access to transportation and major roadways.
Mr. Duncan. Proximity to the White House, is that what I
heard you say?
Mr. Dong. Being able to be close to Washington, to the
center Washington.
Mr. Duncan. Wow. If you needed to get to the White House
rapidly, even driving with security and lights flashing and all
that from that site to the White House it is going to take you
a while. Probably going to get in a helicopter a lot quicker to
get to the White House.
So having that dynamic in play, site selection, looking at
a vacant tract of land in Virginia and starting from scratch
probably would have made just as much sense, because you are
still going to have to get in a helicopter and fly to the White
House for a rapid face-to-face.
Wow. Okay. So I am thinking about the next question. I am
going to just stop right there.
Mr. Barber, do you have any further questions?
Mr. Barber. No.
Mr. Duncan. I would like to ask unanimous consent to submit
to the record the Majority staff committee report from January
2014 on the rising cost and delays in construction of new DHS
Headquarters at St. Elizabeths.
No objection, so ordered.*
---------------------------------------------------------------------------
* The information has been retained in committee files and is
available at http://homeland.house.gov/press-release/duncan-releases-
majority-staff-report-efficiency-construction-dhs-s-new-headquarters.
---------------------------------------------------------------------------
I want to thank the panelists for being here. I want to
thank the committee. This is an issue that is going to be here.
We have put some slides up, I think, of what the site looked
like. I think we have delved into the GAO report. I am going to
ask the committee to read the report. I want to commend the GAO
for its efforts in putting that together. I thank the staff for
delving through this and really staying on top of this.
I want to urge the Department, Mr. Cummiskey, to continue
with acquisition reform management. Hopefully, we can get the
Senate to pass a bill that will give us some more tools, tools
for you and tools for us. We want to work in concert with you
to make sure we are effective on spending taxpayer dollars,
make sure that we have the appropriate oversight, and to make
sure that we are accountable.
Mr. Schneider had a letter, former Bush administrator or
appointee. But, you know what, he is not accountable to the
taxpayers. It is easy to sit on the sideline and say, you can
do this or you could do that better or this is why this
necessary. But when you were accountable to the taxpayer and
the voters, then it is a little different on this side of the
fence. I think we are doing the appropriate oversight and I
think that is what this committee was designed to do. I want to
thank the committee for their efforts.
I really do hate that we ended our work in the House
yesterday and that many Members left, because I think we had a
lot of Members that were interested in this hearing, but they
also have some things to do back home. Mr. Hudson from North
Carolina would have been here this morning, but he is at the
doctor not feeling well. So we wish him a speedy recovery.
Thank you, gentlemen. Committee Members may have some
additional questions for you, and those will be submitted. We
ask that you will provide the answers to us and respond to
those in writing.
So without objection, the subcommittee will stand
adjourned.
[Whereupon, at 10:43 a.m., the subcommittee was adjourned.]
A P P E N D I X
----------
Questions From Chairman Jeff Duncan for David C. Maurer
Question 1a. The GAO report notes that the St. Elizabeths cost
estimate was overly optimistic and the schedule is unreliable.
Do you think it's appropriate for Congress to appropriate funds for
St. Elizabeths without credible and reliable information on how many
taxpayer dollars will be ultimately spent on the project?
Answer. High-quality, reliable cost and schedule estimates are
critical to the success of a major program such as the consolidation
project at St. Elizabeths. Such estimates provide the basis for
informed investment decision making, realistic budget formulation and
program resourcing, meaningful progress measurement, proactive course
correction when warranted, accountability for results, and for the
expenditure of taxpayer dollars. We recommended in September 2014 that
Congress consider making future funding for the St. Elizabeths project
contingent upon the Department of Homeland Security (DHS) and General
Services Administration (GSA) developing a revised headquarters
consolidation plan that includes the development and submission of
reliable cost and schedule estimates, among other things.\1\ We found
that DHS and GSA cost and schedule estimates for the headquarters
consolidation project at St. Elizabeths do not or only minimally or
partially conform with leading estimating practices, and are therefore
unreliable.\2\ For example, we found that the 2013 cost estimate--the
most recent available--was not regularly updated to reflect significant
changes to the program including actual costs and did not include an
independent estimate. In addition, we found that the 2008 and 2013
schedule estimates did not include all activities for both the
Government and its contractors necessary to accomplish the project's
objectives.\3\
---------------------------------------------------------------------------
\1\ GAO, Federal Real Property: DHS and GSA Need to Strengthen the
Management of DHS Headquarters Consolidation, GAO-14-648 (Washington,
DC: Sept. 19, 2014).
\2\ See leading practices at: GAO, GAO Cost Estimating and
Assessment Guide: Best Practices for Developing and Managing Capital
Program Costs, GAO-09-3SP (Washington, DC: Mar. 2, 2009) and GAO
Schedule Assessment Guide: Best Practices for Project Schedules, GAO-
12-120G (Washington, DC: May 2012). The methodology outlined in these
guides is a compilation of best practices that Federal estimating
organizations and industry use to develop and maintain reliable cost
and schedule estimates throughout the life of a Government acquisition
program. The leading practices were developed in conjunction with
Government and industry experts in the estimating community. By
default, these guides also serve as guiding principles for our auditors
to evaluate the economy, efficiency, and effectiveness of Government
programs.
\3\ GAO-14-648.
---------------------------------------------------------------------------
Question 1b. Did DHS and GSA simply lack the expertise to
accurately assess the costs and schedule or was the plan to downplay
the cost and schedule risks of St. Elizabeths to ensure the project
moved forward?
Answer. We believe that DHS and GSA officials have the capability
to implement our September 2014 recommendation to develop more reliable
cost and schedule estimates for the remaining portions of the St.
Elizabeths project that conform to GSA guidance and leading
practices.\4\ DHS and GSA concurred with this recommendation, which
also stated that the estimates should be revised before moving forward
with additional funding requests for the DHS Headquarters consolidation
project. Until DHS and GSA develop reliable cost and schedule
estimates, the project is at greater risk of potential cost overruns,
missed deadlines, and performance shortfalls.
---------------------------------------------------------------------------
\4\ GAO-14-648.
---------------------------------------------------------------------------
Question 2a. DHS clearly disagreed with GAO's criteria for leading
practices in capital planning and cost and schedule estimating used to
evaluate the management of St. Elizabeths.
Please explain why these leading practices are applicable to DHS
and GSA.
Answer. The $4.5 billion construction project at St. Elizabeths, in
conjunction with the larger effort to consolidate DHS Headquarters
personnel in the Washington, DC area, is a major capital project that
requires sound capital planning and reliable cost and schedule
estimating by DHS and GSA. Congress, the Office of Management and
Budget (OMB), and GAO have all identified the need for effective
capital decision making among Federal agencies. GAO developed its
Executive Guide: Leading Practices in Capital Decision-Making to
provide detailed guidance to Federal agencies on leading practices for
the four phases of capital programming--planning, budgeting, acquiring,
and managing capital assets--assets such as the development of the St.
Elizabeths campus. These practices are, in part, intended to provide a
disciplined approach or process to help Federal agencies effectively
plan and procure assets to achieve the maximum return on investment.\5\
---------------------------------------------------------------------------
\5\ GAO, Executive Guide: Leading Practices in Capital Decision-
Making, GAO/AIMD-99-32 (Washington, DC: December 1998). To produce this
guide, we conducted extensive research to identify leading practices in
capital decision making used by State and local governments and
private-sector organizations. Specifically, based on interviews and
documentation obtained from site visits to leading organizations, we
identified innovative practices used by individual organizations as
well as approaches and elements that were common across organizations.
The leading organizations in our study reviewed a draft of this guide
and verified that the case study examples are an accurate
representation of their practices.
---------------------------------------------------------------------------
In addition, we have applied our leading cost and schedule
estimation practices in past work involving Federal construction
projects similar to the St. Elizabeths project at other Federal
agencies.\6\ The leading practices were developed in conjunction with
numerous stakeholders from Government and the private sector, including
DHS and GSA. Furthermore, GSA acknowledged the value of our leading
cost estimation practices in 2007 and issued an order to apply the
principles to all cost estimates prepared in every GSA project,
process, or organization.\7\ DHS has also applied the leading practices
as guidelines for assessing its own programs.\8\ We concluded that
developing cost and schedule estimates consistent with leading
practices could promote greater transparency and provide decision
makers needed information about the St. Elizabeths project and the
larger DHS Headquarters consolidation effort.\9\
---------------------------------------------------------------------------
\6\ See for example GAO, Architect of the Capitol: Incorporating
All Leading Practices Could Improve Accuracy and Credibility of
Projects' Cost Estimates, GAO-14-333 (Washington, DC: Mar. 25, 2014);
VA Construction: VA Is Working to Improve Initial Project Cost
Estimates, but Should Analyze Cost and Schedule Risks, GAO-10-189
(Washington, DC: Dec. 14, 2009); and Modernizing the Nuclear Security
Enterprise: New Plutonium Research Facility at Los Alamos May Not Meet
All Mission Needs, GAO-12-337 (Washington, DC: Mar. 26, 2012).
\7\ See GSA Order 4210.1: CFO P Cost Estimation Policy Handbook,
June 27, 2007. The GSA Chief Financial Officer initiated this cost
estimation policy in response to a GAO recommendation contained in GAO,
Telecommunications: GSA Has Accumulated Adequate Funding for Transition
to New Contracts, but Needs Cost Estimation Policy, GAO-07-268
(Washington, DC: Feb. 23, 2007). Specifically, GSA concurred with a
recommendation to establish a policy for cost estimation efforts that
reflects leading practices by requiring that estimates be:
Comprehensive, well-documented, accurate, and validated.
\8\ See for example GAO, Checked Baggage Screening: TSA Has
Deployed Optimal Systems at the Majority of TSA-Regulated Airports, but
Could Strengthen Cost Estimates, GAO-12-266 (Washington, DC: April 27,
2012).
\9\ GAO-14-648.
---------------------------------------------------------------------------
Question 2b. Why does DHS and GSA think that Government-wide
leading practices should not apply to St. Elizabeths?
Answer. DHS and GSA agreed with our September 2014 recommendations
on the importance of conforming with Government-wide leading practices
throughout future phases of the St. Elizabeths project.\10\ However, in
its formal comments on the report DHS expressed concern that the report
was overly focused on ``leading practices'' as opposed to being more
outcome- and results-oriented. We believe that applying the Government-
wide leading practices on capital decision making and cost/schedule
estimation cited in our report would better position DHS and GSA to
manage the St. Elizabeths project and help ensure better outcomes and
results. DHS also stated that GSA, in concert with DHS, has already
conducted sufficient analysis to support the leading practices in our
report. We disagree, and as we noted in the report, cost, and schedule
estimates for the project were deficient in several areas, including
comprehensiveness, accuracy, and credibility.
---------------------------------------------------------------------------
\10\ GAO-14-648.
---------------------------------------------------------------------------
In its formal comments on the draft report, GSA stated that several
of the leading practices we identified are better-suited to non-real
estate investments such as weapons systems, spacecraft, aircraft
carriers, and software systems. We disagree with this as well. As
stated in our report and noted above, we have applied our leading cost
and schedule estimation practices in past work involving Federal
construction projects, and the leading practices were developed in
conjunction with numerous stakeholders from Government and the private
sector including DHS and GSA.\11\ In addition, OMB's Capital
Programming Guide, a supplement to OMB Circular A-11, states that
Federal agencies must develop sound cost estimates based on the GAO
Cost-Estimating Guide.\12\
---------------------------------------------------------------------------
\11\ GAO-14-648.
\12\ OMB, Capital Programming Guide, Supplement to OMB Circular A-
11, (Washington, DC: July 2014) and GAO-09-3SP.
---------------------------------------------------------------------------
Question From Chairman Jeff Duncan for Chris Cummiskey
Question. The GAO report says that ``DHS and GSA have not conducted
a comprehensive assessment of current needs, identified capability
gaps, or evaluated and prioritized alternatives.''
With the time frame for completion of 2026 and price tag of $4.5
billion at a minimum, it seems based on GAO's work that St. Elizabeths,
as originally envisioned, is unachievable. What is DHS's back-up plan?
What are DHS and GSA considering to get this project back on track and
save taxpayer dollars?
Answer. With the updated Consolidation Plan currently under review
by the administration, DHS and GSA are identifying opportunities to
reduce both scope and projected cost in recognition of the changing
workplace design standards, the constrained Federal budget environment,
and the administration's commitment to reduce the Federal real property
portfolio through the ``Freeze the Footprint'' initiative.
All of the work funded by the Congress and completed to date has
been delivered on-time and on-budget. There have been no cost over-runs
for funded construction. The General Services Administration (GSA) was
required to de-scope certain portions of funded construction contracts
to create sufficient capital to complete critical infrastructure that
was not funded in 2011 and 2012 to support Phase I occupancy. These
actions were fully coordinated and the operational impacts were
mitigated through a cooperative effort among GSA and the DHS/United
States Coast Guard (USCG) team.
From the Master Plan development up though the completion of Phase
I, the Department prohibited requirements changes to allow GSA to
effectively manage cost, schedule, and performance.
In their recent testimony before the Committee on Homeland
Security, the Government Accountability Office (GAO) acknowledged that
while the program did not adhere to their ``Leading Practices,''
published in 1998, the Phase I performance was ``effective.''
Another step taken to further maximize consolidation is the GSA and
DHS collaboration to update the Headquarters Consolidation Plan to
address the on-going changes in workplace design and flexible workplace
strategies. The DHS Office of the Chief Readiness Support Officer,
which manages DHS real property requirements, adopted these strategies
and executed a pilot to reduce their office space by 50%, saving over
$1 million annually in rent. The lessons learned from this pilot are
being implemented as we consolidate space across the country. We
anticipate that our final Headquarters Consolidation Plan will
significantly reduce space requirements and accommodate more employees
than the original plan through the use of flexible workplace
strategies. The plan is currently under administration review and will
be shared with Congress no later than the submission of the President's
fiscal year 2016 budget.
Questions From Ranking Member Bennie G. Thompson for Chris Cummiskey
Question 1. How many locations does the Department occupy in the
National Capital Region, and how much of this office space is
Federally-owned as opposed to being commercially leased?
Answer. The Department occupies 50 HQ locations in the National
Capital Region, including 6 Federally-owned and 44 leased locations as
of November 1, 2014.
Question 2. What will GSA and DHS do with the Federally-owned space
at the current facility on Nebraska Avenue if the Department vacates
it?
Answer. GSA and DHS are planning to continue utilizing this
property as part of the Headquarters Consolidation effort. Significant
investments have been funded by Congress to improve the infrastructure
of the NAC. In addition, several buildings have been renovated,
including special space construction for the Office of Intelligence and
Analysis (I&A).
Accordingly, our plan seeks to continue to leverage the benefits of
occupying Federal space for long-term mission specific needs at lower
total ownership costs over leasing.
Questions From Chairman Jeff Duncan for Norman Dong
Question 1. The GAO report says that ``DHS and GSA have not
conducted a comprehensive assessment of current needs, identified
capability gaps, or evaluated and prioritized alternatives.''
With the time frame for completion of 2026 and price tag of $4.5
billion at a minimum, it seems based on GAO's work that St. Elizabeths,
as originally envisioned, is unachievable. What is DHS's back-up plan?
What are DHS and GSA considering to get this project back on track and
save taxpayer dollars?
Answer. Response was not received at the time of publication.
Question 2. The Food and Drug Administration (FDA) and the General
Services Administration (GSA) are working together to consolidate the
FDA at the Government-owned White Oak site in Montgomery County,
Maryland. Are there lessons learned from GSA's White Oak experience
that can be applied to the St. Elizabeths campus?
Answer. Response was not received at the time of publication.
Question 3. To what extent has GSA thoughtfully considered
exploring public-private partnerships to help complete/fund the St.
Elizabeths campus?
Answer. Response was not received at the time of publication.
Question 4a. GSA has authorities under Section 585 for lease-to-own
agreements and under Section 412 for grand lease/lease back agreements.
The authorities are hardly ever used especially in recent years.
To what extent has GSA considered using Section 585 and 412
authorities at St. Elizabeths? Are there disincentives for using these
authorities?
Answer. Response was not received at the time of publication.
Question 4b. Do you support changing the budget scoring rules to
allow for long-term investments in Federal real estate?
Answer. Response was not received at the time of publication.
Question From Ranking Member Bennie G. Thompson for Norman Dong
Question. GSA uses the Automated Prospectus System, or TAPS
analysis to make decisions regarding leasing and options for new
construction. However, both DHS and GSA have acknowledged that TAPS is
not best-suited for the headquarters consolidation.
What other types of analysis have been conducted to make a business
case for the new consolidation plan that DHS and GSA are developing,
and what did the analysis indicate?
Answer. Response was not received at the time of publication.
[all]