[Senate Hearing 115-115]
[From the U.S. Government Publishing Office]
S. Hrg. 115-115
FBI HEADQUARTERS CONSOLIDATION
PROJECT-WHAT HAPPENED AND WHAT'S NEXT
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HEARING
before the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
AUGUST 2, 2017
__________
Printed for the use of the Committee on Environment and Public Works
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_________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
JOHN BARRASSO, Wyoming, Chairman
JAMES M. INHOFE, Oklahoma THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
JOHN BOOZMAN, Arkansas BERNARD SANDERS, Vermont
ROGER WICKER, Mississippi SHELDON WHITEHOUSE, Rhode Island
DEB FISCHER, Nebraska JEFF MERKLEY, Oregon
JERRY MORAN, Kansas KIRSTEN GILLIBRAND, New York
MIKE ROUNDS, South Dakota CORY A. BOOKER, New Jersey
JONI ERNST, Iowa EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska TAMMY DUCKWORTH, Illinois
RICHARD SHELBY, Alabama KAMALA HARRIS, California
Richard M. Russell, Majority Staff Director
Gabrielle Batkin, Minority Staff Director
C O N T E N T S
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Page
AUGUST 2, 2017
OPENING STATEMENTS
Barrasso, Hon. John, U.S. Senator from the State of Wyoming...... 1
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 2
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland 4
WITNESSES
Gelber, Michael, Acting Commissioner, Public Buildings Service,
U.S. General Services Administration........................... 6
Prepared statement........................................... 8
Responses to additional questions from:
Senator Barrasso......................................... 13
Senator Carper........................................... 13
Senator Cardin........................................... 17
Senator Harris........................................... 20
Senator Shelby........................................... 22
Haley, Richard L. II, Assistant Director/Chief Financial Officer,
Finance Division, U.S. Federal Bureau of Investigation......... 25
Prepared statement........................................... 27
Responses to additional questions from Senator Cardin........ 32
Wise, David, Director, Physical Infrastructure Team, U.S.
Government Accountability Office............................... 34
Prepared statement........................................... 36
Responses to additional questions from:
Senator Barrasso......................................... 51
Senator Cardin........................................... 52
FBI HEADQUARTERS CONSOLIDATION PROJECT--WHAT HAPPENED AND WHAT'S NEXT
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WEDNESDAY, AUGUST 2, 2017
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The Committee met, pursuant to notice, at 10:08 a.m. in
room 406, Dirksen Senate Office Building, Hon. John Barrasso
(Chairman of the Committee) presiding.
Present: Senators Barrasso, Carper, Capito, Boozman,
Wicker, Rounds, Ernst, Cardin, Gillibrand, Booker, and Harris.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM THE STATE OF WYOMING
Senator Barrasso. Good morning. I call this hearing to
order. I want to thank everyone for coming to be with us today.
We have convened this hearing to listen to testimony from
Government witnesses from the General Services Administration,
the Federal Bureau of Investigation, and the General
Accountability Office about the cancellation of the FBI
Headquarters consolidation project and what comes next for
housing the FBI.
The canceled project would have replaced the current FBI
Headquarters, the J. Edgar Hoover Building, located at 935
Pennsylvania Avenue, with a new headquarters in either Maryland
or Virginia.
The project involved an exchange of the J. Edgar Hoover
Building to a private developer. The developer would then in
turn construct a campus-like facility with proper safeguards
for security, suitable for the FBI's new focus as more of an
intelligence agency as opposed to simply a law enforcement one.
The new facility would also consolidate the myriad of FBI
satellite offices, which would make the Bureau more efficient
and save taxpayer dollars.
I have no doubt that there is a need to replace the FBI's
existing headquarters. The men and women of the FBI who keep us
safe deserve an office building that meets their needs. The
security and efficiency arguments for their case are clear.
What is not clear is why the project was suddenly halted, why
Congress was not notified in advance, and what happens now.
Senators should not have to find out about a decision of this
magnitude by reading about it in the Washington Post.
Regardless as to how this decision was made and how poorly
it was rolled out, it is possible that the mechanics of this
deal led to this eventual outcome. The exchange of the J. Edgar
Hoover Building, which was at the heart of this proposal, may
have been doomed from the start. According to the GSA Inspector
General, only eight building exchanges of this type had ever
been executed prior to the start of this project, and none of
those exchanges involved a building worth more than $11
million. And while there is one significant exchange in the
pipeline, it is not yet complete.
The exchange of the J. Edgar Hoover Building, a much larger
building than any of the other completed projects, located in
heart of the nation's capital, on one of America's most famous
streets, is in a completely different league. The questions now
are: Where do we go from here, and how do we find a solution?
The FBI needs a new headquarters. How do we get there and
what do we do in the interim to address the FBI's needs? Does
it make sense to pump millions of taxpayer dollars into the J.
Edgar Hoover Building to upgrade it, only to tear the building
down in a few years, especially since there is over $100
million in pending repair and maintenance needs in the building
today?
Should the FBI pare back its many requirements for a new
facility, reducing its size and scope to make it more
affordable for the American taxpayer? Should we look at
alternative financing mechanisms, such as a lease buyout
arrangement where a developer constructs and leases a facility
to the FBI, with the agency having the option to buy the
facility years in the future?
These are all topics for this hearing today. I look forward
to the testimony.
I would now like to recognize Ranking Member Carper for his
opening statement.
OPENING STATEMENT OF HON. THOMAS R. CARPER,
U.S. SENATOR FROM THE STATE OF DELAWARE
Senator Carper. Thanks, Mr. Chairman. Our thanks to you.
I wanted to thank you and Senator Cardin--especially your
staffs--for all the work that you have done on this issue,
important issue not just for the FBI, not just for Maryland,
the District of Columbia, and Virginia, but really for our
country.
We are blessed by the men and women who serve us in the
FBI, also in GSA and GAO. I want to just say that right from
the outset. We have been blessed by wonderful leadership at the
FBI for years. We have a newly confirmed FBI Director,
Christopher Wray. He was confirmed yesterday. I think he will
be a good one. And he follows on the heels of two really good
ones in Jim Comey and Bob Mueller, and we are grateful for
their leadership and continued service to our country.
I think it is safe to say that we have more questions than
answers surrounding this recent decision by GSA to cancel a
procurement for a consolidated FBI headquarters. I am hopeful
we can learn some of those answers here today.
Prince George's County is home to two of the three final
locations for the new FBI headquarters. The other was in, I
believe, Springfield, Virginia. The decision to cancel this
consolidation was a shock to those jurisdictions, and it was a
shock to me, and it is going to have a significant impact on
the region.
And I have concerns--I know many of my colleagues share
them--regarding the move by GSA to cancel the procurement
process. My concerns range from the lack of consultation with
Congress, to the impacts on national security, to the excess
cost that this decision will impose on the Federal Government.
However, I would say that my largest concern is where do we
go from here. So much energy has already been invested in this
endeavor, only to have the process halted without an
alternative plan. We can all agree that there is an obvious
need to move the FBI out of the Hoover Building to a new
location and to consolidate other FBI locations.
Simply put, the Hoover Building is an aging building that
no longer meets the needs of the FBI in the 21st century. It
suffers significantly from deferred maintenance, and the
employees bear the brunt of that lack of investment. Further,
the status quo, with the FBI scattered across several
locations, a number of locations throughout the D.C.
metropolitan area, is simply unacceptable for the agency to
carry out its mission and approve our national security.
It reminds me a little bit of the situation the Department
of Homeland Security is in. Some of us serve on the Committee
on Homeland Security and Governmental Affairs, and they are
spread over almost a half-acre and are trying to consolidate
the bigger part of their Department in St. Elizabeth's, and
hopefully we will be able to carry that out and get that done
over the next couple of years.
But with increasingly tight budgets, deferred maintenance
on the Hoover Building, and expensive commercial leases for FBI
annexes and satellite offices, it would seem to make sense to
me to consolidate the FBI under one roof, or something close to
one roof.
As stewards of the Federal purse, we should be ensuring
that we are doing all that we can to save taxpayer dollars and
create efficiency in Government, including with respect to
property management, something that Tom Coburn and I--former
Senator from Oklahoma--and others have worked on, Rob Portman
and others have worked on for years with many of you.
We should also ensure that, when appropriate, Congress
provides adequate funding for construction projects that will
help agencies meet their missions. For the last several years I
have been, as I said earlier, a strong advocate for
consolidating the Homeland Security's headquarters at St.
Elizabeth's. It just makes sense; it makes dollars and cents;
enhances morale and makes more efficient, and frankly, gets
them out all these leased spaces that we are paying a lot of
money for all over this part of America.
Let me just close by saying without adequate funding from
Congress in the years to come, this FBI project, the St.
Elizabeth's project may face unacceptable cost escalations and
delays that are wholly preventable through our action. This is
on us, on Congress.
Mr. Chairman, look forward to hearing this all-star lineup
of witnesses, and I would ask them all to do what Gene Dodaro
does when he comes and testifies before us, to do it all off
the top of their heads and use no notes, and to accept no input
from their staffs, and we will be on our way and get a lot
done. Thank you very much.
Senator Barrasso. Thank you, Senator Carper.
Before we turn to our witnesses, I would like to invite
both the Chairman and Ranking Member of the Transportation and
Infrastructure Subcommittee, which has jurisdiction over public
buildings, to make a statement if they would like.
Senator Cardin.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
U.S. SENATOR FROM THE STATE OF MARYLAND
Senator Cardin. Chairman Barrasso, first of all, thank you
so much for holding this hearing. After GSA announced that they
were terminating the consolidation of the FBI prospectus, you
and I talked and you immediately offered to hold this hearing,
and I want to thank you very much for that. I want to thank
Ranking Member Carper for his cooperation in scheduling this
hearing.
I want to start by just expressing a great deal of
frustration as to how this process has gone forward. The delay,
the mixed messages that we have received on financing, and the
ignoring of the action of this Committee and of Congress. As a
result, there has been a waste of taxpayer money--significant
waste of money--and we have compromised the FBI's ability to
carry out its critical mission. That is plainly unacceptable,
and I think this Committee deserves an explanation.
I hope today that there will be a way forward, that we can
move toward a consolidated facility for the FBI in a very quick
way, so that we can move on for the taxpayers of this country
and the important mission that the FBI carries out.
So let me elaborate on what I just said.
The FBI has been in the Hoover Building since 1974. It
lacks usable space. They are in 15 different leased locations
around the District of Columbia, causing an inefficiency in
their operations, additional costs to the taxpayers, an
inability to collaborate, which is important for the FBI to
carry out its function, and it lacks the security that is
necessary for the FBI. All that is known; it has been known for
many, many years. There were reports done 7 years ago, 8 years
ago.
In 2011 the GSA, FBI came to this Committee and said we
need help; do something about it. And in 2011--6 years ago, Mr.
Chairman--this Committee took action. We passed a prospectus in
2011. That prospectus said very clearly you are directed to
proceed with a private sector lease transaction on federally
owned land for a consolidated headquarter facility. We
recognized that. We gave you the authority.
When we give you the authority, we expect that that is
going to be carried out and that you are going to work with
this Committee.
So what happened next? Well, GSA and OMB said, no, we don't
want to use a leased facility; we want to pay for it up front.
Now, that is a heavy lift, to put all that money in the budget,
for Congress to be able to put in excess of $1 billion at the
time, now close to $2 billion, into a budget in 1 year to pay
for one consolidated facility. But that is what GSA and OMB
wanted, so we proceeded with that. Congress cooperated.
In fiscal year 2016, $390 million was put into the
appropriation bill. In fiscal year 2017, $523 million
additional dollars were put into the appropriation process. In
addition, the Appropriations Committee, in their report, made
it clear that they would provide the additional moneys in
fiscal year 2018 necessary to complete the project. And as the
Chairman pointed out, this was based upon the exchange of the
Hoover Building, which added additional resources to this
project.
In 2013 GSA went forward with the Request for Information.
Three sites were selected; seven proposals were filed. And GSA
came back to this Committee in 2016, said we should update the
prospectus in order to comply with how GSA was proceeding. We
passed a new prospectus for you in 2016, giving you all the
authority you needed, so what happened next is very hard for us
to understand.
President Trump's fiscal year 2018 budget contained zero
for the FBI. We don't exactly understand that if we are
proceeding with a cash transaction. Congress was prepared to
move forward, as I have already indicated, by the report
language we put in and the moneys that we put in.
And then what I don't understand at all--and I hope this is
explained to me--on July 12th, 2017, without notice to this
Committee, GSA cancels the procurement. Cancels the
procurement. OK, why? Not enough money appropriated by
Congress?
Well, the Congress put a large sum of money. The President
said it didn't need any more money, because he put no money in
the fiscal year 2018 budget. Was it canceled because you want
to go now to a lease arrangement? We gave you that authority in
2011, to use a lease authority. Why would you cancel and not
come back to us and say we're changing directions? Are you
saying we don't need a consolidated facility for the FBI? I
hope that is not the case, because the FBI needs a consolidated
facility.
So I hope we get some answers as to why it was handled in
this way. And how can we move forward in an appropriate way,
but in a way that recognizes the NEPA studies have already been
done on these three locations; we know about that. We already
have a lot of the work done.
I think GSA has created a legal problem now because of the
word cancellation of the prospectus. I don't understand why you
did that, but maybe you can explain how we are going to move
forward and how you are going to respect the will of this
Committee and Congress. When we told you originally to use a
lease purchase, you came back and said you wanted to use
appropriations. We provided the money, and then you don't go
forward.
I hope we get some answers.
Senator Barrasso. Thank you very much, Senator Cardin.
We are now going to hear from our witnesses.
We have joining us today Mr. Michael Gelber, who is the
Acting Commissioner of the General Services Administration,
Public Building Service; we have Mr. Richard Haley, who is the
Assistant Director and Chief Financial Officer of the Federal
Bureau of Investigation Finance Division; and Mr. David Wise,
who is the Director of Physical Infrastructure Team of the
General Accountability Office.
I would like to remind the witnesses that your full written
testimony will be part of the official hearing today, so I
would ask that you please keep your statements to 5 minutes so
that we may have time for questions.
Mr. Gelber.
STATEMENT OF MICHAEL GELBER, ACTING COMMISSIONER, PUBLIC
BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION
Mr. Gelber. Thank you.
Good morning, Chairman Barrasso, Ranking Member Carper, and
members of the Committee. My name is Michael Gelber, and I am
the Acting Public Building Service Commissioner of the U.S.
General Services Administration. Thank you for the opportunity
to testify today.
I wish to discuss how GSA and the Federal Bureau of
Investigation jointly determined that the J. Edgar Hoover
Building no longer meets the needs of the FBI. I will also
discuss why GSA initially used the exchange process to help
obtain a modern replacement facility, but ultimately reached
the decision to cancel the procurement. Finally, I will discuss
how GSA and the FBI are working together to meet the FBI's
housing needs and mission requirements going forward.
In 2011, in accordance with the resolution adopted by this
Committee, GSA issued a Report of Building Project Survey. The
report evaluated the following four strategies to deliver a
modern headquarters for the FBI: Federal construction, lease
construction, ground lease-leaseback, and acquisition by
exchange. A 30 year net present value cost analysis of all four
options determined that Federal construction was the most cost
effective approach to provide a replacement consolidated
headquarters facility to house the FBI.
Under the present scoring rules agreed to by the
Congressional Budget Office, the budget committees, and the
Office of Management and Budget, a lease construction or ground
lease-leaseback transaction would require full funding up
front. A new FBI headquarters is a long term Federal need for
which Federal ownership has been shown to be the lowest cost
alternative. GSA seeks to develop Federal capital projects that
allow GSA to meet agencies' mission needs while pursuing the
best value for the American taxpayer.
To address Federal capital needs generally, GSA has a
mechanism that is not being fully utilized, the Federal
Buildings Fund. GSA has a significant backlog of unfunded
capital projects resulting from less than full appropriation of
the GSA rent collections in fiscal years 2011 to 2017. Full
access to GSA rent collections for investment in capital
projects is necessary to maintain the portfolio and deliver
priority, mission critical Federal facilities.
In parallel, GSA recognizes that up front funding can be
viewed as an impediment to making key investments, but under
the current scoring rules it is also the way for the Federal
Government to record Federal spending. This Administration is
considering a number of new Federal tools to support better
decisionmaking while maintaining transparency and fiscal
restraint.
Given these facts, GSA determined that an exchange of the
Hoover Building for a new facility of up to 2.1 million square
feet was the most viable funding mechanism to consolidate
personnel from the Hoover Building and multiple leased
locations at the lowest possible cost. The exchange process can
facilitate the disposal of agency properties that do not meet
the Federal need by allowing GSA to leverage its owned
inventory to acquire new and more efficient facilities.
GSA worked closely with the FBI, Congress, State and local
governments, and the private sector to meet project milestones.
To this end, GSA selected three preferred sites and a number of
preferred developers. As part of this process, GSA also
analyzed all three preferred sites pursuant to the National
Environmental Policy Act. Earlier this year, GSA communicated
that, should full funding be provided, we stood ready to select
the developer and make an award.
In May of this year Congress passed the Fiscal Year 2017
Omnibus Appropriations Act. Under the Act, GSA received $200
million, and the FBI received $323 million of a combined $1.4
billion request. This resulted in a funding gap of $882 million
from the requested level.
Following the enactment of the Fiscal Year 2017 Omnibus,
GSA considered various potential paths forward to address the
project's $882 million funding gap. After internal and
interagency deliberations, GSA determined that moving forward
without full funding would put the Government at risk for
project cost escalations. Additionally, both GSA and the FBI
expressed concerns about the potential reduction in the value
of the Hoover property, since developers were scheduled to
receive the property once the new FBI consolidated headquarters
are completed. As a result, GSA decided, in consultation with
the FBI, to cancel the procurement.
It is fair to say that the cancellation of the procurement
was not the desired outcome. Members of this and other
congressional committees, along with Federal, State, local, and
private sector partners, put a tremendous amount of time,
energy, effort, and resources into delivering a modern FBI
headquarters.
At this time, GSA and the FBI are working together to meet
the FBI's short and long term housing needs and mission
requirements. This review includes deciding what investments to
make in the Hoover Building now that we know that the FBI will
be housed there for longer than expected. Additionally, the
FBI's portfolio of leased space is being evaluated, as well as
options to procure a new headquarters for the FBI.
In closing, GSA is committed to carrying out our mission of
delivering the best value in real estate. The need for the FBI
to have a modern headquarters remains.
GSA will continue to work with members of this Committee,
the FBI, and others in the Administration and Congress to meet
this need.
I thank the Committee for the opportunity to testify today,
and I look forward to answering your questions.
[The prepared statement of Mr. Gelber follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Thank you very much, Mr. Gelber.
Mr. Haley.
STATEMENT OF RICHARD L. HALEY II, ASSISTANT DIRECTOR/CHIEF
FINANCIAL OFFICER, FINANCE DIVISION, U.S. FEDERAL BUREAU OF
INVESTIGATION
Mr. Haley. Thank you, Chairman Barrasso, Ranking Member
Carper, and members of the Committee for allowing me to appear
before you today to discuss the importance of the FBI
headquarters facility project.
Sitting before you today, I represent a number of
individuals at the FBI that have spent years of making this
project a reality, a reality that we have not lost sight of
despite this current setback.
Mr. Chairman, as you and Senator Carper and Senator Cardin
have mentioned, and I will just briefly reiterate, this
Committee is very well aware the J. Edgar Hoover Building was
designed in the 1960s to meet an FBI mission of that time that
was largely criminal in nature, most of which was done by each
of our field offices, and the headquarters building was really
just a national police precinct to coordinate those efforts.
When occupied in the mid-1970s, nearly half of the building was
designed for our laboratory functions, fingerprint operations,
and paper records storage requirements. All of those functions
have been moved decades ago.
Today, in addition to the lack of infrastructure and
security required to meet the mission needs, the building
struggles to keep up with the organization's need to continue
to be more and more threat focused, intelligence driven, an
organization that must be able to rapidly address developing
threats and collaborate across multiple operational programs.
Our headquarters is the hub of this coordination for
intelligence and information sharing among our State, local,
Federal, and international partners. It coordinates what is
happening among our 56 field offices and over 300 resident
satellite offices across the country and more than 70 offices
overseas where we liaison with our foreign partners. It also
operates as the nerve center of the organization in times of
national crisis or emergency during major cases and operations.
The current structure of the J. Edgar Hoover Building does not
allow for us to coordinate this effectively or efficiently. The
building itself is not only inefficient, but the technology and
the physical limitations continue to suffer. Everything takes
more money and more time to get things done.
Aside from the physical infrastructure, virtually all of
the critical building systems--mechanical, electrical, and
plumbing--have deteriorated and are either at the end of their
life or beyond their useful life.
While the FBI is disappointed the procurement that would
have provided the FBI with a facility that meets our mission
needs was canceled, it does not change the fact, as you have
mentioned, that the FBI needs a consolidated, secure, resilient
intelligence community-worthy facility, a facility capable of
meeting the increased demands of the nation's premier
intelligence and law enforcement organization.
In conclusion, the FBI's requirements for enhanced safety,
security, flexibility, and collaboration have not changed. How
we achieve this will need to be reexamined, as you have stated,
to get to a successful outcome. Therefore, we appreciate your
interest with this hearing and ask for your continued support.
I am happy to answer any questions.
[The prepared statement of Mr. Haley follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Thank you, Mr. Haley.
Mr. Wise.
STATEMENT OF DAVID WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE
TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Wise. Chairman Barrasso, Ranking Member Carper, and
members of the Committee, thank you for the opportunity to
discuss our work on GSA's efforts to consolidate the FBI's
headquarters and the challenges funding large real property
projects. My statement will discuss three key points: the
status of the FBI's Hoover Building, GSA efforts to implement
real property swap exchanges, and alternative approaches to
funding real property projects.
In November 2011 we reported that over the preceding decade
FBI and GSA studies determined that the Hoover Building no
longer fully supported the FBI's long term security space and
building condition requirements. Due to the lack of space, FBI
functions have been disbursed in various annexes around the
national capital region and other locations. In the 2011
report, we also noted that the condition of the Hoover Building
was deteriorating, and GSA assessments identified significant
recapitalization needs.
In 2017 we reported that several FBI field offices are in
facilities owned by foreign entities, which could present an
added security risk.
GSA proposed exchanging the Hoover Building, plus cash, to
a developer in exchange for construction of a new headquarters
building in one of three locations: Greenbelt, Maryland;
Landover, Maryland; and Springfield, Virginia. However, in July
2017 GSA canceled the procurement because, according to GSA and
FBI officials, they lacked the funding necessary to proceed.
GSA officials stated that GSA and the FBI would continue to
work together to address the space requirements of the FBI.
GSA continues to face challenges related to funding new
construction projects due in part to budget constraints. Using
available legal authorities, GSA has proposed exchanging title
to some federally owned real property for other properties or
construction services, known as swap exchanges. This was the
plan for replacing the Hoover Building. Such exchanges can be
of equal value or can include cash to compensate for a
difference in value between the Federal property and the asset
or services to be received by the Federal Government.
GSA has limited experience successfully completing swap
exchanges and has only completed a few relatively small
exchanges since 2001, both under $10 million. In our 2014
report, we reviewed five projects where GSA proposed and
subsequently canceled swap exchange procurements. For example,
GSA officials told us that there was little or no market
interest in Baltimore and Miami properties. From 2012 to 2015
GSA pursued a large swap exchange potentially involving up to
five properties in the Federal Triangle South area of
Washington in order to finance construction of GSA headquarters
and other Federal properties. In 2013 GSA decided to focus on
exchanging only two buildings, the GSA Regional Office Building
and the Cotton Annex. In February 2016 GSA canceled the
procurement, stating that private investor valuations for the
two buildings fell short of the Government's estimated values,
as well as the amount GSA required to complete its other
projects.
Subsequently, GSA officials noted that they planned to
improve the swap exchange process, including property
appraisals and outreach to stakeholders. However, several
factors may continue to limit GSA. For example, the viability
of swap exchanges may be affected by specific market factors,
such as the availability of alternative properties. In
addition, swap exchanges can require developers to spend large
sums before receiving title to the Federal property used in the
exchanges.
In a potentially successful effort in January 2017, GSA
agreed to a swap exchange with MIT for the DOT's aging Volpe
Center in Cambridge, Massachusetts. Per the agreement, MIT will
construct a new DOT facility on a portion of the 14 acre site
and will receive title to the remaining site. GSA indicated
that the project, once completed, will provide $750 million in
value to the Federal Government.
Our prior work also identified a number of alternative
approaches to funding real property projects, including long
term operating leases, land swaps, retained fees such as user
fees, and enhanced use leases. In March 2014 we reported that
up front funding is the best way to ensure recognition of
commitments made in budgeting decisions and to maintain fiscal
controls. However, obtaining up front funding can be
challenging. Congress has provided some agencies with specific
authorities to use alternative funding mechanisms for the
acquisition, renovation, or disposal of Federal real property
without full up front funding.
Projects with alternative funding mechanisms may present
risks that are shared between the agency and the partner. Some
of these mechanisms allow the private sector to provide the
project's capital at their cost of borrowing, which is normally
higher than the Government's. In some cases, factors such as
lower labor costs or fewer requirements could potentially help
balance the higher cost of borrowing.
Our previous work also identified options for changes
within the discretionary and mandatory sides of the budget
structure. Alternative budgetary structures may change
budgetary incentives for agencies and therefore help Congress
and the agencies make more prudent long term fiscal decisions.
Chairman Barrasso, Ranking Member Carper, and members of
the Committee, this concludes my prepared statement, and I
would be happy to answer any questions.
[The prepared statement of Mr. Wise follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Well, thank you to all three of you. We
will start with rounds of questioning.
I would like to start with you, Mr. Gelber. So the project
originally began in 2004. FBI Director Robert Mueller requested
the GSA recommend a strategy for consolidating the FBI
Headquarters. In 2011 this Committee passed a resolution
directing the GSA to investigate the feasibility and the need
to construct or acquire a new consolidated headquarters
facility for the FBI. So it has been more than a decade.
With the decision now to abandon the current procurement,
are we back at square one?
Mr. Gelber. Not quite at square one. We have learned quite
a bit about the FBI's requirements and the ability of the
surrounding community--the District, Maryland, and Virginia--to
support this requirement. But from a procurement standpoint we
will need to initiate a new procurement.
Senator Barrasso. So then I guess Members of Congress and
the public would want to know what happens to the millions of
dollars that Congress has appropriated for this project.
Mr. Gelber. Those funds are retained in the project budget.
They are currently not being spent, and they are only able to
be spent either on this project or in the event that either the
GSA or the FBI come to Congress with a request to reallocate
those funds. With congressional consent, we could then do that.
But the money that has been allocated to this project can only
be spent on this project.
Senator Barrasso. And since the process to exchange the
Hoover Building for a new headquarters facility, since that
began, that whole process for the exchange began, I think it
has been unclear to many what the total cost for the project
actually is, because it was a property exchange.
So given the FBI's requirements, in your best
approximation, what is the actual current cost of the project,
without a potential exchange factored into it?
Mr. Gelber. I think our cost estimate centered around $1.6
billion and up. We have always been reluctant to express a
specific cost because of the valuation of Hoover was something
we wished the market to determine. But that would be a fair
minimum.
Senator Barrasso. At $1.6 billion. OK.
Mr. Wise, I understand the GSA used build-to-suit leases to
acquire some of the FBI's field offices across the country.
Could GSA use a similar approach for the FBI Headquarters?
Mr. Wise. Senator, yes, that is possible, but there are
constraints to using that process as well, because one never
quite knows who the owner is. As you heard in my statement, in
2017 we reported that there were several FBI leased buildings
that were owned by foreign entities that were maybe or maybe
not they were aware of. So that is an issue that certainly
needs to be studied, especially in a sensitive agency like the
FBI.
Senator Barrasso. Thank you, Mr. Wise.
Mr. Haley, you know, considering that the Federal budget
rules mandate that capital investments must be, I think, fully
funded in advance and that OMB initially recommended that this
project be rolled out in phases, would the FBI consider a
phased approach for this consolidation as a means to limit cost
and comply with the Federal budget rules?
Mr. Haley. Sir, it was a topic early on we have talked
about a lot. I think the concern with this project--and we are
familiar with a number of the construction projects that our
appropriations committees have provided us funding for. You
would be familiar with our SEGUS facility out in West Virginia,
our operations down at Quantico where you are talking about
large thousand acre sites where you can segregate off or
partition off areas where construction and laydown can occur.
These sites, in some ways, are so small, all three of them,
that to put a building into place and to operate that building
with top secret and classified information, and at the same
time be trying to run a construction site, that was always a
concern for us. It was also a concern that we not necessarily
get to a full consolidation, that somehow that partially be
completed and in some state of completion, and that doesn't
necessarily get us to a better situation than we are right now
with facilities. So incremental funding was not necessarily a
problem, where we got money over multiple years and then to
execute the project, but we were concerned about a partial
moving forward through phases.
Senator Barrasso. And Mr. Gelber, news of the decision to
cancel the procurement first broke through various media
outlets the day before GSA gave an official notice to the
Members of Congress and the staff. It is unfortunate that
members of this Committee, the authorizing body for GSA on this
project, had to learn of this sudden decision in the press. Do
you agree that GSA should have alerted its authorizing
committee in advance, and would you pledge to keep us informed
of major decisions in the future?
Mr. Gelber. Yes. But I will also add that the disclosure to
the media prior to the official announcement to the various
congressional committees was not an authorized disclosure and
was not part of GSA's plan to inform individuals about our
decision.
Senator Barrasso. Senator Carper.
Senator Carper. Thanks for your testimony here today.
I mentioned earlier the project and consolidating much of
Department of Homeland Security at a site called St.
Elizabeth's in Washington, DC, and I am trying to draw a
parallel between that project and this project. In that
project, the decision was made, with the help of GSA, to bring
many of the far flung assets and operations of GSA not under
one roof, but at one site, St. Elizabeth's, St. Elizabeth's
campus, which used to be, for many years, a psychiatric
hospital for a long time. And that project is being funded over
several years. It actually goes through a couple different
appropriation committees for GSA and partly for the Department
of Homeland Security.
I am trying to figure out what could be an analogy. For
example, after having invested hundreds of millions of dollars
in this project, we can actually see the end not too far down
the line for actually completing it, if the Administration were
to come in and say zero funding, we are asking for zero funding
to complete this project, that would send, frankly, an alarming
message to us. The Department says they need the money; GSA
says it is a cost effective way to provide their quarters,
their operation; and the Administration, frankly, has not been
generous in their request for continuing the St. Elizabeth's
redevelopment, but I think at least in one regard they have
asked for some money.
This just seems strange to me, the FBI. This just doesn't
seem right. And everybody acknowledges that the Hoover Building
is falling down. I think you can drive by and you see the
netting where the pieces are literally coming off of the
building. And yet we have an Administration that says after all
these years of the work to get us to this point, we don't think
we ought to fund it, and it shouldn't go forward, and that is
it. I am not aware of any consultation. It just doesn't pass
the smell test.
And I would just ask, maybe for Mr. Haley, could you tell
the Committee who at OMB was involved in this decision? And do
you know if this included anyone maybe from the White House?
Mr. Haley. First, I would say your analogy with St.
Elizabeth, which we looked at quite a bit, from an FBI
perspective on that, we saw the Coast Guard, which was a
complete effort on that site to be more kind of in link with
the FBI. You have an agency that moved on to a department site,
but it was a complete agency build more than multiple
department pieces. So that is how we looked at it. And our
concern was that we end up in a phased approach where we are
still all over town, and even maybe stretched in different
ways.
The conversations with GSA, which have been the
conversations that have led to this decision, and from our
standpoint the exchange does make it, the procurement made it
very risky from our standpoint. With everything said about
needing a new building and the eagerness of the FBI especially
to get into a new building as soon as possible was
overwhelming. But at the same time, the way the exchange was
done, without the full funding up front, and this project,
through briefings and our own design and working with GSA, was
always getting all that funding to be able to move forward. The
exchange only works when we get out of the Hoover Building. As
long as we are in the Hoover Building, it depreciates the
value, and it also creates complexities in how the developers
were going forward.
So that conversation back and forth with GSA leading up to
the decision, our conversations with our own direct oversight
at OMB, and they were aware of the decision. I am unfamiliar
with anything above that within the Administration that
occurred, but from an FBI standpoint, GSA is our landlord. We
have hundreds of facilities across the country. We are opening
up a field office in Atlanta next month. It is going to be an
amazing facility. We have operations that have recently opened
up in Boston and out in Sacramento. These are amazing
buildings. Albeit they are leased facilities; they are amazing
buildings, and they allow our operation to go forward.
So this was really a GSA-FBI coordination, and from our
standpoint, the risk of either getting a piece of property that
would stay dormant for 10 or 15 years----
Senator Carper. I am going to stop you. I am going to stop
you, OK? My time is limited. Can you tell the Committee who at
OMB was involved in this decision? Do you know if it included
anyone from the White House?
Mr. Haley. In terms of briefing, it would have been our
branch personnel and GSA's branch personnel within OMB would be
the individuals that we would have met with.
Senator Carper. And I have just a yes or no question I
would like to ask of Mr. Gelber. As you heard, there were many
bipartisan concerns and questions about the GSA decision to end
the procurement process for the consolidation of the
headquarters, and I imagine you don't have time to answer all
those questions today. In fact, I am sure we won't have time to
ask or hear answers for all these questions today, so I am just
asking you on a yes or no basis, do you commit to fully respond
to questions for information from any member of this Committee
so that we can perform our oversight duties? Yes or no?
Mr. Gelber. GSA will respond to questions from the Chair,
yes.
Senator Carper. Only the Chair?
Mr. Gelber. GSA's response will be in line with the current
Administration's policy on responding to oversight.
Senator Carper. Let me just say something, if I could. I
would say this to my Republican colleagues as well. How would
you like it if the Democrats had the White House, the majority
in the House and the majority in the Senate, and we had an
Administration with a policy that said we are not going to
respond to your questions when you try to do your oversight?
You would be outraged.
This is outrageous. We cannot stand for this. Our job is to
do oversight. And for our colleagues to sit here and just
listen to this, I can't believe this. Golden Rule, treat other
people the way you would--how would you like to be treated that
way? Well, you wouldn't like it. We need to hear your voices on
this. This is outrageous.
Senator Barrasso. Senator Rounds.
Senator Rounds. Thank you, Mr. Chairman.
I agree with Senator Carper, we did not like it. Let me
begin just by asking----
Senator Carper. Can I just interrupt for a moment? I want
to say I spent a whole lot of time with the last Administration
trying to make sure your questions from the Republican side
were answered, a lot of time, and I think with some success.
Senator Rounds. I appreciate your comments. I agree with
your concern, because we did not like it.
Let me continue on and just touch on a couple of items. No.
1, I am just curious. With regard to a desired location, right
now is there a specific desired location that has been
determined for a new facility?
Mr. Gelber. If the question is directed to me, sir, no,
there is no specific location that has been identified.
Senator Rounds. So we still have three that we have looked
at, but we do not have an identifiable location at this point
for a new facility?
Mr. Gelber. That is correct, sir.
Senator Rounds. OK. I understand that we are not at square
one, but it sounds like we are very close to square one.
If we were to look at the total values involved in this, we
would be talking about the value of a new facility, which I
assume would allow us to consolidate a number of the FBI
facilities that we are currently leasing, 15 facilities that
are involved in this. Would those 15 facilities then be
available or not having their leases renewed, is that a fair
statement?
Mr. Gelber. It is, sir.
Senator Rounds. OK. In doing so, are these owned buildings
or are these leased facilities?
Mr. Gelber. The leased facilities are leased by the private
sector and leased by the Federal Government, by GSA.
Senator Rounds. So GSA is currently making payments on
those so that those payments are now reconcilable or at least
those are recognized in the process. If we build a new
building, and we actually fully fund it up front, those lease
payments basically go away, fair to say?
Mr. Gelber. That is correct, sir.
Senator Rounds. So there is an ongoing cost savings that
can be basically applied toward this new location once it is
determined.
Mr. Gelber. That is correct, sir.
Mr. Haley. Sir, one of the original justifications for the
new building in the consolidation, there were tens of millions
of dollars in lease payments and other security costs and
everything from each of those separate leased sites that we
would have been able to stop paying as we would roll those into
a campus environment.
Senator Rounds. But that still exits.
Mr. Haley. Yes, sir.
Senator Rounds. OK. The value of the Hoover Building, the
current value of the Hoover Building today, what is it?
Mr. Gelber. Sir, that is subject to the way that the Hoover
Building would be disposed of, and we have been reluctant to
speak in a public forum about the value of the building because
we feel it may affect any future procurements regarding the
disposal of that building.
Senator Rounds. If you were to build a new facility today,
what is the timeframe for building that type of a facility?
Mr. Gelber. It could take between 5 and 7 years, sir,
including the move.
Senator Rounds. So we are actually talking about trying to
determine what the value of the Hoover Building is at some
point in the future in terms of a payback or at least a partial
offset of the costs that we are putting in now.
Mr. Gelber. That is one of the factors that is being
considered, sir.
Senator Rounds. Mr. Gelber, you mentioned that the CBO was
involved in the discussions beginning back in 2011. Could you
share with us a little bit more about their involvement and
share with us once again the concern that they expressed about
having resources available? Can you kind of clarify that a
little bit, what CBO's position was?
Mr. Gelber. The Congressional Budget Office role is to
score or account for these types of major Federal capital
investments, and their approach--as similar to budget
committees and the Office of Management and Budget--is that a
major initiative of this nature must be scored or accounted for
in the initial year of the transaction. So even though the
Government is making payments in a lease scenario over a period
of 20 years, all the cost of that lease must be accounted for
in the original year of the lease.
Senator Rounds. Have you ever worked with CBO on other
projects similar to this before?
Mr. Gelber. More appropriately, I believe, the Office of
Management and Budget works with the Congressional Budget
Office, but we have not directly worked with them.
Senator Rounds. What was the impact, what was the impact of
the CBO determination as to that process in terms of making
this project workable or not under the original format?
Mr. Gelber. Under the original format, the project would
score, again, all the funding of the entire project scores in
the initial year, so we are looking at a up to $2 billion cost
that has to be accounted for in one budget cycle.
Senator Rounds. Making it rather difficult to achieve.
Mr. Gelber. Yes, sir.
Senator Rounds. Interesting. So part of what we should be
talking about is if we are looking at any types of arrangements
like this again in the future, we recognize that we have
another hurdle that we have to go through in terms of making
that type of a process work for other smaller projects. Now, I
understand that when you are talking about a case of where you
are leasing it, and then you are going to try to sell the
property that you have for future value, that most certainly it
seems as though the time value here got away from us because of
the size of the project.
Mr. Wise, you mentioned that a little bit in terms of if
you are looking at actually leaving the Hoover Building for a
period of time, it means that whoever was going to buy it from
you would not have access to that property for an extended
period of time in part because of the large size and extended
time for creating this new facility. Fair statement?
Mr. Wise. Yes, sir. And one of the things that I think made
the swap exchange idea especially challenging for the Hoover
Building is that, as you kind of allude to and what you are
saying is there is a long time lag between the time that
developers expected to build the new FBI building until he gets
title to the FBI's Hoover Building and the site around it. So a
developer has to have pretty deep pockets to be able to get
engaged in a project like that.
So one of the things that we had talked about in our report
was you need to look at trying to tighten or lessen the time
lag so that the relative value of the Hoover Building will not
deteriorate so much, because it will decline. The longer the
time lag, the less value the building is to the developer
because he is waiting and waiting and waiting. In the meantime,
he is building something.
Senator Rounds. I appreciate that. Thank you.
My time has expired, but Senator Carper had mentioned this,
and I just want to come back. Long term, if we really want to
make sure that these projects are defensible by both the
majority and the minority party, I think an effort and an
interest in cooperating in giving data back to both the
majority and the minority members on any committee most
certainly lends to the ability of cooperation that makes things
a whole lot easier to get done in this body.
We saw it; it was frustrating for us as well with the
previous Administration on a number of counts. It is something
that I think Senator Carper brings up here, and I think it
should be something that should be seriously considered with
regard to getting these projects moving, because, as the
Ranking Member indicated, being able to get data and to feel
comfortable with the information you are receiving makes things
go a whole lot easier if you are able to get responses back
through.
Senator Carper. Would Senator Rounds yield for just a
moment?
Senator Rounds. My time has expired, but I will----
Senator Carper. Mr. Chairman, can I have 1 minute?
I just want to thank you for what you have just said. I
can't tell you how many times, especially on the Committee on
Homeland Security, which I was privileged to Chair for a couple
of years, how many times we said at hearings like this what can
we do to help you do your jobs better, whoever was before us as
the Federal agency.
More times than I can count, the word was a one word
answer: oversight. Do your job. Oversight. And that is what we
need to do. And there were times when folks in the Obama
administration were not prompt or fully forthcoming in
responding, but I don't ever remember an Administration that
had a policy from the Administration that said you don't have
to respond to anybody doing oversight except the Chairman of a
committee. It is a dangerous situation because if the White
House, if the President is a Democrat, and the minority are
Republicans, the folks that are usually on the outside, not in
the White House, they are likely to do better oversight over
the Administration. You know that, and I know that. And for us
to have a policy from an Administration that says we are only
going to respond to inquiries from the Chairman in the
majority, that is a dangerous precedent, a very dangerous
precedent.
Thank you.
Senator Rounds. Well, let me just add, before calling on
Senator Cardin, that I stated before the Administration should
and has a responsibility to be responsive to requests by all
members, and I would note that Marc Short, who is the White
House Director of Legislative Affairs, recently wrote to
Chairman Grassley of his committee stating, ``The
Administration's policy is to respect the rights of all
individual members, regardless of party affiliation, to request
information about executive branch policies and programs.''
And I am going to ask unanimous consent that letter be
admitted into the record without objection.
Mr. Short's letter goes on to say that ``The Administration
will use its best efforts to be as timely and responsive as
possible in answering such requests.''
[The referenced information was not received at time of
print.]
Senator Barrasso. So, Mr. Gelber, does the GSA intend to
abide by the policy that is described by Mr. Short's letter of
July 20th of this year?
Mr. Gelber. Yes.
Senator Barrasso. All right, thank you.
Senator Cardin.
Senator Cardin. Thank you, Mr. Chairman.
Senator Carper. I just want to say thank you.
Senator Cardin. Thank you, Mr. Chairman. And I have been on
this Committee now almost 11 years, and I don't remember ever
having any disagreements in regards to our oversight of GSA,
and we have always worked in a non-partisan way because we are
trying to get the best deals for the taxpayers of this country.
So I expect that will be continued. And I tend to work through
staff with Senator Barrasso's and Senator Carper's staff on a
request for information from GSA as relates to the FBI
procurement, because I think there are additional documents
that would be useful for us to see, and I will work with the
Chairman so that this will be, I hope, a mutual request.
Mr. Gelber, I want to work with you here. I am really
trying to get things done here, and I don't understand ``almost
square one.'' If I understand your authority, you could select
a site today. There is no problem with the authority to
announce a location. I understand because you canceled the
procurement, you need to now explain the rules that you are
going to operate and give developers an opportunity to come
forward. By narrowing it to one of the three locations, the
NEPA has already been done, so that expedites the process.
So where am I wrong why you cannot move this a lot faster
than you just said?
Mr. Gelber. We could in fact select a site, as you stated.
Our concern is without the full funding and the structure of
the procurement that we were operating under, we had no
assurance of being able to complete----
Senator Cardin. All right. OK. I just want to make sure you
could move quicker. Congress can help you in those decisions.
It would have been, I think, very helpful for us if, before you
terminated, you would have met with and talked with the people
who have been involved in authorizing and funding this program
moving forward, because I point out the difference between an
operating and capital lease could be defined in different ways,
which raises questions as to whether we should approve lease
prospectus moving forward where there isn't a full funding
throughout the entire term, because you characterize it as an
operating lease. We might think it is a capital lease.
So I think you are raising an issue here which could
jeopardize the ability of our agencies to have adequate
facilities, so work with us. I don't think anybody on this
Committee wants to delay the FBI having an adequate facility.
No, we don't want to wait 5 or 6 years. We can get it done
sooner. But work with us in that regard. We want the best
location, the best facility, the most efficient for the
taxpayers in this country, and this Committee will work with
you in that regard.
I must tell you, do you have any idea how much money has
been wasted by what we have done in the last 6 years? Do you
have any idea how much money the agencies have invested into
the FBI consolidation; how much time has been spent by your
agency, by the FBI, by OMB; how much time has been spent by the
State of Virginia in their proposals and going through what
they had to do, the State of Maryland, Prince George's County;
how much money has been spent by the developers to comply with
mixed messages coming out of GSA? Do you have any idea how many
millions and millions of dollars have been wasted?
Mr. Gelber. We are aware of how much we have spent on the
project, and that is around $20 million to date, sir.
Senator Cardin. And that is wasted.
Mr. Gelber. Some of that can be repurposed, but the
majority, unfortunately, may not be.
Senator Cardin. Well, I think all of us are concerned about
waste. We would like to have that $20 million spent so the FBI
could carry out its mission.
A question was asked to you by several of us working with
us to get this done. I want to make sure that it is done in an
open and fair manner. I want to certainly make sure that the
jurisdictions that are directly involved, that their
representatives are fully participating in whatever is done. I
want to make that clear.
But I would hope that we could expedite a location. That
certainly simplifies things. That we could expedite the NEPA
issues, and we could give you confidence through the
appropriators and authorizers that we are prepared. We already
put up $800 million. That is a lot of money. More than $800
million. I don't want to short change this. Nine hundred
thirteen million dollars we have already put up that you have.
That does not include the Hoover Building.
Senator Rounds, you are right, they will not tell you the
value of the Hoover Building. It is worth hundreds of millions
of dollars, we know that.
So there is already available well in excess of $1 billion
that has already been appropriated by Congress for this
project.
It is clear to me, Mr. Haley, that you do need a new
consolidated facility, and I appreciate you can't use the
piecemeal approach because of the reasons you just said. So we
have to figure out a way, because you hear us nodding our
heads. To put $2 billion in 1 year's appropriation for one
building consolidation is not realistic. That is just not
realistic. So we have to figure out a way to do it, and I would
really hope that we are not getting to the point that we have
to hold up every prospectus here not to stop the location, but
to make sure that we are not going down a path that, 6 years
after we pass a prospectus, we are back to square one.
Senator Barrasso. Thank you, Senator Cardin.
Senator Ernst.
Senator Ernst. Thank you, Mr. Chair.
Thank you, gentlemen, for being here today. In 2011 GAO
reported that FBI and GSA assessments showed that the FBI
Headquarters facilities, the Hoover Building and office annexes
in the national capital region did not fully support the FBI's
long term security, space, and building conditions
requirements.
Mr. Haley, how have the conditions changed since 2011,
since the GAO's report has come out, and what has been the
effect of these changes on the FBI's ability to actually meet
its mission?
Mr. Haley. Thank you, ma'am. Really, nothing has changed;
all those issues still exist. If anything, as I mentioned in
the opening statement, many of the mechanical parts of the
building--I forgot a prop I was going to bring you, one of the
pipes that just recently busted. Many of these are rusting from
the inside out. You have thousands of miles of piping. We had
Ma Bell phones, gray metal desks, and file cabinets when we
moved into the Hoover Building.
It is now a technological hub. Just to move wire from one
part of the building to the other, going through concrete, the
facility is not designed for that. Everything takes a
significant amount of additional funding, a lot of time. There
is frustration on the operational side because they need
something today, and it may be months or even years before we
can get all the pieces in the building.
Having entities spread out all over town means that you are
spending much of your day driving from one location to another
through DC traffic just to try to get around. So those issues
are still there.
Senator Ernst. Right. So the condition of the building is
not getting better over time, the IT struggles are still there,
and those take time and dollars, right?
Mr. Haley. Yes, ma'am. We appreciate GSA has recently
changed the netting which keeps the concrete from falling off,
because the old netting had to be replaced because it had worn
out it had been up so long. So those issues are still there,
and they just continue to get worse.
Senator Ernst. And you mentioned the time spent traveling
back and forth between many of the annex buildings. All of that
costs dollars.
Mr. Haley. Yes, ma'am.
And those leases that you had mentioned, sir, we are having
to renew those leases. In some cases that requires us to re-
compete them for long term, and additional costs are going in.
Some of the mechanicals that we are going to have to replace in
the building; you put an HVAC system in, you are expecting it
to last 20 years, 20, 30 years. We may only be there another
10. So we have to put infrastructure in that we may not fully
amortize or get the full use out of.
Senator Ernst. Right. So a number of issues have been
identified today. There is a pathway forward, maybe two steps
back.
Mr. Wise, what recommendations would you have for GSA to
help move this project forward in a meaningful manner?
Mr. Wise. Well, Senator, thank you. I think in the case of
this project, all the options need to be examined closely and
analyzed. What are the risks? How long will it take? What are
the costs and benefits of one site over another or one method
over another in terms of financing the project? And I think
that is something that the Committee needs to also look at very
closely as the options are presented for moving forward.
It is a complicated arrangement, and clearly the swap
exchange was a difficult maneuver, a situation where many
pieces had to fall into place. It was kind of a complicated
mosaic of effort, and it just didn't really work out, so now it
really needs to look at what might be feasible going forward.
And keeping in mind, also, the very real security needs that my
colleague has brought up here, as well, really has to factor
in, which is a serious problem on the current facility,
especially on its north side.
Senator Ernst. Exactly. Well, I thank you very much. I
think this is going to be a very complicated issue, especially
if the swap exchange is not the alternative moving forward. But
we do have to find a way to make sure that the FBI has a usable
space, a space that is secure, and where they can actually meet
their mission requirements.
With that, Mr. Chair, I will yield back my time.
Senator Barrasso. Thank you, Senator Ernst.
Senator Capito.
Senator Capito. Thank you, Mr. Chairman.
Thank you all for being here. I am sorry I missed your
testimony, but I was able to read this. For me, and I think for
all of us, you have seen, the collapse of this process for
securing a replacement raises serious questions.
Mr. Gelber, as you probably know, I chair the
Appropriations Subcommittee on Financial Services and General
Government, which oversees the funding for the GSA. And this
has been a moving target for us to try to follow. I believe we
found out the cancellation of this through the newspaper as
well, rather than informing the Appropriations Committee
properly, and the rest of Congress in general, as to what was
going on.
You already mentioned that the GSA has spent $20 million.
How much has the FBI spent, Mr. Haley, thus far in this
project?
Mr. Haley. I wouldn't want to give you an exact number,
ma'am, but it has been a significant investment. Much of that
has been our professional staff, individuals who sit behind me.
The individual, the engineer that actually built our SEGUS
facility originally and our biometric facility that you are
well aware of was brought in to DC to lead this project. He is
sitting behind me here. So we have invested a lot of
educational resources on this.
Now, at the same time, the $500 million that we have
sitting in our account, our appropriations, we hope that this
project will take on a similar anatomy like the SEGUS building,
where we were able to incrementally bring those funds in, and
at the point that the funding was available, we were able to
move forward with that capital investment.
Senator Capito. Yes, I was going to mention, but with
Senator Cardin I didn't want to mention the great FBI facility
we have in West Virginia. I didn't want to throw another
location into the mix, but we do enjoy, and actually, it is a
wonderful facility in our area. So we are very, very pleased
about that.
So, we are at a point where how did we get here and how are
we going to make improvements. If I heard you correctly, Mr.
Gelber, did you say that you need the $2 billion in 1 year in
appropriation before you can move forward?
Mr. Gelber. If we were to move forward with a Federal
construction project or a long term lease, that is how the
project would be accounted under the Federal----
Senator Capito. Is that the reason you went for the swap
concept?
Mr. Gelber. At the end of the day, yes. It was not our
preferred option, but given our funding constraints that we
were operating under, and given the inability to gain full
access to the money in the Federal Buildings Fund, that is why
we opted for the exchange concept.
Senator Capito. Have you done swap projects before to this
magnitude?
Mr. Gelber. Nothing of this magnitude.
Senator Capito. Well, I think it might have a little black
mark by it right now, from what we have seen, the development
to this point.
Let me ask you another question, Mr. Wise. In your written
testimony you stated that GSA employees told you, as part of
the research for your 2014 report, that part of the appeal of
the exchange model--and Mr. Gelber just talked about this a
little bit--was to avoid reliance upon the appropriations
process. And yet the agencies state that this project failed
for lack of appropriations sufficient to offset the difference
between the value of the Hoover Building and the new
headquarters.
I think the approach to try to avoid either oversight or
the congressional appropriations process is, I think, not very
palatable to those of us who sit here and also those of us who
sit on the Appropriations Committee and the authorizing
committee.
So would you say that was a primary motivation to work in
this manner, or was it something I am not seeing?
Mr. Wise. Well, I will leave the motivations up to my
colleague from GSA to describe, but suffice it to say that swap
construct is--as I think Michael was saying, it is another way
to try to move forward on Federal construction with the
knowledge that it is a very--as Senator Cardin said--a very
heavy lift to get full funding up front. Now, full funding up
front is the most cost effective way to build something. That
is pretty clear. I think everybody agrees on that. Lease
arrangements, one way or another, normally end up costing more
for various reasons.
But in terms of the swap construct, a very key criteria of
swap construct is that, you need a situation where the
property--it really helps if the Government need is equal to
the property that it is giving up. And that was not the case
here because it was far in excess, so that is why they were
coming back for additional appropriations. And a project of
this magnitude is very, very complicated to run under a swap
construct because, as we talked about in our testimonies, the
previous experience that GSA had in this area was very limited.
One example I can give you in San Antonio was a small piece
of land for a parking garage, several million dollars. And it
worked out well because they were of commensurate value. The
private sector really wanted this piece of Federal land, and
GSA really wanted this parking garage, and they were about
equal.
This is a magnitude of much, much greater magnitude and
complexity. So that was a technique that GSA hoped it could
work to make this building happen, make the project happen, but
I think the Hoover Building situation just was too difficult to
fulfill this way.
Senator Capito. Could I ask one more question?
Senator Barrasso. Yes.
Senator Capito. You know, we are throwing $2 billion around
like it is a confirmed number, just $2 billion. What kind of
assurances can you give us here that $2 billion doesn't lead to
$3 billion? What kind of firm number is that? And are changes
being made to design? I am sure as you look at this, as you
move forward, certain needs may change. What kind of confidence
do you have that $2 billion is either (A) sufficient or not
enough or too much?
Mr. Gelber. We, with the FBI, had developed that extensive
program requirements, which we then developed an independent
Government cost estimate around that number. We also have the
bids that were submitted for the project that give us a sense
of how the market was responding to the request.
Senator Capito. And they came in at about $2 billion then?
Mr. Gelber. If GSA had received the funding requested in
the fiscal year 2017 budget, we would have been able to award
this project.
Mr. Haley. Ma'am, I would add, from an FBI perspective,
that was one of the factors as we, coordinating with GSA,
agreeing to canceling the procurement, was the concern about
that with exchange. And as Senator Rounds had mentioned
earlier, the developer can't get the building until we get out
of it.
So as you extend that period on, there was a potential for
those costs, and we have always--and we have been very clear
with this with our appropriators, that we were trying to be as
transparent and honest with the costs that were going to come
out of CJS, and we did not want to see those costs escalate. So
as you extend the number of years that this procurement would
have had to take, and it wasn't just a building, we were
talking about moving facilities from a number of the sites,
rose, we were afraid that that cost would come up, and we would
have to come back in, and those would look like cost
escalations versus just time and just the cost of the dollar
going forward.
Senator Capito. All right. Thank you.
Thank you, Mr. Chair.
Senator Rounds [presiding]. On behalf of Chairman Barrasso,
Senator Gillibrand.
Senator Gillibrand. Thank you. Thank you, Mr. Chairman.
Mr. Gelber and Mr. Haley, decisions to cancel the
procurement were made by both the GSA and the FBI, and the FBI,
at the time, was lacking Senate confirmed directors. Is there a
reason you could not have waited for a decision of this
magnitude to be made once your senior leadership was in place?
Mr. Gelber. The constraints around the project would not
have gotten better; the cost of the project would, in our
minds, continue to have increased. And as Mr. Haley referenced
and Mr. Wise has also referenced, the value of the Hoover
property would continue to decrease. So, at the end of the day,
the situation we faced was, by waiting, we would not learn
anything new in the process, and the cost of the project, if we
chose to go forward, would only have increased.
Senator Gillibrand. To what extent was OMB and the White
House involved in the decision?
Mr. Gelber. As we normally do on major project decisions,
we informed our staff level colleagues at the Office of
Management and Budget about this matter.
Senator Gillibrand. But not the White House specifically?
Mr. Gelber. That is correct. We normally do not engage at
that level.
Senator Gillibrand. Who was the highest ranking Federal
official to personally sign off on the decision to cancel the
headquarters procurement?
Mr. Gelber. In terms of the formal approval process within
the General Services Administration, that would have been the
Acting Administrator.
Senator Gillibrand. Do you expect that there will be
additional costs associated with the FBI remaining in the
Hoover Building and other leased properties for a longer period
of time?
Mr. Gelber. Yes. And we are currently evaluating what those
costs would be in partnership with the FBI.
Senator Gillibrand. And what are the additional costs, and
how do you expect those costs to be paid for?
Mr. Gelber. We have some discretionary funds out of what we
refer to as below a prospectus level authority, which are
projects of under $3 million for a particular task, so we have
those funds to use. The key question for us is how much do we
invest in the FBI Hoover Building knowing that we are going to
move out of it. So we want to ensure the FBI has a usable, safe
facility, but we also don't want to overinvest in the facility.
Senator Gillibrand. How do those additional costs compare
with the project cost escalations that prompted your agencies
to cancel the new headquarters?
Mr. Gelber. The concern with the projected cost escalations
is we weren't sure when and where they would stop, and so,
given the uncertainty around those escalations, we knew what
the costs and risks were for remaining in leased space; we knew
what the costs and risks were for remaining in Hoover. Those
were--even if they were on par or less than--the concern with
going forward with the project was the unknowns around where
the costs would go.
Senator Gillibrand. Did you include appropriators in those
conversations?
Mr. Gelber. We have had a regular cadence of meetings at
the authorizer and appropriators level throughout the life of
the project and have been regularly reporting where we stood on
the project up until our meeting to decide to inform
individuals that we had canceled the project.
Senator Gillibrand. Prior to the enactment of the fiscal
year 2017 appropriations legislation, did you guys communicate
to the appropriators that the procurement was at risk if that
bill did not include the entire request in the President's
budget for $1.4 billion?
Mr. Gelber. We had regularly communicated that the need for
funding was key for this project to move forward. Our last
written communication was in March of this year, where we
stated that we had met all necessary project milestones to
proceed with the project, but were awaiting the resolution of
the fiscal year 2017 budget cycle.
Senator Gillibrand. Can I just ask you an unrelated
question that I would like you to provide for the record about
Plum Island? I have been working with my colleagues from New
York and Connecticut on legislation to repeal the statutory
requirement for selling Plum Island, which I believe
unnecessarily ties the Federal Government's hands and prevents
you from considering all options for the use of the island,
including continued Federal ownership by a different agency.
That said, I would like to ask you a few questions about
the sale process that you are currently undertaking. And if you
don't know these answers, just for the record is fine.
What entity will be required to clean up any environmental
contamination associated with the Plum Island Animal Disease
Center, the Federal Government or the buyer?
Mr. Gelber. Invariably, it is either the Federal
Government, or if there is anything that hasn't been addressed,
the Government notifies whoever acquires the property that they
must be aware of what is on the soil in the property.
Senator Gillibrand. And will there be stipulations on when
and how the cleanup has to occur?
Mr. Gelber. I am not familiar with the specifics around
that particular issue, but we can get back to you on that.
Senator Gillibrand. Thank you. And how does GSA propose to
use the revenue from the sale of Plum Island?
Mr. Gelber. Normally, the revenues from these sales are
returned to, I believe, either the Miscellaneous Receipts
Account to the Treasury or the Federal Buildings Fund. And our
ability to access either of those accounts, if you will, is
subject to congressional approval.
Senator Gillibrand. OK. And has the GSA had discussions
with U.S. Fish and Wildlife Service about migratory bird and
endangered species habitat that exists on the island? And how
does that factor into the sale process?
Mr. Gelber. I am assuming we did, but I can confirm. As a
part of our disposal process, we engage with a range of Federal
agencies whenever we are disposing a particular property.
Senator Gillibrand. If Congress repeals the statutory
requirement to sell Plum Island, would other Federal agencies
like the U.S. Fish and Wildlife Service and the National Park
Service have an opportunity to acquire the property if they
wanted to, and what process would that occur?
Mr. Gelber. My understanding is the property is currently
under the control and custody of the Department of Homeland
Security. I may be incorrect about that. But at the point where
the Department of Homeland Security no longer requires the
property, it is then made available to other Federal agencies.
Senator Gillibrand. Great. Thank you so much.
And thank you, Mr. Chairman, for the hearing.
Senator Rounds. On behalf of Senator Barrasso, I will
recognize Senator Cardin.
Senator Cardin. Thank you. I just want to make a couple
comments.
First, there has been a lot of discussion about lease cost
being more expensive than direct appropriations, and that is
intuitive and correct, but we would point out that in today's
economic environment, with the interest rates being what they
are, there are certain advantages to using long term lease
purchases, and the cost differential could be not very great.
Just point that out from what I understand.
Second, the swap is very unusual for this size. I
understand that and the reasons it was done. There were three
developers interested in that financing arrangement, producing
seven different development alternatives, so there was at least
interest out there for the Hoover Building. Whether it was the
best deal for the Federal Government we may never know, but
there was certainly interest out there.
And I want to just come back to this last point. GSA has
the authority to select a location. GSA has the authority to
figure out what financing mechanism works best. They can
certainly work with Congress in order to get whatever they
need. Congress has expressed itself in numerous ways that we
want to help you. We know that the overall funding in one
fiscal year is going to be extremely challenging. It is even
more challenging now that we have terminated the contracts. So
we have to find out a way to move this quicker than saying it
is going to take another 4 or 5 or 6 years before we get this
done, because the FBI can't wait, and taxpayers demand us to be
more efficient than this.
So, Mr. Gelber, I just urge you to work with not only
authorizing, but the appropriating committees. You have a good
deal of information, working with the FBI, working with what
has already been developed, to move this project in a fast way,
consistent with law that you are now in, using a lot of the
information that has already been obtained. I would just urge
you to do that so that we can make this project move sooner
rather than later.
Thank you, Mr. Chairman.
Senator Barrasso [presiding]. Well, thank you very much,
Senator Cardin.
Any other questions? I know we are in the middle of a vote,
at the end of a vote. I appreciate everyone being here and
taking the time as you have.
I was going to turn to Senator Carper to see if he had any
additional thoughts or questions.
Senator Carper. Mr. Chairman, I do have. First, I want to
say thank you for entering the letter from Senator Grassley,
July 20th letter from Senator Grassley, from the White House,
actually, to Senator Grassley. Marc Short, Director of
Legislative Affairs. It speaks to my concerns about the
minority, as well as majority, being able to do our oversight
work.
Senator Barrasso. And let me just say you have been a
wonderful partner to work with. I want to continue to work with
you, and I want to work with you to make sure we get the
answers that all of us are looking for.
Senator Carper. Thank you very, very much for that, and I
return to the compliment to you.
I would also like to ask unanimous consent to enter into
the record a letter from Tim Horne, dated June 6th. We had
submitted some questions of him. I think those questions that
we had asked of him in my letter to him of June 6th, 2017, and
we have not received a response.
Senator Barrasso. Without objection.
Senator Carper. I would just ask it be made part of the
record and renew our request for a timely response from the
folks at GSA. Thank you.
[The referenced information was not received at time of
print.]
Senator Barrasso. The other thing I want to do, we have
folks from GAO that are here, right? Would you just raise your
hands, please? Raise them high. Hold them up. I just want to
say, as the former Chairman, now senior Democrat on the
Committee of Homeland Security and Governmental Affairs, how
much we appreciate the work that you do.
I was in a meeting earlier this morning, and one of the
thoughts that came to mind in that meeting in the Capitol was
we were talking a bit about budget deficits, and we seem to
have taken our eye off the ball there, and they continue to
grow. I think the budget deficit is going to grow by another
$100 billion this year alone, and we are looking at about a
$700 billion deficit, up from about $400 billion a couple years
ago. We peaked at $1.4 trillion and down to $400 billion. Now
we are back up to about $700 billion, and nobody is really
paying any attention to that, and that is a cause for concern
to me, and I know it is to folks from Wyoming, including the
Senators.
One of the things that I often like to focus on is the work
that you do at GAO to the high risk list, and identifying high
risk ways of wasting money. It is really important work, and
one of the things that I sought to do--Dr. Coburn did that when
he was the senior Republican on our Committee, always used that
as our to do list. Do we need to raise some evidence? We
probably do. Do we need to cut some spending? We probably do.
But also, you give us a great roadmap, just a to do list for
ways that we can save money.
One of the things that has always confounded me is this
issue--and we have worked a lot with you on real property
reforms, Dr. Coburn, Senator Portman, and myself and others,
and to the extent that the work that was--our work ended up in
legislation, signed by the last President, on real property
management.
How, if at all, does that address or come in contact with
the particular issue that is before us today? We spent a lot of
time trying to put together legislation, guidance, and get the
Administration to work in a more appropriate way with our input
to save money in the way that we handle property, real
property. How does that legislation, if at all, affect this
issue?
Mr. Wise. Well, Senator, I am sure as you know, real
property has been on the high risk list for a long time, I
think since 2003, and one of the key things we looked at--this
is not necessarily specific to the FBI, but it is certainly
related--is that one of the elements that we looked at very
hard over the years is the importance of accurate data in order
to enable Federal agencies' real property managers to make good
decisions in what to do with their excess property or how to
best use what resources they have.
And all along we have pushed a number of recommendations to
OMB and GSA along these lines, and to the credit of GSA, they
made a lot of progress in improving the Federal real property
profile. Now, the legislation, your bill from 2016, the Federal
Real Property Reform Act that you sponsored, is----
Senator Carper. Along with Senator Portman and others.
Mr. Wise [continuing]. Along with Senator Portman is
certainly an assist because it gets at something that we think
is quite important, and that is the ability to give a good
break to the taxpayer and save money is really much more in
consolidation of Federal offices into owned facilities versus
leased facilities. So that somewhat relates to what we are
talking about today. But it is also a general point that I
think is very important for overall management of the Federal
real property portfolio.
And as a result, we think, and as you mentioned, as the
bill specifies, improving the data and also looking at postal
facilities as a potential area that we can consolidate Federal
offices into where there is space available, because a lot of
sorting facilities are not sorting much anymore, although----
Senator Carper. In fact, the number of mail processing
centers is down. A couple years ago we had 600 of them. They
are operating now down to about 300 they are operating.
Mr. Wise. Yes. So there is a lot of potential there,
although, you know, again, these are more----
Senator Carper. In fact, my wife and I just drove by one in
Rockford, Illinois, over the weekend.
Mr. Wise. The issue with the postal facilities, those are
much more like factories than they are like office space, so
they need some resources in order to renovate them to make them
suitable for office space. But there is a lot of potential for
consolidation, but again, you know, until you get really a
solid handle on the data and its accuracy, it is very difficult
for agencies to make these kinds of decisions.
So, yes, your point is well taken that the issue around
management of Federal real property certainly has at least a
tangential relationship to the FBI issue at hand today.
Senator Carper. Last thing I would say, Mr. Chairman,
during my time in State government as the Governor of Delaware,
we worked then and we still work with a capital budget. We
have, actually, three budgets; one is the operating budget, one
is the capital budget, and one is the grant and aid budgets to
help nonprofit organizations, which is small compared to the
other two. But we know that the fiscally smart decision for
providing for space, whether it is for the FBI or for anybody
else in Federal Government, oftentimes it is for the Federal
Government to build and own property. That is the smart way to
do it.
It is hard--as Senator Cardin has said and others have
inferred--it is hard to get that kind of huge, like a $2
million appropriation in a year or maybe over 2 years for
something like the FBI building. It is just very, very hard to
do. In the end we save money, we save money over the long haul.
But the way that our budgeting process works, it does not
reward that behavior.
I will ask some questions for the record. One will deal
with the alternative funding mechanisms that seeks to try to
get at this conundrum, and we would appreciate your response to
those questions, all of you.
Mr. Gelber, we look to hearing from you folks soon and more
consistently in the future. Thank you.
And to our FBI brothers and sisters, God bless you. Thanks.
Senator Barrasso. Well, as we wrap up, I want to make a
couple observations.
It is clear from today's testimony that the FBI does need a
new headquarters; that fixing up the Hoover Building with a
$100 million backlog of maintenance needs makes little sense;
that the elaborate plan to swap the Hoover Building for a new
headquarters facility was, in hindsight, not the best option;
that we need a new cost effective and achievable plan to get
the FBI into a new headquarters facility.
So I would like to ask our witnesses one final question.
Will you commit to providing Congress a workable solution to
the FBI's headquarter needs within 120 days?
Mr. Gelber. Yes, sir.
Mr. Haley. Absolutely, sir.
Senator Barrasso. Mr. Wise, they both said absolutely.
[Laughter.]
Mr. Wise. I think that is the job of the Administration,
and we will be happy to come in and evaluate it at some point.
Senator Carper. Maybe you can give them some advice along
the way.
Mr. Wise. Always happy to do that, sir.
Senator Barrasso. Well, you can expect that this Committee
will hold another hearing on this subject before the end of the
year.
With that, I want to thank all of you for being here. Other
members may submit questions for the record. The hearing record
will be open for 2 weeks. I want to thank the witnesses for
their time and their testimony today.
The hearing is adjourned.
[Whereupon, at 11:25 a.m. the Committee was adjourned.]