[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
FEDERAL REAL ESTATE POST-COVID-19
PART 1: A VIEW FROM THE PRIVATE SECTOR
=======================================================================
(117-17)
REMOTE HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
MAY 13, 2021
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
______
U.S. GOVERNMENT PUBLISHING OFFICE
45-930 PDF WASHINGTON : 2021
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
DON YOUNG, Alaska District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio RICK LARSEN, Washington
DANIEL WEBSTER, Florida GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky STEVE COHEN, Tennessee
SCOTT PERRY, Pennsylvania ALBIO SIRES, New Jersey
RODNEY DAVIS, Illinois JOHN GARAMENDI, California
JOHN KATKO, New York HENRY C. ``HANK'' JOHNSON, Jr.,
BRIAN BABIN, Texas Georgia
GARRET GRAVES, Louisiana ANDRE CARSON, Indiana
DAVID ROUZER, North Carolina DINA TITUS, Nevada
MIKE BOST, Illinois SEAN PATRICK MALONEY, New York
RANDY K. WEBER, Sr., Texas JARED HUFFMAN, California
DOUG LaMALFA, California JULIA BROWNLEY, California
BRUCE WESTERMAN, Arkansas FREDERICA S. WILSON, Florida
BRIAN J. MAST, Florida DONALD M. PAYNE, Jr., New Jersey
MIKE GALLAGHER, Wisconsin ALAN S. LOWENTHAL, California
BRIAN K. FITZPATRICK, Pennsylvania MARK DeSAULNIER, California
JENNIFFER GONZALEZ-COLON, STEPHEN F. LYNCH, Massachusetts
Puerto Rico SALUD O. CARBAJAL, California
TROY BALDERSON, Ohio ANTHONY G. BROWN, Maryland
PETE STAUBER, Minnesota TOM MALINOWSKI, New Jersey
TIM BURCHETT, Tennessee GREG STANTON, Arizona
DUSTY JOHNSON, South Dakota COLIN Z. ALLRED, Texas
JEFFERSON VAN DREW, New Jersey SHARICE DAVIDS, Kansas, Vice Chair
MICHAEL GUEST, Mississippi JESUS G. ``CHUY'' GARCIA, Illinois
TROY E. NEHLS, Texas ANTONIO DELGADO, New York
NANCY MACE, South Carolina CHRIS PAPPAS, New Hampshire
NICOLE MALLIOTAKIS, New York CONOR LAMB, Pennsylvania
BETH VAN DUYNE, Texas SETH MOULTON, Massachusetts
CARLOS A. GIMENEZ, Florida JAKE AUCHINCLOSS, Massachusetts
MICHELLE STEEL, California CAROLYN BOURDEAUX, Georgia
KAIALI`I KAHELE, Hawaii
MARILYN STRICKLAND, Washington
NIKEMA WILLIAMS, Georgia
MARIE NEWMAN, Illinois
TROY A. CARTER, Louisiana
------
Subcommittee on Economic Development, Public Buildings, and
Emergency Management
DINA TITUS, Nevada, Chair
DANIEL WEBSTER, Florida ELEANOR HOLMES NORTON,
THOMAS MASSIE, Kentucky District of Columbia
JENNIFFER GONZALEZ-COLON, SHARICE DAVIDS, Kansas
Puerto Rico CHRIS PAPPAS, New Hampshire, Vice
MICHAEL GUEST, Mississippi Chair
BETH VAN DUYNE, Texas GRACE F. NAPOLITANO, California
CARLOS A. GIMENEZ, Florida JOHN GARAMENDI, California
SAM GRAVES, Missouri (Ex Officio) Vacancy
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ v
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Dina Titus, a Representative in Congress from the State of
Nevada, and Chair, Subcommittee on Economic Development, Public
Buildings, and Emergency Management, opening statement......... 1
Prepared statement........................................... 3
Hon. Michael Guest, a Representative in Congress from the State
of Mississippi, and Member, Subcommittee on Economic
Development, Public Buildings, and Emergency Management,
opening statement.............................................. 4
Prepared statement........................................... 5
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure, prepared statement............................. 43
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 44
WITNESSES
Genevieve Hanson, Principal, Strategy and Transactions, Real
Estate Planning, Execution, and Operations, Ernst & Young LLP,
oral statement................................................. 6
Prepared statement........................................... 8
Kay Sargent, ASID, IIDA, CID, LEED AP, MCR/w, WELL AP, Senior
Principal, Director of WorkPlace, HOK, on behalf of the
International Facility Management Association, oral statement.. 9
Prepared statement........................................... 11
Marcy Owens Test, Senior Vice President and Federal Lessor
Advisory Group Member, CBRE, Inc., oral statement.............. 14
Prepared statement........................................... 15
Norman Dong, Managing Director, FD Stonewater, oral statement.... 19
Prepared statement........................................... 21
Kelly Bacon, Principal, Global Practice Lead, Workplace Advisory
Design and Consulting Services, AECOM, oral statement.......... 22
Prepared statement........................................... 24
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
May 10, 2021
SUMMARY OF SUBJECT MATTER
TO: LMembers, Subcommittee on Economic Development,
Public Buildings, and Emergency Management
FROM: LStaff, Subcommittee on Economic Development, Public
Buildings, and Emergency Management
RE: LSubcommittee Hearing on ``Federal Real Estate
Post-COVID-19
Part One: A View from The Private Sector''
_______________________________________________________________________
Purpose
The Subcommittee on Economic Development, Public Buildings,
and Emergency Management will meet on Thursday, May 13, 2021,
at 2:00 p.m. EDT in 2167 Rayburn House Office Building and
virtually via Zoom to hold a hearing titled, ``Federal Real
Estate Post-COVID-19: Part One: A View from the Private
Sector.'' At the hearing, Members will receive testimony from
private sector real estate industry professionals.
Background
The General Services Administration (GSA) provides
workspace for 1.2 million federal employees across more than 50
federal agencies.\1\ GSA's Public Building Service (PBS) owns
over 1,500 federal buildings.\2\ The average age of these
buildings is nearly 47 years old.\3\ Approximately 53 percent
of PBS's portfolio is over 50 years old and 28 percent is over
75 years old.\4\
---------------------------------------------------------------------------
\1\ https://crsreports.congress.gov/product/pdf/R/R46410.
\2\ https://www.gsa.gov/cdnstatic/
GSA%20FY%202021%20Congressional%20Justification.pdf
\3\ https://www.gsa.gov/cdnstatic/
GSA%20FY%202021%20Congressional%20Justification.pdf
\4\ https://www.gsa.gov/cdnstatic/
GSA%20FY%202021%20Congressional%20Justification.pdf
---------------------------------------------------------------------------
PBS leases approximately 8,100 office buildings,
courthouses, land ports of entry, data processing centers,
laboratories, and specialized space around the country for
federal agencies.\5\ During the period from FY 2019 through FY
2023, 60 percent of PBS leases will expire.\6\ GSA's PBS
portfolio is projected to include 183.4 million square feet of
owned space and 183.5 million square feet of leased space in FY
2021.\7\
---------------------------------------------------------------------------
\5\ https://www.gsa.gov/real-estate/gsa-properties
\6\ https://www.gsa.gov/cdnstatic/
GSA%20FY%202021%20Congressional%20Justification.pdf
\7\ https://www.gsa.gov/cdnstatic/
GSA%20FY%202021%20Congressional%20Justification.pdf
---------------------------------------------------------------------------
PBS and its activities are funded through GSA's Federal
Buildings Fund (FBF).\8\ GSA enters into occupancy agreements
with its federal agency tenants and charges commercially
equivalent rent.\9\ Those rents fund the FBF.\10\ In turn, the
FBF funds the operations of PBS, new construction, repairs and
alterations, and payments for commercial leases. The
availability of funds in the FBF are subject to annual
appropriations.\11\ In FY21, the availability of funds in the
Consolidated Appropriations Act, 2021 is $9.065 billion.\12\
This amount includes:
---------------------------------------------------------------------------
\8\ 40 U.S.C. Sec. 592
\9\ 40 U.S.C. Sec. 586
\10\ 40 U.S.C. Sec. 592
\11\ 40 U.S.C. Sec. 3307
\12\ Consolidated Appropriations Act, 2021, Public Law No. 116-260
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L$5.752 billion for commercial lease payments
L$2.533 billion for building and PBS operations
L$576.6 million for Repairs and alterations
L$230 million for new construction and acquisition
GSA's Process
The Administrator of General Services is authorized by 40
U.S.C. Sec. 585 to enter into lease agreements (of no more
than 20 years) to secure space for federal agencies.\13\ GSA
also acquires space through new construction or purchase.\14\
---------------------------------------------------------------------------
\13\ https://www.gsa.gov/cdnstatic/LDG-CHAPTER_INTRODUCTION-
FINAL_9-30-11final_508C.pdf
\14\ 40 U.S.C. Sec. Sec. 3304, 3305
---------------------------------------------------------------------------
GSA's leasing process begins with the development of space
requirements. Typically, GSA begins reaching out to expiring
lease tenants approximately 24 months in advance of the
expiration to determine whether a continuing need exists, and
to notify the agency of the need to provide GSA with a request
for space and begin development of the program of requirements.
After the space requirements are developed and GSA agrees with
and finalizes the documentation for the lease, if the lease
cost is below the ``prospectus'' threshold (currently at $3.095
million), GSA begins the process of lease acquisition.\15\ If
the lease costs is above the prospectus level, GSA develops a
prospectus pursuant to 40 U.S.C. Sec. 3307 that includes
details on the purpose, need, size, scope of the leased
space.\16\ The prospectus is submitted to the House Committee
on Transportation and Infrastructure and the Senate Committee
on Environment and Public Works. Both Committees must approve
via resolution each prospectus prior to GSA executing the
lease.\17\
---------------------------------------------------------------------------
\15\ https://www.gsa.gov/real-estate/design-construction/gsa-
annual-prospectus-thresholds. FY22 threshold will increase to $3.375
million, Letter dated January 4, 2021 from the General Services
Administration to the Committee on Transportation and Infrastructure.
\16\ 40 U.S.C. Sec. 3307.
\17\ Id.
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Similarly, for new construction, alteration or purchase
projects, GSA works with its tenant agencies on a program of
requirements and Committee action on a prospectus is required
if the costs are above the prospectus threshold.
Federal Telework Policies and COVID-19
The Telework Enhancement Act of 2010 directed the Office of
Personnel Management (OPM) to provide an annual report to
Congress addressing the telework programs of each Executive
agency (5 U.S.C. Sec. 6506).\18\ The most recent report--the
Fiscal Year 2019 Status of Telework in the Federal Government
Report to Congress--documented the last Governmentwide telework
data collection effort prior to the 2020 COVID-19 pandemic, and
does not examine the increase in telework necessitated by the
pandemic.\19\
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\18\ https://www.telework.gov/reports-studies/reports-to-congress/
2020-report-to-congress.pdf
\19\ https://www.telework.gov/reports-studies/reports-to-congress/
2020-report-to-congress.pdf
---------------------------------------------------------------------------
OPM's 2020 Federal Employee Viewpoint Survey found that 59
percent of employees teleworked every workday during the peak
of the pandemic compared to 3 percent who teleworked every
workday before the pandemic.\20\ The report opined that
``changes in management practices and policies in responses to
the pandemic have driven widespread speculation about how
workplaces might look and function post-pandemic.'' \21\
---------------------------------------------------------------------------
\20\ https://www.opm.gov/fevs/reports/governmentwide-reports/
governmentwide-management-report/governmentwide-report/2020/2020-
governmentwide-management-report.pdf
\21\ https://www.opm.gov/fevs/reports/governmentwide-reports/
governmentwide-management-report/governmentwide-report/2020/2020-
governmentwide-management-report.pdf
---------------------------------------------------------------------------
Executive Order on Protecting the Federal Workforce and Requiring Mask
Wearing
On January 20, 2021, President Biden issued an Executive
Order (EO) titled Protecting the Federal Workforce and
Requiring Mask-Wearing.\22\ Accompanying the EO was workplace
safety guidance for executive departments and agencies,
including the following directives: \23\
---------------------------------------------------------------------------
\22\ https://www.whitehouse.gov/wp-content/uploads/2021/01/M-21-
15.pdf
\23\ https://www.whitehouse.gov/wp-content/uploads/2021/01/M-21-
15.pdf
---------------------------------------------------------------------------
LOccupancy: No federal workplace should operate
above 25 percent of normal occupancy standards at any given
time during periods of high community prevalence or
transmission. The agency's COVID-19 Coordination Team should
develop a staffing plan that outlines which employees will work
on-site full-time, on-site occasionally, or fully remote.
LPhysical Distancing: Individuals should maintain
distance of at least six feet from others, consistent with CDC
guidelines, in offices, conference rooms, and all other
communal spaces. Occupational health professionals in each
agency should assess elevators to determine safe occupancy.
Individuals must wear masks in elevators and in elevator
lobbies.
LEnvironmental Cleaning: Enhanced cleaning and
physical barriers such as plexiglass shields may be provided.
LHygiene: Hand sanitizer stations are to be
available at the building entrance and throughout workspaces.
Indoor ventilation will be optimized to increase the proportion
of outdoor ventilation, improve filtration, and reduce or
eliminate recirculation. Phones, computers, kitchen items, and
other office equipment must be disinfected by users.
LVisitors: The number of visitors to the federal
workplace should be minimized. Visitors should be screened.
Visitors are required to wear masks in federal or federally
leased facilities.
LStaggered Work Times and Cohort-Based Scheduling:
Agencies should encourage staggered work times to reduce
density, minimize traffic volume in elevators, and avoid crowds
during commuting.
Centers for Disease Control COVID-19 Employer Information for Office
Buildings
Throughout the COVID-19 pandemic the Centers for Disease
Control (CDC) has provided guidance to federal agencies and the
public on COVID-19 preparedness and response. On April 7, 2021,
the CDC updated its guidance on office buildings and
recommended the following \24\:
---------------------------------------------------------------------------
\24\ https://www.cdc.gov/coronavirus/2019-ncov/community/office-
buildings.html
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LSeats and workstations should be adjusted to
maintain social distancing of 6 feet between employees.
LEmployees should be separated by physical
barriers where social distancing is not an option.
LHigh-touch communal items should be replaced with
pre-packaged, single-serving items.
LStaff should be encouraged to bring their own
water to minimize use and touching of water fountains.
LNo-touch water fountains should be installed.
LBuilding ventilation should be improved by
increasing the percentage of outdoor air, opening windows,
improving air filtration, using portable high-efficiency
particulate air (HEPA) fan/filtration systems, and ensuring
exhaust fans are functional.
LHigh-touch surfaces that are frequently touched
by multiple people, such as door handles, desks, light
switches, faucets, toilets, workstations, keyboards,
telephones, handrails, printer/copiers, and drinking fountains
should be cleaned daily.
LInstructions on hygiene and social distancing
should be posted at building entrances.
GSA's Workplace 2030
Early in 2020, as a result of COVID-19, GSA began a process
to consult with its key tenant agencies and the private sector
to identify the impacts and trends on federal office space
which GSA developed into its Workplace (WP) 2030
initiative.\25\ The initiative examined the potential of
increased teleworking beyond COVID, the opportunities it may
present to improve efficiency and reduce space needs and costs,
and the potential savings to the taxpayer.\26\
---------------------------------------------------------------------------
\25\ Workplace 2030: Envisioning the Future of Federal Work,
General Services Administration
\26\ Id.
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Proposed Alternatives To Address Funding Challenges
Since 2011, the amount of funds available in the FBF for
new construction and repairs and alternations has decreased
below receipts received by GSA from its tenant agencies.\27\ In
addition, reductions, consolidations, and reconfigurations of
space to improve efficiency and decrease real estate costs
often require capital upfront to execute such plans.\28\
Accordingly, a number of solutions have been proposed for
alternative ways of funding projects, including public-private
partnerships (P3s), discounted purchase options, and the
creation of a new fund outside of GSA's FBF. In addition,
Congress provided pilot authority in the Federal Assets Sale
and Transfer Act (FASTA) in 2016 to reform the disposal of
unneeded assets.\29\
---------------------------------------------------------------------------
\27\ See appropriations acts beginning in FY2011
\28\ See, for example, GSA's Consolidations Activities Program,
Prospectus No. PCA-0001-MU21
\29\ Public Law No. 114-287 as amended by Public Law No. 114-318
---------------------------------------------------------------------------
While GSA has the legal authorities to carry out public-
private partnerships (P3s) and discounted purchase options, the
Office of Management and Budget's (OMB) interpretation of
budgetary scoring rules effectively prohibits GSA from using
these alternatives.\30\ Specifically, OMB's interpretation of
the budgetary scoring rules effectively would require GSA to
have the full amount of budgetary authority for a project
upfront.\31\
---------------------------------------------------------------------------
\30\ OMB Circular A-11, Appendix B
\31\ Id.
---------------------------------------------------------------------------
OMB's solution has been proposed in both President Biden's
American Jobs Plan \32\ and President Trump's Fiscal Year 2021
budget submission to Congress which included the establishment
of a new revolving fund--the Federal Capital Revolving Fund
(FCRF)--to finance the construction of new federally owned non-
defense buildings.\33\
---------------------------------------------------------------------------
\32\ https://www.whitehouse.gov/briefing-room/statements-releases/
2021/03/31/fact-sheet-the-american-jobs-plan/
\33\ https://www.gsa.gov/about-us/newsroom/news-releases/president-
trumps-fiscal-year-2020-budget-proposes-focus-on-innovation-physical-
infrastructure-and-efficient-and-effective-government
---------------------------------------------------------------------------
This new fund would be in addition to GSA's FBF, and would
finance federally owned non-defense buildings and classify
funding for purchases/construction as mandatory. After an
initial $10 billion mandatory appropriation to seed the fund,
the FCRF would be allowed to transfer up to $2.5 billion
annually to Chief Financial Officers Act agencies that wish to
make capital acquisitions (construction, renovations, or
purchases) and therefore keep those capital purchases from
eating up the entirety of that year's fiscal year
appropriation.\34\ Appropriators would decide which projects
could be funded, and agencies would pay back the fund in annual
increments over 15 years through regular appropriations. While
GSA would administer this fund, payback would go to the new
fund and not to GSA's FBF. It is unclear how this new fund
would impact the FBF.
---------------------------------------------------------------------------
\34\ https://www.govinfo.gov/content/pkg/STATUTE-104/pdf/STATUTE-
104-Pg2838.pdf
---------------------------------------------------------------------------
Conclusion
As the COVID-19 pandemic enters its second year, federal
agencies and the private sector are contemplating how, when, or
if to bring employees back into office space. It would be
beneficial for Members of Congress to get the private sector's
perspective on post-COVID health and safety trends, capacity
and space design challenges, new technologies, environmental
and well-building goals, and opportunities for long-term cost
savings.
Witness List
LMs. Kay Sargent, Senior Principal, Director of
WorkPlace, HOK
LMs. Genevieve Hanson, Principal, Strategy &
Transactions--Real Estate Planning, Execution & Operations,
Ernst & Young, LLP
LMs. Kelly Bacon, Principal, Global Practice Lead,
Workplace Advisory Design and Consulting Services, AECOM
LMs. Marcy Owens Test, Senior Vice President, CBRE
Federal Lessor Advisory Group
LMr. Norman Dong, Managing Director, FD Stonewater
FEDERAL REAL ESTATE POST-COVID-19
PART 1: A VIEW FROM THE PRIVATE SECTOR
----------
THURSDAY, MAY 13, 2021
House of Representatives,
Subcommittee on Economic Development, Public
Buildings, and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 2 p.m. in room
2167 Rayburn House Office Building and via Zoom, Hon. Dina
Titus (Chair of the subcommittee) presiding.
Members present in person: Ms. Titus, Ms. Norton, and Mr.
Guest.
Members present remotely: Ms. Davids, Mrs. Napolitano, Mr.
Carter of Louisiana, and Miss Gonzalez-Colon.
Ms. Titus. The subcommittee will come to order.
I ask unanimous consent that the chair be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I ask unanimous consent that Members not on the
subcommittee will be permitted to sit at today's subcommittee
hearing and ask questions.
I know we have a guest, and I would like to extend a
special welcome to him. He is the newest member of the
Transportation and Infrastructure Committee, Congressman Troy
Carter of Louisiana. So I look forward to working with him on
the committee.
Without objection, so ordered.
As a reminder, please keep your microphone muted unless you
are speaking. Should I hear any inadvertent background noise, I
will request that the Member please mute their microphone. To
insert a document into the record, please have your staff email
it to [email protected].
I would like to welcome everyone to today's hearing and
thank our witnesses for joining us to discuss the impact of the
COVID-19 pandemic on the Federal real estate portfolio and
where we go from here.
The past 14 months have really been overwhelming. Families
across the country are struggling to make ends meet. Small
businesses and schools have been forced to close their doors to
curb the spread of the virus. The famed Las Vegas Strip, which
I represent in the heart of my district, resembled a scene from
an apocalyptic movie rather than a place that usually welcomes
over 40 million visitors a year.
With businesses closed, schools moving to virtual
classrooms, and our highways and airports nearly empty,
unemployment reached levels not seen since the Great
Depression.
Now, with the implementation of the American Rescue Plan,
vaccination rates continue to rise, infections are dropping,
and communities are starting to open back up, there is a light
at the end of the tunnel.
Of course, Federal workers weren't spared the trauma of the
past 14 months either. Even those who were fortunate enough to
be able to work from home had to deal with the lack of
childcare, the challenges of online schooling, and the health
and well-being of their family members.
While working remotely wasn't ideal for all, and was, in
fact, challenging for many, the experiment in widespread remote
work is widely considered a success, and it is prompting
workers and employers to reimagine how and where work gets done
going forward.
These conversations are no longer theoretical. We are
reopening. Hair salons, restaurants, and gyms are returning to
full capacity, tickets for Broadway shows are going on sale,
and the first major conventions and trade shows are returning
to Las Vegas this summer.
Meanwhile, as State and local governments are also lifting
restrictions and corporate America ponders calling employees
back into offices, discussions about office space are speeding
up.
How much office space will organizations need? Will
workspaces need to be reconfigured? Will employees' start and
end times need to be staggered? Will companies require
employees to be vaccinated before they return to work in their
spaces? And will workers be allowed more flexibility to
continue to work remotely?
These are just some of the questions that are also relevant
to this subcommittee because we authorize the acquisition of
space for the General Services Administration, or GSA.
The GSA provides workspace for 1.2 million Federal
employees in every State and Territory across more than 50
agencies at the Federal level. GSA's Public Buildings Service
owns over 1,500 Federal buildings and leases approximately
8,100 office buildings, courthouses, land ports of entry, data
processing centers, laboratories, and specialized space all
across the country.
With 60 percent of Public Buildings Service leases expiring
in the next few years and agencies contemplating new ways of
working, the Government needs to rethink its real estate
portfolio.
Currently, when agencies seek workspaces, GSA considers the
amount of space needed, the type of space, the location, the
neighborhood amenities, disaster risks such as seismic safety
and fire protection, and, of course, the price.
As a result of the pandemic, GSA will have to also consider
resilience, sanitation, airflow, spatial planning, and telework
policies. The pivot will require GSA to consider how the built
environment can help the Government provide better services,
attract and retain employees, and protect our workers' health.
Today, we will host the first of two hearings exploring
these questions. In a moment, we will hear from expert
stakeholders from the private sector with experience in the
management, design, and construction of Federal buildings and
commercial spaces. In our second hearing, we will discuss these
issues with the leadership of the GSA to understand their
approaches to these questions.
In the coming weeks or so, I look forward to hearing from
them about what changes in policies, authorities, and
regulations Congress can and should enact to meet these
challenges and promote healthy and safe work environments while
also protecting the interest of taxpayers.
I want to once again thank our witnesses for being with us
and for participating in today's discussion. We have heard a
lot about your expertise, and we are grateful for your
testimony. I want to apologize in advance, however. Votes have
been called, and you may see some people moving in and out.
That is certainly no reflection on our interest in what you
have to say.
[Ms. Titus' prepared statement follows:]
Prepared Statement of Hon. Dina Titus, a Representative in Congress
from the State of Nevada, and Chair, Subcommittee on Economic
Development, Public Buildings, and Emergency Management
I'd like to welcome everyone to today's hearing and thank our
witnesses for joining us to discuss the impacts of the COVID-19
pandemic on the federal real estate portfolio and where we go from
here.
The past 14 months have been overwhelming. Families across this
country are struggling to make ends meet. Small businesses and schools
have been forced to close their doors to curb the spread of this deadly
virus. The famed Las Vegas Strip, which is in the heart of my district,
resembled a scene from an apocalyptic movie rather than a place that
usually welcomes over 40 million visitors each year.
With businesses closed, schools moving to virtual classrooms, and
our airports and highways nearly empty, unemployment reached levels not
seen since the Great Depression.
Now with the implementation of the American Rescue Plan,
vaccination rates continue to rise, infections are dropping, and
communities are starting to open back up.
Of course, federal workers were not spared the trauma of the past
fourteen months. Even those who were fortunate to be able to work from
home had to deal with lack of childcare, the challenges of online
schooling, and the health and well-being of their family members.
While working remotely was not ideal for all and was, in fact,
challenging for many, the experiment in widespread remote work is
widely considered a success, and is prompting workers and employers to
reimagine how and where work gets done going forward.
Those conversations are no longer theoretical. We are reopening.
Hair salons, restaurants, and gyms are returning to full capacity.
Tickets for Broadway shows are going on sale. And the first major
conventions and trade shows are returning to Las Vegas this summer.
As state and local governments are lifting restrictions and
corporate America ponders calling employees back into offices,
discussions about office space are speeding up. How much office space
will organizations need? Will work spaces need to be reconfigured? Will
employee start and end times need to be staggered? Will companies
require employees to be vaccinated before they return to their
workspaces? Will workers be allowed more flexibility to work remotely?
These are just some of the questions that are also relevant to this
Subcommittee because we authorize the acquisition of space for the
General Services Administration, also known as the GSA.
The GSA provides workspace for 1.2 million federal employees, in
every state and territory, across more than 50 federal agencies. GSA's
Public Building Service owns over 1,500 federal buildings and leases
approximately 8,100 office buildings, courthouses, land ports of entry,
data processing centers, laboratories, and specialized space around the
country.
With sixty percent of Public Building Service leases expiring in
the next few years and agencies contemplating new ways of working, the
government needs to rethink its real estate portfolio.
Currently, when agencies seek work space, GSA considers the amount
of space needed; the type of space; the location; the neighborhood
amenities; disaster risks such as seismic safety and fire protection;
and most of all, the price.
As a result of the pandemic, GSA will have to also reconsider
resilience, sanitation, air flow, spatial planning, and telework
policies. The pivot will require GSA to consider how the built
environment can help the government provide better services, attract
and retain employees, and protect workers' health.
Today we will host the first of two hearings exploring these
questions.
In a moment, we will hear from expert stakeholders in the private
sector with experience in the management, design, and construction of
federal buildings and commercial spaces.
In our second hearing we will discuss these issues with the
leadership of the General Services Administration and understand their
approaches to these questions. In the coming weeks/months, I look
forward to hearing from them about what changes in policies,
authorities, and regulations Congress can or should enact to meet these
challenges and promote healthy and safe work environments, while
protecting the interest of taxpayers.
I once again thank our witnesses for being with us and for
participating in today's discussion. I am grateful for your testimony.
Ms. Titus. At this time, I would yield to the ranking--
ranking--Mr. Guest--I am not sure what your title is now--for
his opening statement.
Mr. Guest. Thank you, Chair Titus.
And I also would like to thank our witnesses for joining us
today.
Prior to COVID-19, Congress made significant progress
focusing on right-sizing Federal office space. Through
reductions and consolidations, we saved the American taxpayers
over $4 billion. Through the bipartisan approach of focusing on
freezing and then reducing Federal office space, we are still
seeing the savings produced by those efforts today.
As we saw before the pandemic, office space design and uses
were already changing--away from the need for individual
offices toward more open floor plans and shared spaces.
These changes and the subsequent savings not only reduced
costs for the taxpayers, but also freed up more resources for
agencies to invest in their core mission.
As a result of COVID, teleworking has increased
exponentially across Government. Early on, we didn't know how
the impact was going to affect us and the results that it was
going to have on the American work life. Would we need more
overall office space for social distancing? Would this mean
less open space and more individual offices? How would we
change to accommodate in-person services?
If we look at the private sector, private-sector trends, we
are going to see that we will continue to see higher levels of
teleworking and a further reduced need for current office
space.
What we have learned is we don't have to do things the same
way we have always done them before. By leveraging technology
and innovation and focusing on what is actually needed in the
built environment, we can save money, increase efficiency, and
ensure space better supports agency missions.
As we examine the future of Federal office space, it is
important for us to consider private-sector trends. What are
those trends that make sense in a Federal real estate context
and what issues and questions should we be addressing or
asking?
We also must examine how we can position GSA and other
Federal agencies to manage their real estate portfolios
accordingly and how those decisions best prepare them to
execute their mission. In order to facilitate that, the right
initiatives and tools need to be in the toolbox, and we must
remove obstacles.
For example, GSA should not be forced, because of scoring
rules interpretation, to choose either traditional Federal
construction or operation leases. Public-private partnerships,
discounted purchase options, and other flexible solutions must
be on the table. Decisions need to be based on what makes sense
for the agency mission and costs.
That is why I am pleased to be a sponsor and cosponsor of
bills, along with subcommittee Ranking Member Webster and
Representative Pence, that are designed to give the GSA more
choices for P3s and to negotiate discounted purchase options
that provide GSA with the needed flexibility to protect
American tax dollars.
As we saw with the reduce the footprint initiative, right-
sizing the portfolio for future savings, and upfront cost
approach, we see that space needs to be reconfigured. Old space
must be sold, and new, more efficient space needs to be
acquired. Ensuring GSA has real choices is critical to finding
significant savings in our real estate portfolio.
I look forward to hearing from our witnesses.
[Mr. Guest's prepared statement follows:]
Prepared Statement of Hon. Michael Guest, a Representative in Congress
from the State of Mississippi, and Member, Subcommittee on Economic
Development, Public Buildings, and Emergency Management
Thank you, Chair Titus. I want to thank our witnesses for joining
us today.
Prior to COVID-19, we made significant progress focusing on right-
sizing federal office space. Through reductions and consolidations in
space approved by the Committee in GSA's prospectus process, we saved
over $4 billion dollars. Through the bipartisan efforts of focusing on
freezing and then reducing federal space, we are still seeing the
savings produced by those efforts today.
As we saw before COVID, office space usage and design were already
changing--away from the need for individualized offices towards more
open floor plans and shared spaces. These savings not only reduced
costs for the taxpayer, but also freed up more resources for agencies
to invest in their core missions. Since COVID, teleworking increased
exponentially across government. Early on, we didn't know how COVID
would impact federal office space--would we need more space for social
distancing? Less open space? More individual offices?
To the contrary, if private sector trends are any indication, we
may expect higher levels of teleworking to continue and a further
reduced need for space. What we have learned from the past year has
caused many companies to more closely examine the money they are
spending on physical space and making decisions on what space is
actually needed to accomplish their work.
But, of course, as offices reopen, even the most robust teleworking
environments would still require space for in-person collaboration and
interactions. And, we know some agency missions may require very little
teleworking. Ultimately, what we have learned is we don't have to do
things the same ways we've always done them before. By leveraging
technology and focusing on what is actually needed in the built
environment, we can save money, increase efficiency, and ensure space
better supports agency missions.
As we examine the future of federal office space, it is important
for us to consider private sector trends; whether those trends make
sense in the federal real estate context; and what issues and questions
we should be addressing or asking. We also must examine how we position
GSA and other federal agencies to manage their real estate portfolios
accordingly. We can talk all we want about what the real estate
portfolio should look like, how it should be designed, and how much
space is actually needed. But, without the right incentives and tools
in the toolbox, little will happen.
For example, GSA should not be forced, because of scoring rules
interpretation, to choose either traditional federal construction or
operating leases. Public-Private Partnerships, discounted purchase
options, and other solutions must be on the table. Decisions need to be
made based on what makes sense for the agency mission and costs. That
is why I am pleased to be a sponsor and cosponsor of bills, along with
Subcommittee Ranking Member Webster and Representative Pence, that are
designed to help give GSA more choices for P3s and negotiating
discounted purchase options.
As we saw with the reducing-the-footprint initiative, it sometimes
costs money to downsize. Space needs to be reconfigured; old space must
be sold; and new, more efficient space needs to be acquired. Ensuring
GSA has real choices is critical to finding significant savings in our
real estate portfolio. I look forward to hearing from our private
sector witnesses today on these issues.
Mr. Guest. And, Madam Chair, I yield back.
Ms. Titus. Thank you, Mr. Guest.
I would now like to welcome the witnesses to the panel. We
have Ms. Genevieve Hanson who is a principal at Ernst & Young;
Ms. Kay Sargent, a senior principal at HOK; Ms. Marcy Owens
Test, a senior vice president at CBRE Federal Lessor Advisory
Group; Mr. Norman Dong, managing director at FD Stonewater; and
Ms. Kelly Bacon, principal at AECOM.
We thank you all for being here today, and we look toward
to your testimony.
Without objection, our witnesses' full statements will be
included in the record.
Since your written statement has been made part of the
record, the committee would require that you limit your oral
testimony to 5 minutes.
So we will proceed with the testimony. And, Ms. Hanson, we
would invite you to go first.
TESTIMONY OF GENEVIEVE HANSON, PRINCIPAL, STRATEGY AND
TRANSACTIONS, REAL ESTATE PLANNING, EXECUTION, AND OPERATIONS,
ERNST & YOUNG LLP; KAY SARGENT, ASID, IIDA, CID, LEED AP, MCR/
w, WELL AP, SENIOR PRINCIPAL, DIRECTOR OF WORKPLACE, HOK, ON
BEHALF OF THE INTERNATIONAL FACILITY MANAGEMENT ASSOCIATION;
MARCY OWENS TEST, SENIOR VICE PRESIDENT AND FEDERAL LESSOR
ADVISORY GROUP MEMBER, CBRE, INC.; NORMAN DONG, MANAGING
DIRECTOR, FD STONEWATER; AND KELLY BACON, PRINCIPAL, GLOBAL
PRACTICE LEAD, WORKPLACE ADVISORY DESIGN AND CONSULTING
SERVICES, AECOM
Ms. Hanson. Good afternoon, Chairwoman Titus, Ranking
Member Guest, and subcommittee members. I would like to thank
the subcommittee and its staff for the opportunity to speak to
you today on this important topic.
I must say that, Chairwoman and Ranking Member Guest, you
probably summed up my talking points, but I will continue.
My name is Genevieve Hanson. I am a principal with Ernst &
Young in the Strategy and Transactions Real Estate practice. I
have got over 25 years of experience in management consulting
and real estate, both in public and private sectors. I had the
pleasure of managing large-scale public-private partnerships at
GSA, and I have also held the role of Chief Sustainability
Officer at the Department of Health and Human Services while
serving as an Associate Deputy Assistant Secretary for Real
Estate and Supply Chain Operations.
The views that I express today in the written and oral
testimony are my own and not necessarily those of Ernst & Young
LLP, or other members of the global EY organization.
Over the past 20 years, there has been a slow evolution to
now revolution in how real estate is managed, largely dependent
on COVID-19. Meaning that work schedules, places of work, seat
assignments, and the use of a range of spaces have been
democratized. The focus of this testimony is primarily on the
office environment.
Currently, we are experiencing a significant
transformation, as you have noted, in where, when, and how
millions of Americans work, principally in order to mitigate
health and safety concerns while maintaining business
operations and the like.
Today, the pandemic has only intensified the focus on
healthy buildings and workplaces, namely, to support the
physical, social, and psychological health and well-being of
those that use the space.
These elements include air quality, energy efficiency,
building materials, plantings, lighting, sanitized workspaces,
wayfinding, accessibility, fitness, relaxation, and comfort.
Processes and technologies are being reengineered and
innovated to enhance the employee experience. Notably, COVID-19
has been an accelerant in increasing the flexibility of work
schedules and work locations.
As a result, organizations are reevaluating their real
estate requirements, performance metrics, productivity, ability
to work in the office and remotely, culture, and change
management. Decisionmakers from all sectors are asking
themselves the same question: How much should the current
pandemic environment influence our short-term and long-term
real estate decisions?
As you said, depending on its mission, goals, structure,
and operations, an organization may need to expand, contract,
or simply modernize their real estate portfolio.
It is important to note that millions of Americans never
left their worksites because they provide products and services
that are vital to our everyday lives.
I would like to highlight three areas within this rubric of
healthy building and workforce well-being to consider: people,
real estate, and technology.
The first key area is people. The pandemic has emphasized
the need to keep people at the center of business decisions.
Remote working or telework has transitioned from being a perk
to being commonplace. Yet the need for in-person interactions
remains strong in order to collaborate, to team, to mentor, and
connect.
When considered thoughtfully, innovative workplaces and
workplace flexibility can play a pivotal role in attracting and
retaining talent as well as enhancing operational efficiencies.
The second area is real estate. The real estate and
construction sector combined represents approximately one-sixth
of our economy, and the Federal footprint comprises 1 billion
square feet.
With more than 350,000 energy-utilizing buildings and
600,000 vehicles, the Federal Government is the Nation's
largest energy consumer. Therefore, it matters how the public
and private sector work in partnership to support the health,
safety, and well-being of people in its facilities.
Prior to COVID, there had been a 20-year trend towards a
more sustainable Federal footprint. As we emerge out of the
pandemic, we will see an even greater focus on amenitizing
sustainability through smart building design, high energy
efficiency, HVAC systems, supplemental air purification
systems, workplace sanitization, and improved water and waste
management.
Deeper collaboration and solutioning between Federal
Government and the private sector can speed up innovative
sustainability.
The race to innovate leads into the third key area, which
is technology. In recent years, real estate has evolved from
systems that are singular, disconnected, and analog to a more
multidimensional, connected, and digitally integrated network
of smart building technologies.
As we move forward, connectivity among the workforce and
data will become key tenets for continuity of operations,
collaboration, and decisionmaking.
The pandemic has increased the need to consider and scale
workplace technologies to advance sufficient real property
management, such as the Internet of Things, robotic process
automation, chat box, artificial intelligence, and virtual
collaborative tools.
In closing, several force multipliers can further shift
this evolution of enhanced real estate management to a
revolution. This includes deep collaboration with the private
sector, prioritizing initiatives, reengineering processes,
developing durable policies, and enhancing governance.
Thank you for the opportunity to appear before the
subcommittee, and I look forward to any questions.
[Ms. Hanson's prepared statement follows:]
Prepared Statement of Genevieve Hanson, Principal, Strategy and
Transactions, Real Estate Planning, Execution, and Operations, Ernst &
Young LLP
Good afternoon, Chairwoman Titus, Ranking Member Webster and
subcommittee members. I'd like to thank the subcommittee and its staff
for this opportunity to speak with you today on this important topic.
My name is Genevieve Hanson, and I am a principal with Ernst & Young
LLP, in the Strategy and Transactions Real Estate practice. I have over
25 years of consulting and real estate experience, both in the public
and private sectors. I have managed large-scale public-private
partnerships as a special advisor at the US General Services
Administration (GSA). I also held the role of Chief Sustainability
Officer at the US Department of Health and Human Services, while
serving as the Associate Deputy Assistant Secretary for Real Estate and
Supply Chain Operations. The views I express in my written and oral
testimony are my own and are not necessarily those of Ernst & Young LLP
(EY) or other members of the global EY organization.
Over the past 20 years, there has been a slow evolution in how real
estate is managed and how space is democratized, where employees
utilize an increased range of space types and work in open workspaces.
The focus of my testimony is primarily on the office environment, in
which we're now experiencing a significant transformation, largely
attributed to the COVID-19 pandemic. Recognizing that millions of
Americans work in a wide range of workplaces and many are not able to
work remotely, I am limiting my testimony to the office environment.
There is a desire today for what I consider ``healthy buildings'' to
support the physical, social and psychological health and well-being of
those using these spaces. We are also seeing the process and technology
that support these users being re-engineered and innovated. The COVID-
19 pandemic has been an accelerant in increasing the flexibility of
work schedules and work locations, resulting in the need for
organizations to assess their real estate requirements, performance
metrics, productivity, the balance between working in the office and
remote work, and related change management strategies. Decision-makers
across all sectors are asking themselves the same question: How much
should the current pandemic environment influence our short- and long-
term real estate decisions? Depending on its mission, goals and
structure, an organization may need to expand, contract or modernize
its real estate portfolio.
I'd like to highlight three key areas within the rubric of
``healthy buildings'' and workforce well-being for both government and
private sector to consider: people, real estate and technology.
People: The COVID-19 pandemic has emphasized the need to keep
people at the center of business decisions. Remote working, or
telework, has transitioned from being a perk to being commonplace at
present. In many cases, organizations have relied on technology to
maintain their employees' productivity and connectivity; yet the need
for in-person interactions remains strong--to collaborate, team and
connect. It has become a widely accepted view that workplace
flexibility is a way to tap into new sources of talent, and when
considered thoughtfully, innovative workspaces can play a vital role in
attracting and retaining talent.
Real estate: The real estate and construction sectors combined
represent approximately one-sixth of our economy, and the federal
government's real estate portfolio comprises over 1 billion square
feet, according to GSA. With more than 350,000 energy-utilizing
buildings and 600,000 vehicles, the federal government is the nation's
largest energy consumer, based on Department of Energy analysis.
Therefore, it matters how the public and private sector collaborate to
support the physical, social and psychological health and well-being of
people in buildings. Prior to COVID-19, there had been an over 20-year
trend toward more sustainable federal real estate. From the US Office
of Management and Budget's sustainability plans and scorecards to the
US Department of Energy's ``savings performance contracts,'' from
aspiring to achieve green and healthy building certifications to
encouraging ``green'' leases, the federal government and its private
sector stakeholders continue to significantly influence sustainable,
environmentally-friendly practices.
In my view, as we emerge from the pandemic, we will see an even
greater focus on smart building design, energy efficiency and
sustainability. Many view these elements as critical workplace
amenities that better promote healthy buildings and workforce well-
being; additionally, workers increasingly expect inviting places to
relax, interact and collaborate. I believe there are numerous
opportunities for the public and private sector to increase
collaboration on innovations, including in the areas of addressing GSA
Green Proving Grounds and incorporating more sustainability principles
in procurement, products, supply chain, energy-efficient elevators,
roofs, electric charging stations, high-efficiency HVAC systems,
supplemental air purification units, workspace sanitization standards,
and healthy water and waste management.
Technology: In recent years, real estate has evolved from systems
and operations that are singular, disconnected and analog to a more
multidimensional, connected and digitally integrated network of smart
building technologies. As we move forward, connectivity among the
workforce and data management are becoming key tenets of the continuity
of operations, collaboration and decision-making. The pandemic has
increased the need to consider or scale workplace technologies, such as
the Internet of Things, robotic process automation, artificial
intelligence and virtual collaborative tools to better promote
efficient real property inventory management.
In closing, I will add that several force multipliers can further
shift this evolution of enhanced real estate management to a
revolution, including prioritized initiatives, re-engineered processes,
durable policies, and revised governance.
Thank you for the opportunity to appear before the subcommittee,
and I look forward to answering your questions.
Ms. Titus. Thank you, Ms. Hanson.
Ms. Sargent.
Ms. Sargent. Chairwoman Titus, Ranking Member Guest, and
members of the committee, first, on behalf of the International
Facility Management Association--IFMA--and our 20,000 members
who run commercial buildings internationally in over 100
chapters, including strong chapters in Oregon and Nevada, thank
you for the opportunity to testify today.
IFMA is the largest professional association for facility
managers, and our members run billions of square feet of
commercial space.
As the leader of the global WorkPlace practice at HOK, one
of the largest architectural firms in the world, I can tell you
that at no time has the essential role of the facility manager
been clearer than over the last year. FMs in the private and
public sector have met the challenge of the pandemic, and now
they have the critical role in safely reopening and maintaining
America's building infrastructure.
This is a historic time. In my 37-year career as a
workplace strategist and designer, this is the first real
opportunity we have had to rethink how and where we work.
Before the pandemic, the rise of coworking was already
disrupting the commercial real estate market and changing our
perspectives on the workplace. This has been reflected in
congressional establishment of the Public Buildings Reform and
Savings Board and the investment in FMs through the Federal
Buildings Personnel Training Act.
Then COVID hit, bringing our industry to a crossroads.
The average building stands for over 70 years. Interior
spaces are typically only renovated once a decade, if even
that. In other countries, spaces are flipped more frequently,
thus they can evolve and react to things in a more timely
manner.
Your decisions will determine the fate of the Federal work
environment for the next generation of Americans.
The pandemic sent us all home, but the last year has taken
a heavy toll on our citizens' physical and mental health, with
a disproportionate impact on women, and racial and ethnic
minorities.
Now, thankfully, we can start to think about returning to
the office. But as we do, the whole entire world is asking a
really simple question: What is the future of work?
Even before COVID, our offices weren't working. Many
offices didn't support the collective ways that we work, the
technology we rely on, our flatter organizational structures,
or the need to focus on operations and maintenance, not just on
design and construction.
One thing we know for sure: The office of yesterday is not
the answer.
Companies now are in a fierce war for talent and a race to
innovate. To attract the best and to give them what they need
to succeed, we need to rethink their space.
Designing spaces around the world has given us insights
into how aggressive other countries are in innovating to create
smart cities and state-of-the-art environments.
We need to transform the office from a place that people
have to go to an ecosystem of spaces where people want to be.
We need to break down the silos and offer options and choices
that are flexible and resilient to business changes.
There are three main components to the next generation of
this ecosystem that supports hybrid work: the Hub, which is the
reimagined office or the primary place where people come
together; the Home, where you might be doing that solo remote
work; and the Spoke, which is a plug-and-play space outside of
the Hub that might offer more amenities than the home, like a
coworking space or a satellite office.
In this new ecosystem, overall office space per agency can
be reduced while providing more enticing environments that
better meet the needs and give greater experiences to the
workforce.
We need to continue to invest in people that are running
our buildings. New requirements for building performance
require additional investment in facility managers. Smarter
buildings require smarter people.
I am also honored to serve as an adviser to GSA's Workplace
2030 task force looking at these issues. This group knows what
needs to be done, but they need a bigger platform and a mandate
to do it.
The main takeaway that I want to leave you here with today
is that we must create Government workplaces that empower
American ingenuity and keep us competitive in global markets.
We have a unique opportunity now to create Government
workplace ecosystems where the most exceptional people want to
be, but we must take steps today to do so.
If we do, we can help our public-sector buildings improve
environmental and human sustainability and well-being, we can
address safety and productivity, and preserve their asset value
and performance.
Thank you again for inviting me to be here on behalf of
IFMA. We stand ready to help, and I look forward to your
questions.
[Ms. Sargent's prepared statement follows:]
Prepared Statement of Kay Sargent, ASID, IIDA, CID, LEED AP, MCR/w,
WELL AP, Senior Principal, Director of WorkPlace, HOK, on behalf of the
International Facility Management Association
``As lead of the global WorkPlace practice at HOK, one of the
world's largest architectural firms, I can tell you that at no
time has the essential role of the facility manager been
clearer than over the past year. FMs in the public and private
sector have met the challenges of the pandemic.''
Welcome:
Chairman DeFazio, Committee Chairwoman Titus, Ranking Member
Webster and Members of the Committee:
First, on behalf of the International Facility Management
Association--IFMA--and our 20,000 members who run commercial buildings
all over the world in over 100 chapters, including strong chapters in
Oregon, Nevada and Florida, thank you for the opportunity to testify
today. IFMA is the largest professional association for facility
managers and our members run billions of square feet of commercial
space.
As lead of the global WorkPlace practice at HOK, one of the world's
largest architectural firms, I can tell you that at no time has the
essential role of the facility manager been clearer than over the past
year. FMs in the public and private sector have met the challenges of
the pandemic. They now will have critical roles in safely reopening and
maintaining America's building infrastructure.
This is an historic time. In my 37-year career as a workplace
strategist and designer, this is the first real opportunity we've had
to rethink how and where we work.
Before the pandemic, the rise of coworking space was already
disrupting the commercial real estate market and changing our
perspectives on workplace. This has been reflected in recent
Congressional activity including establishment of the Public Buildings
Reform and Savings Board and a continuing investment in FMs through the
Federal Buildings Personnel Training Act. Then COVID hit, bringing the
industry to a crossroads \1\.
---------------------------------------------------------------------------
\1\ HOK, Workplace Beyond 2021; Designing Spaces that Bring Us Back
to a New Degree of Normalcy, January 2021.
---------------------------------------------------------------------------
Key Role of Changing Workplaces:
The average buildings stand for 70 years. Interior spaces are
typically renovated once a decade. In other countries spaces are
flipped more frequently, and thus can evolve and react to changes in a
more timely manner. Your decisions will determine the fate of federal
work environments for the next generation of Americans.
This terrible pandemic sent us all home to work. But the past year
has taken a heavy toll on our citizens' physical and mental health--
with a disproportionate impact on women and racial and ethnic
minorities.
Now, thankfully, we can think about returning to the office. As we
do, the whole world is asking one question: What's the future of work?
Even before COVID, our offices weren't working. Many offices didn't
support the collaborative ways we work. The technologies we rely on.
Our flatter organizational structures. Or our need to focus on
operations and maintenance--not just design and construction. One thing
we know is that returning to the office of yesterday is not the answer.
Companies know they are in a fierce war for talent and a race to
innovate. To attract the best people and give them what they need to
succeed, they are rethinking their space. Designing space around the
world has given us insight into how aggressively other countries are
innovating to also create smart cities and state-of-the-art
environments.\2\
---------------------------------------------------------------------------
\2\ Space Planning Benchmark Report, Special Appendix COVID 19
Impact on Facility Management, July 2020.
---------------------------------------------------------------------------
We need to transform the office from a place where people have to
be to an ecosystem of spaces where people want to be. Spaces that break
down silos and offer choices about how to work. That are flexible and
resilient to business changes.
There are three components to this next-generation ecosystem that
will support hybrid work:
1. The Hub is the reimagined office--the primary physical place
where the organization's people come together.
2. The Home where we can do individual work remotely.
3. The Spoke is a plug-and-play place outside the main hub but
with more amenities than we have at home: be it a coworking center or a
satellite office.
In this new work ecosystem, overall office space per agency could
be reduced while providing more enticing environments and better
experiences for their people.
It would help us address environmental and human sustainability and
well-being, which will improve productivity.
We need to leverage technology and continue to invest in the people
running our buildings. New requirements for building performance
coupled with new expectations in the post-pandemic era require
additional investments in facility managers. Smart buildings require
smart people. Industry research has shown a 15:1 return on investment
for building personnel. This connection between training and
performance cannot be overstated.\3\
---------------------------------------------------------------------------
\3\ Nicholas A. Rocha, ``Evaluating the Value, International
Facility Management Association'', April 2017
---------------------------------------------------------------------------
I'm honored to be serving on the GSA's ``Workplace 2030'' taskforce
looking at these issues. This group knows what needs to be done, but
they need a bigger platform and mandate to do it.
Key Recommendations:
Disposition of Excess Federal Property:
IFMA has long supported the realignment of Federal Real Estate
Portfolio to reduce waste, increase productivity and ensure that
federal buildings are assets, not liabilities in an organization's
strategic purpose. In the 114th Congress a Bi-Partisan group of law
makers supported the establishment of a Public Buildings Reform and
Savings Board to evaluate the civilian real estate portfolio, identify
opportunities for efficiency and dispose of excess property. With that
board now established and operating and as Congress works with the
Administration to identify excess property it is critical that
operational costs and effective facility management continue to be
considered when assessing property value and use. Design and
construction costs of a facility are a small fraction of the overall
expense of a building over its useful life. As most federal facilities
are designed to last 50 years or more, the sale of these facilities
would yield proceeds from the value of the property, but more
importantly result in significant savings from avoided operational
costs and other factors associated with building operations. As
Congress looks to update the federal real estate portfolio IFMA
recommends broad-based consideration of related factors including:
Retention of savings realized through sale by agencies to
address deferred maintenance costs and compliance with the Federal
Buildings Personnel Training Act of 2010
Continued Updates to the Federal Real Property Profile to
Include information facility condition, energy performance, FBPTA
compliance, space utilization rates and workforce productivity metrics
Utilization of Public Private Partnerships to help reduce
Operations and Maintenance backlogs
Leverage Existing Properties To Create an Ecosystem of Work
Environments:
We need to embrace the opportunity to address the disruption being
brought forth and proactively rethink how we can best serve the
workforce, and agencies alike. We need to innovate and evolve. We need
to transform the office from a place where people have to be to an
ecosystem of spaces where people want to be. Spaces that break down
silos and offer choices about how to work. That are flexible and
resilient to business changes.
Value of Education and Training for Facility Managers:
In creating and maintaining high-performance buildings capable of
significantly reducing energy and water use while promoting worker
health and safety, a well-trained facility management staff is an
essential element. Hiring and training professional facility managers
ensures a working knowledge of industry trends, best practices and that
building systems continue to perform as intended. In the 2010 Congress
enacted Federal Buildings Personnel Training Act. Signed into law by
President Obama in December 2010 the bill's premise was simple: if
buildings are maintained properly by trained and certified facility
managers, they will perform better at lower cost, and ultimately be
worth more at their time of disposition, thereby providing a return on
investment to the American taxpayer. At a time when taxpayers continue
to make significant investments in federal property, and as the General
Services Administration and Congress look to realign the federal
building portfolio and dispose of excess property, having qualified
facility managers execute these tasks is critical. Many agencies have
made significant progress in implementing the law and are great
examples of best practices, yet others continue to wait on the
sidelines hoping Congress will not hold them accountable for
compliance. Moreover, the current shift in the federal real estate
portfolio from government owned buildings to leased space means an
increasing number of federal tenants will not be protected by FBPTA
requirements. In order to best address these realities, Congress must
consider:
Expanding FBPTA Requirements to cover leased space and
not just government owned property as is currently required.
Clarify the intent of the FBPTA to focus on utilization of existing
industry education programs ensure compliance
Long-Term Facility Planning:
Effective long-term facility planning requires regular funding and
commitment. Congress now has the opportunity to commit not only to
enhanced remote work programs and flexibility, but also to building,
operating and maintaining workplaces of the future which can continue
to be a shining example of American ingenuity and leadership. Even
before the pandemic there was a significant effort underway in Congress
to better understand the costs of changes in telework policy. These
ongoing considerations must continue to be part of the conversation
around COVID 19 response in federal buildings.
Conclusion
The main takeaway I want to leave you with is that we must create
government workplaces that empower American ingenuity and keep us
competitive in global markets. And we have a unique opportunity to
create government workplace ecosystems where the most exceptional
people want to be. But we must take the steps to do so now. If we do
this, we will help our public sector buildings improve occupant health,
safety and productivity while preserving their asset value and
performance.
Thank you again for inviting me to be here on behalf of IFMA. We
stand ready to help. I look forward to your questions.
[Editor's note: Three supplements to Ms. Kay Sargent's
prepared statement are available online at the House of
Representatives Document Repository; see the ``support
documents'' listed under her name at https://docs.house.gov/
Committee/Calendar/ByEvent.
aspx?EventID=112606.]
Ms. Titus. Thank you, Ms. Sargent. Your background
indicates that is an environment where we would all like to be.
It is lovely. Thank you.
Ms. Sargent. I would be happy to design a space for you.
Ms. Titus. Ms. Owens Test.
Ms. Owens Test. Thank you so much for inviting me to share
my expertise in the Federal real estate space.
Because I have worked in the field of Federal Government
real estate for 32 years, I have a broad perspective and would
like to share some insights into the Federal leasing arena and
express the importance that leasing has in the overall real
estate strategy.
In a phrase, I am here to champion leasing and speak on
behalf of the landlord community.
The Federal Government, including such agencies as the U.S.
Postal Service, Department of Agriculture, Department of
Commerce, Department of Veterans Affairs, and the U.S. General
Services Administration, use leasing to fulfill tens of
thousands of real estate requirements across the country.
Specifically, the General Services Administration inventory
includes 7,859 leases as of April of 2021. And although this
number reflects a 15-percent reduction over the last 10 years
from the peak due to space consolidations and relocations to
federally owned space, the overall leasing square footage
remains close to 50 percent of the total GSA inventory.
Leasing allows the tenant to address changing space
requirements over time, enables the use of efficiently operated
high-quality space, and provides access to private-sector
capital when needed to respond to changing missions--all this
and the ability to terminate its obligation when the space no
longer fits the tenant's needs. Leasing provides flexibility.
The Government uses leasing to lead the commercial real
estate market by establishing requirements and reinforcing code
compliance for security, handicap accessibility,
sustainability, and now COVID. The Government has used leasing
to implement other priorities through its standard lease
contract terms.
Leases are executed with a wide array of real estate
owners, from sole proprietorships to single purpose entities
owned in complex corporate structures. Federal Government
leasing impacts a large portion of the commercial real estate
market and has a wide influence.
Government requirements can take years to plan, approve,
and budget. And even though we are working through the
pandemic, the Government should continue its business of
leasing activity in both smaller and prospectus-level leases
because flexibility is built into the Government lease. If
Government space requirements change over time, GSA has rights
in the lease to negotiate changes.
Once a requirement is released to the commercial market,
the Government has likely been planning that requirement for 2
to 3 years and large prospectus projects could take many more.
Procurement and delivery of a leased space may take another
2 to 4 years. For this, leasing plans are made for long-term
use, meaning 10 to 20 years, and sometimes 30-year periods.
Also, Federal agencies have a wide array of missions and
use real estate many ways. There isn't a one-size-fits-all type
space. Therefore, the Government's implementation of real
estate strategies takes a long time.
For large leases, prospectuses authorize the ceiling of
square footage and dollars, and the approval process can
continue while specific yield terms are negotiated.
Collaboration is where the best of the Federal Government
landlord community can find successful outcomes. Planning and
budgeting are important for landlords too. It can take years
for landlords to plan, design, permit, finance, construct, and
occupy new buildings.
Landlords' planning and collaboration with their teams
results in the best built environment at the most effective
cost. Neither the Government nor the landlord community want to
overpay or be inefficient with their real estate usage.
Whether it is while creating new sustainability goals for
the Government's leased inventory and executing them in
existing leases, or compromising on space utilization, the
private sector can bring implementation strategies to Federal
leases that provide the best overall cost solutions for Federal
tenants.
Ultimately, the Government receives the best pricing from
the private sector because the Government provides confidence
and certainty in meeting its obligations, payment of rents, and
likelihood of renewal. And the financial markets respond well
to income streams they can count on.
The Government uses leasing as a strategy to get the best
space for their real estate needs at the best available pricing
from the commercial real estate community by providing
consistent collaboration even when changing priorities are
implemented.
Thank you for the opportunity to share my thoughts, and I
look forward to your questions.
[Ms. Owens Test's prepared statement follows:]
Prepared Statement of Marcy Owens Test, Senior Vice President and
Federal Lessor Advisory Group Member, CBRE, Inc.
Thank you for inviting me to share the knowledge and experiences of
the commercial real estate industry. I submit this testimony as an
individual and not on behalf of any group or organization. The opinions
expressed are my own and not necessarily those of my employer, or any
other group, organization and/or governmental entity or agency I
reference.
Background and Experience
I have worked in the industry for 32 years and am currently a
professional at CBRE, Inc., the world's largest commercial real estate
services provider. Within CBRE I am a member of the Federal Lessor
Advisory Group (or ``FLAG''), a team of professionals that specialize
in representing private sector owners, investors and developers on real
estate transactions where the federal government seeks to lease office,
warehouse, laboratory, or other spaces using the government's
procurement methodologies. The FLAG team specializes in understanding
the federal government's real estate needs and translating those needs
into a private sector context to help our clients to provide the
Government with the highest quality technical and financial solutions
to meet their real estate space needs. Different groups within CBRE
also represent the federal government in many capacities working with
numerous large and small federal agencies over the years, branches of
government, and independent agencies providing brokerage services
(lease/lessor/purchase/sale), property management, construction
management, valuation services, and many other service offerings. CBRE
has a deep and thorough understanding of the public sector proudly
representing the government and private sector clients in the federal
real estate space.
In addition, I serve as a member of the Board of the National
Federal Development Association (``NFDA''). NFDA is a national
association of private property owners and service providers who lease
space and provide commercial real estate services to federal government
tenants. NFDA is a clearinghouse of knowledge, innovations and
information developed by experts for experts in the government leasing
space.
Purpose of this Testimony
With that background, I am here to share insights I have learned
from the private sector's experiences with COVID-19 and return to the
office; some history on the reducing federal real estate footprint;
concerns that federal real estate Landlords are expressing; and, how
planning and collaboration between the Government and the private
sector can bring cost effective outcomes to both parties.
Private Sector Experiences with COVID-19 and Returning to the Office
The private sector real estate community has been struggling with
the considerable uncertainty caused by the pandemic, but we are
beginning to see private sector tenants declaring dates for returning
to the office. The commercial real estate industry is populated largely
by optimistic people--people who see future opportunity to improve the
built environment and the impact a great built environment can have on
people's productivity and work outcomes. The future brings possibility
and promise for ways to make a difference in the lives of people using
real estate to meet their goals and missions. This last year has
challenged even the most optimistic of us as the industry has been
forced to take a completely new perspective on how work is performed
and the value of the built environment to bring people together.
Today, private sector companies are beginning to bring people back
into the office over the next few months, after working remotely for
the last 15 months. One measure, according to the Kastle Systems Back
to Work Barometer \1\, from data collected from security card swipes
from their partners, as of the week of May 10, 2021, a 10-city average
occupancy is up to 27.1%. Full return-to-the-office plans seem to be
impacted by where the parent company is headquartered, as geographic
differences seem to influence the need for a collective environment and
as well as company culture. There is survey data and anecdotal evidence
that remote work strategies will be in place for the foreseeable future
with many private sector tenants waiting until employees return to the
office to best assess workplace strategies that may have more of a
long-term impact on the use of real estate. There are many examples of
downsizing and restructuring of leases with heavy emphasis on short-
term lease renewals to give private sector companies time to evaluate
the way employees are working and what kind of office space will best
support productive employees in the post COVID environment. Examples
also exist of government contractors closing offices and consolidating
their employees to locations where secure work is required to be
completed within a secure office environment. Likely many government
contractors will continue to be working from home for the foreseeable
future unless government contracts require some minimum amount of work
from the contractor's office, which is a consideration as attention is
focused on heightened cyber security.
---------------------------------------------------------------------------
\1\ Reference https://www.kastle.com/safety-wellness/getting-
america-back-to-work/
---------------------------------------------------------------------------
Federal Real Estate Inventory Reduction
Prior to 2011, the Federal Government had typically focused on
delivery of the tenant agency mission and real estate was a means to
that end. Cost and quantity of real estate was not a significant focus
for measurement. However, following Executive Order 13576 in 2011 which
was issued to focus attention on ``improving the management of Federal
real estate,'' OMB issued guidance in 2013 to direct federal agencies
to implement a ``Freeze the Footprint'' policy \2\ for Federal Real
Estate and then again in 2015 to direct federal agencies to implement
the ``Reduce the Footprint'' policy \3\. With leadership from this
House Committee, the Executive Branch began its detailed attention on
measuring performance for efficiency improvements with utilization
rates, or how much square footage per person is leased by the
Government. The General Services Administration's (``GSA'') lease
inventory \4\ peaked in September 2013 at more than 198.2 million
square feet, and the federal government began focusing on improving
utilization in federally owned real estate and reducing its leased
inventory. As of GSA's April 2021 inventory, the GSA lease portfolio
has been reduced by more than 15 million square feet which equates to a
reduction of just under 8% since September 2013. 69% of this reduction
has been realized in the National Capital Region. Appreciating that the
National Capital Region was 29% of the total GSA inventory, it is now
25.7% of the total inventory. And there are many projects planned for
large consolidations and relocations into federally owned assets like
the Department of Homeland Security into the St. Elizabeth's campus.
The ``Reduce the Footprint'' policy has changed the federal real estate
inventory quite substantially.
---------------------------------------------------------------------------
\2\ White House briefing dated March 14, 2013 by Danny Werfel,
Controller of the Office of Management and Budget
\3\ White House briefing dated March 25, 2015 by David Mader,
Controller of the Office of Management and Budget
\4\ Statistics referenced are based on the GSA leased inventory
database. Recognizing that this only addresses a small portion of the
Government's leased portfolio, it is the inventory that is readily
available, updated monthly, and is most compatible to investor-grade
real estate in private industry. That is not to say that the US Postal
Service, Department of Veteran's Affairs, Department of Agriculture or
Department of Commerce, for example, do not have investor-grade real
estate, but their inventories are not transparent and as available as
GSA's inventory.
---------------------------------------------------------------------------
Raising Concerns of Federal Real Estate Landlords
All of these events impact the Landlords of federal real estate by
undermining confidence in the renewal assumptions of government leases,
which are a critical component of the underwriting and financing of
commercial real estate. Confidence of tenants' renewal probability is a
cornerstone of what drives the best financing and values of federally
leased assets. The Government gets good quality space to meet its
requirements at the best rates because financial markets value a
government lease. The predictability of government occupancy is an
important component of the cost of financing and value of federally
leased assets and thereby the aggressive rents the private sector is
able to offer potential Government tenants.
With some already questioning the value of a lease with the Federal
Government due to the pre-pandemic push to downsize the Federal
footprint, the next question is how will the effects of COVID-19 on the
built environment further impact the federal footprint. Following the
last many years of Government space reduction many Landlords in the
federal real estate space question what the next 3 to 5 years hold for
the federal real estate footprint and if the policies that have helped
the Government negotiate many tenant favorable leases will continue.
The commercial real estate market over these last few years has
favored the tenant versus the Landlord in most of the country. The
Government tenant has been, and will continue to be, in a position of
strength at the negotiation table, and their policies to take advantage
of the market have been well executed. In particular, the policy to
pursue longer lease terms (longer number of years of firm term) with
limited soft term, being the portion of a lease term that can be
cancelled, has been very successful. For years, the private sector has
explained that the Government could negotiate better lease rental rates
with longer lease terms and the Government has had good results from
utilizing a policy of pursuing longer lease terms when it makes sense
to do so.
Through the last year, GSA has been very active in the market. As
an agency with legacy remote work strategies, GSA employees
transitioned to the mandatory remote work directive very effectively
and the private sector saw an increase in the number of lease
requirements advertised year-over-year 2019 to 2020. In other words,
2020 was a very productive year for GSA real estate activity. This was
a very beneficial year for the Government to negotiate aggressive
rental rates and the commercial real estate market has been interested
in pursuing government requirements while many private sector tenants
negotiated short term renewals or decided to wait until employees
return to the office to make long term real estate decisions. This
tenant-favorable market is likely to continue in many markets across
the country and the Government should be able to take advantage of that
with longer term lease requests to the market.
With all of this, many industry folks are feeling concerned and
hesitant about how federal real estate will be impacted now that so
many employees have been working remotely. There is a good deal of
trepidation that the Government will cut office space without
thoroughly reviewing the needs of the mission and the employees for the
long term. This growing sentiment is not great for either the industry
or the Government because the Government benefits from the confidence
it has previously provided the private sector landlord community. If it
wants to maintain its favorable negotiating position, the Government
will need to continue to reinforce the confidence it provides to
private sector landlords by continuing to actively pursue new long-term
leases. However, there are already examples of leases expected to
expire with no renewal plans, albeit smaller offices in urban centers
where employees can be consolidated in other locations, and this
continues to concern the federal real estate Landlord community.
Future workplace determination for the Government is a complex
issue. It takes time to evaluate federal real estate requirements and
budget for the costs associated with changes in space requirements. It
will take time and investment in the physical environment and
technology infrastructure, just like the private sector is experiencing
now. Like the private sector tenant community is learning,
understanding occupancy levels as employees return to the office will
be part of the information gathering effort. There is no one-size-fits-
all solution and federal agencies continue to demonstrate that they
have different cultures and different needs for remote work versus
fixed attendance. GSA and federal agencies will need to move slowly as
they start to understand future work requirements. There are examples
of that kind of study and analysis across the federal real estate
industry and the Landlord community is looking to be engaged in
collaborative and creative solutions with federal agencies just like
the private sector is experiencing. Quick action based on limited
information may ultimately do more harm than good with inefficient
spending and lack of planning.
Just like when the ``Freeze the Footprint'' policy was issued,
federal agencies learned that changes to federal real estate
requirements cost money upfront--with the hope that the upfront
investment will result in long-term real estate reduction and future
annual cost savings. However, without careful planning, the result may
be just the opposite, increased costs now and increased costs later.
Any changes to workplace strategies and real estate requirements will
cost money, some of which comes from the Landlord and some comes from
the tenant. This is one area that requires planning for the Landlord as
well as the Government and the Government should consider more
flexibility with amortization of additional costs into the lease.
Currently, one area of the leasing process that requires improvement is
the space design and alteration process where the Government expects
the Landlord to front load large sums of money without planning or
payment. This has been a significant problem for even the most
financially stable landlords and will only get worse if GSA expects
Landlords to bear all of the cost for the transition to a post COVID
environment, especially if that transition is not well thought through
and undermines confidence in the Government as a long term tenant.
Planning and Collaboration Provide the Best Results
We often get asked to look into our crystal balls to predict future
real estate needs. Where will the Government be in 5 or 10 years with
respect a particular asset or portfolio? Some have suggested that
draconian cuts in the leased federal real estate are coming. However,
we have been working in the federal real estate space for a very long
time and understand a few key attributes worth pointing out:
Federal agencies are all different, have many different
real estate requirements and will continue to have different
requirements after returning to the office.
It takes a long time to implement any real estate
strategy. The reason we are 10 years into the cycle of space reduction
is that leases take time to expire and strategies take time to
implement. We have at least another 5 to 7 years for the ``Reduce the
Footprint'' policy to be implemented through the full portfolio.
Much can be learned through collaboration with the
private sector which has the resources, expertise and financing
available to help the Government execute real estate plans.
Leasing is a critical component of the Government's
federal real estate strategy. Leasing provides the Government access to
flexible, high quality real estate in locations of its choice.
The Government understands that the leasing effort is a
two-way street and that there are ways the Government can help the
private sector while the private sector responds to the Government's
specific and unique needs.
The private sector can pivot faster and address critical
directives by the federal government such as addressing sustainability
and COVID safety and cleanliness requirements.
Just like with security requirements implementation after the
Alfred P. Murrah Federal Building bombing occurred in Oklahoma City and
the handicapped accessibility requirements before that, the private
sector Landlord community has access to resources, expertise, and
capital to implement new government requirements. The private sector
Landlord community will continue to partner with the federal government
to provide the best commercial real estate solutions to meet the
government's requirements and we hope that the Government adopt
policies that will look to solve complex problems with even more of the
private sector's involvement.
Thank you for this opportunity.
Ms. Titus. Thank you very much.
Mr. Dong.
Mr. Dong. Madam Chair, Ranking Member Guest, and members of
the committee and the subcommittee, my name is Norman Dong,
managing director with FD Stonewater.
Our firm is a brokerage, development, and investment firm
with extensive experience in Federal real estate, and I
appreciate the opportunity to be with you today.
Over the past decade, I have had the opportunity to engage
in Federal real estate from several vantage points. From the
tenant agency perspective when I was at FEMA as the CFO. When I
was at OMB as the Deputy Controller, I saw the Federal policy
perspective. And when I was at GSA, we managed thousands of
projects across the owned and leased portfolio each year to
meet the needs of our Federal tenants.
While I learned a lot about Federal real estate during my
time in Government, I have learned even more since I left GSA.
And there are some important lessons from the private sector
that can be brought to bear on the challenges we face.
Today, many agencies face significant uncertainty about
their real estate needs in the aftermath of the pandemic. Does
the recent increase in telework reflect a temporary measure to
get through the current public health crisis, or is it a more
permanent way of doing business?
And as the Government considers its future space needs, it
is important to understand what we have experienced as well as
what we have learned over the past 15 months.
Without doubt, the remote work proof of concept we have
seen over the past year will have lasting implications. Many
employees have lived both the benefits and the shortcomings of
remote work, and few may be willing to give up the increased
flexibility and reduced commute time we have grown accustomed
to during the pandemic.
It seems clear that we will never revert back to the
workplace-centric model we once knew, nor will we maintain the
scale of remote work we saw during the height of the pandemic.
According to one recent workplace survey, at least 80
percent of employees want to return to the office at least 1
day a week.
Some agency missions, such as law enforcement, lab
research, national security, and public-facing functions, they
cannot be performed effectively through telework. And for many
people, myself included, working from home will never provide
the type of workplace setting that fosters the type of
communication, collaboration, and innovation to advance the
agency mission.
COVID compels us to rethink conventional wisdom in managing
the Federal real estate portfolio. Take, for example, large-
scale Federal construction projects, like DHS at St.
Elizabeths.
After a year where much of the workforce has worked
remotely, is the original value proposition of co-locating
thousands of employees still valid?
Or does it make sense to follow a different approach, one
that reflects what we have learned over the past year, where
many employees have been able to work productively without
being tethered to a single physical location?
In many ways, COVID has been an accelerant that compelled
the Federal Government to confront management challenges that
predate the pandemic.
This includes improving agency space utilization across the
owned and leased portfolio, disposing of underutilized
properties and identifying a more productive use for these
assets, and addressing the significant backlog of maintenance,
repair, and renewal needs across an aging Federal portfolio.
As a former agency CFO, I often view these real estate
challenges through a budgetary lens. For example, this year,
GSA only received 39 percent of its total capital budget
request. And over the past decade, its list of capital project
needs has far exceeded the availability of capital funds.
So as the Government evaluates its future space needs, the
time has come for GSA to consider the right mix of owned,
leased, and flexible office space to address agency space
requirements while recognizing the current fiscal reality.
We should take a minute to recognize the progress that has
been made in managing the Federal real estate portfolio over
the past decade.
Since 2012, GSA has reduced its leased inventory by more
than 15 million square feet, and it has saved billions of
dollars in leasing costs.
In 2016, the Volpe exchange reflected how GSA can leverage
its existing authority to harness the development potential of
an underutilized asset and realized more than $750 million in
value for the Federal Government.
And GSA continues to lead the way in sustainability and
environmental stewardship. Since 2010, GSA's energy and water
consumption have decreased by 24 and 36 percent, respectively,
and almost one-quarter of GSA's federally owned portfolio is
LEED certified.
These and other examples demonstrate both the progress and
the potential to manage the Federal real estate portfolio more
effectively, and they demonstrate how sometimes the right
answer is not about the need for more money or additional
authorities, but a more deliberate focus on execution, impact,
and results.
Members of the subcommittee, I very much appreciate the
opportunity to be with you this afternoon, and I look forward
to your questions.
[Mr. Dong's prepared statement follows:]
Prepared Statement of Norman Dong, Managing Director, FD Stonewater
Madam Chairwoman, Mister Ranking Member, and members of the
Subcommittee:
My name is Norman Dong, Managing Director with FD Stonewater. Our
firm is a brokerage, development, and investment firm with extensive
experience in Federal real estate. Our team has managed more than 45
million square feet of lease transactions and completed over 4,000
leases on behalf of our clients. Having delivered over 25 Federal
build-to-suit projects, we are a leader in developing, financing,
owning, and operating facilities leased to government tenants across
the country. I appreciate the opportunity to be here with you today.
Over the past decade, I have had the opportunity to engage in
Federal real estate from several vantage points:
As the CFO at FEMA, I saw the challenges and the
opportunities in real estate through the eyes of a Federal tenant
agency.
During my time at OMB, we recognized the importance of
government-wide policy to control Federal real estate spending,
launching the Federal Freeze the Footprint policy in 2012, followed by
the Reduce the Footprint policy in 2015.
While I was at GSA, our focus was on translating policy
into execution--managing thousands of Federally owned and leased
projects to meet the space and facilities needs of our Federal tenants
each year.
Today, I continue to engage in Federal real estate from the private
sector. While I learned a lot about Federal real estate during my time
in government, I have learned even more since I left GSA. And there are
some important lessons from the private sector that can be brought to
bear on the challenges we face in Federal real estate.
Federal agencies face significant uncertainty about their space and
facilities needs in the aftermath of the pandemic. Does the recent
increase in telework reflect a temporary accommodation to get through
the current public health crisis, or a more permanent way of doing
business? As the government considers the longer-term impact of the
pandemic, it is important to understand how workplace needs will change
given what we have experienced, and what we have learned, over the past
15 months. And the time has come to re-consider some of the
conventional thinking about how best to support the space and
facilities needs of Federal agencies.
Without doubt, the remote work ``proof of concept'' that we have
experienced over the past year will have lasting implications. Many
Federal employees have lived the benefits (and shortcomings) of remote
work, and few may be willing to walk away from the increased
flexibility and reduced commute time they have grown accustomed to
during the pandemic. As a result, Federal agencies must be willing to
accommodate some increased level of remote work to remain competitive
in the labor market.
Although we will likely never fully revert to the workplace centric
model we once knew, neither will we adhere to the scale of remote work
experienced during the height of the pandemic. According to a Gensler
workplace survey conducted last year, at least 80 percent of employees
want to return to the office at least one day a week. Some agency
missions, including law enforcement, lab research, national security
functions, and public facing functions, cannot be performed effectively
through long-term telework. For many people, working from home will
never provide the workplace setting that fosters the type of
communication, collaboration, and innovation to advance agency
missions.
The pandemic compels us to rethink conventional wisdom in managing
the Federal real estate portfolio. Take, for example, large scale
Federal construction projects, like the Department of Homeland Security
at St. Elizabeths or other large agency consolidations. After a year
where most of the workforce has worked remotely, is the original value
proposition of co-locating thousands of employees across multiple
bureaus and divisions still valid? Or does it make sense to pursue an
alternative approach--one that reflects what we have learned over the
past year, where many employees have been able to work productively
without being tethered to a single location?
In many ways, COVID-19 has been an accelerant and is now forcing
the Federal government to confront real estate management challenges
that pre-date the pandemic. For more than a decade, the conversation
has focused on some key challenges:
Improving agency space utilization across the Federally
owned and leased portfolio to reduce overall spending in Federal real
estate,
Disposing of underutilized Federal properties to
eliminate the costs of operating and maintaining these buildings and to
identify more productive use for these assets, and
Addressing the significant backlog of the maintenance,
repair, and renewal needs across an aging portfolio of Federally-owned
buildings.
As a former agency CFO, I often view Federal real estate challenges
through a budgetary lens, and agencies must make the best use of their
limited resources. In FY2021, for example, GSA only received 39 percent
of its total capital budget request. And over the past decade, its list
of capital project needs has far exceeded the availability of capital
funds. As we grapple with the question of how much space the Federal
government ultimately will need in the aftermath of the pandemic, the
time has come for GSA to consider the right mix of owned, leased and
flexible office space that meets future agency space requirements while
recognizing the current fiscal reality.
Over the past decade, the Federal government has made real progress
in managing the Federal real estate portfolio more effectively.
Since 2012, GSA has reduced its leased inventory by more
than 15 million square feet and has saved billions of dollars in lease
costs through its Lease Cost Avoidance Program.
In 2016, the exchange of the Volpe Campus demonstrated
how GSA could leverage its existing exchange authority to harness the
development potential of an underutilized asset and realize more than
$750 million in benefit for the Federal government.
And GSA has been a leader in sustainability and
environmental stewardship. GSA's energy and water consumption have
decreased by 24% and 36%, respectively, since FY2010, and almost a
quarter of GSA's Federally owned portfolio is LEED certified, by square
footage.
These examples demonstrate both the progress the Federal government
has made in recent years and the potential to address future challenges
in managing the Federal portfolio. And in my opinion, these examples
demonstrate how sometimes the right answer is not about a need for more
money or additional authorities, but instead creating a more deliberate
focus on execution, impact, and results.
Members of the Subcommittee, I very much appreciate the opportunity
to appear before this afternoon. And I would be pleased to answer any
questions you may have.
Ms. Titus. Thank you very much.
Ms. Bacon.
Ms. Bacon. Thank you so much.
Good afternoon, Chair Titus, Ranking Member Guest, and
distinguished members of the subcommittee.
My name is Kelly Bacon, and I am the global lead for
AECOM's Workplace Advisory practice, a design and consulting
studio that delivers strategic workplace planning and interior
design services to public and private organizations worldwide.
Our practice works with a diversity of organizations across
the globe. Some of the U.S. Government entities include GSA,
DoD, Department of Homeland Security, Department of State, and
NASA, to name a few.
We have also worked extensively in the private sector with
a number of Fortune 500 organizations, including Estee Lauder
Companies, Pfizer, and Marsh McLennan.
We are a diverse mix of individuals in architecture
interiors, urban planning, and organizational psychology. My
personal background is in sociology and predictive analytics.
So my approach to this topic is that of a societal context with
which our offices operate and the responsibility they play to
the workforce as a whole.
I am honored to be here today to share my perspective as I
truly believe our society is experiencing a once-in-a-
generation opportunity to rethink our relationship to work and
workplaces. As has already been said by every member who has
spoken here today, the pandemic has been a great accelerator
for remote working and hybrid work arrangements.
I will say, long before COVID-19, our team has been
advising organizations to embrace telework as part of a
holistic real estate and workplace strategy. Doing so can and
has resulted in significant spatial savings through a
combination of space sharing, remote working, and technological
investments enabling internal and external mobility.
Historically, we have seen two primary obstacles to
alternative workplace strategies, and those are both cultural
and technological.
The technological, of course, has to do with investment,
cybersecurity, and commercial adoption curves, which is
something that the Federal Government has struggled with
compared to the private sector.
This past year, we have seen the stigma of remote working
has been lifted. Organizations of all scale, all sizes, and all
locations have realized its efficacy.
We have also seen significant technological investments
have been made out of absolute necessity and mission resiliency
in order to maintain and to continue operating.
We have also seen new behaviors have been developed, and we
need to maximize and leverage these new behaviors.
We have heard extensive reports from our clients of
individual and organizational productivity, and every member
who has spoken so far has already testified as such.
However, there is a downside to the all-or-nothing
conditions we are working in--the reports of isolation, the
loss of culture and camaraderie. And in some cases, we realize
not everyone has the appropriate conditions in their home to
work remote. We cannot--as we consider a hybrid future--cannot
leave those folks behind.
I want to be clear. As much as I advocate for teleworking,
humans are a social species. We thrive through connectivity and
collaboration. So place matters. And offices play a critical
role in our society both for the individual, the organization,
and, of course, to stimulate the communities with which they
reside.
So I shared extensive research and anecdotal evidence in my
written testimony, and here I offer three statistics to support
my oral statement.
We have done extensive research in partnership with Mercer,
who is a Fortune 500 human resources consulting firm, and 82
percent of CHROs say their organization is planning to adopt a
flex arrangement. The combination is the spoke to the
institution and the mission requirements, but it is the path
forward that we are seeing in the private sector.
Seventy-one percent of the workforce say they prefer to be
in the office 2 to 3 days a week and work remote the rest,
which, again, is consistent with what I have heard from my
colleagues here.
One thing I do also want to offer, 56 percent of employees
say that they would consider finding another employer if some
level of flexibility weren't made available to them in the
future. And let me clarify, we are talking about administrative
and office workers, not the specialty labs and retail and other
workforces that we just discussed. This is a critical statistic
to keep in mind as we think about what the hybrid future is.
In short, as others have said, the purpose of our offices
are now being redefined. They will serve as a place to enable
collaboration and culture, and the interactions in the office
will be more purposeful.
In my written testimony, I provide details of examples of
what needs to happen for this to occur. In the interest of
expediency, having been the last witness, I will offer three
primary steps needed to realize these benefits.
We need to fully embrace the idea of activity-based
planning, which is to create the spaces which support specific
activities, not simply assigning space based on head count,
title, and hierarchy.
We need to invest in change management, the development of
new behavioral protocols and standard operating procedures,
leveraging the learnings of this past year, leverage the
management style enhancements of this past year focusing on
results, not managing by presenteeism.
Now, while most agree with this conceptually, we find that
as folks are considering the future, the resistance to these
concepts is still palpable. So it is critical that we educate
the Federal workforce and the leadership on the benefits of
activity-based planning and remote working in order to strike
the right balance.
And then, finally, we also need to work with the Federal
Government and the GSA to identify pilot locations to test
these new concepts in a controlled way before applying them
across the broader portfolio.
So I also believe we are at a turning point. As we emerge
from the pandemic, we are seeing organizations and agencies
make decisions. After deferring for the past year, it is
critical we not default to old behaviors and approaches simply
because they are familiar. We have a unique opportunity in
front of us.
Thank you for your time, and I look forward to your
questions.
[Ms. Bacon's prepared statement follows:]
Prepared Statement of Kelly Bacon, Principal, Global Practice Lead,
Workplace Advisory Design and Consulting Services, AECOM
Good afternoon Chair Titus, Ranking Member Webster, and
distinguished Members of the Subcommittee.
My name is Kelly Bacon. I am the Global Practice Lead for AECOM's
Workplace Advisory practice, a design and consulting studio that
delivers strategic workplace planning and interior design services to
public and private organizations worldwide. Our practice works with
numerous Fortune 500 companies and U.S. government entities--including
GSA, Department of Defense, Department of Homeland Security, Department
of State, and NASA--to redesign and reorient their workplace portfolios
to best accomplish their missions. Our team consists of experts in
interior design, architecture, urban planning, organizational strategy,
behavioral psychology, and design thinking. We share a common passion
for creating workplaces that boost performance and enable a thriving
workforce.
I would like to thank the Subcommittee for the opportunity to
testify on the evolution of workplaces in a post-COVID-19 context and
offer a private sector perspective on the trends and opportunities
available to federal real estate.
About AECOM
AECOM's 47,000 professionals--including 19,000 US-based employees--
are engineers, architects, scientists, software programmers, urban and
transportation planners, program and construction managers, and
economists who plan, design and deliver infrastructure. Globally, we
are consistently ranked No. 1 in transportation engineering and design.
We are also the No. 1 provider of environmental services and ranked No.
3 in Interior Design Giants. AECOM has earned a reputation as an
industry leader through the critical and essential support we provide
our clients, as well as the work and infrastructure solutions we
deliver uplift communities, advance economic growth and improve health,
safety and overall quality of life.
Focus of Testimony
Our society is experiencing a once-in-a-generation opportunity to
rethink our relationship to work and reinvest in our workplaces. The
COVID-19 pandemic imposed tragic consequences across our society--a
reality of which we cannot lose sight. At the same time, the pandemic
has been the great accelerator for remote and hybrid work arrangements,
creating long-lasting effects on how we work, live, and play. Many of
these changes are here to say, and the organizations who invest in this
future will reap returns in higher performance, workforce engagement,
and spatial optimization--all while reducing long term operational
expenditures.
As the Committee weighs the best approaches to optimize the federal
real estate portfolio, I offer that the following outcomes should be
targeted:
Developing high-performing workplaces and real estate
portfolios that achieve mission intent, enhance employee wellbeing, and
are flexible to changing organizational and societal contexts
Unlocking capital, revenue, and innovative space uses
through strategic portfolio reductions and investments in hybrid work
capabilities
In my testimony today, I will discuss how the COVID-19 pandemic and
converging trends have changed our relationship to work and what that
means for the future of federal real estate. I will also focus on three
areas where government leadership can achieve the outcomes above:
Focus on activities and mission when creating hybrid work
environments and prioritizing spaces. This is a concept called
``Activity Based Planning.''
Champion office/portfolio updates and cultural shifts
that put performance ahead of hierarchy, outdated workplace values, and
one desk per person approaches.
Adhere to an expanded definition of performance and
return on investment (ROI) that goes beyond typical real estate metrics
such as cost per square foot and/or square foot per person.
The Great Accelerator or: How the COVID-19 Pandemic Changed the Way We
Work
BLUF: The COVID-19 pandemic was a tipping point for the widespread
adoption of remote work. Hybrid work models will become the norm in
office-oriented industries due to the following drivers:
The stigma of remote work has been lifted and popular
opinion has shifted favorably
Many agencies, organizations, and institutions have
already realized the efficiency and effectiveness of remote work on
multiple fronts
Organizations have already made major investments in
their remote and hybrid work capabilities, laying the groundwork for a
hybrid future
Changes in human behavior, travel demand, and settlement
patterns are reinforcing trends in remote work
______
For office-oriented industries, COVID-19 has been the great
accelerator, advancing even the most rigid, in-person office cultures
toward virtual and hybrid work models. While trends in technology and
industrial development have been driving us toward more agile
workplaces for decades now, the COVID-19 pandemic forced a change and
lifted the stigma of remote work seemingly overnight. Cultural
resistance to virtual interaction evaporated out of necessity, with
remote work, remote medicine, and remote education (to name a few)
experiencing exponential adoption \1\.
---------------------------------------------------------------------------
\1\ Prior to the pandemic, only six (6) percent of employed
Americans worked primarily from home; by May 2020, this percentage was
greater than one-third. See American Community Survey and Bureau of
Labor Statistics data in Coate, P. (2021). Remote work before, during,
and after the pandemic. Quarterly Economics Briefing--Q4 2020. National
Council on Compensation Insurance. Retrieved from: https://
www.ncci.com/SecureDocuments/QEB/QEB_Q4_2020_
RemoteWork.html
---------------------------------------------------------------------------
The success of remote work models has been a major contributor to
the newfound cultural embrace. Leaders and employees in office-based
industries have consistently seen remote work be as efficient, if not
more so, than in-office attendance. Additionally, productivity has
generally remained stable and even ticked upward for many activities.
However, given that humans are a social species, full-time remote
working has some negative side effects including isolation and/or
challenges with the human side of work. Solving for this combination of
factors has led our industry to refer to the post-COVID future as
``hybrid''--a mix of remote and in-person working.
Having experienced both the benefits and drawbacks of remote work,
CEOs and administrators across both private and public sectors--some of
whom were outright hostile to the idea of remote work before the
pandemic--are now championing the idea of a hybrid future. While the
ideal amount of days in the office is still very much up for debate and
generally dependent on an organization's specific goals and mission,
leaders across industries are steering their organizations toward a
combination of remote and in-person work \2\.
---------------------------------------------------------------------------
\2\ PwC US Remote Work Survey (2021). It's time to reimagine where
and how work will get done. PwC. Retrieved from https://www.pwc.com/us/
en/library/covid-19/us-remote-work-survey.html
---------------------------------------------------------------------------
Throughout the pandemic, organizations have made major investments
in technology and work processes to better support their mobile
workforces. Across organizations, common technological upgrades have
included digital communication platforms, video conferencing
capabilities, mobile devices, virtual machines, cloud-based software,
document digitization, and cybersecurity. As one example, our team
worked with a Fortune 500 financial services firm to enable its traders
to work remotely. Despite financial trading traditionally being an
office-bound activity, this company invested in the technology and
cybersecurity necessary to facilitate trading from its employees'
homes. It plans to maintain its hybrid work model going forward.
Organizations of all scale and across industry sectors are now
rethinking and redesigning their offices to accommodate the activities
most suitable for in-person work. In our interviews with leaders and
employees, we have frequently heard that spaces for collaboration,
ideation, and socialization are more valued than areas for quiet and
concentration, as heads-down work is often better done from home. Also,
office infrastructure such as printers and shared equipment and
specialized spaces such as labs and test facilities remain important
components of the hybrid office. The most forward-thinking
organizations are updating their highest performing in-person spaces
with new technology, equipment, and furniture, while consolidating,
repurposing, or eliminating the remaining spaces.
In tandem with these physical improvements, organizations have also
invested in new workflows and developed protocols, behavioral
etiquettes, and cultures around remote work. While the ``hard''
expenditures in technology and office design are the most visible,
these ``soft'' adaptations may be even more persistent.
Outside the four walls of the office, societal adaptations will
prove equally persistent. Changing migration patterns within and
between regions has altered the geography of work and life.
AECOM has been examining trends in economic development and travel
demand during the past year and found commuting patterns have changed
substantially. Among office workers, travel on commuter routes has
dropped precipitously. These effects are especially pronounced during
peak periods and on public transportation. Conversely, shorter, local
trips have seen greater resurgence, suggesting remote workers are
increasingly mobile within their community but remain less mobile
between their homes and workplaces.
As we get closer to the ``post-pandemic future'' many organizations
are embracing flexibility--this flexibility will manifest in alternate
workdays already mentioned, but also in a shifting of the
``traditional'' working hours. Given the acceptance of remote work, we
will likely see agencies and organizations allowing staff to work from
home half the day, while coming in solely to collaborate. While the
shift from fully remote to partially remote will lead to a rebound in
longer home-work trips, this ``new geography'' will only reinforce the
staying power of hybrid models going forward.
Why Invest Now?
Just as with private companies, the federal government has a choice
to make: Invest in hybrid work environments or default to old behaviors
and miss the window to capitalize on the opportunities that new models
bring.
While it is too early to know the full benefits, organizations that
are embracing hybrid work models are already seeing positive returns.
Across our government clients, we are seeing just as much success
transitioning to remote work as in the private sector. One government
agency we are working with in a major U.S. city will be able to
consolidate two office locations into one and comfortably remain in its
current footprint for the next decade, freeing up funding to reallocate
to its mission and community.
In contrast, retreating to old models will leave organizations with
bloated, outmoded real estate portfolios that cost too much and
undermine their ability to attract top talent. As culture, industry,
and the infrastructure that supports them converge around hybridity,
those organizations deferring investment may find their competitors and
markets have left them trailing.
Fortunately, a little investment goes a long way. Shifting to a
hybrid work model is not a zero-sum trade-off. Instead, dollars spent
on workplace mobility and flexibility are being recouped and multiplied
through strategic space reductions and higher performance.
The recommendations that follow are clear steps government leaders
can take to capitalize on this once-in-a-generation opportunity for all
Americans.
Activity- and Mission-Based Planning
Remote and hybrid work models are most effective when they are
built around work activities instead of a one-size-fits-all solution.
We have all experienced the horror of a poorly designed open office
concept--no privacy, monotonous layouts, and constant distractions.
Rarely do these concepts account for differing types of workers and the
varied demands their work activities imply for space. Often, these have
been a result of attempting to apply an ``activity-based planning''
model, while still adhering to the now antiquated model of assigning
and allocating space based on hierarchy. These approaches resulted in a
compromise from day one.
The best designed workplaces shape and customize space to best
support the spectrum of work each organization performs, as well as the
profile and preferences of their workforce, and invest in the
technology needed to enable what we call ``internal and external
mobility''. This axiom holds true for hybrid work as well.
Our team has worked with global pharmaceutical firms, advertising
agencies, financial firms, as well as a global luxury consumer goods
brand as they have navigated these changes. In each case, we begin by
surveying employee sentiment, then hosting workshops to ``redefine the
purpose of the office'' to understand the activities and work that will
be done in the office versus remotely.
Many activities lend themselves well to remote work, such as
repetitive computer-based processes and highly concentrative tasks like
reviewing legal documents. Often, employees who perform these tasks
work just as productively (frequently more so) from home and prefer
flexibility over an assigned office seat. As a result, these tasks have
been the best candidates for space reduction. We have worked with
numerous organizations to consolidate their concentrative spaces,
designing smaller, drop-in quiet zones in their stead and supporting
employee mobility with updates to technology and work processes.
Other activities are suitable for both remote and in-person
interaction, such as team meetings and collaboration. We have all
learned to convene virtually throughout the pandemic with little
disruption to organizational effectiveness. Even team ideation has been
possible remotely, with digital whiteboards and shared documents
proving remarkably successful. But there is still a place for the in-
person meeting and no digital solution has quite yet replaced a team
sharing ideas in front of a whiteboard. Spaces that support these tasks
are best suited to redesign and reoutfitting to better accommodate both
in-person and remote employees. Additionally, it's critical we realize
that not everyone has the best conditions to work fully remote. While
we suggest that the purpose of the office should be redefined, we also
recommend that well-provisioned space be allocated for focused, quiet
work and with the needs of all employees in mind. This will help
provide flexibility, access, and choice to employees at all levels and
help promote equitable conditions for the entire workforce.
Some activities simply will not lend themselves to remote work and
require a consistent, well-outfitted physical presence. For this
reason, non-office-based industries have seen far less adoption of
remote work. Examples include laboratories, equipment storage rooms,
highly secure work areas, and ranges. While these spaces may not be
ideal candidates for portfolio reduction, they should be evaluated for
consolidation and considered for hybrid-oriented upgrades. Across large
real estate portfolios, we often see redundancies in these spaces,
presenting opportunities for shared use. Also, our team has worked with
clients to better outfit these spaces with mobile technology, enabling
employees to more seamlessly and securely transition between these
spaces, the office, and their homes.
The following tactics will help the federal government rebalance
its real estate portfolio around its activities and missions:
Better understand user needs and the spectrum of work.
Commission studies to determine which activities are best and least
suited to hybrid work and integrate these findings into portfolio
optimization plans.
Embed remote work-enabling technology and processes into
fixed, in-person spaces to bridge the physical-digital divide.
Identify and consolidate redundancies in fixed, in-person
spaces.
Develop protocols and standard operating procedures
(SOPs) for how teams and individuals will interact both physically and
digitally in order to realize spatial savings
Cultural Shift
The cultural and behavioral shifts needed to achieve portfolio-wide
efficiencies while providing high-performing spaces are not
insignificant. Doing so requires that space sharing be accepted at the
most senior levels of an agency or organization. Despite the proven
positive results of remote work, organizations are still often
resistant to the idea of shifting away from traditional ``space
assignments.'' However, adhering to the model of one desk per person
will only inhibit these organizations from capturing workplace
efficiencies and limit their flexibility and resilience to future
changes. Instead, now is the time to reshape our cultural orientations
toward offices, prioritizing how they enable our people and our
missions over whether there is a desk for every person or an office for
every leader.
In tandem with this top-down shift, organizations need to help
employees understand and embrace new work models from the bottom up.
This takes thoughtful and consistent change management. Employees
cannot just be brought along for the ride. Rather, the most successful
office redesigns--those that lead to efficient and high-performing
spaces--are those that consult their workforce throughout the change
and give them the information and tools they need to take full
advantage of their updated work environments.
The federal government can advance these cultural and behavioral
shifts through the following actions:
Promote and enculturate new work models among senior
administrators and workforce leaders, including addressing
contradictory values around hierarchy, in-person accountability, and
space per person.
Adopt robust change management approaches that not only
prepare employees for change, but also make them champions and power
users of improved spaces.
Performance and ROI, Expanded
Organizations frequently mistake workplace performance with
productivity. Similarly, ROI is often pegged to utilization or square
feet per person. However, leaders in both the public and private sector
are moving away from these simplistic definitions and for good reason:
they fail to capture how workplaces best support their users and, in
turn, enable their mission. Research shows that 80 percent of
organizational costs are for their people, while real estate
expenditures tend to range from 8-12 percent and technology 8-12
percent. When we view the workplace as a space to support our people,
we shift our mindset to being mission enablers--not just space
providers--and open up opportunities to look past one desk per person.
Workplace performance is a function of numerous variables, ranging
from employee wellbeing to facility adaptability, sustainability, and
resilience. Wellbeing itself is a multi-faceted concept, but its
importance cannot be overlooked. As testament, entire certification
programs such as WELL and Fitwel have been developed to help facility
owners operationalize wellness.
Workplaces that support wellbeing help their employees flourish
across six dimensions: physiological, social, material, spiritual,
mental/emotional, and intellectual (as defined by the World Health
Organization). And the effects on mission and financial returns are
significant. For example, cognitive performance is 61 percent higher
for workers in offices with improved indoor air quality, leading to
more creative and prolific output. Good workplace design that
integrates across these dimensions can boost employee retention 47
percent, preserving institutional knowledge and reducing attrition
costs \3\.
---------------------------------------------------------------------------
\3\ GSA. Workplace Matters: Return on Investment. GSA Public
Buildings Service.
---------------------------------------------------------------------------
Performance is also related to facilities' and real estate
portfolios' adaptability to changing contexts. Few anticipated that a
global pandemic would affect our workplaces so significantly, but some
organizations were more prepared to embrace the changes than others.
These organizations had previously invested in technology, facility
designs, and real estate strategies that allowed their workplaces to
flex to the new circumstances. For instance, employees in smart offices
with mobile technology and shared desks seamlessly transitioned to
home; and forward-thinking facility managers who had established more
liquid real estate portfolios were able to easily repurpose or shed
excess space. We rarely know what the next shock will be--a cut in
funding, a sudden growth spurt, another global disruption--but the
highest performing workplaces have designed their spaces accordingly.
The payback on performance is not always as clear as short-term net
present value or internal rate of return. But it yields far more than
blunt reductions in footprint through more enriched employees,
sustainable buildings, and resilient portfolios, all of which optimize
returns over time. Importantly, these returns are not only financial in
nature, but also social and environmental, creating triple-bottom line
benefits for organizations and their communities.
As organizations shift to hybrid work models, performance should be
an important part of the conversation that guides their actions.
Sometimes hybridity and performance will align well, as when the
flexibility to work from home leads to more resilient and balanced
employees. Other times, they will conflict, such as when the push to
reduce footprint and over-densify leads to suboptimal outcomes in
noise, air quality, and growth elasticity. Savvy portfolio managers are
finding ways to balance these drivers, but always prioritizing broader
performance over myopic ROI.
The federal government can expand performance across its real
estate portfolio through the following actions:
Develop multi-faceted workplace performance evaluation
programs
Integrate performance into portfolio optimization plans
Evaluate workplace investments through more than a
financial lens and integrate other non-financial goals (e.g.,
sustainability, equity, resilience)
Develop new operational and behavioral protocols around
office use, redefining the purpose of the office
Summary
The time to reevaluate and redefine the purpose of our offices is
now. The past year has unequivocally proven that the majority of
administrative and/or knowledge work can be done ``anywhere.'' We no
longer can or should expect that the work activities one performs
throughout the day will happen in a single location, such as an office
or a workstation. Instead, we need to enable and empower workers the
autonomy and flexibility to choose.
Organizations, agencies, and institutions all over the globe are
currently reassessing their needs for space. The most successful are
championing activity-based planning and expanded definitions of
performance and ROI to drive their workplaces into the future. Just as
with these private companies, the public sector stands to gain
considerably from these shifts through greater fiscal stewardship and
better achievement of their missions. Thoughtful user research and
active employee engagement will help federal decision-makers best
tailor workplaces to meet the evolving needs of their workforce and
allocate space across their portfolios. With careful upfront investment
in high-quality space, SOPs around how best to use spaces, and broader
cultural acceptance of hybrid work models, the federal building
portfolio can realize significant long-term savings for Americans and
foster a higher performing public workforce.
Ms. Titus. Thank you, Ms. Bacon.
We will now have to take just a brief recess to run and
vote, and then we will reconvene just as quickly as possible.
Thank you for your patience. We will be right back.
[Recess.]
Ms. Titus. The subcommittee will come back to order. Thank
you for waiting for us. Mr. Guest and I are back. Ms. Norton
kind of held down the fort for us.
We will now move on to the Member questions. Each Member
will be recognized for 5 minutes. And I will start by
recognizing myself.
Ms. Sargent, maybe we could begin with you.
You mentioned in your testimony that you are on the GSA's
Workplace 2030 task force.
Could you elaborate a little on that, what you all are
doing, if there is an emphasis on reducing office density, some
of the recommendations that you see coming out of that task
force?
Ms. Sargent. Yes, ma'am. Happy to.
I only serve as an adviser, so I get to see what they are
doing on occasion. But the last report that we had that we all
looked at, they really are looking at a variety of things. They
are looking at infrastructure, they are looking at technology,
they are looking at security, they are looking at the overall
portfolio and the footprint and new ways [inaudible].
Some of that entails breaking down silos and enabling
remote work, and that could be through training, it could be
through new tech tools, new apps, things like that, and really
looking at how do they empower people to be able to have the
greatest flexibility that then enables the Government to have
the greatest flexibility as far as how they address the
portfolio.
Ms. Titus. Great. Well, we are going to be hearing from
them in the next round. And so we want to ask them about that
and get some more details of what they are concluding.
Ms. Hanson, I would like to ask you about some of the
things you referred to. There is that section of the
regulations that nobody knows about except you experts, and it
is kind of a Holy Grail to you, in the ``GSA Leasing Desk
Guide'' that talks about sustainability and environmental
considerations.
I have noticed that that section hasn't been updated since
2012, and so much has changed since then and again changed
because of the virus.
What signal does this send to the commercial world that we
are so far behind? And how do you suggest we revise that or
encourage GSA or mandate GSA to bring those up to date?
Ms. Hanson. Madam Chairwoman, that is a great question. And
that guide is one of our corporate bibles.
I am not in a position to recommend what GSA does or
doesn't do, but I can say that the desk guide allows for
supplemental documents and supplemental data as well as
negotiations.
The desk guide does focus on sustainable requirements in
designing construction of either new or replaced facilities.
But it also refers to OSHA standards and a net zero energy
strategy.
The good news is that much of the private sector has been
working with GSA on the different initiatives. A lot of the
goals are focused on 2030. You have got American Institute of
Architects that has a 2030 goal. You have got Living Building,
2030 Challenge, as well as ASHRAE, Architecture and Engineering
Vision 2030.
Thank you.
Ms. Titus. Great. Well, it seems to me that that needs to
be brought up to date from 2012, looking more at
sustainability, green buildings, things that save energy and
also are more healthy. Doing well by doing good, it seems to
me, if we could update that.
I would then ask Mr. Dong. We have talked a lot about the
telework policies. Given your experiences both in Government
and in the private sector and your understanding of how Federal
decisionmaking works, would you advise each agency to have its
own policy, or do you think that we should look at some overall
policy that can be a guide and set a single standard?
Mr. Dong. I think it is important to address this issue at
an agency level, and I will tell you why.
But let me step back and just say that the remote work
proof of concept that we have seen over the past year is going
to have lasting implications. And during the pandemic, there
was this ``aha'' moment where we discovered how large numbers
of employees can work productively without being tethered to a
single location. And that can have a tremendous impact on an
agency's ability to recruit and retain talent across the
country.
That having been said, we cannot lose sight of agency
mission and function. And we must recognize that some
specialized functions, national security or laboratory
research, for example, don't really lend themselves to telework
that well.
And it is not just about the overall agency mission or
function, but it is also about actual job requirements of
specific positions. Some jobs may require a physical presence
in the office, and others may not.
So, ultimately, I do believe that this is going to be an
agency-by-agency decision where each agency sets remote work
policy in a way that most effectively supports its mission.
Ms. Titus. Thank you.
Ms. Owens Test, we heard from you and from a number of
people that these leases with the GSA don't happen overnight.
They take 2, 3, 5 years sometimes.
Could you talk about some of the leases that are in process
now that were not originally formulated to meet the challenges
of COVID, and things that are a problem now weren't a
consideration 2 or 3 years ago? How do we change authorities to
make those accommodations?
Ms. Owens Test. Well, I appreciate the question. It is a
tough one for sure to answer because of the diversity within
the Federal Government workforce and the different agencies'
needs, missions, and the type of workspace that they need.
For the most part, leases are flexible enough to
accommodate changes in the agencies' requirements. And what we
need to start with is, are the agencies building their
requirements and changing their requirements that can be
articulated to landlords in existing leases?
We are only beginning now to see in the market examples
where leases are ending, where tenants are going to be
consolidating into other spaces, where there [inaudible] to be
plans yet for the new workspace.
So we are looking forward to how the new workspace will be
articulated in the upcoming round of requirements. But it is
going to take time for agencies to develop those space
requirements and understand what the needs of the tenants are,
largely being for tenants to actually and employees to actually
return to their office and then see how they are impacting the
spaces that they are utilizing.
So we will need to see them come back to the office, we
think, before real fulsome requirements can be developed.
Ms. Titus. OK. Thank you.
Now I recognize Mr. Guest.
Mr. Guest. Thank you, Madam Chairman.
Ms. Sargent, I want to take a moment and talk briefly about
public-private partnerships. This is something that I have a
great interest in. I have cosponsored legislation along with
Representative from Indiana Greg Pence to direct GSA to conduct
a pilot program using the public-private partnership.
And you addressed that in some of your written testimony.
You say, ``As Congress looks to update the Federal real estate
portfolio IFMA recommends broad-based consideration of related
factors including . . .'' and you list several. The last one
that you list there is the utilization of public-private
partnerships to help reduce operations and maintenance
backlogs.
And I just wanted to see if you could take a few moments
and expand on how the use of the public-private partnership
could help reduce those operations and maintenance backlogs.
Ms. Sargent. Absolutely. Happy to do that. And I am going
to actually have a few other of the panelists maybe tag in on
this one too.
So there is a long history in the private sector of trying
to create smarter ways of doing business and creating these
partnerships so that the burden is really spread across.
And I think one of the things that we can start looking at
is how do we ensure bringing the best of what the Federal
Government does and the private sector does together to be able
to not only go after some of these opportunities but how we run
them and manage them and oversee them so we are bringing the
best of both.
So it is really about leveraging the expertise that each
brings, opportunity, and the power of the Government, and maybe
the initiation or the resiliency of the private sector really
all coming together to do that.
And whether it is the way that we partner in funding some
of these operations and/or manage them afterwards, I think
there are lots of different opportunities for us to explore
there.
Mr. Guest. And if any of the other witnesses, would love to
hear your opinion on that, if anyone has any followup to Ms.
Sargent.
[Pause.]
All right. If not, then, Ms. Sargent, while I have got you,
I will stick with you for just a minute. I want to kind of
continue to talk a little bit about what is going on in the
private sector.
We know that the Federal Government is often competing with
other employers, many in the private sector, for the best and
the brightest talent. And you talk about that also in your
written statement where you say, ``Companies know that they are
in a fierce war for talent and a race to innovate. To attract
the best people and give them what they need to succeed, they
are rethinking their space.''
You go on to say, ``We need to transform the office from a
place where people have to be to an ecosystem of spaces where
people want to be. Spaces that break down silos and offer
choices about how to work.''
And I was wondering if you could expand on that and speak
on what we are seeing as far as in the private sector, the
trends that we are seeing, and then how we can implement that
into our Federal model.
Ms. Sargent. Yeah. I think it really lies--it really goes
back to that whole ecosystem.
So during this entire pandemic we have repeatedly heard
about productivity. Studies for the last 20 years have shown
that people that work remotely tend to work longer hours than
their office-bound cohorts. Typically, they just roll that
commute time into it.
But I think we are overly focusing on the word
``productivity.'' And just because I empty my in-box faster
than the next person doesn't mean I have really produced
anything.
And what is keeping CEOs up at night before COVID was not
necessarily could they produce a widget fast enough, it was,
can we innovate fast enough, even stay relevant? Are we doing
the right things?
And often productivity can happen when people are remote.
But when you really want to innovate, that comes from synergy
and building that social capital. And social capital is eroding
during this time. And so understanding that different things
happen in different places is important.
So having the ecosystem 2 or 3 days a week when I am doing
my head-down concentrative work, that might happen at home. But
when I need to connect with my colleagues and innovate and
flesh out ideas and banter things back and forth, having a
place that we can physically do that, we can build social
capital, is absolutely essential. And that is what is
disrupting every industry right now. And so needing both of
those is really important.
And nobody is talking about what is happening with
innovative activities during this time. It is all just about
productivity. And I think in the beginning people were very
productive because, quite frankly, people were afraid for their
jobs. So they were working long, hard hours. But that is taking
a toll on individuals.
So we need to create that balance where we can have focused
work and those opportunities for people to come together, build
that social capital, innovate, so that we can even stay
relevant.
Mr. Guest. Thank you.
Madam Chairman, I yield back.
Ms. Titus. Thank you.
I now recognize Ms. Norton.
Ms. Norton. Thank you, Madam Chair.
This is an important hearing for the Government, of course.
But it is also important for my district because so much of the
office space is in the Nation's Capital, and, therefore, brings
Federal workers to the Nation's Capital and has an effect on
the DC economy. But that is not what my question is about.
I want to go first to Ms. Sargent, Ms. Kay Sargent, about
smart buildings and what that really means in this transition.
I am interested in employees, and I am interested in jobs.
How would this impact the number and quality of jobs? And
would it change the number of people who are employed in that
particular sector?
Ms. Sargent. So what we want is for people that are working
to spend their time doing things that are more advantageous; to
make better use.
Eighty percent of an organization's money goes towards
their people cost. If we do anything in the portfolio to
squeeze the real estate and/or have it be ineffective, we could
actually cost the Government more money than we save it if we
make environments where people aren't thriving.
So we have to think about the most valuable asset is the
people and how do we make them as productive as possible.
And I want you to think about this right now. I can start
my car without even leaving my house. And by the time I can
warm it up and when I get there, the car knows that it is me
because I have a fob in my pocket, it automatically turns on,
everything in the car is automatically adjusted to my preset
preferences--the radio, the temperature, the seat, et cetera.
Most of us in our workplaces are still crawling around
under our desk trying to find an outlet. We are so far behind
in leveraging the technology that already exists to create
better experiences.
Ms. Norton. So do you think this will have an effect on the
number of employees in every particular sector?
Ms. Sargent. I think it will have an effect on the
productivity that each employee can do. The number of
employees, that is debatable.
What you get out of those employees would absolutely be
better because they are not spending time doing things that are
ridiculous. They are getting to their job, they are more
satisfied, and you can compete with the best and the brightest
so you have the best and the brightest in the Government.
Ms. Norton. Well, that is an important clarification.
Ms. Hanson, and perhaps also Ms. Owens Test, in the era of
climate change, I have questions for each of you.
If the Federal Government were to shift and require green
leases and healthy building certifications, how would the
private sector adapt to accommodate to that demand?
That is for you, Ms. Hanson--and I note that you have
worked for the DC government--and Ms. Owens Test.
Ms. Hanson. Great. Thank you, Congresswoman. And good to
see you again. We worked together on St. Elizabeths when I was
with the DC government. But your question is a great one.
The private sector is already making a lot of advancements
in the area of green leases and sustainability. Really it has
been part of a collaboration on the Federal Government space
requirement side.
But there have been tremendous advancements on greenhouse
gas reductions, in particular carbon emissions, smart metering,
sensors on chairs, desks, and offices, touchless features,
sensor-based lighting as well, biodiversity focus, renewables,
as well as stormwater management.
So the private sector is certainly framing the conversation
and leading the charge in this area and will continue and
invites really the Federal Government to work with them as they
advance in more technological areas.
Ms. Norton. Ms. Owens Test, do you have any comments on
that question about green leases and healthy building
certifications?
Ms. Owens Test. GSA really was out in front of the market
on this issue when it came to surface around 2000, when GSA
really modified its lease requirements to incorporate many of
the sustainability features that we see today that are now
being incorporated into the private sector, building codes, et
cetera.
And so GSA really supports local codes. The District is a
leader in this as well. And GSA has the ability to incorporate
the green lease modifications that they need into the leases
through their requirements for performance.
We think that it would be good to have continued
coordination with the private sector on what are the features
that can be incorporated in the short term versus the long term
as we look to more and more innovation within this part of the
industry.
Ms. Norton. Thank you.
And I yield, Madam Chair.
Ms. Titus. Thank you.
Mr. Guest, is Mr. Gimenez available to ask a question right
now? Well, if he is, we will come back to him.
Is Mr. Carter with us, or is he still voting?
Mr. Carter?
Well, if we gets back, we will come back to him.
It is interesting, you mentioned how much the private
sector is already doing for green building. Certainly we see
that in Las Vegas. At one time we had 10 major buildings, the
hotels and casinos, that met the LEED gold standard.
So I know there is an incentive for the private sector to
build to those new standards. So requiring that for leases with
the GSA doesn't seem like it would be that difficult. And I
agree with Ms. Norton that is something we ought to look at.
Should we do another round of questions, Mr. Guest, Ms.
Norton, while we wait and see if they show up?
Thank you.
I would ask Mr. Dong, because the amount of funds that are
available in the Federal Buildings Fund for new construction
and repairs and alterations has decreased below the amount of
receipts that have been received by the GSA from its tenants,
several solutions have been proposed for alternative ways of
funding projects.
We have already heard some discussion about public-private
partnerships. There are also discounted purchase options and
the new Federal Capital Revolving Fund concept, which would
finance the construction of new federally owned nondefense
buildings.
GSA has the legal authority to carry out those PPPs, P3s, I
guess, and discounted purchase options. But the Office of
Management and Budget's interpretation of budgetary scoring
rules require GSA to have the full amount of budgetary
authority for a project upfront, and that is often difficult to
achieve.
Mr. Dong, would you talk about how OMB's forceful
application of scoring rules impacts GSA's construction
projects and if the Federal Capital Revolving Fund concept
could enable agencies to finance those nondefense buildings
without eating up all of their annual appropriations?
Mr. Dong. Sure. Let me start with some perspective on
scoring and then we will move to the Federal Capital Revolving
Fund.
First, on scoring, the headline for me is that Federal
scoring rules don't work very well. They hamstring the ability
of the Federal Government to address the needs of an aging
portfolio. And they don't really provide the type of fiscal
discipline they were intended to achieve.
OMB Circular A-11 makes a distinction between operating
leases and capital leases based on a number of factors,
including overall lease terms, the length of the--the value of
the lease payments, and whether there is a bargain purchase
option included in the mix.
What we have seen, though, is that current scoring rules
effectively limit GSA terms to about 15 to 20 years. However,
there are many examples of Federal tenancies that extend 30 to
40 years in the same location.
So, as a result, GSA is resorting to a workaround through
multiple short-term, higher cost lease transactions that
technically scores operating leases to allow for more favorable
budgetary treatment.
However, because the Government is unable to commit to
longer firm terms for leasing, the Government ends up paying
higher rates as landlords incur more expensive financing costs.
The problem with scoring rules is that they are conflating
the concepts of funding and financing. They are two separate
issues.
For me, it is a lot like buying a house. Could you buy your
house--or in this case, rent your house--if you had to pay for
the entire cost of your occupancy, which could run 20 to 30
years, in 1 year? The answer is most of us could not.
So I think the time has come for us to step back, evaluate
how well Federal scoring rules are working. And perhaps we
should take a cue from the private sector or from State and
local governments which have discovered and have embraced far
more current ways of funding and financing these projects.
So let me just skip back to the Federal Capital Revolving
Fund, which you mentioned. To me, that is a step in the right
direction because it reflects a far more rational process for
budgeting for large-scale capital projects.
If you look at the current Federal budgeting process, it is
a bit myopic, because the budget for agencies is set 1 year at
a time. And it is difficult to budget for large-scale capital
projects when the entire cost of the project has to be covered
in a single year.
And when that one project can run several hundreds of
millions of dollars or several billions of dollars, that one
project can crowd out a huge portion of an agency's annual
budget.
In contrast, if you look at the State and local capital
budgeting system, it is different. They have got a capital
budgeting process that allows for the cost of these large-scale
projects to be spread across multiple years.
So when you look at the Federal Capital Revolving Fund and
what is being proposed there, it is embracing some of the key
concepts of capital budgeting. It provides a $10 billion
upfront appropriation on the mandatory side of the budget and
it allows agencies to tap into the fund to cover the cost of
large projects without having to absorb the entire cost in a
single budget year. And then agencies end up paying back the
fund in annual increments over 15 years through regular
discretionary appropriations.
So for me, the way I see it, it is a more rational way of
budgeting for these projects because it allows agencies to
spread the cost over multiple years instead of having to absorb
the entire cost in year one.
Ms. Titus. Thank you. Thank you very much.
Mr. Guest. Thank you, Madam Chairman.
Ms. Bacon, I agree with your assessment here where you say
in your written statement that the COVID-19 pandemic has caused
``widespread adoption of remote work.'' You go on to say
``hybrid work models will become the norm in office-oriented
industries . . . .''
But I think we would all agree that there are some
functions, that there are some activities that do require a
physical presence in office buildings to get accomplished.
And so my question is, would you take a minute and kind of
talk about how do we evaluate those activities, those functions
that require physical presence versus those that we can now do
remotely?
And I think you gave me an example in your testimony about
a financial trading company that thought it was required to
have all the work done within the office, but now they are
planning to return back using a hybrid model.
So can you kind of talk about those things which we would
use to evaluate what can be done remotely, what can be done by
hybrid model, and then those things which require individuals
to actually physically be present in an office or workplace?
Ms. Bacon. Thank you. That is a wonderful question and a
complex one at that.
There are a number of different ways that an organization,
agency, needs to approach that very thing. There is job design.
There is organizational design.And then there is also
evaluating mission, goals, objectives, and behaviors.
Long before COVID-19, we evaluated and looked at the
variety of work modes, whether you are doing deep production,
whether it is analyses, writing, graphic design, or in some
cases trading, which is an individualized activity versus
collaborating.
And there are various components to collaborating. There is
the ideating that Ms. Sargent shared earlier, that co-creation,
where people are in a room together, whether it is for a few
hours or a few days, in the tech sector creating content
together.
But then there is also another element of collaboration
which is doing quite well in the current context, is sequential
collaboration, which is very similar to how we are all
convening now, where project teams all have their individual
tasks and they need to come together to coordinate and assign
sequential tasks to break apart and do individualized work.
So to get to your question about how, there are a number of
things that could or should be done. Of course we have
historically relied on survey data, individuals surveying an
employee population as well as leadership and management to
understand the percentage of time that is spent in these varied
work modes.
But technology, as technology continues to mature,
technology and data have also enabled us to better understand
communication and collaboration patterns. So, for example, we
have been able to discern through social network mapping the
frequency of communication across various departments.
So the how is somewhat bespoke to the organization, but the
overall recommendation would be sentiment surveys, again
opinion, but also augmented with better understanding, breaking
down specific tasks, and specifically within those tasks
identifying the individuals or the groups that need to
participate in those tasks.
And that is the critical component both for smaller groups,
project teams, but also departmentwide adjacencies and/or
collocation strategy, in terms of the groups that work together
most frequently and then those that may be able to segment that
interaction in a few days a week.
Or in some cases we are also looking at organizations that
are making recommendations around they are going to be in the
office 1 week a month and the rest of their activities can
happen remotely.
Mr. Guest. Thank you so much.
My last question, Ms. Hanson, I want to ask you as it
relates to as we move into a post-COVID environment,
particularly cleaning and sanitation. That will continue to be
a very important component as we are returning people back to
the workforce, whether that is back into the offices entirely
or through some sort of hybrid model.
I know that even when we were at maximum telework, GSA
spent approximately $50 million in activities related to COVID
cleaning during the pandemic.
You talk a little bit in your testimony that that are
systems and technologies that can be used that would improve
and reduce the cost of sanitation and cleaning. You talk a
little bit high-efficiency HVAC systems, supplemental air
purification units, workforce sanitation standards.
Could you just very briefly talk about what it is going to
look like as people begin to come back into an office type of
environment, the importance of the cleaning and sanitation, and
some of the tools that are available now that we can use and we
can rely on?
Ms. Hanson. Yes. Thank you, Congressperson.
It is going to look different. And it is really going to
depend on the organization, their mission, their function,
their workforce capacity, who they interact with internally and
externally.
But what I can say is that there is a lot of technology out
there already in use and just speeding up its adoption rate.
You have mentioned some of the technologies already. A few
others are self-certification, whether it is via app or online.
Mobile air purifiers. We also are looking at robotics and
concierge-type services.
A lot of this has to do with artificial intelligence and
modeling the behavior of people so that there can be
preparedness in the tools that they use once they enter the
office. The integrated workplace management system, which has
replaced the CAFM system of the day, is looking more at how
systems are run in a building, how space is managed, and even
room reservations, and also providing for more rapid service
requests to be made.
Another aspect of technology that is important is the idea
of high-performance computing. This is a trending concept that
aggregates computing power, because today, compared to even 10
years ago, we have got thousands more pieces of data that need
to be processed and thousands more users of this data. So that
is one of the ways that you can generate quite a bit of time
savings.
And the last that I will say, data management is key here.
When we talk about technology and talk about the ways that it
can enhance not only our environment but how we do our work, it
has got to be integrated, it has got to be interoperable. The
data has to be cleansed in order to provide accuracy for
decisionmaking; as well, it has got to be accessible.
Thank you.
Mr. Guest. Thank you, Madam Chairman. I yield back.
Ms. Titus. Thank you.
Ms. Norton.
Ms. Norton. Thank you, Madam Chair.
Again, this hearing is particularly important not only to
the Government, but to my own district where so many of these
office spaces are located.
Ms. Owens Test, I noted that you mentioned in your
testimony that if the Government wanted to maintain its
favorable negotiating position, it has always been able to
negotiate because of who it is, and its size, and the amount of
space it has, both here and around the country.
You say it will need to continue to reinforce confidence it
provides to private-sector landlords by continuing to actively
pursue new long-term leases.
But let me ask you, when there are more vacancies in the
commercial real estate market, how can the Federal Government
lose its favorable negotiating position? Perhaps that puts us
in a more favorable negotiating position.
Ms. Owens Test. You point to something that is very
important, and that is that we are currently in a very tenant-
favorable market. And while the Government takes advantage of
the tenant favorableness, if you will, of the market, the long-
term nature of the leases are one of the features that they
then attract better pricing.
So what we are advocating for is that the Government use
the tools that are in their tool belts while they have the
upper hand of it being a tenant market to capture the best
deals possible for the Government.
Long-term leases, and many people will talk about that,
long-term leases have been a great success. As GSA has pursued
long-term leasing, it has been a great [inaudible] to capture
good pricing within the Federal real estate market.
The private sector gets the best financing, the Government
then in turn gets the best rental rates, and all of these--
whether it is a new lease at an existing location or a new
lease in the marketplace, the private sector is able to respond
the best because the Government is giving that commitment for
long term. And the financial markets appreciate that ``long
termness'' of their leases.
Ms. Norton. So you are saying pursue as many long-term
leases now while the getting is good. Is that it?
Ms. Owens Test. Absolutely. You are absolutely right.
Ms. Norton. OK.
Let me go to Ms. Bacon now, because I am very interested in
the workforce. As I listened to the testimony, we are likely to
see great change.
And I was interested, Ms. Bacon, in how important, or at
least you spoke about the importance of consulting employees
and workers when making decisions how to allocate office space
in the future. Now, I am thinking about employees who are
likely to see considerable change.
So both within the Federal workplace and more generally,
Ms. Bacon, can you expand on the importance and what we can get
out of listening to and incorporating the worker perspective
when designing these spaces and policies? I am trying to think
of a future now in light of the changes we are seeing.
Ms. Bacon. Thank you. I think that is a very important
question. I appreciate that you asked it.
The engagement process of a new workplace is really
critical. I think someone already mentioned that 80 percent of
an organization or agency's cost is on its people. And yet
oftentimes because of the nature of the upfront capital spend
required to design or build out an office, the financial
pressures are to require to spend as little as possible, and
that is just the nature of the cost structure.
So in order to engage a workforce, I do think it is
critical because you are able to, again, understand what it is
they do, understand the percentage of time they spend in
various work modes, understand what is or isn't working in
terms of the physical space, but also understand the
opportunities for continued remote working, especially right
now, in terms of as we look at the hybrid future and
acknowledging that, as we have said, there are productivity
gains to be had.
I would like to shift that word less about productivity,
because it is subjective to the organization and the
individual, but performance is less subjective. Individual
performance is critical.
And so, understanding how well an individual feels they are
performing at home, what they need to perform in the office, is
really important.
And, again, going back to the need to not leave anyone
behind as organizations are looking. And we are hearing some
pretty aggressive spatial reduction targets from various
agencies, 20 percent, 30 percent, in some cases 50 percent,
which we haven't yet validated if that is plausible or healthy
for the organization, but we are assessing it.
But we need to understand what people's conditions are at
home. Do they have enough space to work remote? Do they have
the tools they need to work remote?
Some of the potential space savings that can be had from
reducing a portfolio probably needs to be reallocated into the
home office equipment and environments and the individual and
the technology. But we don't know that without serving and
understanding the workforce.
And I talk about surveys. That is one step and it is an
obvious one, pulse surveys, sentiment surveys, et cetera. But
it is also important to get those findings and then do focus
groups and workshops and really talk to employees to dig deeper
as to what the statistical outcomes are.
And also as you are embracing and creating a new program,
both standard operating procedures, behavioral protocols, a new
approach to space, what we are suggesting here in a hybrid
future is, with the office becoming more purposeful, we are
talking about a reallocation of space to spaces that support
this varied collaboration, varied ideation, varied activities.
And it is important that we understand what those
activities are lest an organization allocate spaces to
activities that can be done at home and/or are not the coveted
use of space.
So I think it is a critical thing that every agency and
every organization should be doing.
Ms. Norton. Thank you, Madam Chair. I yield back. My time
has passed.
Ms. Titus. Thank you very much.
I think we have lost our other Members, so we will close
the hearing.
But I want to thank our witnesses. You have given us just
excellent information that we can take to our next hearing and
present to GSA and get their perspective on it.
A couple of things that we haven't discussed that we may
reach out to you for more information on is location. That is
always a consideration. And it certainly impacts, say, mass
transit. And if people aren't going to work, what are the
traffic patterns going to be? Where do you locate buildings? I
think that is all part of the consideration too now in post-
COVID.
And we have talked about spacing, but not other health
requirements, whether it is vaccinations, or a mask, or
whatever it might be.
But we have certainly started the conversation, and we
heard that y'all would be excellent witnesses and certainly
that turned out to be true.
I will now ask unanimous consent that the record of today's
hearing remain open until such time as our witnesses have
provided answers to any questions that may be submitted in
writing in the wake of the hearing.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information that
will be submitted by the Members to be included in the record.
Without objection, so ordered.
The subcommittee now stands adjourned.
[Whereupon, at 3:57 p.m., the subcommittee was adjourned.]
Submissions for the Record
----------
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chair, Committee on
Transportation and Infrastructure
Thank you, Chair Titus, and thank you to our witnesses for agreeing
to participate in this hearing.
The losses we have incurred over the past 14 months are
extraordinarily painful. Lost loved ones, lost academic years, lost
jobs, lost homes, lost businesses, lost wages, lost health, lost
celebrations.
But the pivot to working from home--largely considered a success--
may profoundly alter the work-life dynamic in favor of American
workers.
Employees may expect more control over where they work and when.
They might want to be able to open windows in their offices. They may
demand information about building health and cleaning protocols. They
may refuse to share bathrooms with entire floors of coworkers. They may
want to increase their own space and avoid cramped meeting spaces. And
they might want to change how they commute and how often they go into
their offices.
As states and cities announce reopening plans, federal agencies and
the General Services Administration should be reassessing their real
estate portfolios and asking the following questions:
Should per person utilization rates shrink or expand?
Do agencies have more space than they need?
How should space be reconfigured to protect human health?
Do we have the right balance of owned and leased
properties?
Are we maximizing each owned and leased property?
Are we efficiently disposing of the properties we don't
use and are not maintaining?
Are we using the latest codes and technologies to reduce
energy and water consumption and protect human health?
Does GSA have the flexibility to maximize private sector
assistance, expertise, and funding?
How does repeated underfunding of GSA's Repairs and
Alterations program work against our climate and resilience goals?
The Recovery Act of 2009 provided GSA with $5.5 billion to convert
federal buildings into high-performance green buildings, and renovate
and construct federal buildings, federal courthouses, and GSA-owned
Land Ports of Entry.
President Biden's American Jobs Plan includes $18 billion for the
modernization of VA hospitals and clinics, and $10 billion for ``the
modernization, sustainability, and resilience of federal buildings,
including through a bipartisan Federal Capital Revolving Fund (FCRF) to
support investment in a major purchase, construction or renovation of
Federal facilities.''
While Congress develops President Biden's American Jobs Plan
proposal and potentially provides new funding for GSA's Public
Buildings Service, we must ensure that any spending reflects our post-
COVID-19 priorities of protecting human health and the environment.
I appreciate the participation of our witnesses today. Your
experience in public and private sector leasing and construction,
interior design, workforce development, building health and safety,
federal scoring rules, and real estate financing, will help this
Subcommittee develop the policies needed to turn GSA's leased and owned
real estate portfolios into high-performing assets that facilitate
worker productivity and agency performance, while protecting the health
of workers and our environment.
I look forward to your testimony. Thank you.
Prepared Statement of Hon. Sam Graves, a Representative in Congress
from the State of Missouri, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chair Titus, and thank you to our witnesses for being
here today.
This Subcommittee has a long, bipartisan history of taking a
leading role in reforming federal real estate.
From pressing agencies to reduce their space footprint, to changing
how we dispose of unneeded real estate, we have saved the taxpayer
billions of dollars.
Now we are faced with a potential opportunity to realize more
savings.
Understanding what office space and federal needs look like post-
COVID is critical for us to ensure decisions are being made that
reflect what makes the most sense, particularly from the standpoint of
the taxpayer and agency mission.
I look forward to hearing from our private sector witnesses today
on their perspectives.
Thank you, Chair Titus. I yield back.