[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
---------------------------------------------------------------------------
     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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
     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.
---------------------------------------------------------------------------

          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.