[Congressional Record Volume 167, Number 38 (Monday, March 1, 2021)]
[Extensions of Remarks]
[Page E183]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]





  INTRODUCTION OF THE SECURITIES AND EXCHANGE COMMISSION REAL ESTATE 
                    LEASING AUTHORITY REVOCATION ACT

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                         Monday, March 1, 2021

  Ms. NORTON. Madam Speaker, today, I introduce the Securities and 
Exchange Commission Real Estate Leasing Authority Revocation Act, which 
would revoke the real estate leasing authority of the Securities and 
Exchange Commission (SEC). Since the SEC was granted leasing authority 
in 1990, before I came to Congress, the SEC has consistently stumbled 
through leasing mistakes at great expense to taxpayers. It is time for 
Congress to end this fiasco and return the leasing authority to the 
General Services Administration (GSA), the federal government's real 
estate arm, like other federal agencies.
  When Congress exempted the SEC from GSA regulations and directives in 
1990, it expressed its clear intent that ``the authority granted to the 
Commission to lease its own office space directly will be exercised 
vigorously by the Commission to achieve actual cost savings and to 
increase the Commission's productivity and efficiency.'' (H.R. Conf. 
Rep. 101-924.) Over the past 30 years, none of that has come to 
fruition.
  The SEC did not even establish a Leasing Branch until April 2009, and 
did not put into place any leasing policies or procedures until August 
2010. Before that, in May 2005, the SEC disclosed that it had 
identified unbudgeted costs of approximately $48 million attributable 
to misestimates and omissions of costs associated with the construction 
of its headquarters near Union Station. In 2007, after moving into its 
headquarters, the SEC shuffled its employees to different office spaces 
at a cost of over $3 million without any cost-benefit analysis or 
justifiable rationale.
  In the summer of 2010, the SEC's Office of Administrative Services 
(OAS) conducted a deeply flawed and unsound analysis to justify the 
need for the SEC to lease 900,000 square feet of space at Constitution 
Center and to commit over $500 million over 10 years, overestimating 
the amount of space needed by over 300 percent. In addition to this 
gross overestimation of space, OAS failed to provide complete and 
accurate information and prepared a faulty and backdated Justification 
and Approval after it had already signed the lease.
  As a former chair and ranking member of the Subcommittee on Economic 
Development, Public Buildings, and Emergency Management, I was deeply 
involved in oversight of the SEC's real estate activities in the 
District of Columbia after the agency engaged in this improper sole-
source procurement of nearly one million square feet of leased space. 
We held two hearings on this subject in 2011. At the first hearing, 
titled ``The Security and Exchange Commission's $500 Million Fleecing 
of America,'' SEC Inspector General H. David Kotz testified that 
employees ignored the SEC chair's explicit instructions and engaged in 
possible criminal violations in a sole-source procurement. He also 
supported stripping the SEC of leasing authority if the SEC did not 
undertake major reforms. I agreed with Inspector General Kotz's 
evaluation and introduced legislation to revoke the SEC's leasing 
authority for the first time.
  At the second hearing, titled ``The Security and Exchange 
Commission's $500 Million Fleecing of America: Part Two,'' SEC 
Chairwoman Mary L. Schapiro testified that ``the SEC recognizes the 
benefits of having [GSA] manage the Commission's future lease 
acquisitions. Leasing is not part of the Commission's core mission and 
we cannot allow it to impede that mission.'' She then explained that 
the SEC would pare down its leasing program ``solely to liaise with 
GSA.'' This arrangement, in which GSA manages SEC leasing activities, 
was memorialized in a Memorandum of Understanding between GSA and the 
SEC on August 1, 2011.
  Today, I have concerns that the SEC is going back on the commitment 
it made to Congress, which is why I am reintroducing this bill. In 
August 2016, GSA and the SEC entered into an Occupancy Agreement to 
authorize GSA to conduct the process for a new 15-year lease. In 
December 2016, GSA, with the approval of the SEC, submitted a 
prospectus to the House Committee on Transportation and Infrastructure 
for approximately 1,274,000 rentable square feet for the SEC. Congress 
approved this prospectus in 2018, and by July 2019, GSA had received 
final bids, resolved all protests and even selected a final bidder. A 
month later, in August 2019, the SEC canceled the Occupancy Agreement 
with GSA, citing concerns about the value of the purchase option that 
was part of the lease, concerns the SEC refused to document to 
Congress. The SEC effectively vetoed the entire procurement process 
despite not having the authority or funding mechanism to exercise the 
purchase option without GSA's involvement. After a few more months of 
impasse, the SEC requested that GSA cancel the procurement and commence 
a new procurement process.
  In all this back and forth between two agencies navigating a 
convoluted authority structure, a multi-million-dollar procurement 
funded by taxpayers has gone to waste, adding to the hundreds of 
millions of dollars the SEC has previously squandered in its real 
estate endeavors. These public blunders also risk undermining the 
reputation of GSA and the federal government among developers and 
building owners that participate in these lease procurements and 
ultimately driving up the costs of all GSA real estate procurements due 
to the threat of uncertainty. This also means that the SEC will 
continue to engage in short-term leases at a premium while the 
procurement process plays out again, instead of quickly transitioning 
to a more cost-effective long-term lease as planned. Congress created 
this confusion by granting the SEC leasing authority, and now Congress 
must fix it by revoking that authority.
  The SEC's mission is to protect investors; maintain fair, orderly, 
and efficient markets; and facilitate capital formation. GSA's mission 
is to provide other civilian federal agencies with workspace and 
furnishings at best value to the taxpayer. As the SEC has demonstrated 
over three decades, it is incredibly inefficient, wasteful and 
redundant to have the SEC involved in the nuances of real estate 
decisions when GSA exists for that very reason. Like other federal 
agencies, the SEC would continue to have input and involvement in the 
decision-making process, but the ultimate real estate authority would 
lie with GSA, where it belongs.
  I urge my colleagues to support this bill.

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