General Services Administration: Downsizing and Federal Office Space
(Testimony, 04/24/97, GAO/T-GGD-97-94).

GAO discussed its July 1995 letter on the General Services
Administration's (GSA), the Office of Management and Budget's (OMB), and
10 executive agencies' efforts to identify and manage federal office
space that may be unneeded or underutilized after agencies downsize, and
GAO's ongoing work on this issue.

GAO noted that: (1) with the loss of 107,000 non-Department of Defense
related full-time equivalents (FTE) through downsizing, millions of
square feet of costly federal office space could become unneeded or
underutilized; (2) GAO's letter recognized that it probably was not
possible to save the full cost of all office space associated with FTE
reductions because personnel losses could be scattered over multiple
locations; (3) however, to provide an indication of the potential
savings involved, GAO estimated that the cost of the office space
vacated by the 107,000 FTEs at the time to be about $362 million
annually; (4) GAO said in 1995 that neither of the two central federal
management agencies responsible for space management and budget matters,
GSA and OMB, had developed a governmentwide strategy for managing office
space reductions resulting from the government's downsizing efforts; (5)
GAO reported, however, that both agencies had taken steps to identify
and restrain potentially unneeded or underutilized federal office space;
(6) finally, GAO's 1995 letter pointed out that 10 executive branch
agencies, plus GSA and OMB, had either taken proactive space management
approaches or were awaiting on the outcome of other issues prior to
beginning specific initiatives; (7) four agencies had developed
agencywide space management initiatives; (8) the remaining five agencies
had not begun specific space management initiatives related to
downsizing because they said they were awaiting the outcome of employee
buyouts, agency reorganizations, or legislative initiatives; (9) since
GAO's 1995 letter, GSA has taken additional steps that it believes will
improve its management in general of government-owned and -leased
properties, and that could help in identifying and restraining the
amount of unneeded and underutilized federal office space resulting from
agency downsizing; (10) GSA officials told GAO that GSA is now formally
considering the effects of federal agency downsizing and space reduction
plans in its forecast of rent collections, which in large part make up
GSA's federal building fund used to fund real property activities; (11)
although it is too early to assess the effectiveness of any of these GSA
actions, in discussions with OMB staff responsible for reviewing GSA's
budget, they told GAO that they believe that actions taken or under way
by GSA will position GSA to more effectively manage potentially unneede*

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-97-94
     TITLE:  General Services Administration: Downsizing and Federal 
             Office Space
      DATE:  04/24/97
   SUBJECT:  Federal downsizing
             Strategic planning
             Federal office buildings
             Federal property management
             Federal agency reorganization
             Surplus federal property
             Cost control
             Cost effectiveness analysis

             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Before the Subcommittee on Public Buildings and Economic Development,
Committee on Transportation and Infrastructure, House of
Representatives

For Release on Delivery
Expected at
9:00 a.m.  EDT
Thursday, April 24, 1997

GENERAL SERVICES ADMINISTRATION -
DOWNSIZING AND FEDERAL OFFICE
SPACE

Statement of Michael E.  Motley, Associate Director
Government Business Operations Issues
General Government Division

GAO/T-GGD-97-94

GAO/GGD-97-94T


(240248)


Abbreviations
=============================================================== ABBREV

  GSA - General Service Administration
  OMB - Office of Management and Budget
  FTE - full-time equivalent
  STAR - System Tracking and Administering Real Estate
  NASA - National Aeronautics and Space AdministrationSTATEMENT

GENERAL SERVICES ADMINISTRATION: 
DOWNSIZING AND FEDERAL OFFICE
SPACE
==================================================== Chapter Statement

Mr.  Chairman and Members of the Subcommittee: 

We welcome this opportunity to discuss our July 1995 letter
Downsizing and Space (GAO/GGD-95-51R, July 14, 1995), which provided
information on the General Services Administration's (GSA), the
Office of Management and Budget's (OMB), and 10 executive branch
agencies' efforts to identify and manage federal office space that
may be unneeded or underutilized after agencies downsize, and our
ongoing work on this issue.  As you know, the Federal Workforce
Restructuring Act (P.L.  103-226), enacted on March 30, 1994,
mandated downsizing the federal workforce by about 270,000 full-time
equivalents (FTE) by October 1, 1999.\1

Our 1995 letter, issued early in the downsizing process, noted that
federal civilian agencies occupied over 750 million square feet of
office space in thousands of government-owned and -leased buildings
nationwide.  We expressed concern, that with the loss of about
107,000 non-Department of Defense related FTEs through downsizing,
millions of square feet of costly federal office space could become
unneeded or underutilized.  Our letter recognized that it probably
was not possible to save the full cost of all office space associated
with FTE reductions because personnel losses could be scattered over
multiple locations.  However, to provide an indication of the
potential savings involved, we estimated that the cost of the office
space vacated by the 107,000 FTEs at that time to be about $362
million annually.  We based this estimate on GSA's work space target
of 152.5 square feet per employee, GSA's nationwide office space
average cost of $22.22 per square foot, and the 107,000 FTE reduction
target. 

We said in 1995 that neither of the two central federal management
agencies responsible for space management and budget matters, GSA and
OMB, had developed a governmentwide strategy for managing office
space reductions resulting from the government's downsizing efforts. 
We reported, however, that both agencies had taken steps to identify
and restrain potentially unneeded or underutilized federal office
space.  Steps taken by GSA included (1) in the summer and fall of
1994, calling for a "Time Out and Review" of high-dollar-value
capital spending projects--a step that, according to GSA, identified
and eliminated almost 1 million square feet of unneeded agency
expansion space; (2) instituting in September 1994 a "No Net New"
office space policy to stop agencies from acquiring net new office
space as measured against GSA's inventory baseline of general purpose
office space; (3) in March 1995, proposing a "timeout" for the review
of the need for current and pending agency leasing actions; and (4)
in April 1995, instituting a temporary moratorium on most agency
leasing actions pending administration downsizing decisions. 

As for OMB, we said that in May 1994, OMB directed agencies to
project their office space needs for fiscal years 1996 through 1999,
taking into consideration anticipated personnel reductions, and to
submit these projections to OMB by June 30, 1994.  OMB believed that
the agencies and GSA could use this information to begin analyzing
and planning for how workforce reductions could affect office space
needs.  However, we said that GSA officials told us that these
projections showed no net reduction in office space needs by federal
agencies through fiscal year 1999, even though they projected an
18-percent reduction in total employment. 

Finally, our 1995 letter pointed out that 10 executive branch
agencies, plus GSA and OMB, had either taken proactive space
management approaches or were awaiting on the outcome of other issues
prior to beginning specific initiatives.  Four agencies had developed
agencywide space management initiatives.  The Tennessee Valley
Authority, for example, had developed plans to reduce its space
inventory by 1 million square feet over 3 years.  Three other
agencies did not have agencywide plans but had bureaus or offices
that were developing space management plans.  The National
Aeronautics and Space Administration (NASA), for example, had
directed its headquarters and field offices to develop site-specific
space requirements that were to take personnel reductions into
consideration.  The remaining five agencies had not begun specific
space management initiatives related to downsizing because they said
they were awaiting the outcome of employee buyouts, agency
reorganizations, or legislative initiatives. 

At the request of the Chairman, House Committee on the Budget, we
have recently begun to follow up on our 1995 report, and we expect to
complete this effort in the summer of 1997.  Although it is too early
in our review for us to have any conclusions or recommendations, we
do have several preliminary observations.  Since our 1995 letter, GSA
has taken additional steps that it believes will improve its
management in general of government-owned and -leased properties, and
that could help in identifying and restraining the amount of unneeded
and underutilized federal office space resulting from agency
downsizing.  For example, GSA is in the process of implementing a new
automated system, System Tracking and Administering Real Estate
(STAR), that is designed to be an integral part of GSA's day-to-day
real estate activities.  STAR is to provide direct support to GSA
real estate personnel, and GSA officials believe that STAR will
enable GSA to better manage government-owned and -leased properties. 
GSA plans to phase-in STAR during the first quarter of fiscal year
1998. 

In addition, GSA is pilot testing a program called "Ponding", which
is an effort to consolidate about 1.2 million square feet of leased
office space in 37 federal projects.  GSA is funding this program
with the goal of identifying 600,000 square feet of underutilized
space.  This space could then be leased to other agencies or turned
back to the lessors and the leases terminated.  GSA hopes to
demonstrate to Congress that, by funding the cost of space
consolidations, long-term savings can be realized. 

GSA officials told us that GSA is now formally considering the
effects of federal agency downsizing and space reduction plans in its
forecast of rent collections, which in large part make up GSA's
federal building fund used to fund real property management
activities.  GSA said that its regional asset managers, who usually
have specific knowledge of pending actions relating to local
agencies' space requirements, are now reviewing the data supporting
GSA's rent collection estimates to improve their accuracy.  With
improved rent collection estimates, GSA officials believe that the
agency will be positioned to better manage the federal building fund. 

Although it is too early to assess the effectiveness of any of these
GSA actions, in discussions with OMB staff responsible for reviewing
GSA's budget, they told us that they believe that actions taken or
under way by GSA will position GSA to more effectively manage
potentially unneeded and underutilized federal office space that
might result from downsizing. 

Our work updating the space management strategies of the 12 executive
branch agencies has also just begun.  Although we are not in a
position to report on these activities at this time, we are aware of
one agency's achievements in the area of space management.  We
recently reported that NASA has achieved an estimated $250 million in
cost reductions through fiscal year 2000, mostly from moving contract
personnel from off-site leased space into agency-owned space left
vacant by staff reductions related to NASA's downsizing efforts.\2


--------------------
\1 One FTE is equal to one work year or 2,080 non-overtime hours. 
Put simply, one full-time employee counts as one FTE, and two
half-time employees also count as one FTE.  The FTE concept is
intended to capture the work hours of all federal employees. 

\2 NASA INFRASTRUCTURE:  Challenges to Achieving Reductions and
Efficiencies (GAO/NSIAD-96-187, Sept.  9, 1996). 


------------------------------------------------ Chapter Statement:0.1

Mr.  Chairman, this concludes my prepared statement.  I would be
pleased to answer any questions you or the other Member of the
Subcommittee might have at this time. 


*** End of document. ***