New Project Delivery Method Emerging at GSA
Barbara Heller
The federal agency struggles to overcome challenges with a dwindling budget
The General Services Administration (GSA), the federal agency responsible for owning, operating, renovating and acquiring most federal government civilian facilities, is struggling to maintain existing operations with a significantly reduced budget.
With a portfolio of 375 million square feet in all 50 state and six territories and a $9.4 billion operating budget, GSA is challenged to maintain existing facilities and develop strategic plans with shrinking resources. Dorothy Robyn, Commissioner of the GSA Public Building Service spoke at a meeting of the Federal Real Property Association on January 14, 2014 in Washington, D.C. and described it as "a very dire situation."
Although GSA sometimes receives supplemental appropriations from Congress, most of its operating budget comes from the Federal Building Fund (Fund), a quasi-revolving fund that was established in 1972 to finance GSA acquisition and operations of federal property. Federal agencies occupying space in GSA buildings pay user charges, or rent, based on comparable commercial rates. This money is deposited in the Fund and then made available to GSA for construction, leasing, and real property operations. Currently, the Fund collects about $9 billion annually which is most of GSA's budget. However, unlike true revolving funds such as the EPA Brownfields Fund which restricts the use of fund money to EPA operations, Federal Building Fund money is not automatically allocated to GSA, it must be specifically appropriated by Congress. For about 40 years, Congress appropriated all the money in the Fund to GSA, but that changed in FY11 when Congress decided to appropriate $1.5 billion of Fund money to non-GSA activities. Considering that GSA commercial lease obligations are roughly $5b annually, this reduction cut into GSA operations significantly. The shortfall happened again in FY12 and FY13, forcing GSA to defer maintenance and reduce its capital investment program. As Ms. Robyn described it, GSA had virtually no money for new construction, no money for major repairs and renovations and significantly reduced its minor repair and alteration program. GSA buildings are an average of 50 years old and many have exceeded their anticipated design life. Ms. Robyn noted that "This is not a sustainable situation."
GSA is also getting pressure from Congress and OMB to dispose of under-utilized facilities and move tenant agencies into owned, rather than leased, facilities. "I get called up to the Hill and beaten up on a regular basis for quote, 'sitting on our assets'." Ms. Robyn stated.
Although disposal of facilities reduces costs in the long term, it requires expenditures in the near term to identify facility disposal candidates, relocate existing tenants and structure a transaction. In order to achieve governmental goals and lessen their dependency on the annual budget process, GSA is getting creative and considering new project delivery methods, including an emerging concept called "Exchange for Services." Exchange for Services integrates facility disposal, programming, land acquisition, design and construction into a single transaction. The overall goal is to simultaneously conform to governmental mandates to reduce real property holdings and provide agencies with new facilities that better support their operations than the current facilities.
After identifying under-utilized or obsolete GSA assets in active real estate markets, GSA plans to solicit proposals for new projects in exchange for the existing asset. Candidate facilities in the Washington, DC area include the J. Edgar Hoover Building on Pennsylvania Avenue which currently serves as the FBI Headquarters for the FBI's National Capital Region (NCR) as well as the GSA NCR facility at 7th and D Streets, SW. The proposed plans for disposing of both facilities and simultaneously facilitating a new work environment for existing tenants illustrate why Exchange for Services is an attractive concept to GSA.
The Hoover Building is too small to house FBI NCR personnel and also has design deficiencies, structural deficiencies and fails to meet Level 5 security requirements. In exchange for this site and building, GSA will solicit proposals for a new, consolidated FBI Headquarters somewhere in the Washington metropolitan area. Last November, they requested "expressions of interest" from private sector entities to donate or sell potential sites for a new FBI headquarters. The plan is to identify potential sites in a manner that conforms to federal Competition in Contracting requirements and procure a site as well as services to design and construct a new FBI headquarters facility in exchange for the existing site and building.
GSA NCR personnel occupy a building that utilizes space inefficiently and has numerous other deficiencies. GSA, in keeping with their own organizational philosophy, wants to consolidate the 2000 or so GSA NCR personnel into the GSA Headquarters building at 1800 F Street, NW. The renovation of 1800 F Street is intended to be a showcase of new GSA space standards including a workplace strategy that emphasizes telecommuting, shared desks and provides approximately 132sf per person. Unfortunately, the renovation is only partially complete due to lack of funds and GSA hopes to exchange the GSA NCR site and property in exchange for services to complete the renovation of its Headquarters building.
The details of Exchange for Services protocol are not finalized. GSA intends to work with private sector partners as well as government attorneys to develop a business structure for these deals. The future of GSA's Design Excellence program and the way in which architects compete for these projects is undetermined. However, GSA's expectation is that Exchange for Services will become an important strategic asset in times of fiscal uncertainty. They are not expecting an increase in their appropriations in the near future. Quoting Norman Dong, the Comptroller of OMB, Ms. Robyn stated that as far as appropriations are concerned "Flat is the new up."
Author's Note: On January 30, 2014 Dorothy Robyn resigned from GSA and will be replaced by Norman Dong. As reported in The Washington Post, Ms. Robyn will not take a new job immediately, but plans to "write about some of the government inefficiencies that she said were strangling the country's infrastructure improvements and failing to reduce energy usage."
Barbara Heller graduated from the University of Illinois with a B.S. in Architectural Studies and is registered in the District of Columbia. She served on the American Institute of Architects' Documents Committee for 15 years and as Chair from 2003-2004. She is a Fellow of the American Institute of Architects.