good morning this hearing is being conducted is one of several hearings to meet the oversight requirements on the clause to an o and p of rule eleven of the rules of the house of representatives agencies and whether the contractor has had benefits for the taxpayers we also will hear suggestions for improving the contract we begin with some background concerning  decision to include brokers many of the services of the public buildings service or p b s within g s a have private sector counterparts such as leasing property management property maintenance and response to president reagan to reform eighty eight the agency contracted out virtually all its property management operations g s a has also contracted out it engineering and architectural requirements as well as interior design and space planning services during the mid one nine hundred ninety s g s a engaged arthur andersen to conduct an exhaustive analysis of its leasing program to determine the feasibility of contracting out even that function the agency did quite well in the comparative analysis with only a few administrative leasing functions identif as potential for further review for contracting the author andersen report concluded commercial broker is competitively priced it would be more costly to privatized and should be retained in house however concurrent with the contracting out trends government wide all will be reduced full time equivalent so f t and all agencies of its veteran employees who come into government in the one nine hundred sixty s inspired by president kennedy's call to public service although there was no imperial evidence to support contracting out of  the agency now found itself caught between a requirement to con fright track out a certain number of positions on one hand on the one hand and if you are in house personnel to conduct policing activities on hundred ninety seven the agency signed a series of regional a broker contracts to provide a limited leasing services these contracts were meant to assist the in house leasing leasing specialists not to place them in december two thousand to the office of inspector general issued a review of p p s use of brokerage contracts for lease acquisition services a special interest to the i g was the use of rebates and zero dollars task orders where payment for leasing service rendered was expected to from the landlord or property owner's son inglese and not t g s a and not from g s a control fun the idea is report contained information from the g s a office of general counsel which identified two serious issues one the obvious con potential for a conflict of interest between the government's interest in receiving the best value and the broker's interest in receiving the higher compensation and to the problem of possible although illegal argumentation presented by allowing brokers to be compensated by anyone other than g s a for services provided  general counsel requested an opinion from the general accounting office regarding the compensation issues issued its opinion on august twenty fifth two thousand and three clued in and i'm quoting g s a may enter into a possible conflict of interest between the government's getting the best value and the brokers interested in getting the highest commission and quote they proceeded to put together a national contract today g s a leases one hundred seventy seven point five million mental square feet of space and almost seventy one hundred lease properties now slightly exceeding g s a's own space thus releasing along with some good federal construction is clearly a core function of g s a contract now this activity through the national broke contract is what about a profound change within the agency and one of the most significant changes since it was established in one nine hundred forty nine this approach raises concerns because the agency has no fallback reserve position see specialists and never did recruitment and training funds today for this critical these critical positions leave the government with no alternative except to use these national contracts for a core function of the public building service of the united states government for this reason the subcommittee has a special obligation to look closely at the existing experience with broken contracts to see if improvements are necessary the national broker contract is competitively bid contract that augment services provided by p further determined that it is permissible with g s a to accept a rebate from the tenant brokers and to credit that amount to the lease the original contract was awarded our total force two thousand for four companies but contracts were awarded as one year grace contracts with the option of annual renewal for up to five years the current contract will work spiral in march thirty first two national broker con conference by the g s a inspector general and the general accounting office we want to reveal the g s a age rationale for the decision to place the court hears a public building service function in the private sector we need to determine if the financial and management systems are and place or g s a probably to administer the national broker conference we must scrutinize the assumptions used to justify the agency's decision to contract out lease and service we must understand how g s a has addressed conflicts of interest with brokers that both own and market buildings to federal agencies it gives they believe that is in the best interest of not only government of the government but of taxpayers to have the private sector so responsible for providing lease base for the government g s a must explain and justify its own relationship to agency leasing if g s a is anything more than a bureaucratic middleman between federal agencies and brokers why should g s a end leasing process at all there are myriad of issues that need to be examined in the national broker contract process so that this subcommittee can be confident that the contract properly shield taxpayers from waste and abuse and provides real value to taxpayers that would otherwise not be realized i look forward to hearing from all concerned reviewing the national broker contracts program which adds value to g s a broad leasing programs and generates savings for the taxpayers which is always a welcome welcome thing in the federal government and this program does meet critical needs for g s a and has shown the commission based contracts are saving hundreds of millions of dollars and that potentially potential conflicts of interest can be managed effectively which obviously is keep the current contract this late to expire next year it will be i was important to g s a as a leasing program to ensure that the national broker contracts are reviewed in a timely fashion i also hope that we can examine potential areas of improvement there's obviously always places where we can add value to contracts now because of the significant amount of least space that the federal government utilize it's critical that we ensure that government that the government secures  lease rates possible and as i think you stated just a began a contract for services to carry out those leasing functions in one nine hundred ninety seven now there's been some growing pains obviously but and because of that in response to concerns raised about this early least part of the program by the inspector general and other g another's g s a develop the national progress contract program that contract began two thousand and five with a one year renewable option up to five years and that's the current situation that current contract will expire next year the national brokers contract program meets the needs of g s a in and has demonstrated that it creates savings to taxpayers there's just no debating that the contracts are no cost contracts for the government how often do you hear of that the firms are paid commissioned by the building owners and only if the lease is approved and signed by  a these these firms also add value by providing post award services like like the management of tenant improvements for example and at no additional cost to either g s a or to the agency in addition the leases negotiated by the brokers have resulted in leases nearly eleven percent below market rental rates i think that bears repeating eleven percent below market rental rates which is exceeding the g s a is original goal of one point two five so again that's a saving savings direct savings to the taxpayers which i think is obviously one of the key components so we should look for and since the beginning the contracts the federal government has realized more than one hundred fifty five million dollars in rebates actual rebates from the brokers and i don't even in the federal government standards i think one hundred fifty five million dollars is real money with over half of the federal workforce now in the least based unfortunately because we wish it wasn't and that's something that the chairwoman i believe have a frustration with but not just the fact the savings and rebates can potentially save again can potentially save taxpayers hundreds of millions of dollars as is a  case of any contracting arrangement oversight and proper oversight and management is obviously necessary and that's something i know that they are distinguisher woman is something that is something she's very concerned about now the program does has significant safeguards to ensure accountability and accountability is something that i have dedicated frankly in my life in public service towards trying to work for the brokers must carry out their responsibilities in accordance with forty eight laws now there's efficiency for you forty eight laws regulations executive orders and scuse me procedures related to procuring the least space for government agencies there is something that we should probably look at for some efficiencies currently task force each task order is valid by g s a realty specialist at six milestones during the leasing process in addition the work of the national brokers is reviewed quarterly basis by g s a at the regional and the central office level and the brokers are required by contract to to adhere to very strict firewalls and other requirements to ensure that there are no conflicts of interest or sharing of sensitive information which obviously is something that we should all be concerned about but there are very very strict firewalls in place i do understand obviously that there are always areas as i said before that can be improved and that's always good to look for for example i think one of the frustrations is g s a internal processes for lease acquisition and first and for final sign of lease of a lease completed by a broker that process is contracts again obviously we should always look for ways to improve anything that government does because government usually has a long way to go but this program i think it's pretty other is a win win win win for everybody again as i said this contract these contracts meet very important needs for the federal government and the government benefits and the taxpayer benefits from the expertise and the experience of these firms there are no upfront cost to g s a in the commissions are only paid when a lease is signed again these are things that frankly other government agencies should be looking at to try to emulate the program has allowed g s a to better leverage its staff and its in house personnel and has resulted in savings real savings including actual rebates to the government and to the taxpayers so again i believe that this is shown to be an effective program i look forward to the program continuing federal property with a high risk issue because of long standing problems with excess and underutilized property deteriorating facilities unreliable real property data over reliance on costly leasing and security challenges in january two thousand  jael found that agencies have taken some positive steps to address real property issues but that some of the core problems that led to the designation of this area as high risk persist this testimony focuses on one the progress made by major real property holding agencies to strategically manageable property ongoing problems to as identify in recent work with guarding agencies efforts to address property issues and underlying obstacles we have found through prior work that hamper agencies real property reform efforts government wide to summarize a number one  b in real property holding agencies have made progress in strategically managing real property in response to an administration reform initiative in related executive order agencies have among other things established asset management plans standardize data and adopted performance measures according to o m b the federal government dispose of excess real property value to one billion dollars in fiscal year two thousand and eight bringing the total over eight billion dollars in fiscal year two thousand and four only also reported success in developing a comprehensive database of federal property assets implemented g a o recommendation to improve the reliability of the data in this database by developing a framework to validate these data g a o also found that the veterans administration has made significant progress in reducing underutilized space in another report g a o found that six agencies reviewed have processes in place to prioritize maintenance and repair items the second point well these actions represent positive steps some of the long standing problems alleged to designate this area as high risk persist although jail's work over the years has shown that building ownership often costs less than operating leases especially for long term space needs in two thousand and eight the general services administration which actually governs leasing agent least more property than it own for the first services board's leasing program g s a has implemented seven of gio's eleven recommendations to improve these contracting efforts although g a o is encouraged by g s a actions on these recommendations we have not evaluated their impact moreover in recent work g a o has continued to find the government's real property data are not always reliable and agencies continue to retain excess property and face challenges from apparent means backlogs regarding security g a o testified just last week that preliminary results show that the ability of the federal protective service which provides security services for about nine thousand g s a facilities to protect federal facilities is hampered by weaknesses in its contract security guard program among other things g a o investigators carrying the components for an improvised explosive device successfully pass undetected through security checkpoints manned by f p s guards at ten federal facilities third as g a o is reported in the past real property management problems have been exacerbated by deep rooted obstacles include competing stakeholder interests of various budgetary and legal limitations and weaknesses in agencies capital planning or reforms to date are positive the new administration congress will be challenged to sustain reform momentum and reach consensus on how such obstacles should be addressed madam chair this concludes my prepared statement i'll be happy to respond any questions scrutiny based on the work we were doing first of all we found that there were large amounts of excess and underutilized property in the government used them as well as that there were large amounts of excess and underutilized property vacant property underutilized property the millions upon millions of square feet of property that was nothing effectively utilized and managed for the government this is in our own property that's correct across across the government and it costs a lot of money obviously to maintain and to secure the space particularly if it's not being there is vacant space and and a good deal of underutilized that's correct with the the amount of it has has is that be very efficient for parents and and that's actually that's a separate issue that we categorize of the five issues there's the underutilized vacant space there's the growing backlog of maintenance and repairs unreliable property data reliance on expensive leasing as as as you pointed out and then the security challenges those are the five reasons  reliance on expensive alright reliance on expensive leasing maybe something they can't do anything about because they don't have a loan space and they may not have the capital in any one year as you know right to do it that when we did our work on the on the broker's program an issue we should have reported early two thousand and seven we did our audit between the middle of two thousand and four and the middle of two thousand and six at that point time we found three major problems we found problems with regarding conflict of interest problems regarding compliance with the federal information security management act requirements and then problems regarding program implementation of valuation we had a dual file kind of you to explain to us a notion of a would prevent such errors there should be a if you're going to have the same company you need to have different individuals handling each side animal that than almost a enough task orders that had been completed for us to really evaluate so where are there you're all set up for how to avoid they did have conflict of interest rules that they did set up and we asked them to put in some additional rules based on the contract which did they did they declined to amend the contract to add some additional rules but they did put in some conflict of interest rules we have not gone back to see whether the additional rules have made a difference well there be  evidence yet but i think he's making a common sense notion that if you give to somebody else to do you're not spending the money that we're saving hundreds of millions of dollars for the program contract is that correct at the time of our product madam chair the g s a was not in a position to quantify any of the savings they had not created i mean the service was released on somebody's got to be paid for and he passes it on to the agency i'm trying to figure out  let me ask you because the g a o may be in a better position to do this could you say for the record what the difference between cost avoidance and true savings is i mean i think  somebody is going pay for it i want to know how the bottom line the government is saving money now it's one thing to say this is more efficient it's one thing the say it should be done but but on this committee and on the oversight committee over and over again we have heard notions never to be true i must tell you to be true that contracting out actually produce savings and some say that there is savings i don't i've never understood the notion of savings when when the price of the real that the airline let's take an industry that is in particular trouble hates it when we require them to do anything is not that they hate pain and the airlines aren't leaving for me they want to make sure as many people take the airplane to go i've got to understand this notion that there is something at the bottom line called savings and i'd like you to indicate whether even theoretically you can see that there would be savings and not cost simply passed on as perhaps in actual rent savings for two hundred sixteen leases there are i guess in the pipeline there are over two thousand leases but that are potentially we could continue to find savings but just two hundred sixteen leases in the  and then the estimate there's an estimate credits for the one thousand two hundred twenty five active task task orders could be ninety seven million dollars so the total estimate of commission credits for all of those task orders are hundred fifty five point six million dollars according to g s a and i would say these are questions that we need to ask g s a to see if these numbers are accurate but i like where you're going i think g s a might have some some good numbers there policy role one way or another on whether a position on whether this program are to exist as a contracted program or inside the government our position for any of these kinds of programs tends to be that if they are well managed and w for future action what are you referring to and what we're referring to there is we've as you know for many years g a o has been concerned about the cost of lease versus own property and that owned property is usually a better deal for the government so this isn't specifically related to the broker program itself and its contracting out but that if we have provided our analyses of least vs owned considerations in and o  b is reexamining some of those issues and recognizes that the government long term could save money in most cases by reducing the amount of property that it leases and so it's taking a look at that and is hoping to come up with its own reco s a waive the prohibition against dual agency broker firms in order to increase competition and i have done any analysis to determine whether the waiver did increase competition was a theoretical basis for that waiver to increase competition but i think the point we were making was that in in issuing the waiver they allowed more firms to be able to participate then if they had not we not done any empirical analysis but clearly since so many firms are you know do represent represent more than one it's clear that that has made it easier for many more players to be involved cli's competition and also increase conflict of interest possibility of potential that's why you have to balance the increased competition against the crees what happens with our when you have to make sure that you of the general services administration chair i'm pleased to appear here today to discuss the general services administration national director contract we're currently working on an audit report in this area and my testimony i will briefly summarize our major observations today these focus on three areas first whether anticipated savings from using the progress or realizing second contract utilization and third issues that need to be addressed as g s a prepares to replace these contracts that expire march thirty first two thousand and ten leasing is critical to g s a is ability to satisfy tenet housing needs and the safe now comprises fifty one percent of g s a's real property portfolio from april two thousand and five the start of the national contract to the forty month period ended july thirty first the brokers of negotiated a total of seven hundred eleven leases in two thousand and three g s a presented a business case and supportive commission based national broker contract it argued that in addition to providing critical support to a thinly stretched and health staff the incentives created by a co based compensation would actually lower the cost of acquiring the space this cost savings has to be accomplished through first and offset to rent as a result of the brokerage turning over portion of their commission to the government referred to as commission credit second reduce rental rates attributable to the broker superior market knowledge and expertise and third lower overhead in the form of reduced administrative and personnel costs the audit found that while some of the data for these areas are quantifiable others are more ambiguous first the commission credits are quantifiable through july two thousand and commission credit totaled forty four million approximately one point three percent of the value of the lease or the brokers negotiated secondly as to whether brokers obtained more favorable rental rates than in house data the limited number of broker transactions at the time of our audit and amp or site market data precluded a definitive answer however the audit did find that best the data can support the brokers are achieving results similar to g s a is real specialist classless a lower administrative and personnel costs are now safin decayed the contract administration is resource intensive and that the number of realtors specialists actually increased over the first three years of the contract by eleven percent just a business case also envisioned movement towards an almost completely outsource lease acquisition process this is not occurring just says goal was to get fifty percent of the expiring lease workload to the brokers in the first year culminating in ninety percent by the end of the contract to use the reports that it reached the seventy nine percent mark in fiscal year two thousand and eight we found a significantly lower usage closer to thirty three percent the point here is not the exact number but why different views of the workload can occur and what this means for the future reference over the course of the contract she has a change the basis on which it measures utilization is now excludes about half of this expiring leases from the universe of broker tax because either the leases are not likely to yield a commission or noncommissioned will or otherwise not suitable as a even if brokers were tasked with one hundred percent of commissionable work a substantial workload remains but also like to highlight for areas that you should consider as it moves forward to the next generation of server contracts first there needs to be a clear expectation of the work to be performed under the contract the brokers expressed to us that the post award works as usual and customary practices for commission based commercial services and further resigning for protest consideration should be given to what is expected in performing these posts to work second while the contract providing these acquisitions services they also interject new risks to be managed foremost for each task order whether any conflicts of interest exist the audit found that while the majority of organizational forms are provided to g s a about ninety two percent only sixty five percent of the individual forms were provided third the broker performance evaluation process is complex and cannot provide results in time to facilitate performance based contract testing while the projects are valuated at different points in the acquisition process key performance indicators are not available until the and the chairman which frequently takes over a year the evaluation of the brokers negotiated rental rate compliance with sub contracting plants and customer satisfaction are by necessity done at the end further a sufficient pool of tasks orders is needed to compare performance among brokers and this is not available until seven years into the contract period finally the eally system just says electronic leasing application needs to better support workflow and analysis a few the criticisms noted during the arctic where that there were delays in getting the broker access to the system report generation capabilities were not functional and he really does not interact with other g s a systems do you say continues to make improvements but what the audit found is that not all the information is put into the system and that the paper file is still the official file thank you for your ninety s the report that we issued in two thousand and two with the zonal contractor for zonal contracts and then in addition to the zonal contracts they were regional contracts and i think they numbered approximately i don't know twenty to twenty five what we saw was a conglomeration of methodologies to award broker tasks and we had some underlying concerns about the funding mechanisms and the potential for a violation of appropriation  id's recommendation that the that the p b s enter into the national contract to solve these deficiencies and particularly now our recommendation was that they go back and re evaluate how they  administer these types of contracts it's totally management decision as to whether they go out and acquire other contracts or not but the collection of contracts that they had of the time you know we have found in some circumstances that there needed to be more work done from washington but that was not the case with the regional contracts who are closer to the ground  you referring to the rental rate i'm not quite sure what advantage you're addressing i'm referring to the their their own understanding of their regional market over the regional contract how did the advantages a national broker contract of the regional contracts with supposed to be that there would be better or more centralized ministrations the contracts that you wouldn't have variation from region to region in your project with the lease acquisition and that what would you say did when it went down on the regional contract to the national contract is they went through their lease acquisition process and to the extent that they could standardize of the standard i think they also standardized the ministration of these contracts which is not true in the prior generation of contracts you could have the same company working under different contracts and approaching things differently so there's not a proven advantage or one of the other th st looks like we've made a new bureaucracy there people with the expertise with their medicine contracts others to do the work well the administration of the broker contract is definitely resource intensive we were not able to quantify that in marriage would you explain what you mean by that ok initially they had set up so that there were about seventeen different points which  us that the post award works the usual and customary practices for commission based commercial services darn right so the federal government people you know i'm you know i'm very sympathetic to the private sector when they complain over bureaucratization i hate it you just heard what i said earlier about the bottom line somebody paid then then this committee or the oversight committee will then say who's monitoring these great big contracts i was here to make sure that the government that there's no fraud waste and abuse to make sure that at the bottom line we're not losing money so if you put it into the private sector then you end up according to your testimony having to hire people whose expertise is leasing in greater numbers where the benefit to the government this summer and the benefits of the government that we saw would be in the commission credit and at the current time i don't believe that p b s is positioned to take this work fully in how  we understand that ok that doesn't mean that this subcommittee doesn't have an obligation to do what the government has done i mean that by saying you can't do it so i don't care what happens out there the all the conflicts of interest in the world it can cost you all much and all money in the world are there's nothing you can do about it because you know how to people what would you get the people i agree with you i what i was pointing out is that some alternative would have to be now but i'm we've got a contract out there yes and i'm trying to find what benefit there is the government given the contract that's out there i have posed a rather hard hypothetical i understand that they've got increased number of real the specialists so what they had when they were doing leasing how could that be now that they don't do leasing they give the somebody else to do for sitting up here we've got to say well wait a minute this isn't this what people complain about gov and that government does that it just does paperwork and monitoring what they say looks and says all but if we don't do this monitoring and paperwork that liberal groups complain about that more than they are required to do when they do commercial we don't do it then the government rebounds back on us we're trying to get out of this somehow because we are among those who complain when managing is and but when we see this about an increase  specialist we are having trouble finding out what the benefit to the government was in going and making such a herculean change as this  especially since it was supposed to save money be more efficient whether brokers act not more efficient ways of doing more work or pass it on to the bottom line but then you've got to give a kickbacks if you see everybody remains happy in the long run the agency how separate is the government too and we are paying their rent so i'm just trying to honestly find out i'm not suggesting that there may be you know that we may have an alternative i'm not i'm not suggesting that that that we don't that we're going to set up immediately any kind of  and how system we don't know what we're going to recommend but we need to know what have been the value added to the government of making a cosmic yes it is it can't even do it any more so all the burden on us and on g s a is extremely it is extremely strong so strong that i will put to the ultimate law school hypothetical who leads the g s a why shouldn't the agency go to these pro con part track and do their own thing that the leverage of the federal government in the marketplace that the rules are consistently applied to these things are done in compliance so you think that we still get the economies of scale even though the contracts because it's a national contract well i i think you get the economies of scale from i mean we when we looked at this what we saw was that approximately the same target was being achieved whether it was g s a personnel or whether with more realty special he's not doing leasing but monitoring people who were doing leasing why that value added for the government level percent increase in realty specialist yes and the number of leases have also increased over that time so because we needed to spain i now we think that that that's not a matter of the brokers decision see now it is because we don't have anywhere else to truth so it's got to hire a lot of people to do that as it contracts out more and more of  when you say there needs to be a clear expectation of the work to be performed on the contract that possibly you need a national program contract doesn't make it perfectly clear what work is expected because you go on honestly to say the brokers came back expressed to us that the didn't understand that once you contract with the federal government you in a different ballgame well i'm not sure that they didn't understand that i think there are aspects to the way that the way the government does a supposed to words that are somewhat unique fred could be improved you say that the performance evaluation process cannot provide provide results in time to facilitate determine for example the next year whether you give fifty percent of your work to the highest performing broker what that point is is that you're never going to have that information until almost the end of the contract  your five year contract so to think that you're going to start off and be able to ward in your two and three based on how well the broker performed in your one it's not it's not accurate you won't be able to do that because you don't have the that there's a little more work to do when you do it for the government because they are now responsible to the taxpayers united states of america well in terms of the post awards services biggest issue there is the level of of of work  detail that you have to go to for example often times when you're building out space for canon which is part of the cost towards services you'll have a reimbursable work authorization in other words the tenant wants additional work that space and that's not something that's necessarily part of what their business experience was in the private sector so there's a little more involved in that area in the government a way what is it that the brokers to do did not understand was this not written was this was not clearly enough why didn't the disease a g s a performance contract make it clear that this is how the government has to do work on my what you may be used to whatever they may be used to do with group would you would you recommend a more precise contract so that everyone prepare for this contract yes in fact we met not too long ago with p b s to discuss some recommendations and they had some suggestions for the altar for the recommendations things that they felt would be feasible or not feasible so we did discuss those some of those recommendations which include some improvements that we felt needed to be made to the information systems that again the  utilization of the contract to clarify that as i said what we're seeing is closer to thirty three percent with their reporting is closer to eighty percent the point there is that you're never going to have one hundred percent contracting out you simply you know this is resource intensive there are a lot of aspects that are actually inherently governmental so you're never going to be able to fully contract that out no matter the work of the realty specialist compared with the private sector workers and brokers what we found when we looked at the market rates that were achieved by both s statistically there was no difference she was saying have a performance measure called least cost relative to market and what that is a city basically a midpoint for that particular market and then they target a certain percentage below that so if they if the average in that area was thirty five dollars a square foot they'd want to get you know nine percent less than thirty five dollars per foot and that would be their target what we thought when we looked at the data and again are even know it was basically two and a half three years into the contract or our data is still somewhat limited what we saw was that there really wasn't any statistically valid difference between the two in terms of their achievement of the rental rate well if we so we have that information and the the usual frustrated and committees we don't even know whether there is any cost savings these we more for the government to perform this service and guess what it costs more for the private sector to perform this service at least here unlike my experience and oversight and do have that understanding do you have any comparative analysis with that might compare this service contract with  but of course as we look at what they're doing we need to understand it and understand what the benefit of value added to the government is most third thing is that t s a has a lot so much personnel and yet it has increased work in terms of the number of leases that are are being done if you look at the expiring leases the brokers are handling roughly thirty three percent in our view and the government is handling the they are doing that work it is not completely done by the brokers vission to that you have realty specialists who oversee the broker contract work so they're actually performing just about you have who oversee the broker contract work you do have realty specialists who oversee the work of the brokers that's better there in the contract management business yes yes they are what percentage of them in the contract able to vote and i have and i apologize to the witness in your testimony you said that that the brokers are securing leases and the same rental rate as g s a is roughly what we're saying is the data that we had the best that is passed on to the federal government yeah ok so that's not so when you're talking about equipment rates you're not including the rebates correct you don't know i included as a separate category ok so so there are savings to the taxpayer yes and i pointed that out ok i just want to make i apologize since i was voting so i don't and i ok and how about overhead is there a comparison about overhead that obviously g s a has the contract takes a lot of time and effort by t s a personnel i don't think you could say that there's overhead on the g s a portion and there is no overhead on the broker portion do you do you have any way to know if there's more overhead less this contract to expire this year what would be the repercussions do you believe to the g s a leasing program that you would have a significant portion of police work without a and when you have hold over leases and lease extensions you incur probably some penalties or some kind of from the obviously the owner of the property if they can't secure a contract i would assume that they could assess a penalty to the g s a because of the lack of the contract in the holdover nature because there's not staff in place to in in place of this program and would you say that's an accurate statement i would say that rather than that that the leverage that the government has to acquire a fair and reasonable rental rate would be reduced and the reason is because there is not enough and house  will see what you call him a realty specialist to be able to help this work correct because this program's been in effect for four years and obviously the broker brokers of taken over the bulk of a lot of that work when we talked to the people in the regions we went to four regions and we spoke with the realty specialists and the management there the message that we received was that they needed additional support that they were not at the point where they could handle all of this work without some sort of additional assistance or maybe this is a subjective question but when you talk to the realty specialists in the different regions how did you find their relationships with the broker dealers i mean are the broker or the brokers in this contract the national broker contract program in terms of communication in terms of quality of service we didn't know any particular issues or problems in that area so there were problems the pro would have mentioned it i would imagine ok and i noticed one of your recommendations that you talk about the elise system  that's the i t system i guess for the or the electronic leasing system through the g s a and i guess i would if you have a comment on that i'd like to hear it i mean obviously it's that you need to need to better support workflow and analysis and how do you think that's achievable i mean it still is astounding to me in g s a is not the only government agency that has this issue that in this day and age of technology we're still have these gaps are miscommunications between systems where the it seems to me something like a leasing program is a layout for a great the leasing or an electronic leasing program can you have a comp can you make a comment about that and and what would solve that problem besides a bunch of money probably well actually we have been talking to p b s they had instituted some changes while we were while we're doing the audit we also suggested some additional changes she than during the course of the review  if you one of the things is that you know all the information should be there and there should be more templates for very types of things that are done those would be two aspects of changes for example they required certain documents that the brokers put into the system but there are other documents that have not been required and yet you know they're very important and they're mandatory to the leasing process acquisition plan for example is one where hopefully i mean i appreciate the the recommendations i guess my comment would be that if this if this contract is due to expire on march thirty first two thousand and ten the bottom line what i hear you saying is that g s a is not equipped through the property specialist to be able to handle the bulk of the work which would could result in holdovers and other kinds of penalties to the lease you've mentioned and i mean and the ranking member mentioned some of the savings that have occurred in the chairwoman has mentioned some of the issues in terms of is the work getting done and the and unexpected you mentioned in your report the unexpected workload that some of the brokers found as they were moving through this but it seems to me you know we're six months out here and this isn't something that can turn on a dime so i would recommend that we without getting into this you know that we look at this make some of these improvements and and make sure that we do we do the best cost benefit analysis to the taxpayer which to me looks like is resulted in some pretty significant savings for the taxpayer with the g s a property specialists working together with the private sector in sounds to me to be a true public private partnership so thank you people don't they negotiate like everybody else in the moment that the commission credits are somewhat different than the freeway rent realty specialist i have on occasion depending on the market negotiated free rent as part of the rental agreement what we're talking about there is that the piece in the rental right whatever that dollar portion turns out to be that is normally paid to the brokers and not the perception was that that money was being left on the table when g s a negotiated his g s a could not collect back commission that the license brokers could collect or that that money and then in under the first iteration of contracts it was given back to g s a as a rebate in some instances and now with the new version of the  contract the national record contracts it's a commission credit you for inviting me here today to discuss g s a is leasing program and how we contract for brokerage services through our national broker contracts although the current national broker contracts represent a major change in how we contract for broker services is a long history of retaining real estate brokers historically we had individual regional contracts on a fee for service basis from a menu of available services our first attempt to provide a national contract for broker services was in  hundred seven when we awarded eight national real estate contracts covering four zones in response to audit by the inspector general g s a decided to centralize broker services into a national program a number of factors drove our decision to enter into national broker contracts including increasing our capacity to deliver leases consistently and leveraging our market share to reduce base cost constrained budgets limited staff and the limited availability of new federally owned space continued to drive and increased need for at least space to meet agencies requirements as a result g s a determined that our reliance on brokers was essential at that time based on market research we proceeded with a commission based pricing contract as is customary in the industry and order to save public funds before proceeding with a solicitation we requested an opinion from the government accountability office on our decision to pursue a commission based contract in august two thousand and four g a o determined that g s a would not be illegally augmenting its appropriations or asking contractors to perform studly ank and the trammel crow company the notices to proceed were delayed until april first of two thousand and five because of protests filed with ga after the award since the award c b richard ellis real estate services purchased trammell crow and the stall back company merged with just one will sell leaving us with three contractors at present jones lying with sal america's c b richard ellis and julian j studly while there have been challenges we believe that over the last four years the contracts have proven their value as of april two thousand and nine nine hundred forty two least transactions for over fifteen and a half million square feet have been awarded using these broker services of the eight hundred thirty nine were for full lease acquisitions totaling thirteen point five million square feet eight eighty nine were extensions for one point eight million square feet and another fourteen were expansions of three hundred  thirteen thousand square feet these transactions resulted in fifty five point five million and commission rent credits applied directly to reduce our rental obligations which are also passed through to our customer agencies the total net commissions paid to broker firms through april two thousand and nine has been seventy eight point seven million with the average commission for project at eighty three thousand five hundred dollars and the average project size at sixteen thousand five hundred square feet are changed to commission based pricing has not increased our lease cost relative to market averages with two hundred sixteen brokered leases for over three million square feet completed through the second quarter of physical year two thousand and nine our average rental rates are ten point five six cents ten point five six percent below the midpoint of the market compared to the g s a goal of nine and a quarter percent below market sixty nine percent of the brokered leases are in the new and succeeding lease categories and have average rental rates at eleven point twelve percent and eleven point thirty two percent below the midpoint of the market respectively this results in a cost avoidance of ten point four million dollars annually the annual savings will continue for the life of each lease which in some cases is ten years or more there have also been challenges in this contract and its administration that we are continuing to address our brokers have had to learn government contracting principles that do not apply in the commercial real estate market our lease contracting is regulated by over forty eight different laws regulations and executive orders that make acquisitions process driven and document intensive documentation is necessary to avoid costly protest and litigation to comply with internal controls and to achieve clean audits g s a as user brokers is designed to add leverage to and how staff some of our leasing specialists are focusing to a greater degree  management while others are vote focused on i recited the brokers including the evaluation of the broker performance something left typically to contracting officers and a new experience for leasing specialist normal attrition including retirement has reduced staffing levels below threshold necessary to perform in housework and supervise the brokers we continue succession planning for leasing specialist and lease contracting officers in some instances it can take up to five years to train a leasing specialist to become a seasoned least contracting officer as a result we must rely on the brokers to supplement our workforce we have b un planning on for the follow on to these contracts by conducting industry conferences in washington d c and los angeles california and have posted the transcripts of those conferences on the fed does ops  website we have also conducted lessons learned sessions with our previous preacherman team the office of the general counsel our current brokers and our regional program officials a team is currently developing the statement of work that will best support our needs for the next five years though not intended to replace our staff it is necessary for g s a to continue to utilize brokers to supplement our in house got capacities to meet our program responsibilities and deliver space as efficiently as possible we need to capitalise on the work and what has worked with these contracts and make improvements that will make them more efficient and user friendly g s a also needs to better predict workload projections for the brokers and address continuing problems with extensions and holdovers while we believe the contracts have proven successful and bring savings to the government we can improve their effectiveness and providing additional resources to assist our leasing specialist in meeting program demands this concludes my testimony and i'll be happy to answer any questions that you have mars now what percentage of your are you saying your testimony i think quite candidly these contracts are not intended to replace dan rather than the supplement rather to supplement the resources we have as we plan the most efficient space delivery program possible that makes sense to me everybody in the government uses contracts let me ask you what percentage of your work is done by the brokers and what percentage is done by staff especially considering the eleven percent increase testimony for testimony three percent overall i'm guessing it's higher than that i'd like to clarify a little bit because i think the i g witness really made a good point on how you interpret what how that work load is divvied up we've had successive increases in targets that we have worked worked on over the course of this contract beginning in two thousand and five we had a fifty percent of the expiring leases target that increased ten percent each year up until last year we got to eighty percent this year was supposed to be ninety percent we kept it at eighty percent but the important thing that i'm chairman wanted eighty percent of the utilization rate of exposure for tasking brokers with our expiring  lease workload and it's important because it's to really understand and drill down and see what that number means all of the work has not been going to the brokers what we've been trying to do really and truly is to come up with a target each year as that's my that's really my question what how much work should be how much were good be given to the contract brokers and how much were should be kept inside what is the goal what is the target the target has been expressed as a percentage of of expiring leases so pick one i want they want they are basically supposed to address broken suppose extensions and holdover and now they're doing more and more newly well it wasn't that they were being assigned extensions in holdovers but they are supposed to be helping us relieve that problem so what we do each year is we look out about eighteen to twenty four months and see in our at least inventory what lease these are expiring over the next eighteen to twenty four months so that number if you will forms of the denominator and calculating a percentage so you take a number of eight hundred leases expiring in a particular year and then you look to see well what do we need to give to the broker and if our target right so you could you could you could you could continue that  math and if our ghost on the number expiring what percentage should be given to the broker you know i mean it really specialist you have right well the target is that fifty sixty seventy eighty ninety remember actually we've talked about this is one of our earlier hearings if we don't accomplish if there are eight hundred leases expiring this year for example and we don't get all those leases either replaced in some form or fashion say we only do half of them i'm just picking a number out of they are saying we only get to be do nine hundred well nine hundred leases that are left over something happens to them some of them may go away but those that we don't get to we forty five days to come back with a plan on early leasing and hold those who you know you know when a lease is going to expire a moment you and the moment the lease is signed so all this planning could be done by product and you could know right now as you said of lease how many brokers you're going to need ten years or fifteen years well it's not just expiring leases what's not calculated in there madam chair is what new requirements come about we forecast every six months for the purpose of the broker contract what kind of workload projections we expect to assign to them from that expiring lease workload but we haven't been doing a very good job but kind of what i'm sorry we project each month for the brokers what sort of workload we expect to be coming down the pike the regions turn into us to say here's the workload projection from the expiring leases well all expiring leases are tasked to the brokers they get all kinds so you want to be able to tell me next year i can tell you right now in a snapshot what would be expiring next year but at the end of this year we may not have addressed all of the new leases that have expired this year and so by the end a snapshot taken at the end of september will be a can will be a different set of why by the way would you have not this gets back to my holdover question in my early if you did early leasing if you were internally more in the real he specially with the do it he do it why that kind of planning being done in the agency since actual back and call you've got you've got the leases we actually are doing that kind of planning now with with a lot of impetus from your letter recently we've talked about that in the past we're doing portfolio analysis now we hope to bring to you within the next when the due date is so important i mean it's it's the only way to for the for the the brokers it seems to me they've got a contract that's my contract even tell them how many what to expect in the number of contracts or leases that will come up the contract as a fifty percent of the expiring leas e lease workload targets for them at the very beginning so that that's accurate but the point that i was trying to make was in terminating what gets tasked to the brokers each year we look at and every six months we update what the projections are for expiring leases they get tasks some of those they also get tasks new requirements and at the same time there are and i think it's very important to point out there is a large number of that same workload that is being performed by in house personnel and that's important to know the percentage but what i'm getting at mr marson with the letter you just referred to is how all of this it seems to be wonderfully predictable that is to say there are many areas in government where we can't predict money is one option but guess what beef when it expires agency i'm sure the brokers would would appreciate it and then the really specialist i don't understand why anybody would need to do a monthly analysis or six monthly analysis when they know  when the lease is going to expire if there is an advantage to being the book big in the marketplace it is information and using it as early as you can the big foot is the federal government  and determined that the federal government is going to reap more from the fact that it plays such a increasingly important role in the leasing marketplace in particular i'm determined mr morris not only because i see i see the savings for the government and greater use of its economic power i believe that power ought to be use right now to stimulate this economy president did it when he bought a building somewhere here in washington and early leasing would do it if the banks thought that a six months ahead of  when what is happening to commercial real estate with due dates on their loans you are in a perfect position you are in a position that nobody in the come in the commercial sector is in to take advantage of very bad situation it's a bad situation for for anybody who is in the business it's a good situation for the government if we use it to our advantage i opposed to a person a fixed percentage of how much is done in the house vs how much is done through brokers it should be how much we're saving and the credits are really a function of an industry practice of commission based pricing it's separate and apart from whether one is cheaper than the other there are credits that are achieved through that commission based pricing that the brokers bring to the table so that is an important savings to the government to clarify that what we have experienced and what we had understood for a number of years is that the government was leaving money on the table because landlords and developers build into their business plans when they offer space to the government element of that business plan that includes commissions they typically have realtors representing them and leasing up their buildings and under their listing agreements they agreed to pay those  realtors certain percentage on a transaction just as in a residential home sale if you list your home with their realtor for six percent that realtor is going to get six percent when the home sells if another broker a cooperating broker brings a buyer those brokers split that commission and it's that split that the government was the a radically leaving on the table so we had an earlier iteration of the contracts try to when we were paying fees for services instructing the broker under those earlier contracts because they're licensed to take that commission either negotiated out of the deal or capture that commission and rebate it to the government when we switched to this contract we switched to the commission based pricing where we and it was an experiment let's go out you're getting your fee based upon that opportunity to split under a dual agency transaction if the broker wasn't there and we had no broker and we were just using in house staff those developers and landlords still retain realtors to represent them and they build into their business plan when they're offering to the government an element to pay commissions and so it's that commission splitting that we hope to capture to pay for their services on  frankly and it might be inching if there's a way to better quantify those results of the end brant and the primary way that we've tried to call to indicate to see whether or not it's costing us more is in our rental rates that we're getting under these leases are the rental rates how do they compare to market rates we do that anyway we have to report to o m b and we report to congress each year on what kind of rental rates we're getting in our leases and we use the least cost relative to market as our measure for that and that's a combination of a science and an art i mean we rely on market data sub market data that's published out there in the market and we look at our rates and compare those to the rates in that market and we found that generally speaking these leases that have been procured through the brokers based upon how many have gone through the whole process now are exceeding our targets the i g made the point that well you know there's a small universe that are come that you've actually finished the projects on and that's true we have out of over two thousand task outstanding we have about ten percent to two hundred sixteen leases that are we're actually comparing those rates on now and they're exceeding our targets when you compare those to  overall performance they are comparable to what we're doing as an agency which includes not only the brokered but our in house deals let me let me also let me let me  something that i mentioned the beginning was that i understand that there are some delays at the front end or the back end when there's at least activation processes either initiated and again at the end the when they're released goes through and  there's a final approval process there are some i guess a bottleneck there are there any stuff that you as a could take to streamline that that internal process and furthermore is there any legislation and the authorization legislation that you think would would help you in that process yes or our answer the last question first if i may there are a number of are and we're still working through these issues but there are a number of our leases hundreds of our leases are small leases in tertiary markets and rural areas small towns were all areas small cities the simplified lease acquisition threshold was last updated in one nine hundred ninety six basically under a simplified least acquisition you can do it faster quicker on smaller releases smaller dollar volumes than when we procurements that are above that simplified the right acquisition threshold right now it's one hundred thousand dollars a year in rent so if you're expecting to pay rent at one hundred thousand dollars or less then you can use this i don't want to call it fast track i'll call it a faster track it's a little bit more efficient and and because we haven't updated that it's not tied that that is a statutory threshold and it's not tied to any kind of inflation index it could be helpful to us if that rate were that threshold were increased now so it would capture more of those smaller leases and allow us to do more and that faster method because that number that hasn't changed as a change in ten years well i would have said a hundred thousand dollars a year if it were i'll pick a number a million dollars a year that would capture a lot more of that anticipated work that maybe maybe a way to you know index it or attach it to inflation or something yes that would that would make a lot of sense let me just you know it's interesting how those of us in congress will criticize government agencies for not thinking outside the box and then when you think outside the box we criticize you for thinking outside the box i for one to tell you that that this is precisely the kind of approach that i think the american people demand and so i think you need to be commended for i mean you really do and and absolutely is it a little bit risky to to think outside the box and experiment with things that could save the taxpayer money yes it's a lot easier not do that to not do that but you've done so and i think you've shown some some pretty impressive results that you know we can continue to look at improving but i think that you need to be commended for it so so these from this member of congress hope you take that as a as a as a slap on the back as a job well done not that we can always continue to improve and you just mentioned some felt like the cleanest thing to do was to apply the right credits directly to the leases to reduce around there has been a lot of push from are some of our customers you never asked for the reason i know the read about you no reason that occurs to me because you had to indeed and the general counsel had to get into the whole question of augmentation yes ma'am and so this is just another sliver of augmentation yeah it's not included somebody didn't want to government to get into mine the private sector getting i'm trying to make sure the government at least gets what the private sector  let me ask you this is on the broader question in light of this go first let me find out if it is in fact a  well that's where that's where the confusion comes in a little bit it's not eighty percent of all of our work leasing is a critical core function if it is that eighty percent of that core function if the target of eighty percent is with regards to x and expiring lease load in a twenty four month period this developed each year so there are number of other at least actions that are being done in there are a number of there are a number of functions they don't have opportunities for commissions to be paid so we don't test the brokers for work where there are not opportunities for commissions to be paid that's a chunk of it and there are other whether or not we can for example well antenna leases t s a leases on airport parking lots some extensions our task to the brokers if they if we expect them to get the follow long term space solution short term extensions where we're doing those in house they don't get some mix a lot of expansions they don't get some consolidations they don't get and then a lot of the the core function work of expiring leases is divvied up between the brokers and the in house staff so there's a there's a lot of work that realty specialists do in house that aren't that never go to the broker accurate about what has been contracted and contracted out for virtually all property maintenance operation engineering and architectur requirements and serious design and phase planning services now court function leasing was going to ask you a question that i will have to answer brokers what will be the function of g s a in the leasing business and how will you justify any appropriation from the federal government i'm sure leasing remain is and remains a key core function of of g s a and the public building service and it's it's critically important that we have an adequately staffed experienced i don't think we have asked for that in two thousand and ten we are in the process of routing and training and filling vacancies that currently exist in the organization and we're working very hard about doing that we have today totally dedicated and these are these are rough numbers approximately five hundred and we have about six hundred twenty seven that are either totally or part working on leasing projects i did not compare the numbers that i have four or five years ago is the is the umbrella group not just totally dedicated to leasing so for example in two thousand and four we had four hundred ninety five least realty specialist there would have been a smaller number that would have been dedicated to leasing i'm going to estimate probably four hundred the next year two thousand and five we drop to four hundred eleven seventy realty specialist there would have been probably slightly over three hundred  for estimating purposes three hundred twenty five in leasing we have as the i g noted groan when the contract was let in two thousand notice to proceed in two thousand and five that was awarded in october two thousand and four we have consistently been increasing our number of realty specialist they have not been solely dedicated to monitoring the broker contracts we are trying to rebuild a core of competent leasing people that can assume some of that government work that we are contracting to the brokers for i don't see us ever actually giving up brokers but we had fallen below a critical threshold to be able to carry on that work and i w in court since it's a core function and no one doubts that what the competent core of and house i think we need more and my guess is we've just finished only just a lab or it a little bit we've just finished a regional review in atlanta region for  the southeast region biggest region in terms of geography in the country with a huge huge amount of leasing that's currently ongoing and projected for the future some of the leasing specialists we interviewed see seasoned leasing specialist contracting officers their staffing up now but we're estimate and they have about look at my notes here they have about fifty four they could easily use another twenty to twenty five percent misses them are these very highly trained specialize the person now why do you have leasing specialist doing project management work when you don't have enough real is a special this is just a fat want to have contracting specialist doing contract management work well the lease transaction we really approached approach least transactions lease acquisitions under the concept  project management so there's the acquisition piece of that but there's a lot more to the least procuring at least for the government than just that pure acquisition part we approach it from a project management standpoint because we're really trying to bring in all parts of the organization to be a part of a team to think like they're trying to be to work on a transaction one of the biggest things that they've got to work on is requirements development requirements development with our customers is a huge part of the work that we have to do there and so we want those leasing specialist to be assigned task where their skills are best suited you have people that are really skilled in that government contracting part of the of the of the transaction of the project if you will and you have people that are better suited really for interfacing with our customers and consulting with them to develop their requirements so that we can establish that relationship likewise in this and we've actually talked about this madam chair in some of our earlier meetings with you in an earlier hearing we want those people that are working in the back room operations the people that handle rent the management to the customers the people that handle whether or not those leases are scoring or not the people that look at their work from that kind of internal control standpoint on no one's even to z bases we want them to know that they're part of a project team and that seem as a goal to procure a lease for the government and put a customer in there and they need to be prepared to further that transaction and they've got a player early on and they've got to play their part whenever it's their time to fulfill their role so project management is a concept on how we go about doing our work it's i don't know i'd like to try and clarify that it's not about pulling competent people away from leasing and putting them somewhere else it's break least of all the government the commissions of course commissions of course always built in the lease rate and passed on to the customer and this case the client agency so what do you mean by no no costs contracts page two of your test no appropriations maybe i should say it's no additional cost you're right the cost  the commission is built into the rent so we pay rent our customers pay us rent that we pass on to the landlords and the point is that the developers and the landlords build in a commission into their billion dollars annually would you cost savings are you suggesting that that big your in your testimony is strictly does the proper contract what about market conditions i mean specialists represent so you're right there i see where you're headed that that is more of a cost of void and the calculation that you're looking at there on the on the ten and a half percent below market our rental rates or below market that's the only thing that's right but your rates have always been below market right and so the comparable there is if you're trying to say if that if they're bringing in more savings then if a government person was just doing that without the broker there is little distinction right now because the government is meeting that goal as well so there is a cost avoidance there if you're trying to say that if you're trying to ask me is that an additional benefit it is something that the brokers are bringing to the table but so are in house people on the work and what is it that you say the brokers are bringing to the table and then have people who are not well the big thing there is the rental credit that they bring back sector here it's a little puzzling that the government what would not for example you say that you are contracting out to the broker are there are you able to contract every single lease to the broker where that they could be collected so at least the agency would get the benefit you know that would be a target ok that would be a target you telling me that that money comes back to the government because of free free rent that that would be a target you know we don't send every commission look if if they can get the agency two months ran as hard two months for your grant and your realty specialist can't and you can't and you don't have any authority from the government and never asked for any authority from the government to give them equal authority then why would you want to get a couple of months free rent in every instance where you could i mean you kind of follow the logic of your own  of your own rationale i think the i think the most effective way to try and approach that is what's the right mix how do we maintain our core competencies with an experienced in house leasing staff to handle that core competency is very important to the government be able to perform and that we have that ability to do that in the house though what you are saying is important for the record there is some cost the government that it simply has to assume i'm maintaining a core function absolutely what's the status of the current broker contract and what are the plans for a new contract  the current contract does expire march thirty first of two thousand and ten and we're in the process now of planning for follow on contracts where we as i mentioned in my opening statement would you tell us without divulging contract sensitive information what kinds of changes you are you are trying to make based on experience of the brokers know about that the public knows about it you know about what kind of changes you think are necessary in the broker contract i think well for example we're trying to determine what to what extent and how to price the new contract i think that commission based pricing will be an element of the new contract i think commission based pricing will be an element of the follow on contract what kind of mix for example  what kind of role that will play still but under under discussions there has been for example in the past some request from the regions that we in addition to the full acquisition services that we call for under this contract that we allow for a menu of other services that would be on a fee basis and we have not decided that that's under consideration menu of other services like this one is that we really wanted to target that lease acquisition function there are a number if we have a need for those kinds of services there are a number of those kind of contracts that the federal acquisition service our sister business line of g s a already has on schedule and so we have really encouraged the regions in the past when they needed that kind of work to go to the schedule contracts to get that because it's quicker and easier i say do how do you know  a sits down with the broker to review what that task order is going to consist of and what a market range would be an appropriate market range in that market for a commission in that market and for that work and that may well be that can be tailored to that particular type of deal and that particular market and so when the broker leaves that orientation meeting they are supposed to have a basically a sign off from the contracting specialist that this is the range that they can seek and it would be within that local morning and a follow up to that let me just add on to that when when when we when the broker brings offers back to the government that's one of our important journal controls we require all offers brought back to government to disclose all commissions being paid not only to our broker but to their broker and whether or not there are any offers that aren't paying any commissions so we see when the broker brings those offers back to the government for evaluation you i would think that a higher there would be a higher commission for a large release over a small renewal but the commission is as i understand it the same in both cases the commission may vary depending upon what the deal is put in what the task is well so the commission is not the same and and in both cases with the difference well let me put it this way why would there be for renewals and extensions which involves  a lot less work let's say something more in the nature of a flat fee structure because they could not have much work is necessary i interpret that to mean that we are paying them a fee to do that and this is really a commission based structure where the commission is never flat right so i'm saying if  expect in the agency it ought not to be you know what do we do today what do we do tomorrow these are because this is the kind of work that's most appropriate for the broker this is the kind of work this is most appropriate for and how we know the moment the we really wanted to centralize the delivery of the contracting for brokerage services because we had a whole lot of different contracts going in a whole lot of different directions and doing a whole lot of different things and the i g recognized that and their findings in their audit i mean they didn't this was right they didn't recommend this as the as the as the solution but we came up with i think so and the other thing that we that we've been able to do is really put in place account the accounting system to track the money and that was another thing that they thought that we just didn't have a good handle on because especially in that generation right before the national broker contracts when we were trying to capture those rebates we did a good job of capturing the rebates but trying to handle that money and account for it we were not doing it was all over the place and we've been proved that by doing this fine let me ask you about the problem that that really concerned everyone even those who thought this was the only way to go and that is the conflict of interest there were two recommendations regarding them i want to ask about that one was to modify the two agency contracts to ensure that  we take the recommendations of the g a o very seriously and they looked at this pretty thoroughly and they did make those recommendations madam chair and we went back we didn't ignore those recommendations we went back and looked very closely at what we had put into place at the time and the bottom line was that we found those what we had in place sufficient we believe what what what is preventing conflict of interest this is you know i think people in the saying we have got to be able to justify i don't disagree with you there i'll tell you some of the things that we have in place and we were we were driven to this in part and  reps meant to increase competition we wanted to get out to the big national firms who have depth and experience nationwide can provide these services so these brokerage firms are regulated by every state in the union they have state licensing requirements they have ethical responsibilities they have conflicts of interest that they have to identify for all their clients not just the government but as the government we had to go be above and beyond what the private sector requires we have we have built into our system prohibitions against conflicts of interest so we could not move forward without being at very buttoned up give examples you know  e do something about it well here's what's in place they are required to have their conflict was there far far away all those within each of the organization so that they keep our government information our our our work separate and apart from their landlord the other side of the house if you will the landlord left or side of the house the personnel cannot switch sides if they switch sides they are prohibited from coming back and doing government work for at least six months in that particular market so we have a dedicated team from these dual agency brokers who are doing only government work only tenant rep work their systems and the information are kept separate and distinct so these are the kinds of firewall things that we have in place simply in a separate computers yes the systems are separate they may be local the personnel may be in the same building but they're separated and their systems are separated and it's my understanding that some expenses they had to go to that to meet those kind of government requirements but the sides that whenever they were tasked with learned what monitoring what inspection is done we went there is ever this is only a precautionary question i have no evidence whatsoever no reason to believe that people are not complying with the but if if if  f if if every if you could imagine what kind of terrible scandal it would look like if such a terrible problem work h so now that you have a program contract now you have another bird they've got separate systems then you just indicated how they operate how do you know if we go out inspect go about that we've been all over the lot over the life of this contract we've been out twice we went out at the beginning when we said the contract and we even went back out as part of the follow up after this g a o recommendation and said we found diligence we contacted that they're now they're really their recommendation was we think you ought to go out we think you ought to make sure you've got adequate concrete controls in place and modify the contracts to increase those controls if necessary we went out we did the inspections we thought that what we had and in place was sufficient and so we chose not to modify the contracts to do anything else so it was not like they told you you should go make these particular changes where they said you should you should add you should and do the divisional controls without being specific they didn't say which controls so we went out and looked and felt like we had sufficient controls in broker is tasked with an assignment they have to and they're going to do a lease in a particular delineated area market around the country they have to look at what they already have who they already have contracts with in that market and report back to us before they start work they've got a finite time line to come back and say we have we represent the following office building owners in this delineated market and the government that was part of the way we got our waiver was we had to make sure that we were neutralizing or mitigating these potential conflicts so the government had to make a decision as to whether or not in the face of these potential conflicts that they conflicts where the where the brokerage houses are already representing people there in the files those disclosures are in the files and we've got them on file that's already you know i'm saying at the end of the transaction where both functions were in the same entity somebody have to certify that there has been no breach of the conflict of interest you mean like a follow up read all of the earlier yeah lease the the head of the company have to certify that they are greek i don't i don't actually think there's a follow on certification at the end of each monitoring you go out twice a year somebody has to take responsibility for it when people have to take responsibility they get to be very honest right and you wish them whoever is the appropriate person or to take responsibility for certifying that the conflict of interest regulations obviously i want to look at them in connection with or or guidance in collection with the new can contract this well had indeed who takes responsibility for it and that means somebody on the inside understands that at the top of the agency he is head is accountable that is very necessary to do panel is important for us to hear from the private sector panel julie redfield senior managing director of studly christopher raft project manager jack joan line l good afternoon madam chair congressman diaz balart and distinguished members of the subcommittee my name is debbie bell jesus and i'm the national broke that contract account leader for c b richard ellis thank you for inviting me to appear before you today to discuss our experience with the g s a national broke a contract we are proud of our excellent working relationship with the g s a public building service in support of their mission of providing a superior workplace for the federal worker and the best value for the american taxpayer this morning i will talk about the national broker contract from c b richard ellis perspective a national broker contract benefits the g s a its employees the agencies it supports and the us taxpayers in many ways among the principle benefits are the following using industry knowledge and practices to assist g s a achieve the most advantageous economic outcomes for the taxpayer and hanson the g s a is capability to manage its large annual volume of lease transactions and ensuring that federal employees are equipped in a timely manner with a modern efficient workplace we believe that each of these benefits as already been realized during the current term of the national broker contract and that the g s a will even see more benefits as time goes on c b richard ellis is actively involved in transactions and related post award construction management interest review and assemble a task appropriate team of commercial real estate experts that team guide the transactions in the task or assignment through our and see we have a network of field brokers across all eleven g s a regions who provide local market expertise both the g s a and c b richard ellis are committed to the effective use of small businesses and further into that commitment we partnered with a qualified small businesses throughout the country to assist in the implementation of g s a assignments throughout the process we align our execution to support the g s a is goal a fair and open competition and for all cam and opportunities we report monthly to the regional g s a offices on the status of our assignments in addition we participate in quarterly meetings with g s a representatives a which we review the quality of our work on each transaction the g s a provide strong oversight on every aspect of our account management as well as each transaction their quality control is applied regionally and nationally they exercise prudent supervision of all of our work everything we do to support the n b c is fully transparent to the g s a the value of the national broke a contract to the american taxpayer is realized to achieving below market rental rates and lowering the overall cost of the tenet in addition the national broker contract allows the g s a to spend more time focusing on the requirements of the client agency the significant value achievements for the many american taxpayer are a direct result of a national program contract purpose which calls for the to partner with national private sector and small business for commercial real estate firms who are uniquely qualified to provide consistent cost effective and eye quality leasing and realize the state posed toward construction management services to g s a and its client agencies in a fully accountable and transparent manner manner the national broke a contract enables the g s a to partner with private third party commercial real estate firms in order to realize proven economic savings for the american taxpayer and significant efficiencies for the g s a and the agencies it supports for organizations such as the g s a that have large often complex commercial real estate needs the type of partnering that the national broker contract provides is not only prudent but increasingly the industry standard  industry specialist in such partnerships is that the benefits the g s a and american taxpayers will realize as a result of the national broke a contract will only increase as a partnership continues to evolve we are honored to be a partner with the g s a and stan in the real estate and construction industries five of which were focused on federal government contracts notably in support of the military housing part of a spanish give to the department of defense just fine without not so we had kind of representation brokerage you may know well a few of our successes on the contracts one hundred forty four thousand square foot leaks for the u s equal employment opportunity commission now in noma having moved from the c b d a forty nine thousand square foot lease for the broadcasting  governors in miami florida a seventy one thousand square foot leaf for the consumer product safety commission in montgomery county how would we evaluate g s a first experience we would look to some of the g s a its own objectives one objective was to obtain better pricing for the c s s customers and the tax there's a component of pricing as we see it is the g s a direct compensation to brokers this amount to be quantified is zero j with sellers received no direct compensation from the g s a for services no reimbursement of any expenses the contracts have required us to hire a specialized person now construct office space augment our information technology controls and travel extensively in order to perform as is customary in commercial practice we are permitted by the contract to negotiate a market commission to be paid by the landlords a second component pricing the rent paid by the g and agencies according to the g s a the independent metric we are negotiating rents more than eleven percent below market rent midpoints exceeding the government's expectations set at nine a quarter percent a third component pricing that should be taken into consideration is the rebate of market commissions dollar for dollar that goes directly towards the essays client agencies and national months of around by our calculations this rebate is accumulated over sixty million in direct current savings to government agencies another objective was to increase flexibility in contract administration we were able to respond quickly and we worked nights and weekends to find space when the g s a the agency customers have an urgent and compelling need for example in august of two thousand and seven we were engaged to secure multiple trailer paths for fema to house tornado victims and their families in northeast minnesota in july of two thousand eight we were engaged to find space for several agencies d h s s iraq u s marshals probate and bankruptcy courts to senator office and the g s a his own field office in cedar rapids iowa due to flooding we finished seven customers with a team of twenty four professionals dedicated to the contract and a flexible workforce of more than one hundred we have built institutional knowledge about specific agency requirements and tendencies i see this knowledge shared almost daily across our team with our regional barriers our dedicated team provides better and more consistent services to to the g s a the agency customers while a handful of larger high profile races in major metropolitan markets may steal the show in the media such leases misrepresent the true nature of our typical transactions more than half or less than seven thousand one hundred twenty five square feet geographically we work from nome alaska to the novel puerto rico f hundred ten as find leases to private sector landlords joseline with sales please to participate in the contracts today yes they took longer to perform well than both we and the g s a anticipated and we've offered to the g s a a thorough perspective on lessons good afternoon madam chair ranking member diaz balart and members of the subcommittee i'm julie rayfield a senior managing director of studly inc a privately held employee owned commercial real estate services firm dedicated solely to representing tenants or users of real estate as one of the three national broker contracts on the contract since its inception studly remain maintains a team of over forty professionals dedicated to working on this contract including several small disadvantaged commercial real estate firms with whom we have partnered for the life of the contract to date studly has been assigned six hundred ninety one task orders totaling thirteen point new thirteen point two million square feet throughout the u s and its territories these transactions range in size from under two hundred square feet to over five hundred thousand square feet with sixty percent of these assignments under ten thousand square feet regardless of transaction size or location the g s a demands of us and we deliver the same high level of attention and quality of service on each of these requirements g s a works closely with each broker contractor and monitors our work on every transaction evaluating us at six distinct project milestones based on five individual evaluation factors we are also rated overall on the financial terms of the transaction measured against the market studies negotiated rental rates that are thirteen percent below market well below g s a school of nine percent below market one example i'd like to use to highlight this point is a significant g s a lease award for the department of justice at one forty five in st washington does d c which will consolidate elements of the d o j in the snow location this lease is awarded forty million dollars net present value dollars below the prospectus level rent for a fifteen year term and was a catalyst for the development in an emerging area of washington d c where prior lease actions met with resistance by client agencies the national broker contract as you heard already today is defined as the no cost contract there are no federal government funds expended for the national broker contract services we are compensated by successful offers who pay market commissions to the broker teams upon lease award we receive market commissions and cannot accept an above market commission and i'd like to emphasize that we do not make the decision as to which landlord ultimately receives the award we work at risk and receive no compensation until and unless the lease is fully executed we are also responsible for expenses all expenses related to the execution of each transaction all overhead compensation and expenses related to a transaction are paid for by the broker teams the mechanism for the broker contact broker team compensation allows the government to secure the value of leasing commissions that already embedded in market rental rates and which would otherwise accrue solely to the benefit of the less or each broker team credits a portion of the commissions earned back to the government in the form of free one rent which is reflected in the lease in the form of commision credit studly inc credit fifty one point five percent of its commissions to the government to date studly has earned thirty one million in commissions nationwide which includes the money paid out to our subcontractors and we have credited thirty three million dollars to the government this is over a period of four years of the previously reference six hundred ninety one task orders assigned to studley they said sixty percent of which are below ten thousand see the commissions on those completed lease leases averaged twenty thousand dollars per lease and the cost of executing these transactions in term of top term of time and expense far exceeds its commission amount the national broker contract provides a number of additional benefits because the word services delivered to just say is one such example in summary the partnership twenty essay in the broker changes resulted in the successful melding of federal government procedures and private sector oriented results the broker contract provides g s a with access to valuable broker services says substantial rent abatement at no additional cost to the federal government the national broker contract also allows g s a to leverage its national position taking advantage of the best financial terms offered and providing consistent service nationwide to its client agencies while the broker teams focus on transactions using the and using their expertise to secure space at the most reasonable rates g s a is able to focus on customer service strategic planning portfolio management and policy guidance to agencies and their entire team the broker contractors do not make our job thinking with g s a with each in our experience does not bring to the table the rigor of the sometimes find at least in the private sector and that we like to see in the agency and even the handling of these contracts now i don't want to say to each of you because each you have talked about meeting  to indicate that there was a difference between the we'll see specialists and contractors and we think that that has a lot to do with we think that had less to do with either the realty specialist or if you will forgive me you know it has to do with who your client is the federal government and our problem with the federal government in this case p b s is we want to see more of taking advantage of its role in the market but i do not know how these claims can be made due to personnel when no one has offered any evidence to us that these claims are not attributable to at least a dozen factors i could name such as the market and the government's position in the market so i am i accept what you say but i don't accept that that that is what the program contracts across the table unless you're prepared now to end the case that there is something specific to broker contracts apart from factors such as those i have named given the evidence and how those folks and broker con contractors perform approximately the same when you have any evidence to the contrary i mean i'm not questioning the value of the broker contracts we're trying to reestablish a whole new section of g s a i just want to be able to answer any questions that are put to me especially since i'm on another i would think that the private sector contracts want to get the best deal because they want the contract to be renewed well i think they should be setting the mark for the end house folks you've got to do at least as well perhaps a better but at least as well as the contractors do you know anything about how well they do compared to your own  and i congratulate you on doing it and how much of what you are doing today you have been in the business when it was much better than it is today are you able to reap any benefits from  that my business and my team's business is both oriented in the private sector as well as working with the government what we do believe that we were able to bring to the table is a significant expertise as it relates to private sector practices in commercial real estate and bring that information that knowledge and that expertise to bear on our work with the federal government which i do believe was originally one of the objectives the g s a had in bringing broker contractors on board was to be able to tap that private sector knowledge base and act back then but we've not seen any difference in the performance but you know i don't we should underestimate people who every day have to deal with the the way to do you know different from great from they have been exempted they happen to work with the federal government they've got to understand the market they've got to be able to go see a the same way you do so i don't i don't see that they're that if they don't have the skills the exact same skills they do do they should be working for the g s a as far as i'm concerned well we do have the opportunity we do have the opportunity madam chair to  work with with institutions and with real estate organizations in the private sector that provide us with very good insight on critical issues that relate to our ability to effectively advise g s a and work with them on the transactions everything from financial structuring to understanding the financial markets that are in play at any given time you know with real estate transactions and we do bring that that type of expertise to bear because we're doing it on a regular basis and working also directly in these markets one of the things that i heard said earlier today related to working in local geographic markets and i think it was stated by some of michael panelists here that we actually do utilize our brokers who are in local markets we don't just work out of washington d c we have experts who are out in the markets working in their markets of expertise throughout the country bird in the market today are you finding that there are any advantages to representing the government in this market i think question performance rayfield and get the answer i like to know are we taking events one of the one of my driving benefit the government and all of our work incrementally you know i'm sure you know it's just that it's very easy and i don't blame you frankly for spinning your own expertise i terrible brain drain but i know this not even them it's exactly what you say who they represent a halfway company they ought to be able to get a good deal i continue to ask were you representing the couple you are representing the government in any contracts two years ago any and all of you is there any difference today in the deal you can get for the federal government madam chair absolutely we're aggressive rental rates and overall structure that that is setting a new low in the marketplace absolutely yes may i mean buyer's market does not not characterize what your advantage should be  we deal in construction with the top people and this industry we deal with all the owners we know we can see no signs of even people at the very top we could always get financing can't get it are completely in pain and hurting and we are going department of homeland security imagine getting that kind of work in this economy well we are concerned that that increasingly these folks are in the leasing business and they gotta learn to deal with the and of course they have these that's the evidence according to the i g as the economy rolls up or down it needs to reflect the expertise you bring and that we expect them to bring now we understand that the stuff a company agreed to credit our figure is i think you are you may have offered a different view fifty one point five percent of its commission to the federal government in the form of the free rent that  chair for c b richard ellis we had thirty seven percent of our commissions on the first and second year thirty eight percent on the third year thirty nine percent on the fourth year and forty percent and the said here and i'm i'm no overseeing two contracts the star back contract is a thirty one percent and the jail contract escalated year by year it began at twenty four and is now at thirty two percent  will that it is not a back there in the competition is that your understanding madam chair the commission credit back to g s a was competed as a part of the original contract we all had to submit information related to our technical qualifications as well as our pricing and that was so that was initially a part of the come competition and it has not come further competed on individual task orders but was  computed on the contract overall to fifty one point five percent and you go down from here the other two and well i was not around at the time this was bad but i do i do price contracts which we all are with the federal government and what we do is price to win and what we think is the most the most competitive  without any information about what our competitors are going to price we escalated over the years assuming that there would be a learning curve and that we would learn more about the contract and therefore have less overhead we also escalated over the course of the cut the contract to where we are today forty percent your company is all about the same size and i can't really speak for well i'm sure we'll have a reason for the why except that the difference is we will find out what those reasons were small business plan that's of great interest to this subcommittee what would you need to explain with a small business plan but are a lot of those plans what small businesses you have that you have your plan what number any information you can give was twenty five percent we are currently exceeding that goal with thirty one point nine percent we've given five point nine million dollars to our small business firms in support of the g s a contract would you submit for the record here your small business plan and who have gotten those contracts who have gotten kontrol businesses small businesses the names that you have in fact your back to deal with so that whatever that percentage you just said to thirty nine or whatever percentage that is right our small business firms that work with us yes and they use and we like you submit that for the record ok you know we did we like all of you to do it but mr ross there are our small business goals are our twenty five percent of why was that because initially we found them to be the most super partner able to able to do both the postal service and the acquisition component though we still retain them we have now gone in some areas to other small businesses or small brokers that can help us out how many do you may miss best this is how many small businesses do you deal with in your small business plan businesses i would we need contractors who simply go to a small business may or may not be meeting that requirement it doesn't sound to me as though one does or gives many opportunities with small business is in this business to be rich or else currently has eight small business firms and when the process of signing up to more we have firms that do specifically just the  front end brokerage face we also have firms that do the whole procurement from start to finish we also have some firms that do the post awards services for us you don't have to break it up to do anything with small businesses and guess what they'll come to me and they will complain that we can't get any small business real estate business from the g s a and i know you're not going to be able to get the same kind of business you do mr ross from a small business should have to use is a way to do it i got what i signed on the bottom line it's all i need to get we're trying to increase small business is a small business use within the federal government and certainly within the  so we really do need to see that there is some outreach otherwise we don't believe that we believe only the letter of the spirit and i would argue that even the letter isn't being  thank you madam chair we took an approach under this contract when we were organizing ourselves to respond to g s a r s p which was to reach out to small business concerns around the country in the different g s a regions and find done with these firms really partnered with bound for the life of the contract they are there absolutely in trickles to our team in the execution of our work they signed on with us at the beginning of our contract and they have all been with us through the we have a woman owned business that handles region ten women own small business we have a small service disabled veteran own firm handles all of region and for us we have two women own small businesses who support us in  region four and we have a small disadvantaged woman own a business who does all of our post award work for us in regions one two three and some of our work here in n c r and where it creasing the scope of her work p i referred to they we did not issue an r f p but when the g s a issued their request for broker contractors to submit proposals at that time they had requested we submit information on our team structures was at that point before we even ever were awarded the contract that we reached out and and developed partnerships with the small business concerns and madam chair if i could just emphasize that these aren't professionals who work with us on a one off transactional basis they handle all of our work with us in close coordination with us in these regions they have substantial enter goal roles as partners with us on this program contra this is this notion of partnering with  business real estate people as easily as if i myself and doris the notion of partnering we want them to learn as much of the business as they can we don't insist on to take any particular form takes but we know what i have goal is and we know that if you're just looking for someone who you know who is the easiest person to find who really are reaching for something with when you consider how large this in business and the see there the notion of not partnering if you don't partner you might we do might not be able to do it and you won't be able to meet our goal which is spread the expertise that only the larger firms have to small to small business i've got to get out of here i do need to know have you found any of your broker deals falling through by falling through i i will assume that you know and other words due to the economy that they're due to the economy or any other reason we haven't had any off through we've had many that we're concerned about primarily to developers in weeks construct task orders finding their construction financing and in addition some often permitting issues and those sorts of things are are slow problem with having the firm certify that the conflict of interest guidance has been fully met when you do a transaction  because i can't fail the l a did i have to take personal responsibility and we're not in there looking over your shoulder and should be nor do we doubt your your integrity we believe in your complete integrity but somebody has to feel responsible that's why certification occurs to us as an additional safeguard if there's something about the end history that i don't know or that would make it difficult to not speak up  understand that now there are there in the recommendations that you have for the g s a regarding the new contract madam chair if i could speak specifically to the question that was raised earlier and you just alluded to regarding posterboard services and we worked very closely with g s a all of the broker contractors did at the onset of the contract to bring clarity to that area of service that's required under the contract and i think that the comments that have been made refer to the fact that the scope was perhaps very general and we worked very closely together of the course of the first two years of the contract to entirely different story so the concern from the brokers related to just making sure we were all clear about the specific services that we were providing to g s a because post awards services can range from here to here that is clearly defined and then perhaps that g s a reaches out you know for some input from the industry on that scope of services because it's a really a slightly different area than leasing services all really wants to i don't have to apologize for the job because she knows where i've been but i do want to apologize to the distinguished panel i was on the floor voting and so i'm going to apologize for not being here at the beginning of your testimony i do want to make a couple of observations and maybe a couple r lease costs relative to market measure and we know from the conversations and we finally got some i think really good numbers obviously that the girl was nine point two five below i guess mortgage market rates i guess what it would it would be we all that and they also gave us the fact that the brokers are ten point five six below that so they are exceeding your exceeding the goal but but we also finally got there is a bottleneck and the process takes a long time and do you have any if you all would have any recommendations how to accelerate the peace the pace of the lease acquisitions so that so that particular now by the way that government can take advantage of the current conditions and so anything that we can do to speed that up if you would have and if you have some recommendations recommendations now or if you would have some recommendations that are at a future time i think would be very helpful does anybody want take a crack still be very diligent if they evaluated that a few key milestones among some number of metrics so that the number and the number of evaluations seems to be extraordinary at this time it seems to be occupying a lot of  that whenever possible the government should own that as opposed to lease and so it's kind of a little bit off subject but i do want to just because you know we have such great knowledge right here in this panel will there be now in this market good purchase opportunities for the government where the government could you know where we have long term space needs i've been talking about and i don't want to put words in my mouth but i think we all have concerns about the fact that the where we if we could be purchasing it be a better deal for the for the taxpayer would this not be a good time for the government to purchase as opposed to lease of possible i'm actually kind of asking about the market what's out there what i know it's a little bit off topic so congressman absolutely we think it's at the end and that's all in time for g s a to take advantage of the current market conditions there are multiple situation here in this market and certainly in other markets around the country where there are landlords who are in distress and there are opportunities for g s a to be able to step in through a number of different transactional structures and would be able to take advantage of those excellent opportunities right now they are they exist and now is the time to move on them absolutely sir madam chair yes may i may i respond to a question the you asked earlier that i just wanted you to to make a comment on you asked about of we've had any deal fall through and i just wanted to identify there were  three in particular that come to mind on this under this contract that have fallen through for us one would be the v a deal in washington d c which is a this is not an immediate this was this was to be the last the upswing space in two thousand and five and ultimately i believe that it related to funding for the renovation and we were tasked with the swing space requirements who worked on that for a little over a year and then that was canceled we also worked on the department of commerce that same year the same scenario with the renovation of the department of commerce we were tasked with finding the swing space that was soon twenty five thousand square feet or twenty four thousand that was also canceled close to a year into the procurement and then the third example i would use is actually out in region ten in the u s attorneys generals office which first place and i recall on those do you understand the on the swing space it was the renovation dollars for the federal buildings in the region ten u s attorneys office i believe there were other circumstances don't have any idea if you're going to be able to go through with it what's the point i do want to say to the ranking member that last week g s a did say it was going to ask for ladies and gentlemen can you clear the room is quickly as possible we're trying to set up for another hearing right behind you so we'd appreciate if you could vacate the room thank you