United States General Accounting Office

GAO Testimony

Before the Subcommittee on Public Buildings and

Economic Development, Committee on Transportation

and Infrastructure, House of Representatives

For Release on Delivery

Expected at

9:00 a.m. EDT

Thursday, April 24, 1997

GENERAL SERVICES

ADMINISTRATION

Downsizing and Federal

Office Space

Statement of Michael E. Motley, Associate Director

Government Business Operations Issues

General Government Division

GAO/T-GGD-97-94

Statement 

General Services Administration:

Downsizing and Federal Office Space

Mr. Chairman and Members of the Subcommittee:

We welcome this opportunity to discuss our July 1995 letter Downsizing

and Space (GAO/GGD-95-51R, July 14, 1995), which provided information on

the General Services Administration’s (GSA), the Office of Management and

Budget’s (OMB), and 10 executive branch agencies’ efforts to identify and

manage federal office space that may be unneeded or underutilized after

agencies downsize, and our ongoing work on this issue. As you know, the

Federal Workforce Restructuring Act (P.L. 103-226), enacted on March 30,

1994, mandated downsizing the federal workforce by about 270,000

full-time equivalents (FTE) by October 1, 1999.1

Our 1995 letter, issued early in the downsizing process, noted that federal

civilian agencies occupied over 750 million square feet of office space in

thousands of government-owned and -leased buildings nationwide. We

expressed concern, that with the loss of about 107,000 non-Department of

Defense related FTEs through downsizing, millions of square feet of costly

federal office space could become unneeded or underutilized. Our letter

recognized that it probably was not possible to save the full cost of all

office space associated with FTE reductions because personnel losses

could be scattered over multiple locations. However, to provide an

indication of the potential savings involved, we estimated that the cost of

the office space vacated by the 107,000 FTEs at that time to be about

$362 million annually. We based this estimate on GSA’s work space target

of 152.5 square feet per employee, GSA’s nationwide office space average

cost of $22.22 per square foot, and the 107,000 FTE reduction target.

We said in 1995 that neither of the two central federal management

agencies responsible for space management and budget matters, GSA and

OMB, had developed a governmentwide strategy for managing office space

reductions resulting from the government’s downsizing efforts. We

reported, however, that both agencies had taken steps to identify and

restrain potentially unneeded or underutilized federal office space. Steps

taken by GSA included (1) in the summer and fall of 1994, calling for a

“Time Out and Review” of high-dollar-value capital spending projects—a

step that, according to GSA, identified and eliminated almost 1 million

square feet of unneeded agency expansion space; (2) instituting in

September 1994 a “No Net New” office space policy to stop agencies from

acquiring net new office space as measured against GSA’s inventory

baseline of general purpose office space; (3) in March 1995, proposing a

1

One FTE is equal to one work year or 2,080 non-overtime hours. Put simply, one full-time employee

counts as one FTE, and two half-time employees also count as one FTE. The FTE concept is intended

to capture the work hours of all federal employees.

Page 1 GAO/T-GGD-97-94
Statement 

General Services Administration:

Downsizing and Federal Office Space

“timeout” for the review of the need for current and pending agency

leasing actions; and (4) in April 1995, instituting a temporary moratorium

on most agency leasing actions pending administration downsizing

decisions.

As for OMB, we said that in May 1994, OMB directed agencies to project their

office space needs for fiscal years 1996 through 1999, taking into

consideration anticipated personnel reductions, and to submit these

projections to OMB by June 30, 1994. OMB believed that the agencies and GSA

could use this information to begin analyzing and planning for how

workforce reductions could affect office space needs. However, we said

that GSA officials told us that these projections showed no net reduction in

office space needs by federal agencies through fiscal year 1999, even

though they projected an 18-percent reduction in total employment.

Finally, our 1995 letter pointed out that 10 executive branch agencies, plus

GSA and OMB, had either taken proactive space management approaches or

were awaiting on the outcome of other issues prior to beginning specific

initiatives. Four agencies had developed agencywide space management

initiatives. The Tennessee Valley Authority, for example, had developed

plans to reduce its space inventory by 1 million square feet over 3 years.

Three other agencies did not have agencywide plans but had bureaus or

offices that were developing space management plans. The National

Aeronautics and Space Administration (NASA), for example, had directed

its headquarters and field offices to develop site-specific space

requirements that were to take personnel reductions into consideration.

The remaining five agencies had not begun specific space management

initiatives related to downsizing because they said they were awaiting the

outcome of employee buyouts, agency reorganizations, or legislative

initiatives.

At the request of the Chairman, House Committee on the Budget, we have

recently begun to follow up on our 1995 report, and we expect to complete

this effort in the summer of 1997. Although it is too early in our review for

us to have any conclusions or recommendations, we do have several

preliminary observations. Since our 1995 letter, GSA has taken additional

steps that it believes will improve its management in general of

government-owned and -leased properties, and that could help in

identifying and restraining the amount of unneeded and underutilized

federal office space resulting from agency downsizing. For example, GSA is

in the process of implementing a new automated system, System Tracking

and Administering Real Estate (STAR), that is designed to be an integral

Page 2 GAO/T-GGD-97-94
Statement 

General Services Administration:

Downsizing and Federal Office Space

part of GSA’s day-to-day real estate activities. STAR is to provide direct

support to GSA real estate personnel, and GSA officials believe that STAR will

enable GSA to better manage government-owned and -leased properties.

GSA plans to phase-in STAR during the first quarter of fiscal year 1998.

In addition, GSA is pilot testing a program called “Ponding”, which is an

effort to consolidate about 1.2 million square feet of leased office space in

37 federal projects. GSA is funding this program with the goal of identifying

600,000 square feet of underutilized space. This space could then be leased

to other agencies or turned back to the lessors and the leases terminated.

GSA hopes to demonstrate to Congress that, by funding the cost of space

consolidations, long-term savings can be realized.

GSA officials told us that GSA is now formally considering the effects of

federal agency downsizing and space reduction plans in its forecast of rent

collections, which in large part make up GSA’s federal building fund used to

fund real property management activities. GSA said that its regional asset

managers, who usually have specific knowledge of pending actions

relating to local agencies’ space requirements, are now reviewing the data

supporting GSA’s rent collection estimates to improve their accuracy. With

improved rent collection estimates, GSA officials believe that the agency

will be positioned to better manage the federal building fund.

Although it is too early to assess the effectiveness of any of these GSA

actions, in discussions with OMB staff responsible for reviewing GSA’s

budget, they told us that they believe that actions taken or under way by

GSA will position GSA to more effectively manage potentially unneeded and

underutilized federal office space that might result from downsizing.

Our work updating the space management strategies of the 12 executive

branch agencies has also just begun. Although we are not in a position to

report on these activities at this time, we are aware of one agency’s

achievements in the area of space management. We recently reported that

NASA has achieved an estimated $250 million in cost reductions through

fiscal year 2000, mostly from moving contract personnel from off-site

leased space into agency-owned space left vacant by staff reductions

related to NASA’s downsizing efforts.2

2

NASA INFRASTRUCTURE: Challenges to Achieving Reductions and Efficiencies (GAO/NSIAD-96-187,

Sept. 9, 1996).

Page 3 GAO/T-GGD-97-94
Statement 

General Services Administration:

Downsizing and Federal Office Space

Mr. Chairman, this concludes my prepared statement. I would be pleased

to answer any questions you or the other Member of the Subcommittee

might have at this time.

(240248) Page 4 GAO/T-GGD-97-94
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