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27–509 PDF 2018

S. HRG. 115–115 

FBI HEADQUARTERS CONSOLIDATION 

PROJECT—WHAT HAPPENED AND WHAT’S NEXT 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

AUGUST 2, 2017 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.govinfo.gov 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JOHN BARRASSO, Wyoming, Chairman 

JAMES M. INHOFE, Oklahoma 

SHELLEY MOORE CAPITO, West Virginia 

JOHN BOOZMAN, Arkansas 

ROGER WICKER, Mississippi 

DEB FISCHER, Nebraska 

JERRY MORAN, Kansas 

MIKE ROUNDS, South Dakota 

JONI ERNST, Iowa 

DAN SULLIVAN, Alaska 

RICHARD SHELBY, Alabama 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

CORY A. BOOKER, New Jersey 

EDWARD J. MARKEY, Massachusetts 

TAMMY DUCKWORTH, Illinois 

KAMALA HARRIS, California 

RICHARD M. RUSSELL, Majority Staff Director 

GABRIELLE BATKIN, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

AUGUST 2, 2017 

OPENING STATEMENTS 

Barrasso, Hon. John, U.S. Senator from the State of Wyoming .......................... 1 

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware ................... 2 

Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland ................ 4 

WITNESSES 

Gelber, Michael, Acting Commissioner, Public Buildings Service, U.S. General 

Services Administration ...................................................................................... 6 

Prepared statement .......................................................................................... 8 

Responses to additional questions from: 

Senator Barrasso ....................................................................................... 13 

Senator Carper .......................................................................................... 13 

Senator Cardin .......................................................................................... 17 

Senator Harris ........................................................................................... 20 

Senator Shelby ........................................................................................... 22 

Haley, Richard L. II, Assistant Director/Chief Financial Officer, Finance Division, U.S. Federal Bureau of Investigation ........................................................ 25 

Prepared statement .......................................................................................... 27 

Responses to additional questions from Senator Cardin ............................... 32 

Wise, David, Director, Physical Infrastructure Team, U.S. Government Accountability Office ................................................................................................ 34 

Prepared statement .......................................................................................... 36 

Responses to additional questions from: 

Senator Barrasso ....................................................................................... 51 

Senator Cardin .......................................................................................... 52 

(1) 

FBI HEADQUARTERS CONSOLIDATION 

PROJECT—WHAT HAPPENED AND WHAT’S 

NEXT 

WEDNESDAY, AUGUST 2, 2017 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:08 a.m. in room 

406, Dirksen Senate Office Building, Hon. John Barrasso (Chairman of the Committee) presiding. 

Present: Senators Barrasso, Carper, Capito, Boozman, Wicker, 

Rounds, Ernst, Cardin, Gillibrand, Booker, and Harris. 

OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM THE STATE OF WYOMING 

Senator BARRASSO. Good morning. I call this hearing to order. I 

want to thank everyone for coming to be with us today. 

We have convened this hearing to listen to testimony from Government witnesses from the General Services Administration, the 

Federal Bureau of Investigation, and the General Accountability 

Office about the cancellation of the FBI Headquarters consolidation 

project and what comes next for housing the FBI. 

The canceled project would have replaced the current FBI Headquarters, the J. Edgar Hoover Building, located at 935 Pennsylvania Avenue, with a new headquarters in either Maryland or Virginia. 

The project involved an exchange of the J. Edgar Hoover Building to a private developer. The developer would then in turn construct a campus-like facility with proper safeguards for security, 

suitable for the FBI’s new focus as more of an intelligence agency 

as opposed to simply a law enforcement one. The new facility would 

also consolidate the myriad of FBI satellite offices, which would 

make the Bureau more efficient and save taxpayer dollars. 

I have no doubt that there is a need to replace the FBI’s existing 

headquarters. The men and women of the FBI who keep us safe 

deserve an office building that meets their needs. The security and 

efficiency arguments for their case are clear. What is not clear is 

why the project was suddenly halted, why Congress was not notified in advance, and what happens now. Senators should not have 

to find out about a decision of this magnitude by reading about it 

in the Washington Post. 

Regardless as to how this decision was made and how poorly it 

was rolled out, it is possible that the mechanics of this deal led to 

2 

this eventual outcome. The exchange of the J. Edgar Hoover Building, which was at the heart of this proposal, may have been 

doomed from the start. According to the GSA Inspector General, 

only eight building exchanges of this type had ever been executed 

prior to the start of this project, and none of those exchanges involved a building worth more than $11 million. And while there is 

one significant exchange in the pipeline, it is not yet complete. 

The exchange of the J. Edgar Hoover Building, a much larger 

building than any of the other completed projects, located in heart 

of the nation’s capital, on one of America’s most famous streets, is 

in a completely different league. The questions now are: Where do 

we go from here, and how do we find a solution? 

The FBI needs a new headquarters. How do we get there and 

what do we do in the interim to address the FBI’s needs? Does it 

make sense to pump millions of taxpayer dollars into the J. Edgar 

Hoover Building to upgrade it, only to tear the building down in 

a few years, especially since there is over $100 million in pending 

repair and maintenance needs in the building today? 

Should the FBI pare back its many requirements for a new facility, reducing its size and scope to make it more affordable for the 

American taxpayer? Should we look at alternative financing mechanisms, such as a lease buyout arrangement where a developer 

constructs and leases a facility to the FBI, with the agency having 

the option to buy the facility years in the future? 

These are all topics for this hearing today. I look forward to the 

testimony. 

I would now like to recognize Ranking Member Carper for his 

opening statement. 

OPENING STATEMENT OF HON. THOMAS R. CARPER, 

U.S. SENATOR FROM THE STATE OF DELAWARE 

Senator CARPER. Thanks, Mr. Chairman. Our thanks to you. 

I wanted to thank you and Senator Cardin—especially your 

staffs—for all the work that you have done on this issue, important 

issue not just for the FBI, not just for Maryland, the District of Columbia, and Virginia, but really for our country. 

We are blessed by the men and women who serve us in the FBI, 

also in GSA and GAO. I want to just say that right from the outset. 

We have been blessed by wonderful leadership at the FBI for years. 

We have a newly confirmed FBI Director, Christopher Wray. He 

was confirmed yesterday. I think he will be a good one. And he follows on the heels of two really good ones in Jim Comey and Bob 

Mueller, and we are grateful for their leadership and continued 

service to our country. 

I think it is safe to say that we have more questions than answers surrounding this recent decision by GSA to cancel a procurement for a consolidated FBI headquarters. I am hopeful we can 

learn some of those answers here today. 

Prince George’s County is home to two of the three final locations 

for the new FBI headquarters. The other was in, I believe, Springfield, Virginia. The decision to cancel this consolidation was a shock 

to those jurisdictions, and it was a shock to me, and it is going to 

have a significant impact on the region. 

3 

And I have concerns—I know many of my colleagues share 

them—regarding the move by GSA to cancel the procurement process. My concerns range from the lack of consultation with Congress, to the impacts on national security, to the excess cost that 

this decision will impose on the Federal Government. 

However, I would say that my largest concern is where do we go 

from here. So much energy has already been invested in this endeavor, only to have the process halted without an alternative plan. 

We can all agree that there is an obvious need to move the FBI 

out of the Hoover Building to a new location and to consolidate 

other FBI locations. 

Simply put, the Hoover Building is an aging building that no 

longer meets the needs of the FBI in the 21st century. It suffers 

significantly from deferred maintenance, and the employees bear 

the brunt of that lack of investment. Further, the status quo, with 

the FBI scattered across several locations, a number of locations 

throughout the D.C. metropolitan area, is simply unacceptable for 

the agency to carry out its mission and approve our national security. 

It reminds me a little bit of the situation the Department of 

Homeland Security is in. Some of us serve on the Committee on 

Homeland Security and Governmental Affairs, and they are spread 

over almost a half-acre and are trying to consolidate the bigger 

part of their Department in St. Elizabeth’s, and hopefully we will 

be able to carry that out and get that done over the next couple 

of years. 

But with increasingly tight budgets, deferred maintenance on the 

Hoover Building, and expensive commercial leases for FBI annexes 

and satellite offices, it would seem to make sense to me to consolidate the FBI under one roof, or something close to one roof. 

As stewards of the Federal purse, we should be ensuring that we 

are doing all that we can to save taxpayer dollars and create efficiency in Government, including with respect to property management, something that Tom Coburn and I—former Senator from 

Oklahoma—and others have worked on, Rob Portman and others 

have worked on for years with many of you. 

We should also ensure that, when appropriate, Congress provides 

adequate funding for construction projects that will help agencies 

meet their missions. For the last several years I have been, as I 

said earlier, a strong advocate for consolidating the Homeland Security’s headquarters at St. Elizabeth’s. It just makes sense; it 

makes dollars and cents; enhances morale and makes more efficient, and frankly, gets them out all these leased spaces that we 

are paying a lot of money for all over this part of America. 

Let me just close by saying without adequate funding from Congress in the years to come, this FBI project, the St. Elizabeth’s 

project may face unacceptable cost escalations and delays that are 

wholly preventable through our action. This is on us, on Congress. 

Mr. Chairman, look forward to hearing this all-star lineup of witnesses, and I would ask them all to do what Gene Dodaro does 

when he comes and testifies before us, to do it all off the top of 

their heads and use no notes, and to accept no input from their 

staffs, and we will be on our way and get a lot done. Thank you 

very much. 

4 

Senator BARRASSO. Thank you, Senator Carper. 

Before we turn to our witnesses, I would like to invite both the 

Chairman and Ranking Member of the Transportation and Infrastructure Subcommittee, which has jurisdiction over public buildings, to make a statement if they would like. 

Senator Cardin. 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 

U.S. SENATOR FROM THE STATE OF MARYLAND 

Senator CARDIN. Chairman Barrasso, first of all, thank you so 

much for holding this hearing. After GSA announced that they 

were terminating the consolidation of the FBI prospectus, you and 

I talked and you immediately offered to hold this hearing, and I 

want to thank you very much for that. I want to thank Ranking 

Member Carper for his cooperation in scheduling this hearing. 

I want to start by just expressing a great deal of frustration as 

to how this process has gone forward. The delay, the mixed messages that we have received on financing, and the ignoring of the 

action of this Committee and of Congress. As a result, there has 

been a waste of taxpayer money—significant waste of money—and 

we have compromised the FBI’s ability to carry out its critical mission. That is plainly unacceptable, and I think this Committee deserves an explanation. 

I hope today that there will be a way forward, that we can move 

toward a consolidated facility for the FBI in a very quick way, so 

that we can move on for the taxpayers of this country and the important mission that the FBI carries out. 

So let me elaborate on what I just said. 

The FBI has been in the Hoover Building since 1974. It lacks usable space. They are in 15 different leased locations around the 

District of Columbia, causing an inefficiency in their operations, 

additional costs to the taxpayers, an inability to collaborate, which 

is important for the FBI to carry out its function, and it lacks the 

security that is necessary for the FBI. All that is known; it has 

been known for many, many years. There were reports done 7 

years ago, 8 years ago. 

In 2011 the GSA, FBI came to this Committee and said we need 

help; do something about it. And in 2011—6 years ago, Mr. Chairman—this Committee took action. We passed a prospectus in 2011. 

That prospectus said very clearly you are directed to proceed with 

a private sector lease transaction on federally owned land for a consolidated headquarter facility. We recognized that. We gave you the 

authority. 

When we give you the authority, we expect that that is going to 

be carried out and that you are going to work with this Committee. 

So what happened next? Well, GSA and OMB said, no, we don’t 

want to use a leased facility; we want to pay for it up front. Now, 

that is a heavy lift, to put all that money in the budget, for Congress to be able to put in excess of $1 billion at the time, now close 

to $2 billion, into a budget in 1 year to pay for one consolidated 

facility. But that is what GSA and OMB wanted, so we proceeded 

with that. Congress cooperated. 

In fiscal year 2016, $390 million was put into the appropriation 

bill. In fiscal year 2017, $523 million additional dollars were put 

5 

into the appropriation process. In addition, the Appropriations 

Committee, in their report, made it clear that they would provide 

the additional moneys in fiscal year 2018 necessary to complete the 

project. And as the Chairman pointed out, this was based upon the 

exchange of the Hoover Building, which added additional resources 

to this project. 

In 2013 GSA went forward with the Request for Information. 

Three sites were selected; seven proposals were filed. And GSA 

came back to this Committee in 2016, said we should update the 

prospectus in order to comply with how GSA was proceeding. We 

passed a new prospectus for you in 2016, giving you all the authority you needed, so what happened next is very hard for us to understand. 

President Trump’s fiscal year 2018 budget contained zero for the 

FBI. We don’t exactly understand that if we are proceeding with 

a cash transaction. Congress was prepared to move forward, as I 

have already indicated, by the report language we put in and the 

moneys that we put in. 

And then what I don’t understand at all—and I hope this is explained to me—on July 12th, 2017, without notice to this Committee, GSA cancels the procurement. Cancels the procurement. 

OK, why? Not enough money appropriated by Congress? 

Well, the Congress put a large sum of money. The President said 

it didn’t need any more money, because he put no money in the fiscal year 2018 budget. Was it canceled because you want to go now 

to a lease arrangement? We gave you that authority in 2011, to use 

a lease authority. Why would you cancel and not come back to us 

and say we’re changing directions? Are you saying we don’t need 

a consolidated facility for the FBI? I hope that is not the case, because the FBI needs a consolidated facility. 

So I hope we get some answers as to why it was handled in this 

way. And how can we move forward in an appropriate way, but in 

a way that recognizes the NEPA studies have already been done 

on these three locations; we know about that. We already have a 

lot of the work done. 

I think GSA has created a legal problem now because of the word 

cancellation of the prospectus. I don’t understand why you did that, 

but maybe you can explain how we are going to move forward and 

how you are going to respect the will of this Committee and Congress. When we told you originally to use a lease purchase, you 

came back and said you wanted to use appropriations. We provided 

the money, and then you don’t go forward. 

I hope we get some answers. 

Senator BARRASSO. Thank you very much, Senator Cardin. 

We are now going to hear from our witnesses. 

We have joining us today Mr. Michael Gelber, who is the Acting 

Commissioner of the General Services Administration, Public 

Building Service; we have Mr. Richard Haley, who is the Assistant 

Director and Chief Financial Officer of the Federal Bureau of Investigation Finance Division; and Mr. David Wise, who is the Director of Physical Infrastructure Team of the General Accountability Office. 

I would like to remind the witnesses that your full written testimony will be part of the official hearing today, so I would ask that 

6 

you please keep your statements to 5 minutes so that we may have 

time for questions. 

Mr. Gelber. 

STATEMENT OF MICHAEL GELBER, ACTING COMMISSIONER, 

PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION 

Mr. GELBER. Thank you. 

Good morning, Chairman Barrasso, Ranking Member Carper, 

and members of the Committee. My name is Michael Gelber, and 

I am the Acting Public Building Service Commissioner of the U.S. 

General Services Administration. Thank you for the opportunity to 

testify today. 

I wish to discuss how GSA and the Federal Bureau of Investigation jointly determined that the J. Edgar Hoover Building no 

longer meets the needs of the FBI. I will also discuss why GSA initially used the exchange process to help obtain a modern replacement facility, but ultimately reached the decision to cancel the procurement. Finally, I will discuss how GSA and the FBI are working 

together to meet the FBI’s housing needs and mission requirements 

going forward. 

In 2011, in accordance with the resolution adopted by this Committee, GSA issued a Report of Building Project Survey. The report 

evaluated the following four strategies to deliver a modern headquarters for the FBI: Federal construction, lease construction, 

ground lease-leaseback, and acquisition by exchange. A 30 year net 

present value cost analysis of all four options determined that Federal construction was the most cost effective approach to provide a 

replacement consolidated headquarters facility to house the FBI. 

Under the present scoring rules agreed to by the Congressional 

Budget Office, the budget committees, and the Office of Management and Budget, a lease construction or ground lease-leaseback 

transaction would require full funding up front. A new FBI headquarters is a long term Federal need for which Federal ownership 

has been shown to be the lowest cost alternative. GSA seeks to develop Federal capital projects that allow GSA to meet agencies’ 

mission needs while pursuing the best value for the American taxpayer. 

To address Federal capital needs generally, GSA has a mechanism that is not being fully utilized, the Federal Buildings Fund. 

GSA has a significant backlog of unfunded capital projects resulting from less than full appropriation of the GSA rent collections in 

fiscal years 2011 to 2017. Full access to GSA rent collections for investment in capital projects is necessary to maintain the portfolio 

and deliver priority, mission critical Federal facilities. 

In parallel, GSA recognizes that up front funding can be viewed 

as an impediment to making key investments, but under the current scoring rules it is also the way for the Federal Government 

to record Federal spending. This Administration is considering a 

number of new Federal tools to support better decisionmaking 

while maintaining transparency and fiscal restraint. 

Given these facts, GSA determined that an exchange of the Hoover Building for a new facility of up to 2.1 million square feet was 

the most viable funding mechanism to consolidate personnel from 

7 

the Hoover Building and multiple leased locations at the lowest 

possible cost. The exchange process can facilitate the disposal of 

agency properties that do not meet the Federal need by allowing 

GSA to leverage its owned inventory to acquire new and more efficient facilities. 

GSA worked closely with the FBI, Congress, State and local governments, and the private sector to meet project milestones. To this 

end, GSA selected three preferred sites and a number of preferred 

developers. As part of this process, GSA also analyzed all three 

preferred sites pursuant to the National Environmental Policy Act. 

Earlier this year, GSA communicated that, should full funding be 

provided, we stood ready to select the developer and make an 

award. 

In May of this year Congress passed the Fiscal Year 2017 Omni- bus Appropriations Act. Under the Act, GSA received $200 million, 

and the FBI received $323 million of a combined $1.4 billion request. This resulted in a funding gap of $882 million from the requested level. 

Following the enactment of the Fiscal Year 2017 Omnibus, GSA 

considered various potential paths forward to address the project’s 

$882 million funding gap. After internal and interagency deliberations, GSA determined that moving forward without full funding 

would put the Government at risk for project cost escalations. Additionally, both GSA and the FBI expressed concerns about the potential reduction in the value of the Hoover property, since developers were scheduled to receive the property once the new FBI consolidated headquarters are completed. As a result, GSA decided, in 

consultation with the FBI, to cancel the procurement. 

It is fair to say that the cancellation of the procurement was not 

the desired outcome. Members of this and other congressional committees, along with Federal, State, local, and private sector partners, put a tremendous amount of time, energy, effort, and resources into delivering a modern FBI headquarters. 

At this time, GSA and the FBI are working together to meet the 

FBI’s short and long term housing needs and mission requirements. This review includes deciding what investments to make in 

the Hoover Building now that we know that the FBI will be housed 

there for longer than expected. Additionally, the FBI’s portfolio of 

leased space is being evaluated, as well as options to procure a new 

headquarters for the FBI. 

In closing, GSA is committed to carrying out our mission of delivering the best value in real estate. The need for the FBI to have 

a modern headquarters remains. 

GSA will continue to work with members of this Committee, the 

FBI, and others in the Administration and Congress to meet this 

need. 

I thank the Committee for the opportunity to testify today, and 

I look forward to answering your questions. 

[The prepared statement of Mr. Gelber follows:] 

8 


27509.001

Gelber became the 

Administration's Public Buildings 

the Service's Deputy Commissioner. 

this asslgnme•11t 

that position since January 20!3. 

Services 

The Public Buildings Service is one of the and most diversified public real estate 

or£~an:iza1:iorrs in the world. The supports the Federal Government by designing. developing, 

renovating, leasing, managing, and of a estate portfolio 370 million 

square of space located and leased properties United States. The 

Service is comprised of 5,000 Federal employees has an annual that exceeds $10 

billion. 

Prior current Gelber was 

Commissioner in Pacific Rim Region 

programs four westem states, American Samoa, 

and the Republic of Korea. Based San rnmc!So<J. 

billion in goods and 

His previous senior leadership positions included Regional in 

Region (based in Auburn, Washington) as Deputy Re&rional Administrator, Assistant 

Regional Administrator and Deputy Regional in the Great Lakes Region 

began career with General Services Administration 1988 as a Project 

and Facilities Planner. 

Gelber became a member of the Service in 2009. 

Presidential Rank Award of Distinguished Executive. Mr. Gelber 

University with bachelor's degree he attended the 

20 l 6 he received the 

graduate of Columbia 

of Chicago. 

U.S. General SaMees Administration 

1800 F NW 

Washington. DC 
9 


27509.002

STATEMENT OF MR. MICHAEL GELBER 

ACTING COMMISSIONER PUBLIC BUILDINGS SERVICE U.S. GENERAL 

SERVICES ADMINISTRATION 

BEFORE THE SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC 

WORKS 

August 2, 2017 

Good morning Chairman Barrasso. Ranking Member Carper, and Members of 

the Committee. My name is Michael Gelber, and I am the Acting Public Buildings 

Service Commissioner of the U.S. General Services Administration (GSA). Thank 

you for the opportunity to testify today. 

I wish to discuss how GSA and the Federal Bureau of Investigation (FBI) jointly 

determined that the J. Edgar Hoover Building (Hoover Building) no longer meets 

the needs of the FBI. I will also discuss why GSA initially' used the exchange 

process to help obtain a modern replacement facility, but ultimately reached the 

decision to cancel the procurement. Finally, I will discuss how GSA and the FBI 

are working together to meet the FBI's housing needs and mission requirements 

going forward. 

When the Hoover Building opened in 1974, it was originally designed to store 

vast amounts of paper documents and was constructed in such a way that 

makes it largely incompatible with today's work environment of close 

collaboration of various staffs and operations. More importantly, the size and 

scope of the FBI mission has evolved over time to focus on threats to our 

national security in addition to its law enforcement operations. 

Today, the Hoover Building accommodates only a portion of FBI's Headquarters 

staff in the Washington D.C. Metropolitan Area. The remaining FBI personnel 

are housed in numerous leased facilities throughout the area. The separation of 

personnel has resulted in duplication of some support functions at the different 

leased buildings thereby costing more to conduct operations than otherwise 

would be needed. 

In 2011, in accordance with a resolution adopted by this Committee, GSA issued 

a Report of Building Project Survey. The report evaluated the following four 
10 


27509.003

strategies to deliver a modern headquarters for the FBI: federal construction, 

lease construction, ground lease -leaseback and acquisition by exchange. A 30-

year net present value cost analysis of all four options determined that federal 

construction was the most cost-effective approach to provide a replacement 

consolidated headquarters facility to house the FBI in Washington, D.C. 

Given the fiscal environment at the time and a situation that remains to this day, 

GSA's inability to fully access the Federal Buildings Fund to finance capital 

projects, it was determined than an exchange of the Hoover building for a new 

facility of up to 2.1 million square feet was the most viable funding mechanism to 

consolidate personnel from the Hoover Building and multiple leased locations at 

the lowest possible cost. 

At the end of the exchange process, the selected developer would own the 

Hoover Building, and the federal government would own the replacement facility, 

the new FBI consolidated headquarters. 

It was and continues to be the goal of the Executive branch to invest in Federal 

capital projects in a way that allows the Government to pursue the lowest option 

and make critical capital investments in a transparent way, both of which are 

critical to making sure that we make the most efficient use of taxpayer dollars. 

Under the present rules agreed to by the Congressional Budget Office, the 

Budget Committees and the Office of Management and Budget, a leased or 

ground lease-leaseback transaction, as has been mentioned previously, would 

require full upfront funding. A new FBI Headquarters is a long term Federal need 

for which Federal ownership has been shown to be the lowest cost alte.rnative. 

To address Federal capital needs generally, GSA has a mechanism that is not 

being fully utilized: the Federal Buildings Fund. GSA has a significant backlog of 

unfunded capital projects resulting from less than full appropriation of the GSA 

rent collections in Fiscal Years (Fys) 2011-2017. Full access to GSA rent 

collections for investment in capital projects is necessary to maintain the portfolio 

and deliver priority, mission critical Federal facilities. In parallel, GSA recognizes 

that up-front funding can be viewed as an impediment to making key 

investments, but under the current scoring regime it is also the way which we 

transparently record Federal spending. This Administration is considering a 

number of new Federal tools to support better decision-making while maintaining 

transparency and fiscal restraint. 

2 
11 


27509.004

The exchange concept is one tool GSA employs to manage our real property 

inventory. This process can facilitate the disposal of agency properties that do 

not meet the federal need by allowing GSA to leverage its owned inventory to 

acquire new and more efficient facilities. This approach can also provide 

considerable savings to the taxpayer. 

GSA worked closely with the FBI, Congress, state and local governments, and 

the private sector to meet project milestones. To this end, GSA selected three 

preferred sites, and a number of preferred developers. As part of this process, 

GSA also analyzed all three preferred sites pursuant to the National 

Environmental Policy Act. Earlier this year, GSA communicated that, should full 

funding be provided, we stood ready to select a developer and make an award. 

In addition to the funding projected from the developer of the Hoover Building 

and Congressionally appropriated funding in FY16, GSA and FBI requested 

construction funding in the President's FY17 Budget totaling $1.4 billion 

GSA requested $759 million for the project, while the FBI requested $646 million. 

In May of this year, Congress passed the FY 2017 Omnibus Appropriations Act 

(the Act). Under the Act, GSA received $200 million and the FBI received $323 

million of a combined $1.4 billion request. This resulted in a funding gap of $882 

million from the request level. 

Following the enactment of the FY 2017 Omnibus, GSA considered various 

potential paths forward to address the project's $882 million funding gap. After 

internal and interagency deliberations, GSA determined that moving forward 

without full funding would put the Government at risk for project cost escalations. 

Additionally, both GSA and FBI expressed concerns about the potential reduction 

in value of the Hoover property since developers were scheduled to receive the 

property once the new FBI consolidated headquarters was completed. As a 

result, GSA decided in consultation with the FBI, to cancel the procurement. 

It is fair to say that the cancellation of the procurement was not the desired 

outcome. Members of this and other Congressional Committees along with 

federal, state, local, and private sector partners put a tremendous amount of 

time, energy, effort, and resources into delivering a modern FBI headquarters. 

At this time, GSA and the FBI are working together to meet the FBI's short- and 

long-term housing needs and mission requirements, that necessarily includes 

deciding what investments to make in the Hoover Building now that we know the 

3 
12 


27509.005

FBI will be housed there for longer than expected. Additionally, the FBI's 

portfolio of leased space is being evaluated as well as options to procure a new 

headquarters for the FBI. 

In closing, GSA is committed to carrying out our mission of delivering the best 

value in real estate. The need for the FBI to have a modern headquarters 

remains. 

GSA will continue to work with members of this Committee, the FBI, and others 

in the administration and Congress to meet this need. 

I thank the Committee for the opportunity to testify today and look forward to 

answering your questions. 

4 
13 


27509.026

Senate Environment and Public Works 

Committee 

Hearing entitled, "FBI Headquarters Consolidation Project- What Happened and 

What's Next" 

August 2, 2017 

Questions for the Witness Michael Gelber 

Chairman Barrasso: 

1. Mr. Gelber, I understand there will be several restrictions the D.C. government 

intends to impose on the land the Hoover Building currently occupies, should it ever 

be transferred or sold to a developer. Would you describe these restrictions, and how 

they might impact the value of the land the Hoover Building currently occupies? 

On January 6, 2017, the National Capital Planning Commission approved 

Square Guidelines for the two Squares (378 and 379) that the J. Edgar Hoover 

Building occupies on Pennsylvania Avenue and adjacent streets. The Square 

Guidelines dictate future development of the J. Edgar Hoover building site by 

regulating building density and use, maximum allowable height, circulation on 

and around the site, building offsets and upper story setbacks. The cumulative 

effect of the Square Guidelines on the value of the Government's asset may be 

negative. 

2. Mr. Gelber, is there any way for the FBI to reduce the costs for the new 

headquarters? If so, where do you think there are opportunities for cost-savings within 

the scope of this project? 

The General Services Administration (GSA) will work with the Department of 

Justice- Federal Bureau of Investigation (FBI) for ways for the FBI to reduce 

the costs associated with a new footprint. 

Ranking Member Carper: 

3. During this oversight hearing, in response to Chairman Barrasso's question, 

"Mr. Gelber, does the GSA intend to abide by the policy that's described by Mr. 
14 


27509.027

Short's letter of July 20th of this year?" your response was simply, "Yes". That letter 

is attached. In addition to that attachment, I have attached previous information 

requests. I am again requesting detailed, factual, complete and accurate responses 

to the inquiries in these letters. 

GSA responded to your previous requests for information on October 13, 

2017. 

4. On May 5, 2017, less than three months ago, Congress appropriated $523 million 

dollars for this project in the FY17 omnibus. On July 11, 2017, you terminated it. What 

changed in your analysis over 66 days that led you to terminate it after years of 

development, right after Congress invested more than half a billion dollars? 

After numerous internal and interagency deliberations, GSA determined that 

moving forward without full funding would put the Government at too great a risk 

for project cost escalations. Additionally, concerns were expressed about the 

potential reduction in value of the Hoover property since under the transaction, 

developers only receive the property once the new FBI consolidated 

headquarters was completed. As a result, GSA decided, in consultation with the 

FBI, to cancel the procurement. 

5. You have stated in staff briefings that you continue to affirm the need for a new 

FBI headquarters. If that is the case, why did the FY18 President's Budget include 

zero funds for it? 

Funding was not requested in FY18 in the expectation that the FY17 budget 

request would be fully funded. 

6. This project's procurement schedule has been delayed multiple times. 

Why did you terminate it this time and not simply delay it again? 

The decision to cancel the procurement was based on procurement realities and 

the gap of $882 million in FY17 appropriated funds. Moving forward absent full 

funding put the Government at too great a risk for cost escalations and further 

devaluation of the Hoover property which would further increase the overall cost 

of the project. 
15 


27509.028

7. What metrics can you point us to that show how investing in a building slated for 

demolition (and a dozen sites that a new HQ would consolidate) is a better long-term 

investment than building a new HQ? 

GSA agrees that a new consolidated FBI headquarters is a better long-term 

investment than maintaining FBI's current real estate portfolio of owned and 

leased properties in the National Capital Region. However, certain repairs must 

be made for continued occupancy of the Hoover building. 

8. Precisely who in each agency- FBI, GSA, OMB- made the decision to 

terminate the procurement? 

GSA coordinated this decision with the FBI. The GSA Contracting Officer 

made the decision to cancel this acquisition. 

9. Why was a decision of this magnitude made when neither FBI nor GSA has 

a Senate-confirmed executive? 

The decision to cancel the procurement was based on procurement realities and 

the gap of $882 million in FY17 appropriated funds. After numerous internal and 

interagency deliberations, GSA determined that moving forward without full 

funding would put the Government at too great a risk for project cost escalations. 

Additionally, concerns were expressed about the potential reduction in value of 

the Hoover property since under the transaction, developers only receive the 

property once the new FBI consolidated headquarters was completed. As a 

result, GSA decided, in consultation with the FBI, to cancel the procurement. 

10. The White House announced that Dan Matthews would begin as the Public 

Building Service Commissioner at GSA With senior leadership in place at GSA, what 

are the next steps to move this project forward? 

GSA and the FBI are currently working to identify acquisition solutions to meet 

the requirements of the new FBI headquarters. GSA and the FBI are working to 

report back to Congress by November 30, 2017. 

11. What is the Administration going to do with the funds that have already been 

appropriated for the project both to GSA and the FBI? (GSA has $275M and FBI has 

$638M) 
16 


27509.029

Currently, GSA intends to use these funds in support of the FBI headquarters 

project as appropriated. 

12. GSA and FBI had selected 3 sites for consideration for the project- 2 in 

Maryland and 1 in Virginia. Will those sites continue to be under consideration for the 

project as this process moves forward? Do you believe that GSA has the authority to 

select one of those sites as the process moved forward? Wouldn't it make sense to 

pursue these sites given that GSA has already begun to develop an Environmental 

Impact Statement for all 3 of these sites? 

The three identified sites will continue to be under consideration as the process 

moves forward. Yes, GSA has the authority to select a site. The ultimate location 

of the future headquarters facility will be governed by FBI's program of 

requirements, available funding, and circumstances surrounding a new 

procurement. 

13. One of the complaints of the previous process was that the combination of the 

exchange of the Hoover Building with the construction of the new FBI headquarters 

created unnecessary complication and also had the potential to diminish the value the 

government would get for the Hoover Building. Has the Administration contemplated 

a new process that would decouple the disposal of the Hoover Building from the 

construction of the new FBI headquarters? 

GSA is evaluating all options for a new acquisition strategy, including 

decoupling the disposal of the Hoover property from the construction of the 

new FBI headquarters. 

14. For the last several years, I have been a strong advocate for the Department of 

Homeland Security's Headquarters Consolidation at St Elizabeths. I firmly believe 

that finishing the DHS headquarters will improve our national security, increase 

morale and productivity at the Department, and save money for the taxpayers. 

To date, the St Elizabeths project has received $2.3 billion, or nearly two-thirds 

of the $3.7 billion estimated by the previous Administration needed to complete 

the project. The President's FY2018 budget proposes $135 million for GSA's 

portion of Department of Homeland Security (DHS) Consolidation at St. 

Elizabeths. Unfortunately, Congress did not appropriate any funds for this 

project in FY2017. 
17 


27509.030

a. Can you please share with me an update on progress at the site? Will the 

President's request for funding for FY 2018 keep the project on track for completion 

by 2021? 

The DHS HQ Consolidation at St Elizabeths is continuing to progress utilizing 

funds received during FY16. The funds are being applied to continue, and 

complete, both adaptive reuse and new construction projects for use by DHS. 

Currently, the Center Building, which will house the DHS Headquarters staff, is 

70 percent complete. The Central Utility Plant expansion, the West Addition, 

the Hitchcock Hall, and the Fence Relocation project are all actively under 

construction. As referenced above, Congress did not appropriate funds in 

support of the FY2017 GSA request for construction funding. In addition, the 

current request for $135 million in funding during FY18 is in support of 

identified infrastructure requirements on the West Campus. 

b. What else does Congress and the Administration need to do to ensure that the 

project remains on time and on budget? 

Congress will need to fund the President's budget requests to complete this 

facility. 

Senator Cardin: 

15. Mr. Gelber, the acquisition timeline, which was published in November of 2013, 

was revised at least eight times in four years: 

In the November 2013 version the "award date" was listed as 

summer 2015 

In the July 2014 version the "award date" was listed as spring 2016 

In the October 2015 version the term "award date" was replaced 

with "award contract subject to funding availability" and the date listed 

was November 2016 

In the January 2016 version the "award contract subject to funding 

availability" and the date listed was December 2016 

In October 2016 GSA announced that there would be no award 

by the end of 2016 and that the decision on the site and the bid would 

be made in March 2017 

In March 2017 GSA told Congressional staff that they can't 

move forward without full funding for the project 
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27509.031

In July 2017 GSA announced the cancellation of the procurement 

due to a lack of full funding DESPITE the fact that Congress has 

already appropriated $390 million in FY16, $523 in FY17 and 

committed to providing the rest in FY18 

Can you explain to the committee why GSA failed to meet almost every deadline that 

they set? 

In its March 10, 2017, FBI Headquarters Project Update, GSA stated, "We have 

met the milestones at this point. Appropriations are necessary in order for us to 

make an announcement and move forward with the next critical steps under the 

NEPA process and ultimately make an award." GSA stood ready to move 

forward with the procurement upon receipt of adequate appropriations. 

16. Mr. Gelber, how does GSA explain the current delay, which was based on risk to 

the taxpayer, in light of as much as hundreds of millions of dollars in higher costs that 

are likely to result from the $100 million in renovations GSA has already identified at 

the Hoover building plus the $55 million year in additional lease costs and the higher 

construction costs at the eventual building? 

The decision to cancel the procurement was based on procurement 

realities and the gap of $882 million in FY17 appropriated funds. 

After numerous internal and interagency deliberations, GSA determined that 

moving forward without full funding would put the Government at too great a risk 

for project cost escalations. Additionally, concerns were expressed about the 

potential reduction in value of the Hoover property since under the transaction 

developers only receive the property once the new FBI consolidated 

headquarters was completed. As a result, GSA decided, in consultation with the 

FBI, to cancel the procurement. 

17. Mr. Gelber, for how many years will the FBI need to stay in the Hoover building IF 

the headquarters procurement process gets back on track within the next year and 

utilizes one of the sites, one of the developers and the environmental study work from 

the cancelled procurement? For how many years will the FBI need to stay in the 

Hoover building if the headquarters procurement process gets back on track within the 

next year and does not utilizes one of the sites, one of the developers and the 

environmental study work from the cancelled procurement? 
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27509.032

The first scenario presented is no longer possible. GSA cancelled the 

procurement, thus the previously shortlisted developers no longer have standing 

as offerors. 

Regarding the second scenario, GSA and the FBI are currently working to 

identify the best acquisition solution to meet the requirements of a new FBI 

headquarters. GSA and the FBI are currently working to identify acquisition 

solutions to meet the requirements of a new FBI headquarters. GSA and the FBI 

are working to report back to Congress by November 30, 2017. 

18. Mr. Gelber, GSA chose to include an exchange of the Hoover Building in this 

procurement. This strategy, while within GSA's legal authorities, was extremely risky 

given the fact that this would have been the largest exchange ever undertaken by 

GSA and it significantly complicated the transaction because it prevented the 

developer from accessing the Hoover Building until it was empty. How did the 

utilization of the exchange authority play into the cancellation of this project? 

Given the fiscal environment at the time, GSA's inability to fully access the 

Federal Buildings Fund receipts to fund the project, GSA determined that an 

"exchange" of the Hoover building for a new facility of up to 2.1 million square 

feet was the preferred funding mechanism to consolidate personnel from the 

Hoover Building and multiple leased locations. 

19. Mr. Gelber, what internal conversations have taken place within GSA about the 

future of this project since the July 1Oth cancellation announcement? Have you had 

any formal or informal conversations with FBI staff? Have you had any formal or 

informal conversations with OMB staff? Have you had any formal or informal 

conversations with any developers? 

GSA and the FBI are currently working to identify acquisition solutions to meet 

the requirements of the new FBI headquarters. GSA and the FBI are working to 

report back to Congress by November 30, 2017. 

GSA met with the offerors to inform them of the decision to cancel this 

procurement. 

20. Mr. Gelber, will a restart of the process work off of the three sites and three bid 

teams-acknowledging their significant investments thus far-or will GSA go back to 
20 


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zero and start from scratch? Could a restart switch to the lease back scenario, which 

the FBI identified in 2011 as their preferred financing strategy? If not, why not? Will a 

restart utilize the environmental impact work from the first procurement? Do you have 

a timeframe for getting this procurement started again? 

GSA and the FBI are currently working to identify acquisition solutions to meet 

the requirements of the new FBI headquarters. GSA and the FBI are working to 

report back to Congress by November 30, 2017. 

Senator Harris: 

21. According to the latest 5-year capital project plan, Phase II of the Calexico West 

Land Port of Entry (LPOE) modernization and expansion project is the top LPOE 

construction priority for GSA. However, like the FBI Headquarters project, funding for 

Calexico West was not specifically enumerated in the President's fiscal year 2018 

budget request. Therefore, and in light of the decision to halt the FBI consolidation 

project, does GSA still view the Calexico West LPOE as a priority? If so, where does it 

fall on the agency's list of priorities? 

Funding was not requested in FY18 in the expectation that the FY17 budget 

request would be fully funded. 

22. If the project is, in fact, a top priority for GSA, are you willing to submit a budget 

addendum to Congress clarifying that the project is a top LPOE priority for the fiscal 

year 2018 budget cycle? 

GSA does not plan to request a budget addendum. 

23. To date, Congress has appropriated a significant amount of funding for the 

FBI consolidation project. Is there an expiration date that the GSA must use this 

funding? 

No, GSA's FY16 and FY17 FBI headquarters consolidation project 

appropriations were appropriated as "No Year" funds. 

24. According to your agency's website, GSA owns or leases 113 properties in 

the State of California. How many of those GSA sites are currently left unused? 
21 


27509.034

The vast majority of owned properties are actively used. There are some 

new port buildings at the San Ysidro and Calexico Land Port of Entries that 

are 'pending' while under construction. 

Additionally, GSA has three properties declared excess and in the disposal 

process, and two additional properties are being evaluated for potential disposal 

should GSA not identify a future Federal use. 

GSA also has 6311eases in California. Of the 631 leases, 141eases have 

vacancies. Of those, five small leases (below 10,000 square feet) are vacant as 

the occupying Federal agencies have exercised their rights to move from these 

locations. These leases are set to expire within the next two years. In all such 

cases, GSA pursues opportunities to backfill leased vacant space with other 

tenants. Where backfill opportunities do not exist, lease buyouts are considered 

and termination rights with the lessor are exercised. 

25. Does the GSA continue to pay for leases that go unused? 

Yes, until GSA can backfill the space or terminate the agreement. 

If so, what is the estimated cost that the Federal government pays annually for 

unused leases in California? 

The 141eases with vacancies have $7,505,111 in rent exposure. This figure 

represents less than 2% of the annual rent for leases in California totaling 

$434,212,959. 

26. What does the GSA do with unused properties that they own? Does your agency 

have plans to repurpose or transfer those existing properties? 

If an owned property is unused, GSA typically conducts a financial analysis on 

the following scenarios: (1) renovate the facility and collapse leased space into 

the building(s) and (2) dispose of the facility. The result of this analysis should 

determine the status of these properties. 

Transfer or disposal of unneeded property is governed by Title 40. 

27. The City and County of San Francisco (CCSF) has been in the process to acquire 

and develop surplus property managed by GSA to provide permanent supportive 
22 


27509.035

housing for over 2,000 chronically homeless individuals. Could you provide me with an 

update on the status of this transfer? 

Pursuant to the McKinney-Vento Homeless Assistance Act (42 U.S. C. 11431 et 

seq.), on August 8, 2017, the Department of Health and Human Services (HHS) 

approved the City of San Francisco's application subject to certain conditions, 

including the need to complete an environmental review and provide additional 

information on project financing. GSA is assisting HHS on completing the 

disposal subject to the identified site conditions. Upon successful completion of 

these requirements, the property could be transferred to CCSF at no cost ($0). 

28. Some of these federal facilities are suitable to be repurposed for other beneficial 

projects by our federal, state, local, and private partners. Therefore, could the GSA 

provide my office an assessment of all the unused federal sites in California? 

GSA currently has the following properties reported excess for disposal in California: 

• 1064-1068 Mission St (San Francisco): 2 parcels totaling 1.2 acres. 

• 620 Central Ave (Alameda): 5 buildings totaling 77,041 SF. Homeless 

application from one applicant due to HHS by October 16, 2017. 

• 15000 Aviation Blvd (Hawthorne): 216,102 SF. Currently 100 percent 

occupied but tenant is moving to another location in 2018. 

Senator Shelby: 

29. The Administration's July 11, 2017, decision to end the procurement for the new 

FBI headquarters consolidation project cited financial concerns as the underlying 

reason for the cancellation. This rationale was given despite the fact that the House 

of Representatives and the Senate Appropriations Committees affirmed this project 

by providing funding in the fiscal year 2017 Omnibus appropriations and, in the same 

bill, committed to moving forward with the remainder of the funding in fiscal year 

2018. 

a. Since Congress clearly endorsed the project, why was the lack of funding given 

as the sole reason by the Administration to terminate the procurement? 

The decision to cancel the procurement was based on procurement realities and 

the gap of $882 million in FY17 appropriated funds. GSA determined that moving 

forward without full funding would put the Government at too great a risk for 

project cost escalations. Additionally, concerns were expressed about the 
23 


27509.036

potential reduction in value of the Hoover property since under the transaction 

developers only receive the property once the new FBI consolidated 

headquarters was completed. 

b. Given the direction Congress provided in the FY 2017 Appropriations Omnibus on 

this project, which signaled a multi-year appropriation commitment, why was GSA 

unwilling to adapt to a modified appropriation profile to achieve a successful outcome 

especially since 10 years of planning and tens of millions of dollars have already been 

invested in this project? 

The decision to cancel the procurement was based on procurement realities and 

the gap of $882 million in FY17 appropriated funds. 

GSA determined that moving forward without full funding would put the 

Government at too great a risk for project cost escalations. Additionally, 

concerns were expressed about the potential reduction in value of the Hoover 

property since under the transaction developers only receive the property once 

the new FBI consolidated headquarters was completed. 

30. Due to the Administration's July 11, 2017, decision, the FBI is left with no plan for a 

new procurement for a consolidated headquarters, and no path forward on how to make 

its currently deteriorating headquarters facility structurally sustainable. A new plan is 

needed, but the timeline for creating one is unclear and the scope of lessons learned 

from the faulty original plan is unknown. 

a. How will the Administration adapt future procurement solicitations for such a 

large scale construction project given the reality that securing over $1.4 billion in a 

single fiscal year in this financial environment is clearly difficult? 

GSA and the FBI are currently working to identify acquisition solutions to meet 

the requirements of the new FBI headquarters. GSA and the FBI are working to 

report back to Congress by November 30, 2017. 

b. What new construction/leasing models is the Administration reviewing for 

procuring such a large-scale facilities project as this one? Is a public-private 

partnership model an option, and if not, why? Are you aware of other federal agencies 

that have the authority to utilize the public-private partnership model to meet their 

construction/leasing needs? 
24 


27509.037

GSA and the FBI are currently working to identify acquisition solutions to meet 

the requirements of the new FBI headquarters. GSA and the FBI are working to 

report back to Congress by November 30, 2017. 

GSA cannot speak comprehensively on what authorities other Federal agencies 

may have to utilize public private partnerships to meet their construction/leasing 

needs. 

31. GSA has not updated the long-term maintenance and refurbishment plan for 

the FBI's current headquarters since before 2006. GSA sidelined this assessment 

when the agency focused on the plan to procure a new building despite the fact 

that the current facility continues to deteriorate. 

a. Since the FBI will remain in its current headquarters for an extended time, when 

will GSA complete a new assessment of the FBI's current headquarters' facility? 

GSA and FBI are evaluating the Hoover property, and the approaches to 

implement any appropriate repairs. 

b. Since GSA is responsible for the maintenance and upkeep of the FBI's 

current headquarters, will the agency commit to the necessary funding to 

complete the repairs and refurbishment, and will the agency provide a funding 

profile to accompany the revised long-term maintenance plan? If not, why? 

GSA and FBI are evaluating the Hoover building to identify appropriate 

repairs. Upon completion of a review of the facility's needs, GSA and FBI 

will determine the appropriate path for funding the necessary actions. 
25 

Senator BARRASSO. Thank you very much, Mr. Gelber. 

Mr. Haley. 

STATEMENT OF RICHARD L. HALEY II, ASSISTANT DIRECTOR/ 

CHIEF FINANCIAL OFFICER, FINANCE DIVISION, U.S. FEDERAL BUREAU OF INVESTIGATION 

Mr. HALEY. Thank you, Chairman Barrasso, Ranking Member 

Carper, and members of the Committee for allowing me to appear 

before you today to discuss the importance of the FBI headquarters 

facility project. 

Sitting before you today, I represent a number of individuals at 

the FBI that have spent years of making this project a reality, a 

reality that we have not lost sight of despite this current setback. 

Mr. Chairman, as you and Senator Carper and Senator Cardin 

have mentioned, and I will just briefly reiterate, this Committee is 

very well aware the J. Edgar Hoover Building was designed in the 

1960s to meet an FBI mission of that time that was largely criminal in nature, most of which was done by each of our field offices, 

and the headquarters building was really just a national police precinct to coordinate those efforts. When occupied in the mid-1970s, 

nearly half of the building was designed for our laboratory functions, fingerprint operations, and paper records storage requirements. All of those functions have been moved decades ago. 

Today, in addition to the lack of infrastructure and security required to meet the mission needs, the building struggles to keep up 

with the organization’s need to continue to be more and more 

threat focused, intelligence driven, an organization that must be 

able to rapidly address developing threats and collaborate across 

multiple operational programs. 

Our headquarters is the hub of this coordination for intelligence 

and information sharing among our State, local, Federal, and international partners. It coordinates what is happening among our 56 

field offices and over 300 resident satellite offices across the country and more than 70 offices overseas where we liaison with our 

foreign partners. It also operates as the nerve center of the organization in times of national crisis or emergency during major cases 

and operations. The current structure of the J. Edgar Hoover 

Building does not allow for us to coordinate this effectively or efficiently. The building itself is not only inefficient, but the technology 

and the physical limitations continue to suffer. Everything takes 

more money and more time to get things done. 

Aside from the physical infrastructure, virtually all of the critical 

building systems—mechanical, electrical, and plumbing—have deteriorated and are either at the end of their life or beyond their 

useful life. 

While the FBI is disappointed the procurement that would have 

provided the FBI with a facility that meets our mission needs was 

canceled, it does not change the fact, as you have mentioned, that 

the FBI needs a consolidated, secure, resilient intelligence community-worthy facility, a facility capable of meeting the increased demands of the nation’s premier intelligence and law enforcement organization. 

In conclusion, the FBI’s requirements for enhanced safety, security, flexibility, and collaboration have not changed. How we 

26 

achieve this will need to be reexamined, as you have stated, to get 

to a successful outcome. Therefore, we appreciate your interest 

with this hearing and ask for your continued support. 

I am happy to answer any questions. 

[The prepared statement of Mr. Haley follows:] 

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Richard Haley 

Assistant Director 

FBI Finance Division 

Mr. Haley was appointed Assistant Director (AD)/Chief Financial 

Officer (CFO) of the FBI's Finance Division in February 2008 after 

serving as the Deputy AD/Deputy CFO for three years. He is 

responsible for the FBI's budget, procurement, and financial operations 

totaling over $8 billion. Mr. Haley received the FBI Director's Award 

for Excellence in Management in 2007 and a Distinguished Presidential Rank Award in 2008. 

Prior to joining the FBI, Mr. Haley served as the Deputy Budget Director for the Department of Justice, 

where he was responsible for financial oversight of the Department's law enforcement and litigating 

components. 

Mr. Haley also served as the Director of the Business Management Fund at the National Oceanic and 

Atmospheric Administration, U.S. Department of Commerce, where he oversaw the agency's Working 

Capital Fund. He began his government career as a budget examiner at the Department of Justice and the 

former Immigration and Naturalization Service. 

Prior to his civilian government career, Mr. Haley served as an Intelligence Officer in the U.S. Military. 

He has earned his Masters Degree in Public Administration and undergraduate degree in Political Science 

and Economics. 
28 


27509.007

ilepartntmt nf Justite 

STATEMENT OF 

RICHARD L. HALEY II 

ASSISTANT DIRECTOR 

FACILITIES AND FINANCE DIVISION 

FEDERAL BUREAU OF INVESTIGATION 

U.S. DEPARTMENT OF JUSTICE 

BEFORE THE 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

FOR A HEARING CONCERNING 

FBI HEADQUARTERS CONSOLIDATION PROJECT- WHAT 

HAPPENED AND WHAT'S NEXT 

PRESENTED 

AUGUST 2, 2017 
29 


27509.008

Statement of 

Richard L. Haley II 

Assistant Director 

Facilities and Finance Division 

Federal Bureau oflnvestigation 

Before the United States Senate 

Committee on Environment and Public Works 

August 2, 2017 

Good morning Chairman Barrasso, Ranking Member Carper and Members of the 

Committee. Thank you for the opportunity to appear before you today to discuss the need for a 

new Federal Bureau oflnvestigation Headquarters building in the Washington, D.C. area. I am 

pleased to appear before the Committee with my colleague from the General Services 

Administration. 

As the Committee is aware, the FBI has occupied the J. Edgar Hoover (JEH) building 

since 1974. Since that time, the mission ofthe FBI has evolved, but the building itself has not 

kept pace. Aside from the core headquarters staff located at JEH, the FBI also has staff in 

dispersed leased locations across the National Capital Region. Additionally, the building itself is 

literally falling apart as evidenced by crumbling facades and deteriorating infrastructure. This 

makes it difficult to address rapidly developing threats and collaborate across divisions and 

programs. Our Nation continues to face a multitude of serious and evolving threats ranging from 

homegrown violent extremists to hostile foreign intelligence services and operatives; from 

sophisticated cyber-based attacks to internet facilitated sexual exploitation of children; from 

violent gangs and criminal organizations to public corruption and corporate fraud. As an 

organization, we must be able to stay current with constantly changing and new technologies that 

make our jobs both easier and harder. Our adversaries -terrorists, foreign intelligence services, 

and criminals -take advantage of modem technology, including the Internet and social media, to 

facilitate illegal activities, recruit followers, encourage terrorist attacks and other illicit actions, 

and to disperse information on building improvised explosive devices and other means to attack 

the U.S. Keeping pace with these threats is a significant challenge for the FBI. The breadth of 

these threats and challenges are as complex now as at any time in our history, and the 

consequences of not responding to and countering threats and challenges have never been 

greater. Fighting the current threat, and preparing for the future wave of threats, requires cutting 

edge technology and the foundation for intelligence to flow in and out of the FBI seamlessly. 

Simply put, the J. Edgar Hoover building is obsolete, inefficient, and faces a number of security 

vulnerabilities. 

Aside from the operational shortfalls in the current facility, we also face infrastructure 

limitations. Because of the manner in which the building was constructed, retrofit efforts are 

costly, time-consuming and extremely disruptive. In addition, key components of the building's 

infrastructure have reached the end of their useful life. Providing for those building 
30 


27509.009

infrastructure needs to ensure the safety of employees, as well as the integrity of their work 

even in the short term, will have a cost. Security also remains a key challenge. The J. Edgar 

Hoover building does not meet Interagency Security Committee standards for an Intelligence 

Community-grade building. The building also lacks the resiliency necessary should a minor or 

catastrophic event occur. 

That said, the FBI has worked closely with our colleagues at GSA over the past decade to 

design a solution that meets the needs of the Bureau while recognizing the considerable 

challenges of funding such a large and complex project. GSA's Federal Building Fund is 

specifically authorized to provide for such unique- and clearly- governmental use-type 

building projects. However, the appropriations in recent years have not provided GSA full 

access to the rent resources collected to support capital projects such as ours. 

We were very encouraged that the procurement process resulted in considerable interestand investment- by the private sector to help secure a new headquarters facility. This private 

sector interest, however, has a shelf life and without the full funding that was requested through 

appropriations, FBI and GSA determined that continuing to move forward with this procurement 

without full funding at this time would have put the government at risk for project cost 

escalations and likely result in a devaluation ofthe Hoover property. For these reasons, FBI and 

GSA jointly made the decision to cancel the procurement. 

At this time, GSA and the FBI are working together to meet the FBI's short- and longterm housing needs and mission requirements. We will seek to determine what investments 

should be made to the Hoover Building and whether other government owned facilities and 

locations could be leveraged to provide for FBI support operations. We will also jointly evaluate 

the FBI's current portfolio ofleased space and think creatively and expansively. 

The FBI understands the increasing costs of Federal office space, as it leases more than 

350 locations nationwide for its field and satellite offices (through GSA). However, the FBI has 

made concerted efforts to reduce space requirements by consolidating case files and evidence 

storage in centralized locations in lower cost areas and minimizing personal workspace and 

common areas. Also, the FBI is in the process of moving and consolidating its data centers from 

costly leased locations in downtown areas to owned facilities in locations that have significantly 

lower costs of power and infrastructure. Moving forward, we anticipate that a new headquarters 

would dramatically reduce the total square footage and consolidate or eliminate the need for 

multiple lease locations in the National Capital Region and save tens of millions in annual lease 

payments. 

In summary, the J. Edgar Hoover building is incompatible with what the United States 

expects of the FBI. To protect this nation from the rapidly developing, evolving threats we face 

today, the FBI needs an environment in which its highly trained, skilled workforce can 

collaborate across divisions and programs to fashion solutions that mitigate today's threats. Our 
31 


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goal is to have built a consolidated, secure, resilient intelligence community-worthy facility. 

However, even more than that, what we need is a facility capable of meeting the increased 

demands of the Nation's premier Intelligence and Law Enforcement organization for the future 

of the FBI. This building will address the way we will work for the next 50 or more years. In 

doing so, we are building the security and safety of this nation by creating an environment where 

the men and women of the FBI can use their significant skills and abilities to live up to the 

sacred trust placed in us by the American people: to protect them from harm, and uphold the 

Constitution of the United States. 

While discontinuing the procurement is disappointing, the need for a facility that meets 

the mission requirements of the FBI has not abated. Chairman Barrasso, Ranking Member 

Carper, and Committee Members, I thank you for this opportunity to testify on the new FBI 

headquarters project. We appreciate your interest and support. I am happy to answer any 

questions you might have. 
32 


27509.038

QUESTIONS FOR THE RECORD 

RICHARD L. HALEY II 

ASSISTANT DIRECTOR 

FEDERAL BUREAU OF INVESTIGATION 

BEFORE THE 

COMMITTEE ON THE ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

FOR A HEARING ENTI'I'LED 

"FBIIIEADQUARTERS CONSOLIDATION PROJECT- WHAT HAPPENED AND WHAT'S NEXT" 

AUGUST2,2017 

Questions from Senator Cardin: 

1. Mr. Haley, what internal conversations have taken place within the FBI about the 

future of this project since the July lOth cancellation announcement? Have you had 

any formal or informal conversations with GSA staff? Have you bad any formal or 

informal conven~ations with OMB staff? 

Response: 

Between the July 10,2017 cancellation and the August2, 2017 hearing, the FB[ 

participated in conversations with both the General Services Administration (GSA) and 

OMB staff. Since that time, the team worked diligently to craft the "120-day report" 

committed to during the hearing and delivered that report to the EPW Conunittee on 

February 12, 20!8. 

2. Mr. Haley, the FBI's 2011 project building report recommended a Public~Private 

Partnership lease approach and the EPW Committee authorized a lease transaction 

which would result in eventual ownership. Can you explain how the FBI's preference 

was not reflected in the final procurement strategy? 

Resoonse: 

While all funding options were evaluated, Congress's enactment of a bill to lift the 

budget caps provided an unpre.cedented opportunity to fully fund the project. Therefore, the 

Administration submitted a revised FY 2018 request including $2.175 billion to fund ihe 

project. 
33 


27509.039

3. Mr. Haley, Congress has already appropriated $823(millionJ towa1·ds this project. 

Would the FBI be willing to accept a smaller building on a smaller lot that would 

accommodate fewer employees and not result in full consolidation if it meant getting the 

project started immediately and with significantly less uncertainty? If yes, would the 

FBI be willing to consider new sites or prefer the sites which were previously identified? 

Response: 

The purpose of a new headquarters facility is to provide the FBI with a modem, 

secure facility that will enable the FBI to fulfill its critical national security, criminal 

investigative, and criminal justice services missions and meet the expectations of the 

American public. To accomplish this goal, the FBI seeks to consolidate vital personnel 

currently housed in the J. Edgar Hoover building with other crucial staff spread throughout 

the national capital region in various leased locations. The FBI and GSA considered a range 

of options to meet the FBI's requirements. Toward that end and to best accomplish its 

mission, the FBI made the decision that staying in the Nation's capital and reconstructing a 

new headquarters facility on the existing J. Edgar Hoover site was the optimal alternative. 

4. Mr. Haley, 1 met recently with the FBI Director-nominee and he said that the last time 

he worked in the building was from 2001- 2005 "and even then the status quo was not 

remotely acceptable." Mr. Wray also said "One reason that the FBI has a different 

perspective about this process then GSA ill because the FBI folks have to live and work 

in the building. I am looking forward to getting briefed on this project." Mr. Haley, 

have you discussed the headquarters issue with Mr. Wray? Do you have any 

preliminary direction (rom Mr. Wray? 

Response: 

I have had an opportunity to speak in-depth with Director Wray about the New 

Headquarters project and he is committed to workingwith the Department of Justice, the 

GSA, the Administration, and Congress on a path forward. 
34 

Senator BARRASSO. Thank you, Mr. Haley. 

Mr. Wise. 

STATEMENT OF DAVID WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WISE. Chairman Barrasso, Ranking Member Carper, and 

members of the Committee, thank you for the opportunity to discuss our work on GSA’s efforts to consolidate the FBI’s headquarters and the challenges funding large real property projects. 

My statement will discuss three key points: the status of the FBI’s 

Hoover Building, GSA efforts to implement real property swap exchanges, and alternative approaches to funding real property 

projects. 

In November 2011 we reported that over the preceding decade 

FBI and GSA studies determined that the Hoover Building no 

longer fully supported the FBI’s long term security space and building condition requirements. Due to the lack of space, FBI functions 

have been disbursed in various annexes around the national capital 

region and other locations. In the 2011 report, we also noted that 

the condition of the Hoover Building was deteriorating, and GSA 

assessments identified significant recapitalization needs. 

In 2017 we reported that several FBI field offices are in facilities 

owned by foreign entities, which could present an added security 

risk. 

GSA proposed exchanging the Hoover Building, plus cash, to a 

developer in exchange for construction of a new headquarters 

building in one of three locations: Greenbelt, Maryland; Landover, 

Maryland; and Springfield, Virginia. However, in July 2017 GSA 

canceled the procurement because, according to GSA and FBI officials, they lacked the funding necessary to proceed. GSA officials 

stated that GSA and the FBI would continue to work together to 

address the space requirements of the FBI. 

GSA continues to face challenges related to funding new construction projects due in part to budget constraints. Using available 

legal authorities, GSA has proposed exchanging title to some federally owned real property for other properties or construction services, known as swap exchanges. This was the plan for replacing the 

Hoover Building. Such exchanges can be of equal value or can include cash to compensate for a difference in value between the Federal property and the asset or services to be received by the Federal Government. 

GSA has limited experience successfully completing swap exchanges and has only completed a few relatively small exchanges 

since 2001, both under $10 million. In our 2014 report, we reviewed five projects where GSA proposed and subsequently canceled swap exchange procurements. For example, GSA officials told 

us that there was little or no market interest in Baltimore and 

Miami properties. From 2012 to 2015 GSA pursued a large swap 

exchange potentially involving up to five properties in the Federal 

Triangle South area of Washington in order to finance construction 

of GSA headquarters and other Federal properties. In 2013 GSA 

decided to focus on exchanging only two buildings, the GSA Regional Office Building and the Cotton Annex. In February 2016 

35 

GSA canceled the procurement, stating that private investor valuations for the two buildings fell short of the Government’s estimated values, as well as the amount GSA required to complete its 

other projects. 

Subsequently, GSA officials noted that they planned to improve 

the swap exchange process, including property appraisals and outreach to stakeholders. However, several factors may continue to 

limit GSA. For example, the viability of swap exchanges may be affected by specific market factors, such as the availability of alternative properties. In addition, swap exchanges can require developers to spend large sums before receiving title to the Federal 

property used in the exchanges. 

In a potentially successful effort in January 2017, GSA agreed to 

a swap exchange with MIT for the DOT’s aging Volpe Center in 

Cambridge, Massachusetts. Per the agreement, MIT will construct 

a new DOT facility on a portion of the 14 acre site and will receive 

title to the remaining site. GSA indicated that the project, once 

completed, will provide $750 million in value to the Federal Government. 

Our prior work also identified a number of alternative approaches to funding real property projects, including long term operating leases, land swaps, retained fees such as user fees, and enhanced use leases. In March 2014 we reported that up front funding is the best way to ensure recognition of commitments made in 

budgeting decisions and to maintain fiscal controls. However, obtaining up front funding can be challenging. Congress has provided 

some agencies with specific authorities to use alternative funding 

mechanisms for the acquisition, renovation, or disposal of Federal 

real property without full up front funding. 

Projects with alternative funding mechanisms may present risks 

that are shared between the agency and the partner. Some of these 

mechanisms allow the private sector to provide the project’s capital 

at their cost of borrowing, which is normally higher than the Government’s. In some cases, factors such as lower labor costs or fewer 

requirements could potentially help balance the higher cost of borrowing. 

Our previous work also identified options for changes within the 

discretionary and mandatory sides of the budget structure. Alternative budgetary structures may change budgetary incentives for 

agencies and therefore help Congress and the agencies make more 

prudent long term fiscal decisions. 

Chairman Barrasso, Ranking Member Carper, and members of 

the Committee, this concludes my prepared statement, and I would 

be happy to answer any questions. 

[The prepared statement of Mr. Wise follows:] 

36 


27509.011

Dave Wise 

Director, Physical Infrastructure Team 

U.S. Government Accountability Office 

Dave Wise is a director in GAO's Physical Infrastructure team. 

Dave's main issue areas are federal real property, VA 

construction, and automotive technology. Dave began his career 

with GAO in 1981. From 1985-1989 he was assigned to GAO's 

Far East Office, based in Honolulu, HI. In 1990, Dave left GAO for the Department of State's 

Office of Inspector General, where he focused on Department counternarcotics programs. From 

2000 to 2006, Dave served as a Foreign Service Officer, completing three overseas tours, 

including (I) political officer, Embassy Hanoi. Vietnam; (2) director, Narcotics Affairs, Embassy 

Vientiane, Laos; and (3) political advisor, Provincial Reconstruction Team, Helmand Province, 

Afghanistan. Dave returned to GAO in 2007 for the senior executive training program, 

graduating in 2009. Dave has both bachelors and masters degrees from the University of 

Pittsburgh. He also studied abroad in England. 
37 


27509.012

For Release on Delivery 

Expected at 10:00 a.m. ET 

Wednesday, August 2, 2017 

GA0-17-783T 

United States Government Accountability Office 

Testimony 

Before the Committee on Environment 

and Public Works, U.S. Senate 

FEDERAL REAL 

PROPERTY 

Status of FBI 

Headquarters 

Consolidation and Issues 

Related to Funding Other 

Future Projects 

Statement of Dave Wise, Director, 

Physical Infrastructure 
38 


27509.013

Why GAO Old This Study 

GSA, which manages federat rea! 

prop~rty on behalf of other federal 

agencies, faces challenges ln funding 

new construction projects due to 

budget constraints-,including 

obtaining upfront funding-among 

other reasor~ One type of transaction, 

called a swap exchange, enables GSA 

to apply the value of federal property to 

finance construction without relying on 

appropriated funds. Under such an 

'exchange, GSA transfers ttle title of 

the unneeded property to a private 

investor after receiving the agreed 

upon construction serviCes at another 

location, GSA proposed a swap 

exchange procurement for construction 

of a new FBI headquarters building in 

exchange for the Hoover Building and 

appropriationS: to compeOsate for the 

dtfference in yalue between the Hoove-r 

Building and the new building, GSA 

cancelled this procurement in July 

2017 due to lack of funding, 

This statement addresses (1) GSA's 

and FBfs assessments of the Hoover 

Building, {2) GSA efforts to implement 

swap exchanges, and (3) a!tern':}tive 

approaches to funding real property 

projects. It is based on GAO's body of 

reports on real property from ZOt 1 to 

2017, and selected updates from GSA. 

What GAO Recommends 

GAO has· made recommendations in 

the past to GSA on various real 

property issues, including to develop 

additionaL guidance for swap 

exchanges·and to eval:uate Its 

approach to maintainli'tg the Hcioyer 

Building, GSA agreed with these two 

recommendations and addressed 

them. 

FEDERAL REAL PROPERTY 

Status of FBI Headquarters Consolidation and Issues 

Related to Funding Other Future Projects 

What GAO Found 

In November 2011, GAO reported that, according to General Services 

Administration (GSA) and Federal Bureau of Investigation (FBI) assessments, 

the FBI's headquarters building (Hoover Building) and its accompanying facilities 

in Washington, D.C., did not fully support the FBI's long-term securrty, space, 

and building condition requirements. Since GAO's report, the assessments have 

not materially changed, for example: 

• Security: GAO's prior work noted that the dispersion of staff in annexes 

creates security challenges, including where some space was leased by the 

FBI and other space was leased by nonfederal tenants. Earlier this year, 

GAO reported the FBI is leasing space in D.C. from foreign owners. 

Space: In 2011, GAO reported that FBI and GSA studies showed that much 

of the Hoover Building is unusable. GSA noted in its fiscal year 2017 project 

prospectus for the FBI headquarters consolidation that the Hoover Building 

cannot be redeveloped to meet the FBI's current needs. 

• Building Condition: In GAO's 2011 report, GAO noted that the condition of 

the Hoover Building was deteriorating, and GSA assessments identified 

significant recapitalization needs. Since GAO's report and in response to 

GAO's recommendation, GSA has evaluated its approach to maintaining the 

building and completed some repairs to ensure safety. 

GSA has limited experience in successfully completing swap exchange 

transactions and chose not to pursue several proposed swap exchanges, most 

recently the planned swap exchange for the Hoover Building, GSA has 

developed criteria for determining when to solicit market interest in a swap 

exchange, in response to recommendations in GAO's 2014 report. In addition, 

GSA officials told GAO that they planned to improve the swap exchange 

process, including the property appraisal process, outreach to stakeholders to 

identify potential risks associated with future projects, and to the extent possible, 

mitigate such risks. Nevertheless, several factors may continue to limit use of 

swap exchanges, including market factors, such as the availability of alternative 

properties and an investor's approach for valuing properties. For example, in 

reviewing a proposed swap exchange in Washington, D.C., GAO found in a 2016 

report that the proposals from two firms valued the two federal buildings involved 

in the proposed swap substantially less than GSA's appraised property value. 

In a 2014 report, GAO identified a number of alternative approaches to funding 

real property projects. Congress has provided some agencies with specific 

authorities to use alternative funding mechanisms-including the use of private 

sector funds or land swaps-for the acquisition, renovation, or disposal of federal 

real property without full, upfront funding, though GAO has previously reported 

that upfront funding is the best way to ensure recognition of commitments made 

in budgeting decisions and maintain fiscal controls. GAO has reported that 

projects with alternative funding mechanisms present multiple forms of risk that 

are shared between the agency and any partner or stakeholder. In addition, 

alternative budgetary structures could be established, such as changing existing 

or introducing new account structures to fund real property projects. 

-------------United States Government Accountability Office 
39 


27509.014

Chairman Barrasso, Ranking Member Carper, and Members of the 

Committee: 

Thank you for the opportunity to discuss our work on the General 

Services Administration's (GSA) efforts to consolidate the Federal Bureau 

of Investigation's (FBI) headquarters operations into a new location and 

the broader challenges associated with funding and budgeting for 

similarly large real property projects. GSA, which manages federal real 

property on behalf of other federal agencies, continues to face challenges 

related to funding new construction projects due to budget constraintsincluding obtaining upfront funding-among other reasons. According to 

GSA officials, funding has not kept pace with GSA's need to replace and 

maintain the approximately 1,500 owned buildings under its control. Using 

various available legal authorities, GSA has begun to exchange title to 

some federally owned real property for other properties or construction 

services. 1 

One type of transaction, called a "swap construct" exchange (or swap 

exchange), enables GSA to apply the value of federal property to finance 

construction needs without relying on appropriated funds. Under such an 

exchange, GSA transfers the title of the unneeded property to a private 

investor after receiving the agreed-upon construction services at another 

location. For example, in 2012 GSA exchanged a 5--acre property in San 

Antonio, Texas, for the construction of a new parking structure at a 

different location. Swap exchanges can be of equal value or can include 

federal appropriations to compensate for a difference in value between 

the federal property and the asset or services to be received by the 

federal government. 

GSA had proposed using a swap exchange for consolidation of the FBI 

headquarters operations into a new location in exchange for the existing 

FBI headquarters building (Hoover Building) in Washington, D.C., and its 

underlying land, but cancelled that procurement in July 2017. Specifically, 

GSA proposed construction of a new 2.1 million square foot consolidated 

headquarters building in one of three locations-Greenbelt, Maryland; 

Landover, Maryland; or Springfield, Virginia. As part of a swap exchange, 

the developer chosen to design and construct the new headquarters 

building would, in exchange, receive the Hoover Building site and 

1

See 40 u.s. c.§ 3304(a): 40 u.s. c.§ 3305(a)(1); 40 u.s. c.§ 3305(a)(2); 40 U.S. C.§ 

581(c)(1): 40 U.S. C.§ 543; Consolidated Appropriations Act of 2005, Pub. L. No. 108-447, 

div. H, tit. IV,§ 412, 118 Stat. 2809 (2004). 

Page1 GA0-17-783T Federal Real Property 
40 


27509.015

appropriated funds to compensate for the difference in value between the 

Hoover Building and the new building. However, in July 2017, GSA 

cancelled the project because, according to GSA and FBI officials, they 

lacked the amount of funding necessary to proceed with the 

procurement. 2 

The cancellation of the proposed FBI swap exchange has highlighted the 

continuing challenges GSA and federal agencies face for budgeting and 

funding real property construction projects. My testimony will address (1) 

GSA's and FBI's assessments of the status of the Hoover Building, (2) 

GSA efforts to implement swap exchanges to facilitate real property 

actions, and (3) alternative approaches to funding real property projects. 

My testimony summarizes the results of a number of our previous reports 

on real property utilization and management issued from 2011 to 2017. 

Detailed information on our scope and methodologies for this work can be 

found in these published products, which are cited throughout this 

testimony. In addition, this testimony includes some updates based on 

our follow-up with GSA on the status of our recommendations and 

information posted on GSA's website on the project's status. The work on 

which this statement is based was conducted in accordance with 

generally accepted government auditing standards. Those standards 

require that we plan and perform audits to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provided a reasonable basis for our findings and conclusions based on 

our audit objectives. 

2GSA requested $1.4 billlon for this project in its fiscal year 2017 budget request. 

Congress appropriated $523 million in fiscal year 2017 for the project 

Page2 GA0-17-783T Federal Real Property 
41 


27509.016

Prior GSA and FBI 

Assessments 

Showed That FBI 

Headquarters 

Facilities Did Not 

Fully Support the 

FBI's Long-Term 

Requirements 

In November 2011, we reported that over the previous decade, the FBI 

and GSA conducted a number of studies to assess the Hoover Building 

and its other headquarters facilities' strategic and mission needs. 3 

Through these studies, they determined the condition of the FBI's current 

assets and identified gaps between current and needed capabilities, as 

well as studied a range of alternatives to meet the FBI's requirements. 

According to these assessments, the FBI's headquarters facilities did not 

fully support the FBI's long-term security, space, and building condition 

requirements. Since our report, the assessment of the Hoover Building 

has not materially changed. For example: 

Security: Since September 11, 2001, the FBI mission and workforce 

have expanded, and the FBI has outgrown the Hoover Building. As a 

result, the FBI also operates in annexes, including some located in the 

National Capital Region. During our 2011 review, FBI security officials 

told us that they have some security concerns-to varying degreesabout the Hoover Building and some of the headquarters annexes. In 

our report, we noted that the dispersion of staff in annexes created 

securrty challenges, particularly for at least nine annexes that were 

located in multitenant buildings, where some space was leased by the 

FBI and other space was leased by nonfederal tenants. While this 

arrangement did not automatically put FBI operations at risk, it 

heightened security concerns. In addition, in January 2017, we found 

that the FBI occupies space leased from foreign owners in at least six 

different locations, including one in Washington, D.C. 4 Further, federal 

officials who assess foreign investments told us at that time that 

leasing space in foreign-owned buildings could present security risks, 

such as espionage and unauthorized cyber and physical access. 

Space: In 2011, we reported that FBI and GSA studies showed that 

much of the Hoover building's approximately 2.4 million gross square 

feet of space is unusable, and the remaining usable space is not 

designed to meet the needs of today's FBI. Moreover, the Hoover 

3

GAO, Federal Bureau of Investigation: Actions Needed to Document Security Decisions 

and Address Issues with Condition of Headquarters Buildings, GA0-12~96 (Washington, 

D.C.: Nov. 8, 2011). 

4GAO, Federal Real Property: GSA Should Inform Tenant Agencies When Leasing HighSecurity Space from Foreign Owners, GA0-17-195 (Washington, D.C.: Jan. 3, 2017). We 

recommended that GSA should determine whether the beneficial owner of high-security 

space that GSA leases is a foreign entity and, if so, share that information with the tenant 

agencies so they can adequately assess and mitigate any security risks. GSA agreed with 

our recommendation. 

Page3 GA0~17-783T Federal Real Property 
42 


27509.017

Building's original design is inefficient, according to GSA 

assessments, making it difficult to reconfigure space to promote staff 

collaboration. For example, in its fiscal year 2017 prospectus for the 

proposed FBI headquarters consolidation project, GSA noted that the 

Hoover Building was designed at a time when FBI operated 

differently, and it cannot be redeveloped to provide the necessary 

space to consolidate the FBI Headquarters components or to meet 

the agency's current and projected operational requirements. As a 

result, the FBI reported facing several operational and logistical 

challenges. We similarly noted in our prior work in 2011 that space 

constraints at the Hoover Building and the resulting dispersion of staff 

sometimes prevented the FBI from physically locating certain types of 

analysts and specialists together, which in turn hampered 

collaboration and the performance of some classified work. 5 

Building condition: In our 2011 report, we noted that the condition of 

the Hoover Building was deteriorating, and GSA assessments had 

identified significant recapitalization needs. At that time, we found that 

GSA had decided to limit investments in the Hoover Building to those 

necessary to protect health and safety and keep building systems 

functioning while GSA assessed the FBI's facility needs. We found 

that this decision increased the potential for building system failures 

and disruption to the FBI's operations. Given that the FBI would likely 

remain in the building for at least several more years, we 

recommended that GSA evaluate its strategy to minimize major repair 

and recapitalization investments and take action to address any 

facility condition issues that could put FBI operations at risk and lead 

to further deterioration of the building. In 2014, in response to our 

recommendation, GSA evaluated its strategy for the Hoover Building 

and determined it needed to complete some repairs to ensure safety 

and maintain tenancy in the building. For example, in 2014, GSA 

funded contracts to waterproof portions of the building's mezzanine 

level to prevent water intrusion into the building and repair the 

concrete facade, small sections of which had cracked and fallen from 

the building. 

In July 2017, GSA and FBI officials stated that they cancelled the 

procurement for the new FBI headquarters consolidation project, noting 

that the there was a lack of funding necessary to complete the 

procurement. GSA added that the cancellation of the procurement did not 

lessen the need for a new FBI headquarters, and that GSA and the FBI 

5GA0-12-96. 

Page4 GA0-17~783T Federal Real Property 
43 


27509.018

GSA Has Limited 

Successes in 

Completing Recent 

Swap Exchanges, but 

Has Plans to Improve 

the Process 

would continue to work together to address the space requirements of the 

FBI. 

In July 2014, we reported that the swap exchange approach can help 

GSA address the challenges of disposing of unneeded property and 

modernizing or replacing federal buildings. 6 GSA officials told us that 

swap exchanges can help GSA facilitate construction projects given a 

growing need to modernize and replace federal properties, shrinking 

federal budgets, and challenges obtaining funding. Specifically, GSA 

officials noted that swap exchanges allow GSA to immediately apply the 

value of a federal property to be used in the exchange to construction 

needs, rather than attempting to obtain funds through the appropriations 

process. In our 2014 report, GSA officials stated that the exchanges can 

be attractive because the agency can get construction projects 

accomplished without having to request full upfront funding for them from 

Congress. In addition, because swap exchanges require developers or 

other property recipients to complete the agreed-upon GSA construction 

projects prior to the transfer of the title to the current property GSA is 

exchanging, federal agencies can continue to occupy the property during 

the construction process for the new project, eliminating the need for 

agencies to lease or acquire other space to occupy during the 

construction process. 

GSA has limited experience in successfully completing swap exchange 

transactions and has cancelled several recently proposed swap 

exchanges. More specifically, in 2016 we reported that GSA had only 

completed transactions using the swap exchange authority for two small 

(under $1 0-million each) swap exchanges completed in Atlanta, Georgia, 

in 2001 and in San Antonio, Texas, in 2012. 7 Furthermore, GSA has 

faced a number of obstacles in its use of this authority. For example, for 

our 2014 report, we reviewed five projects identified since August 2012 in 

which GSA solicited market interest in exchanging almost 8-million 

square feet in federal property for construction services or newly 

constructed assets. However, GSA chose not to pursue swap-exchanges 

in all five of these projects, including the proposed FBI headquarters 

Federal Real Property: GSA Should Better Target Its Use of Swap-Construct 

Exchanges, GA0-14-586 (Washington, D.C.: July 24, 2014). 

7

GAO, Federal Real Property: ObseNafions on GSA's Canceled Swap Exchange 

Involving Buildings in the Federal Triangle South Area, GA0-16-571R (Washington, D.C.: 

June 16, 2016). 

PageS GA0·17·783T. Federal Real Property 
44 


27509.019

consolidation project. For example, GSA officials told us that there was 

little or no market interest in potential swap exchanges in Baltimore, 

Maryland, and Miami, Florida, and that GSA chose to pursue different 

approaches. Respondents to the solicitations for these two GSA swap 

exchanges noted that GSA did not provide important details, including the 

amount of investment needed in the federal properties and GSA's specific 

construction needs. In addttion, from 2012 to 2015, GSA pursued a larger 

swap exchange potentially involving up to 5 federal properties located in 

the Federal Triangle South area of Washington, D.C., to finance 

construction at GSA headquarters and other federal properties. In 2013, 

GSA decided to focus on exchanging two buildings, the GSA Regional 

Office Building and the Cotton Annex, based on input from potential 

investors. On February 18, 2016, GSA decided to end its pursuit of the 

exchange, saying in a memorandum supporting this decision that private 

investor valuations for the two buildings fell short of the government's 

estimated values' 

After the discontinuation of the Federal Triangle swap exchange project, 

we reported in 2016 that GSA officials noted they planned to improve the 

swap exchange process, including the property appraisal process, 

outreach to stakeholders to identify potential project risks for future 

projects, and to the extent possible, mitigate such risks. However, we also 

reported that several factors may continue to limit the applicability of the 

agency's approach. Specifically, the viability of swap exchanges may be 

affected by specific market factors, such as the availability of alternative 

properties. In addition, the specific valuation approach used by appraisers 

or potential investors may reduce the viability of the swap exchange. For 

example, in reviewing the proposed Federal Triangle project, we found in 

2016 that the proposals from two of the investment firms valued the two 

federal buildings involved in the proposed swap substantially less than 

GSA's appraised property value. 9 In addition, swap exchanges can 

require developers to spend large sums on GSA's construction needs 

before receiving title to the federal property used in the exchanges. We 

found in 2014 that GSA's solicitations have not always specified these 

construction needs in sufficient detail. 10 Consequently, developers may 

be unable to provide meaningful input, and GSA could miss swap 

8GA0-16-571R. In April2017, GSA fonnally transferred the title for the Cotton Annex to 

the highest bidder for the property, who submitted a bid of approximately $30 million. 

9 GA0-16-571R. 

10GA0-14-586. 

PageS GA0~17~783T Federal Real Property 
45 


27509.020

Various Alternative 

Funding Mechanisms 

for Federal Property 

Exist 

exchange opportunities. In 2014, we recommended that GSA develop 

criteria for determining when to solicit market interest in a swap 

exchange. GSA agreed with the recommendation and has since updated 

its guidance to include these criteria. 

In January 2017, GSA agreed to a swap exchange for the U.S. 

Department of Transportation Volpe Center in Cambridge, 

Massachusetts. After a competitive process, GSA selected the 

Massachusetts Institute ofT echnology (MIT) as its exchange partner for 

the existing Department of Transportation (DOT) facility. Per the 

agreement, MIT will construct a new DOT facility on a portion of a 14 acre 

site to which DOT has title and, in exchange, will receive title to the 

remaining portion of the site that will not be used by DOT, which is 

located near its main campus. GSA indicated that, once completed, the 

project will provide $750 million in value to the federal government in the 

form of the design and construction services and value-equalization funds 

from MIT. 

Our prior work has identified a number of atternative approaches to 

funding real property projects. 11 In March 2014, we reported that upfront 

funding is the best way to ensure recognrtion of commitments made in 

budgeting decisions and to maintain fiscal controls. 12 However, obtaining 

upfront funding for large acquisitions such as the Hoover Building 

replacement can be challenging. Congress has provided some agencies 

with specific authorities to use alternative funding mechanisms for the 

acquisition, renovation, or disposal of federal real property without full, 

upfront funding. Table 1 outlines selected funding mechanisms, and 

considerations for each mechanism we identified in our 2014 report. 

Some of these alternative mechanisms allow selected agencies to meet 

their real property needs by leveraging other authorized resources, such 

as retained fees or land swaps with a private sector partner. Funding 

mechanisms leverage both monetary resources, such as retained fees, 

and non-monetary resources, such as property exchanged in a land swap 

11 GAO, Capital Financing: Alternative Approaches to Budgeting for Federal Real Property, 

GA0-14-239 (Washington, D.C.: Mar. 12, 2014). 

12GA0-14-239. 

Page7 GA0·11-783T Federal Real Property 
46 


27509.021

or space offered in an enhanced use In some cases, the funding 

mechanism may function as a public-private partnership intended to 

further an agency's mission by working with a partner to leverage 

resources. Some of these mechanisms allow the private sector to provide 

the project's capital-at their cost of borrowing. The U.S. federal 

government's cost of borrowing is lower than the private sector's. When 

the private sector provides the project capital, the federal government 

later repays these higher private sector borrowing costs (e.g., in the form 

of lease payments). In some cases, factors such as lower labor costs or 

fewer requirements could potentially help balance the higher cost of 

borrowing, making partner financing less expensive. Our 2014 report also 

identifies budgetary options-within the bounds of the current unified 

budget-to meet real property needs while helping Congress and 

agencies make more prudent long-term decisions. 

13An enhanced use !ease allows an agency to lease out property and receive payment in 

cash or in kind (goods or services that result in direct cost savings to the government) 

from the lessee. GAO has done previous work on the Department of Veterans Affairs {VA} 

use of enhanced use leases to redevelop underutmzed federal rea! property. For more 

information, see GAO, Homeless Veterans.· Management Improvements Could Help VA 

Better Identify Supportive-Housing Projects, GA0-17-101 (Washington D.C.: Dec. 21, 

2016), and GAO, Federal Real Property: Improved Cost Reporting Would Help Decision 

Makers Weigh the Benefits of Enhanced Use Leasing, GA0-13-14 (Washington, O.C"' 

Dec. 19, 2012). 

PageS GA0-17-783T Federal Real Property 
47 


27509.022

Table 1: Selected Alternative Mechanisms for Funding Federal Real Property Projects and Considerations for Using Them 

Mechanism Description Considerations based on prior GAO work 

Operating71e-a-se-us-e-cd7to--A:-n-o_pe_;_ra7

ti-ng-l,-ea_s_e-g7

iv_e_s ""th-e-,fe-d=-e-ra7

1 ----,;W:;:-h-e-n -us-e-cd:-a-s7

in7te-n-cd::-ed=fo-r '-;shc-o-;rt7

-te_r_m_n_e_ed7 s-, -op-e-ra"ti'"'n::-g --

meet long-term need government the use of an asset for a leases are not alternative funding mechanisms. However, 

specified period of time, but the ownership operating leases-or successive operating leases-have 

Land swap 

Retained fees 

Enhanced use lease 

Source· GAO t GAQ.17-783T 

of the asset does not change. While there been used to help acquire assets for which there is a longare no specific time limits, an operating term need, resulting in inefficient resource allocation 

lease is not intended to be used for long- decisions. 

term property needs Operating leases used to consolidate space may require 

upfront costs (i.e., moving, space reconfiguration, furniture) 

but may result in long-term cost savings from decreased 

rental costs. 

A real property swap is an exchange 

of property owned by the federal 

government with either a private 

entity or a state or local government 

for another property. 

Proceeds that result from business-type or 

market-oriented activities with the public, 

such as the collection of user fees. 

An enhanced use lease allows an agency 

to !ease out property and receive payment 

in cash or in kind (goods or services that 

result in direct cost savings to the 

government) from the lessee. 

Use of !and swaps is limited by the need for well~a!igned 

mutual needs. Land swaps are generally non-cash 

transactions and thus are not recognized in the budget. 

Property swaps can relieve the federal government of 

maintenance and/or renovation costs and result in a real 

asset that may be used immediately with no additional 

appropriations required. However, determining fair value for 

the properties exchanged is not always a clear-cut process 

and congressional oversight of these exchanges is Hmited. 

The legislation authorizing these fees may assign them for a 

specific purpose without further Congressional action or 

require them to be appropriated in annual appropriation acts 

before they can be spent. In some cases, agencies have 

been authorized to retain earned fees to fund capital projects 

and improvements. 

The agency acts as the lessor rather than lessee. The 

project is limited by the need to find an appropriate partner 

Note: For more information on alternative funding mechanisms, and examples from our prior work, 

see GAO, Capital Financing: Alternative Approaches to Budgeting for Federal Real Property, 

GA0-14-239 (Washington, D.C.; Mar. 12, 2014). 

In 2014, we reported that projects with alternative funding mechanisms 

present multiple forms of risk that are shared between the agency and 

any partner or stakeholder. 14 Further, we noted project decisions should 

reflect both the likely risk and the organization's tolerance for risk. 

Incorporating risk assessment and management practices into decisions 

can help organizations recognize and prepare to manage explicit risks 

(e.g. financial and physical) and implicit risks (e.g. reputational). For 

14GA0-14-239. 

Page9 GA0~17~783T Federal Real Property 
48 


27509.023

GAO Contact and 

Staff 

Acknowledgments 

(102209) 

example, clearly defined lease terms may help agencies manage risks of 

costs for unexpected building repairs. Further considerations we noted in 

our 2014 report include the availability of an appropriate partner-and 

that partners should bring complementary resources, skills, and financial 

capacities to the relationship-and management of the relationship with 

that partner. 

While different funding mechanisms have been used as an alternative to 

obtaining upfront funding for federal real property projects, changes to the 

budgetary structure itself-within the bounds of the unified budget that 

encompasses the full scope of federal programs and transactions-may 

also help agencies meet their real property needs. Such alternatives may 

include changing existing or introducing new account structures to fund 

real property projects. Our previous work identified options for changes 

within the current discretionary budget structure and options on the 

mandatory side of the budget. 15 Alternative budgetary structures may 

change budgetary incentives for agencies and therefore help Congress 

and agencies make more prudent long-term fiscal decisions. 

Chairman Barrasso, Ranking Member Carper, and Members of the 

Committee, this concludes my prepared statement. I am happy to answer 

any questions you may have at this time. 

If you or your staff members have any questions concerning this 

testimony, please contact me at (202) 512-2834 or wised@gao.gov. In 

addition, contact points for our Offices of Congressional Relations and 

Public Affairs may be found on the last page of this statement. Individuals 

who made key contributions to this testimony are Mike Armes (Assistant 

Director), Colin Ashwood, Matt Cook, Joseph Cruz, Keith Cunningham, 

Alexandra Edwards, Carol Henn, Susan Irving, Hannah Laufe, Diana 

Maurer, John Martin, Monique Nasrallah, Matt Voit, Michelle Weathers, 

and Elizabeth Wood. 

15GAO* 14-239. For discretionary budget programs, Congress provides budget authority 

for programs ln annual appropriations acts. For mandatory Qudget programs, Congress 

provides budget authority for programs in laws other than annual appropriations acts. 

Page 10 GAOv17~783T Federal Real Property 
49 


27509.024

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27509.025

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51 


27509.040

Enclosure 

Senate Environment and Public Works Committee 

Hearing entitled, "FBI Headquarters Consolidation Project- What Happened and 

What's Next" 

August 2, 2017 

Questions for the Witness David Wise 

Chairman Barrasso: 

1. Mr. Wise, GSA recently auctioned the Cotton Annex in Washington, D.C. 

GSA had previously included this building as part of a swap exchange. 

However, GSA ultimately diverted from this approach because private 

investor valuations for the building fell short of the government's estimated 

value of the building. Is this an indication that direct sales of unneeded 

properties are a better approach for GSA to acquire value for its properties 

than swap exchanges? 

GAO Response: 

GSA's use of the swap-exchange and public sale represent two differing 

approaches to acquiring value for excess federal real property. The swapexchange approach allows GSA to transfer title of the federal property to the 

private investor as part of the transaction to finance construction services without 

relying on appropriated funds. However, GSA has limited experience in 

completing swap-exchange transactions. Moreover, as was the case during the 

proposed swap-exchange of the Cotton Annex, a swap-exchange transaction 

can be affected by competing valuations of the property. Similarly, the value 

received from the public sale of excess property, as part of the prescribed 

process for the disposal of federal properties, relies upon the market's valuation 

of the property. However, we have reported that this process can take years to 

complete. Furthermore, a public sale may not necessarily be the outcome of the 

disposal process, which may result in the transfer of the property for homeless 

housing use or other public benefit before the property is made available for 

public sale. 

2. Mr. Wise, what are alternative approaches that might be available for the 

government to capture the full value of the Hoover Building in exchange for 

construction of the FBI's new headquarters? 

GAO Response: 

If GSA determines that it is unlikely to get maximum value from the Hoover 

Building in a swap- exchange, it might consider a different approach. An 

approach that separates construction of the new FBI headquarters from the 

sale/disposal of the Hoover Building may help GSA obtain maximum value from 

the building. Pursuing upfront funding for construction of the new headquarters 

would position the agency to maintain fiscal control over the cost of constructing 

2 
52 


27509.041

a new headquarters building. We have previously reported that upfront funding is 

the best way to ensure recognition of commitments made in budgeting decisions 

and to maintain fiscal controls. 

Senator Cardin 

3. Mr. Wise, in October of 2015 the GSA's Inspector General issued a report 

summarizing the most significant management and performance 

challenges facing GSA including "significant challenges from the risks 

related to large-scale exchanges of real property." The IG noted that GSA 

has only conducted small-scale property exchanges in the past and both 

took several years to complete despite the advanced selection of the 

private sector developer. The report also noted that GSA is pursuing 

several large-scale exchanges, including for the FBI headquarters, which 

the IG viewed as "high risk projects" due to the "risks associated with 

being completed on time, on budget and in scope." "Exchanges may not be 

the most cost-effective option for the government due to their complexities, 

extended timeframes and associated risks. The federal government could 

potentially obtain a better deal for a new asset or construction services and 

potentially larger proceeds for the disposed federal property if it were to 

use traditional acquisition and disposal methods." 

a. Mr. Wise, in your opinion, what should the GSA have done with the 

concerns and recommendations which the IG listed? 

b. Should these concerns have been factored into the structure of the 

procurement process? 

GAO Response: 

GSA faces some key challenges in managing its federal real property portfolio, 

especially in disposing of unneeded federal property and financing the replacement 

or modernization of aging and underutilized properties. In some cases, the swapconstruct approach discussed in our 2014 report might be a useful means through 

which GSA can more readily achieve these property-related goals. However, as we 

reported in 2014, GSA has limited experience in completing swap-exchange 

transactions. In addition, we reported that GSA's recent solicitations for market 

interest in swap-construct have not always been well received by potential bidders. 

One concern for potential bidders was the lack of detail regarding the construction 

services that GSA hoped to gain in return for an asset it would cede to the bidder. 

We found that in developing initial proposals for a swap-construct exchange GSA 

often focused on identifying assets to dispose of and gave less attention to what it 

needed in exchange for those assets. Construction services or a newly constructed 

asset are fully half of any swap-construct exchange, yet GSA has not always clearly 

identified its needs when requesting feedback from potential bidders. Furthermore, 

because GSA did not have screening criteria to make its choices. we reported that 

GSA may have been pursuing swap-construct exchanges with less potential for 

success. and potentially delaying time that it could be spending on traditional 

disposal and appropriation processes. As a result, in 2014, we recommended that 

GSA include, to the extent possible, details on what GSA is seeking in exchange for 

3 
53 


27509.042

federal property in its solicitations, including requests for information, for potential 

swap-construct exchanges and develop criteria for determining when to solicit 

market interest in a swap-construct exchange. In response, GSA stated it would 

include detailed information on what it was seeking for swap-construct exchanges in 

requests for information whenever possible and updated its guidance to include 

criteria for determining when the agency should propose swap-construct exchanges. 

4. Mr. Wise, neither the Federal Property And Administrative Services Act of 

1949 nor the Public Buildings Act of 1959 regulates how GSA makes decisions 

about choosing financing vehicles, deciding which authorities to use, why and 

how to cancel procurements - and in the case of the FBI headquarters - how 

to re-start the project and which of the components of the last process will be 

included in the next process. It is my understanding that decisions about the 

structure of the procurement and the process are internal discussions at GSA. 

In your opinion, are current federal laws sufficient to securing transparency 

and accountability from GSA? 

GAO Response: 

GSA has been provided with a number of statutory authorities to acquire and 

dispose of federal real property and has the discretion to determine which is most 

appropriate to use in a specific circumstance. For leases and construction and 

acquisition projects above a certain dollar threshold, GSA is required to notify its 

oversight committees, and provide information regarding costs and risks of these 

high value transactions. If Congress believes there should be more oversight over 

innovative financing mechanisms, such as swap construct arrangements, it could 

impose, for example, additional congressional notification requirements for certain 

decision points pertaining to high value swap transactions. 

4 
54 

Senator BARRASSO. Well, thank you to all three of you. We will 

start with rounds of questioning. 

I would like to start with you, Mr. Gelber. So the project originally began in 2004. FBI Director Robert Mueller requested the 

GSA recommend a strategy for consolidating the FBI Headquarters. In 2011 this Committee passed a resolution directing the 

GSA to investigate the feasibility and the need to construct or acquire a new consolidated headquarters facility for the FBI. So it 

has been more than a decade. 

With the decision now to abandon the current procurement, are 

we back at square one? 

Mr. GELBER. Not quite at square one. We have learned quite a 

bit about the FBI’s requirements and the ability of the surrounding 

community—the District, Maryland, and Virginia—to support this 

requirement. But from a procurement standpoint we will need to 

initiate a new procurement. 

Senator BARRASSO. So then I guess Members of Congress and the 

public would want to know what happens to the millions of dollars 

that Congress has appropriated for this project. 

Mr. GELBER. Those funds are retained in the project budget. 

They are currently not being spent, and they are only able to be 

spent either on this project or in the event that either the GSA or 

the FBI come to Congress with a request to reallocate those funds. 

With congressional consent, we could then do that. But the money 

that has been allocated to this project can only be spent on this 

project. 

Senator BARRASSO. And since the process to exchange the Hoover 

Building for a new headquarters facility, since that began, that 

whole process for the exchange began, I think it has been unclear 

to many what the total cost for the project actually is, because it 

was a property exchange. 

So given the FBI’s requirements, in your best approximation, 

what is the actual current cost of the project, without a potential 

exchange factored into it? 

Mr. GELBER. I think our cost estimate centered around $1.6 billion and up. We have always been reluctant to express a specific 

cost because of the valuation of Hoover was something we wished 

the market to determine. But that would be a fair minimum. 

Senator BARRASSO. At $1.6 billion. OK. 

Mr. Wise, I understand the GSA used build-to-suit leases to acquire some of the FBI’s field offices across the country. Could GSA 

use a similar approach for the FBI Headquarters? 

Mr. WISE. Senator, yes, that is possible, but there are constraints 

to using that process as well, because one never quite knows who 

the owner is. As you heard in my statement, in 2017 we reported 

that there were several FBI leased buildings that were owned by 

foreign entities that were maybe or maybe not they were aware of. 

So that is an issue that certainly needs to be studied, especially in 

a sensitive agency like the FBI. 

Senator BARRASSO. Thank you, Mr. Wise. 

Mr. Haley, you know, considering that the Federal budget rules 

mandate that capital investments must be, I think, fully funded in 

advance and that OMB initially recommended that this project be 

rolled out in phases, would the FBI consider a phased approach for 

55 

this consolidation as a means to limit cost and comply with the 

Federal budget rules? 

Mr. HALEY. Sir, it was a topic early on we have talked about a 

lot. I think the concern with this project—and we are familiar with 

a number of the construction projects that our appropriations committees have provided us funding for. You would be familiar with 

our SEGUS facility out in West Virginia, our operations down at 

Quantico where you are talking about large thousand acre sites 

where you can segregate off or partition off areas where construction and laydown can occur. 

These sites, in some ways, are so small, all three of them, that 

to put a building into place and to operate that building with top 

secret and classified information, and at the same time be trying 

to run a construction site, that was always a concern for us. It was 

also a concern that we not necessarily get to a full consolidation, 

that somehow that partially be completed and in some state of 

completion, and that doesn’t necessarily get us to a better situation 

than we are right now with facilities. So incremental funding was 

not necessarily a problem, where we got money over multiple years 

and then to execute the project, but we were concerned about a 

partial moving forward through phases. 

Senator BARRASSO. And Mr. Gelber, news of the decision to cancel the procurement first broke through various media outlets the 

day before GSA gave an official notice to the Members of Congress 

and the staff. It is unfortunate that members of this Committee, 

the authorizing body for GSA on this project, had to learn of this 

sudden decision in the press. Do you agree that GSA should have 

alerted its authorizing committee in advance, and would you pledge 

to keep us informed of major decisions in the future? 

Mr. GELBER. Yes. But I will also add that the disclosure to the 

media prior to the official announcement to the various congressional committees was not an authorized disclosure and was not 

part of GSA’s plan to inform individuals about our decision. 

Senator BARRASSO. Senator Carper. 

Senator CARPER. Thanks for your testimony here today. 

I mentioned earlier the project and consolidating much of Department of Homeland Security at a site called St. Elizabeth’s in 

Washington, DC, and I am trying to draw a parallel between that 

project and this project. In that project, the decision was made, 

with the help of GSA, to bring many of the far flung assets and 

operations of GSA not under one roof, but at one site, St. Elizabeth’s, St. Elizabeth’s campus, which used to be, for many years, 

a psychiatric hospital for a long time. And that project is being 

funded over several years. It actually goes through a couple different appropriation committees for GSA and partly for the Department of Homeland Security. 

I am trying to figure out what could be an analogy. For example, 

after having invested hundreds of millions of dollars in this project, 

we can actually see the end not too far down the line for actually 

completing it, if the Administration were to come in and say zero 

funding, we are asking for zero funding to complete this project, 

that would send, frankly, an alarming message to us. The Department says they need the money; GSA says it is a cost effective way 

to provide their quarters, their operation; and the Administration, 

56 

frankly, has not been generous in their request for continuing the 

St. Elizabeth’s redevelopment, but I think at least in one regard 

they have asked for some money. 

This just seems strange to me, the FBI. This just doesn’t seem 

right. And everybody acknowledges that the Hoover Building is 

falling down. I think you can drive by and you see the netting 

where the pieces are literally coming off of the building. And yet 

we have an Administration that says after all these years of the 

work to get us to this point, we don’t think we ought to fund it, 

and it shouldn’t go forward, and that is it. I am not aware of any 

consultation. It just doesn’t pass the smell test. 

And I would just ask, maybe for Mr. Haley, could you tell the 

Committee who at OMB was involved in this decision? And do you 

know if this included anyone maybe from the White House? 

Mr. HALEY. First, I would say your analogy with St. Elizabeth, 

which we looked at quite a bit, from an FBI perspective on that, 

we saw the Coast Guard, which was a complete effort on that site 

to be more kind of in link with the FBI. You have an agency that 

moved on to a department site, but it was a complete agency build 

more than multiple department pieces. So that is how we looked 

at it. And our concern was that we end up in a phased approach 

where we are still all over town, and even maybe stretched in different ways. 

The conversations with GSA, which have been the conversations 

that have led to this decision, and from our standpoint the exchange does make it, the procurement made it very risky from our 

standpoint. With everything said about needing a new building and 

the eagerness of the FBI especially to get into a new building as 

soon as possible was overwhelming. But at the same time, the way 

the exchange was done, without the full funding up front, and this 

project, through briefings and our own design and working with 

GSA, was always getting all that funding to be able to move forward. The exchange only works when we get out of the Hoover 

Building. As long as we are in the Hoover Building, it depreciates 

the value, and it also creates complexities in how the developers 

were going forward. 

So that conversation back and forth with GSA leading up to the 

decision, our conversations with our own direct oversight at OMB, 

and they were aware of the decision. I am unfamiliar with anything above that within the Administration that occurred, but from 

an FBI standpoint, GSA is our landlord. We have hundreds of facilities across the country. We are opening up a field office in Atlanta next month. It is going to be an amazing facility. We have 

operations that have recently opened up in Boston and out in Sacramento. These are amazing buildings. Albeit they are leased facilities; they are amazing buildings, and they allow our operation to 

go forward. 

So this was really a GSA-FBI coordination, and from our standpoint, the risk of either getting a piece of property that would stay 

dormant for 10 or 15 years—— 

Senator CARPER. I am going to stop you. I am going to stop you, 

OK? My time is limited. Can you tell the Committee who at OMB 

was involved in this decision? Do you know if it included anyone 

from the White House? 

57 

Mr. HALEY. In terms of briefing, it would have been our branch 

personnel and GSA’s branch personnel within OMB would be the 

individuals that we would have met with. 

Senator CARPER. And I have just a yes or no question I would 

like to ask of Mr. Gelber. As you heard, there were many bipartisan concerns and questions about the GSA decision to end the 

procurement process for the consolidation of the headquarters, and 

I imagine you don’t have time to answer all those questions today. 

In fact, I am sure we won’t have time to ask or hear answers for 

all these questions today, so I am just asking you on a yes or no 

basis, do you commit to fully respond to questions for information 

from any member of this Committee so that we can perform our 

oversight duties? Yes or no? 

Mr. GELBER. GSA will respond to questions from the Chair, yes. 

Senator CARPER. Only the Chair? 

Mr. GELBER. GSA’s response will be in line with the current Administration’s policy on responding to oversight. 

Senator CARPER. Let me just say something, if I could. I would 

say this to my Republican colleagues as well. How would you like 

it if the Democrats had the White House, the majority in the House 

and the majority in the Senate, and we had an Administration with 

a policy that said we are not going to respond to your questions 

when you try to do your oversight? You would be outraged. 

This is outrageous. We cannot stand for this. Our job is to do 

oversight. And for our colleagues to sit here and just listen to this, 

I can’t believe this. Golden Rule, treat other people the way you 

would—how would you like to be treated that way? Well, you 

wouldn’t like it. We need to hear your voices on this. This is outrageous. 

Senator BARRASSO. Senator Rounds. 

Senator ROUNDS. Thank you, Mr. Chairman. 

I agree with Senator Carper, we did not like it. Let me begin just 

by asking—— 

Senator CARPER. Can I just interrupt for a moment? I want to 

say I spent a whole lot of time with the last Administration trying 

to make sure your questions from the Republican side were answered, a lot of time, and I think with some success. 

Senator ROUNDS. I appreciate your comments. I agree with your 

concern, because we did not like it. 

Let me continue on and just touch on a couple of items. No. 1, 

I am just curious. With regard to a desired location, right now is 

there a specific desired location that has been determined for a new 

facility? 

Mr. GELBER. If the question is directed to me, sir, no, there is 

no specific location that has been identified. 

Senator ROUNDS. So we still have three that we have looked at, 

but we do not have an identifiable location at this point for a new 

facility? 

Mr. GELBER. That is correct, sir. 

Senator ROUNDS. OK. I understand that we are not at square 

one, but it sounds like we are very close to square one. 

If we were to look at the total values involved in this, we would 

be talking about the value of a new facility, which I assume would 

allow us to consolidate a number of the FBI facilities that we are 

58 

currently leasing, 15 facilities that are involved in this. Would 

those 15 facilities then be available or not having their leases renewed, is that a fair statement? 

Mr. GELBER. It is, sir. 

Senator ROUNDS. OK. In doing so, are these owned buildings or 

are these leased facilities? 

Mr. GELBER. The leased facilities are leased by the private sector 

and leased by the Federal Government, by GSA. 

Senator ROUNDS. So GSA is currently making payments on those 

so that those payments are now reconcilable or at least those are 

recognized in the process. If we build a new building, and we actually fully fund it up front, those lease payments basically go away, 

fair to say? 

Mr. GELBER. That is correct, sir. 

Senator ROUNDS. So there is an ongoing cost savings that can be 

basically applied toward this new location once it is determined. 

Mr. GELBER. That is correct, sir. 

Mr. HALEY. Sir, one of the original justifications for the new 

building in the consolidation, there were tens of millions of dollars 

in lease payments and other security costs and everything from 

each of those separate leased sites that we would have been able 

to stop paying as we would roll those into a campus environment. 

Senator ROUNDS. But that still exits. 

Mr. HALEY. Yes, sir. 

Senator ROUNDS. OK. The value of the Hoover Building, the current value of the Hoover Building today, what is it? 

Mr. GELBER. Sir, that is subject to the way that the Hoover 

Building would be disposed of, and we have been reluctant to speak 

in a public forum about the value of the building because we feel 

it may affect any future procurements regarding the disposal of 

that building. 

Senator ROUNDS. If you were to build a new facility today, what 

is the timeframe for building that type of a facility? 

Mr. GELBER. It could take between 5 and 7 years, sir, including 

the move. 

Senator ROUNDS. So we are actually talking about trying to determine what the value of the Hoover Building is at some point in 

the future in terms of a payback or at least a partial offset of the 

costs that we are putting in now. 

Mr. GELBER. That is one of the factors that is being considered, 

sir. 

Senator ROUNDS. Mr. Gelber, you mentioned that the CBO was 

involved in the discussions beginning back in 2011. Could you 

share with us a little bit more about their involvement and share 

with us once again the concern that they expressed about having 

resources available? Can you kind of clarify that a little bit, what 

CBO’s position was? 

Mr. GELBER. The Congressional Budget Office role is to score or 

account for these types of major Federal capital investments, and 

their approach—as similar to budget committees and the Office of 

Management and Budget—is that a major initiative of this nature 

must be scored or accounted for in the initial year of the transaction. So even though the Government is making payments in a 

59 

lease scenario over a period of 20 years, all the cost of that lease 

must be accounted for in the original year of the lease. 

Senator ROUNDS. Have you ever worked with CBO on other 

projects similar to this before? 

Mr. GELBER. More appropriately, I believe, the Office of Management and Budget works with the Congressional Budget Office, but 

we have not directly worked with them. 

Senator ROUNDS. What was the impact, what was the impact of 

the CBO determination as to that process in terms of making this 

project workable or not under the original format? 

Mr. GELBER. Under the original format, the project would score, 

again, all the funding of the entire project scores in the initial year, 

so we are looking at a up to $2 billion cost that has to be accounted 

for in one budget cycle. 

Senator ROUNDS. Making it rather difficult to achieve. 

Mr. GELBER. Yes, sir. 

Senator ROUNDS. Interesting. So part of what we should be talking about is if we are looking at any types of arrangements like 

this again in the future, we recognize that we have another hurdle 

that we have to go through in terms of making that type of a process work for other smaller projects. Now, I understand that when 

you are talking about a case of where you are leasing it, and then 

you are going to try to sell the property that you have for future 

value, that most certainly it seems as though the time value here 

got away from us because of the size of the project. 

Mr. Wise, you mentioned that a little bit in terms of if you are 

looking at actually leaving the Hoover Building for a period of time, 

it means that whoever was going to buy it from you would not have 

access to that property for an extended period of time in part because of the large size and extended time for creating this new facility. Fair statement? 

Mr. WISE. Yes, sir. And one of the things that I think made the 

swap exchange idea especially challenging for the Hoover Building 

is that, as you kind of allude to and what you are saying is there 

is a long time lag between the time that developers expected to 

build the new FBI building until he gets title to the FBI’s Hoover 

Building and the site around it. So a developer has to have pretty 

deep pockets to be able to get engaged in a project like that. 

So one of the things that we had talked about in our report was 

you need to look at trying to tighten or lessen the time lag so that 

the relative value of the Hoover Building will not deteriorate so 

much, because it will decline. The longer the time lag, the less 

value the building is to the developer because he is waiting and 

waiting and waiting. In the meantime, he is building something. 

Senator ROUNDS. I appreciate that. Thank you. 

My time has expired, but Senator Carper had mentioned this, 

and I just want to come back. Long term, if we really want to make 

sure that these projects are defensible by both the majority and the 

minority party, I think an effort and an interest in cooperating in 

giving data back to both the majority and the minority members 

on any committee most certainly lends to the ability of cooperation 

that makes things a whole lot easier to get done in this body. 

We saw it; it was frustrating for us as well with the previous Administration on a number of counts. It is something that I think 

60 

Senator Carper brings up here, and I think it should be something 

that should be seriously considered with regard to getting these 

projects moving, because, as the Ranking Member indicated, being 

able to get data and to feel comfortable with the information you 

are receiving makes things go a whole lot easier if you are able to 

get responses back through. 

Senator CARPER. Would Senator Rounds yield for just a moment? 

Senator ROUNDS. My time has expired, but I will—— 

Senator CARPER. Mr. Chairman, can I have 1 minute? 

I just want to thank you for what you have just said. I can’t tell 

you how many times, especially on the Committee on Homeland 

Security, which I was privileged to Chair for a couple of years, how 

many times we said at hearings like this what can we do to help 

you do your jobs better, whoever was before us as the Federal 

agency. 

More times than I can count, the word was a one word answer: 

oversight. Do your job. Oversight. And that is what we need to do. 

And there were times when folks in the Obama administration 

were not prompt or fully forthcoming in responding, but I don’t 

ever remember an Administration that had a policy from the Administration that said you don’t have to respond to anybody doing 

oversight except the Chairman of a committee. It is a dangerous 

situation because if the White House, if the President is a Democrat, and the minority are Republicans, the folks that are usually 

on the outside, not in the White House, they are likely to do better 

oversight over the Administration. You know that, and I know 

that. And for us to have a policy from an Administration that says 

we are only going to respond to inquiries from the Chairman in the 

majority, that is a dangerous precedent, a very dangerous precedent. 

Thank you. 

Senator ROUNDS. Well, let me just add, before calling on Senator 

Cardin, that I stated before the Administration should and has a 

responsibility to be responsive to requests by all members, and I 

would note that Marc Short, who is the White House Director of 

Legislative Affairs, recently wrote to Chairman Grassley of his 

committee stating, ‘‘The Administration’s policy is to respect the 

rights of all individual members, regardless of party affiliation, to 

request information about executive branch policies and programs.’’ 

And I am going to ask unanimous consent that letter be admitted 

into the record without objection. 

Mr. Short’s letter goes on to say that ‘‘The Administration will 

use its best efforts to be as timely and responsive as possible in answering such requests.’’ 

[The referenced information was not received at time of print.] 

Senator BARRASSO. So, Mr. Gelber, does the GSA intend to abide 

by the policy that is described by Mr. Short’s letter of July 20th of 

this year? 

Mr. GELBER. Yes. 

Senator BARRASSO. All right, thank you. 

Senator Cardin. 

Senator CARDIN. Thank you, Mr. Chairman. 

Senator CARPER. I just want to say thank you. 

61 

Senator CARDIN. Thank you, Mr. Chairman. And I have been on 

this Committee now almost 11 years, and I don’t remember ever 

having any disagreements in regards to our oversight of GSA, and 

we have always worked in a non-partisan way because we are trying to get the best deals for the taxpayers of this country. So I expect that will be continued. And I tend to work through staff with 

Senator Barrasso’s and Senator Carper’s staff on a request for information from GSA as relates to the FBI procurement, because I 

think there are additional documents that would be useful for us 

to see, and I will work with the Chairman so that this will be, I 

hope, a mutual request. 

Mr. Gelber, I want to work with you here. I am really trying to 

get things done here, and I don’t understand ‘‘almost square one.’’ 

If I understand your authority, you could select a site today. There 

is no problem with the authority to announce a location. I understand because you canceled the procurement, you need to now explain the rules that you are going to operate and give developers 

an opportunity to come forward. By narrowing it to one of the three 

locations, the NEPA has already been done, so that expedites the 

process. 

So where am I wrong why you cannot move this a lot faster than 

you just said? 

Mr. GELBER. We could in fact select a site, as you stated. Our 

concern is without the full funding and the structure of the procurement that we were operating under, we had no assurance of 

being able to complete—— 

Senator CARDIN. All right. OK. I just want to make sure you 

could move quicker. Congress can help you in those decisions. It 

would have been, I think, very helpful for us if, before you terminated, you would have met with and talked with the people who 

have been involved in authorizing and funding this program moving forward, because I point out the difference between an operating and capital lease could be defined in different ways, which 

raises questions as to whether we should approve lease prospectus 

moving forward where there isn’t a full funding throughout the entire term, because you characterize it as an operating lease. We 

might think it is a capital lease. 

So I think you are raising an issue here which could jeopardize 

the ability of our agencies to have adequate facilities, so work with 

us. I don’t think anybody on this Committee wants to delay the 

FBI having an adequate facility. No, we don’t want to wait 5 or 6 

years. We can get it done sooner. But work with us in that regard. 

We want the best location, the best facility, the most efficient for 

the taxpayers in this country, and this Committee will work with 

you in that regard. 

I must tell you, do you have any idea how much money has been 

wasted by what we have done in the last 6 years? Do you have any 

idea how much money the agencies have invested into the FBI consolidation; how much time has been spent by your agency, by the 

FBI, by OMB; how much time has been spent by the State of Virginia in their proposals and going through what they had to do, the 

State of Maryland, Prince George’s County; how much money has 

been spent by the developers to comply with mixed messages comVerDate Aug 31 2005 10:10 May 11, 2018 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\27509.TXT SONYA
62 

ing out of GSA? Do you have any idea how many millions and millions of dollars have been wasted? 

Mr. GELBER. We are aware of how much we have spent on the project, and that is around $20 million to date, sir. 

Senator CARDIN. And that is wasted. 

Mr. GELBER. Some of that can be repurposed, but the majority, 

unfortunately, may not be. 

Senator CARDIN. Well, I think all of us are concerned about 

waste. We would like to have that $20 million spent so the FBI 

could carry out its mission. 

A question was asked to you by several of us working with us 

to get this done. I want to make sure that it is done in an open 

and fair manner. I want to certainly make sure that the jurisdictions that are directly involved, that their representatives are fully 

participating in whatever is done. I want to make that clear. 

But I would hope that we could expedite a location. That certainly simplifies things. That we could expedite the NEPA issues, 

and we could give you confidence through the appropriators and 

authorizers that we are prepared. We already put up $800 million. 

That is a lot of money. More than $800 million. I don’t want to 

short change this. Nine hundred thirteen million dollars we have 

already put up that you have. That does not include the Hoover 

Building. 

Senator Rounds, you are right, they will not tell you the value 

of the Hoover Building. It is worth hundreds of millions of dollars, 

we know that. 

So there is already available well in excess of $1 billion that has 

already been appropriated by Congress for this project. 

It is clear to me, Mr. Haley, that you do need a new consolidated 

facility, and I appreciate you can’t use the piecemeal approach because of the reasons you just said. So we have to figure out a way, 

because you hear us nodding our heads. To put $2 billion in 1 

year’s appropriation for one building consolidation is not realistic. 

That is just not realistic. So we have to figure out a way to do it, 

and I would really hope that we are not getting to the point that 

we have to hold up every prospectus here not to stop the location, 

but to make sure that we are not going down a path that, 6 years 

after we pass a prospectus, we are back to square one. 

Senator BARRASSO. Thank you, Senator Cardin. 

Senator Ernst. 

Senator ERNST. Thank you, Mr. Chair. 

Thank you, gentlemen, for being here today. In 2011 GAO reported that FBI and GSA assessments showed that the FBI Headquarters facilities, the Hoover Building and office annexes in the 

national capital region did not fully support the FBI’s long term security, space, and building conditions requirements. 

Mr. Haley, how have the conditions changed since 2011, since the 

GAO’s report has come out, and what has been the effect of these 

changes on the FBI’s ability to actually meet its mission? 

Mr. HALEY. Thank you, ma’am. Really, nothing has changed; all 

those issues still exist. If anything, as I mentioned in the opening 

statement, many of the mechanical parts of the building—I forgot 

a prop I was going to bring you, one of the pipes that just recently 

busted. Many of these are rusting from the inside out. You have 

63 

thousands of miles of piping. We had Ma Bell phones, gray metal 

desks, and file cabinets when we moved into the Hoover Building. 

It is now a technological hub. Just to move wire from one part 

of the building to the other, going through concrete, the facility is 

not designed for that. Everything takes a significant amount of additional funding, a lot of time. There is frustration on the operational side because they need something today, and it may be 

months or even years before we can get all the pieces in the building. 

Having entities spread out all over town means that you are 

spending much of your day driving from one location to another 

through DC traffic just to try to get around. So those issues are 

still there. 

Senator ERNST. Right. So the condition of the building is not getting better over time, the IT struggles are still there, and those 

take time and dollars, right? 

Mr. HALEY. Yes, ma’am. We appreciate GSA has recently 

changed the netting which keeps the concrete from falling off, because the old netting had to be replaced because it had worn out 

it had been up so long. So those issues are still there, and they just 

continue to get worse. 

Senator ERNST. And you mentioned the time spent traveling back 

and forth between many of the annex buildings. All of that costs 

dollars. 

Mr. HALEY. Yes, ma’am. 

And those leases that you had mentioned, sir, we are having to 

renew those leases. In some cases that requires us to re-compete 

them for long term, and additional costs are going in. Some of the 

mechanicals that we are going to have to replace in the building; 

you put an HVAC system in, you are expecting it to last 20 years, 

20, 30 years. We may only be there another 10. So we have to put 

infrastructure in that we may not fully amortize or get the full use 

out of. 

Senator ERNST. Right. So a number of issues have been identified 

today. There is a pathway forward, maybe two steps back. 

Mr. Wise, what recommendations would you have for GSA to 

help move this project forward in a meaningful manner? 

Mr. WISE. Well, Senator, thank you. I think in the case of this 

project, all the options need to be examined closely and analyzed. 

What are the risks? How long will it take? What are the costs and 

benefits of one site over another or one method over another in 

terms of financing the project? And I think that is something that 

the Committee needs to also look at very closely as the options are 

presented for moving forward. 

It is a complicated arrangement, and clearly the swap exchange 

was a difficult maneuver, a situation where many pieces had to fall 

into place. It was kind of a complicated mosaic of effort, and it just 

didn’t really work out, so now it really needs to look at what might 

be feasible going forward. And keeping in mind, also, the very real 

security needs that my colleague has brought up here, as well, really has to factor in, which is a serious problem on the current facility, especially on its north side. 

Senator ERNST. Exactly. Well, I thank you very much. I think 

this is going to be a very complicated issue, especially if the swap 

64 

exchange is not the alternative moving forward. But we do have to 

find a way to make sure that the FBI has a usable space, a space 

that is secure, and where they can actually meet their mission requirements. 

With that, Mr. Chair, I will yield back my time. 

Senator BARRASSO. Thank you, Senator Ernst. 

Senator Capito. 

Senator CAPITO. Thank you, Mr. Chairman. 

Thank you all for being here. I am sorry I missed your testimony, 

but I was able to read this. For me, and I think for all of us, you 

have seen, the collapse of this process for securing a replacement 

raises serious questions. 

Mr. Gelber, as you probably know, I chair the Appropriations 

Subcommittee on Financial Services and General Government, 

which oversees the funding for the GSA. And this has been a moving target for us to try to follow. I believe we found out the cancellation of this through the newspaper as well, rather than informing the Appropriations Committee properly, and the rest of Congress in general, as to what was going on. 

You already mentioned that the GSA has spent $20 million. How 

much has the FBI spent, Mr. Haley, thus far in this project? 

Mr. HALEY. I wouldn’t want to give you an exact number, ma’am, 

but it has been a significant investment. Much of that has been our 

professional staff, individuals who sit behind me. The individual, 

the engineer that actually built our SEGUS facility originally and 

our biometric facility that you are well aware of was brought in to 

DC to lead this project. He is sitting behind me here. So we have 

invested a lot of educational resources on this. 

Now, at the same time, the $500 million that we have sitting in 

our account, our appropriations, we hope that this project will take 

on a similar anatomy like the SEGUS building, where we were able 

to incrementally bring those funds in, and at the point that the 

funding was available, we were able to move forward with that 

capital investment. 

Senator CAPITO. Yes, I was going to mention, but with Senator 

Cardin I didn’t want to mention the great FBI facility we have in 

West Virginia. I didn’t want to throw another location into the mix, 

but we do enjoy, and actually, it is a wonderful facility in our area. 

So we are very, very pleased about that. 

So, we are at a point where how did we get here and how are 

we going to make improvements. If I heard you correctly, Mr. 

Gelber, did you say that you need the $2 billion in 1 year in appropriation before you can move forward? 

Mr. GELBER. If we were to move forward with a Federal construction project or a long term lease, that is how the project would 

be accounted under the Federal—— 

Senator CAPITO. Is that the reason you went for the swap concept? 

Mr. GELBER. At the end of the day, yes. It was not our preferred 

option, but given our funding constraints that we were operating 

under, and given the inability to gain full access to the money in 

the Federal Buildings Fund, that is why we opted for the exchange 

concept. 

65 

Senator CAPITO. Have you done swap projects before to this magnitude? 

Mr. GELBER. Nothing of this magnitude. 

Senator CAPITO. Well, I think it might have a little black mark 

by it right now, from what we have seen, the development to this 

point. 

Let me ask you another question, Mr. Wise. In your written testimony you stated that GSA employees told you, as part of the research for your 2014 report, that part of the appeal of the exchange 

model—and Mr. Gelber just talked about this a little bit—was to 

avoid reliance upon the appropriations process. And yet the agencies state that this project failed for lack of appropriations sufficient to offset the difference between the value of the Hoover Building and the new headquarters. 

I think the approach to try to avoid either oversight or the congressional appropriations process is, I think, not very palatable to 

those of us who sit here and also those of us who sit on the Appropriations Committee and the authorizing committee. 

So would you say that was a primary motivation to work in this 

manner, or was it something I am not seeing? 

Mr. WISE. Well, I will leave the motivations up to my colleague 

from GSA to describe, but suffice it to say that swap construct is— 

as I think Michael was saying, it is another way to try to move forward on Federal construction with the knowledge that it is a 

very—as Senator Cardin said—a very heavy lift to get full funding 

up front. Now, full funding up front is the most cost effective way 

to build something. That is pretty clear. I think everybody agrees 

on that. Lease arrangements, one way or another, normally end up 

costing more for various reasons. 

But in terms of the swap construct, a very key criteria of swap 

construct is that, you need a situation where the property—it really 

helps if the Government need is equal to the property that it is giving up. And that was not the case here because it was far in excess, 

so that is why they were coming back for additional appropriations. 

And a project of this magnitude is very, very complicated to run 

under a swap construct because, as we talked about in our testimonies, the previous experience that GSA had in this area was 

very limited. 

One example I can give you in San Antonio was a small piece 

of land for a parking garage, several million dollars. And it worked 

out well because they were of commensurate value. The private 

sector really wanted this piece of Federal land, and GSA really 

wanted this parking garage, and they were about equal. 

This is a magnitude of much, much greater magnitude and complexity. So that was a technique that GSA hoped it could work to 

make this building happen, make the project happen, but I think 

the Hoover Building situation just was too difficult to fulfill this 

way. 

Senator CAPITO. Could I ask one more question? 

Senator BARRASSO. Yes. 

Senator CAPITO. You know, we are throwing $2 billion around 

like it is a confirmed number, just $2 billion. What kind of assurances can you give us here that $2 billion doesn’t lead to $3 billion? 

What kind of firm number is that? And are changes being made 

66 

to design? I am sure as you look at this, as you move forward, certain needs may change. What kind of confidence do you have that 

$2 billion is either (A) sufficient or not enough or too much? 

Mr. GELBER. We, with the FBI, had developed that extensive program requirements, which we then developed an independent Government cost estimate around that number. We also have the bids 

that were submitted for the project that give us a sense of how the 

market was responding to the request. 

Senator CAPITO. And they came in at about $2 billion then? 

Mr. GELBER. If GSA had received the funding requested in the 

fiscal year 2017 budget, we would have been able to award this 

project. 

Mr. HALEY. Ma’am, I would add, from an FBI perspective, that 

was one of the factors as we, coordinating with GSA, agreeing to 

canceling the procurement, was the concern about that with exchange. And as Senator Rounds had mentioned earlier, the developer can’t get the building until we get out of it. 

So as you extend that period on, there was a potential for those 

costs, and we have always—and we have been very clear with this 

with our appropriators, that we were trying to be as transparent 

and honest with the costs that were going to come out of CJS, and 

we did not want to see those costs escalate. So as you extend the 

number of years that this procurement would have had to take, 

and it wasn’t just a building, we were talking about moving facilities from a number of the sites, rose, we were afraid that that cost 

would come up, and we would have to come back in, and those 

would look like cost escalations versus just time and just the cost 

of the dollar going forward. 

Senator CAPITO. All right. Thank you. 

Thank you, Mr. Chair. 

Senator ROUNDS [presiding]. On behalf of Chairman Barrasso, 

Senator Gillibrand. 

Senator GILLIBRAND. Thank you. Thank you, Mr. Chairman. 

Mr. Gelber and Mr. Haley, decisions to cancel the procurement 

were made by both the GSA and the FBI, and the FBI, at the time, 

was lacking Senate confirmed directors. Is there a reason you could 

not have waited for a decision of this magnitude to be made once 

your senior leadership was in place? 

Mr. GELBER. The constraints around the project would not have 

gotten better; the cost of the project would, in our minds, continue 

to have increased. And as Mr. Haley referenced and Mr. Wise has 

also referenced, the value of the Hoover property would continue to 

decrease. So, at the end of the day, the situation we faced was, by 

waiting, we would not learn anything new in the process, and the 

cost of the project, if we chose to go forward, would only have increased. 

Senator GILLIBRAND. To what extent was OMB and the White 

House involved in the decision? 

Mr. GELBER. As we normally do on major project decisions, we 

informed our staff level colleagues at the Office of Management 

and Budget about this matter. 

Senator GILLIBRAND. But not the White House specifically? 

Mr. GELBER. That is correct. We normally do not engage at that 

level. 

67 

Senator GILLIBRAND. Who was the highest ranking Federal official to personally sign off on the decision to cancel the headquarters procurement? 

Mr. GELBER. In terms of the formal approval process within the 

General Services Administration, that would have been the Acting 

Administrator. 

Senator GILLIBRAND. Do you expect that there will be additional 

costs associated with the FBI remaining in the Hoover Building 

and other leased properties for a longer period of time? 

Mr. GELBER. Yes. And we are currently evaluating what those 

costs would be in partnership with the FBI. 

Senator GILLIBRAND. And what are the additional costs, and how 

do you expect those costs to be paid for? 

Mr. GELBER. We have some discretionary funds out of what we 

refer to as below a prospectus level authority, which are projects 

of under $3 million for a particular task, so we have those funds 

to use. The key question for us is how much do we invest in the 

FBI Hoover Building knowing that we are going to move out of it. 

So we want to ensure the FBI has a usable, safe facility, but we 

also don’t want to overinvest in the facility. 

Senator GILLIBRAND. How do those additional costs compare with 

the project cost escalations that prompted your agencies to cancel 

the new headquarters? 

Mr. GELBER. The concern with the projected cost escalations is 

we weren’t sure when and where they would stop, and so, given the 

uncertainty around those escalations, we knew what the costs and 

risks were for remaining in leased space; we knew what the costs 

and risks were for remaining in Hoover. Those were—even if they 

were on par or less than—the concern with going forward with the 

project was the unknowns around where the costs would go. 

Senator GILLIBRAND. Did you include appropriators in those conversations? 

Mr. GELBER. We have had a regular cadence of meetings at the 

authorizer and appropriators level throughout the life of the project 

and have been regularly reporting where we stood on the project 

up until our meeting to decide to inform individuals that we had 

canceled the project. 

Senator GILLIBRAND. Prior to the enactment of the fiscal year 

2017 appropriations legislation, did you guys communicate to the 

appropriators that the procurement was at risk if that bill did not 

include the entire request in the President’s budget for $1.4 billion? 

Mr. GELBER. We had regularly communicated that the need for 

funding was key for this project to move forward. Our last written 

communication was in March of this year, where we stated that we 

had met all necessary project milestones to proceed with the 

project, but were awaiting the resolution of the fiscal year 2017 

budget cycle. 

Senator GILLIBRAND. Can I just ask you an unrelated question 

that I would like you to provide for the record about Plum Island? 

I have been working with my colleagues from New York and Connecticut on legislation to repeal the statutory requirement for selling Plum Island, which I believe unnecessarily ties the Federal 

Government’s hands and prevents you from considering all options 

68 

for the use of the island, including continued Federal ownership by 

a different agency. 

That said, I would like to ask you a few questions about the sale 

process that you are currently undertaking. And if you don’t know 

these answers, just for the record is fine. 

What entity will be required to clean up any environmental contamination associated with the Plum Island Animal Disease Center, the Federal Government or the buyer? 

Mr. GELBER. Invariably, it is either the Federal Government, or 

if there is anything that hasn’t been addressed, the Government 

notifies whoever acquires the property that they must be aware of 

what is on the soil in the property. 

Senator GILLIBRAND. And will there be stipulations on when and 

how the cleanup has to occur? 

Mr. GELBER. I am not familiar with the specifics around that 

particular issue, but we can get back to you on that. 

Senator GILLIBRAND. Thank you. And how does GSA propose to 

use the revenue from the sale of Plum Island? 

Mr. GELBER. Normally, the revenues from these sales are returned to, I believe, either the Miscellaneous Receipts Account to 

the Treasury or the Federal Buildings Fund. And our ability to access either of those accounts, if you will, is subject to congressional 

approval. 

Senator GILLIBRAND. OK. And has the GSA had discussions with 

U.S. Fish and Wildlife Service about migratory bird and endangered species habitat that exists on the island? And how does that 

factor into the sale process? 

Mr. GELBER. I am assuming we did, but I can confirm. As a part 

of our disposal process, we engage with a range of Federal agencies 

whenever we are disposing a particular property. 

Senator GILLIBRAND. If Congress repeals the statutory requirement to sell Plum Island, would other Federal agencies like the 

U.S. Fish and Wildlife Service and the National Park Service have 

an opportunity to acquire the property if they wanted to, and what 

process would that occur? 

Mr. GELBER. My understanding is the property is currently 

under the control and custody of the Department of Homeland Security. I may be incorrect about that. But at the point where the 

Department of Homeland Security no longer requires the property, 

it is then made available to other Federal agencies. 

Senator GILLIBRAND. Great. Thank you so much. 

And thank you, Mr. Chairman, for the hearing. 

Senator ROUNDS. On behalf of Senator Barrasso, I will recognize 

Senator Cardin. 

Senator CARDIN. Thank you. I just want to make a couple comments. 

First, there has been a lot of discussion about lease cost being 

more expensive than direct appropriations, and that is intuitive 

and correct, but we would point out that in today’s economic environment, with the interest rates being what they are, there are certain advantages to using long term lease purchases, and the cost 

differential could be not very great. Just point that out from what 

I understand. 

69 

Second, the swap is very unusual for this size. I understand that 

and the reasons it was done. There were three developers interested in that financing arrangement, producing seven different development alternatives, so there was at least interest out there for 

the Hoover Building. Whether it was the best deal for the Federal 

Government we may never know, but there was certainly interest 

out there. 

And I want to just come back to this last point. GSA has the authority to select a location. GSA has the authority to figure out 

what financing mechanism works best. They can certainly work 

with Congress in order to get whatever they need. Congress has expressed itself in numerous ways that we want to help you. We 

know that the overall funding in one fiscal year is going to be extremely challenging. It is even more challenging now that we have 

terminated the contracts. So we have to find out a way to move 

this quicker than saying it is going to take another 4 or 5 or 6 

years before we get this done, because the FBI can’t wait, and taxpayers demand us to be more efficient than this. 

So, Mr. Gelber, I just urge you to work with not only authorizing, 

but the appropriating committees. You have a good deal of information, working with the FBI, working with what has already been 

developed, to move this project in a fast way, consistent with law 

that you are now in, using a lot of the information that has already 

been obtained. I would just urge you to do that so that we can 

make this project move sooner rather than later. 

Thank you, Mr. Chairman. 

Senator BARRASSO [presiding]. Well, thank you very much, Senator Cardin. 

Any other questions? I know we are in the middle of a vote, at 

the end of a vote. I appreciate everyone being here and taking the 

time as you have. 

I was going to turn to Senator Carper to see if he had any additional thoughts or questions. 

Senator CARPER. Mr. Chairman, I do have. First, I want to say 

thank you for entering the letter from Senator Grassley, July 20th 

letter from Senator Grassley, from the White House, actually, to 

Senator Grassley. Marc Short, Director of Legislative Affairs. It 

speaks to my concerns about the minority, as well as majority, 

being able to do our oversight work. 

Senator BARRASSO. And let me just say you have been a wonderful partner to work with. I want to continue to work with you, and 

I want to work with you to make sure we get the answers that all 

of us are looking for. 

Senator CARPER. Thank you very, very much for that, and I return to the compliment to you. 

I would also like to ask unanimous consent to enter into the 

record a letter from Tim Horne, dated June 6th. We had submitted 

some questions of him. I think those questions that we had asked 

of him in my letter to him of June 6th, 2017, and we have not received a response. 

Senator BARRASSO. Without objection. 

Senator CARPER. I would just ask it be made part of the record 

and renew our request for a timely response from the folks at GSA. 

Thank you. 

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[The referenced information was not received at time of print.] 

Senator BARRASSO. The other thing I want to do, we have folks 

from GAO that are here, right? Would you just raise your hands, 

please? Raise them high. Hold them up. I just want to say, as the 

former Chairman, now senior Democrat on the Committee of 

Homeland Security and Governmental Affairs, how much we appreciate the work that you do. 

I was in a meeting earlier this morning, and one of the thoughts 

that came to mind in that meeting in the Capitol was we were talking a bit about budget deficits, and we seem to have taken our eye 

off the ball there, and they continue to grow. I think the budget 

deficit is going to grow by another $100 billion this year alone, and 

we are looking at about a $700 billion deficit, up from about $400 

billion a couple years ago. We peaked at $1.4 trillion and down to 

$400 billion. Now we are back up to about $700 billion, and nobody 

is really paying any attention to that, and that is a cause for concern to me, and I know it is to folks from Wyoming, including the 

Senators. 

One of the things that I often like to focus on is the work that 

you do at GAO to the high risk list, and identifying high risk ways 

of wasting money. It is really important work, and one of the 

things that I sought to do—Dr. Coburn did that when he was the 

senior Republican on our Committee, always used that as our to do 

list. Do we need to raise some evidence? We probably do. Do we 

need to cut some spending? We probably do. But also, you give us 

a great roadmap, just a to do list for ways that we can save money. 

One of the things that has always confounded me is this issue— 

and we have worked a lot with you on real property reforms, Dr. 

Coburn, Senator Portman, and myself and others, and to the extent 

that the work that was—our work ended up in legislation, signed 

by the last President, on real property management. 

How, if at all, does that address or come in contact with the particular issue that is before us today? We spent a lot of time trying 

to put together legislation, guidance, and get the Administration to 

work in a more appropriate way with our input to save money in 

the way that we handle property, real property. How does that legislation, if at all, affect this issue? 

Mr. WISE. Well, Senator, I am sure as you know, real property 

has been on the high risk list for a long time, I think since 2003, 

and one of the key things we looked at—this is not necessarily specific to the FBI, but it is certainly related—is that one of the elements that we looked at very hard over the years is the importance 

of accurate data in order to enable Federal agencies’ real property 

managers to make good decisions in what to do with their excess 

property or how to best use what resources they have. 

And all along we have pushed a number of recommendations to 

OMB and GSA along these lines, and to the credit of GSA, they 

made a lot of progress in improving the Federal real property profile. Now, the legislation, your bill from 2016, the Federal Real 

Property Reform Act that you sponsored, is—— 

Senator CARPER. Along with Senator Portman and others. 

Mr. WISE [continuing]. Along with Senator Portman is certainly 

an assist because it gets at something that we think is quite important, and that is the ability to give a good break to the taxpayer 

71 

and save money is really much more in consolidation of Federal offices into owned facilities versus leased facilities. So that somewhat 

relates to what we are talking about today. But it is also a general 

point that I think is very important for overall management of the 

Federal real property portfolio. 

And as a result, we think, and as you mentioned, as the bill 

specifies, improving the data and also looking at postal facilities as 

a potential area that we can consolidate Federal offices into where 

there is space available, because a lot of sorting facilities are not 

sorting much anymore, although—— 

Senator CARPER. In fact, the number of mail processing centers 

is down. A couple years ago we had 600 of them. They are operating now down to about 300 they are operating. 

Mr. WISE. Yes. So there is a lot of potential there, although, you 

know, again, these are more—— 

Senator CARPER. In fact, my wife and I just drove by one in 

Rockford, Illinois, over the weekend. 

Mr. WISE. The issue with the postal facilities, those are much 

more like factories than they are like office space, so they need 

some resources in order to renovate them to make them suitable 

for office space. But there is a lot of potential for consolidation, but 

again, you know, until you get really a solid handle on the data 

and its accuracy, it is very difficult for agencies to make these 

kinds of decisions. 

So, yes, your point is well taken that the issue around management of Federal real property certainly has at least a tangential relationship to the FBI issue at hand today. 

Senator CARPER. Last thing I would say, Mr. Chairman, during 

my time in State government as the Governor of Delaware, we 

worked then and we still work with a capital budget. We have, actually, three budgets; one is the operating budget, one is the capital 

budget, and one is the grant and aid budgets to help nonprofit organizations, which is small compared to the other two. But we 

know that the fiscally smart decision for providing for space, 

whether it is for the FBI or for anybody else in Federal Government, oftentimes it is for the Federal Government to build and own 

property. That is the smart way to do it. 

It is hard—as Senator Cardin has said and others have inferred—it is hard to get that kind of huge, like a $2 million appropriation in a year or maybe over 2 years for something like the FBI 

building. It is just very, very hard to do. In the end we save money, 

we save money over the long haul. But the way that our budgeting 

process works, it does not reward that behavior. 

I will ask some questions for the record. One will deal with the 

alternative funding mechanisms that seeks to try to get at this conundrum, and we would appreciate your response to those questions, all of you. 

Mr. Gelber, we look to hearing from you folks soon and more consistently in the future. Thank you. 

And to our FBI brothers and sisters, God bless you. Thanks. 

Senator BARRASSO. Well, as we wrap up, I want to make a couple 

observations. 

It is clear from today’s testimony that the FBI does need a new 

headquarters; that fixing up the Hoover Building with a $100 milVerDate Aug 31 2005 10:10 May 11, 2018 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\27509.TXT SONYA
72 

lion backlog of maintenance needs makes little sense; that the 

elaborate plan to swap the Hoover Building for a new headquarters 

facility was, in hindsight, not the best option; that we need a new 

cost effective and achievable plan to get the FBI into a new headquarters facility. 

So I would like to ask our witnesses one final question. Will you 

commit to providing Congress a workable solution to the FBI’s 

headquarter needs within 120 days? 

Mr. GELBER. Yes, sir. 

Mr. HALEY. Absolutely, sir. 

Senator BARRASSO. Mr. Wise, they both said absolutely. 

[Laughter.] 

Mr. WISE. I think that is the job of the Administration, and we 

will be happy to come in and evaluate it at some point. 

Senator CARPER. Maybe you can give them some advice along the 

way. 

Mr. WISE. Always happy to do that, sir. 

Senator BARRASSO. Well, you can expect that this Committee will 

hold another hearing on this subject before the end of the year. 

With that, I want to thank all of you for being here. Other members may submit questions for the record. The hearing record will 

be open for 2 weeks. I want to thank the witnesses for their time 

and their testimony today. 

The hearing is adjourned. 

[Whereupon, at 11:25 a.m. the Committee was adjourned.] 

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