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65–644 PDF 2011

CAN A CIVILIAN BRAC COMMISSION 

CONSOLIDATE FEDERAL OFFICE SPACE 

AND SAVE TAXPAYERS BILLIONS? 

(112–22) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

APRIL 6, 2011 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

STEPHEN LEE FINCHER, Tennessee 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

VACANCY 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

(II) 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

JEFF DENHAM, California, Chairman 

TIMOTHY V. JOHNSON, Illinois 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas, 

Vice Chair 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

STEPHEN LEE FINCHER, Tennessee 

JOHN L. MICA, Florida (Ex Officio) 

ELEANOR HOLMES NORTON, District of 

Columbia 

HEATH SHULER, North Carolina 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

TIMOTHY J. WALZ, Minnesota 

DONNA F. EDWARDS, Maryland 

BOB FILNER, California 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Johnson, Hon. Martha, Administrator, U.S. General Services Administration . 5 

Lepore, Brian J., Director, Defense Capabilities and Management Issues, 

U.S. Government Accountability Office .............................................................. 28 

Principi, Hon. Anthony J., Former Secretary, U.S. Department of Veterans 

Affairs, and Former Chairman, 2005 Defense Base Realignment and Closure Commission .................................................................................................. 28 

Werfel, Hon. Daniel I., Controller, Office of Management and Budget .............. 5 

Wise, David J., Director, Physical Infrastructure Issues, U.S. Government 

Accountability Office ............................................................................................ 28 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Norton, Hon. Eleanor Holmes, a Representative in Congress from the District 

of Columbia ........................................................................................................... 42 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Johnson, Hon. Martha ............................................................................................. 45 

Lepore, Brian J., and Wise, David J., joint statement ......................................... 52 

Principi, Hon. Anthony J. ....................................................................................... 71 

Werfel, Hon. Daniel I. ............................................................................................. 75 

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(1) 

CAN A CIVILIAN BRAC COMMISSION 

CONSOLIDATE FEDERAL OFFICE SPACE 

AND SAVE TAXPAYERS BILLIONS? 

WEDNESDAY, APRIL 6, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS, AND EMERGENCY MANAGEMENT, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:04 a.m., in Room 

2167, Rayburn House Office Building, Hon. Jeff Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. The subcommittee will come to order. 

First, let me welcome our distinguished witnesses and thank 

them for their testimony today. We carefully selected each of you 

because of your past experience or current responsibilities for managing Federal real estate on behalf of the American people. Given 

our trillion-dollar deficit and skyrocketing debt, we must examine 

every area of government and look for ways to cut spending. 

I first proposed a civilian BRAC commission at our subcommittee’s first hearing in February, and the President proposed a commission in his 2012 budget. The purpose of today’s hearing is to 

find out if a civilian BRAC commission can save billions of taxpayer dollars by consolidating and realigning Federal real estate 

property. 

In recent years, the GAO identified billions of dollars of waste 

through mismanagement, overbuilding, and anoverreliance on costly leased space to meet long-term housing needs. In Chairman 

Mica’s report, ‘‘Sitting on our Assets,’’ we learned billions of dollars 

of taxpayer assets sit idle or even lose taxpayer money year after 

year. And on a bipartisan basis, this committee has struggled to 

house Federal employees in the most cost-effective manner possible. 

I believe the potential to save billions of dollars is very real. The 

question is: Can a civilian BRAC commission cut through the red 

tape and political turf battles to save taxpayers money and do it 

quickly? 

For example, if all the commission achieves is a fire sale of 

worthless properties in one of the worst real estate markets in our 

lifetime, then we shouldn’t expect to save much money at all. Fortunately, the administration recognizes this very same problem. I 

am very pleased the President made Federal real estate a national 

2 

priority by including it in his State of the Union Address and his 

budget. 

Given our discussions with OMB and GSA, I am hopeful we can 

agree on the goals for a commission and work together to move a 

bill through Congress. To achieve $15 billion in savings, I believe 

the commission will have to focus on a few goals or principles to 

reform. The commission will need to first consolidate the footprint 

of Federal real estate; second, house more Federal employees in 

less overall space; third, reduce our reliance on costly lease space; 

fourth, sell or redevelop high-value assets that are underutilized or 

too valuable for housing Federal employees; and fifth, dispose of 

surplus property more quickly. 

I believe a commission that uses these five principles to guide its decision can save the $15 billion we all believe is there. I would 

like to elaborate on these principles so we can discuss them further 

during the question and answer period of the hearing. 

At the end of the day, the total cost to house the Federal Government is directly proportional to how much real estate we have hold. 

To save money, we will have to consolidate that footprint. To consolidate, we must house more Federal employees in less space. Fortunately, there are tremendous opportunities for savings in this 

area. 

There is just one example of GSA consolidation using three different properties that were leased or owned and now renovating 

the GSA headquarters, consolidating and giving us an opportunity 

on two separate buildings. 

The private sector has been increasing its utilization rates for 

over a decade—and a commission can achieve the same results in 

the Federal Government. Reducing expensive leased space is another principle necessary for a successful commission. 

There is a second example. The Postal Service used a private developer to transfer a rundown money pit with a great location. This 

in turn gave $150 million in revenue and a fully renovated building 

without any taxpayer money. While the government retained ownership of this property, in other cases selling may generate the 

greatest savings for the taxpayer. 

Finally, we have to dispose our surplus property more quickly. I 

believe these guiding principles should help inform the development of any legislative solution, and I look forward to discussing 

them with our witnesses. 

Again, I want to thank each of you for being here today. 

I would now like to recognize Ranking Member Norton from the 

District of Columbia for 5 minutes to make any opening statement 

she may have. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

Good morning, and welcome to our witnesses. I want to thank 

you, Chairman Denham, for calling today’s hearing on the administration’s proposal found in section 735 of the fiscal year 2012 budget to create an independent Civilian Property Realignment Board 

tasked with making recommendations for the realignment and consolidation of Federal real estate, much like the Department of Defense Base Realignment and Closure, known as BRAC. 

The proposed board has the potential to be a valuable and rational tool for providing a source of revenue for the Federal GovernVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
3 

ment to maintain existing buildings and to fund real estate management, not to mention, of course, what this might mean for the 

Federal deficit. The President’s proposed board would dispose of 

unneeded and underutilized real estate and would consolidate Federal real estate functions where appropriate. 

Last year, President Obama issued a government-wide memo 

that ordered agencies to reduce their real estate footprint. This proposal before us today represents the administration’s sustained priority on addressing the management of Federal real estate activities. I applaud the administration’s efforts in the fiscal year 2012 

budget to explicitly address Federal real estate in a comprehensive 

manner. 

In 2003, the Federal Accounting Office placed GAO—placed real 

estate management on its list of high-risk government activities, 

where it remains today. Both this committee and GAO repeatedly 

have registered serious concerns about the way Federal real property has been managed. I am especially pleased, therefore, that the 

current administration has continued to build on its initial efforts 

to right-size the Federal real estate portfolio by issuing a memorandum requiring all Federal agencies to reduce their real estate 

footprint and now by proposing legislation for an independent 

board. 

Much like BRAC, the administration’s proposed board would conduct an analysis of the inventory of Federal civilian property. The 

board would obtain recommendations from Federal agencies on civilian real estate that could be sold, transferred, consolidated, colocated, or reconfigured to reduce the civilian real property inventory and operating costs of the Federal Government. After performing that analysis, the board would conduct public hearings on 

the recommendations of the agency. 

At a minimum, the board would submit a report on its findings 

twice a year to the Director of the Office of Management and Budget. Upon receipt of the board’s recommendations, OMB would conduct a review of the report and would take into consideration the 

views and recommendations of the Federal agencies within 25 days 

of receiving the board’s report. If the OMB director approves the 

board’s recommendation, the director would submit the recommendations to Congress. 

Conversely, as with BRAC, if OMB disapproves the board’s recommendation in whole or in part, the director would then transmit 

to the board and to Congress the reason for its disapproval. The 

board would then be required to transmit to OMB a revised list of 

recommendations. If OMB approved the revised recommendations, 

it would then transmit the recommendations to Congress. 

After OMB’s transmission of its recommendations to Congress, 

Congress would have 45 days to pass a joint resolution disapproving the recommendations. If Congress fails to pass a joint 

resolution, the board’s recommendations would gain legal force and 

agencies would commence with recommended activities. Proceeds 

from sale of properties would be split between deficit reduction and 

covering the costs of agencies to dispose of the property, consolidate, relocate, and reconfigure activities. 

The administration’s proposal would offer a new and more powerful tool to identify underutilized Federal properties that could help 

4 

move agencies out of leased space and would allow the sale of real 

estate where appropriate. Just as importantly, the board would be 

highly instrumental in reconfiguring, co-locating, and realigning 

the Federal real estate portfolio. 

It is impossible to know without a rigorous inventory and analysis whether surplus property equals valuable property in dollars 

and cents or if the Federal Government is really sitting on billions 

of dollars of underutilized surplus properties for which there is a 

market. Now is the time to find out, however, and to provide the 

country with at least one alternative to the mindless slash-andburn approach in use in the House at the moment to reduce the 

deficit. 

In contrast, an independent board to assess the real estate needs 

of agencies would thoughtfully and rationally right size the real estate portfolios of agencies that often lack the expertise to make 

strategic real estate decisions. Astonishingly, although the General 

Services Administration is charged with managing and developing 

Federal Government properties and leases, there are at least 23 

holding agencies currently controlling Federal real estate. Most of 

these agencies have missions unrelated to property and property 

consolidation. 

However, according to GAO, the GSA alone holds 282 excess or otherwise underutilized buildings that cost $93 million annually to 

operate. One of the most prominent of these properties, the priceless, historic treasure, the Old Post Office, had to be pried loose by 

a bill I introduced and got passed into law with strong bipartisan 

House and Senate support. 

At the same time, this subcommittee must always take the broad 

view of real estate. Although I believe the Civilian Property Realignment Board can serve an important missing role in disposing 

of unneeded real estate, the administration’s proposal does not require the sale of real estate assets in a soft market or the sale of 

properties that hamstring the government’s ability to house Federal employees in the future. 

Expert and specialized skill is necessary to dispose of underutilized real estate assets while avoiding selling property the government could need in the future, leading to long-term leasing because 

of haphazard disposal of underutilized real estate. 

For example, the Federal Government was wise to maintain the 

St. Elizabeths property in the District of Columbia. The government could not have foreseen the need to establish the Department 

of Homeland Security. However, there has never been enough 

space to consolidate agencies in the district, and St. Elizabeths was 

a 176-acre federally owned property in the Nation’s Capital. Preserving the land on which the Department of Homeland Security 

agencies are now being consolidated from leased space will save the 

government billions upon billions of dollars in the future. 

Property that does not fit the long-term real estate needs of the 

local government should be sold. However, this subcommittee will 

want to be just as alert aboutredeveloping its property to earn revenue before the government, like the Old Post Office Building, 

whose request for proposals was just issued finally last week, and 

Hotel Monaco, developed from the old Tariff Building, which quickly began to provide a return annually to the Federal Government. 

5 

The Old Post Office building is a prime example today of taking 

an underutilized property that was operating at a loss and converting it into revenue-producing property for Federal taxpayers. 

Ironically, Congress had to force this change by statute, over the 

objection of the Office of Management and Budget. 

For years, OMB has held on to GSA real estate because of the 

absence of staff real estate expertise at OMB. If OMB is to take 

on the responsibility envisioned in the administration’s proposal, I 

will require that OMB finally bring on its staff expert staff with 

specific real estate and redevelopment and development experience, 

a complete hole at OMB that has been there through Democratic 

and Republican administrations, to the great loss of taxpayers, of 

which the Old Post Office is only the most prominent example. 

I support the concepts contained in the administration’s proposal 

for a Civilian Property Realignment Board to meet the goal of 

rightsizing the Federal real estate portfolio and saving taxpayers 

billions of dollars. Now it is up to our subcommittee to quickly pass 

bipartisan legislation that puts this proposal to work. I look forward to the testimony of today’s witnesses to help with this task. 

Thank you, Mr. Chairman. 

Mr. DENHAM. Thank you. I would like to welcome our witnesses 

here today. Our first panel will be the Honorable Daniel Werfel, 

Controller of the Office of Management and Budget; and the Honorable Martha Johnson, Administrator of the General Services Administration. 

Welcome. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. 

Without objection, so ordered. 

Since your written testimony has been part of the record, the 

subcommittee will request that you limit your oral testimony to 5 

minutes. 

Mr. Werfel, you may proceed. 

TESTIMONY OF THE HONORABLE DANIEL I. WERFEL, CONTROLLER, OFFICE OF MANAGEMENT AND BUDGET; AND THE 

HONORABLE MARTHA JOHNSON, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION 

Mr. WERFEL. Thank you, Chairman Denham, Ranking Member 

Norton, Congressman Crawford, and other members of the subcommittee, for the invitation to discuss the President’s Civilian 

Property Realignment Act proposal with you today. 

Each year, the Federal Government wastes taxpayer dollars on 

thousands of unneeded or underutilized government properties. We 

need to take immediate steps to take advantage of the many opportunities that have already been identified to date and simultaneously move forward on additional and more transformational 

possibilities. 

For this reason, the President advanced a bold new approach in 

the fiscal year 2012 budget to right-size the Federal real estate inventory. The President’s proposal would create an independent 

board to achieve long-term and sustainable reductions in real estate-related operating costs and energy use, convert unneeded real 

6 

estate into reductions in the Federal deficit, and adapt the government’s real property to the 21st century. 

As part of the Accountable Government Initiative, President 

Obama has consistently made real property reform a priority. Last 

June, the President issued a memorandum entitled ‘‘Disposing of 

Unneeded Federal Real Estate’’ and ordered agency leaders to take 

aggressive action to reduce their real estate footprints. Agencies 

have made good progress, identifying $1.7 billion toward meeting 

the $3 billion savings goal by the end of fiscal year 2012. 

However, our work with agencies on real estate has made it apparent that even larger savings opportunities lie within our grasp 

but cannot be implemented with the traditional tools available for 

managing our real property assets. 

There are three basic barriers that have prevented more significant transformations of Federal real estate and thus have prevented more significant savings: Red tape, financial disincentives, 

and politics. The President’s proposal builds off the best practices 

of a proven approach, the Department of Defense’s Base Realignment and Closure program, or BRAC, to address and overcome 

each such barrier. 

Specifically, for properties identified by the board as candidates 

for realignment, the board will push through red tape by eliminating the one-size-fits-all approach to the process that exists in 

the Federal inventory today; leverage proceeds and other savings 

as a way to incentivize agencies to initiate changes to their real estate that have a positive return on investment for the taxpayer, 

while still dedicating a substantial amount of savings for deficit reduction; and third, find resolutions to competing stakeholder interests that can stymie or progress. 

The last point merits further emphasis. Proposals by the Federal 

Government to vacate or sell real estate affect numerous stakeholder interests. These competing interests create a powerful disincentive against progress. Like BRAC, the envisioned board would 

overcome this challenge by bundling its recommendations as a 

package that succeed or fail together. Furthermore, like BRAC, 

Congress would have 45 days to consider the recommendations, 

with no ability to line-item veto a property in the package. Instead, 

Congress’ sole option would be either to endorse or reject the whole 

package. 

The President’s budget for 2012 includes the initial legislation for 

standing up this board and this process. Shortly, the administration will submit for congressional consideration a fuller, more detailed legislative proposal that builds on the language in the President’s budget. 

The status quo in our real estate inventory is particularly unacceptable today when we have a pressing need to rein in our spending and reduce our deficits. By using the best practices from the 

BRAC model to address this issue, we can leverage our portfolio to 

improve services to the taxpayer, reduce the government’s energy 

footprint, and reduce the deficit. 

It is time for a bold new step. I invite you to support the Civilian 

Property Realignment Act and help bring about a transformation 

of real property management in the government today. 

7 

Thank you for inviting me to testify. I look forward to answering 

your questions. 

Mr. CRAWFORD. [presiding.] Thank you, Mr. Werfel. 

Administrator Johnson, you may proceed. 

Ms. JOHNSON. Thank you. Good morning, Chairman Denham, 

Ranking Member Norton, Congressman Crawford, and members of 

the subcommittee. I am honored to join you today. 

In the President’s fiscal year 2012 budget the administration announced an effort to accelerate the disposal and consolidation of the 

Federal Government’s civilian properties. This initiative anticipates 

working with Congress to optimize asset utilization, increase disposals of unneeded assets, and streamline the disposal process to 

help the government realize billions of dollars in savings. 

I appreciate the opportunity today to discuss GSA asset management and our role in property disposition government wide. 

Through our experiences and expertise with the disposal process, 

we hope to assist in forming a successful civilian property initiative 

that helps the government meet our responsibilities to taxpayers to 

spend every dollar effectively. 

GSA has a large real estate portfolio. Yet the broader Federal 

Government portfolio is even more extensive. GSA manages the 

Federal Real Property Profile, which is the government’s database 

of owned and leased assets. Of the total government 429,000 building assets, GSA controls approximately 9,000. Less than 3 percent 

of GSA’s portfolio has been classified as under or non-utilized. 

Since 2002, GSA has disposed of over 200 GSA properties, totalling more than 9.5 million square feet. These properties represent 

5 percent of our own portfolio and eliminated $484 million in anticipated repair needs. GSA works diligently to identify unneeded 

assets for disposal, yet it is important to note that not all properties labeled as underutilized are available for sale. In fact, most 

of GSA’s underutilized properties are not candidates for disposition. 

More than half of these properties are either undergoing major 

modernizations or being backfilled with tenants from leased space 

or are being reassigned to agencies with new requirements. 

GSA works aggressively to renovate and renew assets to achieve 

greater utilization. Of the 14,000 assets categorized as excess in 

the FRPP, 138 are GSA excess assets, 114 of which are now in the 

disposal process. In the last 10 years, GSA has disposed of over 

3,300 government-wide assets valued at $8.5 billion; 260 of these 

assets were GSA-owned. 

The disposal process begins when a Federal agency determines 

that it no longer has a mission need for an asset and reports the 

property as excess. A property reported as excess, however, may 

not necessarily be slated for disposal, since some may be demolished or have costly or time-consuming cleanup requirements. If 

there is no valid need for the property within the Federal Government after 30-day period, it is considered surplus and offered to 

other public organizations such as State, county, and city governments and not-for-profit organizations. These local entities can acquire the property through a negotiated sale at fair market value 

or through a public benefit conveyance for specific uses, including 

homeless assistance, historic monuments, educational purposes, 

and law enforcement needs. 

8 

GSA conducts a public sale if there is no public benefit or negotiated sale. Dispositions must also comply with a variety of environmental and historic preservation requirements, which can require considerable time and funding. 

The disposal process is an iterative and deliberate process with 

a number of statutory requirements that seek to strike a balance 

between social and economic policy objectives. This process, I must 

note, can be time-consuming, as it involves many stakeholders, associated political interests, community expectations, environmental 

factors, and regulatory reviews. These variables often manifest 

themselves in competing interests, creating inefficiencies and driving increased time and cost. 

The administration is interested in legislation that will increase 

the number of assets available for disposal and expedite the disposal process. The President’s proposed Civilian Property Realignment Act will help Federal agencies accomplish this goal while the 

improving the efficiency and effectiveness of Federal disposals and 

saving taxpayer funds. 

I appreciate the leadership of both the chairman and the ranking 

member on this matter and your sincere interest in moving this 

issue forward. Thank you for the opportunity to be with you today. 

I welcome your questions. 

Mr. DENHAM. [presiding.] Thank you, Administrator Johnson. 

At this time, I would like to yield the first 5 minutes of questioning to Vice Chairman Crawford, as he has scheduling challenges this morning. 

Mr. CRAWFORD. Thank you, Mr. Chairman. 

I thank you, Administrator Werfel, for being here. 

I have a quick question for you. I understand the administration believes there are $15 billion in potential savings. I am curious, 

how did you arrive at that number? Is that a realistic number? And 

what is the timeline on those savings? 

Mr. WERFEL. Thank you, Congressman. 

The President set out a target last year in a memo in June for the government to eliminate $3 billion in real estate or essentially 

save $3 billion by taking critical steps. We started working with 

agencies toward those goals and looking for different opportunities 

to realign real estate. 

It is during that work with each agency that we recognized that 

there were bolder, broader and more aggressive savings opportunities that were potentially available but not achievable in today’s 

current legal and regulatory and political environment. And so we 

started doing some more research into those opportunities to size 

them up. 

And what we saw were essentially two types of opportunities 

emerging. One was the potential sale of very high-value assets, a 

limited number of high-value assets that the United States Government owns across the country that, for a variety of different reasons, in particular and probably most pressing, the competing 

stakeholder interests that would be involved in surfacing these assets and moving forward to vacate them, that if sold, they would 

generate a very high return on investment. Obviously, we would 

have to take into account real estate market realities. But even in 

today’s real estate market it, is our belief that some of these assets 

9 

would generate a very high rate of return if pushed through to 

sale. 

The other opportunity that emerged, in addition to the limited 

number of high-value assets, are consolidations of numerous—actually, thousands of field offices around the country. We have agencies today that have offices, for example, in every county in America, which does not, we believe, reflect the way benefits and services are delivered in the post-Internet or in the 21st century. And 

so to begin to consolidate some of these thousands of properties 

into a more rational approach, even though they are small in each 

individual case, once you start consolidating them more aggressively, you get an aggregate savings amount that we think would 

be substantial. 

So we looked at these two opportunities and started to map them 

out and figure out what we thought was achievable in the short 

term. And we believe that $15 billion in savings is achievable within the first 3 years that the board that we envision is up and running and be able to make recommendations to Congress. 

Mr. CRAWFORD. Thank you. 

The BRAC process started with the Defense Department developing criteria and standards and applying them to its properties in 

order to develop recommendations for the commission. In the case 

of a civilian BRAC, who would you recommend develop the criteria 

and standards that would be applied to Federal properties across 

the government? 

Mr. WERFEL. I think there can be some broad criteria. One of the 

things mentioned in GAO’s testimony is their suggestion that as we 

approach a civilian BRAC, we think about some of the criteria. We 

have taken that point to heart and are looking at that as we get 

ready to submit our more detailed legislative proposal on this. The 

proposal that is in the budget is more of a summary version. And 

we are working on a detailed version. 

Some of those proposals I think are at a very high level. Obviously, the importance around making sure that we are maximizing 

the return for the taxpayer in terms of deficit reduction; that we 

are thinking about the impact on the local community; that we are 

thinking about ensuring that as our real estate real realigns, we 

are maximizing how that supports agency mission. There are environmental considerations. So I think that there are some general 

frameworks that we can work through. 

I think that the board itself, its mission and what it is going to 

be charged with, is to apply and balance those various factors as 

they look at these different realignment opportunities. So I think 

our vision would be to set out working together between the President and Congress a high-level set of parameters that push for the 

interests that I just described, in particular always looking out for 

the taxpayer before anything else. And then the board would apply 

those on a case by case basis and figure out what the optimal outcome is in each real estate opportunity. 

Mr. CRAWFORD. Thank you, sir. 

I yield back. 

Mr. DENHAM. Thank you, Mr. Crawford. 

Ms. Norton. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

10 

Before I get to the property questions, I would like to ask Administrator Johnson about the current effect or the effect on GSA if 

H.R. 1 were passed. The reason I ask that question is that for the 

entire period of my service in the Congress, GSA has had huge 

understaffing problems, loss of expertise because expertise is very 

valuable in the private sector. What would the effect of H.R. 1 be 

on the GSA appropriation? 

Ms. JOHNSON. Thank you for the question. 

I can summarize sort of estimates about it. First of all, it would 

basically demolish our capital program this year, so we would not 

be able to pursue the projects that are underway, and significantly 

that would include work on the St. Elizabeths headquarters for 

DHS, and some other projects; putting in jeopardy the Coast 

Guard’s ability to move into—finish and move into their new headquarters. 

We estimate there would be approximately 16,000 jobs that 

would be lost as a result of this. It all depends upon the length of 

the way it calculates out, but there could be a point at which we 

would also be unable to meet some of the obligations in our leases. 

The other piece that particularly concerns me is around our open 

government and our electronic government work, so that we 

wouldn’t be able to share the huge amount of data that we are currently putting up in the same way because we would not have 

funding to continue much of that. 

Ms. NORTON. May I ask you, Administrator Johnson, this committee has always pressed GSA to get as many agencies out of 

leased space into owned space. How will the Civilian Property Realignment Board—or will it assist the agency in meeting this mandate? Has it thus far in the properties you have sold? You say that 

9.5 million square feet of property has been sold. Has it helped at 

all with this budget-saving issue? 

Ms. JOHNSON. Frankly, the GSA would be quite delighted if our 

balance of leasing were less. We would welcome the rebalancing of 

our portfolio much more towards owned space, simply because that 

returns revenue into the building fund and allows us into the future to be able to fund the portfolio and the maintenance and repair and new construction. So the formula is such that I can say 

that I would be delighted if we can figure out more ways of moving 

out of leases and into owned. 

Ms. NORTON. You are not into at the moment realigning or using 

space for the purpose of getting people in owned space, but you are 

disposing of property at the moment. 

Ms. JOHNSON. When we are disposing of property, I think we are 

rightsizing our owned inventory. I don’t think that the properties 

that move into disposal are ones that—first of all, we assess whether or not there are opportunities across the Federal community to 

use that space. So there is a first tranche of work. 

Ms. NORTON. So you don’t think those properties are useful to 

the Federal Government at all. 

Ms. JOHNSON. If they are moving through disposal, that is already a question that has been answered. 

Ms. NORTON. The properties that will be in this process will be 

such properties. 

11 

Ms. JOHNSON. I would assume so. They fit the criteria and that 

there would be no use for them across the government. Yes. 

Ms. NORTON. Let me ask you both; this is a very soft market. 

Suppose the BRAC Commission says, here, Congress, here is some 

property, dispose of them and you will get X amount of dollars. 

Anybody with any real estate expertise will say you will get twice 

that amount if you just wait a little while for the market to come 

back. 

Will this commission be required to dispose of properties in a soft 

market, rendering less benefit to market concerns? 

Mr. WERFEL. Congressman, I certainly know the board would not 

be required to sell off any set of assets. 

Ms. NORTON. They would do the selling, right? It is they who 

would do the selling? 

Mr. WERFEL. Well, here is how we envision it working: First of 

all, there would be an independent entity that would develop its 

own set of recommendations. We wouldn’t say to the board, you 

must sell a certain number of assets. The board, I think—and I 

think the strength of this proposal and its success hinges tremendously on the quality and the talent of people that we can place 

on the board and staff them with—will have to make strategic 

judgments about the best decisions on behalf of the taxpayer. And 

in some cases, I think they will find situations in which assets are 

ready to be sold, are no longer needed, and will have a comfort 

level that even in today’s real estate market the return price that 

they are getting is a fair one and it is in the best interest of them 

to move forward. 

In some cases, I think you are right. They will make a judgement, a strategic judgment based on their real estate expertise that 

it might not be the right time, given the market realities of a certain location, for them to sell. 

Ms. NORTON. We probably don’t want to sell properties at a loss. 

Or say somebody who didn’t know what they were doing reaped 

less for the Federal Government than if they had waited a year. 

Mr. WERFEL. Absolutely. That is going to be incumbent upon the 

board to make those smart recommendations in terms of where and 

what sequence to approach these realignment opportunities. But to 

answer your question in terms of whether the board does the selling, once the board recommendations are through Congress, it 

would return back to GSA and the Federal agencies to implement 

those recommendations. So if there is a building within GSA’s inventory that the board and through the congressional process is 

now authorized for direct sale to market, GSA would take on the 

responsibility to sell that asset. 

Ms. NORTON. Thank you, Mr. Chairman. 

Mr. DENHAM. Before I start my questions, Mr. Werfel, I just 

wanted to follow up on Mr. Crawford’s question on the $15 billion, 

is that new revenue, scored new revenue, or does that also include 

lease termination and other consolidation? 

Mr. WERFEL. It combines not just proceeds but also operating 

cost savings as well. So if we were to eliminate a footprint of buildings and the associated operating costs, we would include that in 

the $15 billion. 

12 

Mr. DENHAM. I know this is still—we are still dealing with rough 

estimates at this point, but how much of that is broken down just 

into liquidation of properties that are no longer needed? 

Mr. WERFEL. Very roughly, I would say somewhere between $9 billion and $12 billion is the proceeds and the remainder are other 

efficiencies. 

Mr. DENHAM. Thank you. 

Included in the President’s budget, there is a sketch of the administration’s proposal. When do you expect to actually have the 

overall comprehensive language complete? 

Mr. WERFEL. I think by the end of this month, and we will be 

able to submit it. 

Mr. DENHAM. The private sector has been far ahead of the Federal Government in the efficient use of space and creating value 

out of failed assets. Do you believe there should be experts in private real estate development on a BRAC-like commission, and what 

type of composition do you see making up the entire commission? 

Mr. WERFEL. I think there are absolutely—I think there are 

probably three primary skill sets that we want to make sure are 

represented on the board. Commercial real estate would be one of 

them. Government management, so that we can understand how 

the changing—so we can have expertise that understands how the 

changing real estatefootprint intersects and impacts government 

mission. And the third I think is community development, so that 

we have expertise and understanding that when the Federal Government does leave a space or change its presence in a given locality, what the right approach is to make sure that the impact on the 

community is a positive one. 

Mr. DENHAM. Thank you. 

It is critical to establish key principles. So we have chatted about 

that briefly. But the five areas that I outlined in my opening testimony, I would just like to highlight each principle that I think is 

key and see if you agree with each of these being as part of the 

process. Consolidating the footprint of Federal real estate. Do you 

think that is one of the key principles? 

Mr. WERFEL. Absolutely. 

Mr. DENHAM. House more Federal employees in less overall 

space. 

Mr. WERFEL. Yes. 

Mr. DENHAM. Reduce our reliance on costly lease space. 

Mr. WERFEL. Agree. 

Mr. DENHAM. Sell or develop or redevelop high-value assets that 

are underutilized or too valuable for housing Federal employees. 

Mr. WERFEL. Agreed. 

Mr. DENHAM. And dispose of surplus property much quicker than 

we have done in the past. 

Mr. WERFEL. Agreed. Those are very good principles. 

Mr. DENHAM. Do you have others that you would include in this? 

Mr. WERFEL. I think an important one—I think you hit most of 

them. I think we really are looking at energy efficiency. I think 

that is embedded in what you are saying. But I think it might be 

worth emphasizing that in particular, the real estate transformations that we are looking to achieve have multiple benefits, 

not only housing more people in one location, but a benefit of that 

13 

as implied is energy efficiency, which results in both positive 

environmentaloutcomes and operating cost outcomes. 

I don’t know, Martha, if you have anything. 

Ms. JOHNSON. I think that is a very important aspect of this, and 

a growing one and one that has a high value to it. 

Mr. DENHAM. And in energy efficiency, you are including the tenant improvements that would need to be made to any of our buildings and use that as part of our criteria of long-term planning. It 

is either going to be so expensive to renovate a 50- or 100-year-old 

piece of property or better to sell off. 

Mr. WERFEL. That is correct. 

Mr. DENHAM. I would just add one more, which I include embedded into those five principles as well, is a justification process; really, understanding what we are doing for the taxpayers, justifying 

each building based on similar principles that we have in the real 

estate market. 

Ms. JOHNSON. Yes. I would include transparency in that so everyone can understand this as much as possible. 

Mr. DENHAM. Thank you. Oftentimes, we make things way too 

difficult. Thank you. 

Right now, we have space utilization all over the map. Space for 

employees can vary from 200 square feet per person to over a thousand, without any consideration of actual need or mission. How do 

we get more people in less space, standardized space utilization, 

and promote things like hoteling? 

Ms. JOHNSON. One of my favorite subjects. Frankly, it is a manypronged approach. I think we are at a time when work is changing, 

and how we deliver on our missions is changing tremendously and 

it is about capturing that cross hatch. 

There is no question that the old rules about how much space 

you needed to do your job are changing as people pick up and move 

a great deal, need to be face-to-face with their customers, or their 

grantees or whatever, and not necessarily be sitting in a cubicle or, 

in the old industrial model, on an assembly line. 

So we are in a whole different world of work. I think that there 

are a number of things, and GSA is eager and delighted to be playing a strong role, and we need to promote hoteling, telework, virtual work notions, and the performance management that is associated with this. These are culture changes as much as they are 

technology and policy changes; how to shift the workforce so that 

it is comfortable with moving around and not always reporting to 

duty in the same old way. 

I think a large effort around consolidating and dealing with excess property and so on sends another signal into the system that 

we want to move away from traditionally thinking about work 

places as just space. Space is not the only thing we need to secure 

for people. We need to secure them technology and other types of 

work environments. 

So hoteling specifically, we have terrific software. We are practicing with it in our own building. It is the kind of thing you come 

in and you sign up for a cubicle or space for as much time as you 

need and that then is reserved for you. 

We are also doing some things like using our smart cards to be 

sure we know who has come in and out of the building, so we know 

14 

actually how many people are trafficking in a building. You might 

have a private office that is X number of square feet, but if you are 

never there, it is not being utilized; it is just showing your status 

and rank. So we are trying to gather that kind of data so we really 

understand the work patterns in agencies. These are dramatically 

changing. We have seen in the private sector just in the last 10 

years really shift, and I think we are beginning to catch that wind, 

too. 

Mr. DENHAM. Is there a specific modeling that you are going 

after. Secondly, a brief response, since we are short on time here; 

how do we incorporate these into the commission’s decisions or into 

the commission’sdecisionmaking process? 

Ms. JOHNSON. I think it is appropriate to challenge agencies 

around virtual work, around building the technology to support it 

and to encourage the changing of personnel policies that seem to 

be sometimes tightening the sense of what the work space is. 

Mr. DENHAM. Thank you. 

At this time, we will start our second round of questioning. I will 

start with Ranking Member Norton. 

Ms. NORTON. Thank you, Chairman Denham. 

I mentioned in my opening statement how concerned I was at the 

way in which OMB regards real estate and lack of expertise, frankly, in the agency on real estate and development, shown time and 

again to this subcommittee and our full committee. The reason, of 

course, is that OMB views real estate more as a liability than an 

asset with value that can be extracted to the benefit of the Federal 

Government. 

The most poignant—outrageous even—example is the way scoring is done. Scoring is done for real estate in the very same way 

it is done for commodities. It makes the private sector wonder if 

the Federal Government knows what it is doing. And it puts GSA 

at a severe disadvantage. 

I have a hard time understanding—and you both have got to 

make me, if you can, understand how OMB, as presently configured, with its present staff, could evaluate the recommendations of 

an agency, the civilian board, composed of real experts, all of whom 

have some kind of—will have some kind, as you have testified, of 

important experience related to its mission, how could the present 

OMB be the evaluator, given its track record? I don’t even want to 

cite the one I cited in my testimony where, instead of looking at 

the cost benefit the way—you don’t even have to be in the real estate business to do. First, OMB insisted upon keeping the Old Post 

Office because there were a handful of Federal agencies located 

there that could easily be tucked into any number of buildings. 

Then, when it ran out of that excuse, it wanted to sell a historic 

property, against Federal law. Then it just sat on it and ignored 

the mandate of this committee. That is the extent of its expertise. 

It was wasting Federal Government money. We were pumping 

about $6 million into this building just to keep it alive and breathing. 

Now you come before us—or maybe you don’t; OMB will perhaps 

in the next panel—and say, make us the experts evaluating what 

the civilian board of experts recommended. I would like you to justify that proposal, if you can. 

15 

Mr. WERFEL. Well, Congresswoman, just to clarify that, I am representing the Office of Management and Budget today at this hearing. So we are here on the first panel. 

Ms. NORTON. Well, by all means, speak up. 

Mr. WERFEL. I will. I certainly will. There is a lot in your question. Let me start with the question about OMB expertise. I think 

it is important—and let me point out that I am a 14-year veteran 

at OMB, so I have been through a lot. 

Ms. NORTON. I certainly hope you are not the one that held up 

the Old Post Office. If so, hold up your hand, so I can identify you 

for the public. 

Mr. WERFEL. I did not have any personal involvement in the Old 

Post Office. I would point out that I am not sure that I would agree 

on the record until I could go back and confirm with my staff. 

Ms. NORTON. Well, I am sure that on a bipartisan—you go back 

on the record and tell the record this, that the chairman—the full 

chairman of this committee at his first hearing compelled all of 

us—it was actually Chairman Denham’s hearing. But the Old Post 

Office was of such concern to the full chairman that he took all of 

us to the annex, freezing annex, of the Old Post Office building for 

a hearing, where on the record—and I am amazed you don’t know 

about it if you come here to testify today. On the record. You have 

to go back and check that up. On the record, the agency, GSA had 

to come before us—they who had nothing to do with holding up the 

Old Post Office—and testify. This I must tell you was a total insult 

to Congress. 

You know why, Mr. Werfel? Because Congress passed a bill 3 

years ago and told them to do it. And you have got to go back and 

check? You ought to go back and check before you come before this 

committee. Take our word for it. 

The chairman was there, and I was there. Those are the facts. 

If those are the facts, that you held up the Old Post Office 3 years 

after we passed the bill, that you score real estate in the very same 

way that you score pencils, why should we give OMB the authority 

to supervise or evaluate what a board of experts recommends with 

respect to real estate owned by the Federal Government? 

Mr. WERFEL. Congresswoman, if you allow me the opportunity, 

I think I can address each of your points. 

First, I would like to start with OMB’s expertise, since you raised 

the issue. I think it is a mistake to assume that OMB analyzes 

issues in a vacuum, with just OMB staff involved. The benefit of 

OMB—and it’s our position in government—is we partner very 

closely—— 

Ms. NORTON. Will you use GSA’s expertise? GSA is your real estate expert. Does your proposal contemplate using GSA’s real estate expert, the only expertise in the Federal Government, to advise when you are doing the evaluation? 

Mr. WERFEL. Absolutely. We have a partnership with GSA that 

is ongoing and that has been involved in certain—in real estate 

policy for decades. 

Ms. NORTON. Do you think that it would be advisable for staff 

to be brought on in addition to assist in this way? The reason I 

have to ask that is because you ignored GSA entirely when they 

put the dollars and cents before you about the Old Post Office. 

16 

Frankly, Mr. Werfel, it was a complete outrage because there was 

a complete and total precedent, the Tariff Building, which in literally just a few years began to turn a profit for the government. 

We had GSA before us time and time again and their answer 

was, well, it is at the OMB; it is at the OMB. Ultimately, we are 

sure you are the culprits because a statute had to be passed. And 

we have heard back some of the OMB’s rationale for not moving 

ahead to make the highest and best use of real estate; for example, 

that you had agencies with less than 50 employees there and therefore you couldn’t rehabilitate the Old Post Office in order to reap 

a benefit for the taxpayers. 

I know I am over my time, Mr. Chairman. 

Mr. DENHAM. I think the time has expired. 

I would ask for a response. I would just remind this committee 

that we plan on being very involved in establishing the criteria 

with the administration in making sure that we see eye-to-eye as 

we move forward on this. 

But the whole reason of setting a new commission up is to make 

sure that the travesty that has happened here over years of—over 

decades of a property sitting vacant and having to spend over $6 

million a year in costs annually and the fact that it took a bill coming out of Congress to get GSA to move, we want to take these 

types of challenges out of the process and go to a commission. 

If you could do a quick response. 

Mr. WERFEL. I appreciate the opportunity to respond. And there 

are just a couple of points I want to make sure that are stated on 

the record. First of all, it is my firm belief that the decisionmaking 

process and the analytics that are done at OMB on a daily basis 

have extreme integrity. And the notion that we would ignore directions from Congress or do anything that wasn’t in the best interest 

of the taxpayer is completely inconsistent with every experience I 

have had at the Office of Management and Budget. 

From an external view, I am sure there can be frustrations. And 

I understand those frustrations. And you voicing those frustrations 

is an important part of us improving our work on behalf of the 

President and on behalf of citizens. 

But I want to make sure that I state clearly that any analysis 

that has gone on in OMB on any issue, in particular real estate or 

other management issues, is done with a tremendous dedication to 

public service and the right public policy outcomes. 

Regarding how we would conduct ourselves with respect to the 

Civilian Property Realignment Board, I think one of the key points 

that I want to reemphasize is that we would closely partner with 

a broad base of expertise we have in the government today, that 

being GSA; it also being dedicated professionals throughout the 

government, other agencies, whether they be the Defense Department, the State Department, the Department of Homeland Security, and I could go on, to evaluate the proposals that the board 

would set forward in the same way that Congress will evaluate 

them. 

The way the process works is the Director of OMB will review 

those proposals and, just like Congress, will have the ability to say 

yes or no to the entire slate and not line-item veto. We will leverage expertise from around government in the best way we know 

17 

how to evaluate whether those proposals will go forward. So I just 

want to be clear that OMB alone will not be analyzing the activities of the board. It will be a partnership across the Federal Government. 

Mr. DENHAM. Thank you. 

I wanted to just ask some questions relating back to my time in 

the State Senate dealing with the same issue. The critics—most 

vocal critics of any commission, any BRAC commission, have always said, why are you going to have a fire sale in a bad real estate market? My goal has never been to have a fire sale; it is actually to get the greatest value for our properties. How do we ensure 

we do that? 

Mr. WERFEL. I think you are right, Congressman. I think a fire 

sale is certainly something to be avoided. I think the tension here 

is that in the one regard where it is hard to speculate what the 

real estate market is going to look like. It may be that in certain 

situations 5 or 10 years from now, if we wait, we are going to get 

a worse price than if we sell today. That is always the possibility. 

Mr. DENHAM. You do have some properties that, regardless of 

whether we are at the highest market or lowest market, are so 

unique or the location is such that it is always going to be in demand. 

Mr. WERFEL. That is true. I believe that there are assets within 

the Federal inventory that can be sold in 2011, and it is the right 

decision for the taxpayer, setting aside potential speculation that 

the real estate market may change just because there are certain 

segments of the U.S. economy and the geography where the real estate market is still somewhat strong and there is still a possibility 

for positive return on investment and significant benefit. One of 

the key points here that the board is going to weigh is that the proceeds from the sales not only are important to cut the deficit, but 

they also will be used to position the government to avail ourselves 

of further opportunities. I mentioned earlier that one of the barriers to success here is the financial disincentives that exist. 

It sometimes costs a little bit of money to open up the door to 

a lot of savings. And that little bit of money, well, it is all depending on your perspective, but a modest amount of money has been 

often not within our reach or grasp. 

So we may see the board make a decision that says look, we 

might not be getting top dollar for this asset today but we need the 

proceeds in order to open up the door to a broader set and a different set of real estate opportunities that will take place over the 

next 3, 5, 7 years. Again, it is the board’s determination to make 

these challenging decisions, and we believe that having a board 

like the BRAC Commission will put us in a much better position 

to move through these issues and start making real progress. 

Mr. DENHAM. Now one of the biggest challenges that I have always seen faced when we look at all of our properties or liquidation 

of properties or even a BRAC Commission is actually getting the 

right data, making sure every agency is complying with your requests so that there aren’t properties that are out there hiding or 

agencies that are hoarding properties. 

How do you expect to make sure that we always have up-to-date 

property lists, as well as evaluations from every department? 

18 

Mr. WERFEL. We have a process that exists today. In fact, I was 

happy to see that GAO commented favorably on the progress we 

have made in their testimony regarding the Federal inventory. And 

we started at a place prior to 2003 where our inventory was spotty 

and incomplete, and now we have a detailed tracking of just about 

every constructed or separate asset that the Federal Government 

owns or leases, and GAO is now—and they will testify in the next 

panel, but in their testimony they indicate that they have seen a 

dramatic—an improvement in the reliability of that information 

such that they now feel they can rely on that inventory. 

But more work is needed, and we are looking to refine that inventory each and every day. You mentioned utilization before. You 

know, right now our utilization is captured on a very binary, is it 

under utilized or is it fully utilized. And we are moving more towards a specific quantifiable metric of how much it is utilized and 

that is going to help us and help the board make smarter decisions 

going forward. 

Mr. DENHAM. And you have possession of that list today? 

Mr. WERFEL. The list is maintained by GSA, yes. 

Mr. DENHAM. We have asked for that informally several times. 

We would like to make a formal request today as a committee that 

we receive that list. It is my understanding this list or a similar 

list was given to the Senate—2 months ago? Quite awhile ago, and 

this committee continues to wait. So we would make that formal 

request to you today. 

Mr. WERFEL. Absolutely. And any real estate information from 

the inventory that has been provided to your colleagues in the Senate we absolutely commit we will provide to you in short order. 

Mr. DENHAM. Thank you. And it should be more up to date according to your testimony, that we should be able to get the new 

and improved list, whatever that may be? 

Mr. WERFEL. That is correct. The asset information that we provided to the Senate—and just to clarify, they asked for information 

regarding our excess asset list and we can certainly provide that. 

I think at the time we provided it, it was 2009 data. We should be 

able to provide you the 2010 data. 

Mr. DENHAM. We are not just looking for excess or surplus, we 

would like to see an inclusive list, the same list that we are going 

to be asking our new commission to look at and evaluate, we would 

like to evaluate that as well. 

Mr. WERFEL. And Congressman, on that let me just comment 

that that list has not been provided to the Senate. And the reason 

is, is because there are security issues associated with the entire 

footprint of the Federal assets inventory. Right now that information is maintained in a system by GSA that has a lot of controls 

and IT security surrounding it. And the reason is, is because our 

colleagues at the Defense Department and the Department of 

Homeland Security have identified certain security risks associated 

with the public disclosure of the entire Federal real estate footprint. 

Mr. DENHAM. DOD properties or other properties? 

Mr. WERFEL. All properties, including energy properties that 

might involve nuclear activities or other things like that. So you 

have got some sensitivity in some portions of our inventory. That 

19 

is not to say that we don’t want to work with you to make sure 

that you have the information you need to do your job as chair of 

the subcommittee, it is just an important element that we need to 

work through with you. 

Mr. DENHAM. I would assume you would be able to segregate 

that list from top secret properties versus properties that were 

open for public review? 

Mr. WERFEL. It is something we certainly need to work with you 

on. 

Mr. DENHAM. And then I would also assume that this committee 

with our top secret clearance would be able to evaluate at least in 

an informal process all the properties as well. 

Mr. WERFEL. I think that is something we can work towards a 

logistical solution on. I will say that the number of properties provided to the Senate so far number 80,000. So we will get you that 

list. It will be a good starting point, but certainly we understand 

your concerns and we want to work with you towards a solution. 

Mr. DENHAM. Thank you. 

Ms. NORTON. We are aware of course that when we say properties everybody may see dollars and cents dancing in their heads. 

But GSA owns warehouses, it owns of course commercial space, it 

owns laboratories. Of the properties that you have sold, would you 

give us some sense of what kinds of properties these are? Are these 

commercial office space properties that somebody is going to perhaps use for that purpose? Are these warehouses? When you say 

‘‘properties’’ that word can hide a lot when it comes to funds. Were 

you able to get the amount of money you wanted? Any amount 

looks good to us, but did you evaluate how much you thought the 

property should bring against how much it brought? Those are the 

kinds of questions I have. 

Ms. JOHNSON. Certainly by the time we get to the point of entering a negotiated public sale we are very clear on what the value 

of that asset is and what would be a reasonable negotiation to get 

to. And there is a whole range of property, it is office buildings, 

warehouses, it is also tracts of land. And there is an individual and 

a localized market for many of these things, although, yes, government property at times is unique and has some special aspects to 

it that are also part of the valuation. So I can give you a more detailed list of the breakdown of what we have disposed of in the last 

X number of years. 

Ms. NORTON. That would be very, very helpful. You know, how 

much of this is land, the places where it is located. I mentioned St. 

Elizabeths. You know, there might have been people who got up 

and said why don’t we just get rid of that? It certainly was a blight 

on the District of Columbia. That would have been the most foolish 

decision we ever made. 

Ms. JOHNSON. Right. 

Ms. NORTON. As you say, it covers so many different kinds of 

properties that I am afraid Congress just sees examples of the office buildings up here and thinks of how good they look and just 

see dollars and cents just flowing in to bring down the deficit. I 

think we ought to get a realistic sense of what these properties are 

and whether you got full dollar for the properties based on your 

own negotiation. 

20 

Ms. JOHNSON. Certainly, and it goes to my point about transparency. I think the more people can see what kind of portfolio we 

have they can really appreciate what we are talking about in real 

terms, whether it is proceeds or whether it is operating expenses. 

Ms. NORTON. Understanding the locations would be interesting 

as well. Properties in land scarce places like big cities might be 

very different from properties located in a rural area that was once 

very much more populated than it is today, for example? 

Ms. JOHNSON. Yes. You are always threading that needle whether or not it is a fire sale and whether or not in that local real estate 

market there is going to be a tipping that you will do in that market because of size or the impact. 

Ms. NORTON. What would you do in that case? 

Ms. JOHNSON. Well, I think we have to evaluate each of those 

and be very, very careful to include the community, include all the 

public interest groups that are registering questions and concerns, 

and that is part of where this process can get. 

Ms. NORTON. So if the Federal Government were to sell a piece 

of property in an area it could affect real estate values throughout 

the area? 

Ms. JOHNSON. I think often—I think the number is we have over 

1 million square feet in over 40 cities. So you think about the impact and the size of our footprint, yes, we do need to be very sensitive to that. And it is about communicating, it is about transparencies, holding the open town meetings or whatever so people 

know what is going on and get their questions answered. 

Ms. NORTON. A final question on the Old Post Office. Ms. Johnson, when the GSA released its request for expression of interest 

3 years ago, this was after the statute had passed, then all work 

stopped. So the people had spent a lot of money offering expressions of interest, and GSA simply was silent and didn’t move. 

In light of that experience, very disappointing experience, I am 

going to have to ask you what assurances you can give this committee that once the solicitation period for the RFP on the Old Post 

Office is complete that GSA will be allowed to proceed in the development of the Old Post Office and how long you think that will 

take. 

I am also asking Mr. Werfel whether OMB is now out of it and 

hands off of the process that has proceeded at GSA. So first I want 

to ask Ms. Johnson. 

Ms. JOHNSON. The RFP was issued in the middle of March and 

we are expecting responses, the deadline is in July. So we are looking at a couple months where people are putting together their proposals. And we will—I am quite committed. I have been hearing 

about the Old Post Office for a long time. I would be delighted if 

we could move forward on this, and I will certainly be encouraging 

our people to be expeditious in assessing what those proposals are 

and working with the various partners to keep on moving. 

Ms. NORTON. Mr. Werfel, does OMB have anything to say now 

that a process, a statutory process, is under way? Again people are 

being required to spend private capital in order to compete. Does 

OMB have anything further to say about this competitive process 

under way at the GSA? 

21 

Mr. WERFEL. Well, I am certainly pleased it has started and the 

fact the RFP started has issued I think is an important obvious 

milestone that we are moving ahead. I think OMB’s role going forward just to work and partner with GSA to make sure that the 

process unfolds in a way that the best interest of the taxpayer is 

met and whatever outcome happens for the property. Those are the 

types of things that we will work with—— 

Ms. NORTON. What role would you have, Mr. Werfel? These people have to decide under statutory process that even—that is kept 

virtually under lock and key who wins the proposal based on competitive criteria. As I have indicated to you and you have not been 

able to demonstrate otherwise, this is not OMB’s strong suit. So I 

want to know the exact nature of your partnering on an issue 

where you have not been a very good guardian of the taxpayers’ 

money in partnering on properties like the Old Post Office. 

Mr. WERFEL. We have certainly hit a point in the process right 

now where you are in a competitive procurement and it is important at that point to OMB to distance ourselves from the specific 

agency decisionmaking process. But again, I think that as a global 

matter to the extent GSA requests any advice or consultation with 

OMB on the process going forward within bounds and making sure 

we are not involved in a particular procurement, we would assist. 

You know, the specifics of our partnership are we each bring different expertise to the table and together we hopefully come out 

with the right public policy outcome in each case. 

Ms. NORTON. This is the table where the statute does not contemplate your attendance. If this committee were to find out that 

you were interfering with statutory competitive processes, OMB is 

who would be in trouble. And I warn you because OMB has had 

a record, has been disgraceful. 

Mr. Chairman, I want to say it has been so disgraceful that I will 

not support any legislation without certain kinds of guarantees in 

it. First of all, Mr. Werfel, I do not, in response to your response 

to me, question the good faith of OMB. I don’t question your hard 

work. I question OMB’s good judgment and I question OMB’s expertise in real estate. And there is nobody who has served on this 

committee for any period of time who would not have many examples that document that. 

In light of that, I will not support any legislation that does not 

require OMB to have expert staff in real estate, not only, Mr. 

Chairman, because of the new civilian board that is contemplated, 

but because this committee I have seen for 20 years hindered in 

carrying out the taxpayers’ work because of the OMB, who is supposed to be the guardian of the taxpayer. So if all the administration is asking me to do is to give to OMB, the ranking member will 

not support that legislation without some part of a legislation that 

requires OMB to bring on board staff with expert and development 

expertise, not only because of its intervention in—required intervention in the civilian board, but because of the way OMB has handled real estate throughout my 20 years of service on this committee. 

Thank you, Mr. Chairman. 

22 

Mr. DENHAM. Thank you. And we share a bipartisan view of that 

and we will make sure there is a guarantee in this bill as it moves 

forward. We certainly want your support on that. 

I do have a few questions regarding the financing of this. In your 

testimony you talk about the net proceeds and how it will offset the 

up front costs. In the 2012 budget I think it scored at $8 billion 

to set the Commission itself up. Can you explain in greater detail 

how that offset would be funded directly back to having an overall 

fund—the administration’s proposal on the impact of GSA’s fund? 

Mr. WERFEL. Absolutely, Congressman. I believe the total appro- priation that we are seeking to get the board up and running is $87 

million. A great significant portion of that is to fund certain capital 

investment—— 

Mr. DENHAM. 87 or 8.7? 

Mr. WERFEL. 87, $87 million. Let me explain that a great majority of that again is to finance relocation costs or other types of real 

estate transformations that are needed in the short term to trigger 

that first set of savings opportunities, because once you trigger that 

first set of savings opportunities, the fund becomes self-financing 

going forward and that is at least our vision. 

So let’s say you were to in the first set of recommendations expend 40 million of the dollars in order to pay for the associated 

costs of doing the first set of recommendations. Let’s say those first 

set of recommendations yield back $3 billion in proceeds. So you 

have just spent $40 million to establish a revenue back to the Federal Government of billions of dollars. Sixty percent of those go 

right to deficit reduction, 40 percent come back to the board for the 

fund. And now they are moving forward with a fund that is going 

to enable them to do even more broader transformations that enable an even larger footprint of savings, and that is the vision. So 

we hope this is a one-time appropriation. 

Mr. DENHAM. Is there a cap on that fund? 

Mr. WERFEL. I am not aware there is a cap on the fund. 

Mr. DENHAM. But obviously at 40 percent you could see—— 

Mr. WERFEL. Yes. At 40 percent it is a minimum of 60 percent 

back to deficit reduction. The board at their discretion could change 

that. And then Congress moving forward of course, as we have experienced with this, could change the percentage as well. 

Mr. DENHAM. And the DOD used an accounting system called 

COBRA to evaluate the cost and savings to assist in developing its 

recommendations to the BRAC Commission. Do you believe 

COBRA is the best system or do you have another system that you 

would be recommending for the accounting aspect of this? 

Mr. WERFEL. I think we would look at COBRA as a starting 

point. But we might need to make adjustments to the system given 

the civilian footprint has just different parameters associated with 

it. So we would start there, but we would look potentially at modifications. 

Mr. DENHAM. And on the lease side of things obviously there are 

a number of glaring examples of leases that are at least questionable, others that are just an outright waste. One of them I would 

like to highlight is last year the Securities and Exchange Council 

signed a 10-year lease for 900,000 square feet of prime office space 

here in DC that it did not need. Unfortunately, our committee has 

23 

seen similar types of bad decisions by other agencies that have 

managed to get independent leasing authority apart from GSA. We 

could get a bill passed and go through this process only to see those 

efforts undermined by future agency decisions. 

How would the administration’s proposal affect future decisions 

in Federal agencies and making sure there is not an agency out 

there doing some type of rogue lease that puts taxpayers accountable for hundreds of thousands or millions of dollars? 

Mr. WERFEL. I think you have got to fight the war on two fronts. 

I think first of all working with GSA we need to make sure that 

we are putting up the appropriate roadblocks to agencies entering 

into costly and noneconomically smart leases. I also think that the 

board activities would—— 

Mr. DENHAM. Are you saying redefine GSA’s authority so that all 

leasing authority goes under GSA? 

Mr. WERFEL. No. 

Mr. DENHAM. Because that is part of the challenge now is you 

have agencies out there doing their own thing—— 

Mr. WERFEL. I am not suggesting that as a particular proposal. 

What I am suggesting is that GSA can play—and Martha can 

speak to this—can play an important role. As agencies come to 

them for GSA to serve as their leasing agent, that GSA can push 

back and make sure that we are only moving forward on lease arrangements that make economical sense. 

Ms. JOHNSON. Can I just add, one of the things that I hope I can 

establish during my tenure at GSA is ever increasing respect for 

our capabilities and our expertise so that agencies turn to us because they know that we can provide the support and the expertise 

that they need. There is clearly a dispersed authority and we would 

like to be sure that we are playing as strong and as competent a 

role and sending the message that they don’t need to do it themselves. The agencies really, although they could, I think they need 

to focus on their mission and let us take up some of that work. I 

don’t want that mandated, but I would like it to be a result of our 

competence and visibility and our expertise. 

Mr. DENHAM. If it is not mandated, how do you make sure that 

this type of lease doesn’t happen again in the future? 

Ms. JOHNSON. Well, I obviously can’t make sure, but I have to 

say in the long run we went down that mandated road for a long 

time. I think GSA is better if we have to fight to show that we are 

good. And I believe that we should be out there demonstrating our 

competence and taking pride in our accomplishments. And I need 

to be out, we all need to be out sharing with the rest of the government what we can do for them. 

Mr. DENHAM. Obviously transparency is a very important issue, 

but accountability is just as important. I think this committee 

would be looking in the future to go to one person. If there is this 

type of lease outs there, and we are wasting billions of dollars of 

taxpayers’ money, I want to go to one person to say how did this 

happen. And if you do not have the authority, and maybe GSA is 

not the property agency, but I would like to see one agency that 

is held accountable to all of these leases. Not creating another level 

of bureaucracy, just the accountability. Maybe it is final signoff, 

maybe its helping to harness our buying power. But if have you an 

24 

agency that is able to go out and secure 900,000 square feet of 

prime office space here in DC on not a 1-year lease or 6-month, but 

on a 10-year lease without having—I would think a lease that big 

would warrant the President knowing or having some type of 

signoff on it. That is a big lease without having any justification 

behind it. 

Ms. JOHNSON. I understand that our Office of Governmentwide 

Policy has some capability to be a bit of—to be sure that the processes are being followed and manage a lot of the reporting. So perhaps that could be one way to consider how you get a single picture 

on things. I think it is very complex to think about—I believe it is 

complex to think about agencies—to think about it all coming in in 

a mandated way into GSA. I just believe that that would put us 

into that monopolistic role, and I don’t think you ultimately get the 

kind of down the road respect and performance that you need to 

get by having the pull and push among the agencies to understand 

it is the best place to go. 

Mr. DENHAM. Thank you. I think we need a better understanding 

between us, and I look forward to working with you on that as we 

develop the criteria for this commission. 

Ms. JOHNSON. I would be delighted, thank you. 

Mr. DENHAM. Mr. Hanna, do you have any questions this morning? 

Mr. HANNA. What do you think the fundamental flaw is behind 

a decision process like that? How does it happen that we could rent 

900,000 square feet for 10 years? What anecdotal ideas, information do you have? 

Ms. JOHNSON. I believe that there is a—that expertise is spread 

rather broadly and not concentrated as it needs to be. This goes to 

the whole acquisition workforce. We have a lot of contracting people all over the government, and it needs to be a much tighter community and better woven together. I think our expertise is dispersed, that we have expertise in GSA and it is one of the few concentrations of it and the kind of level that we have is I think is 

a real asset for the government. And I think that is something that 

if I were in management in another agency I would say why am 

I doing this? Why don’t I turn to them? And I want to be sure that 

they know that they can. 

Mr. HANNA. Do you have any idea of how widespread something 

like this might be? 900,000 square feet is a glaring example but it 

isn’t necessarily a theme. Have you seen it other places in your 

tenure? 

Ms. JOHNSON. I believe our governmentwide policy people could 

probably give me a little bit of perspective on that, and I would be 

happy to share it with you for the record. 

Mr. HANNA. I would appreciate that. Thank you. 

Ms. JOHNSON. Certainly. 

Mr. HANNA. I yield back. 

Mr. DENHAM. Thank you. Ms. Norton. This will be our final 

round of questions. 

Ms. NORTON. The chairman has asked a very important question 

essentially when he brought up the SEC bill debacle. He was asking whether or not the Federal Government mandate that the GSA 

manage all lease space, whether that mandate, which is a matter 

25 

of Federal law—I am asking staff to find me the words, particularly in light of your answer, Ms. Johnson. If you have to compete 

for what the statute says, I would like to know how many agencies 

like SEC have their own authority to lease space? 

Ms. JOHNSON. Not all that many. I understand it is a couple of 

the financial agencies and it is by law. I can get you the list. 

Ms. NORTON. Yeah, I will tell you why it is by law, probably because somebody put it in appropriations, probably some Senator 

that they should go out and do. They probably were frankly working for some developer, and that is not in the taxpayers’ interest. 

Let me say to you, Mr. Werfel, you would have thought that the 

OMB would have been on top of this one and if you want to intervene into business of agencies which are in the leasing business. 

I would want to know how in the world SEC over a weekend could 

have on a sole source basis leased almost 1 million I think— 

900,000 square feet in the most expensive property in the District 

of Columbia? It is a property, by the way, that many of us see as 

the kind of property that would be useful for the increasing need 

of the Federal Government for secured properties. This is a brand 

new rehabilitated space where the developer rehabilitated it specifically because the developer saw that the Federal Government 

increasingly wants absolutely secure space for some agencies. 

Now the last time I looked, Mr. Werfel, Arcadia was much interested in SEC, but because they have independent authority they 

went out and leased almost 1 million square feet only because they 

have no expertise. And they did it on a sole source basis, which is 

in violation of Federal law. I don’t know why if OMB wants to do 

something it isn’t putting its considerable expertise, whatever it is, 

and I certainly would think it would fall into this category to see 

to it that agencies don’t in fact engage in this manner. 

As I understand it, they have gone around the city and found 

600,000—there are agencies that they believe will be able to use 

600,000 feet. They don’t know anything about this, and I want to 

know if Ms. Johnson is helping. And they still have on their hands 

at least 200,000 square feet. 

So I need to ask both of you what you know about the SEC lease, 

because the taxpayers of the United States of America are paying 

for this lease every moment that you do not find some real use for 

it or find somebody else to use it. What do you know about what 

is happening with this? I guess since you are out of it, Ms. Johnson, and would like to compete for it, I guess the answer goes to 

Mr. Werfel. 

Mr. WERFEL. Well, I stated in response to your earlier question, 

and before I get to the full answer I just want to restate because 

I think it is important to specify that OMB does not get involved 

in particular procurement activity, it is very important that we 

stay independent from that and allow that process to move forward. 

Congresswoman, I share your frustration and one of the reasons 

why the President is proposing a major change to how we deal with 

real estate is because you will be able to find throughout government instances of inefficient and poor lease decisions that are 

made. 

26 

Ms. NORTON. Mr. Werfel, would you support and, Ms. Johnson, 

would you support the notion that in light of the consolidation 

going on and the President’s mandate that one agency should be 

responsible for all leasing in the Federal Government? 

Mr. WERFEL. I think I would consider that as an option to evaluate against other options to address the problem. 

Ms. NORTON. What would be another option? The public building 

statute—GSA was set up in 1949, in 1959 Congress came to the 

conclusion that special expertise was necessary to manage the 

properties of the United States of America. That mandate included 

all civilian properties. As you indicate, the only exceptions have 

been because somebody slipped something into an appropriation. 

Now you are evaluating and realigning how you deal with real estate. In light of that mandate of the President of the United States, 

should we not go back to the mandate of the public building statute 

in the first place that says unmistakably that one agency shall 

manage leasing and development of Federal properties? Would you 

at least—can we at least get a bottom line agreement on that from 

you in light of the President’s mandate for consolidation and realignment? 

Mr. WERFEL. Again, I think that there are important policy implications to consider before we would—— 

Ms. NORTON. Name some. I am open. 

Mr. WERFEL. I will, I will. If you will indulge me, let me just 

draw an analogy that there has been in debate, for example, in another part of government around debt collection, whether Treasury 

should collect all the debt on behalf of all the Federal agencies and 

the agencies shouldn’t collect their own debt. We don’t have that 

model. We have one in which agencies can collect their own debt. 

And in the nineties and the 2000s some agencies got to be better 

than Treasury at collecting debt. And Treasury raised its game as 

a result and now is better for it and may be now positioned to consolidate all the debt collection activity. 

Ms. NORTON. No, no. Do you know anything about real estate, 

Mr. Werfel? 

Mr. WERFEL. I believe I do. 

Mr. DENHAM. We are out of time here. 

Ms. NORTON. Just let me indicate this, perhaps collecting money 

is something that agencies have proved they are adept at. I have 

cited to you the SEC case which is emblematic, it seems to me, of 

what happens when you give an agency that does not have specific 

expertise a very weighty taxpayer function. 

Ms. Johnson, would you at least be willing if this committee 

mandated it to manage all the real estate leasing and for that matter development of Federal properties? 

Ms. JOHNSON. I have no problem with assuming the authority for 

that. I would believe that there would be cases where our designating that authority into the hands of an agency would be a responsible move. I would take the example of the Forest Service 

where they have minor leases that they need to be negotiating all 

the time and they are right there on top of it. And if we deem them 

to have the appropriate staff, and so on, I would like not to preclude the possibility for some of those kinds of flexibilities. I just 

27 

believe that having only one agent essentially handling all leasing 

is not necessarily the—— 

Ms. NORTON. I tell you what, Ms. Johnson, you are contradicting 

the statute itself. 

Mr. Chairman, I believe this is an opportunity, the President 

says he wants to consolidate and he wants to realign. We can’t just 

say to the President, OK, we will do what you want to do. We have 

got to put into this bucket the committee’s own experience. The 

committee’s own experience has been, Ms. Johnson, that when an 

agency whose mandate is something unrelated to property management the taxpayers are at risk. They are given authority to do 

something they don’t know how to do, that the taxpayers are at 

risk. And again, I am not going to support legislation that simply 

leaves OMB and GSA exactly where they were and expect a different result. 

I just want to lay that on the record. I have been thrilled to see 

this proposal come from the President. I can only hope that his 

agents are prepared to carry out the full intent of that proposal. 

If you are not, I think the only way to do it in light of the SEC 

debacle, Mr. Chairman, is to mandate it. 

Mr. DENHAM. Thank you. Out of the sake of time we would ask 

for written response on that. But this is certainly an area we plan 

to dive much deeper in, whether that is something that is included 

in this bill or within follow-up hearings through this committee, 

but the leasing authority we believe there are a number of things 

that can be done, whether putting a cap on it so that—you know, 

I think the current cap is just under $3 million for the properties 

that we do or the agencies we do see come through this committee. 

There is no reason that we couldn’t have a cap on all properties. 

What has happened with SEC is atrocious, and certainly the sole 

source contract, as Ms. Norton has brought up, but the fact it was 

done I believe over a weekend, it was certainly a very, very quick 

process. You don’t ever see government move that quick, especially 

done on a weekend away from this committee. 

So specifically what I would like to see on the SEC portion of this 

is where the current investigation is right now. I want to know if 

anybody has been fired over this. 

And then lastly, what are we doing with the space now? Are we 

stuck in the contract? Are we going to utilize that for other areas? 

Are we getting rid of our leases in the process? 

But I would hope that we would be able to get that information 

without having to do a hearing on it as well. I know a number of 

committee members have an extensive amount of questions as it 

pertains to the SEC, but it certainly relates to the overall recommendations of what this committee will have on future legislation. 

Ms. Johnson, would you care to comment before I go to my final 

question? 

Ms. JOHNSON. No, I am fine. 

Mr. DENHAM. And just finally, we have appreciated your willingness to work with us on this, your testimony, but as mentioned, we 

are also looking at drafting legislation, both myself as well as the 

committee. We would like to work with you to ensure that the criteria we are combining together and working in a bipartisan fashVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
28 

ion. Just want to reemphasize again are you willing to work with 

us on that legislation, Mr. Werfel? 

Mr. WERFEL. Absolutely, yes. 

Mr. DENHAM. Thank you. We will look forward to hopefully getting that—we talked somewhat about a timeline. We would like to 

expedite that timeline and certainly reap the $15 billion-plus in 

savings to help us out in this budget process. Thank you for your 

testimony today. 

Ms. JOHNSON. Thank you. 

Mr. WERFEL. Thank you. 

Mr. DENHAM. We are going to stay strict to the 5-minute timeline 

as we are starting to get very late in the process. We certainly have 

a lot to talk about. We could talk all day on doing a better job with 

our properties and liquidation as well as leases. But at this time 

I would like to invite Mr. David Wise, Director of Physical Infrastructure Team, U.S. Government Accountability Office, who is 

here today, along with Mr. Brian Lepore, Director of Defense Capabilities and Management Issues at GAO, and the Honorable Anthony Principi, former Secretary, U.S. Department of Veterans Affairs and former Chairman of the 2005 Defense Base Realignment 

and Closure Commission. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. Without objection, so ordered. 

Since your testimony has been made part of the record the subcommittee would ask you to limit your testimony to 5 minutes, 

your oral testimony. 

Mr. Wise. 

TESTIMONY OF DAVID J. WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 

OFFICE; ACCOMPANIED BY BRIAN J. LEPORE, DIRECTOR, 

DEFENSE CAPABILITIES AND MANAGEMENT ISSUES, U.S. 

GOVERNMENT ACCOUNTABILITY OFFICE; AND THE HON. ANTHONY J. PRINCIPI, FORMER SECRETARY, U.S. DEPARTMENT OF VETERANS AFFAIRS AND FORMER CHAIRMAN, 2005 

DEFENSE BASE REALIGNMENT AND CLOSURE COMMISSION 

Mr. WISE. Chairman Denham, Ranking Member Norton and 

members of the subcommittee, thank you for the opportunity to testify today on our work related to excess and underutilized Federal 

real property held by Federal agencies as well as our work with the 

BRAC process. My testimony will focus on the civilian sector while 

my colleague Brian Lepore’s testimony will focus on the military 

side. 

My testimony today will discuss, (1), obstacles to effectively managing Federal real property and, (2), actions the government has 

taken and a framework proposed in the President’s 2012 budget to 

overcome those obstacles. 

As we previously testified before the subcommittee, the Federal 

Government occupies more owned and leased buildings than it 

needs. In fiscal year 2009, 24 landholding agencies, including DOD, 

reported 45,190 underutilized buildings, with a total of 341 million 

square feet, or 1,830 more buildings than they reported the previous fiscal year. These underutilized buildings cost $1.66 billion 

annually to operate and are potentially valuable. 

29 

We designated the management of Federal real property as a 

high-risk area in January 2003 in part because of excess and underutilized property. That year we found that the Federal Government faced a number of obstacles to effectively manage its real 

property. These included the lack of strategic focus, the lack of reliable real property data, legal limitations such as public conveyance, 

environmental requirements and stakeholder influence, such as 

local governments, advocacy groups and the private sector. 

Since that time the government has also made significant 

progress. For example, the land holding agencies have established 

asset management plans, standardized real property data reporting 

and adopted various performance measures to track progress. In 

our 2011 high-risk report we found significant improvement in this 

area. Consequently, we removed the data element of real property 

management from the high-risk list. 

In 2007, we recommended that OMB assist agencies by developing an action plan to address the key problems associated with 

decisions related to unneeded Federal real property, including 

stakeholder influences. OMB agreed with the recommendation but 

has yet to implement it. However, the administration’s recently 

proposed framework, the Civilian Property Realignment Act, 

CPRA, is somewhat responsive to this recommendation in that it 

addresses both legal limitations and stakeholder influences in real 

property decisionmaking. 

According to the proposal, the purpose of CPRA would be in part 

to streamline the current legal framework for disposing of 

unneeded civilian real property. The proposal itself, however, does 

not describe how the streamlining would be accomplished. 

Regarding stakeholder influences, CPRA would create an independent board to recommend Federal properties for disposal or consolidation after receiving recommendations from civilian landholding agencies. Grouping all disposal and consolidation decisions 

into one list that Congress would vote on in its entirety could help 

mitigate local stakeholder influences. In addition, CPRA would also 

help to reduce the government’s overreliance on leasing by recommending that the government consolidate operations from leased 

space to owned space were efficient. 

Mr. Chairman, that concludes my testimony. After Mr. Lepore’s 

testimony, we will be happy to answer the subcommittee’s questions. Thank you. 

Mr. LEPORE. Mr. Chairman, Ranking Member Norton, and members of the committee, I am delighted to be here today to present 

to you some of our observations on the Base Realignment and Closure, or BRAC, process. This may help you as you consider the Civilian Property Realignment Board proposal. 

My testimony today is based on the work that we are doing monitoring implementation of the BRAC process and reporting on the 

BRAC process. 

Now to the first of my two points, the major elements of BRAC. 

DOD begins the process by developing closure and realignment recommendations and submitting them to the independent BRAC 

Commission. The Commission can approve, modify, reject or add to 

the recommendations. The Commission held hearings, voted on 

each recommendation, and reported to the President. The President 

30 

could disapprove the Commission’s report and send it back to the 

Commission for revision or approve all of the recommendations in 

whole and send them to Congress. He did the latter. 

Next, Congress had 45 days to enact a joint resolution of disapproval or all of the recommendations would become binding. 

They are all binding. In authorizing the round, Congress required 

DOD to implement the recommendations within 6 years from the 

date of submission to the Congress. The key similarity between 

BRAC and the Civilian Property Realignment Board proposal is the 

all or nothing approach after the Commission’s report to the President. 

Now to my second point, DOD’s key steps to develop the recommendations. DOD established the round’s goals promoting 

jointness in transformation, reducing excess infrastructure and saving money. DOD proposed and Congress approved the criteria that 

was used to develop those recommendations. DOD used the cost of 

base realignment actions, or COBRA, model to estimate cost and 

savings and provide a common way to compare candidate recommendations. And finally, DOD developed a common analytical 

framework and organizational structure to better ensure consistent 

application of the criteria in developing the recommendations. 

Mr. Chairman, this concludes my prepared remarks and we 

would be happy to answer any questions that you or the other 

members of the subcommittee may have. 

Mr. DENHAM. Thank you. Mr. Principi. 

Mr. PRINCIPI. Good morning, Chairman Denham, Ranking Member Holmes Norton, and members of the committee. I welcome your 

invitation to comment on the question of whether a civilian BRAC 

Commission can consolidate the office space and save taxpayers billions of dollars. The simple answer is yes, if structured properly. 

The most important underlying question is whether the administration and the legislative branches can afford not to execute a civilian BRAC to relieve itself of costly and unneeded infrastructure 

in order to achieve badly needed cost savings to the Federal budget. I commend the administration for their proposal to establish a 

BRAC-like process for Federal civilian infrastructure, and I commend GAO for identifying over 45,000 Federal buildings that are 

underutilized and for their indispensable support of the 2005 

BRAC Commission that I chaired. 

As we have all learned, the process does not come without pain 

at the Federal level in deciding what to close or consolidate at the 

congressional level and fielding constituent concerns and at the 

local community level. There will be tough choices in tough times. 

My comments today will be addressed from my experience as 

former Chair of the 2005 BRAC Commission and former Secretary 

of Veterans Affairs. 

I think it would be helpful to briefly review why a BRAC process 

was even necessary. Prior to 1988, the Secretary of Defense for the 

most part implemented his own base closure program with minimal 

consultation with the military departments or the Congress. In 

1988, the DOD budget declined for 3 straight years and was predicted to decline further. To ensure that scarce DOD resources 

would be devoted to more pressing operational missions and investments needed rather than maintain its unneeded facilities, SecVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
31 

retary of Defense Frank Carlucci chartered the Defense Commission on BRAC that Congress enacted into law. 

In 1988, that provided the statutory basis for this one-time approach. The Secretary of Defense appointed the Commission, the 

Commission reported to him, most hearings and votes were closed, 

and there was little public information about how the Commission 

arrived at its recommendations. 

There were many critics of the 1988 BRAC who decried the lack 

of transparency and independence of the Commission and felt the 

closure list unfairly targeted facilities located in congressional districts of Members out of favor with the administration. 

It was not until 1990 that Congress passed the Defense Base Closure and Realignment Act, when Secretary of Defense Cheney unilaterally proposed closing 35 bases and realigning 20 others. That 

act brought transparency to the process and independence to the 

Commission. Consequently, there were BRAC Commissions in 

1991, 1993, 1995, and 2005 that have withstood the test of time, 

effectiveness, and cost savings. 

BRAC is a major undertaking, to be sure, but if done right it can 

be as open, deliberative, inclusive and nonpartisan a process as I 

have seen in my professional career. I strived to make it so in 

2005. I can assure you that it was not an easy process. 

On May 13, 2005, the BRAC Commission received a total of 190 

recommendations from DOD that would in effect close or realign 

837 military activities nationwide. Not only would the recommendations double in number from the previous BRAC round, 

but they were greater than all previous BRACs combined. We had 

4 months to complete our mission. Over the course of those 4 

months, our commissioners and staff made 182 visits to 173 military installations. We conducted 20 regional hearings and another 

20 to legislative and deliberative hearings as well as hundreds of 

meetings with community representatives and elected officials, and 

then prepared a 338-page report of our findings and recommendations to reach the President and Congress. In my view, the lessons 

learned from this can be applied to other Federal agencies with 

unneeded infrastructure. 

Turning to the current administration’s proposal to establish a 

BRAC-like process, I strongly endorse the proposed Civilian Property Realignment Act and would suggest several changes for your 

consideration. In reviewing the administration’s proposed legislation, I find the purpose clear. In particular, I find myself in agreement with the purpose to enable Federal agencies to retain and reinvest savings and sale proceeds. In my view, this will provide an 

incentive to these agencies to identify costly or unneeded facilities. 

Secondly, the act would create a seven-person Civilian Property 

Realignment Board to assess the recommendations submitted by 

the Federal agencies. In addition to the need to clearly spell out 

the qualifications for appointment to the board, I would strongly 

recommend that to ensure the board’s independence the President 

appoint five members, including its chairman, while the majority 

and minority leaders of both Houses of Congress appoint a member. This would raise a total board to nine people. I also suggest 

that a commission be established in lieu of a board and that all 

32 

commissioners be confirmed by the Senate to ensure independence 

and that they are nonpartisan. 

Third, the act proposes that all proceedings, information and deliberations of the board shall be open upon request to the chairman 

and ranking member of the several Senate and House subcommittees. Again, in the interest of transparency, I would propose for 

your consideration that all proceedings, all information, as well as 

board deliberations not classified be made concurrently public, as 

was done by the BRAC Commission. The 2005 BRAC Commission 

also maintained an Internet Web site for this purpose. 

Fourth, I give pause to the proposal that the board report its 

findings, conclusions, and recommendations to the Director of 

OMB. The proposed act also proposes authority for the Director of 

OMB to manage the process, including the authority to approve or 

disapprove the Commission’s recommendations. Accountability and 

authority, in my view, should rest with the President. The Commission should have the qualifications to undertake their work, and 

they should be supported by an eminently qualified professional 

staff. 

Fifth, I notice the absence of any proposed criteria that would 

govern the deliberations of the board. Such criteria are critical. 

They should be promulgated in the Federal Register for comment 

and included in the act enacted by Congress. The board would be 

bound by these criteria in making their recommendations to the 

President and Congress. 

Sixth, one of the real lessons learned from the 2005 BRAC was 

a need for an effective accounting tool to estimate the true cost savings and true cost for each recommended closure and realignment. 

The Department of Defense, as you know, utilized the COBRA 

model to project costs and savings and net present value. In the 

case of the 2005 BRAC, transformation, and not cost savings, was 

the key driver in the Secretary’s recommendations to the Commission. 

I thank you, Mr. Chairman, Ranking Member Holmes Norton, for 

the opportunity to testify today. 

Mr. DENHAM. Thank you, Mr. Principi. 

Following the last round of questions for the previous committee, 

this subcommittee is very interested in making a better and more 

efficient use of Federal leases. As such, we would like to know 

more about how DOD dealt with leases in the last round of BRAC 

and what do you think should be done under this Commission? 

Mr. PRINCIPI. Well, the Secretary of Defense had proposed in the 

2005 BRAC that a significant amount of lease space be vacated and 

those offices consolidated on military bases, and I think that is a 

viable option for Federal civilian buildings as well. 

To just give you one example, Mr. Chairman, since 1967, I am 

going now to my days as Secretary of Veterans Affairs. Since 1967 

the VA had a VA benefits regional office in downtown Atlanta. It 

was privately owned space leased by the General Services Administration. We, the VA, decided in 1999 to move that benefits office 

to the grounds of the VA Medical Center to collocate that benefits 

office on the grounds, unused vacant space adjacent to the VA Medical Center, providing one-stop shopping for the veterans who needed health care and needed benefits. We were able to save 50 perVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
33 

cent of the cost that we were paying in leased space in downtown 

Atlanta, with additional parking for veterans and staff, furnishings, IT equipment, the entire framework needed to maintain 

a regional office. 

So I think it can be done. It has been done at the VA, and I think 

would work in civilian office space. 

Mr. DENHAM. Thank you. Mr. Wise, ending a lease, we were just 

talking about the SEC, ending a lease has the same outcome as 

disposing of a government-owned property. Do the same obstacles 

apply? 

Mr. WISE. Mr. Chairman, in a word, no. We have found over the 

years that the Federal Government often leases buildings for 

longer term needs when ownership would have really been more 

cost effective in the long run. One way that it is possible to rebalance the ownership-lease mix would be to allow the less efficient 

leases expire and consolidate Federal workers onto federally owned 

facilities. I think some of that came out in the earlier testimony on 

these cases. 

None of the screening, disposal, or environmental requirements 

would apply. So it makes it much, much easier. As long as the different Federal elements can be combined within this space and 

local issues are taken into consideration, then the impacts would 

also be minimized and the Federal Government should be able to 

move forward with a more cost effective arrangement. 

Mr. DENHAM. What would you say have been the biggest hurdles 

in selling and disposing of properties themselves? 

Mr. WISE. There are a number of hurdles that go into selling a 

property. Those include the need for considering public conveyances, the environmental impact statements which can take a very 

long time, the requirements to offer to advocacy groups like the 

homeless and historical preservation and then sometimes private 

sector considerations come into play. Thus, there are quite a few 

hurdles that go into being able to move towards sales of properties 

under the current arrangements. 

Mr. DENHAM. And does GSA’s database capture all the potentially unneeded properties in GSA’s portfolio? 

Mr. WISE. We don’t think so, but quite frankly, we really haven’t 

formally evaluated the extent to which property utilization is correctly covered in GSA’s database. But if you recall in our last hearing (where the temperature was a little low), the Old Post Office 

was one of the buildings not covered in the utilization field. This 

can occur with mixed use buildings. We have done some previous 

work with the Postal Service and found that there were quite a few 

facilities not fully visible regarding the utilization field. However, 

we do have a request that we are going to be staffing in the next 

couple of months to take a look at the overall utilization and leasing arrangements. We will cover that area much more thoroughly 

in the next year. 

Mr. DENHAM. In your testimony you said the BRAC included 

independent oversight by GAO. Does the civilian board as proposed 

in the President’s fiscal year budget include opportunities for independent oversight and should that be at GAO? 

Mr. WISE. I think it is up to the Congress to decide who it should 

be, but I think in general an independent commission lends crediVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
34 

bility to the entire process. The current proposal, at least the 

version that we saw in the President’s 2012 budget proposal, 

doesn’t say anything about independent oversight. Mr. Werfel mentioned there is going to be a much longer, more detailed proposal 

coming at the end of the month, so perhaps it will be covered there. 

But from what we saw in the short proposal that was in the President’s budget, such oversight was not discussed. 

Mr. DENHAM. And GAO’s position? Obviously played independent 

oversight. Not your recommendation, but do you think GAO could 

perform the same type of oversight, if asked by Congress, that it 

did under BRAC? 

Mr. WISE. I think Brian can explain what GAO did in its role in 

BRAC oversight. 

Mr. LEPORE. Mr. Chairman, the 1990 BRAC statute and the 

2001 amendment to that actually specifies several roles for GAO. 

The first one is that the Comptroller General is required to provide 

assistance to the Commission at their request. The idea is we develop an agreement and actually detail staff. We did that in BRAC 

2005. We sent six of our senior analysts and analysts to provide assistance to the Commission and the Commission staff as they considered the recommendation. 

The statute also required that we review the DOD force structure 

plan and infrastructure inventory. You may know that the statute 

required DOD to develop a projection, if you will, of what its force 

structure would look like over the next 20 years, and that was in 

fact part of the criteria that was used in developing the recommendations. We were required to comment on that, and we did 

that. 

Thirdly, we were mandated to review the process that DOD used 

in developing its recommendations, and we did that and reported 

on July 1, 2005, that DOD had used a logical, reasoned, and welldocumented process. 

Subsequent to that, there is one more. The House Committee Report accompanying the Armed Services Committee’s 2008 Defense 

Authorization Act mandated that we monitor implementation of 

the recommendations and report annually on implementation along 

with a lessons learned report. We have just begun that lessons 

learned report effort right now and we will be reporting that later 

this year. 

So GAO actually has had several roles in assisting with the 

BRAC process. 

Mr. DENHAM. Thank you. 

Ms. Norton. 

Ms. NORTON. Thank you very much, Mr. Chairman. I want to 

quote from Mr. Principi. Mr. Principi, I just want to note for the 

record your enormous expertise in this area, not only you have 

been Chairman of BRAC, you have been a Cabinet official who had 

the authority to lease and develop—by the way, that authority was 

given by the Congress of the United States, your Veterans Affairs 

post, and of course you have been on the Senate staff. So you have 

really had a bundle of experience that could be useful to us, and 

therefore I took particular notice—perhaps you heard my own concern about OMB’s expertise. I took particular notice, and I am 

going to quote from your testimony, I give pause, you said, on page 

35 

4, to the proposal that the board report its findings, conclusions, 

and recommendations to the Director of OMB. The proposed act 

also proposes authority for the Director of OMB to manage the 

process, including the authority to approve or disapprove the Commission’s recommendations. 

You give pause clearly because you have issues with that kind 

of direct authority by OMB, which is essentially final, because 

OMB, I guess, makes a recommendations to the President. And you 

seem to want the President himself to have final authority. I wish 

you would explain your views on how this new BRAC process 

should work with respect to OMB. 

Mr. PRINCIPI. Yes, Madam Ranking Member, again, the 2005 

BRAC round that I chaired made our recommendations directly to 

the President, where I believe certainly the final authority in the 

Executive branch should lie. That is not to say that the President 

cannot look to his Cabinet officials to weigh in on the recommendations before he makes a final decision. And ultimately it should 

rest up here with the Congress to make that final decision. 

I would also echo that I think GAO played, again, an indispensable role in supporting BRAC and I think they would play an indispensable role in supporting this process. They are independent. 

They have the expertise. And if they don’t have the expertise, they 

would gain that expertise by bringing on the right people. 

And, very importantly, Congresswoman Holmes Norton, I think 

you have to take great pains to ensure that you have the right 

makeup on the Commission. I was blessed as Chairman to have 

eight wonderful commissioners around me who had the requisite 

expertise on military matters that could really make decisions, supported by a strong executive director who brought on expertise in 

military infrastructure matters. I think that is the most important 

criteria to ensure that the right decisions are made with oversight 

by GAO and go to the President. 

With all due respect to OMB, I just don’t think they are the right 

agency to have the final approval authority. 

Ms. NORTON. And it should be with the President himself? 

Mr. PRINCIPI. Absolutely. 

Ms. NORTON. Then he could call upon the expertise or GSA or 

anybody else that he thought might be able to help him. 

Mr. PRINCIPI. I absolutely believe that. 

Ms. NORTON. Essentially, this gives OMB two bites at the apple. 

It is OMB that you rely on; obviously, the President isn’t sitting 

down there by himself. So it is exclusively relying on OMB. It 

seems to be a pretty circular process. 

Mr. Lepore testified about detailees—I believe it was you, Mr. 

Lepore—from GAO to BRAC. Would you recommend—of course, at 

GAO you do have people with infrastructure experience, with budgetary experience, with real estate experience. Would you recommend such detailees to be used in this process to OMB, to the 

President, or elsewhere? 

Mr. LEPORE. Let me try to answer your question this way. I 

think the key contribution that the GAO staff made to the Commission was the people we assigned had the right background to do 

analytical work. We are very good at developing analytical frameworks for analyzing processes and what we call methodologies. We 

36 

also took great care as we selected the individuals—and here is 

why. We actually knew what the recommendations from DOD to 

the Commission were at the time we were making the choices and 

we were able to select from our staff those individuals who had 

substantive expertise as well as a strong analytical framework. 

Let me give you a specific example with respect to some of the 

medical recommendations. We actually assigned someone from our 

health care team as one of the staff members that we sent to Mr. 

Principi and his colleagues on the Commission. The point being 

here that we carefully chose those staff who had a good subject 

matter knowledge to address the specifics of the recommendations 

as well as were strong analytically, which really all GAO staff are. 

Ms. NORTON. Couldn’t be more important here. 

Yes, Mr. Principi. 

Mr. PRINCIPI. I would like to add one point, and that is the 

BRAC Commission had the authority—we had the authority to add 

bases to the list that were not recommended by the Secretary. I 

think that is very, very important that the civilian BRAC process 

commission have that same authority. It required a super majority 

vote to add a base to the list that the Secretary of Defense did not 

recommend. But we were able to identify bases where there was 

encroachment around a flight line that impacted the training of our 

young naval aviators. We added that base to the list. And I think 

it had an impact on changes that were made. 

Ms. NORTON. Mr. Chairman, my time is up, but Mr. Principi has 

said that the Secretary, DOD Secretary, who obviously managed 

larger agencies, but let’s say four agencies—here there are 23 agencies that would be involved. So if the Secretary—if the board could 

recommend bases beyond the Secretary, then it would seem that 

this board ought to be able to recommend properties beyond those 

that the 23 agencies had OKed. 

Thank you. 

Mr. DENHAM. Thank you. Mr. Principi, diving straight back into 

that same type of question, the Secretary gave the list—the Secretary drove a lot of the issues. Obviously, the Secretary had a 

vested interest in making sure that the BRAC Commission was 

successful, where you may have had independent bases or base 

commanders that had a difference of opinion. Here in this case we 

don’t have a Secretary that would oversee all of the agencies, and 

you can see that it has been difficult for us to obtain lists and information. 

Can you describe the process that you went through in not only 

gaining the lists and the information but actually making sure that 

it was accurate? 

Mr. PRINCIPI. Well, it was really spelled out in statute. We had 

clear criteria by which to measure whether the recommendations 

were correct, and we did thorough analysis. We visited all of the 

military bases under consideration for closures or realignment. We 

had the support of GAO oversight, we had commissioners who had 

the requisite expertise. And I think those combination of things, I 

believe, allowed us to make the appropriate decisions. They may 

not have been right in every case, but I think as long as the Congress spells out the criteria by which agencies have to submit recommendations to the Commission, clear criteria by which the ComVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
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mission assesses those recommendations, and makes a final decision and reports it to the President, gives the President a reasonable but limited period of time to either disagree, send it back to 

the Commission, send it on to Congress, I think, for the most part 

you will come out with the right decisions. So that is the process 

I would suggest you follow. 

Mr. DENHAM. Thank you. How about as far as ensuring that the 

information, the lists, are accurate coming from each different 

agency? Did you have any pushback from any of the various bases 

that you dealt with on not wanting to provide all information necessary to accomplish the Commission’s criteria? 

Mr. PRINCIPI. Well, we did. And in some cases, information that 

was submitted, data that was submitted by military bases, the 

base commander to the Pentagon came to the Commission far different than the base commander reported. So we had instances 

where information that went to the Pentagon didn’t come out as it 

should have. We were receiving different data from the Pentagon. 

But we were able to assess that by our visits to military bases, 

having those discussions, and trying to identify as much as we 

could about the base. 

Again, we had the analytical work of GAO, we had a very, very 

professional staff who had been on previous BRAC rounds, and I 

might also add that we had a very limited period of time, but it 

held our feet to the fire. This thing did not drag out like many commissions do month after month, year after year. We have had a finite period of time. Either we had our recommendations on the 

President’s desk by a certain date or all of our work was terminated. It was all for naught. 

So I have would suggest that you put very different timelines on 

getting this information to the President and getting it to the Congress for an up-or-down vote on the recommendations or it will go 

on for year after year and you will have accomplished very little, 

Mr. Chairman. 

Mr. DENHAM. Was there any repercussions to inaccurate information if a base was giving information to the Pentagon different 

from what they were giving you? 

Mr. PRINCIPI. Well, certainly did our best to make sure that that 

information was conveyed to the higher levels at the Department 

of Defense, but we also tried to protect the base commanders who 

provided us with that information. It was a very delicate balance, 

Mr. Chairman. But we did our best to make sure that the Defense 

Department knew that they were passing on inadequate and different information to us than we had learned in the field. 

Mr. DENHAM. Thank you. Finally, the same question I had for 

the last panel, what type of expertise do you feel is important to 

be on the Commission? 

Mr. PRINCIPI. Real estate people who have requisite knowledge 

in real estate-related matters, financing-related backgrounds, Federal infrastructure, I think former senior executives with the Federal Government in various different capacities, but certainly individuals who have a strong background in real estate development, 

financing, and leasing, who could bring that expertise to the Commission. 

38 

Mr. DENHAM. And are you still working with the BRAC Commission now? 

Mr. PRINCIPI. Other than testifying periodically. 

Mr. DENHAM. You know what my next question is, don’t you? 

Would you be initiated in serving on this new commission? 

Mr. PRINCIPI. My problem is—— 

Mr. DENHAM. You are on the record. 

Mr. PRINCIPI. The problem is I don’t know how to say no to public service, so I guess I would. I am sure there are other more eminently qualified individuals than myself, Mr. Chairman, but thank 

you very much. 

Mr. DENHAM. Thank you. Ms. Norton. 

Ms. NORTON. I wouldn’t be so sure about that, Mr. Principi. We 

really need people who have been around the mulberry bush a few 

times. 

Mr. DENHAM. The correct response would have been I am going 

to check with my spouse first. 

Ms. NORTON. I would like to combine what I am gleaning from 

the testimony of Mr. Wise and Mr. Lepore with what I know about 

the Veterans Affairs Department. I was interested that your testimony indicated that the new board could help with one of this committee’s long-term concerns, the overreliance on leasing, by recommending the consolidation of operations. Well, the President has 

set about the consolidation process already, and I certainly can see 

some possibilities there. But I know that Mr. Principi in fact had 

an authority that if GSA has it, it rarely uses it—its enhanced 

lease authority. 

The Veterans Affairs Department is one of those agencies that 

for very good reasons has its own independent authority. When you 

consider the number of buildings and operations that are under 

your jurisdiction—and that is an example where Congress just 

slipped something in and said this is what we want for the Veterans Administration. How you have done leasing or how you have 

done property management has saved the taxpayers billions upon 

billions of dollars. 

Let me give you an example and ask our other two panel members if they believe that somehow getting better use of such authority would help to get more of our agencies into owned space. 

The Veterans Administration has, among other things, enhanced 

lease authority. So that means that the Veterans Administration 

can do a ground lease where that means that somebody in the private sector can then put that up. Somehow or another, you don’t 

run into the scoring problems that the GSA runs into. So I am sure 

you must do a lot less leasing than the GSA does now. In fact, it 

has tipped. It now does more leasing than it has owned space. 

And I want to know from Mr. Wise and Mr. Lepore, while we are 

at it, whether we shouldn’t see to it that GSA—and, again, it may 

have, it certainly seldom uses; I don’t know how to make sure it 

does—but that it uses enhanced lease authority as well so that the 

Federal Government is not leasing for 10-, 15-, 20-year terms. 

Mr. LEPORE. Congresswoman Norton, as you know, the Department of Defense does have enhanced use leasing authority. What 

DOD will typically do in these circumstances—and there aren’t a 

lot of the enhanced use leases. That typically refers to a very large, 

39 

long-term lease, very complicated negotiated deal, if you will, between a developer and the installation. But typically what they will 

do on an installation is they may identify land that is not excess 

to their needs, because the statute requires it cannot be excess to 

their needs if they are going to do an enhanced lease, and then will 

negotiate with a developer to develop some facility—an office building, hypothetically. The developer gets a 50-year ground lease. The 

developer builds the building, subleases the office space, if that is 

what it is, to a tenant, and the installation gets back some agreedto consideration. It could be cash or it can be in-kind consideration. 

And that is all negotiated upfront. But it is an opportunity for the 

installation to effectively get a kind of return on investment, if you 

will, on land that is not excess to their needs permanently but is 

not used for the period of time of that lease. 

Ms. NORTON. So this board is going to have to decide whether or 

not the Federal Government could reap some benefit or revenue 

from this land or whether it should simply sell it off. One of the 

things they are likely to do is to say, Well, look at what it would 

take for GSA to use the property. If it doesn’t have enhanced lease 

authority, what it would take looks like it might be a steep mile 

to climb and you end up selling off properties that you could be 

earning revenue from forever. 

Mr. Principi, what I am asking both of you, as long as we are 

looking at the collocation, this consolidation, whether or not we 

should not also be looking at what it takes to make sure that the 

government is making the highest and best use of its land before 

it decides it has to sell it off so somebody else can make the highest 

and best use, simply because our procedures don’t afford GSA that 

opportunity. 

Mr. PRINCIPI. I certainly agree with you, Congresswoman Norton. 

That is what I tried to do as Secretary, was to leverage the equity 

that we had in our land. Large VA medical center campuses, lots 

of unused land. Why pay very high lease rates in downtown, separated from the VA Medical Center, so veterans had to go to both 

places. And whether it be a local development authority in the city 

or county or private developer, come on, build us what we need. We 

will get reduced lease rates because it is our land and then at the 

end of the lease term the building would convey back to the VA. 

In many cases, it worked very, very well for the VA. I assume it 

could work for other agencies of government, but certainly in our 

case it did. I believe in DOD it can as well. 

Ms. NORTON. Of course, here we are dealing with essentially 

property that is usually managed by GSA. I just cite to you the example of the headquarters building of the Department of Transportation, where we build an entirely new, huge building for the Department of Transportation. I think they are on a 15-year lease because GSA has but apparently for some reason doesn’t use enhanced lease authority, where you could, obviously, since you are 

never going to move your headquarters if you just built a new one, 

could have used it. That is the kind of waste that I see. As long 

as you are dealing with how you manage your property, seems to 

me you have got to use this opportunity to deal with the whole 

thing. 

40 

I want to ask all of you about the differences between DOD 

BRAC and this BRAC. DOD BRAC happens every few years. You 

know what those properties are. You apparently have got a critical 

mass and then you do a BRAC. Now, is that going to be sufficient 

for a civilian BRAC? Would there need to be some ongoing process, 

given the number of properties that may come and go when you 

have such a huge landowner as the United States Government 

itself? 

Mr. DENHAM. For the sake of time I would ask for a brief response. 

Mr. LEPORE. Certainly, I will try to be brief. As you know, there 

were four rounds of BRAC prior to the 2005 round. I think one of 

the things we saw after the first round in 1988, there were three 

that occurred in alternating years—1991, 1993, and 1995. The idea 

was there was a recognition that there were a significant number 

of installations that DOD felt were excess to its needs, its determination. But there was a recommendation that to try to swallow 

them all at once was probably not going to be doable or feasible. 

And so the 1990 statute that authorized those next three rounds 

put them in alternating years, and it effectively created a cycle, if 

you will, that allowed for the selection of I will call it a reasonable 

number of installations that could be considered for closure or realignment without putting so much before the Commission at any 

one time or any one Commission that it couldn’t get it all done. 

So it created a manageable process, if you will, to allow DOD to 

convey, dispose of and ultimately convey a large number of installations it deemed excess to its needs. But was that rolling cycle 

that helped to make that possible. 

Ms. NORTON. I just think that is a very important point to make. 

You can put too much on the Commission. 

I have one last question. I think it is Mr. Principi who said in 

his testimony there are real lessons to be learned from the 2005 

BRAC on the need for an effective tool to estimate the true cost 

savings and true costs of each recommended closure and realignment. And I tell you there are folks here who believe that there are 

gazillions of dollars just waiting out there to go to market. I have 

got to ask you, what lessons are you talking about? Do we know 

what the cost savings were, what the cost was, what revenue was 

brought in from the last BRAC? Do any of you know that? 

Mr. PRINCIPI. I think it is critically important. You have to have 

a good cost savings model. 

Ms. NORTON. When you say that real lessons learned, did you 

learn that some of these properties did not have true savings or 

provided true costs for the government that you were not aware of? 

Mr. PRINCIPI. Yes, it did. Inflationary costs. There is a 6-year period from the date the decision is made to close or realign a base 

to the time it has to be implemented—in our case, 2011. You have 

a lot of inflation that goes on. That wasn’t accurately reflected in 

the analysis. As well as personnel costs. A significant percentage 

of the proposed savings came from reductions in military personnel. 

Along with GAO, we found that that was not the case. Military personnel were being transferred to other bases; they weren’t being reduced from end strength. And that dropped the cost savings very 

dramatically, Congresswoman Norton. So I think those kind of reVerDate Aug 31 2005 15:38 Sep 19, 2011 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\4-6-11~1\65644.TXT JEAN
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finements have to be made to the model to be effective on the civilian side as well. 

Ms. NORTON. Mr. Chairman, that was my last question, but I 

certainly hope we recommend the lessons from BRAC—we have 

had three or four BRACs; we have had at least three since I have 

been in Congress—that before any statute is drawn, we have some 

experience from BRAC as to whether or not there is any savings 

or whether or not we have estimated costs so that we don’t go 

blindly into this where there is real experience on the table for us 

to learn from. 

Thank you very much, Mr. Chairman. 

Mr. PRINCIPI. I am sorry to interrupt. Following up on Mr. 

Lepore’s statement about the process and having a civil BRAC 

every 2 years, I urge you to consider maintaining a core group of 

civil BRAC experts so that when a new BRAC round begins, you 

don’t have to go out and find that staff. You have a good core staff 

that could then be augmented so that that civil BRAC can get 

going right away without having to ramp up from zero base. 

Mr. DENHAM. Almost sounded like you were volunteering in your 

final statement. 

I would like to thank this panel as well as the previous panel. 

We will be not only submitting a list of questions but looking for 

your assistance in defining a clear criteria. This will be different 

from the DOD BRAC. And we will have to have not only a strong, 

clear criteria up front, but this committee will definitely be looking 

for a guarantee that we have quick and efficient disposal of properties. So we would ask for your help as we are finalizing our legislation over the next few weeks, and look forward to your accessibility. 

If there are no further questions, I would ask unanimous consent 

that the record of today’s hearing remain open until such time as 

our witnesses have provided answers to any questions that may be 

submitted to them in writing and unanimous consent that the 

record remain open for 15 days for any additional comments and 

information submitted by Members or witnesses to be included in 

the record of today’s hearing. 

Without objection, so ordered. 

I would like to thank our witnesses again for their testimony 

today. 

If no other Members have anything to add, the subcommittee 

stands adjourned. 

[Whereupon, at 12:30 p.m., the subcommittee was adjourned.] 

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