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SITTING ON OUR ASSETS: CUTTING 

SPENDING AND PRIVATE REDEVELOPMENT 

OF UNDERPERFORMING BUILDINGS 

(112–40) 

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 

FEBRUARY 10, 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 

TOM REED, New York 

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 

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 

Peck, Robert A., Commissioner, Public Buildings Service, General Services 

Administration ..................................................................................................... 6 

Principi, Hon. Anthony J., Former Secretary, Department of Veterans Affairs 6 

Wise, David J., Director, Physical Infrastructure Issues, Government Accountability Office ......................................................................................................... 6 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Peck, Robert A. ........................................................................................................ 22 

Principi, Hon. Anthony J. ....................................................................................... 29 

Wise, David J. .......................................................................................................... 35 

SUBMISSION FOR THE RECORD 

Wise, David J., Director, Physical Infrastructure Issues, Government Accountability Office, response to question from the Subcommittee on Economic 

Development, Public Buildings, and Emergency Management ........................ 47 

vi 


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(1) 

SITTING ON OUR ASSETS: CUTTING 

SPENDING AND PRIVATE REDEVELOPMENT 

OF UNDERPERFORMING BUILDINGS 

THURSDAY, FEBRUARY 10, 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 notice at 10:17 a.m. in The 

Old Post Office building annex, Washington, DC, Hon. Jeffrey 

Denham (Chairman of the subcommittee) presiding. 

Chairman DENHAM. The Subcommittee on Economic Development, Public Buildings, and Emergency Management will now 

come to order. This is the subcommittee’s first hearing of the 112th 

Congress, and I want to thank our witnesses and committee members for braving the cold to be here this morning. 

First, let me start by thanking Chairman Mica for providing me 

the opportunity to chair this important subcommittee. I appreciate 

the trust that you’ve placed in me and I will work hard to find 

ways to save taxpayer dollars and leverage private resources to redevelop Federal properties. I also want to build a strong partnership with the Ranking Member, Member Norton. 

We have had several meetings already and we look forward to 

continuing our relationship. I am truly fortunate to have a ranking 

member with such knowledge and experience and I look forward to 

continuing this committee’s bipartisan tradition. We are here in the 

annex of the Old Post Office building to turn the spotlight on vacant Federal space in Washington, and all across the country, so 

that we may find ways to stop sitting on our assets and save taxpayer money. 

The Old Post Office building sits on prime real estate in the Nation’s capital. Walking distance from both the White House and the 

Capitol Building on what is considered America’s Main Street, 

Pennsylvania Avenue. Common sense would tell us this building 

should have tremendous value for the taxpayers; however, the reality is much different. GSA loses over $6 million annually on this 

building, and the annex has become vacant for more than a decade—more than a decade. 

The sad fact is, there are buildings like this one all over the 

country. And as a former State senator from California, I’ve seen 

first hand the cost of poor management of these public buildings 

has on all of our budgets, and the waste is significant. In fact, exVerDate Aug 31 2005 09:46 Oct 14, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-10-1~1\65445.TXT JEAN
2 

cess and under used space is a key reason the Government Accountability Office placed Federal real property on its high-risk 

management list in 2003, and why it remains there today. 

It’s on the GAO’s high-risk list for good reason: vacant and 

underperforming assets are costly to all taxpayers. According to the 

Federal Real Property Council in fiscal year 2009, the Federal Government spent $1.7 billion in annual operating costs for underutilized buildings, and $134 million annually for excess buildings. 

Last October, Chairman Mica and the Republican members of the 

committee issued a report entitled, ‘‘Sitting On Our Assets: The 

Federal Government’s Misuse of Taxpayer Owned Assets.’’ 

One of the report’s recommendations is to redevelop millions of 

square feet of idle or vacant Federal buildings, such as the Old 

Post Office building here in Washington, DC, through public/private partnerships. Ranking Member Norton is also a strong advocate of redeveloping underutilized properties and she wrote the Old 

Post Office Building Redevelopment Act of 2008. In this case, GSA 

has the legal authority to redevelop the building and generate a 

positive return. Yet, this annex continues to sit vacant and bleeds 

taxpayer money. 

Business as usual must stop. One of our four witnesses today, 

Secretary Principi, has tremendous experience attracting private 

investment to redevelopment, Veterans Affairs facilities, and I hope 

we can apply these models to GSA properties. In addition, one of 

the first things we must do is identify underperforming assets. I 

understand the GSA maintains a database of Federal real property. 

We have talked about that in recent days, yet we continued to 

find that we are absent a complete list. So that’s certainly an area 

we will be working on very aggressively here. The practice must 

end, so our committee can conduct oversight of all Federal real estate properties. 

I look forward to working with Chairman Mica, Ranking Member 

Norton and other members of our committee on reforms that will 

help stop wasteful spending. I also hope to work with all of our witnesses and others in the private sector who have firsthand experience turning around these underperforming assets. 

I would now like to recognize Ranking Member Norton from the 

District of Columbia for 5 minutes to make any opening statements 

she may have, and we will be operating a little bit old school here 

today with the lack of technology or the lack of wiring here in this 

facility, so bear with us. 

Thank you. 

Ms. NORTON. Thank you, Mr. Chairman. Can you hear me? 

Hello! 

[Laughter.] 

Ms. NORTON. First, I am pleased to be serving with our new subcommittee chair, Representative Jeffrey Denham, and to welcome 

him to Washington. I have had the opportunity to meet with Chairman Denham and I believe that his prior State and professional experience and his expertise will serve the subcommittee and the 

Congress and the Nation very well. 

I would like to apologize to the witnesses and to others who have 

come to this important hearing, and I just want to say for the 

record that I object to it being held in this annex. This is a hearing 

3 

on the Old Post Office. The Old Post Office had a room, which 

would have the dignity of a congressional hearing. This is not a 

historic building. 

It would have allowed us to see this extraordinary structure and 

to understand the waste. Today we examine why the development 

of the Old Post Office, a nearly empty, unique, historic treasure located here at 1100 Pennsylvania Avenue, Northwest, has been delayed. 

What this property can tell the subcommittee about how GSA 

manages its real estate portfolio and how the agency can improve, 

by making this first hearing of the subcommittee a sight hearing 

at the Old Post Office, the subcommittee is making a point to GSA 

as the subcommittee tries to understand why the development of 

a company crying out for development has been repeatedly delayed 

in both Democratic and Republican administrations. 

For more than 10 years our subcommittee and the full committee 

leadership have expressed mounting concern about the neglect and 

underutilization of this valuable government property and have 

pressed the GSA to develop and use this building with its considerable benefit potential—sorry—to benefit taxpayers. The implication 

of today’s hearing and the questions we are asking could not be 

clearer. 

We ask today: are there more Old Post Office sites languishing 

in full view around the Nation? The magnificence of the historic 

Post Office building—you’ll see it if you go out there and look at 

it as you exit. Its central location and priceless value have long 

made the building ripe for development. 

I am mystified why it has been difficult to get GSA through Republican and Democratic administrations to develop this building 

to its highest and best use in light of a directly applicable precedent, the highly regarded GSA renovation of the Hotel Monaco, formerly the Tariff Building. 

The GSA renovation of the Tariff Building into the Monaco Hotel 

demonstrated that GSA could make excellent use of otherwise antiquated and virtually useless structures. It would seem that all that 

was needed was to take out that playbook that led to the born 

again Hotel Monaco, now providing productive use. Located just a 

few blocks from the Old Post Office building, the Tariff Building is 

a recent model that shows what can be achieved when the Federal 

Government works closely with the private sector to develop property, bringing a return to the government while providing a safe 

and necessary facility for the city and preserving a historic structure. However, GSA was either unable or did not try hard enough 

to overcome OMB’s objections to proceeding on the Old Post Office 

building despite consistent bipartisan insistence by the subcommittee. 

Finally, we included in the 1998 Omnibus Consolidated Emergency Act language that required GSA to submit a viable development plan to Congress. That plan was submitted in December 2000 

and on May 16, 2001, this subcommittee approved the plan by resolution. Notwithstanding these efforts, the desired development has 

not occurred. 

The waste and risk posed by the way GSA managed the Old Post 

Office building became even more apparent with a violent altercaVerDate Aug 31 2005 09:46 Oct 14, 2011 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-10-1~1\65445.TXT JEAN
4 

tion and killing of a George Washington University student outside 

the Old Post Office building in May 2005, following rental of the 

Old Post Office for an event held there as part of GSA’s efforts to 

rent the facility and gain revenue from the building. 

Congressional oversight requiring development of the site continued, but GSA did not issue a request for expression of interest or 

RFI until late that year, and only after the violent incident. The 

RFI received many indications of interest; however, for no good or 

sufficient reason, GSA has never proceeded to the next step of development, although private developers view the Old Post Office as 

a trophy building at a trophy location here between the White 

House and Congress. 

In 2008 in exasperation I introduced H.R. 5001, the Old Post Office Building Redevelopment Act of 2008 directing the GSA to move 

forward. How many bills and how many hearings does it take to 

get GSA to develop a single property. Is the Old Post Office emblematic of GSA’s management of its properties nationwide? Whatever GSA’s response, this subcommittee has no alternative, particularly given today’s budget deficit, except to require GSA to use the 

assets it has available or to sell them. 

The Old Post Office building is a historic treasure that cannot be 

sold; but, GSA’s management of the building is a drastic example 

of an underperforming asset that has long been a drain on our 

Treasury when it could provide a handsome financial return to the 

government as the Monaco Hotel has done. GSA spends $12 million 

to operate and maintain the Old Post Office building, while only 

collecting $5.5 million in rent, which results in an annual loss of 

$6.5 million. 

This subcommittee has taken action to provide new tools to develop GSA property. In 2007 Congress enacted and the President 

signed Public Law 108–447, which contained a measure that granted GSA two new significant kinds of authorities, often referred to 

as 412 authority. The first allows the retention of proceeds from 

the disposal of real property; and, the second is additional real 

property disposition authority, including authority for leaseback arrangements. 

To date, GSA has yet to implement this authority to develop any 

of its underutilized property on site anywhere in the United States, 

even though there are opportunities that could bring the government a handsome return. It should not have been necessary for the 

subcommittee to come to this annex today to get the requisite attention to the languishing property of the Old Post Office site and 

others like it. 

The burden is on our witnesses today to get us out of this building, and particularly out of this annex; and to get the government 

out of leasing real estate properties that could be redeveloped or 

could be sold, and I thank you Mr. Chairman. 

Chairman DENHAM. Thank you, Ms. Norton. 

At this time I now call on the Chairman of the full Transportation and Infrastructure Committee, Mr. Mica. 

Mr. MICA. Thank you. Well, thank you, Chairman Denham and 

Ranking Member Norton, also Ms. Edwards for being with us 

today, Mr. Crawford from a warmer climate in Arkansas, and 

maybe even Maryland’s warmer than here today. 

5 

I was hoping, actually, when we were planning this hearing and 

I kept looking at the temperature that we’d have a warmer day; 

but, in fact, it is a cold day for Members of Congress, but it’s been 

an even colder decade for the taxpayers who’ve had to foot the bill 

for an empty building in the heart of our Nation’s capital as Ms. 

Norton said just a few blocks from the White House and a few 

blocks from Capitol Hill. 

Now, I know Ms. Norton, and having worked with her she’s done 

everything she could to move forward. It is a sad day when we 

have to come here on a cold day to emphasize the lack of moving 

forward with this property. We’ve talked about this property now 

for more than a decade, and it’s been vacant for more than a decade. So I’m hoping under your leadership, Chairman Denham and 

other members of the committee, that we can turn this situation 

around. If GSA doesn’t have the tools to make a difference, then 

we need to provide them with the tools. 

If they don’t have the initiative or the incentive to move forward, 

then we’ve got to make certain that we provide them with that 

here. Now, if this isn’t bad enough, being in this empty building, 

is that next door you have 400,000 square feet of which there are 

only 400 Federal employees, and almost half of that space is vacant, underutilized, and is a loss of over $6.5 million per year. This 

goes on and on, a waste of taxpayer dollars. 

Now, if this wasn’t the only example, this empty building and 

next door underutilized, just read a little bit about the report we 

published on sitting on our assets and the underutilized and underperforming public buildings. This is a national disgrace, and this 

isn’t the only example of it. So somehow, we’ve got to get a handle 

on this. The annex that we’re in is only 53,000 square feet, and the 

government is again losing money by the hour in keeping it vacant. 

In 2008 the Federal Government’s real property portfolio totaled 

3.29 billion square feet of space. A review of the three agencies in 

2009 by GAO revealed about 10 percent of their properties were in 

excess or underutilized, meaning there could be as much as 330 

million square feet of extra space costing taxpayers billions of dollars each year to maintain them. 

GSA in particular holds 282 underutilized buildings that are 

costing the taxpayers nearly $100 million a year, so our report details some of this. It’s cold and I’m not going to go into detail. I 

don’t know what the answer is. I don’t know if we should give up 

on GSA and other Federal agencies that look to retain some private 

management agencies to better utilize and capitalize and get a better deal for the taxpayers. But I’m willing to look at any solution. 

The answer is not what we’re seeing in a cold, empty building 

today. We have got to do better and we must do better, because 

millions of taxpayers and Americans are counting on us. Yield back 

the balance of my time, and I thank everybody for enduring one of 

the colder days in Washington. 

Chairman DENHAM. Thank you, Mr. Chairman. 

I now call on Ms. Edwards for a brief opening statement if you 

look. 

Ms. EDWARDS. I think I’ll pass. 

Chairman DENHAM. Mr. Crawford. 

Mr. CRAWFORD. Thank you, Chairman. 

6 

I want to thank Chairman Mica for his leadership on this effort 

and the opportunity to serve on the economic development of public 

buildings and emergency management subcommittee. 

I am from Arkansas. This won’t make you feel a bit better, but 

believe it or not it is colder there than it is here. I am looking forward to working with Chairman Denham as well as Ranking Member Norton, and the full committee to preserve this historic building. Our goal is to make sure that historic Federal properties fulfill 

their highest and best use of preserving them for future generations. 

The Old Post Office is just one example of the many properties 

that we have worth saving. I look forward to working with Chairman Mica and I thank him again for this opportunity. 

Chairman DENHAM. Thank you. I would like to welcome our witnesses and thank them for being here today; and, I want to thank 

Commissioner Peck of GSA for making the space available for this 

hearing. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. Without objection, so ordered. 

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

the subcommittee would request that you limit your oral testimony 

to 5 minutes. This is the first committee hearing of this committee, 

but I do expect to not only run an efficient committee, but be very 

mindful of everybody here’s schedules, so thank you in advance. 

We have one panel today: Mr. Robert Peck, Commissioner of 

Public Building Service, U.S. General Services Administration; Mr. 

David Wise, Director, Physical Infrastructure Issues; the Honorable 

Anthony Principi, former secretary of the Department of Veterans 

Affairs; and Chairman of the 2005 Defense Base Realignment and 

Closure Commission, the BRAC. 

I would like to thank all of you for joining us today. Commissioner Peck, you may proceed. 

TESTIMONY OF ROBERT A. PECK, COMMISSIONER, PUBLIC 

BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION; DAVID J. WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE; AND 

THE HONORABLE ANTHONY J. PRINCIPI, FORMER SECRETARY, DEPARTMENT OF VETERANS AFFAIRS 

Mr. PECK. Thank you, Mr. Chairman, and Chairman Mica, 

Chairman Denham, Congresswoman Norton, Congresswoman Edwards and Congressman Crawford. Thank you for the opportunity 

to talk to you today. I am, I was going to say, happy, but I am still 

happy to be here to join you at the Old Post Office, a fitting if cold 

example of a redevelopment opportunity that this administration is 

prepared to take. 

By a number of measures, I have to say, GSA, itself, is a leader 

in asset management of our building inventory and leases, and I 

will talk about our performance compared even to private sector 

measures. We are building on our successes and managing our assets with aggressive efforts to improve utilization of government 

space across the government to deliver new and innovative work 

place strategies and use the authorities we have to further partner 

with the private sector to benefit taxpayers. 

7 

Since 2002 GSA in the space that we control, which is about 375 

million square feet of space has undertaken a major portfolio restructuring. We have disposed of 204 vacant or underutilized properties in the GSA inventory, totaling the more than 9.5 million 

square feet and receiving $227 million in proceeds which we were 

able to do, by the way, under the section 412 authority that Congresswoman Norton mentioned. This represented a 5.3 percent reduction in GSA’s own portfolio and eliminated some $460 million 

in operating costs, and rather in repair liabilities. 

And I want to give credit to one of my predecessors, Joe Moravec, 

a former Commissioner of Public Buildings, who I know is sitting 

here today. This administration recognizes the need to do a better 

job at getting rid of surplus and excess property, and in June of 

2010 President Obama issued a memorandum, ‘‘Disposing of 

unneeded Federal real estate put GSA along with other agencies in 

charge of culling through the Federal inventory of excess assets 

and making sure that we get them out of the inventory.’’ And in 

his State of the Union Address, a few weeks ago, President Obama 

emphasized that this is going to be a priority for him. 

First, I want to talk a little bit about how we manage our GSA 

assets. Just to let you know, the national vacancy rate right now 

for real estate, because we have a soft market, is somewhere between 15 and 20 percent. The comparable rate in the GSA inventory is 2.4 percent. We manage our assets well; and, here, I want 

to get our terms clear. When in the Federal Government’s real estate inventory report, we recorded an asset as surplus or excess, or 

underutilized. As always, there’s a term of art here. 

Underutilized property can include property, for example, that 

are under renovation. So some properties that look like we’re not 

using them, we’re not using them only temporarily, because we’re 

upgrading them so they can be used better and more intensively. 

Having said that there are clearly Federal surplus properties, and 

GSA is very good in our inventory of tiering our properties. We 

know we have a three-tier system based on performance measures, 

return on investment measures in which we decide whether an 

asset in our inventory is worth keeping, or in the long run is going 

to be disposed of. 

For other agencies across the government, GSA serves as a real 

estate asset manager also, and we are in charge, except for defense 

properties and some others, a few others in the public lands, mostly, as the disposal agent. Under the 1949 Federal Property Act we 

disposed of properties in a number of ways. One is we can take 

them to sale. Two, we can give them to public entities, States and 

localities, for certain specified purposes in the law. 

And then I have to say, just as a reality check, some of our properties are in areas where it’s hard even to give them away. They 

just are someplace that nobody wants them, and some of those will 

be retained in the inventory. I say that not to say that we don’t 

want to get out everything we can, but just to say that some part 

of the excess inventory is probably not amenable to redevelopment. 

One other long-term trend which I want to note that we are 

working on is that we believe that in the Federal inventory we can 

make more intensively use of the space that we do have, and we 

are working very hard with Federal agencies to take advantage of 

8 

the new mobile workplace technologies that allow workers to work 

wherever they can and to use less space for an employee so that 

in the years to come, you should be seeing us use less real estate 

for the ongoing functions of the government. 

I do want to point to a couple of examples of places where we 

have used our authorities to get rid of surplus property. For example, in 2007 we sold more than 50 acres of land at the Denver Federal Center. We got $18 million in cash from the county, and $6 

million in easement and environmental remediation done by the 

public entity and a good example of how we can work with the locality to promote economic development. 

They built a hospital, provided a rapid transit station there, and 

we still occupy an adjacent parcel of land. In 2000 under the leadership of Ms. Norton, the Congress passed the Southeast Federal 

Center Public-Private Development Act. We redeveloped what had 

been part of the Navy Yard in Washington, DC, and over the term 

of that agreement, if we expect to see proceeds of $43 million to the 

Federal Government, a great example of a public-private development. 

As Mrs. Norton noted, and when I was in GSA before, we began 

redevelopment of the historic Tariff Building in Washington, DC, 

as Ms. Norton noted, an example directly relevant to the Old Post 

Office building. And the Tariff Building, which is on a long-term 

ground lease to a hotel developer, will over the course of the lease, 

we believe, earn $50 million in revenues for the Federal Government. 

The Old Post Office itself represents a unique opportunity and 

unique history. We renovated this building, the Federal Government did, in the late 1970s, early 1980s. The Government put in 

money and so did a private developer put in $28 million to develop 

the retail uses in the building. This annex, itself—— 

Chairman DENHAM. We would ask you to be mindful of the time. 

Mr. PECK. I will. I’m summing up. 

Chairman DENHAM. Thank you. 

Mr. PECK. In 1989 this annex was built with $5.5 million in pri- vate funds, and $1.75 million in public funds. This building itself 

was a commercial failure. The owner went into default, and the 

Federal Government eventually acquired the leasehold. 

With direction provided by Congress in the Old Post Office Building Redevelopment Act of 2008 we should now be able to leverage 

the private assets and the public assets in this building with private sector investment to create a new development. We are—I 

have to say this carefully. We are examining best approaches to 

doing that and working on the right kind of request for proposals 

that would include, for example, all of the safeguards that we 

would expect and you would expect to safeguard the government’s 

interest. 

Finally, I’ll just note that we very much support and enjoy the 

opportunities we have to work with the private sector in redeveloping vacant or underutilized Federal properties. We do believe 

that this building, itself, is a great example of one of those opportunities; and, obviously, I’m happy to answer any questions. 

Chairman DENHAM. Mr. Peck, thank you for your testimony. 

At this time, Mr. Wise, you may proceed. 

9 

Mr. WISE. Good morning. I think I could still turn the pages of 

my statement, but Chairman Mica, Chairman Denham, Ranking 

Member Norton and members of the subcommittee, thank you for 

the opportunity to testify today on our work related to Federal real 

property; and, in particular, the issue of excess and underutilized 

property held by the GSA. 

GSA, often referred to as the Federal Government’s landlord, 

controls more square feet of buildings than any other civilian Federal agency. GSA provides a range of real estate services to its tenant agencies, which it finances through a revolving fund called the 

Federal Buildings Fund. 

In January 2003 we designated the management of Federal real 

property as a high-risk area, in part because of excess and underutilized property. Other reasons included overreliance on leasing 

and the challenges associated with protecting government assets 

from terrorism. Later this month we will report on the status of 

these issues as part of our update to the high-risk series. 

My testimony today will discuss (1) the scope and cost of excess 

and underutilized real property held by Federal agencies, particularly GSA; and, (2) the challenges they face in disposing of excess 

and underutilized real property. 

Scope/Costs: 

In fiscal year 2009 Federal agencies, including the Department 

of Defense (the government’s largest property holder), reported 

45,190 underutilized buildings accounting for about $1.66 billion in 

annual operating costs. While not all underutilized properties are 

unneeded, nevertheless, such buildings represent the first places to 

look for possible consolidation that could facilitate property disposals. 

GSA itself has a number of such properties. In fiscal year 2009, 

GSA reported 282 excess or underutilized buildings costing about 

$93 million a year. For example, GSA’s excess properties include an 

office building warehouse complex, covering about a million square 

feet in Fort Worth, Texas. GSA spent about $1.4 million in fiscal 

year 2009 to maintain this complex. 

The administration is continuing to focus on disposing of 

unneeded properties throughout the government. A June 2010 

Presidential memorandum to Federal agencies established a new 

target of savings $3 billion governmentwide through disposals and 

other methods by the end of fiscal year 2012. 

Challenges: 

The Federal Government’s real property portfolio presents significant management challenges. We found that many government 

real property assets are no longer effectively aligned with agencies’ 

changing missions. As a result, many may no longer be needed. 

A number of factors may impede the government’s property disposal ability. Numerous stakeholders have an interest in how the 

Federal Government carries out its real property practices, including local governments and business interests, private sector construction and leasing firms, historic preservation organizations, 

various local advocacy groups, and the general public. These competing stakeholder interests may result in barriers to real property 

disposals. In 2007 we recommended that OMB could assist agencies by developing an action plan to address key problems associVerDate Aug 31 2005 09:46 Oct 14, 2011 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-10-1~1\65445.TXT JEAN
10 

ated with unneeded real property, including reducing the effects of 

stakeholder interests in real property decisions. OMB agreed with 

the recommendation, but has yet to fully implement it, because it’s 

unsure of a strategy to reduce stakeholder interests. 

Legal issues may impact real property decisionmaking. As we reported in 2007 Federal agencies are required by law to assess and 

pay for environmental cleanup that may be needed before disposing 

of any property. In some cases, the cost of this cleanup may actually exceed the cost to maintain the excess property. Also, certain 

legislative mandates, such as the McKinney-Vento Homeless Assistance Act and the Public Benefit Conveyance Program may 

lengthen the disposal process and/or result in zero net proceeds to 

GSA. As a result, GSA officials have stated that they are unlikely 

to have sufficient time to identify additional properties, complete 

disposal, and achieve the cost savings by the 2012 deadline mandated in the aforementioned Presidential memorandum and will 

need to employ other strategies to meet the goal. 

In conclusion, the government has many excess and underutilized properties that cost billions each year to maintain. Despite efforts to reduce this inventory, multiple obstacles remain that preclude any quick and easy solutions. GSA is in a unique position to 

take a leadership role, to promote innovation in how the government manages its excess underutilized properties. Until these obstacles are overcome, this issue will remain high risk. Mr. Chairman, this concludes my statement, and I’m happy to answer the 

subcommittee’s questions. 

Chairman DENHAM. Mr. Wise, thank you for your testimony at 

this time. 

Mr. Principi, you may proceed. 

Mr. PRINCIPI. Thank you. Thank you, Mr. Chairman, and members of the committee. It’s a pleasure to be with you this morning. 

I would like to provide my views as to creating value from underutilized and underperforming Federal assets. My testimony today 

is based on my experiences as Secretary of Veterans Affairs from 

2001–2005. I also served as chairman of the 2005 Defense-based 

Realignment and Closure Commission. 

When I assumed my responsibilities at VA, VA was the Federal 

Government’s second-largest department, being comprised of a nationwide system of healthcare facilities and services, benefit program and national cemeteries for our Nation’s 25 million veterans 

and their dependents. 

The department was and is now a major landholding agency with 

a diverse portfolio of property with over 33,800 square acres of 

land—over 5500 buildings with about 146.9 million square feet at 

approximately 270 locations. This is in addition to leasing over 15.5 

million square feet nationwide. 

While VA is one of the largest direct providers of healthcare in 

the world, it has an aging infrastructure with an average age of 

buildings of over 50 years, many of which were built after WWII 

when treatment was primarily rendered in in-patient facilities. 

Also, since that time we’ve seen a profound change in the delivery of healthcare in America, and certainly at the VA. As a result, 

a significant amount of space either was underutilized or became 

vacant. In order to address these challenges and in an effort to enVerDate Aug 31 2005 09:46 Oct 14, 2011 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-10-1~1\65445.TXT JEAN
11 

courage significant operating cost reductions and savings that 

could be applied to expanding medical care for veterans, I undertook two initiatives. 

The first was to bring all the stakeholders together: the Veterans 

organizations, academic medicine, our physicians, to craft a blueprint on how we could transform the VA from a hospital centric 

system to a patient focused system. Close down unneeded hospitals 

and open up hundreds of outpatient clinics in veterans communities, so that they get access care without having to drive hour 

after hour to a VA medical center to get their prescription drugs 

or primary care—things that can be done on an outpatient basis. 

Secondly, I asked two gentleman: Michael Simmons, one of my 

senior legal counsels, and Tony Kushner who I took from the Navy, 

to establish a new management approach that could be used as an 

additional tool in VA’s management of its infrastructure. That approach was ultimately enacted by Congress, and has become known 

as enhanced use leasing. 

Enhanced use leasing is a cooperative arrangement for the development of underutilized or vacant Federal property. Basically, an 

agency leases Federal property on a long-term basis to a public or 

private entity for the development of non-Federal or Federal uses. 

In return for the ground lease, the agency obtains fair consideration which could be in the form of money, facility, space, services 

or in-kind consideration. 

When applied in the context of an agency’s facility acquisition 

strategy, the results can be very favorable. For example, a VA administrative officer is not significantly different from a commercial 

office building. During my tenure at VA, we built three major office 

buildings along with parking facilities that were privately financed, 

developed and operated on what was once vacant VA land, so that 

veterans would have the benefit of one-stop shopping—a VA medical center, an adjacent medical center, a benefits office where they 

can apply for their benefits. Further, because these buildings were 

constructed on Federal land, title to the buildings passed to the 

government on expiration of the ground lease. 

The EU authority also serves as a useful portfolio management 

tool. A good example is the Chicago lake side enhanced use lease. 

Using this authority, we implemented a much needed realignment 

of two underperforming VA medical centers in Chicago. One hospital was an aging high-rise facility located in the heart of Chicago’s Gold Coast, Michigan Avenue. It was expensive to operate, 

and it will serve the veteran patient base that had moved from 

downtown Chicago, and returned for a long-term lease of that campus to Northwestern University Medical Center and the Rehabilitation Institute of Chicago. 

VA received over $50 million that could be applied to building a 

new vet tower for veterans in the west side where most of the veterans who were accessing the VA lived, and it turned out to be a 

very, very successful program. So I believe that both enhanced use 

leasing and having Federal agencies come together with their 

stakeholders to devise a plan for the future can indeed lead to the 

better utilization of vacant or underutilized property. 

Thank you Mr. Chairman and members of the committee. 

12 

Chairman DENHAM. Mr. Principi, thank you for your testimony. 

At this time we’ll start around of questioning. The first question 

goes to you, Mr. Peck. 

As you know, Congress passed legislation in 2008 to direct GSA 

to redevelop the building we are in today. In accordance with existing authorities, GSA has authority to redevelop underperforming 

buildings even without special legislation; but, it is my understanding the special legislation was needed last year, even though 

this building has went vacant for over a decade. 

Can you explain why the timing and why this has taken so long? 

Mr. PECK. Well I can speak some for the period of time I wasn’t 

at GSA. One, I think that there have been, as you know, times 

when it’s a good time in the real estate market to go out with a 

proposal like this and times when it’s not. So if I could focus on 

2008 to the present, I would be more useful; but, I will note that 

I’m the guy who signed the report in 2000 suggesting that we redevelop the building. 

It clearly took during the succeeding years—I’m not quite sure 

what was going on. But I do know that since I’ve been back at 

GSA, in 2009 we’ve taken a long, hard look at the building; and, 

in December 2009 we had a panel of the Urban Land Institute take 

a look at the building, give us some advice on how we might put 

it out to market. 

Their suggestion at that time was it was not a good time to take 

the building to market because of the softness in the real estate 

economy. I can tell you that one reason we have rekindled our interest and are prepared to go forward is that we have been approached by a number of development interests who’ve told us that 

they are interested in taking the Old Post Office building in some 

kind of an arrangement that probably parallels what we did for the 

Hotel Monaco. 

So I’m hoping sometime soon to be able to report to you that we 

are going out to the market, and we will, when we do that, select 

a developer, negotiate a lease, and as the law requires bring it to 

this committee for its review. 

Chairman DENHAM. You made a determination in 2000. You personally made a determination in 2008, and 2009 you decided it was 

a soft economy and were not prepared to sell at that time; and, yet, 

it took 2010 to actually push legislation to get things moving. We’re 

still in a soft market right now. Are we not? 

Mr. PECK. The hotel market has been actually quite active in the 

last 6 months or so, 6 to 8 months. The chronology, again, in 2008 

Congress passed the Redevelopment Act. I came back to GSA in 

2009. In late 2009 we were advised by a real estate panel that that 

was not a good time to go to market; but, I can tell you that by 

at least halfway through midyear 2010, we were being approached 

by developers who said that the market—at least for hotel and 

some high-end office uses—had changed. Then it might be a good 

time to go back out to the market. And we have been working actively since at least 2009 to prepare for bringing this building to 

market. 

Chairman DENHAM. So are we prepared to go to market now? 

Mr. PECK. We are. GSA is working diligently to produce a request for proposals that we can put out on the street. 

13 

Chairman DENHAM. And when do you expect that to be complete? 

Mr. PECK. I don’t want to give you an exact timeframe, but I can 

tell you that we are prepared pretty soon to go out. 

Chairman DENHAM. In your best estimation, when do you think 

the people of this fine city will actually be able to walk through 

here and see development taking place and be able to utilize this 

building? 

Mr. PECK. Well, let’s say we could get an RFP on the street in 

a couple of weeks. It would probably take—our assumption is that 

we could make a selection for a developer by somewhere around 

June-July of this year and probably take another 9 months or so 

to negotiate a lease. That’s our experience in getting to a real development agreement. I’ve done this in the private sector, and 

that’s about the same timeframe that I experienced doing that kind 

of work there too. 

Chairman DENHAM. So beyond listing the property as surplus, 

excessive or unneeded properties, beyond that, putting the proposal 

out to request and actually finding somebody and moving on it so 

that it’s taking it off of our roles, what do you expect that average 

timeframe would be? 

Mr. PECK. Well, I would say if we could negotiate—— 

Chairman DENHAM. That’s understanding how long it takes just 

to declare something surplus from the land grabs of all the other 

agencies. 

Mr. PECK. Well, in this case, we don’t in the case of this building, 

at least. Are you talking about this building, still, Mr. Chairman? 

Chairman DENHAM. I’m talking specifically about this building, 

but I’m trying to get a good understanding as the President has 

talked about this being a priority. As he talked about it in the 

State of the Union, we are now looking at budgetary numbers and 

making some tough decisions. 

I want to get a good idea that we can take back to the taxpayers 

of this Nation and say it’s going to take us 5 years to sell properties or it’s going to take us 5 months. 

Mr. PECK. Right. 

Chairman DENHAM. It’s an extraordinary time, and I think it’s 

going to take extraordinary measures. 

Mr. PECK. This property, again, I described the process before. 

On this property, we don’t have to declare it surplus or anything 

else. The Congress has declared for us that this property should be 

redeveloped. So I’m telling you that the amount of time it would 

take to negotiate a lease and then for a private sector entity to actually build out the space, whatever they’re going to do, I think 

you’d probably expect that we’re looking at 21⁄2 to 3 years. 

Three years, I would guess, is a better guess of how much time 

before they cut the ribbon and whatever happens in this building 

happens, and we can say we’ve got an asset in full operation again. 

For other properties, as you’ve mentioned, someone has to declare 

the property first excess to the government needs. 

It’s GSA’s job when that happens to go to other Federal agencies 

and see if anyone needs that kind of an asset. That’s a process that 

can take as little as 30 days, and then we declare a property after 

that surplus to the government’s needs. And then we go through 

14 

this, Mr. Wise described a process in which we have to offer it by 

law to homeless groups to see if it’s of use to them, and then we 

offer it to State, county and city entities to see if they can use it 

for certain purposes. And after that we’re allowed to take it to a 

sale if nobody claims it. 

I also have to say though that there have been times when we’ve 

had properties ready to go to sale in various public and political interests have delayed even that happening, so it can take a while. 

I can also tell you that things can happen pretty fast. 

Chairman DENHAM. So there are a number of regulations that 

are impeding your process? 

Mr. PECK. There are at times, yes, sir. But once we get it out to 

sale, I can tell you that we do on-line auctions. We’re pretty good 

at that technology. We can move properties pretty fast. We sold a 

building in Bethesda a couple months ago for $121⁄2 million. 

I think the on-line auction took us about 2 months to work 

through. So things can move fast when we can be very businesslike 

once we actually finally make the decision, we have a property, and 

we can put it out on the street. 

Chairman DENHAM. Well this committee expects to be very aggressive. We plan on making sure that we have plenty of lists. My 

final question to you yesterday, at my request you provided me a 

list of surplus properties. There were only about 30 properties on 

that list, even though GSA has thousands under its purview. 

Mr. PECK. Right. 

Chairman DENHAM. And you explained why there were only 30, 

but why this building in particular is not on that list? 

Mr. PECK. Yes, sir. Well, this building has never, as I said, this 

building has never gone through the surplus property process at 

all. It’s not declared surplus. It’s been declared by the Congress as 

an asset that we should redevelop, and we’re happy to do that. 

The 30 properties that you got on your list were the 30 GSA-controlled properties, in other words, properties in the GSA inventory 

per se that are surplus that we are actively—and we are actively 

marketing those properties. Of the thousands of other government 

properties, I will be happy to work with you to get you the list as 

we can. 

There are some internal government regulations about how and 

when we are allowed to release lists from other government agency 

surplus properties, and that’s what has not allowed us in a short 

timeframe to respond to your request, but I can assure you we will. 

We want to work with you. We’re as motivated as you are to get 

surplus assets out of the government inventory. I can assure you 

that. 

Chairman DENHAM. How quickly do you think you’ll be able to 

provide lists by agency to this committee? 

Mr. PECK. Mr. Chairman, I’ve been in and out of the government 

and I would love to give you an estimate. But I’d like an opportunity to go back and figure out how fast I can move it. I honestly 

don’t know. There is a cumbersome, probably too cumbersome process involved in getting the list out. 

Chairman DENHAM. I understand the inefficiencies of government. I understand that it’s taken over 10 years on this property 

in particular. We do not have that time. 

15 

So let me issue a warning to every agency, that we are going to 

be demanding lists. We want to know what properties are being 

utilized, underutilized, accessed or surplused; and, you know, we 

want to provide the President every opportunity to sell properties. 

But we are coming after agencies to get those lists, so we are 

hopeful that every agency will be encouraged to work with us on 

a very quickly basis; and, if there are any red tape, if there’s anything that’s prohibiting them from providing those lists, we will 

make sure that this 112th Congress facilitates that process in a 

quick manner. 

Mr. PECK. I appreciate that, Mr. Chairman. 

We are accountable to you. I work for the President. He’s breathing down our neck also, and we have a mutual interest in moving 

these properties. 

Chairman DENHAM. Thank you. At this time, I’d like to open it 

up for questioning. I’ll recognize each member for 5 minutes, and 

I’d like to start this round of questioning by recognizing Chairman 

Mica, first. 

Mr. MICA. I am after Ms. Norton. 

Chairman DENHAM. This time, Ms. Norton. 

Ms. NORTON. Thank you, Mr. Chairman. 

My good friend, the full committee chair, does have a flare for 

the dramatic. The next time you want to make a point like this, 

I would suggest that you station Mr. Peck here. And telecast the 

hearing for the rest of us, who had nothing to do with the malfeasance that we’d find in here, do not have to suffer with Mr. Peck. 

[Laughter.] 

Chairman DENHAM. At least we’re not on Pennsylvania Avenue, 

outdoors, in front of the FTC Building. 

Ms. NORTON. Oh, is that a threat, Mr. Chairman? All right. We’ll 

see how your fight is. 

Mr. Peck, in a meeting last year I asked you to have an RFI out 

by the end of the year. We’re now into every word. I want you to 

tell us exactly where the RFI is. Is it with GSA or is it at OMB? 

Mr. PECK. Ms. Norton—— 

Ms. NORTON. Now, you know, if we can’t get straight, Mr. Chairman, this committee, unlike some committees hasn’t always 

sworned witnesses. We may have to start. I am asking a direct 

question, and it is real clear. I want to know. Is it at GSA or have 

you transmitted it to OMB? Yes or no. Where is it? 

Mr. PECK. Ms. Norton, the RFP is under review both by GSA and 

OMB at the moment. 

Ms. NORTON. What does that mean? 

Mr. PECK. Well, we are responding to some questions from OMB 

about what aspect of the RFP. 

Ms. NORTON. Why in light of the fact that you had a full model 

before you, you don’t have to start from the beginning with a historic building. You’ve got the tariff building. Why have you been 

unable to move forward? 

Mr. PECK. Well, two things; one is that we learn the Hotel 

Monaco/Tariff Building project was a successful project. We did 

learn some lessons from it that would apply to this project. This 

is a slightly different asset, requires something different. But I can 

16 

tell you that we do have a request for proposals that is in almost 

final form. 

Ms. NORTON. Mr. Peck, I think you should deliver this message, 

since you say it’s two places. That 30 days from today the chairman 

of the subcommittee expects the RFP to be out or to have an explanation from the Administration as to why it is not out, one or the 

other within 30 days to the chairman of the subcommittee. 

Mr. PECK. I will be happy to deliver that message. I can assure 

you. 

Ms. NORTON. Appreciate it. By the way, you had one RFI and 

they came forward in large numbers. 

Mr. PECK. That’s correct. That is correct. 

Ms. NORTON. So you already know the kinds of uses that the private sector thinks a bit, and yet you had to go out with another 

RFI or you’re doing an RFP now. This is so redundant and repetitive, leading nowhere, and the patience of the subcommittee has 

gone completely out. 

You indicate, and I realize this goes over many administrations, 

but Mr. Peck, do not refer to the state of the market. Not here 

where the market is stronger than it is in any other part of the 

country, and when in fact you had a bull market in 2005, and it 

wasn’t out in 2005 either. I don’t think you can blame it on the 

market. 

I think that the blame has to be taken where it is in the Administration, and that’s who we’re going to hold responsible—not the 

people who would love to have this trophy building out there to 

build on. What obstacles have kept you from using the kind of authority Mr. Principi uses routinely and which the Congress gave 

you by statute, otherwise known as 412 authority? 

Mr. PECK. Since I have been back at GSA, when I was at GSA 

in the Clinton administration, we didn’t have the 412 authority. 

Ms. NORTON. Now, just a moment. I only have so much time. 

What obstacles since you have been an administrator have kept 

you from using 412 authority? 

Mr. PECK. Since I’ve been the Commissioner, there are no legal 

obstacles to using 412 authority? 

Ms. NORTON. What are the obstacles? 

Mr. PECK. There really are few obstacles. One is finding a property that’s marketable, that the private sector will be interested in. 

Ms. NORTON. Are you joking, Mr. Peck? 

Mr. PECK. No, ma’am. Can I finish, please? 

Also, all of those properties, all proposals to do those sorts of 

things have to go through internal government review. And, in 

some cases, they are reviews that—— 

Ms. NORTON. Mr. Peck? Mr. Peck, within 60 days would you 

transmit to the chairman of this subcommittee a list of properties 

that have the potential for the use of 412 authority, within 60 days 

to the chairman of this subcommittee? 

Mr. PECK. I would be happy to do that. 

Ms. NORTON. Would you provide a list within 30 days of all the 

properties in the national capital region where GSA is currently 

losing money? 

Mr. PECK. Yes, ma’am. 

17 

Ms. NORTON. I’d like Mr. Wise and Mr. Principi to indicate 

whether you think the government scoring has been an obstacle, 

why it hasn’t been an obstacle for Mr. Principi, apparently, why 

what Mr. Wise believes would be the reasons why an agency would 

use 412 authority. 

We see that Mr. Peck uses the authority when he is selling or 

disposing of property; and, look! We’ve allowed them to keep the 

money, but GSA, it’s pretty easy to sell properties. Some of our 

properties are themselves quite extraordinary properties, and I do 

understand that some, of course, the market wouldn’t be interested 

in. 

So, you see, you know, you put it up for sale. You sell it. And 

that doesn’t take a lot of expertise. Even I could do that, but I 

couldn’t build something. And you haven’t used 412 authority to 

build, and yet you are the builder. You are the developer for the 

Federal Government. 

So Mr. Wise and Mr. Principi, while you are able to build, Mr. 

Wise, why are they not able to build since they are in fact the developers for our government? 

Mr. WISE. Congresswoman Norton, thank you for your question. 

I think it’s fair to point out that many of the challenges that 

GSA faces are really governmentwide. As I mentioned in my statement, we did recommend in 2007 that OMB, along with the Federal Real Property Council (of which GSA is a member), should develop an action plan to address key problems associated with 

unneeded property, including reducing—— 

Ms. NORTON. I am asking about disposing a property. I have indicated, I think, the easy part. And besides we get to keep the 

cash. I am asking about building properties. I am asking about developing properties, and I want to know whether there are structural obstacles. I even mentioned scoring. I am not sure that’s particularly relevant since they do have 412 authority. 

I also heard Mr. Principi, a major builder of the Veterans Administration. So I am trying to understand why a summit, what agency 

builds and the other agency disposes, what sort of I can’t build. 

Mr. PRINCIPI. We, Madam Ranking Member, we complied with 

OMB scoring requirements. Obviously, it was problematic at times 

getting our plans through OMB; however, we persisted. We provided them with the scoring, and as a result, we were able to develop the buildings, as I indicated, regional office buildings on the 

grounds of VA medical centers, so that we could provide veterans 

with better service and save money by not leasing property in the 

city, if you will. So I think we accomplished both objectives. 

Ms. NORTON. Finally, Mr. Wise, you see structural obstacles at 

scoring and obstacle of those 412 authorities, essentially eliminate 

that obstacle for GSA? 

Mr. WISE. Congresswoman Norton, we have not specifically addressed that issue in our recent work regarding GSA, but it is certainly something we would be willing to discuss with subcommittee 

staff to take to develop that issue. 

Ms. NORTON. Mr. Peck? 

Mr. PECK. May I? It is to answer your question. Section 412 gives 

us the authority to do land exchanges or public-private developments, which would allow us to build on a piece of government 

18 

land, for example. But all proposals to do that do have to go 

through the scoring review at OMB. 

Ms. NORTON. Do you regard scoring as an obstacle to using the 

412 authority? 

Mr. PECK. Yes, ma’am. No question about it; I mean, it is similar 

to Capitol East decisions in the private sector. However, just going 

through that review and trying to figure out a way in which you 

can make it work for the government is a difficulty. 

Ms. NORTON. I thank you, Mr. Chairman. 

I don’t know how Mr. Peck would understand that there was a 

scoring problem, since OMB or CBO waits to see what you’ve got 

before it scores. And since, Mr. Peck, you don’t have anything to 

show us or to show CBO, then of course we cannot know whether 

or not you could do 412 authority, as Mr. Principi does, without 

being scored. I urge you to find out. 

Mr. PECK. Well, Mr. Principi may have clarified, and he can answer for himself, but the enhanced use lease projects in VA do have 

to go through a scoring review. 

Mr. PRINCIPI. Yes, they do. 

Ms. NORTON. And somehow they make it. 

Mr. PECK. That’s true. 

Chairman DENHAM. Thank you. I now call on Chairman Mica. 

Mr. MICA. Well, I’ll try to be brief since everybody’s about frozen. 

Mr. Peck, the ranking member has asked for certain documentation which we would like to share, not only have come to the chairman of the subcommittee, but also to the ranking member in the 

timeframe sheet allotted. 

Also, if you could, in the next 30 days I would like to see your 

recommendations for any changes. If OMB is the problem, if something is an impediment, we’ve passed laws, several laws. We’ve 

passed specific laws to do this, and we’re still sitting here in an 

empty, vacant building. 

I asked the counsel of the committee or staff director if we talked 

to the private sector about what would speed this up. And with the 

private sector and probably many of them are out here today are 

most of them backed away from this about talking about what’s 

going on. They’re afraid to publicly say anything, because they deal 

with GSA. 

So we can’t get out of them a straight answer what the hell to 

do with this, so somehow, if we have to subpoena these people in 

and figure out a way to get these projects done and moving. Unfortunately, this mess that we are sitting in is only the tip of the iceberg, and this is repeated over and over. And Mr. Wise is saying 

that OMB held up an action. 

Maybe you could reiterate to the committee in writing, too, what 

you see as the obstacles in the next 30 days, and Mr. Peck, you. 

And then somehow, if we have to drag some of these folks in, we 

will put them under oath, Ms. Norton, or whatever the people in 

the real estate business that have to deal with these folks. But, 

this isn’t getting done, and it’s just frustrating. 

We’ve been talking about this, I think, my entire career with you, 

and again, we’ve got to do a better job. So those are two requests— 

expect hopefully in the next 30 days to get those to the committee. 

Mr. PECK. Yes, sir. 

19 

Mr. MICA. I yield back the balance of my time. 

Chairman DENHAM. Thank you. At this time, I would like to invite Ms. Edwards up. 

Ms. EDWARDS. Thank you, Mr. Chairman. 

I am shocked I can still move. 

[Laughter.] 

Ms. EDWARDS. Just a couple of questions, and to Chairman Mica 

and Ranking Member Norton, I haven’t been dealing with this for 

many, many years, and don’t intend to spend my congressional career trying to figure out what GSA is doing with the properties, 

with Federal properties. I am curious, though, of the 9600 or so assets that you have indicated. 

Mr. Peck spoke to several different types of properties, and I 

would be interested when you report back to us to have some indication of where those properties are geographically, and where they 

fit in those tiers, because not every property is just alike. And I 

mentioned to Chairman Mica when I came in, my recollection of 

the Post Office building used to come here actually quite regularly. 

It was much more vibrant earlier on, but that was before the redevelopment, the full redevelopment of Pennsylvania Avenue. And 

it feels as though the property didn’t keep pace with the full redevelopment, and so as a result, no retailer. You know, sort of hiring 

retailers, restaurateurs and commercial occupancy really took place 

in the building. But the Post Office building is quite unique in the 

inventory, and so it helped to understand the differences in the inventory so that we can construct both our request and oversight to 

match those differences as some properties, it would seem to me, 

should be easier to move to market than others. 

It would also be helpful to know, and perhaps you can tell us 

now, the distinction between the domestic properties and those 

abroad, and the different challenges the properties abroad present 

versus the inventory that’s here domestically. And what portion of 

those millions of square feet represent—properties that pose different challenges—because they’re not located here in the United 

States? 

Mr. PECK. No. Let me answer your first question. I don’t have 

any internal regulations making it difficult for me to get you their 

tier list of our properties. We’ll do that right away, and I appreciate 

you’re asking the question. 

Ms. EDWARDS. Well, what about the full 9600 in assets? 

Mr. PECK. That’s what I mean. We tier the 1500 properties that 

we own. The other 8,000 are leases in private sector buildings. But 

in the 1500 we own, which is about 170 million square feet, we can 

give you those tiers really quickly. 

Ms. EDWARDS. Thank you. 

Mr. PECK. For properties overseas, GSA doesn’t actually manage 

the overseas properties. They are managed either by the Defense 

Department, by and large, or the State Department. And we can 

get to the answer to that. 

Ms. EDWARDS. But are they considered part of this broad asset 

base? 

Mr. PECK. They are, yes, ma’am. 

Ms. EDWARDS. And if it’s not helpful, I think, for the subcommittee to be looking at an asset base of what we think are 9600 

20 

assets, when in fact some percentage of them are assets abroad 

that are not within your purview. 

Mr. PECK. Right. That’s exactly right. There are hundreds of 

thousands of government assets. Only 9600 are GSA, and as you 

note there are a good number of assets overseas. We can get you 

answers on that, too. 

Ms. EDWARDS. Thank you. And then in terms of valuation, I 

think when we look at those assets, would it be helpful to have 

some idea of the valuation? I mean for this committee’s oversight 

purposes, looking at the various tiers and where they’re valued, we 

might say, well, can you prioritize this set of them, because it has 

much more productive value to the taxpayer. 

Mr. PECK. We will be happy to. We will be inviting you to an incredibly stultifying debate about whether we should value things 

on their fair market value, replacement value, all those kinds of 

things, but we can get you those numbers, too. 

Ms. EDWARDS. Thank you. And then I wonder if you can answer 

the question. Of the properties that you have some control over, the 

ones that where they may be located in some area that isn’t the 

best market, but could provide some economic development opportunity locally, and might we engage in a different kind of process 

for those properties to encourage local economic development and 

growth, and jobs in places that are a little bit harder than some 

of our major metropolitan areas. 

Mr. PECK. Well, I was referring, actually, to assets that are really pretty far from any kind of a metropolitan center, or almost any 

kind of a population base, but assets that are located near a community, we already do have the authority and use it pretty successfully, often, to give properties for free to local entities for either 

public purposes, public safety, health, education, or economic development uses, which communities can also get properties from us to 

undertake. 

Ms. EDWARDS. Thank you. I know my time is expired, so I may 

have some other questions, if we are all just so doggone cold. 

Chairman DENHAM. Well, that’s one good thing about having an 

outside hearing in a cold location. They’re quick hearings! 

Mr. PRINCIPI. Right. 

[Laughter.] 

Chairman DENHAM. I just have one, final question. Mr. Principi 

obviously had some great successes with the Base Realignment and 

Closure Commission. Could such a commission be put in place for 

all of our properties, nationwide? 

Mr. PRINCIPI. It could. I think it would be a very, very difficult 

process. I think BRAC works well for military bases in the sense 

that it’s a combination of recommendations from the Department 

of Defense that have to be applied against criteria established by 

Congress. And I think the five backgrounds that we’ve had thus far 

have been able to reduce excess infrastructure and have the communities where those bases have been closed to be transferred to 

either other public agencies or to the private sector for redevelopment, and we’ve seen many, many success stories. 

So it is an option that you certainly could consider, but it would 

be a massive undertaking, I believe, Mr. Chairman. But, certainly, 

it could be done. 

21 

Chairman DENHAM. The BRAC Commission, itself, was a tremendous undertaking, and yet you were able to have a plan, 

multiyear plan, with liquidation happening immediately. 

Mr. PRINCIPI. Yes. 

Chairman DENHAM. And we need that immediate liquidation 

today, so. 

Mr. PRINCIPI. Well, that’s right. By law, when a military base is 

closed, take the 2005 BRAC ground. There are a period of years in 

which that base has to be closed, and so there’s no delay. By that 

time it has to be disposed of, sold or transferred to another agency 

of government. 

Chairman DENHAM. Thank you. Thank you for your testimony. 

At this time, if there are no further questions from Members, I 

would ask for a unanimous consent that the record of today’s hearing remain open until such time as our witnesses have provided 

answers to any and all questions that have been submitted to them 

in writing, and unanimous consent that during such time as the 

record remains open, additional comments offered by individuals of 

this committee or groups may be included in the record of today’s 

hearing. 

Without objection, so ordered. 

I would like to thank our witnesses again for their testimony in 

this cold environment; and, if no other Members have anything to 

add, the subcommittee stands adjourned. 

[Whereupon, at 11:30 a.m., the subcommittee was adjourned.] 

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