U.S. COMMODITY FUTURES TRADING COMM ISSION 

Three Lafayette Centre 


1155 21st Street, NW, Washington , DC 20581 


T elephone : (202) 418-5110 


Facsimile: (202) 418-5522 


www.cftc.gov 

Office of the June 18, 2015 

Inspector General 

TO: 	 Timothy G. Massad, Chairman 


Commissioner Mark P. Wetjen 


Commissioner Sharon Y. Bowen 


Commissioner J. hri stop ancarl o 

FROM: 	 A. Roy Lavik n R 


Inspector Gen~ 

SUBJECT: 	 A Review of Space Uti lization of the New York R egional Office ofthe 

Commodity Futures Trad ing Conunission 

Attached is our review of leased space in the New York Regiona l Office. It is brief and selfexplanatory; we found that the CFTC is renting more space than it is using in NYC, and 

recommended it take step s to decrease the expenditure of taxpayer funds on unused office space. 

The Executive Director asked us to amend our report to include certain management conclusions. 

We were requested to state or acknowledge: 

• 	 "[T]he agency has determined that it has extremely limited ability to sublease its space 

and that any return of space would have to be by mutual agreement." 

The Agency notes that it obtained "very favorable lease rates" for its ten-year lease. We are 

pleased that the CFTC apparentl y negotiated low rental rates. However, since the CFTC 

successfully negotiated such favorable rates, it would appear to make a return ofspace to the 

landlord feasible; the landlord can re-lease the property at the current market rates and turn an 

inunediate profit. Accordingly, we emphas ize our recomme1i.dation that the Agency seek to 

decrease amounts paid for unused space. 

• 	 "CFTC, though not required to, complied with FAR requirements of openly competing 

the NYRO lease and also complied with its own rules and on the award and 

ad ministration of CFTC office space leases as set forth in Statement ofGeneral 

Principles and Practices Pertaining to the Award and Administration ofCFTC's Office 

Space Leases. " 

We chose not to examine the bidding processes fo r this lease. Because we did not engage in fact 

finding, we have no opinion on whether CFTC's procurement process compl ied with t he FAR. 

Our focus is where the CFTC is now, and we find that it is renti ng more space than it is using 

and should seek to alleviate the expenditure of taxpayer f unds on unoccupied office space. 
• 	 "CFTC did carefully consider its needs for space prior to making its leasing decisions at 

its main and regional offices." 

Again, the planning and procurement processes simply were beyond the scope ofthis review. 

• 	 "Based on the updated drawings and staffing plans, the NYRO's space utilization rate is 

approximately 88% (16 of 134 total seats are available as ofMay 27, 2015)." 

On releasing our review for management comment, we reported that the NY Regional Office 

occupancy rate was 62%. During the period our review was with management, the Agency 

altered its space planning system to eliminate sixteen workstations. Instead of 150 workstations, 

the NY Regional Office now has 134. This has increased the appearance ofoccupancy. 

The majority ofthis change occurred by removing eleven Enforcement intern workstations from 

their previous workspace and re-naming that space as a conference room. Our interviews with 

staff indicated a wide-spread belief that the number ofavailable conference rooms was adequate. 

We are uncertain why one was added. Further, we believe that the Agency should be 

maximizing the number ofworkstations so as to make the most efficient use ofspace. We are 

uncertain why sixteen were eliminated. In addition to eleven Enforcement intern workstations, it 

appears five spaces formerly counted as "occupiable" were converted to "non-occupiable" space. 

As ofJune 15, 2015, the CFTC's electronic space system shows that even taking into account the 

reduced number ofworkstations and counting all ofthe on-board interns, the NY Regional 

Office is at 78% occupancy. But CFTC stated on May 27, 2015 they were at an 88% utilization 

rate. We believe that CFTC is counting offices that are presently vacant but labeled "reserved" 

for incoming interns, employees, consultants, or contractors. 

CFTC also asked us to: 

• 	 Count interns in calculating occupancy rates, noting that this summer CFTC is 


implementing a "recently announced paid intern program." 


The Agency states that it is selecting 21 interns for this summer; at that level, interns will 

account for approximately 20% oftotal NY staff. Because the Agency does not always have the 

funds to sponsor a paid intern program, and because interns work full-time only during the 

summer, we do not believe counting interns makes sense. Specifically, we do not believe it is an 

efficient use oftaxpayer dollars to reserve anywhere near 20% ofworkstations at NYC 

commercial lease rates for seasonal interns that the CFTC may or may not be able to bring on 

year to year. We are interested in ascertaining how many ofthose offices are occupied full time 

during the non-summer months. 

In response to our recommendation that CFTC seek to reduce the use ofspace used for paper 

storage by implementing 100% electronic filing and record-keeping, the Executive Director 

stated: 
• 	 "IT budget constraints have slowed the pace ofelectronic systems development and corequisite business process reengineering necessary for this migration." 

• 	 CFTC now accepts at least six separate report types through electronic filing. The rest 

"continue to be emailed or scanned." 

CFTC's carve out for IT spending was $50 million for FY2015. We believe enabling 100% 

electronic filing should be a priority and its accomplishment should be feasible with those funds. 

Conclusion 

We thank management for their comments and maintain our recommendation that the Agency 

seek to reduce funds spent on unoccupied office space by seeking a return ofunused space to the 

landlord (or by staffing up in NYC). 

We are very pleased with the level ofcooperation received from staffand management in 

Logistics and Operations, and in the New York Regional Office. We appreciate your continuing 

support ofthis Office. 

Attachments: Review of Space Utilization ofthe New York Regional Office, and CFTC 


Response 


Cc (with attachments): 


Anthony C. Thompson, Executive Director 

A Review of Space Utilization of the New York Regional Office of the 

Commodity Futures Trading Commission 

Prepared by the 

Office of the Inspector General 

Commodity Futures Trading Commission 

April 16, 2015 
 

 


 


 

U.S. Commodity Futures Trading Commission 

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Executive Summary 

In June 2014, we issued the first in a series of four reviews of CFTC leasing and space utilization 

rates.1 We noted that over the life of the CFTC’s leases, at current occupancy rates, the CFTC 

would spend in approximately $74,000,000 for the lease of vacant offices. On February 26, 

2015, we issued our second review, focused on the regional office in Chicago.2 

This review is the third in the series and focuses on the New York Regional Office. New York’s 

utilization rate is presently 62%, compared with 80%, 73%, and 33%, for Chicago, Washington 

DC, and Kansas City, respectively. 3 The New York office is located in the heart of the financial 

district, and the price per square foot is estimated at for the first five years of the lease, 

and for the second five years.4 Overall, and at current occupancy rates, approximately 

$8.8 million will be spent on vacant offices in New York over the life of the ten-year lease.5 

Because New York utilizes a relatively low percentage of its office space, and presently exists on 

two and one-half floors, we believe there is an opportunity to reduce the cost of spending on 

vacant offices. It is our understanding that the CFTC plans to hire no more than three new staff 

in New York through the remainder of FY 2015; the bulk of new hires are to be distributed to the 

other regions, and particularly to Washington DC. Accordingly, we recommend that the CFTC 

consolidate staff on the two full floors and sublease or negotiate a return of the half floor to the 

landlord. 

Staff appear widely content with the space configuration; they have few complaints and we 

identified few common areas that are poorly utilized. Nevertheless, better utilization of these 

few areas would increase office efficiency and permit addition hiring without resorting to further 

1 On June 4, 2014, our office released a report that analyzed leasing and occupancy levels in the Kansas City 

Regional Office. We found that approximately $3.6 million would be spent on vacant offices over the term of the 

lease, over two-thirds of the total. We recommended that the CFTC take immediate steps to dispose of the unused 

space to minimize spending on empty offices. Though not the focus of that review, we also looked at CFTC 

utilization in the aggregate, across all CFTC offices. We found that of the approximately $200 million to be spent 

on the lease of office space, approximately $74 million would be spent on vacant offices. We recommended that the 

CFTC institute a review of CFTC offices to identify and implement cost-saving measures. 

2 The Chicago lease review is currently with management for preparation of a management response. 

3 The CFTC uses a space management system called FOXfms. Our calculations and statistics are derived in large 

part from that system, and we have received assurance that it is up to date. According to FOXfms, these rates are 

accurate as of April 6, 2015. 

4 Some confusion exists with respect to the total price per square foot. The price listed in the lease is for the 

first five years, and for the second five years. The figure of was provided by CFTC management and 

includes various add-ons, including operational costs and taxes. However, we were also provided a figure of 

by CFTC management, and that figure was also supposed to represent the current price per square foot. We were 

unable to reconcile the difference prior to publication. If the higher figure is accurate, the costs associated with 

vacant office space would rise accordingly. 

5 The first five years of the NY lease cost the CFTC approximately $11 million. After the lease price increases in 

year six, approximately $12.2 million will be spent in the second five years. Over the life of the lease, the CFTC 

will spend approximately $23.3 million. This estimate assumes that current utilization rates persist over the life of 

the lease, and does not include the costs or credits associated with entering the lease. 

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expansion of the lease. Accordingly, a portion of this review focuses on potential improvements 

to existing space. 

Background 

The CFTC entered into an amended lease at its existing location of 140 Broadway, New York, 

New York, 10005, on September 2, 2011; the amendment expanded the CFTC’s office space 

from approximately 40,000 SF to 61,510 SF. 

The CFTC expanded in every region during this period, and the impetus for the New York 

expansion appears to be the same as elsewhere. In brief, the CFTC anticipated expanded 

jurisdiction into the swaps and derivatives markets, and expected substantial and immediate 

increases in appropriations from Congress to accomplish its expanded regulatory mission. It 

entered into long-term leases on the basis of these expectations. When the CFTC’s expectations 

proved incorrect, the CFTC was left paying substantial sums for vacant office space. The scale 

of expansion in New York appears to have been relatively modest, at least compared to other 

CFTC field offices, at approximately 55%.6 

Scope and Methodology 

To complete our review, we interviewed over 20 staff including staff in all Divisions and Offices 

in the New York region as well as a few key individuals in the Washington DC office. This 

included individuals in the Divisions of Enforcement, Swap Dealer and Intermediary Oversight, 

and Market Oversight, as well as in the Offices of Data and Technology and the Executive 

Director including individuals within the sub-offices of Financial Management, Logistics and 

Operations, and Procurement. Some witnesses were interviewed on multiple occasions. We 

requested and reviewed the relevant leasing documents, procurement documents, and 

architectural drawings, as well as other documents and CFTC communications concerning the 

New York Regional Office. We researched pertinent legal principals including federal leasing 

rules and standards, independent leasing authority, Government Accountability Office (“GAO”) 

reports and testimony, and government-wide efforts to increase agency efficiency with respect to 

real estate. Finally, we reviewed the recent history of CFTC leasing. Our method for calculating 

utilization rates and the related costs follows. 

The FOX system shows 150 total workstations, and that 93 of those are occupied.7 This leads to 

a utilization rate for workstations of 62%. We use this same utilization rate of 62% to calculate 

the overall utilization rate; we reason that common areas are intended for full occupancy, and 

that under occupancy of workstations leads to an equal under occupancy of common areas.8 

6 The scale of expansion in Chicago was approximately 50%, and in Kansas City approximately 300%. 

7 When calculating total available workstations, FOX does not distinguish between corner offices and cubicles. 

8 The CFTC FOX system includes as workstations eleven desks intended for summer interns in a large conference 

room on the 20th floor. The CFTC also uses the room as a library. Management would calculate usage with all of 

the interns in place, resulting in an occupancy rate of 68%, rather than 62%. Because interns are not on site during 

much of the year, we decline, and use actual occupancy. Currently two of these 11 workstations are occupied. We 

also believe the space could be used for CFTC employees or contractors. 

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The cost of the New York lease stays constant for five years and then rises for the second five 

years of the lease. We average the cost of the ten years of lease payments, and then divide that 

average by the under occupancy rate. This results in an estimate of the total spending on 

unutilized space over the course of an average year. 

Legal Background 

The problem of empty and underutilized office space is by no means limited to the CFTC.9 

Congressional inquiries, committee hearings, as well as numerous articles in the press have 

discussed this issue; indeed, some agencies are apparently not aware of all of the real estate they 

own or lease.10 

In January 2003, the GAO designated federal real property as a high-risk area, citing the 

government’s overreliance on costly, long-term leasing as one of the major reasons.11 More 

recently, GAO declared that, “[t]he federal government faces long-standing problems in 

managing real property, including an overreliance on leasing, and excess and underutilized 

property.”12 With regard to excess and underutilized space, GAO stated that “agencies often do 

not have a strong understanding of the real property held by other agencies and may lack the 

authority or expertise to lease their own underutilized property to other federal agencies.”13 

GAO noted that the agencies it reviewed “have taken some actions to dispose of and better 

manage these properties, including using excess and underutilized property to meet space needs, 

consolidating offices to use space efficiently, and reducing employee workspace to use space 

more efficiently.”14 

The General Services Administration (“GSA”) is responsible for creating rules and standards 

governing federal leasing, and it assists agencies by negotiating leases on their behalf. 15 Some 

9 See GAO report, Federal Real Property: Excess and Underutilized Property Is an Ongoing Challenge 

(http://www.gao.gov/products/GAO-13-573T). 

10 E.g., U.S. House Committee on Oversight and Government Reform, Subcommittee on Government Operations, 

Government Operations Oversight: Addressing Unused and Vacant Federal Property, Hearing 

(http://oversight.house.gov/hearing/government-operations-oversight-addressing-unused-and-vacant-federalproperty/) Article: http://www.whitehouse.gov/blog/2011/10/20/sale-cutting-waste-getting-rid-excess-real-estate, 

Article: http://cagw.org/media/wastewatcher/time-get-real-federal-property, 

11 Federal Real Property: Strategy Needed to Address Agencies’ Long-standing Reliance on Costly Leasing, GAO08-197 (January 2008) (http://www.gao.gov/assets/280/271449.pdf). 

12 Federal Real Property: High-Risk Designation Remains due to Persistent Management Challenges, GAO-13-

422T (February 2013) (http://www.gao.gov/products/GAO-13-422T). 

13 Id. 

14 Id. 

15 The Comptroller General has described the process by which the government leases real property as follows: 

Congress has centralized in GSA the authority to lease real property and facilities for the use of federal 

agencies. The Federal Property and Administrative Services Act of 1949 (FPASA) transferred to GSA the 

authority to lease real property and facilities on behalf of the federal government, subject to several 

exceptions not relevant here. FPASA, ch. 288, § 3, 63 Stat. 377, 378 (June 30, 1949), as amended, codified 

in 40 U.S.C. § 585. As presently written, this authority allows GSA, on behalf of all federal agencies, to 

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agencies, like the CFTC, have independent leasing authority and negotiate their own leases 

without reference to GSA.16 But independent leasing authority is more than the ability to 

separately negotiate leases; it also includes independence from GSA rules and regulations 

designed to, for instance, minimize government waste. Exercising that independence, the CFTC 

declined until February of 2011 to develop any written leasing standards or procedures of its 

own. Consequently, there appear to have been no CFTC or other written rules that directly 

governed the CFTC’s leasing process.17 

Over the years, however, Presidents of the United States have issued executive orders to reform 

and improve federal leasing standards. In general, these require government agencies to 

efficiently utilize space.18 Some are more specific, requiring agencies to reduce the amount of 

work space to that which is essential for known agency missions, and ensuring that the amount 

of office space per person is the minimum necessary to accomplish the task.19 For instance, in 

February of 2004, the President signed Executive Order 13327 (EO 13327) which, among other 

things, established a Federal Real Property Council to address issues in property acquisition and 

management, including adding as a performance measure for covered Agencies “changes in the 

amounts of vacant Federal space.”20 Similar in purpose to the Executive Orders, President 

Obama issued a Presidential Memorandum on June 10, 2010, requiring agencies to dispose of 

enter into leases of real property and facilities to meet the government's needs for periods of up to 20 years 

and to obligate fiscal year funds without violating the Antideficiency Act, 31 U.S.C. § 1341(a)(1)(B). 40 

U.S.C. § 585. See B-309181, Aug. 17, 2007. 

Matter of: National Transportation Safety Board--Application of Section 1072 of the Federal Acquisition 

Streamlining Act (41 U.S.C. § 254c) to Real Property Leases, B-316860, 2009 U.S. Comp. Gen. LEXIS 89, April 

29, 2009 (http://www.gao.gov/decisions/appro/316860.htm). 

16 Without specific statutory authority and absent a delegation of authority from GSA, a federal agency may not 

lease real property or facilities for its own use or on behalf of any other government entity. Matter of: Interagency 

Agreements -- Use of an Interagency Agreement between the Counterintelligence Field Activity, Department of 

Defense, and GovWorks to Obtain Office Space, B-309181, 2007 U.S. Comp. Gen. LEXIS 143, Aug. 17, 2007, 

(http://www.gao.gov/decisions/appro/309181.htm). 

17 The amended lease in New York was negotiated in part prior to February of 2011 and signed on September 2, 

2011. CFTC Management states that it followed the same standards prior to 2011, but had not reduced them to 

writing. We note that the written standards focus on the initial leasing process, and do not address any 

circumstances under which the CFTC should reassess its space needs – due, for instance, to underutilization or 

changed budgetary circumstances. 

18 Executive Order 13576--Delivering an Efficient, Effective, and Accountable Government, June 13, 2011, 

(requiring “frequent data driven reviews” of, among other things, “improving the management of Federal real 

estate”). Available at: http://www.whitehouse.gov/the-press-office/2011/06/13/executive-order-13576-deliveringefficient-effective-and-accountable-gov; Executive Order 13589 -- Promoting Efficient Spending, November 9, 

2011, (requiring agencies to “act in a fiscally responsible manner, including by minimizing their costs...”). 

Available at: http://www.whitehouse.gov/the-press-office/2011/11/09/executive-order-13589-promoting-efficientspending. 

19 Executive Order 12411 -- Government work space management reforms, March 28, 1983, (requiring agencies “to 

institute fundamental changes in the manner in which Federal work space is managed to ensure its efficient 

utilization.”) Available at: http://www.archives.gov/federal-register/codification/executive-order/12411.html. 

20 EO 13327 is available here: http://www.gpo.gov/fdsys/pkg/FR-2004-02-06/pdf/04-2773.pdf. EO 13327 did not 

apply to CFTC. The other Executive Orders cited in this paper did apply to CFTC. 

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unneeded federal real estate.21 This included a specific directive to “take immediate steps to 

make better use of remaining property assets as measured by utilization and occupancy 

rates....”22 

Finally, we have the OIG’s own regulatory mandate to detect and prevent waste and abuse, and 

to recommend policies designed to promote economy, efficiency, and effectiveness in 

connection with programs and operations of the Agency.23 In sum, despite the absence of 

written rules requiring minimum levels of utilization or reassessment of leases in light of 

changed budgetary assumptions, the CFTC must still strive to limit waste in this area. 

New York Lease Expenditures on Vacant Offices 

Over the life of its lease ending on April 30, 2022, the CFTC will pay an average of 

approximately $2.3 million/year.24 The CFTC has 150 offices in New York, of which 57 are 

vacant. At 62% occupancy, this means that the CFTC will pay an average of approximately 

$880,000/year for vacant office space. Because some swing space is desirable for visitors, or to 

accommodate minor staffing changes, we use a 95% target for occupancy.25 Given this target, 

the CFTC’s payments for unnecessarily vacant offices in New York are reduced to 

approximately $770,000/year. Using this metric, the CFTC will spend approximately $7.7 

million over the term of the lease on empty offices in New York. 

Because the CFTC occupies 62% of two and one-half floors, it is possible to eliminate excess 

space by subleasing or returning space to the landlord. The 18th floor contains 29 offices; 

accordingly, the elimination of the half floor would reduce the number of unoccupied offices26 

from 56 to 27 and result in substantial savings.27 

Eliminating the 18th floor would lower the total offices from 150 to 121, and lower the 

unoccupied offices from 56 to 27. The new underutilization ratio would be 121:27, or 78% 

occupied. Three new hires would change the ratio to 121:24, or approximately 80% occupied. 

Even if we were to discount the eleven offices that NY management prefers to reserve for 

21 Presidential Memorandum--Disposing of Unneeded Federal Real Estate, June 10, 2010, available at: 

http://www.whitehouse.gov/the-press-office/presidential-memorandum-disposing-unneeded-federal-real-estate. 

This memorandum applied to CFTC. 

22 Id. 

23 5 USC App. 3, § 2(1). 

24 As explained, this estimate excludes up-front costs and benefits, such rental abatement, construction costs, 

negotiation costs, etc. 

25 We used an equal occupancy target in our space reviews of Chicago and Kansas City. 

26 None of the intern desks are on the half-floor, and the figure of 27 remaining offices therefore includes eleven 

workstations presently dedicated to use by interns. 

27 It is beyond the scope of this review to conduct an analysis of the NY commercial rental market in the financial 

district. Potential savings would depend on the current state of the market compared to the rate the CFTC negotiated 

back in 2011. If CFTC negotiated a favorable lease, then the current market price exceeds the rate the CFTC is 

presently paying. In this circumstance, potential savings increase. If CFTC negotiated an unfavorable lease, then 

the current market price is below the rate the CFTC is presently paying; potential savings would then be less. 

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interns,28 the ratio reaches only 121:13, or approximately 91% occupied – still short of our target 

of 95%. 

The remainder of our review focuses on recommendations, all of which come from staff 

interviews, to better utilize certain common areas. We note that better utilization of space may 

free up additional space for offices. 

Underutilized Space 

We have attached three floor maps, which correspond to the 18th-20th floors occupied by the 

CFTC. The highlighted common areas have been identified as underutilized. Because these 

areas lack official usage statistics29 – and indeed, we do not believe that tracking such figures 

would be an efficient use of CFTC resources – we arrived at utilization estimates by interviewing 

staff. We address below those common areas staff identified as underutilized. 

The Missing Rooms (18150, 18220) 

The CFTC occupies slightly over one-half of the 18th floor. On the floor map attached as Exhibit 

3, rooms 1805 and 1806 appear as belonging to the CFTC, and we confirmed this with the Office 

of Logistics and Operations. Together, these rooms occupy approximately 493/SF, making each 

the size of a larger office.30 At a current cost of $35.80/SF, this space will cost the CFTC 

approximately $180,000 over the term of the lease. However, interviews with most staff, 

including management, revealed a lack of awareness that these rooms were part of the CFTC’s 

New York Office. 

Upon entering the room, we saw that it was unfinished, and contained what appeared to be 

leftover construction supplies as well as some trash. In an interview with Logistics staff, we 

learned that the construction company hired to set up the CFTC’s new space on the 18th and 19th 

floors had used the room as a staging area. After they completed the work, the room was 

abandoned. The CFTC has never used it. Though the room is presently unfinished, and is 

outside of the major CFTC area on the 18th floor, it is certainly a usable space. A staff person in 

New York has suggested that it could serve as a supply room, freeing up a current, furnished 

supply room to be used for other purposes. We agree. 

While we recommend that CFTC consider negotiating a return of the 18th floor to the landlord, if 

CFTC determines to maintain the 18th floor we recommend that they find a use for rooms 18150 

and 18220, and to remain mindful of the totality of its leased space. 

28 See fn.8. 

29 Though conference rooms are usually reserved online through a system that does track usage, no interview 

identified the conference rooms in New York as underutilized. Accordingly, we did not attempt to estimate usage 

statistics for conference rooms. 

30 The Logistics Office observed that not all of this space is usable; the building maintains a closet area in one of the 

rooms that contains various equipment that does not belong to the CFTC. However, a substantial majority of the 

space is useable, and the FOXfms system does not estimate the size of the closet area for purposes of inclusion in 

our calculation of total space in these rooms. 

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Training Room (20213) 

The 20th floor includes a training room, approximately 480 SF, that staff estimated they use very 

rarely. We recommend that the training room be converted to offices or a conference room. 

Most training at the CFTC now occurs on desktop computers in staff’s individual offices, and 

staff indicated a preference for training on the desktop computer they use every day. To the 

extent training for larger groups remains necessary, in which many people must simultaneously 

work on computers in the same room, we recommend that laptops or desktops be set up and 

taken down as needed; permanent reservation of space for such limited use is inefficient.31 

Our most recent information is that the NY office has made progress in better utilizing this room. 

The office of Logistics and Operations is in the process of installing multi-purpose furniture and 

has been experimenting with ways to fit all staff from the Division of Enforcement in the room 

for conferences and presentations. We compliment the CFTC on their efforts in this regard. 

File Room (19120) 

This file room is approximately 283 SF and is, predictably, filled with files. Interviews with 

staff indicated that it is rarely used, though management stated that such a room remained 

necessary. 

As we noted in our space review on the Chicago regional office, the CFTC apparently continues 

to require some forms to be filed by fax or hard copy. We understand that progress has been 

made towards electronic filing of all documents, and we understand that further progress is 

planned. Nevertheless, we do not believe it is appropriate in 2015 for the CFTC to be accepting 

hard copies of documents in anything but extraordinary circumstances.32 Presently, forms filed 

in hard copy or fax must then be individually scanned and uploaded as PDFs into a CFTC 

system. Others are never scanned; they are simply physically stored in the file room in case they 

are one day needed. 

In interviews with staff, there was a consensus that 100% electronic filing would be preferred. It 

would improve efficiency not only for collecting the data, but in processing and analyzing the 

data after it is collected. And more immediately relevant to this review, a pure electronic filing 

system would free up a large room in the New York Office; given the value of downtown New 

York real estate, this would result in a measurable efficiency gain. We recommend that the 

CFTC prioritize its move to electronic filing for all of its forms, and that it then consider 

31 A staff person observed that the CFTC’s training rooms are uniquely set up with additional power outlets and 

electricity to support multiple computers running at the same time. We do not suggest that the NY training room 

must never be used for training; rather, we recommend that the room be able to support multiple functions, so as to 

increase the presently low rate of utilization. We recommend that the CFTC consult with NY staff including 

Logistics and Operations staff to determine the best way to convert this room into a multipurpose space. 

32 For instance, some victims and witnesses in cases brought by the Division of Enforcement are not represented by 

counsel and do not have access to the technology necessary to scan their paper documents. In such a circumstance, 

it is of course incumbent upon the CFTC to accept production in whatever means are available to the victim or 

supporting witness. 

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alternative uses for this area. In the short term, we recommend the CFTC consider off-site 

storage as appropriate. 

A Future Market Watch Room 

Washington DC and Chicago each have a room designated as the “Market Watch Room” in 

which a permanent video feed links staff from the two regions. In an interview with the head of 

Market Oversight, we learned that the permanent video link is intended to help the staff of 

Washington DC and Chicago coordinate their work. While there is no current push to construct 

a similar room in New York, the head of Market Oversight has expressed a desire for staff in all 

three regions to be linked in this manner. We do not make a formal recommendation on this 

issue, but we note it given that our other recommendations may result in an increase in the space 

available for such a room to be constructed. 

Conclusions and Recommendations 

The New York Regional Office has an occupancy rate of approximately 62% on two and onehalf floors. Based on current staffing levels, and the fact that the CFTC does not plan to 

appreciably increase staff through the end of FY 2015, we recommend that the CFTC seek to 

reduce lease expenditures by subleasing or negotiating a return of space to the landlord. The 18th 

half-floor seems most logical. 

We identified only a few areas where limited remodeling or construction might increase office 

efficiency, including two rooms on the 18th floor that had apparently been abandoned or 

forgotten by Agency management in New York.33 We recommend that the CFTC be mindful of 

its existing space, and if it determines to maintain leased space on the 18th floor, to convert that 

area into something useable.34 

As we noted in our review of Kansas City: 

We believe that the CFTC should strive to lease only the space that it has the 

current budget and staff to fill. Future appropriations cannot be predicted with 

certainty. It may be that immediately after downsizing, the CFTC will receive an 

appropriation sufficient to completely fill the space that it no longer has. This 

would not change our reasoning; we believe that the CFTC and public are better 

served by the risk of a temporary shortage of space, than a 100% certainty of 

spending substantial taxpayer dollars on the lease of vacant offices. 

33 We note that although apparently unknown to staff and management in NY, Logistics and Operations staff was 

aware of these rooms, knew their history, and had immediate suggestions for putting them to use. We are unsure 

why the rooms had not been utilized (or finished) after construction was completed. 

34 Should the CFTC act on our recommendation to reduce its spending on vacant offices, a negotiated return of the 

18th half-floor would include these two unused rooms. 

9
 
U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 


1155 21st Street, NW, Washington, DC 20581 


Telephone: (202) 418-5160 


Facsimile: (202) 418-5541 


www.cftc.gov 

To: 

From: 

A. Roy Lavik, Inspector General 

Anthony C. Thompson, Executive Directo~ c: 

Date: June 12, 2015 / 

Subject: Revised CFTC Comments on the OIG Review ofLeasing and Occupancy 

Levels in New York City- Discussion Draft 

The Commodity Futures Trading Commission (CFTC or Commission) appreciates the 

opportunity to review and comment on the Revie·w ofSpace Utilization ofthe New York Regional 

Office ofthe Commodity Futures Trading Commission (Revie·w) prepared by the CFTC Office of 

Inspector General (OIG). The following comments revise those previously submitted on June 2, 

2015, and are intended to clarify and provide additional context to the issues discussed in the 

Review. 

General Comments 

The primary recommendation contained in the Review is, "that the CFTC seek to reduce lease 

expenditures by subleasing or negotiating a return ofspace to the landlord" Review at 9. 

In response to the OIG's recommendation, the CFTC would like to note that it is currently 

working with the landlord and property manager to reduce leased space at the Kansas City 

Regional O ffice, and is evaluating potential reductions in leased space at its other locations, 

including the New Yorlc Regional Office (NYRO). Furthermore, with regard to the subleasing of 

CFTC space, the agency has determined that it has extremely limited ability to sublease its space 

and that any return ofspace to the landlord would need to be executed by mutual agreement. 

Accordingly, in light ofthese additional facts, the CFTC respectfully requests that the OIG revise 

the Revie·w to reflect this additional information. 

The Review also notes that the CFTC's independent leasing authority authorizes it to negotiate 

leases without reference to GSA rules and regulations. Review at 5. Further, it notes that "the 

CFTC declined until FebruaJ)l of2011 to develop any written leasing standards or procedures of 

its own," "there appear[s] to have been no CFTC or other written rules that directly governed 

the CFTC 's leasing process," and "the written standards focus on the initial leasing process, and 

do not address any circumstances under which the CFTC should reassess its space needs . .." 

Review at 5; fn. 17. 
In response to these statements in the Review, the CFTC would like to note that while it is not 

required to adhere to GSA rules and regulations because it is given independent lea<;ing authority 

in 7 U.S. C. § 16(b)(1)(3), and the Federal Acquisition Regulation (FAR) does not apply to the 

lease ofoft1ce space, the CFTC nevertheless followed the FAR requirements of conducting a 

competitive acquisition for the NYRO lease. As the OIG's review ofprocurement documents 

should have revealed, the CFTC publically adve11ised its New York office space requirement on 

FedBizOpps and received and evaluated offers from twelve properties. Of the twelve offers 

received, the CFTC chose 140 Broadway because its offer had the highest technical ranking and 

the lowest price of all offers received. Further, when procming the NYRO, the CFTC did have 

in place the following rules on leasing office space, Statement ofGeneral Principles and 

Practices Pertaining to the Award andAdministration ofCFTC's Office Space Leases (see 

Attachment 1), and did comply with these rules at the time. These rules on leasing space were 

previously provided to OIG in May of2014 and were in place prior to the signing of the NYRO 

lease. Please note that the Commission's procedures for Administration ofLeases (Attachment 

1, paragraph III) have since been revised so that the Logistics and Operations staff is responsible 

for analyzing rent-related charges and authorizing payments. 

Therefore, the CFTC respectfully requests that the OIG revise the Review to include that the 

CFTC, although not required to, complied with FAR requirements of openly competing the 

NYRO lease and also complied with its own rules on the award and administration ofCFTC 

office space leases as set forth in Statement ofGeneral Principles and Practices Pertaining to 

the Award and Administration ofCFTC 's Office Space Leases. 

Space Utilization 

The Review further states that the CFTC has been underutilizing space at the NYRO and it bases 

its recommendations for the CFTC to better utilize cetiain common areas solely on "staff 

interviews." Review at 7 . 

The CFTC believes that the OIG's apparent reliance only on staff interviews to make these 

recommendations limits the usefulness ofthe recommendations for planning purposes. Further, 

the Revie·w does not include any background on the planning process for space undertaken by the 

CFTC prior to leasing the NYRO and other office spaces. In particular, the Review does not 

include any discussion of the CFTC's utilization ofthe services ofa professional 

architecture/engineering finn to develop requirements and appropriate design alternatives prior 

to leasing the NYRO and other spaces currently leased by the CFTC. 1 

As background, the CFTC entered into its current lease agreements after an in-depth planning 

and requirements gathering process. Specifically, in July 2009, a year before the Dodd-Frank 

Wall Street Reform and Customer Protection Act of2010 (Dodd~ Frank Act), the Commission 

worked with a professional architecture/engineering firm, RTKL Associates, Inc., to develop a 

long-term Program ofRequirements (POR) for CFTC staffand space in order to meet the 

1 The CFTC plans to continue this practice when considering any significant changes to existing space in tbe future. 

2 
agency's regulatory mission (see Attachment 2)? The driving forces behind this POR were the 

lack ofavailable office space in CFTC's existing facilities due to recent staff increases, and the 

then upcoming lease expirations (District ofColumbia- 2015; Kansas City- 2014; Chicago2012; and New York 2012). Slow leasing markets in the regional cities enabled the CFTC to 

obtain space in accordance with the POR at very reasonable lease rates. The CFTC's 

development of a POR demonstrates clearly that the CFTC worked to carefully assess its needs 

for space prior to making leasing decisions on office space. 

Therefore, in light ofthese additional facts, the CFTC respectfully requests that the OIG revise 

the Review to reflect that the CFTC did carefully consider its needs for space prior to making its 

leasing decisions at its main and regional offices. 

The CFTC would also like to note that space utilization rates at CFTC offices continually change 

as staffing levels, including federal employees, interns, and contractors, can fluctuate 

significantly due to available budgets and the time of year (e.g. seasonal interns). The number of 

available seats also changes based on space configuration, which may be altered to meet mission 

specific requirements. For example, room 20103 in the NYRO was recently converted into a 

Division of Enforcement workroom, based on the existing workrooms in Chicago and DC, to 

prepare and provide storage for large court filings. This room previously contained eleven seats 

reserved for interns, who will now be housed in other existing workstations. Additionally, 

because interns are typically on site in the NYRO in the spring, summer, and fall ofeach year, 

the CFTC believes it important that the Review take into account intern spacing needs. 

Updated drawings, as ofMay 27, 2015, for the NYRO reflecting the change to room 20103 and 

current staffing plans, including the recently announced paid intern program, are attached to this 

letter (see Attachment 3). Based on the updated drawings and staffing plans, the NYRO's space 

utilization rate is approximately 88% (16 of 134 total seats are available as ofMay 27, 2015). 

Accordingly, the CFTC respectfully requests that the Review note the fluctuations in staffing 

levels as a result of available budgets and the time of year. And, that the OIG consider all intern 

related works paces as "Occupied" in the Review even though they are vacant for part ofthe year. 

Doing otherwise significantly underestimates the space demands in the NYRO. Cu11'ently, 

fifteen unpaid interns have been selected and six paid interns are pending selection for this 

summer. 

Electronic Filing 

The Review also recommends "that the CFTC prioritize its move to electronic filing for all ofits 

forms" to reduce the need for file space. Review at 8. 

2 A POR considers aU space regardless oflease expiration date and it is a reasonable practice to begin leasing 

activities two years prior to expiration. Please note that the attached POR contains personally identifiable 

information (PII) covered by the Privacy Act of 1974. 

3 
In response to the OIG's recommendation, the CFTC would like to note that the agency does not, 

as stated in the Review, require any forms to be filed by fax or hard copy. Further, any document 

or form required to be filed with the Commission may be emailed in lieu offax or hard 

copy. The CFTC recognizes the importance of electronic filing and management offorms, not 

only to reduce the need for file space, but to increase efficiency. To this end, it has made 

electronic filing and storage of documents a high priority in its Information Technology (IT) 

operating plan over the past several years. Although we have continued to make progress toward 

receipt of all documents and forms via direct submission to the CFTC.gov portal, IT budget 

constraints have slowed the pace of electronic filing systems development and co-requisite 

business process re-engineering necessary for this migration. 

The agency would like to note that the CFTC.gov portal now accepts the following forms or 

documents via direct electronic submission: DCM and SEF Product Certifications, DCM and 

SEF Product Terms and Condition Cetiifications, Rule Certifications for DCMs, DCOs, SEFs, 

and SDRs, Monthly and Quatterly Reporting for DCOs, DCMs, SEFs, and SDRs and Event 

specific repmting for regulated entities. Documents and forms not yet received directly through 

the portal continue to be either emailed or scanned. 

The CFTC respectfully requests that the Review be revised to reflect the additional information 

provided above regarding the agency's electronic filing requirements and recent changes to the 

CFTC.gov portal. 

In closing, the CFTC sincerely appreciates the oppmtunity to comment on tllis Review and looks 

forward to working with the OIG in increasing CFTC's space utilization in a cost effective 

manner. Please let me know ifyou have any questions about these comments. 

Attachments: 

1. 	 Statement ofGeneral Principles and Practices Pertaining to the Award and 


Administration ofCFTC's Office Space Leases- February 11, 2011 


2. 	 Program ofRequirements- July 24, 2009 

3. 	 NYRO Floor Plans- May 27, 2015 

4 
Statement of General Principles and Practices Perta ining to the Award and 

Administration of CFTC's Office Space Leases 

I. Leasing ofSpace: 

A. 	General Principles: 

The general principles governing Commodity Futures Trading Commission ("CFTC" or 

"Commission") acquisition of office space include: 

• 	 Maximizing competition to the extent practicable; 

• 	 A voiding conflicts of interest; 

• 	 Adhering to the requirements of Procurement Integrity; and 

• 	 Reasoned decision-making to obtain space that enables the Commission to accomplish 

its mission in an efficient and cost-effective manner. 

Although neither the Federal Acquisition Regulation (FAR) nor the General Services Acquisition 

Manual (GSAM) specifically apply to the acquisition of office space by CFTC, the principles 

cited above are embodied in those documents. Accordingly, CFTC has chosen to comply with 

aspects of their requirements that facilitate these ends. This is discussed further below. 

B. 	Applicability of Regulations and Policies: 

The FAR does not apply to the acquisition of!eased office space. Specifically, the scope ofthe 

FAR's coverage is defined in Section 1.104 as follows: "The FAR applies to all acquisitions as 

defined in: Part 2 ofthe FAR, except where expressly excluded." According to Part 2.1 Ol(b), the 

term "acquisition" is defined as the "acquiring by contract with appropriated funds ofsupplies or 

services (including construction) by and for the use of the Federal Government through purchase 

or lease, whether the supplies or services are already in existence or must be created, developed, 

demonstrated, and evaluated." The term "supplies" is defined as "all propetty except land or 

interest in land." Because a lease of real property, including a lease of office space, is an interest 

in land, it is not a "supply" and the FAR does not apply. 

The GSAM is also inapplicable to the lease of office space by CFTC. The GSAM applies to the 

acquisition ofleased office space by GSA and any agencies delegated independent leasing 

authority by GSA and so required by GSA to use the GSAM. CFTC's independent leasing 

authority was mandated by its authorizing legislation and not by GSA. Accordingly the GSAM 

is not required for use by CFTC in its acquisition of office space for lease. 

In the absence of explicit regulatory direction, CFTC has chosen to comply with aspects of these 

documents that facilitate the principles cited above. The GSAM is used specifically for its 

guidance as to the considerations and findings necessary to suppoli a lease procurement by other 

than full and open competition. Additional guidance and processes that may be applicable to 

lease acquisition are contained in CFTC's acquisition policy. 
C. 	 Acquisition Process: 

The acquisition process for all lease awards begins with requirements definition and completion 

ofmarket research. Market research is used to determine whether CFTC is best served by an 

open market competitive acquisition or a follow-on award to the incumbent lessor. 

1. 	 Steps in a competitive acquisition ofleased office space are as follows: 

• 	 Develop Program ofRequirements 

• 	 Conduct market survey 

• 	 Define delineated area 

• 	 Formulate an acquisition strategy 

• 	 Advertise requirement 

• 	 Review expressions ofinterest 

• 	 Tour properties 

• 	 Develop a solicitation list 

• 	 Draft and issue a Solicitation for Offers 

• 	 Draft a Technical Evaluation Plan 

• 	 Designate a Technical Evaluation Committee (TEC) 

• 	 Evaluate initial offers 

• 	 Complete initial TEC report 

• 	 Complete price analysis 

• 	 Complete Phase II Determination (assumes negotiation, otherwise, the Contracting 

Officer will draft a Source Selection Statement at this time) 

• 	 Conduct negotiations 

• 	 Solicit and evaluate revised offers 

• 	 Complete Final TEC Rep01t 

• 	 Contracting Officer completes Source Selection Statement 

• 	 Memorialize terms ofagreement between the parties in a lease document 

2. 	 Steps in award ofa lease by other than full and open competition are as follows: 

• 	 Develop Program ofRequirements 

• 	 Conduct market survey 

• 	 Complete Justification for Other Than Full and Open Competition 

• 	 Conduct negotiations 

• 	 Memorialize terms of agreement between the parties in a lease document 

D. Acquisition Objective: 

The functional objective ofthe acquisition process described herein is to acquire office space in a 

building that efficiently supports CFTC's mission; provides a high quality work environment; 

and offers a satisfactory breadth and variety of amenities. This outcome must be met in a 

manner that maximizes value to the Commission, considering price and technical factors. It 

must be provided at a price that is fair and reasonable. 
II. Construction of Space: 

CFTC's office space is constructed in accordance with the terms ofits office space lease 

agreements. Construction contracts and trade subcontracts, as appropriate, are awarded based on 

a competitive process that results in fair and reasonable pricing. CFTC's Contracting Officer is 

privy to bid information and, in consultation with CFTC's architect, project manager, and other 

knowledgeable Commission personnel, approves project pricing as well as any required contract 

change orders. 

III. Administration ofLeases: 

CFTC's Contracting Officer is responsible for analyzing rent-related charges and authorizing 

payment as appropriate. The Contracting Officer is also responsible for addressing with the 

landlord any issues pertaining to lease compliance. The Office of Management Operations is 

responsible for day-to-day facility operational matters and consults with the Contracting Officer 

on lease-related issues as appropriate. 

Date 

Senior Procurement Executive 

2 - !/ -;( oI I 

Mark Carney Date

ChiefFinancial Officer