Federal Bureau of Investigation: Actions Needed to Document Security Decisions and Address Issues with Condition of Headquarters Buildings
Published: 2011-11-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since September 11, 2001, the Federal Bureau of Investigation's (FBI) mission and workforce have expanded, and the FBI has outgrown its aging headquarters, the J. Edgar Hoover Building (Hoover Building). As a result, the FBI also operates in over 40 annexes, the majority located in the National Capital Region. In the explanatory statement accompanying the 2009 Omnibus Appropriations Act, GAO was directed to examine the FBI's headquarters facilities. In response, GAO examined the extent to which (1) these facilities support the FBI's security, space, and building condition requirements and (2) the FBI and the General Services Administration (GSA)--the real property steward for the Hoover Building--have followed leading capital decision-making practices in identifying alternatives for meeting the FBI's facility needs. GAO reviewed security, space, and condition assessments and planning studies; visited FBI facilities; and interviewed FBI and GSA officials.
section_title: What GAO Found
paragraphs: According to FBI and GSA assessments, the FBI's headquarters facilities--the Hoover Building and the headquarters annexes--do not fully support the FBI's long-term security, space, and building condition requirements. The FBI has addressed many security concerns at the Hoover Building by implementing protective measures. Furthermore, in response to a recommendation GAO made in a law enforcement sensitive version of this report issued in July 2011, the FBI has updated its security assessment of the Hoover Building in accordance with security standards issued in 2010. The assessment includes recommendations but does not indicate whether recommended actions will be implemented. While this is reasonable given the short period of time since GAO's July 2011 report, documentation of decisions on the recommendations and tracking implementation is important because of facility planning and budget implications--for both the Hoover Building and a new headquarters--and time needed to coordinate with GSA. FBI officials told GAO that the annexes will be assessed against the 2010 security standards. The officials noted, though, that the dispersion of staff in annexes creates security challenges. The Hoover Building's original design is inefficient, according to GSA assessments, making it difficult to reconfigure space to promote staff collaboration. Staff dispersion across annexes likewise hampers collaboration and the performance of some classified work. Furthermore, the condition of the Hoover Building is deteriorating, and GSA assessments have identified significant recapitalization needs. However, GSA has decided to limit investments in the Hoover Building to those necessary to protect health and safety and keep building systems functioning while GSA assesses the FBI's facility needs. This decision increases the potential for building system failures and disruption to the FBI's operations. Through studies conducted over the past decade, the FBI and GSA have considered three broad alternatives, each with variations, to try to meet the FBI's facility needs--(1) modernize the Hoover Building, (2) demolish the Hoover Building and construct a new headquarters on the existing site, and (3) acquire a new headquarters on a new site. In doing so, the FBI and GSA thus far have generally followed leading practices for capital decision making. To varying degrees, these alternatives would improve security, space, and building conditions, but each would take several years to implement. Estimates of the alternatives' costs, developed in the studies, are not comparable because they were prepared at different times and for different purposes. The FBI and GSA plan to discuss the FBI's facility needs with the Office of Management and Budget, and GSA and the FBI will need to present a business case, including current, comparable cost estimates, to support the choice of a preferred alternative and financing strategy. The FBI's 2011 security assessment of the Hoover Building, as well as information on any security improvements that may be needed at the annexes, could inform the agencies' decisions and help ensure that limited budgetary resources are allocated effectively. This is a public version of a law enforcement sensitive report that GAO issued in July 2011, which has been updated, including a modification to a recommendation, to reflect recent FBI actions. Information that the FBI and the Department of Homeland Security deemed sensitive has been omitted. The FBI should document decisions about, and track its implementation of, all security recommendations for the Hoover Building and the FBI's headquarters annexes. GSA should reassess its decision to limit recapitalization investments in the Hoover Building, since the FBI is likely to stay in it for several more years while its long-term facility needs are being planned. The FBI agreed with these recommendations. GSA indicated it is working to implement GAO's recommendation.

section_title: Letter
paragraphs: The Federal Bureau of Investigation (FBI), within the Department of  Justice, acts to protect and defend the United States against crime,  terrorism, and foreign intelligence threats. Since September 11, 2001, the  FBI’s antiterrorism mission has greatly expanded and its efforts in other  areas—such as cyber crime—have also grown. The agency’s total  headquarters workforce has increased by approximately 5 percent  annually since 2001. As a result, the FBI has outgrown its main  headquarters facility, the J. Edgar Hoover Building (Hoover Building) in  Washington, D.C. Headquarters staff who cannot be accommodated in  the Hoover Building are dispersed in over 40 leased annexes (annexes),  the majority of which are located in the National Capital Region. FBI  officials report that the dispersion of staff, combined with condition  deficiencies at the Hoover Building and site, affects security and creates  operational inefficiencies. In addition, these security, space, and building  condition issues have raised congressional concerns about how well the  Hoover Building and annexes meet the FBI’s security requirements and  operational needs. In its 2005 Asset Management Plan, the FBI identified  the need for a new headquarters facility to support its strategic objectives,  which include providing security for personnel and information in an  efficient and cost-effective workspace. To meet these objectives, the FBI  has taken steps to document its headquarters facility requirements and, in  collaboration with the General Services Administration (GSA), the  government’s real property steward, has studied a number of alternatives  for meeting its needs.
Congress directed us, in the explanatory statement accompanying the  2009 Omnibus Appropriations Act, to review the Hoover Building and  associated off-site locations in light of its concerns about the security  posture of the Hoover Building and its inability to house the current FBI  Headquarters workforce.  We examined (1) the extent to which the  Hoover Building and annexes support the FBI’s operational requirements  for security, space, and building condition and (2) the extent to which the  FBI and GSA have followed leading capital decision-making practices in  identifying alternatives for meeting the FBI’s operational requirements and  the extent to which each alternative would address these requirements.
This report is a public version of a law enforcement sensitive report that  we issued in July 2011. It communicates the publicly releasable aspects  of our findings while omitting information that the FBI and DHS  considered sensitive about the FBI’s operations, the security posture of  the FBI’s facilities, and measures the FBI has put in place to protect its  workforce. The overall methodology used for both reports is the same.
To determine the extent to which the Hoover Building and annexes  support the FBI’s operational requirements for security, space, and  building condition, we visited the Hoover Building and five annexes— which we selected to illustrate different facility security levels and degrees  of staff fragmentation—to examine conditions firsthand and interview on- site representatives from FBI divisions (programs) and security officials  about those conditions. More specifically:    For security, we compared past site-specific facility security  assessments (security assessments) for the Hoover Building and 15  of the annexes to federal security standards. For the Hoover Building,  we also assessed whether recommendations to improve security were  implemented. We spoke with agency security officials about the  security assessments, risks, and challenges resulting from dispersed  operations. Following our issuance of the law enforcement sensitive  version of this report in July 2011, the FBI updated its security  assessment of the Hoover Building, which we reviewed.     For space, we reviewed the size and location of current facilities and  programs, and we interviewed FBI program officials to understand the  effects on operations of having different programs housed in several  locations. We also compared attributes of the Hoover Building—such  as its efficiency (how much of its space is usable for mission needs)— to GSA standards and guidance.    For building condition, we analyzed assessments of the Hoover  Building’s physical condition and compared this information to GSA  policies for building condition. In addition, we examined GSA’s asset  business plan for the building and other studies to identify completed  maintenance projects, deferred maintenance, and planned major  repair and recapitalization projects, and we asked FBI and GSA  officials about their assessments of the Hoover Building’s condition.
To determine the extent to which the FBI and GSA have followed leading  capital decision-making practices in identifying alternatives for meeting  the FBI’s operational requirements, we compared the FBI’s and GSA’s  planning actions against leading practices we have reported on in this  area. In addition, we reviewed FBI and GSA studies of the FBI’s facilities  and operational requirements and identified the alternatives discussed in  these studies for meeting the requirements. We determined that the  alternatives fell into three broad categories—(1) modernize the Hoover  Building, (2) demolish the Hoover Building and construct a new  headquarters on the existing site, and (3) construct a new headquarters  on a new site—each of which included a number of variations. For our  analysis, we focused on the categories, since the appropriateness of the  variations could not be determined without further study and would  depend on site-specific conditions. We then assessed the extent to which  each alternative would address the FBI’s security, space, and building  condition requirements.
We did not independently analyze the FBI’s requirements for security,  which are based on its assessments of the threats it faces and their  probability of occurrence; its requirements for space, which are based on  its projections of each FBI program’s future staffing and space needs,  such as the need for secure conference rooms; or its process for deciding  which programs to house in a new consolidated facility. In our view, such  analyses were outside the scope of our review and would require  extensive reviews of classified intelligence on threats and hostile groups,  as well as of programmatic mission justifications for FBI branches and  their associated staffing levels. We did, however, determine that the FBI  senior leadership was involved in deciding which FBI programs should be  colocated. Furthermore, because the FBI and GSA are still in the early  stages of the facility planning process and had not finalized cost  estimates for budgetary purposes at the time of our review, we did not  validate cost estimates for new construction or past cost estimates for  modernizing or redeveloping the Hoover Building and site. Appendix I  contains a more detailed discussion of our scope and methodology.
We conducted this performance audit from July 2010 to November 2011,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: In 1964, the National Capital Planning Commission (NCPC) approved the  design concept for FBI headquarters. Construction started in 1967, and in  1974, FBI personnel began moving into the new building, which was  named for the FBI’s first director, J. Edgar Hoover (see fig. 1). Situated on  one entire city block in downtown Washington, D.C., and containing  approximately 2.4 million gross square feet of space, the building is  bounded by four major city streets—9th, 10th, and E Streets and  Pennsylvania Avenue—all of which are open to public traffic (see fig. 2).  The building is a concrete structure, 7 stories high on its Pennsylvania  Avenue side and 11 stories high on its E Street side. A dry moat protects  the building in addition to numerous antivehicular barriers.
When the FBI first occupied the Hoover Building, it was primarily a law  enforcement organization. Since then, its mission has grown in response  to evolving threats and now includes counterterrorism,  counterintelligence, weapons of mass destruction deterrence, and cyber  security. Accordingly, use of the Hoover Building has changed to support  new programs in these areas. For example, the Hoover Building originally  housed a crime laboratory, and more space was dedicated to records  storage. These functions have since been transferred to off-site locations,  making space available for new programs in the Hoover Building.
The FBI’s headquarters workforce has grown as the agency has assumed  new mission responsibilities. In 2001, the FBI had 9,700 headquarters  staff, working in 7 locations. Today, the FBI has 17,300 headquarters  staff, including those housed in more than 40 annexes, the majority of  which are located within the National Capital Region. According to the  FBI, programs in 21 of these off-site locations and in the Hoover Building  should be colocated to meet the agency’s mission requirements. In  projecting its staffing levels from fiscal year 2010 through fiscal year  2018, the FBI estimated that its headquarters workforce will grow by a  total of 7 percent during that period.
The FBI’s headquarters facilities, like all facilities in the United States  occupied by federal employees for nonmilitary activities, are subject to the  Interagency Security Committee’s (ISC) baseline facility security  standards. The ISC, chaired by the Department of Homeland Security  (DHS) and composed of representatives from all major federal  departments and agencies, is tasked with coordinating federal agencies’  facility protection efforts, developing security standards, and overseeing  the implementation of security measures. In 2004, the ISC issued  security criteria for federally owned facilities and space leased by  agencies (hereafter referred to as the 2004 ISC standards), establishing  facility security standards for space owned or leased by the federal  government. In 2010, the ISC issued new standards that superseded the  2004 standards. The new security criteria (hereafter referred to as the  2010 ISC standards) were intended to make security an integral part of  the operations, planning, design, construction, renovation, or acquisition  of federal facilities—whether in owned or leased space. The 2010 ISC  standards establish a baseline set of protective measures  (countermeasures) to be applied at each facility according to its security  level and outline a risk management process for agencies to follow as  they assess the security of their facilities.
To determine the security level of a federal facility, the ISC uses criteria  that it issued in 2008. Factors considered in determining the facility  security level (FSL) include the criticality of an agency’s mission, the  symbolism of the facility, and the building’s size and population. The  Hoover Building is categorized at the same FSL applied to the  headquarters facilities of other agencies with national security missions,  such as the Central Intelligence Agency and the Department of Defense.  The FSLs of the FBI’s annexes in the National Capital Region vary.
In meeting its needs for office space, the FBI generally works through  GSA, although it has received direct appropriations to construct  specialized facilities, such as the FBI laboratory and academy training  facilities, and has entered into leases on its own. GSA can use  government-owned or leased facilities to meet an agency’s space  needs. If a facility is not available to meet the agency’s needs and the  estimated cost of a new facility exceeds a defined dollar threshold, GSA  can request congressional authorization to construct or lease a new  facility by submitting a project prospectus. GSA typically funds new  federal construction and the acquisition of leased space from the Federal  Buildings Fund (FBF). Agencies occupying GSA-controlled space  (owned or leased) pay rent to GSA, which GSA deposits into the FBF.  GSA then pays the landlord from the FBF for those buildings it leases.  In addition to federal construction or leasing, GSA has the authority to  enter into a sale-leaseback or a ground lease and leaseback  arrangement through which GSA sells or leases federal land to a  developer that builds a facility on the site and leases it back to GSA. We  have previously reported that the FBF is not large enough to meet GSA’s  construction and major repair needs and that alternative financing  strategies may be viable options for GSA to meet agencies’ facilities  needs.
GSA has generally provided space in leased facilities for the FBI’s  expanded headquarters staff. We have also reported that GSA has used  operating leases extensively to meet agencies’ long-term space needs,  even though building ownership is generally less costly. Both GSA and  the FBI have generally concluded that the FBI has long-term space needs  and that its operations should be consolidated to achieve greater security  and efficiency. Working with GSA, the FBI has studied a number of  alternatives for consolidation.
section_title: FBI Headquarters Facilities Present Security, Space, and Condition Challenges
subsections: section_title: The Hoover Building Does Not Meet the FBI’s Long- Term Security Requirements
paragraphs: According to FBI officials, the Hoover Building does not meet the FBI’s  long-term security requirements. We found that planning for the FBI’s  headquarters security requirements has evolved over time. A 2005 GSA  study and a 2009 FBI study cited different planning assumptions about  the security requirements for a new FBI headquarters. The 2010 ISC  standards do not prescribe security requirements for federal facilities like  the Hoover Building or new facilities that an agency proposes to construct  or lease. Instead, the 2010 standards indicate that, in establishing  requirements for existing or new facilities, agencies should determine  what combination of countermeasures would provide an appropriate level  of protection against identified threat scenarios that the ISC refers to as  the “design-basis threat.” Furthermore, the 2010 ISC standards indicate  that whenever an agency-determined threat level deviates from the ISC  design-basis threat baseline, the factors that influenced the agency’s  threat assessment must be documented and fully supported by detailed  information as part of the assessment.
In addition to the Hoover Building not meeting the FBI’s long-term security  requirements, FBI security officials told us on our site visits that they have  some security concerns—to varying degrees—about some of the  headquarters annexes, including the following:    Proximity of non-FBI tenants to FBI employees performing  sensitive operations. At least nine annexes are located in multitenant  buildings, where some space is leased by the FBI and other space is  leased by nonfederal tenants. While this arrangement does not  automatically put FBI operations at risk, it heightens security concerns.    Lack of control over common areas. FBI security officials also cited a  lack of control over common areas in multitenant buildings. For  example, at one annex we visited, FBI officials told us that the  building’s landlord denied the FBI’s request to implement some  recommended countermeasures made in 2007 and in 2009 by DHS’s  Federal Protective Service (FPS), which conducts security  assessments of facilities under the control or custody of GSA. The  landlord chose not to implement the countermeasures, citing costs and  concerns about inconveniencing nonfederal tenants in the building.    FBI Police response. According to FBI officials, security at the  annexes is primarily handled by contract guards, local police, or the  FBI’s internal police force, the FBI Police, depending on the location  and circumstances. The FBI Police does not physically station its  personnel at the annexes; rather, it periodically conducts patrols of  annexes.
section_title: FBI Has Implemented Several Countermeasures to Improve the Security of the Hoover Building
paragraphs: Over the past several years, the FBI has implemented countermeasures  at the Hoover Building to improve security, including    upgrading the building’s exterior windows;    moving and upgrading the security of the FBI business visitor center  so that it now provides internal queuing for identification checks, an X- ray screening area, a badge office, and a secure waiting area;  strengthening barriers to prevent unauthorized access;  installing new doors to the building to meet the FBI’s requirements for  protection against forced entry;  securing air intakes to keep airborne contaminants out of the building;  and    paying the District of Columbia government to restrict public metered  parking along one side of the building in order to prevent unscreened  vehicles from parking or idling near the building.
Although the FBI has implemented these countermeasures, others have  yet to be implemented, and FBI officials did not provide historical  documentation of the agency’s rationale for not implementing them. FBI  security officials we spoke with were not part of the earlier decision  making, but suggested that some past recommendations were not  implemented because of their high cost and potential impact on  operations. A 2005 GSA study concluded that some of the  recommendations would have been costly and disruptive to the FBI’s  operations within the building. Because FBI officials did not provide  historical documentation of the FBI’s rationale for not implementing some  recommendations, it is difficult for us to determine why the FBI and GSA  did not pursue them. More recently, in 2008, the FBI received approval  from NCPC for one security project at the Hoover Building, but FBI  officials reported they were unsuccessful in obtaining funding for the  project before NCPC’s approval expired. The FBI said it intends to  resubmit its request for NCPC approval at the end of fiscal year 2011,  and if the request is approved, it may attempt to obtain funding in fiscal  year 2012.
While implementing recommended countermeasures may not always be  feasible—because of physical limitations or budgetary restrictions, for  example—the 2010 ISC standards require agencies to document any  decision to reject or defer the countermeasures’ implementation, including  whether the agency is willing to accept risk and whether there are any  alternative strategies to meet the agency’s required level of protection.  This ISC standard is consistent with a component of our risk management  framework that calls for agencies to identify and evaluate alternatives to  mitigate risk, taking into account the alternatives’ likely effect on risk and  their cost.
section_title: FBI Recently Performed a Comprehensive Security Assessment of the Hoover Building and Intends to Have the Security of Its Annexes Assessed against the 2010 ISC Standards
paragraphs: FBI officials performed a comprehensive security assessment of the  Hoover Building in 2011 using the 2010 ISC facility security standards.  This assessment, which the FBI provided to us after we issued our law  enforcement sensitive version of this report in July 2011, was the FBI’s  first comprehensive review of the building’s security since 2002, although  FBI officials told us they had assessed the security of selected portions of  the building during the interim. For federal buildings under the control or  custody of GSA, such as the Hoover Building, FPS normally conducts  periodic security assessments unless the tenant agency waives the  requirement for FPS to do so. The FBI waived the requirement for FPS to  conduct security assessments of the Hoover Building, acknowledging that  it would assume responsibility for conducting the assessments itself.  However, the FBI did not conduct a comprehensive assessment of the  Hoover Building from 2002 until 2011 because, according to FBI officials,  the FBI had concluded that an updated assessment would be unlikely to  yield new information.
Under the current ISC standards, agencies are to conduct security  assessments of their facilities at regular intervals, depending on the  building’s FSL. The requirement for the Hoover Building is every 3 years.  The ISC also requires agencies to document their security assessment  findings in a report, including the threats and vulnerabilities they have  identified and the specific countermeasures they have recommended  based on their building’s FSL. Conducting regular security assessments  is also an important component of one of our key practices in protecting  federal facilities—allocating resources using a risk management  approach. This practice emphasizes the need to identify threats and  assess vulnerabilities in order to develop countermeasures and to  prioritize the allocation of resources as conditions change.
In July 2011, we reported that an updated security assessment would  allow the FBI to fully assess the building against the 2010 ISC standards,  evaluate if additional security technologies could be implemented, and  document decisions about whether to implement certain  recommendations or accept risk going forward. We also noted that an  updated security assessment would provide the FBI with current  information to help prioritize its allocation of security-related resources  across all of its facilities. We recommended that the FBI update the  Hoover Building’s security assessment using the 2010 ISC standards,  including (1) documenting threats, (2) analyzing the building security  requirements, and (3) indicating whether recommendations would be  implemented.
Subsequent to our July 2011 law enforcement sensitive report, the FBI  completed a security assessment of the Hoover Building. This security  assessment was conducted by the FBI’s Physical Security Unit and  coordinated with the FBI Police and the FBI’s Facilities and Logistics  Services Division. FBI security staff evaluated security conditions against  specific criteria outlined in the 2010 ISC standards. According to our  analysis, the assessment covered some areas that were not covered in  the 2002 assessment. Moreover, the assessment documented both the  security posture of the Hoover Building and the FBI’s building security  requirements in relation to baseline ISC requirements. Where  appropriate, the assessment included recommendations, and those  recommendations were recently forwarded to the FBI’s executive  management for consideration. Currently, the FBI is in the process of  determining its response to these recommendations, some of which  would require capital investments in the building. FBI needs time to make  final decisions on some recommendations and may need to reach  agreement with GSA as the federal steward for the building. As the FBI  determines its response to the recommendations, it is important that it  document decisions because of their budget implications and effect on  the planning for its long-term facility needs.
According to FBI security officials, they were not aware of any  countermeasures that needed to be implemented at the annexes.  Although they indicated that they do have security concerns about  headquarters annexes, such as lack of control over building common  areas, the officials told us the annexes generally meet the 2004 ISC  standards for leased space.
We received security assessments or other security-related information— from both FPS and the FBI—for most, but not all, of the 21 annexes.  According to the FBI, it intends to request that FPS assess the annexes’  compliance with the 2010 ISC standards when the new standards are  fully implemented and then evaluate the need for any additional  countermeasures. Tracking the implementation status of all  countermeasures recommended in FPS or FBI security assessments will  provide the FBI with complete, current information on any security  vulnerabilities at its annexes, and help it determine the extent to which the  annexes meet the 2010 ISC standards and the FBI’s security  requirements.
section_title: The Hoover Building’s Design Limits Space Efficiencies and Hampers Collaboration; Dispersion of Staff Causes Operational and Logistical Challenges
paragraphs: Although the Hoover Building is large, occupying an entire city block,  much of its approximately 2.4 million gross square feet of space is  unusable, and the remaining usable space—according to a 2007 study  conducted for GSA and the FBI—is not designed to meet the needs of  today’s FBI. According to a 2008 GSA market appraisal of the building,  its design is inefficient and functionally obsolete. According to the FBI,  the space is laid out as efficiently as possible, but the original design of  the building’s floor plates is inefficient. For example, the building  provides a lower percentage of usable square footage for office and  mission functions than a federal office building built to current design  standards. In its 2010 facilities standards, GSA established a space  efficiency target of 75 percent for new federal office buildings, based on  the ratio of usable to gross square footage. The Hoover Building’s  efficiency ratio is 53 percent. Figure 3 illustrates some of the features that  limit the building’s efficiency.
To accommodate additional staff at the Hoover Building, the FBI has  reconfigured parts of the building’s interior, including converting about  200,000 square feet of basement, cafeteria, and storage space to offices.  Renovations were implemented reactively as the agency’s mission grew.  Some areas could not be renovated as open spaces, as desired, because  the building’s original design hampered such changes. While converting  building support space has provided the FBI with some additional offices  in the Hoover Building, GSA’s facility condition assessment indicates  that those offices may not be adequately ventilated and cooled. As a  result, some space may provide an uncomfortable working environment  for staff. GSA has a project planned to address ventilation requirements.  While the project was proposed as early as 2004, we found that GSA has  been unable to get the design approvals needed to implement the  project. FBI officials we spoke with also indicated that the building lost  some functionality—for example, they said less space was available for  meetings—after those spaces were converted to offices to accommodate  the agency’s rapid growth.
The FBI and GSA have concluded that the Hoover Building’s interior  design remains a significant barrier to staff collaboration and information  sharing across teams. Furthermore, GSA has concluded that the  building’s structure constrains further increases in its efficiency. For  example, a 2007 study for GSA and the FBI found that the Hoover  Building’s long corridors and closed office suites result in significant  fragmentation among working groups that hampers communication and  collaboration and that the building’s inflexible design is incompatible with  changing mission needs. FBI officials told us that whereas newer office  buildings with modular designs can be quickly and cost-efficiently  reconfigured to accommodate new missions or staff growth, the Hoover  Building would likely require months of modernization work to achieve  similar results. According to senior FBI and GSA officials, space  restrictions at the Hoover Building limit the FBI’s ability to meet two GSA  workplace goals for the next decade—to improve collaboration and  communication and to make more efficient use of space.
Because the Hoover Building cannot readily be modified to accommodate  new mission needs and staff growth, and because core headquarters  staff are therefore dispersed among multiple annexes, the FBI now faces  several operational and logistical challenges. According to FBI officials,  space constraints at the Hoover Building and the resulting dispersion of  staff sometimes prevent the FBI from physically locating certain types of  analysts and specialists together. For example, according to an FBI  report, one FBI division within the Hoover Building is not able to embed  analysts within other offices—to facilitate greater collaboration—because  of the lack of available space. During our site visits, FBI officials reported  logistical challenges as well, including a lack of facilities at a few annexes  for discussing some classified information, known as sensitive  compartmented information facilities (SCIF). As a result, some FBI  personnel told us they have to travel to meetings in different locations  across the National Capital Region, resulting in inefficient use of their time  and the FBI’s transportation resources. Furthermore, FBI officials at three  annexes we visited reported that the private landlords responsible for  building maintenance at their sites were often slow to respond to  maintenance requests from the FBI, such as requests for repairs to  malfunctioning heating and cooling systems.
To mitigate the operational and logistical challenges of dispersion and to  avoid further complications as its workforce continues to grow, the FBI  has centralized its real property management functions for headquarters  and has begun to take a more focused approach to managing its space  needs. In 2005, the FBI established a central Space Management Unit  and started assessing its headquarters space needs twice a year. In  addition, it initiated an interim phased plan to consolidate some leases  into fewer facilities based on the lease expiration dates until it can obtain  a facility designed to consolidate operations in the Hoover Building and in  the 21 annexes it has determined should be colocated.
section_title: The Hoover Building Is Aging and Showing Signs of Deterioration, but Needed Repairs and Recapitalization Projects Have Been Deferred
paragraphs: Although the Hoover Building is nearing its life-cycle age and exhibiting  signs of deterioration, GSA has decided to limit major repair and  recapitalization investments to those systems or components that affect  life safety and building functionality until it is determined whether the FBI  will remain a long-term occupant of the building. According to GSA, its  investments have been appropriate to ensure that FBI operations are not  at risk. For example, since 2004, GSA has spent approximately $22  million to upgrade components and systems in the Hoover Building.  Nevertheless, a 2009 GSA physical condition survey estimated that the  building requires about $80.5 million in further repairs and upgrades. The  condition survey identifies repair needs to the building’s air-handling  distribution systems and ductwork ($44.2 million), electrical switchgear  ($23.3 million), and elevators ($2.3 million), among other systems. GSA  officials told us these repairs have been deferred. GSA also has plans to  repair the building’s concrete façade ($8.9 million) and to replace the  entire fire alarm system ($22 million), but has not yet obtained funding for  either project. GSA officials indicated that the fire alarm system  replacement would most likely be included in any future renovation of the  Hoover Building.
During a tour of the Hoover Building given by FBI officials, we observed  several signs of exterior and interior deterioration. One FBI official stated  that some areas of the upper-level exterior façade have deteriorated over  time, heightening the risk that pieces of concrete could fall and strike  pedestrians below. As a precautionary measure, GSA and the FBI have  installed netting around the upper level of the building to catch any falling  debris. In addition, water infiltration from the courtyard has corroded parts  of the parking garage ceiling. The basement is also prone to flooding from  the interior courtyard during periods of rain. Figure 4 depicts conditions  we observed during our tour.
At the time of our review, the Hoover Building was categorized as a “core  asset” in GSA’s asset business plan. However, this categorization was  inconsistent with GSA’s decision to limit major repair and recapitalization  investments in the building. GSA core assets generally have a long-term  holding period of at least 15 years. For buildings with a long-term holding  period, GSA policy states that reinvestment will be funded to ensure  maintenance of the building’s quality and condition at levels appropriate  to meet continuing mission and customer needs. This includes all  preventative maintenance, necessary upgrades, and enhancements to  the building and its systems to maintain the asset in appropriate  condition. GSA’s near-term maintenance policy for the Hoover Building is  more consistent with GSA’s policy for a “transition asset.” A transition  asset typically has a 6- to 15-year holding period as its tenant prepares  for relocation to a new federal building or a leased building. For such an  asset, GSA funds projects that meet basic needs in transition, but avoids  any major reinvestment. In its technical comments on our draft law  enforcement sensitive report, GSA reported that it has recently  recategorized the Hoover Building as a transition asset to reflect the FBI’s  concerns about the building’s security, condition, and efficiency, as well  as GSA’s own decision to limit investments in the building. GSA further  reported that its categorization of the building may change again if the FBI  moves or further study of the asset points to a change. Regardless of how  the building is categorized, it will likely be used for several more years,  and its large backlog of deferred maintenance, major repairs, and  recapitalization requirements increases the potential for systems or  components to fail and potentially disrupt FBI operations.
section_title: Consistent with Leading Practices Thus Far, the FBI and GSA Have Identified Alternatives for Better Meeting the FBI’s Facility Needs and Are Developing an Approach for Moving Forward
subsections: section_title: FBI and GSA Planning Actions Have Been Generally Consistent with Applicable Leading Practices in Capital Decision Making
paragraphs: Over the past decade, the FBI and GSA have conducted a number of  studies (see fig. 5) to assess the FBI headquarters facilities’ strategic and  mission needs. Through these studies, they have determined the  condition of the FBI’s current assets and identified gaps between current  and needed capabilities, as well as studied a range of alternatives to  meet the FBI’s requirements. (See app. II for more detail on the studies  undertaken by the FBI and GSA.) These activities are consistent with  applicable GAO leading practices in capital decision making.
Consistent with our first two leading practices in capital decision making— to conduct a comprehensive assessment of needs to meet an agency’s  mission goals and objectives and to identify the current capabilities and  condition of existing assets (i.e., facilities) to meet those needs—the FBI  and GSA conducted facility condition and security assessments of the  Hoover Building in 2001 and 2002 and identified recommendations in  both areas. For example, the poor condition of the Hoover Building was  identified as a gap in the FBI’s need for a functional headquarters. In  addition, as noted, the FBI’s 2005 Asset Management Plan identified  the need for a new headquarters facility to safeguard personnel and  information within efficient and cost-effective workspace, and the FBI has  worked with GSA to identify its strategic facility and space requirements.  Also in 2005, the FBI Director and a Deputy FBI Director—with input from  assistant directors—decided which FBI programs should be colocated in  a headquarters facility to meet the agency’s strategic and mission  requirements. According to their analysis, the FBI Director; the National  Security Branch, including its counterterrorism and intelligence divisions;  the Criminal, Cyber, Response, and Services Branch; and other FBI  headquarters functions, such as the Information Technologies Branch,  would need to be colocated. Throughout the decision-making process,  FBI senior officials have consulted with senior GSA regional and national  officials to discuss the FBI’s requirements and the range of alternatives to  meet the FBI’s needs. In 2007, GSA and the FBI found that the need to  colocate certain FBI programs—to better enable collaboration and  facilitate information sharing—could not be met in the Hoover Building  and the annexes and that the FBI’s operations in the Hoover Building and  21 of its annexes in the National Capital Region should be consolidated.  This decision to consolidate is also consistent with a 2010 presidential  memorandum directing federal agencies to eliminate lease arrangements  that are not cost-effective, pursue consolidation opportunities, and identify  reductions when new space is acquired, as the FBI pointed out in its 2010  consolidation report.
In the studies they conducted from 2005 through 2009, the FBI and GSA  identified security requirements for a consolidated FBI headquarters facility.  Our previously issued law enforcement sensitive report describes these  security requirements. The 2005 through 2009 planning studies also  identified space requirements for an FBI headquarters facility. For example,  a formal space programming study performed by the FBI’s architectural  consultant established space requirements for approximately 11,600  personnel and for support headquarters spaces, such as conference rooms  and SCIF space. This personnel figure was based on current staffing levels  for the functions that the FBI had determined should be colocated in a  headquarters facility, adjusted to allow for limited future growth. To further  identify the FBI’s headquarters space requirements, the architectural  consultant and staff from the FBI’s Facilities and Logistics Services Division  met with representatives from the FBI’s branches and their divisions to  assess their operational needs, such as access to SCIF space or proximity  to another organization or function. In addition, the FBI Facilities and  Logistics Services Division established space standards for staff after  reviewing GSA and industry benchmarks. According to the FBI, it requires  modern, open-plan office space for its operations and shared team spaces  to promote collaboration and information sharing across mission teams  and to permit easy reconfiguration to meet changing needs, such as space  for newly formed internal and interagency task forces. The FBI also  identified requirements for large SCIFs to fully support its divisions’  classified discussion and processing needs.
Consistent with our third leading practice in capital decision making— decide how best to meet a gap by identifying and evaluating alternative  approaches—the FBI and GSA, in their 2005 through 2009 planning  studies, identified and analyzed a range of alternatives, together with their  estimated costs and benefits, for meeting the gap between the FBI’s  current and needed space. These alternatives fall into three categories:   (1) modernizing the Hoover Building; (2) demolishing the building and  constructing a new facility on the existing site; and (3) acquiring a new  consolidated headquarters facility—through federal construction or lease— on a new site. Figures 6 and 7 provide summary information about these  three alternatives and the status quo, which we include because the Office  of Management and Budget (OMB) requires agencies to submit baseline  information when they propose a major capital acquisition.
The cost estimates in figures 6 and 7 cannot be compared because the  studies and estimates were completed at different times, for different  purposes, by different consultants, using different methodologies and  facility specifications.
As the FBI and GSA continue to advance through the capital planning  process, our leading practices in capital decision making can help guide  their efforts, as well as inform decision makers’ evaluations of any  preferred alternative and other alternatives considered. Our fourth leading  practice—establish a review and approval framework that is supported by  analyses—encourages management reviews and approvals, supported  by the proper financial, technical, and risk analyses that are critical in  making sound capital investment decisions.
OMB’s guidance, together with GSA’s Capital Planning Program Guide,  provides a capital asset review framework such as our fourth leading  practice describes. OMB’s guidance requires GSA—if GSA constructs or  leases a headquarters facility for the FBI’s use—to submit a capital asset  business case in support of the project. According to OMB’s guidance,  the FBI and GSA need to partner to develop the business case— providing input on the estimated project costs and financing strategies— but the design and construction budget request would be part of GSA’s  annual budget submission to OMB if the construction is to be funded  through the FBF. (See app. III for information on the FBF.) This business  case should include the total estimated life-cycle costs—for the preferred  alternative and the other alternatives the agencies considered— including the costs of acquisition, operations, maintenance, and  disposal. In addition, GSA’s guide directs GSA to conduct a variety of  reviews, such as site feasibility studies and environmental analyses,  designed to ensure that projects are feasible and in compliance with all  federal construction requirements.
As GSA develops a capital asset business case for OMB with input from  the FBI, it will have to rank the alternatives the agencies considered and  select a preferred alternative. This ranking, when weighed against other  relative priorities that the FBI and GSA will have to evaluate, would be  consistent with our fifth capital decision-making practice—rank and select  projects based on established criteria. FBI officials have preliminarily  concluded that their security and space requirements can be met only  through the construction of a new headquarters facility on a new site.  GSA officials have thus far generally concluded that the FBI has long- term space needs and that FBI operations should be consolidated to  achieve greater security and efficiency, but have not finalized their  construction cost estimates. According to GSA officials, the FBI and GSA  will discuss the FBI’s needs with OMB, and a final decision will be based  on the results of a more comprehensive analysis that GSA will complete  with FBI input for OMB. For the preferred alternative, GSA officials said  they will need to undertake a final due diligence process to revalidate the  FBI’s program requirements, update costs, and initiate feasibility  studies—such as an assessment of the likelihood that sites are available  in the National Capital Region—so as to develop a detailed prospectus  for formal OMB approval and congressional consideration.
Our leading practices state that prudent decision makers also should  consider various funding options available to them. In the case of real  property, that means considering other funding alternatives in comparison  to funding new construction or a modernization through the FBF. In  separate interviews, both GSA’s Deputy Administrator and Director of the  Office of Real Property Asset Management indicated that GSA will  undertake a thorough analysis of a range of financing strategies as part  its due diligence. (See app. III for a description of some of the financing  strategies that GSA may consider.) According to GSA, it almost always  recommends federal construction using the FBF because this is usually  the lowest cost alternative. However, GSA reports that in the current  budgetary environment, it believes that alternative strategies such as the  ground lease and leaseback arrangement—providing for eventual  ownership of the building by the government—may need to be  considered.
After GSA and the FBI identify a preferred alternative and financing  strategy, and if the alternative entails constructing a new federal facility  through the FBF, GSA will have to rank the need for any FBI  headquarters capital project against other FBI and governmentwide  facility needs. GSA ranks projects from all agencies that have identified  requirements—first by GSA region and then nationally. The GSA  Administrator decides which major prospectus projects to propose within  GSA’s budget based on recommendations and input from the  Commissioner of the Public Buildings Service, among others. While GSA  has general criteria for prioritizing capital construction and major  modernization needs, it does not specifically include security among its  ranking criteria. Instead, according to a GSA official, the agency relies on  its customers to convey their mission-critical needs in a way that reflects  which issues, such as security, are critical to them. At this time, GSA  officials could not indicate how a new FBI headquarters facility—or a  major modernization of the Hoover Building—might be ranked in relation  to other competing federal asset needs. FBI staff we spoke with indicated  that a new headquarters project has the support of the FBI Director, but it  is unclear whether a new headquarters is the most important facility need  for the FBI or whether regional field office facility needs may be more  important.
The FBI and GSA plan to continue working together to reach a decision  with OMB on how best to meet the FBI’s needs. GSA reports that fiscal  year 2014 is likely the earliest that any budget request and prospectus  might be put forth for congressional consideration. Based on that insight  and our review of preliminary FBI and GSA schedules, we estimate that  the earliest that any project could be completed would be fiscal year  2020.
section_title: Conclusions
paragraphs: With its employees dispersed throughout the National Capital Region and  many of them housed in the aging and inefficient Hoover Building—a  facility constructed prior to current ISC standards governing security  countermeasures—the FBI is under pressure to find an alternative that  will meet its security, space, and building condition requirements. Any  alternative will take years to implement and is likely to cost over a billion  dollars. It is therefore important that the choice of an alternative be based  on up-to-date assessments of the FBI’s security, space, and building  condition needs. In the interim, the FBI and GSA may have opportunities  to further enhance security and address condition deficiencies at the  FBI’s current facilities.
For the next several years or more, the FBI’s headquarters workforce will  be dispersed between the Hoover Building and the headquarters  annexes. During this time, it is important that the FBI and FPS conduct  security assessments of the annexes, as required by the 2010 ISC  standards, and that the FBI track the implementation status of  recommended countermeasures for all its headquarters facilities. For the  FBI, documentation of decisions to implement recommendations— whether made in its 2011 security assessment of the Hoover Building or  in future assessments of its headquarters annexes against the 2010 ISC  standards—could inform decisions on how best to meet the FBI’s long- term headquarters facility needs. Complete, current information on  security needs and the status of recommended countermeasures—some  that have budget implications—at both the Hoover Building and the  annexes could indicate to the FBI whether it is allocating its security  resources as efficiently as possible to mitigate risks. Such information  could also help the FBI and GSA evaluate alternatives to the FBI’s current  dispersed headquarters structure and develop a business case to support  a budget request for the alternative that they determine would best meet  the FBI’s security needs.
Given the likelihood that FBI employees will be housed in the Hoover  Building for several more years no matter which alternative is ultimately  selected, and that the building may remain in GSA’s portfolio whether it is  occupied by the FBI or another federal tenant, it is important to ensure  that GSA’s current strategy for maintaining the facility is appropriate. The  deferred maintenance, repairs, and recapitalization projects that have  accumulated under this strategy could lead to system or component  failures and potentially disrupt FBI operations. Allowing the building to  deteriorate further could also make it difficult to house another agency in  the Hoover Building if the FBI moves to a different location.
Ultimately, decisions about the future of the FBI’s headquarters facilities  will require careful consideration of policy matters related to the FBI’s  mission and security needs and competing budget priorities, as well as  other factors, such as the availability of a suitably sized site in the  National Capital Region where the FBI’s headquarters operations could  be colocated. Currently, planning for a new FBI headquarters is ongoing,  and GSA has yet to submit a business case for a preferred alternative to  OMB, which is essential in the decision as to which specific alternative  and financing strategy to pursue.
section_title: Recommendations for Executive Action
paragraphs: To ensure that complete, current security information is being used to  minimize risks to FBI facilities, operations, and personnel and to inform a  final decision on how best to meet the FBI’s long-term facility  requirements, we recommend that the Attorney General direct the FBI  Director to take the following two actions:    Document whether any recommendations from the FBI’s 2011  security assessment will be implemented at the Hoover Building.     Track the implementation status of all recommendations made in FPS  or FBI security assessments—of both the Hoover Building and the  FBI’s headquarters annexes—using the 2010 ISC standards. Where  recommendations are not implemented, document the rationale for  accepting risk, including any alternate strategies that are considered.
Given that the FBI will likely remain in the Hoover Building for at least the  next several years, we also recommend that the GSA Administrator direct  the Commissioner of the Public Buildings Service to take the following  action:     Evaluate GSA’s current strategy to minimize major repair and  recapitalization investments and take action to address any facility  condition issues that could put FBI operations at risk and lead to  further deterioration of the building, potentially affecting continued use  of the Hoover Building by the FBI or any future tenant.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of the law enforcement sensitive version of this report  to the Department of Justice, GSA, and DHS for review and comment. In  that law enforcement sensitive report we also recommended that the  Attorney General direct the FBI Director to update the Hoover Building’s  security assessment using the 2010 ISC standards—to include  undertaking an analysis of its building security requirements,  documenting if threat scenarios exceed the ISC design-basis threat, and  indicating whether recommendations would be implemented. Given that  the FBI took action to address part of the recommendation—subsequent  to our July 2011 law enforcement sensitive report but prior to this public  version—we modified the recommendation to reflect the FBI’s recent  security assessment. Specifically, the security assessment documents  threats and analyzes building security requirements consistent with ISC  security standards, but does not indicate whether recommended actions  will be implemented. This is reasonable given the short period of time  since our report and the FBI’s ensuing analysis. We therefore revised the  first recommendation above to focus on the need for the FBI to document  decisions on the 2011 security assessment’s recommendations.
Our July 2011 law enforcement sensitive report also recommended that  the FBI track the implementation status of all recommendations in FPS or  FBI security assessments. We will continue to monitor the FBI’s decisions  and actions related to its security assessment of the Hoover Building— and the security assessments of the FBI headquarters annexes—as  indicated in the recommendations above.
For security reasons and for clarity, we made additional modifications to  the language used in the above recommendations to the Attorney  General compared to the language we used in our July 2011 law  enforcement sensitive report.
We received written comments from the FBI on our law enforcement  sensitive report on behalf of the Department of Justice. We also received  written comments from GSA and DHS on that report. The FBI concurred  with our recommendations and said that its primary concern in finding a  long-term solution for its headquarters facility needs is to mitigate the  operational impact of a fragmented workforce located at multiple sites  across a wide geographic area. The FBI also cited concerns that its  current headquarters housing is inefficient and expensive, and stated that  a new, consolidated headquarters facility is one of the FBI’s highest  priorities. GSA indicated that it is currently taking appropriate action to  implement our recommendation and remains committed to making all  necessary investments in the Hoover Building to ensure ongoing  operations until a long-term solution for the FBI can be developed. Written  comments—on our law enforcement sensitive report—from the FBI, GSA,  and DHS are reprinted with sensitive information redacted in appendixes  IV through VI, respectively. The FBI, GSA, and DHS provided additional  clarifying and technical comments, which we incorporated throughout the  report as appropriate in consideration of sensitivity concerns.
In addition, we provided a draft of this public report to the FBI, GSA, and  DHS for review. Those agencies provided no additional comments.
We are providing copies of this report to appropriate congressional  committees, the Attorney General, the Director of the Federal Bureau of  Investigation, the Administrator of the General Services Administration,  the Secretary of Homeland Security, and other interested parties. In  addition, this report will also be available at no charge on the GAO Web  site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  David C. Maurer at (202) 512-9627, maurerd@gao.gov, or David J. Wise  at (202) 512-2834, wised@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Congress directed us, in the explanatory statement accompanying the  2009 Omnibus Appropriations Act, to review the J. Edgar Hoover Building  (Hoover Building)—the main headquarters building for the Federal  Bureau of Investigation (FBI)—and the FBI’s off-site locations (annexes),  which support headquarters and are dispersed throughout the National  Capital Region. We conducted our review to examine (1) the extent to  which the Hoover Building and annexes support the FBI’s operational  requirements for security, space, and building condition and (2) the extent  to which the FBI and the General Services Administration (GSA) have  followed leading capital decision-making practices in identifying  alternatives for meeting the FBI’s operational requirements and the extent  to which each alternative would address these requirements.
To determine the extent to which the Hoover Building and annexes  support the FBI’s operational requirements for security, space, and  building condition, we visited the Hoover Building and five annexes. We  selected the five annexes to represent different facility security levels  (FSL); different FBI divisions, such as Cyber and Counterterrorism; and  varying degrees of staff fragmentation. While visiting these annexes, we  examined security, space, and building condition issues firsthand and  interviewed on-site program and security officials about the FBI’s  operational requirements and the extent to which the annexes do, or do  not, meet those needs.
For security-related issues at the five annexes, we reviewed site-specific  facility security assessments (security assessments) that were conducted  by either FBI security officials or the Department of Homeland Security’s  Federal Protective Service (FPS) in relation to Interagency Security  Committee (ISC) security standards that are applicable to owned and  leased federal buildings. We also discussed with FBI officials the extent to  which countermeasures recommended in those security assessments  had been implemented. In our July 2011 law enforcement sensitive  report, we recommended that the FBI conduct a new security assessment  in accordance with updated security standards issued in 2010. In  response to our recommendation, the FBI conducted such an  assessment, which we also reviewed.
During our site visits, we interviewed FBI security officials about the  security assessments, security risks and challenges, and actual security  incidents or breaches at each facility. We also asked FBI officials whether  any security challenges at the annexes were a direct result of operations  not being colocated at the Hoover Building. To learn more about security  issues at the Hoover Building, we toured the building while FBI officials  reported on security vulnerabilities and some countermeasure  improvements that had been implemented, and we interviewed FBI  security, police, and facilities officials with knowledge of these  improvements.
In addition, we interviewed FBI security and facility officials about  outstanding security projects to determine why they had not been  implemented. To identify these projects, we reviewed FBI, FPS, GSA,  and National Capital Planning Commission documents, including the  FBI’s 2002 security assessment of the Hoover Building, as well as  numerous FBI and GSA planning studies that identified security  requirements for the building. We interviewed FPS security officials about  the security standards for federal facilities, both past and present, and the  FSL determination process. We reviewed FPS’s 2000 Policy Handbook  and the ISC standards from 2004 and 2010. Furthermore, we reviewed  and analyzed GSA’s design standards related to security. In addition, we  relied on internal security experts from GAO’s Office of Security and  Forensic Audits and Investigative Service to verify security assumptions  and requirements.
For space-related issues, we reviewed the size and location of current  facilities and programs; reviewed FBI and GSA reports that tracked annex  leases, space use, and the Hoover Building’s efficiency (how much of its  space is usable for mission needs) and how the existing space does, or  does not, meet the FBI’s operational needs; and interviewed FBI program  officials to understand the effects on operations of having different  programs housed in several annexes. We reviewed FBI and GSA  planning studies that identified which FBI programs or functions should be  colocated. We compared attributes of the Hoover Building, such as its  efficiency, to GSA standards and compared the Hoover Building to other  agency headquarters in the National Capital Region. We asked FBI  officials about the systems they use to manage their real property data  and how frequently they update their leasing and space planning data.  We used GSA’s asset business plans to cross check the real property  data reported to us by the FBI to ensure reasonable consistency in the  facility data, such as the ownership status and size (i.e., square footage)  of facilities. Furthermore, we reviewed and analyzed GSA’s design  standards related to building efficiency and space planning.
For building condition issues, we analyzed assessments of the Hoover  Building’s physical condition and compared this information to GSA  policies for building condition. We also asked GSA how often it conducts  facility condition assessments of owned buildings. We examined GSA’s  asset business plan and other studies of the Hoover Building to identify  completed maintenance projects, deferred maintenance, and planned  major repair and recapitalization projects. We also asked FBI and GSA  officials about their assessments of the Hoover Building’s condition.
To determine the extent to which the FBI and GSA have followed leading  capital decision-making practices in identifying alternatives for meeting  the FBI’s operational requirements, we compared the FBI’s and GSA’s  planning actions against leading practices we have reported on in this  area. In addition, we reviewed FBI and GSA studies of the FBI’s facilities  and operational requirements, identified the alternatives discussed in  these studies for meeting the requirements, and reviewed relevant laws  relating to real property. We determined that the alternatives fell into three  broad categories, each of which included a number of variations. For our  analysis, we focused on the categories, since the appropriateness of the  variations could not be determined without further study and would  depend on site-specific conditions. We then assessed the extent to which  each alternative would address the FBI’s security, space, and building  condition requirements.
We did not independently analyze the FBI’s requirements for security,  which are based on its assessments of the threats it faces and their  probability of occurrence; its requirements for space, which are based on  its projections of each FBI program’s future staffing and space needs; or  the FBI’s process for deciding which programs need to be colocated at a  single location. In our view, such analyses were outside the scope of our  review and would require extensive reviews of classified intelligence on  threats and hostile groups, as well as of programmatic mission  justifications for FBI branches and their associated staffing levels. We did,  however, determine that the FBI senior leadership was involved in  deciding which FBI programs should be colocated. Furthermore, because  the FBI and GSA are still in the early stages of the facility planning  process and have not yet prepared final cost estimates for the Office of  Management and Budget (OMB), we did not validate preliminary cost  estimates for new construction or past cost estimates for modernizing or  redeveloping the Hoover Building and site.
We conducted this performance audit from July 2010 to November 2011  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: FBI and GSA Studies Related to FBI Headquarters Planning
paragraphs: This appendix provides summary information about eight studies that  provide information on the condition of the Hoover Building and the FBI’s  facility needs. The studies, issued from 2001 through 2010, are presented  in chronological order.  1.  Condition assessment, 2001  In 2001, a facility engineering consultant conducted a facility condition  assessment for GSA of the Hoover Building and identified numerous  building deficiencies including deferred maintenance and life-cycle  replacement projects. The study concluded the building was in poor  condition. The contractor prepared three funding scenarios to provide  GSA with insight into how the condition of the building would be affected  based on various investment assumptions over 20 years. One scenario  included improving the building condition to an industry-acceptable level.  2.  Security assessment, 2002  In 2002, the FBI conducted a security assessment of the building, and  with the assistance of two consultants, identified recommendations to  further improve the building’s security.   3.  Headquarters housing strategy, 2005  In 2005, a real estate services consultant contracted by GSA studied the  FBI’s facility needs. According to the consultant, the FBI’s mission was  impaired by a fragmented headquarters organization that caused staff to  be dispersed across the Hoover Building and 16 annexes at that time in  the National Capital Region. In addition, the consultant documented  space inefficiencies in the Hoover Building. To address these  deficiencies, the consultant developed a strategic housing plan and  facility requirements for FBI headquarters. These requirements included    meeting ISC security standards,     making maximum use of open-plan office space,    providing enough secure space for handling classified information,    planning building systems to support current and future information    providing extensive emergency backup power as well as state-of-the- art air filtration systems.
The consultant developed three consolidation alternatives for addressing  identified deficiencies and meeting the FBI’s headquarters facility needs  based on projected 2011 staffing levels:    one-site consolidation with both headquarters national security and  law enforcement located together;  two-site consolidation (option A) with national security functions at one  site and law enforcement functions at a second site; and  two-site consolidation (option B) with a more even distribution of FBI  headquarters elements (compared to option A) and no split between  national security and law enforcement functions.
A preliminary financial analysis, which estimated the net present value of  savings for each alternative over 30 years, showed that each alternative  was more economically beneficial than the status quo. The savings were  largely due to the planned consolidation of 3.1 million rentable square feet  into 2.3 million rentable square feet.
According to a draft timeline, it would take nearly 3 years for GSA to  complete its analysis, develop a project prospectus for congressional  authorization, and identify a site. Another 3 years was estimated for  design, construction, and move-in.
Citing detailed cost estimates for a project of similar size for another  intelligence agency, the consultant predicted a total project cost of over  $1.5 billion.  4.  Site study, 2006  In 2006, another real estate services consultant hired by GSA studied a  range of scenarios for use of the Hoover Building and site. This study was  intended to inform GSA management decisions on optimizing the value of  the Hoover Building as a GSA real property asset and was not  necessarily performed to identify alternatives for meeting the FBI’s  headquarters facility needs. The study did, however, consider the impact  on operations if the FBI remained as the building tenant. The consultant  identified five scenarios:    maintain and operate the building “as is,”  vacate the building and sell the asset,    modernize the building,  vacate and demolish the building and redevelop the site, and    partially demolish the building to redevelop the front side facing  Pennsylvania Avenue and renovate the back portion that faces E  Street.
Estimated costs to modernize the Hoover Building ranged from $850  million to $1.1 billion. Estimated costs to demolish the Hoover Building  and redevelop the site ranged from $853 million to $1.4 billion.
The study concluded that no alternative was a definite best option for  GSA.
The study reported that a modernization, in general, would not improve  the building’s gross and rentable square footage. In addition, this  alternative would create a demand for swing space and could adversely  affect the FBI’s operations if the FBI remained as the building’s tenant  during the modernization. According to the study, the modernization  would be least costly if the FBI vacated the entire building to give the  construction contractor unrestricted access.
According to the study, redeveloping the site with a new building or  buildings would not meet GSA’s required rate of return on investment,  and constructing a new secure facility would sacrifice tremendous value  associated with a highly marketable location.  5.  Space study, 2007  In 2007, GSA hired an architectural design and planning consultant to  assess the condition of the Hoover Building and determine the extent to  which it supports the FBI’s mission. The consultant assessed the Hoover  Building’s design and use of space against industry standards and  compared the Hoover Building to facilities used by other intelligence  agencies.
According to the report, the FBI’s work process is dynamic, requiring  intelligence gathered by one team to be shared with multiple teams for  whom the intelligence may also be relevant. To respond to the FBI’s work  process and mission, the consultant determined that the FBI’s workplace  should promote collaboration and communication among staff and be  easily reconfigured. The study found that the Hoover Building does not  generally meet these criteria because of its structural characteristics and  inherent inefficiencies. For example, the study found that aspects of the  building—including the location of structural elements and hard wall  partitions—result in an inherently inefficient use of space. According to  the consultant, these characteristics limit the degree to which the FBI can  reconfigure space to optimize its operations and respond to mission  changes. The consultant concluded that the Hoover Building is a  significant barrier to the FBI’s performance and operational effectiveness  and no longer effectively supports the FBI’s mission.
The consultant also indicated that the renovations necessary to make the  Hoover Building viable, feasible, and desirable may be unjustifiable given  the costs and disruption they would entail. The consultant concluded that  relocating the FBI to a new facility would likely lead to a significant  improvement in performance at a lower cost.  6.  Real estate appraisal, 2008  In 2008, GSA hired a real estate appraisal firm to develop a market-value  opinion of the Hoover Building and site to inform GSA’s asset  management strategy. The appraisal firm considered three valuation  approaches: (1) a cost approach; (2) a sales comparison approach; and  (3) an income capitalization approach.
The appraisal firm described the construction quality of the existing  building as average and the condition of the building as below average. It  also found the building inferior to other office buildings constructed during  the same period. In particular, the consultant reported the building  windows are very small compared to modern office building windows and  that larger windows are generally required to attract tenants to higher- priced leased space. The firm reported that GSA had estimated a cost of  over $200 million to modify the structure and replace its windows.
GSA provided the appraisal firm with a list of planned recapitalization  projects totaling over $460 million, to be implemented over 10 years;  however, the appraiser reported that GSA’s Property Manager had  indicated that, for lack of funds, none of the planned capital expenditures  would likely be made. Therefore, the appraiser did not consider the value  of any planned recapitalization projects in the estimated value. However,  the appraiser reported that even if the planned capital expenditures were  made, the Hoover Building would not be considered a Class A office  building.
The appraiser reported that the site was zoned to permit retail, office,  housing, mixed, and public uses, and the appraiser concluded that no  reasonably probable use of the site would be likely to generate a higher  value than office use. Accordingly, the appraiser identified office use,  developed to the level permitted by the zoning, as the highest and best  use of the property.
The appraiser reported that the site, if redeveloped, could accommodate  a building area of approximately 2.5 million gross square feet based on  the current zoning regulations. The appraiser also noted that the existing  Hoover Building is 2.4 million gross square feet and therefore a building  on the redevelopment site would likely be similar in size. The appraiser  noted that the existing building is set back farther from Pennsylvania  Avenue greater than is typical for a commercial office building downtown  but not far enough where demolishing the building to capture the space  would be cost-effective. Redevelopment would enable a developer to  construct a new Class A office building.  7.  Relocation study, 2009  In 2009, the FBI contracted with an architectural and planning firm to  develop a housing plan, space requirements program, and conceptual  site plans for consolidating its headquarters in a new facility onto a single  site. While the 2005 GSA study examined space requirements at a macro  level, it did not provide a detailed housing plan and space requirements  program. Thus, to more fully define its requirements, the FBI established  goals for the 2009 study. These goals were to    develop a housing plan that identified the FBI branches and divisions  to be located on-site;  summarize staffing levels by branch and division, including both FBI  personnel and contractors;  summarize future staffing growth factors;    develop space-planning standards and workspace types;    develop a space requirements program for branches and divisions  based on those staffing and space standards;    outline common shared support spaces and special space  requirements;  recommend an ideal floor plate size for a new building that would  maximize future flexibility;  identify circulation factors for the building;  calculate total gross and usable square footage of a new facility;    develop conceptual site plans; and  identify design criteria, including Leadership in Energy and  Environmental Design, security, and building code requirements.
The consultant collected data by walking through the FBI’s headquarters  spaces, using a space requirements questionnaire, and interviewing FBI  personnel in the facilities, security, and information technology groups to  verify information from the questionnaire. Each FBI branch and division  reviewed the consultant’s data.
Using FBI personnel counts from 2008 with projections for future growth  through 2013 and 2018, the consultant derived overall square footage  tabulations. FBI’s Resource Planning Office provided the personnel  counts and growth projections.
Based on the space and security requirements for the main headquarters  building, the consultant developed planning estimates for the site acreage  required.
The consultant developed two site concepts: (1) a suburban office  campus and (2) a more urban site located near the Washington beltway.  Preliminary cost estimates for a new headquarters were developed based  on the consultant’s analyses of space and security requirements. FBI  costs for special security equipment, communications and information  systems, modular systems furniture, and moving were not included in the  construction-related costs but were separately estimated and are not  considered GSA project costs.
Land costs were estimated on the basis of comparable land sales over  the past several years in a variety of locations inside and outside the  beltway. The suburban and beltway property costs were each averaged  to determine average expected prices. The land costs were added to the  GSA project cost summary and increased by 10 percent to reflect  potential increases in land value, which may occur before a property is  acquired.
The study identified a need for a headquarters facility containing an  estimated 2.6 million gross square feet—including 2.1 million useable  square feet—to house nearly 11,600 personnel. Required site sizes were  estimated at between 55 and 65 acres based on zoning assumptions for  suburban and more urban locations.  8.  Consolidation report (Final Draft), 2010  In 2010, the FBI’s Facilities and Logistic Services Division prepared an  executive-level report to summarize past FBI and GSA findings and  conclusions about the Hoover Building and both agencies’ studies of the  need for a new headquarters facility. The report was intended to update  FBI leadership on the current headquarters planning, costs, and  recommendations prior to discussions with GSA and OMB. The report  outlines a range of acquisition strategies that GSA and the FBI could use  to acquire a new consolidated headquarters and identifies the FBI’s  preferred strategy.
According to the report, the FBI’s mission-critical headquarters operations  are dispersed in 22 separate locations including the Hoover Building, up  from 17 when GSA first studied the issue in 2005. Citing space and  staffing requirements, the report identifies the need for a facility with 2.5  million gross square feet, 2.2 million rentable square feet, and 1.9 million  usable square feet to house an estimated 11,500 personnel. The report  further anticipates a reduction of approximately 873,400 rentable square  feet when the 22 current locations are consolidated, as well as an  estimated annual savings of at least $30 million in leased housing costs.
section_title: Appendix III: Financing Strategies Available for Capital Projects
paragraphs: This appendix describes potential financing strategies that may be  considered in acquiring a new headquarters for the FBI.
subsections: section_title: Federal Construction Using the Federal Buildings Fund
paragraphs:   Construction or modernization is funded through GSA’s Federal  Buildings Fund (FBF).    We have previously reported that although ownership through federal  construction is often the most cost-effective option, pursuant to  budget scoring rules, the full cost of construction of a capital project is  recorded up front in the budget.    The FBF is the primary means of financing the operating and capital  costs associated with federal space owned or managed by GSA.  GSA’s Public Buildings Service charges federal agencies rent, the  receipts of which are deposited in the FBF. Congress exercises  control over the FBF through the annual appropriations process,  setting annual limits on how much of the fund can be used for various  activities. In addition, Congress may appropriate additional amounts  for the FBF. Among the activities the FBF is used for are new  construction, building repairs and alterations, building operations, and  rental of space.
section_title: Lease of Federal Site to a Developer Who Constructs a Facility On-site and Leases It Back to the Government (i.e., Ground Lease and Leaseback)
paragraphs:   GSA officials report that lease construction by a developer could be  pursued using GSA real property authorities in 40 U.S.C. § 585(c) or  Section 412 of Public Law 108-447 (hereafter referred to as Section  412).    40 U.S.C. § 585(c) authorizes GSA to lease federal property—for not  more than 30 years—to a developer who would build a facility on a  site owned by the government and lease it back to GSA. The title to  the parcel never leaves government ownership, and at the expiration  of the lease, the title to the building passes to the United States.    Section 412 provides GSA with new, additional authorities to dispose  of and use its real property inventory by sale, lease, exchange, and  leaseback arrangements. Section 412 does not specify any limit on  the term of the lease.    According to GSA, it has attempted to use 40 U.S.C. § 585(c) only  once as a development authority, and it ultimately did not complete  the project using this authority. GSA has never used Section 412 as a  development authority.    Section 412 also authorizes GSA to retain the net proceeds from its  real property disposals. Section 412 might enable GSA to use the  proceeds of a sale—if the existing Hoover Building or site were sold— to pay for some of a new project’s costs.    How a leaseback is structured will determine how it is scored, and it  may be treated as a capital lease with the amount equal to the asset  cost recorded up front in the budget.    Given the current budgetary environment, this type of arrangement  may be more feasible now than in the past. Furthermore, even though  GSA told us that it almost always recommends the traditional funding  strategy—federal construction—it has said that in the current  budgetary environment, it believes that alternative strategies such as  a ground lease and leaseback arrangement may need to be  considered.    FBI officials believe that if a ground lease and leaseback arrangement  were to be pursued, the agency may be able to move into a new  consolidated facility 2 or 3 years earlier than it could with a direct  federal appropriation for design and construction, given the demands  on the FBF.
section_title: Lease Construction (i.e., Leasing)
paragraphs:   The government acquires space through an operating lease.    The government has no ownership of the land or the facility at any  time.    We have previously reported that operating leases tend to be the  most expensive approach to meeting long-term federal space needs  and that over the last decade, GSA has relied heavily on operating  leases to meet new long-term needs because it lacks funds to pursue  ownership. GSA currently leases more space than it owns.
Use of this approach has grown because only the annual lease payment  needs to be recorded in GSA’s budget request, reducing the up-front  funding commitment but generally costing the federal government more  over time.
section_title: Appendix IV: Comments from the Federal Bureau of Investigation
section_title: Appendix V: Comments from the General Services Administration
section_title: Appendix VI: Comments from the Department of Homeland Security
section_title: Appendix VII: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Michael Armes, Assistant  Director; Sandra Burrell, Assistant Director; John Bauckman, Analyst-in- Charge; Kevin Craw; Daniel Hoy; Bess Eisenstadt; Susan Michal-Smith;  Linda Miller; Sara Ann Moessbauer; Joshua Ormond; Thomas Predmore;  and Janet Temko made key contributions to this report.