By Jason Miller
Executive Editor
Federal News Radio

The Office of Management and Budget will submit its legislative proposal to Congress by the end of April detailing how it wants to reshape the way agencies get rid of excess or underutilized property.

Danny Werfel, OMB’s controller, told members of the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management Wednesday the proposal leans heavily on the Defense Department’s Base Realignment and Closure (BRAC) initiative.

“Like BRAC, the proposal would establish an independent board of experts to expedite disposal of a selection of unneeded properties and identify opportunities to consolidate agency offices,” Werfel said. “The CPRA Board would present recommendations to Congress on bundles of identified properties in the greater federal inventory to be voted on in an up or down manner. Similar to BRAC, the process also streamlines the current authorities that are involved in any disposal or consolidation of properties identified by the board.”

President Obama offered a high level view of the Civilian Property Realignment Act (CPRA) in the fiscal 2012 budget request sent to Congress in February. The administration estimates this effort would help dispose of more than 14,000 excess or underutilized properties and end up with $15 billion in savings or cost avoidance for agencies. Werfel said since last June agencies have saved or avoided paying $1.7 billion in property upkeep costs, and are on track to save $3 billion by 2012.

“We are working to flesh out some of the details and questions, but I don’t want to comment before we submit it to Congress,” he said after the hearing. “I think this is a bill that is important for everyone to look at closely. Ultimately the type authorities that the board would have would be to submit bundled proposals for congressional consideration for an up or down vote. I think we would be in a better place if there’s real close consideration of this framework going forward.”

Spending money to save money

Werfel said the proposal would include how OMB wants to use the $87 million request to jumpstart the process and what legislative changes are needed make the disposal of federal property easier and faster.

“There are more than 20 steps in the process required to sell or otherwise dispose of any given federal property,” he said. “There are good reasons why these steps exist; however, it does not make sense to apply the steps uniformly-it is inefficient to use the same process to sell a small warehouse in a rural location as is used to sell an office building in a downtown urban setting.”

Werfel said the new process would accelerate the way in which the government chooses what to do with a property, and expedite the implementation of recommended disposals or consolidations for those properties identified by the board.

“This approach eliminates the one-size-fits-all process that exists today,” he said.

The proposal also will include a request for agencies to keep about 40 percent of the savings to reinvest in future property disposal efforts. Werfel said this would make the $87 million a one-time request and the fund would be self-sustaining in the out-years.

“There are many upfront costs agencies incur when disposing of properties or realigning space, such as for moving expenses, reconfiguring space, environmental remediation, etc.,” he said. “However, in many cases, agencies do not benefit financially from the sale of property by retaining some of the proceeds. Therefore, it can end up costing more money to sell a property than to maintain it in a vacant state from year-to-year, even when there are obvious long-term savings that could be achieved. On top of this disincentive, often an agency does not have the upfront capital to cover the short-term costs.”

The other 60 percent of the savings would go toward deficit reduction.

OMB wants the new process also to help overcome a third barrier: political influence. Similar to BRAC, CPRA’s board would receive recommendations from agencies on which properties to get rid of. After doing their own research, the board would submit suggestions to OMB as an entire package, not individually.

OMB then would submit the recommendations in their entirety to Congress, which would have 45 days to consider them.

Congress would vote on the entire set of recommendations and couldn’t pick and choose which ones they like.

“The BRAC process proved that this approach can overcome the challenge posed by competing stakeholders that makes the typical one-by-one property disposal difficult,” Werfel said.

Werfel said board members must have specific skill sets including expertise in commercial real estate, government management and how disposal of real property could affect agency missions, and community development.

Lawmakers supportive, but want details

Subcommittee members voiced cautious support for the plan.

“I proposed a civilian BRAC commission at our subcommittee’s first hearing in February and the President proposed a commission in his 2012 budget,” said Rep. Jeff Denham (R-Calif.), subcommittee chairman. “I am glad that the Office of Management and Budget agrees with my goals for a civilian BRAC commission and I look forward to working with the administration to move a bill through Congress to save billions of taxpayer dollars.”

Ranking member Eleanor Holmes-Norton (D-D.C.) also supported the civilian property disposal approach, but wanted reassurances that OMB would do a better job than they have done in the past.

“I will require OMB to bring on expert staff with specific real estate and redevelopment expertise,” she said. “I support the administration’s proposal so now it’s up to the subcommittee to pass the legislation and the administration to put the proposal to work.”

Holmes-Norton said she wasn’t sure OMB was well-suited to manage this initiative.

She cited the long process of redeveloping the Old Post Office Pavilion in Washington, D.C. as an example of OMB getting in the way of an effort to improve federal properties. She said it was costing the government $6 million a year to maintain the Old Post Office.

“OMB scores real estate the same way it scores pencils,” she said. “Why should we give OMB the authority to supervise or evaluate what a board of experts recommends with respect to real estate owned by the federal government?”

The General Services Administration last month issued a request for proposal to redevelop the building nearly six years after Congress first approved the upgrades.

Werfel responded to Holmes-Norton’s criticisms, saying OMB doesn’t make decisions in a vacuum. OMB includes GSA and other government experts, as will the CPRA, to make disposal decisions.

“There is a lot that can go into these analyses and they are not always cut and dry,” he said. “There’s a lot of important and challenging public policy and analytical questions that need to be asked. In some cases, you can look back and say a decision did not appear to be ideal and in some cases a lot of decisions are made that never come to light where a lot of money was saved because these questions were being asked.”

BRAC experience will help

But former BRAC chairman and Veterans Affairs Department Secretary Anthony Principi agreed too that OMB is not the right place for this effort.

He said the final decision authority should rest with the President and Congress.

Principi also recommended increasing the number of board members to nine from seven, and making it a commission with the commissioners confirmed by the Senate.

“We had clear criteria by which to measure whether the recommendations were correct,” he said. “We did thorough analysis. We visited all military bases under consideration for closure or realignment. We had the support of GAO oversight. We had commissioners with the requisite expertise. That combination of things allowed us to make appropriate decisions.”

He added that Congress must spell out the criteria by which agencies have to submit recommendations to the commission, the clear criteria by which the commission assesses those recommendations and makes a final decision and reports it to the President. The President also must get a reasonable amount of time to make a decision.

He said if all these things are done, “you will come out with the right decision.”

He also said that all information should be made public about the plan and the commission’s efforts. Principi said the BRAC effort created a simple website to do that.

Finally, he said an effective accounting tool is important, DoD used an approached called Cobra to project net costs and savings.

Werfel said OMB would look at COBRA but it may not meet the civilian agency needs, but it would be a good starting point.

“I think it’s important to point out that real estate reform was listed by the fiscal commission as an area that should be pursued as part of deficit reduction,” Werfel said. “There is a lot of interest in both the House and the Senate side. We’ve had numerous meetings. People want to know how we can tap into the largest possible source of savings in our real estate footprint. Lesson learned and history dictates that the BRAC process was able to do that on the military side.”

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