GSA says more funds needed to offload unneeded federal office space

GSA oversaw 89 projects where agencies consolidated office space over the past eight years. But agencies also missed more consolidation opportunities than that.

The federal government’s landlord, the General Services Administration, is telling lawmakers it can deliver on their demands to sell or dispose of underutilized federal buildings — if Congress approves funds meant to relocate federal employees to new office space.

“We’re going to have to spend some money in order to save some money,” Elliot Doomes, commissioner of GSA’s Public Buildings Service, told members of the Senate Environment and Public Works Committee’s transportation and infrastructure subcommittee on Tuesday.

GSA is asking Congress for a $425 million “optimization” fund in next year’s budget. The funding would help agencies move out of underutilized office space.

Doomes said this funding proposal “would enable GSA to continue improving building utilization rates and provide better services to federal agencies and the community they serve.”

“Although it’s agency by agency, I’ll tell you, the trend is agencies are giving up space. They understand,” Doomes told lawmakers. “We’re bringing our workspace experts to work with these agencies to say, ‘How often are people there? What kind of work do you do? Maybe you don’t need all that space.’ Let’s give some of that space back,” Doomes said.

GSA Administrator Robin Carnahan told Congress last November that the agency is seeing a “huge opportunity” to cut federal office space by as much as 30% in the coming years.

While the Biden administration is calling on federal employees to return to the office more often, most agencies are still allowing many employees to work from home for a least a few days each two-week pay period. That hybrid work schedule is reducing agencies’ needs for office space.

GSA recently launched a Workplace Innovation Lab that lets teams for other federal test out alternative workplace designs. It’s also freed up space in its own downtown D.C. headquarters building to serve as a co-working space for federal agencies who work at other agencies.

“We keep offering these tools to agencies, and a lot of agencies, once they see the opportunity to shrink their footprint, they look at this as operational savings,” Doomes said. “We’re trying out these new things to tell agencies you can shrink your office space.”

In addition, about 50% of all GSA leases are expiring in the next five years, which gives the agency additional opportunities to consolidate.

Doomes said GSA has overseen about 89 projects where agencies consolidated office space over the past eight years. But agencies have also missed about 120 opportunities to consolidate office space because of a lack of funding.

When agencies relocate offices, they pay for furniture, fixtures, equipment and moving costs out of their budgets.

“They have their own separate appropriation process to request those funds. And if an agency doesn’t have that those funds, we can’t move them out and help them consolidate,” Doomes said.

GSA’s $425 million optimization fund, he added, would make it easier for agencies to consolidate office space, even if they can’t afford the move on their own.

“For the first time ever, we’re proposing that we’re going to ask for the money,” Doomes said. “And then we’ll be able to go to the agencies and say, ‘You can amortize the cost that it’s going to take to move and get new furniture. We’re going to move you out of this space, and we’re going to move you into additional spaces.’”

The Government Accountability Office found last summer that all agency headquarters buildings in the Washington, D.C. area had excess space, including 17 that had an average building utilization of just 25%. Doomes told lawmakers thinks the GAO report’s results are “concerning.”

Management of the federal government’s real estate portfolio has been on the Government Accountability Office’s list of high-risk programs since 2003. GAO has found GSA and its tenant agencies don’t have effective mechanisms to determine how much office space they need to meet their missions.

“Better managing this portfolio can mean real savings for federal agencies and ultimately, for the taxpayers. This is a serious challenge. But I think we can also look at it as a huge opportunity for GSA,” Subcommittee Chairman Mark Kelly (D-Ariz.) said.

GSA shed about 8 million square feet of office space since 2020. It now oversees about 371 million square feet of space.

“It’s progress, but we can do more,” Doomes said. “And that’s why these legislative proposals are so important. “We’re going to have to spend some money in order to save some money.”

GSA stepped up efforts to get rid of unneeded real estate last November, when it added 23 federal buildings to its sale and disposal process.

Among the properties, GSA is looking to repurpose the Department of Homeland Security’s former headquarters. GSA expects the properties to amount to a potential reduction of 3.5 million square feet from the federal government’s real estate portfolio, and a $1 billion cost avoidance over 10 years.

“We want to get people out of that space and move them into existing space,” Doomes said. “Sometimes we’re moving them into [GSA] owned space, because oftentimes, that’s the most cost-effective. And then there are some opportunities where we’re saying, ‘The lease rates are so low, we want you to move out of this space and move you into a much smaller space.”

GSA is also asking Congress to get full access to the Federal Buildings Fund, where it keeps rent payments from tenant agencies. Lawmakers have diverted about $1 billion from the fund annually for more than a decade to cover other costs.

Doomes said Congress, since 2011, has skimmed more than $10 billion from the Federal Building Fund.

“As a result, necessary repairs have been unfunded and have had to be resubmitted again,” Doomes said, adding that 13 of 17 major repair and alteration projects in GSA’s budget this year were resubmitted from previous years’ budget requests — but didn’t receive funding from lawmakers.

Doomes said delays in carrying out these projects have driven up the total cost by about $300 million, and prevented agencies from moving forward with consolidation efforts.

Doomes said full access to the Federal Buildings Fund in next year’s budget would allow GSA to “address necessary capital improvements like these in a timely manner, resulting in increased taxpayer savings and safer building conditions.”

He said it would also accelerate GSA’s efforts to sale and dispose of underutilized federal buildings that agencies no longer need.

The Public Buildings Service maintains office space for more than 100 federal agencies and more than 1 million federal agencies.

“Managing this portfolio requires GSA to be dynamic and flexible, including being prepared to repurpose or dispose of properties which have outlived their purpose. This is an increasingly difficult task,” Kelly said.

GSA is the in the middle of plans to move most occupants of the Capt. John F. Williams Coast Guard Building into the nearby John F. Kenney Federal Building in Boston.

Doomes said the $20 million consolidation project would avoid $30 million in repair liabilities and would save $1 million in annual operation and maintenance costs.

Lawmakers are pressuring federal agencies to make better use of underutilized office space, often by demanding that employees return to the office more often. A top Republican on the House Appropriations Committee added language to one of the fiscal 2025 spending bills that would set new requirements for agencies to publicly report their policies on federal telework and office space.

Congress passed the Federal Assets Sale and Transfer Act (FASTA) in 2016, which created an independent board meant to recommend high-value, but underutilized federal properties GSA should sell or get rid of.

The Public Buildings Reform Board has completed its two rounds of recommendations. But so far, GSA has only sold 10 of the properties flagged by the board.

“We have an overall ineffective way to dispose of ineffective buildings,” Subcommittee Ranking Member Kevin Cramer (R-N.D.) said.

The PBRB is currently set to disband in May 2025. But the FASTA Reform Act, introduced by Cramer, would extend the termination date of the PBRB to Dec. 31, 2026, and would give the board additional authority.

“This process has shown a lot of promise, but it needs reform,” Kelly said. “Both sides of the aisle are looking for solutions to help us advance these efforts.

Doomes said GSA is in the process of selling one of the PBRB’s recommendations — a property in Laguna Nigel, California. Doomes said GSA received a $125 million bid for the property.

“We’re excited about that, and selling that property and others,” he said.

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