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Tech Talk Radio – Jan. 30, 2021
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Federal agencies have more buildings than they need, and multiple administrations have tried to rein in federal office space.
Now the incoming Trump administration and its new Department of Government Efficiency are looking at opportunities to shrink the federal government’s real estate portfolio.
DOGE’s leaders, Elon Musk and Vivek Ramaswamy, are on a mission to cut trillions of dollars from the federal government. On X (formerly Twitter), they’re crowdsourcing ideas on how agencies should start cutting back.
Last month, the official DOGE account tweeted about opportunities to sell underutilized federal buildings.
“Why are American taxpayer dollars being spent to maintain empty buildings?” the official DOGE account <a href="https://x.com/DOGE/status/1859457844044497294">posted on Nov. 21.</a>
Senate DOGE Caucus Chairwoman Joni Ernst (R-Iowa) recently released a new <a href="https://www.ernst.senate.gov/imo/media/doc/final_telework_report.pdf">report </a>calling for agencies to rein in telework policies, citing low occupancy rates of federal office buildings.
DOGE and Ernst have both cited the work of the Public Buildings Reform Board, a small, independent agency that flags underutilized federal buildings that agencies no longer need.
<a href="https://federalnewsnetwork.com/facilities-construction/2024/03/agencies-face-once-in-a-lifetime-opportunity-to-sell-real-estate-they-dont-need-will-it-happen/">GSA has sold most of the properties</a> that the board flagged in their first round of recommendations. But OMB blocked the board’s second round of recommendations from moving forward.
Beyond the board's recommendations, GSA is also <a href="https://federalnewsnetwork.com/agency-oversight/2024/12/gsa-steps-up-plans-to-offload-underutilized-federal-buildings/">accelerating its own plans</a> to dispose of federal buildings that tenant agencies no longer need.
<h2>'The public spotlight that we've been looking for'</h2>
Members of the Public Buildings Reform Board say they’re optimistic about DOGE.
Talmage Hocker, founder of a private real estate firm in Lexington, Kentucky, who’s been on the board since its launch, said he’s looking forward to working with DOGE.
“This is the public spotlight that we've been looking for,” Hocker said in a recent interview.
Hocker said the board has not directly heard from Musk or Ramaswamy. But he’s reached out to lawmakers in the hopes of connecting with the DOGE leaders.
“I think that with what President Trump's mandate is going to be, and what DOGE is looking for, and the legislation that we're currently acting under, I think that it can be a wonderful opportunity for the government to get what Congress asked for in 2016,” Hocker said.
Multiple administrations have drafted agendas on freezing and consolidating the federal estate portfolio. But Norman Dong, a former commissioner of GSA’s Public Buildings Service under the Obama administration, now a partner at the real estate firm FD Stonewater, said the federal government has lacked a “sense of urgency” to address the problem.
“The question is, when are you going to actually do something about it, versus just talk about it? I'm hoping that the administration’s increased focus, with DOGE now looking at this question, finally may be that watershed moment where we start to see some real impact and results,” Dong said.
Congress created the Public Buildings Reform Board under the 2016 Federal Assets Sale Transfer Act (FASTA) legislation. But Dong said the legislation did little to prioritize federal building utilization for GSA and OMB.
“Congress put six years on the clock. Those came and went without much progress. The PBRB did its job, but GSA and OMB fumbled the ball and lacked the urgency to make significant progress,” Dong said.
Dong said he’s hopeful the incoming Trump administration will make a “dynamic change” on this issue.
“I think many of us would say that having an increased in-office presence among federal employees would be a good thing, particularly if you work in the area of government real estate,” he said.
David Winstead, another former PBS commissioner under the George W. Bush administration and PBRB member, said the board’s work hasn’t gotten much attention. But he expects that to change under the new Trump administration.
“Covid and telework had an immense impact on the utilization of office space. And yet, to be candid with you, I’ve just not seen the action that we expected from GSA and OMB on the subject,” Winstead said. The taxpayer cannot continue to allow these empty buildings to continue, when telework’s been in place for close to four years, and we know what the patterns are.”
Former Rep. Nick Rahall (D-W.V.), another PBRB member, said agencies are pushing back on proposed moves and consolidations suggested by the board and GSA.
Rahall said the board doesn’t recommend relocating federal employees out of the cities where they live, but it does see an opportunity to move them into space that aligns with the size of their workforce.
<h2>'A triple-win'</h2>
“This new Department of Government Efficiency, using the PBRB, it can be a triple-win. Number one, for the American taxpayers, in getting rid of the underutilized and underused buildings. Second, it can be a win for the incoming administration. And third, it can be a win for PBRB and GSA combined,” Rahall said.
One way to get building occupancy rates up is to bring federal employees back into the office more often. Musk and Ramaswamy say they plan on bringing federal employees back to the office five days a week.
Former Rep. Michael Capuano (D-Mass), a PBRB member, said even if federal employees come back to the office at pre-pandemic rates, there’s still plenty of opportunities to cut underutilized office space.
“Even if 100% of the employees came back five days a week, there's still a lot of efficiencies to be had. They may be a little bit more difficult to find. The numbers may not be as big, but they will still be significant,” Capuano said.
Ernst’s report on federal telework calls on agencies to relocate federal employees away from Washington, D.C. and sell off underutilized federal buildings. <a href="https://www.politico.com/live-updates/2024/12/12/congress/senate-doge-plans-00193909">Politico first reported</a> that Ernst introduced a bill that would require the Small Business Administration to relocate 30% of its workforce out of the D.C. metro area.
Winstead said the PBRB isn’t looking to move federal employees out of the cities where they live.
“All we're doing is relocating into a much more cost-effective housing environment for federal employees. I think our time has come, that we're going to get attention to this and the work we're doing should be compatible with what the administration and Congress end up doing on this question,” Winstead said.
<h2>'We don’t have the data yet'</h2>
OMB expects agencies will shed <a href="https://federalnewsnetwork.com/facilities-construction/2024/08/omb-says-agencies-will-shed-considerable-amount-of-office-space-in-coming-years/">millions of square feet of building space</a> in the coming years, now that many federal employees are on a hybrid schedule of in-office and work-from-home days. The Department of Housing and Urban Development, as an extreme case, plans to eliminate up to 60% of its total office space footprint by 2038.
OMB Deputy Controller Deidre Harrison, chairwoman of the Federal Real Property Council, said there’s no doubt agencies still have underutilized office space. But getting hard numbers from those agencies remains a challenge.
“It is undoubtedly the case that we know we have excess capacity, when it comes to federal buildings. But I will tell you, we don’t know how much excess capacity, or where it is, because we don’t have the data yet to tell that story,” Harrison said last month during a conference hosted by the federal Chief Data Officers Council.
Harrison said OMB is pressing agencies to provide better data on the occupancy rates of their buildings, then start making some hard decisions on what to do with the space.
“We need to know who’s coming into your building, how often, and how many seats are they filling. Because without that data, it’s really hard to optimize. Whether or not we need to shrink or increase requires us to have the data, and today, we don’t,” she said.
It’s not just occupancy data that OMB is lacking. Harrison said OMB isn’t getting reliable data on how much agencies are spending on office space.
“I embarrassingly can’t tell you how much money is being spent at the level of detail that I need on real property, because we’re not collecting that information yet either,” she said.
The board’s goal is to save the federal government billions of dollars. Capuano said that’s a more realistic target than the $2 trillion DOGE is looking to cut.
“We have a lot of money that we can save, but it's not in trillions, and not I'm sure it should be. You'd have to sell pretty much every building the government owned for that purpose. But that doesn't mean we want to do anything other than what we were charged with Congress to do, which is to find efficiencies and to implement them as best we can,” Capuano said.
Recent data shows that telework accounts for a small fraction of total hours worked by federal employees. An OMB <a href="https://www.whitehouse.gov/wp-content/uploads/2024/08/OMB-Report-to-Congress-on-Telework-and-Real-Property.pdf">report in August</a> found federal employees spent nearly 80% of their total work hours in the office. <a href="https://federalnewsnetwork.com/workforce/2024/08/white-house-details-which-agencies-are-ahead-behind-on-telework-goals/">More than half of federal employees fully worked in person</a> due to the nature of their jobs, and even a majority of teleworking workers still spend a majority of their work hours in the office.
During his tenure in the House, Capuano voted for the Federal Assets Sale Transfer Act (FASTA), the legislation that created the PBRB. Now that he’s a member of the board, he’s surprised at what an uphill battle it’s been to chip away at underutilized office space.
“I voted for this board, to create this board. I did not think that certain government agencies would see this board as the enemy, and yet now that I’m on the board, I think that’s true, and I don’t understand it, because we’re not here to hurt anybody. I’m as progressive a Democrat as you get, but I’m not for inefficiency. That’s ridiculous,” Capuano said.
<h2>Some agencies consolidating space</h2>
Some agencies, however, are looking to do something to rein in their office space.
Trae Watkins, the chief readiness support officer for the Department of Homeland Security, said that DHS in 2017 had 47 different headquarters facilities, covering nearly 13 million square feet in the National Capital Region.
But Watkins said the department is trying to get that down to six locations. DHS is still working on a consolidated campus in Southeast DC that will house the headquarters of most of its component agencies. Watkins said the plan is to cut 3 million square feet of space.
“That’s billions of dollars, especially if you take that over 30 years. We all know D.C. is a very expensive market, so we’re definitely driving that initiative. And we’re taking that data and putting it out to our leadership, saying, ‘Here’s what we have to show you. Here’s the recommendation. Does that make sense, and is this where we want to drive?” Watkins said.
As a former chief financial officer for FEMA, Dong said he saw the agency go from 11 locations across the D.C. metro area to one, given significant cuts to its operating budget.
“We started this process back in 2011, of saying, ‘All right, we're going to reduce these leases, we're going to co-locate, we're going to consolidate, we're going to improve space utilization.’”
Dong said FEMA saved about $15-20 million in the process, “because we had to do it. We had no other choice.”
<h2>'It is a ghost town'</h2>
Members of the PBRB say they’re not just focused on saving money. It’s also about giving federal employees modern, up-to-date office space that meets their needs.
The average age of a federally owned building is 50 years old, and GSA’s federal building portfolio has a multi-billion-dollar maintenance backlog.
“You don't have $8 billion to reinvest to make these upgrades in the federal buildings in downtown DC. And that's what the price tag is,” Dong said. “So you have to make some hard decisions, but also potentially impactful decisions about which buildings to keep, and which to dispose of, you do it in a thoughtful way that maximizes the neighborhood impact.”
There are other buildings in need of safety upgrades, such as the 17-story Wilshire Federal Building in Los Angeles. Hocker said the building is 60 years old, and in need of $280 million in seismic upgrades to protect against earthquakes.
“For a building that needs that much in seismic upgrade, it makes you wonder how safe the building is,” he said.
Right-sizing federal office space and modernizing office may also give federal employees more of an incentive to return to the office. At a recent summit hosted by D.C. Mayor Muriel Bowser, attendees discussed underutilized federal buildings taking up large swaths of space in key corridors of the city.
“In many of these buildings, it is a ghost town and there are crickets chirping. As long as the property is being used by the federal government, we assume that was the most productive use of the property,” Dong said.
Dong said consolidating or reshaping the federal office footprint in Washington, D.C. would revitalize the city’s business districts, including Independence Avenue, Federal Center Southwest and Pennsylvania Avenue.
“There are a lot of different potential uses that could reactivate these areas from being the sleepy federal enclaves that they’ve been in the past, as opposed to saddling them with federal use that may not be the highest and best use going forward," he said.]()
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