General Services Administration: Downsizing and Federal Office Space

Published by the Government Accountability Office on 1997-04-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                           United States General Accounting Office

GAO                        Testimony
                           Before the Subcommittee on Public Buildings and
                           Economic Development, Committee on Transportation
                           and Infrastructure, House of Representatives

For Release on Delivery
Expected at
9:00 a.m. EDT
                           GENERAL SERVICES
Thursday, April 24, 1997

                           Downsizing and Federal
                           Office Space
                           Statement of Michael E. Motley, Associate Director
                           Government Business Operations Issues
                           General Government Division


General Services Administration:
Downsizing and Federal Office Space

              Mr. Chairman and Members of the Subcommittee:

              We welcome this opportunity to discuss our July 1995 letter Downsizing
              and Space (GAO/GGD-95-51R, July 14, 1995), which provided information on
              the General Services Administration’s (GSA), the Office of Management and
              Budget’s (OMB), and 10 executive branch agencies’ efforts to identify and
              manage federal office space that may be unneeded or underutilized after
              agencies downsize, and our ongoing work on this issue. As you know, the
              Federal Workforce Restructuring Act (P.L. 103-226), enacted on March 30,
              1994, mandated downsizing the federal workforce by about 270,000
              full-time equivalents (FTE) by October 1, 1999.1

              Our 1995 letter, issued early in the downsizing process, noted that federal
              civilian agencies occupied over 750 million square feet of office space in
              thousands of government-owned and -leased buildings nationwide. We
              expressed concern, that with the loss of about 107,000 non-Department of
              Defense related FTEs through downsizing, millions of square feet of costly
              federal office space could become unneeded or underutilized. Our letter
              recognized that it probably was not possible to save the full cost of all
              office space associated with FTE reductions because personnel losses
              could be scattered over multiple locations. However, to provide an
              indication of the potential savings involved, we estimated that the cost of
              the office space vacated by the 107,000 FTEs at that time to be about
              $362 million annually. We based this estimate on GSA’s work space target
              of 152.5 square feet per employee, GSA’s nationwide office space average
              cost of $22.22 per square foot, and the 107,000 FTE reduction target.

              We said in 1995 that neither of the two central federal management
              agencies responsible for space management and budget matters, GSA and
              OMB, had developed a governmentwide strategy for managing office space
              reductions resulting from the government’s downsizing efforts. We
              reported, however, that both agencies had taken steps to identify and
              restrain potentially unneeded or underutilized federal office space. Steps
              taken by GSA included (1) in the summer and fall of 1994, calling for a
              “Time Out and Review” of high-dollar-value capital spending projects—a
              step that, according to GSA, identified and eliminated almost 1 million
              square feet of unneeded agency expansion space; (2) instituting in
              September 1994 a “No Net New” office space policy to stop agencies from
              acquiring net new office space as measured against GSA’s inventory
              baseline of general purpose office space; (3) in March 1995, proposing a

               One FTE is equal to one work year or 2,080 non-overtime hours. Put simply, one full-time employee
              counts as one FTE, and two half-time employees also count as one FTE. The FTE concept is intended
              to capture the work hours of all federal employees.

              Page 1                                                                         GAO/T-GGD-97-94
General Services Administration:
Downsizing and Federal Office Space

“timeout” for the review of the need for current and pending agency
leasing actions; and (4) in April 1995, instituting a temporary moratorium
on most agency leasing actions pending administration downsizing

As for OMB, we said that in May 1994, OMB directed agencies to project their
office space needs for fiscal years 1996 through 1999, taking into
consideration anticipated personnel reductions, and to submit these
projections to OMB by June 30, 1994. OMB believed that the agencies and GSA
could use this information to begin analyzing and planning for how
workforce reductions could affect office space needs. However, we said
that GSA officials told us that these projections showed no net reduction in
office space needs by federal agencies through fiscal year 1999, even
though they projected an 18-percent reduction in total employment.

Finally, our 1995 letter pointed out that 10 executive branch agencies, plus
GSA and OMB, had either taken proactive space management approaches or
were awaiting on the outcome of other issues prior to beginning specific
initiatives. Four agencies had developed agencywide space management
initiatives. The Tennessee Valley Authority, for example, had developed
plans to reduce its space inventory by 1 million square feet over 3 years.
Three other agencies did not have agencywide plans but had bureaus or
offices that were developing space management plans. The National
Aeronautics and Space Administration (NASA), for example, had directed
its headquarters and field offices to develop site-specific space
requirements that were to take personnel reductions into consideration.
The remaining five agencies had not begun specific space management
initiatives related to downsizing because they said they were awaiting the
outcome of employee buyouts, agency reorganizations, or legislative

At the request of the Chairman, House Committee on the Budget, we have
recently begun to follow up on our 1995 report, and we expect to complete
this effort in the summer of 1997. Although it is too early in our review for
us to have any conclusions or recommendations, we do have several
preliminary observations. Since our 1995 letter, GSA has taken additional
steps that it believes will improve its management in general of
government-owned and -leased properties, and that could help in
identifying and restraining the amount of unneeded and underutilized
federal office space resulting from agency downsizing. For example, GSA is
in the process of implementing a new automated system, System Tracking
and Administering Real Estate (STAR), that is designed to be an integral

Page 2                                                        GAO/T-GGD-97-94
General Services Administration:
Downsizing and Federal Office Space

part of GSA’s day-to-day real estate activities. STAR is to provide direct
support to GSA real estate personnel, and GSA officials believe that STAR will
enable GSA to better manage government-owned and -leased properties.
GSA plans to phase-in STAR during the first quarter of fiscal year 1998.

In addition, GSA is pilot testing a program called “Ponding”, which is an
effort to consolidate about 1.2 million square feet of leased office space in
37 federal projects. GSA is funding this program with the goal of identifying
600,000 square feet of underutilized space. This space could then be leased
to other agencies or turned back to the lessors and the leases terminated.
GSA hopes to demonstrate to Congress that, by funding the cost of space
consolidations, long-term savings can be realized.

GSA officials told us that GSA is now formally considering the effects of
federal agency downsizing and space reduction plans in its forecast of rent
collections, which in large part make up GSA’s federal building fund used to
fund real property management activities. GSA said that its regional asset
managers, who usually have specific knowledge of pending actions
relating to local agencies’ space requirements, are now reviewing the data
supporting GSA’s rent collection estimates to improve their accuracy. With
improved rent collection estimates, GSA officials believe that the agency
will be positioned to better manage the federal building fund.

Although it is too early to assess the effectiveness of any of these GSA
actions, in discussions with OMB staff responsible for reviewing GSA’s
budget, they told us that they believe that actions taken or under way by
GSA will position GSA to more effectively manage potentially unneeded and
underutilized federal office space that might result from downsizing.

Our work updating the space management strategies of the 12 executive
branch agencies has also just begun. Although we are not in a position to
report on these activities at this time, we are aware of one agency’s
achievements in the area of space management. We recently reported that
NASA has achieved an estimated $250 million in cost reductions through
fiscal year 2000, mostly from moving contract personnel from off-site
leased space into agency-owned space left vacant by staff reductions
related to NASA’s downsizing efforts.2

 NASA INFRASTRUCTURE: Challenges to Achieving Reductions and Efficiencies (GAO/NSIAD-96-187,
Sept. 9, 1996).

Page 3                                                                    GAO/T-GGD-97-94
           General Services Administration:
           Downsizing and Federal Office Space

           Mr. Chairman, this concludes my prepared statement. I would be pleased
           to answer any questions you or the other Member of the Subcommittee
           might have at this time.

(240248)   Page 4                                                   GAO/T-GGD-97-94
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