Essential Asset Management

Overseeing the Federal Government’s Real Estate Portfolio

As the landlord for the federal government, the U.S. General Services Administration is charged with maintaining effective office and facilities support, maximizing the use of existing real estate assets, and leveraging technology and increasing sustainability to improve workplace performance and deliver the best return on taxpayer dollars.

 

By Norm Dong 

 


 

As the federal government’s landlord, the U.S. General Services Administration (GSA) has a clear vision: Be the expert real estate workforce enhancing our clients’ missions through exceptional asset management.

In this era of fiscal constraint, GSA plays an essential role in helping federal agencies maximize their financial resources, includ­ing optimizing the use of existing federally owned real estate assets. In doing so, we have saved millions of dollars for our part­ner agencies and for American taxpayers. Being a strategic real estate partner is our strength—and we get better at it all the time.

 

FBI Building in DC

GSA proposes swapping the J. Edgar Hoover FBI Building in Washington, D.C., for a more modern campus outside the downtown area. Creative use of property exchanges can help customers achieve their missions in improved space, improve asset financial performance, and dispose of unneeded and outdated property. PHOTOS COURTESY GSA 


 

This expertise takes on many forms: help­ing agencies modernize their workplaces from the cubicle farms of the past to today’s open and collaborative offices; saving taxpayer dollars by increasing density and improving office space utilization; deploy­ing innovative technology to reduce build­ing operating costs and improve energy efficiency; and making critical capital investments to upgrade, maintain and repair our portfolio of federal buildings.

Let me share some important examples of how we translate this vision into reality.

 

WORKPLACE MODERNIZATION

Every week, groups of people walk by my desk at GSA headquarters in Washington, D.C., where I, along with GSA’s Administrator, Deputy Administrator, the Commissioner of GSA’s Federal Acquisition Service and our immediate staffs work in a wide-open, light-filled space that encour­ages open discussion and collaboration. These visitors to our office are usually federal employees on tours, designated by their respective agencies to understand what we have done in our own building to improve space utilization space and create a truly modern workplace.

GSA is helping federal agencies reduce space requirements by adopting new work­space arrangements and developing mobile work strategies. A key way we do this is through Client Portfolio Planning (CPP). CPP offers a strategic picture of an agency’s complete real estate costs and the opportunities for saving money through space consolidation. We currently have CPPs with 12 agencies and more are coming on-board. In FY2013, this program led to projects that realized more than $10.5 million in annual rent savings and reductions in rentable square feet (RSF) exceeding 453,000. This year, we are on track to accrue $24.1 million more in annual rent savings and 639,000 more in RSF reductions. CPPs allow us to pinpoint high impact projects and prioritize funding accordingly. It is a strategy we look forward to continuing in FY2015 and subsequent years as it generates a quick and significant return on investment.

Our CPP work with the Federal Emergency Management Agency (FEMA) provides an excellent example. In FY2012, we identified the potential for $12 million in annual rent savings. Much of this is achiev­able by consolidating leased locations in the Washington, D.C., area into FEMA’s head­quarters. When these moves are completed in FY2016, FEMA will have reduced its portfolio by more than 200,000-RSF and saved $9.7 million annually in rent.

A complimentary program to CPP is Total Workplace, which helps agencies address the upfront costs of consolida­tion. By packaging office space, furniture and fixtures, IT and telecommunications needs, GSA customers can pay back the costs of these investments over time in their rent bill, removing an often significant barrier to making a cost-saving move.

The Department of Health and Human Services recently leveraged Total Workplace to improve efficiency, consolidate office space and eliminate more than $15 million in real estate costs over 10 years in its Seattle offices. The Department of Homeland Security, by implementing desk sharing and subleasing unused space to other agen­cies, foresees an agency-wide savings of $55 million in office costs. And the U.S. Fish and Wildlife Service is embarking on a Total Workplace project in northern Virginia that will reduce 72,200-ft² of space and lower annual rent by $3 million.

GSAlink

 

GSALink allows building owners and managers to be better stewards of energy resources. GSA IMAGE 


 

LEVERAGING TECHNOLOGY

Today’s technology gives us incredible insights into how buildings are operating and helps identify ways to save energy and money. The GSALink program is generat­ing extensive real-time data on individual facility performance across the country. An online dashboard system connects and monitors on a daily basis 55 of the highest energy-consuming properties in our owned portfolio (representing 32-million-ft²). GSALink automatically performs analytics, fault detection and diagnostics. This trans­lates to cost savings by detecting energy draining faults within our facilities that property managers can immediately act on.

GSALink analysis can also identify where retrofits and innovative technologies will have the greatest impact and shortest payback. Soon, 26 more buildings, repre­senting an additional 15-million-ft², will be brought online.

 

RENEWABLE ENERGY OPPORTUNITY

We are looking to the future through the Green Proving Ground (GPG) program. Launched three years ago, the program installs, tests and evaluates promising green technologies in government buildings. Successes include windows insulated to minimize heat gain or loss, glazing that tints when exposed to sun and warm tempera­tures, interior lighting that turns off when a space is not occupied, and condensing boilers that recapture the heat of water vapor to improve boiler efficiency. GPG currently has 19 evaluations underway and has published findings for 13 technologies.

GSA also is taking a back-to-basics approach by purchasing electricity and natural gas as cost effectively as possible. We have used electronic reverse energy auctions to bid down the price of energy for 29 federal agencies. The current annual value for these supply contracts is $192 million, representing a savings of approximately $34.5 million over previous rates. Of note, 23 percent of the electricity purchased through this process is green power produced using wind, solar or other renewable sources. We also run competitive auctions for load curtailment agreements where GSA is paid to reduce energy use during peak demand periods. We have been able to increase the government’s share of demand-response revenues from 75 percent to 91.8 percent—generating more than $1 million for energy reduction reinvestment.

 


At the Food and Drug Administration campus in White Oak, Md., GSA is expanding the largest ESPC the federal government has ever undertaken. 


 

PERFORMANCE CONTRACTING

GSA is successfully implementing Energy Savings Performance Contracts (ESPC). An ESPC is a partnership between a federal agency and an energy service company, which conducts a comprehensive energy audit of a facility to identify energy savings improvements. The energy company then designs, constructs and arranges funding for the project—guaranteeing that the enhancements will generate energy cost savings to pay for the project over the term of a specific contract term (up to 25 years). After the contract ends, all additional cost savings accrue to the agency.

GSA exceeded the Presidential Performance Contracting Challenge goal, awarding a total of $191 million in ESPCs at over 100 facilities, delivering a 38 percent reduction in energy use. Examples include:

  • A $53 million ESPC for chiller and boiler plant improvements at the Chicago Federal Center, control systems upgrades at three buildings, and the redesign of HVAC and air handling systems at the Everett M. Dirksen Federal Courthouse. The work is scheduled for completion in 2016 and will generate $2.5 million in annual energy savings.
  • A $6 million contract for nine projects at the Almeric Christian Federal Building and Courthouse in St. Croix, Virgin Islands, including a 462-kW solar array that can save the government about $509,000 each year. The total energy reduction at the site has the potential to reach 100 percent, making it a Net Zero facility.

Deep Energy Retrofits are ESPCs that have the potential for major energy savings through top-to-bottom energy makeovers. At the Food and Drug Administration campus in White Oak, Md., GSA is expanding the largest ESPC the federal government has ever undertaken. The proj­ect includes construction of a cogeneration plant that provides totally reliable power for the laboratories and other buildings. The project has been so successful that the facility went “off the grid” (used no utility-provided power) 71 times last year, keeping labs working and helping avoid blackouts in neighboring communities.

 

REAL PROPERTY EXCHANGES

Just as ESPCs showcase creative ways to fund energy related capital projects, GSA is using its authority to swap, sell or lease properties it owns for other assets in order to fund improvements to its portfolio.

The most visible of these efforts is our plan to swap the J. Edgar Hoover FBI Building on Pennsylvania Avenue in Washington, D.C., to a developer that will construct a new headquarters campus in the metropolitan area. The current FBI headquarters is outdated and too small, but its ideal location and high land values are attractive to developers.

This approach has real strong merit. In fact, two similar asset exchanges are under­way. We have proposed exchanging Federal Triangle South, a cluster of federal buildings south of the Mall in Washington, D.C., for construction and repair services needed in other buildings in the area, and are seeking a land-for-construction swap at the Denver Federal Center in Lakewood, Colo.

GSA total workplace concept

 Total Workplace transforms the way agencies think about office space, saving resources, improving efficiency and enhancing collaboration and teamwork.


 

FY2015 BUDGET REQUEST

After four years without capital improve­ment funding, GSA’s horizon became much brighter this past fiscal year when we received $1.11 billion in funding for new construction and major and minor repair and alterations (R&A) projects.

The President’s FY2015 Budget request also provides a promising outlook. It includes a request for Net Zero Budget Authority that would allow GSA to reinvest all incoming rent back into our nation’s buildings to maintain them and meet the needs of tenants.

In previous years, Congress has redi­rected rents received for other purposes or left an unutilized balance. As a result, $1.25 billion in major and minor projects have been delayed during the last four years. The new requested budget will allow us to execute crucial projects such as elevator repairs, upgrading safety and fire alarm systems, and making structural and seismic safety repairs.

Key R&A projects included in the FY2015 request include:

  • Constructing a new seawall at the Captain John Foster Williams U.S. Coast Guard Building in Boston and waterproofing the basement.
  • Replacing the water pipes in the Fritz G. Lanham Federal Building in Fort Worth, Texas.
  • Fixing the parking deck and re-opening more than 100 spaces in the Chamblee IRS Parking Garage in Chamblee, Ga.

The requested FY2015 appropriation will fund major construction projects, including:

  • Modernization and consolidation of space for Immigration and Customs Enforcement in Chicago and the Farm Service Agency in Salt Lake City, reduc­ing the federal footprint and saving millions annually in rent.
  • Significant improvements to the Land Ports of Entry (border stations) at Alexandria Bay, N.Y.; San Ysidro near San Diego and Calexico West in Calexico, Calif., including redesigning circulation for both pedestrian and vehicular traffic as well as developing new facilities.
  • Continued development of the Department of Homeland Security head­quarters on the historic St. Elizabeths Hospital campus in Washington, D.C., focusing on new highway interchanges as well as office space for agency leadership and an operations center.
  • Repair of the historic façade and replace­ment of the HVAC systems at the 133 year-old Sydney Yates Federal Building adjoining Washington’s National Mall.

 

MOVING FORWARD

GSA maintains a robust asset manage­ment plan, addressing the full spectrum of strategic planning, efficient operations, and strong financial performance of its portfo­lio—benefitting both our partner agencies and the American taxpayer.

These initiatives make GSA the real estate partner of choice for federal agen­cies, staffed by an expert workforce that enhances each client’s mission through exceptional asset management. 

 


 

Norm Dong is Commissioner, Public Buildings Service, U.S. General Services Administration. He can be reached through Susan Sylvester at This email address is being protected from spambots. You need JavaScript enabled to view it..