GSA says more funding needed to get rid of unneeded federal office space

The General Services Administration, which owns the federal government, is telling lawmakers it can meet their demands to sell or dispose of underused federal buildings if Congress approves funding 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 the GSA’s Public Buildings Service, told members of the Senate Environment and Public Works Committee’s transportation and infrastructure subcommittee on Tuesday.

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

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

“While it’s an agency-by-agency issue, I’m telling you the trend is that agencies are giving up space. They get it,” Doomes told lawmakers. “We’re bringing in our workspace experts to work with these agencies and say, ‘How often are people there? What kind of work do they do? Maybe they 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 sees a “huge opportunity” to reduce federal office space by as much as 30 percent in the coming years.

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

Recently, GSA launched a Workplace Innovation Lab that allows teams from other federal agencies to test alternative workplace designs. It also freed up space in its own headquarters building in downtown DC to serve as a co-working space for federal agencies working across agencies.

“We continue to offer these tools to agencies, and many of them, once they see the opportunity to reduce their space, see it as an operational savings,” Doomes said. “We’re trying these new things to tell agencies that they can reduce their office space.”

Additionally, approximately 50% of all GSA leases expire within the next five years, giving the agency additional opportunities to consolidate.

Doomes said GSA has overseen about 89 projects in which agencies consolidated office space over the past eight years, but that agencies have also missed out on about 120 opportunities to consolidate office space due to lack of funding.

When agencies move their offices, they pay for furniture, fixtures, equipment and moving costs from their budgets.

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“They have their own allocation process to apply for those funds. And if an agency doesn’t have those funds, we can’t move them and help them consolidate them,” Doomes said.

The 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, we’re proposing that we’re going to ask for the money,” Doomes said. “And then we can go to the agencies and say, ‘You can write off the cost of moving and get new furniture. We’re going to get you out of this space and move you into additional spaces.’”

Last summer, the Government Accountability Office found that all of the agency’s 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 he believes the findings in the GAO report are “concerning.”

The federal government’s real estate portfolio management has been on the Government Accountability Office’s list of high-risk programs since 2003. GAO has found that GSA and its tenant agencies do not have effective mechanisms for determining how much office space they need to accomplish their missions.

“Better management of this portfolio can result in real savings for federal agencies and ultimately for taxpayers. This is a serious challenge, but I think we can also view it as a tremendous opportunity for the GSA,” said subcommittee chairman Mark Kelly (D-Ariz.).

GSA has lost 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 to save some money.”

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

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

“We want to get people out of that space and into an existing space,” Doomes said. “Sometimes we move them into a (GSA)-owned space, because that’s often the most cost effective. And then there are some opportunities where we say, ‘The rental rates are so low, we want you to move out of this space and into a much smaller space.’”

The GSA is also asking Congress to grant it full access to the Federal Buildings Fund, which holds 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 has siphoned more than $10 billion from the Federal Construction Fund since 2011.

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

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

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

He said it would also accelerate GSA’s efforts to sell and dispose of underused 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 that have outlived their useful life. This is an increasingly difficult task,” Kelly said.

GSA is in the midst of plans to relocate most of the occupants of the Captain John F. Williams Coast Guard Building to the nearby John F. Kenney Federal Building in Boston.

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

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

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

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

“We have an inefficient way of getting rid of inefficient buildings,” said subcommittee ranking member Kevin Cramer (R-N.D.).

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

“This process has shown great promise, but it needs reform,” Kelly said. “Both parties are looking for solutions to help us move forward in these efforts.

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

“We are excited about that and the sale of that property and others,” he said.