Segment 2 Of 2     Previous Hearing Segment(1)

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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.

OVERSIGHT OF THE U.S. GENERAL SERVICES ADMINISTRATION LEASING PROGRAM

THURSDAY, JULY 18, 1996

U.S. House of Representatives,

Subcommittee on Public Buildings and Economic Development,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to recess, at 8:33 a.m. in room 2253, Rayburn House Office Building, Hon. Wayne Gilchrest (chairman of the subcommittee) presiding.

    Mr. GILCHREST. Good morning, everybody. The subcommittee will come to order.
    Just a note on the plane crash. I am sure we all collectively feel that if there are any survivors—and it doesn't look like there are any survivors—but those friends and relatives of the people who went down in the crash have the sympathies of all of us.
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    Today we will continue the hearings on the leasing program of the General Services Administration. Last Friday the Commissioner of Public Buildings testified on GSA's new initiative called ''Can't Beat GSA Leasing.'' This initiative is designed to address several deficiencies in the procedures of the current program that have created a perception that GSA is somehow not doing its job.
    I don't feel that GSA is not doing its job; I think it is out there working pretty hard. GSA has over 7,000 leases in place that were negotiated by leasing specialists at GSA, and which have withstood the test of time.
    This morning we are pleased to have a member of the full committee, the gentlelady from New York, who will speak to a particular lease not negotiated by GSA, but reviewed by the professionals at GSA. I believe our colleague from New York, who has first-hand experience with a lease executed by a Federal agency other than GSA, can speak to the deficiencies and omissions that this lease contains. I will defer to Congresswoman Molinari to provide details.
    I welcome the Administrator of GSA, the Honorable David Barram, who was unable to be with us last week. Perhaps the Acting Administrator will provide the subcommittee will provide the subcommittee with the details of the initiative.
    Let me restate something. I really don't believe that GSA is not doing its job. We hear so many complaints about the cumbersome procedures that GSA is currently under; that can change. We hope it will change, and presumably, it will.
    But no one disputes the basic fact that generally, GSA follows the law.
    I do have some questions about certain lease actions that appear to cut corners and preclude certain building owners from competing for GSA leases, but that may be driven by agency desires and not GSA's own policy.
    I also have an interest in the status of Executive Order 12072 and its effect on the current GSA leasing activity and how that Executive Order will be impacted by ''Can't Beat GSA Leasing''.
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    I now recognize the gentleman from Ohio, the ranking member of the subcommittee, Mr. Traficant.
    Mr. TRAFICANT. Thank you, Mr. Gilchrest.
    Welcome to all the witnesses, and Mr. Barram.
    As I stated last Friday, this subcommittee, with its extensive expertise, knowledge, and familiarity with GSA, has been a strong supporter of the agency. I certainly have been. We have always acted, in my opinion, with the best intentions to reaffirm our authority and to keep the agency on a firm footing.
    I also mentioned last week that I was concerned that if the agency relaxed its central control over this program, then waste, fraud and abuse could become the order of the day and could take this agency back to a time when the development of the agency became necessitated by the behavior of others, swinging with cash and dollars out on the streets of America.
    You can imagine, then, that I was very disappointed that on the very day that I was voicing those concerns, the agency was putting the finishing touches on a news release which announced with great pride a program to delegate leasing authority to Federal agencies—which on its surface sounds good, new, streamlined, and different. It now appears that a mere recommendation in the National Performance Review has become ample justification for turning aside a statutory responsibility.
    It also appears that recommendations by an ad hoc National Performance Review team can evidently override concerns and questions of an oversight subcommittee such as this which has vast experience with the agency and has an historical perspective on some of the abuse that has occurred with this type of a delegation posture.
    Furthermore, the specifics of the new approach, which the members asked for at the hearing, were announced not at the hearing but at the press. Indeed, the agency has yet to explain how this ''new, improved'' delegation or contracting-out process will save, number one, time; or, more importantly, money.
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    I am looking for some data. Somewhere someone, probably inside one of these NPR teams, has evidently determined—in my opinion, erroneously—that GSA evidently has a monopoly, and therefore must waste money. Well, evidently, GSA will soon be in the marketplace, acting on behalf of the Department of Transportation to acquire a large block of space for DOT headquarters here in the District. There are only a handful of sites available and suitable. As we all know, if every Federal agency started bidding for this site, or these sites, the prices could escalate and reflect the basic concept of supply and demand.
    Now, I'm no economist; I'm just the son of a truck driver here, but it certainly seems to me that GSA is acting in the best interest of the taxpayer by controlling and centralizing the Government's needs and buying power, and expanding the wise utilization of the dollars that they have at their disposal. The agency now seems intent, based on what I consider a misguided recommendation in some National Performance Review report, a delegated contract, or a combination, to the Government's leasing program. The agency cannot tell us if it will save money. The agency cannot tell us if it will save time.
    I guess everybody around here is looking for some new, idealistic standard for national performance, ''it's new, it's different, but let costs be considered later.''
    I believe this will cost the taxpayer a lot of money. I believe it will open the doors up for waste, fraud and abuse, and I believe we open the process up for lawyers. For the lawyers, this is Christmas in July.
    I urge caution of this subcommittee before we have 2,000 Monte Halls running across the streets of America, dealing in cash prizes.
    With that, Mr. Chairman, I urge caution. I commend you for the work that you've done in having the hearings and taking at least that oversight step to secure information. I welcome Ms. Molinari for her first-hand knowledge, and I am always glad to make sure that at this particular hearing, Mr. Duncan is here. I have great respect for what he has done and am hoping that he keeps an eye on this thing, as well. So thank you for the time.
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    [Mr. Traficant's prepared statement follows:]

    [Insert here.]

    Mr. GILCHREST. Thank you, Mr. Traficant.
    Mr. Duncan, any opening remarks?
    Mr. DUNCAN. I have no formal statement at this time, Mr. Chairman. I appreciate the remarks by Mr. Traficant and I look forward to working with both of you on these matters.
    I do have some questions later on about the narrowing of the district in Philadelphia, and whether this is going to cost the GSA and the taxpayer any additional money because of what's been done, after we complained about that being done when the property was being leased for the EPA. The GSA backed up on that, and now it looks like the same thing is happening all over again with the lease for the HHS property, and I think that's something we need to look at very closely and see if that's going to cost us additional money. But maybe the witnesses can address that.
    Thank you very much.
    Mr. GILCHREST. Thank you, Mr. Duncan.
    Ms. Molinari?
    Ms. MOLINARI. Thank you, Mr. Chairman. I appreciate your giving me the opportunity to, if do nothing else, for the purposes of this hearing, vent very significantly over a situation that both you and the ranking member have been helping me to try to resolve.
    If you will indulge me for just a moment, I would like to bring this committee and the members of GSA back to what was initially a misstep by GSA that has continued to evolve itself into a stonewalling at the Department of Defense, and I would like to just take us very briefly through this problem.
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    Mr. Chairman, as you both know, for over 3 years I have attempted to seek answers to several questions regarding a lease action that took place in the spring of 1993 in Virginia Beach, Virginia, for the Navy's Exchange Service Command, what we refer to as NEXCOM. The relocation of NEXCOM prior to the 1993 Base Closure Commission precipitated the closing of Naval Station New York, which negatively impacted my community, of course.
    In the spring of 1993 the Navy set about relocating these employees from NEXCOM, which was located on an Army base at that time—a Navy base in Staten Island—and targeted Virginia Beach, Virginia as the choice for relocation. The Navy alone proceeded to execute a lease for about 75,000 square feet of space in a vacant office building. When I inquired about the appropriateness of the Navy signing the lease, I was told that the Navy had the authority to sign, and this was communicated directly to me by the Administrator of GSA, the Honorable Roger Johnson.
    A full 1 year later, NEXCOM exercised an option in the lease and expanded its presence by another 18,000 square feet. However, at that point GSA recognized a deficiency in the authority, notified the Navy and my office, and said that the Navy didn't have the leasing authority, but because they had gone so far, GSA felt they had to provide a delegation of leasing authority retroactive to the previous year.
    I asked GSA to review the lease to determine the appropriateness of the provisions of that lease. I also asked the Navy to review the appropriateness of leasing space in a building owned by the former employee of the then-Secretary, now Secretary of the Navy. I pressed the Navy to respond to several concerns regarding this lease, and I asked GSA to review the business terms of the lease. At this point I wish to insert into the hearing record copies of the correspondence, the GSA analysis of this lease, as well as several articles that have appeared in the Staten Island Advance regarding this lease. This is the amount of correspondence that has been transacted.
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    This matter is now under review by the Department of Defense Inspector General's Office and the Department of Defense's General Counsel's Office. I am not pleased that these two Federal agencies have taken well over 2 years to complete their findings, but this delay will not diminish my interest in pursuing this matter.
    Now, I don't wish to belabor this point. I do wish to quote from the GSA analysis which was provided to my office, and which was extremely professional:
    ''The NEXCOM lease demonstrates the lack of knowledge about basic lease procedures. The NEXCOM officials ignored a basic concept involving the exercise of options. The contracting officer's memorandum and lease files are silent as to why the other two renewal options were not evaluated and priced, despite the fact that SFO contemplated 5-year renewals. There is no evidence that an appraisal was obtained in this case. The clauses in the lease seriously undermine the Navy's usual rights, and increase its exposure to unwanted liabilities in exchange for no benefits discernible in the file. In short, this lease is deficient in many respects, but the Government is now obligated, instead, for 5 or 3 years, to 10 years for almost 100,000 square feet of space that will cost the taxpayers over $16 million. On top of this, the successful bidder was the highest bidder, and there were only two bidders. The Navy chose to use a local broker to find this space, and that broker did not bother to advertise for space.''
    I believe that the point that they were referring to in terms of liabilities is that the Navy waived all liabilities for the building's landlord and assumed it themselves, something that, according to GSA and according to our General Counsel here, has never been done before.
    Finally, the Navy has once again entered into the leasing with a 45,000-square-foot lease for the Military Sealift Command, which is moving from the Military Ocean Terminal in Bayonne, New Jersey to space now in Camp Pendleton, Virginia. While I received a response from the Assistant Secretary of the Navy regarding this action, I have little confidence in this lease itself, given the woefully inadequate performance of the NEXCOM lease.
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    Finally, Mr. Chairman, I request that the subcommittee keep the record open to submit for the record the findings of the DOD Inspector General regarding the NEXCOM lease, as well as any other information on this matter.
    Once again, I came to this hearing not to pick on GSA; we did that, and their response and their analysis and the cooperation that we have received from them, once they admitted that there was a mistake that was made, has been outstanding, and we appreciate that. My frustration with DOD—now it is close to 2 1/2 years—is that they have overtaken this. We had asked DOD to be here as the final witness so that we could finally question what their findings are. This is not that complicated a matter. I would hope that our Department of Defense had handled matters that were a lot larger and a lot more complicated, that would allow them, after 2 1/2 years, to get some answers to a Congressional subcommittee. They were prepared to testify at a certain point, and then they were taken by surprise when we told them and counsel told them—and a Staten Island Advance reporter found out—that for a nonappropriated agency, NEXCOM, they had received $10 million in Congressional appropriations, something else we have asked them to investigate. They had told us they did not have to respond directly to Congress because they were a nonappropriated agency. They did have their funds appropriated for the move. This, apparently, a few days ago came as a complete surprise to the Inspector General's Office and the General Counsel's Office. They then told us that therefore, based on that information, they could not come to this hearing because they had to go back and review their findings, and that they would perhaps be able to answer our questions next week. This ''next week'' answer has been going for well over 2 1/2 years, Mr. Chairman.
    I know that's not the direct cause of this hearing. It does state the problems that we have when GSA delegates a lease to an agency that clearly is unfit, or has other reasons for wanting to enter into their own lease as opposed to working through GSA.
    I have grave concerns that if this is just one that I've picked up because of the parochial concern that brought it to my attention, and it is costing taxpayers, it's a deal—again, it's a 10-year lease; no advertising for space; they said they had the delegation of authority when they did not have the delegation of authority; they assumed liability for anything that goes on in this building, something that's never been done; and there is a relationship between someone in the Department of the Navy and the landlord that we should be able to get some answers forthcoming on.
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    Again, I appreciate your indulgence and ask that the record be held open. I also thank the indulgence of GSA for allowing me to vent that way.
    Mr. GILCHREST. Ms. Molinari, we appreciate your patience and persistence and determination in this. I can assure you on behalf of the other members of this subcommittee that we will have representatives of the Navy here, for you to come in directly, in a short period of time—I hope to do this before the recess—I think we can accommodate that.
    Ms. MOLINARI. Thank you, Mr. Chairman.
    Mr. GILCHREST. You can ask them directly, and if for some reason there is a hesitant motive on their part for whatever reason, I am sure we can get into a vehicle provided by GSA or this subcommittee, and drive to the Pentagon and ask them directly. But I think we will get to the bottom of this before the end of this session.
    Ms. MOLINARI. Sounds good to me, Mr. Chairman. I thank you very much for that.
    Mr. GILCHREST. Thank you for coming this morning.
    Mr. Traficant?
    Mr. TRAFICANT. Mr. Chairman, I would like to make one brief suggestion to this committee. I don't believe this committee should have to get in a van and drive to the Pentagon to get an answer on this. I believe the Pentagon should get their buns up here, Mr. Chairman, before we open up a process where there will be a hundred types of leases. And I want to comment Ms. Molinari here for her work on this. I think it highlights and shows a microcosm of the possibilities of things that can happen. I am very concerned about it. I think they should come here. I don't think the committee should be running up there to find them.
    Mr. GILCHREST. I just wanted to see the Pentagon. I've never been inside.
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    [Laughter.]
    Mr. GILCHREST. Thank you, Ms. Molinari.
    This morning, the first panel is Mr. David Barram; Mr. Paul Chistolini; and Mr. Jay Pearson, who will bring us a weather report from the Arctic.
    Mr. Barram?

TESTIMONY OF DAVID BARRAM, ACTING ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION; PAUL CHISTOLINI, REGIONAL ADMINISTRATOR, REGION III, U.S. GENERAL SERVICES ADMINISTRATION; AND JAY PEARSON, REGIONAL ADMINISTRATOR, REGION X, U.S. GENERAL SERVICES ADMINISTRATION

    Mr. BARRAM. Good morning, Mr. Chairman, Mr. Traficant, and members of the subcommittee. My name is Dave Barram and I am the Acting Administrator of the U.S. General Services Administration. I am pleased to appear before you today to discuss our plans for making the leasing program of the Public Buildings Service the best in the business.
    Since its establishment in 1949, GSA has been the Government's sole agent for leasing private office space. Today, the Public Buildings Service of GSA provides owned and leased space to over 100 Federal agencies. Leased space accounts for 48 percent of the total space in our inventory, and is used to accommodate about half of the civilian employees we house. We are the single largest manager of Federal leased office space, with 137.4 million square feet of leased space in the inventory at an annual cost of $2.4 billion. The Government's total commitment on our 7,108 leases—that is, the cost of our lease payments over the terms of those leases—is more than $13 billion.
    Of course, those lease payments are the cost of a service contracted out to private building owners. In fact, 90 percent of the total Public Buildings Service budget is contracted out. This year we will pay out $4.9 billion to private sector building owners, custodial and maintenance, security, construction and design firms. The remaining 10 percent of the budget goes to administrative, computer, and personnel costs.
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    We are clearly in an era of doing more with fewer resources. As a result of the Administration's commitment to downsizing, the in-house workforce of the Public Buildings Service has declined about 20 percent, from 10,000 to about 8,000, since 1993. Therefore it has become imperative for us to find new business approaches which will allow us more efficiently and effectively to satisfy the needs of our customers. Because our client agencies are also downsizing and trying to make do with decreased budgets, they need us to help them economize on real estate costs, including lease costs.
    In the past 2 years, through aggressive action with building owners over lease terms, escalations and property tax appeals, we have saved the Federal Government more than $300 million over the term of our leases, usually 10 years.
    We also anticipate that Government downsizing will lead to a reduction of our leased inventory and payments over the next few years. In fiscal year 1996, our leased inventory is projected to remain at around 137 million square feet. In fiscal years 1997 and 1998, the leased inventory is expected to decline by 2 million and 5 million square feet respectively.
    Fortunately, GSA has been experimenting for several years with bold new approaches to leasing that will enable us to manage this change. I will defer to Jay and Paul to describe the accomplishments of the folks in their regions in a few minutes.
    Earlier this year, we thought it was time to take advantage of those experiences everywhere we do business, so on May 24th, Public Buildings Service Commissioner Bob Peck and I announced the ''Can't Beat GSA Leasing'' program. Under the new ''Can't Beat GSA Leasing'' program, employees are freed from cumbersome procedures, complicated forms, and duplicative management reviews. I know that Commissioner Peck discussed this program with you at your hearing last Friday, the day after we all returned from our 2 1/2-day ''Can't Beat GSA Leasing'' conference in Chicago. I understand Bob briefed you fully on how successful that conference was. But if I may make a personal observation, I was very impressed with the skill, commitment, and enthusiasm of our GSA leasing specialists, managers, and technicians. They committed themselves to faster, more cost-effective service, and proved what I have often said, that the Federal worker is as hard-working and knowledgeable as any private sector employee.
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    During the conference we announced that on Columbus Day the General Services Administration will offer Federal agencies the option of leasing office space for themselves to meet their own needs. In the end, when agencies are given the option to choose, I expect most will stay with GSA. We certainly want them to, and we will actively market our experience and our other competitive advantages.
    But the new program and the challenge of competition will help GSA specialists focus better on timeliness and bottom-line results. Our GSA Office of Policy, Planning, and Evaluation and PBS are working out the guidelines under which we will offer choice to the agencies, while assuring that they will follow the requisite laws and policies and provide the information necessary to manage the Government's overall real estate holdings.
    As you know, as part of our new business approach during 1994 and 1995 we conducted Federal Operations Review Model analyses, FORM analyses, of all the major GSA business lines to ensure that we had the optimal methods of ownership, management, and operation. FORM primarily focused on efficiencies in the 10 percent of our budget devoted to our administrative staff. It basically did not address opportunities for efficiencies in process or economies in the other 90 percent of our lease budget. The FORM analysis showed that the cost-efficiency of our in-house leasing service delivery rivals that of private sector firms now. The analysis also indicated that privatizing the leasing function in full would increase costs, because the Government would lose the economies of scale realized from having GSA function as a central procurement agent.
    FORM did note that there are opportunities to realize greater savings from more aggressively leveraging our size. Our ''Can't Beat GSA Leasing'' program will help us better realize those economies of scale and better wield our purchasing leverage.
    We have awarded contracts for realty services to private sector commercial brokerage firms in two of our eleven regions. We have also begun a solicitation process for multi-regional commercial broker service contracts which will provide us with greater flexibility and improve our capability to maximize our existing personnel and budget resources.
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    We believe that contracts with private sector brokers have their place as a tool for our leasing specialists and managers to user in accomplishing their workload. We do not see an advantage in the wholesale privatization of our leasing function.
    In conclusion, we are well underway with our new business approach for the Public Buildings Service leasing program. The ''Can't Beat GSA Leasing'' program embodies the reinvention of GSA to a customer-focused agency by enhancing the competition of the leasing process and streamlining our customer care.
    Again, I believe that when agencies are given the choice to remain with GSA or do it themselves, this program—combined with the quality and expertise of our employees—will help us maintain and even increase our share of the Federal leasing market. Further, ''Can't Beat GSA Leasing'' will become a major part of GSA's contribution to the fulfillment of the President's promise to make our Government work better and cost less.
    Mr. Chairman, I would be happy to answer any questions which you or the committee may have about our leasing program. You may want to do that now, or wait until after Paul and Jay make some comments.
    Mr. GILCHREST. Thank you, Mr. Barram. I think we will have Mr. Pearson and Mr. Chistolini testify first.
    Mr. Chistolini, you're next.
    Mr. CHISTOLINI. Thank you, Mr. Chairman and members of the subcommittee. My name is Paul Chistolini, and I am the Regional Administrator for GSA's Mid-Atlantic Region, headquartered in Philadelphia.
    When I was here last, in March 1995, to testify before you, Mr. Chairman, we talked about some of the accomplishments that our Region had pursued and accomplished as a National Reinvention Region. At that time the chairman suggested that maybe GSA ought to take a look at out-sourcing some of its real estate functions.
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    I went back to Philadelphia and looked at your request, and also considered where my staffing was going. Over the past few years I have lost over 20 percent of my real estate specialists, and I have looked at the workload per specialist, which is increasing. So we decided that we could come up with a contract that we would put out on the street for competitive bid which would provide real estate services. The contract was advertised in the Wall Street Journal and other well-known publications. We have over 100 funds ask for solicitations. They came from over 20 States plus the District of Columbia. In the end, we had 12 firm offers that we wound up negotiating with.
    In February of this year we awarded a contract to LaSalle Partners of the Washington, D.C. are for real estate services for leases of less than 10,000 square feet. We had chosen 10,000 square feet for what I think is a very good reason; 75 percent of the leases in my region are 10,000 square feet or less, and they represent approximately 23 percent of the cost of my $180 million leasing budget a year. A lot of those smaller leases are also very intensive in terms of time for my staff. So I looked at this as an opportunity to dedicate the remaining resources to the bigger, more complex leases where more is at risk and where you're dealing with a different level of sophisticated developer or owner.
    So we have awarded a contract. We have only recently issued some task orders against that contract. The contract provides basically everything from taking it at the beginning to delivering the space through the build-out. The broker does not get paid until GSA fully accepts the space.
    The contract is also structured so that there are certain intervention points throughout the process where a contracting officer gets to see the progress, so that we wouldn't wind up with the types of conditions that Congresswoman Molinari described, where the Government gave away something when there was no need to do that.
    So we think we have structured a contract with enough safeguards in it. We have only issued the first series of task orders; in several months we would have some results where we could say, ''Based on these costs, here are the time frames these things take.'' It covers a rather large geographic area, the area of southern New Jersey, all of the State of Pennsylvania, all of West Virginia, the northern part of the State of Maryland, and most of the State of Virginia except for those areas around the Washington, D.C. area which are handled by our sister Region, the National Capital Region.
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    So to sum up, we have a contract in place. It will be several months before we have some definitive results. I look at it as a tool to augment the leasing specialists that we have. I was very pleased, as Mr. Barram talked about Chicago, that from my feedback from our regional staff out there, a lot of the things that we do as a normal matter of course, a lot of other Regions are starting to pick up, and that the professionalism that Congresswoman Molinari referred to—as having been done by one of my staff members—can be propagated throughout all the other Regions at the same level of professionalism.
    I'd be glad to answer any questions you have after Mr. Pearson reads his statement.
    Mr. GILCHREST. Thank you very much, Mr. Chistolini.
    Mr. Pearson?
    Mr. PEARSON. Good morning, Mr. Chairman. I am Jay Pearson, the Regional Administrator for the Northwest/Arctic Region, which comprises Alaska, Washington, Oregon, and Idaho.
    In October 1993, the Region's Public Service Real Estate Division was established as a Reinvention Laboratory. The reinvention efforts of the Reinvention Division resulted from the National Performance Review, an initiative of the Clinton Administration.
    Having real estate specialists closer to the customer helps to improve our efforts. The Northwest/Arctic Region has continued to shift personnel from our Auburn headquarters to our field locations around the Region to assist in enhancing the quality of communication and contact with our customers. Last year I testified before the subcommittee that Region X had reassigned nine real estate employees to the field. Since that time we have added three more to the field. In February of this year we received a letter from the National Transportation Safety Board commending Region X's Anchorage personnel for their assistance through a difficult move. And when the fires began to rage in Alaska this past June, the Federal Emergency Management Agency needed space quickly. Representatives of the Real Estate Division and the Federal Supply Service met with FEMA at 10:00 a.m. to discuss the agency's needs. By 4:00 p.m the same day the market survey had been completed, the lease awarded, the furniture delivered, and FEMA was in their space.
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    Without the staff being located in Anchorage, close to the customer, the type of service the Board and FEMA received would have been difficult.
    In 1994, Region X embarked on an ambitious program known as ''One-Stop Shopping.'' GSA nationally has initiated the Integrated Occupancy Services Program; Region X wholeheartedly embraced the concept because we believe it allows our customers to receive the benefits of the entire agency's expertise with the least amount of trouble and delays.
    One highly successful example of utilizing the Integrated Occupancy Services approach would involve the expansion of the Internal Revenue Service in Seattle and the subsequent need to relocate the General Accounting Office and the Small Business Administration rapidly. This 40,000-square-foot project was accomplished in 6 months, with all three agencies being fully operational throughout the moving process. We are currently involved in six new projects utilizing this approach.
    In addition to streamlining the internal processes, Region X Real Estate Division decided to establish the broker services contracts covering each of the four States within our Region. There is one primary motivating factor that led us to establish and utilize the broker services contracts; that is, the need to offer our employees the tools with which to enhance the quickness and efficiency of our leasing process. The regional broker services contract supplies realty specialists the flexibility to procure a variety of services to augment the work they perform by allowing them to order off a menu of services available through the contract. By utilizing the contract, realty specialists have the ability to perform many leasing steps concurrently. This has cut down on the amount of time that it takes to implement a lease.
    In Region X we don't consider our leasing program to be a standalone program. GSA Region X places its leasing program in the context of management of our entire building inventory to the maximum benefit of our customer and the taxpayer. As Federal agencies shift resources, change in size, and are required to move, GSA can best meet their needs by using a combination of leased and federally-owned space. It is critically important that GSA retain the flexibility to make quick decisions regarding housing of agencies, within both Federal and leased space, to accomplish our mission at a minimum cost to the taxpayer.
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    It is also important to point out that the leasing process is better and faster when the customer agencies and the GSA teams partner in a dedicated fashion. The smoothness of the aforementioned IRS/SBA/GAO moves was directly enhanced by building a partnership among all involved. Using the partnership approach is a preeminent factor in providing the managers and employees of my region with the ability to help other agencies fulfill their missions.
    It is a growing trend throughout GSA nationwide. I truly believe that by using the tools now available to us, and fostering the enhanced partnership that we now enjoy with customer agencies, you ''Can't Beat GSA Leasing''.
    Thank you for allowing me the time to speak to the committee.
    Mr. GILCHREST. Thank you, Mr. Pearson. Did you have a good winter up there in the northwest?
    Mr. PEARSON. It was a terrible spring in Alaska, with the fires. But it was fairly calm.
    Mr. GILCHREST. Any sign of Sasquatch yet?
    Mr. PEARSON. Only on television.
    [Laughter.]
    Mr. GILCHREST. Mr. Traficant, you can follow up on that question.
    Mr. TRAFICANT. Mr. Barram, I have a number of questions. I am going to put them on the record, but I want you to listen to the questions, and I would like to know how long it will take for you to respond in writing, with accompanying data, to this committee. That's the question I will ask of you upon my conclusion, after you hear the question. We have a tendency to ask a lot of questions under the 5-minute rule, and by the time the hearing is over and everybody leaves, we all forget. I want my questions answered in writing, with corroborating documentation. These are the questions.
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    You mentioned in your testimony that you are going to economize on real estate costs. Please explain the components of lease costs and what goes into determining the costs of doing a real estate transaction, especially a leasing transaction.
    The news release of July 12th contained a list of changes to current practices. This can't be GSA; one of the steps would allow award without negotiation, where appropriate. Please explain how that would work.
    How does GSA intend to take advantage of current leasing relationships—that is, extend, renew, succeed, renegotiate—and still comply with existing procurement law?
    The agency advocates elimination of mandatory technical reviews and utilization of market-based rent approaches. Please explain in detail those two items.
    What, if any, legislative changes will the agency recommend to accomplish the goals of working cheaper and faster, as alleged?
    Which agencies are the biggest users of this program? If those agencies decide to take up this generous offer of leasing authority, what will be the decline in money flowing into the Federal Building Fund, and what would that impact be? And have there been any cost estimates or scoring of that?
    Are there any recommended changes in scoring in looking at delegated lease authority?
    How can you and the agency guarantee that GSA will maintain its current employee levels? Could there be large-scale defections?
    What are the possible outyear impacts if the agency wishes, because of cost factors and the possibility of a downside to this, if they wish to return to more of a centralized operation?
    Has General Counsel's Office at GSA given you an opinion regarding the ability to voluntarily relinquish your statutory authority? If so, I would like you to submit correspondence and documentation of that.
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    How many personnel are in the Lease Contract Administration Division here in Washington, D.C. versus nationwide? What would you project the number to be in December 1996? What is the average grade of these workers?
    Please explain in detail the elements of the existing contracts with private sector broker firms. Exactly what do they do and how much do they charge our Government for those services?
    Now, many of these new recommendations are found in this National Performance Review report. The report labeled GSA as a monopoly, called for more competition. My question is, I guess, is that since GSA does not control the product price, the agency location, the amount of space requested, or even the quality of space requested, how is it to maintain that the GSA has been labeled a monopoly, and that label has been allowed to stand by GSA officials and professionals?
    During the National Performance Review at GSA, who was on this GSA review panel? I would like for you to supply any information you can with the names of those people who have come up with our whirlwind real estate changes here.
    Finally, in regard to waste, fraud and abuse, what deterrents, safeguards, parameters of operation are planned to be incorporated into the practice of this new delegated leasing authority? Or how many more NEXCOMs will we be meeting over, maybe driving to the Pentagon over?
    So my question to you, having placed these on the record, is how long will it take for you to respond in writing in detail to the committee for us to look at your answers?
    Mr. BARRAM. If I may do one thing, I will turn around in a second and see if I can get a good answer so that I can give it to you right now.
    While you're thinking about that, let me just make a comment, if I can.
    I am convinced that, as I sit here in July 1996, that we as a Nation, and you in Congress, don't expect to have no Government, but I think everybody wants a smarter Government. Here's what I think a smarter Government is as it relates to GSA.
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    We have to be as productive as we can in order to get at this ''work better, cost less'' idea. We have to find ways to be sure we know what we're doing and how to measure it and determine how to take individual responsibility for that, whether it be individual people or agencies.
    Second, the country is changing in every organization that I know about, private sector, nonprofit, Government, to have better sets of skills. I have talked at length with the leaders of our employee unions about the importance of my commitment to seeing the people of GSA increase their own skills so that they will be not just functional, but have a chance to flourish in the last part of this century and the next century. I think that means the ability to adapt to change and to be able to imagine what the future is going to look like, and be able to function in it.
    We have to make changes as an organization if we expect our people to make changes. What I would love to see happen, I would love for our people to be in great demand by this vaunted private sector that you have some skepticism about—and I understand that—but not want to leave, because we're doing such great work.
    You raised some very interesting questions this morning, in my opinion. I happen to think that I believe we're doing the right thing, but I think your questions are fair, and we'll answer them. Someone handed me a note to say that we would get these to you within a month. Is that okay with you?
    Do you want us to take longer?
    [Laughter.]
    Mr. TRAFICANT. Well, do you need more staff to comply sooner?
    [Laughter.]
    Mr. TRAFICANT. You're talking about eliminating staff so that you can be more efficient, and it will take you 30 days to respond to this humble person's questions? I think that's pretty extensive, quite honestly, but if that's all you can do—I'm sure you're not going to delegate the answers out to somebody.
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    Mr. BARRAM. Can you give me just a second?
    Mr. TRAFICANT. Fine.
    Mr. BARRAM. I would have said the same thing you said. But let me tell you the problem that we're going to have. The problem we're going to have is on the extensive amount of documentation that you're asking for.
    I'd be happy to try to get answers to you on your questions if you will let us provide you some of the documentation—we'll tell you when it's not there, and what we still have to get.
    Mr. TRAFICANT. That would be fine with me. That's up to the chairman. But let me just say this to you, over a period of several years most of these questions have been submitted from me, and have never been answered. I want them answered. Tell me when you can do it.
    Mr. BARRAM. What is next Friday? What day is next Friday? We will get you answers to as much as we can by next Friday, and tell you what the plan is for the rest of it. How's that?
    Mr. TRAFICANT. I defer to the chairman.
    Mr. BARRAM. Mr. Chairman, would that be all right?
    Mr. GILCHREST. First we probably should pick up a calendar so that we can determine what next Friday is. It's the 26th? That's been confirmed.
    [Laughter.]
    Mr. GILCHREST. A confirmed sighting, Mr. Pearson.
    I think Mr. Traficant has asked very honest and legitimate questions, and I think the only way for Government agencies, GSA included, to be efficient and competent and reflect the idea that Government can work well is for us to have the kind of oversight that is absolutely essential for that to take place.
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    I certainly would hope that it would not take longer than 30 days, and if it can take less than 30 days and some of the questions are complete and we can get those answers, I think it would be mutually beneficial to both sides.
    Any other questions, Mr. Traficant?
    Mr. TRAFICANT. No, Mr. Chairman.
    Mr. GILCHREST. Yes, sir. The son of a truck driver has a certain amount of presence in Congress.
    I have just a few questions that I'd like to run through.
    Mr. Barram, you said in the beginning of your testimony—I'm not sure if it was 1 million or 2 million square feet of leased space that would be—you would have 1 million or 2 million less square footage of leased space——
    Mr. BARRAM. By 1997 and 1998?
    Mr. GILCHREST. ——by 1997 and 1998.
    Mr. BARRAM. It's 2 million and 5 million, respectively.
    Mr. GILCHREST. It's 2 million and 5 million?
    Mr. BARRAM. Fewer, from our—137 million in 1996. In fiscal year 1997 and 1998 we expect it to go down by 2 million and by 5 million the year after.
    Mr. GILCHREST. Now, why is that? Is that because you're purchasing more, we're buying more, or there are fewer people——
    Mr. BARRAM. Because we're downsizing the Government. That's what it is.
    Mr. GILCHREST. And that reflects all of the various agencies?
    Mr. BARRAM. That we deal with, and it's our best guess. Of course, it's very difficult because we have been downsizing the Government for a little while here. You could ask, ''Well, why haven't we seen a reduction?'' There are a couple of reasons for that. One is that people tend to have a difficult time getting out of a space that they occupy; either they don't believe that they're really going to have to downsize, or—I shouldn't be speculating on what people think. We haven't seen that, but we are beginning to see it now, so that's what we're basing our estimate on.
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    Mr. GILCHREST. Did you give an estimate of the cost savings of that?
    Mr. BARRAM. Did I? I didn't in my comments.
    Mr. GILCHREST. Is there a ballpark figure?
    Mr. BARRAM. I don't think——
    Mr. GILCHREST. Anyway, there is going to be considerable saving, I would imagine.
    Mr. BARRAM. You know, we have increased by 26 million square feet over the last 5 years, and we have increased our rent, the money we've collected, by almost $1 billion. Two-thirds of that is due to the additional space, and one-third is due to increases in rent. So you could guess from that. Two million and five million are pretty small, relative to 26 million.
    Mr. GILCHREST. The idea that agencies will have the option to lease their own space—would they have the option to buy their own space? Is that also an option?
    Mr. BARRAM. That's not part of what we've been talking about. Our idea here is that we would decide, as a Government, whether there was existing federally-owned space available. If there wasn't, then we would discuss whether they wanted to lease it on their own, or whether they—making a wiser choice—would use our services to lease it for them.
    Mr. GILCHREST. Would this be an annual contract for the different agencies?
    Mr. BARRAM. We don't know that yet. We haven't worked that out yet. My guess is that we would like to have it be more specific regionally, and not necessarily with one whole agency.
    The work takes place between somebody in Jay's Region and the Department of the Interior in Jay's Region. There are relationships from the Department of the Interior in his Region to the headquarters, but my guess is that the real work is done out there where people know what's going on.
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    Mr. GILCHREST. Now, if they choose the option of leasing their own space, how do you control your dollar outlays? Does it come out of their budget? Does it come out of your budget? How would that work?
    Mr. BARRAM. Well, it comes out of their budget. They pay us for the space that they rent. So presumably, if they rented it straight from a lessor, they would pay the lessor directly.
    Mr. GILCHREST. If the program proved to be unsuccessful, would it be—I assume that his is sort of an experimental thing where you're likely not to try it nationwide, but Region by Region.
    Mr. BARRAM. No, we expect to try it nationwide. As I say, we haven't put all the guidelines together, but the guidelines for this are going to have to include following all the laws and regulations that exist, that should exist. And nobody should be able to do anything that is unlawful or——
    Mr. GILCHREST. Do you then always retain the option to say, ''Sorry, you can't lease your own space now, you haven't met the criteria''?
    Mr. BARRAM. We don't have it figured out, but I would assume that would be the case.
    My sense is that—our thinking today is that we would orient this around a regionally-specific delegation, at a time. But we need to work all those things through a little bit more.
    Mr. GILCHREST. Could this possibly open up more situations? I would guess that as you're going through this to dot all the Is and cross all the Ts, that you would create a situation that we wouldn't further have more situations like Ms. Molinari described.
    Mr. Chistolini, in this outsourcing that you describe, it sounds like an interesting program that you have initiated. Have you ever done this before? Have any other regions ever done this before? And now that you've started some of these task orders, are they for a contracted period of time, 6 months or a year?
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    Mr. CHISTOLINI. Have we ever done it before? We've done pieces of outsourcing before. We've contracted for market information; we've contracted for appraisal data; we've contracted for the management of the build-out and the move-in. In our Region, this is the first time that we've put it all together. I believe in the late 1980s GSA in a couple of other Regions, or at least in one other Region, had some sort of broker contract, but I don't know the specifics about that.
    The task orders that we have issued are for small leases. I believe they are for 5,000, 6,000, 7,000 square feet, in some remote areas.
    Mr. GILCHREST. Is ''remote areas'' in the mid-Atlantic States?
    Mr. CHISTOLINI. When you travel to southern Virginia and some parts of West Virginia, there is a lot of travel time involved, and sometimes all the——
    Mr. GILCHREST. You have task orders of 5,000 to 7,000 square feet. I guess this represents a small building?
    Mr. CHISTOLINI. Yes.
    Mr. GILCHREST. How many of those orders are there of 5,000 to 7,000 square feet? Ten? A hundred?
    Mr. CHISTOLINI. Well, so far we've only issued a few. We anticipate that under this contract we could do as many as 25 to 30 per year.
    Mr. GILCHREST. I see.
    Mr. CHISTOLINI. And part of our process was to look at a window of which leases were coming up in different time windows so that we could let the prospective bidders know what they would be getting involved in. They would know what the geographic dispersion was, because this contract means that they have to provide all the labor, the travel, everything that's involved with this.
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    Mr. GILCHREST. How long did you say the contract is?
    Mr. CHISTOLINI. The contract is a 1-year contract with two 1-year options.
    Mr. GILCHREST. Mr. Pearson, is there anything similar in your area with outsourcing?
    Mr. PEARSON. Yes. The brokers contract that we have, we have used 63 times since its implementation last year for various functions. One of the primary ones is the market surveys that we do. An example of that would be the market survey that we did for NOAA in Alaska where they needed four small offices around Alaska, and we used the brokers contract because to send people out to do market surveys in each of those four areas, for us, when there are people there who understand the market, is more cost-effective.
    Mr. GILCHREST. Did both of you go to this Chicago meeting?
    Mr. CHISTOLINI. Yes.
    Mr. PEARSON. Yes.
    Mr. GILCHREST. Was this an issue that was discussed and shared, this information about resource contracting? Was that on the agenda?
    Mr. PEARSON. It was part of the agenda.
    Mr. GILCHREST. One last question. Mr. Pearson, you said there is a number of agents that have been assigned as real estate agents to the field.
    Mr. PEARSON. Yes. We have four brokers contracts, one for each of our four States. Two——
    Mr. GILCHREST. I'm not quite sure what you meant when you said that you've had people reassigned, or assigned, to the field as real estate agents. I just wondered what they did before, and who is doing——
    Mr. PEARSON. They did it centrally in Auburn rather than go out to Boise or over to Spokane or down to Eugene. Now we have people in those areas that can learn the markets and become more effective at what they do.
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    Mr. GILCHREST. So I guess they would have a lot of travel time? Is that the case?
    Mr. PEARSON. They used to have a lot of travel time.
    Mr. GILCHREST. And now they don't have a lot of travel time?
    Mr. PEARSON. Now they are located in the area in which they work.
    Mr. GILCHREST. I see. So they moved their families from one State to another?
    Mr. PEARSON. That's what they did.
    Mr. GILCHREST. I guess they went, if they wanted their job.
    I don't have any more questions. I appreciate your coming this morning. I think Mr. Traficant may have some follow-up questions.
    Mr. TRAFICANT. Yes. Number one, Mr. Chistolini, what, if any, involvement did your Region have in the NEXCOM lease?
    Mr. CHISTOLINI. We were involved after it became known that the Navy had executed this lease. As Congresswoman Molinari mentioned, one of my staff members did the analysis. They actually provided a piece of paper to the Navy that analyzed the lease.
    Mr. TRAFICANT. Did you support that lease in writing?
    Mr. CHISTOLINI. I believe—I don't remember the letter. I believe the Region supported that the economic deal was within the market range.
    Mr. TRAFICANT. Was there any notice of the fact that there was really very little competition on it, that there were no bids placed?
    Mr. CHISTOLINI. That was all highlighted in the Region III realty specialist's report, that there were only two bidders, that it was done through a local broker.
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    Mr. TRAFICANT. At any time in reviewing this lease did the GSA, through your Region, in citing these shortfalls, make any report or recommendation that this process should be stopped, that it should be submitted for competitive bidding and/or to correct the deficiencies?
    Mr. CHISTOLINI. I think it's important to understand here that for the first phase of that lease, the 75,000 square feet, the Navy had already executed it before GSA knew about it. GSA became involved, became really aware of it, when they were trying to exercise an option, and then the question of whether a nonappropriated account has its own leasing authority came up.
    Mr. TRAFICANT. Mr. Chistolini, on what authority did the Navy go ahead and effect a lease that was clearly under the responsibility and jurisdiction of GSA, without the GSA questioning it or at least bringing it to the committee?
    Mr. CHISTOLINI. I think that's a question best answered by the Navy.
    I would point out one thing. In October 1994 the GSA Deputy Administrator at the time, Julia Stasch, wrote to the DOD IG asking for a copy of the report to the Secretary of the Navy. GSA never received any of the information, just as Congresswoman Molinari has not received any of the information.
    Mr. TRAFICANT. See, my concern is that perhaps there was an element in the GSA that was so intent on going out with all these new changes that they allowed the process to take place without intervention, even though at some particular point there were serious questions raised into how this was applied.
    Mr. CHISTOLINI. No.
    Mr. TRAFICANT. Second of all, I would like to know in writing from you about your experience with broker contracts, those that are in place in your Region, what are the costs of those particular contracts, and how their development in any way differs from any other private sector activity.
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    I would like to know, further, from all three, on the basis of your testimony, how this change is going to save time and money. Be specific.
    Finally, Mr. Pearson, there's an old saying that ''if something's not broke, don't fix it.'' What's broke at GSA, from your Region position? Why the need for change?
    Mr. PEARSON. We have been in the process of change because we were a Real Estate Reinvention Lab, and we have found that in fact our employees, our real estate specialists, work more effectively under a less sort of ''oppressive system'' of being able to do their jobs effectively on their own, without multiple layers of review. We do have peer review involved with what's happening, and we have an open door policy with our attorney's office to make sure that the laws are followed, that the regulations are followed. And it's working better than it worked before.
    Mr. TRAFICANT. Okay.
    Maybe, then, in closing, Mr. Chairman, no one wants a boss. I certainly don't want one and you don't want one. You're sort of like a boss.
    I just want to know one last thing that you could submit. If all this goes through, this free-for-all where we throw out the ball, no one has an oppressive boss and everything and everything satisfies everybody and we're all happy, what Appropriation Committee do these respective delegated real estate lease arms go to for funds? Do they go to Treasury and Postal? Does the Navy start going to Defense? Does Interior go to—do you know what I mean? I would ask you to answer that briefly. What do you envision, or what will it be?
    Mr. CHISTOLINI. I would expect, having once worked for a client agency of GSA, the Department of Defense, that agencies would continue to go to their same Appropriations Committee, that the same budget function codes that now include the amount of rent money they pay to GSA will include any money that they would pay for any leases that they would have under this delegation program. So if you were looking for that type of information, you could readily find that from the different Appropriations Committees that the different agencies report to.
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    Mr. TRAFICANT. Just one last thing. What about the Federal Buildings Fund? How will that be impacted by this broad-based appropriation process?
    Mr. BARRAM. We will answer that as part of the set of questions that you asked.
    But remember that we are——
    Mr. TRAFICANT. It's a tough one.
    Mr. BARRAM. It's a tough question in general, the Federal Buildings Fund. Remember, we're expecting that we're going to keep this business.
    Mr. TRAFICANT. Thank you, Mr. Chairman.
    Mr. GILCHREST. Thank you, Mr. Traficant.
    I have just two quick questions.
    One, how are your careers going? I was just wondering how things were going out there.
    Mr. BARRAM. These guys are doing a great job.
    Mr. GILCHREST. Are your expectations being reached from the time you left high school through college to this point in your life?
    Mr. PEARSON. I was supposed to be a great actor by this time.
    [Laughter.]
    Mr. GILCHREST. I hope you're in a local theater guild or something out there.
    Mr. PEARSON. Sometimes I am.
    Mr. GILCHREST. That's good. That's great.
    Mr. Chistolini?
    Mr. CHISTOLINI. Well, if I could have hit a curve ball in high school, I probably would have had a different career.
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    Mr. GILCHREST. You would have been with the Philadelphia Phillies by now.
    Mr. CHISTOLINI. But I am very proud of what the people are doing in the Region.
    I would like to submit something for the record. I recently received a letter from one of your esteemed colleagues, Congressman Kanjorski, which was directed to Administrator Barram, and it talked about some of the points you raised, about a very complex leasing transaction done by our staff—in fact, the staff member is here today, and I thought that if you had questions about Chicago, you might want to have someone who was more involved there than I was. But it was a very complex transaction involving the U.S. Courts, a private developer, a private construction company, and the Postal Service. It dealt with restoring a historic property on the National Register, consolidating Government agencies within the central business district, and at a very good price. Those are the kinds of transactions that I think I would prefer to use my staff on, the things that are more complex, things that have a longer continuity to them, that require more coordination, and that we feel we have better control over.
    Mr. GILCHREST. Thank you.
    Mr. Barram, you didn't answer yet. Did you want make a comment?
    Mr. BARRAM. If I could have thrown a better curve ball——
    [Laughter.]
    Mr. BARRAM. My career has been in the private sector for a long time. I have had a fantastic experience in Washington, very interesting. It's not something that I will do forever, however. But I am very excited about the things that we're doing at GSA because they are both fundamental to the chance for Government to be good, and I hope they will be models for other agencies as well. I do not have any interest in presiding over an organization that lets waste, fraud and abuse occur. I do, however, think that the only way for Government or for any organization to be good is for people to know what their responsibilities are, to take that responsibility, and be held accountable for it. That's what we're trying to do with ''Can't Beat GSA Leasing'' and not only that, but we want to do this with every part of the organization so that if we're good, you use us; if we're not good, then why should we exist?
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    Mr. GILCHREST. Thank you very much.
    Our last question, which you don't have to answer at this point but I think Mr. Traficant and I and the other members of the subcommittee would like to do our best to ensure that this situation in Norfolk that Ms. Molinari described is not duplicated in any way, shape, or form by any other agencies, and certainly not by the Department of Defense.
    So on behalf of myself and the ranking member, we appreciate the time you spent here with us this morning. Thank you.

    Mr. GILCHREST. Our next witness is Mr. J. William Gadsby, Director of Government Business Operations Issues, General Government Division of the General Accounting Office.
    Good morning, Mr. Gadsby. Welcome.
    Mr. GADSBY. Good morning. I brought to the table with me——
    Mr. GILCHREST. Can you hold up just one second? I want to yield just very quickly to Mr. Traficant.
    Mr. GADSBY. Sure.
    Mr. TRAFICANT. Mr. Chairman, I recommend to this committee that we request an investigation of that naval lease, NEXCOM, and that we do everything possible to investigate it from our position of oversight, and to cause to have investigated, to the jurisdiction of other committees in this body, those that have oversight, a review of what happened there. I would ask unanimous consent that we would in fact request an investigation of NEXCOM and any other related activities that may be associated therein.
    Mr. GILCHREST. Without objection, so ordered. Mr. Traficant, you have my complete support on that request, and I look forward to working with you on that.
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    Mr. Gadsby?
TESTIMONY OF J. WILLIAM GADSBY, DIRECTOR, GOVERNMENT BUSINESS OPERATIONS ISSUES, GENERAL GOVERNMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY THOMAS KEIGHTLEY
    Mr. GADSBY. Thank you, Mr. Chairman. I brought to the table with me Tom Keightley. Tom has been the key person on our staff looking at the FORM efforts of GSA, and he will be with me to answer questions related to that.
    I have a relatively short statement. I am going to summarize it, and I would ask that my whole statement be included in the record.
    Mr. GILCHREST. Without objection.
    Mr. GADSBY. Mr. Chairman and Mr. Traficant, we welcome this opportunity to appear before you today to provide our observations on GSA's implementation of the Federal Operations Review Model, as well as to discuss our previous recommendations on improving GSA's leasing process.
    As agreed with the subcommittee, our role in reviewing the FORM process has essentially been limited to monitoring that process. To carry out that role, we reviewed the final FORM reports prepared by GSA for the initial analysis of all of the business lines, seven IG business line reports and several other reports that were prepared by the IG.
    On the basis of the limited work that we did, we support the IG's view that while GSA's implementation of the preliminary phase generally followed the prescribed FORM process, it contained a number of weaknesses related to the consistent application of assumptions, the sufficiency of relevant data, and the appropriateness of certain cost estimates, as well as certain other financial calculation errors.
    Also, the IG's observation that the data in the initial FORM analysis report should not be relied on as the primary basis for making final decisions about privatizing or outsourcing specific business lines seems reasonable to us, particularly since phase one was to be followed by a second, more in-depth analysis.
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    Despite these weaknesses, the FORM process appears to have aided GSA in better understanding its business lines and the marketplace. We are encouraged by GSA's ongoing reform efforts, especially those related to streamlining the Federal leasing process. In recent years, GSA has become increasingly dependent on leasing to satisfy Federal space needs, and now spends over $2 billion a year for leased space.
    Our February 1995 leasing report showed that GSA's highly prescriptive and inflexible leasing process did not enable it to respond quickly enough in today's dynamic commercial real estate marketplace, and it impeded GSA's ability to get the best available leasing values.
    Accordingly, we made several recommendations to GSA that were aimed at simplifying and streamlining the leasing process, making it less costly and less time-consuming, more responsive to Federal agency needs, and a better value for the taxpayer. GSA generally agreed with the overall thrust of this report and our recommendations, and said that it would address them as part of its ongoing effort to reform its real estate program, which they are now doing.
    I wanted to mention, Mr. Chairman, that this morning I did review the statements of Mr. Barram and the two Regional Administrators. Many of the actions that they refer to deal directly with the problems that we discussed in our leasing report, which was issued in 1995.
    Another observation is that Mr. Pearson in his statement referred to the excellent service provided to different agencies, including the GAO, in conjunction with the move in Seattle. I called our real estate people this morning to get their opinion on that statement, and they agreed with the statement that was made by Mr. Pearson—namely that we did get very good service on that move.
    In conclusion, Mr. Chairman, we believe GSA is headed in the right direction. However, there are inherent risks involved in making any major reform. GSA needs to be able to show that any reform it proposes will involve only acceptable risks, improve mission support services to Federal agencies, and provide a net cost savings to the taxpayer. To do this, GSA will need good performance data, adequate benchmarks, and effective oversight and measurement systems for their efforts.
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    That concludes my summary. We will be glad to answer any questions you may have, Mr. Chairman.
    Mr. GILCHREST. Thank you, Mr. Gadsby.
    Mr. Traficant?
    Mr. TRAFICANT. I have several questions that I will submit and you can respond to them in writing.
    I want to thank you. From what I understand, you have met on many occasions with members of the staff of this committee over the years, and that has been very helpful to us in helping us to provide oversight, so I just wanted that on the record today.
    Thank you, Mr. Gadsby, and Thank you, Mr. Keightley, and we thank GAO for the things that you have done. We will look at your report and those questions will be submitted in writing.
    Thank you, Mr. Chairman.
    Mr. GILCHREST. Thank you, Mr. Traficant.
    I have just a couple of quick questions.
    Number one, where did you call out west this morning? To Washington?
    Mr. GADSBY. I didn't call out west. It's too early to do that.
    [Laughter.]
    Mr. GILCHREST. I was going to say, it was about 3:00 o'clock in the morning there.
    Mr. GADSBY. But I did call the people in GAO who were involved with GSA in the activities in Seattle, and they were very complimentary of the service that the GSA people did provide them in conjunction with that move.
    Mr. GILCHREST. You mention on page 3 of your statement that ''the idea of privatizing small lease acquisition services was not derived from an analytical process, but from a suggestion from PBS management.'' Who in PBS suggested this idea?
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    Mr. GADSBY. I don't know the answer to that question. I don't know if Mr. Keightley knows.
    Mr. KEIGHTLEY. That was a finding of the GSA IG, and at the time we did not follow it up to determine which individual made the recommendation.
    Mr. GILCHREST. Do you think it's a good recommendation?
    Mr. GADSBY. The recommendation relating to——
    Mr. GILCHREST. Privatizing small lease acquisitions.
    Mr. GADSBY. The small lease acquisitions, in fact, the whole effort of streamlining or privatizing either small or large lease acquisitions is one that we feel needs to be looked at carefully. GSA needs to move cautiously on that, and I think they need to collect data in support of examining whether those delegations are working for the GSA and are in the best interest of the taxpayer.
    Mr. GILCHREST. Is the process, then, which Mr. Chistolini is now undertaking—is that a prudent way to proceed, in your judgment, to outsource those smaller leasing projects?
    Mr. GADSBY. We think that if you are going to outsource, those would be good ones to outsource. The volume of small leases is substantial. It represents, as I think he said, about 75 percent of the total lease volume, but only about 25 percent of the cost. I think that the notion of concentrating their in-house activity on reviewing those major leases that have much more substantial costs is probably a prudent approach.
    Mr. GILCHREST. I know you weren't prepared to testify about this, but do you have any recommendations about how we could eliminate any duplication of the problem that Ms. Molinari described?
    Mr. GADSBY. I wouldn't have any specific observations on that, Mr. Chairman.
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    Mr. GILCHREST. Well, gentlemen—you don't have to travel back to Washington State? You're here in D.C., I would guess?
    Mr. GADSBY. Very much so. We're here in this Washington, yes.
    [Laughter.]
    Mr. TRAFICANT. Mr. Chairman?
    Mr. GILCHREST. I yield to Mr. Traficant.
    Mr. TRAFICANT. One more question. You can submit an answer in writing. On the larger leases, there aren't as many and they can be focussed on, but these smaller leases, it's pretty hard for our committee to provide oversight. On the large number of leases that would be small by nature, please respond to what the potential is for providing oversight by the committee to curtail waste, fraud and abuse, and what some of the safeguards are that we might employ.
    [Information received follows:]

    [Insert here.]

    Mr. TRAFICANT. Thank you, gentlemen.
    Mr. GADSBY. We will respond.
    Mr. GILCHREST. Thank you, Jim.
    Mr. Gadsby, Mr. Keightley, thank you very much for testifying this morning.
    Mr. GADSBY. Thank you, Mr. Chairman.

    Mr. GILCHREST. Our next panel will be Mr. Harry Dawson, National President, GSA Council of AFGE Locals, Fort Worth, Texas. Mr. Dawson is accompanied by Mr. Chandler, Leasing Specialist, GSA.
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    Welcome, gentlemen.
TESTIMONY OF HARRY DAWSON, NATIONAL PRESIDENT, GSA COUNCIL OF AFGE LOCALS, FORT WORTH, TX, AND DARRELL N. CHANDLER, LEASING SPECIALIST, U.S. GENERAL SERVICES ADMINISTRATION
    Mr. DAWSON. Good morning, Mr. Chairman——
    Mr. GILCHREST. Good morning, Mr. Dawson.
    Mr. DAWSON. ——and members of the staff, howdy.
    Mr. GILCHREST. That's a Texas term. Any relatives that fought in the Alamo?
    Mr. DAWSON. Pardon, sir?
    Mr. GILCHREST. Do you have any relatives that fought in the Alamo?
    Mr. DAWSON. Distant.
    Mr. GILCHREST. Distant.
    Mr. DAWSON. Distant relatives. It's argued in Texas that we are all distant relatives and descendants of those who fought in the Alamo.
    Mr. GILCHREST. It's a good thing to be a part of.
    Well, welcome, Mr. Dawson, and you may begin.
    Mr. DAWSON. Mr. Chairman, members of the committee and staff, we are honored and privileged to appear before this committee on behalf of over 5,000 of the remaining GSA–PBS employees we represent. We applaud the committee's interest and, equally noteworthy, the work of the committee's hard-working staff.
    We began our participation in the FORM review and the National Performance Review to make GSA more efficient and less expensive to the taxpayer. We support the NPR principles of dollars and sense—tax dollars and common sense. We sought to bring a different, more objective approach to the FORM process. We publicly endorsed the changes which reduced costs to the taxpayer and which made common sense.
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    Through actual participation on the FORM team we saw the manipulation of data, suppression of overhead information, and endorsement of illogical assumptions to manipulate data into predetermined results. Our observations were later supported by GSA's own internal IG audit.
    We reviewed the Arthur Andersen FORM attestation letter, which was watered-down to nothing more than a simple confirmation of the process in place of data confirmation. Arthur Anderson could not and would not confirm GSA's numbers, even though the Arthur Andersen Company provided some of the assumptions resulting in those numbers. In the area of lease administration, we learned NCI's aerial easement leases in Washington, D.C. and Dallas, Texas were used as the benchmark to compare with GSA's lease administration of buildings.
    With me today is a realty specialist with over 30 years' experience with GSA who was on the PBS Commercial Broker FORM analysis team, to answer questions the committee might have regarding the Commercial Broker FORM analysis. The FORM study cost GSA several million dollars and still did not provide GSA with the desired results tow arrant converting GSA into a strictly oversight agency.
    There is only one authorized legal process available to privatize, and that is the A–76 procedure required by law. We have seen directives from this committee and commitments from GSA to comply with A–76; however, an in-house A–76 study appears to have been replaced by public announcements to award contracts with specific dates. The delegation of leasing authority fails the tax dollar and common sense test, as well.
    Centralized lease procurement by enactment of the Public Buildings Service Act of 1949 made GSA the Government's landlord, instead of over 200 separate individual agencies literally competing with each other at taxpayer expense. It gets even worse. Upon closer examination, the opportunities for fraud, waste and abuse erupt on an uncontrollable national scale.
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    Without even knowing what is involved, many agencies tend to jump to the conclusion that they can acquire space cheaper and faster without the needed experience or staff to acquire space.
    GSA has, for 45 years, met the public need and downsized to the current bottom level of approximately 16,000 FTE. Every known indicator shows additional disruption and added costs to the taxpayers with delegating out. The most obvious example lies in GSA's central clearinghouse ability to backfill vacant space.
    Currently, an agency can vacate GSA-acquired space with 120 days' notice. This vacant space reverts to GSA inventory, to be backfilled or bought out. If agencies acquire their own space, they execute the lease and are stuck with the results for the term of the lease. Their knowledge of the local market and needs of other agencies cannot compare to that of GSA.
    We strongly believe, based on the experiences of those who actually perform the work, that shifting delegation to other agencies creates more problems and solves nothing. Change for the sake of change, without cost benefit, contradicts both the NPR and the public trust.
    There are other serious contradictions involved as well. If the stated objective is to increase customer service and become the provider of choice, downsizing becomes ''dumbsizing'' if the costs to the taxpayer increase.
    In fairness, GSA has attempted to empower and encourage realty specialists to work more efficiently by assuring management support when they take reasonable risk and speed up the process.
    This was the purpose of the Chicago meeting last week, attended by over 700 employees at a cost close to a million dollars. Our concern was the cost justification to support a million dollar ''pep rally'' providing minimal substantive changes. Eight months ago, the PBS Commissioner projected a deficit below necessary funds required to pay salaries. This clearly demonstrates the fact that PBS enjoys and benefits from self-imposed bad accounting practices. GSA's public announcements regarding privatization and the delegation of leasing authority to other agencies disregarded their statutory duty to bargain prior to implementation.
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    Our objectives, as the elected representative of public servants at GSA, are simple: propriety in the application of tax dollars and common sense. We believe GSA can and should reduce its central office overhead by moving the already-identified 240 overhead positions into productive work. We believe GSA can and should seek legislation to improve its operations.
    In closing, we would respectfully request this committee to consider GSA's inventory of talented professional employees. We continue to support cost-effective changes, while we oppose misrepresentation and misuse of the NPR as an excuse to waste tax dollars and eventually annihilate GSA.
    Thank you again, sir, for the honor and privilege of appearing before you. Mr. Chandler, as I stated earlier, is available and has a statement which we request be put into the record regarding his participation in the FORM, and then we will be happy to address any questions the Chair might have.
    Mr. GILCHREST. Thank you very much, Mr. Dawson.
    Welcome, Mr. Chandler. Did you want to make a statement now?
    Mr. CHANDLER. Yes, sir.
    Mr. CHANDLER. Mr. Chairman, members of the committee, my name is Darrell Nelson Chandler. I have worked 30 years as a realty specialist for the General Services Administration, as a front line worker with hands-on experience on GSA's commercial broker function. In 1995, I participated in the FORM study as the AFGE representative to the commercial broker business line.
    To my knowledge, another GSA person who assisted me, and I were the only people on the FORM analysis team with both recent and long-term hands-on experience with the working level of the commercial broker business line. Since the conclusion of that FORM analysis I have been privy to numerous letters, press releases, and public statements regarding the FORM study results. I have found some of those statements, including certain statements made to this committee, to be lacking in candor and somewhat confusing as to the applications of the FORM results. I offer my help to this committee to unravel some of the confusion.
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    First, please do not be misled as to the results of the FORM study. The bottom line, without combining various numbers to get specious results, is that the FORM analysis shows a savings of between $9 million and $12 million by keeping the leasing function of the Government in GSA. The $9 million to $12 million in savings is actually very conservative and should be more like $96 million. The $9 million to $12 million figure was predicated on assumptions by the consultant to the FORM study, the Arthur Andersen Company, that private industry could provide the leasing process for a 3 percent commission. Andersen also concluded that the 3 percent commission could be discounted to a 1.5 percent commission because of the Government's volume of business.
    On March 14, 1995, I submitted a full study using Arthur Andersen's own data, and further confirmed by BOMA data, showing that the Andersen Company's assumptions were incorrect and that it would cost $51 million more to privatize the leasing function. Furthermore, a test to privatize the leasing function was done in Region III, Philadelphia, in early 1996. The test further showed that the Andersen Company's assumption of a 3 percent commission, discounted down to 1.5 percent, was not realistic. The Region III test, which is an actual contract based on competition, showed a brokerage commission equivalent to 10 to 20 percent, depending on the value of the lease rate in that contract.
    Using a very ultra-conservative commission rate of only 6 percent reveals a savings of $96 million by keeping the leasing process in GSA when the 6 percent rate is placed within the FORM format.
    The main areas that were ignored by the Andersen Company's assumptions were:
    One, the volume of leases are not in a single city, but are actually scattered throughout the 50 States;
    Two, private industry data is void of the wrap-around laws and regulations imposed on GSA;
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    Three, private industry data was based on what is called ''rentable square footage'' as opposed to GSA's net usable square footage, which results in a 15 percent higher rate. GSA has since gone to a rentable measurement, but the data in the FORM study was used as being net usable; and
    Four, private industry is not subject to the liability of protests, contract appeals, and lawsuits over Congressionally-mandated programs, as is GSA. The Region III contract included provisions for private industry acceptance of the Government's liability, and thus the cost increased substantially.
    A copy of the March 14, 1995 study, complete with hard data as opposed to assumptions, is available to this committee.

    I am very concerned over erroneous statements to the effect that the FORM analysis indicated potential savings by contracting some acquisition and administrative services, including contracts for less than 10,000 square feet of space. As a participant on that FORM analysis team, I consider such statements to be misleading. That is why I refused to sign the final product, despite several attempts to have me sign it.
    The FORM study was conducted to analyze the leasing process as a whole, not in fragmented parts. It was only after it was shown that it was more economical to keep the real estate function within GSA that steps were taken to look at fragmented parts of the process. As an experienced employee, I knew the data being used was faulty and biased. The participants from the IG Office also questioned the data and assumptions.
    It should also be noted that in late 1995 and in early 1996, a blue ribbon study within GSA showed approximately 240 overhead positions that could be channeled into job-related productive work. Such a move would reduce overhead and render GSA's commercial broker function even more on the plus side.
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    To my knowledge, no action has taken place to implement the recommendations of that study. I now find it difficult to believe that GSA would initiate steps to downsize the agency, and then use downsizing as the excuse that work must now be contracted or delegated. Mr. Dawson and I have long contended that the 240 overhead positions could be converted to direct productive work, thus eliminating any thought of contracts or delegations.
    GSA's proposal to delegate the leasing process to other Government agencies also concerns me. The FORM study shows that such a delegation would not be cost-effective, and only transfers the cost from GSA to other agencies. In reality, delegation would cost more because it would transfer a highly technical function from experienced hands into hands with little or no experience.
    Based on my 30 years' experience, I would expect many more protests and lawsuits against the Government if such a delegation took place, especially in light of GSA's promise in Chicago, that GSA would not train nor help employees of other agencies who choose to accept the delegation.
    I further question whether Congress would get the same oversight it now enjoys over laws and policies passed by Congress if the function were delegated to dozens of agencies instead of being centralized in GSA. History has taught me that programs of interest to Congress are watered down when delegations are given to other agencies. Congress would no longer have a central point of control and oversight.
    I compliment GSA for recent efforts to eliminate the red tape associated with leasing. The employees of GSA have pushed for such actions for years. The elimination of red tape will make GSA employees even more cost-effective and timely which will, again, eliminate the need for contract delegations.
    If there are any questions, Mr. Dawson and I will gladly try to answer them. Thank you for this opportunity to supply input on behalf of the GSA employees.
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    Mr. GILCHREST. Thank you very much, Mr. Chandler.
    Mr. Traficant?
    Mr. TRAFICANT. Mr. Chandler, yes or no, in your opinion is the FORM study so faulted that we here in Congress should not rely on it?
    Mr. CHANDLER. I really can't answer that, Mr. Traficant, as far as yes or no. I would answer that it is faulty to the point that I would not rely on the small amount of results—those results that show in GSA's favor—of keeping the real estate, that it should be expanded, or more than is shown on the FORM study.
    Mr. TRAFICANT. You mentioned in your testimony that you were one of two with experience at that particular FORM study. How many in total were there?
    Mr. CHANDLER. There were approximately 15 people involved in the process.
    Mr. TRAFICANT. Mr. Dawson, many times they say that the workforce is always opposed to change. I listened to your testimony very carefully, and what I have ascertained so far is that I haven't found anything to be broken, but nevertheless we're going to fix it; we're talking about change for change's sake.
    Several questions. Number one, are you surprised at what happened with NEXCOM, as you have heard it unravel here today?
    Mr. DAWSON. Not at all, Congressman Traficant. It emphasized on a larger scale several other instances that we are familiar with, and I would offer some examples in that area of a lease administration contract in Region VII for $0.34 per square foot, awarded and utilized, when the in-house cost study showed exactly half that, of $0.17 per square foot. A lease acquisition some 2 years ago in Baton Rouge, Louisiana contracted out to the Roger Staubach Company. The contractor did a market survey, located some five potential buildings in response to this agency's request. When those five buildings were submitted, three of those buildings were outside the central business area, which was a requirement of primary consideration. One could not meet the minimum fire safety requirements, and I think the last one was declared completely uninhabitable, which resulted in GSA in Region VII cancelling the contract and negotiating a settlement with the Roger Staubach Company, and paying some $19,000 to get out of the contract with the Roger Staubach Company, then still having to go to Baton Rouge and acquire the space like we should have been doing in the first place.
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    So I am not surprised by the situation in Myrtle Beach at all.
    Mr. TRAFICANT. I didn't mean to get into Roger. We played football against one another in college, so——
    [Laughter.]
    Mr. DAWSON. I doubt that he personally handled it.
    Part of the problem, Mr. Traficant, is from the standpoint of the solicitation for offers that we see going to these firms as potential recipients of these contracts. They are so vague and ambiguous to be manipulated into other areas, and I agreed with your other statement that it is Christmas in July for the attorneys—and Heaven knows that attorneys really need Christmas, whatever time it is.
    I don't think this agency needs that. I don't think this Government needs that. I don't think the taxpayers need that, and I know that I certainly don't need that.
    Mr. TRAFICANT. Just let me say this, then, in closing. I am concerned about morale and attitude and the mindset of the workers there. I am wondering how they have been incorporated into this whole process, and if change for the sake of progress is necessary, I will support it. I want you to know that, as workers. But I have may concerns about some of the risk, which I have articulated.
    Just one last question. Will the workers at GSA be upset that a Democrat has requested an investigation into the NEXCOM leasing?
    Mr. DAWSON. Not at all, sir. In my opinion they will applaud any investigation, as will we, that enhances propriety, authenticity of the data, and compliance with the laws and the oversight responsibilities that this committee has, that AFGE has, and that in fact every Government employee has.
    Mr. TRAFICANT. Well, I just want to thank these two workers. I think many times management doesn't listen to workers.
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    The only other thing I would like for you to submit in writing is the process by which they tried to incorporate—to your opinion, good, bad, or indifferent—the worker, the worker's view, the worker's input into any recommended changes.
    Thank you, gentlemen.
    Mr. GILCHREST. Thank you, Mr. Traficant.
    I would also like to reiterate what Mr. Dawson just said, that as a Republican, I will not be upset that a Democrat is asking for an investigation.
    I also want to thank you two gentlemen for coming here this morning and giving us your insight and, to a certain extent, a different perspective. I would assume that—I just have a few questions which either one of you who feels comfortable in answering may do so—I would assume, then, the gentleman from Philadelphia that talked about outsourcing—I assume that you are not in favor of outsourcing, especially for some of the smaller leases?
    Mr. DAWSON. Mr. Chairman, we will not oppose outsourcing or delegation or any other change, and I think I can speak for my National President, Mr. Sturvin, in this capacity; we have had several discussion, provided those changes result in tax dollar benefits and common sense. We bought into the NPR initially at 100,000 jobs to be abolished. That was expanded to some 270,000 jobs Government-wide. I don't think labor's position has changed. We recognize fully the mandate of the taxpayer and a smaller, cheaper, smarter, faster Government. We want to be a party and a productive participant in that change.
    Mr. GILCHREST. In that light——
    Mr. DAWSON. But we insist on tax benefits being definitely determined in advance, and that they make common sense. Beyond that, we support these changes.
    Mr. GILCHREST. So I guess my word would be the experiment that the Philadelphia Region is now undertaking is something that you would be in favor of at least trying on a limited scale to see how it works?
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    Mr. DAWSON. There's not a simple answer of yes or no to that, Mr. Chairman. And I have to recognize the number of experiments that GSA has embarked on in the last 3 years. We have been experimented into what I believe is the verge of oblivion. We are being experimented in Region VIII, which is Denver, Colorado, with delegation of leasing authority on the smaller leases. We have the Region X experience, which is my friend Mr. Pearson's Region. We have the other experiment that Mr. Chandler addressed in Philadelphia, Region III, Mr. Chistolini. Now we are faced with yet another experiment of LaSalle Partners, based here. We are also facing—and here again, those words seem to be in vogue, and I think the experiment is reaching that level—a delegation of authority to all agencies on a national scale.
    So I think that GSA is selectively experimenting in the areas that they feel are most beneficial to—for the wrong reasons—privatize and downsize and annihilate this agency.
    Mr. GILCHREST. What's driving this experimentation, in your judgment?
    Mr. DAWSON. I go back to—and I engaged in this ''out of body experience,'' I suppose you would call it, on the flight up yesterday—I go back and examine the statement made by the Honorable Roger Johnson on November 19, 1994, which we refer to as GSA's ''Pearl Harbor Day,'' when it was announced that——
    Mr. GILCHREST. Who used that term?
    Mr. DAWSON. I did.
    That GSA was going to be converted into a policy and oversight agency, with some 4,000 employees. This was——
    Mr. GILCHREST. How many employees does GSA have now?
    Mr. DAWSON. Peripherally, 16,000 today, sir.
    This was abandoned shortly thereafter and replaced by, as Mr. Chandler referred to, a blue ribbon study of overhead.
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    Mr. GILCHREST. Are any of these comments that you are giving us today, was any of this discussed—were you in Chicago?
    Mr. DAWSON. Yes, sir.
    Mr. GILCHREST. And Mr. Chandler was in Chicago?
    Mr. DAWSON. No, sir.
    Mr. GILCHREST. You weren't in Chicago.
    Were any of these concerns that you're telling us now discussed in Chicago?
    Mr. DAWSON. No, sir. The Chicago meetings that took place—700 employees in one large room, complete with balloons and so forth—centered on the encouragement to gain enthusiasm from those realty specialists that were there, to buy into several verbal assurances that they should cut through the existing red tape, and ''we will support you verbally.''
    Mr. GILCHREST. Do you think there's red tape out there that has to be cut through?
    Mr. DAWSON. Yes, Mr. Chairman, I do. It's not in the testimony or in the record. I joined GSA in 1978 as a realty specialist. I engaged in union activities—let me back it up. I was consumed by union activities, I suppose, in 1988.
    Mr. GILCHREST. Consumed by——
    Mr. DAWSON. Union activities in 1988. During that 10-year tenure I was a realty specialist, performing leases, specializing in the disaster leases for FEMA and SBA, similar to what Mr. Pearson addressed. So I have some knowledge on the process, even carried over through today.
    The significant thing about Chicago, there were 26 items as announced in the press release last Friday. Most of these that had substance to them were already being done in most of the Regions: elimination of justifications for fair and open competition; minimal price negotiation memorandums; waiver of appraisal requirements——
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    Mr. GILCHREST. Well, was this—I think we have an understanding of your concern, that a change in the direction of an agency is not a good change if it's just cosmetic and it's used for political purposes. I would hope—and we would like to help all of the management and the employees of GSA to seek and find some level of mutual understanding so that the change can be in a direction where it is positive. We certainly want to utilize all of the personnel at GSA, not just eliminate positions because it might sound good to somebody on the House floor, or create options for other agencies for leasing, the ramifications of which we have no idea of. So before we jump into that bailiwick we would want to have some sense of understanding of the results before we go full steam ahead.
    We do appreciate your input. We take your observations and recommendations very seriously, and as we proceed on this we would like to continue to stay in touch with you to get your input on all of the policy changes that may or may not happen in the future.
    Mr. Dawson and Mr. Chandler, thank you very much for coming all the way up here to the mid-Atlantic States. I hope you enjoy the rest of your time here. We appreciate your testimony.
    Mr. DAWSON. Thank you.
    Mr. GILCHREST. Mr. Traficant?
    Mr. TRAFICANT. Nothing further, Mr. Chairman
    Mr. GILCHREST. The hearing is now adjourned.
    [Whereupon, at 10:21 a.m., the subcommittee was adjourned, to reconvene at
the call of the Chair.]

    [Insert here.]