SPEAKERS CONTENTS INSERTS
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TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR 1999
Thursday, March 19, 1998.
FEDERAL ELECTION COMMISSION
WITNESSES
SCOTT THOMAS, VICE CHAIRMAN AND CHAIRMAN OF THE FINANCE COMMITTEE, FEDERAL ELECTION COMMISSION
LEE ANN ELLIOTT, COMMISSIONER AND VICE CHAIRMAN OF THE FINANCE COMMITTEE, FEDERAL ELECTION COMMISSION
Opening Statement of Chairman Kolbe
Mr. KOLBE [presiding]. The Subcommittee on Treasury, Postal Service, and General Government will come to order.
I apologize for the delay. Thank you for postponing it in order to accommodate my schedule, and we apologize for the delay here caused by votes. But, I think, we're probably good for a little while here.
So, we are pleased, this morning, to welcome the Federal Election Commission, Chairman Elliott, Vice Chairman and Commissioner Thomas, before our subcommittee today. I'm going to be very brief in my opening remarks because we are getting started late, and so we can get the questions quickly. And, I know that both Mr. Hoyer and I have a short timeframe here today because we have speaking obligations at noon.
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Commissioners, I appreciate the fact that the Federal Election Commission continues to be challenged, both by its resources and the workload that comes its way. There's no doubt about it, the workloads are up. The issues surrounding enforcement are becoming ever more complicated, and public scrutiny is becoming greater than ever.
For the upcoming Fiscal Year, the FEC's requesting $36.5 million, that's an increase of 15 percent over the current Fiscal Year. It also represents approximately the same increase in staffing that you're asking for.
I want to, first, commend you for the resources that you are allocating this year in your budget request—the computer modernization—to keep that effort on track. As you know, from the comments I've made at past hearings, I believe these efforts are critical to your ability to meet the growing workloads, particularly in the areas of disclosure, as well as compliance. I'm not quite as optimistic about some of the rest of what I see in the budget request.
Despite the fact that you tell us that disclosure is one of the top priorities of the FEC, the budget doesn't reflect this. You request an increase of 34 FTEs and $2.4 million for the Office of General Counsel, all of which are dedicated, of course, to compliance. But, you're not requesting much of an increase, or any increase at all, for disclosure activities. As a percent of your total resources, 29 percent goes to compliance, only 20 percent goes to disclosure. It just doesn't seem consistent with the strategic plan, and I don't think it's consistent with what I believe American people need, and that is, first, to have information regarding committees and candidates and to make sure that we're getting that information in the most timely fashion.
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As it relates to the issue of compliance, my concern is that all of your energy seems to be dedicated to investigating possible campaign finance violations. I don't see, in the budget, initiatives that target prevention and deterrence of possible violations—educational ways in which we can keep it from happening in the first place. And, finally, as I review the performance plan, I don't see any true measures of compliance. They all seem focused on workloads and outputs. So, you'll see in the questions I'm going to have about the current compliance rate, not only what the current compliance rate is, but what you consider to be an acceptable rate, and how you know when we've reached that compliance rate. I look forward to hearing the testimony that you have and clarifying some of those concerns.
Before I ask for your opening statement—and, by the way, as always, your full opening statement will be placed in the record, and if you would summarize it, it would certainly help us to get as quickly as possible to the hearing—let me see if Mr. Price has any opening remarks before we go to your statement.
Mr. PRICE. No, Mr. Chairman. I'd just extend my welcome to the witnesses and look forward to the testimony.
Mr. KOLBE. Thank you very much. Commissioner? I'm not sure if Commissioner Thomas is going to deliver a statement.
Summary Statement
Mr. THOMAS. Thank you, Mr. Chairman, and members of the committee. My name is Scott Thomas. I just wanted also to clarify, briefly, Commissioner Elliott is here in her capacity as Vice Chairman of the Finance Committee. I am Vice Chairman of the Commission, and in that capacity, get the honor of presenting the budget, most directly. And, of course, Chairman Aikins—Joan Aikins—is chairman this year, and she would be here but for other commitments that she had to undertake.
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The purpose of our appearing here this morning is, obviously, to present our budget request. I will do my best to summarize my statement, and, in doing that, I think, maybe the best thing would be to just choose a few choice paragraphs from our testimony and that will give the flavor of our request.
FY 1999 BUDGET REQUEST
We are currently operating with a budget of $31.6 million, roughly, and an FTE allowance of $313.5. For the Fiscal Year 1999, we are asking for an appropriation of $36.5 million, as you noted, and an FTE allowance of $360.5. Although this is a significant increase, percentage-wise, we believe that it is justified. What we are facing, in essence, is a situation where we think that we need to have both the technology that this committee has helped us achieve in recent years, and staff resources. We feel this is crucial because we're starting to sense that you need both in order to make sure the laws on the book are actually being adhered to.
PROCESSING REPORTS
Fiscal Year 1999 will be a pivotal year for the Federal Election Commission. During the period running from October 1, 1998, through September 30, 1999, Commission staff will process the financial reports immediately preceding and immediately following 1998 congressional elections. At the same time, we will begin processing the matching funds submissions by the primary candidates for the 2000 Presidential election. Also, we will be working on the complaints and audits associated with the 1998 election, and still we'll be digging ourselves out from under the tremendous compliance fallout of the 1996 election cycle.
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COMPLIANCE PROGRAM
So, our focus in this budget request, obviously, is on an increase in staff for the compliance component. Investigating these extensive allegations of multimillion dollar violations involving hundreds of players requires extensive resources. There's just no escaping that. Timely and thorough investigation of these matters requires human resources more than anything else. Analyzing records, taking depositions, and drafting reports, interrogatories, subpoenas, and briefs associated with these cases, takes auditors, investigators, and lawyers. And, yet, in the current Fiscal Year, we are able to assign only about 24 FTE to the line attorney function of handling enforcement cases.
Also, our present compliance caseload is substantially different than previously experienced. A simple head count of the number of cases doesn't reflect the enormous increase in the scale of work we now face. Our major cases are completely different in terms of magnitude than what—than we were dealing with just a few years back. One way to quantify that is in terms of the number of respondents. The number of respondents, on average, has gone up—25 percent—between the Fiscal Year 1995 timeframe and the Fiscal Year 1997 timeframe.
To give you an illustration of what this means—five of our largest current cases involve a total of 222 respondents, they'll generate an estimated 2.1 million pages of documents in discovery, and they will require the assignment of 32 staff, commission-wide. We have experienced problems, obviously, because of this resource strain. We have discovered that we are having to dismiss, regrettably, more cases than we ought to, simply, because we aren't able to apply resources to them.
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The longer cases remain unassigned on our enforcement docket because of inadequate resources, the more the utility of commencing an investigation declines until, eventually, activation of that kind of case would not be an efficient use of commission resources. Indeed, some of the very serious allegations from the 1996 election cycle already have been dismissed due to staleness. This is a very troubling situation to us.
The requested budget increment of 37 FTE for the compliance program would give us the capacity to better handle this extraordinary compliance workload. We could pursue more cases, fewer would be dismissed without substantive commission action, and those cases activated would be resolved faster.
Mr. Chairman, that's really the heart of our request. I did want to, if I could, right at the outset, address what I think is your major concern, and that is that it seems that we're putting so much into the compliance program at the agency, and not really improving in the disclosure area. Just by way of detail, as I looked at the dollar numbers, we're actually, in terms of the disclosure component, we're increasing expenditures from $6.9 million for that function, to $7.4 million in the Fiscal Year 1999 budget. So, there is an increase there, in terms of the base functions for our disclosure effort.
ELECTRONIC FILING
Also, in terms of the electronic filing initiative, itself, which we ordinarily have separated out in the budget process, and have done so this year, we are planning to spend $563,000 in the current Fiscal Year. Yet, in Fiscal Year 1999, we're planning to spend $1.6 million. So, we are quite clearly, in terms of the disclosure effort, putting a lot more resources into that, as well. It just so happens that because we have been trying to show the committee, as we go along through the years, how much money we're putting into those computerization initiatives, we've separated out that electronic filing component. But, when you consider that, and add that in, it is clear that we are really moving upward in terms of our effort at that disclosure component, as well. Thank you.
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[The information follows:]
"The Official Committee record contains additional material here."
Mr. KOLBE. Thank you very much, Mr. Thomas. Let me see if Mr. Hoyer would like to make some opening remarks before we go to questions, since he wasn't here at the outset.
Congressman Hoyer's Opening Remarks
Mr. HOYER. And, I apologize, and I'll be very brief. I've read the Chairman's opening remarks. I understand his concern. You have just spoken to it and we'll look at it further. I want to welcome Mr. Thomas and Ms. Elliott to the hearing. We, obviously, as we pursue the consideration of your budget, will, again, raise the questions I know in terms of your information systems and the status of those updates—I'm pleased to see in the Chairman's remarks, that he believes that you're making significant progress on that; and, also, make some observations about the resources that you have to do what continues to be a geometrically increasing workload. But, I look forward to working with you to ensure, as I know the chairman wants to, as well, not only that we have proper disclosure of who is contributing to candidates, but also that the public has quick and easy access to that information so they can use it to make decisions on elections. I mean, that's, obviously, the entire purpose of the statute and the reforms that were effected, to have some logical controls, with reference to contributions, and have the public informed as to what those contributions are.
So, I look forward to the balance of the hearing and to working with you as we move towards, what I presume to be, an early markup. Thank you, Mr. Chairman.
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Mr. KOLBE. We certainly hope so. Thank you very much, Mr. Hoyer.
COMPLIANCE PROGRAM
Let me begin with some of these questions on the issue—on the area of compliance. In your own words of your own statement, or from the FEC, itself, you said, the greater concern is limited scope of the compliance program that fosters a belief that there are no consequences for violations of the Federal Election Campaign Act. Yet, of course, as you would acknowledge, the compliance program really is based on voluntary compliance. It has to be just as our tax laws are—really based largely on voluntary compliance. So, my first question is: how do you define compliance? Does the commission have a definition for what they consider to be compliance?
Mr. THOMAS. Well, it is not an easy task. It's a bit like defining air, but we do, as a basic proposition, try to keep various measurements that, I think, are a good way to objectively look at whether voluntary compliance is tapering off. Anticipating the committee's concern in this regard, I've had our folks try to put together some information that might be helpful.
In terms of just objective measurement, though, first, I want to start with the statement that we think that overall voluntary compliance is very high. We noted in our budget justification document that if you look at, for example, the fact that we have about 8,000 political committees reporting during any particular election cycle, only about nine tenths of one percent of those committees end up getting referred for some sort of compliance action from our Reports Analysis Division. Only about three tenths of one percent of those get approved for a ''for cause'' audit. Only about nine one-hundredths of one percent, of those committees, end up getting sued by the Federal Election Commission. So, overall, from our perspective, we, I think, can look at that and say: there is a high degree of voluntary compliance. By the same token, though, there are some other measurements that suggest, in recent years, compliance is tapering off a bit.
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We have provided these kinds of statistics in our budget justification document. You can look at and calculate these numbers. The number of requests for additional information (RFAIs) that our Reports Analysis Division sends out when they see something that looks like it might be a problem (the number of RFAIs) per report reviewed has gone up between the 1992 and 1996 cycle, by 25 percent. Now, that would be possibly a sign that we're having to send out more RFAIs per report because we're finding less voluntary compliance.
Similarly, if you look at the number of audit referrals from the Reports Analysis Division, per report reviewed, you see an even more dramatic increase between the 1992 and 1996 cycle. You see a 99 percent increase in the number of those referrals for possible audit. Another statistic that might be helpful for you concerns committees that we find are not filing reports by election day, and by this I mean candidate committees. We end up, under the law, having to publish the fact that they have not filed their reports. In terms of the number of published nonfiling committees that we saw in the 1992 cycle, compared to the 1996 cycle, the number we had to publish went up by 31 percent.
So, if you're looking for some measurement of voluntary compliance and whether it's tapering off, that's what I would offer.
Mr. KOLBE. Well, that's a measurement I can understand. I mean, if you don't file a report at all, that's a pretty easy one. And, you're saying if they're no longer active, they're supposed to file and tell you they're no longer active, right?
Mr. THOMAS. Yes. The committees we publish, however, are committees that are——
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Mr. KOLBE. Active.
Mr. THOMAS [continuing]. And the committees that are active in the upcoming election.
Mr. KOLBE. And, it went up 31 percent—the nonfiling of those? That's a whopping jump.
Mr. THOMAS. Yes. And I——
Mr. KOLBE. Thirty-one percent. What percent overall don't file—of the total number of committees?
Mr. THOMAS. Don't file? Well, I guess——
Mr. KOLBE. I mean, what is the total number of nonfilers?
Mr. THOMAS. The total number, say, in the 1996 cycle——
Mr. KOLBE. Right.
Mr. THOMAS [continuing]. Was 88, which we published——
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Mr. KOLBE. Oh, just 88.
Mr. THOMAS [continuing]. Out of about 2,000 candidate committees, probably.
Mr. KOLBE. Okay. So, 31 percent jump and that is statistically much different than—I thought we were talking about much larger numbers than that. In your statement about those who you have to send out—what was it called—RA?
Mr. THOMAS. RFAI. Request for Additional Information.
Mr. KOLBE. Request for additional information. Is that because of noncompliance or is that because you've made the forms hopelessly complicated, like Congress does with the IRS and tax law. [Laughter.]
Mr. THOMAS. Well, I'm not going to say that our forms are the easiest thing in the world, but we work very hard to try to make them simple and understandable, and, in fact, we're in the process of revising the forms to make them even more so. But, for the most part, what we're talking about are fairly straightforward problems, like there is contributor information missing or there is an excessive contribution reported right on the face of the report when you do an aggregation with previous contributions by the donor.
Mr. KOLBE. I'm sure you track what it is that most of them go out for—your RFAIs—and whether it's related to one specific item. You must question whether or not you're asking for that information in the right way for the committee.
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Mr. THOMAS. We do. Every two years, we take another look at our review procedures, and we analyze whether or not they ought to be revised. In the last several election cycles, we have revised those thresholds to increase the tolerance to allow, in essence, more possible problems to go by without sending out a request for some sort of clarification. So, if anything, to me, that would suggest that when you start seeing these drop offs, in terms of voluntary compliance, that those numbers I gave you are, in spite of the fact that we are increasing our tolerance levels, if you will. I think, it's an even clearer signal that there's a slight drop off, and we would say that one of the crucial components of getting disclosure is having an effective compliance system. You've got to have a credible threat that the Federal Election Commission will be able to do something about it if a committee does not adhere to the disclosure rules.
Mr. KOLBE. Well, one final question in this round, and that is: what are the tools that are available to you to get greater compliance levels besides audits and investigations? Are there any other tools you have?
Mr. THOMAS. We do. We work very hard on our information programs. We are conducting workshops around the country for treasurers of committees or any other official who's going to be involved with campaigning. They can learn the rules. We have workshops for corporations and unions. We have workshops for candidate committees. We have workshops for party committees. And we try as best we can with those to help the community. We also, I would note, Mr. Chairman, have had great success, again with your assistance, in promoting the use of computer technology to educate the regulated community.
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We have developed a web page, which we are very proud of. Anybody in America, who has access to the Internet, can pull off of our web page all of the relevant guides about how to comply with the laws. Our Information Division has actually won several awards for their publications. They are very well written and clear, and they are there free of charge, on the Internet, for anybody that wants them.
So, I guess we've been a success at working on getting voluntary compliance to the extent possible because we have worked very hard to get that information out there—about what the rules are and how they work.
Mr. KOLBE. Thank you very much. Mr. Hoyer.
WORKLOAD INCREASES
Mr. HOYER. Thank you very much, Mr. Chairman. I didn't read your statement, and if you've already done this in the statement, then don't repeat this; but, clearly, one of the debates we've had is that you don't need more money, you need better handling of information capability, and, therefore, you don't need more money for people. You need it for computers, and if your information handling ability was more efficient, more effective, you wouldn't need more people. Can you outline, if you haven't already done it, the workload projection that we've gone over in the past as to why you've had this very substantial, sharp increase in workload and, therefore, requiring more people: and in that answer, specifically focus on why you can't handle the additional workload solely by doing more with less through information technology?
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Mr. THOMAS. Well, our compliance workload——
Mr. HOYER. Yes or no? [Laughter.]
Mr. THOMAS. Part of what I read covered it, and that was——
Mr. HOYER. You know I'm just teasing you.
Mr. THOMAS [continuing]. The talk about how we have had increasing complexity of the types of cases we handle. We are now finding that more respondents are being involved in a particular case, and that probably reflects a growing complexity. We're finding that we are focusing our resources on enforcement cases where you have a number of different people involved in the allegations at hand. So, it's partly the substance of what we're looking at.
We have, in years past, focused, I suppose, more on the fact that there's a huge increase in the amount of financial activity in campaigns, and that, in and of itself, drives our resources. We didn't focus on that so much this year, but it is certainly true. The amount of spending in the 1996 Presidential election campaign cycle for Federal elections that we had to monitor was $2.7 billion. And, that was——
Mr. HOYER. How did that relate to four years prior?
Mr. THOMAS. Four years prior, it was about $2 billion. So, it was a significant increase, percentage-wise. And, that carries all through our operations. Obviously, our staff has to make sure that all of those reports are put into the disclosure system, whether in terms of the digitized imaging at our FEC operations and on computer systems across America, or on the Internet, or, in some cases, in microfilm form. Then the reports analysis review folks have to review all that information and look for potential problems and send out requests for additional information and make referrals and so on.
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So, with a larger volume of activity in the process, they're going to have to review more, they're going to find more problems, going to have to make more referrals to the Counsel's office and so on.
And, likewise, with more financial activity in the process, you'll have the Counsel's office receiving more complaints. It's just inevitable that with more transactions going on out there, and more money coming into the process, there is more opportunity for someone to, say, file a complaint, because they have heard about a problem with the opposing party or opposing candidate.
So, in every sense, the increase in the volume of financial activity for campaigns carries through to our staffing requirements.
Mr. HOYER. And, specifically, why can't the additional volume simply be handled? For instance, if you have two candidates—two major parties raising, i.e., soft money, to the extent that that's reported, or hard money through candidates—I don't know how many additional candidates we had—but candidates, obviously, are raising a lot more money individually. Now, the premise could be whether I deposit $1, or I deposit $10, it is a deposit, in effect. And, if I have good enough information technology to handle that information, the increase, per se, in dollar volume that Steny Hoyer takes to run his campaign, as opposed to seven hundred thousand, $1.2 million, which is $500,000 additional dollars, which gets you that $700 million extra from $2 billion to $2.7, but does it, in fact, create additional workload. What you're saying, as I understand it, is in order to collect that extra $500,000, there are more transactions, more people contributing, more solicitations, more fundraisers, and, therefore, greater oversight being required.
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Mr. THOMAS. That's exactly right. And, as I said, we didn't include that kind of statistical increase, except in some of the charts in our budget justification document. But, we can supplement that for the committee, if you would like, to give you a sense of how that works.
Mr. HOYER. As you know, this has just been a continuing debate. Clearly, you're on the right track. Now, the Chairman's question—or statement—reflects that, in terms—we all know that throughout government, we need to do a better job of handling information. IRS is our biggest example in our committee of where that's fallen down. But, clearly, it's an issue with you, as well. And, you're not alone on that. Most agencies of government have not done as well as they could have done, or they probably would have hoped to have done, in terms of information handling. But, you're still asking for more people, and your response to that, as I understand it, is yes, because of the growing complexity that cannot simply be handled by information technology analysis.
Mr. THOMAS. Yes. The growing complexity results in, as I noted, an increased number of respondents. We have also had some changes in the laws in recent years, that have the Commission having to undertake the kinds of investigations that weren't quite as prevalent before. One example: as a result of the Colorado Republican Party Supreme Court decision, we now have an obligation in cases where there's an allegation of excessive spending by one of the party committees, to look into whether or not there was, in fact, coordination between the party officials and the candidate's officials. We used to presume there was such coordination, but now, if we have to prove a violation, we're going to have to prove there was coordination. To do that, you have to go out and depose the people involved. You have to take statements and so on. That moves into areas where staff are necessary. You have to have attorneys and investigators and auditors to do those kinds of functions.
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Mr. HOYER. Thank you. Thank you, Mr. Chairman.
LEGISLATIVE RECOMMENDATION ON PUSH POLLS
Mr. KOLBE. Mr. Price.
Mr. PRICE. Thank you, Mr. Chairman. I'd like to turn in the exercise of our oversight responsibilities to some of your legislative recommendations, especially those having to do with disclaimers. You note the increase in so-called ''push-poll'' activity in your legislative recommendations, and suggest that Congress might want to consider adding disclaimer requirements for this kind of activity. You also acknowledge that it's rather hard to define exactly what falls within this category. How do you define push poll activity, and do you have some specific basis for the claim you make that this activity seems to be increasing?
Mr. THOMAS. Well, we don't actually have any occasion to define push polling, per se. The way that we have gotten into the question of how to deal with push polling in terms of disclaimers, is that our statute requires a disclaimer if a communication to the general public contains either express advocacy of the election or defeat of a clearly identified candidate, or some sort of solicitation of contributions. As it turned out, push polling, as most of us understand it now, sometimes involves an effort to go beyond just an innocent query of the person on the end of the phone as to what their views are on many topics. It starts to move into an area where there are suggestions that a particular candidate, who is not liked, has done something bad. And, so, there's an effort to somehow influence. So,——
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Mr. PRICE. Well, I think in our experience, it often does go beyond that in the way of deception, in that it often purports to be a poll, or at least that's the way the communication begins. Yet, as one listens to the questions, it becomes clear that they're designed to influence, really, rather than to elicit opinion.
Mr. THOMAS. I don't know how far Congress can go in terms of requiring disclaimers on communications that someone might argue has no connection at all with an election, but, with regard to most push polls, I think it would be fairly apparent that they are involved with a particular election. It might be that Congress could change the law and just specify that, in cases of any polling that is paid for by a candidate committee, or some other registered political entity, there has to be a disclaimer. That would take care of this difficulty we have of having to analyze in more detail whether there is some express advocacy of the election or defeat of a clearly identified candidate, or a solicitation.
Mr. PRICE. Well, I commend you for the attention you've paid to this, and for the recommendation you've made. It's very disturbing that it's on the increase because it is almost always deceptive activity. It's under the radar screen. It's precisely the kind of campaign activity where a disclaimer is most needed. And, one would hope that if a disclaimer were to be required, then that would, of course, discourage the activity, or at least discourage the worst abuses. So, I commend you for raising the subject.
DISCLAIMER RULE
Let me ask you now about the content of the disclaimer requirement we do have, and that you enforce. The disclaimers that appear on television ads, for example, let's just focus on that. These consist of unreadable, small print lines of type, postage stamp size pictures—almost a parody, it seems to me, of what one would think of as an effective disclaimer. To what extent are you bound in what you require by the law? To what extent do you have the flexibility to make those disclaimers something more meaningful—that would encourage a genuine assumption of responsibility by a candidate or a political committee for the material that's appearing on the screen?
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Mr. THOMAS. Well, we do enforce the existing statute which does require a disclaimer indicating, in the case of a candidate's ad, who paid for it. In the case of an ad that's paid for by someone else, a disclaimer has to go on and state whether it was authorized by a candidate. But, in terms of the length of time a disclaimer has to appear on a TV ad, or the size of the type, we regulate that, in essence, through the concept in our law which says it has to be a clear disclaimer. So, we have attempted to borrow the FCC's rule on how long a television disclaimer has to be on and how large it has to be. Whether we could go beyond that, I'm not quite sure. I'm not quite sure, specifically, what you have in mind, whether you're talking about requiring an image of the candidate to actually appear in the disclaimer, as well?
Mr. PRICE. Well, I've made clear, personally, what I would like to see. Steve Horn and I and a number of co-sponsors have a stand by your ad proposal which we think would improve disclaimers greatly. We would require a full screen appearance, either in person or a photograph and the candidate's own voice saying, ''I'm so and so, running for so and so, and I paid for this ad.'' We would require that kind of significant assumption of responsibility on the part of the candidate. We're not trying to regulate content, we're not breaking new ground legally. The disclaimers are already required; we just want to make them effective. So, that's my own opinion of what an effective disclaimer would look like. What I'm asking you, is what kind of flexibility you already have to improve on what I think almost anybody would agree is an ineffective disclaimer requirement. To what extent are you bound by what the FCC or anybody else has done in the past?
Mr. THOMAS. I would say we're not bound by what the FCC has said, but I suppose it would take a fair amount of lawyering to try to work on whether or not we think we have authority to do more. I'm sure part of the legal analysis would be, given the fact that the current statute says that the disclaimer has to state who paid for it and whether it was authorized, it would be a pretty strong argument, I suppose, that going beyond that and having the Commission require a picture of the candidate, or an image of the candidate, would be problematic. I don't mean to be pessimistic, but I'm just guessing that there might be some credible argument that that would be going a little bit beyond our existing statutory authority. But, that's not to say that if some sort of petition for rulemaking were filed, and our legal staff looked at it, something couldn't be worked on which would be, perhaps, different than what we have now.
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Mr. PRICE. Well, just one follow-up, if you don't mind, Mr. Chairman. The present requirement for a picture, which is interpreted to mean a very small picture, is that your requirement or the FCC's?
Mr. THOMAS. It's not our requirement. No.
Mr. PRICE. But, it is a requirement.
Mr. THOMAS. I believe the FCC's rule does not require a picture on a television ad of the candidate in question. Just a statement as to who paid for it.
[CLERK'S NOTE—The witness later stated that further research indicates that although the FCC's disclaimer rules do not require a picture, as a practical matter most candidate ads include either a picture or a voice over in order to qualify for the lowest unit rate. See 47 C.F.R. §73.1212, 73.1941(b), and 1942.]
Mr. PRICE. Well, in most ads, the very small picture does appear on screen.
Mr. THOMAS. I think you see some state laws that have gone beyond and have non-Federal——
Mr. PRICE. No, these are Federal campaigns. We need to clear that up and we will do that. Thank you. Thank you, Mr. Chairman.
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Mr. KOLBE. Mrs. Meek.
Mrs. MEEK. Okay. Mr. Chairman, how are you?
Mr. KOLBE. Very well.
OUTREACH PROGRAMS
Mrs. MEEK. I don't have a question. I have a comment. I agree very much with the Chairman when he spoke about the fact that you have increased your compliance and your disclosure methodology. But, hopefully, you will do a strong job in terms of educating us in terms of what those rules are, and what those regulations are. I think that an outreach program doing that would be very helpful. And, I'm sure you're going to do that because of what you said in your opening statement. Thank you very much.
Mr. THOMAS. Thank you.
Mr. KOLBE. Mrs. Northup.
MONEY LAUNDERING
Mrs. NORTHUP. Yes. Thank you. I'm sorry I was so late today. You may have covered some of these.
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There are mainly two issues that I'd like to ask you. One is, I understand that PACs are a way of—let me see—it is possible for a PAC to raise money from an individual who's already given to a campaign, given the maximum, and when they give, in a sense, that money is pooled together. But, considering the few numbers of PACs that give the maximum and the few individuals who have given the maximum, how directly would you be able to say that's money laundering? But I do believe, on both sides of the political spectrum that there are several organizations that are very into what I call money laundering. What I want to make sure of is, is that whoever I'm running against is playing by the same rules that I'm playing by. And, I believe that money laundering is illegal, or it is certainly an immoral interpretation of present law. And, I just wondered how able you are to identify PACs that try to funnel money from previous contributors who have donated previously to a candidate and then return to that candidate about an equal number of additional money by bringing it in from out of state?
Mr. THOMAS. Well, under the current law, there are provisions that we can utilize to try to prevent an obvious attempted evasion of the contribution limits. For example, under the statute, if someone gives money to a PAC that is directed to be for a particular candidate—that is earmarked for a particular candidate's benefit—the law says that that contribution does have to be treated legally as if it were a contribution by that original donor to the candidate. So, the question we get into is: was there sufficient indication of earmarking or designation to trip that test? Aside from that, we have a regulation at 11 C.F.R. 110.1(h) which, in essence, says that if you give money to a committee with an understanding that that money is, in fact, going to be expended on behalf of, or contributed to, a particular candidate, that likewise is a contribution that would have to be treated as if it's from the individual.
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Mrs. NORTHUP. Is that enforceable?
Mr. THOMAS. Is it enforceable? It is when we find out about it.
Mrs. NORTHUP. Okay.
Mr. THOMAS. Now, in terms of finding out about it, that's more difficult. The benefit of having a good disclosure system is that someone who's looking closer can sometimes find patterns. If you find a pattern of a lot of money coming into a particular PAC on a certain date from a bunch of contributors who happen to be, perhaps, related in some fashion, and then promptly, a similar amount of money going to a particular candidate from that PAC, someone can file a complaint, and if they've got any sort of information that will help us generate that as an enforcement case, it would help, but we can look into it that way. For the most part, though, it is something that has to be brought to our attention by a complaint.
ISSUE ADVOCACY
Mrs. NORTHUP. The other thing, though, is I wanted to talk about issue ads being charged as in-kind contributions to candidates. First of all, I have to tell you I'm not crazy about issue advertising because, even if somebody does it on my behalf, it may not be the message that I want to give. It may not be—it often isn't—how I would define myself to the public. I have been just so careful about not ever having a conversation that would ever—not allowing anybody in my office to ever have a conversation; that everybody understands that we are not going to be a partner to issue ads.
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But the risk I take is that somebody that thinks they're helping me really doesn't help me, and that actually happens to us. My concern is that not only would I be subject to that, and I am subject to it—that's a free speech issue, and I understand I can't do anything about it, but I'd hate to have it charged against me.
Mr. THOMAS. If I somewhere said that we do think we can and should regulate issue ads as a general concept, then that's a misstatement. We don't. We do, however, have to look at the question of whether or not there is coordination with a candidate. So if something is not perhaps an express advocacy ad, but it, nonetheless, is something where a candidate's people have requested it or suggested it, or coordinated in the airing of that particular ad, that is a fair definition of an in-kind contribution.
Mrs. NORTHUP. I'm actually talking about what I think is your recommendation to us, and that is that issue ads actually be considered an in-kind contribution; that we change the law.
Mr. THOMAS. I see. What we're asking in our legislative recommendation in that regard is that, if you will, you help us try to clarify when there is sufficient coordination to amount to an in-kind contribution, and also help us define the line between something that someone would agree is pure issue advocacy, has nothing to do with the Federal election process, and something that, on the other hand, does have to do with election process; it's electioneering in purpose and effect in every sense.
Mrs. NORTHUP. I think sometimes with issue ads that they think that their purpose is to help Jim Kolbe be elected. They think this is the way to do it. Jim Kolbe may see that ad on television and be horrified that it defines him to his voters. The problem is that, for those people that are just so careful not only to go by the letter of the law, but the spirit of it and everything else, we have even less chance to influence what the content of the ad is, and are more likely to be horrified.
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Mr. THOMAS. Rest assured, if there's no coordination, you won't have any trouble with the Federal Election Commission.
Mrs. NORTHUP. Oh, and I'm not worried about trouble. I'm just worried about changing the law like you've recommended.
Mr. THOMAS. Oh, your opponent then.
Mrs. NORTHUP. Oh, I'm very worried about that. [Laughter.]
COMMISSIONER VACANCIES
Mr. KOLBE. We should have time for one additional quick round of questions, I think, before we have to go. Let me try to focus the question here on a couple of areas. One, about the vacancies among the Commissioners—there's been a vacancy since October of 1995, I believe. That vacancy includes not only the Commissioner spot, but, presumably, the staff that's assigned to that Commissioner, but we have funded the Commissioner and staff salary in each of those subsequent years. What savings were achieved in 1997 and/or 1998 due to these vacancies, and how did those savings get applied?
Mr. THOMAS. Well, if you look at what happened in Fiscal Year 1997, you'll see that, rather than expending funds for 18 FTEs, which would pick up six fully-staffed Commissioner offices, we ended up funding the equivalent of 15.7, I believe it is, FTEs. So instead of 18, we were down at 15.7.
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If you look at a Fiscal Year, you would save roughly $300,000 when you take into account the Commissioner's salary, the Executive Assistant's salary, and an Administrative Assistant's salary. There are only three people in each Commissioner's office. So, roughly, $300,000 you would expend on any Commissioner office in any one year.
The current Fiscal Year, it's not clear when this will happen in terms of getting new Commissioners onboard, any new Commissioner to fill that vacancy, that is, but our current planning is that maybe it will happen in early June. In terms of savings in this Fiscal Year, staff tells me that, in terms of what we have planned for all along, it's going to work out to about, I guess it works out to about $200,000, because we weren't planning on expending any for the first quarter anyway. So roughly $200,000 we're planning on having to work with.
Mr. KOLBE. So the Commissioner spot, the staff spots are not filled when the Commissioner is not there?
Mr. THOMAS. That's correct.
Mr. KOLBE. What are the consequences of having this vacancy in terms of the operations of the Commission?
Mr. THOMAS. Well, we have more difficulty, I suppose, getting a fourth vote on some cases. You need four votes to take action at the Federal Election Commission, and that has not changed even though there is a vacancy. So in practical terms, I suppose we have some longer debates and some more difficult discussions, because we're trying to come to a consensus and get that magical fourth vote.
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Beyond that, you lose, I suppose, whatever benefit of additional input you get from an extra person, but, in terms of savings, I suppose the bright side is it has given us a little financial flexibility, having that extra money that we can pour into some of the programs that this Committee and we at the Commission feel are essential.
DEPARTMENT OF JUSTICE RESOURCES
Mr. KOLBE. I want to ask you a couple of questions about the detailees. I understand you've asked for some from Justice. How many have you requested, and what's the status of those negotiations? Have you gotten any onboard?
Mr. THOMAS. In March of 1997, we asked the Justice Department if they would be able to help us by detailing some workers. We didn't hear back from them until September. They then said, give us a specific request. We then at that point sent them a letter saying we would like 32 people, and we listed the different kinds of job classifications we would like to have help with. So far, they have not responded favorably to that request. So that's where we are at this point in Fiscal Year 1998, and we haven't received those support services from the Department of Justice. I'm sure that they're obviously very busy over there, and so it's not as though we exactly expected to get it. We hoped we could get it, but so far we have not.
Mr. KOLBE. If you—you don't expect to get them?
Mr. THOMAS. If I were a betting man, I would say we will not get them.
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Mr. KOLBE. But you still have——
Mr. THOMAS. We're still working with——
Mr. KOLBE [continuing]. Negotiations ongoing?
Mr. THOMAS [continuing]. Them. We have periodic contacts. Our General Counsel's office has been the lead on this, and they have been staying in contact with the Justice folks.
Mr. KOLBE. If you got all those that you were asking for, I think your budget justification says you wouldn't need 37 of the 47 additional positions that you requested?
Mr. THOMAS. Well, I suppose, depending on how we framed the request, if we framed the request to give us enough people for the full 37 compliance component that we're asking for in Fiscal Year 1999, we wouldn't need any of that, if we got them from Justice. In terms of Fiscal Year 1998, we had only asked them for 32, thinking that, given the timeframe we had, taking on 32 would be about all we could handle in terms of providing space and all of the backup support and services as well.
Mr. KOLBE. One final question, and then I'll let Mr. Hoyer, and we'll be able to finish this up. Last year we gave you $1.3 million for litigation, document support. I think that was for a contract, I believe, with the DOJ for imaging, coding, storing, retrieval related to ongoing operations. What's the status of that? Is that happening?
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Mr. THOMAS. It has been great. The Counsel's office has been able to install the terminals and they've gotten the process up and working. It allows them to image and index documents in these discovery cases that have hundreds of thousands of pages. They tell me they've already imaged and indexed 700,000 pages. They project having to image as many as 2 million using this system. But it has been very helpful and, again, it's something that we're happy that the committee has helped us along with and pushed us to do; it has been a great project.
Mr. KOLBE. Mr. Hoyer?
PRESIDENTIAL ELECTION CAMPAIGN FUND
Mr. HOYER. I have a lot of questions that I won't have time for right now. But the question I would ask you is: Tell me about the presidential fund. I notice one of your recommendations is changing priorities so that conventions would be third, rather than first. Can you tell me where we are in the fund and how it looks for the next presidential election?
Mr. THOMAS. We have prepared some analysis which suggests that there will be a shortfall in matching fund payments when the first payments are made in January of the year 2000. In terms of how drastic that shortfall will be, roughly, we're saying we'll have about $25 million available to use for primary matching fund purposes on that date, and yet we'll probably have a payout obligation of about $60 million. So that first payment, based on those kinds of projections, would suggest that the candidates will only get about a 42 percent ratio payment on what they would otherwise be entitled to.
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Now as receipts start coming in through calendar year 2000 from checkoffs, we'll eventually be able to make that up by the end of the year certainly, and we'll in fact be able to make up most of that shortfall probably in the July-to-August timeframe of that year, before the conventions.
But there is definitely a shortfall. There is a structural problem, if you will, built into the system right now. Congress was helpful and upped the checkoff to $3 several years ago, but did not actually at that time index it for inflation. Eventually, inflation is just going to catch up, and the payouts which are indexed for inflation are going to outpace the checkoff receipts coming in.
So the bottom line, though, for the 2000 election cycle: the primary matching fund program is in some jeopardy of having a shortfall, but campaigns will probably have to operate under those circumstances by getting bank loans to cover expenses during that timeframe before they can get the replenishment.
In the year 2000, I would assume that the situation may be more drastic, depending on how many candidates are active. If it's an open election, like we have this year, certainly the year 2000 suggests that we'll have—I'm sorry, 2004, if I misspoke—2004 will be even more problematic.
Mr. HOYER. Mr. Chairman, I guess our time is just about up. So I'll submit the rest of them.
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Mr. KOLBE. Thank you very much, Mr. Hoyer, for your questions.
Commissioners Thomas, Elliott, thank you very much for being here today with us.
The subcommittee will stand in recess until 2:00 o'clock.
"The Official Committee record contains additional material here."
Tuesday, March 24, 1998.
U.S. GENERAL SERVICES ADMINISTRATION
WITNESSES
DAVID J. BARRAM, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION
DENNIS J. FISCHER, COMMISSIONER, FEDERAL TECHNOLOGY SERVICE
ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE
Opening Remarks
Mr. KOLBE. The subcommittee will resume its testimony now with Mr. David Barram, Administrator of the General Services Administration and his staff; Mr. Peck, who is Commissioner of Public Buildings Service [PBS]; and Dennis Fischer, Commissioner of Federal Technology Service [FTS].
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Thank you very much for being with us here.
For the next fiscal year 1999, the General Services Administration is requesting an appropriation of $140,735,000, a decrease of about $2.8 million below fiscal year 1998. But it is also requesting $5.1 billion in new obligational authority for the Federal Buildings Fund.
My colleagues will recall that last year we had a lot of discussion about this issue, particularly the revenue shortfall in the Buildings Fund. And I am pleased to hear, Mr. Barram, at least from your written testimony that we have reviewed, that you believe you have successfully corrected the problems that led to the shortfall.
We are certainly going to want to hear more about that so that we can monitor that situation. This year, you are facing a shortfall in the rental of space activity of the Federal Buildings Fund. It is a continuation of a problem that surfaced last year. I hope you will be able to tell us what you are going to be able to do in this area to improve your ability to forecast your needs.
You have requested new obligational authority within the Federal Buildings Fund for new construction projects but have not requested any new courthouse construction. If we were to follow the recommendations of the Administration it would be the second year in a row with no courthouse construction. I am very concerned about how many years you can go without keeping up with the courthouse infrastructure needs. I recognize that the realities of the budget are going to make it very difficult to continue this important program.
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We are also, though it is not an appropriations matter, we are also following very closely the progress you are making as you prepare for new contracts for long-distance telecommunications services for the Federal Government.
So, we look forward to what you have to say to us today. As always, your full statement will be placed in the record and I hope that you would summarize it very briefly.
But, before I do that, let me call on Mr. Hoyer, for any opening comments.
Mr. HOYER. Thank you, Mr. Chairman.
Welcome, Mr. Barram, and Mr. Peck, Mr. Fischer and other officials of the General Services Administration. I share the chairman's concern. We have to some degree fallen on bad times at GSA in the sense that our investment in our public infrastructure is being delayed, perhaps not postponed, well, delayed and postponed, not eliminated but certainly delayed.
And to the extent that we have done this last year, to presumably affect the payment of the shortfall in the rental receipts which were projected, which I understand now total somewhere in the neighborhood of $800-plus million. Maybe a little more.
To the extent that the problem has been substantially resolved, I think we need to look very carefully at whether or not we can afford to continue to delay very needed Federal projects, particularly courthouses. We are talking about increasing our law enforcement efforts, we are increasing our arrest levels, we are increasing our incarcerations, all of which have led to some additional activity in the courts of the land at the Federal and State levels. And I share the Chairman's concern and we look forward to hearing your thoughts on that and we will have some questions on that. But I look forward to hearing your testimony.
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You are doing more with less. At least we are doing administratively more with less people. I think you have a 31 percent decline in FTEs since 1993. And to that extent I suppose that you mirror to some degree the rest of the Federal Government, although perhaps a deeper cut than some others.
Thank you, Mr. Chairman.
I look forward to Mr. Barram's testimony.
Mr. KOLBE. I would ask if any other members of the subcommittee have an opening statement or remarks that they want to make?
Okay. Let me begin the questions here.
Oh, I am sorry, you have not made your statement.
I am so anxious to get right into it.
Mr. WOLF. Take that as a hint. [Laughter.]
Mr. KOLBE. Mr. Barram, of course, your testimony.
Summary Statement
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Mr. BARRAM. Mr. Chairman, and members of the subcommittee, thank you. I am Dave Barram, Administrator of GSA and you have already said I could put my full statement into the record and I am going to do that.
I would like to make two points today that will maybe take four minutes. The first point is an assertion and that is that GSA is a successful agency today. Our people have a lot to be proud of. It is not your father's GSA, not even the GSA of a few years ago. We had to change a lot and we have.
I could go on and on about that but I will not. You have all been very gracious listening to me do that already, so I will not do that today. But I believe our change and resultant success is driven by two forces. One is that we have committed ourselves to our customers to try to thrill them and the second is that we are learning how to get satisfaction from having tough measures of performance and holding ourselves to it.
We are going to screw up sometimes, I am afraid, but we are confident that we can fix it, that we can get back on the right track and be stronger for it.
The second point is the one you both talked about, our budget for new construction. We have discussed it with you individually and we should talk about it today in as much depth as you would like. You mentioned that this is the second year in a row that our budget has no new dollars, essentially, for construction.
This decision reflects a number of considerations. A couple I will mention. One is the President's decision to curb spending as he drove toward his balanced budget. Second, we now have an agreed on willingness, I think, to allocate all the available dollars to repairs and alterations. This comes from a recognition that the Federal Buildings Fund is capable of paying for repairs and alterations or new construction, but not both.
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We have an inventory of Federal Buildings at a replacement value of $30 billion and we need to keep them up. We have spent about $600 million a year over the last nine years in Repairs and Alterations, R&A. The private sector benchmarks say we should annually spend between 2 and 4 percent of asset value which would suggest $600 million to $1.2 billion a year, which puts our $600 million at the bottom of that range.
Even if we were to spend at that $600 million level, we have a hill to climb as many of our old and historic buildings are behind the curve when it comes to rehabilitation. We would need more than the bottom of the range to get where we need to go.
The Congress has asked us to run GSA like a business. That means we need to charge enough rent to generate enough money in the Federal Buildings Fund to allow us to keep our assets in good shape.
Our customers expect to occupy Class A space when they pay Class A rents, so, we need to keep their spaces in Class A condition. To do that, we cannot skimp on R&A funds in the budget. It is a little like not keeping bridges and roads in top condition, it is pay me now or pay me later. And for some of our buildings it has been, unfortunately, pay me later. Later never seems to come for OPM, Education and a few other buildings.
And all this is before we even talk about new construction. For the foreseeable future, I believe we will require appropriated dollars to fund new construction. So, I want to make the case that we should not raid the R&A account to finance new construction.
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That is a stark way to describe the situation, Mr. Chairman, but that is how I see it. Last week, the Senate Budget Committee decided there should be additional new construction in fiscal year 1999, and its budget resolution specified that the funds should come out of general appropriations. I think that is the right way to do it.
I have with me today the right people to discuss anything that you wish about GSA. Bob Peck is here, Donna Bennett is Deputy Commissioner of Federal Supply Service, Dennis Fischer from FTS, Marty Wagner, who runs our office of Government-Wide Policy, Bill Early, our very able budget director, our new CFO, Tom Bloom, Bill Ratchford, your old colleague, Martha Johnson, GSA's Chief of Staff and a number of other people from GSA.
We did leave a few people back at the office, but we have enough here to answer any questions that you have.
Thank you.
[The prepared statement of Mr. Barram follows:]
"The Official Committee record contains additional material here."
RENTAL OF SPACE ACCOUNT
Mr. KOLBE. Thank you very much, Mr. Barram, for your remarks there. Mr. Barram, a couple of months ago in January, you submitted a reprogramming request of $243 million to meet the contractual and program requirements in the rental of space and installment acquisition payments activities.
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Would you explain to us what happened to cause the shortfalls in these accounts?
Mr. BARRAM. Do you mind if Bill Early answers that?
Mr. KOLBE. Certainly.
Mr. EARLY. Thank you, Mr. Chairman.
The primary reason was in our rental of space account. As we indicated a year ago, we had projections for government downsizing that did not occur. We have had a robust real estate market where rental rates have gone up higher than projected two years ago. And your committee approved reprogramming last year in this rental of space account and the full year impact this year.
Those are the major reasons that we need to change our priorities, and realign our dollars so that we can pay for our leases with the private sector landlords.
Mr. KOLBE. What is going to happen if you do not get the additional money in that rental account?
Mr. EARLY. We will have inadequate funds in mid-August to pay contracts with our landlords.
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Mr. KOLBE. And what happens?
Mr. EARLY. We will be in violation of anti-deficiency statutes, which do have criminal penalties.
Mr. KOLBE. Not a very good option.
Mr. EARLY. We would have to abrogate our contracts with our landlords.
Mr. KOLBE. Not a very good option.
Mr. EARLY. Not very many choices, no.
Mr. KOLBE. Where are we reprogramming this from?
Mr. EARLY. The reprogramming is primarily from the balances that we have in some of our repair projects. Where the projects have been completed, schedules would not be impacted and there are balances in those accounts that would be made available for this.
Mr. KOLBE. There is a piece of it from your construction and acquisition facilities activity; is that going to affect any projects now underway?
Mr. EARLY. No, sir.
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Mr. PECK. Well, let me put it a different way, Mr. Chairman, that is actually good news. That is all from projects that have been completed that we brought in under-budget.
Mr. KOLBE. Those projects are all completed, signed-off, done?
Mr. PECK. Yes, sir.
Mr. KOLBE. So, that is money that is available.
Mr. PECK. The bad news for us quite honestly is that a big chunk of the rest of the funding source for that reprogramming, $142 million, is from our basic repair and alteration program and in a year in which we did not have much to begin with.
Mr. KOLBE. So, this means what Mr. Barram was talking about earlier, the $600 million which is going to be cut even further?
Mr. PECK. Right.
Mr. KOLBE. So, we are really—it is like eating your young in a sense almost?
Mr. PECK. Yes, sir. The problem in our program, of course, is that we have two accounts that are just completely non-discretionary. One is installment acquisition payments. Those are like mortgages. You have to pay them. And the other is leasing because we have signed on behalf of the Government contractual obligations to pay rent.
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And as Mr. Early explained, in this case what is happening is that when you project a budget, as we have to in our budget system, 18 months in advance, we projected what we thought was a generous amount for anticipated increases in the rent levels we would pay as we renew leases. About 1/6 of our inventory is renewed every year.
We thought that the economy would be improving and the real estate market would improve to the tune of about 2 percent increases in lease rates. It has turned out to be about 3 to 5 percent increases in leased rates.
Now, for the fiscal year 2000 budget we will project that and hopefully in that year we will be right.
Mr. KOLBE. Is there anything you can do to improve those projections of those rental rates?
Mr. PECK. Well, I have been in the private sector real estate market also. You are trying to project a year and a half or two years in advance, actually, what the market is going to do and it is just very hard. I think that when we projected two years ago that there would be 2 percent increases average in new leases people would have thought that was a generous amount.
Mr. KOLBE. What is the amount in 1999 you are requesting for new obligational authority for the rental space and is that going to be sufficient? Do you have confidence?
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Mr. PECK. In 1999, it is about $2.6 billion. We will be in better shape than we were in 1998, I think, by quite a bit.
But each year, as in 1998, in which you add to the lease payments you are making means that you add to the base you will be paying in fiscal year 1999.
In other words, this thing rolls along. What we believe we can do in fiscal year 1999 is to come up with an accounting way in which we take account of that particular dollar amount that you just cannot predict in advance. There is a way to do this within the Federal budget system. We have had some discussions with OMB about it but I cannot yet present to you a finished product for taking better account of that kind of uncertainty.
Mr. KOLBE. One final question. By reprogramming $142 million out of your repair and alterations, is there a major renovation project that is going to miss getting going this year or is it a little bit taken out of an air conditioning system here and stairs there and that kind of thing?
Mr. PECK. It is the latter. We have taken it out of the account that is the small projects, below prospectus limits.
Mr. KOLBE. That is a lot of small projects, $142 million that is not going to get done.
Mr. PECK. Yes, sir. Well, when you have 1,800 buildings you have these all over the place. And that is what we basically have.
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Mr. KOLBE. Mr. Hoyer.
PERSONNEL COMPLEMENT
Mr. HOYER. By reference you have had a significant reduction in personnel. Based upon your being there for some period of time, do you have sufficient people to accomplish the objectives and responsibilities you have?
Mr. BARRAM. Yes. If we improve our ability to get rid of old work and do the new work well, we will do a better job of doing the right work.
If we do not, if we just do things the way we——
Mr. KOLBE. Excuse me for interrupting, we have a vote.
The subcommittee will be recessed for a vote.
[Recess.]
Mr. KOLBE. We will resume. As I mentioned, there will apparently be another vote or two, so we may get interrupted again.
Mr. Hoyer, did you need to repeat the question or Mr. Barram, in mid-thought, can you resume where you were?
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Mr. HOYER. Complement of personnel sufficient to carry out your duties.
Mr. BARRAM. The short answer is yes but we have to work real hard at it because as we do more and more new things, people need to develop new skills. That takes a lot of flexibility in systems; it takes a lot of flexibility in the personnel system, something that, in my view, hasn't always been a word you associate with personnel systems in the government. But we are working hard at it.
GSA people are under a lot of stress right now—I can feel it all around the country—because we are doing some exciting things and people are working very hard. We have to learn the lesson that all organizations have to learn in this rapidly changing time: how to do the A work and not the B work. It is really tough.
I don't know if that answers your question. I think if you asked any manager in GSA if he or she wanted more people, that person would answer yes.
Mr. HOYER. I presume, like all managers, the challenge is to identify A and B.
Mr. BARRAM. That is right.
Mr. HOYER. And the opinion of which is A and which is B sometimes differs.
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Mr. BARRAM. That is right.
Mr. HOYER. Okay, I will move on. I am very concerned about where we are in terms of complement of personnel in GSA.
NEW CONSTRUCTION
Your 1999 budget, $44 million for new construction, we have all talked about it. Is that the right amount?
Mr. BARRAM. It is the amount.
Mr. HOYER. I stated it as being the amount in my premise to the question. Now, is it the right amount?
Mr. BARRAM. It is like A and B work. You know, everybody has a different opinion. We spent a lot of time with OMB in the budgeting process and this is what we have submitted as the President's budget.
Mr. HOYER. What was your request to OMB?
Mr. BARRAM. It was $570 million.
Mr. HOYER. $570?
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Mr. BARRAM. I think so.
Mr. HOYER. We have that list, I think.
Mr. BARRAM. The bulk of that, of course, is courthouses because that is what we build in this country—courthouses, jails and border stations.
One of the things that I think is really important, and you know this very well, we have established in the last couple of years a priority list on which courthouses to build and I am very pleased, as a relative newcomer to government, to see the way the Congress and GSA and the Administration in general and the Courts have worked on this because otherwise, it gets to be who has the most political power rather than what is the right thing to do.
We have an eight-year program, a long-time program of $8 billion or whatever it is of building new courthouses in this country and we have a list of which come first. So when we have the dollars, the idea is this courthouse gets built first.
Mr. HOYER. Because our time is brief, let me ask a series of quick questions on this.
A, do you believe the federal judiciary's process of setting priorities is appropriate at this point in time?
Mr. BARRAM. I think it is, the short answer.
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Mr. HOYER. Do you believe that the dollars projected for construction is for what the public would say is needed space, as opposed to gingerbread space? I don't like either one of those terms, but I couldn't find any better way to say it. Do you know what I mean?
Mr. BARRAM. Yes.
Mr. HOYER. So that of the $570 million, GSA's view is A, this is appropriate, it is priority and it is the proper priorities?
Mr. BARRAM. Yes. One of the things that we had planned a couple of years ago is to spend about $500 million a year every year and that would be a reasonable way to do it. We were unable to do it in 1998 and the budget says we are unable to do it in '99.
Mr. HOYER. Have there been discussions about alternative means of financing?
Mr. BARRAM. Yes. We have had lots of discussions. I think I will let Bob answer that.
Mr. HOYER. Again, time is brief and we may want to answer that for the record.
Mr. PECK. I will just give you the brief answer. Yes, we have looked at lots of different ways, some of which are actually done in the government right now. A lot of them don't conform to rules that were set down in the Budget Enforcement Act of 1990, so there are lots of hurdles you have to overcome to try to make any of those things that people do in the private sector work in the public sector.
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Mr. HOYER. Mr. Chairman, if I can, a last question. What are we doing on amortizing federal construction projects? What is the maximum time you have available to do that under the present rules?
Mr. PECK. Well, we actually do not amortize federal construction,
Mr. HOYER. It is 100 percent in one year?
Mr. PECK. Yes, sir.
Mr. HOYER. My point being, Mr. Chairman, every state government, I presume, and I know Maryland, that purchases capital projects amortizes them over—in Maryland it is 15 years, which is a relatively short period of time We do it 100 percent up front and it is a real constraint fiscally but it also is a real constraint in terms of investment.
Mr. BARRAM. I think that is because you don't build nuclear submarines in Maryland.
Mr. KOLBE. I was going to say we do the same with aircraft carriers and nuclear submarines—buy them all in one year.
Mr. Wolf has asked to go next and I will accommodate his request.
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GOVERNOR'S ISLAND
Mr. WOLF. Thank you, Mr. Chairman. I am going to have a series of questions for the record but I just want to make the record here.
You would agree that Governor's Island is a treasure that we should protect? Is that fair? It is a very historical site—would you just give us a sentence or two, why it is so historical, for the record?
Mr. BARRAM. Well, it is a wonderful place and at one time or other in its existence it was under seven different flags. It has some beautiful old buildings. It has great historical significance.
Mr. WOLF. It looks out on Ellis Island; is that correct?
Mr. BARRAM. Yes, it does.
Mr. WOLF. It looks out on the Statue of Liberty; is that correct?
Mr. BARRAM. Yes.
Mr. WOLF. Secondly, how much money did the President request for maintenance of Governor's Island in fiscal year 1999?
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Mr. BARRAM. $7 million.
Mr. WOLF. $7 million, and you have a tight budget. Can you afford these costs over the next five years, given the rapid deterioration taking place over on the island?
Mr. BARRAM. It is appropriated funds. We also have talked about the value of having it be no-year funds, if we can do that.
Do we think seven is enough?
Mr. EARLY. We think that seven is enough but that is for this year. There is a recurring need. We would expect to see recurring requirements in future budgets, maybe at this level, maybe at higher levels. This is the amount we are comfortable with for this year.
Mr. WOLF. I was out on the island about a month and a half ago. For the members, they have Coast Guardsmen raking leaves. The buildings are beginning to show the effects of weather.
There has been some interest by only one or two individuals in New York City to bring gambling to the island. Do you think it would be inappropriate to bring gambling to the island?
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Mr. BARRAM. Well, I do personally.
Mr. WOLF. Well, that is all we need to know. [Laughter.]
And I agree with you.
The last question is this, and then you can elaborate a little bit more for the record.
Senator Moynihan and Congresswoman Maloney and some others have an amendment, have an idea of a concept to set up a commission to save the island with people from the Federal, state and local governments. My own sense of what should be done with Governor's Island, is it should be used for the citizens of the New York State area, for tourism, and for citizens from Maryland and Virginia and Arizona or wherever, when they come.
Secondly, a portion of it should be used for the Park Service because there are some very historic buildings out there. I think one of the oldest buildings in New York City is out on the island. The prison out on the island is very, very historic.
And lastly, to take all of the buildings that are not historic and allow universities—NYU, Cornell, Fordham and other universities—to use them.
Would you work with the committee and with Senator Moynihan and Congresswoman Maloney to work out some mechanism for an orderly process for the disposal of the land?
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Mr. BARRAM. Absolutely. We really welcome it because we have the responsibility to dispose of it and we are delighted that they are taking such an active role and that you are, too. It is a tough task unless we get a lot of people working together in some creative ways.
Mr. WOLF. I thank you, Mr. Administrator.
Mr. Chairman, thank you very much. I have others I will just submit for the record.
Mr. KOLBE. We will resume our order here. Mrs. Northup.
GOODWILL GAMES
Mrs. NORTHUP. Mr. Barram, I wanted to ask you about the GSA's cooperation with the Goodwill Games. There was language specifically in the bill last year about cooperating with the Goodwill Games and about the GSA providing services to the Goodwill Games, like we do for the Olympics.
I think what I understand is that for any other services besides the ones specifically in the report language, the Goodwill Games is interested in reimbursing you. For example, if there are printing services that are part of your buildings, communication services, whatever, that they could use the GSA's facilities and services and then reimburse for them.
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The question is, do we need specific language to allow that? And were those contracts always with the memorandum of agreement with DOD and GSA in the past or with the Olympics? Did you all provide those services directly to the Olympics with provisions in the budget, special report language?
If not, I understand that DOD is no longer doing that. It has now been transferred to the Army. But because it just was transferred to the Army, they have never done it before; they don't have the expertise; they are not prepared to set it up.
The Goodwill Games are going to be on Long Island this summer and I guess there are some people getting pretty desperate about that.
Mr. BARRAM. We are going to try to give a short answer.
Mr. PECK. Let me try a short answer. One is we think we are close to an agreement with DOD on some cooperation, which will allow us to do a couple more things, but I would like to get you an answer for the record on what we can do reimbursably because that always gets complicated.
[The information follows:]
SUPPORT FOR GOODWILL GAMES
On March 26, 1998, GSA and DOD signed a Memorandum of Understanding concerning coordination and assistance in support of national and international special events. Either GSA or DOD may provide any of the following services to the other on a reimbursable basis in conjunction with that agency's support of a national or international special event: waterhouse space, furniture, security, administrative supplies, inventory management, motor vehicles, telecommunications, and other forms of support or services.
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Mrs. NORTHUP. The question that is before us immediately is that we have the supplemental going through and there was a question about report language and what it should say. There was disagreement from the staff about what the exact language would be that would be appropriate and acceptable, apparently between your committee staff and the committee staff.
This bill is headed to the floor now but certainly in conference committee that report language possibly could be accommodated. We just need to know what it is.
I think, Mr. Chairman, am I right that we are looking for that?
Mr. KOLBE. Yes.
Mrs. NORTHUP. I think there is just a clarification that we really need here.
Mr. BARRAM. Bill.
Mr. EARLY. As you indicated, the authorities that we are aware of are with the Defense Department now, and with the Department of Army. GSA does not have the authority to deal directly with these nongovernmental entities, even on a reimbursable basis, but the Defense Department and now Army do.
So it is important for us to have that memorandum of understanding with them. Absent that, we are not able, without new statutory authority, to deal directly on a reimbursable basis for those services.
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Mrs. NORTHUP. If the supplemental beats the memorandum of agreement in terms of a time level, could the report language say pending memorandum of agreement between DOD and GSA that reimbursable services would be allowed?
Mr. EARLY. We try to be as imaginative as possible but I think we would have a problem without clear statute. Report language would be inadequate for us to do things where we don't have the authority.
Mrs. NORTHUP. So it would actually have to be bill language.
Mr. EARLY. Yes, ma'am.
Mrs. NORTHUP. You are not aware of anything with the Olympic Committee?
Mr. EARLY. What we have done in the past with Goodwill and Olympics and Para-Olympics has been through the agreements with DOD. They have been the lead and in many cases under their charter we might work directly with those agencies, but the reimbursements are all through DOD as the parent.
Mr. KOLBE. Mr. Istook.
Mr. ISTOOK. I pass, Mr. Chairman. I have another commitment.
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Mr. KOLBE. Mr. Forbes.
CHILD CARE
Mr. FORBES. Thank you, Mr. Chairman.
I note in this wonderful brochure you gave the committee the kids on Broadway, the GSA Child Service Center, the partnership with the City of San Diego and the private sector and, of course, I want to thank GSA and Commissioner Peck for the help that you all gave us in New York and Long Island with the IRS and child care there.
My question is, Mr. Administrator, first of all, you note that GSA has opened three additional child care centers in the last year. How many GSA-sponsored child care centers or GSA-encouraged child care centers exist in the various court complexes around the country?
Mr. BARRAM. Well, there are 108 or 109 total. In courthouses?
Mr. FORBES. Just the courthouses. Are there child care facilities at courthouses?
Mr. BARRAM. There are some, yes, a handful, six, seven.
Mr. FORBES. I would appreciate it if we could have that for the record at some point.
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Mr. BARRAM. Sure.
[The information follows:]
CHILD CARE CENTERS IN COURTHOUSES
There are fifteen child care centers currently located in facilities where there are Judiciary court operations. Only one of these—a new courthouse in Kansas City, Kansas—is located in a building used strictly as a courthouse. There is also a child care center planned for the new Boston Courthouse Building which is scheduled to open September 1998.
Mr. FORBES. My concern, of course, is I think the President has laid out that child care facilities is certainly a priority. I know your administration, Mr. Barram, and GSA in general has a very strong philosophy in favor of encouraging child care centers and we do, as I said, appreciate what you did with the IRS at Brookhaven Service Center on Long Island. These are obviously among the most modest of wage-earners, and having a child care facility there, even in the event that it is not fully staffed by federal employees but the fact that there is a partnership with the private sector, I think, goes a long way.
There is another complex being constructed at Central Islip, the court complex there. I was wondering and I would appreciate it, if you can't do it now, if you could provide it for the record, have there been any discussions about providing child care? There are going to be, I think, close to 2,000 employees when that facility is completed.
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Mr. BARRAM. There have been discussions. The issue we have, the struggle we have, and maybe those are the wrong words to use but not all judges feel like it is a good thing to have child care in the courthouses, for security reasons. We are in extensive and intensive discussions with them about that.
[The information follows:]
CHILD CARE CENTER IN CENTRAL ISLIP COURT COMPLEX
Yes, we have had and will continue to have child care discussions with the Courts and with the other agencies who will be tenants of the facility when it is completed in 2000.
Mr. FORBES. Because they don't necessarily have to be on the site; is that correct? As a matter of fact, I think there are some facilities that are within a mile or two, a three- or four-mile radius of a site? They aren't always contiguous to the site itself.
Mr. BARRAM. They don't have to be and a child care center has to work economically, too. So the space has to be cost-effective and the clientele has to be available. So all that stuff plays, but it could be close by.
Do you know anything specifically about the Islip one?
Mr. FORBES. Well, if you could provide it for the record, I would appreciate it. I think, though, for the record, I think it has been a public policy decision by the Clinton Administration and one that I certainly agree with and I think large numbers of the Congress, if not the Congress in general, feel that in the current climate, that child care facilities are a very, very important undertaking.
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And I understand the cost. We have debated that cost at the facility on Long Island in particular but certainly if we can't take the lead, as public policy-makers, whether it is on the administrative side or on the congressional side, I wonder who does take that lead.
So I would appreciate it very, very much if GSA could look seriously at not just the Central Islip courthouse, which I encourage you to do, but also some of the other new construction projects that may be coming down the pike, because this is certainly an area where that ought to be the place where leadership starts on the child care question.
Mr. BARRAM. Absolutely. We agree.
Mr. FORBES. And I thank you certainly for your personal leadership and, Mr. Peck, for your help in New York.
Mr. BARRAM. Let me just say one thing about that brochure you mentioned. I only had five because they are actually warm. They just came off the printers. So for those of you who didn't get one, I will make sure you get one.
Mr. FORBES. Thank you. Thank you, Mr. Chairman.
Mr. KOLBE. Thank you very much, Mr. Forbes.
Mr. Price.
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FTS 2001
Mr. PRICE. Thank you, Mr. Chairman.
I am happy to have you here, and I would like to raise a brief question about your FTS 2001 contract procedure. I understand the RFP on that went out the middle of last year and you are looking now at early 1998; is that right?
Mr. BARRAM. It went out at the beginning of this year.
Mr. FISCHER. In the latter part of February we had proposals on the technical side in.
Mr. KOLBE. We need to have you come up and identify yourself.
Mr. FISCHER. Dennis Fischer, Commissioner of FTS.
The RFP closed on March 2 with all the technical proposals. The price proposals are due April 2 and we contemplate an award in the fall of this year.
Mr. PRICE. Award will be in the fall of this year?
Mr. FISCHER. Yes, sir.
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Mr. PRICE. And how does that relate to the expiration date of the FTS 2000 contracts? To what extent do those overlap?
Mr. FISCHER. Well, the existing FTS contract expires in December of 1998. We have a unilateral right to extend that for six months. Because the transition, given the time line that we are on now, will take longer, we will also negotiate with the existing providers for transition beyond that until the complete transition is made to FTS 2001.
Mr. PRICE. Well, as you probably know, some questions have been raised about the extent to which the FTS 2001 contract procedure is going to be open to all comers and to what extent there may be a locking-in taking place or a bias towards those who have the earlier contract.
I just would like to ask you to explain this mandatory use issue that has come up with regard to your budget submission and to offer whatever assurances you can as to the openness of this process.
Mr. FISCHER. Okay, sir. The present contract, FTS 2000, has a contractual requirement that calls for mandatory use and this subcommittee over the years has been very supportive legislatively of helping us enforce that.
Two years ago the subcommittee approved an extension of it because at that time it appeared we would only need it for two years. Subsequent to that time, as you mentioned, the RFP process was extended. The Telecommunications Reform Act came into play.
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What we are asking for is to have that mandatory use language on FTS 2000 extended in an open-ended fashion until the FTS 2000 contracts are completed.
Now, the follow-on contracts for FTS 2001 will not be mandatory. So agencies will have a choice. The major agencies have pledged to stick with us through the initial part of that contract as we satisfy the minimum revenue guarantees that are in there and we need those revenue guarantees to attract good and aggressive and hopefully lower prices than we pay today.
Mr. PRICE. Is the effect of that handling of the issue to bias the procurement process for FTS 2001 in favor of the present contract-holders?
Mr. FISCHER. No, sir, it is not. All it really does is say to us that while this old contract winds down, to the extent that services need to be provided under it after December 1998, that it would be extended to keep that in the envelope until the contracts expire.
Mr. PRICE. All right, thank you.
Mr. Chairman, do I have any time remaining or should I wait until the next round?
Mr. KOLBE. You have one minute.
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Mr. PRICE. Well, I will wait until the next round. Thank you.
Mr. KOLBE. Mrs. Meek.
WELFARE TO WORK INITIATIVE
Mrs. MEEK. Thank you, Mr. Chairman.
I apologize. I was in a full committee meeting. That is why I wasn't here to greet Mr. Barram. He certainly has come a long way since last year. I notice you have quite a bit of information, which I have hurriedly read here.
I have a question that I hope is germane to what you are doing. It has to do with job creation by GSA. I notice you have a lot of out-sourcing. You have a lot of contractual arrangements with everybody, it seems, throughout the country.
Have you paid any attention to a welfare-to-work initiative with the people with whom you do this contracting?
Mr. BARRAM. The people with whom we do this contracting? We have a very aggressive welfare-to-work initiative inside of GSA. That is a very interesting question. We account for maybe $14 billion, I think the number may be, $40 billion in contracts with people in the private sector, but we do that by having our customers, the federal agencies, make purchases from them. We set up contracts and let them purchase.
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We are very aggressive with SBA; we have recently made it even easier—in getting our federal agency customers to pay attention to small businesses, but I don't know if anybody has ever done what I think you are asking.
Mrs. MEEK. You would think there would be some sentiment from the top down as far as you are concerned in impressing this over the agency.
Mr. BARRAM. Well, personally I would have some sentiment for it but I would really be careful of it. I would want to understand it well because it could end up being a really difficult task to figure out how you were doing it. If you ended up with requirements and regulations or laws, you could spend an awful lot of effort and I don't know whether you could get where you want to get. It's a very interesting sentiment.
I like the way we are going about it in the country with doing it inside the federal government in an aggressive way and the President challenging American companies to try to make welfare-to-work work, but I haven't ever thought about the question you asked.
FEDERAL AGENCIES REQUEST TO MOVE BETWEEN DISTRICTS
Mrs. MEEK. My next question has to do with a concern of mine. I may have asked you this question last year. I can't recall exactly if I asked it or how I asked it.
What procedures does GSA use when an agency requests to be moved from one district, one congressional district, to the other? Let me give you an example.
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Members are fairly provincial about having Federal buildings moved out of their district into another district.
Mr. BARRAM. I hadn't noticed that.
Mrs. MEEK. Yes. Tell me what kind of methodology do you use or regulations do you use before you go forward with this kind of request?
Mr. BARRAM. I will answer that and Bob may want to add to that, as well. Here is how I look at it. We have some drivers for us and one of them is helping the central cities of America stay strong. The President's executive order says to locate in the central cities, locate in historical districts and we have worked very hard to try to make that happen.
If an agency wants to move out of a central district into another member's district that is not in a central city, we are going to work hard with them to try to keep them located downtown, not because we like one member over another but because it is the downtown central city reason.
We, I hope, are indifferent to what district it is in.
Mrs. MEEK. He said he is indifferent to which district it is in. That is what you said, Mr. Barram?
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Mr. BARRAM. Except for the two of you.
Mr. PECK. Obviously——
Mr. BARRAM. Let me be clear about this for the record. We should be professionally indifferent to which congressional district a property is in. We work with our customers, the federal agencies, and we focus on the downtowns.
Mrs. MEEK. When Mr. Peck finishes, I will——
Mr. PECK. There are several ways in which a relocation can happen. For example, an agency can decide that it is going to consolidate the number of offices it has nationally and instead of having 40 field offices, have four. That is not a decision that we in GSA look behind, nor can we because we have no competence to tell them how to do their business.
That may mean that some federal employees who are currently located in congressional district X are going to go to congressional district Y or transfer to another agency or whatever. We sort of take the locations as they are given.
What the Administrator was talking about is absolutely right. With respect to relocations within a given metropolitan area we have clear policies given to us by the President, which are incumbent upon us and the federal agencies to follow. That puts us in the position of sometimes trying to enforce something that some agencies aren't happy with.
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There is one other factor that I would be remiss if I didn't note. We are very strong; we have a fixed inventory of federal office space, which we pay on whether it is occupied or not. If it is not occupied, we are losing money for the taxpayers.
Our first preference is to locate federal agencies in existing federally owned space if we believe that that space is productive work space. If it is not productive we ought to dispose of it somehow or other. So that is another clear preference which sometimes comes into play when we talk to agencies about location decisions.
Mrs. MEEK. Mr. Chairman, I would like to go off-record with my next statement. I want to be off the record.
Mr. KOLBE. Off the record.
[Discussion off the record.]
Mr. KOLBE. Thank you, Mrs. Meek. We will begin here with a second round of questioning.
FEDERAL BUILDINGS FUND
I want to come back to the Federal Buildings Fund and the concerns we have about that. How are your revenues in 1998 matching up to the projections you made so far?
Mr. BARRAM. Very good.
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Mr. KOLBE. Very good?
Mr. BARRAM. Yes. We have a quarter of the year done and we have a quarter of the year revenues.
Mr. KOLBE. As far as you know, in the budget that has been submitted to Congress for fiscal year 1999, have all the agencies requested the full amount of their rents?
Mr. BARRAM. Yes, sir.
Mr. PECK. Which I might note is a breakthrough.
Mr. KOLBE. All agencies have requested the full amount, so there is none that is outstanding?
Mr. PECK. Yes, sir.
Mr. KOLBE. Are all agencies currently paying their full amount of rent?
Mr. PECK. This year?
Mr. KOLBE. Yes.
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Mr. PECK. No, sir.
Mr. KOLBE. Can you tell us which ones are not or provide for the record a list of those that are not?
Mr. PECK. I would rather give you the list so I don't have to say it in public.
Mr. KOLBE. Well, it is going to be in the record.
Mr. PECK. They are being better.
Mr. KOLBE. It is going to be in the record. I want the list and I want it in the record.
Mr. EARLY. Those that are not paying us the full amount today are related to not having adequate funds appropriated for them to pay us, so they——
Mr. KOLBE. I want that list.
[The information follows:]
AGENCIES NOT PAYING FULL RENT
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Several years ago the Department of Agriculture (USDA) appropriation bill began imposing limitations on the rent payments to GSA, regardless of the volume or value of space received from GSA. Additionally, the law stipulated that GSA could not decrease service or decline requests for new space from these agencies. Due to the perceived intent of Congress, USDA and the Food and Drug Administration (FDA) have been requesting in their budgets insufficient funds to pay GSA full rent. In fiscal year 1998, the loss of income to GSA due to these rent limitations is expected to be approximately $43 million. In fiscal year 1997 and 1998 appropriations bills, GSA was instructed to decrease service and decline requests for new space from agencies who do not pay GSA full rent. As a result, GSA, OMB, USDA, and FDA have worked together to prepare a budget which includes full rent payments to GSA from USDA and FDA in fiscal year 1999.
Since the inception of the Federal Buildings Fund (fiscal year 1975) GSA has billed trust fund agencies (Social Security Administration, Health Care Financing Administration, and Railroad Retirement Board) only for the cost of space, not the full market rent. The loss of income to GSA is expected to be approximately $99 million in fiscal year 1998 and approximately $98 million in fiscal year 1999. The policy of billing for actual cost arises from report language accompanying the fiscal year 1975 Labor, HEW appropriation Bill. This policy is currently under review but a final resolution was not reached for the fiscal year 1999 budget cycle.
Mr. PECK. Let me note one other thing. The trust fund agencies, by statute, provide us cost but don't provide full rent. Again that is a statutory determination.
Mr. KOLBE. Would you repeat that again?
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Mr. PECK. Social Security and other trust fund agencies pay a cost of space but don't pay us the full market rent like everybody else.
Mr. KOLBE. The reason they are not paying full rent in all cases is because they have not had the funds appropriated; is that correct? Is there any other reason? Are there other agencies that are withholding, not paying their rent?
Mr. PECK. No, sir. But to be fair to you all, the couple of agencies that hadn't paid rent before hadn't requested their appropriators to give them full rent. There have been other cases in the past in which it has been requested and it hasn't been provided but currently it is——
Mr. KOLBE. I definitely want that list. I intend to make an issue out of that this year.
You have requested a little over $5 billion in new obligational authority for the Federal Buildings Fund. What is your estimate of revenue for this coming fiscal year?
Mr. PECK. For fiscal 1999 we are in balance. We anticipate a small surplus based on our anticipated revenues.
Mr. KOLBE. You only have the $44 million request for obligational authority for new construction projects. Can we anticipate that is the level of new construction we are going to be able to support in the future?
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Mr. PECK. We have taken a look at the 20 some years that the Federal Buildings Fund has been in existence. I have to say that if we provide the level of basic infrastructure repair that the Administrator talked about, we think that $50 million, in some years maybe $100 million—this is our view—of what it would be prudent to spend on new construction, compared to the requirements to spend on keeping up what you have.
So that is a pretty good guess about where we think the level——
Mr. KOLBE. Let me see if I understand that statement. You are saying if we provide the adequate funding for renovation and repair, then $50 million would be about all you would need for new construction?
Mr. PECK. No, sir. I am not saying that is all you would need. I am saying that if you run the fund in a businesslike way, the amount of construction that the fund can support——
Mr. KOLBE. Ah, that is all we can support. Now you are asking for $668 million in the repair and renovation fund. You told us a few moments ago that $600 million to $1.2 billion should be spent and you are right at the lower end of that. So you are really not asking for an adequate amount for that, are you?
Mr. PECK. No.
Mr. BARRAM. We could be confusing you with these two answers, and I don't want to do that. We think we have $4.5 billion of repairs and alterations over a period of eight or nine years, which would get us to that $500 million, but that we should do that faster if we really were doing it right.
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I want to say what I hear from Bob and he may want to disagree with that, but yes, we could, if we think about things the way we thought a little bit in the past, we could maybe find $50 million or $100 million out of that—we could take $50 million or $100 million and spend it on new construction but we wouldn't be rehabbing as fast as we should.
Is that fair?
Mr. PECK. Yes.
Mr. KOLBE. All right. We are running out of time. We have votes called and I want to see if others have other questions. I want to ask just one question here.
FCC RELOCATION
You have released some of the relocation money to the FCC for moving into the Portals Building. A, have you taken control of all of that building? B, has the move started?
Mr. PECK. The base building is complete and the move has not started. That is the short answer. We do not have the building yet in shape for the FCC to move in. We have released all the funds necessary, however.
Mr. KOLBE. I thought you were going to take over segments of it on six-month or month-long segments.
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Mr. PECK. Mr. Chairman, we had an agreement to begin paying rent and to take all the different parts of the building under our wing for rental purposes and the answer to that is yes, we are now at a point where we are paying rent on it.
Mr. KOLBE. You are paying rent but you still don't have it in rentable condition. Is that what you are saying?
Mr. PECK. There are parts of the building that are still not in a move-in position. It is in a rentable position.
Mr. KOLBE. When is the FCC going to start moving?
Mr. PECK. We believe in September.
Mr. KOLBE. Not until September. I will probably have some other questions on that. Thank you.
Mr. Hoyer.
Mr. HOYER. Is GAO still looking at this move?
Mr. PECK. Yes, sir. As you know, they concluded one report and said that they were asked to look into some allegations of political influence and they said they had not concluded their inquiry on that. But they did conclude their inquiry on the question of is it cost-effective for the government to move the FCC. There the answer is yes. Did GSA follow all of its laws and regulations in signing the lease? The answer was yes.
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Mr. HOYER. It is my understanding that we tried to cancel this procurement. We were taken to court and lost in 1992, and then told to reinstate the procurement at the point of cancellation. Is that correct and is that why we are at the point we are now?
Mr. PECK. That is correct, sir.
Mr. HOYER. Okay. Well, I share the Chairman's concern about this project and I am sure we will follow it closely.
Mr. Chairman, I have other questions. I will submit them for the record.
Mr. KOLBE. Mr. Price.
ICC/CONNECTING WING PROJECT
Mr. PRICE. Thank you, Mr. Chairman.
We are pressed for time but let me raise the issue of this ICC Connecting Wing project that is in your budget request. I very much hope that the management problems that the Chairman is referring to and the funding difficulties that have gone along with that can be resolved . . . because the ICC Customs Connecting Wing project is in abeyance and, as I understand it, it is costing us money the longer we fail to complete it.
I wonder if yo