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On the Right Real Estate Track

Danny Werfel provides an update on the Administration's ongoing effrots to consolidate and sell off excess Federal properties that are no longer needed.

In June 2010, President Obama set an ambitious goal for his Administration: to eliminate billions in real estate costs by consolidating or selling off excess Federal properties that are no longer needed. Today, OMB is proud to report that agencies have made significant strides toward meeting – and exceeding – the President’s goal.

As of the end of the first quarter of FY 2012, agencies have already achieved over $5.6 billion in real estate savings and are on track to exceed the President’s directive to save $8 billion by the end of this year – historic progress that will reduce costs and thereby make government more efficient and effective. The President’s directive included two parts: $5 billion in savings through the Base Realignment and Closure Commission (BRAC) process, as well as $3 billion in non-BRAC savings. We are currently on track to exceed both of these goals, having achieved $3.25 billion in BRAC savings and $2.4 billion in non-BRAC savings to date.

The Federal Government is the largest property owner in the United States. But over time, agencies accumulated more properties than the Government needs to effectively meet its mission. That’s why from his first days in office, the President has made it a priority to eliminate wasteful spending on Federal real estate. At his direction, agencies have worked to reduce office space, encourage wider adoption of telework, provide alternate workspace configurations, reduce operating costs, and consolidate data centers. Through these efforts, agencies have generated millions of dollars in savings from selling or consolidating properties, on top of numerous examples of lease cancellations, improved space management, and reductions in operating costs that are driving greater returns for the taxpayer.

As just one example, this year the Federal Government sold the GSA Nome Federal Building in Nome, Alaska – a 27,000-square-foot, two-story office building that was built in 1958 – for $1.68 million. The building is slated for continued office use in downtown Nome. We also recently were able to sell the Moscow, Maine Radar Site. This roughly 1,425 acre radar site previously functioned as part of a system of facilities used to track military targets across the Eastern seaboard. After a public auction, the Government sold this site for roughly $750,000. 

Agencies are taking actions like this on excess buildings across the country. Just last week, the IRS announced plans to close 43 smaller offices and reduce space in many larger facilities – cutting total IRS office space by more than one million square feet.  All told, these measures will save taxpayers more than $40 million dollars. Similarly, in January of this year, the Department of Agriculture announced that it will close 259 offices, facilities and labs across the country, driving efficiencies for the Department that will net roughly $150 million annually.

And we are continuing to put more properties in the pipeline for disposal. For instance, the Federal Government is moving aggressively to sell the Portland Custom House in Portland, Oregon. The property is expected to be sold as early as this summer, and could yield upwards of $4 million in proceeds for the taxpayer.

To continue building on this momentum, the Administration – as part of its broader Campaign to Cut Waste – established a new policy earlier this month to freeze the Federal real estate footprint, and require agencies to identify offsetting consolidations when acquiring new Federal building space. These types of common sense steps, paired with improved Federal asset management practices, will continue to drive this Administration’s efforts to deliver the most efficient and effective Government possible for the American taxpayer.

Of course, there is more work to be done. Federal agencies need to have the right tools and data available to identify and dispose of excess Federal properties. In addition, identifying better ways to make our real estate information more consistent across all the agencies will allow agencies to collaborate more effectively and save money on operations. OMB and Federal agencies are working closely together to drive our real estate reform efforts forward. 

But we need Congress to act as well. 

In the President’s FY 2012 Budget, the Administration proposed the Civilian Property Realignment Act (CPRA) to cut through the red tape and politics that slowed the sale of excess Federal property for too long. Building on the successful model established under BRAC, the President’s proposal would create an independent Board of experts to identify opportunities to consolidate, reduce, and realign the Federal civilian real estate footprint. This proposal would use bundled recommendations, a fast-track Congressional procedure, streamlined disposal and consolidation authorities, and a revolving fund replenished by proceeds to provide logistical and financial support to agencies in their disposal of high-value properties that are no longer needed.  If Congress approves it, the President’s proposal would serve as a comprehensive solution to key obstacles such as red tape and competing stakeholder interests, and together with the ongoing efforts of Federal agencies, will help drive further progress in effectively managing our real estate footprint. 

Danny Werfel is Controller of the Office of Management and Budget