On Monday, February 6, 2012, the House is scheduled to begin consideration of H.R. 1734, the Civilian Property Realignment Act, under a rule. The rule provides one hour of debate, equally divided and controlled by the chair and ranking minority member of the Committee on Transportation and Infrastructure. In addition, the rule provides that an amendment in the nature of a substitute shall be considered as adopted. The rule also makes five amendments in order, each of which is debatable for up to ten minutes. The bill was introduced on May 4, 2011, by Rep. Jeff Denham (R-CA) and referred to the Committee on Transportation and Infrastructure, the Committee on Oversight and Government Reform and the House Rules Committee. On October 13, 2011, the Committee on Transportation and Infrastructure held a mark-up and reported the bill by a vote of 30-22.

H.R. 1734 would establish an independent commission known as the Civilian Property Realignment Commission (CPRC) to provide recommendations on civilian federal properties that can be sold, transferred, exchanged, consolidated, or redeveloped, so as to reduce the civilian real property inventory, reduce the operating costs of the Government, and create the highest value and return for the taxpayer. Specifically, the CPRC would be required to identify not less than five federal properties that have a total market value of at least $500 million and transmit the list to the president and Congress within 180 days. Once approved by the president, CPRC’s recommendations would be considered in Congress under expedited procedures. Under the bill, the CPRC would sunset six years after enactment.

Composition of the Civilian Property Realignment Commission: Under H.R. 1734, the CPRC would be composed of a chairman who is appointed by the president and confirmed by the Senate, as well as eight other members appointed by the president. Under the bill, the term for each member of the Commission would be six years. In selecting individuals for appointment to the Commission, the president would be required to ensure the Commission contains individuals with expertise in commercial real estate and redevelopment, government management or operations, community development, and historic preservation. The bill would require the CPRC to hold open meetings which are announced at least two-weeks in advance. The bill would authorize compensation for members of the CPRC up to level IV of the Executive Schedule and up to level III of the Executive Schedule for the Chairperson of the CPRC. The Commission would also be required to appoint an Executive Director who, with the approval of the CPRC, could appoint and compensate personnel to carry out the purposes of the Commission. The bill would also authorize the CPRC to procure by contract, to the extent funds are available, the temporary services of experts and consultants.

Recommendations of the CPRC: H.R. 1734 would require each federal agency to submit data on all federal civilian property owned, leased, or controlled by that agency with 120 days of enactment. The data would have to include the age and condition of the property as well as the operating costs and number of federal employees and functions contained in each property. In addition to supplying data, each federal agency would be required to submit recommendations for properties which could be sold or otherwise disposed of, or federal properties that could be transferred in order to reduce the operating costs to the government. Agencies would have to report the data and recommendations to the Director of the Office of Management and Budget (OMB) and the General Service Administration (GSA). 

Within 60 days of receiving the agency information, OMB and GSA would be required to develop standards and criteria for reviewing agency data and making recommendations to the CPRC. The standards would have to incorporate the following:

• The extent to which the building could be sold, redeveloped or otherwise used to produce the highest and best value and return for the taxpayer.
• The extent to which the operating and maintenance costs could be reduced through consolidating, co-locating, reconfiguring space and other operational efficiencies.
• The extent to which the utilization rate is being maximized and is consistent with non-governmental industry standards for the given function or operation.
• The extent and timing of potential costs and savings, including the number of years, beginning with the date of completion of the proposed recommendation.
• The extent to which reliance on leasing for long-term space needs would be reduced.
• The extent to which a federal building or facility aligns with the current mission of the federal agency.
• The extent to which there are opportunities to consolidate similar operations across multiple agencies or within agencies.
• The economic impact on existing communities in the vicinity of the federal building.
•   The extent to which energy consumption would be reduced.

Commission Duties: Under the bill, the CPRC would be required to identify opportunities for the government to significantly reduce its inventory of civilian real property and reduce cost to the federal government. Specifically, the CPRC would be required to identify not less than five federal properties that have a total market value of at least $500 million and transmit the list to the president and Congress as Commission recommendations. In addition, H.R. 1734 would require the CPRC to develop an accounting system to assist in the development of its recommendations. According to the legislation, the intention is to ensure there is a standard accounting system to assist the Commission in developing recommendations that would produce the highest return to the taxpayer.

Review by the President: H.R. 1734 would require the president to review the recommendations of the CPRC within 30 days of their receipt.  The president would be required to submit a report describing the president’s approval or disproval of the CPRC’s recommendations to Congress and the Commission.  If the president approves of the Commission’s recommendations, the president would be required to transmit a copy of the recommendations to Congress. If the president disapproves of the recommendations, the Commission shall then transmit a revised list of recommendations to the president, within 30 days.

Congressional Consideration: Under the bill, each chamber of Congress would be required to vote on a joint resolution of approval on the commission recommendations within 45 days of the of the president’s transmission of approved recommendations. After the House or Senate receives the president’s transmission of approval, the majority leader of that chamber would be required to introduce a joint resolution within three legislative days (in the case of the House) or three session days (in the case of the Senate). Any committee of the House to which a joint resolution is referred would be required report the resolution to the House without amendment no later than the 10th legislative day after its introduction. The bill would also require expedited procedural instructions for floor consideration of the joint resolution.

Implementation of Committee Recommendations: Upon enactment of the joint resolution by Congress, federal agencies would be require to begin preparation to carry out the Commission’s recommendations within two years from the president transmitting the recommendations to Congress.  Agencies would be required to complete all recommended actions within six years from the date the president transmits recommendations to Congress. For actions that will take longer than the six-year period due to extenuating circumstances, each federal agency shall notify the president and Congress as soon as the extenuating circumstance presents itself with an estimated time to complete the relevant action.  The bill would require that all actions be economically beneficial and cost neutral or otherwise favorable to the government.

Authorization of Appropriations: The bill would authorize the one-time appropriation of $20 million for salaries and expenses of the Commission and $62 million for the Asset Proceeds and Space Management Fund for activities related to the implementation of the Commission recommendations.

According to House Report 112-384, poor asset management and missed market opportunities with regard to federal real estate holdings have cost taxpayers significant sums of money. For this reason, in 2003, the Government Accountability Office (GAO) placed real property management on its list of ‘‘high risk’’ government activities, where it remains today. GAO conducts biennial reviews on high-risk areas within the federal government to bring focus to specific areas needing attention and oversight. Areas are identified as high-risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement or areas that need broad-based transformation to address major economic, efficiency, or effectiveness challenges.

The key reasons the GAO identified federal real property as high risk are:

• Excess and underutilized real property,

• Deteriorating and aging facilities,

• Unreliable property data, and

• Over-reliance on costly leasing.

Unfortunately, despite executive orders and memoranda issued during two administrations and acts of Congress intended to improve the management of federal real property, these problems persist.  According to the Committee Transportation and Infrastructure, vacant or underperforming assets can translate into significant costs associated with their operation, maintenance, and security. For example, in fiscal year 2009, the federal government spent $1.7 billion in annual operating costs for under-utilized buildings and $134 million, annually, for excess buildings. H.R. 1734 is intended to save taxpayer money by selling and redeveloping high value assets, consolidating facilities, maximizing utilization rates, and increasing the use of efficient space. H.R. 1734 would require the Commission established in the legislation to examine federal real property across government used and un-used and make decisions based on the best return to the taxpayer. In order to accomplish these goals, H.R. 1734 is modeled after the Base Realignment and Closure (BRAC) process.

The BRAC process first requires DoD to collect data about its facilities and establish standards and criteria to apply in the evaluation of those facilities. Applying those standards and criteria, DoD then develops recommendations on base closures and realignments. Those recommendations are sent to the independent BRAC Commission for review. The Commission then determines if DoD followed its standards and criteria and reviews the associated data to determine if changes to the recommendations are appropriate. The BRAC Commission may make revisions; however, those revisions are limited in scope. The BRAC Commission then submits its recommendations to the president, who in turn must forward all recommendations to Congress or none of them. If the president disapproves of the BRAC recommendations, BRAC can revise and resubmit to the president. If the president approves of the revisions the recommendations are transmitted to Congress. Congress must affirmatively disapprove of the recommendations within a specified period of time and if Congress does not disapprove of the recommendations, the BRAC recommendations are implemented. Unlike BRAC, H.R. 1734 applies to property issues government-wide including those agencies that may or may not be willing partners in the process. Unlike the private sector, agencies have few incentives to eliminate unneeded property or shrink their footprint. And, even in those cases in which agencies want to dispose of real property, the process for doing so can be slow and require initial appropriations.

According to CBO, implementing H.R. 1734 would cost $3 million in FY 2012 and $68 million over the FY 2012 through FY 2017 period. However, H.R. 1734 could result in the sale of at least five high-value federal properties with an estimated total fair market value of at least $500 million, which would fully offset the funding provided in the bill and reduce the deficit by an additional $432 million. Since the enactment of the Commission’s recommendations would be dependent on subsequent legislation, any estimated receipts from property sales would be attributed to that subsequent legislation.

Amendment No. 1—Del. Eleanor Holmes Norton (D-DC): The amendment would require agency recommendations to take into consideration the environmental effects of the disposal, transfer, consolidation, or reconfiguration of civilian federal real estate.  In addition, the amendment would provide for a limited review of property by homeless service providers for any buildings identified for disposal in the approved recommendations that are no more than 25,000 square feet or valued at less than $5 million.

Amendment No. 2—Rep. Jeff Denham (R-CA): The amendment would provide for a 90 day review of property by homeless service providers for any buildings identified for disposal in the approved recommendations that are no more than 25,000 square feet or valued at less than $5 million.

Amendment No. 3—Rep. Gerry Connolly (D-VA): The amendment would allow General Services Administration (GSA) to override the congressionally-approved recommendations of the Commission and allow property to be given at no cost to create open space.

Amendment No. 4—Rep. Shelia Jackson-Lee (D-TX): The amendment would add a sense of the Congress that suggests the Commission should provide assistance to small and minority-owned businesses.  Specifically, the amendment would express the sense of Congress that:

• “The Civilian Property Realignment Commission, should take steps to provide assistance to small, minority, and woman-owned businesses seeking to be awarded contracts to redevelop federal property;
• “The Civilian Property Realignment Commission and other appropriate Federal officials should conduct a public information campaign to advise small, minority, and women-owned business firms with respect to contracts for the sale or redevelopment of Federal property; and
• “Firms that are awarded contracts pertaining to the redevelopment of Federal property should, to the maximum extent practicable, seek to award sub-contracts for such contracts to small, minority, and women-owned business firms.”

Additionally, the amendment would require the Commission to submit a report every six months to the president and Congress indicating the size of all business firms awarded contracts by the Commission and the size of all business firms awarded subcontracts under such contracts.

Amendment No. 5—Del. Eleanor Holmes Norton (D-DC): The amendment would require GSA to grant Indian tribes the option of obtaining excess federal properties directly from GSA at fair market value rather than through the Department of Interior.

Amendment No. 6—Rep. Russ Carnahan (D-MO): Would require the General Services Administration to evaluate the life-cycle costs before constructing or leasing a new building.  Buildings subject to the cost evaluation would include construction projects receiving at least 50 percent Federal funding and which construction cost is over $1 million or the space to be leased is over 25,000 square feet. The amendment would require future prospectuses submitted to Congress for the construction, alteration or acquisition of a building or space to be leased by the Administrator of General Services to describe the use of life-cycle cost analysis and how its use has impacted long-term costs.