<DOC>
[105 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:47219.wais]
S. Hrg. 105-408
STATUS OF DEPARTMENT OF TRANSPORTATION HEADQUARTERS BUILDING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
OF THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
ON A PROPOSAL BY THE GENERAL SERVICES ADMINISTRATION TO DEVELOP
PROPERTY CALLED THE SOUTHEAST FEDERAL CENTER AS THE HEADQUARTERS
BUILDING FOR THE DEPARTMENT OF TRANSPORTATION
__________
NOVEMBER 5, 1997
__________
Printed for the use of the Committee on Environment and Public Works
U.S. GOVERNMENT PRINTING OFFICE
47-219 CC WASHINGTON : 1998
_______________________________________________________________________
For sale by the U.S. Government Printing Office
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20402
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FIFTH CONGRESS
JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma HARRY REID, Nevada
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas BARBARA BOXER, California
WAYNE ALLARD, Colorado RON WYDEN, Oregon
JEFF SESSIONS, Alabama
Jimmie Powell, Staff Director
J. Thomas Sliter, Minority Staff Director
----------
Subcommittee on Transportation and Infrastructure
JOHN W. WARNER, Virginia, Chairman
ROBERT SMITH, New Hampshire MAX BAUCUS, Montana
DIRK KEMPTHORNE, Idaho DANIEL PATRICK MOYNIHAN, New York
CHRISTOPHER S. BOND, Missouri HARRY REID, Nevada
JAMES M. INHOFE, Oklahoma BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming BARBARA BOXER, California
(ii)
C O N T E N T S
----------
Page
NOVEMBER 5, 1997
OPENING STATEMENTS
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island 1
WITNESSES
Basso, Peter J., Acting Assistant Administrator for Budget and
Programs, U.S. Department of Transportation.................... 2
Prepared statement........................................... 12
Chistolini, Paul, Deputy Commissioner, Public Buildings Service,
General Services Administration................................ 1
Prepared statement........................................... 11
(iii)
STATUS OF DEPARTMENT OF TRANSPORTATION HEADQUARTERS BUILDING
----------
WEDNESDAY, NOVEMBER 5, 1997
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m. in
room 406, Senate Dirksen Building, Hon. John Warner (chairman
of the subcommittee) presiding.
Present: Senators Warner, Thomas, Baucus, Moynihan, and
Chafee [ex officio].
OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE
STATE OF RHODE ISLAND
Senator Chafee. Good morning, everyone.
This is a subcommittee hearing in which Senator Warner is
the chairman of the subcommittee. He is detained at a Rules
Committee gathering of some type and will be along later.
But the purpose of this hearing is to consider the General
Service Administration's proposal to construct or otherwise
acquire a facility to house the headquarters of the Department
of Transportation. I don't know if there are any comments. Do
you have any comments, Senator Baucus?
Senator Baucus. No, except that doing nothing is not an
option. And we'll look forward to the various options. Thank
you.
Senator Chafee. Thank you.
Senator Thomas?
Senator Thomas. I'm just interested in hearing the
information. Thank you.
Senator Chafee. Good. I'm glad each of you are here. This
is serious business.
We'll now call Mr. Paul Chistolini from GSA and Mr. Peter
Basso from Department of Transportation. Mr. Basso, I
understand Mr. Fields is also here. Why don't you come to the
table. All right, Mr. Chistolini, Deputy Commissioner of Public
Buildings Service, General Services Administration. Please
proceed.
STATEMENT OF PAUL CHISTOLINI, DEPUTY COMMISSIONER, PUBLIC
BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION
Mr. Chistolini. Thank you, Mr. Chairman, and members of the
subcommittee.
I really do appreciate this opportunity to appear before
you today regarding the acquisition of new headquarters
buildings for the Department of Transportation.
Rather than restate what is in my submitted statement,
there are a few key points I would like to make and then be
available to answer any questions you have.
First, I believe that immediate action is needed to resolve
the housing situation for this agency, the Department of
Transportation. They're currently housed in a building that is
30 years old. They're not able to effectively function in their
building, because the systems have reached the end of their
operating life.
Second, the current lease expires in March of the year
2000. And under any deeds of acquisition, the current lease
will expire before the DOT action can be completed.
So unless we move forward quickly, the Government's ability
to negotiate an extension with reasonable terms will be
negatively impacted.
Finally, the House had passed a resolution that I believe
permits GSA to move forward with the DOT projects. That
resolution gives GSA quite a bit of flexibility to acquire
replacement space in the most cost-effective manner considering
what resources are available at GSA.
That's all I have to say at this time, Mr. Chairman. I'll
be pleased to answer any questions you have.
Senator Chafee. All right.
Mr. Basso?
STATEMENT OF PETER J. BASSO, ACTING ASSISTANT ADMINISTRATOR FOR
BUDGET AND PROGRAMS, U.S. DEPARTMENT OF TRANSPORTATION;
ACCOMPANIED BY: GEORGE FIELDS, DIRECTOR, TRANSPORTATION
ADMINISTRATIVE SERVICE CENTER, DEPARTMENT OF TRANSPORTATION
Mr. Basso. Thank you, Mr. Chairman. I'll be very brief.
Senator Chafee. You gentlemen don't have to be brief. We're
not rushing to any fire here. This is serious business, and I
think we want you to explore the alternatives. For instance,
Mr. Chistolini has said that we've got to move quickly. Others
say, look, the crucial opportunity occurred during 1996 and
that wasn't taken. So why not put this off until when we come
back in February, or come back in late January.
So I think these are issues the committee would be
interested in hearing. We're talking some big dollars here. And
it's a serious matter.
So usually we tell you move along, but not today.
Senator Thomas. Don't discourage brevity, Mr. Chairman.
[Laughter.]
Senator Chafee. Well, I have to be careful here. But
anyway, lay it out as you wish, Mr. Basso.
Mr. Basso. Thank you, Mr. Chairman. I said ``brief.' Brief,
to get to your questions so we could lay it out.
Let me just first mention that Secretary Slater asked me to
convey to you and the members of the committee his personal
appreciation for your promptly and quickly scheduling this
hearing and for your help in this matter.
Let me just mention three critical points. Mr. Chistolini
has already mentioned that the DOT building is essentially 30
years old. While there have been some improvements, they have
been cosmetic and basic improvements, not substantial
improvements that helped a great deal.
Absent a major renovation, the building does not meet the
Department's current or planned needs. It was designed in the
1960's, so it lacks energy efficient systems, doesn't take
advantage of state-of-the-art technology and precludes us in
part from having the latest communications equipment in the
building.
To address the capital expenses involved here, to date, we
have spent over $440 million in rental payments over this 30-
year period. It's coincidental I've been there that long, Mr.
Chairman, so I've seen the dollars go, and it's quite
substantial. If we purchased the building, we could have
purchased it three times over for that cost. So I think we've
reached a point where action needs to be taken to preclude this
problem for the future.
We are working closely with the General Services
Administration to try to solve those problems. And one other
feature I might mention in this whole effort, currently between
the U.S. Coast Guard and ourselves, in two buildings, we occupy
a million and a half square feet of space. Our plan, which is
moving forward to satisfy this headquarters need, would reduce
about 400,000 square feet by consolidating those two agencies
in a building where the layouts could accommodate more
personnel in a more efficient way. So I wanted to make that
point, sir.
And the bottom line for all of this is----
Senator Chafee. That's a 25 percent reduction in square
footage.
Mr. Basso. Yes, sir. And let me just make a little further
explanation of that.
One of the problems that we face in this building is,
because of the way it's designed internally, the walls are
movable but not without considerable construction. Substantial
amounts of space are consumed in very large corridors. And we
really do have plans, and Mr. Fields could elaborate later, if
you'd like, on how we could accomplish that reduction.
But I thought that was an important point to draw to the
committee's attention.
Let me just close by saying, we would appreciate anything
the committee can do to move this matter forward at this time.
Senator Chafee. Mr. Fields, do you want to add anything or
just be available for questions?
Mr. Fields. Mr. Chairman, I am available to respond to your
questions.
Senator Chafee. My first question is, why are you here?
What are you asking us to do?
Mr. Chistolini. I guess in the shortest possible manner,
we're asking that the committee authorize GSA to begin an
acquisition plan which would lead to the replacement of the
Department of Transportation headquarters. It would allow us to
provide replacement space, either through an operating lease or
new construction, or some combination of both. And that
competition would also allow the current lessor to compete in
the process.
Senator Chafee. So what you're asking us is to authorize
you to go out and spend $300 million or whatever it is for a
new building?
Mr. Chistolini. That is one alternative. As this moves
forward, the Administration would have to decide if that's the
way they wanted to do that in terms of the new construction, or
whether we would do as authorized in the House Resolution,
enter into a 20 year operating lease, during which we would
have the opportunity to purchase the building.
So in effect, we would be entering into a lease for a
building that would be built to Government specifications, in
effect, a Government building. And we would have the right to
buy out the lessor at certain points during that process.
Senator Chafee. Mr. Basso, what are you asking us to do?
Mr. Basso. Mr. Chairman, we're asking that you approve a
prospectus that would allow competition to occur to get an
adequate Department of Transportation headquarters building.
And we feel that the time is now, given the fact that our past
experience has been, with only a 2-year window until this lease
expires, we will find ourselves in a holdover situation and in
a very poor position to negotiate from that holdover situation.
Senator Chafee. But aren't you asking us ``to buy a pig in
a poke''? Apparently you don't have a recommendation now as to
whether you should build; or whether you should get somebody
else to build it, and then you buy it from them. You don't want
to make that decision now on, what do you call it, the Nassif
Building?
Mr. Basso. Yes, sir.
Senator Chafee. You want to have these options, right?
Mr. Basso. Yes, Mr. Chairman. We think that having those
options really is the best way to go, because it creates, what
we really want to create is the opportunity for full and open
competition. And let that competition work out what is the most
cost-effective and logical way to fulfill that need. And Mr.
Chistolini and I have talked about this.
Mr. Chistolini. This is a very large procurement, very
unusual. We feel that by engendering this type of competition
we can get the most cost-effective solution. And as we get down
the road, depending on the resources available, we could
convert it to Federal ownership or continue in an operating
lease mode.
Senator Chafee. Well, I don't want my questions to be
interpreted that I'm not out to be helpful to you. I am.
Senator Baucus.
Senator Baucus. Thank you, Mr. Chairman.
As I understand it, DOT's been paying approximately $30
million a year in rent, is that correct?
Mr. Basso. Yes, it's approximately that.
Senator Baucus. So since 1970, that's roughly $440 million?
Mr. Basso. That's correct, Senator.
Senator Baucus. And if that is roughly three times the cost
of the building maybe back then?
Mr. Basso. Yes, sir, that's correct.
Senator Baucus. So you feel it is more cost effective for
the Government to own a building rather than paying such high
lease payments, is that correct?
Mr. Basso. What we believe at this point is that ownership
could certainly have the benefit of being more cost effective.
But we don't have the answer other than in concept. I think the
point we made earlier is that we need to go out on the street,
exercise the options and see what the best solution is.
Senator Baucus. Is it true that DOT is the only Cabinet
agency without a Government-owned building?
Mr. Chistolini. They are the only Cabinet agency in leased
space, that's correct, sir.
Senator Baucus. Could you tell us just about what
competition there is to date for that size of leased space?
Mr. Chistolini. Back at the end of----
Senator Baucus. That's a lot of space, what is it, 1.1
million square feet, something like that?
Mr. Chistolini. Yes, Senator, it's about 1.1 million square
feet.
At the end of 1996, we ran an ad in the newspaper looking
for expressions of interest. Out of that, we received in double
digits, in the low teens in terms of what I would call serious
expressions of interest, of which we did investigation and
looked at sites or combinations of sites that developers could
put together.
So I'm very comfortable in telling you that within the
central employment area of Washington, DC, there are enough
sites that would engender a lot of competition for this
procurement.
Senator Baucus. So there is a lot of competition for 1.1
million square feet?
Mr. Chistolini. I believe so.
Senator Baucus. For another lease?
Mr. Chistolini. Yes, sir.
Senator Baucus. At some other location?
Mr. Chistolini. Yes, sir.
Senator Baucus. It's my understanding that there's not a
lot of competition for that size of lease. Which puts the
Government in a disadvantageous position when negotiating with
a lessor. That's not true here, apparently.
Mr. Chistolini. I think there's enough competition that
would engender very intense competition between those with new
solutions as well as the current lessor to modify, upgrade his
building and also compete with us.
Senator Baucus. That's right. New solutions, that is, there
would be more competition with more options.
Mr. Chistolini. I believe so, sir.
Senator Baucus. Lease options as well as procurement
options?
Mr. Chistolini. Yes, sir.
Senator Baucus. That's basically what your argument is,
that's what you want?
Mr. Chistolini. Yes, sir.
Senator Baucus. In order to get the best rates to the
taxpayer?
Mr. Chistolini. Most cost-effective solution.
Senator Baucus. Most cost-effective solution. OK.
Is there some way you could design this request so that if
you come back to us again to ask for further authorization, if
I'm addressing the Chairman's reaction, which is a natural
reaction, we're giving an awful lot of authority here and don't
want to buy a pig in a poke, and we'd like to have some control
of what's going on here, some guidance.
Mr. Chistolini. Well, certainly if we were to move into a
process where we wound up with Government construction or
Government ownership of the building, I see no problem in
coming back and notifying the committee. We would certainly
have to come back through the Senate Appropriations committees.
But I see no problem in notifying this committee of how we're
going to solve this when we get to a certain point.
Senator Baucus. Mr. Chairman, I would think there would be
some way to keep us advised in addition to the appropriations
process, so we have an idea what's happening here.
Thank you.
Senator Chafee. Senator Thomas.
Senator Thomas. You are the Deputy Commissioner of the
Public Buildings Service?
Mr. Chistolini. That's correct, sir.
Senator Thomas. So you deal with this all the time?
Mr. Chistolini. Yes, but generally not this large a
project.
Senator Thomas. It just seems to me that you guys are kind
of open for doing this all the time. I would think you'd have a
little more specific idea of how you do this, what the costs
are, and all those kinds of things, since that's what you do
every day.
Mr. Chistolini. This is unusual, and it's such a large
transaction, well over a million square feet. We usually don't
do a transaction like that in the Washington, DC area.
Generally, the headquarters agencies, all except the Department
of Transportation, are housed in Government-owned building.
Senator Thomas. Well, don't you have anything to do with
that?
Mr. Chistolini. Yes. We're responsible for that. The
construction of a new building is on the order of $300 million.
Our proposal, and our acquisition strategy is to get out into
the marketplace and see what the different alternatives are.
Senator Thomas. I guess that's what puzzled me. I would
assume you would know that, since you deal with it all the
time. That's your business.
Mr. Chistolini. We have enough information, we have had a
consultant on board giving us a lot of data, told us a great
deal about potential sites, potential costs, how this project
could be done with no scoring implications or minimal scoring
implications. So we have a great deal of data, and that's gone
into our acquisition strategy.
Senator Thomas. I see. You haven't shared much strategy
with us, I don't think. This thing kind of, here we are, you've
been dealing with this now for quite a while and now you're
saying, gosh, we have to do this immediately. Where have you
been for the last two or 3 years?
Mr. Chistolini. Several years ago, there were different
proposals for solving this problem. They just never got this
far. We now have got this finally to what I call the----
Senator Thomas. Like the chairman, I don't think there's
anyone who quarrels with the notion you have to do something
different. But I think you could quarrel with the idea we're 2
days away from adjournment. And we're here.
I also agree, and apparently the House gave authority,
authorization to do whatever you decide. Is that right?
Mr. Chistolini. They gave us authority to move along, yes,
sir.
Senator Thomas. That's not what I'm saying. Do you have the
authority, then, to make the decision and come in and ask for
the dollars, appropriations?
Mr. Chistolini. Yes, sir.
Senator Thomas. Then I think maybe we're suggesting we're
not maybe prepared to do that, that we need to come back and
get some more authority after you've decided what it is you
want to do.
Do you think there's merit in having the private sector
participate? I mean, you compared the cost of rent, but there's
also the cost of money to the Government over this period of
time, which is worth something, there's also taxes, which are
worth something, I presume. And you say there are no private
renters in this whole business of headquarters. So apparently
you don't think the private sector is the right way to go.
Mr. Chistolini. No, I believe that the private sector will
actively participate, offer us a great number of----
Senator Thomas. What other evidence is there of that in
terms of headquarters buildings?
Mr. Chistolini. I wouldn't put it in terms of just
headquarters buildings. I would put it in terms of buildings of
this size. We know from our studies that there are a number of
private sector developers out there who have sites and the
wherewithal to deliver the square footage that we're looking
for.
Senator Thomas. But you haven't used any of them?
Mr. Chistolini. In the past, we have used some of the
people, some of these developers for different procurement.
Senator Thomas. I just sense that you're dedicated to the
idea that the Government ought to own the building.
Mr. Chistolini. That is certainly the most cost-effective
solution.
Senator Thomas. Are you sure?
Mr. Chistolini. Recognizing the resources it takes to make
that happen, we're open to other alternatives, too.
Senator Thomas. See, I don't necessarily agree with the
observation that that's particularly the cheapest way to go,
unless you can show me the money. There's a lot of merit in
having the private sector involved, it seems to me, and I hope
that you haven't already arranged your prejudices in such a way
that they don't have a chance.
Mr. Chistolini. No, I expect that they will actively
participate.
Senator Thomas. Thank you.
Senator Chafee. Senator Moynihan, who's spent a lot of time
in this area, not only as chairman of this committee, but as
chairman of the subcommittee that dealt with these matters. I
guess he authorized more public buildings in this city than
most anybody else in a long time.
Senator Moynihan. I'm in good company.
Senator Chafee. Well, you were the guiding star.
Senator Moynihan. I'd like to say to my friend, Senator
Thomas, that when we began this project, Senator Chafee and I,
21 years ago, the issue was not how to get the private sector
involved in Government building. The issue was how to get the
public sector involved. We had this problem, and it's still a
budgetary fact, that if you want to build a building you have
to put the entire amount of cost in the 1-year's budget, the
capital budget.
We began renting. And all over Washington, we have been
renting, and people have made fortunes. This particular
building was done by a very elegant man named Nassif who got
Edward Durrell Stone to design it. And we have paid them $440
million, and all we've got to show is the old Irishman's rent
checks. And we don't have a building.
What I think they'd like to do, if I understand Mr.
Chistolini, is just look around and see if there's an
alternative. The rent-to-own alternative. There's one specific,
sir, if I can get my bearings, it would be right over there,
the Thurgood Marshall Building, that was the third building in
the complex of Union Station, post office and this building,
that was anticipated in the MacMillan plan of 1901. And we
built the two, Bernham built them, but we never built the
third.
The Judiciary Committee, Judiciary Office of Administration
and the Federal Court, has a lot of office space. There are a
lot of administrative things to do. We built that one building,
a private sector person built it for us. No secret about his
name, no secret about his name except I can't remember it----
Mr. Chistolini. Boston Properties, sir.
Senator Moynihan. ----Boston Properties, the owner of the
New York Daily News.
We owned the land, and so we built a beautiful building. We
were moving tenants in from private owners, private leases, and
we were paying Mr. Zuckerman less rent than we had been paying
other owners. And in about 24 years now, we own the building.
And we've tried to get a balance, Senator Chafee and I have
talked, in terms of if the Federal Government owned about 55
percent of its space and rented 45 percent, it would be a fair
balance.
But our rental bill is now approaching $2 billion a year,
is it not, sir?
Mr. Chistolini. It's $2.4 billion, sir.
Senator Moynihan. It's now $2.4 billion. And you never see
it back.
Senator Thomas. Well, we could go into a great
philosophical thing about having the private sector involved in
the public, or having the public own all the facilities. I
don't want to go into that. I understand what you're saying.
Senator Moynihan. I think what Mr. Chistolini is asking is
that they be given the instruction to go out there and look
around and think hard. But then you must come back to this
committee with what you propose.
Senator Chafee. We get a little difference here, Mr.
Chistolini.
First of all, I want to say to Senator Thomas, you've been
the beneficiary of the Moynihan education process.
Senator Thomas. And I'm grateful for that.
Senator Chafee. And we're conducting a test on that.
[Laughter.]
Senator Thomas. Thank you. I took notes.
Senator Chafee. The first question in the test, who was the
architect that designed not only the station, but if you look
carefully, as Senator Moynihan said, the post office next to
it?
I've learned my lesson, have I not done well?
Senator Moynihan. Pretty well. Certainly.
Senator Chafee. And it was Mr. Bernham. I believe in, was
it 1902, thereabouts?
Senator Moynihan. Yes.
Senator Thomas. I wasn't here then, sir.
[Laughter.]
Senator Chafee. So in any event, I think it is important to
note, as Senator Moynihan said, we didn't go all the way to
have us own all the buildings, all the space. It's roughly 55-
45 percent. The idea is to keep the private sector involved
with some competition.
But Mr. Chistolini, I think the House resolution goes
further. I think they just give you carte blanche, as I read
the thing. And you can go ahead and make commitments. Am I
correct?
Mr. Chistolini. That's correct, sir.
Senator Chafee. And I don't think you're going to find this
committee that willing to do that, go that far.
Senator Moynihan. But encourage them.
Senator Chafee. Oh, sure. We want you to go out. We don't
want to stifle you at all. We want you to go out and do the
best you can, even with the present landlords.
How are you fixed with time? I'm not suggesting we delay
this at all. Do you have enough time? In other words, suppose
you say to the current landlord, give us a better deal or we'll
get out. Can you get out? I guess it's up in March of 2000.
That's only----
Mr. Chistolini. Twenty-eight months away, Senator.
Senator Chafee. Not very far. Although, Senator Moynihan, I
believe that the Pentagon was built in less than 28 months,
that entire building.
Senator Moynihan. Oh, yes, sir.
Senator Chafee. And one of the great builders, General
Brenton Somerville was the man from the Corps who built that
Pentagon. He built it in, I'd say, just before the war, was it
1938?
Mr. Chistolini. Started in 1941, it was completed in 1943,
it took 16 months, and it's quite an accomplishment.
Senator Chafee. Was Somerville in charge?
Mr. Chistolini. Yes, sir.
Senator Baucus. Like the Cooke Stadium.
Senator Chafee. Lot better job than the Cooke Stadium.
[Laughter.]
Mr. Chistolini. Although I don't know if you could build a
building in this area these days working three shifts, around
the clock, for that time period. It still stands as a great
accomplishment.
Senator Chafee. You said 16 months?
Mr. Chistolini. Yes, 16 months, sir.
Senator Chafee. It's incredible, isn't it.
Well, back to my point here. The House goes further than we
go, than I believe this committee would be willing to go.
However, we don't want to restrain you. Is that a restraint on
you, if you come back here?
Mr. Chistolini. Well, I guess it would depend on what we
would have to come back and tell you. I believe that if we had
to come back and simply tell you what our solution is if we're
going to go to new construction or how we're going to do that,
that is not a restraint. We have to have enough authority so
that the marketplace knows that we're serious about conducting
this competition, that we have the maximum leverage with the
current landlord.
If you look at this in a timeframe, the lease runs out in
28 months. That's about the time when we, or slightly less than
that, when we would know what the solution is. We certainly
want to minimize any holdover time that we're with the current
lessor if he is not the winner.
But we also want to conduct a competition that allows him
to participate to the fullest extent.
Senator Moynihan. Mr. Chairman, if I could just make a
point. As I understand it, the building has problems,
ventilation, etc.
Senator Baucus. Sick building. It's true.
Senator Chafee. Well, I notice there's a vote on. And I
know Senator Warner wants to come over, and he has some
questions, after everybody gets a chance.
Mr. Fields, do you have anything you want to add to this?
Mr. Fields. I would add that we're looking for competition,
and the the marketplace is going to believe that we're serious
if we in fact receive the authorization necessary. We have to
come back to this committee and report back. We are comfortable
with that.
But we need to make certain that we are transmitting to the
marketplace that we're serious in terms of competition, so that
we don't find ourselves faced solely with one proposer.
Senator Chafee. Well, I'll guarantee you this. As far as
I'm concerned, I think I can speak for----well, Senator Baucus
can speak for himself. But we're not here to delay anything. If
you come back, we'll act expeditiously. And if you've got a
reasonable proposal, we'll go for it. We're not here to hold
you up in any fashion.
Senator Baucus. With that I would agree.
Senator Chafee. Does anybody have any questions here? I'm
just going to recess, because Senator Warner has some
questions. He'll be right over. Anybody have any questions?
[No response.]
Senator Chafee. I might come back myself, likewise. So what
we'll do, if you gentlemen could please wait, and we'll just
take a little recess, and Senator Warner will be back over in a
few minutes.
Thank you very much.
[Recess.]
Senator Warner. The subcommittee will resume its hearing.
I apologize for my absence this morning, I was chairing
another hearing. Mr. Chafee filled in for me.
Mr. Chafee and I have now just met with our witnesses, and
we have resolved a technical matter. We will take it up
tomorrow at the business meeting of the full committee. And at
such time, I think we will be able to go forward in principle
with what you're doing--building in a check-and-balance whereby
final action would be reviewed by the chairman and the ranking
member of this committee.
And that seems to, in principle, as we work up the papers
here, meet the requirements. Am I not correct?
Mr. Basso. Absolutely correct, Mr. Chairman.
Mr. Chistolini. Yes, Mr. Chairman.
Senator Warner. So are there further matters to take up?
[No response.]
Senator Warner. If not, the committee will stand in recess.
[Whereupon, at 11:25 a.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
[Additional statements submitted for the record follow:]
Statement of Paul Chistolini, Deputy Commissioner, Public Buildings
Service, General Services Administration
Mr. Chairman, and members of the subcommittee, I am Paul
Chistolini, the Deputy Commissioner of the Public Buildings Service. I
want to thank you for this opportunity to discuss our efforts to
provide the Department of Transportation with the best possible working
environment for their headquarters staff, and our current plans for the
development of the Southeast Federal Center in southeast Washington,
DC.
Plans for the development of the Southeast Federal Center property
go back at least to the 1970's. The latest version is the 1990 Master
Plan and we are now re-evaluating it. The 1990 Plan assumed that this
large site would be developed for the single purpose of housing a
number of large Federal agencies. In this era of government downsizing,
that assumption is no longer valid. In addition, the Department of the
Navy is moving five thousand employees to the adjacent Washington Navy
Yard which is expected to spur private development in the adjacent
area. Accordingly, GSA is reassessing the Master Plan, including tenant
mix, private sector participation, and the potential for mixed uses of
the site. We are doing this reevaluation in coordination with the Navy.
At this time, therefore, we do not intend to develop infrastructure
such as roads, parks, piers, etc., the locations of which would all
depend on our having more specific and achievable plans for use of the
Southeast Federal Center than we currently have. However, we do have an
obligation to perform environmental remediation on this property. We
will be demolishing contaminated structures, halting the flow of
contamination into the Anacostia River and similar activities.
Irrespective of how we develop the Southeast Federal Center, these
remediation actions and their associated costs are an unavoidable
obligation of Government ownership of the property. The urgency of some
form of these actions has been highlighted by a lawsuit filed by the
Earth Justice Legal Defense Fund of behalf of local residents. We
anticipate expending approximately $20 million in previously
appropriated funds on remedial work. In the future, when a proposal for
occupancy at the SEFC and alternative sites is made for a Federal
agency, GSA will consider the prorated costs of infrastructure
investment and additional site-specific environmental cleanup in any
comparison of site proposals.
As the plans for developing the SEFC continue to evolve we will
keep this Committee fully informed.
The Department of Transportation is currently housed in the Nassif
Building in Washington, DC. This building is leased from a private
owner and the current lease expires in March, 2000. The need for
authorization of a new housing plan for DOT was first brought to the
attention of Congress in 1991. At that time GSA submitted a prospectus
to this committee for the authorization of a $780 million construction
project, financed in part with DOT funds, over the air rights at Union
Station as a solution to DOT's long-term needs. In 1996 DOT included a
funding request in its budget for a headquarters facility. These
proposals were not approved by Congress, and neither was a leasing
prospectus submitted to the Congress in July 1996. In September 1996,
the House Public Works and Transportation Committee directed GSA to
prepare a Report of Building Project Survey on the ``feasibility and
need to construct or otherwise acquire a facility to house the
headquarters of the Department of Transportation.'' This report was
submitted to this Committee and the House Public Works and
Transportation Committee on May 29, 1997. The House Public Works
Committee authorized the recommendations of this report by Committee
resolution on July 23, 1997.
The essence of the recommendation in our report is that while
government ownership is the optimal solution, an operating lease may be
necessary as a bridge to an ownership solution. In other words, our
report recognized that government ownership of a headquarters building
is the most cost-effective solution over the long term. However, it
recognized at the same time that we may not be able to obtain the up
front funding necessary to acquire a building and so it laid out a
strategy for obtaining a leased building with options to convert to
government ownership should funding become available.
Nonetheless, pursuant to the requirements of the September 1996
House Public Works Committee resolution, we believe it is premature to
submit our proposed acquisition strategy for the DOT headquarters since
various construction and leasing options are being evaluated in the
preparation of the FY 1999 President's Budget.
Mr. Chairman, I would be happy to answer any questions which you
and the members of this subcommittee may have.
__________
Statement of Peter J. Basso, Acting Assistant Secretary for Budget and
Programs, U.S. Department of Transportation
Mr. Chairman and members of the committee: We appreciate the
opportunity to appear before the committee today to advance the process
that will identify the possibilities for housing the Department of
Transportation headquarters staff beginning in the year 2000.
Secretary Slater would like to convey his personal thanks to the
committee for acting on this matter of real importance to future
transportation objectives, our customers, and our headquarters staff.
As you know, the Department headquarters is now located in a 27-
year-old leased structure at Seventh and D Streets, Southwest. While
this building has proven serviceable since we first occupied it in
1970, its innate design problems are increasingly obvious. Although it
has been retrofitted over time for such necessary safety improvements
as a sprinkler system, the current system of demountable partitions
limits floorspace options in the building compared.with comparable
modern structures and presents a real drawback for the efficient
utilization of space.
Absent major renovation, the building does not meet the
Department's current and planned needs. Designed in the 1960's, the
facility lacks energy efficient heating and cooling systems and, as
tenants, we are unable to take advantage of the state-of-the-art
operating controls and advanced insulation materials that would provide
significant gains in cost control and occupant comfort. Also, new
communication technology cannot be satisfactorily installed and
operated using current building systems.
Quite apart from the structure and its substantial problems, the
current headquarters is a leased facility. It has cost the U.S.
Government $440 million in lease payments since 1970. Even factoring in
the effects of inflation, taxpayers have effectively ``purchased'' this
building three times over, and yet we have nothing to show for it. If
we owned the building and determined that it no longer suited our
purposes, we would at least be able to sell it at this point, recapture
some of our investment, and move on.
Facing these issues, we have worked-closely with the General
Services Administration (GSA), which is spearheading the current effort
to choose the best option for a future headquarters building. I am
pleased that the GSA is here today in partnership with us to address
this issue. We all agree that simply accepting the status quo is
unacceptable.
Mr. Chairman, this concludes my statement. I would be pleased to
respond to any questions you or other Members of the Committee may
have.