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General Services Administration's Fiscal Year 2002 Budget Request

STATEMENT OF THURMAN M. DAVIS
ACTING ADMINISTRATOR

 

GENERAL SERVICES ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT
COMMITTEE ON APPROPRIATIONS AND THE
UNITED STATES HOUSE OF REPRESENTATIVES

MAY 9, 2001

 

Mr. Chairman and Members of the Committee:

I am Thurman Davis, Acting Administrator of General Services, and I am pleased to appear before you this morning to discuss the fiscal year 2002 budget request for the General Services Administration (GSA).

GSA is the Federal Government's central management agency for administrative services. GSA's mission is to provide policy leadership and expert solutions in services, space and products, at the best value, to enable Federal employees to accomplish their missions. Our principal goals are to promote responsible asset management, to compete effectively for the Federal market, to excel at customer service, to meet Federal social and environmental objectives, and to anticipate future workplace needs. We believe that our dual policy and operational roles provide a unique capability to ensure high performance and cost effectiveness in Federal work environments.

ACCOMPLISHMENTS AND NEW DIRECTIONS

Before addressing the specifics of the budget request, I would like to give you some perspective of where we have been and where we are going. GSA has evolved with the times to become an agent for change in our Government. GSA has become increasingly attentive to the needs of Federal employees and the citizens for whom they work. We have committed ourselves to bringing best practices and the latest technology to the Federal workplace, while leveraging the large Federal market to provide the Government the best value available for commercial-quality goods and services.

In the past few years, GSA has become adept at using the Internet to transact business electronically and helping others to do so. Federal agencies can easily get the support they need to do their work, and Americans wishing to do business with the government can now use the Internet to avoid traveling to government offices, waiting in line, or mailing paper forms. We are on the cutting edge in developing and implementing new information technology practices and solutions for electronic government, electronic commerce, and electronic security.

Electronic government is a major focus of the new administration, as expressed in President Bush's Budget Blueprint, and GSA expects to play a major role in its implementation. Expanding e-procurement will reduce transaction costs and foster greater competition. Expanding citizen access to the government through the Internet will result in a citizen-centric government, where citizens can readily access the information and services they need, and agencies can conduct transactions with the public through secure web-enabled systems that use portals to link common applications and protect privacy. Citizens will be able to go online and interact with their Federal Government�and with their State and local governments that provide similar information and services�around citizen preferences and not agency boundaries. Our Office of Governmentwide Policy (OGP) has a major role in the implementation of electronic government, and is working with both the E-Gov fund and FirstGov initiatives.

The Administration's proposed Electronic Government (E-Gov) fund would provide $20 million in FY 2002 for initiatives that use the Internet or other electronic methods to make the Federal Government more accessible, efficient and productive. These initiatives would emphasize providing the public with easy, standardized access to Federal information, benefits, services and business opportunities. OMB would determine the allocation of the funds to various Federal agency information technology projects, and GSA would administer the new fund.

Additionally, in FY 2002 we are requesting $3 million to augment almost $8 million in agency contributions for the FirstGov Program. Designed to be a single point of access for the U.S. Government, the FirstGov web site consolidates and simplifies connections to agencies' records, services, and informational releases. In addition, the program will coordinate with State and local governments to create links to their web sites. By consolidating access through one E-Portal, FirstGov will provide a comprehensive resource to those attempting to gather information from government agencies. FirstGov currently accesses more than 30 million Federal web pages, and links to web sites in all fifty states.

GSA's Federal Technology Service is also supporting electronic government initiatives through the products and services it provides on a fee for service basis. FTS also supports the Federal Computer Incident Response Capability (FedCIRC) and Federal Public Key Infrastructure (PKI) initiatives. We are requesting an increase of $6.5 million for these two programs in FY 2002.

FedCIRC is a collaborative partnership drawing on the skills and resources within Government, academia, and the private sector to address computer security related incidents. Federal civilian agencies turn to FedClRC for assistance in identifying, containing and recovering from adverse events that impact on the confidentiality, integrity or availability of information traversing the critical information infrastructure.

The PKI initiative requires development of an interoperable, Government-wide capability that will use digital signature and encryption to provide four basic security services: authentication, data integrity, non-repudiation, and confidentiality.

Our enthusiasm for innovation is apparent in everything we do under both our policy and operational roles. GSA provides the leadership needed to develop and oversee the implementation of policies designed to achieve the most cost-effective, innovative solutions for the delivery of administrative services, and the products and services to make them a reality. For example, we are working collaboratively with agencies to develop the appropriate policy and technical solutions for electronic commerce including smart card technology, leading the Federal civilian sector in security solutions related to Internet use, promulgating regulations in plain language, and creating shared databases for interagency access through the Internet.

Using obligations as an indicator of business volume, our fiscal year 2002 budget program will be about $18.2 billion, most of which will be funded in the form of revenues from other agencies for goods and services. GSA revenues have steadily grown each year, thanks to the successful strategies that make GSA an extremely competitive and cost-effective source of goods and services. At the same time, we have significantly streamlined our organization. Budgeted fiscal year 2002 employment of 14,216 full-time equivalents (FTEs) is almost 30% below fiscal year 1993 levels, and is 25,000 below our peak workforce of the early 1970's. We are in fact doing more - and doing it better - with less.

It is also worthwhile to note that the vast majority of GSA funding - 94% - is ultimately channeled to the private sector. Of the anticipated $18.2 billion budget program, only $1.1 billion, about 6%, is for salaries and benefits of GSA personnel.

In addition to funds obligated directly by GSA, the agency will put in place contractual mechanisms through which all Federal agencies in FY 2002 will directly place over $37 billion in commercial purchases, up almost 19% compared with FY 2000. We have simplified and expanded the use of multiple award schedules and purchase agreements to further streamline the acquisition process. We strive to get the best deals for the Government by leveraging vendor-competitiveness and the size of the Federal market to contract for top quality goods and services at a discount. For example:

• The Contract Airline City-Pairs program provides Federal travelers discounts of 70% from published unrestricted coach fares, with no advanced booking requirements or penalties for changes. The contracts covered about 5,000 routes, yielding $2 billion in annual savings in FY 2000.
  
• Overnight package delivery is priced about 46% lower than comparable corporate rates, saving $108 million in FY 2000, with a money-back guarantee for late delivery.
  
• Negotiated agreements with motor carriers on freight shipments resulted in charges to Federal customers that were below commercial rates for comparable services in FY 2000, 46% below rates for freight and 52% below rates for household goods, saving about $145 million.
  
• Vehicle fleet services are the most cost-effective anywhere, with compact sedan acquisitions providing an average of 27% savings compared to commercial "Black Book" prices. (The Black Book Lease Guide is recognized by the automotive industry as an authoritative baseline for invoice and retail prices.)
  
• The cost of Federal long-distance telecommunication services declined from an average 27 cents per minute in FY 1988 to 5 cents per minute under FTS2000. Under FTS2001, average prices were 3.5 cents per minute for FY 2000, and are expected to drop to less than 1 cent per minute by the end of the contract period. GSA is also conducting telecommunications acquisitions in major metropolitan areas across the country as a way of establishing competition for local telecommunication services. These acquisitions, known as Metropolitan Area Acquisitions (MAAs), began in May 1999, with contracts awarded in San Francisco, New York and Chicago, which resulted in an average price reduction of 70% in those cities. To date, 37 contracts have been awarded to six industry partners in 20 cities. These 37 contracts have the potential to save the Federal Government approximately $1.1 billion over the eight-year contract term. These contracts will help GSA realize its ultimate goal of delivering end-to-end competitive telecommunications services.
  
• Our success in offering information technology and telecommunication services is reflected in the extremely rapid growth of our programs. IT Fund resources have grown from approximately $1.5 billion in FY 1995 to over $5 billion in FY 2000 and are expected to exceed $6 billion in FY 2002.

Making it easier for Federal agencies to purchase items at discounted prices is only part of the story. We are working to change Government procurement, and technology is helping us to pave the road to a new way of buying in the 21st century. To expand and promote electronic commerce, we made over 1.2 million products available on-line by the end of FY 2000 through our GSA Advantage!, an Internet-based ordering system. Our goal is to have 95% of all FSS schedule contracts on-line by the end of FY 2001.

In the real property arena, we have much to be proud of. Some of our successes include:

• Linking Budget to Performance. In FY 1998, PBS identified several performance indicators that reflect the core drivers of its regional operations and serve as the centerpiece for its Linking Budget to Performance incentive program. This program has improved the quality of our asset management. FY 2000 measures included: Funds From Operations, Customer Satisfaction, Non-revenue-producing Space, Operating Costs Compared To Industry, Leasing Costs Compared to Industry, Indirect Costs as a Percentage of Revenue, Data Accuracy, Capital Investment Program, and Security - Customer Satisfaction. Overall, Linking Budget to Performance has achieved savings of approximately $400 million since its implementation in mid-1998.
  
• At the end of FY 2000, non-revenue producing Government-owned space was 12.2% of the GSA inventory. This was a significant improvement over the 13.5% posted in FY 1999. Non-revenue producing space declined in leased space as well, from 3.7% in FY 1999 to 3.3% in FY 2000.
  
• Operating costs per square foot of office space are 17% below private sector.
  
• Customer satisfaction with Government-owned space scored 82% in FY 2000; leased space scored 80%.
  
• We continue to be a world leader in energy efficiency. Preliminary data show the energy consumption rate in GSA buildings, at 66,861 BTUs per gross square foot, is currently better than the revised 67,144-BTU Federal energy - use target for FY 2000. This consumption rate is 20.3% below the 1985 baseline level. GSA's energy conservation goal is to reduce energy consumption 2% per year in FY 2001 and FY 2002.

These efficiencies are paying off. In FY 2002 the Federal Buildings Fund will generate $1.2 billion in revenues in excess of operating costs. However, this level of performance cannot be sustained if we do not use these revenues to modernize a deteriorating government-owned inventory. We need Congressional approval of our FY 2002 repair and alteration budget request of $827 million in order to begin to bring our buildings up to 21st century standards.

In addition to bottom-line cost effectiveness, GSA is committed to improving the quality of life for Federal employees, as well as promoting such broad socioeconomic goals as improving environmental quality and increasing access to technology.

• In its support of family-friendly workplaces, GSA took a giant step in FY 2000 toward making child care affordable to more Federal employees. GSA oversees 113 child care centers in Federal facilities that serve around 8,000 children. Nearly 88% of the GSA centers are accredited by the National Association for the Education of Young Children, significantly higher than the national average.
  
• A general provision in GSA's FY 2000 appropriations legislation allowed Federal agencies for the first time to provide tuition assistance for lower- income employees' child care needs. GSA was one of a handful of employers to develop a subsidy program, and, in FY 2000, over 50 GSA families received child care subsidies. More than twice as many families will benefit in FY 2001.
  
• GSA has an award-winning recycling program. About 83% of all Federal office buildings nationwide participate in recycling. As a result, more than a third of the office waste stream generated in these buildings is recycled, saving more than $23 million in landfill and hauling costs. In addition, GSA recycles a fourth of its construction waste. We also use products that are recycled. GSA's entire paper supply is of 30% recycled content; 29% of the building insulation used comes from recycled sources; and 60% of the concrete used contains fly ash, a byproduct of burning coal.
  
• GSA's experiments with innovative motor vehicle technologies, such as alternative-fuel vehicles (AFVs), led to GSA's induction into the Clean Air Hall of Fame. GSA has purchased over 36,000 AFVs since FY 1991, with 30,000 of them for the GSA fleet.
  
• GSA remains committed to purchasing from small business. Approximately 77% of Schedule contracts are awarded to small business.

These accomplishments are both individually significant and a direct consequence of GSA's Strategic Plan, submitted to Congress in September, 2000 in accordance with the Government Performance and Results Act. The goals and objectives of the Strategic Plan have been translated into specific performance goals under each of the agency's major programs, with output, outcome, or other performance measures used to gauge the success of the effort. These goals are reflected in the detailed budget justification materials submitted to the Committee. We think that these will help demonstrate what we have long believed: that a dollar invested in GSA is taxpayer money well spent.

FY 2002 BUDGET REQUEST

I would now like to turn to the specifics of the budget request. As mentioned earlier, most of our planned $18.2 billion program for fiscal year 2002 is provided by revenues from our customers. We are asking the Committee to appropriate only $197.9 million for GSA direct funded operations. We are also requesting $6.4 billion in new obligational authority (NOA) to spend available resources in the Federal Buildings Fund (FBF), which includes $663 million for new construction projects. Our request is shown by account in the following table:

The Fiscal Year 2002 Program Requiring Congressional Action $(Thousands)
FY 2000	ActualFY 2001 CurrentFY 2002 Budget
Operating Appropriations
Policy and Operations	139,426 137,406 138,499
Electronic Government (E-Gov)	0020,000
Office of Inspector General	33,317 34,444 36,025
Allowances, Former Presidents	2,241 2,511 3,376
Presidential Transition	070 084  0
Subtotal Budget Authority/Appropriations	174,984 181,445 197,900
Federal Buildings Fund New Obligational Authority
Construction & Acquisition of Facilities	94,363 499,575 662,689
Repairs and Alterations	669,010 673,263 826,676
Installment Acquisition Payments	201,646 185,369 186,427
Rental of Space	2,917,896 3,163,370 2,959,550
Building Operations	1,588,543 1,624,771 1,748,949
Transfer to Pennsylvania Ave. Act	3,652 0 0
Columbia Hospital for Women	14,000 0 0
Subtotal New Obligational Authority (NOA)	5,489,110 6,146,348 6,384,291
Subtotal FBF Budget Authority	(210,471) 280,887 307,454
Subtotal FBF Appropriations	1047 6,523 276,400

1$276.4 million advance appropriation enacted in FY 2001 for FY 2002.

Operating appropriations, while only about one percent of the total proposed budget, are a vitally important part of GSA's total program. They support our Governmentwide policy function, the Office of Inspector General, Former Presidents, and other direct funded programs. The $197.9 million requested is $16 million above levels enacted in fiscal year 2001. This net increase is made up primarily of the following increases, some of which have been discussed above:

• $3 million for the FirstGov program.
  
• $6.5 million for the Federal Computer Incident Response Capability (FedCIRC) and Public Key Infrastructure (PKI) programs.
  
• $4.5 million for pay raise and other administrative costs.
  
• $800 thousand for full-year staff and rent for Former President Clinton, and equipment, rent and other costs for other Former Presidents.
  
• $20 million for the new Electronic Government fund (E-Gov).

These increases are offset by decreases for several one-time costs incurred in FY 2001, including decreases of:

• $7.1 million for Presidential transition.
  
• $11.2 million for unrequested one-time grants and other Congressional initiatives.

The Federal Buildings Fund (FBF) finances GSA's real property activities, except for disposal. $6.4 billion in New Obligational Authority (NOA) is requested for the FBF. The budget proposes $663 million for new construction projects in FY 2002. $827 million is also being requested for repairs and alterations projects. This $1.5 billion capital program is the largest since 1994:

• $276 million of this total is funded from direct appropriations enacted in FY 2001 for FY 2002, and
  
• $1.2 billion is funded from Fund revenues.
• GSA's FY 2002 budget reflects a significant construction program, including:
  
• $217 million for twelve Federal Judiciary projects, including construction funding for two projects, funding for five new design starts, and additional funding for five projects currently underway.
  
• $17 million for six Border Station projects, three each on the Northern and Southern borders of the Continental United States.
  
• $6 million for nonprospectus projects.
  
• $34 million for the Suitland, MD, National Oceanic and Atmospheric Administration (NOAA) facility, which is to house NOAA's satellite monitoring computer equipment.
  
• $6 million for a new Federal Bureau of Investigation (FBI) facility's site and design in Houston, TX.
  
• $5 million for demolition of the existing facility utilized by the U.S. Mission to the United Nations so that construction of its replacement can proceed.
  
• $9 million for the design of the Montgomery County, MD, Center for Devices and Radiological Health Laboratory and Office, as part of the consolidation of the Food and Drug Administration Headquarters office and laboratory space.
  
• $5 million for site remediation work at the Southeast Federal Center in Washington, DC.
  
• $3 million for design of a new Department of Commerce, Bureau of the Census facility, to be located in the Suitland Federal Center.
  
• $84 million for repayment to the Judgment Fund for monies disbursed in settlement of 20 claims against 11 new construction projects.

Our proposed fiscal year 2002 capital program emphasizes repairs and alterations. More than half of our government-owned buildings are over fifty years old and nearly a quarter of the inventory bears historic designation. Our first capital program priority must be repairs and alterations of our existing inventory to ensure that its value and condition do not decline. For fiscal year 2002, we are proposing a $827 million repairs and alterations program.

To allocate the limited resources of the Federal Buildings Fund for Repairs and Alterations projects, we evaluate and rank our proposals based on the following criteria: 1) Economic Justification, 2) Project Timing and Execution, 3) Physical Urgency, 4) Client/Agency Needs and 5) Historical Significance. Economic Justification evaluates both the project's financial impact to the Federal Buildings Fund and the overall cost to the U.S. taxpayer. Project Timing and Execution examines our ability to deliver the project in the respective year in which we are requesting funding as well as the timing of those projects that could possibly affect the execution of our proposal. Evaluating Physical Urgency examines the infrastructure needs of our assets. This includes but is not limited to Americans with Disabilities Act (ADA) requirements; seismic; asbestos abatement; heating, ventilation and air conditioning (HVAC); fire-life health safety; security; roof repairs and elevators. Client/Agency Needs looks at positioning our assets/buildings to best support the mission and goals of our agency clients in a cost efficient manner. Historical Significance puts a special emphasis on maintaining our national treasures that are often long lasting symbols of our Federal Government.

One of the initiatives funded by the $827 million Repairs and Alterations program includes the recapture of 734 thousand vacant square feet at a cost of $30 million, which would generate $13.2 million in annual revenue to the FBF.

We will continue our investments in 1) security enhancements, such as glass fragment retention program, 2) PCB removal, 3) HVAC upgrades, 4) elevator upgrades, 5) tenant improvements, 6) asbestos abatement, 7) electrical upgrades, 8) fire-life safety, 9) ADA improvements, and 10) roof repair and replacement.

Under the FBF operating programs, the $3 billion budget for Rental of Space is based on projections of a 1.2% increase in the size of the inventory, or an additional 1.8 million square feet. While many agencies are downsizing and releasing unused space to us, others, such as the Department of Justice, Social Security Administration, and the Judiciary, are expanding. Market rents that we pay for space also continue to increase for the portion of inventory that will be subject to new lease agreements (about one-sixth of our leased inventory turns over every year). Market rents are continuing to rise more steeply than the inflation rate - as much as 10% in some large markets.

The $1.7 billion budget requested for Building Operations in FY 2002 funds building services provided by PBS for facilities occupied by Federal Government employees, including cleaning, protection, maintenance, minor repairs, and utilities. This year's request is $124 million higher than the $1,625 million approved for FY 2001. The increase includes pay raises, new space entering the inventory, Law Enforcement Security Officer (LESO) hires, an enhanced contract guard security program, security system/equipment replacements, and utility increases.

The funding levels achieved in the FY 2002 request reflect our improved stewardship of the FBF. The accuracy of our revenue forecasts has improved dramatically, and our operating cost efficiencies have allowed us to plan for a reasonable level of capital investment.

GSA's proposed FY 2002 budget emphasizes protecting and enhancing our nation's real property and information infrastructures. Real property assets will be protected and preserved through capital repairs and alterations to our aging owned buildings, and will be enhanced by new courthouse construction to accommodate the expanding needs of our judicial system. Information assets will be protected by the Federal Computer Incident Response Capability (FedCIRC), and enhanced by innovative information technology applications, including the FirstGov, E-Gov, and Public Key Infrastructure (PKI) initiatives.

Mr. Chairman, this concludes my formal statement, and I would be glad to answer any questions about our accomplishments or proposed budget program.

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