Winstead Highlights PBS Achievements and Challenges for Society of Marketing Professionals
As Prepared for Delivery
Public Buildings Service Commissioner
U.S. General Services Administration
Society of Marketing Professional
Services National Conference
August 24, 2007
Good morning, thank you Jim Brolin for the kind introduction. I’m pleased to have the opportunity to introduce the General Services Administration’s Public Buildings Service (PBS) and our role as the real estate provider for the federal workforce. Perhaps I can interest some of you who have not done so already to do business with us.
I’ve been the PBS Commissioner for almost two years, and it has been an extraordinary experience. Managing our portion of the federal government’s massive real estate portfolio has required me to use everything I’ve learned throughout my entire career—working for two major real estate law firms, and as the head of Maryland’s Department of Transportation. PBS is basically a huge and diverse development, management, and leasing company embedded in the federal government, and funded by rent and sales of assets through a revolving fund—The Federal Buildings Fund.
Today I would like to focus on three main topics:
- The business we do at PBS, along with some of our recent accomplishments,
- My top priorities for moving PBS forward; and
- How you can get started in doing business with GSA.
As for our business, we acquire workspace, whether by lease, construction or occasional purchase, and then we manage it. Our PBS mission is twofold – first, to provide the federal workforce with superior work space, so employees can do their job for the American people, and second, to make sure we do this at good economies for the taxpayer. That means managing 350 million square feet of office buildings, courthouses, laboratories, warehouses, and border stations in over 8,600 owned and leased buildings. Our annual budget is around $8 billion; and we house one million federal employees from 100 different agencies.
For the coming fiscal year, we expect a healthy construction, leasing and repair and alterations programs. For leasing, our Fiscal Year 2008 request is $4.4 billion. That is a slight increase over this year’s figure. For our repair and alterations program, we requested $804 million for buildings around the country, with the majority in Washington, DC, including the major renovation of the Eisenhower Executive Office Building. For new construction, we’ve submitted a request in the amount of $615 million for 2008—with the majority for our expanded Land Ports of Entry Program along the northern and southern U.S. borders.
This may appear to be a large amount, but in fact, with today’s environment of tighter budgets, GSA’s reinvestment capital is limited and insufficient to keep pace with the repair needs of the federally-owned portfolio. Fortunately, we do have some alternative financing possibilities. Most importantly, in 2005, GSA was given the authority to retain proceeds from the sale, lease, or exchange of real property. We have sold a number of under-producing assets. The ability to retain the proceeds provides a much needed source of funding for investment in the remaining government-owned inventory. We are also exploring other potential uses for this authority such as ground lease/leaseback or out lease/leaseback. While there are regulatory limitations on these uses, they may still provide an opportunity to support further investment and reinvestment in our portfolio in the future.
I’m proud of the accomplishments we’ve made in the past couple of years and would like to share a few with you.
As one of the largest public real estate organizations in the country, we fulfill our mission by employing a reinvestment strategy that is based on more than five decades of experience of owning, managing, leasing, developing, and disposing of real property. We’re playing a prominent role in responsible asset management in the federal government, and I’m proud that GSA was the first federal agency to achieve “Green” status on the President’s Management Agenda scorecard for real property asset management.
PBS real estate expertise and experience in the national marketplace bring savings to our federal customers and the taxpayers. In Fiscal Year 2006, we acquired leased space at 9.2 percent below market comparables. We are operating buildings at 4.2 percent below the private sector. We’ve limited vacant space to 4.3 percent, and recaptured $147.5 million in capital reinvestment from the sale of 55 underutilized properties. While these accomplishments are significant, PBS is committed to rightsizing our owned real property portfolio, and identifying opportunities in our leased portfolio to achieve cost savings for our customers.
I look forward to the remainder of my tenure as Commissioner and the exciting opportunities that lie ahead—including managing our portfolio of Design Excellence Buildings such as the newly dedicated San Francisco Federal Office Building with its innovative environmental and energy savings features.
GSA is setting the example for the government and the private sector in incorporating principles of sustainable design and energy efficiency into all of its building projects. As a means of evaluating and measuring its green building achievements, we require all new construction projects—and major renovations—to be certified through the U.S. Green Building Council’s “Leadership in Energy and Environmental Design” or the “LEED” rating system. We recognize that buildings in the United States consume about 40 percent of the total energy used in the U.S. and as much as 70 percent of the electricity. GSA has always made significant investments in energy saving solutions. In fact, between 1985 and 2005, GSA achieved a 30 percent reduction in energy consumption. The President has challenged all federal agencies to reduce our energy consumption, to increase the use of renewable energy and continue to find new technologies. We continue to take energy reduction measures, but we’re also researching new technologies that can help us reduce energy consumption even more and reduce overall costs to the government.
Moving forward—priorities for the Public Buildings Service center on the improved delivery of products and services to federal agencies at prices they can afford. Our central business premise is offering best value, based on market knowledge of customer requirements, real estate and regulatory expertise and market volume. I call this our “economic case.” Strengthening our economic case and operational excellence is essential for PBS to retain and expand its customer base, while ensuring sufficient funds are available to reinvest in our real property assets, construct new assets for growing agency missions, and cover lease and operating costs.
My first priority is to improve GSA’s real property capital project planning and delivery.
Time and cost are our two biggest project issues. We have too many delays, and construction costs are rising dramatically. Rising costs have been particularly troubling. Construction markets are hot worldwide, and this is driving up prices for both materials and labor. Fluctuations in commodities like petroleum and petroleum-based products are adding to volatility in pricing. The market we’re all dealing with has taken away any room that we once had to live with our inefficiencies. To manage these challenges, we have realigned our Design and Construction team to focus on project delivery. This includes ramping up oversight and consistency in project delivery with new tools and procedures in place so we know when a project schedule or budget has slipped before it becomes a crisis.
Second priority is to improve GSA’s real estate leasing program.
Our main goals for the leasing program are to improve customer service and to achieve savings for federal agencies. Our most significant effort involves the National Broker Contract. This contract has been in place for about two years and we are seeing results. Last year, projects with our brokers were more than 13 percent below the market midpoint. That far exceeds our overall goal of 8.75 percent.
In addition, because of increased efficiency, beginning this October, we’re reducing our leasing fee to customer agencies from 8 to 7 percent. We’ve been receiving National Broker Contract success stories from around the country and I want to quickly cite a couple. With the FBI’s changing mission as intelligence organization, focused on the Global War on Terrorism, the agency needs more and new kinds of space. GSA is working with the FBI to deliver over 15 new field offices across the country in the next three years. Our two agencies worked together to create a national FBI program strategy and management model. We’re following a similar approach for the State Department’s Gateway Offices, and we’re also pursuing Border Patrol Station leases in a consistent manner. The 2010 decennial census is another example. GSA will lease 520 local Census offices of between 6,000-8,000 square feet with lease awards to begin at the end of 2007.
The third priority is to continue to expand and strengthen GSA’s workspace and workplace delivery.
PBS has refocused its core value proposition. We’re getting beyond a narrow focus on individual space transactions and on being a mere “provider of space.” Our new focus is customer-centric, and we see ourselves as a “workplace solutions provider.” This approach includes customer account management, advanced customer requirements development, project delivery, and customer demand forecasting. We are perfecting our basic approach to space delivery by offering integrated solutions that draw on the breadth of PBS’s and GSA’s technology services.
Fourth priority is to explore ways to leverage funding of real property capital projects.
We’re promoting increased investment in real property through alternative financing options. This appears to be our best opportunity to support further investment and reinvestment in our portfolio in the future.
And lastly to continue to implement the President’s Management Agenda by adopting good governance practices.
This agenda involves measures for good governance and good management.
And beyond the real estate services that PBS procures, GSA purchases other products and services. Our sister service is the Federal Acquisition Service, that procures products and services for federal agencies--everything from cars to desks to IT services. In fact, GSA does more procurement than any other non-defense agency in the government.
I invite you – if you are not already working with us at GSA – to consider doing so. I think you will find it a rewarding experience and a wonderful opportunity to do something for the American people.
GSA and the Public Buildings Service stand ready to help you in many ways. We know the process can look a bit intimidating at first. Sometimes small firms will partner with larger firms as they learn the process. Or sometimes they come to us from the start.
We have set up a number of ways you can get information and help. The best way to start is by contacting your local GSA office. We have eleven regional offices, located across the country. Every regional GSA office has people who can answer your questions and help you get started. You can find individual regional contacts on our website at www.gsa.gov’s home page, regional contacts or search by state.
This year in the area of architecture and design, PBS awarded contracts in the amount of 73 million dollars with over 50 million going to small businesses. Business opportunities are out there.
Information is also available on our website at www.gsa.gov/business. There, you can find out when and where we offer training nationwide. One seminar we offer quite often, for example, is called “How to Obtain a GSA Schedules Contract.” The website also lists national GSA events, like our conference next week in Phoenix, Arizona, called “Opening Doors for Small Business.” Also on that site, you can access FedBizOpps, where federal agencies advertise their procurement needs that exceed $25,000.
We recently held a Design Symposium in June 2007 that brought together top leaders in the Architectural and Engineering communities to discuss a host of topics, including how we can get the word out to smaller firms about our program. Steven Lewis, an architect with GSA’s Capital Construction Program, would be happy to discuss this with you and answer any questions. He can be reached at firstname.lastname@example.org. Another resource is the PBS Office of Vendor Alliance and Acquisition headed up by Tami Riggs. She can be reached by email at email@example.com.
In closing, I am reminded of a quote from Winston Churchill: “We shape our buildings; thereafter they shape us.” I would like to share with you some images of the spectacular public architecture we’re building at GSA. Thank you and enjoy the remainder of the conference.