Spotlight: CBER

PrintThe sprawling Food and Drug Administration (FDA) campus in Silver Spring, Maryland, will soon be welcoming another major regulatory component of the agency: the Center for Biologics Evaluation and Research (CBER). Beginning about May 1, moving vans will collect CBER employees from various leased suburban Maryland locations and deliver them to the federally owned 130-acre Federal Research Center at White Oak. One of six centers within the FDA, the CBER pursues a mission “to ensure the safety, purity, potency, and effectiveness of biological products including vaccines, blood and blood products, and cells, tissues, and gene therapies for the prevention, diagnosis, and treatment of human diseases, conditions, or injury.” Protecting the public against emerging diseases and bioterrorism is also part of CBER’s mission.

The on-going FDA consolidation was first authorized back in 1990 through the FDA Revitalization Act. The CBER can trace its origins still further back. Deaths of children from contaminated vaccines led to the Biologics Control Act of 1902, which regulated the interstate commerce in antitoxins, serums and vaccines. Originally called the Laboratory of Hygiene, the center’s name and oversight shifted through the decades. In 1937, the Division of Biologics Control formed within the National Institute of Health. Transfer to the FDA came in 1972, along with another new name, Bureau of Biologics, and an expanded mandate to regulate blood products and serums for allergy shots as well as vaccine. A 1982 merger with the Bureau of Drugs formed the National Center for Drugs and Biologics, but by 1988, drug and biologics components were separated again, creating the Center for Drug Evaluation and Research (CDER) and the CBER. CDER focuses on chemically synthesized drugs, while CBER regulates products derived from living sources (whether human, animal, or microbiological), often through advanced biotechnologies. Growing awareness of HIV and its spread through blood transfusions and related products led to CBER taking responsibility for regulating HIV/AIDS-related products.

“Biological products touch people’s lives on a daily basis,” says Dr. Karen Midthun, director of CBER. Each year, the center regulates over 200 million vaccinations, 29 million transfusions of blood and blood components, and 1.6 million musculoskeletal tissue transplants. Emerging biologic therapies are innovative, complex and vulnerable to contamination, presenting major technological and regulatory challenges to the CBER. CBER reviewers depend on an equally sophisticated regulatory science and research program to support their decisions. The CBER’s Strategic Plan for Regulatory Science and Research, FY 2012–2016, identifies the center’s 5 strategic goals for meeting these challenges:

  • Increase national preparedness for threats from terrorism, pandemic influenza, and emerging infectious diseases;
  • Improve global public health through international cooperation including research and information sharing;
  • Enhance ability of science and technology to develop safe and effective biological products;
  • Ensure the safety of biological products; and
  • Enhance research excellence and accountability.

Enhancing research throughout the FDA was a major driver behind consolidation of the agency at White Oak. In 1995, the BRAC Commission recommended closure of the U.S. Naval Surface Warfare Facility, and the coveted outside-the-beltway site was turned over to the GSA in 1997.  The GSA and FDA worked together to plan and design a multi-phase, state-of-the-art campus, then estimated to comprise 3 million SF, cost $650 million and require 7 years to complete. Groundbreaking occurred in 2000, and the first FDA occupants moved in 3 years later.  According to Clark Construction, which was awarded a $202 million contract from the GSA, the new CBER facilities include 2 lab buildings totaling 553,890 SF and a 334,000 SF office building, with a central atrium connecting the structures.

Energy conservation and sustainability are priorities for the White Oak development. LEED certification is in progress for the CBER labs and office, but the FDA’s Central Shared Use Facility already achieved a Silver award with daylighting, waterless and low-flow plumbing fixtures, a green roof and other conservation features. In 2011, the Department of Energy announced a $213 million Energy Savings Performance Contract (ESPC) with the FDA for the complex. The largest awarded to date, the ESPC established a public-private partnership to leverage private capital to pay for energy and water efficiency improvements at the site. Awarded by the GSA to Honeywell International, the contract supported construction of a heat and power plant, plus upgrades in heating, ventilation and lighting that are expected to save 279 billion BTU per year for 20 years—an estimated equivalent of annually removing 4,000 cars from the road.

CBER’s move should to be completed around July 1, but final completion of the consolidated campus is not expected until 2016.

Polar Vortex Not Chilling WDC Core Office Sales

WDC Risk Premium Analysis

Our investment sales team was especially prolific last week, issuing two new reports on the Washington, DC area property market. The 2013 Year End Washington, DC Capital Markets Report noted that many primary and secondary markets around the country saw markedly increased sales volume and pricing in 2013, yet performance of the Washington, DC metro region lagged slightly. Much of this is attributed to on-going political uncertainty in Congress, public- and private-sector efforts to improve space utilization and tepid growth in office-using industries.

The team also produced a report entitled “Polar Vortex Not Chilling Pricing For Core Assets”. In it they observe that the Washington, DC market has been pricing initial capitalization rates for ‘core’ product at an average of 195 bps over 10-yr Treasuries. Yet, increasingly, yield oriented investors are measuring returns against alternative investments such as 6-month CDs and AAA corporate bonds. Relative to CDs, cap rates for core properties have compressed, now to a margin of about 400-450 bps.

As relates to core government-leased properties, this certainly rings true. As we noted in our profile of last year’s 1301 New York Avenue sale. That building, which is leased for 15 years to GSA, sold in the low 5% cap range. The nearby Bond Building was also leased to GSA for 15 years and it was also valued at a low 5% cap rate.

If you would like to read further, the 2013 year end market summary can be found here and the Polar Vortex report is here.

Alternative Approaches to Funding for Federal Real Property

GAO Report Capital FinancingA recent bounce in GSA’s funds from Congress has modestly improved the agency’s ability to reduce the federal footprint and shift more toward owned space, as we discussed earlier this month. But the slight budget relief may be only temporary and does not resolve chronic funding problems faced by GSA and other agencies needing to acquire, renovate or dispose of federal real property without full upfront funding. This enduring difficulty—more acute in times of fiscal stress—is the focus of a new GAO report on how selected agencies have used other funding mechanisms to meet real property needs. The result of the GAO’s careful analysis appeared this month, “Capital Financing: Alternative Approaches to Budgeting for Federal Real Property.”

The GAO identified management of federal real property as a high-risk issue back in 2003. Efforts to improve the situation have included a 2010 presidential directive for agencies to save money through disposal of excess real property and by consolidating and increasing space utilization. A 2012 OMB memorandum specifically directed agencies to “Freeze the Footprint,” that is, not increase their real estate inventory. “As a result,” states the GAO report, “acquisition has become more about consolidation and identifying opportunities to share space rather than acquiring new space.”

A 2006 GAO analysis found upfront funding to be the ideal approach to fulfilling federal commitments and maintaining fiscal control. But purchases or capital leases are recorded in full in the budget year in which they are made. In contrast, short-term, operating leases require only the first year’s lease payments (plus cancellation costs) to appear in that year’s budget, making costly operating leases often preferable on paper to construction or renovation projects. Consequently, agencies regularly face funding challenges to acquiring or renovating federal real property.

In lieu of upfront funding, agencies turn to alternatives. Because legal authorities vary between and within agencies, alternatives are not universally available, and preferred alternatives also vary. The GAO chose to examine financing alternatives through case studies of four agencies that were among the top 10 federal real property holders in 2012: GSA, Department of Agriculture (USDA), Department of Veterans Affairs (VA), and Department of the Interior (DOI). Methodology involved analyzing agency documents, reviewing federal laws, regulations and policies and interviewing officials. The report emphasizes that the results are “nongeneralizable” but meant to illustrate a range of possibilities.

Alternative funding mechanisms used by selected agencies include:

  • Land swap—used, for example, by the USDA which exchanged land with the city of Ames, Iowa, which gave the city space to build a water treatment plant and the USDA space to dispose of diseased animals’ manure.
  • Retained fees—used in the case of DOI’s National Park Service to direct recreation fees toward essential repairs to eroding beaches and outdoor amenities and to install energy efficient features in a renovated park building in Massachusetts.
  • Enhanced use lease—notably used by the VA to lease excess space to the Volunteers of America of Greater Ohio, which renovated and maintained a building, resulting in cost savings to the government.

The report points out that many of the alternative mechanisms relied on partnerships, often public-private partnerships, to leverage resources. One consequence was that additional time was required to identify potential partners and work out beneficial arrangements for both parties. In the USDA’s Agricultural Research Service example, it took 10 years to successfully complete a land exchange.

Each alternative mechanism, in fact, had shortcomings for the agencies, and the report also considers how changing the budgetary structure itself might offer greater benefits for meeting federal property needs. The GAO offers options for consideration, rather than making recommendations. For example, Congress could improve flexibility for agencies needing to make acquisitions or repairs by allowing full access to the Federal Buildings Fund (FBF). Or, a capital acquisition fund could be created with authority to fund approved projects by borrowing from the Federal Financing Bank. The report concludes that there is no single best option for federal real property budgeting, but alternative budget structures should attempt to balance the need to provide agencies with flexibility with goal of promoting transparency and fiscal control for Congress.

The GAO also includes comments from the four selected agencies as appendixes to the report. Most are technical, but a letter from GSA Administrator Dan Tangherlini agrees that alternative budgetary structures could lead to improvements. While the report does not make recommendations as to which alternatives to pursue, Tangherlini contends that some are indeed preferable to others. His concluding remark is a call for a continuing discussion with the GAO and GSA’s congressional oversight committees “to help ensure that the Government has the capital and the flexibility to make cost effective real estate decisions.”

Better Buildings Bill Update

Thirty-two U.S. Senators stayed up all night on March 10, speaking non-stop to stir Congressional colleagues into action on climate change. Overnight talking points emphasized state-by-state economic damage such as crop losses from California droughts, coastal destruction from extreme storm surges in New Jersey, and shrinking lobster harvests in Connecticut’s warming Long Island Sound. Senator Jeanne Shaheen (D-NH) added concerns about diverse impacts of warming New England winters, ranging from falling maple sugar production to dwindling moose populations, and called for bipartisan efforts to find solutions. But no Republicans participated in the all-nighter, and political skeptics might reasonably ask: Is bipartisan legislation to reduce carbon pollution and improve energy efficiency possible in the current Congress?

Yet evidence is growing that common ground can be found. In fact, on March 5, the House of Representatives voted overwhelmingly (375-36) in support of the “Energy Efficiency Improvement Act,” a.k.a. the Better Buildings Act of 2014 (H.R. 2026). Introduced last May, the bill was crafted by Congressmen David McKinley (R-WV) and Peter Welch (D-VT) to improve energy efficiency in commercial office buildings, with particular application to tenant spaces. Key provisions of the voluntary, market-based approach include:

  • GSA requirement to develop and publish model leasing provisions encouraging energy efficiency in privately owned buildings with federal tenants;
  • Federal agency requirement to implement strategies for improving energy efficiency of data centers operated by the federal government;
  • Establishment of a benchmarking and disclosure process for energy consumption in buildings leased by the federal government; and
  • Revising regulations to facilitate manufacture of large-scale water heaters.

Perhaps most notably for federal leaseholders, the bill would require the EPA to develop a “Tenant Star” program within its Energy Star program, which is widely respected for improving energy performance in whole buildings. The new Tenant Star program would recognize tenants that achieve high levels of energy efficiency in separate spaces. Jeffrey DeBoer, CEO of Real Estate Roundtable, is among those praising the Tenant Star program, saying in a press release that it will “encourage cooperation between commercial tenants and landlords to design and construct high performance leased spaces, and make smart operational decisions to lower energy use by investing in measures that will pay for themselves through energy savings.” The bill’s co-sponsor, Peter Welch, also commended the March 5 House vote in a press release. “Saving energy creates jobs, saves money and improves the environment,” said Welch. “I have long believed that energy efficiency is an area of common ground in this divided Congress.”

Companion legislation is pending in the Senate. Democratic Senator Shaheen first joined Rob Portman (R-OH) in 2011 to promote energy efficiency in homes and commercial buildings, streamline government programs for energy efficiency and reduce energy waste in federal buildings through a bill widely known as Shaheen-Portman. Their original version of the Energy Savings and Industrial Competitiveness Act (ESICA) garnered broad support until it was derailed by unrelated amendments many supporters found objectionable. The co-sponsors reintroduced the ESICA, or S. 2074, earlier this month, with added bipartisan provisions including Tenant Star and improvements in data center energy efficiency to attract additional backers. The American Council for an Energy-Efficient Economy estimates that the new version would create more than 190,000 jobs, save consumers and building owners $16.2 billion per year and cut carbon dioxide emissions as much as taking 22 million cars off the road by 2030. Supporters are again lining up, ranging from the U.S. Chamber of Commerce to the U.S. Green Building Council.

The Natural Resources Defense Council’s analysis of the new version of Shaheen-Portman complains briefly that it would repeal requirements in earlier legislation that new federal buildings achieve zero-carbon footprint by 2030. However, the report emphasizes that the legislation would also significantly improve federal building energy efficiency, offsetting the estimated costs of ESICA ($357.5 million from 2014-2018) by reducing appropriations ($362.5 million for the same period). Passage of the House bill suggests that momentum is building for ESICA. If it can proceed through the Senate without poison pill amendments, Shaheen-Portman would prove that both parties can share ground when it comes to common sense energy conservation legislation.

The Bounceback: GSA’s Budget Returns to “Normal” (and what that means for lessors)

GSA Budget Trend

We’ve often said on this blog that you need only look at GSA’s budget as the bellwether for leasing demand. In recent years we’ve noted that budget reductions imposed by Congress have put GSA in a position where its owned inventory suffered and demand for leased space was buttressed. Despite the agency’s stated goal of reducing reliance on “costly leasing” there has been little funding available for upgrade of federal buildings to accommodate additional tenancy.

Now that may be changing. After suffering three years of historically constrained spending at the hands of Congress, GSA has received a little wiggle room. Let’s be clear: this year’s appropriated funds aren’t sufficient for watershed change but they are enough for the agency to move forward more quickly with its strategic initiatives to reduce the footprint and begin shifting into owned space. This prospect isn’t appealing to private-sector property owners.

So, what can lessors expect?

1. GSA will remain as cautious as ever. The détente established with Congress can easily be unraveled. The agency is just one false move from a return to the fiscal doghouse. If you’ve been frustrated with the maddeningly “deliberate” pace of GSA decision making, get used to it.

2. Wherever possible, GSA will seek to shift personnel into owned facilities and it will seek to downsize space. It will do this even in instances where it arguably doesn’t make financial sense for the tenant agency. Downsizing and elimination of “costly” leased space are the primary metrics that matter at GSA and on the Hill.

3.  Long term, non-cancellable leases will remain difficult to come by.  Yes, in some cases budget clarity will give agencies the green light to enter into long-term deals but we’ll also see agencies seek flexibility to enable future consolidations or relocations to owned space. Lessors will be frustrated by this because those future consolidation/relocation plans will often be purely aspirational, with no concrete plan behind them. It’s a different type of kicking the can.

4. In the event that tenants do embark on long-term leases, they will more often seek to improve space efficiency in conjunction with downsizing or consolidation. This will typically require substantial reconstruction of existing space that erodes the incumbent Lessor’s pricing advantage. In fact, it’s an outright disadvantage in those instances where swing space and phasing is required. Therefore, federal tenants will become more mobile, and renewal probabilities–especially among buildings with less efficient space build-outs–should decline. It will require a lot more planning to execute successful renewals.

GSA’s budget isn’t sufficient to cause immediate radical change and agencies will continue to resist huge lump-sum expenditures for relocation and replication of space, but we already see the above trends percolating in markets across the United States. If the federal budget continues to stabilize and GSA further funds programs like Total Workplace (which finances furniture and IT costs) we are certain to see continued downsizing in the leased inventory. The budget drives all of this.

New Cybersecurity Center Planned

Cyber_SecurityThe President’s 218-page FY 2015 federal budget request was released a week ago and it underscores the growing importance of cybersecurity. The word “cyber”, for example, appears 40 times in the budget. Collaboration is another major theme and Obama’s proposed request “identifies and promotes cross-agency cybersecurity indicatives and priorities, including improving cybersecurity information sharing while protecting privacy, civil liberties and enhancing state and local capacity to respond to cyber-incidents.”

In addition to the Pentagon’s request for $5.1 billion in funding for cybersecurity, GSA is requesting $35 million to establish a civilian cybersecurity center in the D.C metro area to consolidate various federal agencies. GSA Administrator Dan Tangherlini says the goal is to shift approximately 600,000 square feet of leased space to a federally owned building. “We’re spending substantial amounts of resources on rent to maintain multiple, separate activities that we think could provide value if they were consolidated and co-located in single state-of-the-art campus, recognizing that this is the type of work that we’re going to need to do in a collaborative way going forward,” he says. The plan is still in its initial stages, however it will be interesting to see how the proposal is received on the Hill, and ultimately how it will be implemented. 600,000 square feet is significant even in an office market the size of Washington.

Spotlight: Federal Bureau of Prisons

BOP SealA highly-efficient HVAC system, locally sourced stone and recycled construction waste are just a few of the sustainable features at a new federal building complex in Hazelton, West Virginia. An innovative laundry water recycling system is also expected to save over 2 million gallons of water per year. But design elements that bring daylight into the facility, without compromising security, may be the most appreciated by building inhabitants: 1,100 inmates of a medium security Federal Correctional Institution. The 540,000 SF complex is the first LEED Gold project of the Federal Bureau of Prisons (BOP), the federal law enforcement agency tasked with administering the federal prison system. A subdivision of the Department of Justice (DOJ), BOP has headquarters on First Street in N.W., D.C., 6 regional offices, 26 residential re-entry offices, 2 staff training centers and 119 correctional institutions. A BOP staff of 38,948 is responsible for 215,000 federal inmates.

The first three federal penitentiaries were authorized by the Three Prisons Act of 1891, under the DOJ. Congress established the Bureau of Prisons in 1930 (through Public Law No. 71-218), charging it with “management and regulation of all Federal penal and correctional institutions.” Only 11 federal prisons with about 13,000 inmates existed when the bureau was established but within 10 years the system had roughly doubled to include 24 institutions with 24,360 inmates. The prison population remained relatively stable for the next four decades, but BOP nearly doubled the number of facilities again, from 24 to 44, as it shifted from running large institutions with multiple security levels to small facilities housing inmates with particular security requirements.

The Sentencing Reform Act of 1984 dramatically increased the challenges faced by the BOP. The act, and additional reforms in the 1980s, established mandatory minimum sentences and abolished parole, resulting in a rapid increase in prison population. Prison population reached 136,000 by 1999, fueled particularly by convictions related to illegal drugs. The BOP managed the growth by constructing new facilities, expanding existing prisons and, increasingly, contracting with state, local and private facilities to house inmates.

Film buffs might imagine that federal prisons resemble the austere and brutal conditions in Bird Man of Alcatraz. But facilities are surprisingly diverse, classified by BOP largely based on security needs:

  • United States Penitentiaries (USP) are high-security facilities with highly secured perimeters and high staff-to-inmate ratios, including film-favorite USP Leavenworth and Administrative Maximum Security Florence, the “supermax” facility currently housing terrorists such as Oklahoma City bomber Terry Nichols.
  • Federal Correctional Institutions are medium and low security facilities with strengthened perimeters such as double fences and electronic detection systems, including Butner in North Carolina, which is home to Bernie Madoff.
  • Federal Prison Camps are minimum security facilities with little or no perimeter fencing and dormitory-style housing, such as Alderson in West Virginia, where domestic guru Martha Stewart served five months for insider trading.
  • Administrative Facilities have special missions such as pretrial detention, medical treatment, or confinement of extremely high-risk prisoners. The Medical Center for Prisoners in Springfield, Missouri, has housed Mafia bosses such as John Gotti, assassin Jared Lee Loughner, and the Birdman of Alcatraz himself, Robert Stroud.
  • Federal Correctional Complexes (FCC) include various facilities with different levels of security, such as FCC Terre Huate, which includes a Special Confinement Unit for male prisoners sentenced to death and where Oklahoma City bomber Timothy McVeigh was executed.

The BOP accounts for about 25% of the DOJ budget, yet federal prisons remain overcrowded and understaffed. Members of the committee from both parties have called for BOP reform, recognizing the high costs and other challenges posed by swelling prison populations. In testimony before the Senate Judiciary committee last year, BOP Director Charles Samuels, Jr. endorsed the DOJ’s “Smart on Crime” initiative, which promotes alternatives to incarceration for some non-violent offenders. Samuels also pressed the Senators to support programs that aim to reduce recidivism, such as vocational training, substance abuse counseling and job opportunities within Federal Prison Industries (FPI). According to Samuels, inmates need “job skills, vocational training, education, counseling and other assistance. . . if they are to successfully re-enter society.” But the number of federal inmates employed by FPI had declined by 2012 to 12,394, the lowest level since 1986 and far below the BOP goal of 25% of the inmate population. Some at the hearing resisted recommendations for shorter sentences or fewer incarcerations. According to Senator Chuck Grassley (R-IA), “It’s hard to think of a more successful domestic policy accomplished over the last 30 years than the reduction of crime that we have.” Senator Leahy (D-VT), however, asserted in a press release, “The dramatic increase in the prison population threatens public safety and critical funding for victim services.” No matter how much money is saved through energy and water efficiencies at new LEED prisons, it is hard to imagine how the current rate of inmate population growth can be sustainable.

The Pile-Up

GSA Lease ExpirationsSeveral times on this blog I’ve observed that GSA has been engaged in a spirited game of can-kicking when it comes to leasing. Much of this has been due to intense budget distress from record deficits, rising debt, the sequester, and a series of continuing resolutions, all cast against a backdrop of hopeless political dysfunction. Without long-term clarity of funding or mission, federal agencies have shifted into triage mode resulting in an increasing number of short-term extensions and holdovers. In a study last year we looked at leases due to expire between June 2012 and June 2013 and found that 42% of them were extended for three years or less (this is net of leases that were already in holdover).

These ever-shorter extensions have created a “pile up” of lease expirations such that now one-quarter of all GSA leases are due to expire this year and next. We are talking about almost 44 MSF of leases (net of several million square feet of holdovers) teetering on the verge of expiration. Worse yet, currently 52 MSF of leases are in their soft term*. The situation creates opportunity and peril for both GSA and for lessors.  Let’s look at the plight of each.

Opportunity and Peril for the Government

When it comes to the issue of real estate spending reduction, there is rare bipartisan agreement. Both Congress and the White House are clear on the goals: freeze the footprint, reduce costs and improve space utilization. These are the only three metrics of political importance. Regarding the huge volume of upcoming lease expirations, Rep. Lou Barletta, in his first hearing as the new chair of the Economic Development, Public Buildings and Emergency Management Subcommittee, observed that “we don’t want to miss this opportunity” to quickly reduce real estate costs and inventory.

From the government’s standpoint, this really is a unique time to quickly achieve its space reduction goals, yet GSA has been challenged to accomplish on-time completion of even the “normal” amount of leasing. In most years, some portion of leases simply don’t get done and they are either extended for a short period or they lapse into holdover. In order to execute the next generation of leases GSA will need to coordinate with its tenant agencies to plan consolidation, realignment and space reconfiguration. Each such project is a difficult and time consuming exercise and we can expect that thoughtful efforts could take years to execute. That means there will continue to be many more short term leases and, frankly, more burden on GSA.

In last year’s fiscal environment GSA’s task was clearly futile. This year feels more promising in the wake of the Ryan-Murray budget agreement and subsequent appropriations. Yet, more progress must made before agencies feel emboldened to commit to major lump-sum expenditures for space reconfiguration.

Opportunity and Peril for Lessors

The federal government’s reluctance to execute long, firm-term transactions has made them largely captive. Short-term extensions have enabled lessors to maintain occupancy with very little capital input, and higher rents are often achieved in compensation for these extensions. So, purely on a current yield basis, GSA’s plight can provide a financial benefit.

However, for many lessors short-term extensions are nothing more than a consolation prize. These days, lease term–firm term–is critically important. It is a prerequisite to refinancing or creating dispositions value. In some circumstances the cash flow from extensions is merely swept by the lender.

Based on the (hopeful) assumption that the federal government will eventually return to a more normal long-term leasing approach, we can expect a new set of challenges for lessors. Where agencies ultimately seek to downsize or dramatically reconfigure their space, incumbent lessors could find themselves at a disadvantage. Executing renewals in those circumstances can require phased renovation, swing space and other logistical complications. GSA won’t always be willing to entertain this complexity, structuring its procurements to favor the ”blank canvas” offered by competing vacant buildings.

The business of leasing space to the federal government has become more demanding. Terrific opportunities remain but successful investment more often requires greater diligence and hands-on asset management.

* We use “soft term” to describe portion of lease term where the government has a termination right. his is typically structured as a rolling termination right and is (unfortunately) quite common in GSA leases.

Spotlight: Executive Office of Immigration Review

EOIR SealPresident Obama has said that immigration reform is the most important domestic policy agenda of his second term, and hope springs that Congress will pass legislation acceptable to both parties. But in the meantime, it’s worthwhile to consider the offices that support immigration policies in place today. A key agency within the Department of Justice (DOJ) is the Executive Office for Immigration Review (EOIR).  The EOIR administers the nation’s immigrant court system, under delegated authority from the Attorney General. It conducts immigration court proceedings, appellate reviews and administrative hearings in pursuit of its primary mission: “to adjudicate immigration cases by fairly, expeditiously, and uniformly interpreting and administering the Nation’s immigration laws.” From a headquarters at two neighboring locations in Falls Church, Virginia, the agency oversees 59 immigration courts in 27 states, Puerto Rico and the Northern Mariana Islands.

The EOIR celebrated its 30th anniversary in 2013, but its origins can be traced at least to the Immigration Act of 1891. That first comprehensive federal immigration law established an Office of Immigration within the Department of Treasury and a process for examining and potentially excluding individuals seeking to enter the U.S., plus federal authority to deport individuals and to appeal deportation decisions. Over the next several decades, federal responsibilities related to immigration expanded, shifted and moved among departments. In 1933, the Immigration and Naturalization Service (INS) was created within the Department of Labor and tasked with handling all immigration issues. The INS was moved to the DOJ in 1940, and the Attorney General created the Board of Immigration Appeals (BIA), an independent adjudicatory body that continues to review decisions on immigration case appeals.

Further efforts to coordinate and streamline immigration law and implementation led to an internal DOJ reorganization in 1983; the BIA was combined with other functions once performed by the INS to establish the EOIR. Notably, the reorganization made Immigration Courts independent from the INS. The Immigration Reform and Control Act of 1986 further modified EOIR tasks, by establishing an office within the agency to decide cases related to illegal hiring and other unfair immigration-related hiring practices. In 2003, the Homeland Security Act abolished the INS, transferring its remaining immigration-related functions to the new Department of Homeland Security, while maintaining the EOIR within the DOJ.

Today, the EOIR employs about 1,460 full time-equivalent positions within the DOJ, with a FY 2014 requested budget of $329,569,000. Priority responsibilities include:

  • Deciding whether foreign-born individuals charged with immigration law violations should be ordered removed from the U.S. or granted relief or protection from removal. Such decisions are made by about 235 immigration judges around the country;
  • Deciding appeals of immigration judge decisions, through the BIA appeals process;
  • Deciding cases unrelated to removal proceedings, such as document fraud, unfair employment practices and employer sanctions for hiring of unauthorized workers. These hearings are conducted by the Office of the Chief Administrative Hearing Officer within the EOIR.

Since 2010, the nation’s top official in charge of the immigration court system has been Juan Osuna, first as acting director and now as director of the EOIR. From the outset, Osuna found his courts overstretched. Escalating numbers of cases, due to DHS heightened enforcement efforts, pressured judges to decide even major cases quickly. Yet the high volume resulted in such a backlog that a typical defendant faced an average wait that well exceeded 12 months. A managed hiring freeze in 2011 exacerbated the problem by reducing the number of immigration judges while caseloads continued to increase. A FY 2014 Congressional Budget Submission for the EOIR states that the number of matters pending adjudication increased 44% from early FY 2010 to early FY 2013. According to the report, “Immigration court cases are now routinely scheduled unacceptably far into the future.” Further delays are predicted unless the agency receives a requested program funding increase of $25 million to support an additional 30 Immigration Judge teams and 15 BIA attorneys.

On January 8, a lease prospectus was also submitted by the GSA, proposing to relocate the EOIR headquarters in one Northern Virginia location. The requested 176,000 RSF would be a reduction of 14,181 RSF compared with the current locations, and USF per person would shrink from 222 to 199. In keeping with efforts to improve energy efficiency throughout the federal government, the GSA urges offerors to seek Energy Star certification. The EOIR’s current lease expires September 15, 2015.

National Targeting Center to Consolidate

NTC Photo 2

Inside one of the current National Targeting Centers (Photo by Manuel Balce Ceneta/AP File Photo)

Two days after planting a car bomb in Times Square, Faisal Shahzad boarded a plane for Dubai at JFK International Airport. But a routine post-boarding check discovered Shahzad on the no-fly list, and US Customs and Border Protection (CBP) agents arrested the terrorist on May 3, 2010. CBP’s then-commissioner, Alan Bersin, lauded the capture, 52 hours after the attempted attack, and credited swift success to the National Targeting Center (NTC), calling it a “national treasure.”

Part of the CBP’s layered strategy for securing US borders, the NTC is responsible for identifying timely, actionable information before borders are crossed. A growing need for quick and coordinated intelligence analysis is one reason behind a planned consolidation of NTC to a new 24-hour, 7-days-a-week facility in Northern Virginia.

Originally, the NTC grew out of federal efforts to develop targeting practices to protect ports from drug and currency smuggling. But after the 9/11 terrorist attacks, targeting techniques were re-focused on anti-terrorist concerns. NTC began 24/7 operations on November, 2001, tasked with supporting CBP’s mission to prevent terrorists and their weapons from crossing US borders—while also enabling public travel and international trade. In 2007, NTC was divided in two: NTC-Passenger and NTC-Cargo. NTC-P screens inbound and outbound commercial airline passengers to spot potential high risk individuals, while NTC-C focuses on high-risk cargo that might conceal ingredients for weapons of mass destruction, chemical precursors of illegal drugs or conventional weapons or explosives.

NTC has not been immune from criticisms. Many objected in 2007 when a Federal Register notice revealed that the NTC’s program for tracking cargo would also be used to generate ratings on human travelers. The Automatic Tracking System began to scrutinize volumes of data for each person who crosses a U.S. border, as well as for container cargo, and the Bush administration excepted the procedures from the 1974 Privacy Act. But despite privacy concerns, comparing government watchlists, lost passport reports, criminal activity and other data, has allowed NTC-P to issue 3,181 no-board recommendations to airlines in FY 2011. Proponents point out that the program saves money as well as lives by improving operating efficiency for commercial airlines.

In 2003, the NTC (then still one entity) moved into a state-of-the-art facility in Reston, Virginia. President Bush visited a year later and observed how analysts, called targeters, pour over screens of data about people, ports and flights around the world. Workload and staff grew swiftly as national security concerns mounted, leading to NTC-C’s separate creation and move to Herndon, Virginia. At both facilities, targeters work closely with CBP personnel in the field and on-site staff from the Coast Guard, the FBI, Transportation Security Administration and other agencies. NTC-P targeters collaborate with Department of Homeland Security (DHS) intelligence officers and numerous law enforcement organizations to develop passenger targeting algorithms, and NTC-C targeters and DHS intelligence staff jointly refine rule sets for rating cargo risks. NTC-P personnel increased from 20 in 2001 to 307 in 2012; NTC-C staff grew from about 40 in 2007 to 407 in 2012. A DHS report in 2011 asserted that NTC-P caseload exceeded staff capacity, resulting in heavy reliance on overtime and high staff turnover. Reliance on 17 different data systems further contributed to work inefficiencies, and the report concluded that both technology upgrades and staff expansion were essential to improving the nation’s border security.

Technological and space enhancements are major reasons for consolidating the NTC-P and NTC-C at one facility, according to a lease prospectus submitted by the GSA in November, 2012. In addition, the prospectus notes that NTC-C lacks certain types of space, sometimes requiring travel to the NTC-P facility. Data sharing between the two entities is also complicated and slowed by maintaining separate locations, heightening the risk that a terrorist plot might not be identified in time. Unlike many other recent prospectuses, this one requests 78,426 RSF more space (from 90,574 RSF to 169,000 RSF), and USF per person is projected to increase as well (166 USF/person to 207 USF/person). In addition to special operational space, the new facility would include security areas, a fitness center for law enforcement personnel and Local Area Network (LAN) rooms for classified and unclassified materials. The location will remain near Dulles Airport to facilitate communication with other intelligence and law enforcement agencies in Western Fairfax County.

Today, February 11th, initial offers are due from developers hoping to build this new mission-critical facility. GSA has solicited owners of sites large enough to accommodate the 169,000 building along with parking for more than 1,000 vehicles. All of this will need to be provided on a site with a secured perimeter and two points of ingress and egress. The winning bidder will need to be able to complete the facility by the second quarter of 2016.