New Approach Needed for St. Elizabeths DHS HQ?

St. Elizabeths Campus Rendering (courtesy of GSA)

The original $3.45 billion plan to consolidate the U.S. Department of Homeland Security (DHS) headquarters at a 4.5 million-square-foot campus on the site of the former St. Elizabeths Hospital—moving more than 14,000 workers from more than 180 separate offices and reducing the department’s leased spaces in the Washington area to fewer than a dozen by the end of FY 2016—was an ambitious one. While it has been clear for several years that the three-phase project would be delayed significantly—and that its costs would go up—the extent of those delays and cost increases continues to rise.

Delays caused by congressional budget cuts have pushed the cost of what, if completed as planned, would be the largest federal construction project since the building of the Pentagon in the 1940s, up to $4.06 billion, according to the department’s latest estimates, as reported by Federal Times reporter Andy Medici last week.  Since last December alone, costs have increased by $100 million and another year has been added to the schedule.

The original schedule listed the following project components:

  • Phase I (2013 completion): U.S. Coast Guard Headquarters and shared-use spaces.
  • Phase II (2014): DHS National Operations Center (NOC) and Federal Emergency Management Agency (FEMA) Headquarters.
  • Phase III (2016): Transportation Security Administration (TSA), Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) Headquarters.

While the 1.2 million-square-foot U.S. Coast Guard headquarters is on target for completion next summer, all of the other components have been pushed back. The most recent schedule posted on the project website called for Phase II occupancy to begin in 2015 and Phase III in 2018, with all construction to be completed by the end of 2020. That schedule, however was last updated in July 2011; more recent DHS documents have pushed the final completion date to at least 2022.

The primary reason for the delay is insufficient funding. DHS and GSA—which is managing the project—requested $668 million in FY 2011 but received only $77 million, 12% of its request. In FY 2012, the agencies requested $376 million and got $93 million. For FY 2013, they requested $89 million, but the continuing resolution provides only $56 million. According to DHS documents, Medici reported, the department would need at least $426 million in FY 2014 and $430 million in 2015 to meet the new schedule.

With costs and the construction timeline stretching even further into the future, GSA Acting Administrator Dan Tangherlini believes that the planned DHS campus—while still a great idea—is in need of a new approach.  According to Washington Post reporter Jonathan O’Connell (writing in the Capital Business blog on Sunday, December 9), Tangherlini has said “I think right now if we’re going to try to go about it the way we’ve traditionally gone about it, it’s going to take a long time. So I think St. Elizabeths is one of those projects that we really have to start thinking about new ways to approach.” According to O’Connell, Tangherlini added that the government needs to make sure that it fully uses the investment it already has made in the project, without committing to spend money that it doesn’t have.

Whether this new approach will involve some sort of special financing deal—similar to those GSA hopes to use to build a new FBI headquarters and redevelop the Federal Triangle South area—or  something completely different remains to be seen. What we foresee for the near- and mid-term, however, is that DHS will need to re-think it’s housing strategy.  The agency currently occupies pockets of space strewn primarily throughout the District of Columbia and Arlington, a vestige of the fact that DHS did not have prospectus authority to execute large leases at the time it was hastily formed in the wake of 9/11. We see the possibility now that GSA may begin to consider consolidation strategies.