Must One Bad Apple Spoil the Barrel?

Both the House and Senate have been working on their respective versions of legislation designed to improve the process by which the federal government can dispose of unneeded and underutilized properties.  This legislation has bi-partisan support and it is likely that a bill will eventually be passed.

Improving asset management, disposing of unneeded assets, reducing operating costs and raising capital to pay down the national deficit – this is the focus of Congress’ legislative efforts and few would deny that it is truly noble stuff.  Unfortunately, versions of this bill emerging from both the House and Senate include a provision meant to curtail or fully eliminate the ability of many independent federal agencies to lease space under their own authority.

In the Senate bill there is a requirement that independent agencies must receive prospectus authorization from Congress for its large leases.  There is great irony in this provision because it is Congress that has been sitting on a backlog of prospectuses, some for almost two years.

The House version reaches further: It seeks to transfer all leasing authority to GSA.  There is great irony in this too since this legislation stems from the same House committee that makes sport of browbeating GSA over its inability to get things done.

Why then would Congress be pushing this issue?  There is no doubt it is legislative backlash from SEC’s Constitution Center lease.  Even outside of the Washington, DC area most people have heard about the $550 million, 20 year lease SEC signed for 900,000 SF in the newly renovated Constitution Center building.  It was almost immediately recognized as a bad deal because SEC wildly overestimated its space needs (in anticipation of Dodd-Frank) and, worse yet, it executed a contract prior to receiving budget appropriations.  Since then, SEC has been forced to relinquish its leasing authority to GSA.

Yet, there are any number of independent agencies that continue to manage their own leasing responsibly.  They start their procurements early, they carefully evaluate options and costs, they receive input from all stakeholders and, far more often than not, they do this without going into holdover.  We can’t pretend the SEC Constitution Center lease never happened, but we must recognize that many other agencies – whether operating under independent, statutory or delegated authority – manage their space needs effectively.