In 2012, the Obama administration’s Freeze the Footprint policy order mandated that the federal government reduce its real estate footprint and curb its accumulation of unused or underused properties. The following year, the Office of Management and Budget (OMB) issued guidance on how these reductions should be planned. Since then, the federal government reduced its real estate footprint by 21.4 million square feet, disposing of 7,350 buildings in FY 2014 alone. Reductions in real property inventory, according to the OMB, accounted for savings of more than $17 million in operating costs.
On March 25, the Obama administration followed up with two wide-ranging documents: the National Strategy for Real Property and its accompanying Reduce the Footprint management procedures memorandum. Together, they require federal agencies not just to freeze growth but also to better measure their use of space through tools such as the Federal Real Property Profile, and ultimately reduce the inventory, cutting back on real property holdings by “prioritizing actions to consolidate, co-locate and dispose of properties.”
OMB has also announced that with the General Services Administration (GSA) it has developed and implemented new analytical tools to facilitate data-driven decision making, tools that are meant to be fully in place by the end of FY 2015. By the terms of the National Strategy, the first of these tools will be online by the end of this month.
By those terms, too, each federal agency is required to submit a draft of a five-year Real Property Efficiency Plan by July 20, with the final plan completed by September 10. These plans will embrace policy standards specifying space requirements and setting reduction targets.
The White House adds that new legislation will likely be required in order to streamline existing regulations for the disposal of property. It notes that existing requirements for selling federal property involve 20 discrete steps, creating an administrative burden that increases both cost and time spent. The administration proposes that this legislation follow the Civilian Property Realignment Act (CPRA), first proposed by the President in 2011.
As with any federal plan, it seems, there are loopholes woven into the very fabric of the National Strategy. For instance, if an agency has fewer than 200 warehouses then it does not have to submit reduction targets for its warehouse portfolio. Nor do agencies have to retrofit their holdings to accommodate the requirements for per-employee office space that are set forth in the new policy. In addition, as a memorandum from the OMB puts it, “there may be circumstances where an agency experiences mission changes leading it to exceed its square-footage baseline in a given year.”
OMB plans to make data on the freeze-and-reduce program available annually on the Performance.gov website.
Kurt Stout is the national leader of Colliers International’s Government Solutions practice group, which provides government real estate services to private investors and federal agencies. He also writes about federal real estate on his Capitol Markets team blog. You can contact Kurt by email or on Twitter.