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More from GSA and OMB on real estate cuts

By Jonathan O'Connell

We reported last week on a new memo from President Barack Obama requiring the federal government to cut $8 billion in real estate costs by the end of fiscal 2012. Most of that - $5 billion – is savings Obama would like to see from already planned BRAC changes. Federal agencies, mostly outside of the Department of Defense, will have to find the rest of that savings, and their plans for savings are to be submitted by the second week in September.

For commercial property holders there are still a lot of questions, some of which the head of the General Services Administration, Martha Johnson, and Jeffrey Zients, deputy director of the Office of Management and Budget, addressed in interviews for the article Wednesday.

First, will the government really be selling off thousands of properties? Zients, stressed that yes, the government needs to dispose of property, especially to save on maintenance. Any portion of agencies’ portfolios that is not being used, he said, “needs to be disposed of as fast as possible, because it brings in money and it stops the operating expenses against that.”

If property isn’t sold, he said, the government won't be able to hit the $8 billion savings goal. Even the BRAC number, $5 billion, will be tough. “There is a good plan in place there, but again the president is saying 'I want execution of that plan and I want a minimum of $5 billion delivered against that plan,' ” he said.

Johnson said that the GSA, with its real estate expertise, will serve in an advisory position for agencies as they look to hit savings goals and navigate political battles that will naturally ensue.

“We’re not the police on this but we have the data, and we certainly recognize that there are a lot of issues that every agency has to cope with around this,” she said.

Another question: will the government be looking to terminate leases? Johnson said the government will be looking to consolidate space, such as it will be with the new headquarters for the Department of Homeland Security, which will consolidate dozens of sites into six or seven. This will include “getting out of” leases, subletting or allowing leases to expire.

Some consolidation, Johnson said, could come from agencies that identify portions of their workforce that could just as well work from home, thus requiring less office space.

She offered the tagline: “Work is what you do, not where you are.”

By Dan Beyers  |  June 14, 2010; 7:01 AM ET
 
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