Key Takeaways
- •The Federal Buildings Fund faces a $50 billion deferred maintenance liability and a $1 billion annual funding gap, complicating the management of the government's aging and underutilized real estate portfolio.
- •David Marroni (Director, Physical Infrastructure, GAO) testified that the government must dispose of underutilized, high-liability properties to address the $370 billion total federal maintenance backlog and improve efficiency.
- •Rep. Steny Hoyer (D, MD-5) pressed Marroni on the security risks of relocating the FBI to the Reagan Building, which Marroni noted would require substantial investment to meet standards.
- •Rep. David Joyce (R, OH-14) and Rep. Chuck Edwards (R, NC-11) prioritized property disposal, while Rep. Mark Pocan (D, WI-2) raised concerns regarding the preservation of New Deal artwork.
- •The subcommittee awaits utilization data required by the USE IT Act on March 31 to identify buildings for consolidation or disposal and reduce the federal real estate footprint.
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Hearing Analysis
Overview
The hearing examined the chronic mismanagement of federal real property and the structural deficiencies of the Federal Buildings Fund (FBF). With federal real estate management having remained on the Government Accountability Office (GAO) "high-risk" list since 2003, the discussion focused on a staggering deferred maintenance backlog that some estimates place as high as $50 billion. The proceedings highlighted the tension between the General Services Administration (GSA) and the tenant agencies it serves, the impact of remote work on office utilization, and the urgent need to "right-size" the federal footprint through the disposal of underutilized assets.
Key Testimony & Policy
Mr. David Morroni, Director of Physical Infrastructure at the GAO, testified that the FBF—the primary mechanism for GSA to maintain and operate federal buildings—is fundamentally strained. While the fund is supported by rent payments from tenant agencies, it is subject to the congressional appropriations process. For the past 15 years, a consistent $1 billion annual gap has existed between the rent GSA collects and the amount Congress authorizes it to spend. This shortfall has forced GSA to prioritize immediate operational needs over long-term capital repairs, leading to the current maintenance crisis.
A central theme of the hearing was the implementation of the Use It or Lose It (USE) Act and the Federal Utilization of Land Act (FULL Act). Rep. Chuck Edwards (R, NC-11), the author of these measures, emphasized that they require the Office of Management and Budget (OMB) and GSA to report utilization data for all federal leased and owned space by March 31. Mr. Morroni noted that if space utilization falls below 60%, the USE Act mandates that agencies take steps to consolidate or reduce their footprint. This data is seen as a critical prerequisite for disposing of properties that carry high maintenance liabilities but low occupancy.
Mr. Morroni also discussed alternative financing and budget structures to alleviate the FBF's burden. Proposals included providing direct appropriations to tenant agencies for major capital projects rather than routing them through the FBF, and creating specific funding streams for the upfront costs of property disposal and environmental remediation. Additionally, the subcommittee explored the United States Judiciary’s proposal to manage its own buildings independently of GSA. While Mr. Morroni remained neutral, he cautioned that such a move could lead to a duplication of expertise and a loss of economies of scale for the remaining GSA portfolio.
Notable Exchanges & Partisan Dynamics
The most significant partisan and regional exchange involved the relocation of the Federal Bureau of Investigation (FBI) headquarters. Rep. Steny Hoyer (D, MD-5) expressed sharp criticism of the proposal to move the FBI from the "decrepit" J. Edgar Hoover Building to the Ronald Reagan Building. Citing a redacted Inspector General report, Rep. Hoyer argued that the Reagan Building, designed for "permeability" and public access, cannot meet Interagency Security Committee (ISC) Level 5 security standards required for a premier law enforcement agency. Mr. Morroni agreed that retrofitting the Reagan Building would require a massive investment and noted he was unaware of any previous successful retrofits to Level 5 standards.
Rep. Mark Pocan (D, WI-2) raised concerns regarding the William J. Coyne Federal Building, which is slated for accelerated disposal. He characterized the building as the "Sistine Chapel of New Deal art" and questioned how GSA would protect integrated historical artwork during a sale or demolition. Mr. Morroni admitted that federal real property data regarding artwork is often flawed but stated that GSA is required to include preservation requirements in property sales.
Rep. David Joyce (R, OH-14) and Rep. Mark Alford (R, MO-4) focused on the "cultural reticence" of agencies to share space. Mr. Morroni described a "turf war" mentality where agencies view dedicated buildings as part of their identity. Rep. Joyce argued that taxpayer efficiency must override agency egos, advocating for more "hoteling" and desk-sharing models, especially as telework remains a factor in the post-pandemic environment.
Organizations Mentioned
- General Services Administration (GSA): The primary agency responsible for managing the federal real property portfolio and the Federal Buildings Fund; criticized for a $50 billion maintenance backlog. - United States Government Accountability Office (GAO): Provided the core testimony and assessment, maintaining federal real property on its high-risk list for over two decades. - Federal Bureau of Investigation (FBI): Discussed extensively regarding the urgent need to vacate the Hoover Building and the security challenges of the proposed Reagan Building relocation. - United States Judiciary (Judiciary): Mentioned regarding its $8.3 billion repair backlog and its proposal to gain independent authority over its own facilities. - United States Department of Agriculture (USDA): Discussed in the context of the controversial sale of its historic South Building and the relocation of sub-agencies to Kansas City. - United States Department of Housing and Urban Development (HUD): Currently under GAO investigation regarding the legality and cost-effectiveness of its headquarters relocation to Virginia. - Office of Management and Budget (OMB): Tasked with overseeing the implementation of the USE Act and enforcing utilization standards across the executive branch. - Public Buildings Reform Board (PBRB): Cited for its report identifying the $50 billion deferred maintenance liability facing the federal government.
What's Next
The subcommittee is awaiting the March 31 deadline for the first comprehensive utilization reports mandated by the USE Act. Mr. Morroni suggested that Congress should consider raising the $4 million prospectus threshold, which currently triggers a lengthy oversight process for even routine repair projects like elevator replacements. GAO is also expected to release a report in the coming months regarding the HUD headquarters relocation. Members were given seven days to submit additional questions for the record, with a focus on obtaining productivity data related to telework and its long-term impact on federal space requirements.
Transcript
The Subcommittee on Financial Services and General Government will come to order. This hearing is titled GAO's Assessment of the Federal Buildings Fund. Members will have five legislative days within which to revise and extend their remarks and insert extraneous material into the record. I now recognize myself for an opening statement. The General Services Administration, or GSA, maintains, builds, leases, or operates more than 360 million square feet of space that houses thousands of federal employees in 2,200 communities across our country. In addition, our constituents visit GSA-managed properties every single day. Everyone from veterans accessing their benefits, disaster victims seeking assistance, to plaintiffs and defendants attending court enter a GSA property. However, GSA's management of federal real property has been on the Government Accountability Office, or GAO's, high-risk list since 2003, and the scope of the crisis has never been clearer. The Public Buildings Reform Board, which oversees our public buildings, recently released a report indicating that the deferred maintenance in the federal building portfolio has become a $50 billion liability. GSA's Public Buildings Service, or PBS, is responsible for the maintenance of the GSA-managed facilities. Most of PBS's activities are supported through the Federal Buildings Fund. The FBF, as it's commonly known, is funded by agency rent payments to GSA, but as many of you know, the FBF is subject to the appropriations process. Over the last several years, the FBF has been used to fund other priorities. As a result, the FBF has been and continues to be insufficient to address the deferred and regular maintenance of federal real estate property. We need to have honest conversations about how we get these costs under control. It starts with disposing of federal properties with high deferred maintenance and low occupancy to reduce the strain on the FBF. Moreover, ensuring the FBF has the resources it needs to maintain federal properties is another part of the equation. I am pleased that we have Mr. Marroni from GAO here again to assess the FBF and to get GAO's perspective on the scope of the issue facing the fund. I look forward to our discussion today. I now recognize my distinguished ranking member of the subcommittee, Mr. Hoyer, for his opening statement.
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