The U.S. Department of Commerce (DOC) prepared a Real Property Cost Savings and Innovation Plan in response to the July 1, 2010, memorandum to all CFO ACT agencies from the Controller, Office of Management and Budget (OMB). The memorandum directed that each agency plan provide an overview of the initiatives underway or planned that will contribute to the government-wide $3 billion real property savings goal by September 30, 2012. The Department’s goal of $7.2M was increased to $10M by OMB. The Department reports progress toward the savings goal quarterly to OMB. OAS and ORPP also reports monthly to the Deputy Secretary on actions being undertaken by Bureaus as well as quarterly for the Balanced Score Card for CFO/ASA.
Sources of Savings include:
- Elimination or reduction of space in underutilized lease arrangements.
- Consolidating common asset types (such as data centers, office space, warehouses, and laboratories) within and across agencies).
- Demolished or disposed real property assets.
- Avoidance of rent or project cost through cancellation of lease or construction projects.
- Cost effective alternatives to acquisition, such as consolidation or collocation, or desk sharing through telework, or virtualizing small offices through 100% telework.
- Avoidance of deferred maintenance liabilities operating expenses through disposal.
- Reduction of operations and maintenance cost through energy efficiency and consumption reduction investments.
How Savings And Cost Avoidances Are Being Counted
Presidential Memorandum of June 10, 2010, “Disposing of Unneeded Federal Real Estate – Increasing Sales Proceeds, Cutting Operating Costs, and Improving Energy Efficiency,” for the heads of executive departments and agencies. It directed that that agency plans also include the following:
1. Anticipated programmatic or mission changes that may impact their real estate Footprint
2. Plans for eliminating lease arrangements that are not cost effective
3. Plans for consolidating common asset types (such as data centers, office space, warehouses, and laboratories) within and across agencies, consistent with the Federal Data Center Consolidation Initiative
4. Real property assets that are reported in the Federal Real Property Profile as “excess,” but have not been reported for disposal
5. Processes to accelerate the identification of excess assets and disposal of surplus assets
6. New construction projects or new leases for FY 2010-2012 and associated plans
7. Cost effective alternatives to acquisition, such as consolidation or collocation, (only for agencies that plan to acquire space as part of programmatic or mission changes)
8. Existing space standards or applicable policy guidelines
9. Anticipated real property cost savings for FY 2013 and out-years.
The Department’s Facility Cost Savings and Innovation Plan addressed these nine items. They are also used to identify how savings and avoidance is counted.
- In response to #1, 2 & 3 we are counting leased space that is reduced by turning part of the space (partial termination) or all (terminated/expired) of the space into GSA in leased/owned or direct leased buildings and the DOC OU has vacated.
- The reason space is terminated or partially terminated is not important
- Temporary reduction through an MOU is not counted.
- The delta in rent that is not being paid during the 2011-2012 reporting period is counted.
- In response to 4 & 5 for cost avoidances we are counting the annual Operating Cost and Repair Backlog for the demolished/transferred/or sold facility. If we sell a facility (through GSA) we would claim the savings too.
- These numbers have been used for many years throughout government to report on facility cost avoidance.
- Temporary reduction through an MOU is not counted.
- The values in the last reporting year in FRPP are used for determining the amount of avoidance.
- For #7 we are counting any cancellation of lease acquisitions where we have done an alternative to a new acquisition.
- For example NOAA cancelled a request for space they had sent to GSA for 25,000 sf and instead housed new hires in existing space.
- Deciding to virtualize a small office that is being established also fits into this category.
- An estimate of market rent that would have been paid during the 2011-2012 reporting period.
- It groups the savings into five categories. Reduction, Cancellation, Disposal, Consolidation, and Telework (virtualization). This is to aid in categorizing these savings into OMB’s four categories: Property Disposal, Space Management, Sustainability, and Innovation.
- Reduction, Cancellation, and Consolidation go to Space Management.
- Disposal goes to Property Disposal, and
- Telework goes to Innovation.
- Sustainability savings are related to conservation, solar, alternative energy, commuting reduction, and similar cost savings.
- Facility Consolidations, Reductions and Terminations: Under the administration’s June 2010 direction, Commerce is continuing a comprehensive review of its facility needs to drive down costs and reduce its footprint in new and existing space. These strategies have generated savings to date of $9.85M towards its $10M goal by the end of FY 12. Savings are being generated from multiple strategies, including the termination of leases, relocations to less expensive space, reduction of existing space, reduction of new requirements, virtualization of space/telework, and disposal of excess assets. Commerce continues to review strategies to drive additional savings and reduce space.
- $4.790M from space reductions;
- $2.560M from lease cancellations;
- $1.946M from disposals;
- $337K from space consolidation;
- $223K from virtualization of space
- MBDA virtualized three offices, closed one and cut another by 50%. They have reduced their overall leased area by 21%
- NTIA consolidated from a 9,830 square foot leased facility into less than 2,000 square feet saving $337K in annual rent
- OIG saved $250K in rent through space reduction
- Census’ termination of a DRC lease a year ahead of schedule saved over $1M.
- NOAA and NIST have demolished about 17,500 square feet of buildings
Office of Real Property Programs
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